IRS makes plea for modernization funds

The Internal Revenue Service needs a huge infusion of money this year to help its modernization program get off the ground, IRS Commissioner Charles Rossotti said Monday.

Testifying before the House Government Reform Committee's Government Management, Information and Technology Subcommittee, Rossotti said the tax agency is still storing taxpayer information on tape systems from the 1960s and failing to find tax cheats because of antiquated technology. "This agency is very, very deep in the hole in this matter," Rossotti said. "Every day, we see examples of horrible problems in administering the tax laws."

The 1998 IRS Restructuring and Reform Act set the stage for overhauling the IRS, but money has been slow in coming from Congress.

For fiscal 2001, the IRS is asking for $119 million for its information technology investment account — $42 million to cover IRS reorganization expenses and $40 million to develop or redesign new systems. The IRS expects to spend billions to carry out its modernization program.

News about IRS technology initiatives is not all bad. According to Rossotti, the IRS World Wide Web site has had 658 million hits since last year, with taxpayers downloading more than 251.5 million forms for the 1999 tax season.

But the number of taxpayer audits has dropped by 50 percent in the last three years, because of a lack of modern technology, he said.

Upgrading those systems will be no easy task, according to the General Accounting Office. In a report delivered to the committee on Monday, GAO said the IRS' most difficult work upgrading its systems lies ahead.

"The magnitude of this modernization effort makes it a high-risk venture that will take years to fully implement," GAO said.

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