[Congressional Record Volume 143, Number 151 (Monday, November 3, 1997)]
[Senate]
[Pages S11591-S11597]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           EXECUTIVE SESSION

                                 ______
                                 

  NOMINATION OF CHARLES ROSSOTTI, OF THE DISTRICT OF COLUMBIA, TO BE 
                    COMMISSIONER OF INTERNAL REVENUE

  The Senate continued with the consideration of the nomination.
  Mr. MOYNIHAN. Mr. President, I yield such time as he may require to 
my distinguished friend and colleague on the Finance Committee, the 
Senator from Louisiana.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.
  Mr. BREAUX. Mr. President, I thank the ranking member, the Senator 
from New York, for recognizing me.
  I take this time just to say a couple of words about the President's 
nominee to be the Internal Revenue Service Commissioner, Mr. Charles 
Rossotti, who I enthusiastically support. I think the President has 
made a good choice. It is interesting to note that this appointment 
will be the first nontax lawyer to head the Internal Revenue Service 
since World War II. That might not make a lot of waves in some areas, 
but I think considering the problems we are experiencing with the 
Internal Revenue Service that this is a very positive qualification at 
the current time.
  I say that because I think that many of the problems that we heard in 
the days of hearings that we had in the Senate Finance Committee about 
the Internal Revenue Service were not so much tax problems but human 
problems; not so much a problem about how much money was being 
collected and where it was being collected from or where it was not 
being collected from, but really more evidence was given to us about 
mishandling of individuals, mistreatment of individuals, setting quotas 
for Internal Revenue Service agents that they had to meet in order to 
be considered for an appointment; review processes of Internal Revenue 
Service personnel that were conducted by Internal Revenue Service 
personnel themselves whose appointments many times were based on how 
they defended the Internal Revenue Service.
  These are not problems that call for a tax attorney but rather cry 
out for a person who is experienced in the business world, who is 
experienced with handling large numbers of employees, who is 
experienced in the management of a company or in the management of a 
corporation. These are the type of qualifications that I think are 
needed at this particular time in the history of the Internal Revenue 
Service. It is a very large agency with over 100,000 employees, and, of 
course, there are going to be mistakes made. The question is not 
whether mistakes are going to be made, but rather how we correct those 
mistakes. I think Mr. Charles Rossotti brings a particular degree of 
expertise to this position at this particular time.
  I was interested in some of the answers that he gave when we asked 
him questions about what he thought needed to be done and how would he 
approach his job. I think the responses we received were right on 
target for what is needed at this time.
  He said that he would not tolerate IRS workers who treat taxpayers 
abusively and would fire such workers as necessary.
  I don't know about my colleagues, but as one Member of the Senate, I 
feel a sense of apprehension when I deal with the Internal Revenue 
Service, and I am a Member of the U.S. Senate and sit on the Senate 
Finance Committee which has jurisdiction over the Internal Revenue 
Service. Yet, I feel a little hesitant when I deal with the agency for 
fear of doing something wrong. It is like that knock on the door that 
comes and someone says, ``It is the IRS,'' and they are here to see you 
and you go into an absolute panic. That should not be the feeling that 
Americans have toward an agency that really works for them. They work 
for the taxpayers of this country, as do we.
  So I was very pleased to see Charles Rossotti say, ``I will not 
tolerate IRS workers who treat taxpayers abusively and would fire such 
workers, if necessary.''
  He also said that the practice of evaluating an IRS employee 
performance based on quotas or based on how many cases they make will 
not be a determining factor in how well they do within the agency. I 
think that is important.
  I think some of our colleagues have probably had experiences in 
respective States where State troopers were promoted and evaluated 
based on how many tickets they wrote. It was a quota system. They had 
to issue so many tickets in 1 day or they were going to be looked upon 
as not doing their job properly. That is something that I think is a 
mistake.
  Mr. Charles Rossotti has indicated that that will not be the basis 
for evaluating and determining performances by IRS agents. I think that 
is a step in the right direction. They should not be judged just on how 
much money they bring in. They should be judged on a whole series of 
factors on how they perform on their jobs, not the least of which is 
how they treat the people they work for--the taxpayers of this country.
  He outlined three principles. These are not tax principles. These are 
personnel principles, management principles, and that is why I think he 
is the right man for the job at this time.
  In talking about management responsibility, he said he would expect 
managers to keep on top of activities under their authority and quickly 
halt abuses. These managers will be responsible for the abuses that may 
or may not occur within their jurisdiction.
  He said that he was going to be strongly supportive of open 
communication. He wants to create an atmosphere in which workers are 
willing to bring problems to the attention of the managers without fear 
of reprisal. That is a personnel decision. We had people

[[Page S11592]]

from the agency testifying before our committee behind a screen to 
separate them from the other IRS personnel for fear of retribution 
because of their testimony.
  They actually said they were fearful to tell anybody about the 
problems that they saw for fear of being retaliated against or demoted 
or never promoted because of their willingness to come up and say, 
``Look, there's something wrong in my section. I don't think we're 
dealing right with the people that we work for.'' So I was very pleased 
to see that the nominee addressed the question of open communication.
  And then, finally, on the performance measurements--and I mentioned 
this--he said, there will be no revenue quotas or perceptions of quotas 
in worker evaluation. Instead, he said he wants to create a set of 
measurements that do in fact measure what we want, including taxpayer 
satisfaction with their dealings with the agency.
  I think that that goes a long way. If an agent is of the opinion that 
he is going to be judged on his performance based on how much money he 
brings in, there is a certain degree of pressure to go out and do as 
much as he or she possibly can. That should not be the guiding 
principles of the Internal Revenue Service agents when they deal with 
the American public.
  The final point I make is that I think most of us would agree that 
the American taxpayer should feel there is someone within this 
department that is on their side. They know that the 104,000 Internal 
Revenue Service agents have a job, that their job is to collect the 
legitimate revenues that are owed by taxpayers so that their country 
could be a better place, a safer place in which to live. They 
understand that.
  But right now they feel that in dealing with this agency of 
Government, there is no one on their side, that they are against a 
bureaucracy and that they are really helpless, particularly when they 
understand that they have to somehow prove themselves innocent if they 
are ever accused by the Internal Revenue Service. I think that is 
wrong.
  I mean, every courthouse in America that I have ever been in, when 
someone is accused of doing something wrong, the person who is bringing 
that accusation, whether it be a State's attorney, the district 
attorney, or what have you, has an obligation to make the case beyond a 
reasonable doubt and with a preponderance of the evidence in civil 
cases and beyond a reasonable doubt in criminal cases. The person 
making the accusation has to prove it to various standards according to 
the court that they happen to be operating in--except here, where the 
Government can bring down the full bureaucracy of the American 
Government on an individual taxpayer, and somehow that individual has 
to come in and say, ``Let me attempt to prove my innocence,'' instead 
of having the Government prove that something was done incorrectly, 
improper, or illegally in order to justify a penalty against the 
American taxpayer. I think that is incorrect. I think that that should 
be changed.
  The other point that I think is important to note right now is that 
we have legislation--I have introduced it with a number of cosponsors; 
it has been incorporated into the Senators Kerrey and Grassley 
proposal--which creates this commission, which creates what I will call 
a Taxpayer Protection Office where when the taxpayer has a problem with 
the agency, that he or she knows there is some place where he or she 
can go, either by walking into a district office or using a 1-800 
telephone number to explain their side of the dispute and have someone 
in the agency take the time to learn their side of the issue, so that 
they can have someone to represent them and their position before their 
own Government. I think that is important.
  We have a type of office like that now called the Taxpayer's 
Advocate, but it really is run by IRS agents. They are only going to be 
there a short time. Then they will be promoted or demoted, depending on 
their performance, to some other part of the department at a later 
date. So those people are just moving through the system.
  Our legislation says that these people shall not directly be IRS 
employees, but should be more an organization that looks after the 
interests of the taxpayer and would be subject to the Commissioner 
himself's jurisdiction. I think that should go a long way to helping 
the American taxpayer know that within this bureaucracy there is some 
department, some division, someone who is actually going to be on their 
side and help them represent their case to the Internal Revenue Service 
itself.

  So I think that is where we are today, and the question before the 
Senate is, should the Senate confirm this nominee? I enthusiastically 
lend my support to the nomination. We had an excellent hearing with 
him. I think what he said was right on target. The fact that he is not 
a tax lawyer is probably part of his qualifications for this particular 
title. I support the nomination.
  I yield the floor.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I ask unanimous consent that my time be taken from the 
leader's time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, I voted for Mr. Rossotti to be reported 
out of the Senate Finance Committee. So, obviously, I support his 
nomination on the floor of the Senate today.
  His resume differs from many of his predecessors. That is, he did not 
come to this position through appointment of the President as a tax 
practitioner. He comes to us from having succeeded in the business 
world, but not as a tax lawyer.
  In business, he provided a superior product and a superior service. 
The country desperately needs a superior product and superior service 
at the IRS and a manager who can deliver both. That is why the country 
needs someone like Charles Rossotti to be Commissioner of the IRS.
  Senator Kerrey and I found, through our work on the Commission to 
Restructure the IRS, that what the IRS really needed was not a tax 
lawyer to head it up. That had been tradition. What they need is an 
organizational leader. I think Charles Rossotti fills that 
responsibility. The duties of the IRS are very much like a big business 
organization.
  Last year, the IRS had revenue of $1.4 trillion and a congressional 
appropriation of over $7 billion to collect that money. On the other 
hand, the IRS cannot satisfy the General Accounting Office that its 
books are in order. The IRS has a work force of 106,000 people. This 
compares to the 50 largest business organizations in America. The IRS 
serves 115 million individual taxpayers. Last year, it received 76 
million inquiries. It handles 200 million different tax returns and 
over 1 billion information returns annually.
  It has offices in every State in the Nation. The National Treasury 
Employees Union is one of the largest labor unions in the country. The 
IRS deals with over 12,000 financial institutions and 12 Federal 
Reserve banks in some 600 locations.
  All of these things taken together require a manager with very 
special skills. Those skills do not necessarily involve expertise in 
the Tax Code. Consequently, that is my argument. The tradition of 
having a tax lawyer as IRS Commissioner is overblown. Somebody with 
organizational skills coming from a business organization with a proven 
track record in that environment is the best person to run this massive 
organization we call the IRS.
  The IRS Commissioner's job has been thought of as the chief tax 
collector of our country. In a way, I hope that Mr. Rossotti does not 
become the Nation's chief tax collector. We all expect him to collect 
every dollar that is legally due.
  But I would rather think of the Commissioner's job as that of the 
``chief customer service representative'' at the IRS. We need to 
instill, in other words, through Mr. Rossotti and his background, the 
attitude of customer service at the IRS. In other words, another way to 
say that would be to put the word ``service'' back into the Internal 
Revenue Service. Mr. Rossotti seems to recognize improved customer 
service as his personal task. In the private sector he knew his 
organization would not be successful without putting customer service 
No. 1 on his priority.
  In January this year I wrote to the President. I discussed the kind 
of person that we would need to be the next

[[Page S11593]]

IRS Commissioner. Mr. President, I ask unanimous consent to have that 
letter printed in the Record.
  There being no objection, the materials was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                 Washington, DC, January 13, 1997.
     Re selecting a non-lawyer as the next IRS Commissioner.

     The President,
     The White House
     Washington, DC.
       Dear Mr. President: Presently you are confronted with the 
     resignation of Internal Revenue Service Commissioner Margaret 
     Milner Richardson. Though the Commissioner and I have 
     disagreed on certain practices and policies of the IRS, we 
     have had a good working relationship that has resulted in 
     some successes.
       As you begin to consider persons whom you will nominate as 
     the next IRS Commissioner, I urge you to consider nominating 
     a new kind of administrative leader for the IRS. Rather than 
     focusing on lawyers with a workable knowledge of the tax law, 
     it may be time to nominate someone who is both a non-
     Washington, D.C.-insider and a non-lawyer to be the next IRS 
     Commissioner. A person educated in business and experienced 
     in running a large private sector company would be better 
     suited to administer the IRS than most lawyers.
       The duties of IRS are very much like a business. The IRS 
     would benefit from the leadership of a trained and 
     experienced business person. Last year, the IRS had a revenue 
     of 1.4 trillion dollars, and a Congressional appropriation of 
     over 7 billion dollars, but it cannot balance its own books 
     to satisfy our own Congressional accountants, the General 
     Accounting Office.
       The IRS has an employee workforce of 110,000 individuals. 
     This makes it comparable to the group of the fifty largest 
     companies in the country. The IRS has 115 million individual 
     taxpayers that it must serve. As taxpayers, all of these 
     customers, are also owners of the IRS. IRS received 76 
     million taxpayer inquiries last year. It handles 200 million 
     different tax returns, and over 1 billion information returns 
     annually. It has offices in every state in the nation. The 
     employee union with which the Commissioner must deal, the 
     National Treasury Employee's Union, is one of the largest 
     labor unions in the country. The IRS deals with over 12,000 
     financial institutions and 12 Federal Reserve Banks in some 
     600 locations.
       I think that these things suggest the need for an expertise 
     that is not taught in law school and is not tested on any bar 
     exam. The best of our prospective administrative leaders are 
     found in this country's private sector companies. One would 
     think that, if the President of the United States would ask, 
     he would have his choice of the best of the best.
       There will be people in both the public and private sector 
     who will criticize the idea of a non-lawyer running the IRS. 
     Many of these people will be professionals of what I call the 
     federal tax industrial complex. About these criticisms, I 
     will say two things. First, most of the critics will 
     themselves be lawyers. Second, I will remind them that many 
     non-lawyer CEOs of this country all have many lawyers who 
     work for them, and they seem to get along just fine. I would 
     even suggest that the stock-holders of big companies run by 
     non-lawyers are much happier with the production and service 
     of those companies, than the people who own the IRS, the 
     federal taxpayers.
       For these reasons, I sincerely hope that you can select a 
     non-lawyer as your next nominee for the post of IRS 
     Commissioner. If you are interested, I would like to help you 
     with the selection process.
           Sincerely,
                                              Charles E. Grassley,
                                                     U.S. Senator.

  Mr. GRASSLEY. In subsequent discussions with Deputy Secretary Summers 
we agreed that now is the time to acquire a nontax practitioner to lead 
the IRS.
  With Mr. Rossotti, we hope to capture the benefit of a superior 
organizational leader. The risk is that a nonlawyer could not handle 
the legal side of the Commissioner job. At the Finance Committee 
hearing on Mr. Rossotti's nomination, I asked Mr. Rossotti how he 
intends to perform legal analysis as a Commissioner of the tax law 
agency when he does not have that background. He responded that he 
would do it exactly the same way he would do it as a private-sector 
business leader. He would hire good advisers, consult the experts, and 
make clear decisions based upon all the information supplied to him.
  The Nation has a great opportunity with a person like Charles 
Rossotti. When coupled with legislative reform at the IRS, a nontax 
practitioner as IRS Commissioner represents a sea change at the IRS. 
The IRS is moving away from being a law enforcement agency and toward 
becoming a customer service agency. Of course, it is about time. Most 
people pay their taxes voluntarily and pay them honestly.
  Therefore, I encourage all my colleagues to support Mr. Rossotti's 
nomination and then we can take up the matters of legislative reform of 
the IRS with him as an ally.
  I think I need to speak for a moment in support of the Internal 
Revenue Service Restructuring and Reform Act, the Kerrey-Grassley 
legislation. Our bill, S. 1096, is the product of 1-year's work in the 
National Commission to Restructure the Internal Revenue Service. 
Senator Kerrey and I participated in the commission as four 
congressional Members of this 17-member commission. The other 13 
members were non-Congress-oriented, and 10 of those were from the 
private sector. So I think we had a broad range of expertise on this 
commission to study how can we make the IRS more consumer friendly and 
more efficient in its operation.
  The House might pass this same legislation as early as tomorrow. Our 
legislation is maybe the only thing more important to the IRS and the 
taxpayers than who the next Commissioner might be. If that Commissioner 
is dedicated, as I think Mr. Rossotti is, to change at the IRS, then he 
needs our legislation in order to succeed.
  I introduced S. 1096 with Senator Kerrey last July. However, the 
Senate seems to be on track to address this legislation next year 
rather than this year. There are arguments to wait--and I think our 
distinguished chairman, Senator Roth, is very sincere in his expression 
of these reservations. But, speaking for myself, delaying IRS reform is 
a mistake. The Senate should pass our legislation yet this year. The 
House is prepared to pass the companion bill. We can make IRS reform 
the law of the land before the 1997 holidays. If we did, the Senate 
would create a new reason for Americans to be thankful this November.
  There are two reasons for the Senate to join the House in supporting 
the IRS Restructuring and Reform Act. First, troubled taxpayers 
literally can't wait for the relief that we provide in our bill. 
Second, the Senate will hopefully confirm the next IRS Commissioner 
nomination. Mr. Rossotti needs the tools that are in our bill in order 
for him to fully succeed in his job. Let's not require him to spin his 
wheels for another half-year. When you are dealing with the Internal 
Revenue Service, every day counts. If you are a taxpaying family and 
you are being hunted by the IRS, you need relief right away. If the 
Senate does not pass relief until 5 or 6 months from now, individual 
taxpayers will continue to suffer. At best, they may lose their life's 
assets. At worse, they may lose that which holds the family together. 
If you are in trouble with the IRS, 6 months is an eternity.
  The IRS Restructuring and Reform Act would provide immediate relief 
to taxpayers in trouble. We would extend to taxpayers a greater ability 
to recover costs and fees incurred to defend the family against the 
aggressive tax man. In the Senate hearings where we had these sort of 
horror stories about how the IRS can treat the taxpayer, we found that 
many taxpayers simply pay an unlawful tax assessment. Often it is 
cheaper than a legal defense against the IRS.

  When there is a tax due, our legislation sets standards and sets 
allowances within which we would require the IRS to make offers in 
compromise of a disputed claim. In other words, taxpayers get to pay 
their bill and go on with their lives. When a disputed claim includes 
both an IRS debt to the taxpayers and a taxpayer debt, we once and for 
all eliminate the IRS interest rate preference over taxpayers.
  Currently, when you owe the IRS money you pay a higher percentage 
than when the IRS doesn't make your refund and the Government owes you 
money. So if we wait another 6 months, we continue to give the 
Government the monetary advantage over the taxpayer. The Government 
earns a higher rate of interest from taxpayers than what the taxpayer 
get in return. It is a matter of equity that we would not charge the 
taxpayer more than we are willing to pay the taxpayer for money not 
refunded.
  Indeed, fundamental fairness is what finding a new breed of IRS 
Commissioner is all about. We are about ready to confirm Mr. Rossotti 
to be this person. I think he will be a fundamentally

[[Page S11594]]

new sort of IRS Commissioner. He is experienced in leading large 
multistate organizations. He is experienced in organizing state-of-the-
art information systems. That is his business. He is experienced in 
providing customer service or he would not be the head of a very 
successful private-sector organization.
  However, when he takes office, he is going to need all of the tools 
that we can think to provide him in order to succeed. It seems to me 
that Congress needs to pass legislation to knock down the legal 
barriers to his success on behalf of the taxpayer. Charles Rossotti 
needs the tools of reform on his very first day, not 6 months from now, 
and the IRS Restructuring and Reform Act provides those tools.
  For example, our legislation provides that the incoming IRS 
Commissioners would sit for a single 5-year term. The revolving door 
between the Commissioner's office and the tax industry will be closed. 
We will require Commissioners to stick around long enough to reap what 
they sow. More important, we will provide the Commissioner with an 
independent board of nine persons who will be his strategic leaders. 
The board will provide guidance on long-term goals and investments. The 
Commissioner will implement the corresponding day-to-day leadership at 
the IRS.
  Our legislation provides that the new Commissioner need not operate 
as a team of one. Our legislation offers the opportunity for the new 
Commissioner to bring in his or her own team of senior managers, 
because currently at the IRS and over decades of time, high-level 
bureaucrats at the IRS know they can always outlive any new IRS 
Commissioner. Previous IRS Commissioners have gone into those positions 
with high-level management there in a place frustrating what the 
Commissioner wants to accomplish.
  So it seems to me that the taxpayers deserve the best. Our 
legislation allows the next Commissioner to recruit the best and then 
to retain the best. We make it clear as the intent of the law. Mr. 
Rossotti hopes that even under existing law he can bring people in from 
other agencies of Government, through the Senior Executive Service, to 
accomplish a team that he wants. However, it is not clear if he can 
bring in people from outside of Government. He will need such new faces 
in order to get the job done. We ought to give him the best team that 
he sees necessary to accomplish his goal.
  However, I would say, having the right personnel is not enough 
because much of the trouble at the IRS stems from the IRS information 
system debacle. Currently, the IRS gets poor information from its 
computers and then makes it worse. In this age of information and 
technology, most persons are still filing paper tax returns. Then 
employees of the IRS input that data by hand at the IRS processing 
centers. This is where mistakes happen most often. Each mistake 
translates into an expense of time, money and, most importantly, 
hardships for the taxpayers. In our legislation, the Senate offers some 
strategic direction.
  We will direct the IRS and the next Commissioner to reach a target 
electronic tax filing rate of 80 percent by the year 2007. That 10 
years starts right now, and it ought to start right now; it ought to 
not start 6 months from now when the Senate gets around to acting on 
this legislation. The Commissioner nominee recently told the Finance 
Committee that, once he can begin his job, it will take him 10 years to 
design and implement a state of the art information system at the IRS. 
We need to get that 10-year clock ticking right now, not 6 months from 
now. And the 10-year clock will not tick until the taxpayers get this 
legislation, the IRS Restructuring and Reform Act.
  For example, our IRS Restructuring and Reform Act would provide and 
set standards for security and access to taxpayers' electronic 
accounts. If we are going to have electronic filing, we will need 
electronic payment. Otherwise, we would still have people out there 
licking stamps and going to the post office on April 15. Our 
legislation accomplishes these things and many more.
  In short, waiting until next year to pass IRS reform is bad for 
taxpayers, and it's going to be lengthening the period of time that Mr. 
Rossotti will be the most effective Commissioner we have had for a long 
time.
  I yield the floor.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  (The remarks of Mr. Moynihan pertaining to the submission of Senate 
Resolution 142 are located in today's Record under ``Submission of 
concurrent and Senate resolutions.'')
  Mr. CRAIG. Mr. President, today I rise in support of the nomination 
of Charles Rossotti to be IRS Commissioner. I don't know whether to 
offer this new Commissioner congratulations or condolences. He comes to 
the IRS at a time of great turmoil and, I must say, also at a time of 
great opportunity. The process of investigating and reforming the IRS 
has only just begun, and I commend Senator Roth and the ranking member, 
the Senator from New York, Mr. Moynihan, for holding the recent Finance 
Committee hearings, and especially commend the courage displayed by the 
witnesses at those hearings. I say ``courage'' because oftentimes in 
the past, as witnesses have come forward, they were to find themselves 
only later victims of a very aggressive rogue agency that would not 
adhere to any reasonable policy of treating the taxpayer as somebody 
who deserved appropriate treatment.
  I suggest that those hearings and those witnesses are merely the tip 
of an iceberg; there is so much more to be uncovered and to be 
investigated. The recent hearings were barely over when my office 
started hearing from basically two groups of taxpayers: those who were 
cynical, saying, well, now that the hearings are over, I suspect 
nothing more will happen and it will be business as usual.
  That was the first type. The second type were those who were relieved 
to discover what appeared to be a very serious Congress finally looking 
toward reform and an effort to prevent IRS abuse. So they were saying 
to me, as a Senator, that they were not alone and that they were now 
willing to come forward and to express to me, or to a larger body of 
interest, their experience with the IRS, the problems they had.
  Similarly, the IRS restructuring bill that is now moving through the 
other body is a start. Let me suggest, and I think the ranking member 
who is here on the floor, the Senator from New York, would agree it is 
only a start. Taxpayers deserve as much due process protection in the 
matter of taxes as do all other citizens dealing with our Government in 
all other issues.
  Blatant disregard for individual rights has all been in pursuit of 
one goal by the IRS, and that was, ``Get the money, get the money,'' 
and sometimes at nearly all costs to due process, and we heard some of 
those examples expressed by witnesses before the Finance Committee. 
Drug dealers, child molesters and organized crime in many instances 
have more legal rights than the average taxpayer whom the IRS suspects 
may owe a few dollars of back taxes.
  With the IRS, the taxpayer is guilty until proven innocent, and 
therein lies the difference, because I will tell you that a drug dealer 
is, by law, innocent until proven guilty, as is the child molester. But 
we heard very clearly from those witnesses that they were guilty until 
proven innocent. Unlike the FBI or the local sheriff, if the IRS thinks 
someone has underpaid taxes, it can seize cars, freeze bank accounts, 
and all under its own authority without obtaining any kind of impartial 
or prior approval. If the taxpayer fills out his or her return relying 
on tax advice from the IRS and that advice turns out to be wrong, guess 
who is liable. Not the IRS, that's for sure, but the taxpayer himself 
or herself. If the IRS wrongfully assesses back taxes or penalties, the 
taxpayer usually has three basically no-win choices to make: You pay up 
and shut up, take the case to the tax court where the judge is usually 
a former IRS employee and taxpayers usually lose, or pay up and then go 
to Federal district court and sue to get your money back.
  Remember, I say ``sue to get your money back.'' While the Finance 
Committee's investigations focused on middle- to lower middle-income 
individuals, I had the representative of a relatively large corporation 
in my State approach me and say: You know, Senator, I know we get no 
sympathy.

[[Page S11595]]

 We are considered big and therefore we are considered wealthy as a 
company. But a good number of years ago the IRS withheld an additional 
$8 million that they thought was theirs and we thought was ours, and we 
went after it, and not long ago the courts ruled it was ours. The only 
problem is, the $8 million plus the interest plus all other assessments 
was now about $24 million.
  Will they get it back? I doubt it. But it was the IRS that was wrong, 
and it was the large corporation that was right. Now, that large 
corporation could spend the money to fight the IRS and they probably 
could write off a lot of their expenses fighting the IRS. Could an 
individual, small taxpayer, do that? Absolutely not. So, even when the 
IRS loses, it really wins, because the IRS, with unlimited resources, 
has been known to appeal and appeal a weak case until the innocent 
taxpayer gives up or is just simply financially exhausted and goes 
away. That is a story that should not have to be told on the floor of 
the U.S. Senate, but it is in fact a story of fact that occurs many 
times across this country when it should not.
  I think the IRS needs to realize that the taxpayer is the boss, 
because in our system of Government that is exactly the way it ought to 
be. Taxpayers are not a suspect criminal class in our society. Yet it 
appears from what we have heard, in example after example, and a good 
many more that could be expressed, that that is oftentimes the way they 
are viewed by the IRS. Taxpayers should be treated with respect and 
dignity and should be presumed innocent until proven guilty.
  Why should this Senator have to say that on the floor, when it ought 
to be a matter of fact and law? Because it is not a fact today, and now 
we know it. There should be no quotas, pushing agents to prosecute 
dubious cases. Taxpayers should not be targeted on the basis of how 
little resistance they can offer. Can you imagine that as the policy of 
a Federal agency, ``Let's pick on those who can offer least resistance 
because we will get a greater yield on the money spent,'' when they 
could be innocent and can be at least embattled until they are willing 
to give up? There should be no vendettas, absolutely not, and yet there 
appear to have been some and probably are some. The privacy of 
taxpayers should be fully respected. And, yet, is it?
  Both the IRS and the Congress have been a part of the problem. I can 
point the finger only at the IRS, but that would be somewhat unfair. We 
have created one of the most complicated tax systems in the history of 
this country. Sometimes the problem is the IRS, who act outside the 
law--or certainly to the very edges of the law. I am sure most IRS 
employees are decent, hard-working, and conscientious people. And I 
know many of these employees, as do others, and they would fit that 
which I have just described. But the exception has become the rule, 
tragically enough. The tail is wagging the dog, and the IRS is now 
widely perceived as a rogue agency, marching to its own beat with 
Congress afraid to touch it because Congress itself, individually, 
could be audited. And that has happened in the past.

  So we draw back quietly, talk tough on the floors of our collective 
bodies, but very seldom follow through with actual and real hearings 
and reform that is a product of those hearings. I certainly hope that 
is simply now the exception, and the rule of the day, with the action 
that the other body is taking and the action that I hope we will take, 
will be comprehensive and broad-ranging reform of this agency.
  Sometimes problems happen because previous Congresses, liberal 
Congresses, or simply those with a ravenous appetite that the taxpayer 
pay the money because we need the money--whether it is balancing the 
budget or spending beyond the will of the citizen--the money has to be 
there. So we have granted IRS what I call power beyond the law, in many 
instances, to collect what we ask them to collect. In any case, there 
is never an excuse for such behavior, and this Congress is going to 
change things, I hope. Certainly, if it is this Senator speaking by his 
intent, then it is my intent, and I believe the intent of a bipartisan 
Congress, for major reform. And that we must get at.
  So I invite the Commissioner whose nomination will be voted on today 
to work with us in a constructive way to change the character, the 
image, the style, the culture of an agency that is now out of control. 
And witnesses in our country, those who make up our country, have so 
demonstrated.
  Real IRS reform also depends on real Tax Code reform. I will not 
mention the Senator, but right after we offered some reasonable tax 
relief this year, he said: Well, there is relief in the Code, if you 
can find it. So now, to the lower middle-income people for whom we 
champion the tax relief, we say now go hire an accountant and spend the 
money to get the tax relief, and probably the tax relief will at least 
pay for the accountant. If that is true, that is tragic. And tragically 
enough, that is probably true.
  Sometimes the problem is the Tax Code--too complicated even for the 
IRS to understand it. Listen to these figures. The IRS publishes 480 
different tax forms and another 280 forms to explain the first 480. If 
laid end to end, the 8 billion pages of instructions sent out by the 
IRS every year would circle the Earth 28 times. That is why Senator 
Shelby and I introduced--or reintroduced--the Freedom and Fairness 
Restoration Act, better known as the flat tax. Why? Simplification, 
equity, fairness, the ability with ease to fill out a form, to know you 
are in compliance when you do it, and to once again set in motion 
something that has been historically true up until about two decades 
ago of the taxpayer versus the Tax Code--that was an understanding in 
this country that laws ought to be self-enforcing and that citizens 
really did want to pay their taxes, their fair share of running a 
Government and keeping a free society and assuring that our democracy 
survived.
  That has not been true of the last several decades. Taxpayers today 
are much more often heard to be telling their tax accountant: Find out 
everywhere you can where I do not have to pay taxes, because the code 
is too complicated and the taxes are too much. Grandfathers used to pay 
only about 20 percent in their taxes. That meant they got to keep 80 
percent. Their grandchildren in today's work force now have to pay 
nearly 50 percent in their taxes, keeping only half.
  And we wonder why families can't provide for themselves today, why 
both parents are working when one may not want to. Oftentimes it is a 
combination, but most often it is just simply that they have to pay so 
much, so much is taken from their paycheck that they cannot survive 
unless both are working and providing for their family.
  Underlying our commitment to making substantial tax reform a reality, 
I have also cosponsored leading bills to sunset the current Internal 
Revenue Code by the year 2001. Mr. President, this Senate, the 105th 
Congress, led by conservative Republicans, have a unique opportunity, 
working with all of our colleagues, to assure that major reform of the 
IRS occurs and that we lead a march toward a significant reform of the 
code that brings us to a simple, fairer form that then allows the 
responsible downsizing of the IRS.
  No people can remain free or their government effective if they do 
not display trust and confidence in each other. Yet, America's tax 
system increasingly eats like a cancer at the very bonds of support and 
the legitimacy of our society.
  I urge all of my colleagues and invite the new IRS Commissioner to 
redouble their efforts to restore fairness to the tax system and trust 
to the people. Reform for the Tax Code, making it simpler, fairer and, 
I hope, flatter, is one approach toward doing that. Reform for the tax 
collector, increasing IRS accountability and requiring the IRS to treat 
the taxpayer with dignity, respect and the due process of the law would 
be a legacy that I wish could be done during my tenure in the U.S. 
Senate and I believe that would be a legacy that a majority of the 
Senators would like to leave. That is our goal. That is certainly my 
hope. Recognizing that, I yield the floor and suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. CRAIG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S11596]]

  Mr. CRAIG. Mr. President, I ask unanimous consent that the vote occur 
on the pending nomination at 5:45 this evening.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I want to take this opportunity to express 
my support for the nomination of Charles Rossotti to be the new 
Commissioner of the Internal Revenue Service. Mr. Rossotti will face a 
daunting challenge as he takes over the reins of this besieged agency.
  The IRS has suffered from years of neglect and lack of focus. As new 
Commissioner, Mr. Rossotti will need to repair the damage that has 
eaten away at the Service's foundation and try to restore some 
semblance of respect for the IRS among the average taxpayer.
  At the same time, he will need to be preparing the IRS for the 
challenges of the next century.
  The public expects some essential services from the Government, and 
most people are willing to pay their fair share of taxes in order to 
pay for these services.
  Nobody likes paying taxes, but most of us do it regularly and 
honestly.
  In return, we expect the Government to keep the process fair, make it 
as simple as possible, and keep our personal information private.
  Running the IRS is a study in careful balances. And I believe that 
the IRS has somehow lost its ability to maintain one side of the 
equation over the years.
  Many tax collectors, in their zeal to catch the few people who don't 
pay their taxes, seem to have lost sight of the most important truth 
about our tax system--that citizens have rights that must be protected.
  Anything less undermines our ability to make a system of voluntary 
taxation work.
  We certainly don't want to tie IRS's hands so much that tax cheats 
are encouraged, because the rest of us end up picking up the tab when 
someone cheats.
  At the same time, we also can't have IRS harassing innocent citizens, 
assuming everyone is guilty the minute they walk in the door. Mr. 
Rossotti will be the one person we will expect to help IRS find its way 
back to the reasonable balance that our tax system requires.
  I hope and expect that we in the Congress will do our best to help.
  We will be looking at legislative solutions, to give the new 
Commissioner the tools to encourage the climate of change we need if we 
are to reverse the past years of decline.
  We will be looking at stable funding, to make sure Mr. Rossotti has 
the money to pay good people and buy new computers.
  I hope we would also be looking at tax simplification, to make it a 
little easier for both taxpayers and the IRS to figure out how much our 
fair share really amounts to.
  Mr. Rossotti has the background and expertise to help him achieve the 
difficult tasks we expect of him in the days ahead. I wish him every 
success, and look forward to working with him to make sure the Internal 
Revenue Service reaches its full potential.
  Mr. DODD. Mr. President, I rise today in support of Charles 
Rossotti's nomination to serve as Commissioner of the Internal Revenue 
Service. The IRS is an agency under widespread, deeply felt, and 
entirely justified criticism. In my view, the nomination before us 
today is perhaps one of the most critical the Senate will vote on this 
session. I commend President Clinton for endorsing an individual who 
has the expertise and vision to lead the effort to restructure and 
reform this troubled agency, as well as my colleagues on the Finance 
Committee for moving the nomination expeditiously.
  It is no secret that the IRS has come under fire lately from 
taxpayers who, in their dealings with the agency, have experienced 
anger, frustration, and despair. The hearings conducted by the Finance 
Committee earlier this fall highlighted some of the problems at the 
IRS, including shoddy management, poor taxpayer service, and in some 
cases, reports of taxpayer abuse by IRS employees.
  I've heard stories from my own constituents about calls that aren't 
answered, and about calls that are bounced from one person to the next, 
where they never get a real answer or any type of guidance or support. 
I've also heard stories about the IRS losing people's checks and then 
charging them interest and penalties on this money. The list goes on 
and on, Mr. President, and the more people you talk to, the more 
nightmares you hear.
  Every citizen who pays taxes has a right to be treated fairly, and 
treated as innocent until proven guilty. Although we have taken several 
steps in this regard in the last few years, there is still more that 
can be done, and that is why I am a cosponsor of S. 1096, the IRS 
Restructuring and Reform Act.
  This legislation aims to transform the troubled agency into a modern 
institution that provides efficient and fair service, yet still has the 
ability to effectively collect revenues. Specifically, the bill will 
enact 21 new taxpayer protections and will establish a hotline for 
taxpayers to register complaints of IRS misconduct. This legislation, 
which enjoys broad, bipartisan support and is endorsed by the 
administration, is, in my view, a tremendous step forward in our effort 
to protect the rights of our nation's taxpayers.
  Yet, without an effective leader to implement these much-needed 
changes, our ideas become nothing but good intentions. I believe that 
Mr. Rossotti is up to the challenge to successfully steer the IRS 
through this difficult period. Mr. Rossotti brings with him the 
refreshing ideas and outlook of a successful businessman with more than 
30 years of management and technology experience, including his current 
position as Chairman of American Management Systems.
  During his confirmation hearings, Mr. Rossotti expressed a 
willingness and desire to implement fundamental changes that would 
focus on the rights of the taxpayer, modernize the agency and its 
technology, and strengthen communication between Congress, the IRS, and 
the public. In my view, Mr. Rossotti has the vision and the capability 
to lead this agency and is committed to holding the IRS to the highest 
standards of efficiency, competence, and accountability. I urge my 
colleagues to support this nomination.
  Mr. CRAIG. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MURKOWSKI. Mr. President, I rise to speak in favor of the nominee 
to be Commissioner of the Internal Revenue Service, Mr. Charles 
Rossotti. Mr. Rossotti is unique among nominees for this position since 
he is the first nontax-lawyer nominated for the post. In fact, he is a 
businessman who is chairman of American Management Systems, a company 
he cofounded in 1970, which now employs some 7,000 people.
  Mr. President, if this man is confirmed, and I expect that he will 
be, he faces a daunting challenge in turning around an agency which has 
very serious credibility problems with this Senator and, I think, a 
majority of the American public as well.
  As this country learned some 6 weeks ago in the hearings at the 
Senate Finance Committee, the IRS is an agency with structural and 
personnel problems that have led to an agency culture that is abusive, 
unresponsive, and to some extent arrogant. Far too often, the Internal 
Revenue Service appears to be out of control, with no accountability to 
the public or to the policymakers here in Washington. For anyone who 
has tried to phone the IRS lately, why, I think you get the flavor for 
my generalizations.
  The bipartisan Kerrey-Portman Commission that examined the Internal 
Revenue Service recommended a series of changes at the IRS, including 
the creation of an independent board to oversee IRS operations. 
Recently, the House passed a measure incorporating nearly all of the 
Commission's recommendations. However, I believe that the lessons 
learned from the Finance Committee September hearings suggest that far 
more needs to be done if the public is going to regain a measure of 
confidence in the Internal Revenue Service.
  I applaud the Finance Committee chairman, Chairman Roth, for his 
commitment to hold a series of hearings

[[Page S11597]]

that will build on the achievements of the House and bring a tough 
reform bill to the floor of the Senate next year.
  To give you an idea of the structural problems that exist at the 
Internal Revenue Service, consider the following description of the 
Service that was done by Paul Light, author of ``The Tides of Reform: 
Making Government Work, 1945-1995.''

       Just imagine a bureaucracy that goes something like this: 
     an agent reports to a district group manager, who reports to 
     a district group manager, who reports to a branch chief, who 
     reports to an assistant chief of the division, who reports to 
     the assistant district director, who reports to the assistant 
     regional commissioner, who reports to the deputy assistant 
     commissioner, who reports to the assistant commissioner, who 
     reports to the chief operating officer, who reports to the 
     deputy commissioner, and so on.

  What we have here, Mr. President, is a layered bureaucracy which 
implies accountability on paper but which, in reality, is designed by 
its very nature to be unaccountable.
  Consider, Mr. President, the testimony the committee heard from Lynda 
Willis of the General Accounting Office [GAO].

       IRS systems, both manual and automated, have not been 
     designed to capture and report comprehensive information on 
     the use and possible misuse of collection authorities.
       IRS cannot readily produce data on the overall use or 
     misuse of its collection enforcement authorities or on the 
     characteristics of affected taxpayers.

  In effect, GAO said they couldn't audit IRS because the systems IRS 
has put in place are designed to ensure that there is no way for IRS 
personnel to be held accountable for their erroneous actions. There is 
no way to determine how many times IRS has made a mistake in sending 
out a collection notice. No way to determine how many complaints have 
been received. And this is the way the managers at IRS set up the 
system--set it up so that no one can trace improper behavior.
  Mr. President, the committee also heard testimony to the effect that 
the Problem Resolution Office [PRO], the office designed to resolve 
taxpayer disputes with IRS is, and I quote one of our witnesses, 
``utterly useless'' in protecting the American taxpayer. The reason the 
PRO cannot function as designed is because employees at PRO are 
evaluated for promotions by the same Collection Division management 
they are supposed to police while assigned to the PRO.
  Mr. President, there is no reason that that kind of conflict of 
interest should exist. I plan on working with the Finance Committee 
chairman to develop legislation that will fundamentally change the PRO 
structure to ensure that taxpayers get a fair shake when there's a 
conflict with the IRS.
  Mr. President, the Finance Committee hearings had a profound effect 
on the American public and on the President of the United States. 
Shortly after those hearings, and seeing the polls, the President did a 
180-degree U-turn on the recommendations of the IRS Commission and 
decided to back the House reform legislation creating an independent 
IRS management board.
  That's not the end of this matter. Instead we need a top-to-bottom 
review of the IRS. In the past, we adopted two taxpayer bill of rights 
bills which many of us thought would improve taxpayer-IRS interactions. 
The hearings in the Finance Committee suggest that these bills did 
little to alleviate tensions between the IRS and the American taxpayer.
  That is why the Finance Committee needs to hold further hearings on 
IRS reform. It has taken decades for the IRS to develop internal 
procedures that appear to make it unaccountable. We've learned of these 
problems 6 weeks ago. I am willing to admit that we don't know all the 
answers, but I know that now is not the time to merely take the House 
bill, pass it, and tell the public we fixed the problems at IRS. We 
haven't.
  Mr. President, Charles Rossotti is to be admired for his willingness 
to leave the private sector and take on this challenge at a time when 
IRS is in serious trouble. I look forward to receiving his 
recommendations for change at the Service after he has been there a few 
months. And I am sure his hands-on experience will assist the Finance 
Committee in drafting a comprehensive IRS reform bill.
  Mr. MOYNIHAN. Mr. President, I ask for the yeas and nays on the 
nomination of Mr. Rossotti.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is, Will the Senate advise and 
consent to the nomination of Charles Rossotti, of the District of 
Columbia, to be Commissioner of the Internal Revenue Service?
  On this question, the yeas and nays have been ordered and the clerk 
will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from New York [Mr. D'Amato], 
the Senator from North Carolina [Mr. Faircloth], and the Senator from 
North Carolina [Mr. Helms] are necessarily absent.
  Mr. BREAUX. I announce that the Senator from Delaware [Mr. Biden], 
the Senator from Kentucky [Mr. Ford], the Senator from Idaho [Mr. 
Harkin], the Senator from Nebraska [Mr. Kerrey], and the Senator from 
Maryland [Ms. Mikulski] are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 92, nays 0, as follows:

                      [Rollcall Vote No. 290 Ex.]

                                YEAS--92

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bennett
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bryan
     Bumpers
     Burns
     Byrd
     Campbell
     Chafee
     Cleland
     Coats
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Enzi
     Feingold
     Feinstein
     Frist
     Glenn
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kempthorne
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wellstone
     Wyden

                             NOT VOTING--8

     Biden
     D'Amato
     Faircloth
     Ford
     Harkin
     Helms
     Kerrey
     Mikulski
  The nomination was confirmed.
  Mr. MOYNIHAN. I move to reconsider the vote.
  Mr. LOTT. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________