Senators Unveil Legislation to Overhaul the IRS

Twenty years after he co-chaired a commission to restructure the Internal Revenue Service, Sen. Rob Portman, R-Ohio, on Thursday announced his plan for a 21st century update.

The draft “Taxpayer Protection Act,” co-sponsored with Sen. Ben Cardin, D-Md., aims to improve customer service, modernize information technology and “make the agency more responsive and accountable to taxpayers,” the senators said before a hearing of the Senate Finance Taxation and IRS Oversight Subcommittee.

“This past weekend was the 20th anniversary of the passage of the IRS Restructuring and Reform Act of 1998, which is the last time Congress enacted a major overhaul the agency,” Portman told the hearing.

Like today’s circumstances, “During the late '90s, there was a clear need for reform at the IRS,” he said. “Calls with questions for the IRS went unanswered by the thousands, and the calls that were answered were often incorrect. The agency had also spent $3 billion on IT systems that weren’t working.”

Sen. Mark Warner, D-Va., added, “We’ve all seen the IRS make good faith efforts to get its technology up to date. Sometimes those good faith efforts have not panned out. But something is wrong with our overall federal government when we spend $90 billion a year on IT, but a huge share is spent on maintaining and trying to upgrade legacy systems.”

The multi-pronged bill would increase protections for taxpayers through such tools as more-frequent delinquency notices; ease burdens on corporations and small businesses through clarified reporting requirements; aid low-income taxpayers by shielding some from fees and private debt collectors; and expand taxpayer rights to information when appealing IRS rulings.

In terms of management, the bill would require a strategic training plan and more face-to-face training among different divisions. Most concretely, it would reconfigure the lapsed IRS Oversight Board as a streamlined “IRS Management Board.” That new board would play an enlarged role in budgeting and “drive the overall strategic direction of the agency,” a summary said.

The IRS Oversight Board “started off pretty well, but then because of lack of support by really every administration, it has since fallen by the wayside,” Portman told the hearing, noting that  the board suspended operations a couple of years ago and technically, only one member remains out of nine.

The Portman-Cardin bill complements a larger bill introduced by panel chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore.

The House last April passed a package of nine bills from the Ways and Means Committee with titles such as “21st-Century IRS Act” and the “Taxpayer First Act.” The House bills too would redesign the tax agency to stress customer service, new taxpayer appeal rights, improved responsiveness to victims of identity theft and modernization of technology.

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