Senate budget committee cuts BSM funds

The Senate Appropriations Committee approved less than half of the Internal Revenue Service's fiscal 2005 funding request for the agency's Business Systems Modernization.

Committee members voted for a Transportation, Treasury and General Government appropriations bill this week that includes $125 million in business modernization funds for 2005. IRS officials had requested $285 million.

"The Committee has significantly reduced funding for Business Systems Modernization to only $125 million due to continuing concerns over escalating costs and significant delays in the development of [information technology] systems," according to a Senate Appropriations Committee statement.

Tax officials' effort to modernize their Kennedy-era tax-processing technology has been plagued by problems for years. BSM officials need "to work on one thing rather than work on a conglomerate of things," a Senate staffer said.

IRS officials have already significantly scaled down their fiscal 2005 request for precisely that reason, asking for $144 million less in fiscal 2005 than Congress approved for fiscal 2004. "We did that because we needed to reduce the number of projects we were working on and get more focused," said W. Todd Grams, the IRS' chief information officer, in an interview last month.

Modernization funding was also cut in order to free funds for more tax law enforcement funding, the Senate staffer said. Senate appropriators approved $4.5 billion for tax law enforcement — $348 million than appropriated in fiscal 2004 and $241 million more than the House appropriators voted for in July.

"We had to move [money] from one place to another" to accommodate tax law enforcement priorities, the staffer said. "It wasn't that we cut them just to cut them."

Officials at Computer Sciences Corp., leader of the seven-company Prime Alliance team handling the systems modernization contract, responded to the proposed cuts with a statement touting recent successes, including the Customer Account Data Engine's processing of some 1040EZ taxpayer forms and the planned November delivery of the Integrated Financial System. "It's critical that we keep the momentum going," said CSC spokesman Chuck Taylor, in response to the Senate's proposed cuts. "The President's request for fiscal year 2005 is essential to the health of our nation's tax system."

The bill must still clear the Senate floor. If funding is not restored, the issue will then become a matter needing resolution in conference. The House Appropriations committee voted in July to fully fund the $285 million request.