October 29, 1999


        IRS Acknowledges Problems In Y2K
        Preparation


        REUTERS INDEX | INTERNATIONAL | BUSINESS | TECHNOLOGY 


        Filed at 12:39 p.m. EDT

        By Reuters

        WASHINGTON (Reuters) - The Internal Revenue
        Service has told Congress it has experienced some ``trouble
        spots'' in preparing for the Year 2000 computer problem,
        although it is working on contingency plans and could
        manually issue some tax refunds. 

        In a letter sent earlier this month to House Ways and
        Means Committee Chairman Bill Archer, the IRS said its
        records of equipment and software at its offices around the
        country posed a high risk to its Y2K preparation efforts. 

        IRS Commissioner Charles Rossotti wrote that visits to the
        Atlanta and Philadelphia Service Centers and the
        Philadelphia and Pittsburgh field offices had revealed both
        strengths and weaknesses in the inventory records. 

        ``The quality of the IRS's inventory currently poses a high
        risk to the Y2K effort,'' he said in the letter dated Oct. 15. 

        Some computers and software withdrawn from service
        were still in the database while other equipment being used
        was not recorded. 

        ``While there is always an element of risk, and we do have
        some trouble spots in our effort toward becoming Y2K
        compliant, I am confident we will be prepared for the Year
        2000,'' Rossotti wrote to Archer, a Texas Republican. 

        A coding glitch could cause older computers and software
        to mistake the 2000 date rollover as 1900 come Jan. 1
        unless the machines are fixed or replaced. 

        The IRS Commissioner stressed that the agency's returns
        processing systems, both paper and electronic, had been
        made Y2K compliant and successfully undergone so-called
        end-to-end tests in which all parts of the system work
        together. 

        But there is no alternate IRS system to process returns or
        issue refunds in the event of a Y2K failure, Rossotti said. 

        The 10 IRS service centers combined could produce up to
        10,000 manual refunds daily and would be issued to
        taxpayers most in need. 

        If manual refunds were issued, Rossotti said, they would go
        first to taxpayers with IRS-approved taxpayer assistance
        orders, then to people with gross incomes of $10,000 or
        less, and then increasing in increments of $5,000 depending
        on the ability to issue the manual refunds.