"This moves us another step forward in our long-term effort to modernize IRS business systems," Paul Cosgrave, IRS chief information officer, said. The $200 million comes from $577 million previously set aside by Congress in a special Information Technology Investment Account (ITIA).

"A lot of work remains, but we are encouraged by our initial efforts and the continuing support from Congress and other oversight groups," Cosgrave said. "This partnership approach with Congress and other groups has put us on track to deliver significant business and technological changes to help taxpayers."

The IRS said the $200 million will be targeted for several areas, including: completion of the vision and strategy initiative for systems development, which establishes the future direction and priorities for modernization efforts; completion of the architecture engineering activities, which identify the structure and standards that the modernization projects must follow; completion of a tax calculation software package for use by IRS employees who examine corporate and international tax returns; beginning installation of a new accounting system; developing and deploying infrastructure projects that will help guarantee data security and privacy involving modernization projects.

For the first time, congressional leaders approved releasing $15 million to the IRS as a management reserve fund. Cosgrave said the fund - included as part of the $200 million -- will help ensure the modernization projects move forward smoothly and without interruption. The IRS will develop criteria for using the fund and alert congressional leaders before drawing on the reserve.

The IRS is also working on the Customer Account Data Engine, or CADE, which will create a centralized database for taxpayer records, capable of being updated daily. According to the IRS, CADE will improve customer service by making complete and current information about taxpayers available at one reference point. CADE will be developed in phases over the next six years, beginning with individuals filing the simplest returns, the agency said.

"This new technology will be the springboard for us to improve taxpayer service," IRS Commissioner Charles O. Rossotti said.

The release of the funds, the fifth made since June 1999, brings the total amount of money released from the ITIA to $448 million. It also marks the largest release from the fund, according to the IRS.

Projects previously funded from ITIA include a customer communications call routing package to help improve telephone access for taxpayers calling the IRS that will be in place next year.

The modernization project, known as the Prime -- short for Prime Systems Integration Services contract -- is a joint effort between the IRS and a private-sector consortium headed by Computer Sciences Corp. The Prime contract could last 10 to 15 years.

-- SmartPros News Staff

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