That’s a strange sentiment, but it’s on the rise. Three years after Congress held televised hearings over charges of rampant taxpayer abuse, there’s a kinder, less scary IRS. “They used to be like pit bulls, but now they’re like lap dogs,” says Eliot Kaplan, a former IRS lawyer who’s now in private practice. The new attitude is driven by several factors. As the IRS has shrunk (it has 31 percent fewer employees than in 1988) and Congress has demanded better customer service, the agency has more people working to help taxpayers (by manning taxpayer-assistance hot lines) and fewer doing audits. All employees are kept in line by a strict new list of taxpayer rights, so staffers now face harsh penalties if they mistreat customers. As a result, “the run-of-the-mill IRS guy is more scared than the clients,” says Kaplan. Credit for the changes also goes to Charles Rossotti, who arrived in 1997 as the first IRS commissioner with a background in management, not tax law. Says Susan Long, a Syracuse University researcher who studies the IRS: “Rossotti is doing more than just talking–he’s really trying to walk the walk.”
The new attitude is being felt most directly by folks who owe back taxes. As a result of reforms ordered by Congress, the IRS has liberalized its “offers in compromise” program, which settles disputes with taxpayers who owe money. Last year it wrote off $2.6 billion in debts in exchange for payments of just $316 million–roughly 12 cents on the dollar. That generosity is due in part to the booming economy, which helped send overall tax revenue to $1.9 trillion last year. Maybe it’s those swollen coffers that have staffers playing so nicely. When Teresa Duke fudged the number of exemptions on her W-4 to reduce the taxes from a last paycheck when she left a job, the IRS caught her. But they couldn’t have been friendlier. She settled the matter with a five-minute phone call and no penalties. “The agent was really nice,” she says. “He didn’t offer to buy me dinner, but he didn’t treat me like Leona Helmsley, either.” Still, the IRS has a way to go before it becomes a Nordstrom-style benchmark for customer service. More than a third of taxpayer phone calls still don’t get through, and a report last week showed that when citizens do get through, they’re given bad advice 47 percent of the time. That goes to show that when it comes to government agencies, improvement is a relative term.
