Testimony of Roger Harris, Vice Chair, Federal Taxation Committee, National Society of Accountants

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On The IRS Budget for Fiscal Year 1999 & The 1998 Tax Return Filing Season Before The House Committee On Ways and Means Subcommittee On Oversight March 31, 1998

The National Society of Accountants is pleased to testify on the status of the 1998 tax filing season and the fiscal year 1999 budget for the Internal Revenue Service. NSA commends Chair Nancy Johnson and the other members of the Subcommittee on Oversight for holding today's important hearing. In the context of a proposed fiscal 1999 budget for the IRS, we strongly support the Subcommittee's goal of creating a modernized, efficient and responsive tax agency.

My name is Roger Harris, President of Padgett Business Services and Vice Chair of the National Society's Federal Taxation Committee. Padgett Business Services, headquartered in Athens, GA, provides accounting, tax, and financial advisory services to individuals and small businesses through a network of 400 offices located throughout the United States and Canada.

NSA is an individual membership organization. Through our national organization and affiliates in 54 jurisdictions, we represent the interests of approximately 30,000 practicing accountants. Our members are for the most part either sole practitioners or partners in moderate-sized public accounting firms who provide accounting, tax return preparation, representation before the Internal Revenue Service, tax planning, financial planning, and managerial advisory services to six million individuals and small business clients. The members of NSA are pledged to a strict code of professional ethics and rules of professional conduct.

Internal Revenue Service Budget

The National Society of Accountants strongly supports H.R. 2676, the Internal Revenue Service Restructuring and Reform Act of 1997, approved by the House of Representatives on November 5, 1997. This excellent bill, which was carefully crafted by the Ways and Means Committee, strives to make the Internal Revenue Service a more customer service oriented agency.

NSA firmly supports the objective of making the IRS a more customer responsive agency, as opposed to an agency solely focused on carrying out aggressive collection activities. We believe a customer oriented philosophy should yield significant increases in tax revenues for the Treasury over the long-term. In fact, the National Society is so supportive of making the IRS a more customer responsive agency, that we further believe the IRS' fiscal 1999 budget request should also be measured against the benchmark of "putting the customer first."

In terms of the IRS' customers, the agency must implement procedures designed to improve its relations with America's taxpayers and its ability to service the needs of those taxpayers. The National Society of Accountants believes the Internal Revenue Service's budget request for fiscal year 1999 does in fact strive to address these needs.

Consequently, the National Society supports the Internal Revenue Service's request for a net budget increase of $529 million over fiscal year 1998. Under this budget proposal, a net $176 million would be used to maintain current program levels within the agency. Further, as part of its budget request, IRS has proposed a $103 million increase in funding for customer service functions, and an additional $227 million for improving the agency's information systems. As described in more detail below, Commissioner Rossotti has also requested $25 million to support a long-term reorganization plan for the agency.

According to IRS projections for fiscal year 1999, the agency's 100,000 employees will respond to 120 million telephone calls from taxpayers and will examine 1.3 million individual tax returns. These statistics only briefly highlight the critical governmental mission served by IRS employees to our nation. The practitioner community appreciates and understands the heavy burdens placed on IRS employees to improve the agency's work culture from within. …