IRS Investigates Delays In Project UpgradeIRS Investigates Delays In Project Upgrade

The best integration talent money can buy can't figure out how to move terabytes of taxpayer data from a legacy system that dates back to the Kennedy era to a new Internal Revenue Service database.

IRS commissioner Mark Everson wants to know why a group of contractors—BearingPoint, Computer Sciences, IBM, Northrop Grumman, SAIC, and Unisys— is running two years behind in implementing the Customer Account Data Engine to store records of 200 million tax filers. Everson has asked Carnegie Mellon's Software Engineering Institute to determine what changes are needed. The database has cost taxpayers $67 million, with another $84 million slated for next year.

Lead contractor CSC, which declined to be interviewed, told the IRS it couldn't meet this month's deadline to transfer tax data on 6 million 1040EZ filers, the first phase of the project originally slated for December 2001 and now rescheduled for early next year. "This most recent setback is a serious matter," Everson says.

Larry Levitan, chairman of the business-transformation committee of the IRS Oversight Board, an independent body that guides the tax-collection agency, says the contractors misjudged the difficulty of keeping the Web-based system in sync with the tape-based legacy system patched together over four decades. Plus, the contractors failed to consider all the implications the Byzantine federal tax laws—in effect, the system's business rules—have on the new system, Levitan says. "The system is as complex as the tax code itself."