IRS: Status of Restructuring and Reform at the Opening of the 107th Congress (CRS Report for Congress)
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| Release Date |
March 22, 2001 |
| Report Number |
RL30899 |
| Report Type |
Report |
| Authors |
Sylvia Morrison and Gary Guenther, Government and Finance Division |
| Source Agency |
Congressional Research Service |
Summary:
Passage in July 1998 of the IRS Restructuring and Reform Act ( H.R. 2676 , P.L. 105-206 )
required a number of significant changes in the way the service operates as well as a fundamental
change in its culture. After two years of intensive work, IRS is well along in the process of
converting itself to a user-friendly institution, which is one of the most difficult tasks the
Restructuring Act (RRA) requires of it. The RRA was based fundamentally on the report of the
National Commission on Restructuring the Internal Revenue Service. This commission was created
by Congress in its FY1996 appropriations legislation ( P.L.104-52 ) and funded for 15 months. The
report of the commission, A Vision for a New IRS , recommended the
establishment of an IRS
oversight board, a change in the organizational structure of the service, and the encouragement of
increased electronic filing, but it especially recommended intensified training for staff and more
access to them for the public.
The service has completed most of the requirements of the RRA. The geographic structure of
the agency has been changed to a functional one. The Oversight Board is in place. A list of 71
taxpayer protections and rights are being applied, although with difficulty in some cases, particularly
in the case of relief for innocent spouses. The Office of the Taxpayer Advocate has opened the IRS
door to negotiation of those tax obligations that impose hardship. IRS' staff has been assured that
the sanctions for taxpayer abuse will not result in their removal unless they commit illegal acts
willfully. The intent of this assurance was to prevent employees from being inhibited in doing their
jobs for fear of loss of employment. Electronic filing is growing in acceptance among individual
filers, but slowly. The matching grants for low-income tax clinics reached the cap of $6 million in
2001. The century date change (Y2K) was handled without incident, supported by an appropriation
of $1.3 billion specifically for that purpose. The Joint Committee on Taxation has completed
complexity analyses on 10 bills since passage of RRA, and is preparing a report on the general
complexity of the tax code.
Some projects, however, will require more time to reach completion. Planning for any program
is based on agency assumptions about how much funding it is likely to receive. The Commission on
Restructuring recommended that funding be appropriated for the IRS every three years to make
advance planning possible, but Congress has taken no action on this issue. The problem which 10
years ago precipitated the journey toward the restructuring law--inadequate computer technology--
remains a problem for the agency, although work is in progress to replace the least useful computers.
Perhaps the most urgent initiative underway at IRS is training. Every initiative taken under RRA
requires retraining of experienced staff and new training for newcomers, the public, and tax preparers.
This report will not be updated.
