It was payback time. I wanted what was due me and now I was ready to take the law into my own hands.
Tax law, that is.
This year, I completed and filed both my federal and state tax returns without so much as lifting a pen or picking up the phone to call an accountant. I did it with my home computer. And I wasn't alone.
It's been estimated that as many as 30 million Americans will file their taxes electronically in 1999, a increase of 23 percent from last year. That's an impressive statistic, considering that the federal electronic tax filing system was first launched just nine years ago. Back then, only a few pilot programs were available. Today, according to commissioner of Internal Revenue Charles O. Rossotti, 99.9 percent of individuals can file electronically.
There's a way to go before the more complicated business returns are eligible for electronic filing, but the fact that we've progressed this far is testimony to big changes going on at the Internal Revenue Service. And yet, so much remains to be done.
Remember those old episodes of Star Trek where Captain Kirk and his crew travel back in time to the 20th Century? A set from one of those episodes is what you might expect to see if you walked into the main computer room at the Internal Revenue Service today.
"A technological time warp from the 1950s and 1960s" is precisely how Charles Rossotti described the IRS's computer systems when he first took the job of commissioner in 1998, and they haven't changed much since then.
Rossotti has said he'll see to it personally that the IRS becomes fully modernized over the next 10 years. The question remains: can the agency meet the challenge?
The agency's archaic computers, which still run on huge reels of magnetic tape rather than gigabytes of RAM and hard disks, are frighteningly slow by modern standards. For example, although an electronic tax return may appear to be transmitted instantaneously, in fact it can sometimes take up to two weeks before a taxpayer's personal account data is updated in the IRS databases.
For this reason, the IRS computers can't be trusted to directly receive and process electronic tax returns in a secure fashion. To make it possible, the agency came up with another solution: let someone else handle it.
Taxpayers who file electronically must file with a third-party "transmitter" agency, which then processes and forwards the information to the IRS. Transmitters for taxpayers filing their returns from home include Nelco, and personal finance and tax software vendor Intuit.
For some, the transmitter system raises a red flag. How can we be sure that our tax information is kept private and secure on a transmitter company's computer systems — especially when to meet IRS bookkeeping requirements, it may languish there for as long as three years ?
It seems clear that a permanent solution is needed, and that solution begins with a thorough upgrade of the IRS computers. But that's easier said than done.
PC vendor Micron's recent $27 million deal to supply new notebook and desktop computers to the IRS field auditors represents less than 8 percent of the estimated 130,000 personal computers currently in use at the agency. All told, the IRS employs some 80 mainframes, 14,000 minicomputers, and more than 200,000 other systems.
Worse — before Rossetti could begin the arduous task of upgrading those computers, his first priority was to certify the IRS for Y2K readiness. That project could eventually account for as much as 10 percent of the $10-12 billion the federal government expects to spend on Y2K issues altogether.
Even with this undertaking now seemingly behind him, the pressure remains on Rossetti to implement a successful plan to modernize the Internal Revenue Service. The IRS already tried once to meet the challenge of upgrading its systems in the early 1990s, and fumbled the ball.
Much of that failed initiative was ultimately scrapped by IRS technology chief Arthur Gross, who joined the agency in 1996 and resigned two years later. In total, it's estimated the IRS has spent as much as several billion dollars on recent technology efforts, with little to show for it.
Again, Rossetti's novel solution is to let someone else handle the job. In March, Computer Sciences Corporation was awarded a 15-year contract to complete the overhaul of the IRS computers, beating out a bid from rival Lockheed-Martin.
CSC, currently the nation's third largest supplier of computer consulting and maintenance services, will head an alliance of companies including IBM, Unisys, and Lucent Technologies that will work together on the effort. The deal is expected to be worth as much as $5-10 billion over its duration, making it the largest such outsourcing contract in history.
The first six months of the project will be devoted to improving customer service by phone and over the Internet. That means increased electronic tax filing capabilities, as well as faster access to forms and publications for taxpayers. The IRS already maintains a library of all its forms, publications and regulations online, available in Adobe PostScript or Acrobat (PDF) format. This will be expanded with further resources for taxpayer help and assistance.
After that, the work to modernize the IRS agency will continue well into the next decade. That is, unless changes in tax law or government policy mandate another change of direction.
The computer industry's rapid cycle of advancement and innovation long ago outpaced the slow-turning gears of bureaucracy. It may already be too late for the government to ever truly catch up with the private sector in the area of technology.
In the meantime, I'll take what I can get. Electronic tax filing takes less time, less paper, and is certainly no more painful than the old fashioned method. And with both my federal and state refunds already successfully direct-deposited into my checking account, I won't lose too much sleep if the IRS's back-end systems aren't the most up-to-date.
So fire up your PCs and get those returns in. Tax day is April 15. It may be 10-15 years yet before the IRS gets fully up to speed. You, however, have one less excuse.
