Treasury: Let Us Cut IRS

Treasury Department officials told a Senate panel Thursday that they want to suspend civil service protections at the IRS that they say prevent them them from holding IRS managers and employees accountable for results.

Testifying before the Senate Governmental Affairs Committee, Deputy Secretary of the Treasury Lawrence Summers said when a new, management-oriented IRS commissioner is chosen, Treasury "will work to give the new commissioner the flexibilities and tools he or she needs to effect change and to recruit a first-rate management team."

Summers said the department will work with Congress and the National Treasury Employees Union to draft legislation that will modify civil service rules in the IRS.

"If legislation is passed, employees of the IRS, as in any well-managed business, will be held accountable for results," Summers said.

The Senior Executives Association has already blasted a Treasury proposal to loosen restrictions on moving career IRS executives out of their jobs.

The increased flexibilities are part of a five-part plan Treasury unveiled to restructure the IRS and improve its business operations. The other parts are:

• Institutionalize Oversight. Treasury will ask the President to issue an executive directive to make the agency's Modernization Management Board permanent and expand its powers. Summers also said Treasury will create a "blue ribbon advisory committee" of private sector business leaders to suggest ways IRS can improve its operations. Sen. John Glenn, D-Ohio, questioned the creation of another advisory commission. "We can't get people in government smart enough to do this?" Glenn asked.
• Reform Budget Procedures. Treasury will try to get Congress to allow IRS multi-year budgets for capital projects, including tax systems modernization.
• Simplify Taxes. Summers said Congress and Treasury should try to streamline the 9,451-page tax code. Both Glenn and Committee Chairman Fred Thompson, R-Tenn., agreed tax code simplification should be a priority for this Congress.
• Leadership. The administration will appoint a management-oriented commissioner to replace Commissioner Margaret Milner Richardson, who is a former tax lawyer. Summers has already been blasted by the Senior Executives Association for telling a Tax Institute gathering that "the commissioner should not have to wait four months to hire the management team he or she needs." Under current law, a new political appointee must wait 120 days before firing career senior executives in his or her agency.

Summers also said Treasury plans to rely more heavily on contractors than it has in the past.

"The IRS of the future will have to contract out, outsource, partner with the private sector, and rely on outside vendors to a much greater extent than the IRS of the present," Summers said.

Glenn cautioned against considering contracting out a panacea for the IRS's problems. "No one in the private sector is currently doing anything close to this magnitude," Glenn said.

The General Accounting Office testified that security problems plague the IRS, some of which are so serious they could not be made public. IRS employees "browsing" through tax records was one of the major concerns highlighted in a recent GAO study of security weaknesses at IRS. The House is expected to take up anti-browsing legislation on April 15, the last day of this year's tax filing season.