Hard Times Befall the US Tax Collector

Taxpayers who fret over the possibility of an IRS audit may find some consolation in the fact that this year the taxman is looking over his own shoulder.

Discontent with the Internal Revenue Service has reached a crescendo in Washington, and some officials here are making bold predictions that the agency will be overhauled to improve efficiency and customer service.

Four separate investigations of the IRS are under way or in the offing. The probes have been prompted by wide-ranging complaints about unresponsive IRS service to 111 million callers who want agency clarification about tax forms, and heavy-handed use of IRS authority to seize documents and assets of suspected tax scofflaws.

IRS management has been besieged, too, by revelations that a $4 billion modernization effort, including a comprehensive computer upgrade, still cannot process data as intended.

"There is a lot to be done so that the ordinary person with an ordinary problem can get an ordinary level of advice," says Rep. Nancy Johnson (R) of Connecticut, chairwoman of the House oversight subcommittee, who has been holding a series of hearings into IRS problems.

In addition to the House subcommittee hearings, Congress's Commission to Restructure the Internal Revenue Service has been conducting an investigation since last June. That panel is scheduled to release its blueprint for overhaul this June.

The White House, meanwhile, this week announced its own set of proposals to improve IRS management and to create a permanent Treasury Oversight Board. The administration says the recommended changes are enough to improve the agency, but critics charge that the plan is inadequate.

Some of the harshest criticism has come from Sen. William Roth (R) of Delaware, who chairs the Senate Finance Committee and is likely to lead yet another IRS investigation this spring. Senator Roth says has received overwhelming public support for his request for $300,000 and authorization for his probe, which could come by month's end.

"The fact that all these groups are taking an interest in this matter means there will be action," predicts Roth. "We are going to make sure the IRS is the servant of the people."

Margaret Milner Richardson, outgoing IRS commissioner, says improvements at the agency have gone unreported. The IRS now spends just 54 cents for every $100 it collects, down from 60 cents back in 1992, she says. Moreover, the agency collects 86.5 percent of all taxes due, which she says is an improvement.

While agreeing changes are needed, Ms. Richardson says almost 40 percent of her time has been spent on oversight issues.

Efforts to overhaul the IRS have gained momentum from those who want to scrap the current tax system for something different, such as a flat tax.

Deputy Treasury Secretary Lawrence Summers, who released the Clinton administration's overhaul plan, warns against confusing the two different movements. "What we must not do is attack the IRS in order to promote other agendas," he warned March 17.

But critics say America's Byzantine tax code is the root of the IRS problem. "There are IRS agents who brag they can find something wrong with just about any tax return," says Pete Sepp at the National Taxpayers Union. "They have 20,000 pages of rules to work with."