Schulman Comments On IRS Reform Progress

by Mike Godfrey, Tax-News.com, Washington

21 July 2008

Speaking last week at a conference examining the impact of the 1998 IRS Restructuring and Reform Act, IRS Commissioner Doug Schulman looked back at the progress made by the US tax authority since the introduction of the Act, and outlined plans for the future.

He told those attending the conference that:

"As you all know, the Act was a landmark in the history of the IRS. It laid out a fundamental new direction for the agency. And it contains many detailed provisions including 71 new taxpayer rights. As I reviewed the Act to prepare for today, it’s easy to get lost in the trees and fail to see the forest. So I will confine my remarks today to the broader issues that I believe the Act addressed."

"One of the clear mandates of the Act was for IRS to dramatically improve service to taxpayers. No one can argue that this was not the right thing to do. In the 1990s, service at the IRS fell to unacceptable levels. Getting through the toll-free system to talk to an assistor was a daunting task. And to add insult to injury, once a taxpayer got through, the risk that the information given out was wrong was unacceptably high."

"In this area, the IRS has shown dramatic improvement. In FY 2007, our toll-free assistor level of service was 82 percent and the tax law accuracy was 91 percent. So we are giving better service, and it is easier to get through. But the toll-free line is no longer the sole way to get help from the IRS."

He continued:

"The Act also addressed a number of governance issues. Perhaps most notably, it created the IRS Oversight Board. I have experience working with boards, and I believe they can be helpful. In my time as commissioner so far, I have found the Oversight Board to be a valued resource, and I am grateful to the Board for their support and assistance as we work on strategic issues going forward."

After examining the implications of the structural shake-up of the IRS facilitated by the 1998 legislation, Schulman turned to the future of the agency, observing that:

"Many on the commission were concerned that some of the structural issues ultimately enacted in the legislation would create different types of stove-piping and parochialism. While the district structure had many shortcomings, it did allow for a better understanding by employees of what their colleagues did. Revenue Agents and Exam managers dealt on a daily basis with Revenue Officers and Collection managers. And everyone in the office reported to the same District Director. Some of this changed with RRA, which created the four operating divisions and made adjustments to the structure of the Taxpayer Advocate and the Chief Counsel."

"To ensure that the current structure truly meets taxpayers’ needs, I believe we need to reinforce the notion of “One IRS.” From the taxpayer’s point of view, we are the IRS. We are not SB/SE, LMSB or the Advocate or Chief Counsel. It is important the entire operation of the IRS is seamless and consistent, while respecting that its different parts each provide a critical piece of tax administration."

"Another thing we must focus on is the taxpayer’s experience: We must not only meet legal requirements, we must walk a mile in the taxpayers’ shoes and help them navigate the system. There are many critical components to taxpayer service, but there are two I would like to highlight. First, we should aim to resolve any open issues at the earliest moment possible. This will save both the IRS and the taxpayer extra work down the line. Second, if a taxpayer deals with more than one business group within the IRS, we should coordinate with each other so the hand-off is quick and trouble free."

He further suggested that:

"The Act also recognized that tax law complexity makes it difficult for taxpayers to comply and difficult for the IRS to administer. The legislation proposed that the IRS have a seat at the table as tax legislation is drafted to offer their view on the administrability of the legislation. While I understand that, upon request from the Joint Committee, we currently provide a complexity analysis of proposed legislation, I think there is more we could and should do to ensure that the policy goals of legislation are administrable."

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