IRS: Modernization takes people

Internal Revenue Service Commissioner Charles Rossotti delivered some bad news to the Joint Committee on Taxation Wednesday: The tax collection agency needs $42 million in 2001 to keep its modernization program afloat.

Testifying before the panel, Rossotti said the requested money, along with the $148.4 million released last week by Congress, is necessary to cover the expenses of reorganization mandated by the 1998 IRS Restructuring and Reform Act.

"The 2001 budget is critical. Last year, we didn't know exactly where we were going to need resources. Now we do," Rossotti said.

The money would be earmarked to recruit, relocate and train employees as well as purchase equipment and information services for a leaner and more efficient IRS. He said the money is essential to keep modernization efforts on the right path and to hire workers, whose numbers have steadily dwindled in the 1990s.

Since 1993, while the number of individual tax returns with $100,000 in reported income has increased by 63 percent, the number of IRS workers has dropped 17,000, making it harder to operate an efficient agency. "These conflicting treads, increased demands and reduced staff have not been addressed by new technology," he said.

The $5 billion, 15-year reorganization plan is supposed to modernize an IRS computer system that is 40 years old. Rossotti said modernization would make it easier for the IRS to monitor compliance and collect some of the $220 billion in outstanding debts, penalties and interest.

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