While the rest of the nation-and much of the world-has joined the computer age, the IRS, which collects $2 trillion each year, still remains critically dependent on the obsolete computer systems it developed over the last 35 years.
But a large-scale computer modernization effort, started two years ago, is beginning to show progress. Once complete (sometime during this decade), the improvements promise to make the IRS more service-oriented and, to the dismay of some taxpayers, better able to track down those who want to avoid paying taxes.
With the new system, the IRS expects not only to identify simple taxpayer mistakes faster but also to be more adept at spotting tax avoidance and evasion, says Mike Dolan, director of IRS policies and dispute resolution for KPMG's tax controversy service in Washington, DC.
The overall goal, however, is to "provide better service across the board and eventually reduce the taxpayer burden," says Paul J. Cosgrave, IRS chief information officer and the person in charge of the modernization efforts.