1.The IRS should be divided into two separate functions: a Taxpayer Service Administration and a Tax Enforcement Administration. In addition, Congress should establish a Congressional Tax Administration Office, similar to the Congressional Budget Office, to coordinate all oversight issues and IRS responses to problems raised by the Members' constituents, to provide an independent point for analysis of trends, eliminate the wasteful duplication of investigations and reviews, and provide for a centralized overview of the agency's effectiveness.
2. NAEA believes the IRS is as vital a part of the national infrastructure as the interstate highway system or air traffic controllers. Congress must ensure that IRS has the financial resources to be adequately staffed, trained and supplied. NAEA supports long-term, multi-year funding for IRS systems that cannot be built in one year.
3. NAEA recommends that IRS be at the table as tax legislation is being developed so that implementation issues can be resolved early in the process. The current filing season is going very smoothly despite the fact that Congress made several hundred tax law changes in late July and early August last year which required significant implementation work by IRS. It is a tribute to the dedication of IRS staff that necessary forms, instructions and publications were available in timely fashion.
4. NAEA recommends that the IRS standard for electronic filing submissions should be written to an unencrypted, open-document standard so that individual taxpayers and practitioners may be given the option of utilizing whatever electronic filing transmission service they select based on market place pricing. The process already is in place to require all tax preparation software vendors to submit their program output to the Service for final approval. To add the additional requirement that they provide open access to the data file needed for electronic filing is relatively simple. The continuance of the software vendors hegemony must end if electronic filing is to receive the fair test it deserves and the American taxpayers are to recognize the return on their investment made in IRS computing power. Once this cost logjam is broken, we believe a signifcant increase in electronically submitted returns will occur.
5. NAEA believes 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. The tax laws of this country are too complex to permit commercial firms and individuals 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. For this reason, NAEA recommends that all commercial taxpreparers be licensed.
6. The concept of client privilege should be extended to Enrolled Agents and Certified Public Accountants. It is a basic right of taxpayers not to have their own advisors used as witnesses against them.
7. The IRS should contract out the marketing of electronic filing services.
8. NAEA recommends that the General Accounting Office address what incentives could be pursued to bolster the IRS recruitment of competent, well educated, promotable individuals for government service.
9. In a number of areas, the tax code is overly complex or at variance with stated public policy goals. An example of this is the Alternative Minimum Tax (AMT). The Earned Income Credit, despite recent efforts at reform, remains overly complex to average taxpayers yet is relatively easy to abuse. User fees and penalties should not be used as revenue raisers. There should be closer collaboration between federal and state law-makers as to the interaction of federal and state laws.
10. NAEA recommends that greater attention be given to bringing non-compliant taxpayers into compliance. A dramatic increase in the number of personal bankruptcies since January, 1996, despite a very strong national economy, may be attributed in part to IRS national and local standard expense allowances for housing, utilities, property taxes, homeowners or renters insurance, association fees and property maintenance and repairs. These expense allowances are used in collection cases, however, in many geographical areas, the allowances 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.