Congress threatens TSM funds

Members of Congress last week warned the Internal Revenue Service that they will cancel the Tax Systems Modernization next year unless the agency proves to them within the next two months that it can repair the multibillion-dollar program.

"We're done," said Rep. Jim Lightfoot (R-Iowa), chairman of the House Appropriations Committee's Treasury, Postal Service and General Government Subcommittee, at a hearing on the IRS budget Thursday. "I'm prepared to zero the whole program out. All we've asked for is a blueprint."

"The program is at risk," cautioned Rep. Steny Hoyer (D-Md.), one of the most vocal defenders of TSM, unless lawmakers "have a high level of confidence" that it can succeed. "I don't know that I've been as frustrated with a program as I have been with this one."

Treasury Department deputy secretary Lawrence Summers told the panel that the department would explain how the IRS plans to spend the $850 million it is requesting for TSM in fiscal 1997 as well as meet a demand in last year's spending bill that the IRS report on how it will improve the management of the project. But he left doubt as to whether any of this information would be completed in time for the subcommittee to write the appropriations bill for the agency in mid- to late May.

Summers, together with other top Treasury officials, have been reviewing TSM investment and management decisions since last year, as concern grew within the Clinton administration and on Capitol Hill that the IRS could not manage the mammoth project. Summers said he plans to strengthen Treasury's Modernization Management Partnership, composed of senior officials from the IRS and Treasury, to "function like an outside board of directors of a company" and "insist on regular and clear reporting about progress and decision making.

"The TSM project went badly off track," Summers said, nodding in agreement when Lightfoot suggested the No. 2 Treasury official might share some of the same frustrations that lawmakers have about the project. "The department is not going to, as in the past, [just] pass along reports the IRS has provided."

Once unshakable, support for TSM has eroded over the past three years with the publication of increasingly critical reports by the General Accounting Office and the National Research Council of the IRS' progress with the decade-old systems overhaul. Lawmakers, who withheld $100 million of fiscal 1996 TSM funds pending proof that the IRS could fix the program, are more skeptical now because the agency still has not produced the requested information.

So far, the IRS has spent about $2.5 billion out of $3.5 billion in funds appropriated since 1990. The total cost of installing new systems is estimated to be $8 billion, with another $15 billion expected to be spent maintaining legacy systems in the interim.

During the two-hour hearing, lawmakers at times became testy. Lightfoot asked why NASA could promise to build a space station in eight years with $25 billion, but the IRS had already taken longer to build its information systems, which were not "rocket science."

Later in the day, IRS commissioner Margaret Milner Richardson also appeared before the panel but made only passing reference to the problems with TSM. Richardson and Summers each outlined improvements that technology has brought to the IRS, including electronic funds transfer for payment of business taxes and new electronic filing options for individuals and companies.

After the hearing, Richardson refused to answer a reporter's question about whether the IRS would be able to meet the panel's demands.

Summers testified that the IRS would address criticism that it has lacked the technical expertise to build TSM by giving more work to its contractors. Also last week, the IRS announced that it had appointed a new chief information officer, Arthur Gross, to manage the technical aspects of the program.

During an interview, Lightfoot said TSM has similar problems to those that afflicted the Federal Aviation Administration's Advanced Automation System, which has taken years to develop, in part because the agency could not settle on its technology requirements.

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