In a reprise of a contentious debate that swirled around the Internal Revenue Service two years ago, memos by a new watchdog office created to investigate wrongdoing inside the IRS raised questions yesterday about a possible quota system that might distort agents' work.

Parts of the memos seemed to suggest that this time, however, it would be IRS employees rather than taxpayers at risk of unfair numerical goals.

But the head of the new watchdog office, David C. Williams, the Treasury Department inspector general for tax administration, said that was not the point of the memos, saying "we only want to see that the investigations are conducted competently."

In the memos, Williams appeared to set a "performance goal" requiring his agents to investigate 4,000 misconduct cases at the IRS during this fiscal year. But Williams said yesterday the number was not a goal but a "workload indicator" intended to show his field offices how many cases they might have to handle following IRS reforms mandated by Congress in 1998.

Williams acknowledged, though, that the August and September memos to IG employees could have been more clearly written. "If I have a concern, it is the workload indicator was confusing, poorly understood and caused people to have concerns," he said.

He added, "I regret . . . that it created the impression that this was somehow an enforcement statistic for which IRS has been criticized in the past."

Congress created the new IG office to ensure independent probes of IRS employees accused of misconduct. It began operations early this year, replacing an inspections division at IRS that the Senate Finance Committee viewed as too cozy with agency management and reluctant to take up internal probes unless they involved criminal activity.

The IG office was one part of a complex reform bill approved by Congress in 1998 that gave taxpayers new rights when dealing with the IRS, a part of the Treasury Department. During the committee debate on the bill, IRS employees testified they had been mistreated by agency managers and other witnesses complained of abuse by IRS agents.

The memos reflected the pressure that the IG office feels to meet congressional expectations. "Major cases are the most important element in expressing our value to our stakeholders within Congress and the Treasury," Williams wrote his agents.

The notion of numerical goals for employee misconduct investigations, first disclosed by the New York Times, drew expressions of concern from leaders of employee groups yesterday.

"What's important is that employees can be confident that allegations that should be investigated are investigated and that is the only criteria used, and not some artificial number," said Colleen Kelly, president of the National Treasury Employees Union.

"Our concern was in the wisdom of dictating numbers of cases to be worked," said Bob Quigley, president of the Federal Law Enforcement Officers Association unit representing IG special agents. "As it moved down the ranks, it was translated into a quota for each agent."

But Williams said the memos were intended to give field offices "a feel for what is coming at them."

During the last year, Williams said, his office and its predecessor conducted 1,420 probes of agency employees and 1,505 investigations of people who allegedly tried to bribe or threaten IRS employees. They turned back 2,775 cases to the IRS to investigate itself.

"It was everyone's feeling" that the IG should have taken on more of the complaints that were bounced back to the IRS, "so we projected this workload indicator to 4,000, and perhaps as high as 5,000," he said. As a result, the IG office probably will handle about 1,000 extra cases in the coming year, he said.

Defending the use of a numerical indicator, Williams said, "We can't throw our resources into the darkness. We have to have some sense about how to deploy our resources, and that's the value of that number."

Sorting out the numbers can prove difficult, Williams said, because about half the cases involve outsiders--sometimes taxpayers making false accusations against IRS employees--and the rest involve IRS workers who are repeatedly investigated for misconduct. "A small population gets a large number of investigations," he said.

Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) said yesterday he did not believe the IG was creating a quota for employee investigations.

"There must be a process to review all allegations to ensure legitimate allegations are investigated," Roth said. "Without this process, taxpayers and IRS employees alike would be harmed."

CAPTION: Sen. William V. Roth Jr. says he doubts there are quotas.