Washington (July 30, 2003) -- The Internal Revenue Service has delayed the first phase of the program to modernize its taxpayer master files, the Customer Account Data Engine (CADE), until the 2004 filing season. The first group of taxpayers, approximately 6 million 1040 EZ filers, was originally scheduled to move to the new system in 2001.

“This most recent setback is a serious matter,” said IRS Commissioner Mark W. Everson.

Everson said that the IRS has launched an independent review of the program to evaluate its progress and determine whether any changes are needed. Following up on a commitment he made when becoming commissioner in May, Everson announced the selection of the Software Engineering Institute of Carnegie Mellon University to conduct the study and report back to the IRS in 60 to 90 days.

When fully operational, CADE will be a modern database that will house tax information for more than 200 million individual and business taxpayers. It will replace the antiquated, magnetic tape-based system that came into use four decades ago. The system, called the Master File, takes a week to update its records, creating delays in providing accurate account information for taxpayers. When completed, CADE will provide a variety of benefits to taxpayers, such as faster refunds along with daily postings of transactions and updating of accounts.

“The CADE project has had a number of delays over the past several years - too many delays,” Everson said. “These delays are particularly disturbing, especially since the General Accounting Office continues to view modernization as a ‘high risk area.’ ”

“The review will evaluate its progress and determine whether any mid-course corrections are needed,” Everson said. He said he will also ask the IRS Oversight Board to assess CADE and the future of the project.

-- WebCPA staff

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