IRS Announces Delay In Completion Of Key IT Project

by Mike Godfrey, Tax-News.com, Washington

29 July 2003

The Internal Revenue Service has announced a further delay in a key technological update program designed to modernize its taxpayer master files, the Customer Account Data Engine (CADE), which is now scheduled to come online in 2004.

It is not the first time the modernisation project has overrun its deadline. It was originally scheduled to be operational in 2001 with approximately 6 million 1040 EZ filers earmarked to move on to the new system. IRS Commissioner Mark Everson has called the latest setback "a serious matter".

At present, the taxpayer database is contained on an antiquated system using magnetic tape which is now in its fourth decade. This system, known as Master File can often take up to one week to update records, and naturally it is prone to creating regular delays in providing accurate taxpayer information. The new CADE system will be able to facilitate much faster refunds in addition to posting daily transaction records and account updates.

Everson has also announced that the Revenue is to launch a review in conjunction with the Software Engineering Institute of Carnegie Mellon University to evaluate whether any changes are need in the program in addition to assessing the consortium of private firms awarded the CADE contract, known as PRIME. The study is likely to report its findings in the next 60 to 90 days.

According to the IRS, the department budgeted $33 million out of a total of $422 million for the CADE project in 2003. This will rise to $84 million from a total of $458 million in fiscal year 2004.

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