[Congressional Record Volume 143, Number 139 (Wednesday, October 8, 1997)]
[House]
[Pages H8700-H8701]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     THE INTERNAL REVENUE SERVICE CUSTOMER SERVICE IMPROVEMENT ACT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Kansas [Mr. Moran] is recognized for 5 minutes.
  Mr. MORAN of Kansas. Mr. Speaker, my constituents continually remind 
me of their frustration with the IRS. Not all the problems taxpayers 
have with the IRS are making headlines. The kinds of problems my 
constituents tell me about are less spectacular but no less 
frustrating. Oliver Wendell Holmes famed the quote, ``Taxes are what we 
pay for a civilized society,'' but in my opinion, this does not justify 
the government's collection of taxes in an uncivilized manner.
  I have introduced the IRS Customer Service Improvement Act. I have 
supported the IRS Customer Service Improvement Act legislation 
addressing numerous taxpayer complaints in dealing with what most 
Americans consider to be one of the most onerous of all Federal 
agencies.
  For example, I recently spoke with a CPA in Kansas who told me of his 
many experiences with the IRS. One of his greatest frustrations has 
always been the ability to reach anyone at the IRS when he had a 
question he needed answered. Recently, in an attempt to get some simple 
information, he was forced to assign an employee to staff a phone and 
wait to connect with an IRS agent. Well, patient paid off Mr. Speaker, 
and they finally did get through--5 hours later. This is just one 
example but it is simply unacceptable--and the list goes on.
  The IRS Customer Service Improvement Act addresses seven areas of 
taxpayer concern.
  First, it would require the IRS to implement a plan to have all phone 
calls answered promptly by IRS employees, not machines or voice mail 
mazes.
  Second, the bill would require all letters and notices mailed out by 
the IRS to be signed by an IRS employee. Too often notices are mailed 
out, sometimes in error, to taxpayers who then have to sort out what 
their mistake was and what they need to do about it.
  I hear this complaint repeatedly. And while we expect taxpayers to be 
accountable; IRS agents should be as well.
  Third, the bill would equalize the interest rate you pay the IRS for 
underpayments, making it equal to the interest that the IRS owes from 
you for overpayments.
  Currently, the IRS holds an unfair advantage.
  Fourth, one of the really discouraging revelations of the oversight 
hearings has been the IRS's preference for targeting taxpayers who do 
not have the resources to defend themselves from audits.
  The IRS Customer Service Improvement Act would address these 
injustices by shortening the period of limitations the IRS must meet to 
assess additional taxes on returns filed by middle-and low-income 
taxpayers. Current limitations allow the IRS to find errors on three-
year-old returns that can snowball into 3 years' worth of penalties and 
interest for people who cannot afford to fight. The new limitation 
would not apply to fraudulent returns, so those who do, in fact, cheat 
would not be protected.
  Fifth, simple mathematical and clerical errors should not lead to 
large, unexpected penalties. This bill would require the IRS to notify 
taxpayers of mathematical or clerical errors in their returns within 6 
months. Late notice would cancel penalty and interest.
  Six, taxpayers would have the opportunity to correct their errors 
quickly, within 60 days, without facing penalties. Most Americans are 
more than willing to make good on simple mistakes if given the 
opportunity.
  Seventh, the bill would include a provision that makes electronic 
filing of taxes voluntary for small business.
  [The Taxpayer Relief Act of 1997 included a 1-year delay in the 
enforcement of mandatory electronic filing, but this provision, like 
the bill sponsored by the gentleman from Washington [Mr. Hastings], 
makes the exemption permanent.]
  Make no mistake, this legislation is certainly not a substitute for 
full-scale, long-term tax reform, which should be the goal of this 
body. If these provisions are successful in making the IRS more 
accessible and fair, it still would not change the fact that the U.S. 
Tax Code is far too complex and takes too much money out of the hands 
of working families.
  Until the day that wholesale tax reform is in place, the American 
people will be forced to continue to deal with the IRS every day. With 
this bill we can help level the playing field for taxpayers, while 
making the IRS more accountable and accessible. if you want to remind 
the IRS what the ``S'' in its name stands for, please join me in 
supporting this bill.
  I would now like to further elaborate on how our tax code in all its 
complexity, negatively weaves its way into all our lives. While 
acknowledging the fact that we must have some capability of collecting 
taxes, we must pursue avenues by which we do so more efficiently and 
accurately. Further we must leave behind what is perceived as a cold, 
heartless bureaucracy that cares little of the frustration and 
devastation it places upon those the IRS purports to serve: the 
American Taxpayers.
  Mr. Speaker, I quote, ``The purpose of the Internal Revenue Service 
is to collect the proper amount of tax revenue at the least amount of 
cost, serve the public by continually improving the quality of our 
products and services; and perform in a manner warranting the highest 
degree of public confidence in our integrity, efficiency, and 
fairness.''
  Does this statement accurately reflect your view of the IRS? If you 
are like most Americans, probably not. However, this is the actual 
mission statement that guides the IRS in serving the American people.
  With businesses throughout our Nation constantly reevaluating and 
retooling their efforts in improving customer services, too often our 
Federal Government remains unresponsive and behind the curve in serving 
its clients--the American taxpayers. Nowhere in government is this more 
frustrating or directly touches more lives than when dealing with the 
IRS.
  Recently this Congress passed some healthy tax relief. In general, my 
constituents viewed this very positively. However, they also expressed 
justifiable criticism that the tax relief provisions that were passed 
further complicated an already complex Tax Code.
  And while I agree, we must observe that this is the absurdity of the 
present tax code: to even cut taxes we must complicate the tax code 
further.
  Mr. Speaker, let us look at some notable statistics involving the 
Internal Revenue Service: The IRS is twice as big as the CIA and five 
times the size of the FBI, with over 100,000 employees who control more 
information about individual Americans than any other agency. Currently 
there are 480 separate IRS tax forms. Over 10 million correction 
notices are sent out each year. Small businesses spend $4 dollars in 
compliance for every $1 dollar they actually pay in taxes to the IRS. 
Individuals and businesses spend at least 5.4 billion hours a year 
figuring out their taxes, more man-hours than we spend building every 
car, truck, and airplane manufactured in America. It is estimated that 
we spend between $200 and $300 billion each year paying others to 
complete their complex tax forms for them. According to the IRS, in 
1995, 2.1 million tax returns were audited at a cost to the IRS of 
nearly $1 billion dollars.
  The IRS has spent $4 billion dollars on upgrading its computer system 
that it now admits doesn't work. According to a recent General 
Accounting Office report that the IRS could not account for $216 
billion in delinquent taxes in 1996. Other comprehensive GAO audits 
have shown consistently that the IRS cannot even balance its own 
financial books. Again, the agency charged with the collection and 
accounting of the nation's tax revenues has consistently failed to 
balance its own books.

[[Page H8701]]

  Mr. Speaker, this is a pretty sad commentary on the current state of 
the IRS.
  We now have a unique opportunity, and in fact an obligation, to begin 
a serious national debate on how best to fundamentally reform our 
Nation's broken tax system. It is a system where we spend simply too 
much time filling out too much paperwork to send too much money to 
Washington.
  Under the current tax code the Federal Government simply has too much 
power and control over peoples' lives.
  Since the income tax was first established, politicians have talked 
about reforming, fixing, or replacing the system, only to end up making 
it more unfair, more complex, and more intrusive. The New York Times, 
in a 1909 editorial opposing the very first income tax, predicted, 
``When men get in the habit of helping themselves to the property of 
others, they cannot easily be cured of it.''
  Eighty-eight years later, this prediction has proven disturbingly 
true. For the time being, however, let us implement the reforms 
included in the IRS Customer Service Improvement Act as we move toward 
further discussions over replacing the current Tax Code.

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