IRS modernization scrutinized

The upcoming year will be an important test for the Internal Revenue Service and its ability to manage its massive modernization program, according to Larry Levitan, chairman of the IRS Oversight Board.

Levitan, testifying May 14 before Congress's Joint Committee on Taxation, said the business system modernization plan is scheduled to roll out several major components to modernize the tax agency.

"The longer it takes the IRS to modernize, the longer taxpayers will be deprived of the benefits of improved IRS processes and systems and be forced to endure the inadequacies of the antiquated systems in place today," Levitan said.

Nevertheless, he said all organizations involved in modernization must do a better job, including the IRS and Computer Sciences Corp., the prime contractor.

He said the IRS must improve its program management skills and work more effectively with CSC. And CSC must deliver business results within budget and on schedule.

The multibillion-dollar, 15-year project is expected to turn the tax agency into a paperless one with electronic filing. This year, more than 46 million Americans filed their taxes electronically.

"The IRS is far from a perfect agency, but it is making progress in improving itself," Levitan said. "What is particularly important is that the IRS is beginning to use best practices that will enable it to continue to make progress if it can successfully implement what it is planning."

Meanwhile, James White, director of tax issues at the General Accounting Office, told lawmakers that the modernization program had made good strides in implementing new systems, including a telephone response system that became available to taxpayers last summer.

However, White said in joint testimony that GAO is concerned that the modernization program is moving too quickly and not all "essential management controls are in place and functioning."

As a result, GAO warned that the modernization projects could face additional cost, schedule and performance shortfalls. The project has spent $1 billion so far, and it is anticipated that it will need an additional $2.5 billion during the next five years.

The "IRS acknowledges these risks and is committed to addressing them," White said in his joint statement.