Everson said the IRS is moving quickly to fix the problem with the EFDS system.

CSC declined to comment on the matter to Computerworld. But spokesman Chuck Taylor told Govexec.com that company is "working closely with the IRS to review options and execute a plan that ensures the legacy system is operational for the 2007 filing season." CSC is one of three companies the IRS hired to update EFDS, Taylor said.

"The IRS continues to rely on a contractor that for the past two filing seasons couldn't deliver what it promised and accepted $20.5 million to deliver," Sen. Chuck Grassley, (R-Iowa), chairman of the Committee on Finance, said in a statement. "Because of this contractor, the IRS's poor oversight of that contractor, and the IRS's own poor judgment, the IRS lost as much as $320 million over this botched project. That's money down the drain."

He noted that the IRS had serious concerns about the implementation of the new EFDS, yet trusted CSC to make it work, Grassley said.

"That trust was misplaced," he said. "I might have more patience if this were the first time the IRS had a bad experience with a computer contractor, but this isn't the first time. It's far from it.