Charles O. Rossotti, Commissioner of the Internal Revenue Service, steps down today after five years of service. In an interview that appeared in The New York Times on Tuesday, Mr. Rossotti expressed his view that the IRS is steadily losing its war with tax cheats, particularly those in the higher income brackets.
He also suggested that he had received a request by the Bush administration that he not present Congress with his views that the IRS cannot adequately function without budget increases. When asked to elaborate, Mr. Rossotti indicated he might do so after his term ends. Refusing to comment in the interview, Mr. Rossotti merely replied, "I am still a member of this administration."
Four years ago, Mr. Rossotti suggested that perhaps as many as 80% of tax cheaters would be able to succeed in their efforts unless the IRS were to receive needed budget increases. Methods of cheating continue to proliferate and become more sophisticated, while money for the IRS remains tight.
"The tax system continues to grow in complexity, while the resource base of the IRS is not growing and in real terms is shrinking," said Mr. Rossotti. "Basically, demands and resources are going in the opposite direction."
No one knows exactly how much tax money is being lost by the IRS's alleged inability to follow every lead. Recent efforts to track transactions in offshore accounts have succeeded in providing data that suggests as much as $70 billion in taxes may be lost each year in offshore evasion methods alone.
Mr. Rossotti has dedicated his tenure as head of the IRS to modernizing the agency's outdated computer system, a project that is still underway, and changing the management structure of the IRS. No replacement has been appointed, but Deputy Commissioner Bob Wenzel will take over immediately as acting commissioner.