In this Competitive environment, people expects rendering of public service should be speed with good quality, error free, less time and complete the work through online computerized system. The case of Ethiopia is slight different in application of Information Communication Technology (ICT) because the users are not showing interest to utilize the system to enhance effective management of Public Services. This paves a way to the researcher to undergo a study on challenges in application of ICT in Tax administration in Dessie City revenue office. In order to achieve these objectives, both qualitative and quantitative research approach, and survey research method were applied. Sample respondents are taxpayers, civil servants, ICT technicians and head office employees were selected using both probability and non-probability sampling technique. Questionnaire and interview was used to gather relevant information pertinent to the study. From the findings the ICT helped in saving time to complete tax payment, efficient and convenient tax payment, increasing transparency intermesh in assessing of information. ICT also provided significant benefits for effective taxpayer data encoding and help to apply SIGTAS software. Furthermore the study identified challenges that hinder the application of ICT in tax administration are inadequacy of ICT infrastructure, lack of leadership commitment, inefficient training facilities, poor network connection and lack of awareness. This paper suggests the better ways and means to improve the application of ICT in Tax Administration to the study area and also helps the government to eradicate the pitfalls in the tax system.