When Boosting IT Is A Bad Thing

Getting rid of tax evaders is a good thing. But spending more money on technology to catch them after-the-fact is not, say some federal contracting advocates.

In his fiscal 2010 budget, President Obama proposes adjusting discretionary funds to enlarge a system that looks for discrepancies between a taxpayer's return and reports from third parties, such as employers, to detect tax cheats or under-reporters.

Larry Allen, president of the Coalition for Government Procurement, a trade group for federal contractors, said he is disappointed with this budget strategy.

"Increasing funding for this is consistent with this administration's push on what I call backend enforcement," Allen said. "[You're] catching the bad guys after they've already acted."

The budget would spend $7.19 million over five years on enhanced tax enforcement to reap an estimated $13.35 million savings.

As part of this improved tax enforcement, the IRS "plans to further expand document matching, one of the highest ROI enforcement activities, through the Automated Under-Reporter (AUR) system," the proposal states. "Through these activities and others, the IRS will narrow the tax gap through improved tax compliance."

Allen somewhat disagrees with that rationale.

"One of the reasons that people like spending money to catch bad guys is it makes for good headlines, but I would argue that that's not the best government management approach," he said.