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IRS reform plan unveiled
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March 17, 1997: 6:58 p.m. ET
White House seeks IRS commissioner skilled in customer service
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WASHINGTON - The Clinton administration unveiled a plan Monday to reform the troubled Internal Revenue Service, long a symbol of a tax system many consider unfair and needlessly complex.
The IRS has been under heavy fire from Congress for alleged insensitive treatment of taxpayers, as well as mismanaged and failed attempts to update technology.
Critics charge that despite some $4 billion in spending over the past decade, the IRS has shown little if any improvement in processing tax returns, or in computer and phone-answering systems.
Monday's plan, outlined in a speech by Deputy Treasury Secretary Lawrence Summers, focuses on improving IRS management.
Summers called for greater IRS management flexibility, more outsourcing, long-term budgeting, Treasury oversight and tax simplification.
"The IRS needs to be more responsive to taxpayers, to use technology more effectively and to be more efficient," Summers told a meeting of the Tax Executives Institute.
He said the Treasury Department would beef up its oversight of IRS operations, focusing in part on making private industry expertise more available.
Moreover, Summers said the plan gives the IRS itself more flexibility, allowing the agency to enhance and strengthen operations without bureaucratic red tape.
"The IRS faces a multitude of restrictions -- restrictions that would be unacceptable in the private sector -- that hamper its ability to provide efficient service," Summers said.
In addition, Summers said the administration would work with Congress to help the IRS get the stable and predictable funding the agency needs to operate more effectively.
"Today, the IRS operates in a low-trust, short-tether budgeting environment," Summers told the meeting. "This makes rational planning for capital projects such as information technology very difficult."
The program also seeks a new commissioner skilled in customer service, organizational change and information technology. Current Commissioner Margaret Richardson plans to step down later this year.
Monday's moves come less than one month before Americans go through the annual ordeal of paying their taxes before the April 15 deadline.
But Summers made clear that making the tax agency work better does not require adopting various proposals to update or even scrap the U.S. tax system.
Summers said he believed that for the foreseeable future, the United States would have an income tax based on the ability of people to pay -- and would need the IRS to administer it.
He said politicians should not use IRS shortcomings or the current tax code's complexity to sell extreme measures, such as the much-discussed "flat tax" proposal.
"What we must not do is attack the IRS in order to promote other agendas," Summers said.
Still, Summers also made clear that the administration remained committed to simplifying the tax code, noting that the president has proposed to exclude up to $500,000 of capital gains on the sale of a home.
Summers said Clinton's plan would "dramatically simplify record keeping for more than 60 million families."
However, congressional sources, who are also investigating the IRS's plight, say the plan does not go nearly as far as recommendations due out July 1 from a blue-ribbon National Commission on Restructuring the International Revenue Service.
"Not much meat," one congressional source told CNN.
The blue-ribbon commission's co-chairs, Nebraska Democratic Sen. Bob Kerrey and Ohio Republican Rep. Rob Portman, plan to address the Tax Executives Institute on Tuesday.
From staff and wire reports.
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