COMMISSION RECOMMENDS COMPREHENSIVE
IRS OVERHAUL

Senator Bob Kerrey (D-NE) and Congressman Rob Portman (R-OH), co-chairmen of the National Commission on Restructuring the Internal Revenue Service recently announced a historic plan to overhaul the IRS for the first time since 1952. The commission's report contains comprehensive recommendations to change the IRS by improving customer-service, increasing management accountability, and simplifying the tax code.

"These recommendations are based on a simple idea," said Senator Kerrey. "The IRS works for the taxpayers, not the other way around."

"These reforms will begin to put the 'service' back in the Internal Revenue Service," said Congressman Portman.

The bipartisan commission was authorized by Congress through legislation written by Kerrey while he served as a member of the Senate Appropriations Committee in response to concerns about poor performance by the agency. Most alarming were reports that the IRS was unable to balance its own books and that the IRS had wasted $4 billion on a failed computer modernization effort. The 17-member commission, which included four Members of Congress and representatives of the Clinton Administration, the private sector, taxpayer advocacy groups, and IRS employees, spent a year conducting an intensive review of the problems and challenges facing the IRS before issuing recommendations. The commission conducted 12 days of public hearings, and spent over 100 hours with public and private sector experts, academics, IRS employees, and others.

The comprehensive recommendations made by the commission address three areas: customer service, accountability, and simplification.

Customer Service. The commission recommends that the IRS be transformed to make customer service the organization's mission. The commission's recommendations include increased taxpayer rights, return-free and electronic filing, and telephone and computer systems that work so that taxpayers can have problems resolved on the first phone call.

Accountability. The commission found serious deficiencies in the Treasury Department's oversight of the IRS, and recommended the creation of a board of governors--appointed by the President and confirmed by the Senate--to oversee IRS operations. While the Treasury Department would retain its tax policy and law enforcement functions, the IRS board would have the ability to hire and fire IRS employees, set the budget for the agency, and establish long-term management goals and objectives. The board would include representatives from the Treasury Department and taxpayer advocacy groups.

Simplification. The commission found a clear link between the complex and everchanging nature of the tax code and the problems of the IRS. The commission is recommending changes to the legislative process to make it more difficult for Congress to complicate the tax code, and provides congressional tax-writing committees with a list of 60 specific code provisions that should be simplified or reformed to reduce administrative problems for the IRS.

On hand to endorse the commission's recommendations were congressional leaders including Senator Charles Grassley (R-IA), leaders from the National Taxpayer's Union, Americans for Tax Reform, and others.

"The commission's report is bipartisan and bicameral and is the legislative vehicle for comprehensive IRS reform," Kerrey said. "We did not tinker around the edges. Our access to IRS management, procedures, and employees was unprecedented and the input we received from taxpayers was invaluable. Having a well-run IRS is vital to our nation and will go a long way toward restoring the public faith in our government and tax system."

"No one likes paying taxes, but these reforms will make it much less painful and confusing for taxpayers," said Portman. "By prioritizing customer service, ensuring accountability, and simplifying the tax code, we can make the IRS work much better for all Americans."

For a copy of the report, contact the National Commission on Restructuring the Internal Revenue Service by calling
(202) 225-7004. *