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Risks in Modernized e-File will delay retirement of legacy systems, says TIGTA

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The Internal Revenue Service may not be able to retire its legacy e-File system due to insufficient testing of the latest release of the Modernized e-File system, or MeF. Performance waivers and deferrals used in performance tests of MeF 7.0 remain unresolved, according to a Treasury Inspector General for Tax Administration report (.pdf), published Nov. 14 but dated Sept. 27.

According to MeF 7.0's end of test status report, dated Jan. 20, there were 30 failed systems acceptability test, or SAT, cases requiring resolution at the conclusion of the SAT process.

"Thirteen of the failed test cases related to specific MeF business rules that help to prevent fraud and detect errors," write auditors.  

"The remaining 17 failed test cases related to MeF application code and edit rules that primarily affect downstream processing of tax returns after transmission through the MeF system," they add.

The problem of incomplete testing is compounded by the fact that significant infrastructure changes are planned at the agency--introducing uncertainty that may affect MeF system reliability, say report authors.

What's more, MeF has not fully demonstrated that it can process the projected 121 million combined individual and business returns expected in a filing season. The system's un-proven processing capacity is a red flag for TIGTA. During the 2010 and 2011 filing seasons, the actual volume of returns transmitted to the MeF system fell considerably short of IRS expectations, note auditors.

Not only should the agency resolve the current risks posed by inadequate testing, it should outline conditions that must be met by MeF prior to shutting down the legacy e-File system, says the TIGTA report.

Report authors recommend the agency update the Internal Revenue Manual to improve performance testing processes--ensuring test teams get waivers when tests are not conducted and ensuring teams submit end of test status reports for senior management review.

The IT organization should also create a retirement plan for legacy system and communicate those retirement timeline milestones to key stakeholders.

In response to the report, the IRS said it was building contingency plans for the MeF system and updating manuals. It won't, however, develop a retirement plan for the legacy e-File system.

For more:
- download the report, 2012-201-121 (.pdf)

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