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IRS priority must be Year 2000

The head of the tax agency asks a congressional committee to delay new directives until systems are ready for the year 2000.

The Senate unanimously passed legislation yesterday to overhaul the Internal Revenue Service, but the head of the tax agency has asked a congressional committee to delay any new directives until the bureau readies its computer and telecommunications systems for the year 2000.

Calling his agency's Y2K problem a "dangerous and risky situation," IRS commissioner Charles O. Rossotti told the House Ways and Means Committee's Subcommittee on Oversight that "failure to identify, renovate, and test each of these system calculations could result in catastrophic disruption to taxpayers and the government."

The commissioner said he has serious concerns with provisions of the Internal Revenue Service Restructuring and Reform Act of 1998 that require changes to IRS computer systems in 1998 and 1999.

"Mandating these changes according to the schedule currently in the bill would make it virtually impossible for the IRS to ensure that its computer systems are Year 2000 compliant by January 1, 2000, and would create a genuine risk of a catastrophic failure of the nation's tax collection system in the Year 2000."

He explained the challenges facing his agency as it tries to convert a network of 80 mainframe computers, 14,000 minicomputers, 130,000 personal computers, and 100,000 desktop computers to recognize the changeover in the year 2000, while at the same time attempting to carry out more than 750 changes the Taxpayer Relief Act of 1997 requires for the 1999 filing system.

The agency is not the only federal body struggling to meet the millennium deadline. In March, the Office of Management and Budget released their latest quarterly report on all federal efforts addressing the issue. It pointed out a number of agencies not making adequate progress, including the Labor, Energy, Education, Health and Human Services, and Transportation departments.

The Year 2000 bug could cripple software that cannot accommodate a four-digit entry for the current year. Thus when 2000 begins, many programs will register only the "00" and read the date as 1900.

Rossotti said the Year 2000 effort at the IRS is a $1 billion dollar project. "Although we are making sustained progress and are on schedule, risks remain in specific technical areas such as [certain hardware], telecommunications, end-to-end integration testing, and noninformation technology equipment."

The IRS project is one of the largest in the federal government. On the whole, some federal officials have estimated the price for fixing government computers as high as $10 billion to $12 billion.

Senator Bob Bennett (R-Utah), the chairman of the recently formed Senate Special Committee on the Year 2000 Technology Problem, agreed with the commissioner but said the new bill placed a high priority on resolving Year 2000 issues.

"The IRS's preparedness for the millennial bug is of utmost importance if we are to avoid a national crisis and further blunders by the agency," Bennett said in a statement. "As we learn more about the far-reaching impacts of the Year 2000 problem, it is irresponsible to think our nation's tax collecting body, and taxpayers for that matter, will not be drastically affected if changes are not made."

Rossotti may have a chance to press congressmen to address some of his concerns in the new bill because the differences between the Senate version and House version, which was passed last year, must still be worked out before the bill is sent to the president to sign into law.

Reuters contributed to this report.