Enrolled Agents are tax professionals licensed by the Department of the Treasury to represent taxpayers before the Internal Revenue Service. The Enrolled Agent designation was created by Congress and signed into law by President Chester Arthur in 1884 to ensure ethical and professional representation of claims brought to the Treasury Department. Members of NAEA ascribe to a Code of Ethics and Rules of Professional Conduct and adhere to annual Continuing Professional Education standards which not only equal but exceed IRS requirements. Today, Enrolled Agents represent taxpayers at all administrative levels of the IRS.

We understand the focus of the Committee's hearings over the next three days will be the practices and procedures of the IRS. The members of NAEA work with the employees of the Internal Revenue Service's Examination and Collection Divisions on a daily basis. Since we represent individuals and small business owners before the IRS, Enrolled Agents are uniquely positioned to provide substantive input to the Service on the effect its policies have on the average taxpayer and to provide feedback to Congress on the practical feasibility and administrability of the tax code sections it enacts into law. We offer in our statement today, some observations about what is working well within the Service as well as areas we feel need to be improved. We also offer some suggestions about possible structural realignments for the Committee to address with the new nominee for Commissioner of IRS in the upcoming confirmation hearing.

We are pleased that the legislative recommendations of the National Commission on Restructuring the IRS are pending before the House and Senate tax writing committees at present. Representatives of NAEA testified at five public hearings conducted by the National Commission on Restructuring the IRS and we submitted written testimony for the record for a sixth heating. In addition, our National staff attended numerous informal meetings with Commission staffers and Commissioners. We praised the work done by the Commission in focusing on constructive ways of improving our tax administration system and making the IRS more responsive to taxpayer input. We support the Commission's recommendations which have been incorporated into the pending legislation. We believe the true bipartisan nature of the Commission's deliberations and the earnest give and take of the democratic process have produced a set of recommendations which are carefully woven together and interdependent upon each other to bring about the change all agree is necessary in the way our tax administration system works. We urge the Senate to pass S. 1096, the Grassley-Kerrey bill, so the restructuring of our tax agency can proceed as soon as possible.

WHAT IS GOING RIGHT WITH IRS?

We believe the Service should be commended for the way it has embraced the recommendations for improvement which were contained in the National Commission's report. We understand that not every recommendation was welcomed with enthusiasm but we have been impressed with the open and nondefensive stance the Service has exhibited in deciding to implement as many recommendations of the Commission as are administratively permissible.

We applaud the recent selection of Bob Barr as the new Assistant Commissioner for Electronic Tax Administration. The willingness to recruit knowledgeable outside expertise to fill critical positions is a mark of an agency willing to change. We hope to see more efforts to bring the best minds and best systems to bear in resolving the problems confronting the Service.

We welcome the recently published Request for Proposals for ways to expand the electronic filing program. We believe as a result of the National Commission's efforts the IRS will now consider to a far greater degree and with much more responsiveness the feedback it receives from the tax practitioner community regarding the great potential of widespread electronic filing. We are concerned about the delay inherent in any RFP process and believe the Service could implement several recommendations already before it which would impact next year's filing season immediately. We can also applaud some of the initiatives the IRS field components are undertaking to increase their responsiveness to local practitioner and taxpayer input. In the past month, our Members have attended many sessions around the country with local IRS officials and reported back to us that they have seen some new willingness to open up the decision-making process where possible to factor in outside stakeholder input. We have seen this concept work very well for the past several years in the Central California District with its Win-Win teams composed of Service employees and tax practitioners. We are starting to see it work in the Pacific Northwest District with the Small Business Laboratory and in the Gulf States District's renewed practitioner outreach efforts.

We can also report to you that the Service's National Office is making a concerted effort to communicate better with NAEA and all national tax professional organizations. Better communication creates a more positive atmosphere for constructive resolution of disputes and differences of opinion.

EMPLOYEE MORALE ISSUES OF CONCERN TO NAEA

We would like to discuss the current state of employee morale in the IRS. We have noted over the past several years an increasingly deteriorating esprit d'corps among Service employees.

In our testimony before the House Ways and Means Oversight subcommittee and the National Commission on Restructuring the IRS, we urged that Congress request that GAO study this issue. The reason we are concerned about this problem is that our voluntary compliance system depends on both sides of the table being staffed by competent, motivated individuals who share a responsibility to ensure that the laws are administered consistently and fairly. This means that individual taxpayers are entitled to the best representation possible before the Service when their individual tax returns are being audited or their individual taxes collected. It also means that all taxpayers, as a group, are entitled to the best possible people representing the public interest to ensure correct returns are filed and the correct amount of taxes are assessed and paid.

The perception of all taxpayers about the fairness and impartiality of the tax administration system is dependent on confidence that their interests are adequately represented by theofficers and agents of the Service. We believe the current state of employee morale is so low that it jeopardizes this perception of adequate representation of the public interest.

Our Members continually provide us with information about dispirited employees and how their attitudes have detrimental effects on taxpayers. Government agents who feel put upon and victimized by continual criticism and harping in the media and political arenas easily develop a callousness when dealing with taxpayer cases assigned to them. This is a human reaction and is very understandable but it is as serious a threat to our voluntary system as anything else confronting it today.

By the very nature of its function, the IRS is not a popular place to work and will always encounter problems in recruiting the best talent available. It is further hampered in its effort to bring in new talent when the esprit d'corps falls to the level where employees cannot recommend employment with the Service. Thisleaves the Service with the unenviable task of revising job criteria to fill jobs with the people available rather than recruiting choice personnel. Often those who are selected have limited promotion potential within the organization.

We believe Congress should study the whole issue of employee morale and task the GAO to address what incentives could be pursued to bolster the IRS recruitment of competent, well educated, promotable individuals for government service. One suggestion might be to explore the possibility of paid internships for tax and accounting students to work within the Service for several years prior to commencing private practice. This would provide excellent on the job training and development experience of future practitioners; insure a steady supply of well educated government employees; regularly give the Service an infusion of new viewpoints with the end product being increased taxpayer confidence and satisfaction.

COLLECTION ISSUES

There are several Collection program policy areas we feel need to be reviewed by the Committee.

The Use of Standard Expense Allowances in Determining Collection Actions

We have reviewed the legislative proposal drafted by the American Bar Association's Tax Section and concur with the concept that the Service should be barred from using statistically generated average expenses in favor of considering the unique facts and circumstances of each taxpayer's case in making collection case resolution decisions.

We understand the Service's position that using the Bureau of Labor Statistics data provides a level playing field among all taxpayers. The Service maintains that the standards were developed to answer taxpayer and practitioner complaints about inconsistent treatment of taxpayers. We agree that if the result of the use of standards was consistent treatment it would be an acceptableresult, but we are increasingly concerned about the lack of good judgment being exhibited in cases reported to us by our Members. Service employees, especially Revenue Officers, are compensated based on the complexity of their cases. When the National Office dictates that standard allowances be used, then more often than not the standard amount becomes the final answer despite the fact that the Internal Revenue Manual permits some deviation from the standards in exceptional cases with supervisory approval. This "checklist mentality" approach leads to as many inequities as the prior system of evaluating each taxpayer on their actual expenses and has caused some new concerns to crop up, notably in the areas of bankruptcy and offers in compromise.

There has been a dramatic increase in the number of personal bankruptcies since January, 1996. The increase last year was in excess of 25% despite a very strong economy in almost every pan of the country. In our opinion, many of these increased bankruptcieswere the direct result of the IRS imposition of National and Local standard expense allowances for use in reaching Collection case determination decisions in October 1995. In many instances, these limits on what a taxpayer may claim as a necessary and reasonable monthly expense has benefitted the Service to the detriment of other unsecured creditors and, in some cases, secured creditors who enjoyed lien priority to the IRS liens. This is especially true with respect to real estate holdings of taxpayers.

We do not believe this effect was ever intended by Congress when enacting the Federal Tax Lien statutes. These standards have a pervasive effect as they impact any case resolution decision relating to the ability of the taxpayer to secure an offer in compromise, an installment agreement or a determination that the tax is currently not collectible.

In many geographical areas, the standard expense allowances for housing, utilities, property taxes, homeowners or rentersinsurance, association fees and property maintenance and repairs are absurdly low. As a consequence, many practitioners have been forced to recommend that their clients seek the protection of the bankruptcy court as there simply is no way to resolve the matter administratively within the IRS.

When we raised this issue with IRS National Office Collection officials last summer, we were advised that their new policy had no impact they could discern on bankruptcies. We believe there is ample indication that there is a direct cause and effect and urge the Committee to ask that GAO examine the problem.

Inconsistent Enforcement Policies Across the Nation

The Service explained that the purpose for imposing the use of the reasonable and necessary expense allowances was to eliminate inconsistencies in application of enforcement criteria. We have long complained about these regional inconsistencies and we agreed with the Service that some effort at uniformity was needed at thenational level.

We now find, however, that new inconsistencies keep cropping up in the way the local districts are choosing to interpret the "standards," as if the term standard was open to debate. For example, some districts now hold out a policy that they will not permit an installment agreement to pay off back payroll tax obligations, even if the debtor business is now current and complying. This causes unnecessary business failures and bankruptcies, not to mention grievous equity losses to the small business owners involved.

The Service made a point of restricting the allowable expense criteria to individual taxpayers, rightfully deciding that business entities had too diverse a group of necessary expenses to ever arrive at a fair allowance number. Despite this wise National Office policy, it has not prevented local districts from proceeding to limit expenses on business taxpayers who are self-employed.

We have had complaints that Revenue Officers have not allowed legitimate business travel expenses where the taxpayer failed to secure a sale on the trip in question. This is a prime example of why decisions of field Revenue Officers need to be subjected to a real appellate review process.

We have also heard of Revenue Officers allowing only the amount authorized by the local housing and utility standard to taxpayers who ran substantial businesses out of their homes and should have been permitted a higher amount of expense allowance to reflect the true cost of the business activity.

We have also had complaints about Revenue Officers not allowing business expenses for automobile and truck costs incurred in the course of the taxpayer's business - but rather limiting the taxpayer to the local transportation standard expense allowance developed for individuals.

All of these examples indicate we have a "standard" that is not a standard in the eyes of many local Revenue Officers.

Collection Statute Extension Authority Questioned

The internal Revenue Code permits the Service to request taxpayers' agreement to extend the statutory period for collection of their tax debts. The current statutory period for collection is ten years from the date of the assessment. This ten year statute was increased from six years in October, 1990. In our opinion, current IRS procedures for seeking statute extension approvals from taxpayers need a total overhaul. It should be an exceptional case where the Service is not able to collect the assessment within the ten years permitted by statute.

One would be reasonable to assume that requests for taxpayers to extend statutes were rare. In fact, the Collection Division Automated Collection Service (ACS) has begun requiring taxpayers who request installment agreements and cannot fully pay their taxobligation within ten years to sign extensions on the collection statute now even though there may be as much as 9.5 years left on the statute. For example, a taxpayer filed a 1996 return on April 15, 1997 owing $10,000.00. The IRS review of the taxpayer's financial condition revealed an ability to pay installments of $55.00 per month. The taxpayer was asked to sign an extension until the year 2012 ! In a contrasting situation, a taxpayer with no ability to pay monthly would have their case reported as "currently not collectible" and suspended without being asked for the statute extension. We question if the current statute permitting extensions is still needed in light of the 10 years permitted to collect. After all, the Service always has the right to reduce its lien to a civil judgment if it feels additional time is warranted to effect collection.

Congress should examine the whole issue of permitting the extension of Collection statutes and at the very least shouldconsider establishing some dollar criteria threshold before a statute extension request could be made of a taxpayer. In the interim, we suggest that the Service be required to provide every taxpayer asked to sign a statute extension with a publication specifically addressing the implications of signing or refusing to sign such requests. Additionally, we think Service requests for extension ought to be in writing and that the taxpayer should be provided with a 5 business day "cooling off" period to seek professional advice concerning the request for extension. Finally, in the event Service personnel coerce, mislead, or misinform taxpayers about the consequences of statute extensions then taxpayers should have the right to revoke the extension and the original statute date should be reinstated even if that means the Service becomes effectively barred from further Collection efforts. These changes would go a long way towards making taxpayers feel the Service is adhering to both the spirit and theletter of the law.

Collection Appeals Process Isn't an Appeals Process

The Service introduced an "appeals" process for Collection cases last winter and made much to do about how it afforded taxpayers the opportunity to seek an appellate review of such matters as the filing of the notice of federal tax lien, withdrawal or denial of a request for an installment agreement. and seizures of taxpayer assets.

The scope of this program is so circumscribed by the procedural limitations imposed that it really does not constitute a true appellate process. The appeals function is limited to reviewing whether or note the decision by the Collection officer adhered to the procedural requirements of the Internal Revenue Manual only. It does not permit any appellate review of the judgment or conduct of the Collection officer.

The one beneficial aspect of this process from our viewpoint isthat it requires the involvement of the Collection group manager prior to the case going up to Appeals. This is a welcome sign that the National Office wants group managers to become more involved in the taxpayer case management and negotiation process, something which has been sorely neglected in the past decade.

We believe the lack of taxpayer and practitioner use of this "appeals" process is ample evidence that this program is not perceived as a fair and independent appellate procedure and believe the Committee ought to examine its intent and practice.

EXAMINATION ISSUES

Use of Enforcement Statistics for Evaluative Purposes Jeopardizes Taxpayer Rights

We are very concerned about some provisions of the most recent Examination Program Letter issued by the Service for the current year. The program letter spells out for the field organization the goals and objectives established by the National Office forexamination divisions nationwide. In the latest version at Appendix F, there is a discussion of new performance measures to be used in evaluating local district directors by using the amount of additional tax, penalty and interest proposed by their examination division, regardless of the validity of the assessments.

We must point out the danger of this approach. Whenever an enforcement agency resorts to using production statistics for evaluative purposes, be they audit yields or traffic tickets, the first casualty is citizen fights. This is especially critical given our perception of the current state of employee morale in the Service.

The Committee should inquire about the impact this emphasis has caused thus far this year and, we believe, should recommend to Congress that the Service be barred from using this data in the way suggested.

Inappropriate Use of Financial Status Auditing Techniques We are still hearing complaints from our Members and taxpayers about the insistence of local Examination Division personnel using "economic reality" auditing procedures when there is no information provided to the taxpayer or representative as to why the Service believes there is evidence to indicate unreported income. We are aware that the National Office issued instructions to the field organization in May, 1996 to use the financial status audit procedures only when appropriate but feel that this is being observed on a sporadic basis by the districts across the nation. We urge the Committee to delve into this problem during these hearings.

One way of informing taxpayers and their representatives of the potential for this type of audit would be to require that the Service provide every taxpayer with a printout of all of the Information Returns Program (1099s, W-2s, CTRs, etc.) data it hasfor the tax year in question along with the original examination notice sent to the taxpayer. This would permit taxpayers and their representatives to be prepared for any inconsistencies between the return and the reported information in the possession of the Service and eliminate the audit "gotcha" game.

Market Segment Specialization Program Audits

We believe the Service should be recognized for the efforts it has made in the development of the Market Segment Specialization Program. In our opinion, it is one of the best approaches to identifying the root causes of taxpayer noncompliance introduced into tax administration in the past twenty-five years.

The best example of the effectiveness of the MSSP approach is the important compliance program the Central California District has underway in the Central Valley of California. This program, which focuses on a major source of noncompliance with tax, labor and immigration laws by farm labor contractors, has yielded dramaticresults in a relatively short time. The best thing about this program is that it has aided the legitimate businesses in the Central Valley who for years have been at a competitive disadvantage when faced with competitors who, by not paying taxes and offering benefits, were able to underbid them. This is exactly the type of program the Service should be focusing on to restore its reputation as a premier government agency and to reestablish their credibility with the legitimate business community. They should be applauded for this effort. We urge the Committee to hold a field hearing in the Fresno, California area to permit a first hand look at this success story.

The traditional assumptions the Service made about its impact on taxpayer compliance behavior patterns have always been questionable in the minds of many tax professionals and academics. For the first time, through the use of the MSSP examination process, patterns of compliance and noncompliance can be trackedby industry and enforcement efforts targeted in appropriate directions.

We think this is good news for taxpayers who are complying and paying their fair share as well as presenting the Service in the favorable light of channeling its enforcement dollars into those areas most in need of its attention.

Examination Quality Review

One of the consequences of the morale problem we discussed earlier in our statement is evident in the assessment of the outcome quality of entry level examinations. When the Service has to fill jobs with the bodies available rather than the best candidates the quality of the work product declines.

We are consistently being told by our Members and by taxpayers via our Web site and America OnLine Tax Channel that they cannot resolve basic issues with the entry level examination staff; that group managers will not meet with them or, if they do, they always back the position taken by the subordinate; that the only way toresolve anything in favor of the taxpayer is to by-pass the examination staff and proceed to appeals on every case.

These are disturbing complaints because there will never be enough staffing available for every case to proceed to appeals. We would like to see the Service make a renewed effort to involve Examination group managers in an informal conference process prior to a case going unagreed. We feel it would be in the best interests of the Service to resolve these cases at the lowest possible level and we know it would save taxpayers millions of dollars annually in representation fees. We have been delighted to learn that the Pacific Northwest District is proposing a pilot test of a district conference staff to help resolve exam cases more expeditiously. This is now a concept which has come full circle as district conference is where many exams were resolved in the 1960s and 1970s before it was abolished. We will be watching this pilot closely and will keep the Committee informed of theresults from the practitioners' perspective.

TAXPAYER RIGHTS ISSUES

Protecting a Taxpayer's Right to Confidentiality We would like to see the Committee recommend legislation protecting a taxpayer's right to confidentiality for any tax counsel and advice. It should be a basic right of taxpayers not to have their own advisors used as witnesses against them. We believe that the IRS has overly broad summons authority which permits it to inquire into a taxpayer's thought processes and the tax advice they received. This violates the taxpayer's reasonable expectation of privacy and confidentiality and goes beyond IRS needs for factual information to determine proper tax liability. Under current law, taxpayers can protect nonfactual information such as analyses, advice and opinions only if they have the financial resources necessary to obtain legal counsel. This practice results in unequal treatment of taxpayers based on their financial statusor choice of tax professional.

We propose that the Committee consider the following proposal to provide all taxpayers fair and equal treatment: 1. For all taxpayers, permit the IRS access to all factual information upon which a return is based;

2. if the IRS has a reasonable suspicion based on evidence that the taxpayer failed to fully report income, the Service would have authority to summon other factual information relevant to the taxpayer's income; and

3. if a taxpayer became the subject of a criminal investigation, the IRS could employ the same broad summons authority available today.

This proposal removes the conditions and ambiguities regarding whether a taxpayer may keep tax advice confidential by linking that protection to the taxpayer, rather than the identity of the tax advisor. Taxpayers remain fully obligated to report everydollar of income and prove every. deduction, exemption, expense, and credit claimed on the return. However, the IRS would not have access to nonfactual information, such as opinions, analyses, thoughts, theories, and mental impressions of the taxpayer and his or her advisor, without the taxpayer's consent.

Register All Commercial Tax Return Preparers

We would like to see the recommendations of the IRS Commissioner's Advisory Group (CAG) regarding the registration of all commercial tax return preparers enacted into law. We believe that a fundamental taxpayer right is to be able to rely on the expertise of the individuals who assist in helping citizens meet their tax obligations. We have, for too long, had an uneven playing field where those tax professionals who have made the most significant commitment to their profession -- Enrolled Agents, attorneys and Certified Public Accountants -o are the most regulated. Only those professions require continuing professional education. Only thoseprofessions have developed standards of professional practice and published standards of professional ethics. The tax laws of this country are too complex to permit commercial tax return preparers to offer services to taxpayers without requiring that they maintain a minimum level of technical proficiency and stand by their product in the event of error. Taxpayers deserve no less. We regulate barbers more than we regulate commercial tax preparers in this country and you can recover from a bad haircut in three weeks!

Provide Full Credit for Social Security and Self-Employment Taxes Paid In

Current procedures followed by the IRS and the Social Security Administration (SSA) with respect to properly crediting the Social Security (FICA) and self-employment (SE) taxes paid by delinquent taxpayers need to be corrected by statute. If a taxpayer fails to file a tax return for more than three years, even if there is arefund due and all taxes are paid in timely, the taxpayer is not credited by the SSA for the FICA and SE taxes paid in, yet the IRS insists on collecting these same taxes. If the government is paid the taxes, it should credit the taxpayer's account.

The Total Amount of Penalties Should Never Exceed 100% of the Tax As a general principle of fair and reasonable tax administration, we believe Congress should declare that the total amount of penalties asserted against taxpayers should never exceed the tax amount for the same period.

Tax Penalties Should Not be Used for Revenue Raising

We believe the current penalty statutes should be subject to a top down Congressional review. There are too many penalties for too many infractions and no one could reasonably expect taxpayers to comprehend their applicability. We think the current Code's proliferation of penalties has accomplished nothing but to create taxpayer perceptions of a system run amok and acts like a "hiddentax rate." This feeling is reinforced by the fact the tax committees have taken to scoring penalties for revenue raising. The Number of Years to Claim Refunds Should be Lengthened We have seen some recent tax law cases where ample reasonable cause existed to permit longer periods for taxpayers to claim refunds and the Courts found themselves bound by statute to deny the claims. We believe this is wrong and Congress should extend the right to refund claims for a period longer than three years.

ORGANIZATIONAL STRUCTURE OF THE IRS

As we stated in our opening remarks, we strongly endorse the recommendations of the National Commission. We originally proposed during testimony before the Commission last April that the Commission consider the division of the IRS into two separate agencies. While we recognized that was a radical suggestion, we made it to point out significant problems with the organizational culture of the Service. We think it would be beneficial for theincoming Commissioner to study the possibility of accomplishing the organizational schema we proposed within the existing agency. This could be accomplished by establishing two Deputy Commissioner positions - one filled by the Presidentially-appointed Taxpayer Advocate and the other, also Presidentially appointed, to serve as Deputy Commissioner, Tax Enforcement. We could envision these two appointees serving the following roles:

Deputy Commissioner, Taxpayer Advocacy

The new Taxpayer Advocacy organization would be headed by the Taxpayer Advocate, nominated by the President and confirmed by the Senate. This would bring the degree of independence to the Advocate's role sought by Congress and the public. The field component would be headed by local Taxpayer Advocates under the local District Directors. This organization would be responsible for:

• Taxpayer Advocacy function (taxpayer intervention, systemicmonitoring and legislative advocacy);
• Taxpayer Communications (TDA and TDI notices, correspondence examinations, information returns programs such as document matching, underreporter program, etc.);
• Taxpayer Service function (telephone assistance, taxpayer education, small business education clinics, local walk-in services);
• Tax Forms (design, printing and distribution);
• Electronic Tax Administration (electronic filing initiatives, electronic tax payment programs. web site maintenance, electronic commerce applications, electronic communications applications);
• Data Processing and Information Technology functions;
• Appeals function, for resolution of disputed collection and examination cases;
• Technical function for issuance of Revenue Procedures, Rulings, Technical Advice memorandums and private letter rulings - in shortanything that has to do with interpretation of the Internal Revenue Code; and
• Internal Audit and Internal Security Functions.

Legal services to the Taxpayer Advocacy organization would also be provided by the Chief Counsel of the Treasury's Chief Counsel for Tax Administration function, thereby assuring coordination on Tax, District, Appeals, and Supreme Court cases as they progress through the system.

The benefits derived from separating these functions from enforcement functions are numerous:

• It permits recruitment of creative individuals with the temperament for taxpayer service and provides a promotion ladder for advancement up the taxpayer advocacy and customer service line;
• It permits technology issues to be addressed by individuals with technology expertise and broader business experience thantraditional IRS managers;
• It permits technology decisions to be driven by overall business judgment as it affects 200 million taxpayers;
• It permits taxpayers to seek answers to their questions from an organization the Congress has appropriately funded with an adequate budget to serve citizens and it populates the technical tax law interpretation function with individuals driven by customer service motivations and not enforcement attitudes;
• It places the ability to enforce the Taxpayer Bill of Rights legislation in the hands of truly independent Taxpayer Advocates who will have the right to intervene in Tax Enforcement organization cases when appropriate; and
• It provides taxpayers with a truly independent appellate process thereby improving perceptions of fair and impartial administration of the tax laws.

Deputy Commissioner, Tax Enforcement

The tax law enforcement functions of Examination, Collection, and Criminal Investigation should be all that comprise the new Tax Enforcement organization. The head would also be nominated by the President and confirmed by the Senate. Its field component would be headed by local Tax Enforcement Chiefs under the local District Directors. The organization would take over responsibility for Collection cases once those cases have completed the notice cycles and the taxpayer had not adequately responded. The existing Automated Collection Service (ACS) would be part of this entity. The responsibility for examination cases would be assumed when the case required the taxpayer or his/her representative to appear. Thus, correspondence examinations questioning one or two items would remain with the Taxpayer Advocacy organization. Obviously, all criminal cases would originate in and be worked by the Tax Enforcement organization only. The Chief Counsel of the Treasury would still provide legal support services through a Chief Counselfor Tax Enforcement function. This organization would not have its own data processing operation, but would secure its information technology services from the Taxpayer Advocacy organization. The benefits of locating all law enforcement functions under one roof and permitting one organizational focus to dominate direction should improve morale of the individuals working in the agency, should concentrate efforts in combating the growing problems of taxpayer noncompliance, and permit innovative solutions to targeting law enforcement.

SUMMARY

We hope these ideas have proven useful to the Committee in its deliberations. I would be very happy to respond to questions you may have regarding our views.

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