Audit: IRS killed online project just before deployment

The Internal Revenue Service has spent $10 million on a canceled project that would have given taxpayers online access to their tax accounts, according to a new audit released today by the Treasury Inspector General for Tax Administration.

The IRS started the “My IRS Account” (MIRSA) project in 2006 to provide taxpayers with the ability to view their tax accounts online. The IRS terminated the project in December 2008 as it was nearing deployment.

The reason for the cancellation was IRS officials' decision to strategically re-examine the project in light of the IRS Strategic Plan for 2009-2013, according to the 25-page audit, which was released today. “This decision occurred after 32 months of development and the expenditure of approximately $10 million to build MIRSA Release 1,” the audit said.

To recoup its investment, the IRS has said it intends to reuse “most of the hardware and functionality” of MIRSA in a future project restoration.“However, at the time we completed our review, the IRS had not developed a tangible plan or a time period for restarting the MIRSA project,” the audit said.

“If the IRS does not soon develop a comprehensive and well-researched strategic plan to further develop and deploy the MIRSA project and/or related projects, the IRS may not realize the maximum benefit from its $10 million investment,” auditors wrote.

Two other problems also stand in the way of reviving the project. For one, the IRS has not yet developed an enterprisewide secure electronic authentication strategy and was planning to use a temporary strategy in MIRSA Release 1, the audit said. Secondly, the agency has not yet developed formal plans for archiving, transferring and disposing of the data collected under the program.

The audit recommended that the IRS move quickly to create a long-term strategy for the program and initiate an enterprise solution for authentication. IRS officials agreed with the recommendations and said they had set up a system for data disposal for such programs.

The IRS recently has expanded other online activities by launching YouTube and iTunes sites, among other efforts.