Treasury has its own solution to IRS problems.

There have been plenty of public statements on how to improve the way the Internal Revenue Service collects taxes. Some members of Congress have said they want to abolish the IRS altogether and institute a single, postcard-size flat tax form for all businesses and individuals, while others have scheduled committee hearings and commissions, such as the National Commission on Restructuring the IRS, to consider new ways to improve IRS operations. Now the Treasury Department--which oversees the IRS--has made public its own plan to make the IRS more responsive to taxpayers' needs and use technology more effectively.

In March, Lawrence Summers, deputy secretary of the treasury, told members of the Tax Executives Institute in Washington, D.C., that the Treasury had established a framework that would enable the IRS to "get its mission accomplished." To do this, Summers said the Treasury was going to focus on five critical areas--oversight, flexibility, budgeting, simplification and leadership--that will "build an IRS for the 21st century."

Summers said the Treasury would begin by devoting the necessary managerial and financial resources to strengthen its oversight of the IRS. To do this, the department plans to ask President Clinton to make permanent a modernization management board that would oversee the IRS's information technology programs the same way corporate boards oversee companies' major strategic decisions and investments. Summers said the Treasury also planned to establish a blue-ribbon advisory committee that would meet regularly with the treasury secretary and "bring private sector expertise to bear on the management of the IRS."

"Second, we will enhance and strengthen the IRS's ability to manage its operations," said Summers. He said the Treasury would eliminate the multitude of restrictions that hamper the IRS's ability to provide efficient service. For example, Summers said the IRS should have the flexibility to hire highly trained people more quickly, pay them more competitively and give them the necessary training. He also said the Treasury would consider outsourcing more IRS functions. "Where it is cost effective--but only where it is cost effective--we will pursue outsourcing strategies vigorously."

Summers said the Treasury would work with Congress to ensure the IRS receives more stable and predictable funding. The IRS currently operates in a low-trust, short-tether budgeting environment, according to Summers. "This makes rational planning for capital projects very difficult." He said the IRS needed multiyear budgets for its capital expenses, such as systems modernization.

The Treasury also intends to support proposals to simplify the tax code to help reduce the code's administrative burden. Summers said the IRS would have a much easier job if it could streamline the 9,451-page code. However, he stopped short of endorsing a flat tax proposal. "I believe such a proposal would not only unfairly increase the tax burden on the middle class and hamper economic growth," but also it "would not simplify the administration of the code."

Last, the Treasury plans to make changes at the top of the IRS. Summers hinted that the Treasury was looking for an expert manager to replace retired Commissioner Margaret Milner Richardson. "We are committed to appointing a new commissioner who has experience with the challenges of organizational change," said Summers. "While technical excellence in tax matters must be maintained, the greatest challenges facing the IRS in the coming years are managerial." Summers said the Treasury would charge the new commissioner with developing a detailed strategic plan and it would expedite the recruitment of a first-rate management team.

RELATED ARTICLE: Making Tax Data Easier to Get

The Organization for Economic Cooperation and Development (OECD) approved recommendations to improve the exchange of tax data between its member countries. In March, the OECD council agreed to

* Use tax identification numbers (TINs) to take advantage of technology and improve information exchange while guarding confidentiality.

* Revise a 1992 standard for automatic information exchange on magnetic tapes and diskettes.

All but five OECD member countries have TINs. The OECD recommends that member countries encourage foreign recipients of income to disclose TINs from their home countries, consider making disclosure mandatory and issue special TINs for taxpayers with foreign sources of income or provide an alternate means of identification if they do not use TINs.

RELATED ARTICLE: TAX FILES

Deducting Cars

* Taxpayers looking for tax deductions can donate their used cars. The National Kidney Foundation's kidney cars program uses the proceeds from donated cars, buses, trucks and motorcycles to support research, patient services, organ donations and public information and education programs. Each donor receives a letter thanking him or her for the donation, which lists the year, make and model of the vehicle. Interested contributors should call 800-488-2277 for an information packet.

Overnight On Time

* The Internal Revenue Service issued a notice just five days before the April 15 filing deadline allowing taxpayers to use four private delivery services. Notice 97-26 designated Airborne Express, DHL Worldwide Express, Federal Express and United Parcel Service "official" delivery services taxpayers can use to file their returns on time.

Pull Over, Sir, It's the IRS!

* House Speaker Newt Gingrich (R-Ga.) has called for reducing the IRS budget by 60% in tandem with tax simplification. He proposed transferring employees who lose their IRS positions to other federal agencies, such as to the Drug Enforcement Administration and the Border Patrol. "We'll spend more time stopping illegal drugs and immigrants and fewer resources auditing small business," said Gingrich.