On Capitol Hill, reformers of the Internal Revenue Service want you to believe that they're going to turn the dreaded tax collector into a "customer-friendly" service agency. Why, soon your local auditors will be so eager to please that they might even walk your dog or wash your car--a far cry from the black-shirted thugs portrayed in sensational Senate hearings in September.
Don't hold your breath. The sweeping IRS reform bill passed by the House Ways & Means Committee on Oct. 22 with President Clinton's reluctant endorsement includes worthwhile protections for taxpayers who run afoul of the tax collectors. But reformers, particularly Republicans, are running the risk of overselling their legislation.
COLD COMFORT. Take the hot issue of "burden of proof." Currently, taxpayers audited or sued by the IRS must prove their deductions are valid, their incomes correctly stated, and their returns honest. That reversal of the usual presumption of innocence inspires Ways & Means Chairman Bill Archer (R-Tex.) to fulminate that "criminals in this country have more rights than taxpayers." Archer's reform shifts the burden of proof to the IRS in cases before the U.S. Tax Court.
But that's little comfort to the 1 million Americans who face IRS audits each year. They would still have to justify their figures, which is only fair, since taxpayers control the records. The alternative is an even more intrusive IRS with power to compel banks, accountants, and others to cough up the data. In practice, Archer's plan would mean only a slight drop in the 30,000 civil cases appealed to the Tax Court each year. And the audits that precede such suits could become more intense, as agents try to bolster their cases.
The bill does bring welcome reforms: Spouses who unknowingly sign a fraudulent joint return would face less risk of punishment. Tax preparers could not be forced to divulge what clients say in confidence. And taxpayers could more easily collect damages when the IRS goes wrong.
But the changes don't affect the vast majority of citizens who don't tangle with the IRS. What matters to them is how well the IRS answers questions during filing season, how quickly refunds arrive, and whether minor errors can be cleared up with a simple phone call. Congress can't legislate improved service; that's a long, grinding job of upgrading computers, improving management, and changing the mind-set of 100,000 IRS workers trained to see taxpayers as potential cheats instead of customers.
Those problems are the result of years of neglect by presidents and Congress. The private-sector IRS advisory board that Archer proposes--and Treasury Secretary Robert Rubin has begrudgingly accepted--could start to push the necessary changes. But the real test for IRS reformers will be their persistence. That won't match concealed witnesses for political theater--but it could make Apr. 15 a less painful day for ordinary taxpayers.