IRS Reform Moving, But More Slowly
Sen. Roth says doing it right is worth the extra time
By Craig Staats/AllPolitics
WASHINGTON (April 13) -- When the House of Representatives approved its Internal Revenue Service reform bill (HR2676) on a lopsided 426-4 vote last November, it looked as though Congress might move quickly this year to revamp what is the probably the most reviled government agency.
There was bipartisan momentum for change, thanks to a commission's recommendations and last fall's vivid Senate hearings about the tax agency's sometimes abusive, heavy-handed treatment of people.
But legislative progress has slowed since then because Senate Finance Committee Chairman William V. Roth Jr. says it's worth taking enough time to do the job right.
Late last month, the Delaware Republican offered an expanded version of the IRS proposal, different enough from what the House passed to throw the outcome into doubt.
Roth said his expanded version of the House bill represents real reform, and it cleared the Senate Finance Committee on a 20-0 vote on March 31.
Roth has said he expects final action on the bill this spring, but to critics who were hoping to pass legislation by the April 15 tax deadline, he asks, what's the rush?
When Sen. Bob Kerrey, the Nebraska Democrat, suggested the Senate shouldn't let the perfect be the enemy of the good in drafting IRS reform, Roth asked, "Why?"
"To rush, as Congress has before, is to rob the taxpayer and
employees of the IRS of the reform and protections they need," Roth said. "To rush in an effort to hit an artificial deadline would require -- and my good colleague Senator Kerrey knows this -- us to water down the reform this bill
contains." [Read Roth's statement].
What Congress and the administration are debating is how the IRS does its job, what constitutes proper oversight, and what protections taxpayers should have. There are separate debates underway on some more fundamental issues, including tax cuts and a simpler tax code.
Two different approaches
The House IRS reform legislation was spearheaded by Ohio Rep. Rob Portman, co-chairman of the National Commission on Restructuring the Internal Revenue Service.
The measure would form an 11-member oversight board, with eight members from the private sector; shift the burden of proof to the agency in disputes that reach trial in tax court; protect taxpayers from liability accrued by a former spouse; and make it easier to sue the IRS for wrongful pursuit of unpaid taxes.
After some early opposition over the question of an oversight board and its composition, the Clinton Administration signed on to the legislation. "At a certain point," a senior administration official told TIME, "the avalanche is going to happen, and you have a choice: stand in the hut and get crushed or get outside in the most elegant manner possible."
Roth's proposal goes farther than the House-approved version and would cost more, an estimated $16.3 billion over 10 years.
According to Roth's office, his legislation aims to: increase oversight of the IRS to prevent abuses; hold IRS employees accountable for their actions and reward employees who treat the taxpayer fairly; and ensure taxpayers are treated with fairness "by creating a whole new
arsenal of taxpayer protections."
Those steps include making the Taxpayer Advocates office independent of the agency; giving the IRS commissioner the statutory authority needed to restructure the agency; requiring the IRS to
terminate employees who commit perjury, falsify documents, or violate the
rules to retaliate against a taxpayer; ensuring that innocent spouses are responsible only for their own tax
liability; suspending interest and certain penalties when the IRS does not provide
appropriate notice to a taxpayer within one year after a return is filed; and ensuring due process in collections activities.
Roth's bill would cost an estimated $6.5 billion in its first five years, but some $9.8 billion in the next five years.
Democrats on the Senate Finance Committee also support Roth's approach, but have questions about how to fund the legislation, and they have attached an amendment that would guarantee the Treasury secretary a seat on the oversight board.
A taxpayer-friendly IRS?
In advance of congressional action, the Clinton Administration wants to make Americans' dealings with the IRS simpler and less painful, too.
Last month, Vice President Al Gore unveiled 200 customer service recommendations from a report called "Reinventing Service at the IRS."
Gore, who highlighted the report at a White House event, called the recommendations "the next critical step" in improving the IRS and creating a new culture of customer service within the tax agency.
The 92-page report, prepared as part of Gore's "reinventing government" campaign, is the result of a 10-month study that drew on expertise of IRS workers. It says that many of the improvements can be made within the IRS' existing budget, while others will require new money.
One of the most far-reaching proposals would change how IRS workers are evaluated -- to reward them for good customer service instead of by the numbers of cases processed, which can lead to abuse of taxpayers.
"IRS performance measures are production driven, overvalue enforcement, focus on isolated steps ... and may inadvertently encourage unfair treatment of taxpayers," the report says.
It notes the IRS banned use of enforcement statistics, such as dollars collected, to gauge performance of IRS district offices. Instead, the report recommends a new evaluation tool that rates employees on customer service, employee satisfaction and "business results."
The report also calls for simplifying IRS forms, notices and letters; giving IRS field executives authority to issue one-day "emergency tax refunds" in hardship cases; adopting new technology to ensure telephone calls are answered faster and more accurately; and improving face-to-face service.