Roscoe L. Egger

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Egger also downplays the role of the IRS's infamous under-the-table informer system. "People write or call us about taxpayers and say you ought to look at this individual return. We don't always follow up on those because we recognize that people do this out of anger or resentment."

Policy aside, the truth is that"pulling a return" is no simple matter these days. With some 170 million tax returns coming in each year (not to mention 900 million information forms), it takes six weeks simply to retrieve one from the record storage center in Kansas City, Mo. That situation should change by the end of the decade, however, when the IRS plans to be storing tax information on immensely capacious, ultra-high-speed laser disks. "Our hope is that we'll be able to retrieve a return electronically from anywhere in the country in a matter of seconds," says Egger. "This is not Buck Rogers, it's known technology. It's here."

That unbearably combination -- high technology plus a determined administrator -- is bound to make habitually shortcutting taxpayers think twice in the future. But don't count on a federal tax amnesty. Egger is against the idea, despite the success of recent state amnesties. "My feeling is, once you start that kind of thing, you have to keep it up. People begin thinking that, if they wait long enough, soon there will be another amnesty. It rewards the evasion of tax liability in a fashion I just don't subscribe to."

On the other hand, the IRS has long maintained an unstated policy that allows penitent tax cheats to pay up with little fear of prosecution. Egger himself acknowledges, "If somebody got a pang of conscience and came forward and said, 'I really shouldn't have done that,' certainly we would give that factor a great deal of weight in consideration of whether to proceed with criminal action."

Egger is far less sympathetic toward tax-shelter packagers who knowingly promise more than they can legally deliver. Although he has spent a lifetime in accounting and law -- interrupting a partnership at Price Waterhouse to accept the Reagan appointment -- he has been shocked by some of the sheltering setups he has seen as commissioner. "They are a blemish on the whole system," he declares.

What especially riles him is that the victims are often people with relatively modest incomes, in the $25,000-to-$45,000 range. "The really high-income people, particularly those who are active in the business world, tend to be quite cautious about the shelters they choose to invest in. Most of them are interested in something that's a good investment They aren't so quick to buy merely because it is going to postpone their taxes this year." In contrast, middle-income people have proven to be fairly easy marks for shady shelter promoters. "That's disturbing, because in those brackets it creates a severe financial problem when they discover that the schemes won't work and they have to pay the back taxes plus interest and penalties." As a consequence, Egger has broken with tradition and begun actively seeking injunctions against sellers of abusive tax shelters. "We are trying to identify them on the front end, so people can be forewarned that these schemes are not what they purport to be. We can stop the promoters before they involve too many people." As of February, the Department of Justice attorneys had obtained half a dozen injunctions on behalf of the IRS, with "many, many more in the pipeline," according to Egger.

All of which has been a lesson for the commissioner. "I don't think I really appreciated the impact that such entities as tax shelters have on the system until I got here," he admits. "And I didn't realize the tremendous amount of resources we have to use to deal with these things."

On the other hand, he does not favor any wholesale changes in the system, such as adoption of a so-called flat tax, which would eliminate all deductions in favor of a lower universal rate. We believes that such a tax would "probably bear more heavily on middle-income groups and be quite a boon to the very-high- and very-low-income earners. I suggest that that runs counter to the political philosophy that has surrounded the development of our tax system for a long, long time."

He has even stronger views on the subject of cash-based accounting, whereby to jockey tax obligations companies pay taxes on income when it is actually received, rather than when it is recorded. "When I got here, and looked at the long list of cases that were in her seeking that kind of change, I realized all of a sudden that here was a significant and material distortion of income. I know good accounting when I see it and I can't see any public purpose being served by permitting the cash method, which really isn't a method at all but really a kind of convention."

Indeed, there is probably nothing more taxing to the commissioner's patience than the sight of people steering around the tax code, even if it is tolerable within the letter of the law. If Egger comes back in 1985 -- an event dependent on the Presidential election, a repeat invitation, and his own inclination to accept -- both businesses and individuals can look for loopholes to grow tighter still.

"My experience as a professional was not oriented to gimmickry," declares Egger. "I feel strongly about that. I found that there are many legitimate areas of tax planning that will minimize the impact of taxes on certain transactions and business activities, and that's where the value of the profession lies. I don't think it lies in trying to invent some cute gimmick that clearly circumvents the intent of the law. That never was my intent in practice, and I don't think it belongs in our society. I really don't."

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