IG, GAO again assail IRS on modernization

IG, GAO again assail IRS on modernization

Systems modernization is still a big challenge, the IRS' Charles Rossotti says.

By Shruti Dat'

GCN Staff

The Restructuring and Reform Act of 1998 has done little to alleviate problems at the IRS, but modernization efforts may prove more beneficial, federal officials said.

A recent congressional review of the tax service'the second since the Restructuring Act became law'provided a forum for the Treasury Department's inspector general for tax administration, the Joint Committee on Taxation mandated by RRA and the IRS taxpayer advocate.

The IRS' problems reflect weaknesses in fundamental facets of its operations, such as its organizational structure, information systems, financial management, performance management and human capital, General Accounting Office auditors said.

GAO said three critically important challenges lie ahead: completing a performance management system, revamping business practices and effectively modernizing systems.

The IG agreed with GAO's assessment. The IRS spent more than $3 billion over a decade in failed modernization efforts, said IG David C. Williams at a hearing of the Joint Committee on Taxation. The current Prime contract held by Computer Sciences Corp. is worth $5 billion.

The IRS has increased top management involvement in systems modernization, but stumbled in its execution of the early phases, Williams said.

'A recent IRS review of key systems modernization initiatives found that as many as 68 percent of the work products required during the planning phases of these projects had not been completed,' he said.

Painful delays

'These growing pains were a primary cause of the IRS' decision to scale back or delay delivery of several modernization initiatives originally slated to provide improved service to taxpayers by the 2001 tax filing season,' he said.

The first projects were intended to improve communications with taxpayers by centralizing the IRS' nationwide call screening and routing for selected toll-free numbers.

The IG also reported that the IRS must establish a performance and management plan to determine whether its telecommunications system can handle 80 percent of transactions electronically.

Congress ordered the IRS to hit the 80 percent mark by 2007. For the 1999 tax season, IRS received 35 million, or 30 percent, of its tax returns electronically.

IRS commissioner Charles O. Rossotti said he agreed that the IRS still faces challenges, especially in systems modernization.

'This is a large and risky process, but the risks can be managed,' Rossotti said. 'In order to succeed, we need to have adequate resources.'

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