By Lear, Jeffrey
The National Public Accountant , Vol. 38, No. 11
Over the past several years, the Internal Revenue Service has been revamping its administrative structure and rethinking its relations with taxpayers and practitioners. More recently, Vice President Al Gore released the report of his National Performance Review (NPR), entitled From Red Tape to Results: Creating a Government that Works Better and Costs Less. This report makes numerous recommendations for improvements at IRS, many of which the Service was already on its way to fixing.
At NSPA's National Convention, Commissioner of Internal Revenue Margaret Richardson outlined several areas in which she felt voluntary compliance could be improved--one of the major concerns of the NPR. Following the release of the Vice President's report, the Service issued Fact Sheet 93-3, which reviews programs currently in place that will be charged with implementing the six major recommendations under the reinventing government plan.
Increasing Voluntary Compliance
The National Performance Review states its "support of the current efforts of the IRS under compliance 2000 to improve voluntary compliance and other efforts to collect taxes already owed to the Federal government." In her first few months, Commissioner Richardson indicated her commitment to the dual goals of returning nonfilers to the system while at the same time, keeping current filers from dropping out of the system. She noted several areas of compliance she would like to improve and asked NSPA to contribute ideas. These areas are:
* Improving compliance in small corporations;
* Increasing the effectiveness of the nonfiler initiative;
* Reducing opportunities for electronic filing fraud; and,
* Reducing complexity in the administration of the tax system.
She stressed the importance of communication between practitioner groups such as NSPA and the Internal Revenue Service in resolving problems with the system and improving voluntary compliance.
Modernizing the IRS
According to the NPR, the Service's Tax System Modernization (TSM) initiative, "currently in its initial stages, would ease taxpayer burdens due to manual return processing and inaccessible information, and enable IRS to provide a level of service comparable to private sector financial institutions." The Service notes that it plans to have its system technologically current by the year 2001, at a cost of $8 billion above what it would cost to keep the existing system running over the same period of time. IRS points out the following benefits already resulting from the TSM program:
* Enhanced efficiency in responding to taxpayer questions: Information regarding taxpayer accounts is now available to IRS employees on line, eliminating the delay in handling minor errors caused by retrieving taxpayer files from a central location.
* Prototype in place for paperless employment return filing: Taxlink, the Service's program that will eventually lead to filing of all employment tax documents electronically, is currently being tested with three banks in the southeast.
Fostering Federal-State Cooperative Initiatives by the IRS
Vice President Gore's report suggests that, "Cooperative relationships between the IRS and state tax administrations, including joint filing of data, should improve taxpayer service as well as collection activity while reducing costs." Already working on relations in this area, the Service notes that its FedState program encourages cooperation between Federal and state tax administrators and implements joint projects in tax administration. One of the cornerstones of this program is the coordination of joint state and Federal electronic filing, available in 15 states in 1993 with another nine states expected to participate next year. In 1994, the Service expects to see almost two million joint electronically-filed returns. …