The IRS is developing a new fraud detection system but does not have a termination date or adequate transition plan for the old system and running them both costs an additional $18 million a year, the Treasury Inspector General for Tax Administration has said.
The Electronic Fraud Detection System – EFDS, was first implemented over 10 years ago and has fundamental technology and design limitations. The agency is developing a new Return Review System that has demonstrated some promising capabilities so far. In September TIGTA said the RRP could handle eight million returns uploaded each day, and that it identified 25 percent more confirmed fraud cases than EFDS.
But TIGTA also warned that classifying the RRP system as an information resource rather than a major system means security issues might not be effectively addressed. And TIGTA is now calling attention to risks inherent in the old system and questioning how and when the agency can make a clean break to the new one.
The IRS agreed with recommendations to develop a retirement plan for the EFDS and retire the EFDS after validating that the RRP effectively identifies, at a minimum, all issues currently identified by the EFDS, as well as to ensure that contractors have software licenses to use a required testing repository and verify that guidance is followed, among other recommendations.
