IRS tallies up challenges

White House fiscal 2002 budget blueprint: Treasury/IRS funding

As tax-filing season draws to a close, the Internal Revenue Service commissioner told a House oversight committee Monday that the IRS has made great strides but that future improvements depend on the tax agency carrying out its modernization plan.

IRS Commissioner Charles Rossotti said, however, that the project is high-risk. "Replacing virtually the entire technology infrastructure in the next 10 years while also delivering short-term service improvements demanded by taxpayers, employees and the Congress remains an enormous challenge fraught with risk," Rossotti said. "We have no choice; we must move ahead for the good of America's taxpayers."

The IRS has been able to make incremental progress, but true change will require long-term modernization of the tax service, he said.

"The IRS core data systems that record taxpayers' tax accounts are fundamentally deficient. The IRS will never be able to perform its mission without replacing these systems.. The solution is to modernize the IRS to do things more efficiently and effectively," Rossotti said during testimony before the House Government Reform Committee's Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee.

Unlike previous appearances before lawmakers, Rossotti said that the IRS now has a real plan that lays out how modernization will take place. That plan is embodied in a strategic plan approved by the IRS Oversight Board in January as well as in the IRS enterprise architecture.

Implementing that plan is going to take long-term commitment, Larry Levitan, chairman of the IRS Oversight Board, said at the hearing Monday. The board is asking Congress to put $1 billion into the IRS Information Technology Investment Account over two years — $450 million for fiscal 2002 and $550 million for fiscal 2003. But within a few years, the IRS will need as much as $700 million put into that account for several years. The overall modernization will take as long as a decade to complete, Levitan testified.

The Bush administration has said it will ask for about $400 million for IRS modernization.

Meanwhile, IRS officials said that they have taken steps to ensure that taxpayer data filed electronically is safe. Robert Dacey, the General Accounting Office's director for information security issues, said that the IRS corrected several previously reported weaknesses and is implementing a computer security management program that should help the IRS manage risk.

Dorobek is a freelance writer based in Arlington, Va.