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Complete Testimony of Steven H. Kassel, EA

February 26, 1997

The National Commission on Restructuring the Internal Revenue Service

Senator Kerrey, Congressman Portman, Commissioners, my name is Steven H. Kassel and I am an Enrolled Agent engaged in private practice in Daly City, California. Prior to going into business for myself in 1992, I spent five years as a Revenue Officer with the IRS in the San Jose District Office. I began my career as a GS-5 before leaving the Service five years later as a GS-11. I was considered a tough, but fair Revenue Officer, working to achieve the objective of collecting the most dollars available without undue burden or hardship on that taxpayer. My relationship with most of the taxpayers with whom I worked was excellent, even when it involved the seizure of assets. In one case, a gentlemen placed the keys and pink slip of the motor home to be seized under the front mat so that I could do so without embarrassment to him. I also dealt with more than my fair share of illegal tax protesters. On at least four occasions, I went out went body armor accompanied by Agents of the Criminal Investigation or the Inspection Division. I also called on various police departments for assistance on difficult field calls.

 I believe I am in a unique position to address this Commission. The Central California District (formerly San Jose) in which I worked has long been considered one of the best in the nation. The local Mission Society of Enrolled Agents and California Society of Enrolled Agents has worked to establish a superb ongoing dialogue between the practitioner community and district management to resolve problems and concerns of both practitioners and the Service. I encourage the Service to put in place similar programs throughout the country.  

My business is devoted exclusively to representing clients before the Collection Division of the IRS and related state agencies. I am intensely interested in the work of the Commission and in the betterment of our current tax administration system because of the direct impact it has on the thousands and thousands of clients similar to those I represent and for the broader impact it has on millions of America’s taxpayers.

I applaud the openness of the Commission staff in approaching their task and appreciate the opportunity to appear before you today to testify my perspective on collection issues facing the IRS.

Topics for discussion

1) Disparity between districts in the handling of in-business trust fund (payroll) tax cases

2) Lack of emphasis on FTD (Federal Tax Deposit) alerts

3) The effect of bankruptcy on collection activities

4) Offer in Compromise program appears to be dying

5) Living allowance standards

6) Overuse of form 900 collection waivers

7) Revenue Officers and ACS personnel making their own rules

8) Lack of continuing professional education

9) Performance standards

1) Disparity between districts in the handling of in-business trust fund (payroll) tax cases

The first and most pressing concern of mine is that of the disparity in how different IRS districts treat business taxpayers with regard to delinquent trust fund taxes. Trust fund taxes are those payroll taxes withheld from employees and which are supposed to be paid over to the government. Unfortunately, in times of financial crisis, many taxpayers find it easier to forego paying over than taxes and use those funds to make net payroll, pay their rent, utilities, suppliers, etc. These taxes can add up very quickly. My average business client owes the IRS four quarters of taxes for upwards of $100,000. Some businesses owing the IRS will not be able to climb out of the hole. Most of these business started out terribly undercapitalized and taxes are frequently not their only liability.

The current emphasis on in-business trust fund (payroll) cases began in June of 1994. The guidelines are contained in Internal Revenue Manual Supplement 56G-44, Identifying and Working Repeater Trust Fund Taxpayers and IRM section 5614.2, Procedures for Identifying Repeater Trust Fund Taxpayers (last amended: July 12, 1996). The sections correctly acknowledge that a major compliance problem are the large number of in-business taxpayers who repeatedly accrue trust fund tax liabilities. In order to be classified as a repeater, a business generally must have owe for three quarters or more with an aggregate unpaid balance of assessment of $10,000 or more.

Under these sections, Revenue Officers are required to stop the pyramiding of taxes (accruing of new liabilities on top of the existing ones). If additional unpaid trust fund liabilities accrue, Revenue Officers are told to take severe action by means of seizure as long as all requirement are met before doing so. I have not yet met a single practitioner that has offered an objection to the IRS taking strong enforcement action against a business that was not able to meet this requirement.

It is also required that sufficient financial information be obtained and that determination of the taxpayer’s ability to pay current and delinquent taxes per IRM 5331.52(4)(a) should be made without delay. The manual goes on to state that normally an installment agreement is not appropriate for repeater taxpayers. An installment agreement may be consider only if the taxpayer is making current Federal tax deposits and verifies efforts to borrow against tangible and intangible assets and future business revenue. It also warns against reinstating a payment agreement when the default results from non-payment of current taxes. Later on, the IRM states, “If a repeated taxpayer submits an Offer in Compromise, process the Offer, but, if there is any indication that the offer was submitted solely to delay collection, do not suspend collection while the Offer is under consideration.”

However, many of these taxpayers do have a legitimate chance to succeed. The problems is that some IRS districts refuse to give them that opportunity. In some areas, taxpayers who have demonstrated the ability to both make their current Federal tax deposits and make significant payments towards their existing liabilities are given three years to fully satisfy their obligations, while in other districts, despite proving the ability to completely satisfy their tax obligations within a reasonable amount of time, the taxpayer may be given only 90 days to pay in full or be shut down. In particular, my clients stretch across two districts, Central California (formerly known as the San Jose District) and Northern California (which comprises the former San Francisco and Sacramento Districts). In two locations, the Northern California and Central California Districts meet. On one side of San Francisco Bay, San Mateo County makes up the southernmost point of the Northern California District and meets Santa Clara County, the northernmost point of the Central California District. On the other side of the Bay, Alameda County meets Santa Clara. The difference in how taxpayers who happen to be on the “wrong” side of the county line is treated is indeed, frightening. I have had numerous clients in far worse financial shape in the Central California District for whom getting a payment agreement was not particularly tough. I did have to prove that the company was, in fact, viable and was unlikely to incur future delinquencies. I also had to show that we had the ability to make substantial payments to retire the debt within three years. However, assuming that we could achieve both objectives, the payment agreement is normally approved.

Such is not the case in the Northern California District. Taxpayers are presumed to be deadbeats and in the vast majority of the cases, despite meeting all of the requirements found in the manual sections just discussed are deemed to be unworthy of a payment agreement. In fact, in the June, 1996 San Francisco District Tax Fax for the Tax Practitioner, an article appeared entitled “Stepped Up Enforcement Payroll Trust Fund Tax Delinquency”. That article, written by a collection Branch Chief makes a mockery out of the National Office policy and common sense. Quoting directly from that document, it states “IRS will not approve installment agreements and if an Offer in Compromise is filed, we will not suspend collection action”. More outrageous is the concluding statement. “Immediate enforcement action may result in collection of less tax than entering into a protracted payment agreement, however, it will avoid the risk of increasing the total debt”.

In the thirty two months since this policy went into effect, I have had exactly one long term payment agreement approved by the Northern California District. Meanwhile, I have had at a dozen such agreement approved in Central California. In every single circumstance, the taxpayer has been able to make current Federal Tax Deposits as well as retire the debt in which I consider to be a timely manner.

I have looked over and over again throughout the IRM to find the appropriate language on which the Northern California District bases this abusive policy. Quite frankly, it does not exist. Yet, management seems to have no compunction whatsoever about putting into place a policy that doesn’t exist at the National level. Questions concerning this fall upon deaf ears, even with the Problem Resolution and Appeals Offices, both of whom I respect highly and work with frequently. Local offices must not be permitted to take decisions into their hands so much that it completely twists the intent of the National Office policy. This often forces taxpayers into a bankruptcy situation to get the Installment Agreement which the IRS refuses to grant. I shall discuss the bankruptcy matter later in my testimony.

2) Lack of emphasis on FTD (Federal Tax Deposit) alerts

As a Revenue Officer, I learned that the best way to keep businesses from accruing large tax liabilities was by working cases called FTD alerts. These cases are designed to send a Revenue Officer to see a potentially delinquent in-business taxpayer at the first sign of a problem. When handled properly, I have absolutely no doubt that the vast majority of large dollar in-business cases would not even exist. The cases are assigned when a business which has previously made Federal Tax Deposits either stops doing so or does so in lesser amounts than in the past. Cases can also be assigned for businesses which acquire an employer identification number but fail to make any deposits. When assigned, a Revenue Officer must make a field call within 10 days of receiving the case. In many instances, the Revenue Officer will determine that payroll has been cut or that employees have been laid off and the case can be immediately closed. However, frequently they will find that a business has significant problems and has not been able to make its payroll tax deposits. By sending out Revenue Officers on these cases, the bleeding can be stopped before it leads to the death of the business and hundreds of thousands in taxes go uncollected.

In the districts of which I am aware, the IRS has failed to make these cases a priority. By doing so, they have assured themselves that taxpayers will owe far more than is necessary. The average case that I have seen, both as a Revenue Officer and as an Enrolled Agent involves at least 4-5 quarters and $100,000 to $150,000 in taxes. The Service has the ability to set the threshold for when these cases come out at various levels. It is my recommendation that the threshold be set at its lowest level, which I believe is $10,000. By doing so, both the taxpayer and the Service will benefit. The benefit to the taxpayer is obvious. It is relatively easy for me to work with a business that owes $10,000 to $25,000. It is infinitely more difficult to resolve a liability that involves $100,000 or more. The benefit to the Service should also be obvious. However, such is not always the case. Let’s say a field call is made to a business and there are delinquent taxes, but the business is able to pay them prior to a TDA (tax delinquent account) being issued to the field. The collection division does not get credit for money collected or a case closed. I have spoken with many Revenue Officers who feel as I do. They are not concerned that a TDA is closed. They are glad to see that a potentially ugly situation has been averted. By sending someone out on the case quickly, the business can restructure debt and make other necessary modifications to keep their heads above water. District management often views these cases quite differently. Since they do not get credit for a case closure or dollars collected, they choose to let multiple quarters accrue before it is sent to the field. This horribly cynical attitude has a direct effect on many business failures. This is not to say that the taxpayer has any less responsibility for paying their taxes which are legally due and owing.

Several years ago, as a Revenue Officer, we were surveyed as to when FTDs should be worked. Of course, I stated at the lowest possible level. Management chose otherwise and it leads directly to the number of large dollar in-business cases we see today.

3) The effect of bankruptcy on collection activities

It has long been my opinion that the collection division often seeks to push individuals and businesses into bankruptcy for one very simple reason; they are able to report that case as being successfully closed. In fact, it is anything but a successful closure. As reported in the February 17th edition of the Washington Post, bankruptcy filings are at an all-time high. While I have no way of knowing how many of those cases are related to Federal taxes, I believe they make up a significant portion. I call on Congress to randomly survey bankruptcy filings throughout the nation and determine the percentage of filings in which delinquent Federal taxes appear to be the primary motive for the bankruptcy.

With respect to payroll taxes, many of my clients have been forced to file bankruptcy because the IRS refuses to grant an installment agreement. In a Chapter 11 or 13, debtors have up to five years to complete a repayment plan. Secured tax liabilities must be repaid in full while unsecured liabilities can be repaid for as little as five cents on the dollar. In fact, many income taxes and some payroll taxes can be discharged without any payment in a Chapter 7 bankruptcy. When Congress enacted the Bankruptcy Code, allowing for the discharge of taxes, they should have given the IRS some general direction about how to consider dischargeability in its collection activities.

My experience is not unique. Virtually every practitioner with whom I have spoken reports the same thing. They are unable to secure a payment agreement and are forced to send their clients to a bankruptcy attorney. The courts grant those individuals and businesses what the IRS will not. That is, a payment agreement based upon their current income and expenses. If they incur additional liabilities or fail to make their agreed upon payments, they can have their bankruptcies involuntarily dismissed. Yet, field collection personnel often refuse to take this into account. As I stated, the culture appears to be to close cases without regard to what is in either the government’s or the taxpayer’s best interest.

When examined closely, the effect of a bankruptcy filing is thus:

  1. The debtor is forced to divert funds which could have been used to pay taxes to an attorney. In the case of a corporation, a Chapter 11 filing in the San Francisco Bay Area will cost on average, at least $15,000 to $20,000;
  2. Taxes are actually paid far more slowly. Cases in which taxes could have been paid in full over a one-year period are instead scheduled over a five-year period;
  3. Resentment against the Service. There is simply no logical reason for many of these filings. What will not be approved by the IRS is approved by the courts. The taxpayer has been taught that the IRS has no desire to work with them and finds the IRS to be an enemy.

On the other hand, I have personally witnessed many Revenue Officers who advise taxpayers to file bankruptcy. Once again, I believe this is for the sole purpose of closing cases. For any IRS employee to advise a taxpayer to file bankruptcy is tantamount to practicing law without a license. There are some cases where the Revenue Officer has good intentions in giving such “advise”. However, it is my strong suggestion that field personnel be instructed in no uncertain terms that they are never to even remotely suggest the possibility of bankruptcy.

With respect to Offers in Compromise, Revenue Officer examiners appear to be unwilling to consider the effect of taxes which may be dischargeable in bankruptcy. Many taxpayers do not wish to file bankruptcy for moral and ethical reasons even though their taxes may be discharged in full. For those individuals, the Offer in Compromise program is an excellent alternative. However, by refusing to consider the fact that the taxes will simply go away, the Service is not only foregoing millions of dollars that would not be otherwise collected, but once again is building ill will with those taxpayers.

4) Offer in Compromise program appears to be dying

A few months ago, a Collection Divisions Branch Chief made the following statement at the Northern California District / Enrolled Agent Liaison Meeting, “We will be de-emphasizing the Offer in Compromise program.” I research the Manual as well as materials sent out by the various Districts and Western Region and found no such policy existed. However, it once again shows that individual managers make up their own set of rules at their whim. And once again, this trickles down to the individual Revenue Officers.

Recently, I have been told that some districts will not even look at an Offer below a certain dollar amount. I have had a group manager tell me that as recently as one month ago. He also stated that they would be looking for a rough percentage of the tax due. However, that is not in the IRM or any other IRS publication. It is clear that the Service has forgotten that there are at least three separate reasons that the current Offer program was expanded in 1992:

1) Collect money in excess of what the IRS could otherwise expect to receive;

2) Erase untold millions, if not billions, in uncollectible receivables from the books;

3) Give taxpayers a fresh start.

If the IRS has indeed changed the Offer program in the other direction, it should be prepared to explain to Congress and the GAO precisely why it has chosen to do so. The number of dollars collected is far from the most important consideration in the Offer program. I know that the average accepted Offer is for 16 cents on the dollar. While there should never be any correlation between the amount owed and the amount either offered or collected, that has lately become the case. The GAO was rightly appalled that the Service was carrying billions in uncollected taxes on the books. For those taxpayers, the Offer program gave them the opportunity to gain a fresh start while it gave the IRS the opportunity to resolve much of those otherwise uncollected taxes.

There is no question that a significant number of Offers should never be submitted in the first place. Many of those are submitted by individuals who do not understand the Offer process. Still others are submitted by unprofessional tax practitioners, some of whom are unlicensed. These practitioners often have no compunction about taking money from persons even though there is absolutely no chance that their Offer can be accepted because it simply does not meet IRS criteria.

That said, the majority of Offers submitted by licensed practitioners are sound and merit strong consideration. My success rate in Offers is directly related to knowing what the IRS will and will not accept. However, the Offer program has been significantly wounded by the implementation of the living allowance standards, which while well-intentioned, have significant problems and have not been changed in 18 months.

5) Living allowance standards

All in all, I believe that the living allowance standards first implemented in September, 1995 are an improvement over the practice of some collection personnel allowing very small amounts for items such as groceries and household expenses. For several months now, we have been waiting for the Service to announce the changes to this program. Despite numerous requests and promises those announcements have not been forthcoming. There are some significant concerns which I hope will be addressed in these changes. My first concern has to do with the pitifully low amounts allowed for housing and utilities. I live in a working class section of San Mateo County, which rents and mortgages are at the lower end of the spectrum. Yet, my mortgage, property taxes, homeowner’s insurance, utilities and maintenance put me approximately $200 over the maximum allowance. The second problem is that unlike the allowances for food, clothing and household items, housing and utilities are the same for a single individual with no dependents as they are for a family of ten. That is, to put it mildly, ludicrous. The third problem, which I have not heard addressed in any other forum, is that a family with two cars is only allowed $37 per month more in operating expenses than for a family with one vehicle. I have calculated than a person driving 10,000 miles per year averaging 22 miles per gallon paying $1.50 per gallon of gasoline will spend $56 per month in gas alone. Once insurance, maintenance, tolls and parking are factored in, one can expect the real monthly figure to be $150-$200 per month.

6) Overuse of form 900 collection waivers

Several years ago, Congress extended the statute of limitations for the IRS to collect taxes from 6 years to 10 years. That means that unless other conditions prevail, the government has 10 years to collect from the date the taxes were assessed. There are circumstances where it is in the best interests of both the government and the taxpayer to voluntarily extend the statute beyond the 10 years. This would usually be in a circumstance where a taxpayer owned an asset which was going to be sold or was going to be used as the basis for a loan. In those cases, the statute could be extended briefly to allow the transaction to proceed, thus preserving the government’s interest and preventing seizure of that asset.

The Collection Division continues to this day to force taxpayers making very small monthly payments to sign long term extensions of the statute of limitations as well. I have with me today, waivers that have been extended out to the year 2025. There is little doubt that this violates the spirit and intent of the law. If Congress had decided that there would be no statute of limitation on the collection of taxes, it could have changed the law to do just that. Failure to return the signed waiver will result in voiding the installment agreement and enforcement action will be pursued even in cases where the taxpayer has the ability to make the smallest of monthly payments. The foolishness of this policy can be viewed in several ways. First, it builds up even more resentment against the IRS. Second, it does not to encourage the taxpayer to comply with payment and filing requirements in the future. Third, it makes it a near certainty that the taxpayer will file a Chapter 7 bankruptcy as soon as the taxes become dischargeable. Thus, I strongly encourage that absent very unusual circumstances, the Service abandon this insidious practice as once.

7) Revenue Officers and ACS personnel making their own rules

There is a large distinction between collection work and the examination division. That is, collection activity contains far more discretion and far less dependency upon case law, rules and regulations. This often leads to practices that fall well outside what is intended by Congress or the National Office. The number of things I am told by ACS (Automated Collection System) that violate the IRM is astounding. Just two days ago, a supervisor at the Seattle call site refused to file a Taxpayer Assistance Order as I demanded. She allowed refused to have my case reviewed by an Appeals officer. Upon request by either a taxpayer or practitioner, these requests must be granted. The issue concerned a high income taxpayer and whether or not the case would be placed into an uncollectible status while he attempted to sell his home. Under the allowable expenses standards, taxpayer is allowed up to one year for expenses over the maximum allowed. In this case, the taxpayer’s mortgages, property taxes and insurance total over $6,000 per month. The property is empty and my client is paying rent of $1,500 an another location. We merely asked for the allowance of the expense until the property is sold. It has been listed for some time and the price reduced to make it more salable. The supervisor refused, saying and I quote, “We will not allow someone who makes that much money to have his account declared uncollectible for any amount of time.” This arbitrary and capricious action is exactly what irks the public and practitioners most about dealing with the IRS.

Another recent example involves the improper use of levies. Section 6334(d) of the Internal Revenue Code exempts a certain amount of money from levy of wages, salary and other income. However, Revenue Officer frequently and I believe, intentionally deny this exemption to the taxpayer. Form 668-W is the levy on wages, salary and other income. That levy is in effect until released or until the tax liability is satisfied in full. Unless the taxpayer has other income which, in effect, gives the taxpayer the exemption, no IRS employee has any legal authority to override the Code section. Revenue Officers sometimes fail to send Publication 1494 to the party paying over the funds which gives the amount exempt from levy. Revenue Officers also use form 668-A, which is to be used primarily to reach bank accounts and as such does not state anything about exemptions.

I have also found that increasingly ACS employees are increasingly arrogant and often times unknowledgeable. Some offices tend to be excellent while others are awful. Despite my recent problem with the Seattle call site, they are extremely professional and other districts would do well to copy their operation. Meanwhile, the Oakland call site is often disrespectful and do absolutely nothing to work with the practitioner nor the taxpayer. I frequently advise potential clients to attempt to handle matters on their own to avoid spending money needlessly. Often times, professional intervention is needed because what could be handled very simply becomes a contentious matter.

Even I have had great difficulty in something that should be very easy; receiving the type of transcripts that I wish to receive. I do not want the English version sanitized record of account normally sent to taxpayers. I want the complete unedited account transcript because there is a great deal of information contained therein not found on the other record. 99% of the time I am refused this request, unless I am dealing with someone that I know personally. I have verified with Division Chiefs repeatedly that this information is not confidential, yet it never given to me.

Many problems exist and persist because the public at large has no idea if what they are being told by collection personnel has any basis in truth. I have heard Revenue Officers demand that taxpayers make their Federal Tax Deposits, not estimated taxes, but FTDs, directly through them. When that is done, under the law, they are automatically assessed a 10% penalty for failing to make a deposit in the proper manner. I have frequently been told and have had clients told that they must make estimated taxes and FTDs more frequently than required by law or enforcement action would take place. Of course, most Revenue Officers are smart enough not to put such statements in writing, but I can assure you that this occurs on a daily basis.

Just recently, I have had Revenue Officers refuse to release levies after original returns showing no tax due were filed to replace 1040s and 941s filed under IRC section 6020(b). 6020(b)s or Substitutes for Return (SFRs) are filed when a taxpayer has neglected to do so and the IRS filed one involuntarily. The taxpayer always retains the right to file an original return although that return can be examined and audited for accuracy. Nonetheless, unless there is clear evidence of fraud, enforcement action is not supposed to take place if the return clears the liability in full. Despite that, I have had cases where Revenue Officers refuse to release levies until forced to do so through the filing of a Taxpayer Assistance Order. This is one circumstance where I do believe a Collection Appeal is the proper course of action.

I have found that in the vast majority of cases, managers back up their employees no matter whether the decision made by the line employee was good or bad. Managerial review is nothing but lip service. I feel as though managers are extremely reluctant to overrule their employees decisions. In the few cases where I have seen it occur, the managers have become the target derision by the group’s Revenue Officers. I do not believe that the Collection Appeals Program is working at all as the criteria for overturning a decision is extremely narrow. It is my understanding that the CAP was put into place at the last minute only because of Congressional pressure. While most of the Appeals Officer do a good job, unless they are given far more discretion and the parameters of the program opened much wider, I have found the CAP to be essentially useless.

8) Lack of continuing professional education

In the past year, the amount of CPE received by IRS employees has been virtually non-existent due to budget cuts. That is penny wise and pound foolish. More importantly is that when the IRS does CPE, it teaches virtually nothing of any value. The California Society of Enrolled Agents has met with employees and managers of the Central California District for several years and the Enrolled Agents have benefited tremendously from the knowledge we have gained from this program. There is no reason that this shouldn’t be a two-way street. Currently, many Revenue Officers look at EA’s, CPA’s and tax attorneys the same way that prosecutors look at defense attorneys. If the IRS would let the practitioner community teach both collection and examination employees, much of the tension between our two groups would be eliminated. If bankruptcy attorneys teach Revenue Officers something about bankruptcy law, the likelihood that a they will gain knowledge is far greater than if that class is taught by someone who is asked to study from a book for a few days prior to the class. In thinking about what I gained in five years as an IRS employee from CPE, I must admit it was very little. I would much rather have someone like myself come in and explain how I prepare a financial statement and how I reach a conclusion as to how a case should be handled. I have worked far more Discharges and Subordination’s of Federal tax liens (that is where a property is sold or refinanced, but the taxes will not be satisfied in full and thus the IRS must approve the transaction) than 99% of all Revenue Officers. I would gladly donate my time to teach a class on the topic so that IRS employees know when a good case comes through and when it is necessary to ask additional questions. Many of my colleagues who have expertise in business valuations would also give of their time to teach classes in that arena. I ask that the Service implement a nationwide program of cooperation with tax practitioner groups who will offer their Services at no charge. We can all benefit greatly.

9) Performance standards

I have a serious concern that much of what is wrong with the IRS today is due to performance standards set by management that have absolutely nothing to do with the task at hand. Closing cases is not the be all and end all of tax administration. Yet, the way managers are graded greatly influences the IRS culture. As stated with FTD alerts, these are cases which when handled properly and swiftly keep taxpayers from getting into serious trouble. However, unless management gets away from the current stands, nothing will change. Under the initial Taxpayer Bill of Rights, collection employees cannot be graded on dollars collected, levies served or seizures completed. However, Congresses intent has been largely ignored simply by moving the data collected to the next level. That needs to stop.

I also believe that in order to make the IRS collection division stronger, Revenue Officers should be upgraded from technical to professional employees. I started as a GS-5 earning $14,118 per year in the San Francisco Bay Area in 1987. The number of times I have heard IRS employees state “I live on such and such amount and your client should learn to do the same” is shocking. Revenue Officers should never start below a GS-7 and probably should begin at the GS-9 level. They should be able to make GS-13 without going into management and they should be granted 20-year retirement. One might be surprised by this suggestion given some of my criticisms of the collection division. I feel strongly that a major reasons for some of the weaknesses faced by the IRS is uncompetitiveness when searching for employees. Considering the importance of the collection division to the IRS mission and the importance of the IRS to the nation’s financial infrastructure, it is critical that the Service be able to fight for strong employees coming out of our nation’s college and universities. Such is most definitely NOT the case today.

It is also my desire that the IRS stops talking about our system of ‘voluntary compliance’. There is nothing voluntary about it and the phrase actually assists those in the tax protest movement. Most of those people are not evil, but are ignorant of the laws and are easily misled. The IRS would do itself a grand service if it abandoned that phrase and instead called our tax system one of ‘self-reporting’

Our tax system is still one of the world’s most efficient, least costly and certainly the most corruption free. Ultimately, the name of our tax collection agency doesn’t matter at all. Whether or not we have a flat income tax; a national sales tax; a value added tax; or any other form of tax, we will need an effective, efficient and reliable tax collection system. The goal is produce just that.

Thank you again for this opportunity to meet with you today and share my views. I will be happy to respond to any questions the Commissioners may have and am pleased to offer my support for any future projects the Commission plans to address.