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Summary and Comments

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Category: 

Taxation

Date: 

1997-10-27 12:36:52

Subject: 

IRS Computer Problems Escalate: 1997 Tax Act

Comment: 

This report is on the problems of tax code changes. Changes in the law are always a problem for the IRS, however. But this time the deadline draweth nigh.

Note the news on IRS compliance: supposedly they are moving along, though they are nowhere near compliance. This is in stark contrast with Gross's report last May.

Notice also the concern Gross has about the short time for testing: one year. He recognizes that this is cutting it short. Yet there are government agencies that have planned for only six weeks of testing: November and December (a holiday month), 1999.

* * * * * * *

OCTOBER 20, 1997

CAPITOL HILL

CIO: Tax bill hampers IRS' millennium fix

BY NICOLE LEWIS (nicole_lewis@fcw.com)

The chief information officer for the Internal Revenue Service last week said the tax-collection agency's schedule to make its computers Year 2000-compliant will be disrupted by the Taxpayer Relief Act of 1997.

Arthur Gross, speaking at a Year 2000 seminar held by the Information Technology Association of America, said the act, which changes the exemptions for children and the way capital gains are taxed, will require the IRS to open its 95,000 applications to make major changes to systems to accommodate the tax changes while it is still trying to make the applications Year 2000-compliant.

"That's a huge undertaking of having to integrate two major development efforts, two major testing efforts and two major rollouts," Gross told the audience. "And if that weren't enough, the same phenomenon is going to occur in 1999."

As a result, Gross said the requirements will significantly push back the agency's plans to make computers Year 2000-compliant. The IRS planned to test its systems for Year 2000 compliance from October 1998 to December 1999. Now, changes to computer systems to reflect 1999 tax changes, which must be put into place by Jan.1, 1999, will leave only 12 months for integration testing and end-to-end testing for Year 2000, Gross said.

A spokeswoman for the IRS said the agency has little time to fix and test its computers for Year 2000 compliance, and the loss of three months is significant. In addition, Gross said that while IRS computer specialists have identified 60 million to 70 million lines of code and the agency is working feverishly to correct its 20 mission-critical systems, he was doubtful that the IRS will find all the lines of date-sensitive code needed to be fixed.

"The entire IRS inventory still has not been fully fleshed out and like many large organizations . . . we still have not fully captured the scope and breadth of the problems in terms of some applications," he said. "Frankly, I'm skeptical."

Gross said he projects that the IRS will spend much more than $850 million on making IRS computers Year 2000-compliant -- a process that is still moving through the five phases laid out by the General Accounting Office: awareness, assessment, renovation, validation and implementation.

Gross noted that the IRS has completed the awareness and assessment stages. In addition, the agency is 52 percent through the renovation step, has completed 22 percent of testing and 4 percent of installing the fixed systems.


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