IRS faces restructuring, retrenchment

WASHINGTON (AP) — As millions of taxpayers scrambled to meet the tax filing deadline, politicians and activists engaged in their own springtime ritual of bashing the Internal Revenue Service and pushing for changes.
Supporters of a flat tax and backers of a national sales tax held events Wednesday ranging from a re-enactment of the Boston Tea Party in Boston to a mock funeral outside the Baltimore IRS office to symbolize burial of the tax code.
But whether big changes were on the way was another question.
“Until the politicians can satisfy the public that they are not going to pay more tax under these alternatives, I think tax reform is dead in the water,” said Lawrence Gibbs, a former IRS commissioner in the Reagan administration.
And Sheldon Pollack, associate professor at the University of Delaware and author of “The Failure of U.S. Tax Policy,” agreed: “I don’t think anyone realistically believes it’s going to happen.”
Perhaps one measure of the public’s mood was the attendance at the “Taxpayer Day of Outrage” rally in Lafayette Park across from the White House. Journalists outnumbered participants at the event, sponsored by GOP strategist Grover Norquist of Americans for Tax Reform.
Still, Republicans kept hitting hard at the tax issue everywhere.
“Campaigns will send out millions of direct mail pieces this year, but the one mailing that will garner the GOP the most support in this election is due back to the IRS today,” said Rep. John Linder of Georgia, chairman of the National Republican Congressional Committee.
House Majority Leader Dick Armey of Texas, and Rep. Billy Tauzin of Louisiana staged their own version of the Boston Tea Party by dumping the tax code — safely contained in a water cooler — in Boston Harbor.
“Americans have had it up to the gills with this tax code and they are prepared to join us in a national movement to beat Washington on this one,” said Tauzin, who advocates a national sales tax. Armey favors a flat tax.
Congress is expected to pass an IRS restructuring bill this year that would provide new rights to innocent people who are targeted for collection of tax debts of their former spouses. The bill also would create a new board consisting of private citizens to oversee the tax collector.
The Senate version of the bill also would suspend interest and certain penalties when the IRS hasn’t notified a taxpayer within a year that he faces a penalty. A Senate vote is expected in early May, but not before the Finance Committee holds four days of hearings focusing on alleged abuses by IRS enforcement agents.
Meanwhile, the IRS and the Clinton administration are working to improve customer service with a variety of initiatives.
“We are not putting a new face on the IRS,” Commissioner Charles O. Rossotti told the National Press Club on Wednesday. “We are fundamentally changing the IRS. We are facing up to our problems and our challenges.”
The IRS toll-free telephone help lines were open 16 hours a day during most of the tax filing season, and this week the lines were staffed 24 hours a day. IRS agents will receive conflict resolution training this year to help them more courteously handle tax collections. Ultimately, IRS workers’ performance evaluations will measure the quality of service provided to taxpayers.
Rossotti, who has led the IRS since November, was candid about the agency’s problems, such as the $1 billion dollar effort to reprogram its computers to recognize the year 2000.
“Twenty-one months from now, there could be 90 million taxpayers who won’t get their refunds, and 95 percent of the revenue stream of the United States could be jeopardized,” he said. “If we don’t fix the century date problem, it’s going to be a scenario that’s very dire indeed.”
Rossotti and other IRS officials have said that they are on target to fix the computers by Jan. 1, 1999, but that the problem remains substantial.
He was buoyed by a new poll from Louis Harris & Associates Inc. that indicated 76 percent of people who had direct contact with the IRS said they were treated fairly.
Politicians didn’t have a corner on Tax Day as a springboard for street theater. A modern rock station near Washington, D.C., WHFS-FM, gave free concert tickets to two brave listeners who agreed to show up in front of the IRS headquarters — naked — to pass out doughnuts as people arrived for work.