Walorski Calls for IRS Reforms to Close Trust Gap
Cites Repeated Acquisition Failures, Cost Overruns in Demanding More Accountability at Oversight Hearing
WASHINGTON – U.S. Rep. Jackie Walorski (R-Ind.) today at a hearing of the House Ways and Means Oversight Subcommittee called for fundamental reform of the Internal Revenue Service (IRS) to address repeated acquisition failures and cost overruns.
“There’s a clear, critical, and urgent need for the IRS to fundamentally overhaul its IT systems, but repeated mistakes, big and small, undermine our trust that they’ll get it right,” Congresswoman Walorski said. “I believe if we can instill more accountability, better contracting practices, and better strategic planning, the IRS can get on the right path.”
Video of Walorski’s remarks is available here. The full text is below.
Thank you, Chairman Jenkins, for holding this hearing.
It’s hard to believe that it was just literally over a month ago that President Trump signed the Tax Cuts and Jobs Act into law. Yet we’ve already seen workers getting raises, bonuses, and better benefits and companies announcing new investments in equipment and facilities right here in the U.S.
While this was the most transformative overhaul of the tax code in 32 years, it’s easy to overlook the fact that it’s been 20 years since Congress took a major look at the structure of the IRS. A lot has changed since then. In 1999, only 23 percent of individual returns were e-filed. In 2016, that figure was 89 percent.
With the growth in e-filing, fraudsters are unfortunately becoming more and more sophisticated in their techniques. And yet the IRS’s IT infrastructure is woefully lacking. They still rely on systems from the Kennedy administration. There’s a clear, critical, and urgent need for the IRS to fundamentally overhaul its IT systems, but repeated mistakes, big and small, undermine our trust that they’ll get it right.
Consider this quote from a September 2017 TIGTA report: “The IRS suspended the [Enterprise Case Management, or] ECM project due to insufficient funding and staffing. In addition, the IRS determined that the software product selected for ECM cannot support an enterprise-wide deployment.”
To put it more plainly, the IRS bought the wrong product and then didn’t have enough money to buy the right one. I’d be pretty upset if my husband took $20 to get gas for the car, but came back and said, “Honey, I need another $20 because I got a new ice scraper instead. Also we need to call a tow truck because I ran out of gas.”
Unfortunately, this isn’t the only failed acquisition. The IRS wasted $12 million on an email system that, as it turned out, it could not use. According to TIGTA again, they bought it “without first determining project infrastructure needs, integration requirements, business requirements…and whether the subscriptions were technologically feasible.” But considering the wasted staff time and rebidding the contract, you’re actually talking about a mistake that costs well over $12 million. The staff time and taxpayer dollars could have be devoted to other critical IT projects.
The IRS is run by human beings, and human beings make mistakes. But when a mistake happens, we need to ensure that there is accountability and that procedures are followed to prevent it from happening again.
The IRS would also benefit from a better strategic vision and long-term planning. Back in 2009, the agency embarked on the Return Review Program, or RRP, a new fraud detection program to replace legacy systems. It came in years behind schedule and hundreds of millions of dollars over-budget.
The RRP is a long saga, but I want to highlight one episode in particular. The IRS put the project into a “strategic pause” in 2014. They cited many reasons, but here’s a sampling:
- To “[determine] the priority and direction from IRS senior leadership”;
- “To articulate and align on RRP’s role in the broader business vision”;
- To “[develop a] Roadmap for future state capabilities and architecture for RRP”;
- “To ensure clear and concise understanding of scope, cost, and schedule” with contractors;
- And, finally, budgetary constraints.
Looking at this list, I wonder how any project could ever be on time or on budget. I see things like this and I can’t help but ask: Are these budgetary constraints real, or are they because people spend so much time spinning their wheels without any direction they just run out of money?
Now, the RRP is more or less up and running and that’s a good thing. It’ll help catch fraud. But the process was a failure. Picture a basketball player on a breakaway. He trips on his own shoelaces, but heaves the ball up while falling and makes the basket. You wouldn’t say, “Good job.” You’d say, “Tie your shoelaces!”
Have the underlying planning issues that led to such a cost overrun and long delay with the RRP been fixed? Are new projects like CADE 2 needlessly doomed to the same fate?
Chairman Jenkins, this is the trust gap. It didn’t open up overnight and it won’t be closed overnight, either, but we absolutely have to fix it. I believe if we can instill more accountability, better contracting practices, and better strategic planning, the IRS really can get on the right path. Some of this can be legislated, but some involves a cultural shift that is up to our next IRS commissioner, who I hope will make it a priority. Our Committee is seeking to closely engage the IRS on multiple fronts to better address these issues, too.
Still, I look forward to this Committee’s continued work in the overhaul on reforming the IRS, I look forward to hearing our colleagues’ ideas today, and I yield back.
Walorski represents the 2nd Congressional District of Indiana, serving as a member of the House Ways and Means Committee.