[Congressional Record Volume 143, Number 155 (Friday, November 7, 1997)]
[Senate]
[Pages S11913-S11915]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     IRS RESTRUCTURING ACT OF 1997

  Mr. KERREY. Mr. President, I ask unanimous consent the Senate proceed 
immediately to H.R. 2767, the IRS Restructuring Act of 1997, just 
received yesterday from the House, that the bill be read three times 
and passed, and the motion to reconsider laid on the table.
  Mr. ROTH. Mr. President, I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. KERREY. Mr. President, I hope my colleagues understand this 
legislation is something that will, by all accounts, today improve the 
operational efficiency of the IRS. It does not address many of the 
issues that were raised by the Senate Finance Committee during its 3 
days of hearings and the chairman has indicated he is going to take 
those up next year. But in the 24 hours since I have offered this 
unanimous-consent resolution there have been 135,000 notices sent to 
taxpayers asking them to pay additional taxes and over 250,000 phone 
calls made by taxpayers to the IRS, trying to get information. These 
are the two principal points of contact, of irritation, that taxpayers 
have brought to us over and over and over.
  The IRS Commissioner under current law simply does not have the 
authority to manage the agency. He can't hire and fire his top people, 
can't provide financial incentives, doesn't have the kind of oversight 
that's needed and doesn't have the requirement to publish his audit 
data. All that is kept for the moment confidential.
  This piece of legislation, passed almost unanimously by the House, 
would certainly get nearly a unanimous vote here in the Senate as well. 
Everything in this legislation--if you look at it you would say, ``My 
gosh, I'm surprised it isn't done already.'' As I said, every single 
day we wait, another 135,000 or so notices are going to go out to 
taxpayers that they owe additional taxes; a quarter of a million phone 
calls are going to be coming into the IRS, and they are not going to be 
managed nearly as well.
  In our own survey we did to determine what was going on out there we 
found that 70 percent of the people who call in say they get good 
service from the phone calls, but that means that 3 out of 10 do not 
get good service. They are complaining. They are not getting their 
questions answered, for those who actually get through: A 25 percent 
error rate in the current environment, the current paper environment; 
less than 1 percent for electronic filing. The law that we propose, 
that was passed, as I said, nearly unanimously by the House, provides 
new incentives and powers to move to electronic filing. I hope my 
colleagues will understand the urgency of doing this. And what will 
happen, the price the taxpayers will pay, with a delay.
  In this morning's papers there were stories about the Speaker saying 
he was going to try, in one of the conference committees, to get an 
amendment accepted that would have the IRS doing something that I can't 
imagine that anybody in this body would support. My guess is, if we 
discovered the IRS was doing what the Speaker is saying that he would 
like the IRS to do, most of us would be out here on the floor speaking 
out against it. He is proposing that the IRS conduct a poll, a 14-
question poll. If you look at questions, you know what the answers are 
going to be. ``Do you think your taxes are fair or unfair?''
  Not only a poll, but every single American taxpayer would be mailed 
under separate cover this poll. Not only would the taxpayer be mailed 
the poll, but the poll would also go to post offices, it would go to 
preparers, this poll would go to anybody who has contact with the IRS. 
The taxpayer then would be asked to fill out the questionnaire and mail 
it--not back to the IRS, but back to the General Accounting Office 
where they would be compiled and the results then would be published. 
The estimate of the costs to do that range from about $30 million up to 
$80 million. If somebody came to the floor today and said guess what, 
the IRS is doing a $30 to $80 million poll to find out whether or not 
the American taxpayers think their taxes are fair enough, if the level 
of taxes is fair or not, among other questions, I think it would be a 
100-to-nothing vote to say the IRS cannot do this.
  So I hope those who are on the Appropriations Committee, when they 
are working in these conferences, will make it clear that the Senate 
doesn't support asking the IRS to do a $30 to $80 million poll which 
will increase the caseload and work of the IRS itself, which will cause 
taxpayers to say, ``My gosh what does this mean?'' call the IRS with 
additional questions, and will cause people to say, ``I don't know 
whether I want to mail this back. I am afraid this might produce some 
adverse reaction from the IRS itself.''
  This will increase complexity. Those who are proposing this have said 
that it is real simple, ``We will just take it out of customer service, 
we will take the money out of customer service and it won't cost us 
anything at all.'' Again, can you imagine if somebody came to the floor 
and said, ``Guess what the IRS is doing? They are proposing to spend 
$30 million up to $80 million out of customer service to do a 14-
question poll.'' I can't imagine there wouldn't be 100 Senators down 
here saying we object to the IRS doing it.
  This is a case where the Speaker of the House says he may ask the 
conference committee to direct the IRS to do this very thing. Mr. 
President, I hope Members, if we hang around here for another 4 or 5 
days--given the word that I got that the House is going to vote on fast 
track, I guess, tomorrow; we could be here for awhile--every single day 
we wait, another 130,000 notices go out from the IRS to taxpayers that 
they owe money, another quarter of a million phone calls are going to 
come into the IRS, asking the IRS questions. The commonsense 
recommendations in this piece of legislation are so compelling that 
only four Members of the House of Representatives voted against it.
  I believe this legislation would pass very quickly here in the 
Senate. It would set up, in fact, a debate over our tax system and put 
us in a position to be able to enact many of the things the

[[Page S11914]]

chairman of the Finance Committee, the distinguished Senator from 
Delaware, wants to pass. I think it is very difficult to explain to 
taxpayers back home why we didn't give the Commissioner the legal 
authority needed to manage his agency in a manner that would enable the 
voluntary compliance to go up and customer satisfaction to improve as 
well.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I rise to object to the unanimous-consent 
request made by my distinguished colleague, Senator Bob Kerrey. In 
doing so, let me be clear that I applaud Senator Kerrey's tremendous 
work and leadership, and I am grateful for the groundwork he and the 
commission he has chaired have laid in the important effort to reform 
the Internal Revenue Service.
  What concerns me, Mr. President, is that the legislation which is 
being advocated at this time is--as the Washington Post pointed out--a 
measure that has not been subject to the kind of scrutiny and debate 
that must attend such an important issue. The fact is that Congress 
will get only one good opportunity to pass necessary and meaningful 
reform to the IRS. The work accomplished by the commission chaired by 
Senator Kerrey and Congressman Portman disclosed a number of 
shortcomings within the agency. A near year-long investigation by the 
Senate Finance Committee and hearings that we held in September 
disclosed even more issues that need to be addressed. And our on-going 
investigation continues to turn up others on what has nearly turned 
into a daily basis.
  IRS reform must be complete. It must be accomplished thoughtfully, 
methodically, thoroughly--with Congress, the administration, and the 
taxpayers working together. Everyone knows that the last great attempt 
at reform, the King Commission in the 1950's, led to a major overhaul 
of what was then known as the Bureau of Internal Revenue. But within 
only a few years, the agency was once again whacked by abuse and misuse 
of authority.
  We need complete reform, Mr. President. This time, we must get it 
right.
  Among those things that we must analyze and address are:
  Giving the oversight board--called for in this legislation--the 
authority to look at audit and collection activities;
  Insuring that all taxpayers have due process and that the IRS does 
not abusively use its liens and seizures authority;
  Making the taxpayer advocate within the agency independent and 
responsible to the oversight board;
  Establishing an independent inspector general within the IRS, and 
requiring the IG--like the taxpayer advocate--to report to the 
oversight board;
  Requiring signatures on all correspondence;
  Banning the use of false identifications;
  Banning the use of Bureau of Labor Statistics as a mechanism to 
determine taxpayers' income; and,
  Banning the use of statistics and goals in determining performance of 
IRS employees.
  Mr. President, each of these represents an area where we need to make 
reform. And the truth is, they are only a sampling of the needed 
changes that emerged from our first series of hearings. I know that 
there will be others. They, as well as these, will have to be examined, 
debated and--where and when appropriate--adopted as part of a major 
overhaul.
  For these reasons, I object to the unanimous-consent request made by 
Senator Kerrey.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I appreciate very much the comments of the 
distinguished chairman of the Finance Committee, the senior Senator 
from Delaware. Especially his willingness to hold 3 days of hearings, 
penetrating what is called the 6103 veil, which allows us to see 
information that typically is held in secret, in confidence, to protect 
the taxpayer. These hearings enabled the American people to see abuses 
that most Americans look at and say: This is objectionable and should 
not be allowed to continue.
  I would point out, though, that the board question that the chairman 
raised here, giving the board more authority--the Washington Post 
editorial cited one of the reasons they wanted more hearings was they 
thought the legislation that we had given the board too much authority. 
So my guess is they would write it, if we gave the board more 
authority--they would write the committee saying: You better give the 
board more hearings because you still have it wrong.
  We had 12 days of hearings in the hearings that Congressman Portman 
of Ohio and I conducted. Thousands of interviews with IRS employees, 
former Commissioner Richardson supports it, former Commissioner Goldman 
supports the recommendation, former Treasury Secretary Baker, former 
Treasury Secretary Brady and current Treasury Secretary Rubin--all 
support the legislation. All have examined it. We have had a full 
markup in the Ways and Means Committee. This may not go as far as some 
would like, but given the fact that we handle 200 million tax returns, 
individual and corporate, every single year, it seems to me reasonable 
that we begin with this board somewhat cautiously.
  It has significant authority in the development of the strategic 
plan. It has authority to make advisory recommendations on the budget 
as well. It can pass judgment on the performance of the Commissioner 
and make recommendations to the President in regard to the 
Commissioner's actions.
  We do, in fact, in the amendments that have been agreed to now by 14 
members of the Finance Committee, as the chairman indicated, give the 
taxpayer advocate the independence needed to be a true effective 
advocate for the taxpayer. Instead of being an employee of the IRS, the 
advocate would be able to operate more independently than is currently 
the case, and many of the changes the chairman has indicated that he 
would like to do I fully support.
  What seems to me to be the most compelling question of all is, do you 
want the new Commissioner of the IRS to have the authority to hire and 
fire senior people, to be able to provide positive financial 
incentives, to be required to disclose what the audit requirements are, 
to have incentives to be able to go to electronic filing, to have the 
legal authority to be able to comment on tax complexity?
  All these things are fairly straightforward. I can't imagine anybody 
saying the IRS Commissioner should not have the authority this 
legislation gives him to be able to manage the agency. The risks are 
high, Mr. President, that in this next filing system, given what we 
have discovered now by penetrating the 6103 veil, there is a good 
chance we are going to get a decrease in voluntary compliance, with 
citizens saying it may be a small percentage and, indeed, our 
commission discovered that it is a relatively small percentage of IRS 
employees who are abusing the authority and the power that they have. 
But I can tell you that when the odds are only 4, 5 or 6 percent, that 
is still pretty good odds if it is your tax return, if it is your life, 
if it is your future that is at stake.
  We risk a lot by delaying, and the people who are going to pay a 
price, again, are those 130,000 people who every single day are going 
to get a letter in the mail saying, you owe additional taxes, and that 
quarter of a million people who are going to call up every single day 
to the IRS trying to get a question answered.
  I don't disagree at all with the chairman's identifying some 
additional things that need to be done, but where we have such broad 
consensus among Republicans and Democrats, with only four dissenting 
votes in the House, my guess is in the Senate it would pass nearly 
unanimously as well once people look at the details of this legislation 
and see what it would give new Commissioner Rossotti the authority to 
be able to do.
  Again, I don't know how long we are going to be around here, but this 
piece of legislation, if it were taken up in the manner I have 
described, I believe would be passed quickly, would be in conference 
quickly, get it to the President, get his signature and would set up 
not just the debate that the distinguished chairman of the committee 
has identified, but also a debate on tax simplicity and other things 
that ought to be taken up by this body as well as the House.
  This sets up the debate. It doesn't decrease the opportunity for a 
debate. It

[[Page S11915]]

makes it more likely we will have a healthy debate about tax 
simplicity, about our code and about further changes that need to be 
made in the IRS in order to make certain that we can close this 
breathtaking gap that exists today between what the IRS is able to do 
and what the private sector is able to do for that 85 to 90 percent of 
the American people who are voluntarily willing to comply to pay their 
taxes, if they can just get one answer, which is: How big is the bill? 
How much do I owe?
  It is that question that dictates much of the financial planning that 
American families are doing, and it is a very difficult question to get 
answered in the current environment. That question would be made much 
easier to answer if we would just take this piece of legislation up, 
enact it and get it on to the President for his signature.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, our colleague from Nebraska, I think, 
made the same request yesterday, and maybe some of the same comments 
were made yesterday. If we didn't have additional ideas to make the 
legislation better, I would agree with him, because I think the House 
passed some good legislation. I think we can make it better. Chairman 
Roth mentioned a couple things we can do.
  We had good hearings. Actually, the hearings that promulgated a lot 
of the IRS reforms happened in the Senate, not in the House. Our House 
colleagues, as the Constitution provides, initiates revenue measures. 
So they have acted and they have acted promptly. I congratulate 
Chairman Archer, who I think does an outstanding job as the chairman of 
the Ways and Means Committee. The House has done good work and passed a 
good, bipartisan bill.
  Likewise, we can do good work in the Senate and pass a bipartisan 
bill. We might do better. We might add and build upon what the House 
has in their legislation. We heard from a lot of things. Mr. Dolan, the 
acting Commissioner of the IRS, had some suggestions, brought out some 
points. We had witnesses who talked about IRS abuse. I think we can 
build upon some of the changes that the House has advocated and make a 
better bill, but it may take a little bit of time to do it. I would 
like to do it and do it right.
  Again, I appreciate what our colleague from Nebraska is saying, but I 
would very much like and happen to agree with the chairman, I think we 
would be better off if we allow the Finance Committee to mark up the 
legislation, make some improvements, and pass legislation that, again, 
will, hopefully, receive bipartisan support and the President's 
signature as well.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I appreciate very much what the 
distinguished Senator from Oklahoma is saying. We have had many 
conversations. He is cosponsoring the legislation, so I know he wants 
to get this reform enacted. I believe that when we know we can get 
something done that will improve the operation of the IRS, we ought to 
do it.
  Again, I respectfully say, I think this sets up the basis for further 
action, because it gives the IRS Commissioner the kind of authority 
that the IRS Commissioner needs to manage the agency. It gives the IRS 
Commissioner authority to say this is what we think the Code is doing 
to the taxpayers, this is what it is costing the taxpayers to comply 
with the Code we have.
  I favor rather aggressive reform of the Code. I certainly wouldn't 
come to the floor and say I don't think we ought to do it until we 
reform the Code. There is lots more that can be done with the IRS, no 
doubt about it. But I don't think we are ever going to have a single 
piece of legislation that does it all.

  For gosh sakes, we just confirmed a new Commissioner and sent him 
over to run an agency of 115,000 people. Look at the law. The law 
doesn't give him the authority to manage the agency.
  It doesn't give him the authority to hire and fire senior people.
  It doesn't give him the authority to provide positive financial 
incentives so the agency can be run in a better fashion.
  It doesn't give him legal authority to move expeditiously to 
electronic filing.
  It doesn't require the basis of the disclosure of audits. There is a 
cumbersome Freedom of Information Act process with the IRS. It is 
especially slow and difficult for citizens who are trying to get 
information.
  It doesn't require the establishment of some complexity analysis so 
that we can make a judgment about whether or not what we are doing is 
going to make it harder for the taxpayers to comply.
  It doesn't require the kind of coordinated oversight that is needed 
with a public board governing the IRS that will enable us to achieve 
consensus on a strategic plan.
  All these things are in there. You look at them and say, ``I can't be 
against it.'' There likely will be 100 votes for all the things I just 
described. Why not do it now? It doesn't preclude us from coming back 
next year and taking further action. All these things I listed will 
improve benefits to American taxpayers, to those 130,000 every single 
day who are going to receive in the mail a notice that they owe 
additional taxes, to a quarter of a million who are going to pick up a 
phone and make a phone call and try to get an answer to some question 
they have.
  If you look at the law that is being proposed that was passed by the 
House by all but four Members, I urge my colleagues on the other side 
of the aisle to look at the law and see, for gosh sakes, that this 
doesn't prevent us from taking action next year, this doesn't prevent 
the Finance Committee or any other committee from holding hearings and 
considering legislation to improve it.
  All this does is it matches with authority the responsibility that 
the Commissioner has and will enable, unquestionably enable, the 
customers, the taxpayers of the United States of America to get better 
service than they are currently getting. They are going to pay a price 
for delaying.
  The congressional restructuring commission had 12 public hearings, 
thousands of interviews with private sector individuals. This 
legislation, by the way, has the endorsement of every provider out 
there of services to payers, as well as the endorsement of the National 
Federation of Independent Businesses.
  This piece of legislation has been examined from stem to stern by an 
awful lot of people who are now embracing and endorsing the legislation 
and saying that on behalf of the American taxpayers, this piece of 
legislation, this change in the law for the IRS will make the IRS more 
efficient and make the taxpayers themselves more competent; that not 
only are they going to get a fair shake, but get a right answer to the 
question that they ask.
  I will be down here again tomorrow if we are still around here, and 
the next day if we are still around here, and however long it takes. We 
can conference this thing in a day and get it on to the President. I 
hope Members on the other side will look at this law and begin to ask 
the question, do we want to change the law this time and come back and 
address all the other things the distinguished Senators from Delaware 
and Oklahoma said we ought to be doing?
  Mr. President, I yield the floor.
  Mr. SMITH of Oregon addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oregon.

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