Summary

An evaluation of a cost-benefit study by Internal Revenue Service (IRS) in support of a proposed computer system, the Tax Administration System, shows some needs for revision. IRS estimated that with an increased cost of $154 million over the present system, the proposed system would achieve gross benefits of about $2.1 billion in personnel savings and increased revenues.

GAO's review supports the proposed system, but finds that the ratio between costs and benefits is not as great as IRS estimated. Benefits were overestimated by $606 million and costs underestimated by $62. million. Possible software problems and delays create additional uncertainties. However, with adjustments in estimates, the proposed system would be more desirable economically than improving the present system.