Letter on IRS budget and new commissioner

On December 9, 2002, TEI President Drew Glennie sent the following letter to President George W. Bush concerning the need for adequate funding of the Internal Revenue Service. The letter also addressed the need to appoint a new Commissioner as soon as possible.

On behalf of Tax Executives Institute,

I am writing to urge you to ensure that the Internal Revenue Service receives the funds and other support it needs to effectively administer our country's tax laws and to appoint a new Commissioner as soon as possible in order to most effectively address the challenges now facing the IRS. We are concerned about recently published reports that the Office of Management and Budget has substantially pared back the IRS budget authorization request for business modernization for fiscal year 2004 by as much as 50 percent. We are also concerned that no nominee for the vacant position of Commissioner of Internal Revenue has yet been submitted to the Senate for confirmation. Both matters may detrimentally affect in a significant way our nation's system of tax administration.

TEI's 5,200 members are accountants, attorneys, and other business professionals who work for 2,700 of the largest companies in the United States, Canada, and Europe. TEI's members work on tax issues, and with the IRS, on an every day basis. They are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. The Institute is committed to maintaining a system that works - one that builds upon the principle of voluntary compliance and is consistent with sound tax policy, one that taxpayers can comply with, and one in which the IRS can effectively perform its audit function without unduly burde-nine taxpayers.

As the preeminent association of business tax executives, TEI knows how critical it is to invest in and plan for the future. Our members know the importance of sound business processes and strict internal controls, Equally important, the companies represented by TEI's membership know that to be successful, they must plan ahead and ensure that adequate resources are devoted to core functions such as customer service and employee training. As a group, they applauded the decision to restructure the IRS to operate more like a business and to adopt a more taxpayeroriented service focus.

The IRS's previous attempts at major technological modernization have not been successful. As a consequence American taxpayers have had to endure customer service that has been less effective than it should be, and significant amounts of taxes that could have been collected were not. This failure to modernize has operated as an indirect tax increase on compliant taxpayers. Taxpayers trying to pay their taxes and IRS personnel trying to do their jobs have had to work with systems that are inadequate and seriously out of date. The current reorganization is the most far-reaching yet, and at the five-year mark is approximately one-half of the way through the original planning horizon.

If the IRS is to continue its efforts to rebuild the agency's credibility and effectiveness, the agency must have a full complement of leadership and must be assured that the programs needed to implement its mission will be fully and consistently funded. Much has been accomplished under the IRS Restructuring and Reform Act, but much remains to be done. We recognize that the IRS has experienced problems in the past with its modernization programs, but we believe that the agency has made substantial progress in dealing with internal management systems. In addition, these concerns, while important, should not impede the IRS's efforts to deal with its broader mission. TEI respectfully suggests that reducing the IRS's funding is not the most efficient or effective way to address concerns about management of its modernization. OMB, the Treasury, and the IRS should directly address the problems that have been encountered and find workable solutions to them. It is imperative that effective solutions be found as soon as possible. A failure of the current effort would have far-reaching effects on our government and American taxpayers. The current reorganization programs must be successful. If the IRS is to succeed as a modern, customer-focused agency, it must have adequate funding for its service initiatives. Thus, we urge the Administration to restore funding for IRS modernization.

And again, although TEI has the highest regard for acting Commissioner Bob Wenzel and other senior officials of the IRS, the departure of Commissioner Charles Rossotti at the end of his five-year term leaves the agency at a critical juncture without a leader appointed by the President and confirmed by the Senate.

If you have any questions, please do not hesitate to contact me, at (403) 691-4900, or Timothy J. McCormally, TEI Executive Director, or Fred F. Murray, TEI General Counsel and Director of Tax Affairs, at (202) 6385601.