Considering any balance between the concepts of service and enforcement presumes that both concepts have equal weight. It is axiomatic to professionals of administrative theory that an organization can have only one primary mission. The United States Supreme Court realized in the 1950’s that the concept of “separate but equal” was flawed. The United States Congress in the IRS Restructuring and Reform Act of 1998 (RRA ’98) also agreed with the notion that there could only be one primary mission and ordered the IRS to revise its mission statement to place the emphasis on servicing the public and meeting taxpayers’ needs.
Congress’ recognition of the need to have a service-oriented IRS was significant. All of the recommendations made by the commission to restructure the IRS that became the blueprint for RRA ’98 describe an IRS that is to be built on a foundation of service. Legislating adoption of a primary mission of enforcement would have yielded entirely different results in both the Commission’s report and the legislation that followed.
Service should be the foundation of our voluntary tax system. In a democracy we will not achieve broad based tax compliance without having service as the primary mission of the tax administration agency. The belief that the Internal Revenue Service is a tax collection agency is a myth. The Internal Revenue Service is a tax-receiving agency. The major portion of the tax revenues of our nation is collected by employers who are required by law to withhold taxes from the wages of their employees. Tax practitioners of all kinds: Enrolled Agents, Certified Public Accountants, Attorneys, commercial tax prepares, payroll tax services and others facilitate the process. Practitioners prepare over 60% of all individual tax returns, most employment tax returns and a wide variety of business related returns. In doing so, these professionals determine the additional taxes that are paid by taxpayers through their calculations of estimated tax payments and balance due tax returns.
The practitioner community and taxpayers need and deserve a service oriented Internal Revenue Service to nourish and foster our voluntary tax system. Most taxpayers, with the help of practitioners, early or timely file tax returns indicating overpaid taxes. These citizens deserve the service of rapid processing and prompt refund of their money. Also deserving service are the several million employers who, with the help of practitioners, have actually collected the tax from their employees. These non-paid “tax collectors” deserve service in the form of easy deposit systems; accurate accounting for receipts; trouble-free information return procedures and straightforward, post-filing resolution of problems. Practitioners, who are the real compliance experts, play a major role in the process of administering our tax laws. They deserve the opportunity for liaison with IRS management so that they may understand the difficulties IRS employees face when they attempt to service the needs of practitioners’ clients. Liaison activities are more beneficial to the IRS than they are to the practitioner community. Yet, opportunities for liaison between the IRS and practitioners are declining. Longstanding and regular forums, panels and mutual education opportunities have been reduced by IRS management officials at national and local levels. For example, in 2004 the IRS Nationwide Tax Forums attracted an audience of over 17,000 practitioners who serve almost ten million taxpayers. The Forums provided a conduit of information helpful to practitioners who prepare tax returns and helpful to those who are eligible to represent their clients before the IRS. In addition, the IRS Forums provided feedback to the IRS useful in improving the effectiveness of its programs and procedures. Additionally, the IRS Forums provided “case resolution” services, where with help from the Taxpayer Advocate Service, practitioners were given the opportunity to bring difficult, yet to be resolved, taxpayer problem cases for resolution assistance. The Taxpayer Advocate Service employees were able to resolve 90% of these cases on site. The Forums are scheduled for this year. However, due to budget cuts in service, practitioners understand that the Forums are not being supported by IRS management to the same degree. It is even rumored that the Service has determined that case resolution is too expensive to devote the resources of the IRS Taxpayer Advocate Service even though its employees remain dedicated to the program. Practitioners have been advised that many of the supporting divisions such as the Criminal Investigation and Appeals may not be sending staff to interact with practitioners. Accordingly, compliance and enforcement initiatives will be not shared by IRS management with practitioners and the opportunity to receive feedback information, which might reveal potential problems in IRS strategy, will be lost. An organization with a primary mission of Service would be making different decisions about how it interacts with the professional community.
Another example of a different decision that should have been made is the IRS decision to deny access to the electronic account resolution (EAR) services to the only practitioners that it tests and licenses- the Enrolled Agent. The Services refuses access to those account resolution services unless applicants file five electronic returns a year. Many Enrolled Agents do not process tax returns, but specialize on representing taxpayers before various divisions of the IRS. These are the professionals who need the EAR system more than any other. The IRS has lost an opportunity to provide rapid access for account resolution to the most capable account resolvers.
Everyone understands the noncompliant taxpayers must face enforcement. The IRS, however, doesn’t seem to distinguish among those who are temporarily unable to comply from those who intentionally fail to comply. Those who are trying to comply should be treated sympathetically and realistically in light of their current inabilities. Those who won’t comply should get the service of prompt enforcement measures.
In RRA ’98 Congress called for a new mission statement that emphasized service as the primary mission for the Internal Revenue Service. Yet, the IRS’ 2005-2009 Strategic Plan identifies service and enforcement as equal priorities. Their strategic plan is in conflict with the principles of administration and possibly violates the law and intent of Congress. In fact, it is our understanding that the Service is making significant cuts in the budgetary area that they don’t consider enforcement.
Congress saw the need to provide taxpayers with a powerful tool to cut through the red tape inertia that is endemic to bureaucracies. They gave taxpayers a service-minded IRS including a Taxpayer Advocate Service sympathetic to hardships and taxpayer rights. From a practitioners perspective, it appears that the IRS has management eliminated service as first priority and marginalized the vital functions of the Taxpayer Advocate Service by slashing their budget and leaving their personnel un-empowered and demoralized. Most taxpayers will never know what a friend they nay have had in the Taxpayer Advocate Service, a would be friend that is being returned from whence it came. At this crucial time, the National Taxpayer Advocate’s voice inside the IRS must be heeded. Practitioners have high hopes that Congress will respond positively and constructively to the recommendations within her annual report and restore the Taxpayer Advocate Service to the original intent of Congress.
As part of its attempt to rebuild public confidence in the tax system, Congress created the IRS Oversight Board. The practitioner community considers the Board to be acting as its voce in the process of improvement of tax administration. The Board is generally responsible for overseeing the IRS in its administration and management of the internal revenue laws. Our country needs an effective Oversight Board. The Service, contrary to Congressional intent, does not seem to want the Board to make a real difference any more than it wants the Taxpayer Advocate Service to be effective.
Congress in RRA ’98 directed the IRS to implement an employee training program to ensure adequate service training because the need was apparent to change the internal structure of the IRS form one that is enforcement driven to one that is more responsive to taxpayer service needs. While the IRS believes it has followed the letter of the law by providing Congress with such a plan, everyday observations reveal that the culture of the agency remains enforcement minded. The IRS in-service educational programs in most areas are relatively ineffective, inconsequential and unacceptable by even the minimum of standards. Evidence of this manifest by the IRS employees involved in telephone and face to face conferences who are unaware of the law and regulations they are paid to administer.
An organization dedicated to a mission of service would have a robust training and education program at every level. Problem solving by under trained staff is preventing both compliant and out-of-compliance taxpayers from efficiently resolving their issues efficiently. A Service mission requires that IRS staff at all levels b involved in a continuous training program to bolster their abilities to perform their functions with a perspective of the real world built on a foundation of technical knowledge. The committee Report from RRA ’98 stated: “The bill requires the IRS to place a high priority of employee training and to adequately fund employee training programs…” Also, TIGTA reported on September 29, 2003, “…the training data provided to the IRS Oversight Board by the IRS were not adequate for the Board to perform an assessment or to develop a baseline of training in the IRS.” The apparent lack of commitment to education and training is revealed by the lack of resources deployed to fund and support a major effort. Even when the IRS adopts service as its primary mission, it will fall short in delivery due to the lack of appropriate funding for its education and training programs.
Congress legislated an Offer in Compromise (OIC) program years ago and recently directed the IRS to make it available to more taxpayers by liberalizing it. In response, The IRS created an obtuse and unrealistic program. It is so flawed that many practitioners have removed OIC’s from the box of tools they use to try to obtain relief for taxpayer’s problems. The OIC program is more restrictive now than it was prior to RRA ’98. With a new bankruptcy law on the horizon, practitioners will have lost their last outpost of financial mercy on the route to repairing taxpayers’ financial lives.
In conclusion, there can be no balance between service and enforcement. Service is the foundation of enforcement in a voluntary tax system and it must have the greatest weight. If service is not the IRS’ primary mission, perhaps the name Interval Revenue Service should be replaced with Internal Revenue Enforcement Agency.
William Stevenson, EA, Spokesperson for the National Council for Taxpayer Advocacy
Bryan Gates, EA, Founder of the National Council for Taxpayer Advocacy