IT Modernization Vision

1
IT Modernization Vision Strategy

• Overview Presentation

2
The Challenge of Tax Administration The
Business Environment

• Extremely high volumes
• Over 130 million individual taxpayers
• Over 6 million business taxpayers
• 200 million tax returns every year
• 2.1 trillion in receipts 1.5 trillion in
  electronic payments
• Tax refunds totaling over 190 billion
• 1.5 billion information documents every year
• 46.7 million electronically filed returns
• 19.2 million combined federal/state returns
• Transaction rates on the order of billions per
  year and storage measured in tens of terabytes
• Widely varying inputs from taxpayers
• From simple records to complex documents
• Yearly tax law changes
• Similar to a Y2K every year
• Cant delay the tax year
• Uneven workload The peaks of the filing season
  affect systems and resources throughout the year
• Customer Service
• Seasonal work
• Notices

3
The Challenge of Tax Administration The
Technology Environment

• The Master File Systems that post and settle
  taxpayer accounts were designed in the 1960s
• Monolithic applications written in assembly
  language millions of lines of code
• Processed sequentially
• Updated once a week
• Contains the code for from over 40 years of
  business rules that implement the Tax Law and IRS
  procedures
• On-line access to master file data is read only
• Integrated Data Retrieval System (IDRS) for
  on-demand access and update of taxpayer accounts
  was designed in the early 1970s
• Applications written in COBOL millions of lines
  of code
• Has an extract of about 10 of the taxpayer
  accounts
• Complex synchronization of taxpayer and third
  party information with master file data
• Dozens of interfaces to downstream systems
• IDRS is not a single system, an integrated
  collection of over 25 tightly coupled systems
• Aging workforce
• Retirements of employees from both business and
  information technology organizations
• Very long learning curve
• Downstream systems for Customer Service,
  Examination, Collection and Criminal
  Investigation
• Built on paradigm of weekly, sequential master
  file processing
• Contain additional copies of the taxpayer account
  and tax return data extracted from IDRS and the
  master files
• Account changes synchronized with IDRS and the
  master files

4
The New Modernization Vision StrategyA
Fundamentally Different Approach

• Business leadership and involvement throughout
  the process started with definition of business
  opportunities and required capabilities as a
  basis for developing IT projects. Recommendations
  are vetted regularly through top-level Executive
  Advisory Board composed of both business and MITS
  executives
• Unified approach to setting priorities and
  selecting Major and non-Major investments (as an
  integrated portfolio)
• Smaller, more incremental releases delivered more
  frequently
• Leveraging existing systems (or components of
  existing systems) where appropriate as a major
  approach to modernizing IRS operations
• Investments viewed as a portfolio, not simply a
  collection of individual projects
• Comprehensive technical and costing reviews by
  MITS engineers and service providers
• End-to-end costing models applied to ensure that
  we have a full picture of all costs associated
  with each project, both investment and operations
  maintenance (OM)

5
Modernization Vision and Strategy (MVS) -
Framework
Embedded into the Annual Planning Process
Aligned with IRS Strategic Goals
Modernization Goals and Business Challenges
BUSINESS DOMAINS
Reporting Compliance Filing and Payment
Compliance Criminal Investigation
Submission Processing Manage Taxpayer
Accounts Customer Service
Annual Review Process
SERVICE DOMAINS
Common Business Services
Data, Infrastructure and Security Services
Opportunities and Supporting Capabilities
Driven by Business Priorities and Lead by the
Businesses
Future Investments
Future Investments
Fiscal Year 2007 Investments
Produces Five-Year IT Investments Projects that
Yield Greater Business Value
Investment Proposals and E300s
Projects

• Business Domains Not in Current Scope
• Internal Management
• Financial Management
• Other Functional Areas (e.g., Chief Counsel,
  Appeals, Communications Liaison, Taxpayer
  Advocate)

6
Business Domain Submission Processing (SP)
Submission Processing
POTENTIAL SOLUTIONS
SUBMISSION PROCESSING DEFINTION
OPPORTUNITIES
Includes the filing of paper and electronic tax
returns and the initial capture and accounting
for tax revenues
Modernized E-File (MeF)
1
Electronic Filing Expand Filing Options
2
Remittance Processing Optimize Electronic
Payment Options
IRS GOALS
Remittance Strategy

• Improve Service
• Enhance Enforcement
• Deliver Modernization

Remittance Processing Convert Paper
Remittances at Point of Receipt
3
Excise Tax e-File and Compliance (ETEC)
4
Return Processing Upfront Issue Detection and
Resolution
SUBMISSION PROCESSING GOALS
Modified Exempt Organization/Employee Plans
(EO/EP)Determination System(MEDS)
5
Return Processing Return Validation and
Computation

• Expand electronic filing to a majority of return
  types and payments
• Develop systems for processing residual paper
  (returns and payments) in a manner consistent
  with electronic returns

6
Return Processing Entity Management
IRS Employee Retirement Income Security
ActResidual Solution (IERS)
7
Return Processing Convert Paper Returns at
Point of Receipt
7
Business Domain Manage Taxpayer Accounts (MTA)
Manage Taxpayer Accounts
MTA DEFINITION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Includes the data, systems and processes used to
manage taxpayer accounts. Provides critical
support to Submission Processing.
Customer Account Data Engine (CADE)
1
Manage more accounts using themodernized
platform (CADE)
2
IRS GOALS
Provide immediate access to integrated account
data
Account Management Services (AMS)

• Improve Service
• Enhance Enforcement
• Deliver Modernization

Update and settle taxpayer accounts daily
3
ICAM- 1) User Interface 2) Case
Processing-Document Inventory Management 3)
Activity History
Notice Services/Composition and Print Service
MTA GOALS
Online account creation and maintenance
4

• Standardize taxpayer account issue and case
  management processes
• Provide on-demand access and the ability to
  update taxpayer accountinformation in a single
  authoritative data store
• Note Goals are initially focused on individual
  taxpayers

Notice Services/Notice Review
Account Monitor
8
CADE and Account Management Services Long Term
Vision
Treasury, GAO
Revenue Accounting Financial Reporting
Workflow, Work Management, Case Management,
Pending Updates Customer Communications
Daily/ On Demand
Taxpayer (Telephone Correspondence)
Returns, Payments, Correspondence
Capture Data From Paper
Taxpayers
Daily
Customer Service Systems
Submissions Processing Paper
Validate Perfect Data
Taxpayer Accounts
Daily/ On Demand
Examination Systems
Customer AccountData Engine (CADE)
Account ManagementServices
Electronic Receipt of Submissions
Tax Returns
Collection Systems
Electronic Returns, Payments, Correspondence
Case / Activity History
Criminal Investigation Systems

• Post Transactions (tax assessments, payments,
  interest, penalty, extensions, bankruptcy,
  address changes, etc.)
• Issue refunds
• Identify account issues
• Generate notices
• Financial balance and controls

• Online tools to view and update taxpayer data
  (adjustments, transfer money, apply credits, and
  do other updates to taxpayer accounts)
• Record activity history
• Monitor account for follow-up activity
• Compose and print notices
• Generate notices

Daily
Daily
9
Business Domain Customer Service (CS)
Customer Service
CUSTOMER SERVICE DEFINITION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Centralized Contact Center Forecasting and
Scheduling
Provides tax law and compliance assistance,
taxpayer education, and taxpayer
account/refund/notice inquiries
Multi-Channel Contact (for CSR-assisted Help)
and integrate the communication channels used by
the IRS Contact Center and Field Assistance
1
Contact Recording
IRS GOALS
Self-Service Applications (without CSR
assistance) Increase taxpayers ability to
self-assist and self-correct
Corresponding Imaging System Release 2
2

• Improve Service
• Enhance Enforcement
• Deliver Modernization

End-to-End Publishing (E2EP)
Self-Service Applications (without CSR
assistance) Increase tax professionals
ability to self-assist and self-correct
3
Enterprise Queue
CUSTOMER SERVICE GOALS
e-Services for Reporting Agents
Internet Customer Account Services

• Expand electronic service capabilities to tax
  professional community
• Implement new capabilities targeted directly at
  individual taxpayer
• Redirect Customer Service resources to work
  complex inquiries requiring one-on-one contact
  with taxpayers through the multi-channel contact
  center

Queuing Management System
4
Self-Service Applications (without CSR
assistance) Increase capabilities for Tax
Exempt and Govt Entities and Compliance
Reporting Agents Access to e-Services
Enable effective and fast decision-making with
decision support tools
5
Tax Exempt and Govt Entities Application
e-Services
10
Business Domain Reporting Compliance (RC)
Reporting Compliance
REPORTING COMPLIANCE DEFINITION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Performs compliance activities by seeking to
identify taxpayers who are not complying with
reporting requirements that impact their tax
liability or exempt status.
Compliance Data Environment Rules-Based Engine
(CDE RBE)
Enhance planning tools in order to provide an
integrated approach to Exam Plan development
1
RICS Compliance Decision Analytics (RICS-CDA)
IRS GOALS
Proactively detect and respond to issues and
assign cases to the most appropriate treatment
stream
2

• Improve Service
• Enhance Enforcement
• Deliver Modernization

Inventory Control andIMS Integration (ICII)
Compliance Support Tools(CST)
3
Leverage technology to enhance processes and
provide better resources for staff to manage
workload
REPORTING COMPLIANCE GOALS
Examination Desktop SupportSystem (EDSS)

• Identify, address, and prevent abusive tax
  schemes
• Discourage and deter noncompliance
• Detect and deter domestic and off-shore-based
  tax and financial criminal activity
• Deter abuse within and misuse of tax-exempt and
  governmental entities
• Increase the number of taxpayers covered through
  pre-filing programs
• Increase examination coverage
• Reduce examination cycle time

4
Capitalize on technological advances and utilize
data to work cases more effectively
Correspondence ExamAutomation Support (CEAS)
Service-Wide Employment TaxResearch System
(SWETRS)
Selection and WorkloadClassification (SWC)
Risk-Based Scoring System(RBSS)
11
Business Domain Filing Payment Compliance
(FPC)
Filing Payment Compliance
FPC DEFINITION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Filing and Payment Compliance Program
Investigation and collection of delinquent tax
obligations (payment) and securing delinquent tax
returns (filing)
1
Expand the use of third-party information for
case selection and treatment assignment
Universal Case History
Integrated Collections System (ICS) to Windows
IRS GOALS
2
Implement a more flexible and easily adaptable
process to select workload and assign treatment
streams
Enhance Compliance Data Warehouse

• Improve Service
• Enhance Enforcement
• Deliver Modernization

BMF Case Creation NonFiler Identification
Process (BMF CCNIP)
Enhance and integrate case management capabilities
3
FPC GOALS
Pre-Populated Collection Information Statement
(PCIS)
4
Construct a data asset to associate data sources
and allow the development of decision analytics

• Improve measurement and detection of
  non-compliance
• Better allocate enforcement resources
• Leverage enforcement activities with other govt.
  agencies, external partners, stakeholders, and
  media
• Expand the scope and accessibility of services
  offered electronically
• Deliver modernized systems designed to strengthen
  collection and other enforcement efforts and to
  meet taxpayer and practitioner needs and service
  expectations

Consolidated Decision Analytics (CDA)
Enhance non-filer case identification,
prioritization and delivery through improved
processes, data and technology
5
E-Liens
Automated Substitute for Return Employee Access
(ASFR-EASE)
Utilize Private Collection Agencies to resolve
delinquent accounts
6
12
Business Domain Criminal Investigation (CI)
Criminal Investigation
CI DEFINITION
POTENTIAL SOLUTIONS
Enforcing criminal statutes of the Internal
Revenue Code and related statutes, along with
identification and investigation of money
laundering, narcotics, and counterterrorism.
OPPORTUNITIES
Asset Forfeiture Tracking (AFTRAK)
1
Enhance management of seized assets, capture full
costs of seizure activities
Investigative Data Analytics (IDA)
2
Standardize, streamline and specify processes
such as enforcement actions, management approvals
and evidence control
IRS GOALS
Investigative Scanning and Document Management

• Improve Service
• Enhance Enforcement
• Deliver Modernization

Provide ability to rapidly identify and respond
to the constant change in tax schemes and
redirect resources appropriately
3
E-Crimes Environment
Proactively identify patterns of illegal
activities through data analysis
4
CI GOALS
Electronic Total Investigative System
Improve efficiencies through the expansion of CI
modernized systems and platforms
5

• Develop the investigation techniques needed to
  combat tax evasion, money laundering and
  terrorist financing through the use of
  technologies available today and in the future
• Enable agents to work complex, high-impact cases,
  achieve consistently high conviction rates, and
  provide access to current and accurate case
  inventories
• Streamline processes to aid management reviews
  and approvals
• Expedite case prosecutions and closures
• Accurately track seized assets and equitable
  distribution of proceeds

Receive and analyze high volume electronic
records in response to summons, subpoenas, and
warrants
6
Leverage emerging technologies to ensure digital
evidence is used efficiently
7
Enhance capabilities to detect tax fraud and
prevent erroneous refunds
8
13
Service Domain Common Business Services (CBS)
Common Business Services
CBS DEFINITION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Designed to support rapid, cost-effective
delivery of similar business functionality
within, or across, business domains
Account Management
Document Management Center of Excellence
(CentEx) Provide centralized guidance and
oversight to the various IRS departments /
projects that intend to deploy document
management applications
1
2
Workload Management
IRS GOALS

• Improve Service
• Enhance Enforcement
• Deliver Modernization

3
Case Management
4
Document and Image Management
CBS GOALS
Workforce Management

• Develop standard common services that support
  multiple solutions, leverage current production
  services, and reduce cost
• Develop common business services to enable
  transition
• Align services with FEA SRM
• Enable collaboration across the enterprise and
  with other agencies

5
Portal Management
6
14
Service Domain Data, Infrastructure, and
Security Services (DISS)
Data, Infrastructure, Security Services
DISS DEFINTION
POTENTIAL SOLUTIONS
OPPORTUNITIES
Provide the data, infrastructure, and security
services required to support the business
functionality identified for MVS
Data Strategy
1
Data Services Definition, organization and
access to unique and shared data stores
Infrastructure Roadmap Initiative
IRS GOALS
Infrastructure Services Common technical
infrastructure capabilities
2

• Improve Service
• Enhance Enforcement
• Deliver Modernization

Portal Strategy
Integration Services Interface and integration
capabilities provided through the implementation
of an Integration Broker
3
Enterprise Application Integration Broker
DISS DOMAIN GOALS

• Develop standard common services that support
  multiple solutions, leverage current production
  services, and reduce cost
• Review solution concepts for Major, non-Major and
  Current Production Environment (CPE) projects to
  identify
• Common data strategy needs and create a data
  strategy
• Integration Strategy
• Security considerations
• Integration with other Infrastructure-related
  efforts
• Infrastructure Roadmap
• Active Directory
• IPv6

Security Services Common security capabilities
embedded or used by the applications to protect
data privacy, integrity and access control
4

• HSPD12
• Personal Identity Validation (PIV)