Since the IRS Restructuring and Reform Act of 1998 was initiated, major changes have revolutionized IRS operations to better serve taxpayers. The IRS has undergone changes in many aspects of its operations including changes to its organizational structure, updating privacy regulation, implementation of changes to the tax code and procedural adjustments within the organization. These changes are set forth in the IRS strategic plan and include the meeting of several goals.
In terms of regulatory structure, the IRS has been able to make several modifications to help meet its mission. In March of 2008, the Department of the Treasury exempted the IRS from specific provisions of the 1974 Privacy Act. The purpose of this exemption, claimed to be within accordance with the Privacy Act, is aimed at compliance in reporting of excise taxes. The Privacy Act exemption was preceded by a removal of a previous exemption in September of 2007 and accompanied by previous changes regarding disclosure of employee information.
Other goal reaching methods reported in the IRS strategic plan include internal and external performance audits such as the Office of Management and Budget (OMB) Program Assessment Rating Tool (PART) and audits performed by the Treasury Inspector General for Tax Administration (TIGTA). These performance audits aim to ensure that the IRS is operating properly and correctly servicing the needs of the government and taxpayers. Additionally, the IRS is monitored by the Senate Committee on Finance, and the Government Accountability Office (GAO).
The IRS generally aims to maintain the lawful collection of taxes through high quality of service and operational improvements in the face of a changing tax environment. Moreover, the ability of the IRS to adapt and implement future operational improvements are essential to its performance as an organization. For example, a combination of modern developments within information technology and tax code adjustments made through fresh legislative action require a sound managerial and operational process to effectively deal with a new and dynamic tax environment.
IRS statistics for the years 2000-2010 demonstrate its capacity to meet the objectives set out by the IRS Restructuring and Reform Act of 1998. The IRS’s numerical data reveals that the IRS is fulfilling its mission and continues to achieve its goal of consistent and efficient tax collection despite an ever changing legal and technological environment.
To illustrate, IRS tax revenues have increased, the tax gap has declined; additionally, the push to increase the number of e-filed returns has reduced the need for costly manual processing of tax returns. No matter what you think of tax collection and tax rates, you must agree that the IRS is an efficient organization, check this out:
Many Government agencies have been criticized for ineffectively serving the public. The IRS is no exception and over the years several controversies have arisen around some IRS practices. The controversies may seem well-founded on the surface, but they may not be as controversial as some believe. A look at the controversies surrounding the IRS reveals its dynamic nature.
Controversy 1: Critics, including the National Treasury Employees Union (NTEU), have claimed the IRS is not committed to collection and enforcement of taxes with the objective of closing the tax gap i.e. the amount of unpaid U.S. taxes.
Counterpoint 1A: According to the CATO institute, a think tank advocating free market principles, the IRS has not experienced a rising tax gap.
Counterpoint 1B: Since the tax gap in the first decade of the 21st century was fairly steady and GDP grew by approximately $4.5 Trillion dollars between 2000-2008, then the tax gap became a smaller percentage of GDP over time.
Controversy 2: Since 1998, despite a reduction of the total amount of IRS employees, by about 20,000, the agency's operating budget increased $3 billion.
Counterpoint 2A: Inflation alone would increase operating costs by approximately ¼ of a billion dollars.
Controversy 3: Violations of taxpayer privacy have been a concern for many years due to a policy of non-disclosure of internal use documents and reports of unauthorized review of taxpayer information. IRS accountability is also less vulnerable to inspection due to the IRS’s removal of the voluntary disclosure of IRS officials’ names. This and other immunity from disclosure can also lead to in-house violations of privacy within the IRS.
Counterpoint 3A: The IRS, through revision of the “Privacy Act Systems of Records”, has eliminated the option of voluntary disclosure of officer information. However at the same time, new rules have been implemented by the IRS to more effectively deal with employee misconduct. Furthermore, disclosure of internal use documents could lead to violations of the IRS responsibility to keep taxpayers information confidential.