IRS needs an overhaul Over its head: Making agency more efficient easier politically than rewriting tax code.

March 30, 1997

CONGRESS HAS been making noises about rewriting the federal tax code. Republicans sent President Clinton a letter last month asking him to develop sweeping changes by May 1. It's unlikely they will get what they say they want. For one thing, it is difficult to take seriously the Republicans' call for "no loopholes or special treatment for favored interests." True tax reform would have both parties screaming over gored oxen.

More palatable politically would be yet another so-called Taxpayers Bill of Rights to make the Internal Revenue Service operate more efficiently and fairly. But two such laws since 1988 have not erased complaints about IRS zealotry and mistakes. The agency admitted in January that it has spent $4 billion on new computer systems that don't work. And recently it has been embroiled in a labor dispute over the layoffs of about 2,000 workers.

Many IRS problems predate Commissioner Margaret Milner Richardson's taking over in 1993, and it seems they will remain after she quits in April. The General Accounting Office calls the IRS a high risk for waste, abuse, fraud and mismanagement. Despite privacy questions, outside help may eventually have to be hired to help process tax returns. Revising the tax code could make filing a return simpler, but it won't correct all the agency's woes.

The Clinton administration has already offered some ideas to improve the IRS, but critics say they are inadequate. Congress is supposed to receive its own report on the IRS in June from a study commission. Taxpayers would benefit greatly if politics could be put aside long enough to consider all the resulting proposals and those of the president without politics getting in the way of needed changes.

Congress may want to amend the 1996 Taxpayers Bill of Rights to bring about additional reforms in the way the IRS treats taxpayers.

However, steps beyond that also must be taken to improve the efficiency of the IRS and upgrade its electronic capabilities so there are fewer of the mistakes that occur in handling paper returns. The IRS needs to be torn down and rebuilt.

Pub Date: 3/30/97

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