The IRS has had a big headache for a decade, and it's called CADE, the Customer Account Data Engine.

It's a modernization program intended to replace the legacy Master File that still relies on computer tape, a program developed in the 1960s. It cost the government millions of dollars to build CADE, and so far this year, the system has handled only 39 million tax returns, far less than the 127 million individual income tax returns processed each year.

The Government Accountability Office disclosed last week that the IRS has halted development of the project. It didn't say why or for how long, but this is just the latest obstacle in the path to making the IRS completely electronic.

"Future growth is uncertain, given that IRS has stopped work on CADE while rethinking its strategy for managing taxpayers' accounts because of concerns over increasing complexities in system development," the GAO said.

That was the bad news in the latest GAO report. There was some good news, too. Electronic filing has grown dramatically--91 million taxpayers, or 72 percent filed online. That continues to grow at a fast pace, up from the 20 million who filed electronically in 1999.

But the IRS modernization program has been a long time coming. It's been much harder than other modernization programs in government, and it has had many false starts. Tax collection is just about the most important task facing government, and in this technological age, it must be done efficiently. The big question is...how?

For more on this IRS setback:
- check out this Government Computer News article