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Summary and Comments

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Category: 

Taxation

Date: 

1998-01-08 12:25:45

Subject: 

Can the IRS Make It? The Challenge

  Link:

http://www.tax.org/fotw/f120297.htm

Comment: 

TAXPRACTICE (Dec. 2) ran a feature on the IRS and y2k: "Is the IRS Ready for the 21st Century? We'll Have to Wait." Is short, the author doesn't know. But what the article describes sounds as though the IRS will not be ready. The question is: Will it survive at all? Here is a key statement:

"The IRS has no fallback plan for failure. If its computer systems are unable to deal with the year 2000, it is not clear exactly what the consequences will be. Will the computers freeze up or just post some data incorrectly? Or is the whole Y2K problem overblown?"

* * * * * * *

The law of unintended consequences makes it more likely that the IRS computer systems will not be able to perform adequately during the 2000 filing season. . . .

What if the IRS computers have problems with the 2000 date change? At best, taxpayer service will slip. At worst, systems may crash because computers were not reprogrammed in time to recognize the century date change. . . .

After joining the IRS in April of 1996, Arthur A. Gross, the agency's chief information officer (CIO), put together an ambitious plan to survey and fix the various computer systems. It includes a three-tier priority approach. As part of this plan, the IRS recently completed an inventory of its various computer systems. This was an important first step because the IRS did not readily know how many computer systems it had with Y2K problems, and documentation for the computer programs was often missing or incomplete.

The three tiers are as follows:

Tier 1, which gets top priority, includes all mainframe-resident application programs, such as the business and individual master files and the national account profile. These systems, created specifically for the IRS, are located at the two IRS computer centers (Martinsburg, W.Va., and Detroit) and at a number of the 10 service centers around the country.

Though he is CIO, Gross does not control all computer resources at the service centers. Many are controlled by the service center directors, who report to the deputy commissioner through the service center executive. These are not directly covered by Gross's plan. . . .

Similarly, it is unclear what impact the century date change will have on the computer systems Gross doesn't oversee. They include the district offices and the individually created computer systems at the local offices.

Approximately 23 application systems are operated by the field and the service centers outside the control of the CIO. Nine of these systems are considered "mission critical" and must also be made Y2K compliant. . . .

It is unclear who has specific responsibility to assure that these systems become Y2K compliant and what progress has been made on getting them ready for 2000. Presumably, this is also being handled by the IRS Y2K staff.

Another concern is that some tax-related systems that are vulnerable to the century date change problem will not be subject to any Y2K scrutiny. This includes the data exchange program that the IRS uses to receive taxpayer information, such as Form 1099 data, from third parties. For these there is simply no time or resources. Also, the IRS receives data from a number of foreign countries, such as Canada. It is unclear what impact foreign Y2K problems could have on international programs. . . .

If the agency does not process the yearly tax returns and send out the 70 million or so refund checks, any additional failings are incidental. Congress and the taxpayers have made the agency pay for troubled filing seasons in the past.

So although preparing for the 2000 filing season is a far larger effort than preparing for 1998 or 1999, the latter two must get first priority. Also, getting ready for a typical filing season requires the review of discrete sections of the IRS computer programs; Y2K requires a review of all 63 million lines of computer code.

If the IRS's systems are not fixed in time to deal with the change of date, a number of problems are expected. Refunds may be slowed, taxpayer correspondence will be delayed or lost, there will be delays in compiling various management data, and nobody knows for sure what else will happen. . . .

The IRS has no fallback plan for failure. If its computer systems are unable to deal with the year 2000, it is not clear exactly what the consequences will be. Will the computers freeze up or just post some data incorrectly? Or is the whole Y2K problem overblown?

The problem is the answers may not be known until late in January 2000, when the first filing season of the next century is under way. The century date problem will be an event or nonevent, but it very well may determine the success of the new IRS.

Link: 

http://www.tax.org/fotw/f120297.htm

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