The Internal Revenue Service's Modernized e-File system is set to fully rollout during the 2012 filing season, but inadequate testing and limited participation in early MeF deployments concern the Treasury Inspector General for Tax Administration.

As of February 2010 MeF began accepting standard individual tax returns, but it only received 8.7 million through the MeF system as of April 18, 2011--far fewer than the 35 million tax returns the IRS expected, according to a TIGTA report (.pdf) dated Sept. 29 but only released publicly Nov. 28.

Not only were individual MeF filing numbers low, the breadth of software used for filing also raised flags, according to auditors. Only 28 percent of the tax return preparation software packages used to file tax returns in the legacy e-File system were used to file through MeF, which TIGTA says indicates IRS should do more to engage software developers on interoperability and MeF usability.

Proper testing could allay some of TIGTA's concerns around the 2012 MeF rollout, but auditors say MeF testing is incomplete. The report recommends that IRS ensure MeF system testing includes testing of system performance, stability of web services and processing capacity. IRS should also adequately test the MeF system's ability to receive, process, store and retrieve tax returns, say report authors.

In a written response to the report, Richard Byrd, commissioner of the wage and investment division, said a comprehensive testing plan was unnecessary because the MeF system was developed under the Enterprise Life Cycle guidance, which included testing and certification.

The report makes no "mention or analysis of the significant testing effort undertaken as part of the software development process," wrote Byrd.

But according to TIGTA, the IRS did not complete a three-phase plan to test the processing of tax returns through the MeF system in the 2011 filing season.

"This report contains mischaracterizations with respect to the overall quality control process, and we disagree with the characterization that the Modernized e-File systems underwent ‘limited testing,'" wrote Byrd.

In all, auditors made six recommendations to the IRS for improving MeF prior to the 2012 filing season. IRS's wage and investment division concurred with four of them.

For more:
- see the TIGTA report (.pdf)

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