WASHINGTON - The multibillion-dollar overhaul of the antiquated IRS computer systems has encountered cost overruns and delays that raise questions about the program's long-term management, according to an audit released Tuesday.

The Treasury Department>)'s inspector general for tax administration said a review of four projects that are part of the broader modernization plan indicated that the IRS and its prime contractor "have been overly optimistic about their timetable" for delivering the changes.

"Further delays could erode confidence in the IRS's ability to deliver modernized systems that are needed to dramatrically improve both internal operations and service to taxpayers," said Pamela J. Gardiner, the deputy inspector general for audit, in a memo to IRS officials.

The overhaul will replace key Internal Revenue Service computer systems, including those containing all taxpayer records, that date from as far back as the early 1960s. Previous modernization programs have failed.

This year, the IRS is planning key steps that would begin moving taxpayer data from old tape drives to modern systems and establish secure communications systemwide.

The audit was released by Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's ranking Republican, Sen. Charles Grassley of Iowa. They said in a joint written statement that the report "raises troubling questions about the agency's ability to manage this undertaking" and said the committee would hold hearings in the spring.

In recent testimony to Congress, IRS Commissioner Charles Rossotti acknowledged that the complexity of the modernization program "involves considerable risk" but that does not mean it will fail.

"We are actively identifying and managing the risks in (the program), and we have not hesitated to make changes in programs when necessary," Rossotti said.

Key findings in the audit:

_In one project, the IRS paid the main contractor, Computer Sciences Corp., $3.9 million for work that was never finalized and eventually canceled.

_A project aimed at allowing tax practitioners and others to conduct business electronically with the IRS was delayed for nine months and had a $4.2 million cost overrun.

_Planning for a project to enable IRS agents to handle corporate taxes took seven months longer than planned and cost about $2.3 million more than expected.

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-- Anonymous, March 06, 2002