[Congressional Record Volume 143, Number 22 (Wednesday, February 26, 1997)]
[Senate]
[Pages S1671-S1678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COVERDELL (for himself, Mr. Abraham, Mrs. Hutchison, Mr. 
        McCain, Mr. Kyl, Mr. Faircloth, and Mr. Inhofe):
  S.J. Res. 17. A joint resolution proposing an amendment to the 
Constitution of the United States to prohibit retroactive increases in 
taxes; to the Committee on the Judiciary.


                         TAX REFORM LEGISLATION

  Mr. COVERDELL. Mr. President, today I rise to offer a tax reform 
package to provide greater tax fairness and to protect citizens from 
Internal Revenue Service--IRS--abuses. This package includes three 
initiatives: a constitutional amendment called the retroactive tax ban 
amendment, a bill to establish a new budget point of order against 
retroactive taxation, and the Internal Revenue Service Accountability 
Act.
  The first, the retroactive tax ban amendment, is a constitutional 
amendment to prevent the Federal Government from imposing any tax 
increase

[[Page S1677]]

retroactively. The amendment states simply ``No Federal tax shall be 
imposed for the period before the date of enactment.'' We have heard 
directly from the taxpayers, and looking backward for extra taxes is 
unacceptable. It is not a fair way to deal with taxpayers.
  In addition, I am introducing a bill that would create a point of 
order under the Budget Act against retroactive tax increases. Because 
amending the Constitution can be a very long prospect--just look at the 
decades-long effort on behalf of the balanced budget amendment--I 
believe this legislation is necessary to provide needed protection for 
American families from the destabilizing effects of retroactive 
taxation.
  It was clear to Thomas Jefferson that the only way to preserve 
freedom was to protect its citizens from oppressive taxation. Even the 
Russian Constitution does not allow you to tax retroactively. 
Retroactive taxation is wrong, and it is morally incorrect.
  Families and businesses and communities must know what the rules of 
the road are and that those rules will not change. They have to be able 
to plan their lives, plan their families, and plan their tax burdens in 
advance. They cannot come to the end of a year and have a Congress of 
the United States and a President come forward and say, ``All your 
planning was for naught, and we don't care.''
  Mr. President, my third proposal is the Internal Revenue Service 
Accountability Act. It is wide-ranging and deals with a number of 
faults within the IRS that I have become aware through my constituent 
services work and through discussions with everyday Americans. Whenever 
I travel through my State, or across the Nation for that matter, 
concerns inevitably are raised about the IRS. This agency seems to 
believe the vast majority of American taxpayers are looking to cheat 
the Government. Instead, I believe American taxpayers are honest and 
hardworking, and they deserve to be treated accordingly.
  Our Nation suffers under an unfair and incomprehensible tax code that 
takes far too much of what we earn. Even worse, the organization 
responsible for enforcement of the tax code--the IRS--often seeks to 
intimidate and frighten honest citizens. We cannot tolerate a Tax Code 
that punishes families, and we cannot tolerate an IRS eager to bully 
and harass taxpayers.

  Let me briefly outline my proposal. First, the IRS Accountability Act 
would make agents of the IRS responsible for their actions. My 
legislation would make it a crime for an agent to use extortion-like 
tactics when collecting a tax. Agents must know there are real 
consequences for their actions. When they abuse their authority by 
maliciously and willfully disregarding the statutory procedures 
established for collecting taxes from honest taxpayers, they must be 
held accountable.
  In addition, this legislation would lift the current shield 
protecting IRS agents from holding any personal liability for their 
actions in the course of collecting a tax. I was surprised to learn 
that this shield remains in place even when their abusive actions 
result in judgments against the United States for hundreds of thousands 
of dollars. How ironic that American taxpayers end up footing the bill 
for the abuses they suffer. My legislation would end this intolerable 
arrangement.
  My legislation also protects the privacy of taxpayers. A few years 
back, I was shocked to learn that nearly 370 employees of the Atlanta 
IRS office were caught accessing the tax returns and return information 
of friends, neighbors, and celebrities without proper authorization. 
They were file snooping. The IRS Accountability Act would make this 
activity a crime and allows the offender to be held personally liable.
  Further, my legislation requires notification of any taxpayer who 
suffers this abuse. Unfortunately, what should seem to be a simple 
matter of decency must be required of the IRS. In response to 
suggestions taxpayers be notified when their privacy has been invaded 
by file snoopers, IRS Commissioner Margaret Richardson stated, ``I'm 
not sure there would be serious value to that in terms of protecting 
the taxpayers' rights.'' With all respect, such sentiment is typical of 
a Washington status quo mentality that is out-of-touch with the rest of 
America.
  Recent reports in the press suggesting the IRS has been conducting 
audits for political reasons, add weight to the need for limitations on 
this activity. The IRS Accountability Act requires that all audits be 
reasonably justified. It also prohibits random audits and reauditing of 
returns or issues of a return unless approved by court order in the 
course of a criminal investigation. Further, the IRS will be limited 
explicitly to 3 years from the time a return is filed in which to 
conduct an audit unless approved by court order in the course of a 
criminal investigation.
  The IRS Accountability Act also would extend the time responsible 
taxpayers have to pay a tax without suffering a penalty. I could not 
say how often I hear complaints about the inaccessibility of the IRS. 
Time and time again, taxpayers cannot get answers from the IRS or even 
speak with a customer service agent.

  According to the IRS Taxpayer Advocate's recent report, one of the 
most common complaints against the IRS is its failure to acknowledge 
taxpayer correspondence.
  The IRS's only responses seems to be more threats and higher 
penalties. The IRS Accountability Act will help taxpayers by offering 
some needed relief.
  This legislation also preserves the integrity of judicial decisions 
against the IRS. This section grants a Federal court the authority to 
dismiss a case of controversy involving the IRS if it is shown that a 
similar or identical case already has been decided within the court's 
jurisdiction or circuit. The IRS places itself above our Federal 
judiciary and will choose to disregard a court decision in subsequent 
cases when it believes the court's decision is in error. This arrogance 
must be held in check.
  Mr. President, this legislation would place limits I believe are 
needed on the IRS when it seizes or levies assets. How many times have 
we heard press reports that a child's earnings from a paper route has 
been seized or that a child's pennies have been taken to pay the tax 
bill of a relative.
  In Georgia, I recently learned of an instance where the care and 
health of an elderly nursing home patient was jeopardized by the IRS 
when it seized her account to pay the tax bill of a relative. Even 
though it was well documented that the account contained only her 
Social Security benefits and were used to pay for her care, the IRS 
refused to relent until my office interceded. In addition, we have 
heard numerous examples where assets have been taken erroneously. My 
legislation would ensure that all levies and seizures are proper under 
the law and are warranted by requiring the IRS to obtain prior court 
approval.
  My legislation also places what I believe are reasonable limits on 
the accrual of interest and penalties. Specifically, it would decouple 
the two, preventing interest from accruing on the penalty portion of an 
unpaid tax bill.
  Keep in mind the IRS' track record on responding to taxpayers. 
According to the IRS Taxpayer Advocate, it isn't good. Now add the 
following to the mix: interest on the unpaid tax, penalties on the 
unpaid tax, and interest on the penalty on the unpaid tax. If a 
hardworking taxpayer is unfortunate enough to run afoul of the IRS, 
before he or she knows it, the tax bill has doubled, even tripled. For 
too many taxpayers, when they become aware a problem exists, their bill 
has turned into a burden they cannot hope to pay.
  Further, this legislation would equalize the interest rates charged 
by the IRS and against the IRS. Current law gives the IRS an advantage 
in interest charges over taxpayers. I believe this is predicated on the 
assumption that the Federal Government is more entitled to a taxpayer's 
income than the taxpayer. Nothing should be farther from the truth. 
Requiring equal rates to be charged will provide equity and bring to a 
close another instance where Washington thinks it knows best with what 
to do with families' income.
  Finally, the IRS Accountability Act provides fairness in cases of 
mathematical and clerical errors. For honest mistakes, the taxpayer 
should have an opportunity to correct it without getting slapped by a 
tax bill full of interest and penalty charges. Under my legislation, a 
taxpayer would have a 60-day grace period after notification in which 
to pay the unpaid tax or to file

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an abatement request without incurring penalty or interest charges. 
However, should the 60-day period elapse without the taxpayer selecting 
either option, penalties and interest would be owed in full.
  In closing, Mr. President, let me say what I have stated many times 
before on the floor of the Senate. American families already send 55 
percent of their income to government in the form of taxes and other 
costs. Out of the remaining 45 percent, we expect them to clothe, feed, 
house, educate, and otherwise raise America.
  We also know that if things do not change, future generations will 
face a lifetime tax rate of 84 percent. Already, families are bullied 
and harassed by an agency eager to intimidate. How much farther would 
the IRS be willing to go to collect an 84 percent tax burden? The time 
has come to bring reason to the IRS. I invite my colleagues to join me 
in this effort.
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