Feature

The IRS Mess

By From the June 1998 issue

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Some of the IRS reform provisions currently circulating on the Hill have about as much credibility as a Clinton vow of chastity. The House's reform legislation would require an analysis of the complexity-impact of any new tax legislation. This is not a bad idea, but it is ironic to see it overwhelmingly supported by the same Congress that greatly increased the complexity of the tax code with the so-called Taxpayer Relief Act of 1997. That law contains "36 retroactive changes, 14 changes effective August 5, 1997, 69 changes effective January 1, 1998 and 5 changes effective thereafter, and 285 new sections and 824 Internal Revenue Code amendments."

The Senate hearings have at least smoked out the Democrats as unabashed champions of the tax collectors. The nine Democrats on the Senate Finance Committee implored Roth last March to spend half of the April hearings documenting "serious problems associated with taxpayer compliance"—focusing especially on the problem of tax evasion and the day-to-day job difficulties of IRS agents. Senate Minority Leader Daschle whined: "We're sending the wrong message about law enforcement by this incessant concentration on the abuse and not the enforcement." But congressmen are responsible for the injustices that the federal government commits against taxpayers—not for the connivings of private taxdodgers. Besides, there has been no "incessant concentration" on abuses, since the Senate Finance Committee hearings are the first serious oversight hearings on IRS abuses in almost ten years.

Republicans seem spooked by some polls released at tax time showing that most Americans do not favor razing all IRS buildings within the continental United States. At least one of the polls used slanted question to minimize the number of people who claim to have been treated unfairly by the IRS. In any case, the GOP congressional majority seems to have a new standard for action: Any federal agency that is not publicly recognized to be directly violating the rights of at least 50.1 percent of American citizens does not need to be reformed.

Nor is it clear how committed some Republican leaders are to fundamental IRS reform. House Speaker Newt Gingrich seized the issue after last fall's Senate hearings proved to be a public relations success. Yet in an interview with the Washington Times a few weeks after the hearings, Gingrich proposed to "solve" the problem of the excessive 110,000-person IRS bureaucracy by transferring "about 70,000 of those IRS employees to the Border Patrol and drug enforcement." Some politicians see IRS reform as a way, not to decrease the number of government officials with power over other Americans, but simply to redistribute the power among different government agencies.

The Clinton spin-machine is in high gear. Rossotti told the Senate on May 1 that "it is critical that the public have confidence in IRS's ability to fight tax evasion" and promised "quality service to taxpayers." After another week of devastating hearings about IRS practices, Clinton responded in his May 2 radio address by bragging that "now you can call the IRS and get telephone service six days a week, 18 hours a day. Soon it will be 24 hours a day."

Senator Phil Gramm was of a different mood. He told Rossotti at the end of the hearings, "I have no confidence in the Internal Revenue of this country.... I am still totally convinced that the problem is this agency has too much unchecked power." As for the Senate IRS reform bill, he later said, "I am convinced that [it] is inadequate." Is the Republican Congress listening?

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