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IRS on long track to make improvements

Once maligned for its heavy-handed approach and nasty form letters, the agency is more customer-friendly, but there still is work to be done.


© St. Petersburg Times, published April 8, 2001

WASHINGTON -- Congress' favorite punching bag, the Internal Revenue Service, is bouncing back.

Three years after lawmakers ordered the IRS to be more friendly, there are signs of improvements. The agency has been reorganized into four customer-oriented divisions. Its forms have been simplified, and some of the notorious form letters are easier to understand.

"This filing season may be one of the best ever," said Rep. William J. Coyne, D-Pa.

But there are lingering reminders of the old, elephantine IRS.

A recent test found IRS phone staffers gave wrong answers nearly half the time. That finding was especially embarrassing because topics for the test came from the Frequently Asked Questions on the IRS Web site.

The agency has antiquated computers and there has been a decline in audits and collections.

"The IRS is in a hole and trying to dig its way out," said Don Alexander, who headed the agency in the 1970s. "IRS is going to have a real tough time in the next two or three years. Its budget is going to increase very little."

Charles Rossotti, the current IRS chief who has been praised for many improvements, said, "I think we're on the right track, but I think that track is still a long track."

An exclamation point!

Two years ago, Congress saw an opportunity to score political points by attacking the IRS.

The Senate Finance Committee held hearings that portrayed IRS agents as gun-toting storm troopers. Senators complained about the agency's heavy-handed approach and its nasty form letters. So Congress passed a bill to overhaul the agency and make it more customer-friendly.

Since then, the IRS has made many improvements.

The notorious form letters are being simplified and redesigned. The old ones were so confusing that the agency got flooded with questions every time a new batch was sent. THEY WERE WRITTEN IN ALL CAPITAL LETTERS, WHICH MADE THEM APPEAR THREATENING.

The IRS gradually is replacing them with friendlier notices that use boxes and arrows so they will be easier to understand. The capital letters are gone.

Also, the agency has expanded its use of focus groups to get feedback from taxpayers and professionals who prepare tax returns. That, in turn, has led to better forms and brochures.

One example: a new box on Form 1040 where taxpayers can authorize the IRS to contact the person who prepared the return.

In the past, taxpayers received a stern letter when the IRS had a question about a return. People often became worried they had broken the law. But if taxpayers check the new box, which was suggested by a South Florida focus group, the IRS can simply call the preparer. That may resolve the question without the taxpayer being bothered.

In a sign of the agency's cheery new approach, Form 1040 even has an exclamation point now.

In a section that allows taxpayers to have their refunds deposited in a bank account, the return says, "Have it directly deposited!"

Tax professionals praise the changes and say the agency is getting better.

"I do sense they are trying to be more proactive and helpful," said Louis Ortiz, a St. Petersburg accountant.

'Stand up and cheer'

Much of the credit for the IRS' improvements goes to Rossotti, who took over the agency in 1997.

A balding, unassuming man who made a fortune with a computer consulting company, he has tried to run the IRS like a business. He changed the mission statement to emphasize customer service.

It now reads: "To provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all."

Rossotti has been candid about his agency's mistakes.

"We are not reaching a level of service that we think taxpayers deserve," he told a House subcommittee last week. "It is still not on a level of what taxpayers receive in the private sector."

He acknowledged that old computers prevent the IRS from giving taxpayers up-to-date information on their accounts and that "many of our notices are still confusing and poorly written."

He said he is concerned that there has been a significant drop in audits and collections in the past two years.

Rossotti's candor, and his willingness to let senators flog him in front of the TV cameras, has won him fans in Washington.

Alexander said Rossotti was "the right person for these troubled times."

Rep. Earl Pomeroy, D-N.D., had even more lavish praise: "I never thought anybody could make people stand up and cheer at the IRS, but by golly, he did."

'A horrible mess'

The IRS' telephone help line has long been a source of problems for the agency.

Millions of taxpayers get busy signals, and millions more get wrong answers from IRS employees.

In the latest test, which was completed in early February, the agency's inspector general had people posing as taxpayers call to ask questions. Topics came from the agency's own list of Frequently Asked Questions.

Once again, the IRS got poor marks.

The callers got busy signals 37 percent of the time. When they succeeded in getting through, the IRS employees gave wrong answers to 47 percent of the questions.

IRS officials acknowledge the need to improve but say their own measurements show much higher accuracy rates.

"We've made great strides over the last four or five years, and the improvements in the last couple of years have been very dramatic," said John Dalrymple, who heads the IRS' wage and investment division.

To reduce errors, the IRS has a new system that should route calls to an employee who specializes in several tax topics. That way, employees have to master a few subjects instead of the 20 or 30 they had to know in the past.

Alexander, the former IRS commissioner, says Congress is to blame for the wrong answers and the IRS' other woes.

"It's not that IRS people are incompetent," he said. "It's just that (Congress) has made such a horrible mess out of our tax code."

He said Congress also has failed to spend enough money for new computers.

"I wanted to upgrade the computer system years ago," he said. But Congress balked because members feared the public would see the new computers as so powerful they would invade privacy. Congress was worried that people "would say Big Brother is watching you. They didn't want the IRS to be efficient."

- Bill Adair can be reached at (202) 463-0575 or

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