House approves new IRS user fees

September 28, 1994|By New York Times News Service

WASHINGTON -- In a move likely to make taxes more taxing for millions of Americans, the House approved a bill yesterday allowing the IRS to collect up to $119 million in user fees that the agency would have a bureaucratic incentive to impose. Passage within days by the Senate is considered a formality.

Within months, the Internal Revenue Service expects to impose new levies on individuals and businesses, which it can keep rather than turn over to the Treasury.

Spokesman Frank Keith said, however, that the IRS did not intend to apply these still-undetermined charges to such common agency services as supplying forms or offering advice over the telephone.

"The fees we will be implementing will not be mission-related," Mr. Keith said. The IRS, he explained, would charge taxpayers only when they demand "special services."

But even if the agency, which is pressed for money to process returns and modernize its computers, resists the biggest targets, more than 13 million taxpayers are likely to be affected by charges for two items alone next year.

About 11 million who file electronic returns would pay for the IRS to certify that a refund was not subject to a charge for unpaid debt, allowing a taxpayer to seek a loan against the refund.

A further 2.5 million filers would pay to obtain agreement to pay the tax they owe by installments.

These have been regarded as likely sources of extra money since the Clinton administration proposed last winter, in its 1995 fiscal year budget, that the IRS be authorized to collect $8 for refund certification and $18 for installment deals.

User fees have become increasingly popular since the early years of President Ronald Reagan's administration, but in most cases agencies collecting them, such as the Securities and Exchange Commission, have been required to turn the money over to the Treasury. The appropriations bill passed by the House of Representatives yesterday, in contrast, allows the IRS to keep as much as $119 million for itself.

Though part of the Clinton budget plan, the matter of user fees for the IRS has attracted little attention and less opposition.

Last week, however, Rep. Ernest Jim Istook, an Oklahoma Republican who had sought to remove such fees entirely from a broad appropriations bill, won a reduction to $119 million from an initial $147 million.

The bill requires that the fees be set no higher than the cost of providing the service, officials noted, implying that the figures first proposed for the two items last winter would be reduced.

George Guttman, a Washington tax lawyer, expressed dismay at the prospect of an array of new IRS user fees, especially charges for refund certification and installment agreements.

"I think they are bad tax policy," he said, declaring that certification penalizes people who help the IRS by filing electronically and that fees for installments discourage hard-pressed taxpayers who come forward and try to comply with the law.

Of the latter group, Mr. Guttman added, "The implicit message might be 'Don't work it out, and let the IRS come find you.' "

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