Amid challenges, hope floats for IRS

Amid challenges, hope floats for IRS

klunney@govexec.com

Although the IRS continues to face significant modernization challenges, witnesses at a congressional hearing Wednesday agreed the agency is on the right track to reform.

"As we have said in the past, this modernization effort, more so than past efforts, clearly has the potential to provide improved service to taxpayers and to address IRS' long-standing management weaknesses," said James R. White, director of tax policy and administration issues at the General Accounting Office.

The IRS continues to grapple with its competing missions as law enforcer and taxpayer assistance provider. According to IRS data, 1999 collections from delinquent taxpayers were down about $2 billion from 1996 levels. At the same time, taxpayers are increasingly frustrated with the agency's fledgling telephone service. Although the IRS introduced 24-hour, 7-day-a-week telephone service in 1999, the answer rate for the 2000 filing system was only 62 percent as of April 15-a drop from 1998's rate of 73 percent.

Congress passed the IRS Restructing and Reform Act in July 1998 in response to calls for better service from the IRS. The act required the agency to implement 71 new or modified taxpayer rights provisions. The provisions were intended to make collection agents more accountable for their cases.

GAO noted that the root causes of the IRS' problems are "complex and interrelated," making reform a long and arduous task for the agency.

Despite the many problems, there are some bright spots. By April 23, the agency reported that it had processed 83.1 million tax returns-3.2 million more than in the same period last year. Electronic filing has become more popular as well. By April 21, almost 35 million individual taxpayers filed their returns using one of three e-file options.

In the customer service arena, the agency is creating a new tax resolution representative position. The representatives will be permanent staff members who answer tax law questions for customers and help them with returns.

GAO also noted that the agency's internal reorganization-an important part of the modernization process-was "proceeding reasonably well."

IRS Commissioner Charles Rossotti discussed the IRS' acccomplishments and obstacles, noting that although it will probably be more than a decade before full-scale reforms have taken effect, the agency has come a long way.

"In the 21 months since [the reform] bill was enacted, we have learned a great deal, and at this point, I am convinced we can succeed through the combination of a limited increase in staff resources and critical investments in new technology and organization," Rossotti said.

Instead of significantly increasing staffing levels, which Rossotti said would be very expensive, he wants to focus on revamping the IRS' business practices and investing in technology.

The commissioner also pledged to continue working with Congress, the Office of Management and Budget, GAO, Treasury and other stakeholders on turning the agency around.

"Reorganizing the IRS' outdated structure and replacing its archaic technology will take years to fully accomplish, but it is absolutely necessary if we are to reach a higher level of performance," he said.

The IRS is requesting a $8.8 billion budget for fiscal 2001.