NCPA - National Center for Policy Analysis

Measuring Change By "Inchstones" At The IRS

February 29, 2000

It has been almost two years since Congress held hearings on abuses at the Internal Revenue Service. And it has been almost 18 months since enactment of a law designed to correct them. But observers say the pace of change at the agency is remarkably slow.

Even IRS Commissioner Charles O. Rossotti admits he measures progress at the agency in terms of "inchstones," rather than milestones.

  • The agency's computers are ancient, many taxpayers' phone calls don't get through, enforcement actions have all but stopped, audit rates have shrunk to the vanishing point, there is no reliable data on the scope of tax cheating and the work force reportedly struggles with bouts of anxiety.
  • There is now a backlog of about 46,000 so-called "innocent spouse" claims from taxpayers seeking relief under the 1998 law -- a provision designed to protect divorced and widowed people from tax liabilities run up by their ex-spouses.

Audits are a major area of concern. Experts point out that widespread recognition that audits are way down invites cheating by some taxpayers. If compliance were to drop by even 5 percent, the budget surplus would dry up.

  • In the mid-1990s, about 0.7 percent of taxpayer returns were audited.
  • But for 1999, only 0.3 percent will be reviewed.
  • About 0.19 percent of taxpayers in the $25,000 to $50,000 income bracket will be audited on the basis of their 1999 returns.
  • That rises to 0.77 percent for those making $100,000 or over.

Source: Albert B. Crenshaw and Stephen Barr, "How Long Does it Take for a New Leaf to Turn," Washington Post, February 27, 2000.


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