IRS REFORM BILL HOLDS PROMISE OF CHANGE

By a vote of 402-8, the U.S. House has passed and sent to the Senate a bill enacting significant reforms in the Internal Revenue Service. This package is said to be the most significant set of IRS reforms in nearly 50 years. Fed up with complaints about lousy service and mismanagement at the IRS, the House included in the measure provisions strengthening oversight and boosting taxpayer rights in collection disputes.

The House vote on the bill, on the provisions of which key senators have already signed off, culminates a two-year effort to bring the tax collector under control. Senate passage of the IRS Restructuring and Reform Act of 1998 is expected upon lawmakers' return from the Independence Day recess. President Clinton has said he will sign the measure.

Complaints about the IRS were so numerous that they spurred formation of a broad consensus to revamp the agency. The ranking Democrat on the powerful Ways and Means Committee, U.S. Rep. Charles Rangel of New York, praised majority Republicans for "an extreme bipartisan effort" in crafting the bill.

The bill's most costly item shifts the burden of proof from taxpayers to the IRS in civil court cases. This little fact of dealing with the IRS has always seemed fundamentally contrary to centuries of Anglo-American legal tradition and its cherished presumption of innocence.

After the bill becomes law, it will fall to the IRS to prove a taxpayer is wrong in cases in which a taxpayer presented "credible evidence" concerning his or her tax liability. Taxpayers win this right if they maintain required tax records, cooperate with the IRS and don't have a net worth greater than $7 million. (The last of those three requirements raises the interesting issue of the equal protection of the laws that is guaranteed all Americans under the 5th and 14th Amendments to the Constitution. How can a right extended to most Americans disappear solely because you're successful in amassing a greater net worth?)

Amid tales that the IRS failed to promptly tell taxpayers that they owed back taxes, the bill will require the agency to suspend interest and penalties if the agency waited more than 18 months to tell taxpayers they owe additional taxes.

The bill also gives new innocent-spouse relief to taxpayers, typically divorced women, who face collection actions due to tax problems caused without their knowledge by spouses. It will allow divorced or legally separated people to separate their tax liability from their former spouse.

There are myriad smaller items, requiring the IRS to respect taxpayers' due process rights in collections, requiring a judge to grant approval before the IRS seizes a house and granting taxpayers new rights to appeal a notice of a tax levy.

Congress is to be congratulated on passing this much-needed bill. If it begins to even the score between the lowly taxpayer and the most feared agency most Americans will ever deal with, it will prove a major step forward.