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Washington, D.C.—One of the most important ways to get the full benefits of the modernization effort underway at the Internal Revenue Service (IRS) is to substantially modify a law that unfairly targets only IRS workers and threatens them with the loss of their jobs, the leader of the union representing IRS employees told a key House subcommittee today.

Section 1203(b) of the 1998 IRS Restructuring and Reform Act (RRA) continues to have a “chilling effect” on the ability of IRS employees to do their jobs, President Colleen M. Kelley of the National Treasury Employees Union (NTEU) told the House Ways and Means Oversight Subcommittee.

Violation of any of the 10 infractions outlined in the law—one of which is the late filing of a tax return even when a refund is due—results in mandatory termination. Since the law’s passage, NTEU has led the fight for changes in it. Such changes are now supported by the administration, the Treasury Department, the IRS Commissioner and the IRS Oversight Board.

President Kelley commended the Ways and Means Committee on its approval of changes to 1203(b). “We are hopeful the full House will approve this legislation soon,” she said, and urged the subcommittee members to continue to press for these changes until they are signed into law. “With administration and bipartisan congressional support, there is no reason these changes should not be enacted in the very near future.”

“Violations of any of the ten offenses should be taken seriously,” the NTEU leader said, “but mandatory termination in every instance should not be the only disciplinary action available.” She called this a “uniquely harsh standard” that no other government or private sector employee faces.

On the IRS budget proposal itself, she said the full benefits of a more efficient, more effective and higher performing workforce at the IRS “will not be realized” unless Congress and the administration provide more funding and staffing for the agency and “remove many of the barriers to improving morale and productivity.”

The administration’s proposed budget “comes up far short” of what is needed for the agency to continue to perform current operations, while simultaneously meeting its modernization goals, she said.

“Improving customer service, enhancing tax return processing, and increasing tax compliance can happen only if the administration and Congress support increased funding for staffing, more advanced technology and equipment, and better training,” the NTEU leader said. IRS employees have made “tremendous progress” in responding to congressional mandates in (RRA), she added, but “the current workforce can only do so much with its limited resources.”

President Kelley noted that there are now some 20,000 fewer IRS employees than only a decade ago, even though the workload has not only grown but become much more complex, including sharp rises in both the number of tax returns filed and the number of taxpayers seeking assistance from the agency.

While the administration’s proposed $10.4 billion budget for the IRS in fiscal 2003 “may appear to be slightly higher” than this year’s level, she said the funding is essentially “flat” in dollar terms because of a “budget gimmick” suggested by the administration that would, for the first time, require agencies to pre-fund future retiree health and retirement costs from appropriated funds.

The NTEU leader also urged rejection of the administration’s “competitive sourcing” initiative which sets arbitrary quotas for the IRS and other agencies to open up thousands of federal jobs to the private sector. “This one-size-fits-all quota gives no consideration to the unique circumstances at the IRS or other agencies,” she said.

NTEU is the largest independent federal union, representing some 150,000 employees in 25 agencies and departments, including some 97,000 in the IRS.