Feature

The IRS Mess

By From the June 1998 issue

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Once the furor over the Senate hearings last fall made it clear that some IRS reform was inevitable, Clinton administration officials moved to claim credit for the parade—and the charades continue. On March 18, Vice President Gore announced a 200-step reform to make the IRS the friend of the American people. The Clinton-Gore IRS Reinvention report is full of platitudinous recommendations such as "upgrade technology to improve customer service" — "promote one-stop service on a world class web site on the Internet" (the site is slower than a snail race) — "treat taxpayers as customers" —"build a system that focuses on Customers" —"develop a new Mission Statement" —"measure performance on the Right Things" —"foster a family-friendly workplace" and "Create an Ideas Advocate!' Some of these reforms have already been implemented, while others are the same reforms every administration promises in response to bad publicity about IRS abuses.

Reform Action #C103.6 should inspire civil servants everywhere: "Ensure an adequate supply of forms and materials are available to allow employees to do their jobs." The Gore Reinvention folks may as well have proposed to make sure that employees turn on the lights when they come to work each day.

The Gore Reinvention package is important only because it is a key wedge in the Clinton administration's strategy to derail any reform that would actually decrease the IRS's power over American citizens.

The IRS's image is also rebounding thanks to the PR skills of its new commissioner, Charles O. Rossotti, once a McNamara whiz kid during the Pentagon's body-count glory days. (In his radio address on May 2, President Clinton falsely claimed that Rossotti had spent his entire career in the private sector.) A management consultant before becoming IRS boss, Rossotti is expected to lift the the agency's modernization out of chaos. (IRS officials admitted in testimony last year that the $4 billion spent on modernization in the last decade has been largely squandered.) However, the GAO reported in late February that the IRS's modernization blueprint "does not provide sufficient detail and precision for building or acquiring new systems.... Information that is critical to effective and efficient systems modernization is not yet known, essential decisions have not yet been made, and needed actions have not yet been taken." Rossotti is launching another internal reorganization of the IRS—the 30th the agency has enjoyed since 1952. Tax Notes's George Guttman observes: "Using the past 15 years as a guide, one could conclude that IRS reorganizations are a wonderful way to create the illusion of progress while producing confusion, inefficiency, and demoralization.... Overall, there is no sense at the agency that those changes have produced positive benefits."

Some in the Washington press corps are rallying to the IRS's side. After Sen. Roth announced plans for a second round of IRS-horror-story hearings, the Washington bureau of the Wall Street Journal weighed in on March 31 with an article headlined: "New Round of Senate Hearings On Taxpayers, IRS Risks Overkill." That same week in the Washington Post, reporter Albert Crenshaw pointed out: "Although Roth says his office has received thousands of complaints from taxpayers who say they have been mistreated, it would take a million taxpayers before even one percent had complained." Apparently, anything less than a million complaints does not count. The Post, disdaining proposals to rein in IRS power, declared: "In the long run, more taxpayers will probably benefit from the envisioned management improvements than from the new taxpayer rights." After Rossotti testified on May 1, Crenshaw filed a story overflowing with frets from unnamed critics that the reform legislation could dangerously weaken the IRS.

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