IRS starts $8 billion effort to modernize its services


WASHINGTON -- Although grandiose plans often go awry, even partial success for the Internal Revenue Service's $8 billion modernization effort will bring visibly big improvements for the nation's 100 million-plus taxpayers.

Did you misplace the copy of the return you filed last year ago just when you need to document an application for college financial aid? The IRS, which now has a 45-day target to respond to such requests but misses it in one case out of three, expects to be able to supply a copy within 24 hours.

Does it drive you into a frenzy to respond properly to an IRS request for additional information or money only to get a computer-generated enforcement notice three weeks later about the same issue? The service proposes to eliminate 95 percent of such erroneous dunning.

Are you weary of being shunted around from one place to another to resolve a problem, dealing with IRS personnel with ready access to only 2 percent of your account information? The agency anticipates that in 95 percent of cases a single employee will be able fix things.

But not right away.

The master plan, three years in development, was disclosed last week. It is to be phased in throughout the 1990s. The new system replaces one that was designed in the late 1950s and that uses the technology of the 1960s. The way the IRS receives, processes and manages tax data has remained basically unchanged since.

At a news briefing on the plan, Commissioner Fred T. Goldberg Jr. called it a revolution. And for the IRS, long been criticized by the General Accounting Office and others for failing to produce a detailed modernization program, it surely is.

Yet in some respects the IRS is proposing to do by the end of the century what credit-card companies, retail stores and banks now do routinely.

There are various reasons that this has taken so long, including the now-admitted error of allowing rapid technological improvement to paralyze planners seeking grand solutions. The IRS also cites a backwash concern for privacy arising from the Watergate scandal.

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