ABSTRACT
The U.S. Internal Revenue Service (IRS) is working on a taxing problem that has very little (and yet everything) to do with taxes. That problem is a series of large-scale information technology (IT) projects focused on agency modernization. In the late 1950s and early 1960s, the IRS invested heavily in information-processing equipment to automate a variety of data-processing functions. Perhaps the most critical component of the resulting design was the IRS “Masterfile.” Over time, many additional system components arose around the central Masterfile, creating an elaborate configuration of systems and processes. Since the late 1960s, the IRS has expended considerable effort and resources on modernization. Most of those efforts ended in some of the most widely cited failures in IT project management history. While the IRS improved existing tax systems through software and hardware replacements, elements of the IRS Masterfile are reportedly still in use. This creates one of the most significant and complex challenges to the agency today: how to modernize legacy systems without risking organizational failure.
