Keeping modernization on track

The Internal Revenue Service must replace its aging tax processing systems, but the agency can’t stop running them while it builds replacements. So the IRS builds new systems while it operates the old systems, and it tries to make sure the new systems work with the old.

The job is “like trying to change the engines on a jumbo jet while it’s in flight, and you don’t have a complete set of blueprints to know how the original engine was put together,” said W. Todd Grams, the IRS’ chief information officer from 2003 to 2006.

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2008 budget would boost IRS modernization by $85M

The Bush administration is seeking $282 million to modernize the Internal Revenue Service in his fiscal 2008 proposed budget, an $85 million increase over the fiscal 2007 request.

Modernization is one piece of a three-part strategy for closing the gap between taxes owed and taxes paid. Congressional leaders have discussed how to bring in the taxes owed. Through modernization, the Treasury Department intends to emphasize the other two parts: better taxpayer services and enforcement to eliminate the gap, according to the budget proposal, which was released today.

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Free File opens for early birds

Free File, a tax-filing program, opened today for taxpayers wanting to get an early start on filing season.

The controversial program, in its fifth year, is a free tax preparation and electronic filing initiative between the Internal Revenue Service and the Free File Alliance, which is composed of 20 private-sector tax preparation companies.

Congress and the IRS’ inspector general have criticized the program for excluding taxpayers who once used the program by setting stricter income requirements. Those requirements caused a double-digit percentage drop in usage in 2006.

But the IRS and the alliance have made Free File more consumer-friendly this year, according to the IRS.

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Business owners can get tax help online

Officials are urging taxpayers and business owners to go online to make tax preparation easier.

This month, business owners are preparing W-2 forms and doing other tax-related tasks, and the Small Business Administration is touting its Web site, Business.gov, as a means to get the job done with fewer headaches.

Business.gov provides federal form searches so visitors can quickly find and download federal tax forms and guides

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