Halfway measures

Congressionally mandated reform of the IRS has been in place for two years, and the results are in: these changes benefit the wealthy at the expense of the poor

A series of reforms mandated by the Republican Congress in 1998 directs the Internal Revenue Service to be more taxpayer-friendly. It's a great idea. But the reforms, as currently implemented, are halfway measures that benefit corporations and wealthy individuals and leave lower- and moderate-income taxpayers out in the cold. Proper reform of the IRS -- and there's no question that such reform is desperately needed -- would benefit everyone.

We shouldn't be surprised that GOP-instigated reform leaves much to be desired. The legislation was drafted after Congress staged three days of sham hearings. Chaired by Senator William Roth (R-Delaware), the hearings consisted of anecdotal evidence -- horror stories told by wronged taxpayers. Democrats were not allowed to examine the witness list until the night before the hearings began. And because the IRS cannot discuss specific cases without the consent of the taxpayers involved, the agency was unable to offer evidence to counter any of the stories. One of the more horrific tales -- that gun-toting IRS agents had knocked a taxpayer's son to the floor and leered at the taxpayer's daughter -- was later discovered to be false.

Does this mean that the IRS is innocent of all charges raised during the hearings (which also featured accusations that agents stole property and harassed taxpayers over niggling details)? Not at all. The IRS is a famously difficult institution to defend oneself against. Contrary to the principle that holds in the US court system, the accused are considered guilty until proven innocent. But the rigged hearings engineered an entirely predictable public outcry for reform, which resulted in the cynically applied IRS Reform and Restructuring Act of 1998. (President Bill Clinton signed the measure after polling revealed that White House opposition to the reform was extremely unpopular.)

As the IRS enters its second year under the reform legislation, it's clear that the measure benefits wealthy taxpayers and private corporations (in other words, the very people likely to vote Republican) while leaving lower- to moderate-income taxpayers (the folks who tend to vote Democrat) to fend for themselves.

All of this was detailed in a front-page New York Times article published on December 19. Congressional pressure on auditors to close cases more quickly -- and stop harassing taxpayers -- apparently benefits only those who can afford to hire tax attorneys and accountants. In interviews with auditors, the Times found that IRS managers are pressuring employees to simply close cases involving affluent taxpayers, in order to avoid their dragging on. Conversely, little pressure is exerted on agents auditing lower- and moderate-income taxpayers.

In fact, the IRS is stepping up pressure on lower-income taxpayers. Congress has mandated a crackdown on taxpayers who claim the Earned Income Tax Credit. The measure was never a favorite of the GOP Congress (it was enacted to ease the burden of Social Security taxes on the working poor), and Republicans have been claiming that the credit is an easy target for taxpayer fraud. And so this year, to comply with congressional demands, the tax agency is expected to spend more resources ferreting out abuses of the earned-income credit.

Sadly, not one of the presidential candidates is talking about the problems outlined in the Times article. Many of them -- well, the Republicans, anyway -- are prattling on about tax reform. Someone in the field -- hello, Al Gore; hello, Bill Bradley -- should be talking about tax justice.

What you can do

Contact your congressional representatives and let them know you'd like to see the IRS apply the same standards to the working poor that it does to the wealthy. Write to Congressman Barney Frank, 2210 Rayburn HOB, Washington, DC 20515-3007 (202-225-5931); Congressman Michael Capuano, 1232 Longworth HOB, Washington, DC 20515-2108 (202-225-5111); Congressman Ed Markey, 2108 Rayburn HOB, Washington, DC 20515-2107 (202-225-2836); and Congressman Joe Moakley, 235 Rayburn HOB, Washington, DC 20515-2109 (202-225-8273, or e-mail jmoakley@mail.house.gov). Write to Senator Edward Kennedy, 315 Russell Senate Office Building, US Senate, Washington, DC, 20510 (202-224-4543, or e-mail senator@kennedy.senate.gov); and Senator John Kerry, US Senate, Washington, DC, 20510 (202-224-2742, or e- mail john_kerry@kerry.senate.gov).

What do you think? Send an e-mail to letters[a]phx.com.