[Congressional Record Volume 144, Number 37 (Friday, March 27, 1998)]
[Senate]
[Pages S2703-S2704]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               IRS REFORM

  Mr. KERREY. Mr. President, the Senate Finance Committee, since last 
fall, has been holding hearings on the Internal Revenue Service. We now 
expect to mark a bill up sometime next week, though we have not yet 
seen the bill.
  I appreciate very much the leadership of the chairman of the Finance 
Committee. However, Mr. President, I must say that I believe we are 
doing what is commonly referred to as ``making the perfect the enemy of 
the good.'' In other words, we are taking a good piece of legislation 
that passed the House last November in a 426-4 vote, which would give 
taxpayers substantial new powers. Over 100,000 collection notices are 
sent out every single day. There are over 238,000 incoming phone calls 
to the IRS every single day and, by some estimates, over 40 percent of 
them are not answered, and a very high percentage of those calls that 
are answered are answered incorrectly. The collection notices go out 
with no concern about whether or not negligence has occurred. So 
fearful are the American people when they receive a collection notice 
that former Commissioner Richardson--when she came before the Finance 
Committee this year, she said that her first paycheck came with an IRS 
return address and it terrified her to open it. She was the 
Commissioner of the IRS, and she was practically too frightened to open 
a letter from the IRS.
  About 114,000 collection notices go out every single day. The bill 
that passed the House would say that, if an error has been made, the 
taxpayer can recover the cost that they put into trying to defend 
themselves against the IRS. If the IRS is negligent, the taxpayer would 
be able to collect up to $100,000 in punitive damages. For the first 
time, we change the environment in which the IRS sends out its 
collection notices.
  In addition, the IRS would be required to publicly say: Here is the 
objective criteria for our audits. Today to get that information, you 
have to put in a Freedom of Information Act request. Thus, in the 
hearings we have had, both in the Restructuring Committee as well as 
the Finance Committee, through this Freedom of Information Act request, 
we had an opportunity to see substantial differentials between the 
bases of audits in one State versus another State and examples where 
the IRS agents were actually given quotas and incentives to go out and 
get more, even though there was no basis for it. There are all sorts of 
examples of abuses that are corrected in the bill that passed the 
House.
  The chairman of the Finance Committee is trying to improve that bill. 
I think that is terrific. He has a lot of terrific ideas that he has 
pulled from the hearings he has had. I think that is all well and good.
  Mr. President, I hope the Republican leader will say to the chairman 
of the Finance Committee that we need a process that will meet the 
deadline that the American people have. The deadline they have is April 
15. That is after we go out of session next Friday. But for 120 million 
taxpayers, they have to have their taxes paid by the 15th of April. I 
hope we can put together an expedited process that would have the 
chairman of the Finance Committee meeting with Ways and Means Committee 
Chairman Archer, the ranking members of both committees, with the 
administration, sometime early next week, because if we can pass a bill 
in the Finance Committee and on the floor of this Senate which could be 
conferenced quickly with the House and signed by the President, we 
could give the taxpayers of the United States of America a tremendous 
bonus on the 15th of April--more power, more certainty that, if the IRS 
sends a collection notice out, they are going to send a notice out to 
the taxpayer that actually owes additional money rather than one that 
doesn't.

  In addition, this new legislation, again, was passed by the House 
with some good improvements that the chairman wants to put on this 
bill, which would give the commissioner authority to manage the agency. 
This is a terribly important issue, Mr. President. Currently, we have 
regions, districts and areas, and we organize the IRS geographically. 
What the Commissioner indicated he wants to do is restructure the IRS 
so that it is organized around the category of taxpayer--small 
business, large corporation, individual payers, as well as nonprofit. 
That way the Commissioner is going to have an opportunity to not only 
run the IRS more efficiently, but to reduce the cost to the taxpayer to 
comply with the Tax Code. By organizing it by category of taxpayer, the 
Commissioner has indicated, and I think quite correctly, that he is 
going to be able to say to some taxpayers that it costs us more to 
collect the money than we get from you; thus, we are going to provide 
regulatory relief,

[[Page S2704]]

especially in the area of small business, in situations where the cost 
exceeds what we are able to collect, be able to manage the problems 
that large businesses have, that nonprofits and individuals have, in a 
much different way than we currently see.
  Next, with that authority, and especially with an oversight board 
that is independent from the executive branch, and hopefully a 
restructured congressional oversight--and, remarkably, some have 
actually proposed that we strike the consolidation of the oversight in 
the Congress. We had hearings in the Restructuring Commission with 
Congressman Portman, a Republican from Ohio, and I for over a year, and 
almost every witness said problem No. 1 is Congress. Remember, the IRS 
is not Sears & Roebuck. This is not a private-sector organization. They 
have 535 members of their board--the Congress. There are six committees 
that have oversight responsibility over the IRS, and what we were told 
repeatedly, both with anecdotes and with data, was that they need to 
consolidate the oversight so the Commissioner, with a new independent 
board, can meet and achieve consensus on what the vision and the 
purpose of the IRS is going to be. Why? For a variety of reasons, Mr. 
President. One is making certain that funding is going to be constant, 
but, more importantly, to make certain that the investment in 
technology is done right.
  This whole effort started a couple of years ago. Senator Shelby and 
I, in oversight hearings on the Appropriations Committee, noted with 
considerable concern that almost $4 billion of taxpayer money had been 
wasted in a thing called ``tax system modernization,'' trying to get 
the computers to operate, to talk to one another so the stovepipes 
would not prevent the conversations back and forth.
  Tax systems modernization, Mr. President, is very difficult to do, 
unless you have a shared consensus between the executive and 
legislative branches, with consolidated oversight on the congressional 
side and with an independent board that is able to act on behalf of the 
taxpayers. In that kind of environment, it is much more likely that 
technology investments will be made right.
  Most importantly, I hope the majority leader will instruct the 
Finance Committee chairman, let's get a meeting next week with Mr. 
Archer, Mr. Rangel, Senator Moynihan, and Mr. Rubin, and whatever we 
pass in the Senate committee, let's do it in a fashion that enables us 
to meet this April 15 deadline.
  Mr. President, there are important things in this legislation. I have 
behind me a chart which I call the IRS Reform Index. I will mention 
some of the things that are on that chart. The date the IRS reform 
legislation passed the House with 426 votes to 4 was November 5, 1997. 
The date by which the Senate Republican leadership promised to bring 
the IRS reform to the floor is March 30, 1998. I think the majority 
leader understood why it needed to be done then--because we need to set 
a deadline of April 15 to complete our work, and I very much appreciate 
that that in fact is what is possible for us.

  Still, if we expedite the process, rather than putting something out 
of committee that has no chance of being conferenced and perhaps won't 
be signed by the President as well--again, one of the worst mistakes 
here is making the perfect the enemy of the good. Since November 5 to 
March 30, over 17 million Americans have received a collection notice. 
That is a huge number of people who have received a collection notice 
without the power of the law that has passed the House, as well as some 
significant new powers the chairman wants to provide. That legislation 
would pass 100-0 if we brought it up quickly, 34 million Americans 
called the IRS since November 5, nearly 17 million did not get through 
and of those who did, over 1 million received wrong answers. We have 40 
cosponsors in the Senate, and 14 of the Finance Committee's 20 members 
are cosponsors of the bill. All this is to say that, if we want to pass 
good, strong legislation and meet the April 15 deadline, there is 
absolutely no legislative reason for us not to.
  I am hopeful that sometime early next week the majority leader will 
talk with the Finance Committee chair and say meet with Mr. Rangel, 
meet with Mr. Archer, meet with Mr. Moynihan and Mr. Rubin; let's have 
a joint meeting so whatever we pass out of the Finance Committee we can 
pass here on the floor of the Senate, conference it quickly with the 
House, get it on to the President for signature, meet the April 15 
deadline that 120 million American taxpayers have imposed upon them 
under current law.
  I thank my colleagues and I yield the floor.
  Mr. President, 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. DOMENICI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Gorton). Without objection, it is so 
ordered.

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