IRS modernization gets $205M

Congressional appropriators served up relatively slim pickings for the Internal Revenue Service's modernization effort next fiscal year despite the agency's already trimmed-down budget request.

Congress approved $205 million for the Business Systems Modernization project, $80 million less than tax agency officials had requested. Both chambers approved the final amount Nov. 21 as part of a $388.4 billion combined-agency spending package for fiscal 2005. President Bush is expected to sign the bill later this week after the House follows the Senate in removing language permitting appropriations committees to examine individual tax returns.

The final funds tally for IRS modernization is more, however, than Senate appropriators originally wanted to give the troubled project. Senators voted in September to give the decade-long effort to replace the IRS' Kennedy-era processing technology only $125 million.

At the time, a Senate staffer said the proposed deep cut would have forced the IRS to concentrate its resources on completing projects rather than continuing to spread itself too thin by attempting to achieve too much. IRS officials had already significantly scaled down their fiscal 2005 request to allay those fears, asking for $144 million less than Congress approved for fiscal 2004.

"We did that because we needed to reduce the number of projects we were working on and get more focused," said W. Todd Grams, the IRS' chief information officer, in an August interview.

Modernization funding was also cut in order to free funds for more tax law enforcement funding, the Senate staffer said. Senate appropriators approved $4.5 billion for tax law enforcement — $348 million than appropriated in fiscal 2004 and $241 million more than the House appropriators voted for in July. The final amount approved in the omnibus was $4.3 billion.

About the Author

David Perera is a special contributor to Defense Systems.

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