IRS board urges modernization increase

IRS Oversight Board FY06 IRS Budget/Special Report

A new report from the IRS Oversight Board says the Internal Revenue Service's modernization effort needs more money.

Congress approved $203 million for IRS modernization in 2005. That figure is $82 million less than Bush administration officials' requested $285 million. IRS officials are now asking for less, $199 million in fiscal 2006. "This is an appropriately focused program that will allow us to devoted the right management attention and resources and knock off the important things," IRS Commissioner Mark Everson said today during a National Press Club luncheon. "I think once again it’s a balanced request."

But oversight board members say modernization should have funding increased, not reduced.

"Cutting back on modernization will force the program to take longer and cost more than necessary," the report states. "As time passes, a catastrophic disruption in our nation’s tax system becomes more likely."

Board members urge lawmakers to add $140 million for core modernization efforts and $78 million more for other modernization-related initiatives, including agencywide training on modernization systems and money for simulataneously operating legacy systems and new ones during a transition period.

Administration officials believe that the modernization effort, which for years was plagued with problems, needs to have two consecutive good years before agency officials can ask Congress for funding increases. IRS officials say they want to repeat last year's performance, which they characterize as the best year ever in modernization.

That would demonstrate "two years of good solid delivery on schedule and costs – and then look for growth in the future," W. Todd Grams, the IRS' chief information officer, said shortly before the board’s report was released.

During congressional deliberations on the fiscal 2005 budget, Senate staffers said one reason lawmakers cut the modernization budget was to accommodate a tax agency request for increased tax enforcement funding.