ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, April 9, 1996 TAG: 9604090060
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
THE IRS HAS STUMBLED since launching its modernization program in 1986, according to Congress' General Accounting Office. It has spent more than $3 billion.
Processing tax returns at most Internal Revenue Service centers looks much the same as it has for decades.
Hundreds of canvas bags, stuffed with returns, are dumped onto concrete loading docks in the early morning darkness. From there, returns are shunted through a series of rooms, as vast as football fields, where row upon row of employees remove them from envelopes, check to see if they're signed and keypunch the information into 1960s-vintage computers.
But in the Cincinnati service center, the old-style processing system operates side by side with the system the IRS envisions as its future.
A half-dozen refrigerator-size computers, tended by a handful of employees, silently record a steady flow of data filed electronically through commercial tax preparers, punched into telephones by taxpayers with the simplest returns and transmitted through services such as CompuServe from taxpayers' home computers.
It's a contrast as stark as that between a wire-and-plug telephone switchboard and modern, automated call-switching equipment.
In Cincinnati, 2,553 employees, occupying 128,300 square feet, will process an estimated 12.6 million paper returns this year. At the same center, a computer and just 50 employees in 2 percent of the space will process 36 percent as many electronic and telephoned returns.
But, although the future of the IRS is literally a short walk from its past, the agency just can't seem to get there from where it is, according to critics.
The IRS has stumbled badly and repeatedly since launching its Tax Systems Modernization program in 1986, according to Congress' General Accounting Office. It has spent more than $3 billion, yet may not reach its goal of transforming its paper-heavy system into a telephone-based system by 2001. The goal is to make paying your taxes as easy as buying a sweater from a mail-order catalog.
IRS Commissioner Margaret Milner Richardson conceded the validity of some criticism but said critics miss real progress at the agency.
``The fact of the matter is ... we are providing better service to taxpayers than ever before,'' she said in an interview.
However, the GAO's Gene L. Dodaro told the Senate Governmental Affairs Committee that the modernization program ``is jeopardized by persistent and pervasive management and technical weaknesses.''
Attempts to improve so far ``do not provide enough evidence that weaknesses will soon be corrected,'' he said. ``IRS continues with plans to spend billions more ... with little assurance of successfully delivering effective systems.''
The most recent example is the Cyberfile program, designed to allow personal-computer users to file their returns directly to the IRS, without an intermediary. They would file either by telephone through their computer's modem or via the Internet.
Dodaro said the program has proceeded without regard to the security of confidential taxpayer information.
It's housed in a dusty basement room exposed to the danger of both fire and flooding. Anyone can enter the room by flipping a latch on the main door with a finger. And employees share passwords, making it impossible to trace the use of the system.
Meanwhile, a committee of the congressionally chartered National Research Council also has harshly criticized the IRS.
Robert P. Clagett, the engineer who was chairman of the panel, told congressional committees that until recently, IRS management of the modernization project has been disjointed and directed by longtime IRS executives who lack the specialized training and experience needed.
``They have not grasped our recommendations as to what it takes to develop a huge information system,'' Clagett said.
In October, a 35-year employee, Judy Van Alfen, started as the new associate commissioner for modernization. Beginning April 15, Arthur Gross, who led New York state's modernization program, will report to her as the new chief information officer. And the Treasury Department and IRS have strengthened the authority of a joint supervisory group of senior officials who oversee the effort.
But according to the GAO, management of the project still is not completely consolidated. The IRS research and development division retains authority for technology research and prototypes.
The GAO also faulted the IRS for what it calls ``ad hoc and sometimes chaotic'' development of computer software. And, it said, the IRS has yet to develop a comprehensive strategy for persuading taxpayers to file electronically once all the alternatives are fully developed.
IRS Commissioner Richardson, though, pointed to telephone filing available nationwide for the first time this year for many single taxpayers without dependents. Of 61.1 million returns received through March 29, 2.5 million have been filed by telephone and 10.6 million electronically.
New technology, she said, is allowing the IRS to serve more taxpayers more efficiently this year, despite a cut in the IRS budget from $7.5 billion in 1995 to $7.3 billion this year and a cutback in walk-in office hours.
The IRS has a home page on the Internet. Computer users can search for answers to their tax questions and download many forms and publications. Forms also now are available by fax.
In other improvements, equipment routs taxpayer calls nationwide to the least-busy service center, employers can electronically deposit payroll withholding, and revenue officers have on-line access to taxpayer account information.
Nevertheless, Republican lawmakers dismayed by the GAO and National Research Council reports are threatening to withhold the $850 million the agency requested for modernization in fiscal 1997 unless it comes with a clear plan to spend it wisely.
``You can't build a house without a blueprint,'' said Rep. Jim Lightfoot, R-Iowa, chairman of the House Appropriations Treasury subcommittee. ``The way they're going about it, they're liable to build the roof first, the bathroom may be in the middle of the living room, and you turn on the lights in the kitchen and the toilet flushes.''
LENGTH: Long : 116 lines ILLUSTRATION: PHOTO: AP. Janet Tate (left photo) sorts forms the old way atby CNBthe Cincinnati Internal Revenue Service Center in Covington, Ky. Sue
O'Neill uses a computer. color.