Tuesday, July 18, 2006

Botched Computer Program for Fraud lets Over $200 Million Get Away

The Internal Revenue Service estimates that a poorly-written program and the inability of a government contractor to reinstate a previous antifraud computer program has produced losses of $200-300 million in tax revenue. Contractor Computer Sciences failed to deliver a promised fraud screening program in workable order and the IRS was unable to fully return the previous antifraud program by the time that the 2005 tax season had started. The result was that only one-third as many returns were flagged for fraud this year compared to last. Not surprisingly, the carnage has been significant; IRS employees have been fired, the contractor is under scrutiny and likely to penalized and Eric Solomon, nominee for Assistant Secretary for Tax Policy, has been severely questioned by Senators about the topic during confirmation hearings.

Brian Tankersley and others would have a better understanding of what needs to be done to get a seamless anti-fraud computer program going, but at the very least this failure of a IRS subcontractor will not help the prospects for privatizing IRS debt collection.


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