Stephen S. Street, Alaska Business Development Center, Anchorage, Alaska.. Susan D. Anderson, Executive Director, Lower Yukon Economic Development Gene L. Dodaro, Assistant Comptroller General, Accounting and Information Management Division, U.S. General Accounting Office; accompanied by Rona B. Stillman, Chief Scientist for Computers and Telecommunications; Gregory M. Holloway, Director, Government-Wide Audits; and Lynda D. Willis, Director, Tax Policy and Administration Issues, General Government Margaret Milner Richardson, Commissioner, Internal Revenue Service; ac- . companied by Michael P. Dolan, Deputy Commissioner; Judy Van Alfen, Associate Commissioner for Modernization; Jim Donelson, Chief, Taxpayer Service, and Acting Chief Compliance Officer; and Tony Musick, Chief Robert P. Clagett, Chairman, Committee on Continued Review of the Tax Systems Modernization of the Internal Revenue Service, National Research Council; accompanied by C.A. Irvine, Member, Committee on Continued Review of the Tax Systems Modernization of the Internal Revenue Service, Lynda D. Willis, Director, Tax Policy and Administration Issues, General Government Division, U.S. General Accounting Office; accompanied by Rona B. Stillman, Chief Scientist, Office of Computers and Telecommuni- cations, Accounting and Information Management Division Michael P. Dolan, Deputy Commissioner of Revenue, Internal Revenue Serv- ice; accompanied by Judy Van Alfen, Associate Commissioner for Mod- ernization; and Jim Donelson, Chief, Taxpayer Service and Acting Chief Valerie Lau, Inspector General, U.S. Department of the Treasury Gregory M. Holloway, Director, Government-Wide Audits, Accounting and Information Management Division, U.S. General Accounting Office; accom- panied by Dianne Guensberg, Assistant Director, Government-Wide Audits, and Eleanor Long, Audit Manager, Government-Wide Audits Anthony Musick, Chief Financial Officer, Internal Revenue Service TUESDAY, SEPTEMBER 10, 1996 Gene L. Dodaro, Assistant Comptroller General, Accounting and Information Robert P. Clagett, Chairman, Committee on Continued Review of the Tax Systems Modernization of the Internal Revenue Service, National Research Page 177 198 225 226 .... 228 John Gioia, President and Chief Executive Officer, Robbins-Gioia, Inc. APPENDIX GAO report entitled "Tax Administration: IRS Is Improving Its Controls for Ensuring That Taxpayers Are Treated Properly" GAO report entitled "Tax Systems Modernization: Cyberfile Project Was Poor- ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD IRS letters with attached GAO reports commenting on miscellaneous GAO reports during the 104th Congress regarding tax administration and mod- ernization issues relevent to these hearings: Tax Administration: IRS Could Do More to Verify Taxpayer Identities ..... Tax Administration: IRS Faces Challenges in Reorganizing for Customer The 1995 Tax Filing Season: IRS Performance Indicators Provide Incom- plete Information About Some Problems Tax Administration: Electronic Filing Falling Short of Expectations Tax Administration: Making IRS' Telephone Systems Easier to Use OVERSIGHT OF THE INTERNAL REVENUE SERVICE TUESDAY, MARCH 26, 1996 U.S. SENATE, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, DC. The Committee met, pursuant to notice, at 9:27 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Ted Stevens, Chairman of the Committee, presiding. Present: Senators Stevens, Glenn, Levin, and Pryor. OPENING STATEMENT OF SENATOR STEVENS Chairman STEVENS. I have been notified that the Senators are going to be a little late, so since we are all here, why don't we start a little early. Our first panel is Stephen Street from the Alaska Business Development Center and Susan Anderson from the Lower Yukon Economic Development Council. I will just make a short introductory statement here this morning. The Internal Revenue Service is one of the most critical interfaces between the Federal Government and most Americans. It really touches every American at home and at work. The efficiency and effectiveness of the IRS depends on its use of information technology now. The IRS must change the way it does its work in order to keep up with the rapid changes that define the information age in our country. Today, our hearing will focus on whether the IRS has the capability to fulfill the needs of the American public as we near the 21st Century. The taxpayer data entrusted to the Internal Revenue Service is among our most personal and private information, and one of the realities of this age is the threat to privacy and the possible manipulation of personal data. We are very concerned about the findings of the National Research Council in its study of the Tax System Modernization Program (TSM), and I quote: "The gap between the current TSM security posture and the minimum security acceptable will continue to widen, thus virtually ensuring massive security breaches in the coming years." The IRS appears so far not to be able to protect taxpayers with TSM. Correction of even minor errors in tax return processing can be extremely difficult and costly to taxpayers. It takes considerable time, effort and money to make those corrections, but it would be impossible to correct the damage to the privacy of taxpayers and their families if the IRS cannot protect this taxpayer data. (1) |