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AT&T Connects the Tax Man

AT&T , which is pushing its managed network services to overcome fading long-distance phone business, has landed the Internal Revenue Service as a customer.

The five-year deal flows through AT&T's Government Solutions division, based in Vienna, Va., and could be worth more than $54 million. Losing bidders were not disclosed.

Under the terms, the telecom giant will design, install and manage a virtual private network that will replace legacy hardware and software and standardize communications technology.

More and more, IRS auditors are working from home or agency sites where they currently may be unable to access the IRS network, AT&T said.

AT&T will provide high-speed access (including cable and DSL) to more than 50,000 remote and traveling IRS workers so they can securely tap agency applications and information stored in government data centers.

A list of subcontractors who will provide network equipment for the project was not immediately available.

Jim McGann, an AT&T spokesman, said the company does not disclose how much business it does with the federal government. However, there is "tremendous opportunity" because of the public sector's emphasis on security and reliability, he told internetnews.com.

This is not the first contract the two have had together. Last year, the IRS awarded AT&T Government Solutions a contract putting it in charge of the agency's toll-free numbers.

Bedminster, N.J.-based AT&T competes with MCI, Sprint and others for large networking and service deals with corporate and government customers.

These services, along with an aggressive rollout of consumer and business Voice over Internet Protocol offerings, are key to AT&T's strategy.

In recent years, the company's long-distance revenues have dropped sharply as customers switched to regional telecoms and national wireless providers, and more recently VoIP offerings from upstarts like its Garden State neighbor Vonage.

The IRS has been trying to upgrade its entire IT structure with the help of Computer Sciences Corp. Earlier this year, both sides detailed some of the reasons that the massive project has been held up.