Shaking Up the IRS

Because the recently completed budget deal includes so many changes to the tax code, it's unlikely Congress will make major tax policy changes any time soon. But lawmakers do seem ready for some serious debate about shaking up the Internal Revenue Service.

A national commission on restructuring the IRS, co-chaired by Sen. Robert Kerrey, D-Neb., and Rep. Rob Portman, R-Ohio, in June recommended a series of changes, including placing the agency under the control of a new seven-member board rather than the Treasury Department. The Administration is strongly opposed to the idea.

Legislation to implement the commission's recommendations was introduced on Capitol Hill in July. There's already been one hearing on the Portman-Kerrey proposals before the House Ways and Means Committee, and L. Ari Fleischer, a spokesman for the committee's chairman, Rep. Bil Archer, R-Texas, says more hearings and possibly a markup will take place this fall.

An IRS restructuring bill could even be passed and sent to the President as early as March or April of 1998, Fleischer predicts. "Getting the IRS out of people's lives one step at a time," he says, "is a very important step toward the eventual goal of total tax reform."

But William G. Gale, a tax expert at the Brookings Institution, says the IRS is simply a convenient target. "One of the great ironies of all this is that one direction the debate goes is that now Congress will focus its attention on the IRS and claim that they're doing a poor job administering the tax system and neglect to mention the fact that the tax system is a holy mess precisely because of the laws that Congress has passed," says Gale. "The IRS is by no means a perfect agency, but having to administer this tax system, they're starting with one hand tied behind their back."

This article is excerpted from "A Hike in Complexity" from the August 23 issue of National Journal.

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