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Cracking The Code

Congress and the White House go to work to simplify the tax code.

The push is on to overhaul the IRS, making it more customer service-oriented. Sound too good to be true? It may be. But Congress is clamoring for change. A congressional commission that spent a year studying the IRS recently issued a series of recommendations on how to improve the agency. High on the list: simplifying the tax code.

If the commission's recommendations are enacted, small-business taxpayers will find it easier "to comply with their tax obligation with less intrusion from the IRS," states a commissional report. They'll also gain more rights and protections.

The IRS interacts with more citizens than any other government agency or private-sector business in the United States and collects 95 percent of the revenue needed to fund the federal government. Overhauling the IRS is a tall order--but it's long overdue, say Sen. J. Robert Kerrey (D-NE) and Rep. Rob Portman (R-OH), co-chairs of the National Commission on Restructuring the IRS. Among the commission's findings is that the agency lacks expertise and accountability, and there's not enough continuity among senior officials.

The IRS' attempts to update its computer system also received poor marks. The $4 billion wasted on ineffective computer modernization efforts is a perfect case study of the deficiencies that exist within the current IRS management and oversight structure, says Portman.

Attorney and CPA Mark Luscombe agrees. "The IRS botched up its conversion to technology. It spent a lot of money and [doesn't have] much to show for it," says Luscombe, principal federal tax analyst with CCH Inc., a Riverwoods, Illinois, publishing company specializing in federal laws and business finance. Despite these problems, he says, "the IRS is still probably the most efficient and effective tax collector in the world."

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This article was originally published in the October 1997 print edition of Entrepreneur with the headline: Cracking The Code.

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