IRS challenges noted by Oversight Board.

• Author: Nevius, Alistair M.

The IRS Oversight Board released its annual report to Congress, describing the IRS's performance during fiscal 2010 and its progress in meeting the goals in its strategic plan.

The board describes the challenges the IRS has faced in recent years in administering new tax laws enacted to provide economic relief during the recession. The report notes that "[t]he IRS has responded well to these challenges, but the result has been to stretch the IRS' resources thin." An appendix to the report describes the effects recent tax law changes have had on tax administration during the 2007-2010 filing seasons. The board is concerned that there is an "under-appreciation of the importance of tax administration to the nation's economic well-being as evidenced by a willingness to expand the complexity of the tax code with little regard for the impact on taxpayers or the resources needed by the IRS to administer the code."

However, despite facing the challenge of implementing various new tax provisions, the IRS had "a generally successful 2010 filing season," the report concludes.

The report identifies two systemic weaknesses that the IRS should address: the tax gap and information technology. The reports states that "[f]ailure to mitigate these weaknesses will cause long-term performance...