Internal Revenue Service Commissioner Roscoe L. Egger Jr. and the agency's chief counsel are planning to spend $85,000 to remodel and redecorate their offices.

"As far as I'm concerned, this office, because it is the senior office of the IRS, ought to reflect an appropriate executive-level atmosphere," Egger said. "The place looks shabby the way it is."

President Reagan, two days after taking office, told his appointees to "set an example by avoiding unnecessary expenditures" in setting up their offices. He exempted "reasonable and necessary cleaning, painting and maintenance or structural changes essential to the efficient functioning of an office."

A study last year by the Chicago-based Better Government Association found that Reagan's department heads subsequently ordered more than $350,000 worth of new furnishings, including $118,000 for Commerce Secretary Malcolm Baldrige's suite. Robert P. Nimmo, head of the Veterans Administration, later came under fire after $54,000 worth of work was done on his offices.

At 1111 Constitution Ave. NW, Thym Smith, assistant to the IRS commissioner for public affairs, said the remodeling will be funded out of the current appropriation.

"We are so sensitive to the taxpayers, because those are the people we serve," he said. "We don't want people to think that's where our taxes went to -- the commissioner's office. I bet it will be 30 years before they do the remodeling again."

Egger has ordered $6,517 worth of blue carpeting to replace his beige carpets, 10 mahogany and leather arm chairs, at $5,650, to replace white modern ones, and a new $1,966 conference table.

Egger ordered an additional door for his secretary installed at a cost of $4,015. He ordered a remote-control device for $886 so that he can open his door from his desk.

Egger also requested a new and expanded kitchen for his suite. It will include a $1,213 microwave cooking center, new cabinets costing $3,596, and a dishwasher, refrigerator, garbage disposal and hot water heater costing a total of $1,296. The existing kitchen has an electric range, under-the-counter refrigerator and cabinets.

The General Services Administration estimates that it will cost an additional $15,000 to break through walls to expand the kitchen.

The offices of the agency's chief counsel, Kenneth W. Gideon, are also being reconstructed, at a cost estimated by GSA at $45,000. Gideon plans new carpeting and furnishings, but the items have not yet been purchased.

GSA still has to give final approval to the plans and could reject them, according to officials at both GSA and IRS. In the past, GSA generally has gone along with remodeling requests of presidential appointees. In any case, the IRS has already spent $21,283 on Egger's appliances and new furnishings.

Egger, a former partner in the Price Waterhouse & Co. accounting firm who was appointed by Reagan last year, said the work is necessary and "modest" in cost. He said his chief counsel's office needs reconstruction because of the addition of a deputy chief counsel.

Egger said he needs an expanded kitchen because the existing one is not large enough to make meals for himself and official visitors. The meals are prepared by Egger's secretary or a caterer, or are brought from the IRS cafeteria, all at Egger's personal expense.

"I have breakfast once a month with the chairman of the IRS oversight committee on the Senate side," Egger said, referring to Charles E. Grassley (R-Iowa), a member of the Senate Finance Committee. "The last time he was here, he didn't say a word, but they his eggs were cold."

Egger said he personally bought some of his own furniture from Price Waterhouse because of difficulty in finding furniture through GSA. "It's not being done for personal preference," he said.

GSA regulations say, "As long as an office is in good repair and suitable to the function of the executive position to which it is assigned, it is GSA's policy to discourage preferential modifications with a change in occupant."

But a GSA official noted, "Somehow government agencies insert in their justification that [remodeling] is needed for the mission of the agency. We have a great deal of difficulty arguing against that."

The regulations permit a kitchen of no more than 30 square feet for agency heads such as Egger. Egger's new kitchen will have 66 square feet, according to the IRS.

James G. Whitlock, GSA's assistant regional administrator, said IRS officials told him the expanded kitchen could be considered a substitute for a 200-square-foot dining room, to which Egger is entitled under GSA rules. He now dines at his conference table.

"The IRS pleaded their case on the basis of no dining room," Whitlock said. "That's not an unlikely trade-off. I don't consider it to be illegal." The plans do not appear to be "ostentatious or outrageous," he said.

Lee Keller, chief of the IRS national office facilities branch, said Egger's present kitchen is a "safety hazard" because it is so small that people crowding into it could spill coffee on each other. "One of the things we try to do," he said, "is avoid injuries, especially on the third floor," where the commissioner has his office.

An official said counsel Gideon had been given several plans that would have provided a new office for his deputy and two additional people without rearranging the entire suite. However, Gideon, a Texas lawyer, said this week, "We felt it was important that my deputy be right next to me."