On the Trail of Tax Cheats

THE Internal Revenue Service often has had a bad-guy image for cracking down on average taxpayers who inadvertently make mistakes. But the agency takes on a distinctly good-guy role when it tracks down egregious tax-evasion scams.

After all, those who shun their legal obligation to pay taxes simply put a larger burden on everyone else.

Currently the IRS is probing unreported income in offshore bank accounts tapped by credit and debit cards. By examining credit-card records, it hopes to identify the owners of accounts in tax havens like the Cayman Islands. From its Master Card probes alone, the IRS projects that as many as 2 million Americans may have overseas accounts they're using to hide income. The loss in taxes is some $70 billion a year.

This tax enforcement comes at an apt moment. A government survey found 76 percent of taxpayers in 2001 saying there should be no cheating at all on taxes. Two years earlier, however, the figure was 87 percent. This disturbing drop may be tied, at least partly, to perceptions of the IRS as a less than fair or effective enforcer.

Ferreting out tax evaders who hide money overseas will help alter such perceptions. So will the agency's commitment this year to expanded auditing of tax returns.

It should be noted that the IRS's budget has been sharply reduced by Congress. Maintaining public confidence in this agency is crucial. Congress can set limits on IRS probes, but must provide the means to do its job.