IRS missing some conditions, GAO reports

The Internal Revenue Service has met some — but not all — of the requirements

Congress spelled out to keep money flowing into a computer modernization

system, according to a General Accounting Office report.

The Nov. 8 GAO report gave the tax agency some high marks for handling

the 15-year, multibillion-dollar project to streamline the IRS and turn

it into a paperless agency. But GAO also said the IRS still must shore up

management weaknesses before the agency begins building "software-intensive

systems."

Although the IRS did not meet all of the congressional requirements

for this year, the GAO report said money would continue to flow to keep

the project moving. The IRS is expected to receive a total of $200 million

for projects in 2001.

"IRS has not fully satisfied all of the conditions...for further release

of [modernization] funds. However, IRS has moved aggressively and has made

important progress in addressing its modernization management weaknesses,

and it has similarly made progress on project initiatives," the report stated.

Among the problems the report cited:

* The IRS did not adhere to the funding plan approved by Congress.

* The IRS approved a project to begin the detailed design and development

phase without sufficient preliminary work.

In a letter to GAO, IRS chief information officer Paul Cosgrave defended

the agency and said it has made progress in the past 14 months in planning

the modernization program.

"While not without start-up problems, our initial experience with this

program compares favorably with successful business systems programs in

the private and public sectors," Cosgrave said.

Congress is closely watching the IRS modernization project — the agency's

second attempt to phase out its legacy system and replace it with a fully

automated one. Lawmakers imposed strict controls and required the IRS to

get approval for all expenditures in the wake of a previous modernization

project that was declared a failure in 1997 after wasting $3 billion.