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The situation on Constitution Avenue is not altogether bleak. That the IRS is publicly acknowledging problems is a sign that it is on the road to remedying them. The agency is not entirely in the digital Dark Ages. It has a nifty Website www.irs.ustreas.gov) which is taking a million queries daily. Although it is still hit-and-miss to get through to a real live person on the phone, taxpayers who do speak to an IRS employee now have a 94% chance of getting the right answer, compared with 63% in 1989, according to the GAO. Last year the agency's Teletax recorded information line took 45 million toll-free calls.
The 1997 filing season, according to the IRS and independent observers, is going swimmingly. The agency says it has "seen significant increases...in electronic filing and telephone accessibility." By March 21 this year, 15.9 million electronic returns had been filed, 3 million more than at the same time last year. Testifying in late March at a Ways and Means Committee hearing, Beanna Whitlock, representing the National Association of Enrolled Agents, said, "This is not the old IRS. In many respects, it's now doing a good job."
So is it necessary to destroy the IRS in order to save it? Not quite. Remember, the IRS already collects what it estimates is 86% of the tax pie; to get to 90% should not be impossible and would mean an extra $65 billion or so. Gross's game plan--making incremental reforms and remedying the stovepipe problem while improving customer service and electronic filing--is a sensible start. The IRS should also consider the following:
--Get Thee a Manager. The agency has had four commissioners in the past four years, all of them green-eyeshade tax specialists. The job requires continuity and independence. The IRS ought to have an uber-manager with the stature of the head of the Federal Reserve.
--Oh, for Multiyear Funding. The IRS needs at least a two-year budgeting cycle. "Congress is mischievous when it appropriates funds and then cuts them," says Mitchell Adams, Massachusetts revenue commissioner. "You can't budget and plan that way."
--Outsource What You Can. Although the IRS has long resisted this on privacy grounds, there are tasks (like hassling people for money) that are not confidential and might be done better by commercial agencies. The IRS has realized this as well. According to Treasury's Summers, the agency is already contracting out 64% of modernization work in 1997, compared with 40% in 1995.
--Be at the Table. Congress proposes, the IRS disposes. Tax legislation is drafted without reference to the consequences for the IRS. Let the exigencies of tax collection guide the framing of tax legislation.
--Weed Out the Bureaucracy. Top managers have overseen the failure of modernization. They've had their chance. The quality of agents is declining. Morale is low. Broaden the merit pay system: the fact that managers have it but not those in the field creates an unhealthy rivalry.