IRS to boost database capability, cut modernization work

The IRS will begin processing the simplest tax returns with the latest version of its new taxpayer database on Tuesday. But an anemic 2005 budget will force the agency to curtail work on most efforts to modernize its business systems and instead focus on payment and compliance and improving tax administration, said IRS CIO Todd Grams today.

"In the past we tried to do both tax administration projects and management projects. We're not doing that anymore," he said. IRS is not doing any new work this year on the next releases of the Integrated Financial System or the Custodial Accounting Project. Both are components on the multi-billion dollar Prime contract held by Computer Sciences Corp. of El Segundo, Calif.

"We're simply going to concentrate on the next suite in Modernized e-File services, getting filing and payment compliance off the ground and continuing to work on CADE," Grams said.

CADE also is part of CSC's contract.

The latest version of the CADE incorporates 2004 tax law changes and will be used this year to process up to 2.5 million 1040EZ tax returns for single taxpayers who require a refund or have no balance due. To date, CADE is unable to process returns that require any special treatment.

In July, the IRS will update CADE so it can process returns of 1040EZ tax filers who changed their address during the year. IRS will test the address change capability on returns that have already been processed through the end of the year and then take it live in January 2006.

The IRS expects to process more than 4 million 1040EZ returns next year, Grams said.