[Congressional Record Volume 143, Number 151 (Monday, November 3, 1997)]
[Senate]
[Pages S11588-S11590]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               IRS REFORM

  Mr. GRAMM. Madam President, I wanted to come over today and talk 
about the IRS and about reforming the IRS. We are on the floor 
considering the nomination of Charles Rossotti to be head of the IRS. 
We had an excellent hearing on the nomination in the Committee on 
Finance. His background is somewhat different in that he is an 
information management person, a very successful businessperson. I 
believe that he will be an excellent head of the IRS. I intend to vote 
for him. However, like most people who have spoken during this time, I 
want to talk about reforming the IRS, not the naming of the new head of 
the agency.
  First of all, Madam President, I want to reject the idea that what is 
wrong at the IRS is sort of a sociological environment that has 
developed there. We heard a little of that during our hearings. We 
heard a lot of it from the Treasury Department when an effort was 
undertaken to try to change the IRS.
  The whole logic of this argument, which I reject, is that the problem 
at the IRS is that an atmosphere has developed, that there is this 
sociological environment that has come into existence over a long 
period of time, and what we really need is to have some counselors come 
in and have sensitivity training for IRS agents and that will make 
everything great.
  We then have terms used, and I would have to say by Members of both 
parties, such as, ``Let's make the IRS a consumer-friendly agency.'' I 
am afraid that just reeks of nonsense to me. Let us not forget that we 
did not create the IRS with the best of intentions. Congress created 
the IRS to get money from people who, by and large, did not want to 
joyfully give. When it comes to the IRS, most Americans are not happy 
givers. They believe that Government spends too much money. I share 
that belief. They believe that the Government spends it inefficiently 
and unwisely. I share that belief. In fact, both

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of those beliefs would be strengthened if the average citizen could 
spend 1 week as a Member of the Senate. People do not like paying 
taxes. They object to much that the Government does, and the IRS uses 
the power of the State to force people to provide money that, by and 
large, they do not want to provide.
  But there has developed a notion that somehow at the end of this 
process, when the agent calls up and says, ``I'm from the Internal 
Revenue Service and I want to help,'' people would say, ``Well, gosh, 
great; it's awfully nice that you called. This is the beginning of a 
good day, possibly a good week or year and may be a turning point in my 
life.''
  If we are going to approach the IRS problem from the point of view 
that the agents simply need sensitivity training or that this can 
become such a friendly Government agency that people will be happy to 
hear from it, I think we are making a terrible mistake.
  I think the problem with the IRS is very easy to define and quite 
hard to do something about. The problem with the IRS, to paraphrase an 
ancient Greek, is that power corrupts. The basic problem with the 
Internal Revenue Service is that IRS agents, in the bureaucracy that 
has developed to collect taxes, have tremendous power. I guess the best 
way I found to try to get people to visualize it is to talk about a 
courtroom. Most of us, fortunately, have never been in a courtroom, but 
almost everybody has seen it on television or at the movies.
  Think of yourself as going into a courtroom and the judge is from the 
IRS. You look over at the jury, and the 12 jurors are all from the IRS. 
And then you look over at the prosecutor's table, and the prosecutor is 
from the IRS. And the policeman who is going to testify, having 
arrested you, is from the IRS. And you walk into the courtroom faced 
with a presumption that you are guilty.
  Now, that sounds like a picture that is completely out of focus as 
far as the American system of justice is concerned. But in reality that 
is an accurate picture of a taxpayer dealing with the Internal Revenue 
Service.
  Now, the question is, how do you change that picture? How do you do 
it in such a way as to guarantee due process? How do you separate the 
powers of the IRS to eliminate the abuse? And how do you do it all in 
such a way that you do not undermine the ability of the Internal 
Revenue Service to collect $1.6 trillion a year in taxes from working 
Americans.
  That is our challenge. I want to congratulate our colleagues in the 
House for their efforts. I want to congratulate Senators Grassley and 
Kerrey for their IRS restructuring commission effort. I think that 
effort gave us a good starting point. I think Chairman Archer's bill is 
a good bill.

  But I would have to say that I agree with Chairman Roth, that what we 
need to do is to carry this issue over until next year. We had very 
productive hearings, hearings that awakened not only us but the 
American people to abuses in the IRS. But now, before we legislate, we 
need to hear from some people who have ideas as to how we fix the 
problem. I think we need to hear from financial experts, including 
people from the Internal Revenue Service. I think we need to be certain 
that this issue has been thoroughly examined.
  I would like to share just a few thoughts and then yield the floor, 
because I see that we have other colleagues who have come to the floor.
  First, I believe that we need, to the maximum extent possible, to try 
to find a way to separate powers that are currently joined together in 
the Internal Revenue Service. It seems to me, if you look at the 
criminal justice system, that the separation of functions represents a 
separation of powers that, while it doesn't always succeed, while there 
are failures and abuses in the system, at least in the criminal justice 
system you have the police that do the investigating and then they take 
their evidence to the district attorney and the district attorney 
evaluates their evidence and in the process evaluates them. And then 
the district attorney goes to a grand jury and the grand jury evaluates 
the evidence and makes the determination as to whether there is 
sufficient evidence to take you into court. If they decide there is, 
you go into a court where you have a judge and where you have a jury. 
And the investigating police, the district attorney, the grand jury, 
the judge, and the jury all represent separations of power and checks 
on the potential abuses of one or the other.
  Our problem in the Internal Revenue Service is that this one agency 
performs all of those functions. It seems to me that the first thing 
that we have to try to do is to find a way to separate those functions 
so that each of these different levels of our dealings with the 
Internal Revenue Service represents a check on the potential abuses of 
the other level or function that we are dealing with.
  Obviously, this is a golden opportunity for us to look at the Tax 
Code, to look at its complexity, to look at the degree to which it is 
unfair, and try to fix it. I am not one of those who believes that 
short of Heaven we will ever eliminate the Internal Revenue Service. We 
can change its name, we can change the plaque, we can take down the 
flag, but in reality, as long as the Government spends massive sums of 
money, somebody, some agency is going to have to collect that money. 
But I think, with a simplified system, we could dramatically change the 
way the IRS works by making it easier for citizens who intend to abide 
by the law to do it.
  I think also that, to the degree that we control Government spending 
so that Government takes less, to the degree that we spend the money 
more wisely, then I think we would make people more willing to pay 
taxes. The great Abraham Lincoln was quoted during the Civil War as 
having said that he was a joyful taxpayer. He perhaps was the last one 
in America. Because he supported winning the Civil War. I think, to the 
extent that we can make the system simpler and fairer, to the extent 
that we can be wiser in our expenditure of money, that we can improve 
the situation. But, in the end, the Internal Revenue Service has too 
much power. We need to shift the burden of proof. The Internal Revenue 
Service should have the burden of proving that someone is a lawbreaker. 
We should not begin with the presumption, when you are dealing with the 
Internal Revenue Service, that the taxpayer is guilty.
  It seems to me that we ought to also look at a system where, if I am 
trying to run a business and the IRS comes in and audits me and I spend 
$250,000 on accountants and lawyers, defending myself from the IRS, and 
at the end the IRS says, or the judge and jury say: This was all a 
mistake. You didn't do anything wrong. If that turns out to be the 
case, it seems to me that small business ought to be able to go into 
court and say: Look, I spent $250,000. I didn't do anything wrong. The 
IRS didn't even say it's sorry. Maybe the IRS ought to have to pay that 
small business $250,000 and pay their court costs.

  A final point which has almost never been mentioned in this debate 
but which I want to mention here because I think it has to be a factor 
in our deliberations, is that at the end of the day, with whatever we 
do in reforming the IRS, it still has to be able to collect taxes. I 
have no sympathy for people who cheat on their taxes. People who cheat 
on their taxes make the rest pay more. And as we strengthen the rights 
of taxpayers--which I am in favor of, and I intend to fight hard for--
as we shift the burden of proof, as we divide the powers of the IRS and 
make it less intrusive, to the extent that such reforms make it easier 
for people to cheat we have to have stiffer penalties for those who 
knowingly violate the law.
  So I think we have quite a legislative effort ahead of us. I think we 
have a golden opportunity to do something that is important. I want to 
congratulate Chairman Roth and the Finance Committee because I do 
believe we had an excellent set of hearings. But simply because we know 
more about the problem does not mean that we yet know the solution. I 
am hoping that we can have equally productive hearings on ideas from 
people around the country as to what could be done to fix the IRS, how 
we could change the system. We should take the time to get it right, be 
more comprehensive in what we want to achieve, and build on an 
excellent bill that came over from the House. We have an opportunity to 
dramatically change the Internal Revenue

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Service and convince Americans that, while the Government is still 
spending too much money and is not spending it as wisely as it should, 
that the tax system is fairer and that the collection process is fairer 
as a result of the reform efforts that we are about to undertake.
  I don't think people expect to love their Internal Revenue agent, 
unless they married one or unless one is their child or their parent. 
But they expect to be treated fairly. And obviously they know when they 
are contacted by the IRS that they are potentially in deep trouble, and 
it is that threat that drives many people to go ahead and declare 
income that they might have hidden and to pay taxes that they didn't 
want to pay.
  So, finding this balance, I submit, is going to be a difficult task. 
I am very grateful that I am on the Finance Committee and I am going to 
have an opportunity to play a small role in it. I think it is 
important. I am glad that we are waiting to gather more facts, not just 
on the problem but the solution. I thank my colleagues for their 
tolerance and I yield the floor.
  The PRESIDING OFFICER (Mr. Allard). Who yields time? The Senator from 
Michigan?
  Mr. ABRAHAM. Mr. President, I seek unanimous consent to speak for up 
to 5 minutes, the time to be deducted from the leader's time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ABRAHAM. Mr. President, I don't believe I will necessarily need 
the full 5 minutes, even, but let me speak today about an issue of 
great concern to the citizens of my State.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.

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