Tax Administration: Uses of and Problems With IRS' Non-Master File
(Letter Report, 04/21/99, GAO/GGD-99-42).

Pursuant to a congressional request, GAO provided information on the
Internal Revenue Service's (IRS) non-master file (NMF), which IRS
established to process taxpayer accounts that cannot be processed on its
master file, focusing on: (1) the basic differences between the master
file and the NMF; (2) known problems that IRS and taxpayers have been
experiencing with the NMF, including the sources of such problems; and
(3) recent IRS proposals and actions intended to address these problems.

GAO noted that: (1) IRS uses the NMF for accounts that either the master
file is not configured to process or that must be processed more quickly
than can be done through the master file; (2) compared to the master
file, the NMF is newer and smaller (about 122,000 NMF accounts scattered
among 10 decentralized databases vs. millions of master file accounts in
one large centralized system); (3) the NMF is more flexible than the
master file, and IRS' procedures for entering data into and processing
accounts on the NMF are more streamlined and thus quicker than those for
the master file; (4) although the NMF enables IRS to process certain
accounts that cannot be handled by the master file, the NMF also had
limitations, at the time of GAO's review, that caused problems for IRS
staff and taxpayers; (5) GAO's review and IRS' studies revealed that the
most significant limitations were: (a) the lack of a central repository
of all NMF accounts; (b) the absence of any meaningful link to the
automated system that IRS staff use to obtain information about
taxpayers' accounts; and (c) the fact that the NMF processing procedures
were predominately manual; (6) these limitations made it difficult for
IRS staff to identify and access accounts and could cause delays in
processing account information in some situations; (7) these access
problems and processing delays could cause taxpayers whose accounts were
processed on the NMF to receive incorrect information and experience
poor customer service; (8) after the September 1997 Senate Finance
Committee hearings, IRS undertook several reviews of the NMF and
developed a plan that included numerous proposed corrective actions; (9)
implementation of some significant proposed actions has been deferred
until at least 2001 because those actions involve extensive computer
reprogramming that could interfere with IRS' efforts to make sure its
computer systems are year 2000 compliant; (10) recognizing the need to
make improvements in the near term, however, IRS recently implemented
other actions that required fewer resources and little or no
reprogramming; (11) if effectively implemented, IRS' near-term actions,
in conjunction with the actions that have been deferred, should go a
long way toward correcting identified NMF problems; (12) however, IRS'
action plan lacks a key component; and (13) there is nothing in the plan
about IRS': (a) monitoring the NMF to identify any problems that arise
in the future; and (b) ensuring that timely action is taken to address
any such problems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-42
     TITLE:  Tax Administration: Uses of and Problems With IRS' 
             Non-Master File
      DATE:  04/21/99
   SUBJECT:  Comparative analysis
             Tax administration systems
             Taxpayers
             Strategic information systems planning
             Quality assurance
             Decentralization
             Systems conversions
             Systems compatibility
             Customer service
IDENTIFIER:  IRS Integrated Data Retrieval System
             IRS Non-Master File
             IRS Master File
             Y2K
             IRS Business Master File
             IRS Individual Master File
             IRS Exempt Organization Business Master File
             IRS Employee Plans Master File
             

Tax Administration: Uses of and Problems With IRS' Non-Master File
(Letter Report, 04/21/99, GAO/GGD-99-42).

Pursuant to a congressional request, GAO provided information on the
Internal Revenue Service's (IRS) non-master file (NMF), which IRS
established to process taxpayer accounts that cannot be processed on its
master file, focusing on: (1) the basic differences between the master
file and the NMF; (2) known problems that IRS and taxpayers have been
experiencing with the NMF, including the sources of such problems; and
(3) recent IRS proposals and actions intended to address these problems.

GAO noted that: (1) IRS uses the NMF for accounts that either the master
file is not configured to process or that must be processed more quickly
than can be done through the master file; (2) compared to the master
file, the NMF is newer and smaller (about 122,000 NMF accounts scattered
among 10 decentralized databases vs. millions of master file accounts in
one large centralized system); (3) the NMF is more flexible than the
master file, and IRS' procedures for entering data into and processing
accounts on the NMF are more streamlined and thus quicker than those for
the master file; (4) although the NMF enables IRS to process certain
accounts that cannot be handled by the master file, the NMF also had
limitations, at the time of GAO's review, that caused problems for IRS
staff and taxpayers; (5) GAO's review and IRS' studies revealed that the
most significant limitations were: (a) the lack of a central repository
of all NMF accounts; (b) the absence of any meaningful link to the
automated system that IRS staff use to obtain information about
taxpayers' accounts; and (c) the fact that the NMF processing procedures
were predominately manual; (6) these limitations made it difficult for
IRS staff to identify and access accounts and could cause delays in
processing account information in some situations; (7) these access
problems and processing delays could cause taxpayers whose accounts were
processed on the NMF to receive incorrect information and experience
poor customer service; (8) after the September 1997 Senate Finance
Committee hearings, IRS undertook several reviews of the NMF and
developed a plan that included numerous proposed corrective actions; (9)
implementation of some significant proposed actions has been deferred
until at least 2001 because those actions involve extensive computer
reprogramming that could interfere with IRS' efforts to make sure its
computer systems are year 2000 compliant; (10) recognizing the need to
make improvements in the near term, however, IRS recently implemented
other actions that required fewer resources and little or no
reprogramming; (11) if effectively implemented, IRS' near-term actions,
in conjunction with the actions that have been deferred, should go a
long way toward correcting identified NMF problems; (12) however, IRS'
action plan lacks a key component; and (13) there is nothing in the plan
about IRS': (a) monitoring the NMF to identify any problems that arise
in the future; and (b) ensuring that timely action is taken to address
any such problems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-42
     TITLE:  Tax Administration: Uses of and Problems With IRS' 
             Non-Master File
      DATE:  04/21/99
   SUBJECT:  Comparative analysis
             Tax administration systems
             Taxpayers
             Strategic information systems planning
             Quality assurance
             Decentralization
             Systems conversions
             Systems compatibility
             Customer service
IDENTIFIER:  IRS Integrated Data Retrieval System
             IRS Non-Master File
             IRS Master File
             Y2K
             IRS Business Master File
             IRS Individual Master File
             IRS Exempt Organization Business Master File
             IRS Employee Plans Master File