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Lessons of E-Filing – Government & IT

By Daniel Eisen

The impact of technology on the federal government operations and the delivery of citizen-centric services are undeniable. Developing and implementing any technology is a complex undertaking. Developing and implementing technology for the federal government, can and usually does, increase this level of complexity. These efforts usually involve multiple stakeholders and interests such as the prime contractor, subcontractor(s), consultants (technical and/or management), other federal agencies, federal budgeting constraints, cumbersome procurement processes, state, local, tribal ,or federal laws and statutes, Congress, and citizens. These efforts are also well-known for their size, complexity, staggering budgets, mismanagement, poor planning, and failures. A 2008 Government Accountability Office report stated:

OMB and federal agencies have identified around 413 IT projects—totaling at least $25.2 billion in spending for fiscal year 2008—as being poorly planned, poorly performing, or both. Specifically, through the Management Watch List process, OMB determined that 352 projects (totaling about $23.4 billion) are poorly planned. In addition, agencies reported that 87 of their high risk projects (totaling about $4.8 billion) were poorly performing. Twenty-six projects (totaling about $3 billion) are considered both poorly planned and poorly performing.

Since it is no fun to lead with the bad news, let’s look at “the good” of one federal government IT effort with the goal of increasing agency efficiency and effectiveness in delivering citizen-centric services.

In 1986 the IRS piloted its electronic tax filing program (e-file). In 1990, e-file became nationally available. By June 2011, a Treasury Press Releases (Issue Number: IR-2011-64) touted individual e-file tax returns had surpassed the one billion mark since 1986. Also, reported was more than “100 million individual tax returns were e-filed during the 2011 filing season”. And, in a December 2010 report (http://www.gao.gov/new.items/d11111.pdf), the GAO stated for fiscal year 2009, the IRS reported an e-file return cost 19 cents to process compared to $3.29 for a paper return. The report cited in 2005, the IRS processed 62 million paper fillings and 68 million electronic fillings and in 2010, only 40 million fillings were paper compared with 94 million electronic fillings.

However, the e-file program has not been all wine and roses. The IRS began a program to modernize the original e-file system in 2004. Now called, Modernized e-File (MeF), the December 2010 GAO report also suggested “although IRS began using MeF to accept individual returns for the first time in 2010, the system was underutilized.” The report states IRS officials cited several reasons such as the system is “unproven compared to the current legacy e-file system” and “the legacy e-file system had a lower rejection rate than MeF and return filers may have stopped using MeF after encountering performance problems.”

Here’s where things get complicated. Congress has set an 80% e-file adoption goal for major returns. So, how might the issues and challenges faced by the MeF modernization effort impact e-file adoption? A July 2010 study in Computers in Human Behavior discussing a model of e-file adoption suggested adoption of electronic filing is significantly influenced by factors such as “trust in the internet and trust in the e-file provider”. Also, a 2011 study in Transforming Government: People, Process and Policy, highlighted factors such as level of effort, social influence, security and an individual’s belief in their own competence to successfully use the e-file system all played a role in “predicting taxpayers’ e-filing intentions.” And, a 2011 report by The Electronic Tax Administration Advisory Committee (ETAAC) discussed the following five groups of recommendations on issues in electronic tax administration:

Standards for security and accuracy for the electronic tax community
1040 Modernized e-file (MeF) platform
Barriers to e-filing employment tax returns
Tax filing simplification
Collaboration and partnership with the electronic filing community

What does all of this mean? Like I said, IT development efforts are complex and Federal IT efforts only add to this complexity. And, in reality, most technologies are not completely perfect. With all of this complexity and imperfection, I like to think in all of the confusion, things will somehow work themselves out.

I need to stop writing and get working on my 2012 taxes. In my next post…the growth of federal IT contracting.

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