For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
Oct. 14 — The IRS’s on-site e-mail system doesn’t archive messages and is “experiencing numerous failures,” the agency’s watchdog said in a report.
The Internal Revenue Service may not be able to perform its duties effectively without an upgraded system, and its current setup is burdening information technology staff, the Treasury Inspector General for Tax Administration said in the report released Oct.13. The agency spent $12 million on a new system between June 2014 and June 2016 that it never used—an inappropriate waste of taxpayer money, the report also said.
Lacking the ability to archive all e-mails on site is especially troubling considering the blowback the agency has faced for the last several years, Douglas Mancino, a partner at Seyfarth Shaw LLP, told Bloomberg BNA Oct. 14. Members of the House Freedom Caucus are vying to impeach the IRS commissioner, saying he misled Congress and alleging the agency destroyed e-mails showing evidence of its scrutinizing of conservative groups. The agency’s records retention was also at the heart of a recent 2014 lawsuit ( Judicial Watch, Inc. v. IRS, D.D.C., No. 1:13-cv-01559).
“I would think that’s all the more reason to have had this issue be a front-burner issue,” Mancino said.
The IRS strongly disagrees with the notion that it wasted taxpayer dollars or didn’t follow appropriate practices, Gina Garza, the chief information officer, said in a response letter included in the report. The IRS does plan to upgrade its system, and officials found in 2014 they could save money by purchasing subscriptions instead of perpetual licenses for the e-mail software, she said.
“The IRS takes seriously our obligation to manage taxpayer dollars in the most efficient and effective manner possible,” she said. “The IRS remains committed to continuously improve our IT systems and processes.”
TIGTA alleges the agency violated Federal Acquisition Regulation requirements in its purchase of a new Microsoft Office e-mail program. When the agency moves to a cloud-based system in the future, it must follow the regulations, TIGTA said. The IRS said it would “continue to follow all applicable procedures.”
The IRS didn’t consider infrastructure needs, business requirements, security bandwidth or feasibility when it purchased the e-mail subscriptions, TIGTA said.
The findings show mismanagement, and spending $12 million on a system that was never implemented would be considered “a career-limiting move” in the corporate world, Mancino said.
“The IRS expects taxpayers to have record-retention policies that extend for years, particularly for major corporate records, including when they’re maintained in electronic format. One would think the IRS itself would think along the same lines and have the same policies, especially in the environment of the last five or six years,” he said.
But between conflicting priorities, inconsistent funding and complicated procurement requirements, it isn’t a matter of the IRS simply switching systems, Marcus Owens, a partner at Loeb & Loeb LLP, told Bloomberg BNA Oct. 14. The procurement process is slow and “the nature of the funding is almost a barrier,” he said.
Owens, a former director of the IRS Exempt Organizations Division, said the division received hand-me-down computers from other areas of the agency during his time there—an example of how the agency has historically not received enough funding to “do what it is supposed to do as well as to modernize the back-office systems.”
Congress has cut the agency’s budget by $900 million since 2010, which hurts its ability to keep its technology current—especially when that goal is secondary to collecting tax revenue and enforcing the tax laws, Owens said.
“If you’re going to underfund the agency’s core mission activities, which is what Congress has done the last few years, that means the money to support these non-mission critical, arguably not mission-related kinds of activities just isn’t there,” Owens said.
To contact the reporter on this story: Colleen Murphy in Washington at email@example.com
To contact the editor responsible for this story: Meg Shreve at firstname.lastname@example.org
Text of the TIGTA report, “Review of the Enterprise E-Mail System Acquisition” (2016-20-080), is at http://src.bna.com/joJ.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)