THE IRS NEEDS COMMON SENSE THE ISSUE IT ASSESSES AN ESTATE TAX AGAINST THE SURVIVORS OF A PAN AM VICTIM. OUR OPINION EITHER THE LAW OR PERSONNEL NEED CHANGING, AND MAYBE BOTH.(MAIN)

The Internal Revenue Service, never particularly sensitive in dealing with its ``clients,'' appears to have outdone itself.

Last month it notified the family of a man killed in a Pan Am jetliner crash in Scotland in 1988 that his estate faces a tax bill of more than $6 million on the settlement of a lawsuit against the now-defunct airline and its insurer. This bill has arrived even though no payment has been made to the family's estate. In fact, the size of the settlement has not even yet been determined.

The lawyer for the billed family says the notice is ``idiotic.'' A spokesman for the IRS, meanwhile, says the agency had no choice. In order to …