Madame Chairman and Distinguished Members of the Sub-Committee:

I'm pleased to be here today to make some brief comments relating to the Taxpayer Bill of Rights 2 proposals and to answer any questions you may have.

As the executive within the IRS with responsibility for administering the Problem Resolution Program (PRP) on a day-to-day basis, I am in a most unique position. Although I do not have direct responsibility for day-to-day field tax administration programs, I am vitally concerned with how those programs are being administered and how they may be affecting individual and business taxpayers. One of my primary responsibilities is to ensure that the perspective of taxpayers is considered as decisions are being made and new programs are being implemented. In addition, in my role as head of the Problem Resolution Program, I work with our many field offices to provide assistance to over 400,000 taxpayers annually who have experienced problems when normal IRS processes or channels don't seem to work. Perhaps, most importantly, I am also responsible for the Taxpayer Assistance Order program which was statutorily established by the first Taxpayer Bill of Rights to assist taxpayers who are experiencing significant hardship. On an annual basis PRP works about 33,000 of these cases, more commonly referred to as ATAOs.

In the operation of both of these programs, a primary goal of PRP is to identify IRS systems which may be, inadvertently or otherwise, contributing to taxpayer problems. We then work with those segments of the organization that have "ownership" of the process to suggest and make improvements designed to reduce problems of a similar nature for taxpayers in the future.

From an organizational perspective, I report directly to the Commissioner and Deputy Commissioner and have therefore been provided with a great deal of latitude and independence in accomplishing the mission of PRP. I provide functional direction, guidance and support to the field Problem Resolution Officers (PROs) located in every IRS region, district and service center. Since the vast majority of PRP casework is accomplished in our field offices, it is critical that PRP employees also receive strong support from their local head of office and appropriate functional management.

I have previously shared my views on the Taxpayer Bill of Rights 2 with the committee in writing and recently testified before the committee on IRS efforts to reduce taxpayer burden. Today, I would like to share my thoughts on one particular area of the Bill of Rights which I understand is of concern to the Congress and that is the independence of field PROs. Although we in the IRS feel that the PRP program is working well as it is currently constructed, and that both the Taxpayer Ombudsman and field PROs have been afforded the independence necessary to accomplish our mission, I realize that the Congress may not fully share that view.

Based on previously stated congressional concerns in this area, I have given this matter a great deal of thought and would like to propose some specific changes that might alleviate your concerns. I must stress that these are my views and suggestions and are not presented as those of the Administration, the Treasury Department or the Commissioner.

First, concerning the TAO program, current procedures provide that a director, upon appeal, may overturn a TAO and deny relief to a taxpayer claiming significant hardship, based on the facts and circumstances of the particular case. I would propose that TAOs can only be appealed to the Taxpayer Ombudsman. This would address concerns about PRO decisions on hardship cases being overturned by directors. It would also strengthen the independence of field PROs regarding decisions relating to TAOs.

Second, concerning the reporting relationship of field PROs, I am strongly in favor of retaining the current reporting structure to the head of office for district and service center PROs for a number of reasons which I will cover in just a minute. I would suggest, however, that if there are concerns about the independence of field PROs in the current reporting alignment, the elevation of TAO appeals to the Taxpayer Ombudsman would address most if not all of those concerns. A further proposal would be to either designate the Taxpayer Ombudsman as the selecting official for all field PRO positions or ensure that the Ombudsman has significant input into both their selection and annual appraisal. These actions would further enhance the relationships and accountability that currently exists between field PROs and the Taxpayer Ombudsman while retaining the high level of support that PROs currently receive from their directors.

Field PROs have expressed their concerns, both to me and to their congressional representatives regarding the impact of no longer reporting to the local head of office. They feel this could change the positive relationship they currently have with their directors and other staff members and possibly impact on their ability to influence decisions and assist taxpayers on ATAO cases. I share that concern. The vast majority of ATAOs are handled in our field offices on an informal basis. This is due primarily to the positive working relationships established by the PROs with their functional counterparts. Any change to the current reporting structure could have an impact on those relationships with perhaps unintended consequences. I am of the firm belief that the current reporting structure, with the modifications I have proposed, is in the best interests of continuing our high level of assistance to taxpayers. We are certainly willing to engage in additional discussion on this issue.

Earlier, the Commissioner, in her remarks, indicated that I would comment on the proposal to change the standard for ATAOs from a taxpayer experiencing significant hardship to the more general standard of experiencing hardship. PRP has already made a distinction in the categories of cases handled by the program. As I mentioned earlier, we handle over 400,000 PRP cases annually.

The general standards for these cases are:

• subsequent contact by the taxpayer on the same issue (allowing time to resolve the initial inquiry);

• any contact that indicates the taxpayer has not received a esponse from IRS by the date promised;

• any contact that indicates established systems have failed to resolve the taxpayer's problem; or

• where it is in the best interest of the taxpayer or the Service that the case be worked in PRP.

ATAO cases, on the other hand, both have a higher standard (significant hardship) and are afforded a higher priority as a result. The essence of the ATAO program is speed and individual attention. Substantially expanding the volume of cases handled in the ATAO program would inevitably diminish the level of attention and high priority these cases now receive. With over 150,000 ATAOs processed since the establishment of the program in 1989, my view is that the proposed change would actually hurt those who are in most need of the immediate attention the program provides. Those cases not meeting the higher standard of significant hardship can still be included and receive attention as a regular PRP case.

In conclusion, I fully realize that despite the best efforts of the many hard-working capable individuals in PRP, we are not able to resolve every problem in the most timely and efficient manner. There are probably also instances where the program has failed to work as expected. I would invite and encourage you to bring those situations to my attention in order that they may be examined and hopefully contribute to our continuing efforts to improve our services.

I would be glad to answer any question you may have.