IRS asks Congress for flexibility in tax reforms

The new commissioner of the Internal Revenue Service today called on Congress to give his agency more flexibility in abiding by proposed tax reforms so the agency can focus more on its Year 2000 problem.

Pending tax reform legislation in Congress would call on the IRS to be more responsive to and lenient with taxpayers. It would require the agency to take actions such as including IRS case workers' names and phone numbers on notices sent to taxpayers or forgiving penalties if taxpayers in payment installment plans fail to pay.

But IRS Commissioner Charles Rossotti said adjusting agency computer systems to accommodate such changes could detract from the agency's progress with its Year 2000 problem. "The administration has serious concerns with provisions of the IRS- restructuring legislation that require changes to IRS computer systems in 1998 and 1999," Rossotti testified at a hearing before the House Ways and Means Committee's Oversight Subcommittee. "Mandating these changes according to the schedule currently in the bill [H.R. 2676] would make it virtually impossible for the IRS to ensure that its computer systems are Year 2000-compliant by Jan. 1, 2000 and would create a genuine risk of a catastrophic failure of the nation's tax collection system in the Year 2000."

Harris Miller, president of the Information Technology Association of America, supported Rossotti in his testimony before the subcommittee. "With systems already committed to the limit, Congress must show flexibility in asking the IRS to maintain existing systems, introduce changes to the tax laws, [and] modernize and conduct the Year 2000 conversion," Harris said.

But Pete Sepp, vice president for communications at the National Taxpayers Union, said in an interview that the Year 2000 problem is no excuse to ease off on tax reform. "From a policy standpoint, we don't think that [Year 2000] should be a consideration," Sepp said. "The IRS has had plenty of time to deal with it.... They can find the resources to make these changes within that [$7 billion] budget. I don't think that anybody should shed any tears over the IRS's modernization problem."