The Internal Revenue Service (IRS) will follow the example of the UK Inland Revenue and outsource the data processing of national tax records to a third party.
The IRS has sent a 43-page report to the US Treasury recommending that IT companies be asked to pitch for the business, which would include installing and maintaining new systems. One of the reasons for considering outsourcing is that the existing infrastructure is becoming obsolete with replacement parts having to be cannibalised from other machines.
Congress has approved additional funding for a short term systems upgrade to address some of the obsolescence issues, but with long term budgets set to decline, the IRS believes that outsourcing would be a more economically sensible option.
It wants White House approval for the move because of the politically sensitive nature of handing personal data over to a third party and because of the "the potential impact on existing IRS service centres and the government employees whose positions may be in jeopardy."
There are ten IRS tax return processing centres in the US handling 200 million tax return forms a year. These rely on many temporary workers to cope with seasonal demands for tax rebates when US citizens complete their self-administered IRS declarations.
Even if President Clinton?s existing Treasury team approves the recommendation this year, it could be as long as four years before the contracts are in place and the service is handed over to a third party.
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