GAO discussed the Internal Revenue Service's (IRS) progress in achieving its business vision for 2001 and how its Tax Systems Modernization (TSM) supports that vision. GAO noted that: (1) as part of its business vision, IRS will increase the number of returns it receives electronically, consolidate its paper processing operations, and provide return-free filing; (2) without a returns processing strategy based on its customer service and compliance needs and a cost analysis, IRS has no assurance that its TSM investments are sound; (3) IRS plans to improve customer service by reorganizing its customer service centers according to the work performed, expanding and simplifying telephone interaction with customers, and using information systems to provide the information IRS employees need to assist customers; (4) while IRS customer service improvements appear promising, IRS must continue to handle its current workload through the conversion, train its customer service employees, and develop the necessary information systems; (5) IRS plans to improve enforcement and voluntary compliance; (6) while access to good data and more staff could improve enforcement and voluntary compliance, IRS does not plan to use its savings from TSM to hire more employees; and (7) managerial and technical weaknesses could jeopardize TSM investments.

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