IRS: Modernization progresses'slowly

In addition to a half-dozen new services planned for the next year, the IRS plans another 74 Web apps.<>
'IRS' Terry Lutes

Olivier Douliery

The new Customer Account Data Engine, which is at the heart of the IRS' massive modernization scheme, is running a year behind schedule, but tax agency officials said it should be ready for limited use next year.

'We're trying to get Release 1 out the door' for CADE, said Fred Forman, associate IRS commissioner for business systems modernization, this month at a conference of companies that provide tax services and software. The system will replace the 40-year-old Master File that contains account information about millions of U.S. taxpayers.

'CADE has been very painful,' Forman said. 'We're running almost a year behind where we hoped we would be.'

Without CADE, none of the IRS' tax work, such as processing returns or responding to taxpayer queries, can be accomplished quickly and smoothly. The database will be updated daily, and IRS employees will be able to make changes interactively. Currently, the Master File is updated weekly via batch processing.

Web is a priority

Although the database modernization has been under way since 1998, Forman said that still 'we have hundreds of interfaces back into the legacy system''a situation that will improve once CADE begins operation. The data engine is now being tested to see how it would handle returns filed this year.

Meanwhile, the agency is also putting a high priority on development of many electronic services that will be available on the Web.

The IRS launched a 'Where's my refund?' feature on its Web site, at, with little fanfare this year. It also lets new businesses request taxpayer identification numbers via the Web. The IRS already has logged 12 million re-fund status requests, said Terry Lutes, the agency's director of electronic tax administration.

The agency will roll out at least a half-dozen more new services within the next 12 months. They include the ability to register as a Web site user and get a copy of a taxpayer account. Some of the new features will not be available to everyone but instead will be only for professional tax preparers or other subsets of IRS customers. These efforts, too, are about a year behind schedule, Forman said.

Another 74 Web applications are planned, Lutes said. He and Forman spoke at a meeting of the Council for Electronic Revenue Communication Advancement in Arlington, Va.

Enhanced e-filing of tax returns is well under way and will be ready for testing at the end of the year, Forman said. The new system will support more forms and types of returns than the current version of e-filing.

Another initiative, the Customer Accounts Management system, has been halted because of a $70 million shortfall in the modernization budget the agency requested for this fiscal year, he said. It will let customer service agents modify and update accounts in real time.

Lutes said the agency is reviewing its architecture plans and considering whether to make all its systems accessible online. Until now, plans have called for keeping a layer of old Cobol middleware between CADE and front-end systems, such as those that support Web services.

He said he is meeting with contractors to discuss eliminating the Cobol layer and creating 'a true online filing experience,' now that affordable technology is available.

About the Author

Nancy Ferris is senior editor of Government Health IT.


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