IRS Commissioner addresses spring tax meeting.

Marking her first year in office, Internal Revenue Service Commissioner Margaret Richardson told attendees of the American Institute of CPAs tax section's spring meeting the three most important challenges she faced were (1) improving the rate of voluntary compliance, (2) simplifying regulations and reducing taxpayer burden and (3) modernizing IRS technology. The meeting was held in Washington, D.C.

Voluntary compliance. Noting that each percentage point increase in the voluntary compliance rate would result in $7 billion to $10 billion in additional revenue each year, Richardson said her goal was to increase the rate from its current 83% level to 90%. She pointed to progress in a number of areas:

* In the past one and a half years, receipts of delinquent returns under the nonfiler program increased by 6%.

* From October 1993 to March 1994, the IRS entered into almost 50% more installment agreements than it had two years previously.

* The number of offers in compromise rose by nearly 750% over the number accepted in the same period two years before.

Richardson also reported the Clinton administration and the IRS had asked for $405 million in the 1995 fiscal year budget to fund a program to increase compliance. The program's goal is to generate $9.2 billion in revenues between 1995 and 1999; the revenues will be used to reduce the federal budget deficit.

Simplification and burden reduction. Richardson took the opportunity to recognize AICPA efforts on behalf of simplification. As an example, she cited last year's section 263A uniform capitalization regulations. "Many of the de minimis exceptions ... in the regulations and the historic absorption ratio methods [that] permit producers and resellers to compute their additional section 263A costs only once every six years were provided in response to comments received from the AICPA and its members," she reported.

The commissioner also addressed another issue of critical importance to tax section members: work-load compression. Although she understood tax practitioners' concerns, Richardson said she had to balance those concerns with competing considerations. The IRS wants "taxpayers [to] take a look at their tax positions as soon as possible after the close of the tax year, for example, to ensure that procrastination does not become a bar to compliance," she said. The IRS also wants returns to be processed "as quickly after the close of the taxable year as possible so that we can shorten the time period for validating return data, performing document-matching routines and selecting returns for examination."

Modernization. Richardson was confident electronic filing and similar innovations would improve the efficiency of the filing process for both AICPA members and the IRS by reducing errors. "The error rate this year on electronically filed returns was .5%," she reported, compared with a usual 15%-17% for paper returns."

Richardson concluded her remarks with a challenge to both the AICPA and the IRS: "Let's seek ways to break down potential barriers to the use of electronic filing and to expand significantly the use of our electronic filing program within the accounting profession."

Richardson found it "puzzling" that AICPA members had not been more vocal in seeking an expansion of the electronic filing program to accommodate corporate and partnership returns. "Why can't we both commit to a goal of meeting together over the next year," she asked, "to develop the systems that will allow these returns to be submitted electronically by a third-party computer-processing company through an accounting firm directly to the IRS"