SACRAMENTO, CA -- "The IRS -- We’ve Got What it Takes to Take What You’ve Got."

With the government’s annual heist just around the corner, this proposed bumper sticker isn’t very funny.
It’s not true either, according to reports last week from the General Accounting Office (GAO).

In fact, the Internal Revenue Service is no better than some business that fudges its expenses, keeps records
in shoe boxes, does the math in a dog-eared notebook, and even loses its refund check.

"The IRS cannot do some of the basic accounting and record-keeping tasks it expects American taxpayers to
do," said Gregory Kurtz of the GAO, which had conducted an audit of the IRS, a prospect that will cheer many
victims of this "service."

According to the GAO, the IRS can’t balance its own checkbook and is failing to keep track of its own assets such as cars and computers. Neither does it have what it takes to do its job of collecting what is legitimately owed. Out of $222 billion in unpaid taxes as of October 1998, the GAO noted, only $26 billion is likely to be collected, with the agency writing off a staggering $119 billion.

This is the same agency which, as hearings on the Taxpayers Bill of Rights confirmed, has persecuted many
law-abiding citizens to recover trivial amounts, presuming their guilt, seizing their assets, and ruining their lives. The IRS behaved this way because it promoted people based on how much money they seized. "Seizure Fever: Catch it" read a banner at one office. This predatory ethos moved them to single out the most vulnerable taxpayers, particularly small businesses.

The agency claims this has been changed, but the GAO notes other problems. The IRS paid out at least $17
million in fraudulent refunds through the first nine months of last year. It also maintains poor security
over sensitive taxpayer information.

After the GAO revelations, Donna Cunninghame, the IRS’ chief financial officer, showed her deep grasp of the
obvious by calling the agency’s performance "unacceptable." Steve Horn, the Long Beach Republican
on the House Government Reform Committee, called it a "national scandal." The performance should dispel
illusions about efficiency in government and reinforce the need for checks and balances.

The IRS collected $1.8 trillion in tax revenue in fiscal 1998 and maintains a budget of $8.1 billion. That kind of clout demands a GAO audit on a regular basis. The changes should be accompanied by still deeper political reforms.

Politicians have hesitated to demand such reforms because they depend on the IRS to provide the money
they use to buy their constituents. As long as lawmakers use their power to transfer money from some
citizens to others, a process that demands the continued expansion of government, reforms will remain
in doubt.

The most promising reform is a flat tax that would set one rate for all Americans and at last would satisfy
the constitutional requirement of equal treatment under the law. The current scheme of "progressive" taxation
violates that principle by punishing people for working hard. A flat tax would eliminate the current bloated,
incomprehensible, and unjust tax code, making life easier for taxpayers and government alike.

Under a flat tax, the current IRS could be junked and replaced with a smaller agency capable of simple
accounting.

-- K. Lloyd Billingsley