Appendix IV

Comments From the Department of
Commerce

Mr. Gene L. Dodaro

Page 2

uncovered. That effort, in conjunction with the Inspector General's findings, will also enable us to determine if the situation warrants identification as a material weakness under the Federal Managers' Financial Integrity Act.

As for your other three recommendations concerning cost issues related to the Cyberfile Project, our report will describe our decisions and their rationale in detail. We agree that late payment penalties and the associated surcharge should not have been charged to the Project, and NTIS is rescinding the $2,276 in charges. NTIS is also working to identify all costs that can be avoided while Cyberfile is suspended. However, the decision to use NTIS for Cyberfile-related purchases was made by IRS for it own convenience, with full understanding that the NTIS fee would be assessed.

Enclosed is our report entitled
Internal Revenue Service: Business
Operations Need Continued

Improvement. As you requested,
this report provides our overall
perspective on opportunities to
improve IRS' management practices
and computer modernization efforts.
It summarizes and updates our
recent reports and testimonies
before your committee. We are
providing the report to interested
committees as well as the National
Commission on Restructuring the
Internal Revenue Service.

Sincerely yours,

Hens Dorland

Gene L. Dodaro

Assistant Comptroller General

Enclosure

'Tax Systems Modernization: Management and Technical Weaknesses Must Be Overcome To Achieve
Success (GAO/T-AIMD-96-75, March 26, 1996), Tax Systems Modernization: Progress in Achieving IRS'
Business Vision (GAO/T-GGD-96-123, May 9, 1996), Financial Audit: Actions Needed to Improve IRS
Financial Management (GAO/T-AIMD-96-96, June 6, 1996); and Tax Systems Modernization: Actions
Underway But IRS Has Not Yet Corrected Management and Technical Weaknesses (GAO/AIMD-96-106,
June 7, 1996).