Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 22, 1990                   TAG: 9003232689
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-3   EDITION: METRO 
SOURCE: Associated press
DATELINE: WASHINGTON                                 LENGTH: Medium

MAGAZINE: IRS WRONG IN ALMOST HALF OF CLAIMS

Taxpayers confused by the law and afraid of challenging the Internal Revenue Service forked over $7 billion that they did not owe, the magazine concluded.

"Clearly, individuals are caving in to questionable demands for more money that would propel them to the phone in a second if the bill came from some bank or credit-card company," Money says in its April edition.

The magazine, building on a 1988 study by the General Accounting Office, an arm of Congress, interviewed lawyers, tax accountants and IRS officials in reaching those conclusions.

Last month, Money polled 300 of its subscribers (with a median income of over $52,000 a year) and found that at sometime in their lives, half had received IRS bills for more taxes and penalties.

"A stunning 45 percent of those who contested their notices report that the IRS claims were totally incorrect and an additional 24 percent said that they were at least partially wrong," the magazine wrote. "What's more, of those who challenged the IRS on their own, 53 percent wound up paying nothing and another 17 percent succeeded in getting the bill reduced."

The magazine blamed the IRS error rate on poorly trained, low-paid clerks who type data from tax returns into computers at the agency's 10 regional service centers, and examiners, just as poorly paid and undertrained, who manage the notices and follow-up letters.

Another key factor, acknowledged by the IRS: an aging computer system. The IRS has begun a plan, which could cost $8 billion and take eight years to complete, to modernize its 1960s computers.