Wednesday, January 13, 2010

Stuck in the Mud: IRS Spins its Wheels on Electronic Modernization

The popularity of electronic tax return filing has increased drastically over the past few years, and it has certainly not escaped the attention of the IRS. In an attempt to keep up with the trend and improve efficiency, the Customer Account Data Engine (CADE), a branch of the IRS began creation on a modern processing system that would get refunds back to taxpayers eight days faster than before. However, new obstacles are coming up which means the system may not be ready as quickly as the government had hoped. Checkout the following article from on the struggle to get the system implemented.

The number of taxpayers filing electronic federal tax returns has increased steadily since 2005, accounting for more than two thirds of returns during the 2009 filing season. However, as the Internal Revenue Service enters the 2010 filing season, it is curtailing development of a major element of its modernization program and rethinking its strategy for delivering electronic services.

The Customer Account Data Engine (CADE), a part of the IRS Business Modernization Program that is intended eventually to replace the legacy Master File processing system, processed 40 million returns in 2009, producing taxpayer refunds from one to eight days faster than the older system. CADE originally was to be completed by 2012, but increasing complexities have extended that date.

“After over 5 years and $400 million, CADE is only processing about 15 percent of the functionality originally planned for completion by 2012,” a Government Accountability Office report says.

Each successive release of the system was expected to process more complex returns, but several technical challenges in the system had not been dealt with. The IRS estimated that full implementation would not be achieved until at least 2018, and possibly as late as 2028.

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