[Congressional Record Volume 144, Number 7 (Thursday, February 5, 1998)]
[Senate]
[Pages S451-S452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself and Mr. Feingold):
  S. 1612. A bill to provide for taxpayer recovery of costs, fees, and 
expenses under section 504 of title 5, United States Code, and section 
2412 of title 28, United States Code, and for other purposes; to the 
Committee on the Judiciary.


         the equal access to justice for taxpayers act of 1998

  Mr. LEAHY. Mr. President, I wish to introduce the Equal Access to 
Justice for Taxpayers Act of 1998. I am pleased that the Senator from 
Wisconsin, Senator Feingold, is joining me as an original sponsor of 
this important legislation.

  Like so many Americans, I was disgusted by the evidence that surfaced 
of so many abuses of the IRS at recent hearings by the Senate Finance 
Committee. I followed the hearings very closely, and I heard taxpayer 
after taxpayer come before the Finance Committee recounting horror 
stories and trying to fight against unjustified action by the IRS that 
cost them thousands of dollars and countless hours of emotional 
distress. These average taxpayers told of frustration and despair 
caused by rogue IRS personnel who used the awesome resources of that 
agency to punish them.
  Probably the saddest part about what we heard was that these good 
Americans, taxpayers, felt powerless to even question or fight back 
against their own Government. I believe, as many of my colleagues from 
both sides of the aisle do, that Congress needs to reform the IRS and 
stop these abuses from ever happening again.
  Unfortunately, current law hamstrings taxpayers who challenge the 
IRS. Our legislation would change that by giving taxpayers, for the 
first time ever, a cause of action under the existing Equal Access to 
Justice Act (EAJA). Under our bill, taxpayers may exercise their rights 
under the EAJA to win awards of legal fees, expert witness fees and 
other costs against the IRS when that agency takes substantially 
unjustified action against them. Thousands of citizens have won 
vindication against unjust governmental action under the EAJA, and 
taxpayers should be able to do the same thing.
  Today, most taxpayers feel that if the IRS comes after them, even if 
they think it is unjustified, they don't dare fight it because it will 
cost more in lawyers, accountant fees, and so on. Under our act, if 
they prove it was unjustified action, the Government pays them for 
their lawyer fees and for their accountant's fees. This was done by 
Congress to help individuals, partnerships, and corporations in other 
administrative actions involving the Government. We should do the same 
with the IRS.
  In 1981, Congress enacted the EAJA to help individuals, partnerships 
and corporations seek review of, or to defend against, unjustified 
governmental action because of the expense involved in securing the 
vindication of their rights in civil actions and in administrative 
proceedings. The EAJA permits citizens who prevail in these actions in 
proceedings against federal agencies to recover their costs when the 
government acted unjustly. Its purpose is to deter abusive actions and 
overreaching by the government and to enable individuals to vindicate 
their rights, regardless of their economic circumstances.
  But court decisions have interpreted the EAJA to exempt all civil 
actions and administrative proceedings in connection with the Internal 
Revenue Service (IRS) from its protections. Instead, taxpayers must 
seek review of, or defend against, unjustified actions by the IRS under 
provisions in the Internal Revenue Code. These Internal Revenue Code 
provisions make it much harder for average taxpayers to recover against 
unjust IRS actions.
  The recent report of National Commission on Restructuring the 
Internal Revenue Service agreed that the Internal Revenue Code fails to 
provide taxpayers with adequate legal rights to recover attorney's fees 
and other costs against unjust IRS actions. The Commission recently 
proposed numerous reforms to make the IRS more effective and responsive 
to taxpayers. I commend Senators Kerrey and Grassley, who served on 
this bipartisan commission, for introducing legislation to implement 
many of its recommendations. I am a cosponsor of the IRS reform bill 
that they have introduced, and I hope the Senate's majority leadership 
will allow this bill to come to a vote soon to put these taxpayer 
protections in place as rapidly as possible.
  The Commission's report found that: ``While the Taxpayer Bill of 
Rights legislation made great strides to allow taxpayers to recover 
damages for IRS malfeasance, current provisions do not provide adequate 
relief. In addition, there are many cases in which taxpayers are not 
able to obtain review of IRS actions.'' The Commission concluded that: 
``Congress must provide taxpayers with adequate and reasonable 
compensation for actual damages incurred for wrongful actions by the 
IRS.''
  What I am saying is this: If the IRS comes after a taxpayer, and if 
they use draconian methods in an unjustified action, that not only is 
the taxpayer going to win but the taxpayer is going to get their costs 
of defending back. So that at least we are going to have the potential 
of an equal playing field so that we will not have taxpayers who feel 
that they are being attacked in an unjustified fashion. We will not 
have them think, ``I will either pay the lawyers or I am going to pay 
the IRS. I might as well surrender, even though I have done no wrong.'' 
Now they can defend their rights.
  It is time for Congress to heed this advice and give taxpayers the 
same rights that other citizens now have to seek review of, or to 
defend against, unjust governmental action. The IRS should be treated 
like every other federal agency under the law--no better and no worse.
  I urge my colleagues to support this legislation to provide taxpayers 
with the same rights as all other citizens who are subject to unjust 
governmental action.
  Mr. FEINGOLD. Mr. President, I am pleased to join my colleague, 
Senator Leahy, the distinguished Ranking Member of the Senate Judiciary 
Committee, in introducing a bill today that gives American taxpayers 
greater ability to recover attorneys fees and other costs against the 
Internal Revenue Service (IRS) for unjustified civil actions and 
administrative proceedings under the Equal Access To Justice Act 
(EAJA).
  Clearly, there is a need for such legislation in light of recent 
hearing testimony that average taxpayers have lost thousands of dollars 
in actual damages defending themselves against unjustified IRS actions. 
As the National Commission on Restructuring the Internal Revenue 
Service reported, current Internal Revenue Code provisions do not 
provide adequate relief for unjust IRS

[[Page S452]]

actions, much less enable many taxpayers to obtain review of IRS 
actions at all. I am pleased to join the Senator from Vermont in this 
effort to help level the playing field and help the American taxpayer 
recover when the IRS acts improperly.
  Like other citizens who seek review of, or defend against, 
unjustified governmental action by federal agencies, taxpayers who 
successfully defend against the IRS should be able to recover attorneys 
fees and other costs against when the situation warrants such an award. 
By providing such relief to taxpayers under the EAJA, not only does 
this bill help individuals recover the cost of their defense, but also 
helps deter future abusive actions by the IRS. The Equal Access to 
Justice Act has helped American citizens and small businesses recover 
against other federal agencies and this bill makes the IRS accountable 
under EAJA, just like the rest of the federal government.
  My interest in the Equal Access To Justice Act predates my election 
to this body, dating back to my tenure as a State Senator where I 
worked on the Wisconsin version of EAJA. In addition to working on the 
Wisconsin EAJA, I have introduced in a previous Congress, and will do 
so again today, separate legislation to update and streamline the 
existing federal EAJA--to make the process of recovery less cumbersome 
and to help ensure that people are made whole when the government 
cannot defend their actions.
  The federal EAJA was originally enacted in 1980 and made permanent in 
1985. The Act was intended to make taking on the federal government in 
court less intimidating and I was specifically aimed at helping average 
citizens and small businesses that prevail against unjustified 
governmental actions. In my view, EAJA is an effective and valuable 
check on the virtually limitless power of the federal government.
  One would assume that the typical American taxpayer is protected by 
the EAJA. However, this is not the case as the Act exempts all civil 
actions and administrative proceedings in connection with the IRS from 
its protections. In addition, court decisions have consistently 
interpreted the tax code as providing the only relief for taxpayers 
treated unjustly. The current system is inadequate and this legislation 
will help to change that untenable situation.
  I want to commend my friend and colleague from Vermont for his 
leadership on this important issue. The legislation we are introducing 
today is only one step in reforming the Internal Revenue Service and 
making that agency more accountable to the American people. However, it 
is an important and essential step in that process. The American people 
should not have to squander their hard earned money defending against 
unjustified actions by federal agencies--including the IRS. I look 
forward to working with Senator Leahy and the other concerned Members 
of this body as this legislation moves forward.
                                 ______