The winds of change blowing through the IRS.

• Author: Summers, Lawrence

It is a pleasure to be among tax professionals to discuss the tremendous changes under way at our nation's tax collection service and the best ways to continue that transformation.

These past couple of years have been a period of tremendous ferment -- inside the IRS and about the IRS. Continuing improvements in the service provided by banks, brokers, credit card companies, and other users of information technology have brought ever more sharply into focus the IRS's problems with customer service. Treasury, the IRS, the National Treasury Employees Union, and many interested members of Congress have all recognized that the IRS needed to do much better at providing the kind of cost-effective, high-quality service that American taxpayers have come to expect from the private sector and that our nation deserves.

The problems at the IRS have developed over many decades, and they will not be solved overnight, or even over a couple of filing seasons. But with the work of the National Commission on Restructuring the IRS, led by Senator Bob Kerrey and Congressman Rob Portman, with input from valuable hearings on Capitol Hill, and through the work of many others inside and outside the Administration, a clear consensus has emerged among a wide group of stakeholders on the need for change. With the executive actions we have taken and will take and the legislative progress that has been made, those changes are now firmly on the way to being achieved. The IRS has started to change and the public is starting to feel the benefits of that change.

Today I would like to review what we have done; what the results have been so far; and where we need to go from here, emphasizing the importance of passing the IRS reform legislation currently before Congress.

1. Changes at the IRS

   When I spoke here a year ago I had the opportunity to lay out Treasury's five point plan for changing the IRS. Our goals were: to strengthen leadership; to increase managerial flexibility; to enhance oversight; to improve IRS budgeting; and to work for a simpler, fairer tax code. We have made real progress in all of these areas. But more progress depends on passing the IRS reform legislation that has already passed the House last fall and that we hope soon to see enacted.

   New Leadership

   Last year I emphasized the need for a different type of Commissioner -- whose experience emphasized management, emphasized customer service, and emphasized the critical importance of technology. We believed that major change at the IRS had to come from the top. At that time we did not know who that commissioner would be. Fortunately after an extensive search we were successful in finding and appointing Charles Rossotti.

   Commissioner Rossotti will be speaking later today, and I know all of you will be as impressed by his bold new approach to the IRS as we at Treasury -- and so many in the IRS and in Congress -- have been. He is a former Chief Executive Officer of a large, highly successful private-sector company. He is someone with a long record of building effective organizations -- effective organizations that succeed because they meet their customers' needs.

   An important aspect of leadership is continuity. The IRS reform bill passed in the House last fall and now being debated in the Senate calls for the five year term for the new Commissioner that we proposed. This will enable longer term planning and greater independence and provide for much greater continuity from Administration to Administration. It is the modern way to run an effective organization. And it is the right way.

   Greater Flexibility

   One thing is clear: if new leadership is to mean anything, it will be vital to provide for the managerial flexibility at the IRS to translate it into practice. Getting the right people in the right jobs is one of the most important elements of effective management. Everyone who has looked seriously at the IRS, including the Restructuring Commission and the Congress, agrees that this kind of flexibility is badly needed, particularly to help recruit people in the critical areas of information technology...