CIO says goals are achievable

Chief information officer Paul J. Cosgrave, like other recent additions to the IRS
staff, came to his first government job after a successful career in the private sector.
More than anything else, he said, he was looking for a challenge. The IRS, under a
congressional mandate to modernize and beset by the immutable deadline to prepare its
systems for 2000, offered challenge in excess.

Cosgrave joined the IRS in July as an expert consultant and became CIO in August. He
left a consulting start-up in New York to join the IRS. Before that, he was chairman and
chief executive officer of Claremont Technology Group Inc., a systems integrator in
Beaverton, Ore.

Cosgrave has bachelor’s and master’s degrees in industrial engineering from
Rensselaer Polytechnic Institute.

Cosgrave spoke with GCN about the IRS modernization effort.

COSGRAVE: The goal for electronic filing of tax returns, stated in the IRS
Restructuring and Reform Act, is 80 percent by 2007. Today electronic filing runs at about
23 to 24 percent.

The goal is to get halfway home by 2002 to 2003. That is not as hard-and-fast as 80
percent by 2007, but we want to make orderly movement in that direction.

This is not simply having people file their taxes electronically. It is the whole
ability to communicate with tax preparers electronically. Today we don’t do that as
it relates to taxpayer data because we do not have a secure enough e-mail capability over
the Internet. We hope to have that capability up and running in a year or two, if not
sooner.

Another area is tax payment. We are already processing the vast majority of money
electronically. We are about 80 percent there, but we would like to get as close to 100
percent as possible.

We would like to let taxpayers access their account data over the Internet. We
don’t have a secure enough environment to do that, either, and that would be another
major initiative. So it is quite a comprehensive set of activities that needs to be done,
not just simply filing tax returns.

In October we announced the decision to go to a standard e-mail system. We have 17 of
them today and our intent is to be there by summer.

What we are rolling out is essentially internal e-mail, but the environment we
selected, Microsoft Exchange, has the ability to handle secure e-mail as well.

It is our intent to take that environment and expand that outward to third parties,
preparers—anyone who wants to communicate with us.

One of the first things [prime contractor Computer Sciences Corp.] will work with us on
is to deploy the exchange solution and handle secure e-mail. The infrastructure we are
going to put in place for that hasn’t been determined yet.

Y2K is the major effort and, although we are starting modernization, we are not going
to take any resources away from Y2K or in any way, shape or form jeopardize the progress
we are making there. That is the No. 1 priority for the service.

In terms of the original plan from two years ago, we are going at a slower pace in
modernizing. We have operated on an old packet-switching network that we have been rapidly
replacing over the past two or three years with a TCP/IP network. We are almost 90 percent
done on that.

We are moving from a Novell Inc. system to all Microsoft Windows NT. We are about
halfway there today.

For the systems that we have not converted to NT by this month, we will patch them with
the Y2K patch that we got from Novell and then move to NT after the filing season. By July
we should be a full NT and Exchange environment.

Paul J. Cosgrave
  Chief Information Officer

John D. LaFaver
  Deputy Commissioner for Modernization

Bob Wenzel
  Deputy Commissioner for Operations

Robert Albicker
  Deputy CIO for Systems

Toni L. Zimmerman
  Deputy CIO for Operations

Greg Rothwell
  Assistant Commissioner for Procurement

Robert E. Barr
  Assistant Commissioner for Electronic Tax Administration

Albert E. Mazei
  Assistant Commissioner for Program Management and Engineering

John Yost
  Director of the Century Date Change Project Office

Fred Martin
  Director of Tax Systems Acquisition

TOTAL  $292.5

Modernization—In the latest chapter of the decade-long effort to
overhaul its tax processing systems, the IRS last month awarded a 15-year, $5 billion
contract to Computer Sciences Corp. to manage the day-to-day modernization effort, with
the IRS providing oversight. Early projects targeted for the next two years include
designing new front-end systems for IRS workers, providing a secure e-mail system to let
taxpayers communicate electronically with the service and expanding electronic filing and
payment options.

Reorganization—Last year, the IRS came up with a three-phase plan
to reorganize its work by taxpayer type rather than geographic region. Employees will be
assigned to one of four business units and specialize in one type of taxpayer. During
Phase 1, Booz, Allen & Hamilton Inc. of McLean, Va., did an initial study on the
reorganization. During Phase 2, which will end by spring, 12 employee teams are detailing
the new design. During Phase 3, the IRS will implement personnel and management changes.

Electronic Tax Filing—Congress mandated last year that by 2007
the IRS receive 80 percent of taxpayers’ returns electronically. The Office of
Electronic Tax Administration is leading the effort, with oversight by the 17-member
Electronic Tax Administration Advisory Committee. The IRS has two pilots set for the
coming tax season that will use personal identification numbers in lieu of digital
signatures. The IRS has its own interim goal: to receive all returns prepared on computer
electronically by 2001.

Year 2000 Testing—The IRS will test its mission-critical systems
using an offline test bed at its Memphis, Tenn., computing center. TRW Inc. is building
the test bed on which tests for the main tax-gathering and processing systems as well as
other administrative and support systems will run. The service will test hardware,
operating systems, applications software, databases and internal and external
communications links.