2013 Citizen Services

Terence V. Milholland

Overhauled IRS’ information technology and tax processing systems, leading to quicker refunds and notices to taxpayers, reduced fraud and better internal management.

During the past five years, Terence Milholland has helped revamp the Internal Revenue Service’s (IRS) aging information technology systems, resulting in faster tax refunds and notices going to taxpayers, more timely account updates, reduced fraud and improved internal management processes.

Milholland, the chief information officer and chief technology officer at IRS, handles all aspects of the IT systems that operate the nation’s tax structure and process 200 million tax returns a year. He manages a 6,800-person organization.

“He inherited an organization that was in a survival mode and took it to world-class mode by implementing new processes that achieve extraordinary efficiencies,” said Julie Rushin, deputy chief information officer for operations. “He’s turned the IT organization from being reactive to proactive.”

Beth Tucker, the IRS deputy commissioner for operations support, said Milholland came to the job with an understanding that IRS not only needs superior technology, it also needs to be “a world-class organization.”

“Terry had a remarkably successful career in private industry, but he has the heart of a public servant who came to IRS to give back to his country. He quickly pulled together an executive team that has truly transformed technology at IRS,” Tucker said.

Milholland’s technology transformation included the introduction of a sophisticated and updated IT system that now delivers daily instead of weekly tax return processing, as well as an upgraded database that has become a central source of trusted data to improve service to taxpayers and enhance IRS tax administration.

“Both initiatives brought numerous advancements to the organization, including quicker tax refunds and payments, as well as helping to resolve issues such as identity theft quicker than ever before,” said David Stender, IRS’s associate chief information officer for cybersecurity.

Tucker said when a taxpayer filed a return or made a payment under the old system, it took a week to show up in their account.

“With daily processing, we can now have accounts updated overnight, which moves the process forward,” said Tucker. “It has been a tremendous help with customer service and at the same time has enhanced our compliance efforts.”

Milholland updated the decade-old eFile tax return filing technology with a modernized, Internet-based filing platform. This new system allows for tax return originators to transmit returns electronically to the IRS in real-time, improving processing times. The modernized eFile system also is better equipped to handle greater volumes of information and more complex transactions in shorter timeframes.

In addition, Milholland is credited with improving information security controls, the reliability of financial data, and the development and acquisition of computer software.

Tucker said that even when faced with large budget cuts, Milholland kept the technology enhancements on track and has made progress under the challenge of having to advance new technology while also maintaining legacy systems until they can be replaced.

“Budgets have decreased significantly, but Terry has been able to continue to move things forward with limited funding,” she said.

Milholland’s accomplishments come after many years of repeated IRS missteps involving a complex, multi-billion dollar Business Systems Modernization program that was begun in the 1980s and was intended to replace the outmoded and largely manual systems. The problems of building new technology systems became so severe that the Government Accountability Office (GAO) placed the IRS business modernization program on its “High Risk List” in 1995, and year after year has documented shortcomings and failures by the agency.

By 2013, however, all that had changed in large part of because of Milholland’s work. The GAO removed the IRS from its High Risk List because the agency had made “progress in addressing the significant weaknesses in information technology and financial management capabilities.” The GAO also found that the IRS was committed to “sustaining progress in the future.”

“All the material weaknesses that existed within the IT realm when he arrived are gone,” Stender said. “Terry has knocked out huge stumbling blocks for us.”

Milholland’s achievements have been recognized outside government. In 2012, the Forrester Group, a global, independent research company, stated that in terms of effectiveness of operations, IRS was above industry standards, compared with many other large and global enterprises.

Milholland came to the job from the private sector as the eighth IRS technology head in 10 years. He said he had to face an employee mindset that the IRS chief information officer, and in his case, the first-ever chief technology officer, wasn’t likely to be around long, and a feeling that progress was impossible.

“I saw this as an opportunity to do a transformation and bring the IT part of the IRS into the 21st century,” said Milholland. “I saw this as an opportunity to serve my country.”