The Internal Revenue Service is in the midst of one of the most protracted of all systems renovations as it modernizes its Master File taxpayer account system.
The Internal Revenue Service must replace its aging tax processing systems, but the agency can’t stop running them while it builds replacements. So the IRS builds new systems while it operates the old systems, and it tries to make sure the new systems work with the old.
The job is “like trying to change the engines on a jumbo jet while it’s in flight, and you don’t have a complete set of blueprints to know how the original engine was put together,” said W. Todd Grams, the IRS’ chief information officer from 2003 to 2006.
The progress that the IRS has made in modernizing its tax systems has occurred because of a revolution of thinking at the agency and a restructuring of the organization, former IRS officials and modernization experts say. A restructuring of the IRS in 1998 broke down cultural barriers and resulted in centralized operations, a new focus on customer service and, most importantly, a new plan for modernizing the agency’s Master File taxpayer account system.
A 1960s classic
The Master File system is the central component of the IRS’ tax processing systems. It was designed when John F. Kennedy was president. It’s still coded in the same language in which it was created in 1964. The Master File is a relic of bygone generations of technology, but it maintains information accounts for all taxpayers. In the past, rigidly scheduled updates to the Master File occurred once a week. Before Internet connections let the IRS move information instantaneously, the agency regularly had to transport magnetic tapes containing taxpayer account information to update central data centers.
“It is classic 1960s architecture,” said Tom Lucas, the IRS’ senior adviser for enterprise architecture.
Because the Master File has been around so long, the IRS has added many new systems and connected them to it. Now more than 500 information technology systems interface with the Master File. However, its design is not documented well enough for anyone to know for sure how all the systems connect to it.
The IRS has a complex tax code wrapped around a complex IT environment, said Richard Spires, the agency’s current CIO.
Agency officials have made several expensive attempts to renovate the tax systems. Past endeavors, such as Tax Systems Modernization (TSM), cost billions of dollars but did not improve tax processing.
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