Terence Milholland pushing IRS toward world-class IT status


IRS CIO Terence Milholland (Astrid Riecken/The Washington Post)
August 28, 2013

Terence V. Milholland joined the Internal Revenue Service in 2008, becoming the agency’s eighth chief information and technology officer in a decade.

His challenge was to modernize the agency’s tax-processing system, a multibillion-dollar project that had resulted in mostly failures for the past 20 years.

Repeated missteps earned the program a spot on the Government Accountability Office’s “high-risk list” for 13 consecutive years — and doubts among agency employees that the job could even be done.

“The department was in crisis mode on everything,” said Julie Rushin, the deputy chief information officer for operations. “There was no confidence.”

This year, the GAO removed the IRS from its list, and the agency has updated its online filing platform. It has switched to a system of daily instead of weekly tax processing, helping speed refunds and reduce fraud, according to the congressional watchdog agency.

For Milholland’s work, the nonprofit Partnership for Public Service has named him a finalist for its annual Samuel J. Heyman Service to America Medals for citizen services.

Immediately after arriving at the agency, the Baltimore native declared that the IRS should operate a world-class IT program. But the transition wasn’t going to be easy for the staff, or for Milholland, who had served as chief information officer and chief technology officer for corporations including Geico, Boeing and Visa.

Milholland realized that he was going to have to simultaneously dismantle a system and build a new one — without offending his new colleagues.

IRS employees had grown comfortable using a hodgepodge of technologies and systems they’d developed. Different offices used different programs, and many weren’t compatible. “Even if the end result may work, it’s not a very efficient and effective way to operate,” Milholland said.

“When you standardize this stuff, people can do more, and you increase capacity,” said Milholland, who divides his time between Washington and his home in Frisco, Tex.

He required his engineers to learn Java, one of the most common programming languages. The move made IRS systems compatible with one another and helped the agency attract the best new talent, which is largely trained in using the code, Milholland said.

To avoid resistance and hurt feelings as practices changed, Milholland emphasized the need for standardization instead of dwelling on which old systems worked and which didn’t. “I learned over the years not to come in as a know-it-all,” he said. “People want you to apply your knowledge about the way things ought to be done without making the way things are already done look bad.”

Milholland also encouraged his employees to look inward instead of pointing fingers when problems arose. He also called for respectful collaboration with vendors outside the agency.

“There’s cross-organizational collaboration now, both within the IRS and with other agencies,” said Ann Altman, IBM’s general manager for federal government and industries. “It’s a trusted relationship across the board.”

Despite Milholland’s executive experience, he faced a steep learning curve at the IRS. One thing that surprised him was the degree of oversight: the audits, the questions from Congress, and interactions with the Treasury Department and the Office of Management and Budget.

“I hadn’t realized how much of a burden it is for anyone working in government — how much time and effort they have to spend doing that as opposed to doing what you think they’re being paid to do,” he said.

Milholland invites auditors from the GAO and the IRS inspector general’s office to attend meetings within his department, both for transparency and to help identify potential problems before they grow out of control. “I view it as these folks being another pair of eyes to help me and my teams know where we may run into trouble,” he said. “We want to stay ahead of the game.”

GAO officials have applauded that approach, saying it saves time for everyone involved in the review process.

“If agencies are reluctant to share their issues, we spend a lot of time digging through documents and requesting meetings and interviews,” said Dave Powner, GAO’s director of IT management issues. “I would rate the IRS high on the openness scale.”

Milholland quickly learned that one of the primary measures of success at the IRS is whether the agency had a “clean filing season,” as he put it. “You know based on whether we’re in the newspaper,” he said.

He declined to discuss the fact that the agency has been in the news a lot lately. Besides, his technology division has no connection with the ongoing controversy involving the IRS’s targeting of groups based on political ideology.

However, he did say the agency’s employees are dedicated to the public-service mission.

“There’s far more loyalty to the mission here than in many of the private enterprises I’ve been around, where it’s often loyalty to the paycheck,” he said. “That’s why people come to the IRS and stay — they like what they’re doing despite all the issues around them.”

As for his goal of a world-class IT program, Milholland said his department still has work to do.

“My employees ask me how we’ll know when we’re there,” he said. “I tell them they have to define it. They’ll know when we’re there by whether we’re as good or better than others in the industry.”

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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