Budget proposal lowers IRS' modernization funding

The fiscal 2007 budget proposal lowers funding for the Internal Revenue Service’s Business Systems Modernization program by $31.7 million, according to the proposal released today.

Congress appropriated $199 million for the program in fiscal 2006. This year, the administration proposed $167.3 million for the project. The IRS’ total proposed budget is $4 billion, about $100 million less than in fiscal 2006.

The modernization effort is a program to revamp the IRS' decades-old systems. It focuses on three key administration systems: the Customer Account Data Engine project, Modernized e-File, and Filing and Payment Compliance.

Modernized e-File will allow more taxpayers to file their taxes online and electronically file joint federal and state returns. Filing and Payment Compliance will complete the deployment of the agency's inventory management capabilities. The program will help the IRS eliminate the backlog of delinquent tax payment cases. One of the IRS’ strategic goals is “ensuring that taxpayers meet their tax obligations.”

The IRS will unveil an updated modernization strategy in March. The plan will replace the current blueprint, which was developed in 1997, and emphasize short- and long-term goals.