NCPA - National Center for Policy Analysis

Millennium Worries At The IRS

October 27, 1999

Will the taxman be in Y2K compliance when January 1, 2000 rolls around? The answer is of considerable importance to every American taxpayer -- as well as every American business.

Experts point out that chaos at the Internal Revenue Service would produce a nightmare for the economy, as well as for a government dependent on tax revenues.

Here are some of the concerns:

  • Some testing of IRS' software and hardware won't be completed until late 1999.
  • In September, the Treasury Department noted that at least four IRS "mission critical" systems have not been completed or are not Y2K compliant.
  • Following a $4 billion, 10-year attempt to modernize its computer system in the 1980s and 1990s, the agency has embarked on yet another full modernization program that will take about 10 years to complete.
  • Although other federal agencies, such as the Social Security Administration, began focusing on Y2K as early as 1989, the IRS didn't even begin a preliminary analysis until 1996, according to the Treasury Department.

Moreover, a General Accounting Office report in September said the IRS' contingency plans for refunds and receiving paper submissions "were inconsistent and incomplete."

Another Treasury report found areas that if not addressed would deny IRS "sufficient time to remedy unforeseen causes of delay."

Private tax preparers are warning their clients to make paper copies of their completed tax returns and be sure to file their returns with the IRS through certified mail.

Source: John Berlau, "Is the IRS Ready for Year 2000?" Investor's Business Daily, October 27, 1999.


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