Internal Revenue Service statistics for fiscal year 1999 show that
enforcement actions have resulted in a $1.3 billion decline in unpaid
tax collections — a decrease amounting to only a fraction of the $1.8
trillion in taxes collected in 1999, and yet which some government
officials fear will lead to the eventual breakdown of the U.S. tax
“We really don’t want it to go down any more than it has,” said IRS
Commissioner Charles Rossoti, according to an Associated Press report.
“We’re trying to keep the ship afloat.”
The commissioner’s fears are echoed by other top IRS officials who
say the decline in enforcement action collections must be reversed or
the integrity of the entire tax system could be placed at risk.
Several factors have been cited as the cause of the decline in
collections, including the steady reduction of some 15,000 agency
employees over the last few years, as well as the temporary shift of
some collections agents to other duties, such as answering taxpayer
Also blamed is the new requirement that the IRS must prove a taxpayer
is delinquent — a change from previous policy which put the burden of
proof on the taxpayer’s shoulders.
The IRS Restructuring Reform Act of 1998, sponsored by Rep. Bill
Archer, R-Texas, granted several other new rights to taxpayers accused
by the IRS of owing more money to the government, and included a section
dealing with Service employees who violate those taxpayers’ rights.
Section 1203 of the new law made such actions as agent harassment or
retaliation against taxpayers punishable by immediate dismissal which
cannot be appealed, sending panic and confusion through the ranks of IRS
agents who feared they would lose their jobs, according to Colleen
Kelley, president of the National Treasury Employees Union.
“There was a lot of uncertainty. Employees did need clarity about
the new rules and what was expected of them,” said Kelley.
Kelley also noted that the first round of Section 1203 investigations
were done “fairly,” and that the IRS was “applying appropriate
standards” in its investigation of union employees.
Rossoti said thousands of agents have received intensive training
about the new law and taxpayer rights, but also noted that he believes
more money is needed from Congress in order to hire additional staff and
purchase better technology to reverse the agency’s decline in
Critics, however, maintain more money for the Internal Revenue
Service will not reverse the trend of slipping collections, nor prevent
the demise of the tax system.
“This has very little to do with fear over lost revenue, and a lot to
do with fear over lost powers,” said Pete Sepp, spokesman for the
National Taxpayers Union. “What will cause the
system to collapse is the complexity of the tax code.”
Sepp called IRS and press accounts of the decline in collections
“over-exaggerated,” saying that while the $1.3 billion loss sounds like
a vast amount of money, it pales in comparison to the total amount of
tax revenue collected each year by the IRS.
However small the decline, Rossotti believes Americans will look to
the statistics and be enticed to cheat on their taxes.
“What we want to achieve is maximum compliance,” he said. “Everybody
should want that, if they’re an honest taxpayer, because it means nobody
is getting away with something.”
The problem is that honest taxpayers account for much of the unpaid
revenue, according to Sepp, who told WorldNetDaily that the confusing
nature of the tax code causes mistakes, leading to the delinquent
Sepp also noted that the same law blamed for sending panic among IRS
employees and resulting in diminished collections also calls for the
development of a board of directors to give guidance and instruction the
agency says it needs.
“If we want to assign blame, there’s plenty to go around,” said Sepp,
who noted that the White House is responsible for nominating potential
The board is to be made up of both public and private sector
representatives, due to have been nominated by the White House by
January 1999. However, with no nominations having been made and
Congress now in recess, development of the board is unlikely in the near
future, said Sepp. Once nominated, members must be confirmed by
Congress, which does not reconvene until Jan. 24, 2000.
Specific numbers for fiscal 1999, which ended on Sep. 30, show the
following IRS actions:
- 504,403 levies on delinquent taxpayers’ bank accounts and
wages, down from 2.5 million in 1998 and 3.1 million in 1997;
- 161 property seizures, down from 2,300 in 1998 and 10,000 in
- 167,867 property liens, down from 544,000 two years ago.
Money collected from such methods totaled $6.5 billion in 1999,
which is $1.3 billion less than was collected last year.