Maximizing the Efficiency of the IRS's Filing Season Operations

May 2014
Topics: Taxation, IT Investment Management, Government Agency Operations
Every year, the tax filing environment grows more complex. With MITRE's support, the IRS has introduced new efficiencies into its tax filing season planning and execution processes.
Jim Dumais in a meeting.

One of the IRS's principal goals is to deliver a successful tax filing season—one with minimal processing delays and system disruptions—to the more than 200 million taxpayers filing individual and business returns each year. It's not a simple task. To achieve this goal, the Internal Revenue Service recently embarked on a project to revamp its tax filing season planning, execution, and continuous improvement processes.

During 2010 and 2011, the IRS engaged MITRE, which operates a federally funded research and development center for the agency, to conduct a yearly post-filing season assessment to support the refinement of its processes for the subsequent tax year. But given the growing complexity of tax laws, increased numbers of electronically filed returns, and frequent legislative changes requiring systems redesign, in 2012 the agency stepped up our involvement. That year, MITRE began a 365-day rolling activity of observation, recommendation, delivery process enhancement, and decision-support tool development to maximize the efficiency of the IRS's return processing systems.

Under this initiative, known as the Processing Year Delivery Assurance project, the IRS assigned MITRE the task of applying processes and tools that would provide better risk management, operational readiness, incident management, and situational awareness to the agency.

A Map to Guide Future Progress

As a first step, MITRE created a map of the technology systems that support filing season.

"There are about 100 different tightly integrated systems, both legacy systems and new applications, that are part of the individual tax-return processing pipeline," says Jim Dumais, MITRE's manager for Treasury and IRS programs. "By creating a picture of the 50 most critical systems in that pipeline, we provided IRS personnel and their contractors with a common understanding of that pipeline and how their systems fit into the overall picture. That laid a strong foundation for the agency and its private-sector contractors to identify the best investment opportunities for improving the flow of operations."

The MITRE team next captured data about return volumes, processing times, and past causes of delays. We used this information to create a model that allows the IRS to estimate the impact of potentially disruptive events. The agency now uses this tool to proactively plan for contingencies.

We also developed the Risk and Readiness Assessment, which MITRE conducts twice a year. "As soon as filing season ends, we use this framework to assess opportunities to improve flow and functionality, reduce IT costs, and prevent system disruptions," Dumais explains. "This helps the IRS identify how to best use the time between May and December to prepare for the next filing season."

In December, MITRE runs the assessment again to determine how well the newly implemented processes and systems are functioning. The assessment also identifies any residual risk for system disruptions or processing delays and recommends how to address them as the IRS begins its filing season operations phase.

Changes Help Manage Growing Complexity

MITRE is now working across the agency to bring together and apply best practices, along with the unique experiences and needs of the IRS. These resulting policies and standard operating procedures will enable personnel to successfully execute their new roles and responsibilities.

Drawing on a model for successful programs, MITRE suggested a change in the oversight of the individual tax return process as well. "We recommended that the IRS put in place an executive whose primary role would be to oversee assessment and readiness activities and to work with all of the delivery partners to ensure effective communication and coordination of their roles—an 'integration' function," Dumais says. The IRS accepted our recommendation, and we're now helping develop the requirements for the executive who will fill that position.

Together, these measures are producing dramatic results. IRS officials reported that the 2013 processing year was one of the smoothest since electronic filing began in 1986. Refund timeliness is up, incidents causing delay or disruption are down, and the IRS believes it is well-positioned to respond quickly to any problems that do arise.

——by Marlis McCollum

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