Internal Revenue Service officials are wasting millions of dollars by running multiple computer programs that do the same thing: stop the agency from losing money to fraud.
One of the programs has been outdated for years and should have already been retired. The other has been in a testing phase for more than two years, but the IRS has no plan to make the switch permanent, the agency’s inspector general said in a report made public Wednesday.
Every year the two programs run simultaneously, the IRS wastes $18.2 million in taxpayer money, the watchdog found. The agency could also lose hundreds of millions more by relying primarily on the old system, which can’t handle the growing demands imposed by the Affordable Care Act.
The IRS said its current fraud detection software is “no longer capable of keeping pace with the levels of fraud” and would be “too risky to maintain, upgrade or operate beyond 2015.”
But the new system, a web-based program intended to replace outdated software that had to be uploaded onto each individual computer, won’t be ready to take over until 2016 or later, which is “at least one year after the system was determined to be too risky to operate.”
What’s more, the old system may suffer from “the inability to detect up to $1.5 billion in fraudulent refunds each year that it is not replaced,” the watchdog said.
The risk is even greater for tax credits included in the Affordable Care Act, which the IRS oversees. Obamacare’s premium credits “are among the most popular targets for fraud.”
The tax agency still has not developed a plan for replacing the aging system.
“There is no indication of an exit strategy … as to when or how the IRS will shut down” the old fraud detection program, the inspector general discovered.
