Former IRS chiefs lament agency’s slow reform progress

Despite five years of work to transform the Internal Revenue Service, much remains to be done, according to four of the agency's former commissioners.

The former agency chiefs joined IRS Chief Counsel B. John Williams and Taxpayer Advocate Nina Olson at a forum Friday sponsored by Tax Analysts, a nonprofit organization. The forum's roundtable discussion focused on the health of the agency in the aftermath of the 1998 IRS Reform and Restructuring Act, which mandated that agency leaders improve employee morale, beef up customer service efforts and revamp its decades-old computer systems.

Margaret Richardson, IRS commissioner from 1993 to1997, described the law as "an example of the blind leading the deaf." Customer service had improved, she said, but the agency needed further improvements "in terms of answering phone calls and responding to taxpayers."

"If the time and money spent on consultants had been spent on finding solutions to real problems, I think the taxpayer would be better off," Richardson said. "But the taxpayer advocate group has done a good job of helping taxpayers work through the system as it exists today."

Donald Alexander, who headed IRS from 1973 to 1977, agreed that money could have been allocated more effectively, but saw collection efforts as the best place for additional spending.

"Less should have been spent on consultants and more on agents, more on those people who have the job of collecting taxes," Alexander said.

Earlier this year, Congress scrapped a measure in the House-Senate conference over the Bush administration's tax cut bill to let the IRS hire private firms to collect unpaid taxes. Now, IRS officials are trying to decide how to respond to the Bush administration's mandate to consider using private contractors to do some of the work currently performed by federal workers.

Agreeing that tax compliance and collection are areas where the agency has fallen short in the past few years, Lawrence Gibbs, IRS commissioner from 1986 to 1989, said "the 90s . . . contributed to the noncompliance environment that exists now" and charged that the IRS Oversight Board, an independent panel created by the 1998 reform law to oversee agency management, was less than fully effective.

"But I think its willingness to identify the level of noncompliance is to be commended," Gibbs added.

Sheldon Cohen, who headed the IRS during the Johnson administration, said the agency and its employees were too concerned with making sure they didn't run afoul of taxpayer protection measures during the past five years to implement much-needed reforms. The 1998 law requires automatic termination of IRS employees who commit any of 10 infractions, including threatening to audit someone for personal gain; conducting a seizure without approval; assaulting, harassing or violating the civil rights of a taxpayer or a coworker; lying under oath; falsifying or destroying records; concealing information from Congress; underreporting income; and failing to file a tax return on time.

"You've had the revenue service down on its haunches now for five years," Cohen said. "We have people at the revenue service who won't do anything aggressive to collect debts . . . because they don't want to face disciplinary action or a personal lawsuit."

The IRS's Williams defended the agency, contending that it was now in a position to take on its institutional problems.

"This wasn't just plastic surgery, this was a major operation," Williams said. "Though the hearings in 1998 were unfair, there was a problem with the agency and people inside admitted it. I think the agency is poised to do so much better work than it would have if the rest had not occurred."

The 99,000-employee tax agency is led by Mark Everson, former deputy director of the Office of Management and Budget, who was named to head the IRS in January. Charles Rossotti left the agency in November 2002 when his 5-year term ended.