IRS modernization target: $450M

The Internal Revenue Service needs $450 million for fiscal 2003 to keep its business systems modernization plan on time and on target, the independent IRS Oversight Board said in an annual report released Jan. 31.

On the eve of President Bush's fiscal 2003 budget disclosure, the board's initial annual report said the program to modernize the tax collection agency was a major investment and would require "significant and growing multiyear funding."

"Although current funding levels have been limited by the IRS' ability to manage the program, the funding level must increase as IRS gets further into the program," the report said.

For fiscal 2002, IRS received $400 million as part of a 15-year project to turn its 1960s-era computer system into a 21st-century paperless one. In fiscal 2003, it needs $450 million and for fiscal 2004 and beyond, it is likely to require $500 million a year, the board said.

The IRS must work more efficiently with its prime contractor, Computer Sciences Corp., the oversight board also said. Furthermore, CSC must "improve its breadth and depth of skills" and deliver results on time and within budget. The longer it takes to modernize, the longer the taxpayer will be deprived of an efficient system and be forced to endure "antiquated systems in place today," the report said.

"Even under the best of circumstances, it will take the IRS far too long to complete its modernization program — at least 10 years," the board said.

As a result, the board urged the IRS to finish modernization as quickly as possible and increase its ability to manage the program more efficiently.