IRS Chief Lobbies for More Money By CURT ANDERSON, AP Tax Writer

WASHINGTON (AP) -- The Internal Revenue Service chief told lawmakers Monday the tax agency needs a budget increase of nearly 10 percent to halt a steep decline in audits and continue modernizing ancient IRS computers.

''We have to both do the modernization and enforce the tax law,'' IRS Commissioner Charles Rossotti told a House Government Reform subcommittee. ''We have half the number of audits we had three years ago. We're really risking the entire tax system.''

The IRS commissioner's appearance came one week before this year's April 17 income tax filing deadline, a week the Republican-led Congress traditionally use for symbol and substance. This year will see a symbolic vote on scrapping the tax code and serious consideration of a 10-year, $248 billion income tax cut for married couples.

The IRS is asking Congress for about $8.8 billion in fiscal 2001 -- an increase of $769 million over last year's budget. Some of it is meant to hire almost 2,000 more people to beef up enforcement of tax laws and improve service to taxpayers. The agency also wants $119 million to continue the long-term task of replacing its 1960s-era main computer systems.

Without endorsing the budget request, Rep. Stephen Horn, the subcommittee chairman, said lawmakers are concerned that taxpayer-friendly reforms enacted in 1998 -- coupled with a reduced IRS work force -- has contributed to a decline in enforcement. Horn, R-Calif., said taxpayers now owe $231 billion in overdue taxes and penalties.

''Some people are now concerned that the agency has become so user-friendly that it isn't collecting enough of the tax money it is owed,'' Horn said.

Still, the IRS will collect a lot: Rossotti said net tax collections should top $1.6 trillion this year. About 127 million individual tax returns will be filed this year; as of April 2, the agency had received about 70.1 million.

As Americans rush to finish their returns, Republicans in Congress plan to keep focused on cutting taxes and tax reform, two of their signature issues. Highlights include:

--Votes in the Senate on legislation cutting income taxes for millions of married couples, including the 25 million who now pay more than they would if single. The bill also would permanently ensure that taxpayers could claim personal credits such as the $500-a-child tax credit without running afoul of the complex alternative minimum tax.

--Another Senate vote on whether to debate a bill pushed by Majority Leader Trent Lott, R-Miss., that would roll back 4.3 cents of the federal per-gallon gas tax through the rest of the year. The bill, which faces long odds, would suspend the entire 18.4-cent tax if average prices topped $2 a gallon at the pump.

--House consideration of legislation costing $2.1 billion over five years that would expand taxpayer rights and give people new breaks on IRS penalties and interest. The House also plans symbolic votes on measures that would sunset the tax code in five years and a proposed constitutional amendment requiring a two-thirds vote of Congress to enact most tax increases.

--Three days of hearings at the House Ways and Means Committee on alternatives to the income tax, including a flat tax and a national sales tax. The panel's chairman, Texas Republican Bill Archer, has long advocated scrapping the income tax but is retiring before such a major change could become law.

--Senate Commerce Committee consideration of a bill to extend a moratorium on new Internet taxes by five years, sponsored by the panel's chairman, Arizona Republican John McCain. A federal commission chaired by Gov. Jim Gilmore, R-Va., also will formally present its majority report recommending that extension, as well as repeal of the 3 percent telephone tax and a permanent ban on Internet access taxes.

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-- Martin Thompson (mthom1927@aol.com), April 10, 2000

Answers

I'll never forget when Rossotti told Congress about a year ago that, if IRS went down as a result of y2k, it--alone--could bring down the U.S. economy. I imagine, when you figure that 97% of the income, and outgo, of the U.S. economy is processed through IRS, this makes sense.

-- Uncle Fred (dogboy45@bigfoot.com), April 11, 2000.

With the I.R.S.'s ancient mainframes with their archaic languages, I just can't see how they are going to hold up. Jury is still out on this one. We won't know for several months yet how I.R.S. held up through y2k.

-- Billiver (billiver@aol.com), April 11, 2000.

I've heard that I.R.S. has only made 100% more mistakes in their refunds so far this year.

What do you suppose they mean, "only"?

-- LillyLP (lillyLP@aol.com), April 11, 2000.