Budget cuts have IRS using technology they used back when JFK was president

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NEW YORK (CNNMoney) — The IRS has one foot in the 21st century, and the other in the days of Camelot.

The majority of taxpayers can file their federal income tax returns online. And those eager to see how soon they’ll get their refunds can even use the IRS’s mobile app.

But thanks to persistent budget cuts the agency’s efforts to modernize its technologies have been held up, IRS Commissioner John Koskinen told a Senate panel on Tuesday, February 3rd.

“We’re running applications we were running when John F. Kennedy was president,” Koskinen told lawmakers when asked why there’s been a delay in sending out new tax identification numbers to victims of identity theft.

He also said some IRS systems still use the COBOL programming language, which Computer World once described as “a programming dinosaur that was last hot in the 1980s.”

When one senator asked how the agency could still be using such old systems when it spends over $2 billion a year on information technology operations, Koskinen explained that the money has been going into upgrading its systems, which were customized for the IRS in the 1950s and 1960s.

“It’s like driving a Model T that now has a great GPS system and wonderful sound system, [and] has a rebuilt engine,” he said.

Part of the problem: All the new tax laws and programs that Congress mandates the agency to administer.

One of the latest is the Foreign Account Tax Compliance Act (FATCA), which will require many foreign financial institutions to report accounts held by U.S. citizens to the IRS.

“We have 145,000 foreign financial institutions about to provide us data under [FATCA]. All of those systems had to be built and rebuilt to absorb that data,” he said.

And there are still more than 50 information technology updates on the IRS’s to-do list, he added.

Koskinen’s goal is to get the IRS to a place where Americans can do all their tax transactions online like they do their banking, without ever needing to call or fill out paper forms.

“We’re not talking about going to the moon. We’re talking about ‘Can I catch up with where financial institutions are?’ To do that we have to keep spending the money,” Koskinen said.

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