IRS contractor pledges to meet revised modernization schedule

New computer systems for the Internal Revenue Service are on track and will be completed on their revised schedule, according to the president of the leading contractor on the project.

Lawmakers have become increasingly impatient with delays and cost overruns surrounding the Customer Account Data Engine, a multi-year effort to replace IRS' antiquated "master file" with a modern database. The master file holds more than 150 million taxpayer records and serves as the hub of the tax-collection system.

At a hearing this month, Alabama Republican Richard Shelby, chairman of the Senate subcommittee that oversees the IRS, said the department's modernization efforts have "woefully under performed," adding that "schedule slippages and cost overruns have been epidemic."

Shelby worried that the current modernization could repeat an earlier two-year program to update IRS systems that failed after spending $4 billion. "That effort was a complete loss," he said.

Paul Cofoni of Computer Sciences Corp. acknowledged "some performance issues" in an interview about his firm's work on the modernization. But he said the delays were due to the age and complexity of the old system and unexpected technical problems in the overhaul process.

"We are getting better and better at this," he said, adding that while CSC is "not out of the woods yet," he expects delivery of the project's multiple stages to occur on its revised schedule.

Cofoni noted that IRS system modernization has been attempted twice before, but no contractor has moved as far as CSC in terms of a complete overhaul.

CSC is set to test the first phase of the database this summer. It will automate income-tax records submitted on 1040 EZ forms, which constitute 5 million of the 150 million total IRS files. The system is expected to be online in January. Final work is being completed on an internal records system set for delivery on a revised schedule in October.

CSC touted several smaller electronic systems that came online last fall and winter, making tax filing simpler and easier for a large segment of tax filers trying to meet the April 15 deadline. The seven systems enabled third-party tax filers, including tax-preparation services, to create accounts for tax filing on a secure database, search for clients' relevant information, such as a taxpayer identification numbers, and resolve online any questions from the IRS, Cofoni said.

He said more than 10,000 third-party tax filers took advantage of the system this year. "It has been very favorably received by that constituent base."

He noted that 24 million individual tax filers used applications to check the status of tax refunds and the status of child tax credits. "That's 24 million fewer phone calls to the IRS this year."