IRS set to ask for first modernization funds

The Internal Revenue Service's top technology official today told a group of industry leaders that the tax agency next week will request its first set of funds from Congress to develop a business plan for the IRS' high-profile modernization project.

During a meeting of the Council for Electronic Revenue Communication Advancement, IRS chief information officer Paul Cosgrave said the amount of money that the IRS plans to ask for has yet to be determined. But Cosgrave said the request will be less than 10 percent of the $506 million already set aside for the agency's Prime modernization project in the Information Technology Investment Account. The ITIA is a special capital account set up for the IRS to make large IT purchases.

Cosgrave said the "business system planning project'' will include five years of details on exactly how the agency will spend money to manage Prime, which the IT community estimates will cost as much as $5 billion. Obtaining funding to develop a plan is important, Cosgrave said, because the IRS intends to use the plan to persuade Congress to free up funds for purchasing the hardware and software for the modernization project.

Members of Congress have said they will not release funds for the Prime project until they see the IRS' plans on how the money will be spent. Congress put in place the spending restrictions because of the IRS' unsuccessful modernization attempts in the past—attempts that cost taxpayers billions of dollars.

"The key message is, We're going to work with Congress as a partner,'' Cosgrave said. "We are very cognizant of [Congress'] concerns. This is not a big-bang program. We will ask for money in sessions. We're literally going to show them everything. This is an open process."