[Congressional Record Volume 143, Number 131 (Friday, September 26, 1997)]
[Senate]
[Pages S9990-S9994]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        CAMPAIGN FINANCE REFORM

  Mr. SPECTER. Mr. President, I have sought recognition this morning to 
compliment our distinguished majority leader, Senator Lott, for 
scheduling floor debate on campaign finance reform. I think that this 
is a very important matter to be debated by the U.S. Senate and, 
hopefully, to be voted on as to amendments and, ultimately, final 
passage.
  I have long believed that campaign finance reform is indispensable in 
order to take out the tremendous amount of money that is present in 
Federal elections. For more than a decade, I have worked on the issue 
to have a constitutional amendment to overrule Buckley versus Valeo 
with Senator Hollings under the Hollings-Specter amendment. I believe 
that there is a very important distinction between amending the first 
amendment and overruling a specific Supreme Court decision, many of 
which are split decisions.
  There are many besides those on the Court who have an understanding 
of the Constitution. I think the Buckley decision was wrongly decided. 
When that decision was handed down, I happened to be in the middle of a 
contest for the U.S. Senate primary in Pennsylvania running against the 
then Congressman John Heinz. In the middle of that campaign, the 
Supreme Court ruled that an individual could spend as much of his or 
her money as he or she chose. My brother was limited to $1,000 under 
the law. He could have helped finance my campaign. With Buckley not 
being reversed, that has been a major impediment to dealing with these 
tremendous sums of money, plus the unlimited amount of independent 
expenditures. We have seen the ravages of soft money. We have seen 
millions of dollars contributed in Presidential elections, as in 1996, 
in the context where the candidates are pledged not to spend money 
beyond the Federal contribution. We have seen these ads which have been 
classified as ``issue ads,'' which are blatant ads urging the election 
of one candidate and the defeat of another, on both sides of the aisle.
  I have introduced campaign finance reform legislation myself which 
would deal with the issue of soft money, prohibiting it, and which 
would define an advocacy ad as one which shows the likeness or name of 
an individual urging his or her election or his or her defeat. With 
respect to the independent expenditures, they are touted as 
independent, but in fact they are not independent expenditures.
  My legislation would require that someone who makes a so-called 
independent expenditure make an affidavit to that effect, with strict 
penalties for perjury on the affidavit form showing the individual 
making it what the consequences are. That would then be filed with the 
FEC, with the requirement that the candidate on whose behalf the 
expenditure was made, plus the campaign manager, make a tough 
affidavit, so that you do not have the feeling that there is really no 
enforcement or enforcement so much after the fact that it is 
irrelevant.
  In order to deal with the problem of unlimited expenditures by 
individuals, my bill provides for a Federal provision analogous to the 
Maine ``standby public financing provision,'' which provides that if 
candidate A spends $15 million of his or her own money, then candidate 
B will have that matched by the Government. I am against generalized 
Federal funding. However, I do believe that such a provision would be a 
deterrent so that there would not be the necessity, or at least a very 
limited amount of governmental money put in the campaigns if they knew 
there would be no advantage because the Government would match it for 
his or her opponent.
  My bill further builds upon what we have seen in the Governmental 
Affairs hearing, to require that there be a limit and reporting on 
contributions to legal defense funds, which are a first cousin to 
campaign contributions. We saw in the testimony involving Charlie Trie, 
coming into the legal defense funds, pouring out hundreds of thousands 
of dollars. My bill further tightens the requirements as to foreign 
contributions which we saw on the Young development matter, where the 
money had a foreign origin and ended up in a political campaign 
committee.

  I had been unwilling to cosponsor McCain-Feingold as long as it had 
the provision calling for lesser expenses or free television time, 
because I think that provision is unconstitutional, in violation of the 
fifth amendment as the taking of property without due process of law. I 
know the arguments that they are public airwaves, but once the 
situation has been established on a property right, I think that 
constitutes a taking. I discussed that matter with Senator McCain some 
time ago, and once he says that provision is going to go, I am prepared 
to cosponsor McCain-Feingold. Last year, when the subject came up, I 
voted for cloture on McCain-Feingold. Although I didn't agree with all 
of its provisions, I thought the matter should come to the Senate floor 
and be voted upon.
  Regrettably, we will probably not have campaign finance reform, or we 
won't have campaign finance reform until there is a demand by the 
American people that we do so. Only that kind of a demand will move the 
Congress. My own sense is that we are far short of the 60 votes for 
cloture for cutting off debate. But I think there may be 8, 10, 12, 
maybe even more, Senators who would be influenced by a very strong 
constituent demand. That influences us from a very realistic sense. 
Regrettably, our hearings this week in Governmental Affairs have not 
been covered because there is no scandal. The media and the public are 
attracted, regrettably, only to scandal. It is my hope that as we move 
ahead in Governmental Affairs, we will have more public attention.
  Last week, when we had the testimony as to Roger Tamraz and his 
$300,000 contribution and the testimony about John Huang asking for 
money in the White House at a coffee, which the President, apparently, 
condoned, and the testimony about the man in the line giving the 
President a card suggesting millions of dollars of contributions and 
later being contacted by a Presidential aide, had that been on national 
television, I think the public might well be aroused. It is my hope 
that the debate here will be spirited. I think, realistically, Senate 
debates are unlikely to lead the American people to catch fire on this 
issue. But perhaps our Governmental Affairs hearings can do that, or 
supplement it by media attention generally.
  I think it is a very useful thing to move ahead with these debates on 
campaign finance reform. Again, I compliment Senator Lott for 
scheduling them, and I look forward to participating in those debates, 
aside from this brief comment in morning business.
  I yield the floor.
  Mr. BURNS addressed the chair.

[[Page S9991]]

  The PRESIDING OFFICER. The Senator from Montana.


                         IRS OVERSIGHT HEARINGS

  Mr. BURNS. Mr. President, I rise today to talk about some oversight 
hearings that have been going on here in the Senate. Also, I hope that 
the American people are seeing some things happen now that should have 
happened a long time ago. It wasn't very long ago that the suggestion 
was made to the Senate that we should go to a 2-year appropriation and 
a 2-year budget, because it seems like the time is eaten up here in the 
first part of the year to deal with budget and budget reconciliation, 
which is very, very important, and then the next part is taken up with 
the appropriations process.
  I have contended all along that our role here is not only to deal 
with budgets and appropriations, but to also deal with legislation and 
reform that, in some areas, is needed to stay up with the times, and 
also in the area of oversight. We have absolutely taken and extended 
the work day, more or less, to accommodate oversight. I think what the 
American people are seeing now is the result of that, as there are many 
hearings going on not only in Energy, but Governmental Affairs and, of 
course, in the Finance Committee. I want to compliment the chairman of 
the Finance Committee for this oversight hearing on the IRS.
  It is something that has been ongoing out there, I think, since 
probably we started this business of tax collection. Maybe there is no 
right way to collect taxes. I don't know that for sure. Even some 
activities and actions taken by the Congress have made their job a 
little more complicated, and maybe in some cases a little bit tough. 
But it does not give the IRS the right to do this job in the way that 
has been enlightened for us through these hearings of oversight of the 
IRS. It has shown a lack of compassion--exhibited by IRS employees 
beyond my comprehension, and I think beyond the comprehension of those 
in this country, and I imagine those people who have been watching 
those hearings. Yes. It happened to me too. Because we maybe are just 
talking about the tip of the iceberg.
  But some abusive IRS employees have expanded their scope of 
enforcement activities to include business men and women who are just 
trying to make a living; trying to stay in compliance with all Federal, 
State, and local revenue collecting and regulating laws.
  At the source of this evil we can level our sights in on some 
mismanagement by some IRS employees. IRS management needs to recognize 
that they have a difficult job promoting customer service as an IRS 
attribute. It is not an easy task considering the historic attitude 
toward not the IRS, but taxes. The founding of this great Nation and 
history tells us that it kind of started with the Boston Tea Party--a 
revolt against the tyrannical rule of unfair taxation.
  Taxes are a necessary evil. But if kept in check, it is important at 
all levels of government. It is a must. Taxes have created the world's 
greatest highway infrastructure, contributed to the protection of our 
borders, and has created the most successful democratic government in 
history. But waste and abuse of those dollars have burdened the 
American taxpayer with one of the highest levels of taxation in the 
history of this country.
  Tax collecting needs to reflect its controversial history. The IRS 
does not have the right to use harassment, and, yes--as has been 
brought out in these hearings--even extortion as a method of collecting 
taxes.
  Major changes are overdue. The IRS needs to improve its education and 
services to taxpayers. Taxpayers must have, at least, a comfort level 
when they approach the IRS for help so that they feel with some degree 
of reliability that the IRS will be sensitive to their needs and to 
their questions.
  We need to modernize the computers. Let's face it, the IRS can't do 
that. They spent some $5 billion to buy new computers. They don't work. 
They have never worked. We tried to simplify things. What do we do? We 
made them more complicated.
  So the general public loses its confidence to go to the IRS and ask 
questions that they will get answers for; so that they will try to do 
the right thing for the right reason.
  I think this is a very serious wake-up call to the IRS. Customer 
service will never be considered as one of their great attributes. But 
that is what IRS needs to pound into their employees: We work for the 
American public; it does not work for us. We are a service 
organization. We try to accommodate folks trying to get through a very 
difficult situation, a situation that some do not understand.
  Perhaps some of that blame lies with Congress. This is not the first 
time Congress has held oversight hearings. The IRS has a littered 
history of abuse, and, yes--I hate to say--even a little corruption.
  I think these hearings may pave the way for Senator Domenici's 2-year 
budget appropriations bill. I think that will lend credence to it. And 
Congress could spend more than 1 year on budgetary and spending matters 
and another year on tough-minded oversight of Government agencies, and 
maybe the future of such abuse can be averted. But it just does not 
happen in the IRS. We have other agencies in this Government that are 
just as abusive.

  I have contacted numerous of Montana constituents hearing complaints 
about the IRS. And I will tell my Senators beware. With these hearings 
I think our casework is going to go up a little bit.
  During the length of the bureaucratic process, debts grow 
fantastically high with interest and penalties.
  But I have been contacted by a few taxpayers in Montana that have 
similar stories as those that we heard about this week during these 
Finance Committee hearings. In one of those cases a Montana constituent 
had a pending case with the IRS that still today is unresolved. The 
small business was audited in the 1980's. And every time there was an 
offer, or attempt to make settlement, the IRS denies the offer, and the 
interest and the penalties continue to compound. In the meantime, he 
has been forced to sell all of his assets. He has lost everything that 
he has worked his whole life for, and is now facing retirement with 
only his residence and darned little capital. Even if the IRS could 
accept his recent offer he would be left with a mortgage that he will 
not be able to pay off in his lifetime.
  So as a result of these hearings we can certainly expect to hear from 
more constituents who realize that they are not the problem; that this 
problem goes way beyond them as individuals, and the problem goes way 
beyond them as a nation.
  Prior to the August recess Congress passed the Tax Relief Act of 
1997. The 105th Congress has the opportunity not only to reduce the tax 
burden on the American public but also simplify a system that is badly 
in need of reform. A far less complicated tax system may help to clear 
up some of the IRS abuses. But simplifying the tax system, one can only 
think, would simplify our revenue collection system.
  I realize that tax collection is a thankless job. There are employees 
of the IRS that try to do a good job. I happen to know a few of those. 
They do a good job, and they do it with pride. I commend them for not 
letting the arrogance, uncaring attitude that we have seen emerge out 
of the hearings earlier this week pollute their work ethic. I want to 
compliment those folks who do a good job.
  Tax collectors have a long history of public persecution. Today my 
colleagues and I stand here not to tar and feather the tax collector, 
but to put an end to the abusive culture that has crept into the 
agency--this business of a situation arising and becoming a personal 
thing. So when they personalize things then it becomes ``me against 
you, and I have the power of the U.S. Government to destroy you.'' When 
they personalize things, that is when they get out of hand.
  I ask the American public, if we, who are elected, when we debate 
personalize everything, nobody would speak to anybody around here. 
Nobody. We have to bring that back into our service organizations. 
Basically the IRS is a service organization. They must accommodate. 
They must feel some compassion. And they must try to help people out of 
this almost bottomless abyss of trying to do the right thing for the 
right reason. We cannot let this abusive culture spread like a bacteria 
through an agency and let it live. We just cannot do that.

[[Page S9992]]

  Again, I say to my colleagues, rethink your position on a 2-year 
budget and 2-year appropriations because with all the hearings, as 
controversial as they may be in an open and free Government, oversight 
is still the best way to put problems on the table and deal with them. 
It is the only way in a free self-government that people can deal with 
them.
  I thank our secretary of the conference for setting this time aside 
to bring this about. And to thank the chairman of the Finance Committee 
for this oversight because I think he has done a great service for the 
American people.
  I yield the floor.
  Mr. COVERDELL. Madam President, I thank the Senator from Montana for 
his statement here this morning. I think he is right on target.
  I yield at this time up to 5 minutes to the Senator from Alaska.
  The PRESIDING OFFICER [Mrs. Hutchison]. The Senator from Alaska is 
recognized.
  Mr. MURKOWSKI. Madam President, let me wish the Presiding Officer a 
good morning. Let me thank my colleague from Georgia for his leadership 
in this area, and my good friend from Montana for the points he made so 
succinctly.
  Good morning, Madam President. I have an obligation and an 
opportunity as a member of the Finance Committee to address this 
problem. As a member of the committee of jurisdiction, I had the 
privilege of participating in an extraordinary set of hearings that 
were chaired by Senator Bill Roth, chairman of the Finance Committee. 
These hearings really illuminated for the first time the internal 
workings of an agency of the Government that really generates fear, 
anger, frustrations and oftentimes public outrage, and that is the 
Internal Revenue Service.
  No matter how scrupulous and honest the citizen is in filling out his 
or her tax return, when that taxpayer opens the mailbox and receives an 
envelope from the IRS, a shiver of fear shudders through that citizen. 
And after this week's hearings, it is clear to all of us why the public 
holds this view of the IRS.
  A witness--some of those witnesses were hooded, I might add--
testified that her 17-year ordeal--let me say that it wasn't just an 
ordeal, it was more of a nightmare--involved improper liens and 
unwarranted demands from the IRS for more than $10,000 simply because 
there was a mixup in the taxpayer's employment identification number--
17 years, and still the matter is not resolved.
  Another witness testified about her 14-year ongoing dispute with the 
IRS involving a joint return she had filed with her former husband. 
Although this matter could have been easily resolved, the IRS demands 
caused her to lose her apartment and ultimately forced her second 
husband to file for divorce to avoid improper IRS liens.
  Neither of these cases have been finally resolved even though it is 
clear that at every stage the IRS simply acted improperly.
  A former IRS employee told the committee of a common IRS tactic of 
assessing a tax twice for the same 1040 tax form.
  A current IRS employee, an employee who did not want his identity 
known for fear of IRS retaliation, told the committee of situations 
where revenue officers with management approval used enforcement to 
punish taxpayers instead of trying to collect the appropriate amount of 
money for the Government.
  Another anonymous current IRS employee told the committee that IRS 
officials browsed tax data on potential witnesses in Government tax 
cases, and on jurors sitting on these Government tax cases.
  Madam President, this is a portrait of an agency of Government which 
appears to be out of control.
  Is there political influence in the IRS? The answer is clearly yes. 
One witness testified that she had been advised by her senior official 
to be somewhat lenient on union returns or returns from union 
officials. This, obviously, smacks of political influence in the IRS.
  Earlier in the week it was reported that 800 Alaskans from my State 
received notices from the IRS that their permanent fund dividends--this 
is a payment that comes from the yield of oil revenues distributed to 
our citizens by our State government--were being seized; 800 seized 
with a tax lien.
  The reason for the seizures? The IRS claimed these Alaskans owed back 
taxes. In one case the notice claimed a deficiency of 4 cents. In 
another, 7 cents. That's right, Madam President, notices to 800 
Alaskans based on alleged underpayments of 4 to 7 cents. An IRS 
spokesman apologized and, you guessed it, Madam President, blamed the 
computer. But who programmed the computer? Who checked the program? Is 
the programmer still working for the IRS? Who approved sending out 800 
notices to Alaskans?
  From what I know about the IRS, no human being approved that mailing 
or the millions of other mailings that go out from the IRS. It appears 
to me that the managers of the IRS have set up a system that minimizes 
human oversight so that whatever and whenever there is a foulup, no 
employee, no manager can be held accountable. It is easier to blame an 
impersonal machine for a problem than hold an individual accountable.
  Madam President, I believe a culture that affixes blame on machines 
and not human beings reflects on an institution that has for far too 
long not been held to account for its activities. What we learned from 
the General Accounting Office is that the system the IRS has in place 
is designed to ensure that there is no way for IRS personnel to be held 
accountable for their erroneous actions.
  I can assure the American taxpayer that I will be working closely 
with my colleagues on Finance Committee to change the culture of the 
IRS and demand a system be put into place that makes the individuals 
who work for the IRS accountable to the American people.
  Madam President, I yield the floor.
  Mr. COVERDELL. Madam President, I thank the Senator from Alaska and 
his colleagues on the Finance Committee for the great work they have 
done under the chairmanship of Senator Roth.
  I now yield up to 5 minutes to the distinguished Senator from 
Wyoming.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. I thank the Chair.
  Where has our country gone when people appearing before a Senate 
committee have to have their voices disguised and have to be behind 
partitions?
  I commend the Senate Finance Committee for holding the hearings 
examining the Internal Revenue Service. These hearings have given the 
American people an insight into one of the most powerful and secretive 
of Federal agencies. I applaud Chairman Roth and members of the Finance 
Committee for their diligence in examining this agency.
  For any who might have missed the hearings, on my web site, which is 
www.senate.gov/enzi/, you can get the full text of the comments made 
before the committee. There is also an opportunity there to do an easy 
e-mail to comment on what has gone on in those hearings. It is 
important for this body to follow up on those hearings with a complete 
reexamination of the Nation's tax policy and the IRS. If we are ever to 
be successful in establishing a just tax code, we in Congress must 
first come to a consensus about our underlying tax policy.
  In the past 3 days, we have heard stories from taxpayers who have 
been mistreated by an inefficient and confrontational Internal Revenue 
Service. Taxpayers testified that they were forced into personal and 
financial ruin by an all-too-often faceless agency with little 
accountability to either the American taxpayers or to Congress.
  We have heard about the enormous power of the IRS, which includes the 
power to take a taxpayer's home on nothing more than the signature of 
the district director. There is no court hearing. There is no notice. 
There is no opportunity to litigate the merits of the Service's claim. 
The IRS has the power to close down a person's business and take away 
his livelihood by merely filing a few papers in Federal court. The 
judge signs a seizure order without ever giving the taxpayer notice or 
an opportunity to contest the legality of the assessment or the amount 
of the tax owed or the problem with the computer system.

  Madam President, this is precisely the kind of abuse by our 
Government

[[Page S9993]]

our Founding Fathers were attempting to avoid when they included the 
fourth and fifth amendments in the Bill of Rights. These actions amount 
to administrative tyranny.
  As I have traveled around the State of Wyoming, I have heard a great 
deal of concern about the present state of the IRS. Our Tax Code is so 
frustratingly complex that even the professional tax preparers are 
pleading for simplicity. These folks know that the present Tax Code 
exposes them to a great deal of liability due to the likelihood of 
conflicting interpretations of the code and its myriad of accompanying 
regulations.
  As an accountant myself, I am sympathetic to the concerns of those 
who claim that even the experts cannot agree on many of the provisions 
of the current system. It is unfair to expect Americans to operate 
under a tax system with such a mind-numbing complexity and inherent 
contradictions.
  Under the current regime, it is perhaps the moderate-income taxpayer 
and the small businessman who suffer the most. That is not how audits 
are supposed to work. One of the most surprising facts which came out 
of the testimony this week is the significant increase in audits of 
lower income people and very small businesses over the past several 
years. This increase is not because the IRS believes these people have 
large amounts of unreported income. Rather, it is because the Service 
believes these people are the least likely to fight them after an audit 
since they can least afford professional tax preparers and expensive 
legal counsel.
  Just this week, I heard from some small business owners in Wyoming 
who have been battling the IRS for 5 years over $200,000 in taxes they 
are convinced they do not owe. After a 3-year onsite audit, the IRS 
determined that they only owed $30,000, including the fines and 
penalties. Even though they disputed this amount, they figured they had 
no choice but to pay it since they could not afford to take the case to 
court. Moreover, the agency threatened that if they didn't agree to pay 
the bill, IRS would reopen the investigation and insinuated that this 
might result in even more money owed. That is blackmail. This treatment 
of our citizens is unjust. An agency which turns to coercion and 
intimidation to settle unreasonable disputes is in desperate need of 
reform.
  Madam President, while I realize that many of the IRS agents are 
hard-working, dedicated public servants, I am convinced the problems we 
have heard about this week are more than isolated occurrences. Instead, 
they represent a systematic disease which cannot be cured by tinkering 
with the current Tax Code or modifying a few Internal Revenue Service 
procedures. I believe these hearings will force us to reexamine the 
specifics of our current code and our underlying policy as well.
  I have made the examination of our tax policy one of my top 
priorities for my service in the Senate. I will work with my colleagues 
toward developing a policy that reflects the legitimate priorities and 
goals of raising revenue for a Government which should in its every 
facet serve the people from whom it derives its power, not control the 
people from whom it derives its power.
  I thank the Chair and yield the floor.
  Mr. COVERDELL. I thank the Senator from Wyoming and yield up to 5 
minutes to the distinguished Senator from Colorado.
  Mr. ALLARD. I thank the Senator from Georgia for yielding.
  Madam President, I rise this morning to talk with my colleagues about 
the Internal Revenue Service. This week my colleagues on the Finance 
Committee have been holding hearings to examine the inner workings of 
the Internal Revenue Service. I appreciate their effort to more closely 
examine this institution. Not only do I appreciate it, but there are 
many Americans who appreciate this effort.
  For too long the Internal Revenue Service has not been accountable as 
an institution. Our Nation was built on a system of checks and 
balances. However, the Internal Revenue Service seems to have escaped 
this protection for Americans. For too long the Internal Revenue 
Service has used secrecy, intimidation and fear to do battle against 
those whom it has been called upon to serve, and that is the American 
taxpayers.

  I found it especially interesting that during those hearings those 
who know the Internal Revenue Service best--that is its own employees--
were the most afraid. Those who know what the Internal Revenue Service 
does were the ones who wanted to protect their identities.
  Although there are many dedicated employees at the Internal Revenue 
Service who perform their jobs honestly and responsibly, there are some 
who do not. Those few have forgotten the mission statement of the 
Internal Revenue Service, which calls on them to perform in a manner 
warranting the highest degree of public confidence in their integrity, 
efficiency, and fairness. I remind them of this pledge and call on them 
to uphold it.
  Unfortunately, the abuse of taxpayers is not limited to the testimony 
we have heard this week. I have held more than 63 town meetings 
throughout the State of Colorado, and obviously taxes were a big issue. 
But it was not unusual for me to hear from many people about the 
difficulties they have had with the Internal Revenue Service. Time and 
again I have heard stories about how the Internal Revenue Service plays 
a waiting game, knowing that they have the time, the money, and 
manpower to outlast a small taxpayer.
  One of my constituents was awarded $325,000 in damages by a Federal 
court because Internal Revenue Service agents had wrongfully publicized 
information about her, after agreeing earlier that they would not make 
that information public. After auditing this taxpayer's business, the 
Internal Revenue Service seized the business and demanded $325,000 in 
back taxes. After requesting a reaudit, it was found that she did not 
owe anywhere close to $325,000. In fact, all she owed was $3,400. And 
certainly there was no real intent to avoid the law.
  The real problem here, however, was that the agents involved in the 
case wrongfully disclosed information about the taxpayer after agreeing 
to not disclose that information. When awarding damages in the case, 
the judge harshly criticized the Internal Revenue Service saying:

       The conduct of our Nation's affairs always demands that 
     public servants discharge their duties under the Constitution 
     and laws of this Republic with fairness and a proper spirit 
     of subservience to the people whom they are sworn to serve. 
     Respect for the law can only be fostered if citizens believe 
     that those responsible for implementing and enforcing the law 
     are themselves acting in conformity with the law.

  Once again, though, the Internal Revenue Service is dragging its 
feet, refusing to pay the money.
  Other constituents have described situations where they received 
notices from the Internal Revenue Service for very minor mistakes and 
then are assessed penalties and interest that far exceed the amount of 
tax owed. It is a frightening experience to get a notice from the 
Internal Revenue Service, particularly when it is so difficult to 
communicate back to them and actually get some real answers concerning 
a case.
  I am reminded of a case that came up in interacting with the 
constituents that I represent in the State of Colorado. Someone came up 
to me and said, ``We sent a certified letter to the Internal Revenue 
Service with the check.'' They signed for the envelope and yet the 
check apparently had been lost by the Internal Revenue Service. This 
constituent was fined $200 by the Internal Revenue Service. She felt 
paying the fine was cheaper than getting professional help to fight the 
case. Constituents tell me of years of meetings, negotiations, and 
delay by the Internal Revenue Service.
  Madam President, I request 30 seconds just to summarize my remarks, 
if I may.
  Mr. COVERDELL. If the Senator will yield for just a moment, Madam 
President, time allotted for this discussion was to end at 10. I have 
conferred with Senator McCain, and I believe he is agreeable to 
allowing it to run until 10:05 to allow Senator Bond to make his 
remarks. So I yield 30 seconds to the Senator from Colorado.

  Mr. ALLARD. I thank the Senator.
  The PRESIDING OFFICER. Is there objection to the request to extend 
time 5 minutes? The Chair hears none, and it is so ordered. The Senator 
from Colorado.
  Mr. ALLARD. I thank the Chair.
  Constituents tell me of years of meetings, negotiations and delays by

[[Page S9994]]

the Internal Revenue Service in order to wear them down, even in cases 
where the law is unclear and subject to different interpretations. This 
abuse of taxpayers must stop. The Internal Revenue Service must 
recommit itself to serving the taxpayers. It must stop making criminals 
out of those whom it is charged with helping.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. COVERDELL. Madam President, I thank the Senator from Colorado and 
now yield up to 5 minutes to the distinguished Senator from Missouri.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. BOND. Madam President, I thank my colleague from Georgia and I 
thank the Chair.
  I rise today to address an issue of profound importance, as my 
colleagues have been addressing, and that is the urgent need for a 
complete overhaul of the tax system in this country.
  Over this past week, we have all watched as the Senate Finance 
Committee has held important hearings on the administration of our 
current tax system. The testimony has demonstrated many things quite 
clearly, among them the fear of many taxpayers. But it has also been 
quite plain that for many taxpayers the root of their difficulties 
starts with the enormous complexity of the tax laws as they currently 
stand. Clearly, there is an urgent need to scrap the current tax law 
and start with a new system so that taxpayers can understand and follow 
the law in the first place.
  As chairman of the Senate Committee on Small Business, I have heard 
in hearings from entrepreneurs all across the country that their 
biggest obstacle to staying in business is complying with the tax laws. 
The tax bill that we passed last summer did much to ease the tax burden 
for many small businesses. But at the same time it did nothing to 
reduce the complexity of the law which small enterprises must navigate 
in order to enjoy the lower tax bills. As a result, instead of leveling 
the playing field for small businesses we have made it more lopsided. 
Unlike their larger competitors, small businesses can rarely afford a 
staff of full-time professional employees to maintain the tax records 
and fill out the dozens of forms required each year. To put these 
duties in context, it has been estimated that Americans spend more than 
5 billion hours each year complying with the tax laws. That is a 
staggering amount of time spent on completely unproductive activities.
  One of the figures that we have heard in the Small Business Committee 
is that the average small business spends 5 percent of its revenues on 
figuring out how to comply with the tax laws. That is not paying the 
taxes, that is figuring out how much tax they owe and how to comply 
with the tax laws. Would it not be better for small businesses to spend 
that time making products, providing services, providing jobs--
activities that they set out to do in the first place?
  For the vast majorities of small enterprises there is only one person 
who handles all the tax matters and that is the small businessowner. 
That is the one person who has to deal with nearly 10,000 pages of tax 
laws, 20 volumes of tax regulations, and thousands and thousands of 
pages of instructions and other guidance, issued by the IRS. Sadly, 
much of that burden is more than most small businessowners can do on 
their own. Instead, they are forced to spend vast amounts of their 
limited capital to hire accountants to keep the records and prepare the 
tax returns.
  For the small business that runs into difficulties on its taxes, the 
situation becomes even worse. The businessowner must spend additional 
funds on accountants and lawyers to handle the issue. Resolving these 
cases can take years, and cost tens of thousands of dollars in 
professional fees. Not infrequently, the end result is a tax bill that 
is inflated by the large amounts of interest and penalties.
  Once again, we must keep in mind that every hour the small 
businessowner spends trying to resolve tax problems is taken away from 
the actual productive business of running his or her own company.
  Madam President, the Small Business Committee will hold a hearing 
next month to elicit the views of small business on what the optimal 
tax system would look like, if we started from scratch. I look forward 
to constructive suggestions from the small business community. I expect 
they will say the system should be fair, simple, and easy for the 
average person to understand. It should apply a low rate to all 
Americans. It should eliminate taxes for individuals and families who 
can least afford to pay. It should not penalize marriage or families. 
It should protect the rights of taxpayers and reduce taxpayer abuse. It 
should minimize recordkeeping and reporting requirements. It should 
eliminate the bias against jobs, and investment. It should protect 
Social Security and Medicare and help ensure all Americans have access 
to health insurance.
  The case cannot be clearer that we need a dramatic change in our tax 
laws, and we need it soon.
  For the information of my colleagues, the full text of my remarks 
will be on the web site of the Small Business Committee at 
www.senate.gov/sbc.
   Mr. President, the case cannot be clearer that we need a dramatic 
change in our tax laws and we need it soon. Too much time, money, and 
effort are now wasted by individuals and businesses in this country 
that could be spent to improve our economy, our society, and the 
environment. I ask my colleagues to join me in raising the alarm and 
committing ourselves to do more than just talk about the problem. It's 
time to act--it's time for a new, fair, and simple tax system for all 
Americans.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. COVERDELL. Madam President, I thank each of the Senators who this 
morning commented on the extensive hearings under Chairman Roth. They 
were very revealing. I believe there can be no doubt but that major 
reforms must be brought to the Nation in short order. Each of these 
Senators made a substantial contribution to further elaborating and 
making clear the urging of the Congress for this agency to reform 
itself. Remember that it works for the people, not the other way 
around.
  I yield the floor. It is exactly 5 minutes after 10. I know the 
Senate is prepared to move to campaign reform.

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