Rossotti: IRS modernization built trust

PHILADELPHIA, Pa. -- Years of work remain for the Internal Revenue Service's modernization effort, but the initiative lifted the pall of pessimism that once hung over the tax agency, said former IRS Commissioner Charles Rossotti.

"People have seen that it had changed and there was some significant positive impacts from that, not the least of which is regaining the sense of trust from the public and from the Congress," Rossotti said today, speaking at the annual Management of Change conference.

But the effort deserves more funding, Rossotti said. "Merrill Lynch spends more money on modernization every year than the IRS does," he said.

Rossotti was recruited in 1997 by then-Treasury Department Secretary Robert Rubin to head the IRS during a nadir of the tax agency. A previous massive information technology modernization effort had failed and taxpayers complained of an abusive collections system.

Inside the IRS, "very few people believed anything really major was going to change," Rossotti said. "There was this fear of what's called the agency culture ... the belief that no matter what happened, or who came in, nothing would change."

Reversing that sentiment required an approach to modernization that did not attempt to graft new technologies onto an antiquated organizational structure, Rossotti said. "Changing technology or IT by itself, as bad as the systems were, would not have worked," he said. "All of the structural elements of the IRS, not just the technology, were out of date."

Change required a strong commitment from the tax agency's overseers, as well as internal leaders who could spearhead modernization, he said.

The IRS' experience demonstrates that large modernization projects cannot be indefinitely postponed, Rossotti added. Hanging on to existing technology at some point "really threatens the viability of an organization," he said.

"The biggest barrier to success is the belief that it can't be done," he said. "If everyone thinks that it's hopeless, nobody’s going to get on the team."