IRS funding slows IT modernization, former commissioner says

PHILADEPHIA'The Office of Management and Budget and Congress are two of the biggest impediments to continuing IRS modernization, according to the former commissioner who started the initiative.

Former IRS commissioner Charles Rossotti said today the IRS is forced to underinvest in IT modernization even though it has had at least three successful implementations during the past few years.

'I can't quantify how much more money the IRS would need, but I think they are getting $200 million and that is down from $350 million a few years ago,' Rossotti said during the American Council for Technology's 2005 Management of Change Conference. 'They need to keep investing to finish ongoing projects, update functionality and improve enforcement systems.'

Rossotti added that Merrill Lynch and Co. Inc. of New York spends more money on modernizing its IT systems with 3 million customers than the IRS does with 136 million taxpayers, and that is a huge problem.

'OMB and Congress just don't fund it enough,' he said. 'There always is the excuse of there isn't enough progress, but look at what the IRS has done over the past four years and I would disagree.'

Rossotti pointed to the success of the launching the Customer Account Data Engine taxpayer database, the financial system from SAP America Inc. of Newtown Square, Pa., and the modernized E-File system. He also pointed to the consolidation of processing centers as another example of IT providing increased efficiencies, noting that two of 10 were shut down and two others were converted to specialty centers for business returns.

'Any business or agency would be happy to deliver one of those systems,' he said. 'If we are getting some efficiencies, no one can say we are not gaining something.'

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