Column: Now is the time for IRS reform

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Central to Americans’ confidence in our government is their confidence in our tax-collection system. Unfortunately, the Internal Revenue Service has not always earned that trust, undermining this system of voluntary compliance and taxpayer engagement. Fortunately, this has been a bipartisan issue in the past, and we believe a bipartisan proposal exists to once again solve the problem and make the agency more responsive and accountable to taxpayers.

Based on recent testimony before a congressional committee, IRS technology is outdated and the Taxpayer Advocate estimates that only 29 percent of the telephone calls to the IRS are answered.

About 20 years ago the IRS had similar difficulties. Calls went unanswered by the thousands, and calls that were answered often were incorrect or unhelpful.

Due to a lack of leadership and strategic direction, the billions of dollars that Congress poured into the IRS computer systems were largely wasted.

The American public had lost faith in the IRS, and sweeping changes were needed to get it back on track. As a result, Congress created the National Commission on Restructuring the IRS.

We co-chaired that IRS commission, and we convened some of the best and brightest minds across industries and political parties to work with us on restructuring the IRS to better serve taxpayers. We published our findings and recommendations in a comprehensive report, which served as the basis for the IRS Restructuring and Reform Act of 1998, the first major overhaul the agency had undergone in 40 years.

The law created dozens of new taxpayer rights, including the right to an independent appeal of an IRS decision. It restructured how the IRS was governed, by establishing an independent IRS Oversight Board to add needed experience, expertise and continuity to review and approve the agency’s budget requests and strategic direction. It also refocused the IRS’s long-term customer service and IT modernization strategies to better serve the basic needs of taxpayers.

For a number of years following those reforms, there were substantial improvements at the IRS. The percentage of taxpayer calls that it answered was up from 52 percent in 1997 to 83 percent in 2007, according to the IRS. That same year, the IRS hit another goal by reaching a rate of 80 percent of taxpayers filing electronically. Customer opinion surveys showed that the IRS had moved from the bottom to the middle ranks of government agencies. The general consensus was that the 1998 IRS reform law was a success.

Unfortunately, that period of sustained improvement at the IRS has unraveled in recent years. For example, according to the Taxpayer Advocate, the percentage of calls that the IRS answered bottomed out at a staggeringly low 15 percent in 2015. In addition, nearly 40 percent of taxpayers that called the IRS in 2017 felt they were not able to resolve their issues with just one call.

Moreover, despite the efforts 20 years ago to include an independent appeal of a decision, appeals have declined because the IRS has chosen to settle more cases in tax court — at a higher cost to taxpayers. Finally, while the 1998 law intended the IRS Oversight Board to help set long-term strategic goals for the IRS, the goals stopped being met, and by the end of 2015, the board had failed to maintain enough members and has been shut down.

The IRS is failing to effectively serve the American people, and it is time to overhaul the agency again. We applaud the efforts of Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., as well as the House for the solutions they have offered over the past couple of years to advance IRS reform.

Much as we did 20 years ago, we believe more substantial reforms are needed, and we believe any solution should empower taxpayers of all types and income levels.

We support legislation called the Protecting Taxpayers Act that will do this by focusing on strengthening protections for taxpayers, ensuring an effective taxpayer appeals process, revitalizing the Oversight Board and IRS strategic direction on customer service and IT, improving IRS taxpayer service training and helping low-income taxpayers interact with the IRS. This is a bipartisan proposal that will enact commonsense reforms to help the IRS better serve American taxpayers and achieve its critical mission.

As Congress moves forward with new rounds of IRS reforms, it is important to reflect on what we learned 20 years ago and apply those lessons to help the IRS once again become a more responsive, effective agency that truly serves the people’s interests. It’s time to go through another IRS reform process to help restore taxpayers’ faith in America’s tax collector.

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Sen. Rob Portman, R-Ohio, and former Sen. Bob Kerrey, D-Neb. Sen. Portman chaired a recent Senate Finance Subcommittee on Taxation and IRS Oversight hearing.

 

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