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Taking Aim at the IRS

It isn't that reformist zeal is lacking in Washington. It just needs the right target. Right now, that means the Internal Revenue Service.

Last week the House Ways and Means Committee approved a package of major changes put forward by committee chairman Bill Archer (R) of Texas. These reforms come in the wake of recent Senate hearings that showcased examples of taxpayer mistreatment by the tax agency. They also follow up on the recommendations of a bipartisan commission on reforming the IRS.

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After publicly sniping at the Archer bill, even Treasury Secretary Robert Rubin has come aboard. That put the Clinton administration on the politically correct side of the issue - but not quick enough to overtake party rival and House minority leader Richard Gephardt. He'd already staked a Democratic claim to IRS reform. Many Republicans, of course, had hoped to own this issue.

Political turf-grabbing aside, what are the proposed reforms likely to accomplish for the country's taxpayers? One major plank will shift the burden of proof from the individual (though not the corporate) taxpayer to the IRS when tax-payment disputes go to court. Chairman Archer has proclaimed that taxpayers should have at least as many rights as criminals, who head to court with a presumption of innocence. In fact, however, only some 1,500 tax-payment cases reach the courts each year, out of about 2 million yearly tax audits by the IRS.

In those few cases, taxpayers able to muster credible evidence against the agency's claims may find themselves better off (a "tie" would go to them). But the IRS, faced with its new "burden," might prove more aggressive than ever, using subpoena power to build its documentation. The "burden of proof" switch has great political symbolism, but it's likely to have little substance for Joe Taxpayer.

Another big reform item, formation of an independent board to oversee the IRS, could prove weightier. A complaint against the agency has been insular, inefficient management. Problems within the sprawling IRS bureaucracy have frequently been bottled up by management. Debacles like bungled efforts to overhaul the agency's computer systems have embarrassed the IRS.

But blatant misuse of power, as brought to light in the Senate hearings, is rare. America's record of voluntary tax compliance - most of us willingly pay - is the envy of much of the rest of the world. That indicates the IRS may not be quite as dreaded as politicians would have us believe.

The biggest threat to that public acceptance of taxpaying duties is the ever-sprouting complexity of the tax code. Every time Congress attempts a fix, another layer of procedures, forms, and loopholes is added.

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