IRS' tab for Year 2000 fix to total nearly $1 billion

On the last day of the tax filing season, the commissioner of the Internal Revenue Service said the agency will spend nearly a billion dollars to fix its computers for the millennium bug.

"[The Year 2000 fix will cost] about $850 million up through fiscal 1999, and then there is some more money in the Year 2000," IRS Commissioner Charles Rossotti told reporters after testifying to the House Subcommittee on Government Management, Information and Technology. "So it's going to get up close to a billion dollars by the time all fiscal years are accounted for."

In a February report released by the Office of Management and Budget, the Treasury Department, which relies heavily on older mainframes to support the IRS, reported its Year 2000 costs would top $1.4 billion departmentwide.

Rossotti said that if the century date problem is not fixed in time, it could adversely affect the IRS' ability to process tax returns after 1999.Rossotti also outlined the target dates for completing the Year 2000 work. By January 1999, the IRS plans to finish replacing the old systems that are not Year 2000-compliant or rewriting the computer programs in the systems it plans to keep. It also plans to finish fixing related systems, such as a communications network, and to rewrite software to reflect tax law changes.

"We want to get that all done by January 1999 prior to the next tax season," he told the subcommittee. "That gives us the remainder of 1999 to do a very comprehensive test. We're focusing every day on trying to make that happen."