Reshaping IRS: a Quarrel Over Private Board

Tax collectors have never been popular throughout history. Luke's Gospel records that Zacchaeus, a tax collector, was labeled a "sinner."

Few people would apply that label to modern-day tax agents, but in the United States, there is no shortage of frustration with the tax agency itself, the Internal Revenue Service.

Uncle Sam's tax enforcer is now under siege in Washington.

A bipartisan congressional panel recommended in June a large number of reforms for the IRS. Some aim to make the taxpayer's job of filling out forms simpler.

But the most controversial proposal of the National Commission on Restructuring the IRS is that administration of the agency be taken away from the Treasury and turned over to a private-sector board of governors. The Treasury would be left deciding with Congress only tax-policy issues.

The issue has become a turf war, with the Treasury defending its domain in speeches and hearings. Four congressional committees plan hearings in September on bills implementing reforms. A potential presidential veto lurks in the background.

Former IRS Commissioner Donald Alexander opposes the plan for basically the same reason as the Clinton administration.

The corporate executives likely to hold the seven private-sector board seats (two more seats would go to the Treasury secretary and a Treasury union representative) would have a conflict of interest between their company and IRS obligations, he figures.

Mr. Alexander recalls being "leaned on" by several CEOs when he headed the IRS during President Nixon's time.

"General Electric's taxes would go back down to zero if [CEO Jack] Welch were on the board," says Alexander, now a tax lawyer at Akin, Gump, Strauss, Hauer & Feld in Washington.

The White House plans to announce its own legislative plan soon. And it has been pushing through preemptive changes at the IRS.

Some IRS reform is seen as likely, perhaps even this year. It would be the first comprehensive reform since 1942.

Key goals include:

* Providing better service to taxpayers. Only 51 percent of calls to the IRS for help on their taxes were even answered this tax season. But that is up from 20 percent in 1996.

* Making tax collection more efficient - a need highlighted by the failings of its multibillion-dollar computerization program. A majority of the panel thought corporate brass would do a better job easing the filing process.

Another change many Americans would cheer is cutting the complexity of the tax system. Reckoning the many deductions, credits, and exceptions gobbles up taxpayer time as well as money. But the complexity is mostly introduced by the lawmakers, beyond the reach of the IRS.

For now, the agency has a huge task: rounding up 95 percent of the $1.6 trillion in revenues going to Washington and processing 200 million tax returns (twice as many citizens pay taxes as vote).

Shirley Peterson, IRS commissioner at the end of the Bush presidency, cheers the commission for urging a five-year term for the commissioner and a three-year IRS budget. This will build continuity and stability.

But Ms. Peterson, now president of Hood College, Frederick, Md., dislikes the idea of a nine-member, primarily outside, board.

Donald Kettl, a Brookings Institution scholar, holds that the plan would be unconstitutional.

Alexander, who stood up to Nixon's effort to use the tax returns of his political enemies, also dislikes the Clinton plan for a larger board of only administration officials

Brian Besanceney, spokesman for commission co-chair Rep. Rob Portman (R) of Ohio, describes that plan as "status quo." It would "fail to solve" IRS problems and give political employees control.

Proposed IRS Reforms

Key changes proposed by a congressional commission on IRS reform:.

* Enable taxpayers to resolve problems with only one phone call.

* Create a nine-member board, including private business executives, to oversee operations.

* Extend the April 15 tax filing deadline to June 15 for people filing electronically, as an incentive to eliminate paper tax forms. Extend deadline for paper filers to May 15 to smooth IRS work flow.

* Avoid mixed messages from Congress through regular meetings of committee leaders involved in overseeing the IRS.

* Stabilize the IRS budget for the next three years so it can plan for modernization.

* Redesign training, incentives, and salary structure to attract qualified executives.

* Increase taxpayer rights, including the right to sue the IRS for wrongful actions.

* Consider evaluating tax complexity for each tax bill put before Congress.

* Have IRS officials explain impact of proposed laws to Congress.