IRS requests more IT funds

The Internal Revenue Service needs more money for its long-term modernization

program to replace a system that still uses tape to store taxpayer data.

IRS Commissioner Charles Rossotti told a subcommittee of the House Government

Reform Committee on April 10 that the tax agency needs an infusion of $119

million this year to keep its modernization plans on time and on target.

Without the funding, taxpayer records will continue to be filed on tape

and physically stored at IRS sites, not electronically. And efforts to audit

taxpayer compliance will be hampered.

"This agency is very, very deep in the hole in this matter," Rossotti

said. "Every day, we see examples of horrible problems in administering

the tax laws."

The 1998 IRS Restructuring and Reform Act set the stage for overhauling

the IRS, but money has been slow in coming from Congress. For fiscal 2001,

the IRS is asking for $119 million for its information technology investment

account, including $42 million to cover IRS reorganization expenses and

$40 million to develop or design new systems. The IRS expects to spend billions

to carry out its modernization program.

But upgrading those systems will be no easy task, according to the General

Accounting Office. In a report also delivered to the subcommittee on April

10, GAO said the IRS' most difficult work in upgrading its systems lies

ahead.

"The magnitude of this modernization effort makes it a high-risk venture

that will take years to fully implement," the report stated.

News about IRS technology initiatives is not all bad. According to Rossotti,

the IRS World Wide Web site has had 658 million hits since last year, with

taxpayers downloading more than 251.5 million forms for the 1999 tax season.