[Congressional Record Volume 144, Number 11 (Thursday, February 12, 1998)]
[Senate]
[Pages S724-S725]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      INNOCENT SPOUSES NEED RELIEF

  Mr. KYL. Mr. President, I want to commend the chairman of the Senate 
Finance Committee, Senator Bill Roth, for the very thoughtful and 
determined way that he has handled the Internal Revenue Service (IRS) 
reform effort.
  Had he simply bowed to calls from some on the other side of the aisle 
to sweep problems with the IRS under the rug and rush the IRS reform 
bill to a vote, we probably would not have had the chance to shed light 
on the serious abuses that innocent spouses have experienced at the 
hands of the IRS. And we certainly would not have the chance to ensure 
that an effective fix for innocent spouses is included in the IRS 
reform legislation.
  I think it is important to say at the outset that most IRS employees 
are law-abiding and professional, and most

[[Page S725]]

of them deal fairly with taxpayers. It is important to remember, too, 
that the IRS has been given the difficult and thankless task of 
administering a Tax Code that is exceedingly complex, filled with 
contradictory provisions, and open to differing interpretations. But 
since the IRS has been given such tremendous power--power that can 
bankrupt families, put people out of their homes, and ruin lives--any 
abuse of that power cannot be tolerated.
  Mr. President, last December, I hosted a Town Hall meeting and a 
series of other events in Arizona to solicit public comment about how 
best to reform the IRS. One of the people I heard from was a woman who 
divorced in late 1995. While she paid her taxes in full and on time 
during the last two years of her marriage, her husband did not. The IRS 
ultimately came after her for the taxes that her former spouse did not 
pay.
  About two weeks after hearing from her--on December 19--I sent 
Chairman Roth a letter identifying ways of improving the IRS reform 
bill, and on that short list was a recommendation to make innocent-
spouse relief easier to obtain, and to make it available retroactively, 
or at least to all cases pending on the date of enactment of the bill.
  So obviously, I am delighted that the Finance Committee has focused 
on the issue of innocent-spouse protection. The hearing held by the 
Committee just yesterday revealed just how seriously people can be 
abused. The Committee heard from several separated or divorced women 
who, like my constituent, had been pursued by the IRS for tax debts run 
up by their former husbands.
  Mr. President, husband and wife are equal partners in a marriage. 
Financial obligations are a shared responsibility, and appropriately 
so. We need to be careful not to undermine the commitment that people 
have made to each other, or we may unintentionally create new 
incentives for couples to divorce merely to limit their tax 
obligations. That is how the marriage penalty was born--something we 
will need to fix later this year.
  But there are unique circumstances that arise from time to time that 
make it inappropriate to hold one spouse liable for taxes that are 
primarily attributable to the other spouse. Those circumstances seem to 
arise far more frequently than one might think. One estimate by the 
General Accounting Office suggests that the IRS tries to collect taxes 
from the wrong spouse after a separation or divorce in at least 50,000 
cases a year.
  One of the women who testified before the Finance Committee yesterday 
was a fourth-grade teacher from Florida who divorced back in 1995. Her 
husband--himself a former field auditor for the IRS--has reportedly 
failed to file the couple's tax returns for 1993 and 1994. When he did 
later file joint returns, he allegedly forged her signature. The IRS 
has now put a lien on her home, while he is apparently paying just $200 
to $300 per month toward the debt.
  A widowed mother of five who has been on and off food stamps 
testified before the Committee. The IRS said she owes more than 
$527,000.
  A disabled nurse has a lien put on her home for taxes dating back to 
the 1960s, even though her divorce decree explicitly stated that she 
was not responsible for her former husband's debts.
  The problem is that, while the IRS is targeting these women, it is 
apparently failing to pursue their former husbands with equal vigor. 
There are cases where men, too, are the primary focus of the IRS's 
collection efforts, but this is predominately a problem that affects 
women. Nine out of 10 innocent spouses are women. Maybe that is because 
they are more likely to pay up when confronted by the IRS. Maybe it is 
because women sometimes have fewer resources available to defend 
themselves. In either case, singling out women for abusive collection 
efforts is just plain wrong.
  One solution might be simply to repeal the joint liability rules. 
Maybe liability ought to be proportionate to each spouse's earnings 
during the marriage. I understand the Committee is looking at a range 
of options. One way or the other, though, we have got to solve this 
problem and get the IRS off the backs of women whose only offense is 
that they took their husband's word that their finances were in order. 
And we ought to be sure that whatever we do extends back retroactively.
  Mr. President, I am obviously very appreciative of the fact that 
Chairman Roth and the Finance Committee have focused on this very 
important issue. And again, I want to thank Chairman Roth for resisting 
calls from the other side to merely rush ahead with an IRS reform 
measure before the Committee could deal with the innocent-spouse issue. 
I look forward to working with the Committee to ensure that an 
effective solution to this problem is included in the IRS reform bill 
before final passage.

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