About 76 percent of taxpayers agreed when asked in a recent survey if they should cheat "not at all" on their taxes - meaning almost a quarter felt otherwise. Eleven percent said it was OK to cheat "a little here and there," with 5 percent saying people could cheat "as much as possible."
Each number represents a significant change compared with 1999, when the Internal Revenue Service asked taxpayers the same questions. The biggest difference was in the "not at all" question: 87 percent agreed then that any cheating was unacceptable.
The most recent survey was conducted by the Roper polling organization for the IRS Oversight Board, created by Congress as an independent agency watchdog. The survey involved 1,990 in-person interviews of adults conducted in late July and early August and contained a margin of error of plus or minus 3 percentage points.
The survey is part of the 2001 Oversight Board report, due for formal release in late January. An advance copy was provided to The Associated Press.
The board's chairman, Larry Levitan, said although the survey only presents a short-term snapshot of taxpayer attitudes it does "indicate some erosion in the commitment to the importance of paying taxes."
"If future results show a continuation of that attitude, that's a cause for alarm," Levitan said. The board intends to do similar surveys each year, he said.
The survey findings come as the IRS struggles to reverse a long decline in its enforcement activity, including the steep slide in audits.
In 1988, one out of every 79 tax returns was audited, or a total of about 1.77 million. But by 2000, the 716,000 audits represented only one out of every 232 returns.
There are several reasons for this, the Oversight Board found. The number of IRS employees has dropped over the same period, even as the number of returns filed continues to rise. The tax code itself gets bigger and more complicated every year, coming in at about 1.4 million words and 20,000 pages of regulations. The IRS also must operate with 1960s-era mainframe computers, which are gradually being phased out.
The IRS announced this week it would randomly check about 50,000 returns this year, in an effort to glean information to target audits better in the future. IRS Commissioner Charles Rossotti told reporters the number of audits may not rise very quickly but that the agency intends get better results by focusing on people considered likely cheaters.
"We hope (the audit rate) won't go down any further, because it's already pretty low," Rossotti said. "But at least with the ones that we have, we'll be able to be more effective."
Tax experts say confidence in the tax system erodes if people believe their neighbors are getting away with cheating. More and more people may be persuaded to cheat, further alling into question the system's fairness and reducing government revenue.
"If we can't make sure that everyone pays their fair share, then honest taxpayers get stuck making up the difference," Treasury Secretary Paul O'Neill said this week.
The Oversight Board gave its support to this year's random audits, saying in its report there is an "urgent need" to gain better research on taxpayer compliance.
Regarding the decades-old computer systems, the board recommended that Congress approve nearly $1 billion over the next two years to keep the modernization program moving along - with another $500 million a year necessary for several more years beyond that.
"The IRS has been broken," Levitan said. "The service to taxpayers is not what it should be. The level of enforcement is not adequate. So much of it revolves around inefficient technology, and in order to fix the IRS, we have to get modernization done as quickly as possible."
By Curt Anderson
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