Wednesday, May 12, 1999
IRS reform still isn't a reality
Plan's report due April 15
BY MIKE BOYER
The Cincinnati Enquirer
Almost as certain as death and taxes is that restructuring the Internal Revenue Service will be more complicated than conceived.
Implementation of the IRS Restructuring and Reform Act of 1998, viewed as the most sweeping change in the agency in more than 40 years, hasn't been smooth sailing, says Margaret M. Richardson, IRS commissioner from 1993 to 1997 and now a tax attorney for Ernst & Young LLP in Washington, D.C.
“It's been far more complicated than originally envisioned,” said Mrs. Richardson, who participated Tuesday in a briefing for Ernst & Young clients in Cincinnati on the the restructuring.
In its broad outline, the reforms will replace the IRS' present geographic regions and districts with four operations divisions focused on taxpayer groups:
• Wage and investment, for the 88 million taxpayers subject to withholding.
• Small business and the self-employed, for about 40 million taxpayers with assets under $5 million.
• Large and midsized businesses, for the 170,000 taxpayers with assets of more than $5 million.
• Tax-exempt, for the 1.6 million organizations, such as charities, employee pensions and governments, that are exempt from federal taxes.
The IRS was slated to release details of the restructuring April 15 so changes could be implemented in the upcoming fiscal year starting Oct. 1.
But the April deadline passed without the plan.
Also, President Clinton has yet to name the six private-sector members to a new IRS oversight board that will include the Treasury secretary, the IRS commissioner and the head of the National Treasury Employees Union, representing 80,000 IRS workers.
Mrs. Richardson said the oversight board is designed to be more than just a board of directors. It was conceived to take an active role in reshaping the IRS into a taxpayer-friendly organization.
Further, she said, negotia tions with the Treasury employers union, on how its members will be affected by the restructuring, have not begun in earnest.
“One of the features of the legislation was to give the commissioner and the senior staff more personnel flexibility, so they could move people around,” she said.
But the negotiations with the Treasury workers union could be long and involved, she said, because they will have an impact on jobs and morale.
IRS reform has been a high priority with Rep. Rob Portman, R-Terrace Park, who was co-chairman of the IRS reform commission and a principal architect of the reform legislation.
Brian Besanceney, Mr. Portman's spokesman, said that despite the problems, “we're satisfied they are making progress in some areas. They're doing a much better job providing taxpayer services and in information technology.”
But, he said, Mr. Portman remains critical of Mr. Clinton's failure to appoint the oversight board.
Mrs. Richardson said she has heard that criticism but she thinks it is less because of presidential foot-dragging than the difficulty finding people willing to serve.
“It is difficult to find people with knowledge, who are willing to subject themselves to the conflict-of-interest rules,” she said.
For example, she said, the head of a company that has done computer work for the IRS would have to resign from the firm in order to serve on the oversight board.
“Interestingly, the law specifically exempts the head of the (Treasury workers) union from the conflict-of-interest rules,” she said.
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