Beneath the IRS Mess Lies the Tax Code Mess
The Internal Revenue Service is a 100,000-employee bureaucracy whose appalling customer-relations problems were paraded before the country in congressional hearings a few weeks ago. But more than that, the IRS is an organization badly in need of structural overhaul. Legislation based on the recommendations of a bipartisan commission could help to address both of these concerns. The Clinton administration, after negotiating some changes in the Republican-initiated bill, now supports the reorganization plan. By next spring, it is likely to be law.
For most Americans, the key provisions of the bill are those that address taxpayer rights. The most important of these shifts the burden of proof from the taxpayer to the IRS when disputes go to civil court, provided the taxpayer produces the information the agency has requested. Taxpayers wrongly subjected to IRS proceedings would have an easier time collecting costs and damages if the agency was found negligent. The attorney-client privilege would be extended to accountants and others authorized to practice before the IRS. “Innocent spouses,” which usually means divorced women, would find it easier to obtain relief from tax liabilities arising out of mistakes made by their former spouses on joint returns. Additionally, the bill would provide for grants to fund more low-income taxpayer clinics.
Republicans originally wanted to strip the president of his authority to name the IRS commissioner. This ill-conceived effort to deny the chief executive his constitutional appointments authority has wisely been abandoned. The IRS would, however, get an 11-member oversight board, eight of them private citizens. The board would have no role in setting tax policy but would be able to review the IRS’ strategic plans and its managers’ performances and to approve any major reorganization.
All this, we think, is a generally laudable move to give new emphasis to service on the part of the IRS, not least by seeking to curb the excesses of zeal that have been so arrogantly demonstrated by some of its employees. But let no one pretend this legislation offers a sovereign remedy for the IRS’ most basic faults. The central problem remains the complex, often ambiguous, sometimes contradictory tax code, every section and loophole of which was produced on Capitol Hill. A Congress that was truly concerned about taxpayers’ welfare would be working hard right now to simplify and rationalize those laws.
