The IRS: A Changed Agency? |
With Washington Post columnist Al Crenshaw
Tuesday, February 29, 2000 at 1 p.m. EST
Two years after Congress and the nation focused on the IRS' failings at customer service, the agency has made few visible changes. Now, it is swamped with taxpayer claims for “innocent spouse” relief and faces Congressional criticism over its inability to collect taxes that are owed.
So, will it ever be a kindler, gentler, yet effective, agency?
Washington Post personal finance columnist Al Crenshaw will be live to answer your questions at 1 p.m. Tuesday. But please, don't come with your "how to" tax questions. We've got a message board for that.
Al Crenshaw: Hello all. It has been more than two years since the famous Senate hearings that cited problems at the IRS, including a number of instances in which taxpayers claimed to have been abused by the agency. The new IRS commissioner, Charles O. Rossotti, has promised to fix the agency, but warns that it will take time. I'll be happy to answer your questions about the agency and what I know of how it is coming, so fire away. Try to keep it to agency questions, please, rather than specific tax questions. Lets leave those for the CPAs.
What do you know about the additional IRS agents proposed in Clinton's FY2001 budget? How many agents will it add? How much will it increase the percentage of returns audited?
Al Crenshaw: President Clinton's budget would add several hundred agents. But remember the IRS has been losing its most senior agents in large numbers in recent years, and with little increase in its budget recently hasn't been able to replace them. This should reverse that -- assuming Congress agrees -- but it will take time to train the folks and then for hem to gain experience. Audit rates should rise, but it'll be a while before any real effect is visible.
I know IRS is trying to be kinder and gentler, or at least that's what the Commissioner wants, but I've often wondered why IRS refuses to regulate Enrolled Agents, especially those who handle or direct refunds due their clients. Many years ago, a large national preparation service simply lost my return, and neither filed for me nor told me. That took 3 years to correct! When IRS finally acknowledged that I was not culpable, I asked to file a complaint against the tax preparation franchise. The IRS Officer told me that the IRS has never, in its history, disenrolled an Enrolled Agent except for certain disqualifying criminal convictions. With the growth of electronic filing and refunds, this problem is undoubtedly becoming more common.
Al Crenshaw: Dealing with incompetent or even dishonest preparers is a longstanding problem for the IRS. Agency people tell me they are anxious to do something about it, but given their manpower and budget constraints it just keeps getting pushed back. Right now, in fact, they have lists of problem preparers, but mostly they just give those prepares' clients' returns extra scrutiny.
When I call the IRS with a tax question, 5 people give me 5 different answers. For instance, my hardwired internet connection is for business at home. 2 agents said they didn't know if it was deductible, 2 more said it definitely was, and another said definitely not. How is the IRS going to improve customer response and make what representatives tell "customers" mean something.
Al Crenshaw: As Thomas Wolfe wrote of Brooklyn, no man living knows it through and through. The same is true of the tax code. The IRS is frantically trying to train people -- they devoted more han a million person hours to it last year -- but getting people up to speed on some many different issues is very hard. Their new organization is supposed to carve the taxpaying public up into groups so that their questions get referred to specialists in their field. That way they won't have to try to teach every phone answerer the whole code. But like most of their other reforms, that is just now getting under way.
Does anyone blame this downward trend in IRS collections and revenue on the investigation by Senator Roth and his committee. It seemed very politically motivated and I don't know if they actually knew the "facts" of each case they reviewed. They seemed to want to demonize all the IRS workers, not just the few that were found to be abusive.
Al Crenshaw: At a House subcommittee hearing this morning, several members said they have been hearing from IRS workers about low morale. This is in part the result of those hearings, but also a response to the new law that allows the agency to fire a worker almost summarily for a variety of infractions -- the so-called 10 Deadly Sins. However, some of the IRS workers who testified in those hearings tell me they are genuinely hopeful that at the end of this long process they will be better trained and better equipped and just maybe the agency will really get better.
Mt. Rainier MD:
I don't work for the IRS, but I have a fellow sympathy for the good people there, being a fed myself. I hate the way a number of congressmen verbally tar and feather the IRS for trying to enforce the tax code that Congress wrote. The worst part about doing taxes is how incredibly complicated it is - but the IRS is not guilty of that!
Al Crenshaw: It's no mystery why members of Congress like to refer to the tax laws as the "IRS Code," instead of the Internal Revenue Code. It implicitly shifts responsibility for problems in the law onto the agency. There is widespread agreement that the tax law is much too complicated. Congressional staff try to anticipate every possible "abuse" and head them all off, and members love to use the tax law for social engineering. It would be nice to get away from that, but it probably won't happen -- we in the press love to write about abuses, and on the social front, once a subsidy gets into the law, it acquires a constituency and is very tough to root out.
How much real progress do you think has been made since the new Commissioner took over two years ago? Looks like much energy and money plowed into reorganizations, etc., but little real benefit that taxpayers can see.
Al Crenshaw: I think there has been only a small amount of actual progress. The agency is so strapped, and its equipment so old, that getting through Y2K ate up whatever resources it had beyond getting returns processed last year. The best hope is that, with Y2K out of the way and a possible budget increase, that real change will become visible in the next three or four years. We'll see. Rossotti is not the first commissioner to acknowledge problems and promise to solve them if he just gets the time and money.
Regarding a previous tax code question, perhaps the mere fact that millions of man-hours have to be devoted to training people on it and that no one knows it in its entirety, says something about the code. Perhaps there's a case for a simple one rate tax, as much as I hate to give credit to Steve Forbes. maybe vastly reducing the complexity of the code - how many thousands of pages it it? - will make the IRS a little less cranky and vicious. "The simplest answer is usually the correct one." Perhaps I'm too simpleminded, but it's just an observation.
Al Crenshaw: The notion of a very simple code is appealing, but when most people start to think about what it would really mean they start wanting exceptions -- keep the mortgage interest deduction, the charitable contribution deduction, etc. And of course many people think the "rich" -- defined as anybody with more money than me -- should pay a higher rate. Before long, you're back where we are right now.
What do you think about this new IRS Oversight Board comprised of private citizens? Do you think they have any real power?
Al Crenshaw: The Clinton administration has shown little enthusiasm for the oversight board. The Treasury opposed it at first and then gave in, but only now are the nominees finally being named. Backers drawn an analogy to a corporate board of directors, and I think that's appropriate. Like corporate boards, some of which are very active and some of which are mere rubber stamps, I think the oversight board might be helpful but more likely won't do very much.
Thanks everybody. Taxpayers and tax collectors both have tough jobs under our system. Lets hope that the IRS restructuring really lives up to its billing because not only will that make honest taxpayers' lives easier, by nabbing the cheats the agency can hold down what we have to pay.
© Copyright 2000 The Washington Post Company