IRS modernization may stall

The Internal Revenue Service has a money problem and the agency is pointing to Congress, not taxpayers, as the cause.

The IRS' long-term project to modernize its technology systems has run out of money and is in danger of shutting down at least temporarily unless Congress releases $128 million already earmarked for the program.

"We need it now," said Bert Concklin, head of the IRS' business systems modernization effort. Concklin said last week that he will leave his post in September.

The program "is one of the largest business systems projects in the United States today," Concklin told the spring meeting of the Council for Electronic Revenue Communication Advancement in Arlington, Va., on May 10. "We still have a major challenge in funding."

The money in question is in the IRS Information Technology Investment Account, which funds the modernization effort. Under the IRS reform law, the agency must get the approval of Treasury Department officials, the General Accounting Office, and House and Senate appropriators before the money is released. But lawmakers are hesitant to release the funds because of continuing IRS management problems.

The funding delay will hamper the IRS' 15-year modernization program, which will replace systems developed in the 1960s and enable the agency to do such simple tasks as updating taxpayer information online.

Delays may also hurt the efforts of Computer Sciences Corp., prime contractor for the $15 billion program, to find and keep qualified high-tech workers to do the job.

Congress delayed the release of money last year as well, forcing the program to shut down for five weeks. That cost CSC a quarter of its skilled workforce on the project, according to one CSC official.

"We can't operate without funds," said a company official. "You are going to lose the key people you want."

CSC laid off no employees during last year's budget struggles and has no plans to do so this year, according to the official. But any delay will likely cost the government money.

The IRS is not the only agency with budget anxiety. Customs Service modernization head Charles Armstrong also spoke at the conference and reaffirmed that Congress came up short funding his agency's modernization program, providing only $130 million of the $210 million sought for the first year of operation. Armstrong said Customs is urging lawmakers to find the money to keep the project on schedule.

"We don't want the technology to get stale before we get it out there," he said.