DATE: Monday, September 29, 1997            TAG: 9709270030

SECTION: LOCAL                   PAGE: B8   EDITION: FINAL 

TYPE: Editorial 

                                            LENGTH:   66 lines

IRS: THE ARROGANCE OF POWER MORE IS NEEDED THAN A PROMISE TO DO BETTER

Senators appeared shocked last week to learn that taxpayers fear and loathe the IRS, in part because the IRS engages in fearsome and loathsome behavior. Talk about being out of touch.

Three days of testimony revealed what many taxpayers already know from unpleasant first hand experience - the IRS is too often an agency characterized by arrogance, insensitivity and abuse of its immense power.

Manners, morals and legality aside, such behavior is counterproductive on purely pragmatic grounds. If we are to have the kind of country we all desire, taxation is inescapable. Taxes are required to pay for roads, a strong military, the administration of justice and other essential services.

But the social contract between citizens and their government implicit in taxation relies to a very great extent on voluntary cooperation by taxpayers. For that to happen, taxpayers must believe that the tax system is fair and that the tax collector behaves in a just manner.

The investigation into IRS abuses revealed an agency capable of treating taxpayers without justice. And, when pitted against the IRS, the individual citizen finds himself in an inequal struggle. Certainly, those who scoff at the law and avoid taxation have to be held accountable. If they aren't, the burden on honest citizens is unfairly increased. And non-payment is a serious problem. As much as $200 billion a year that is owed is not collected, 17 percent of all dollars owed.

But it's possible to pursue deadbeats without crushing the temporarily insolvent and to make distinctions between deliberate evasion and unintended error. Instead, the IRS appears to have made no such distinctions. It put into effect policies that encouraged the pursuit of small fish ad let the big escape. It forgot that whatever you incentivize you get more of.

Implicit quotas gave collectors an incentive to make more cases. Sometimes `how' was not a consideration; quantity rather than quality was all that counted.

In a tepid mea culpa, Michael P. Dolan, acting IRS commissioner said he would order district directors to ``review allegations,'' hold monthly ``problem-solving days,'' and quit using the quotas that the IRS denies having. That's hardly the agenda of a man hellbent on sweeping reform.

Incentives must be rethought so that the IRS delivers customer service as enthusiastically as it pursues those who owe it a buck.

IRS employees who abuse taxpayers must be treated as harshly as they treat their victims. Cops on the tax beat have no more right to use rubber-hose tactics than street cops do.

Far greater oversight is needed from the Treasury Department. For too long the IRS has behaved as if a law unto itself. This is a problem of management structure that needs to be addressed.

Ultimately, however, Congress needs to consider not just the sins of the IRS but its own. To a great extent, taxpayers fail to comply with the law and the IRS is driven to extremes in enforcing it because Congress has concocted a tax code that mere mortals can't fathom.

It requires ordinary citizens to waste billions on tax preparers, tax attorneys and tax accountants. It requires the government to squander billions on tax enforcers, the largest contingent of government employees after the Defense Department.

The IRS should be compelled to behave better or taxpayers won't. But Congress must make tax reform a top priority.

That means simplifying a code whose complexity turns good citizens against their government, provides bad citizens with ample opportunity and incentive to cheat and tilts the playing field in favor of individuals and coroprations with the means to buy their own private loophole. It's a disgrace, and Congress is culpable.

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