[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[Senate]
[Page S4377]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               IRS REFORM

  Mr. AKAKA. Mr. President, I am pleased that the Senate is finally 
taking action to restructure the IRS. As my colleagues know, the IRS 
supports operations of the Federal Government by collecting 
approximately $1.5 trillion in taxes each year. With roughly 102,000 
employees and a budget of $7.8 billion, the IRS has a wide variety of 
programs designed to help taxpayers understand and meet their Federal 
tax obligations.
  Given the highly publicized criticism of the agency, let me begin by 
making a few comments relating to staff of the IRS. I am confident that 
the majority of the staff at the IRS, whose job it is to enforce 
federal tax laws, are diligent and competent in their responsibilities. 
Yet, we need to ensure that this professional staff lives up to a 
strict code of conduct, especially the supervisors and the regional 
directors. We must demand that taxpayer complaints about unfair 
treatment are promptly heard and that abusive IRS employees are dealt 
with appropriately.
  No one disagrees that serious reform is needed at the IRS. We in 
Congress also need to recognize that the complexity of the tax code and 
the constant changes by Congress add to the taxpayer burden and 
compound the difficulty of administering the laws we enact.
  The Senate Finance Committee hearings last week again highlighted 
serious allegations of abuse by the agency. I was pleased that IRS 
Commissioner Charles Rossotti raised an important issue that deserves 
Congressional attention--that of tax evasion. Commissioner Rossotti 
disclosed that the tax gap, or the amount that taxpayers owe to the 
Federal Government but fail to pay, is $195 billion annually. Previous 
estimates indicated that the figure was between $70 billion to $140 
billion. I agree with many of my colleagues that we must work together 
to conduct a review of ``willful non-compliance.'' We also need to 
maintain public confidence in the ability of the IRS to fight tax 
evasion. This is one example among a host of serious issues that should 
be a part of IRS reform.
  I am presently working with members of the Finance Committee to 
address an issue which involved IRS non-compliance with provisions of 
the Internal Revenue Code.
  Late last year, I was contacted by an IRS compliance officer who 
described his efforts to ensure proper enforcement by the IRS of the 
Foreign Investors Real Property Tax Act. After being assigned in 1990 
to a special IRS project involving tax compliance of non-resident 
aliens, the compliance officer identified an internal IRS recordkeeping 
problem at the Philadelphia center, which hinders IRS collection and 
enforcement efforts. The compliance officer tried to resolve the matter 
using the processes available to him in the IRS, but was unsuccessful. 
This particular problem stems from the absence of an independent 
process for redress or complaint at the IRS. This recordkeeping failure 
prevents proper tax assessment and collection, and has resulted in a 
significant revenue loss. If these facts are correct, and the revenue 
loss is so great, then personnel actions should be considered for those 
who are responsible.
  I raise this issue to illustrate the point that we need greater 
oversight of the agency. As we work to improve service and 
responsiveness to taxpayers, we must also strive for an IRS that more 
effectively administers the tax laws.
  Mr. President, again, I am pleased that the Senate is moving forward 
on this critical issue. We must find a way to achieve an effective 
enforcement agency while ensuring that IRS powers are used responsibly. 
I believe that the legislation we are considering will move us in this 
direction.
  The bill incorporates many of the recommendations of the National 
Commission on Restructuring the Internal Revenue Service and is 
designed to enhance taxpayer rights and make the IRS more customer-
friendly. I look forward to the debate in the coming days.
  I yield the floor.

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