Congress seven years ago ordered the Internal Revenue Service to enhance services to taxpayers, improvements financed by cutting enforcement of the tax laws to make sure telephones were answered and forms readily available. That era is ending.

The IRS will close up to 105 of its 367 walk-in centers, which dispense forms and advice, said Mark Everson, the agency's commissioner. Hours when the IRS answers telephone calls also will be reduced, he said. After the tax-return filing season ends Friday, people with simple tax returns no longer will be able to file using a touch-tone telephone. Last year, 3.8 million taxpayers, most of them with low incomes, used this Tele-File system.

President Bush, in his budget for the fiscal year that starts Oct. 1, wants to cut money to respond to taxpayer requests for help by 1.3 percent and money to reach out to taxpayers by 6.8 percent. The $57 million in proposed cuts is about one-half of 1 percent of the IRS' $10.2 billion budget.

The walk-in center closings and related cuts will save $17 million to $21 million annually, Everson said.

More cuts likely

More service cuts are likely in future years because of tightening budgets. To save money, Everson said, the IRS will steer taxpayers to the Internet to obtain forms and automated answers.

A major reason for the cuts, he said, is "the crazy way that Congress" evaluates the budget of the IRS, which in business terms is the government's only major profit center. Everson said "the extra revenues you get" through helping cooperative taxpayers and enforcing the law against cheats are treated as costs without regard to revenues they generate. "That is a big piece of the problem," he said.

Sen. Christopher Bond, R-Mo., chairman of the Senate Appropriations Committee, said Thursday at a hearing on the IRS budget that service to taxpayers generates revenue and thus should not be treated like most government spending.

"The IRS must provide high-quality and in-depth customer service to assist taxpayers, especially low-income taxpayers," he said, because "most people who fail to comply with the code do so unintentionally because of its difficulty and complexity." Bond said he also supported more money for "effective enforcement of our tax laws."

The tax gap, the amount of money that should be paid but is not, was $351 billion in 2001, the IRS said. Independent experts have said that estimate is conservative because it undercounts offshore trusts and shell companies, which have been growing in number, according to statistics disclosed by the Cayman Islands, Panama and other countries whose tax-secrecy laws make them popular with tax evaders.

Bush is proposing to spend $500 million to enforce the tax laws, but the extra money he requested over the past four years has not been enough to keep pace with the growing number of taxpayers and complex new tax laws, resulting in continued erosion of tax enforcement.

500 jobs to be lost

The IRS did not hire any tax collectors last year and is not hiring auditors, known as revenue agents, fast enough to replace those who are leaving, said Colleen Kelley, president of the National Treasury Employees Union, which represents most IRS workers. She said about 500 jobs will be lost in the first round of closings of the walk-in sites.

Charles Rossotti, the former tax commissioner who was known for referring to taxpayers as customers, emphasized improvements in customer service as a way to bring in more revenue during his tenure. Because 98 percent of taxes come in without enforcement actions, Rossotti said, the government would get its highest returns by investing in ways to help those trying to comply with the law.