Sam Corcos and the IRS Mess

I've been writing about the government's data processing troubles for quite awhile now, and particularly since DOGE started to find where the bodies — well, I was going to say "bodies were buried" but that's wrong. The government's data processing corpses aren't buried. They're stinking shambling zombie bodies shuffling through the corridors seeking brains.

Of course, as wild wastes of money are uncovered, everyone and their aforementioned brothers, brothers-in-law, and politically connected people outside government have been screaming, while we regular old taxpayers are saying "God oh God, how did we get in this mess?"

So, Sam Corcos, CEO of Levels, a health startup, and Scott Bessent, secretary of the Treasury, were on Laura Ingraham's show on March 20, talking about data processing at the IRS in particular. 

The IRS has come up before — for example, when Musk and the DOGE boys discovered there were people up to almost 400 years old still active in the Social Security records, which are closely tied to the IRS records ever since the IRS declared that line on the Social Security Card about "not to be used for identification" was no longer operative.

Corcos was brought in to work for the Treasury to look at the IRS modernization program and its operations and maintenance budget. Now, the modernization program is new development — they're attempting to build a more modern system and infrastructure to handle what the Social Security Administration does, while maintenance and operations is the budget that pays for just keeping the existing system running.

Corcos is running a successful startup — have a look at its website. So he has some expertise in software development. He started looking at the IRS systems.

It was interesting, if by interesting you mean "enraging" and "obscene." The IRS has had this ongoing modernization program in operation since 1990 — that after a previous modernization program called Tax Systems Modernization (TSM), which started in 1986 and was finally declared a failure in 1997. Then there was the Customer Account Data Engine (CADE), which was launched in 2001 and terminated as a failure in 2009, having delivered about 15 percent of its planned function.

The existing system, as I've written about before, is based on IBM mainframes and written in COBOL and Assembler — that is, directly as machine instructions.

The current modernization program, according to Corcos, is currently 30 years behind schedule and $15 billion over budget. It's been 35 years in development, and is now "five years away" from completion. And has been since 1996.

According to Secretary Bessent, the hangup is "entrenched interests" like consultants and contractors. Eighty percent of the IRS's $3.5 billion budget goes to outsiders. Bessent says, "That's not efficiency — that's a racket."

Corcos says the top priority is to turn this around. "The IRS spends way more than any private company would on a program like this. We've cut about $1.5 billion from the modernization budget. ... It's about asking tough questions and trimming the fat."

It's easy to blame the government developers, but Corcos says the developers are excellent — it's management that's the issue. "You see contracts — $10 million, $20 million, $50 million — and ask 'Why are we doing this?' Everyone shrugs. ... You cancel it and nothing breaks. Inertia's running the show — it just takes someone who cares to start asking questions."