Rossotti: IT is key to reforming IRS

Rossotti: IT is key to reforming IRS

A budget cut would

IRS head points to archaic systems, strained human resources as obstacles

By Shruti Dat'

GCN Staff

IRS commissioner Charles O. Rossotti last month told House lawmakers that technology will play an essential role in the implementation of the congressionally mandated restructuring of the tax agency.

Requirements of the year-old IRS Restructuring and Reform Act of 1998 have placed an enormous strain on the agency's human resources, and its archaic technology has hamstrung the agency's ability to implement modernization, Rossotti testified at a House Ways and Means Subcommittee on Oversight hearing.

'These kinds of advancements often depend on making investments in organization, training and technology,' he said.

Updating business practices will require almost complete replacement of the IRS' 30-year-old systems, which the General Accounting Office labeled inept, to provide taxpayer information and comply with the mandates of the reform act, Rossotti said.

Updating systems

In December, the IRS awarded its Prime contract for systems modernization to Computer Sciences Corp. Following reports from the IRS, Congress early last month approved $35.1 million to the agency for the technology upgrade from the $506 million Information Technology Investment Account.

'One of the most significant challenges over the next few years will be systems realignment and technology changes needed to implement the new IRS reorganization,' Rossotti said. The requirements include applications changes to align taxpayer segments and employees with the new operating divisions, and modifications in payroll, financial, personnel and workload management.

Also, the IRS must train its information technology staff to operate newly installed systems and must teach its entire work force to use the front-end applications, Rossotti said.

Because of these requirements, Rossotti said, he is worried that the agency will not have sufficient funds to meet the reform act's demands next year. In mid-July, the House Appropriations Committee approved a fiscal 2000 appropriations bill that sliced $135 million from the IRS' budget request, of which $60.86 would be cut from the information technology budget.

The House Appropriations Committee approved $8.11 billion for the overall IRS budget, with $1.39 billion intended for information systems. The Senate approved $8.19 billion for the overall budget and $1.45 billion of that for IT. The bill heads to conference committee in the coming weeks.

'I am gravely concerned that a cut of $135 million will seriously jeopardize the IRS' ability to implement its reform effort,' Rossotti said in a letter to Rep. William J. Coyne (D-Pa.), a Ways and Means member. He said that the IRS might not be able to meet Congress' mandate that it receive 80 percent of personal income tax returns electronically by 2007.

James R. White, director of tax policy and administration issues at GAO, testified that the agency recommends continued funding of the IRS modernization effort, but in small increments to accomplish goals cost-effectively.

'We can build an IRS that scrupulously respects taxpayers' rights, that provides high-quality service and collects taxes efficiently and fairly,' Rossotti said last month in a speech at the National Press Club in Washington. 'But saying we can succeed is not the same as saying we will succeed.'

Still in the developmental stage of technology modernization, Rossotti said, most of the IRS' work lies in the critical 18 to 24 months ahead, when the agency must surpass self-imposed milestones.

This year, the IRS will complete its year 2000 end-to-end testing, establish a core systems modernization process and revise its systems strategic plan, he said. Next year, the agency will make its first upgrades to core systems and begin to address major data issues. Then, in 2001, the IRS will implement further core systems upgrades, Rossotti said.

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