Most federal agencies have Internet Web sites, but few agencies have embraced cyberspace with as much enthusiasm as the Internal Revenue Service. The IRS has established online services that can greatly ease the burden of compiling and filing tax returns for Net-savvy taxpayers.
-- In 1996, the IRS launched a new Web site (http://www.irs.ustreas.gov) that enables taxpayers with Fax machines or computers to download forms and instructions and receive highlights of the tax law, answers to frequently asked questions and an interactive guide to common tax issues.
For last-minute filers, this service can end the desperate search for forms long after post offices and libraries have run out of them. The site has been a hit with taxpayers: During its first year of operation, it logged more than 100 million hits and downloaded more than 3 million documents.
-- Taxpayers also can file their returns online through another IRS service. The agency reports that more than 14 million returns were filed electronically in 1997, either through tax preparers or home computers. The service has recently been expanded to enable taxpayers to file both their federal and state returns online.
The IRS is not the only purveyor of tax-related information on the Net. House Republican leaders introduced a site last November. And champions of various tax-reform bills also have Web sites touting their proposals:
-- The Republicans are soliciting taxpayer “horror stories” at http://hillsource.house.gov/irs.html.
-- House Majority Leader Dick Armey, R-Texas, promotes his flat tax at http://flattax.house.gov.
-- Rep. W.J. “Billy” Tauzin, R-La., promotes a national sales tax at www.house.gov/tauzin/cvr.htm.
-- House Minority Leader Richard A. Gephardt, D-Mo., the Democratic Party's leading champion of tax reform, describes his 10 percent tax plan at www.house.gov/democrats/taxplan/taxplan.html.
Adams, Charles , For Good and Evil: The Impact of Taxes on the Course of Civilization, Madison Books, 1993. A tax lawyer looks at history through the lens of taxation and comes up with a mostly negative view of the myriad ways governments have supported themselves.
Boskin, Michael J. , ed., Frontiers of Tax Reform, Hoover Institution Press, 1996.Boskin, an economics professor at Stanford University and former economic adviser to President George Bush, presents a collection of essays in which tax experts examine the goals of tax reform and describe in detail the various reform proposals that dominated the 1996 presidential campaign debate.
Graetz, Michael J. , The Decline [and Fall?] of the Income Tax, W.W. Norton, 1997. The author, a Treasury official during the Bush administration, decries the tax code's growing complexity over the past two decades as the cause of Americans' anti-tax sentiment. He points out the failings of the leading tax-reform proposals and offers as an alternative a value-added tax, combined with an income tax for upper-income individuals.
“Binning the IRS,” The Economist, Oct. 4, 1997. Restructuring the IRS would do little, according to this editorial, to improve the U.S. tax system. A better solution would be fundamental tax reform to simplify the tax code itself. But champions of current proposals have thus far failed to dispel fears that the changes will do more harm than good.
Birnbaum, Jeffrey H. , “Does Not Compute,” The Washingtonian, December 1997. Since 1989, the IRS has wasted millions of taxpayer dollars in a failed attempt to modernize its antiquated computer system. Most of the problems stem from the agency's reluctance to use outside experts for fear of jeopardizing taxpayer privacy.
Chait, Jonathan , “The Flat Tax Scam,” The New Republic, Dec. 15, 1997. Adoption of the flat tax espoused by House Majority Leader Dick Armey, R-Texas, the author writes, would jeopardize the nation's employer-based health insurance system, home ownership and charities, which depend on tax-deductible contributions.
Hirsh, Michael , “Infernal Revenue Disservice,” Newsweek, Oct. 13, 1997. The IRS is not so much a mere enforcer of the tax code as a malign bureaucracy that abuses taxpayers at will with little or no oversight, the author writes. While its victims are few, considering the number of taxpayers overall, they are largely helpless to defend against the agency's allegations of wrongdoing.
Kettl, Donald F. , “The Battle Over Fixing the IRS,” The Brookings Review, winter 1998. The author takes issue with two elements of the IRS restructuring bill now before Congress. Creating a new oversight board including individuals from the private sector, he writes, would create unavoidable conflicts of interest. Shifting the burden of proof on the IRS in tax court cases also would be counterproductive because it would force the agency to adopt more aggressive tactics to collect unpaid taxes.
Reports and Studies
Congressional Budget Office , “The Economic Effects of Comprehensive Tax Reform,” July 1997. Adoption of a consumption-based tax to replace the current income tax system would likely leave younger generations better off, but older generations worse off, the CBO concludes. A final assessment of tax reform must await further refinement of the proposals under discussion.
National Commission on Restructuring the Internal Revenue Service , “A Vision for a New IRS,” June 25, 1997. A bipartisan commission co-chaired by Sen. Bob Kerrey, D-Neb., and Rep. Rob Portman, R-Ohio, reports after a yearlong investigation of the IRS that instances of taxpayer abuse are rare, but that the agency should become more efficient by improving such areas as management training and computer technology.
Willis, Lynda D. , “Taxpayer Compliance: Analyzing the Nature of the Income Tax Gap,” General Accounting Office, Jan. 9, 1997. The tax policy director of the General Accounting Office reports that American taxpayers pay only about 87 percent of the taxes they owe, leading to a “tax gap” of lost revenues that amounts to billions of dollars each year. Because adopting more intrusive record-keeping requirements would be unacceptable to the public, she calls on the tax-collecting agency to find cost-effective ways to close the gap.