- The Washington Times - Thursday, December 5, 2013

While the White House continues to struggle with technical issues on the health care insurance website, the Internal Revenue Service is experiencing its own glitches costing millions.

A new information database, aimed at improving customer service for taxpayers, has been delayed again, increasing the cost of deployment by 74 percent from $47 million to $83 million. The IRS has delayed the implementation of the system due to issues with data processing and user safety, according to a Treasury Inspector General for Tax Administration (TIGTA) report.

The original estimated cost of $47 million was calculated for two interfaces that were mean to be implemented this month. With the delays on the first one raising the cost to $83 million, the IRS will need to re-evaluate the total costs for the deployment.

“I am troubled by these delays and the escalating costs associated with implementing this significant component of the IRS’s modernization efforts,” said J. Russell George, inspector general for tax administration. “The IRS needs to be aggressive in its efforts to resolve these problems.”

The first phase of implementation of the database in question, known as the Customer Account Data Engine 2 (CADE 2), has already been delayed once before. CADE 2 was originally intended for deployment in September of 2012 and was delayed until June 2013. After conducting a review, the inspector general found that the database interfaces were still not implemented by the revised date due to inefficiencies in data processing.

“Since the IRS now relies extensively on its computer systems to carry out the responsibilities of administering our Nation’s tax laws, it must ensure that those systems are effectively secured to protect sensitive financial and taxpayer data,” Mr. George said. “TIGTA found that the IRS’s Modernization Program remains at risk.”

The IRS did not immediately respond to a request for comment but stated in a response to the audit that it would certify that the database is accurate, complete, timely, and available. But the agency also disagreed with several of the auditors recommendations.

“We believe these recommendations question foundational decisions and management judgements rather than audit the processes we used to come to the decisions and judgements,” said Terence Milholland, the IRS‘ chief technology officer, in a response letter to the inspector general.

IRS officials said that two transitional stages must be completed first before CADE 2 can serve as the consolidated authoritative source of taxpayer data. During the transition phases, “CADE 2 may serve indirectly as a data source for downstream systems,” IRS officials said in the response. The inspector general, in the report, stated that risks likely remain.

According to the design specification, the interface should be always available, serve 15,000 concurrent users and support up to 400,000 transactions per peak hour, the inspector general reported.

But auditors say the IRS only deployed the interface once, for a period of six hours during which only six employees used it to request 1,500 pre-selected taxpayer accounts. “The interface has not been turned on again since December 2012,” says the report.

According to the report, data validation tests conducted between July 2012 and January 2013 resulted in over 1,000 defects which prompted the IRS to apply over 2.4 million data corrections to the database.

In addition, the technology used to validate the data only had the capability to validate 55 percent of the information in the database, meaning there are potentially more data defects to be discovered.

TIGTA also found that much of the data within CADE 2 is incomplete due to a lax updating system. Whenever there is a problem updating individual taxpayer information and accounts that have known data problems, they are left incomplete on the database and users have to access the missing information through other, less efficient, means.

To make matters worse, the CADE 2 system does not meet IBM’s required safety measures to ensure that the users are who they say they are. When TIGTA ran a test to trace information through the different levels of the system the found that the user information was not linked to the system account, making it impossible to trace the users’ identity past that point. The IRS argued that the safety concerns raised by TIGTA are not a problem for taxpayers using the system because those users would not be able to gain direct access to the database anyway.

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