The Internal Revenue Service has awarded International Business Machines Corp. a contract possibly worth as much as $339.6 million to computerize the agency's tax-collection system.
With the new system in place, the IRS expects it will be able to collect an additional $2.52 billion in unpaid taxes over a seven-year period.
Under the contract, IBM will provide hardware and software to centralize all the information available to IRS collections agents. If the plan works out as expected, every collections agent will have access to a complete, up-to-date file on every taxpayer who is the target of a collection effort, IRS officials said.
Currently, only part of the IRS's collections system is automated, and agents sometimes must consult different databases or even pull out paper files to get the latest information on tax scofflaws. As a result, one agent may not be aware of actions taken by another or by the taxpayer in the same case, so that collection efforts are sometimes duplicated and taxpayers may get calls or letters about issues that have been resolved.
The basic contract, which was awarded Dec. 28 and on which IBM has already begun work, will be worth $126.3 million. But if the system proves satisfactory, the IRS could spend an additional $213.3 million.
The system, called the Integrated Collection System, calls for 11 mainframe computers with an option for 10 more. The mainframe computers will be installed at the the IRS computer center in Martinsburg, W.Va., and at 10 service centers around the country. The first of them are expected to be in operation this year in Martinsburg and Memphis.
In addition, the IRS has an option to buy 5,000 desktop systems and 10,000 laptop systems.
"The new system will orient all information around the taxpayer," in contrast to the present setup that organizes data into separate "modules," an IRS spokesman said.
Working on the contract along with IBM will be GC Services Corp. of Houston, a systems integration and collections firm, and Andersen Consulting, part of Arthur Andersen & Co., the big accounting firm.