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Restructuring the IRS May Carry Liabilities

Congress has tried before to improve functions at the IRS, but has gotten only mixed results.

In 1998, lawmakers passed legislation signed by President Bill Clinton that significantly reorganized the agency, centralizing more of its power in Washington.

This seemed to help in some areas, as a new leadership team moved assertively to crack down on corporate tax shelters. Yet in the aftermath of the recent controversy, some have pointed to another effect of the law, which critics say created a greater gulf between senior management and IRS field officers.

Former IRS Chief Counsel Donald Korb says the restructuring “took away the pipeline of future leaders” because a “whole series of jobs were eliminated that in the past had given IRS people, as they were moving up to executives, broad experience all over the country in all types of jobs.”

Whether Congress will take another shot at reorganizing the agency remains an open question. Ways and Means Republicans have hinted that changes to the agency could be included in tax overhaul legislation. They have also argued that eliminating tax breaks, lowering rates and generally simplifying the tax code would itself minimize the importance of the IRS.

That may be an unrealistic goal, however.

“Tax reform in the short run in the decade after it requires a lot of interpretation,” lobbyist Jeff Trinca said. “Whenever there’s new law in the books, you have to go and get people[’s] guidance.”

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