IRS News Release  
April 05, 1999

Filing Season Heralds More
Changes at IRS

WASHINGTON - The Internal Revenue Service has taken a number of important steps during this year�s filing season to improve taxpayer service, but more work remains in the years ahead to finish the agency�s transformation into a customer-oriented organization, IRS Commissioner Charles O. Rossotti said Monday.

�We have achieved a great deal of success this year, but we have a long road in front of us,� Rossotti said. �Modernizing the IRS will require fundamental changes in almost every aspect of the agency. The process will take years, but it is essential for the IRS to achieve a higher level of performance to meet the needs of taxpayers and the nation.�

Rossotti outlined his vision for the IRS during a gathering of members of Washington�s Regional Reporters Association. With the April 15 tax deadline just 10 days away, Rossotti said the IRS has shown progress in several areas this year:

Taxpayers continue using electronic filing at a record pace. Computer e-filing of tax returns � either by tax preparers or those using home computers � is 23 percent ahead of last year.

Electronic filing and the new $400 child tax credit have helped encourage more taxpayers to send in their returns early this year. Returns are nearly 3 percent ahead of last year�s pace. Despite the early influx of tax returns, overall IRS processing remains slightly ahead of last year.

As part of the IRS�s emphasis on service, taxpayers can now reach the toll-free IRS help line (1-800-829-1040) 24 hours a day, seven days a week.

Taxpayers have used various IRS services � telephones, the IRS web site and in-person assistance � tens of millions of times this year. The IRS�s �Digital Daily� web site at has received more than 500 million hits since Jan. 1 � more than 150 percent ahead of last year.

�We need to build on the successes of this year�s filing season to help us prepare for the next steps of the IRS reorganization,� Rossotti said. �Simply put, we have a lot of work to do in the years ahead.�

Several long-term changes are in the works that will fundamentally alter the way the IRS does business.

Following passage of last year�s landmark IRS Restructuring and Reform Act, the entire agency is reorganizing. Starting later this year, the IRS will begin shifting from being geographically based in 33 local district offices to a customer-based structure built around four major groups of taxpayers:

The Wage and Investment Income Operating Division will cover 88 million tax filers. This category includes all 1040 filers.

The Small Business & Self-Employed Operating Division will cover 40 million filers.

The Large and Mid-Size Business Operating Division will cover 170,000 filers.

The Tax Exempt Operating Division will cover about 1.5 million filers. The IRS also has embarked on a massive computer modernization effort to replace systems dating to the 1960s with state-of-the-art technology that can improve service and add new security features.

�To improve service, the IRS needs to break out of its technological time warp,� Rossotti said.

The IRS is working with a consortium of private companies in a computer modernization effort that�s expected to touch on every facet of the agency. The project, called the Prime contract, is expected to last 10-15 years.

The combination of changes reflect the new IRS mission statement to �provide America�s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.�

�The IRS has the opportunity to rise to a new and much higher level of performance,� Rossotti said. �If we are successful, millions of American taxpayers will benefit for years to come. They will have a tax agency serving them the way they expect to be served.�

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