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On the IRS pursuit of revenue and service

By Jeff Flock
CNN Correspondent

April 13, 2000
Web posted at: 12:32 p.m. EDT (1632 GMT)

This news analysis was written for CNN Interactive.

The IRS Web site, www.irs.gov, offers forms and tips for e-filing  

In this story:

Would you like smiles with that?

The e-tax man cometh



OGDEN, Utah (CNN) -- The deluge looms. In Fresno, California, Andover, Massachusetts, Austin, Texas and at the other seven Internal Revenue Service processing centers, they await the coming onslaught of paper.

If tradition holds, the biggest flood of returns -- almost a third -- will come in the next two weeks, immediately following Monday's deadline (extended from April 15 this year because the big day falls on a Saturday).

And these are the returns the IRS is most eager to get, because unlike most of those it has received up to now, the ones that arrive after the deadline tend to contain checks from people who owe money and were waiting until the last minute to pay.

In the midst of the lull before the storm, the IRS let CNN visit its busiest processing center -- the one in Ogden, Utah -- to gain some insight into the new IRS mindset and watch some of its 5,000-plus employees sort, file and enter returns into the system.

The IRS processing center in Odgen, Utah  

As the Internal Revenue Service enters the new millennium, it is trying to be as much about service as revenue. In other words, it is trying to balance its use of the carrot and the stick.

Would you like smiles with that?

IRS Commissioner Charles Rossotti recently testified to Congress about the 2000 tax-filing season.

He talked about the IRS 24/7 phone line (800-829-1040) which gives taxpayers access to a live person any time, day or night. He trumpeted the Saturday service at IRS taxpayer assistance centers, and problem-solving days where taxpayers can bring in what amounts to a mess and have the IRS help them figure it out.

Rossotti's testimony did not mention the numbers of audits planned or performed. It also left out how much the IRS projects it will recover from tax scofflaws.

Since the public outcry over an allegedly unresponsive IRS sparked Capitol Hill hearings in 1997, the agency began shifting employees from enforcement to duties such as answering more taxpayer phone calls and processing returns more quickly.

"Resources devoted to critical compliance and enforcement programs have declined by 20 percent over the past five years," Rossotti told Capitol Hill.

 

As a result, individual chances of an audit have shrunk. As recently as 1996, 1.67 percent of all returns were audited. Last year, it was just 0.9 percent. Good news, at least for the people who like to, as one IRS tax analyst put it, "push the envelope" of propriety when filling out their return.

Bottom line: The chances of getting caught pushing the envelope these days are reduced, which is not such good news for those who pay their taxes by the book. To them it's just not fair.

"We believe that by educating taxpayers and treating them well, the vast majority will comply," said Richard Creamer, director of the Odgen processing center.

Last year the IRS collected $1.9 trillion from U.S. taxpayers. But since Congress barred the ultra-intrusive audits the IRS used to measure compliance, the agency has had no way of determining how many people do actually pay what they owe according to the tax code.

Recognizing the need to maintain a tax system that people believe will catch cheats, the IRS requested $144 million in its 2001 budget request to hire an additional 1,633 people, including more than 600 auditors and tax collectors.

The e-tax man cometh

It's paper, paper everywhere for thousands of IRS workers  

But the biggest boost to taxpayer compliance may come by way of the Internet.

Last year, the IRS received a total of 154,216,676 returns. Of those, 124,887,136 were filled out the old-fashioned way: On paper, by hand.

The IRS Restructuring and Reform Act of 1998 sets the goal for at least 80 percent of all returns to be filed electronically by 2007. If that happens, it will take just a fraction of the current staff to process.

At the Ogden center, it took more than 5,000 people to process 17 million returns last year; it took just 34 of those people to handle the 5 million returns received electronically.

And what will happen to all those thousands of those soon-to-be-obsolete IRS employees who will no longer have to push paper? All the mail-cart pushers, sorters, form-checkers, data-entry clerks?

One alternative would be to shift those job positions to compliance: More people to look over electronically filed returns for red flags such as inflated deductions, fuzzy calculations on stock gains and other dubious tax information.

"If you're going to be 'creative' on your taxes, do it now," said one IRS employee.

In Ogden, industrious IRS employees think that one day soon it will be a very polite and efficient IRS that also has the resources to make sure all taxpayers are paying their fair share.


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CNNfn: Tax Season message board

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RELATED SITES:
U.S. Internal Revenue Service
IRS Electronic Services
1040.com
e1040.com
Tax and Accounting Sites Directory

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