Payment compliance system will target tax deadbeats

The IRS plans to collect more delinquent payments from taxpayers by implementing a filing and payment compliance system.

The tax agency will release a request for proposals shortly for a system to automate case analysis and support IRS revenue agents and private-sector collection agencies.

“The system will be designed to analyze collection cases and to intelligently identify the more complex cases that require IRS involvement as opposed to the less complex cases which can be handled by private collection agencies,” IRS CIO Todd Grams said.

The system will transmit the necessary taxpayer data for collection, which will be minimal, to contractors in a secure environment, he said.

The filing and payment compliance system will use analysis and data-mining software to identify cases that will be the most productive for IRS revenue officers to follow up and to make the information available to them faster. Data that goes to IRS employees would be more detailed than data provided to industry collection agencies.

The IRS has amassed funding for the system, which has a price tag of $14 million, from various sources. Although the agency described last year as the most successful year for its modernization program, Congress reduced the agency’s modernization budget by $82 million to $203 million for this fiscal year.

Grams said the agency has been forced to scrap most work on its modernization programs and tighten its belt to focus on a limited 2005 IT agenda.

“I don’t want people to think this budget cut didn’t make a difference,” he said. “There is no money for filing and payment compliance in the 2005 budget.”

The IRS will take advantage of $8 million appropriated but not used for the project last year. The other $6 million will come from the IRS’ modernization management reserve.

“Since we’ve brought more financial stability to the modernization program, we didn’t spend as much of our management reserve in 2004 as in the past,” Grams said.

The Treasury Department, the Office of Man- agement and Budget, and Congress still must approve the funding plan.

The IRS will also bring work that contractors have been performing back in-house, Grams said. The agency will make up for the majority of the reduction by reducing spending on support for programwide activities, such as architecture integration, program management, software release management and testing.

“What the budget reduction did was put a much greater emphasis and much greater speed on moving that along,” Grams said.

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