More news from today...IRS=>>>January 4, 1999
TAXES
I.R.S. Anticipates Year 2000 Well
Ahead, Early in 1999
By DAVID CAY JOHNSTON
or taxpayers, the pesky software flaw known as the
Year 2000 problem could cause lots of trouble -- not
in the year 2000, but this spring, when the IRS processes
1998 income tax returns.
The problem will be felt a year early at the IRS because
the service must, early this year, reprogram all its
computers to be ready for next year. Some of these still
use technology developed when Dwight D. Eisenhower
was in the White House. The IRS must also process 124
million individual tax returns and millions of corporate
and other returns so that it will be ready for the year
2000.
At the same time, IRS
executives are trying to
reorganize a bureaucracy with
110,000 employees and change
its culture from one of deep
suspicion of taxpayers to one
dedicated to helping them
comply with increasingly
complex tax laws.
If things go badly, Americans
can expect all sorts of foul-ups,
like lost tax returns or an
occasional anticipated refund
check emerging from IRS
computers as a demand for
millions in additional taxes.
"If there is a bad filing season, it
will be the upcoming one,
because this is the period when
the service has to test whether
they are going to be
Y2K-compliant," said Michael
Murphy, a former senior IRS
official who is executive director
of the Tax Executives Institute,
a Washington organization for
corporate tax officials. "If they
can't demonstrate it in this filing
season, they are going to have
difficulties in the next one."
Charles Rossotti, commissioner
of internal revenue, said, "Our
task is like changing the engines in the plane while you
are still flying."
In the real world, such a situation would virtually assure
a disastrous crash. But Rossotti said that while he
anticipated there would be some unusual and unexpected
problems for taxpayers, there should not be many, and
only a few people should be affected. "It shouldn't be too
bad," he said, "but people need to understand that 1999
really is going to be the risky year for us, not the year
2000."
Among government agencies that could experience
disasters because of Year 2000 problems, none faces a
bigger challenge than the IRS, which still uses huge reels
of magnetic tape, rather than modern disk systems, to
store and process data.
Rossotti likens the main IRS data center in Martinsburg,
W.Va., to a living museum of early computer
technology.
Today, the Martinsburg center's relics of data-processing
past operate in a tenuous electronic marriage with highly
complex databases that are supposed to link each section
of the tax code, each regulation, and each schedule of
taxes, penalties and interest to the appropriate lines on
thousands of different tax forms -- those completed by
taxpayers and those used by the IRS to generate notices.
A big concern is that with the complications introduced
by reprogramming, this marriage might become a
communications problem that would thrust taxpayers into
a nightmare of bizarre notices and demands or into a void
where their information would vanish.
Groups like the National Association of Enrolled Agents
have alerted their members to be on the watch for bogus
notices and to send them on to its national headquarters
in Washington. Joseph Lane, an enrolled agent in
Bellevue, Wash., who serves on a national advisory
panel for the IRS, said, "Tax practitioners are all geared
to watch for indications of programming glitches, such as
oddball notices saying, 'You owe $35 million,' and we
have an early warning identification system."
Lane said he expected few problems,
however. "So far as I know, they have
done enough systems-acceptability
testing."
To process the torrent of tax returns
each spring, the IRS operates 10
paper-pushing factories around the
country, commonly known as the
Pipeline. In these sprawling
complexes, clerks open letters, sort
the returns, assign numbers to track
the documents, enter most of the data
from the returns into computers and
then review the results for accuracy
before deciding which returns need
immediate attention and which can be
boxed for storage.
The Pipeline is from an era when department stores had
wooden floors and charge slips were rolled up and put in
metal canisters that were moved by wire-and-pulley
systems to clerks on other floors.
In 1985, part of the Pipeline, the IRS Philadelphia
Service Center, suffered a breakdown, brought on in part
by inadequate computer systems. Some employees ended
up shredding some tax returns and putting others in the
trash so that they could appear to be meeting work
quotas.
Rep. Steve Horn, R-Calif., has been holding hearings on
the administration's progress in dealing with Year 2000
issues. He gave the Treasury Department, of which the
IRS is part, a grade of C in November, up from D-plus
90 days earlier.
The IRS was not among 25 individual departments and
agencies given report cards, but Horn singled out the
service for praise in its efforts to deal with the problem,
saying that Rossotti, a former computer systems
executive, was "an outstanding commissioner who
understands this problem better than others in the
administration" and was moving the service to "the
cutting edge of technology."
Rossotti also said that the complex changes Congress had
made to the tax code were creating new difficulties for
the service's aging computers. He cited new protections
for "innocent spouses" as a prime example.
"Innocent-spouse relief requires separating the tax
liability of spouses," he said, "but our computers are not
equipped to deal with proportionate liability." |
