Rubin fights IRS reform bill

Treasury Department Secretary Robert Rubin last week told the House Ways and Means Committee that any changes to the management of the Internal Revenue Service may result in a setback for the agency's agenda part of which is its current plan to increase its use of electronic filing of tax forms.

Defending what he saw as the agency's achievements since the Modernization Management Board was established more than a year ago Rubin said that because of the improved oversight the IRS has made significant strides in improved use of technology and better customer service.

"Around 14 million people filed their taxes electronically this year - an increase of 19 percent " Rubin testified. "Filing by telephone was up more than 65 percent to more than 4 million returns."

Rubin also noted that the IRS' World Wide Web site received more than 140 million hits in 1997 and that 26 information technology contracts were either canceled or merged to make a total of nine contracts. The secretary said these statistics indicate that the IRS is moving in the right direction in terms of managing IT and that "a comprehensive technology proposal for a public/private partnership has received a favorable response both from Congress and the private sector."

Rubin said the IRS Restructuring and Reform Act of 1997 which would remove the management of the IRS from Treasury and give it to an independent board composed of private-sector executives might jeopardize the agency's progress in modernizing the department's computer systems. Rubin said the provision in the bill that would establish a management board made of individuals from the private sector would weaken accountability put greater control of a major public law enforcement agency in the hands of private-sector individuals and create conflicts of interest.

Rubin said he supports an alternative bill the IRS Improvement Act which was introduced in the House last week. The bill he said would "institutionalize our commitment to change."

According to Rubin the bill would make the IRS management board a permanent fixture. "This board which under the legislation would be comprised of senior officials from Treasury [the Office of Management and Budget] and the IRS and a representative of the employees union provides ongoing oversight of the operation of the IRS the modernization of its systems customer service IRS strategy and other relevant matters " Rubin said.

Rubin also said important synergies can develop from such an arrangement "as we have seen for example in the recent close and continuing cooperation between the IRS and Treasury on the Year 2000 computer conversion."

But Sen. Bob Kerrey (D-Neb.) who also testified at the hearing said the IRS has done little to improve IT management. "There is a breathtaking gap between the service levels of the IRS and those of the private sector " he said. "The IRS has a 20 percent error rate for processing paper returns.... It captures only 40 percent of the data from returns and is still drowning in a sea of paper."

Just days before Rubin testified IRS officials said they plan to make the agency's electronic tax filing system Telefile available nationwide in the first quarter of 1998. IRS acting commissioner Michael Dolan told the House Ways and Means Committee's Subcommittee on Oversight that in 1997 Telefile got more than 50 000 Form 941s from small businesses and 4.7 million 1040EZ forms via Telefile.

But Rep. Rob Portman (R-Ohio) said he did not understand why the IRS cannot commit to achieving an 80 percent electronic-filing rate in 10 years.