in expenditure by the Bureau of Internal Revenue but in an improved service to the public and a more efficient collection of revenue." The Commissioner of Internal Revenue has ably presented to the committee the plans of the Department of the Treasury to reorganize the Bureau administratively. The review of these plans by myself and Budget Bureau staff over the past months has convinced us that they offer many opportunities for substantial economies. These plans apply the important principles of good administration as we have come to recognize them. The Commissioner has stated, and we concur with him, that it is impractical at this time to enumerate in detail any specific dollar amount of economies that can be achieved. We do know, however, that the administrative reorganization can be expected to provide opportunity for substantial economies. These should come about in the eventual reduction in costs of rent, travel allowances, telephone, personnel services to be supplanted by mechanical operations, and the like. They should also be reflected in greater service to the taxpaying public and in the more effective collection of revenue. I believe the committee can appreciate the great difficulty in attaching a single specific dollar amount of saving to be realized from Reorganization Plan No. 1 of 1952. I further believe that the Congress does not want any statements of savings which would be inaccurately arrived at or misleading, or both. It is preferable to state frankly that the savings to be realized cannot be reliably estimated in detail. Apart from the question of savings both in Reorganization Plan No. 1 and those possible under the ensuing administrative reorganization of the Bureau, the collection of revenue during the next year is expected to require an enlargement of the revenue service, estimated at about 7,400 additional positions for the fiscal year 1953. This enlargement is due to such factors as the increased workload of the Bureau, the administration of the new wagering tax, and intensified racketeering investigation work. This increase is necessary whether or not the Bureau be reorganized. The CHAIRMAN. Is there any other question? Mr. LANTAFF. Can that estimate be supplied prior to the time that we have to take action on this? The CHAIRMAN. We thank you very much if there are no other questions. Our next witness will be Mr. Dunlap, Commissioner of Internal Revenue. Will you state to the committee your qualifications, how long you have served as Commissioner, your experience, and so forth, in your statement? Mr. DUNLAP. Mr. Chairman, may I first introduce the people with me? Over here I have Mr. William Parsons, who is the administrative assistant of the Secretary of the Treasury; and Mr. Sugarman, the assistant head of our management staff; Mr. Winkle, Assistant Commissioner for Operations; and Dr. Atkeson, the head of our manage ment staff. As to your question, Mr. Chairman, I was appointed a deputy collector 181⁄2 years ago. I have served as assistant chief field deputy, chief field deputy, collector of internal revenue, and internal revenue agent in charge, chief of the special racket drive, and from there on into the Commissioner's office. Mr. McCORMACK. Might I not ask if you were not on military leave during the war? Mr. DUNLAP. Yes, sir. Mr. McCORMACK. Will you give us your other background from that angle your military background? I think it all is a part of a broad picture. Mr. DUNLAP. I enlisted in the Texas National Guard in 1923 as a private. I held every rank up to major at the time of induction, which was in November of 1940. At that time I was a commander of a squadron of horse cavalry. Shortly thereafter I was promoted to lieutenant colonel, as regimental executive. I commanded the regiment for a short time, and then was promoted to colonel as brigade executive and went from there to chief of staff of a horse cavalry division, and from there to the Pacific area as a G-3 of the Alaskan-Aleutian command. After which, of course, after the end of the war I returned to the Internal Revenue service. Mr. McCORMACK. What was your last rank? Mr. DUNLAP. Brigadier general. The CHAIRMAN. You may proceed, Mr. Dunlap. STATEMENT OF JOHN B. DUNLAP, COMMISSIONER OF INTERNAL REVENUE; ACCOMPANIED BY WILLIAM W. PARSONS, ADMINISTRATIVE ASSISTANT TO THE SECRETARY OF THE TREASURY; N. A. SUGARMAN, ASSISTANT HEAD OF MANAGEMENT STAFF; J. F. WINKLE, ASSISTANT COMMISSIONER FOR OPERATIONS; AND DR. T. C. ATKESON, HEAD, MANAGEMENT STAFF Mr. DUNLAP. Mr. Chairman, I do not have any prepared statement, because I felt I could talk to you better from the detailed charts that we have brought with us and which I feel will answer most of the questions I have heard here in the past 2 days. There is one thing I would like to emphasize as we go along. The first is that, in my opinion, from the development of this plan it provides far better and less annoying service to our taxpayers at the local level than we can possibly render under our present situation. It provides tighter control all the way down the line from a management standpoint. It provides enormous possibilities for economies in the service, and it provides a tighter control over the conduct of our personnel throughout. The entire plan is a simple one. It is far simpler than the method under which we now operate. And I know that from experience as a collector and internal revenue agent in charge in the many complications that we encounter under our present plan. There is one misconception, apparently, that is in the committee's mind that I would like to straighten out right now. There are not 25 new offices. There are not 70 new offices. That terminology is necessary in the plan for legal purposes on setting their compensation under civil service laws. These 25 offices mentioned and the 70 offices mentioned are merely the replacement and consolidated offices representing at this time almost 200 field offices when we wind up. Instead of having 200 field offices, we would have up to 25 district offices and up to 70 State and division offices. So we are replacing a much larger number of field offices with a considerably lower number of operating offices. This first chart I have here is a very simplified thing. I do not want to talk too much about it, because I have detailed charts of each segment as we go through, which will show in more detail what we mean. (Chart 2 above referred to appears on p. 98.) CHART 2 DEPARTMENT OF THE TREASURY-BUREAU OF INTERNAL REVENUE Mr. DUNLAP. This chart merely shows the Commissioner's level, that is, our office here in Washington. I would like at this point merely to confine my remarks to a statement that no duties will be performed in Washington except those that must be performed on a Nation-wide scale; no detailed operations, just things that must be done on a Nation-wide scale to insure that all of our offices over the country are enforcing the tax laws on a uniform basis. This is our main operating level, the new office of District Commissioner, one of the 25 mentioned in the plan. I would like to emphasize that it is not a new office except in terminology. It is a consolidation of the functions now performed by internal revenue agents in charge, what you know as the technical staff which we call the appellate staff in recent weeks, the Alcohol Tax Unit people, the various administrative services, personnel, budget control, all of those matters, and the drudgery task now. performed in various scattered field offices. It is a consolidated office wherein all of those persons are consolidated. The same function is now performed by many different offices which will be placed into one office. From here on down are what you generally know now as the offices of the director of internal revenue stripped of its drudgery functions, and with the added facilities so that we can provide that a taxpayer will be examined only once during the year, where the possibility now is that he might be examined six times by different types of agents. You know it is possible to be examined for income tax, then for withholding, then for social security, then for excise tax. All of that will be done in one examination under this plan. So this is the office which replaces the local office which you now know as the collector of internal revenue and added into it the other little local offices in each area, such as the branch offices of the agents in charge, the special agent in charge, and people of that kind. What I want to emphasize is the line of direct control which the Commissioner does not now have. He just does not have it. There are over 200 field offices reporting directly to the Commissioner now through the various assistants. Under this plan there would be only 25 people reporting directly to the Commissioner, the head of this consolidated office. The head of this consolidated office supervises the operations of the various deputy district commissioners within his area. So he is responsible for the entire operation below this line, and the Commissioner deals only with one man, one operating man at this level. The Commissioner also deals with the inspection service which is entirely separate from the management control line. On this chart is the only place that you see the full line of the new inspection service. There again I would like to tell you that that is a consolidation of existing functions. (Chart 3 above referred to appears on p. 100.) |