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1998-05-28 19:59:21


Treasury Secretary Rubin Promises a New, Improved IRS



Here are words to live by . . . or die laughing:

"Just as these problems took a long time to develop, it is going to take a great deal of time and effort by all of us to build the kind of IRS that the taxpayers deserve."

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Text as Prepared for Delivery

March 12, 1998



Mr. Chairman, members of the Committee, I appreciate the opportunity to testify on the Treasury Department's fiscal year 1999 budget request. With me today is Nancy Killefer, our Assistant Secretary for Management and Chief Financial Officer.

Treasury is requesting $12.3 billion in fiscal year 1999, an increase of 7.2 percent over FY 1998. This increase is necessary to maintain current operations by supporting mandatory cost increases and meeting anticipated workload requirements in FY 1999; to invest in critical capital improvements for future efficiencies and program improvements and for addressing future workload growth; and to accomplish important program enhancements. . . .

Second, let me turn to the Internal Revenue Service.

Shortly after I first became Secretary, I became aware of serious problems at the IRS. In many cases, those problems came to my attention as a result of the work and diligence of this Committee. Over the last two and a half years we have been engaged in a highly intensified process of change and reform at the IRS that has led to dramatic change with respect to technology -- though that is just the beginning of getting to where we need to go -- increased electronic filing, improved telephone service and a greatly strengthened Taxpayer Advocate. Perhaps most importantly, and symbolizing our commitment to thoroughgoing change, we brought on board a new type of Commissioner, Charles Rossotti, who had extensive experience as a CEO in the private sector, with expertise in computer systems. And, let me just add, we are looking very hard to find a new CIO to replace Art Gross, who has done such a outstanding job in that position.

However, while important steps have been taken, the great bulk of the challenges lie ahead. Just as these problems took a long time to develop, it is going to take a great deal of time and effort by all of us to build the kind of IRS that the taxpayers deserve. We are committed to working with you to accomplish that goal. Our budget request includes a series of items to advance this effort.

First, our request includes additional resources to improve customer service, including increasing and improving the quality of telephone access, rewriting of notices and forms, expanding the Taxpayer Advocate staff, and implementing Citizen Advocacy Panels.

Second, our request positions the IRS to move forward with implementing the Modernization Blueprint, which is absolutely a requisite to improvements in customer service, efficiency, tax compliance and financial reporting. On a broader front, the budget provides seed funding as the Service moves more fully to implement its new organizational concept. . . .

Finally, Mr. Chairman, let me say a word about an issue of pressing importance to our nation and one on which we are keenly focused at Treasury: the Year 2000 date change problem. As you know, many computer systems rely on two digit dates as a result of a short cut computer programmers widely used until recently. The year 2000 would be entered as "00" but interpreted as "1900." As a result, these computers will not be able to execute many required functions properly as of January 1, 2000. As an agency with massive computer system activities second only to the Defense Department in the Federal government, this issue is one of the highest priorities to us. I meet bi-weekly with Assistant Secretary Nancy Killefer and our highly respected Treasury CIO to track progress and focus on problems.

Our FY 1999 budget includes $253 million to address this problem at Treasury. Treasury's date change needs are also part of the Administration's FY 1998 Supplemental Budget Request. We have identified close to $200 million in additional needs in the current year that must be funded if we are to complete the fixes in time, but the supplemental proposed by the Administration includes additional flexibility of up to $250 million in order to fund these requirements. To date, we have identified new requirements of approximately $175 million that need to be addressed this fiscal year. We look forward to working together with the Committee in addressing these critical requirements. . . .


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