IRS wants culture change

An Internal Revenue Service official told professional tax preparers this week that he would like to change the culture and the budget of the information technology organization that supports the IRS.

Speaking at an industry event this week, Terry Lutes said one of his priorities as the new deputy associate chief information officer will be to change the mindset of IT personnel at the IRS. The IT staff has traditionally not had to deal with members of the public, he said. Until now, its only customers have been inside the IRS.

But as the tax agency modernizes its systems and offers more online services, the IT organization will have to abandon its insular culture. "We're struggling with how to make that transition," Lutes said.

At a meeting of the Council for Electronic Revenue Communication Advancement, a nonprofit trade group representing tax preparers and tax preparation software companies, Lutes said IRS employees are finding the transition difficult. "We've really got to work that through," he said.

Another challenge is the annual IT budget for the IRS, Lutes said. At $1.5 billion a year, it is about $500 million dollars short of what it should be relative to the average IT budgets of financial services institutions of comparable size, he said.

Two years ago, the IT budget was $100 million more than it is today, Lutes said. But a return to those budget days is improbable, he added.

As for the tax agency's systems modernization project, one IRS executive said he was feeling more confident than he has felt for some time. John Dalrymple, deputy commissioner for operations support, said he was guardedly optimistic that a new customer account database could be ready to use for filing a small portion of 1040EZ forms during the next filing season.

But another and less well-understood milestone must be reached before optimism sets in, Dalrymple said. The IRS and its prime contractor must demonstrate that a business rules engine for the customer account database works as planned. If it does, Dalrymple said, the IRS could consider tightening its schedule to partly make up for the three years that the database project has fallen behind schedule.