The IRS has gotten rid of bad policies, created new ones and stepped up oversight since a political scandal thrust its tax-exempt group into the spotlight two years ago.  

A recent report by the Treasury Inspector General for Tax Administration confirmed the agency had made significant progress since the watchdog office sounded the alarm in May 2013.

But going forward, it’s the IRS’ people, rather than its rules, who will keep the agency out of trouble, Commissioner John Koskinen said in an interview on In Depth with Francis Rose.

“Every employee should view themselves as a risk manager and if they see a problem–see something not going the way it ought to or not in the way we expected–then they should feel empowered to raise their hand and make sure somebody knows about that,” he said. “I really do think that bad news is good news. As I tell employees, the only problem we can’t fix — can’t solve — is one that we don’t know about.”

Since taking office in December 2013, Koskinen said he had met personally with 14,000 IRS employees to encourage them to speak up if they spy trouble. He acknowledged that employees worry about retribution from their supervisors.

“As I tell the employees, we don’t shoot the messenger. We reward the messenger. It’s important for them to feel comfortable with that,” he said. “I’ve tried to reassure managers if there’s a problem in their area and someone’s made a mistake, then we’re all in it together and we’ll fix the problem.”

He has not received pushback from IRS division leaders, he said.

Koskinen said he takes the same approach in his meetings with auditors and Congress. He tells lawmakers that he wants to hear about problems their constituents have with the IRS so the agency can learn from those experiences, he said.

“We deal with virtually every American in the country. We have the world’s most complicated tax code and we have 87,000 employees,” he said. “Things won’t go perfectly. But if there’s a problem, we’ll find it quickly, fix it quickly and be transparent about it.”

While the new IG report lends credence to Koskinen’s claims that the IRS has changed, conservatives remain wary. Since the IRS was accused of unfairly scrutinizing tea-party groups’ applications for tax-exempt status, Republicans have led Congress in cutting the agency’s budget dramatically.

Now Koskinen is asking for an 18-percent increase to restore the budget to a level he describes as steady and sustainable, but Republicans have described as “astronomical” and “massive”.

“There’s a lot of focus in the appropriations process on things that have happened in the past and I’ve tried to get them to understand that we have fixed those problems,” he said.

The IRS has cut convention spending by 80 percent. Koskinen personally authorizes any training or events that cost more than $20,000, he said. Expensive videos— a Star Trek parody had been a source of ridicule a few years ago — are relics of the past, he said. The agency now has a video review board. It also no longer offers performance awards to employees who have had past performance issues or problems with their taxes.

“It’s a new day at the IRS in the context of most of the discussion people have had about prior problems,” he said. “They need to understand we took those prior problems seriously and we fixed them.”

But is that enough to convince Congress?

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