House passes IRS reform bill

The House passed a sweeping IRS reform bill Thursday by a 402-8 vote.

The bill, which the Senate is expected to pass after its July recess, would create an independent oversight board and require the IRS commissioner to restructure the agency, revamp its personnel system and focus employees on customer service.

President Clinton has said he will sign the bill.

Within minutes after the bill passed, longtime IRS Deputy Commissioner Michael P. Dolan resigned from the agency, the Associated Press reported. Dolan said he wanted to give Commissioner Charles Rossotti "the maximum opportunity to form a senior team that will provide continuity through the very important work of the next several years."

The independent oversight board would include six private sector members with managerial expertise, along with the Treasury Secretary, the IRS commissioner and an employee union representative. The board would approve strategic and organizational plans for the IRS, as well as review executive appointments.

Several lawmakers, the Office of Government Ethics and the Senior Executives Association opposed union representation on the board, citing conflict-of-interest rules. But the bill grants the union representative a waiver from those rules.

The bill also gives the IRS commissioner authority to hire up to 40 executives outside of normal rules governing political and executive appointments. The positions are limited to 4-year appointments, but are eligible for salaries up to the Vice President's pay level. The commissioner can also grant executives bonuses above 20 percent of base pay, which is the statutory cap for senior executives. The bill stipulates that executives be evaluated on their ability to achieve results as required under the Government Performance and Results Act, the Clinger-Cohen Act and other performance measurement initiatives.

Under the bill, the IRS chief will also be able to establish a personnel demonstration project, a broad-band pay system, new performance standards and cash award programs for employees. The act prohibits IRS managers from measuring employees' performance based on tax enforcement results or production quotas or goals. Instead, managers should set "the fair and equitable treatment of taxpayers" as one of the standards for evaluating employee performance. The bill also denies IRS employees the right to protest denials of within-grade increases to the Merit Systems Protection Board.

The bill grants the IRS buyout authority through Jan. 1, 2003, allowing the agency to offer employees up to $25,000 to resign or retire early.

To improve customer service at the IRS, the bill requires the agency to restate its mission statement to "place a greater emphasis on serving the public and meeting taxpayer needs." The act instructs the IRS commissioner to develop a customer service training program for employees.

The IRS will also have to include an employee's name and telephone number on all correspondence with taxpayers and IRS representatives will have to give their name when speaking with taxpayers over the phone. The bill instructs the IRS to come up with a way for one employee to handle a taxpayer's matter until it is resolved whenever that is feasible.

The bill also supports IRS Commissioner Charles Rossotti's plan to restructure the agency into customer lines and reorganize its system of national, regional and district offices.

House and Senate negotiators agreed to the IRS conference report on Tuesday. The bill follows months of Senate and House debate in the wake of two sets of Senate Finance Committee hearings into taxpayer abuses and employee complaints at the IRS.