TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, October 16, 2016

The IRS Scandal, Day 1256: The IRS Spent $12 Million For Microsoft Cloud-Based Email Archive That Was Incompatible With Its On-Premises Email System And Never Used

IRS Logo 2Treasury Inspector General for Tax Administration, Review of the Enterprise E-Mail System Acquisition (2016-20-080):

The IRS currently maintains an on-premises e‑mail environment that does not have archive capability. The existing system hardware is approaching manufacturer end-of-support and is experiencing numerous failures resulting in a significantly increased workload on enterprise e‑mail support staff. If the IRS does not efficiently upgrade its e-mail environment, it could adversely affect the IRS’s ability to effectively perform tax administration.

The IRS purchased subscriptions for an enterprise e-mail system that, as it turned out, it could not use. The purchase was made without first determining project infrastructure needs, integration requirements, business requirements, security and portal bandwidth, and whether the subscriptions were technologically feasible on the IRS enterprise.

IRS Information Technology organization executives made a management decision to consider the enterprise e-mail project an upgrade to existing software and not a new development project or program. Therefore, the Information Technology organization did not follow the Internal Revenue Manual Enterprise Life Cycle guidance. The IRS authorized the $12 million purchase of subscriptions over a two-year period between June 2014 and June 2016. However, the software to be used via the purchased subscriptions was never deployed.

Figure 1

The IRS may have violated the bona fide needs rule when it purchased the subscriptions using Fiscal Years 2014 and 2015 appropriations and did not deploy the software subscriptions in those years. In addition, the IRS violated Federal Acquisition Regulation requirements by not using full and open competition to purchase these subscriptions.

Bloomberg BNA, IRS Wasted $12 Million on Failing E-Mail System, IG Reports:

Lacking the ability to archive all e-mails on site is especially troubling considering the blowback the agency has faced for the last several years, Douglas Mancino, a partner at Seyfarth Shaw LLP told Bloomberg BNA today. Members of the House Freedom Caucus are vying to impeach the IRS commissioner, saying he misled Congress and alleging the agency destroyed e-mails showing evidence of its scrutinizing of conservative groups. The agency’s records retention was also at the heart of a recent lawsuit (Judicial Watch, Inc. v. IRS, D.D.C., No. 1:13-cv-01559).

The IRS strongly disagrees with the notion that it wasted taxpayer dollars or didn’t follow appropriate practices, Gina Garza, the chief information officer, said in a response letter included in the report. “The IRS takes seriously our obligation to manage taxpayer dollars in the most efficient and effective manner possible,” she said. “The IRS remains committed to continuously improve our IT systems and processes.”

But Mancino differed. “The IRS expects taxpayers to have record-retention policies that extend for years, particularly for major corporate records, including when they’re maintained in electronic format. One would think the IRS itself would think along the same lines and have the same policies, especially in the environment of the last five or six years,” he said. The findings show mismanagement and spending that would be considered “a career-limiting move” in the corporate world, he said.

https://taxprof.typepad.com/taxprof_blog/2016/10/the-irs-scandal-day-1256-the-irs-spent-12-million-for-microsoft-cloud-based-email-archive-that-was-i.html

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Comments

Its a feature not a bug and it would be better if emails were retained at more than one site that the IRS has no access to.

Posted by: wodun | Oct 16, 2016 3:44:05 PM

"The IRS expects taxpayers to have record-retention policies that extend for years, particularly for major corporate records, including when they’re maintained in electronic format. One would think the IRS itself would think along the same lines and have the same policies, especially in the environment of the last five or six years."

One would think, really? This is the same agency that violated the Federal Records Act when it destroyed and did not report Lerner's crashed hard drive, and then again when backup tapes were destroyed years later, right after they'd been subpoenaed, and faced zero consequences.

The only irony here is that the IRS has plead poverty regarding its year-over-year budget appropriations, yet still has the same fruitcakes wasting oodles of taxpayer dollars on screw-ups like this. The only tangible punishment for a lengthy pattern of behavior of malfeasance is to continue to cut their budget, because the agency obviously can't reconcile what is says with what it does...

Posted by: MM | Oct 17, 2016 1:12:02 PM

Remember the Commissioner is a politician not one who actually worked in the real world ....when are we going to get people who actually were tax attorneys, CPAs . to run this area.

Posted by: Sid | Oct 17, 2016 7:56:09 PM