[Congressional Record Volume 144, Number 55 (Wednesday, May 6, 1998)]
[Senate]
[Pages S4379-S4405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998

  The PRESIDENT pro tempore. The clerk will report the pending 
business.
  The assistant legislative clerk read as follows:

       A bill (H.R. 2676) to amend the Internal Revenue Code of 
     1986 to restructure and reform the Internal Revenue Service, 
     and for other purposes.

  The Senate resumed consideration of the bill.
  Mr. ROTH addressed the Chair.
  The PRESIDENT pro tempore. The Senator from Delaware.
  Mr. ROTH. Mr. President, I further ask that at the conclusion or 
yielding back of time the Senate proceed to vote on the Roth amendment 
followed by a vote on the Kerrey amendment.
  The PRESIDING OFFICER (Mr. Allard). Without objection, it is so 
ordered.
  Mr. ROTH. Mr. President, before we begin debate today, I would like 
to offer some comments about the consent agreement that governs the 
offering of amendments. Basically, amendments that are to be in order 
must be relevant to the purpose of the IRS reform legislation, which 
covers three major areas.
  First, it reorganizes, restructures, and re-equips the IRS to make it 
more customer friendly in its tax-collecting mission.
  Second, it protects taxpayers from abusive practices and procedures 
of the IRS.
  Third, it deals with the management and conduct of IRS employees.
  These are the main purposes of the bill. While there are provisions 
dealing with electronic filing and congressional oversight, that is 
basically what this bill does.
  Title 6 of the bill is an entirely different matter. That title 
contains technical amendments that run the breadth of the tax code. In 
the House of Representatives, this title was reported by the Ways and 
Means Committee as a separate bill--which, in fact, it is.
  Title 6 is unrelated to IRS reform. It contains only technical 
corrections to previously enacted tax legislation that meet the 
following criteria:

[[Page S4380]]

  First, they carry out the original intent of Congress in enacting the 
provision being amended.
  Second, by definition, the technical correction does not score as a 
revenue gain or loss.
  Third, the policy has been approved by the Treasury Department, the 
Joint Committee on Taxation, and the majority and minority of both the 
House Ways and Means Committee and the Senate Finance Committee.
  As a consequence, amendments which are relevant because of provisions 
in title 6 must meet a more difficult standard under the consent 
agreement. They must not only be relevant, but must be cleared but the 
two managers and the two leaders. And in clearing provisions that 
relate to title 6, I will apply the same criteria that the provisions 
of title 6 had to meet to become part of that title.
  I hope this explanation provides a clearer understanding of the 
application of the consent agreement to possible amendments.


                           Amendment No. 2339

    (Purpose: To ensure compliance with Federal budget requirements)

  Mr. ROTH. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Delaware (Mr. Roth) proposes an amendment 
     numbered 2339.

  Mr. ROTH. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 401, strike line 3, and insert: ``beginning after 
     December 31, 1998''.
       On page 415, between lines 16 and 17, insert:

     SEC. 5007. CLARIFICATION OF DEFINITION OF SPECIFIED LIABILITY 
                   LOSS.

       (a) In General.--Subparagraph (B) of section 172(f)(1) 
     (defining specified liability loss) is amended to read as 
     follows:
       ``(B) Any amount (not described in subparagraph (A)) 
     allowable as a deduction under this chapter which is 
     attributable to a liability--
       ``(i) under a Federal or State law requiring the 
     reclamation of land, decommissioning of a nuclear power plant 
     (or any unit thereof), dismantlement of an offshore drilling 
     platform, remediation of environmental contamination, or 
     payment of workmen's compensation, and
       ``(ii) with respect to which the act (or failure to act) 
     giving rise to such liability occurs at least 3 years before 
     the beginning of the taxable year.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to net operating losses arising in taxable years 
     beginning after the date of the enactment of this Act.

     SEC. 5008. MODIFICATION OF AGI LIMIT FOR CONVERSIONS TO ROTH 
                   IRAS.

       (a) In General.--Section 408A(c)(3)(C)(i) (relating to 
     limits based on modified adjusted gross income) is amended to 
     read as follows:
       ``(i) adjusted gross income shall be determined in the same 
     manner as under section 219(g)(3), except that--

       ``(I) any amount included in gross income under subsection 
     (d)(3) shall not be taken into account, and
       ``(II) any amount included in gross income by reason of a 
     required distribution under a provision described in 
     paragraph (5) shall not be taken into account for purposes of 
     subparagraph (B)(i).''

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 5009. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       Subsection (c) of section 10511 of the Revenue Act of 1987 
     is amended by striking ``October 1, 2003'' and inserting 
     ``October 1, 2007''.

  The PRESIDING OFFICER. Under the previous order, the amendment is now 
set aside.
  Does the Senator from Nebraska wish to offer his amendment?


                           Amendment No. 2340

    (Purpose: To ensure compliance with Federal budget requirements)

  Mr. KERREY. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nebraska (Mr. Kerrey) proposes an 
     amendment numbered 2340.

  Mr. KERREY. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments submitted.'')
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  The Senator from Delaware has 30 minutes under his control.


                           Amendment No. 2339

  Mr. ROTH. Mr. President, I yield myself 5 minutes.
  Mr. President, under the Senate's budget rules, the first year, first 
five years, and second five years of revenue losses in a tax bill must 
be offset with either mandatory savings or revenue increases.
  When the Finance Committee marked up the underlying bill, the first 
five years of revenue loss were offset. The second five years of 
revenue loss were not fully offset. The IRS Restructuring bill was 
short in excess of $9 billion in the last five years. During the 
markup, I indicated that I would work with the Budget Committee to 
attempt to find offsets so that the bill would be fully paid for over 
the last five years.
  Finding offsets was not an easy task. Every major revenue raiser I 
considered brought forth opposition from different members. After 
several weeks of reviewing options, I have developed a package, in 
consultation with the leadership.
  Mr. President, this pay-for package contains three new revenue 
raisers and a change to a revenue raiser in the underlying bill.
  The first revenue raiser comes from the Administration's budget. This 
proposal would tighten the definition of operating losses that are 
eligible for a special ten year carry back. Congress intended this 
treatment to be limited to a narrow category of activities. This 
proposal simply clarifies the types of losses eligible for this special 
treatment. This proposal is noncontroversial.
  The second new revenue raiser relates to the rollover rules for Roth 
IRAs. Under current law, individuals or married couples with adjusted 
gross income over $100,000 cannot rollover a traditional IRA into a 
Roth IRA. For purposes of the $100,000 test, minimum distributions 
which are required when an IRA beneficiary reaches 70\1/2\ are counted 
as income.
  This second new raiser would modify current law by excluding minimum 
distributions from the $100,000 test. The effect of this proposal is to 
allow more taxpayers, at age 70\1/2\ and above, to rollover from a 
traditional IRA to a Roth IRA. This proposal will enlarge the group of 
taxpayers who can enjoy the benefits of the Roth IRA.
  The third new raiser would extend the current law user fees charge by 
the IRS for private letter rulings. This extension would be effective 
for four years.
  Let me note that the IRS restructuring bill uses the balance on the 
pay-go scorecard of $406 million in the last five years as an offset. 
We have been informed by the Budget Committee staff that the use of the 
pay-go balance is appropriate in this instance.
  Finally, this amendment modifies an effective date of a revenue 
raiser in the Finance Committee bill. The proposal modified is the 
proposal to limit the carry back period of the foreign tax credit. 
Under this amendment, the effective date of the foreign tax credit 
raiser has been moved out one year to tax years beginning after 1998.
  Now, Mr. President, some on the other side may criticize the most 
significant new revenue raiser in this package. The target of their 
criticism is the proposal to allow more older taxpayers to convert to 
Roth IRAs.
  As I see it, those criticizing the rollover provision have the 
objective of limiting retirement savings choices for taxpayers who 
reach the end of their working years. For taxpayers who reach 70\1/2\, 
the opponents of the rollover provision are saying those taxpayers 
should fall under a more restrictive rule than those taxpayers under 
70\1/2\.
  If you are over 70\1/2\ and you are a middle income person who has a 
healthy IRA or pension plan, the opponents of the rollover provision 
are arguing you should not have the choice of a Roth IRA.
  Alan Greenspan says America's most important economic problem is its 
low savings rate. It is a problem that we must address. The rollover 
provision in this amendment is a small step toward resolving our number 
1 economic problem.

[[Page S4381]]

  Mr. President, I ask unanimous consent that a technical description 
of this amendment, and a revised revenue table for the IRS 
restructuring bill, prepared by the Joint Committee on Taxation, be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Description of Roth Financing Amendment to the Internal Revenue Service 
    Restructuring and Reform Act of 1998 as Reported by the Senate 
                          Committee on Finance


a. foreign tax credit carryback and carryover periods (sec. 5002 of the 
                                 bill)

       Under the bill, the provision is effective with respect to 
     credits arising in taxable years ending after the date of 
     enactment. Under the modification, the provision would be 
     effective with respect to credits arising in taxable years 
     beginning after December 31, 1998.


 b. restrict special net operating loss carryback rules for specified 
                            liability losses

     Present law
       Under present law, that portion of a net operating loss 
     that qualifies as a ``specified liability loss'' may be 
     carried back 10 years rather than being limited to the 
     general two-year carryback period. A specified liability loss 
     includes amounts allowable as a deduction with respect to 
     product liability, and also certain liabilities that arise 
     under Federal or State law or out of any tort of the 
     taxpayer. In the case of a liability arising out of a Federal 
     or State law, the act (or failure to act) giving rise to the 
     liability must occur at least 3 years before the beginning of 
     the taxable year. In the case of a liability arising out of a 
     tort, the liability must arise out of a series of actions (or 
     failures to act) over an extended period of time a 
     substantial portion of which occurred at least 3 years before 
     the beginning of the taxable year. A specified liability loss 
     cannot exceed the amount of the net operating loss, and is 
     only available to taxpayers that used an accrual method 
     throughout the period that the acts (or failures to act) 
     giving rise to the liability occurred.
     Description of proposal
       Under the proposal, specified liability losses would be 
     defined and limited to include (in addition to product 
     liability losses) only amounts allowable as a deduction that 
     are attributable to a liability that arises under Federal or 
     State law for reclamation of land, decommissioning of a 
     nuclear power plant (or any unit thereof), dismantlement of 
     an offshore oil drilling platform, remediation of 
     environmental contamination, or payments arising under a 
     workers' compensation statute, if the act (or failure to act) 
     giving rise to such liability occurs at least 3 years before 
     the beginning of the taxable year. No inference regarding the 
     interpretation of the specified liability loss carryback 
     rules under current law would be intended by this proposal.
     Effective date
       The proposal would be effective for net operating losses 
     arising in taxable years beginning after the date of 
     enactment.


 C. Modification of Minimum Distribution Requirements to Determine AGI 
                        for Roth IRA Conversions

     Present law
       Under present law, uniform minimum distribution rules 
     generally apply to all types of tax-favored retirement 
     vehicles, including qualified retirement plans and annuities, 
     individual retirement arrangements (``IRAs'') other than Roth 
     IRAs, and tax-sheltered annuities (sec 403(b)).
       Under present law, distributions are required to begin no 
     later than the participant's required beginning date (sec. 
     401(a)(9)). The required beginning date means the April 1 of 
     the calendar year following the later of (1) the calendar 
     year in which the employee attains age 70\1/2\, or (2) the 
     calendar year in which the employee retires. In the case of 
     an employee who is a 5-percent owner (as defined in section 
     416), the required beginning date is April 1 of the calendar 
     year following the calendar year in which the employee 
     attains age 70\1/2\. The Internal Revenue Service has issued 
     extensive Regulations for purposes of calculating minimum 
     distributions. In general, minimum distributions are 
     includible in gross income in the year of distribution. An 
     excise tax equal to 50 percent of the required distribution 
     applies to the extent a required distribution is not made.
       Under present law, all or any part of amounts held in a 
     deductible or nondeductible IRA may be converted into a Roth 
     IRA. Only taxpayers with adjusted gross income (``AGI'') of 
     $100,000 or less are eligible to convert an IRA into a Roth 
     IRA. In the case of a married taxpayer, AGI is the combined 
     AGI of the couple. Married taxpayers filing a separate return 
     are not eligible to make a conversion.
     Description of proposal
       The proposal would modify the definition of AGI to exclude 
     required minimum distributions from the taxpayer's AGI solely 
     for purposes of determining eligibility to convert from an 
     IRA to a Roth IRA. As under present law, the required minimum 
     distribution would not be eligible for conversion and would 
     be includible in gross income.
     Effective date
       The proposal would be effective for taxable years beginning 
     after December 31, 2004.


                     D. Extension of IRS User Fees

     Present law
       The IRS provides written responses to questions of 
     individuals, corporations, and organizations relating to 
     their tax status or the effects of particular transactions 
     for tax purposes in the form of ruling letters, determination 
     letters, opinion letters, and other similar rulings or 
     determinations. The IRS is directed by statute to establish a 
     user fee program with respect to such rulings and 
     determinations. Pursuant to this statutory authorization, the 
     IRS establishes a schedule of user fees. The statutory 
     authorization for the IRS use fee program is in effect for 
     requests made before October 1, 2003 (P.L. 104-117).
     Description of proposal
       The proposal would extend the IRS user fee program for 
     requests made before October 1, 2007.
     Effective date
       The proposal would be effective on the date of enactment.

ESTIMATED REVENUE EFFECTS OF H.R. 2676, THE ``INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998,'' AS REPORTED BY THE SENATE COMMITTEE ON FINANCE AND MODIFIED BY THE ROTH FINANCING
                                                                                            AMENDMENT
                                                                        [Fiscal Years 1998-2007, in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
               Provision                           Effective              1998      1999      2000      2001      2002      2003      2004      2005      2006      2007    1998-2002  2003-2007
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Title I. Executive Branch Governance..  ..............................                                                      No Revenue Effect
Title II. Electronic Filing...........  ..............................                                                      No Revenue Effect
Title III. Taxpayer Bill of Rights 3:
    A. Burden of Proof................  eca DOE                            (\1\)      -221      -232      -243      -256      -269      -282      -295      -311      -326       -953     -1,483
    B. Proceedings by Taxpayers:
        1. Expansion of authority to    180da DOE                       ........       -14       -15       -16       -17       -20       -21       -22       -23       -25        -62       -111
         award costs and certain fees
         at prevailing rate and CFR
         rule 68 provision with net
         worth limitation (includes
         outlay effects).
        2. Civil damages with respect   DOE                                   -2       -15       -25       -50       -30       -25       -25       -25       -25       -25       -122       -125
         to unauthorized collection
         actions (includes outlay
         effects).
        3. Increase in size of cases    pca DOE                                                                             No Revenue Effect
         permitted on small case
         calendar to $50,000.
        4. Expand Tax Court             pca DOE                              -11       -15       -13        -7        -7        -7        -7        -8        -8        -8        -53        -38
         jurisdiction to include
         responsible person penalties.
        5. Actions for refund with      rfa DOE                                                                         Negligible Revenue Effect
         respect to certain estates
         which have elected the
         installment method of payment.
        6. Provide Tax Court            pfa DOE                            (\1\)        -5        -2        -2        -2        -2        -2        -2        -2        -2        -11        -10
         jurisdiction to review
         adverse IRS determination of
         a bond issuer's tax-exempt
         status.
    C. Relief for Innocent Spouses and
     Persons with Disabilities:
        1. Innocent spouse relief--     iaa & ulb DOE                        -58      -350      -288      -273      -346      -480      -608      -773      -910    -1,071     -1,315     -3,842
         innocent spouses would be
         able to elect to be liable
         only for tax attributable to
         their income (assumes no
         interaction with any other
         proposal; includes anti-abuse
         rule; not innocent if have
         actual knowledge of
         understatement of tax).
        2. Reports on collection        bi 1999                                                                             No Revenue Effect
         activity against spouses.
        3. Suspension of statute of     (\2\)                                -10       -70       -35       -15       -16       -17       -18       -19       -20       -21       -146        -95
         limitations on filing refund
         claims during periods of
         disability.
        4. Require the IRS to send      -nma DOE                                                                            No Revenue Effect
         separate notification to both
         spouses by certified mail.
    D. Provisions Relating to Interest
     and Penalties:
        1. Elimination of interest      cqba DOE                          -(\1\)        -9       -28       -42       -54       -57       -60       -63       -66       -69       -134       -315
         rate differential on
         overlapping periods of
         interest on income tax
         overpayments and
         underpayments.
        2. Increase refund interest     cqba DOE                              -5       -51       -54       -56       -59       -62       -65       -69       -72       -76       -225       -344
         rate to Applicable Federal
         Rate (``AFR'') + 3 for
         individual taxpayers
         (includes outlay effects) \3\.
        3. Elimination of penalty on    iapma DOE                            -29      -272      -287      -302      -317      -338      -354      -372      -390      -410     -1,207     -1,864
         individual's failure to pay
         during installment agreements
         (for individuals and timely
         filed returns only).
        4. Mitigations of failure to    dma 180da DOE                   ........       -47       -64       -64       -65       -66       -66       -67       -68       -68       -240       -335
         deposit penalty cascading
         (all taxpayers).

[[Page S4382]]

 
        5. Suspend accrual of interest  tyea DOE                        ........  ........      -358      -428      -482      -514      -609      -615      -622      -628     -1,268     -2,988
         and penalties if IRS fails to
         contact taxpayer within 12
         months after a timely-filed
         return (except for fraud and
         criminal penalties).
        6. Notices of interest and      na 180da DOE                                                                        No Revenue Effect
         penalties must show
         computation.
        7. Require management to        pa 180da DOE                                                                    Negligible Revenue Effect
         approve non-computer
         generated penalties
         (excluding failure to file,
         pay, or estimated tax
         payment).
    E. Protections for Taxpayers
     Subject to Audit or Collection:
        1. Due process for IRS          caia 6ma DOE                    ........       -45        -1        -1        -1        -1        -1        -1        -1        -1        -48         -5
         collection actions.
        2. Extend the attorney client   DOE                                (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)      (\5\)      (\5\)
         privilege to accountants and
         other tax practitioners for
         tax advice of accountant and
         other tax practitioners.
        3. Expand the Taxpayer          DOE                                (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)      (\4\)      (\4\)
         Advocate's authority to issue
         taxpayer assistance orders.
        4. Limitation on financial      DOE                                                                                 No Revenue Effect
         status audit techniques.
        5. IRS summons of computer      sia DOE & pfsib DOE             ........       -26       -32       -39       -45       -53       -61       -66       -72       -74       -142       -326
         source code.
        6. Prohibition on extension of  (\6\)                                 -6       -44       -38       -31       -25       -25       -25       -25       -25       -25       -144       -125
         statute of limitations for
         collection beyond 10 years
         with estate tax exception.
        7. Notice of deficiency to      nma 12/31/98                                                                    Negligible Revenue Effect
         specify deadlines for filing
         Tax Court petition.
        8. Refund or credit of          DOE                                                                             Negligible Revenue Effect
         overpayments before final
         determination.
        9. Prohibition on improper      DOE                                                                                 No Revenue Effect
         threat of audit activity for
         tip reporting.
        10. Codify existing IRS         DOE                                                                                 No Revenue Effect
         procedures relating to appeal
         of examinations and
         collections and increase
         independence of appeals
         function.
        11. Appeals videoconferencing   DOE                                                                                 No Revenue Effect
         alternative for rural areas.
        12. Require IRS to notify       180da DOE                       ........     (\4\)     (\4\)      (\4\     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)     (\4\)      (\5\)      (\5\)
         taxpayer before contacting
         third parties regarding IRS
         examination or collection
         activities with respect to
         the taxpayer (does not apply
         for criminal cases).
    F. Disclosures to Taxpayers:
        1. Explanation of joint and     180da DOE                                                                           No Revenue Effect
         several liability.
        2. Explanation of taxpayers'    180da DOE                       ........       -13     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)      (\5\)      (\4\)
         rights in interviews with IRS.
        3. Disclosure of criteria for   180da DOE                                                                           No Revenue Effect
         examination selection.
        4. Explanations of appeals and  180da DOE                                                                           No Revenue Effect
         collection process.
        5. Require IRS to explain       180da DOE                                                                           No Revenue Effect
         reason for denial for refund.
        6. Statement to taxpayers with  180da DOE                                                                           No Revenue Effect
         installment agreements.
    G. Low-Income Taxpayer Clinics
    H. Other Taxpayer Rights
     Provisions:
        1. Cataloging complaints of     DOE                                                                                 No Revenue Effect
         IRS employee misconduct.
        2. Archive of records of IRS..  DOE                                                                                 No Revenue Effect
        3. Payment of taxes to the      DOE                                                                                 No Revenue Effect
         U.S. Treasury\3\.
        4. Clarification of authority   DOE                                                                                 No Revenue Effect
         of Secretary relating to the
         making of elections.
    I. Studies:
        1. Study of penalty and         9ma DOE                                                                             No Revenue Effect
         interest administration and
         implementation.
        2. Study of confidentiality of  1ya DOE                                                                             No Revenue Effect
         tax return information.
    J. Limits on Seizure Authority:
        1. IRS to implement approval    caca DOE                                                                            No Revenue Effect
         process for liens, levies, or
         seizures.
        2. Prohibit the IRS from        Soa DOE                                                                             No Revenue Effect
         selling taxpayer's property
         for less than the minimum bid.
        3. Require the IRS to provide   soa DOE                                                                         Negligible Revenue Effect
         an accounting and receipt to
         the taxpayer (including the
         amount credited to the
         taxpayer's account) for
         property seized and sold.
        4. Require the IRS to study     DOE & 2 years                                                                       No Revenue Effect
         and implement a uniform asset
         disposal mechanism for sales
         of seized property to prevent
         revenue officers from
         conducting sales.
        5. Increase the amount exempt   cata DOE                           (\1\)        -5        -5        -5        -5        -6        -6        -6        -6        -6        -21        -30
         from levy to $10,000 for
         personal property and $5,000
         for books and tools of trade,
         indexed for inflation.
        6. Require the IRS to           lia DOE                                                                         Negligible Revenue Effect
         immediately release a levy
         upon agreement that the
         amount is not collectible.
        7. Codify IRS administrative    DOE                                                                                 No Revenue Effect
         procedures for seizure of
         taxpayer's property.
        8. Suspend collection by levy   tyba 12/31/98                                                                   Negligible Revenue Effect
         during refund suit.
        9. Require District Counsel     taa DOE                                                                         Negligible Revenue Effect
         review of jeopardy and
         termination assessments and
         jeopardy levies.
        10. Codify certain fair debt    DOE                                                                                 No Revenue Effect
         collection procedures.
        11. Ensure availability of      DOE                                                                                 No Revenue Effect
         installment agreements.
        12. Increase superpriority      DOE                                                                             Negligible Revenue Effect
         dollar limits.
        13. Permit personal delivery    DOE                                                                                 No Revenue Effect
         of section 6672(b) notices.
        14. Allow taxpayers to quash    ssa DOE                                                                         Negligible Revenue Effect
         all third-party summonses.
        15. Permit service of           ssa DOE                                                                             No Revenue Effect
         summonses by mail or in
         person.
        16. Provide new remedy for      DOE                                                                             Negligible Revenue Effect
         third parties who claim that
         the IRS has filed an
         erroneous lien.
        17. Waive the 10% early         la DOE                                -1        -3        -4        -4        -4        -4        -5        -5        -5        -5        -17        -24
         withdrawal penalty when IRA
         or qualified plan is levied.
        18. Prohibit seizure of         DOE                                                                             Negligible Revenue Effect
         residences in small
         deficiency cases.
        19. Require the IRS to exhaust  aa DOE                                                                              No Revenue Effect
         all payment options before
         seizing a business or
         principal residence.
    K. Offers-in-Compromise:
        1. Rights of taxpayers          DOE                                (\1\)     (\4\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)      (\5\)      (\4\)
         entering into offers-in-
         compromise.
        2. Prohibit IRS rejection of    osa DOE                                                                             No Revenue Effect
         low-income taxpayer's offer-
         in-compromise based on amount
         of offer.
        3. Prohibit IRS rejection of    osa DOE                                                                             No Revenue Effect
         an offer-in-compromise solely
         based on a dispute as to
         liability because the
         taxpayer's file cannot be
         located by the IRS.
        4. Prohibit the IRS from        DOE                                                                                 No Revenue Effect
         requiring a financial
         statement for offer-in-
         compromise based solely on
         doubt as to liability.
        5. Suspend collection by levy   tao/a 60da DOE                                                                  Negligible Revenue Effect
         while offer-in-compromise is
         pending.
        6. Rejected offers-in-          oara DOE                                                                            No Revenue Effect
         compromise and requests for
         installment agreements to be
         reviewed.
        7. Appeals review of rejected   osa DOE                                                                             No Revenue Effect
         offers-in-compromise.
    L. Additional Items:
        1. Prohibit using tax           DOE                                                                                 No Revenue Effect
         enforcement results to
         evaluate IRS employees.
        2. IRS notices must contain     60da DOE                                                                            No Revenue Effect
         name and telephone number of
         IRS employee to contact.
        3. Require approval of use of   DOE                                                                                 No Revenue Effect
         pseudonyms by IRS employees.
        4. National Office conferences  DOE                                                                                 No Revenue Effect
         without field personnel.
        5. Require the IRS to end the   DOE                                                                                 No Revenue Effect
         use of the illegal tax
         protestor label.
        6. Modify section 6103 to       DOE                                                                                 No Revenue Effect
         allow the tax-writing
         committees to obtain data
         from IRS employees regarding
         employee and taxpayer abuse.
        7. Publish telephone numbers    1/1/99                                                                              No Revenue Effect
         for local IRS offices.
        8. Alternative to Social        DOE                                                                                 No Revenue Effect
         Security numbers for tax
         return preparers.
        9. Expand Alternative Dispute   DOE                                                                                 No Revenue Effect
         Resolution; binding
         arbitration pilot program.
        10. Treasury can not implement  DOE                                   -8       -36       -10        -6        -3        -3        -2        -1        -1        -1        -63         -8
         98-11 regulations for 6
         months, with no inference
         about transition rules.
        11. Require IRS to notify all   tyba 12/31/98                      (\7\)     (\7\)     (\7\)     (\7\)     (\7\)     (\7\)     (\7\)     (\7\)     (\7\)        -1         -1
         partners of any resignation
         of the tax matters partner
         that is required by the IRS,
         and of the identity of any
         successor tax matters partner
         who was appointed to fill the
         vacancy created by such
         resignation.
                                                                       -------------------------------------------------------------------------------------------------------------------------

[[Page S4383]]

 
          Subtotal of Taxpayer          ..............................      -137    -1,251    -1,499    -1,592    -1,742    -1,957    -2,225    -2,442    -2,635    -2,849     -6,223    -12,110
           Protections.
                                                                       =========================================================================================================================
Title IV. Congressional Accountability  ..............................                                                      No Revenue Effect
 for the IRS.
Title V. Revenue Offsets:
    A. Repeal Schmidt Baking with       tyea DOE                             603     1,141     1,160       141       148       156       163       172       180       189      3,193        860
     Respect to Vacation and Severance
     Pay.
    B. Allow Taxpayers to use foreign   ftcai tyba 12/31/98             ........        84       546       487       454       424       394       271       267       263      1,571      1,619
     Tax Credits to Reduce Income for
     1 Year Back and Carryforward 7
     years.
    C. Clarify and Expand Math Error    tyea DOE                        ........        12        25        26        27        28        29        39        31        32         90        150
     Procedures.
    D. Freeze Grandfathered Status of   tyea 3/26/98                       (\8\)         1         3         6        10        14        19        26        35        45         20        139
     Stapled or Paired-Share REITs.
    E. Make Certain Trade Receivables   tyea DOE                              33       317       500       333       117        70        73        77        81        85      1,300        386
     Ineligible for Mark-to-Market
     Treatment With Spread.
    F. Add Vaccines Against Rotavirus   vpa DOD                         ........         1         2         3         4         5         6         6         6         7         10         30
     Gastroenteritis to the List of
     Taxable Vaccines ($0.75 per dose).
    G. Authorize the Federal            rda DOE                                2         2         3         3         3         3         3         4         4         4         13         18
     Government to Offset a Federal
     Income Tax Refund to Satisfy a
     Past Due, Legally Owing State
     Income Tax Debt.
    H. Restrict Special Net Operating   NOLgi tyba DOE                  ........  ........        15        32        42        43        41        40        41        42         89        207
     Loss Carryback Rules for
     Specified Liability Losses.
    I.  Disregard Minimum               tyba 12/31/04                   ........  ........  ........  ........  ........  ........  ........     2,362     2,854     2,812  .........      8,028
     Distributions in Determining AGI
     for IRA Conversions to a Roth IRA.
    J.  Extend Fee for IRS Letter       10/1/03                         ........  ........  ........  ........  ........  ........        64        67        71        75  .........        277
     Rulings.
                                                                       -------------------------------------------------------------------------------------------------------------------------
          Subtotal of Revenue Offsets.  ..............................       638     1,558     2,254     1,031       805       743       792     3,055     3,570     3,554      6,286     11,714
                                                                       =========================================================================================================================
Title VI. Tax Technical Corrections...  ..............................                                                      No Revenue Effect
Title VII. Pay-Go Surplus\3\..........  ..............................  ........  ........  ........  ........  ........        29        61        93        97       126  .........        406
                                                                       -------------------------------------------------------------------------------------------------------------------------
          Net total...................  ..............................       501       307       755      -561      -937    -1,185    -1,372       706     1,032       831         63        10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Los of less than $1 million.
\2\ Effective for periods of disability before, on or after the date of enactment but would not apply to any claim for refund or credit which (without regard to the proposed provision)
\3\ Estimate provided by the congressional Budget Office
\4\ Loss of less than $5 million.
\5\ Loss of less than $25 million.
\6\ Effective for requests to extend the statute of limitations made after the date of enactment and to all extensions of the statute of limitations on collections that are open 180 days after
  the date of enactment.
\7\ Loss of less than $500,000.
\8\ Gain of less than $500,000.
 
 Legend for ``Effective'' column: aa=actions after; bi=beginning in; caca=collection actions commenced after; caia=collection actions initiated after; cata=collection actions taken after;
  cqba=calendar quarters beginning after; dma=deposits made after; DOE=date of enactment; eca=examinations commencing after; ftcal=foreign tax credits arising in; iapma=installment agreement
  payments made after; la=levies after; laa=liability arising after; lia=levies imposed after; na=notices after; NOLgi=net operating losses generated in; nma=notices mailed after; oara=offers
  and requests after; osa=offers-in-compromise submitted after; pa=penalties after; pca=processings commencing after; pfa=petitions filed after; pfsib=protection for summonses issued before;
  tia=penalties imposed after; rda=refunds due after; rfa=refunds filed after; sia=summonses issued after; soa=seizures occurring after; Soa=sales occurring after; ssa=summonses served after;
  taa=taxes assessed after; tao/a=faxes assess on or after; tyba=taxable years beginning after; tyea=taxable years ending after; ulb=unpaid liability before; vpa=vaccines purchased after;
  1ya=1 year after; 6ma=6 months after; 9ma=9 months after; 60da=60 days after; and 180da=180 days after.
 
 Note.--Details may not add to totals due to rounding.
 
 Source: Joint Committee on Taxation.

                           amendment no. 2340

  Mr. ROTH. Mr. President, I would now like to turn to the amendment 
offered by the Senator from Nebraska, Mr. Kerrey.
  Senator Kerrey is offering an alternative pay-for package. I must 
oppose Senator Kerrey's package.
  The Kerrey amendment contains revenue raisers similar to the Roth 
amendment. There are a few additional items that I had considered in 
crafting my pay-for amendment.
  There, is, however, one very controversial revenue raiser in the 
Kerrey amendment. I think it is important that my colleagues focus 
their attention on it.
  Rather than modifying the rollover rules for Roth IRAs, which would 
allow more taxpayers to enjoy the benefits of the Roth IRA, the Kerrey 
amendment would reinstate the expired Superfund taxes.
  It is an undisputable fact that the present Superfund program needs 
immediate, substantial reform. I am a longstanding supporter of the 
Superfund program. It is critical that Superfund sites be cleaned up. 
It is a shame that the program has floundered over the past several 
years. Every Senator should feel the responsibility to get the 
Superfund program back up and running at full speed.
  The Superfund trust fund received its revenues from excise taxes on 
domestic crude oil and imported petroleum products, certain chemicals 
and imported derivative products, and a corporate environmental tax.
  These taxes expired a couple of years ago. If the taxes are extended, 
they will provide the necessary resources for Superfund cleanup 
activities.
  It is important to maintain the ``connection'' between the Superfund 
taxes and the Superfund program. It is the view of our Senior 
Republican colleagues on the Environment and Public Works Committee 
that this connection is important for both the politics and policy of 
Superfund.
  Our distinguished colleagues from the Committee on Environmental and 
Public Works, in particular, Senator Smith and Senator Chafee, have 
worked long and hard on Superfund reform legislation.
  They produced a bill, passed it out of committee, and have asked me 
to extend the expired Superfund taxes to cover the authorization 
period. Senators Smith and Chafee should be commended for moving 
Superfund forward, not undercut here on the Senate floor.
  I intend to support Senators Smith and Chafee's efforts. As they have 
communicated to me, unless the Superfund taxes are enacted directly in 
connection with a Superfund reform bill, any hope for the long-needed 
changes in this environmental program would be dashed.
  In deference to Senators Smith and Chafee, the Finance Committee did 
not include an extension of the Superfund taxes in either the IRS 
Reform bill that passed our committee unanimously or in the Roth 
amendment. I agree with Senators Smith and Chafee that the appropriate 
vehicle for extension of the Superfund taxes is their Superfund bill.
  As chairman, let me be clear--I pledge to work with Senators Smith 
and Chafee on Superfund with respect to the issues within Finance 
Committee jurisdiction.
  It is my hope that will move forward with a viable Superfund reform 
proposal. The recent progress made by the Environment and Public Works 
Committee is encouraging.
  If you are for Superfund reform, as I am, you need to support 
Senators Smith and Chafee. For this reason, I respectfully urge my 
colleagues to oppose the Kerrey amendment.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, first of all, the choice that the Senate 
will be making today really is, the first choice we have to make is do 
we want to put another $9 billion of spending in this bill. That is 
what the Finance Committee did. And as a consequence we are now trying 
to find a pay-for of some kind. I believe it is a perfectly good bill 
without that $9 billion worth of additional expenditure, but that is 
the threshold question. Do you want to spend an additional $9 billion? 
And if you do, the question is, how do you get the money? Where do you 
get the money to pay for it?
  What we have done in our amendment is included two provisions that

[[Page S4384]]

were included by the chairman of the Budget Committee. The Chairman of 
the Budget Committee, Senator Domenici, has advocated these two 
provisions as reasonable provisions, and we have included them as a 
pay-for. The alternative must be described here in a little more 
detail.
  It is essentially an accounting gimmick that will be used by people 
over the age of 70\1/2\ that will basically enable them to pass to 
their heirs, tax free, assets that they currently own. That is what it 
is. Members need to know who will be affected by this.
  I ask unanimous consent a letter from the Joint Committee on Taxation 
be printed in the Record.
  There being no objection, the memorandum was ordered to be printed in 
the Record, as follows:

                                  Joint Committee on Taxation,

                                      Washington, DC, May 5, 1998.
     To: Mark Patterson.
     From: Lindy L. Paull.
     Subject: Estimated revenue effects of proposal included in 
         Roth financing amendment to modify rules relating to Roth 
         IRA conversions.
       Included in the proposed Roth Financing Amendment to the 
     IRS Restructuring bill currently pending on the Senate floor 
     is a proposal to modify the definition of adjusted gross 
     income (``AGI'') for purposes of determining the income 
     limitation of conversions of IRA balances to Roth IRAs, 
     effective for taxable years beginning after December 31, 
     2004. The following describes the analysis of the staff of 
     the Joint Committee on Taxation in preparing estimated 
     revenue effects of this proposal.


                        Description of proposal

       Under present law, uniform minimum distribution rules 
     generally apply to all types of tax-favored retirement 
     vehicles, including qualified retirement plans and annuities, 
     IRAs other than Roth IRAs, and tax-sheltered annuities (sec. 
     403(b)).
       Distributions are required to begin no later than the 
     participant's required beginning date (sec. 401(a)(9)). The 
     required beginning date means April 1 of the calendar year 
     following the later of (1) the calendar year in which the 
     employee attains age 70\1/2\, or (2) the calendar year in 
     which the employee retires. In the case of an employee who is 
     a 5-percent owner (as defined in section 416), the required 
     beginning date is April 1 of the calendar year following the 
     calendar year the employee attains age 70\1/2\. In general, 
     minimum distributions are includible in gross income in the 
     year of distribution.
       Under present law, all or any part of amounts in a 
     deductible or nondeductible IRA may be converted into a Roth 
     IRA. Only taxpayers with AGI of $100,000 or less are eligible 
     to convert an IRA into a Roth IRA. In the case of a married 
     taxpayer, AGI is the combined AGI of the couple. Married 
     taxpayers filing a separate return are not eligible to make a 
     conversion.
       If a taxpayer is required to take a minimum required 
     distribution from an IRA, the amount of the required 
     distribution is includible in gross income, and cannot be 
     rolled over into a Roth IRA.
       The proposal would modify the definition of AGI to exclude 
     the required minimum distribution from the taxpayer's AGI 
     solely for purposes of determining eligibility to convert 
     from an IRA to a Roth IRA. As under present law, the required 
     minimum distribution would not be eligible for conversion and 
     would be includible in gross income.


                     revenue estimation assumptions

       The proposal targets a fairly narrow, well-defined 
     taxpaying population who have attained or will attain age 
     70\1/2\ during the budget period. For purposes of the revenue 
     estimate, it is assumed that the proposal would be utilized 
     by a subset of this population. Two classes of taxpayers who 
     become eligible for the conversion to a Roth IRA as a result 
     of the proposal have been identified.
       (1) Taxpayers who are currently over age 70\1/2\, are 
     taking a minimum required distribution, and who have AGI in 
     excess of $100,000. When the proposal becomes effective, some 
     taxpayers whose AGI would fall below $100,000 if the minimum 
     required distributions were disregarded would convert to a 
     Roth IRA. In addition, some taxpayers whose AGI would not 
     fall below $100,000 under the proposal but who have income 
     that could be shifted easily from one tax year to another 
     would convert to a Roth IRA. It is assumed for estimating 
     purposes that some of these taxpayers would utilize this 
     income shifting technique under present law to take advantage 
     of the conversion to a Roth IRA; however, taxpayers whose 
     minimum required distributions are substantial would be less 
     able to utilize this technique under present law.
       (2) Taxpayers whose AGI exceeds $100,000 and who will 
     attain age 70\1/2\ during the budget window. These taxpayers 
     are currently not eligible to convert to a Roth IRA; some of 
     these taxpayers have income which could be shifted easily 
     from one tax year to another and might be expected to do such 
     income shifting in order to make a conversion to a Roth IRA 
     under present law. Other taxpayers would not be able to shift 
     income easily and would not be able to utilize the conversion 
     to a Roth IRA under present law.
       Approximately 500,000 taxpayers would be eligible for the 
     conversion under the proposal during the budget years 2005 
     through 2007. Of those eligible, we estimate that 
     approximately 170,000 taxpayers would convert to a Roth IRA.

  Mr. KERREY. The Joint Committee on Taxation said, as we all know, it 
only affects Americans with retirement income over $100,000 a year. 
That is who is affected. So ask yourself how many people in your State 
have incomes over $100,000 a year, because that is who it is going to 
affect. The Joint Committee on Taxation is saying 170,000 of those 
individuals--that is what they are saying, 170,000 of those 
individuals--will convert to a Roth IRA. What does that mean? That 
means they are going to pay $50,000 each to convert. In order to get $8 
million, you have to have an average of $50,000 of taxes paid by each 
of these 170,000 people to convert.
  You ask yourself, why are they doing it? Love America? Love their 
country? Get teary-eyed when they watch the flag go by? No, sir. What 
they are doing is saying they would rather pay that extra $50,000 
because they know their heirs will not pay any tax on this asset when 
it is transferred. That is what happens. It is a substantial reduction 
in tax revenue in the 10- to 15-year period at the very moment that 
this Senate and this Congress is going to be facing a tremendous 
problem of growing entitlements. They are going to force us into a 
situation where we will have to be reducing the cost of entitlement 
programs. While we are reducing the cost of entitlement programs, the 
heirs of very wealthy Americans are going to be receiving income on 
which they are paying no tax. That is what this is all about. This is 
not about Americans who are under the gun. Remember, of all of the 
nearly 40 million Social Security beneficiaries, almost 70 percent of 
them have 50 percent of their income being Social Security only; that 
is $745 a month.
  This is about people over the age of 70\1/2\ with retirement incomes 
over $100,000 taking an IRA, converting it to a Roth IRA, paying, on an 
average, $47,000 per person for taxes so their heirs don't have to pay 
any taxes at the very moment that this Senate is going to be facing 
cutting back on benefits to the middle-income Americans. That is the 
choice that this proposal presents to us.
  We are saying, first of all, on this side we would prefer that we not 
add to the cost of the bill. We have. Second, if we are saying we are 
going to add to the cost of the bill, let's find something that is more 
appropriate than providing a tax break to people right now who, 
frankly, not only are they not asking for a tax break, I think it is 
very difficult to justify that they need one. Our offset includes a 
provision that was recommended by the chairman of the Budget Committee.
  In addition, our proposal, our amendment, includes some requests.
  I ask unanimous consent a letter sent to the chairman of the Finance 
Committee from Commissioner Rossotti be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                       Department of the Treasury,


                                     Internal Revenue Service,

                                   Washington, DC, March 31, 1998.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance,
     U.S. Senate, Washington, DC.
       Dear Mr. Chairman: I am writing to provide the Senate 
     Finance Committee information about provisions under 
     consideration as part of the IRS restructuring bill which, in 
     order to implement, will require changes in IRS computer 
     information systems.
       As is noted in one of the provisions of the restructuring 
     bill, it is essential that the work needed to make the IRS 
     computer systems comply with the Century Date Change be given 
     priority. If these changes are not made and tested 
     successfully, computer systems on which the IRS directly 
     depends for accepting and processing tax returns and tax 
     payments will cease to function after December 31, 1999. In 
     order to accomplish this change, a massive effort is underway 
     now and will continue through January 2000. This project, one 
     of the largest information systems challenges in the country 
     today, is estimated to cost approximately $850 million 
     through FY 1999 and requires updating and testing of about 
     75,000 computer applications programs, 1400 minicomputers, 
     over 100,000 desktop computers, over 80 mainframe computers 
     and data communications networks comprising more than 50,000 
     individual product components. In addition, the data entry 
     system that processes most of the tax returns must be 
     replaced.
       Most of the work to repair or replace these individual 
     components must be done prior to the tax season that begins 
     in January 1999,

[[Page S4385]]

     and thus is at its peak during calendar 1998. During this 
     peak period, the IRS must also make the changes necessary to 
     implement the provisions of the Taxpayer Relief Act of 1997 
     which are effective in tax year 1998. These changes are still 
     being defined in detail but are currently estimated to 
     require about 800 discrete computer systems changes.
       The most critical systems to which these changes must be 
     made are systems that were originally developed in the 
     1960's, 1970's and 1980's, and many are written in old 
     computer languages. A limited number of technical staff have 
     sufficient familiarity with these programs to make changes to 
     them. Furthermore, the IRS suffered attrition of 8% of this 
     staff during FY 97, which attrition has continued at the same 
     or higher rate until recently. In part, this attrition 
     reflected the very tight market for technical professionals 
     as well as a perceived lack of future opportunities at the 
     IRS.
       This extraordinary situation has required the IRS to commit 
     every available technical and technical management resource 
     to these critical priorities and to defer most other requests 
     for systems changes at least during calendar year 1998.
       For these reasons, it will not be feasible to make any 
     significant additional changes to the IRS systems prior to 
     the 1999 filing season, pushing the start of all additional 
     work to about the second quarter of calendar 1999. 
     Furthermore during 1999, a major amount of additional work 
     will be required to perform the testing to ensure that all 
     the repaired or replaced components work as expected prior to 
     January 1, 2000. Given the magnitude of the changes, it is 
     likely that additional work will be required to repair 
     defects and problems that will be uncovered during the 
     testing in the second half of 1999. Thus, while some capacity 
     to make systems changes is projected to exist in 1999, there 
     is considerable uncertainty about how much capacity will in 
     fact be available even during calendar 1999.
       With this context in mind, we have attempted to identify 
     the provisions in the restructuring bill that require 
     significant changes to computer systems and estimate how much 
     staff time would be needed to implement these changes. Based 
     on this very preliminary analysis, we have prepared a list of 
     recommended effective dates if these provisions are adopted. 
     In all cases, we would strive to implement the provisions 
     sooner if possible. In addition, two provisions entail both 
     significant systems and policy issues. For these items, which 
     are discussed first, we suggest an alternative approach.


                          Alternative approach

       1. Require that all IRS notices and correspondence contain 
     a name and telephone number of an IRS employee who the 
     taxpayer may call. Also, to the extent practicable and where 
     it is advantageous to the taxpayer, the IRS should assign one 
     employee to handle a matter with respect to a taxpayer until 
     that matter is resolved.
       Concern: We agree with the objectives of this proposal, but 
     are concerned because it would entail a total redesign of 
     customer service systems and would actually move the IRS away 
     from the best practices found in the private sector. We do 
     support the proposal that the IRS should assign one employee 
     to handle a matter with respect to the taxpayer where it is 
     both practicable and where it is advantageous to the 
     taxpayer.
       The proposal would affect the Masterfile, Integrated Data 
     Retrieval System (IDRS), and any system supported by IDRS 
     (including AIMS and ACS). In addition, the proposal is likely 
     to decrease the customer service we are trying to improve 
     through our expansion of access by telephone to 7 days a 
     week, 24 hours a day. The assignment of a particular employee 
     for a taxpayer contact could actually increase the level 
     of taxpayer frustration as the named employee may be on 
     another phone call, working a diffrent shift, or handling 
     some other taxpayer matter when taxpayers call. In 
     addition, consistent with private sector practices, we are 
     currently installing a national call router designed to 
     ensure that when a taxpayer calls with a question, the 
     call can be routed to the next available customer service 
     representative for the fastest response possible.
       Proposal: Require that the IRS adopt best practices for 
     customer service with regard to notices and correspondence, 
     as exemplified by the private sector. Require that the IRS 
     report to Congress on an annual basis on these private sector 
     best practices, the comparable state of IRS activities, and 
     the specific steps the IRS is taking to close any gap between 
     its level and quality of service and that of the private 
     sector. Furthermore, the IRS could be required to put 
     employee names on individual correspondence; it could require 
     all employees to provide taxpayers with their names and 
     employee ID numbers; and, finally, it could record, in the 
     computer system, the ID number of the employee who takes any 
     action on a taxpayer account.
       2. The proposal would suspend the accrual of penalties and 
     interest after one year, if the IRS has not sent the taxpayer 
     a notice of deficiency within the year following the date 
     which is the later of the original date of the return or the 
     date on which the individual taxpayer timely filed the 
     return.
       Concern: We agree with the objective of the proposal to 
     encourage the IRS to proceed expeditiously in any contact 
     with taxpayers, however, our systems are currently unable to 
     accommodate some of the data requirements with the speed 
     necessary to make this proposal workable. In addition, we are 
     concerned that the proposal could have the perverse incentive 
     of encouraging taxpayers to actually drag out their audit 
     proceedings rather than work with the IRS to bring them to a 
     speedy conclusion. Our administrative appeals process, which 
     is designed to resolve cases without the taxpayer and the 
     government incurring the cost and burden of a trial, could 
     also become a vehicle for taxpayers to delay issuance of a 
     deficiency notice.
       Proposal: Require the IRS to set as a goal the issuance of 
     a notice of deficiency within one year of a timely filed 
     return. Mandate that the IRS provide a report to the Congress 
     on an annual basis that specifies: progress the IRS has made 
     toward meeting this goal, measures the IRS has implemented to 
     meet this goal, additional measures it proposes toward the 
     same end, and any impediments or problems that hinder the 
     IRS' ability to meet the goal. In addition, the proposal 
     could reemphasize the requirement that the IRS abate interest 
     during periods when there is a lapse in contact with the 
     taxpayer because the IRS employee handling the case is unable 
     to proceed in a timely manner. The IRS could be required to 
     provide information on the number of cases in which there is 
     interest abatement each year in the report.


                            Effective dates

       We propose the following effective dates for specific 
     provisions. These dates are driven by the capacity of our 
     information technology systems, not the impact of the policy. 
     Some of these provisions would be fairly easy to implement, 
     but in total--and in conjunction with all the other demands 
     on our information technology resources--it is simply not 
     feasible to implement them until the dates proposed. If the 
     situation changes, we will strive to implement the provisions 
     sooner.
       The effective date for many of these changes is January 31, 
     2000. Given that all of these changes must be made compatible 
     with the Century Date Change, we believe we will need the 
     month of January 2000 to ensure all the Century Date Changes 
     are successful before implementing the provisions listed 
     below.
       Allow the taxpayers to designate deposits for each payroll 
     period rather than using the first-in-first-out (FIFO) method 
     that results in cascading penalties. Effective immediately 
     for taxpayers making the designation at time of deposit. 
     Effective July 31, 2000 for taxpayers making the designation 
     after deposit.
       Overhaul the innocent spouse relief requirements and 
     replace with proportionate liability, etc. Effective date: 
     July 31, 2000. The IRS has no way of administering 
     proportionate liability with our current systems. This 
     provision would require significant complex changes to our 
     systems and is likely to be cumbersome and error-prone for 
     both taxpayers and the IRS.
       Require each notice of penalty to include a computation of 
     penalty. Effective date: Notices issued more than 180 days 
     after date of enactment.
       Develop procedures for alternative to written signature for 
     electronic filing. The IRS is already preparing a pilot 
     project for filing season 1999. Subsequent roll out of 
     alternatives to written signatures for electronic filing will 
     depend on the success of the pilot.
       Develop procedures for a return-free tax system for 
     appropriate individuals. This provision should be interpreted 
     as a study of the requirements of a return-free tax system 
     and the target segment of taxpayers. Actual implementation 
     will be based on the findings and conclusions of the study.
       Increase the interest rate on overpayments for non-
     corporate taxpayers from the federal short-term interest +2% 
     to +3%. Effective date: July 31, 1999.
       Do not impose the failure to pay penalty while the taxpayer 
     is in an installment agreement. Effective date: January 31, 
     2000.
       Require the IRS to provide notice of the taxpayer's rights 
     (if the IRS requests an extension of the statute of 
     limitations). Require Treasury IG to track. Effective date: 
     January 31, 2000.
       Require IRS to provide on each deficiency notice the date 
     the IRS determines is the last day for the taxpayer to file a 
     tax court opinion. A petition filed by the specified date 
     would be deemed timely filed. Effective date: January 31, 
     2000.
       Require the Treasury IG to certify that the IRS notifies 
     taxpayers of amount collected from a former spouse. Effective 
     date: January 31, 2000.
       Require the IRS to provide notice to the taxpayer 30 days 
     (90 days in the case of life insurance) before the IRS liens, 
     levies, or seizes a taxpayer's property. Effective date: 30 
     days after date of enactment for seizures; January 31, 2000 
     for liens and levies.
       Require the IRS to immediately release a levy upon 
     agreement that the amount is ``currently not collectible.'' 
     Effective date: January 31, 2000.
       Waive the 10% addition to tax for early withdrawal from an 
     IRA or other qualified plan if the IRS levies. Effective 
     date: January 31, 2000.
       The taxpayer would have 30 days to request a hearing with 
     IRS Appeals. No collection activity (other than jeopardy 
     situations) would be allowed until after the hearing. The 
     taxpayer could raise any issue as to why collection should 
     not be continued. Effective date: January 31, 2000.
       IRS to implement approval process for liens, levies, and 
     seizures. Effective date: implement procedures manually 60 
     days after

[[Page S4386]]

     date of enactment; implement system for IG tracking and 
     reporting January 31, 2000.
       The following items were proposed in the Administration's 
     FY 1999 Budget. In conjunction with the other proposals in 
     this bill, they will also require significant systems 
     changes:
       Eliminate the interest rate differential on overlapping 
     periods of interest on income tax overpayments and 
     underpayments.
       Prohibit the IRS from collecting a tax liability by levy 
     if: (1) an offer-in-compromise is being processed; (2) within 
     30 days following rejection of an offer; and (3) during 
     appeal of a rejection of an offer.
       Suspend collection of a levy during refund suit.
       Allow equitable tolling of the statute of limitations on 
     filing a refund claim for the period of time a taxpayer is 
     unable to manage his affairs due to a physical or mental 
     disability that is expected to result in death or last more 
     than 12 months. Tolling would not apply if someone was 
     authorized to act on these taxpayers' behalf on financial 
     affairs.
       Ensure availability of installment agreements if the 
     liability is $10,000 or less.
       Finally, we would attempt to immediately implement the 
     cataloging of taxpayer complaints of employee misconduct and 
     would stop any further designation of ``illegal tax 
     protesters.'' However, there may be some systems issues with 
     regard to these proposals that could delay certain changes 
     until some time in early 1999.
       I look forward to working with you, the Finance Committee, 
     and the Congress as we strive to restructure the Internal 
     Revenue Service.
           Sincerely,
                                              Charles O. Rossotti.

  Mr. KERREY. Our amendment includes something that I urge my 
colleagues to consider. My hope is Senator Moynihan will offer this as 
a free-standing amendment later. Mr. Rossotti, quite appropriately, 
says we have about 600 days before the 31st of December 1999. No one is 
more eloquent than the Senator from Utah, Senator Bennett, talking 
about the problems that the year 2000 is going to create as a 
consequence of having to rewrite all of our computer codes. The 
computers will think it is the year 1900 and everything is going to end 
up getting shut down, a huge problem for the IRS. Mr. Rossotti is very 
much worried. Right now the IRS is a bit behind. He sent us a letter 
asking us to delay some of these provisions.
  We have not been able to get these scored yet from Joint Tax. I 
regret that. It takes a little longer out of Joint Tax than we would 
like. We will get that scored before we are through with this debate 
and we will be able to reduce some of the offsets in other areas. But I 
am urging Members have an opportunity to put themselves on the side of 
honoring the request of Mr. Rossotti, who is saying we are not going to 
be able to meet that year 2000 problem if a whole series of additional 
things are imposed upon us that we have to do.
  Understand, we pass the law but the IRS has to implement it. We 
change the law, whether it is a Tax Code or some other area of the tax 
law, and the IRS is the one that has to organize human beings to get 
the job done.
  We have an offset in here that has been endorsed by the chairman of 
the Budget Committee. We have an offset that does not have us saying to 
people with retirement incomes over $100,000 a year here is a way for 
you to shelter that income for your heirs. And we have a provision in 
here that enables Senators to say we have taken a step to make certain 
that at least the IRS is not, in the year 2000, going to cause all 
kinds of additional hardships to the American taxpayers as a 
consequence of not having their computer system and their software Y2K 
compliant.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I yield 5 minutes to the distinguished Senator from New 
Hampshire.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH of New Hampshire. Mr. President, I thank the distinguished 
chairman of the Finance Committee, Senator Roth, No. 1, for recognizing 
me, but more importantly for supporting the provision that we should 
not use these environmental income taxes, and oil and chemical excise 
taxes, for anything but Superfund. I know it was a difficult decision. 
I support the Senator fully on the IRS reform which he has done such a 
tremendous job on, and on which he has exerted such great leadership. I 
commend him for understanding, also, there is another issue here with 
Superfund.
  This, essentially, with the greatest respect to my colleague from 
Nebraska, will just totally destroy the Superfund reform that we have 
worked on for some 3\1/2\ years. In order to make the things happen 
that we need to make happen in the Superfund Program, these taxes would 
have to be reinstituted and used strictly and exclusively for the 
Superfund Program. So I vehemently oppose the Kerrey amendment.
  I am certain the majority of this body, and I think the majority of 
the American people agree that IRS and Superfund have a similarity. 
They are both badly broken. They both need to be fixed. But they don't 
have to go against each other to do that. These are two separate and 
distinct issues.

  I support the IRS reform the distinguished chairman is pursuing and I 
also support reforming the Superfund Program. It is inappropriate to 
utilize Superfund taxes to pay for the cost of IRS. Superfund taxes 
should be used to fix Superfund.
  For those who have been anxiously waiting for the reform of the 
program, help is on the way, I hope, if the Senate will be supportive. 
Working with the distinguished chairman of the Environment and Public 
Works Committee who is on the floor, Senator Chafee, and through his 
leadership we were able to pass a bill out of committee. I am hopeful 
the majority of our colleagues will allow that bill to be brought to 
the floor and fully debated. Within the next few days the committee's 
report will be complete. There are differences on the bill. But I think 
clearly no one should be of the opinion that we should use Superfund 
taxes; that is, the environmental income tax and the oil and chemical 
excise tax, for anything other than to reform that program.
  I don't want to get into a full debate now on the problems associated 
with Superfund. I will have that opportunity when we get the bill to 
the floor. But I just want to say, when Congress established this 
program in 1980, the consensus was it would take a few billion dollars 
to clean up what we thought were around 400 sites. In order to fund 
this program, revenues were collected through these taxes. We 
reauthorized the program in 1986, extending the taxing authority. What 
has happened is we spent $20 billion of taxpayers' money and we have 
only cleaned up about 160 sites; that is 160 sites were removed from 
the NPL.
  These folks who pay the environmental income taxes, who pay the oil 
and chemical excise taxes, rightfully say this program isn't working. 
We are paying all this tax money and it is going to lawyers and it is 
being wasted and we are not cleaning up sites. Our Superfund bill 
clearly expedites cleanup, gets the money away from lawyers and towards 
cleanup. To take that money away from this program and provide it for 
some other use is simply unconscionable. Although maybe well intended, 
it is a serious mistake in terms of the bipartisan consensus that we 
have to fix a broken program.
  So I am hopeful--I wish the Senator would reconsider his amendment 
and I hope this will be defeated.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. First of all, as to ``unconscionable,'' we are just 
following the lead of the chairman of the Budget Committee who 
apparently is unconscionable as well. He had the same proposal in his 
budget.
  Second, let me say this is not to fund the operation of the IRS. This 
basically funds a tax cut. That is what we are talking about. We have 
new innocent spouse provisions in this bill and a burden of proof shift 
that will result in a reduction of taxes of some American taxpayers. 
That is what this pay-for is set up to do.
  Let me say these taxes are not imposed until the year 2002. This 
gives the Environment and Public Works Committee nearly 3 additional 
years. They had 3\1/2\ years now already since this bill expired. My 
presumption is 3 years is plenty. I can find an additional offset, 
perhaps, and push it back to 2003 if you want an additional year to get 
this bill authorized.
  This takes care of a second 5-year problem. Again, I say to 
colleagues, we are having to deal with this because the Finance 
Committee decided to spend $9 billion more, and that $9 billion is 
being spent to reduce some people's taxes who are going to pay higher

[[Page S4387]]

taxes as a result of the innocent spouse provision and the burden-of-
proof issue.
  We are reducing taxes in one area and we have to find an offset. It 
seems to me, Mr. President, that Senator Domenici's recommendation is 
correct. By delaying this until 2002, we take away the argument the 
distinguished Senator from New Hampshire had about destroying the 
Superfund Program. This gives the Environment and Public Works 
Committee 3\1/2\ years to finish their job.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished 
Senator from Rhode Island.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I thank the distinguished chairman of our 
Finance Committee for yielding me some time on this matter.
  I rise to oppose the amendment offered by the Senator from Nebraska. 
This amendment offers the Senate an alternative to the Finance 
Committee's plan to pay for the tax relief provided in the IRS reform 
bill, but the reality is that the Kerrey amendment would prevent 
meaningful Superfund reform. The amendment, I believe strongly, should 
be rejected.
  I oppose this amendment, obviously, but let me tell you what I do 
support. I support reimposition of the Superfund taxes. I also support 
reasonable Superfund reform. We will need to reimpose the three 
Superfund taxes--namely, the corporate environmental income tax, the 
excise taxes on crude oil and the excise tax on chemical feedstock--to 
provide the revenue to pay for a fairer Superfund Program.
  Why do I keep talking about Superfund? Mr. President, the Committee 
on Environment and Public Works reported a Superfund bill to the floor 
6 weeks ago. Just yesterday, the committee received CBO's estimate on 
the bill. As we expected, we will need to reimpose the Superfund taxes 
in order to pay for the Superfund reforms and the Superfund 
reauthorization. In other words, if we gobble up this money now in 
connection with the IRS reforms, the money won't be there for the 
Superfund bill which we are moving along now and which has used in the 
past these very funds; in other words, these are Superfund taxes.
  The Kerrey amendment, if adopted, would prevent meaningful reform of 
the Superfund Program. I could discuss at length the numerous problems 
that plague Superfund. There is no question it has a lot of 
difficulties. I am prepared to explain the solutions we propose in our 
comprehensive Superfund bill that is on the floor now, but it is not 
necessary to do that today.
  While the Environment and Public Works Committee reported our 
Superfund bill on an 11-to-7 vote--there are 18 members of our 
committee, 10 Republicans and 8 Democrats--the bill was reported out in 
really a nearly partisan vote by 11 to 7 with only one Democratic 
Senator in support. However, there is bipartisan consensus that the 
Superfund has to be reformed.
  There wasn't, obviously, agreement with the way the Republicans on 
the committee wanted to proceed, but, nonetheless, there is agreement 
that the Superfund legislation needs to be reformed. Indeed, I see the 
ranking member of the committee now, and he devoted many hours of his 
time to this effort for reform.

  He also knows it will be necessary to offset the spending in any 
Superfund reform by reimposing these Superfund taxes. This was the case 
when Senator Baucus chaired the committee and reported a Superfund bill 
in 1994, and it still remains the case today. If we are going to have 
Superfund reform, we are going to need these moneys that now are 
apparently being seized or attempting to be seized by Senator Kerrey to 
use for this other purpose; namely, the IRS changes.
  The Kerrey amendment would preclude any meaningful reform of the 
Superfund Program. In other words, how are we going to pay for the 
thing? We wouldn't be able to if this Kerrey amendment is adopted.
  The real issue before us is whether the Senate wants to abandon 
Superfund reform. If we do, then go ahead and vote for the Kerrey 
amendment. If you don't, if you want Superfund to take place and do 
something about the brownfields redevelopment, for example, we have to 
have these moneys. There aren't other revenues around that we can use. 
The Kerrey amendment would preempt reform. The amendment would 
frustrate any Superfund reform efforts. I believe it is bad public 
policy to take these taxes and use them to pay for tax relief in the 
absence of Superfund reform.
  Mr. President, I strongly hope this amendment will be rejected and 
that we can all agree we are saving these Superfund taxes. They will 
have to be reimposed at sometime when we get a reauthorization of the 
Superfund legislation, but let's save them for that purpose, the 
purpose they have been used for in the past and the purpose I believe 
they should be used for in the future.
  I thank the Chair, and I urge my colleagues to support the Roth 
amendment and to reject the Kerrey amendment.
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER (Mr. Enzi). Who yields time?
  Mr. KERREY. I yield such time as necessary to the Senator from 
Montana.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Montana.
  Mr. BAUCUS. Mr. President, I thank my friend from Nebraska.
  I strongly support the Kerrey amendment for several reasons. First, 
the funding mechanism provided for in the manager's amendment to the 
underlying bill, while creative and it meets the technical requirements 
of the budget rules, it is also very misleading. The rollover 
provisions in the managers' amendment do raise $8 billion in the first 
5 years that the provision will be in effect, but that same provision 
loses $7 billion in the second 5 years--a clear revenue loss.
  Here we are in the underlying amendment saying, ``OK, early on, we'll 
raise the revenue,'' but we don't tell the rest of the world, 
particularly the Congress and Senators who are voting on this, that we 
are going to lose $7 billion in the next 5 years.
  Part of our efforts in the Congress, I hope, have been truth in 
budgeting not just in the first 5 years, but also beyond, in the next 5 
years. Too often, this Congress has, unfortunately, hoodwinked people--
the President has been part of it, both administrations, in the last 10 
to 15 years--by saying, ``OK, we will meet the budget requirements in 
the first 5 years, but we won't tell everybody what we are doing in the 
next 5 years,'' and often in the next 5 years, if not disastrous, it is 
inimical to the American people because it tends to increase deficits 
rather than decrease. That is a fact. To the credit of this 
administration, it has tried to be truthful not only in the first 5 
years, but also the next 5 years, and so has the Congress.
  Here we are with an underlying amendment which goes totally against 
that effort on the part of good, solid statesmanlike Senators to be 
truthful not only in the first 5 years, but the next 5 years.
  This amendment increases the deficit because it costs $7 billion more 
in the next 5 years. That is not right. We shouldn't be doing that. 
That is what this amendment does. This is a gimmick. It is purely and 
simply a gimmick, and that is why it is a bad idea.
  The Kerrey amendment, on the other hand, raises revenue in several 
ways. One is by postponing some of the effective dates of the 
provisions. Why is that important? Not only because it raises revenue, 
that is only of minor importance, but the major reason is because we 
all know, Mr. President, this country faces a massive problem in the 
next year or two with the fancy term Y2K. It is computer conversion to 
the next millennium.
  We know that most computers in our country, whether it is in the IRS, 
whether it is in the companies, have a system where they have two 
digits for the date, two digits for the month, and two digits for the 
year. What is today? Today is May 6, 1998. So it would be 05-06-98.
  That is how the computers record today's date. All computers do that. 
So we get to December 1999--12-30-99, 12-31-99, and next is 01-01-00. 
Now, we like to think that is January 1, 2000, but most computers today 
will record that as January 1, 1900, because two zeros are treated as 
1900, not 2000. Massive problems.

[[Page S4388]]

  It is going to cost the IRS, to convert these computers just to meet 
this conversion problem, $1 billion--$1 billion just to convert. That 
is to say nothing of all the other costs to comply with new changes in 
the law.
  So the Kerrey amendment is very, very logical. It is safe. Maybe a 
little on the conservative side. It says, let us delay the effective 
dates of some of these new provisions. Why? Because we do not want to 
further complicate the conversion problem.
  This IRS restructuring bill is going to further complicate the 
conversion problem--further complicate it--not lessen, but further 
complicate it. So Senator Kerrey says, well, let us not do the gimmick, 
let us delay the effective date a little bit, and let us also delay the 
effective date to take care of the Y2K problem, the conversion problem.
  The underlying amendment, the manager's amendment--I have the highest 
regard for my friend from Delaware, the chairman of the committee--does 
not delay, therefore, further causes a problem for the IRS to convert 
and is much more expensive. It also comes up with a way to get revenue, 
which is a gimmick.
  Some on the floor have said that extending the Superfund tax will 
prevent the enactment of Superfund. That is not true, just basically is 
not true. What is the advantage of using the extension of the Superfund 
tax? I will give you several.
  One, it is not a gimmick. It is straight. It is right there. People 
know what it is. It is not a gimmick. Second, it is a tax that 
everybody knows about, is comfortable with. Sure, it expired a couple 
years ago, but everybody knows who pays the tax, what the tax is; and 
it would be extended I think to the year 2000, which means that the 
revenue is there.
  Let us say Congress does enact Superfund. And I sure hope it does. I 
say, Mr. President, we have been working on Superfund for a long time. 
Let us say we enact Superfund. I hope we do. That does not mean it 
cannot be enacted because previously we extended the Superfund tax. Not 
at all. The Superfund tax we talk about here is not offset against the 
Superfund. It is not offset against--it is there. It is revenue and 
held in a pot to pay for the bill.
  We can still enact Superfund. And, frankly, the underlying tax bill 
still pays part of Superfund. The Superfund bill will still go to the 
Finance Committee. The Finance Committee is pretty creative in figuring 
out ways to find the additional revenue, which will not be very much, 
basically to pay for the orphan share, the effect of the later date. 
There is no rocket science in the choice of the standards we have 
before us.
  On the one hand it is the underlying amendment, which is a gimmick, 
which is deceiving the taxpayers, which will require this body to come 
up with $7 billion more revenue than otherwise is the case because we 
are widening the budget deficit, not decreasing it in the second 5 
years.
  Also, on that amendment--let me say it again. First is the underlying 
amendment. It further complicates the conversion problem. It is a 
gimmick. That is one choice. The other choice is to enact a revenue 
measure which is not a gimmick and which will not further complicate 
the conversion problem. That is the case.

  Mr. President, I think the choice is pretty simple. I think it is 
pretty straightforward. I think, accordingly, we should put politics 
aside. I know the majority party is going to vote for the amendment 
because that is what they are told to do. That is the drill. You vote 
for that one. But if you step back and think a little bit about what is 
really going on here, I hope both parties can find a way to come 
together, find a way not to further complicate the conversion problem 
and to pass a revenue-raising measure that is not a gimmick.
  Believe me, Mr. President, the Kerrey amendment is certainly the 
beginnings of that. Maybe with further modifications we can come 
together to finally get this thing passed.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Nebraska.
  Mr. KERREY. I thank you, Mr. President.
  First, I want to make it clear again what we are doing here. We are 
trying to come up with an offset for $9 billion worth of additional 
cost that the Senate bill has that the House bill does not. It is $9 
billion worth of additional loss of revenue, $9 billion of loss of 
revenue that occurs as a consequence of changes that we are making in 
the tax law. Somebody will pay less taxes. That is essentially what 
this amounts to.
  Mr. President, we tried to ascertain who was going to benefit from 
these changes. I think it is very important as we look at our tax law 
that we ask ourselves--since the vast majority of our taxes come from 
middle-income Americans and there is a significant concern on their 
part as to whether or not they are paying their fair share, we tried to 
get some distributional analysis on this thing to find out who is going 
to benefit from the innocent spouse provisions, the burden of proof 
shifts, and the Tax Court. Not many Americans go to Tax Court. There is 
a provision in here as well that has to do with interest being 
accumulated.
  Unfortunately, Joint Tax was not able to give us a distributional 
analysis. So we are flying a little bit blind and not able to describe 
who is going to benefit from these provisions. The underlying issue for 
us, though, is we now have to find $9 billion.
  We have a proposal. Chairman Roth has a proposal. I alert colleagues, 
by the way, what I think will likely happen. My guess is the majority 
will all vote for the Roth amendment and that will pass. And if it does 
pass, I will not insist on a rollcall vote on the alternative 
amendment. There are other alternatives that we can come up with.
  The baseline question is going to be for us, after the Roth amendment 
is accepted: How comfortable do you feel with the provisions in it? So, 
you will have rejected the alternative amendment, fine. Let us reject 
the alternative amendment. But remember this: This law now is going to 
contain a provision in there that is going to do something for certain 
taxpayers. Approximately 170,000 taxpayers will be affected by this 
provision in the law.
  How will they be affected? That is the question we have to ask 
ourselves. The answer is, they are going to be entitled to pay more 
taxes early on, approximately--the estimate is $47,000 per taxpayer. 
They will pay about $8 billion total. And then they will not pay any 
taxes in the outyears. When they convert, they will not pay any taxes. 
We are trying to ascertain what the outyear costs are going to be for 
this program, Mr. President.
  I ask unanimous consent that a response from Joint Tax to this 
question be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                      Washington, DC, May 5, 1998.
     To: Mark Patterson.
     From: Lindy L. Paull.
     Subject: Revenue Request.
       This is in response to your telephone request of May 5, 
     1998, for a revenue estimate of a proposal which would expand 
     the eligibility for conversions to Roth individual retirement 
     arrangements (``IRAs'')
       Under present law, uniform minimum distribution rules 
     generally apply to all types of tax-favored retirement 
     vehicles, including qualified retirement plans and annuities, 
     IRAs other than Roth IRAs, and tax-sheltered annuities (sec 
     403(b)).
       Distributions are required to begin no later than the 
     participant's required beginning date (sec. 401(a)(9)). The 
     required beginning date means April 1 of the calendar year 
     following the later of (1) the calendar year in which the 
     employee attains age 70\1/2\, or (2) the calendar year in 
     which the employee retires. In the case of an employee who is 
     a 5-percent owner (as defined in section 416), the required 
     beginning date is April 1 of the calendar year following the 
     calendar year the employee attains age 70\1/2\. the Internal 
     Revenue Service has issued extensive regulations for purposes 
     of calculating minimum distributions. In general, minimum 
     distributions are includible in gross income in the year of 
     distribution.
       Under present law, all or any part of amounts in a 
     deductible or nondeductible IRA may be coverted into a Roth 
     IRA. Only taxpayers with adjusted gross income (``AGI'') of 
     $100,000 or less are eligible to convert an IRA into a Roth 
     IRA. In the case of a married taxpayer, AGI is the combined 
     AGI of the couple. Married taxpayers filing a separate return 
     are not eligible to make a conversion.
       If a taxpayer is required to take a minimum required 
     distribution from an IRA for a year, the amount of the 
     required distribution

[[Page S4389]]

     is includible in gross income, and cannot be rolled over into 
     a Roth IRA.
       The proposal would modify the definition of AGI to exclude 
     the required minimum distribution from the taxpayer's AGI for 
     the year of the conversion for purposes of determining 
     eligibility to convert from an IRA to a Roth IRA. The 
     required minimum distribution would not be eligible for 
     conversion.
       The proposal would be effective for years beginning after 
     December 31, 1997. We estimate that the proposal would change 
     Federal fiscal year budget receipts as follows:
Fiscal Years:                                                  Billions
    1998............................................................(*)
    1999...........................................................$2.6
    2000............................................................3.1
    2001............................................................3.1
    2002...........................................................-0.9
    2003...........................................................-1.0
    2004...........................................................-1.2
    2005...........................................................-1.4
    2006...........................................................-1.5
    2007...........................................................-1.7
    1998-2002.......................................................7.8
    1998-2007.......................................................1.1

(*) Gain of less than $50 million.

Note: Details do not add to totals due to rounding.
                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                      Washington, DC, May 5, 1998.
     To: Nick Giordano and Maury Passman.
     From: Lindy L. Paull.
     Subject: Request for Distributional Effects.
       This is in response to your request dated April 23, 1998, 
     for the distributional effects of provisions contained in 
     H.R. 2676, the ``Internal Revenue Service Restructuring and 
     Reform Act of 1998'' relating to: (1) the burden of proof; 
     (2) innocent spouse relief; and (3) the suspension of accrual 
     of interest and penalties if the Internal Revenue Service 
     (``IRS'') fails to contact the taxpayer within 12 months 
     after a timely filed return.
       We can not provide analyses of the distributional effects 
     of these types of proposals. In general, the information used 
     to prepare estimates for these types of proposals does not 
     come from statistical samples of taxpayer return information, 
     but from various operational data bases within the IRS 
     collectively referred to as administrative data. 
     Administrative data does not contain the type of taxpayer 
     income information necessary to prepare a distributional 
     analysis. Moreover, often the data are in an aggregate form 
     so that individual taxpayers can not be identified. As a 
     result, there would be an enormous amount of uncertainty 
     involved in characterizing the income distribution of 
     taxpayers contained in this type of data. Should you wish to 
     discuss this request any further, please feel free to contact 
     me.

  Mr. KERREY. Mr. President, what happens is that in the first 5 years 
that this provision is in effect, Joint Tax is estimating there will be 
$2.6 billion of additional revenue coming in year 1; $3.1 billion in 
year 2; $3.1 billion in year 3. Americans with incomes over $100,000, 
who are 70.5 years of age or older, $100,000 of retirement income or 
more, they will be converting existing accounts into Roth IRA accounts, 
and paying, on average, $47,000 for the privilege of doing that. In the 
year 2002, we will lose $1 billion; in 2003, we will lose $1 billion; 
in 2004, it goes to $1.2 billion we lose; in 2005, we lose $1.4 
billion; in 2006, we lose $1.5 billion; and in 2007, we lose $1.7 
billion. The trend line is up.
  I remind my colleagues, in the year 2010, we will see the beginnings 
of the retirement of 77 million Americans called baby boomers. If you 
look at the cost, the outyear cost of our mandatory programs, you can 
see clearly what is going to happen.
  In order to fund a tax cut for Americans who have $100,000 a year of 
retirement income and up, because their heirs or whoever is converting 
and not going to pay any taxes on this income, in order to fund a 
growing tax cut for these individuals, we are going to be cutting 
programs for middle-income Americans. It is an inescapable thing that 
we will be facing.
  So, again, I want my colleagues to understand, issue No. 1 is, do you 
want to spend another $9 billion to reduce the taxes of Americans who 
have been affected by innocent spouses who go to Tax Court or who have 
other problems that are identified in this bill? If the answer is yes, 
then you have to find an offset. And what we have is the chairman's 
proposal to reduce the taxes of upper-income Americans, or more likely 
their heirs, at some point out in the future, and that point is the 
very point when our mandatory programs are going to be squeezing all of 
our discretionary programs even worse than they are today.
  My expectation is the majority will come down and vote for the 
amendment that the Senator from Delaware has offered, the chairman of 
the Finance Committee. As I said, I will not insist on a rollcall vote 
on ours.
  Colleagues, I hope both Republican and Democrats will look at this 
pay-for. It will not be too late for us to change it. We can still 
change it on this floor. We can change it in conference. I don't think 
when you examine the details of this pay-for that you will be very 
comfortable going home to Nebraska or other States, first of all, 
finding somebody who has over $100,000 worth of retirement income and 
saying, ``Congratulations, your heirs won't pay any taxes on whatever 
asset you convert to a Roth IRA.''
  Mr. DORGAN. Will the Senator yield?
  Mr. KERREY. I am happy to yield to the Senator.
  Mr. DORGAN. I venture to say most Members of the Senate are not very 
familiar with this issue because the bill was brought to the floor and 
a mechanism to pay-for--it is brought to the floor this morning; I 
guess it was disclosed yesterday.
  As I looked at it, it seems to me it is exactly as the Senator from 
Nebraska described. But even more than that, it is a device by which 
you bring some money here and say this is really paid for but. In fact, 
the cost in the outyears is very substantial.
  It is just a timing issue, kind of a clever timing issue, but in my 
judgment not a very thoughtful way to do this bill.
  Mr. KERREY. The Senator from North Dakota is exactly right.
  I hope colleagues will look at this letter from the Joint Tax 
Committee. This is the tip of the iceberg. The tax only scores 10 years 
out. They are saying, yes, Americans with over $100,000 in retirement 
income converting to a Roth IRA pay $47,000 in taxes each, and that 
will add to $2.6 billion by year 1, 2, 3, but after that it starts to 
cost more and more money as the individuals convert and don't pay any 
tax on their income. That is basically what will happen--and it grows.
  I say to the Senator from North Dakota, not only are you exactly 
right, but in the fourth year it costs $900 million and in the 10th 
year it is $1.7 billion. It is going up. This is less taxes that upper-
income Americans will pay on these retirement accounts. As I said, it 
is apt to be the heirs.
  Who will pick up the slack? We know who will pick up the slack. If 
this amendment is accepted, which I suspect it will, I hope colleagues 
will look at the details of it. If you want to spend another $9 million 
in the second 5 years to pay for all the things that we added in the 
Senate Finance Committee, most of which are good and reasonable, if you 
want to add those provisions, the question is how will you pay for it. 
My hope is that we will find an alternative to this.
  Mr. DORGAN. If the Senator will yield, I think I understood the 
Senator to say you were not able to get any burden tables or 
distribution tables to determine who gets the benefit of this proposal. 
That is troublesome because when ideas are brought to the floor as late 
as this, you are unable to get information about who this is going to 
benefit and how.
  Mr. KERREY. The Senator is right.
  Title 3 of the bill is called the taxpayer rights provision. I worked 
very hard on those provisions. We extended lots of new taxpayer rights. 
In the bill that Senator Grassley and I introduced in the Finance 
Committee--and I voted for it--we added some additional rights.
  The problem is we don't know who will benefit from those tax 
reductions. We know three principal provisions cost us money. One is 
the shifting of burden of proof in Tax Court. For citizens, they need 
to ask themselves, do they go to Tax Court? If they don't go to Tax 
Court and don't have the experience on a regular basis in Tax Court, 
they will not bill.
  The second provision is called innocent spouse relief. They have to 
ask, will that affect me? Seventy percent of Nebraskans do not itemize 
their deductions. They will not be impacted by the second one.
  The third one, the suspension of the accrual of interest and 
penalties if the IRS fails to contact the taxpayer within 12 months 
after a timely filed return. Again, ask yourself who will be affected 
by this? We were unable, I regret, to get from the Joint Tax Committee 
an answer to that. We don't know who will benefit from those three 
additional provisions, but that is what is costing us the money. That 
is why we have to find some kind of an offset.

[[Page S4390]]

  As I said, I understand the die is likely to be cast and we will 
probably have 55 votes for the Roth amendment and 45 votes against. I 
will not ask for a rollcall vote on our alternative, but I appeal both 
to Republicans and Democrats on the floor to examine what it is we are 
about to do and ask ourselves, do we want to open up a hole in revenue 
in the outyears as a consequence of these conversions that will benefit 
a relatively small number of Americans who have retirement income in 
excess of $100,000 a year.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Delaware.


                           Amendment No. 2339

  Mr. ROTH. Mr. President, as I mentioned earlier, Alan Greenspan says 
that America's most important economic problem is its low savings rate. 
With that, I agree. As a practical matter, I have done my very best the 
last several years to try to build the kind of incentives into the tax 
picture that would promote savings on the part of the American people. 
The rollover provision in this amendment is a small step toward 
resolving our No. 1 economic problem.
  Just let me point out what we are saying. What we are proposing is 
letting older people keep the money that they have saved. We are not 
asking them to do anything that others are not able to do. As a 
practical matter, the way the system now works, it discriminates 
against the older people. The problem is that if you are under the age 
of 70\1/2\, there is no requirement that you make withdrawals from your 
IRA. It is only when you reach 70\1/2\ that you are required to do so 
under the deductible IRA. So there is a built-in discrimination against 
the senior citizens. I think that is wrong.
  Again, let me emphasize what we are talking about. What we are 
proposing is to treat these older Americans, those that are over 70\1/
2\, to have the same kind of treatment as those that are younger than 
70\1/2\. As I said, if you are under 70\1/2\ there is no requirement of 
withdrawals, and of course the basic problem is that if you have income 
in excess of $100,000 you are not entitled to this benefit.
  Let me correct one further point that has been made. My distinguished 
friend and colleague, Senator Kerrey, has said that the purpose of the 
IRA rollover provision is to allow heirs to escape payment of estate 
taxes. That is just not the case. If the IRA is part of the estate, 
then the individual who passes on is subject to the estate tax. If he 
or she tries to give it during the lifetime to someone else, and it is 
a permanent irrevocable gift, then it is subject to the gift tax. So 
there is no escaping of estate taxes by this provision.
  Let me just say, as we all know, the Roth IRA has become a very 
popular savings vehicle. A taxpayer, as I said, who has a regular IRA 
may convert their regular IRA into a Roth IRA as long as the taxpayer 
and the taxpayer's spouse have adjusted income of $100,000 or less. 
Again, let me repeat, older Americans are now required to receive 
minimum distribution from their regular IRA on an annual basis 
beginning in the year following the year they attain the age of 70\1/
2\. Those required distributions must be counted, under current law, as 
part of the older taxpayer-adjusted gross income, which in some 
instances will cause these older Americans to become ineligible to roll 
over their IRAs.
  My amendment gives these older taxpayers the opportunity to roll over 
their IRAs into Roth IRAs by not counting these required minimum 
distributions toward $100,000 adjusted growth income.
  It is only fair, in my judgment, that these older taxpayers are given 
the same ability to roll over their IRAs and not be penalized because 
they must take distribution from their regular IRA solely because of 
their age.
  Let's be clear here, the revenue cost by this provision comes from 
taxpayers who will pay tax on their regular IRA when they convert to 
the Roth IRA. These conversions are entirely voluntary on the part of 
the taxpayers.
  Mr. President, I ask the Members of this distinguished body to 
support the Roth amendment because I think it brings equity into the 
picture and only treats the senior citizens the same as the younger.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. KERREY. Mr. President, as I said, the die is cast on this thing. 
This amendment is going to be accepted. The question is, Will we have 
any reexamination moment? We will reexamine what we are about to do?
  Again, this affects people with incomes over $100,000 in retirement 
income. To get $100,000 in retirement income, I am probably going to 
have to have a million or more dollars in liquid assets that are 
earning this income. I would probably have tax-exempt bonds that I own 
as well. This is a very select group of people. We are not penalizing 
them; we are treating them like everybody else. I am capable of feeling 
sympathy for low- and moderate-income seniors who are struggling to pay 
for health care bills, and about making certain that Americans have the 
opportunity to save. But we are not helping Americans who are 
struggling to save with this. These are Americans who have accumulated 
a substantial amount of wealth.
  If we want to help struggling Americans, we ought to cut the payroll 
tax, as Senator Moynihan is proposing, giving Americans an $800 billion 
cut in taxes; that would go immediately into savings. That is exciting 
to me. And 98.5 percent of Americans die with estates under $600,000. 
We are talking about 1.5 percent of the American people who have 
estates over $600,000. You have to have an estate over a million 
dollars in order to generate $100,000 worth of income.
  Please don't tell me that tax lawyers and tax advisers can't figure 
out a way to transfer this to your heirs. If that assertion is made by 
a colleague, let's bring a tax adviser in before one of our committees 
and ask them. It darn sure can, and they darn sure will.
  This provides a benefit for a very small amount of Americans, and, 
frankly, it is very difficult to make the case that they need a 
benefit. They are not treating them in a fashion that is equal; they 
are treating them unequally with other Americans who are in the 
workforce and might be looking to retirement accounts as well.
  Mr. President, this pay-for ought to be rejected by this body; it is 
going to be accepted nonetheless. I hope we have some ``morning after'' 
doubts about this, after examining whom it is going to benefit and the 
dilemma it will pose to us down the road. I don't know how many in this 
body expect to be here 6, 7, 8 years from now, but if you are here, one 
of the questions you are going to have to answer is: Why did you give 
away $2 billion a year back in 1998 to less than 1 percent of the 
American public, who are not struggling, who are not foraging in the 
alley for food, and they are not trying to figure out how to make ends 
meet? They will use this change in the law to transfer an asset to 
heirs, and their heirs won't pay any taxes as a consequence.
  Mr. President, as I say, I know when it is time, if not to accept 
defeat, to acknowledge it. I expect 55 Republican votes for this 
amendment. I do not intend to ask for a rollcall vote on the 
substitute, but I hope my colleagues, as they begin to examine what 
this amendment does, will ask that we come back and revisit the pay-for 
for the second 5 years.
  I yield back whatever time I have.


                    Amendment No. 2340, As modified

  Mr. KERREY. Mr. President, as I indicated earlier, I have to ask for 
one modification. It is a date on page 2, line 2. In the earlier 
unanimous consent request, I indicated that I might need to modify our 
amendment.
  I send the modified amendment to the desk, as described.
  The PRESIDING OFFICER. The amendment is so modified.
  The amendment (No. 2340), as modified, is as follows:

       Beginning on page 277, line 4, strike all through page 279, 
     line 25.
       On page 280, line 1, strike ``3105'' and insert ``3104''.
       On page 282, line 11, strike ``3106'' and insert ``3105''.
       On page 286, line 1, strike ``3107'' and insert ``3106''.
       On page 309, lines 7 and 8, strike ``the date of the 
     enactment of this Act'' and insert ``September 1, 1998''.
       On page 399, line 24, strike ``the date of the enactment of 
     this Act'' and insert ``December 31, 2001''.
       On page 400, lines 4 and 5, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 2001''.

[[Page S4391]]

       On page 415, between lines 16 and 17, insert:

     SEC. 5007. CLARIFICATION OF DEFINITION OF SPECIFIED LIABILITY 
                   LOSS.

       (a) In General.--Subparagraph (B) of section 172(f)(1) 
     (defining specified liability loss) is amended to read as 
     follows:
       ``(B) Any amount (not described in subparagraph (A)) 
     allowable as a deduction under this chapter which is 
     attributable to a liability--
       ``(i) under a Federal or State law requiring the 
     reclamation of land, decommissioning of a nuclear power plant 
     (or any unit thereof), dismantlement of an offshore drilling 
     platform, remediation of environmental contamination, or 
     payment of workmen's compensation, and
       ``(ii) with respect to which the act (or failure to act) 
     giving rise to such liability occurs at least 3 years before 
     the beginning of the taxable year.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to net operating losses arising in taxable years 
     beginning after the date of the enactment of this Act.

     SEC. 5008. PROPERTY SUBJECT TO A LIABILITY TREATED IN SAME 
                   MANNER AS ASSUMPTION OF LIABILITY.

       (a) Repeal of Property Subject to a Liability Test.--
       (1) Section 357.--Section 357(a) (relating to assumption of 
     liability) is amended by striking ``, or acquires from the 
     taxpayer property subject to a liability'' in paragraph (2).
       (2) Section 358.--Section 358(d)(1) (relating to assumption 
     of liability) is amended by striking ``or acquired from the 
     taxpayer property subject to a liability''.
       (3) Section 368.--
       (A) Section 368(a)(1)(C) is amended by striking ``, or the 
     fact that property acquired is subject to a liability,''.
       (B) The last sentence of section 368(a)(2)(B) is amended by 
     striking ``, and the amount of any liability to which any 
     property acquired from the acquiring corporation is 
     subject,''.
       (b) Clarification of Assumption of Liability.--Section 
     357(c) is amended by adding at the end the following new 
     paragraph:
       ``(4) Determination of amount of liability assumed.--For 
     purposes of this section, section 358(d), section 
     368(a)(1)(C), and section 368(a)(2)(B)--
       ``(A) a liability shall be treated as having been assumed 
     to the extent, as determined on the basis of facts and 
     circumstances, the transferor is relieved of such liability 
     or any portion thereof (including through an indemnity 
     agreement or other similar arrangement), and
       ``(B) in the case of the transfer of any property subject 
     to a nonrecourse liability, unless the facts and 
     circumstances indicate otherwise, the transferee shall be 
     treated as assuming with respect to such property a ratable 
     portion of such liability determined on the basis of the 
     relative fair market values (determined without regard to 
     section 7701(g)) of all assets subject to such liability.''
       (c) Application to Provisions Other Than Subchapter C.--
       (1) Section 584.--Section 584(h)(3) is amended--
       (A) by striking ``, and the fact that any property 
     transferred by the common trust fund is subject to a 
     liability,'' in subparagraph (A),
       (B) by striking clause (ii) of subparagraph (B) and 
     inserting:
       ``(ii) Assumed liabilities.--For purposes of clause (i), 
     the term `assumed liabilities' means any liability of the 
     common trust fund assumed by any regulated investment company 
     in connection with the transfer referred to in paragraph 
     (1)(A).
       ``(C) Assumption.--For purposes of this paragraph, in 
     determining the amount of any liability assumed, the rules of 
     section 357(c)(4) shall apply.''
       (2) Section 1031.--The last sentence of section 1031(d) is 
     amended--
       (A) by striking ``assumed a liability of the taxpayer or 
     acquired from the taxpayer property subject to a liability'' 
     and inserting ``assumed (as determined under section 
     357(c)(4)) a liability of the taxpayer'', and
       (B) by striking ``or acquisition (in the amount of the 
     liability)''.
       (d) Conforming Amendments.--
       (1) Section 351(h)(1) is amended by striking ``, or 
     acquires property subject to a liability,''.
       (2) Section 357 is amended by striking ``or acquisition'' 
     each place it appears in subsection (a) or (b).
       (3) Section 357(b)(1) is amended by striking ``or 
     acquired''.
       (4) Section 357(c)(1) is amended by striking ``, plus the 
     amount of the liabilities to which the property is 
     subject,''.
       (5) Section 357(c)(3) is amended by striking ``or to which 
     the property transferred is subject''.
       (6) Section 358(d)(1) is amended by striking ``or 
     acquisition (in the amount of the liability)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. 5009. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       Subsection (c) of section 10511 of the Revenue Act of 1987 
     is amended by striking ``October 1, 2003'' and inserting 
     ``October 1, 2007''.

     SEC. 5010. EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND TAXES.

       (a) Extension of Taxes.--
       (1) Environmental tax.--Section 59A(e) is amended to read 
     as follows:
       ``(e) Application of Tax.--The tax imposed by this section 
     shall apply to taxable years beginning after December 31, 
     1986, and before January 1, 1996, and to taxable years 
     beginning after December 31, 2001, and before January 1, 
     2008.''
       (2) Excise taxes.--Section 4611(e) is amended to read as 
     follows:
       ``(e) Application of Hazardous Substance Superfund 
     Financing Rate.--The Hazardous Substance Superfund financing 
     rate under this section shall apply after December 31, 1986, 
     and before January 1, 1996, and after December 31, 2001, and 
     before October 1, 2008.''
       (b) Effective Dates.--
       (1) Income tax.--The amendment made by subsection (a)(1) 
     shall apply to taxable years beginning after December 31, 
     2001.
       (2) Excise tax.--The amendment made by subsection (a)(2) 
     shall take effect on January 1, 2002.

     SEC. 5011. MODIFICATION OF DEPRECIATION METHOD FOR TAX-EXEMPT 
                   USE PROPERTY.

       (a) In General.--Subparagraph (A) of section 168(g)(3) 
     (relating to tax-exempt use property subject to lease) is 
     amended to read as follows:
       ``(A) Tax-exempt use property.--In the case of any tax-
     exempt use property, the recovery period used for purposes of 
     paragraph (2) shall be equal to 150 percent of the class life 
     of the property determined without regard to this 
     subparagraph.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to property--
       (1) placed in service after December 31, 1998, and
       (2) placed in service on or before such date which--
       (A) becomes tax-exempt use property after such date, or
       (B) becomes subject to a lease after such date which was 
     not in effect on such date.

     In the case of property to which paragraph (2) applies, the 
     amendment shall only apply with respect to periods on and 
     after the date the property becomes tax-exempt use property 
     or subject to such a lease.

     SEC. 5012. EXTENSION OF REPORTING FOR CERTAIN VETERANS 
                   PAYMENTS.

       The last sentence of section 6103(l)(7) (relating to 
     disclosure of return information to Federal, State, and local 
     agencies administering certain programs) is amended by 
     striking ``September 30, 2003'' and inserting ``September 30, 
     2008''.
       On page 260, line 14, strike ``shall develop'' and insert 
     ``shall, not later than January 1, 2000, develop''.
       On page 305, lines 3 and 4, strike ``the date of the 
     enactment of this Act'' and insert ``June 30, 2000''.
       On page 305, lines 10 and 11, strike ``the date of the 
     enactment of this Act'' and insert ``June 30, 2000''.
       On page 308, line 13, strike ``the date of the enactment of 
     this Act'' and insert ``June 30, 1999''.
       On page 309, lines 7 and 8, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 310, strike line 19, and insert ``December 31, 
     1999''.
       On page 312, lines 15 and 16, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 314, lines 3 and 4, strike ``the 180th day after 
     the date of the enactment of this Act'' and insert ``December 
     31, 2000''.
       On page 315, line 11, strike ``June 30, 2000'' and insert 
     ``December 31, 2000''.
       On page 324, strike lines 9 through 12, and insert:
       (e) Effective Date.--The amendments made by this section 
     shall apply to collection actions initiated after December 
     31, 1999.
       On page 343, after line 24, insert:
       (c) Effective Date.--This section shall apply to collection 
     actions initiated after December 31, 1999.
       On page 345, lines 6 and 7, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 348, line 6, strike ``December 31, 1998'' and 
     insert ``December 31, 1999''.
       On page 351, lines 13 and 14, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 357, lines 6 and 7, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 357, lines 9 and 10, strike ``the date of the 
     enactment of this Act'' and insert ``December 31, 1999''.
       On page 357, strike lines 16 and 17, and insert:
       (B) December 31, 1999.
       On page 362, lines 12 and 13, strike ``the 60th day after 
     the date of the enactment of this Act'' and insert ``December 
     31, 1999''.
       On page 370, lines 17 and 18, strike ``the date of the 
     enactment of this Act'' and insert ``January 1, 1999''.
       On page 371, line 11, insert: ``This subsection shall apply 
     only with respect to taxes arising after June 30, 2000, and 
     any liability for tax arising on or before such date but 
     remaining unpaid as of such date.'' after the end period.
       On page 374, lines 4 and 5, strike ``180 days after the 
     date of the enactment of this Act'' and insert ``July 1, 
     2000''.
       On page 379, line 15, insert ``, on and after July 1, 
     1999,'' after ``shall''.
       On page 382, line 2, strike ``60 days after the date of the 
     enactment of this Act'' and insert ``on January 1, 2000''.

[[Page S4392]]

       On page 383, line 14, insert ``, except that the removal of 
     any designation under subsection (a)(2)(A) shall not be 
     required to begin before January 1, 1999'' after ``Act''.
       On page 385, lines 7 and 8, strike ``the date of the 
     enactment of this Act'' and insert ``January 1, 2000''.


                           amendment No. 2339

  The PRESIDING OFFICER. The Senator from Delaware has 4 minutes 
remaining.
  Mr. ROTH. Is the Senator ready to yield the balance of his time?
  Mr. KERREY. Yes, sir.
  Mr. ROTH. Mr. President, I yield the balance of my time.
  The PRESIDING OFFICER. All time is yielded back.
  Mr. KERREY. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. Under the previous order, the question is on 
agreeing to the Roth amendment No. 2339.
  The yeas and nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  Mr. FORD. I announce that the Senator from Hawaii (Mr. Akaka) is 
absent due to a death in the family.
  The PRESIDING OFFICER (Mr. Frist). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 56, nays 42, as follows:

                      [Rollcall Vote No. 120 Leg.]

                                YEAS--56

     Abraham
     Allard
     Ashcroft
     Bennett
     Biden
     Bond
     Brownback
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--42

     Baucus
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Torricelli
     Wellstone
     Wyden

                             NOT VOTING--2

     Akaka
     Helms
       
  The amendment (No. 2339) was agreed to.
  Mr. ROTH. Mr. President, I move to reconsider the vote.
  Mr. KERREY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                       Vote on Amendment No. 2340

  The PRESIDING OFFICER. Under the previous order, the question occurs 
on amendment No. 2340.
  The amendment (No. 2340) was rejected.
  Mr. ROTH. Mr. President, I move to reconsider the vote.
  Mr. KERREY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BYRD addressed the Chair.
  The PRESIDING OFFICER. May we please have order. The Senator from 
West Virginia is recognized.
  Mr. BYRD. Mr. President, this request has been cleared with the 
leaders on both sides.
  I ask unanimous consent that the distinguished Senator from Texas, 
Mrs. Hutchison, and I may proceed for not to exceed 35 minutes as in 
morning business for the purpose of introducing a bill and speaking 
thereon.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from West Virginia is recognized.
  (The remarks of Mr. Byrd and Mrs. Hutchison pertaining to the 
introduction of S. 2036 are located in today's Record under 
``Statements on Introduced Bills and Joint Resolutions.'')
  Mr. BYRD. Mr. President, I understand that Senator Kohl wishes a few 
minutes on another matter.
  Whatever remaining time remains under our request, I ask that the 
Senator from Wisconsin, Mr. Kohl, have the remaining time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Wisconsin is recognized.
  Mr. KOHL. Thank you, Senator Byrd.
  Mr. President, I rise today in strong support of the IRS Reform bill. 
There is no doubt that this bill will count among the most important 
pieces of legislation that we will pass in the 105th Congress. A great 
deal of thanks and appreciation is due to Senators Roth and Moynihan 
for their work sheperding this bill through the Finance Committee, and 
most especially to my friend from Nebraska, Senator Bob Kerrey, whose 
efforts on the Restructuring Commission and tireless advocacy brought 
us here today.
  We have all been struck by the stories of abuse of taxpayers by 
overzealous or self-serving IRS employees. And all of us have received 
calls of concern and outrage from constituents who feel they have been 
treated unfairly by an agency that wields a tremendous amount of power 
in the daily lives of Americans.
  We have also learned of retaliation against honest IRS employees who 
worked hard and wanted to do the right thing by speaking out against 
abuses. This legislation will go a long way towards addressing these 
problems.
  It will also go a long way toward making the agency more effective in 
its policy mission and more responsive to budget constraints. We have 
all witnessed the $4 billion debacle of the IRS computer modernization 
effort and want to ensure resources are allocated responsibly in the 
future.
  As ranking member of the Treasury Appropriations Subcommittee, I have 
had the opportunity to meet the Commissioner of the IRS, Mr. Rossotti, 
and am encouraged by his strong background in management and 
information technology. The legislation before us will provide the 
Commissioner with tools to put together a high-quality team to run the 
agency, and award those who do their jobs well.
  This bill also includes new sources of outside oversight of the 
agency, such as the Oversight Board and the new Treasury IG's Office 
for Tax Administration. Coming from the business world, I know the 
importance of accountability and constant self-examination. Management 
and employees should always be looking for ways to do their jobs more 
effectively and be open to constructive criticism.
  But for too long, the IRS has operated as if it were a class by 
itself, somehow above the standards of efficiency and customer service 
that any American business must follow to survive.
  We have witnessed the effects of this problem in my home state of 
Wisconsin. For the past two and a half years, we have worked to address 
allegations of misconduct and discrimination at the Milwaukee-Waukesha 
IRS Offices. These allegations were discussed at length at the 
Committee hearings last week, and were so serious that some IRS 
employees felt the need to sneak into my office in Milwaukee to report 
on abuses.
  Employees feared retaliation and alleged again and again that 
management was allowing, if not promoting, a hostile work environment. 
Such a deplorable situation of fear and intimidation is unacceptable, 
must be stopped, and must be prevented from happening in the future.
  This bill sets up a confidential means through which honest employees 
can report allegations of abuses. In addition, I am offering an 
amendment with my colleague, Senator Feingold, to ensure that oversight 
of the Milwaukee office is a top priority of the new IG. This 
legislation will prevent abuses in the future, but we must also be 
vigilant in dealing with serious problems that have yet to be resolved 
in the present.
  Mr. President, while taking time to mention only a few of the many 
important provisions of this bill, I want to urge my colleagues to 
support this legislation.
  We have a historic opportunity to right future wrongs and be party to 
the creation of a more consumer-friendly, efficient and responsible 
IRS. Let us seize that opportunity with enthusiasm and without further 
delay.

[[Page S4393]]

  Mr. BYRD. Mr. President, I yield back the balance of the time.
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. BOND. Mr. President, I will rise to introduce an amendment, but I 
will defer to my colleague from Delaware if he wishes to ask for a time 
agreement.
  Mr. ROTH. Mr. President, I say to the distinguished Senator that I do 
want to ask for an agreement on the 40 minutes, but I have to wait for 
Senator Kerrey to return. I will raise that when he comes.
  Mr. BOND. Mr. President, I rise in support of the Internal Revenue 
Service Restructuring and Reform Act that we are now considering. Over 
the past several months Senator Roth and his Finance Committee have 
done an exemplary job of reviewing the legislation sent to us by the 
House and identifying ways to improve and strengthen that bill. And 
it's been well worth the wait. I also commend my colleague from 
Delaware and his committee for including a number of the proposals that 
I introduced as part of my Putting the Taxpayer First Act, earlier this 
year. They represent suggestions that I received from Missourians and 
small business owners across the country, who have called, written, and 
stopped me on the street to stress the need for IRS reform and greater 
taxpayer rights.
  While I believe we have made substantial progress toward that goal, 
one aspect of this bill continues to trouble me--the creation of the 
so-called oversight board. As currently proposed, a majority of this 
board will consist of six individuals who must split their time between 
watching over the IRS and running their private-sector businesses--each 
of which can be more than a full-time job. And even if these 
individuals can dedicate sufficient time, their ability to make real 
changes for the benefit of taxpayers amounts to little more than advice 
to the Commissioner, which he may or may not decide to take.
  Despite these issues, the creation of a part-time board has been 
portrayed by many as the linchpin of solving the problems at the IRS. 
But when has such a part-time advisory board ever turned around a 
governmental agency as vast as the IRS and with such a poor record of 
service to millions of Americans? I have searched for a comparable 
success story within our government, and came up dry. And while some 
point to Canada's Revenue Office as an example, Canada's part-time 
board is still on the drawing board. Consequently, I think we are 
placing too much reliance on the untested and unproven concept of a 
part-time board to bring fundamental change to the IRS.
  If we are going to create a board to steer the IRS back on course, 
let's do more than add some window dressing to this troubled agency. 
America's taxpayers deserve a well-managed agency committed to service. 
The amendment I offer today establishes the framework to accomplish 
that goal.
  Mr. President, my amendment creates an independent, full-time Board 
of Governors for the IRS, which will exercise top-level administrative 
management over the agency. The Board of Governors will have full 
responsibility, authority, and accountability for the IRS' enforcement 
activities, such as examinations and collections, which are often at 
the heart of taxpayer complaints about the IRS. In addition, the Board 
will oversee the Office of the Taxpayer Advocate and the new 
independent appeals function required by the bill.
  Under my amendment, the Board of Governors will consist of five 
members appointed by the President and confirmed by the Senate, each 
with a staggered five-year term. Four of the members will be drawn from 
the private sector. Overall these members will bring private-sector 
experience critical to the management of an agency like the IRS. Of 
equal importance, they will bring the perspective of the diverse group 
of taxpayers the IRS must serve, including individuals and small and 
large businesses. The fifth member of the Board will be the 
Commissioner of Internal Revenue, who will also serve as the Chairman 
of the Board of Governors.
  The board I envision through this amendment corrects the major 
weaknesses of the bill's part-time advisory board. First, my full-time 
Board of Governors is a permanent solution to the management 
difficulties that have plagued the IRS for years. It seems like little 
more than a token gesture to create an oversight board for the IRS and 
have it expire after 10 years, as set out in the bill. If a board is 
expected to turn the IRS around, wouldn't it make sense to continue the 
reason for that success story?
  Second, my full-time Board of Governors will have real authority to 
make a difference. The Board's direction is to ``oversee the Internal 
Revenue Service in the administration, management, conduct, direction, 
and supervision of the execution and application of the internal 
revenue laws or related statutes and tax conventions to which the 
United States is a party.'' The only exception to this broad authority 
is that the Board will have only a consultative role in developing tax 
policy.
  In contrast, the part-time advisory board recommended by the Finance 
Committee starts with broad authority but is quickly whittled down 
essentially to an advisory role. For instance, the part-time board 
would have no responsibility or authority with respect to tax policy. 
In my view, good tax policy must take into account more than just 
revenue and collections; it must consider the burdens that the law 
imposes on the taxpayers and the corresponding burdens involved in 
administering and enforcing those laws. A full-time Board of Governors 
managing the IRS will be uniquely qualified to provide critical 
perspective and feedback to the Treasury Department in crafting future 
tax proposals.
  Similarly, the bill's part-time board would have no responsibility or 
authority over specific IRS law enforcement activities or personnel 
actions.
  These restrictions fly in the face of the testimony that the Finance 
Committee received just last week, not to mention to committee's 
hearings last fall. Each of us was shocked by the taxpayers and IRS 
employees who came forward with accounts of poor service and abuse, and 
many of these cases involved IRS examination or collection activities. 
Moreover, these horror stories merely echo the countless letters and 
calls that each of us receives from taxpayers embroiled in disputes 
with the IRS in our home states.
  Can any of us suggest, with a straight face, that creating a part-
time advisory board will ``fix'' the IRS when that board cannot know 
about or address specific enforcement or personnel problems? While I am 
not suggesting that the IRS board should address every taxpayer 
grievance, the board should be able to take action with respect to 
specific types of examination and collection problems and those that 
involve IRS personnel.
  Some will argue that the expansion of the taxpayer-confidentiality 
rules addresses this issue. I must disagree. The information that the 
part-time board will receive under this provision is dependent on the 
discretion of the Commissioner and the Treasury Inspector General. For 
too long, ``section 6103'' has been a convenient shield for the IRS to 
hide behind, and it will be too easy for that practice to continue 
leaving the board in the dark about the types of problems described all 
too clearly in the Finance Committee's hearings. In addition, limited 
access to taxpayer information won't help the board address personnel 
problems in the agency, which is critical if we are to restore 
credibility to the term ``service'' in its name.
  My amendment resolves this problem. As full-time employees, the four 
members of the Board of Governors drawn from the private sector will 
have access to the same information available to the Commissioner. 
Moreover, the Board under my amendment will have authority to address 
personnel issues. As a result, their hands will not be tied when it 
comes to restoring taxpayer service and respect in all IRS enforcement 
activities.
  The bill's part-time advisory board also starts out with authority to 
review and approve reorganization plans for the IRS. Yet tucked away at 
the end of the effective date section is a provision barring the part-
time board from approving the current plan to reorganize the IRS along 
customer lines. This contradiction simply defies reason.
  I am a strong advocate of reorganizing the IRS into divisions that 
serve

[[Page S4394]]

particular taxpayers with similar needs, like individual taxpayers and 
small business owners, and I included such a plan in my Putting the 
Taxpayer First Act that I introduced. IRS Commissioner Rossotti has 
also embraced this approach. With so much support, why should we 
restrict even a part-time advisory board from approving such a 
fundamental restructuring of the IRS but require its review and 
approval for all future plans? The full-time Board of Governors under 
my amendment would be required to evaluate and sign-off on all plans to 
reorganize the agency--it only makes sense!
  Mr. President, besides giving the IRS board real authority to run the 
agency and make critical changes, my amendment also ensures that the 
members of the Board of Governors are sufficiently committed to the 
task. Having been governor of my state of Missouri, I have some 
appreciation of the time and energy it takes to run a large 
organization. But I can't begin to imagine how I could have hoped to 
make a difference if I spent only a few days a year commuting to our 
capital, Jefferson City, to govern the state, and spent the rest of my 
time running a successful business or even a not so successful law 
practice. That is the trap we will create with a part-time advisory 
board for the IRS.
  The IRS has over 100,000 employees spread across the country and 
around the world. The agency has a budget of over $7 billion, and it 
collects more than $1 trillion each year from millions of taxpayers. It 
is an imposing task for even a full-time Board of Governors to reform 
an institution of this size-- common-sense suggests it is an impossible 
task for a part-time advisory board.
  What's more, the proponents of the bill contend that its part-time 
board will improve accountability within the IRS. But take, for 
example, a part-time board member who is an executive in a major 
corporation headquartered on the west coast. He flies to Washington 
several times a year as part of his IRS oversight responsibilities. How 
can he be accountable for the daily actions of this enormous 
organization when he is little more than a hostage to its bureaucracy 
on his occasional visit to Washington? If we are going to make changes 
to the IRS' management structure, we should give them a real chance for 
success and give the taxpayers confidence that reform can be achieved.
  Mr. President, while not everyone will agree with my proposal, let's 
take a moment to look at some arguments I've heard so far. Some have 
commented that we won't get the best people to serve on the IRS board 
if they have to leave their private-sector jobs for a tour of 
government service. As an example that just the opposite is true, I 
point to our current IRS Commissioner. In my assessment, Commissioner 
Rossotti has outstanding credentials and has been very successful as a 
business owner in the private sector. In addition, I think most of my 
colleagues would agree that he has done an exceptional job during his 
short tenure at the helm of the IRS.
  This criticism also rings rather hollow when we look at the 
individuals who have served on similar full-time boards and commissions 
throughout the government, like the Federal Reserve, the Federal Trade 
Commission, and the Securities and Exchange Commission, to name a few. 
I've never heard it suggested that we scrape the bottom of the barrel 
to find people qualified to serve in these full-time positions. Just 
the opposite is true. As Commissioner Rossotti, Treasury Secretary 
Rubin, and many others have demonstrated, there are business leaders in 
this country who are willing to take leave from their private-sector 
lives to serve the public.
  Others have argued that the IRS Commissioner doesn't need a full-time 
board to run the agency, especially since the bill gives the 
Commissioner broader authority to bring in senior management talent. If 
that's true, why do we need a board at all? Why not have just Alan 
Greenspan run the Federal Reserve or Arthur Levitt oversee the 
securities markets? Surely the same arguments would apply to those 
boards and those commissions.

  I believe there is value in having a core group of individuals who 
bring important talents and experience to complement the Commissioner's 
management of an agency like the IRS. Just as with other boards and 
commissions throughout the government, these individuals can share the 
top-level management burdens and allow the Commissioner to focus on the 
most pressing issues completely and quickly.
  A third issue raised by my opponents is that a full-time board with 
real authority will make the IRS too independent. So what exactly is 
the problem? Sadly, there have been allegations in recent years that 
the IRS is being used for politically-motivated audits. Whether true or 
not, such assertions severely undercut any efforts to instill 
confidence in our tax-administration system. While I applaud the 
provision in the bill that prohibits Executive Branch influence over 
taxpayer audits, we can further ensure that result by establishing a 
board with representatives of both political parties, as my amendment 
requires. In the end, there should be nothing partisan about helping 
taxpayers to comply with the tax laws in the least burdensome manner 
possible.
  Mr. President, my amendment offers a straight forward, common-sense 
solution for the management of this troubled agency and it cures the 
inherent weaknesses of the part-time advisory board called for in the 
bill. With a vast number of agencies across this city, including the 
city itself, managed under full-time boards and commissions, we have 
ample evidence that this structure can work for the IRS. In my opinion, 
if we want more than window dressing on the current management 
structure, a full-time, full authority, full accountability Board of 
Governors is the answer.
  A part-time advisory board will not make a difference in how the 
agency is run. If we need a board, we need a full-time board. We don't 
need a part-time advisory board. Otherwise, if we do not want to have a 
full-time board, let's leave the agency's management alone, because 
when has a part-time advisory board ever turned an agency around? I 
suggest never.


                           Amendment No. 2341

 (Purpose: To strike the Internal Revenue Service Oversight Board and 
   establish a full-time Board of Governors for the Internal Revenue 
                                Service)

  Mr. BOND. Mr. President, I send my amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Missouri (Mr. Bond) proposes an amendment 
     numbered 2341.

  Mr. BOND. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. ROTH. Mr. President, as I indicated before the distinguished 
Senator from Missouri spoke, we had a tentative agreement of 40 minutes 
for this amendment, with 20 minutes to a side. I ask that we 
unanimously agree to that with the time that the distinguished Senator 
used to discuss the amendment being deducted from the 20 minutes. I 
understand that is roughly 13 minutes. Is that satisfactory?
  Mr. BOND. I ask for 10 minutes, because there are others on this side 
who may wish to speak.
  Mr. KERREY. Mr. President, I wonder if the Senator from Delaware 
would agree--Senator Reid has an amendment he wants to bring right 
after this--that we stack these votes, and have a UC to have both of 
these votes stacked.
  Mr. ROTH. That would be fine.
  The PRESIDING OFFICER (Mr. Burns). Is there objection?
  Mr. KERREY. We would have to get a time agreement.
  Mr. ROTH. Let's agree on the Bond amendment first; the agreement 
being 40 minutes divided between the two sides, and that Senator Bond 
would have the remaining 10 minutes.
  Mr. BOND. That is correct. Mr. President, 20 minutes for the side in 
opposition, and 10 minutes.
  Mr. ROTH. And no second-degree amendments.
  The PRESIDING OFFICER. Could I ask the Senator to restate the 
unanimous consent request.
  Mr. ROTH. Mr. President, what we are proposing for unanimous consent 
is 40 minutes for consideration of the amendment to be divided between 
the

[[Page S4395]]

two sides, that it be agreed that the distinguished Senator has 10 
minutes remaining on his side of the 20 minutes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. ROTH. And I would also add there would be no second-degree 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERREY. Could we modify it so we go to Senator Reid's amendment 
next and have rollcall votes not before 1:15?
  Mr. ROTH. Let's wait on the rollcall votes. We can go ahead with the 
Reid amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. President, I ask for the yeas and nays on this amendment.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The yeas and nays were ordered.
  Mr. BOND. Mr. President, I ask unanimous consent that there be a 
minute on each side for the proponents and opponents to state their 
case on the amendment since the vote is going to be stacked later.
  Mr. ROTH. That is fine.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. I yield 10 minutes to the distinguished Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa is recognized for 10 
minutes.
  Mr. GRASSLEY. Mr. President, I, unfortunately, oppose the amendment 
by the Senator from Missouri. I say ``unfortunately'' because the 
Senator from Missouri has good motives in offering his amendment. They 
come from the fact that he has been an outspoken advocate for small 
business in the Senate. He has made a career of promoting an 
environment very good to small business, and obviously we all know that 
sometimes the Internal Revenue Service is one Government agency that 
tends to be anti-small business. We had a lot of information coming out 
of our hearings that IRS agents are told to go after the small people--
forget about the bigger, wealthier people--because smaller people do 
not have the resources to fight.
  That is particularly true of small business where you have 
accumulated some wealth in a small business but you do not necessarily 
have a lot of income. And so you do not have the resources to fight the 
IRS. So I do not find fault with the motives behind what Senator Bond 
is trying to do.
  I definitely believe this bill we have before us, including the 
provisions for an advisory board, has been well thought out. The 
National Commission on the Restructuring of the IRS created the concept 
of this Board. We assessed the various pros and cons of separating the 
IRS from the supervision of the Secretary of the Treasury and making it 
more independent. We decided that it needed more independence. Next, we 
had to decide how the independent operation should be governed. To 
answer this, we came up with the Oversight Board.
  So I thank Senator Bond for his advocacy for small business and his 
concern about this important legislation. But at the same time I think 
I must rise in opposition to this amendment. The Commission came up 
with this idea of having an oversight board for the IRS after months 
and months of discussion and consideration. It was a recommendation 
that we on the Commission put in our report because we thought it would 
keep the IRS on track and improving in the right direction. The Senator 
from Nebraska and I made this board one of the centerpieces of our 
legislation, S. 1096, which, of course, was the first comprehensive IRS 
reform legislation introduced in the Senate.

  The National Commission on Restructuring of the IRS--Senator Kerrey 
and I, two members of the House of Representatives, and 13 other people 
served on this Commission. Ten of the members were nongovernmental, 
private sector people who knew about the problems that the private 
sector was having with the IRS. We fully considered adopting a full-
time oversight board at one time, but we came to the conclusion that it 
was not an advisable thing to do. We decided that this part-time board 
would be more effective, and I will give you the reasons for that.
  First of all, the purpose of the board is to be advisory, not to 
manage the IRS. It is meant to function like a corporation's board of 
directors. It is not intended to get involved in the day-to-day 
operations of the IRS because the IRS already has a leader--the 
commissioner. And by the way, this is the first nonlawyer and more 
specifically nontax lawyer who has been head of the IRS. Mr. Rossotti, 
or somebody with his background from private sector management, brings 
to the management of the IRS a person who is consumer oriented, 
customer oriented. His own private sector corporation had to satisfy 
his consuming public for the services that he sold or he would not have 
been in business. He would not have developed a successful business. So 
to have a nontax attorney for the first time running the IRS is very, 
very good because it brings somebody in there who knows that 
organization ought to serve the taxpayers and not be a master of the 
taxpayers. He has already led the organization in some important 
changes and I have great confidence that he will continue to make 
productive changes. He will do a better job because of this 
legislation.
  In addition, it seems to me that a full-time board would not attract 
the people who we want to attract to this board. A full-time board too 
often in this town attracts inside-the-beltway, Washington career 
people. That is not the type of person we want on the board.
  What the IRS needs is guidance from people who come from the real 
world of work, people outside the beltway, people who are real 
Americans. It needs experts in business, management and customer 
service. It needs people who are willing to take the time in the name 
of public service to help guide the IRS, through this recovery period 
it is now in. The IRS does not need people who consider the full-time 
job of being on the IRS board a good career move. The fact is the 
people we want to serve on this board will not give up their full-time 
jobs to do it.
  This bill is not intended to create more bureaucracy. We have too 
much bureaucracy already. This is generally true throughout Government. 
But we found it is definitely the case in the IRS. A full-time board 
would just be one more layer in an organization with way too many 
layers of bureaucracy already. For these reasons, I ask my colleagues 
to join me in opposing this amendment. If we want the IRS to be 
customer friendly, like a corporation must be, we must give it a 
corporate-like board.
  I thank the Chair. I yield back the remainder of my time to be 
reserved.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I yield 5 minutes to the distinguished Senator from 
Nebraska.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. KERREY. Mr. President, let me first do as the Senator from Iowa 
did, Senator Grassley, and compliment the intent of the distinguished 
Senator from Missouri. I started out exactly where the Senator from 
Missouri is, considering that a full-time board would be best. What I 
have concluded is that over time, examining what this board is going to 
be doing--and let nobody doubt, by the way, this board has substantial 
powers. This is not an advisory board. There are a number of things 
that we specifically say they cannot do, in order to avoid conflict of 
interest with procurement and with personnel and with confidentiality, 
but this board oversees the IRS in its administration, its management, 
its conduct, its direction, and its supervision of the execution and 
application of the IRS law.
  It has substantial powers in making recommendations to the President 
as to who the Commissioner ought to be and has the power to recommend 
the Commissioner ought to be terminated. I urge colleagues to look at 
section 1102 of the proposed legislation.
  I share the conclusion Senator Grassley has just iterated in his 
opposition to this amendment; that is, that a full-time board would 
actually restrict our capacity to go out and get the people with the 
kind of talent that we need to be on this board in the first place. 
There are an awful lot of Americans who have expertise in management, 
have expertise in computers, have expertise in the operation of a large 
organization. They especially

[[Page S4396]]

have expertise in restructuring, which is going to be a very, very 
important piece of work that Mr. Rossotti will have the authority to 
do, restructuring and changing the nature an organization.
  We need people with all those kinds of expertise. And if you require 
the individual to serve full time, my conclusion, strongly felt, is you 
will exclude large numbers of citizens who would say: If it is part 
time, I'm prepared to sit on this Board as a consequence of my desire 
to improve the way this IRS is operated. My desire to improve it is 
strong enough to serve part time, but I can't possibly do it full time. 
We are going to reduce the list if we make it full time, of citizens 
who could serve this in this way.
  In addition, I point out this board sunsets in 2002; thus, Congress 
would have the opportunity to revisit and make a determination as to 
whether or not, as a result of the experience that we have had, this 
board needs to be full time.
  So I urge those who were concerned about this board being part time, 
on the one hand to consider we are going to restrict our ability to get 
the kind of expertise that is needed on this board, and, second, we 
will have an opportunity, after 5 years, to revisit this issue. If the 
experience of this board is that they are recommending to us that full 
time would be better than part time, we will have ample opportunity to 
make that judgment.
  I urge my colleagues, with great respect to the Senator from Missouri 
and his intent, to vote against this amendment.
  The PRESIDING OFFICER. Who yields time?
  Mr. BOND. Mr. President, I yield myself such time as I may require. I 
thank my colleagues from both Iowa and Nebraska for their very 
thoughtful comments. As I said earlier, I appreciate so much the 
excellent work the Finance Committee has done on restructuring of the 
IRS. Truly, it is a very important issue.

  Primarily, I hear them raising the point that we can't get people to 
serve if we have a full-time board. We are making it a small board. We 
need four individuals who want to serve.
  Some say you can have part-time people who can come in and get the 
big picture authority. The problem is, we need them to work on specific 
law enforcement activities and personnel actions. We are not talking 
about somebody giving them the big picture; we are talking about 
somebody taking management responsibility. If individuals would serve, 
is their question. They say we can't get good individuals to serve.
  We have the Commissioner of the IRS. He came from the private sector. 
He was willing to move in. Private-sector individuals have served, and 
have served with great distinction, in related areas, where they do an 
excellent job. Why should we think it is harder to get people to serve 
on the IRS board than it would be to serve on the FTC board or on the 
SEC? These are issues that I think are very closely related. If we 
can't get good people to serve on that board, I would be very much 
surprised. We would not see a part-time advisory board dealing with 
actual cases of taxpayer abuse. They would have to do so only when the 
Commissioner or the Treasury Inspector General said they could.
  Let's just take an example--the alarming revelation last week that 
former Secretary Howard Baker and former Congressman James Quillen were 
the targets of a vendetta by a rogue IRS agent. Even more troubling, 
more troubling is that the agent's activities were covered up by 
numerous officials in the IRS district office.
  This case clearly demonstrates a pattern of bad behavior in one 
office, but it may be indicative of structural or procedural defects 
throughout the agency. Are we really going to tie the hands of the IRS 
board and only permit it to review such problems as the Commissioner or 
the Treasury IG permit it? I say not. If we are going to do the job, we 
ought to do it right. Without this authority, the board will only find 
out about the problems like the rest of us--when the press points them 
out or when we have to go through a congressional hearing.
  The problems of the IRS are well known. Now we need to make sure we 
fix them, not just tinker around the edges. The Bond amendment replaces 
the IRS management structure of a Commissioner plus a part-time limited 
authority board with an independent full-time board of governors, 
including the Commissioner. It is not an accident, as I have said 
earlier, that the SEC, the FTC, the Federal Reserve, are all run by 
boards or commissions. These agencies carry out sensitive regulatory 
and enforcement duties, and they must be insulated from political 
motives. Insulation from political motives is one of the objectives we 
must achieve in this IRS restructuring. The American taxpayer deserves 
the same level of protection as the people who are governed by and are 
subject to the rules and regulations of the SEC and the FTC and the 
FCC.
  Who has not heard of the allegations that the IRS has targeted out-
of-favor groups or those who seem to have nothing in common but their 
opposition to various White House policies? No American should have the 
enforcement powers of the IRS unleashed on them because they don't 
agree with the White House on an issue. I think that is simply why my 
amendment is so necessary. Under the current bill, the only way the 
part-time board would have known about the abuses we learned about last 
week is the same way the rest of us did when we watched Senator Roth's 
hearing on television. That is how limited the authority of the part-
time board is.
  We need real reform of how the IRS does its business. I believe 
putting a full-time, independent board in place to run the agency is 
the best way to do that. I say to those people who really want reform, 
if you really believe a board is essential to restructuring the IRS, 
then I say let's get out and run with the big dogs; let's get a full 
time, independent board. Otherwise, get back up on the porch, because a 
part-time advisory board is not going to even have a large bark; it 
will have a minor meow.
  If we are going to put some teeth into it, we need to have the teeth 
that a full-time, independent board governing the IRS can give to 
managing the agency, to make sure it does not abuse taxpayers.
  Mr. President, I reserve the remainder of my time and yield the 
floor.
  Mr. SHELBY. Mr. President, I rise in support of Senator Bond's 
amendment to establish a full-time IRS Board of Governors. I firmly 
believe that oversight of an agency with the equivalent of 100,000 
full-time employees, a requested fiscal year 1999 budget of almost $8.2 
billion, and a history of wasting $4 billion in an attempt to modernize 
the tax collection system, is, without question, a full time job.
  Furthermore, rigorous oversight will be critical to ensuring that the 
reforms that Congress has in store for the agency will be carried out 
effectively and expeditiously. I think the prudent strategy is to keep 
the agency on very short leash given the shocking stories that have 
come to light from the recent Finance Committee hearings. I have my own 
ideas as to how to liberate the taxpayer from the IRS--namely the 
implementation of my flat-tax proposal. But short of comprehensive tax 
simplification, I strongly support Senator Bond's efforts.
  Mr. President, the IRS is a very troubled agency that demands the 
highest level of scrutiny. I strongly urge my colleagues to support 
this amendment. I feel we owe it to the American taxpayer.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, how much time do I have?
  The PRESIDING OFFICER. The Senator from Delaware has 10 minutes.
  Mr. ROTH. Mr. President, I yield myself such time as I may use.
  Mr. President, I, too, join my colleagues in paying my respects to 
the distinguished Senator from Missouri. He brings a wealth of 
background and experience, so his comments are always welcomed and 
listened to with great care. While I completely agree that the IRS 
oversight board must be adequately structured, I respectfully urge my 
colleagues to oppose this amendment which would make the IRS oversight 
board a full-time board.
  In my judgment, the board should be a part-time board. The purpose of 
the board is to provide ``big picture'' oversight over the IRS, provide 
specific expertise to IRS management to ensure

[[Page S4397]]

accountability at the IRS, as well as to ensure that taxpayers are 
being treated and served properly.
  The purpose of the board is not to micromanage the IRS. Commissioner 
Rossotti is a management expert, unlike his predecessors who were 
experts in tax law. As I have said many times on the floor, I think we 
are very fortunate in having an individual of his qualifications, his 
expertise, not only in management but high tech as well. I believe we 
should support the manager and provide a board that will help him turn 
the troubled agency around.
  It is my judgment a full-time board would destroy the delicate 
balance we tried to include in this legislation. The Commissioner, not 
the board, should manage the IRS.
  A full-time board would bog down in details, diffuse accountability, 
and I fear very much probably not include the type of individuals, the 
experts, the background, and vision that are necessary on the board. 
Also, I have to say that I would doubt that Commissioner Rossotti might 
remain with the IRS if the board were full time.
  The very basic question is what would be the point? While I agree 
with my colleague's objectives, I do not believe that a full-time board 
would enhance the prospect of turning this agency around. In fact, 
making the board full time could very well undermine the purpose of 
this legislation.
  As my distinguished colleague, the Senator from Nebraska, has pointed 
out, the board is sunsetted. There will be an opportunity in the future 
to see how this board is functioning, whether it is working in the 
manner that we hope and believe it will.
  I urge my colleagues, Mr. President, to vote against the full-time 
board. I reserve the remainder of my time.
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BOND. Mr. President, I, again, commend my colleague from Delaware 
for his outstanding leadership. I will only say that Commissioner 
Rossotti is going to leave sometime. I think it is important for us to 
make a structure which gives us the possibility of real reform in the 
IRS. An advisory board, in my experience in dealing with advisory 
boards, cannot and will not make a difference in the day-to-day 
management, the selection of IRS audits and the running of the agency 
which is the issue on the minds of American taxpayers. We need to do 
the job right, and I believe we need to make the change now.
  Mr. President, if the distinguished manager of the bill has no 
further people wishing to speak--the ones who wanted to speak in 
support of the amendment are otherwise occupied--I am prepared to yield 
back the remainder of my time. We have 1 minute on each side prior to 
the vote. If the manager is finished with his speakers, I will join him 
in yielding back whatever time remains.
  Mr. ROTH. Yes, Mr. President, I am pleased at this time to yield back 
the remainder of our time.
  Mr. BOND. I yield back the remainder of time on our side. I thank the 
distinguished Senator from Delaware.
  The PRESIDING OFFICER. All time has been yielded back.
  Mr. ROTH. Mr. President, I ask unanimous consent that following the 
expiration or yielding back of time on the pending Bond amendment, it 
be temporarily set aside and a vote occur on, or in relation to, the 
Bond amendment at 1:15 p.m. today.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Privilege of the Floor

  Mr. REID. I also ask unanimous consent that a congressional fellow, 
Alan Easterling, be allowed privileges of the floor during this issue 
that is now before the Senate.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2342

   (Purpose: To amend the Internal Revenue Code of 1986 to eliminate 
           payments for detection of underpayments and fraud)

  Mr. REID. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 2342.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the end of subtitle H of title III, add the following:

     SEC.   . ELIMINATION OF PAYMENTS FOR DETECTION OF 
                   UNDERPAYMENTS AND FRAUD.

       (a) In General.--Subchapter B of chapter 78 is amended by 
     striking section 7623.
       (b) Conforming Amendment.--The table of sections for 
     subchapter B of chapter 78 is amended by striking the item 
     relating to section 7623.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

  Mr. REID. Mr. President, as Members of this body know, I have worked 
long and hard with other Members of this body to change how the IRS 
functions. The first speech I gave on the Senate floor after being 
elected in 1986, was on the Taxpayer Bill of Rights. As I presented my 
remarks that day, presiding was Senator David Pryor of Arkansas. At the 
time, he was chairman of the Subcommittee on Finance that dealt with 
the Internal Revenue Service. Also, that same day in the Chamber was 
Charles Grassley of Iowa, a longtime proponent of changes within the 
Internal Revenue Service.
  I received a note from Senator Pryor after I finished my remarks that 
a page delivered to me, indicating he wanted to work with me on the 
legislation that I talked about. That same day, I received word from 
Senator Grassley he wanted to work with me.
  This was bipartisan legislation. The bill that I wrote, the Taxpayer 
Bill of Rights--because of these two Senators; the Senator from 
Arkansas, the Senator from Iowa; a Democrat and a Republican--we were 
able to move this bill through the Senate. It passed in 1988 and became 
law. It was really a significant change. The Taxpayer Bill of Rights 
changed the way the taxpayers dealt with the tax collectors. It put the 
taxpayer on a more equal footing with the tax collector. It was the 
beginning of some major changes in the way we deal with the Internal 
Revenue Service.
  The Taxpayer Bill of Rights No. 2, in 1996, was also a change. But we 
are here now because of H.R. 2676, the IRS Restructuring and Reform Act 
of 1997. I say to the chairman of the full committee, the senior 
Senator from Delaware, I appreciate his working hard on this issue. I 
think the hearings have been informative to the American public and 
indicate that we need to do more. The Taxpayer Bill of Rights No. 1 and 
No. 2 were important, but we need to go further.
  I was one of those initial sponsors of this legislation in the 
Senate. Senator Kerrey of Nebraska, Senator Grassley of Iowa, and I 
held a press conference where we talked about this legislation. At that 
time we didn't have a lot of support. But the support has built, and 
now we have support from the administration, and it is once again 
bipartisan legislation.

  I look forward to the opportunity to speak in favor of the speedy 
passage of this much needed and long overdue reform.
  What I want to talk about today in my amendment is one of the things 
that leads to the bad press, the bad feelings that the American public 
has about the IRS. What I want to prohibit the IRS from doing in the 
future is continuing with a program that I refer to as the ``Reward for 
Rats Program.'' This is a program where the IRS, in effect, has a 
contingent fee, much like a lawyer gets in a personal injury case. They 
say, ``If you have somebody who will snitch on a neighbor, an ex-wife, 
or business partner, and this will lead to our collecting money, then 
we will give you part of that money.''
  I believe anyone who owes money to the Internal Revenue Service 
should pay it. But I think it should be collected in a way that is in 
keeping with the American system, not go into people's personal lives, 
where you have a wife--former wife or former husband

[[Page S4398]]

who just completed a long divorce, and the IRS contacts one of them and 
says, ``Hey, if you can give us a little information on your ex-spouse, 
then we will give you part of the money we collect.''
  I think this is wrong, and I think we should stop it. There is 
nothing specifically in the statute which allows this. The problem is, 
there is nothing that disallows it. That is what this amendment would 
do. It is a practice which, if it isn't corrected, will be permitted 
under this legislation now before the body.
  Last week, the Senate Finance Committee, under the leadership of the 
senior Senator from Delaware, conducted hearings in the cases of 
abusive practices by employees of the IRS. Witnesses before that 
committee provided testimony which describes an organization prepared, 
I am sorry to say, to use virtually any means to collect this Nation's 
taxes.
  Again, I think the taxes should be collected but it should be in a 
fair way. An organization apparently prepared to take advantage of 
individual greed or desire for revenge to identify, rightly or wrongly, 
citizens who have failed to pay their taxes is something we need to do 
away with.
  Last week, we learned of a restaurant owner whose life was ruined on 
the basis of no more than a tip from a vengeful informant. As recently 
reported in the press, we learned of a tax accountant who snitched on a 
client, motivated only by the expectation of payment for betraying a 
confidential relationship. In both cases that I have just provided, the 
information was false.
  Such informants, most of the time, are not acting in some sense of 
civic duty. They don't act from a selfless interest in the Nation's 
well-being. They act against friends, relatives, employers, and 
associates because the IRS pays them to do so.
  Under section 7623 of the Internal Revenue Code of 1986, they are 
authorized to pay sums, as required, to informants in order to bring to 
trial violators of Internal Revenue laws. In plain English, the IRS 
pays snitches to act against associates, employers, relatives, and 
others--whether motivated by greed or revenge--in order to collect 
taxes. I find this activity unseemly, distasteful, and just wrong.
  Under the current IRS program, these informants are paid up to 15 
percent of the money recovered as a result of their tips, but no less 
than $100. In a recent change to the so-called Snitch Program, the 
Service increased the maximum allowable reward to $2 million--a 
powerful incentive to anyone interested in becoming rich at the expense 
of a neighbor, former business associates or business associate, former 
wife, former husband.

  As if the desire for revenge alone hasn't been responsible enough for 
ruined lives, the Service has a $2 million jackpot to sweeten the 
payoff. For the nosy neighbor, the alienated spouse, or the wronged 
partner, the odds of seeing that payday may appear better than anything 
the State can offer. This program is unethical, it is contrary to 
taxpayer privacy, and inconsistent with the spirit of the Taxpayer Bill 
of Rights.
  Let's assume that someone comes to an accountant with a tax problem--
under the present law, there is no confidentiality; we are trying to 
change that, of course--comes to an accountant with a tax problem, 
thinking, of course, you have to get this thing worked out with your 
accountant; and the accountant walks out after the meeting and calls 
the IRS and says, ``I have somebody you can get a real good chunk of 
money from, but of course I get 15 percent of it.''
  I think that is wrong. It is contrary to taxpayer privacy and 
inconsistent with the spirit of the Taxpayer Bill of Rights which was 
passed previously.
  The IRS would have you believe that these programs--this snitch 
program is warranted because of the millions of dollars it is able to 
collect through the snitches. This simply demonstrates that the IRS is 
relying upon others to do its work. It shouldn't be up to friends, 
families, coworkers, and neighbors to ensure taxes are being paid; it 
is up to the IRS. We should not be paying private citizens to perform 
the job the IRS employees are expected to carry out.
  I think this program should come to an end. To that purpose, I 
propose this amendment, which will eliminate the payments for detection 
of underpayment and fraud. The amendment to eliminate the reward of 
greed and invasive action against honest taxpayers should pass.
  I propose that in the process of reforming and restructuring the 
Internal Revenue Service, we join together to eliminate the ``Reward 
for Rats Program.'' It is time that this snitch program be eliminated 
and that we restore greater civic order to the manner in which the IRS 
conducts itself.
  The amendment is considered important because it reforms the IRS, it 
fundamentally overhauls the manner in which they conduct business, and 
it serves the customers and also allows a more orderly way of 
collecting money. This amendment addresses an unethical and destructive 
program employed by the IRS in the collection of revenues. In that the 
amendment eliminates the program, it must be considered consistent with 
the spirit of this bill.
  I ask unanimous consent to have printed in the Record a story from 
the Los Angeles Times dated April 15, 1998, entitled ``Rewards-for-
Snitches Program Comes Under Fire,'' which illustrates what the problem 
is we are trying to correct.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

              [From the Los Angeles Times, Apr. 15, 1998]

         IRS ``Rewards-for-Snitches'' Program Comes Under Fire

                         (By Ralph Vartabedian)

       Washington.--Americans voluntarily hand over most of the 
     $1.3 trillion owed to the Internal Revenue Service each year, 
     but a tiny fraction of tax collections depends on an obscure 
     and increasingly controversial IRS program of using paid 
     informants.
       Motivated by a combination of greed and revenge, informants 
     are typically business associates, employees, acquaintances, 
     neighbors or ex-spouses of tax cheats. Many experts say the 
     program is one of the most unseemly parts of the U.S. tax 
     system.
       However, IRS officials say they exercise great care in 
     handling the informants, weeding spurious allegations, and 
     that the rewards play an important role in the nation's tax 
     enforcement system.
       The IRS pays the informants up to 15% of the taxes it 
     recovers from their tips--up to a maximum of $2 million--
     though the vast majority of informants end up empty-handed.
       After a series of recent congressional disclosures about 
     widespread taxpayer abuses, watchdog groups are growing 
     concerned about the ethics of the agency's informant reward 
     program.
       ``We should refocus our efforts on good citizenry, not 
     bribing people to answer questions,'' said John Berthoud, 
     president of the nonpartisan National Taxpayers Union, who 
     called on the IRS to end the program in an interview with The 
     Times.
       The program has been sharply criticized by individuals who 
     say they were victimized by bogus allegations, and even by 
     informants, such as Mary Case of Sherman Oaks, who say the 
     IRS has stiffed them on their rewards.
       The Senate Finance Committee, which has been 
     broadly investigating IRS abuses over the last year, is 
     expected to unveil new evidence later this month that 
     taxpayers have been devastated by aggressive IRS 
     investigations based on phony information from snitches.


               one tax accountant snitched on his client

       Tax attorneys and accountants generally decry the informant 
     reward system, asserting that the government is on thin ice 
     in offering money to taxpayers to turn each other in. They 
     argue that a cornerstone of the U.S. tax system is the 
     protection of taxpayer privacy and that the IRS is wrong to 
     encourage people to breach confidential business or family 
     relationships. In one case, a St. Louis tax accountant 
     informed on his own client.
       ``It smacks of communism, turn in your parents if you catch 
     them cheating,'' said San Francisco tax attorney Frederick 
     Daily, author of the book ``Stand up to the IRS.''
       Bruce Hockman, a top Los Angeles tax attorney whose 
     clientele includes the rich and famous, refuses to help 
     clients snitch to the IRS. ``I have had people come in and 
     ask me to take them downtown to IRS district headquarters,'' 
     Hockman said. ``I say no way. The Nazis did it, turn people 
     in. It is unseemly.''
       Of course, Congress authorized the IRS to create the 
     informant reward program in the first place. Former IRS 
     historian Shelley Davis says her research indicates that 
     informant rewards date back to the Civil War ear.
       Tipsters are one of the important parts of the IRS toolbox 
     for enforcing tax compliance, says Thomas J. Smith, assistant 
     IRS commissioner for examination and chief of the agency's 
     informant reward program.


               93% of snitches' tips end up in trash can

       IRS figures for 1996, the last year for which data are 
     available, show that 9,430 Americans sought rewards. Of 
     those, the IRS acted on just 650--meaning that 93% of the 
     tips

[[Page S4399]]

     ended up in the IRS garbage can. The IRS paid out about $3.5 
     million in rewards and recovered $103 million in taxes.
       ``If you look at the last three years, we have had 2,000 
     cases closed, resulting in taxes of $797 million,'' Smith 
     said. ``So, in terms of dollars, most people would judge that 
     as reasonably significant. It does supply a very useful 
     source of information for us.''
       The IRS has a national informant hotline (1-800-829-0433), 
     though many informants walk in or call in to the IRS' 33 
     district offices or 10 regional service centers, Smith said.
       With little fanfare and with no explanation, the IRS last 
     year decided to substantially boost the maximum allowable 
     award to $2 million from $100,000. It also set a minimum 
     reward of $100, eliminating a lot of penny ante payments.
       In 1996, the agency's largest award was a jackpot-size 
     $1.06 million. (The agency does not disclose who gets the 
     awards or what cases they involve.) The agency's smallest was 
     just $18--less than the typical reward advertised in 
     newspapers for lost dogs.
       Under the new guidelines, rewards range from 1% to 15% of 
     the tax recovered, depending on the assistance provided by 
     the informer. But all awards are at the ``discretion'' of IRS 
     officials, who make their decisions behind closed doors. Of 
     course, the rewards are taxable income.
       The IRS takes a low-key approach, not seeking to send the 
     message that the federal government is actively recruiting 
     paid stool pigeons. The agency does not make Form 211, which 
     informants must fill out to claim a reward, widely available. 
     It isn't even kept in the IRS national headquarters lobby, 
     where the agency has almost every form on display.
       Asked if the IRS encourages Americans to inform on others, 
     Smith said he could offer no advice and suggested that 
     individuals do what they feel is right. But former IRS 
     officials are more blunt.


                 garbage information comes streaming in

       ``Informants rewards are pretty distasteful to everybody 
     except the person who gets one,'' said Phillip Brand, a tax 
     expert at KPMG Peat Marwich LLP and former IRS chief of 
     compliance. ``People have a different feeling about informing 
     when they do it as good citizens.''
       Another problem with paying for information is that the IRS 
     gets a lot of garbage information. Brand recalled a tipster 
     once sought a reward for the disclosure that a secretary of 
     State was dealing drugs to Queen Elizabeth II and not 
     reporting the sales on his taxes.
       But week allegations are less humorous when the IRS pursues 
     them against innocent taxpayers. That apparently happened to 
     John Colaprette of Virginia Beach, Va., whose home and two 
     restaurants were raided in 1994 by armed IRS agents after his 
     bookkeeper, Deborah A. Shofner, made phony allegations.
       The bookkeeper was later arrested and charged with stealing 
     from a Colaprette restaurant, the Jewish Mother. She was 
     sentenced to 6 years and 11 months in Virginia.
       ``This case was investigated for just one and a half days 
     before they obtained a search warrant, which was then 
     executed 12 hours later,'' said Colaprette, who is expected 
     to testify this month before the Senate Finance 
     Committee's hearings on IRS abuses.
       Although the committee is saying little about its planned 
     hearings, it is expected to focus on the IRS' criminal 
     investigation division, which handles most of the paid 
     informants and conducts a wide range of undercover 
     operations.
       Since the raid on the Jewish Mother, the IRS has never 
     assessed any back taxes or made any changes to his tax 
     returns, Colaprette said. He has a $20-million suit against 
     the IRS.
       ``Why do we have an agency that nobody controls?'' 
     Colaprette asked.
       It isn't unusual for the IRS to deal with informants who 
     violate confidential relationships. Like Colaprette's 
     bookkeeper, when St. Louis tax accountant James Checksfield 
     informed on his own client in 1989, he was discredited. The 
     government dropped its tax evasion case against the client 
     and the accountant lost his license.
       Smith, the IRS chief of exams, said he could not discuss 
     any specific cases because of privacy laws. But he said the 
     IRS carefully screens allegations and is mindful of the 
     potential for bogus information.
       ``It is a concern that we take very seriously,'' Smith 
     said. ``We absolutely try to be very careful about looking at 
     returns with the greatest probability of error.'' Smith added 
     that 89% of the returns examined as a result of a tip end up 
     with changes.
       While it isn't surprising that the targets of allegations 
     feel abused, informants also are often frustrated over how 
     the agency treats their claims.


                If Case Isn't Closed, No Reward Is Paid

       Case, the Sherman Oaks woman, tipped the IRS in 1985 to 
     Stanley D. Hexom, a San Jose real estate broker later accused 
     of swindling millions of dollars from elderly California 
     investors in fraudulent real estate deals. She has never 
     received a reward from the IRS, but neither has the agency 
     closed her case.
       As Hexom's bookkeeper, Case provided IRS agents boxes of 
     evidence, including copies of doctored tax returns and 
     locations of bank accounts, as well as testifying to a 
     federal grand jury.
       Under IRS guidelines, an informant who provides such 
     specific information is supposed to get 15% of the back 
     taxes. But a big caveat is that the IRS has to actually 
     collect the back taxes. So, if the agency comes up empty-
     handed, so does the informant.
       There is no doubt that the IRS went after Hexom, who was 
     convicted on two counts of bank fraud and one count of 
     preparing a false tax return. IRS agents tried to collect 
     from Hexom's wife, though she may have escaped assessment by 
     claiming she was an innocent spouse, said Richard Blos, 
     Hexom's attorney in San Jose.
       Hexom was released from prison in 1993 and is currently 
     living in the Phoenix area. He could not be reached for 
     comment.
       Smith acknowledged that the agency is often criticized for 
     taking too long time to pay rewards, but he added that 13 
     years is an abnormally long time for an informant to be kept 
     waiting.
       Other informants say the agency's criminal investigation 
     division takes all the credit for big money cases and 
     undermines the role played by informants.
       Joseph Pinnavaia, an Oceanside gemstone expert, helped the 
     IRS crack a tax fraud ring in the early 1980's, in which 
     worthless stones were being donated to museums for big tax 
     write-offs.
       Pinnavaia died last November, but not before completing a 
     manuscript, entitled, ``The Most Corrupt Agency in the 
     Federal Government: The Internal Revenue Service,'' which 
     detailed how the agency mishandled his case.
       With Pinnavaia's help, the IRS went after a doctor in 
     Florida who had donated an allegedly worthless blue topaz gem 
     to the Smithsonian Institution. By 1979, the IRS was 
     receiving 10,000 tax returns a year with deductions for 
     gemstones, it was later discovered.
       Though Pinnavaia was awarded $11,000 for his help in the 
     case, he asserted that the IRS cheated him by claiming it 
     already knew about the larger nationwide fraud ring. The 
     manuscript, a copy of which was provided to The Times, 
     includes a variety of internal IRS documents, in which 
     criminal division agents downplayed his role in the case.
       ``He felt the $11,000 didn't even cover his expenses,'' 
     said Mathew D. Pinnavaia, his son. ``They tried to deny he 
     played any role.''
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. First of all, let me say to the Senator from Nevada, long 
before I got on this issue of taxpayer rights, the Senator was there, 
working on Taxpayer Bill of Rights 1 and Taxpayer Bill of Rights 2. 
This legislation in title III is a continuation of your work. And I 
appreciate very much your early support of this bill that enabled us to 
fashion this legislation in a bipartisan way, which I think allows us 
to make certain that we can extend the rights and power and authority 
to the taxpayer and stop abuses that we see within the IRS's capacity 
to collect money that this Congress authorizes is to be collected.

  I appreciate, specifically, the problem you are identifying with your 
amendment. It is a problem that, thanks to Chairman Roth, we heard 
before our committee. We saw the problems that can occur when you offer 
somebody, essentially, a reward to inform; you can get abuse from that. 
As the Senator knows, as I have heard him talk about this as well, the 
dilemma is, how far do you go? We have this mechanism being used 
throughout law enforcement and there are many times when it works and 
when it is not abuse.
  I am wondering if the Senator would allow to us modify his amendment 
so it can require the commissioner to do a thorough analysis of this 
problem. Commissioner Rossotti has had this brought to his attention. 
It would require him to do a thorough analysis of this problem and then 
come back to us and say, how can we change the law so as to make 
certain that you are able to use this system when appropriate, but we 
can get rid of some of the abuses that are quite obviously not the 
intent of this Congress.
  Mr. REID. Mr. President, I say to my friend from Nebraska that I 
appreciate the kind comments about my work on the Internal Revenue 
Service tax issues generally in the past. I also want to say that but 
for the Senator from Nebraska, we would not be on the floor today. The 
people of Nebraska should understand, as I am sure they do, the 
tenaciousness of the senior Senator from Nebraska. The work that he has 
done on this issue--when the history books are written about tax reform 
in this country, one of the chapters has to be dedicated to him. I 
personally appreciate, on behalf of my constituents from the State of 
Nevada, the work that you have done on this issue. I also think the 
work done on the underlying legislation, giving the commissioner of the 
Internal Revenue Service the power to do some things for a change will 
allow the commissioner to take a good look at this program and make 
some

[[Page S4400]]

suggestions, which in the past fell on deaf ears because he had no 
power and authority to do anything. So I think we have a good 
commissioner. I am willing to have my amendment modified. I think it is 
a step in the right direction. There may be some things that I don't 
understand having only gotten----
  Mr. ROTH. Mr. President, if the Senator yield. I find it very 
difficult to hear what the distinguished Senator is saying.
  Mr. REID. Mr. President, I am happy to talk a little louder. I say to 
my friend from Delaware that this has always been one of my habits. I 
can remember when I first started trying case, there was a judge named 
Marshall--and Las Vegas only had 3 or 4 judges at the time--and he was 
hard of hearing. I would get up and talk to the jury and he could not 
hear what I was saying, so he would get upset at me. He thought I was 
saying things I didn't want him to hear. That wasn't the case then and 
it's not the case now. I will try to be more direct to the Senator from 
Delaware.
  What I was saying is that I think this underlying legislation gives 
the commissioner of the IRS power he didn't have before, which is good. 
One of the problems we have had in the past is that the commissioner of 
the IRS has had no power to make changes in the way the Service 
operates. This legislation certainly gives him power to do that.

  So, as I said to my friend from Nebraska, and I say again, I am 
willing for my amendment to be modified to have the commissioner report 
back to us within a reasonable time as to whether or not this program 
should be terminated in its entirety, or whether it should be modified. 
There may be instances when there may be a need for some type of a 
contingent fee. I am not aware of any, but there may be. I have enough 
confidence in the underlying legislation, which will be in effect in a 
few weeks, we hope, and in the commissioner of the IRS that I am 
willing to allow my amendment to be modified.
  Mr. ROTH. Mr. President, I say to the distinguished Senator from 
Nevada that that is a very positive step, a very sound way of 
addressing the problem. It has been the practice in Government, as he 
well knows, that contingent fees are sometimes made available, not only 
in the IRS, but I believe in other areas of activity as well. As we all 
witnessed last week, this practice was used in an extremely abusive 
manner--a manner that should be dealt with. So I can understand the 
Senator's concern and interest in this matter.
  I appreciate it and would find it acceptable, as far as I am 
concerned, if he would modify this to make a study, and within a 
limited time come back. I think we do have a new commissioner that is 
very effective and is bringing about change. This would help give him 
direction, and we think this is a matter of critical importance.
  Mr. REID. If the Senator from Delaware will yield. I say to the 
manager of the bill, I think also that we focused attention, through 
the hearings that you have held, newspaper articles written, and 
through this amendment, on this practice that I am sure the 
commissioner will have enough information to come back to us as to 
whether or not this practice should be continued, modified in some way 
or, as I said, eliminated. So I would be happy to modify this amendment 
so that the commissioner could report back to us within a reasonable 
period of time.
  Mr. ROTH. Mr. President, I think I will make a point of order that a 
quorum is not present and try to reach agreement on the specific 
language.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. MURRAY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. MURRAY. Mr. President, I rise today in strong support of H.R. 
2676, the Internal Revenue Service Restructuring and Reform Act. We 
have waited too long for the opportunity to debate this issue and move 
this legislation. Senate action is coming six months after the House 
overwhelmingly passed this legislation and almost a year after the 
Kerrey/Portman Commission issued their recommendations for improving 
and reforming the IRS.
  It is no wonder the American taxpayer is frustrated and angry. What 
kind of penalty or interest would the IRS levy against a taxpayer who 
was six months late in filing their taxes?
  Mr. President, the IRS is an agency out of control. I hear this from 
people all across my state. They want the IRS reformed. And they want 
it done now.
  What has this six month delay meant to taxpayers? Since November 5, 
1997 the date the House voted on H.R. 2676, more than 17 million 
taxpayers have received a collection notice from the IRS; more than 34 
million Americans have contacted the IRS to request assistance or 
information--of these calls, more than 16 million did not go through 
and close to 2 million Americans did not get correct answers.
  This is unacceptable. Had we acted back in November, the impact on 
these families would have been dramatically different. We did not need 
more hearings, we needed action.
  Since November 1997 I have heard from close to 1,200 taxpayers from 
my state who have written in support of systemwide reforms at the IRS. 
They have told me of their experiences and frustrations--and I have to 
say, some are quite disturbing.
  Mr. President, I want to read some excerpts from a few of these 
letters--which have come from every corner of my state. They really 
highlight the abuses taking place by the IRS.
  This comes from a constituent in Moses Lake, Washington. She says:

       We are people who obey the law. If there were things on our 
     tax return which were in error or were questionable, we have 
     no problem with being called to account for it. Nor do we 
     take issue with paying more taxes if we legitimately owed 
     more. However, the way we were treated by a representative of 
     the IRS should never be allowed in any country, let alone 
     ours, which is supposed to be based on presumption of 
     innocence.

  Another letter comes from a constituent in Seattle:

       In 1993, my husband and I bought a franchise and opened our 
     business as sole proprietors. (If we had incorporated, our 
     suffering would be over now). My husband, Craig, had plenty 
     of knowledge and experience in carpentry and built a strong, 
     thriving closet remodeling business. He did not, however, 
     have business tax and accounting training, and he made 
     mistakes in the paying of taxes and filling our paperwork to 
     the IRS. As soon as he recognized his mistake, he alerted the 
     IRS and began to try to make amends.
       It seemed he had awakened a vicious sleeping dog.

  He goes on to say:

       Along with everything else, the IRS randomly cleaned out 
     our bank accounts, as well as those of our children.
       It seems the IRS has an incentive program for their 
     employees which persuades them to take quick, harsh action, 
     trying to ``get what they can'' and ask questions of the 
     ``customer'' later.

  Finally, from a constituent in Kirkland, WA:

       For the past seven years both my husband and I have lived 
     our lives under the tormenting cloud of the IRS.
       We had a lien put on our home and the letters began to come 
     of companies wanting to help us with our troubles with the 
     IRS. This was so devastating as we were just starting what we 
     thought would be a beautiful life together. One day I came 
     home to 12 different notices from the IRS I needed to sign 
     for at the Post Office. That is a great way to spend 
     taxpayers' money, don't you think?

  These heavy-handed tactics by the IRS are not acceptable.
  But this is not the first time I have heard from constituents about 
problems with the IRS. I knew reform was long overdue. It was not until 
the release of the Kerrey/Portman Commission report that I realized 
that it was not just a few bureaucrats abusing their position, but 
rather an agency out of control. An agency with management practices 
that encouraged abuse of taxpayers; managers who rewarded the most 
aggressive and unbending employees; and an agency that viewed taxpayers 
as the enemy.
  Why is it so critical to enact IRS reform? We can all name many 
reasons why reform is necessary and important, but I think we all have 
to remember that taxpayers are only trying to meet their 
responsibilities in a democratic society. They are not turning to the 
IRS to apply for benefits or for assistance. They are attempting to 
honor their financial obligation and commitment to a democratic and 
progressive society. They are not asking for anything in return but to 
be treated fairly.

[[Page S4401]]

  Unfortunately, this is not the experience of most taxpayers. This 
frustration with the IRS jeopardizes compliance with the tax code and 
undermines the faith taxpayers have in our system.
  Currently, honest taxpayers and businesses pay an average of $1,600 
per person for those who do not meet their financial obligations. An 
estimated $120 billion a year goes uncollected. We do not need to add 
to this by encouraging more taxpayers to give up.
  The great thing about this legislation is that it keeps the 
taxpayer's interest in mind. It simply levels the playing field between 
the taxpayer, both large and small, and the IRS. What's more effective 
than forcing the IRS to work in a more fair and even-handed manner?
  I am particularly pleased this legislation provides relief for 
``innocent spouses'' who find themselves liable for taxes, interest, or 
penalties because of actions by their spouse. This has become a severe 
problem for many women and children. Following a divorce many women are 
left to fight the IRS to save their homes and their children's future. 
Spouses who engaged in illegal activities or misrepresented their 
income to the IRS simply flee and leave. The IRS then attempts to 
collect from the innocent spouse--who is often easier to locate--as she 
has custody of the children. It is a little difficult to hide when you 
have children.
  The IRS then aggressively pursues these innocent spouses for a debt 
that they never knew about. If only we could be as aggressive in 
tracking down the billions of dollars in uncollected child support.
  I urge the Senate to do the right thing today and pass this 
legislation. No more delays and no more excuses. The American taxpayer 
deserves better.
  Thank you, Mr. President. I yield the floor.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Gregg). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KERREY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2343

  (Purpose: To provide electronic access to Internal Revenue Service 
                      information on the Internet)

  Mr. KERREY. Mr. President, I send an amendment to the desk, an 
amendment offered by Senator Leahy and Senator Ashcroft. It has been 
cleared on both sides. I ask that this amendment be agreed to.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The bill clerk read as follows:

       The Senator from Nebraska [Mr. Kerrey], for Mr. Leahy, for 
     himself and Mr. Ashcroft, proposes an amendment numbered 
     2343.

  Mr. KERREY. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 262, after line 14, add the following new 
     paragraph:
       ``In the case of taxable periods beginning after December 
     31, 1998, the Secretary of the Treasury or the Secretary's 
     delegate shall establish procedures for all Tax Forms, 
     Instructions, and Publications created in the most recent 5-
     year period to be made available electronically on the 
     Internet in a searchable database not later than the date 
     such records are available to the public in printed form. In 
     addition, in the case of taxable periods beginning after 
     December 31, 1998, the Secretary of the Treasury or the 
     Secretary's delegate shall, to the extent practicable, 
     established procedures for other taxpayer guidance to be made 
     available electronically on the Internet in a searchable 
     database not later than the date such guidance is available 
     to the public in printed form.''

  Mr. LEAHY. Mr. President, I commend Chairman Roth and Senator 
Moynihan for their outstanding work on legislation to reform the 
Internal Revenue Service (IRS). It is time for the IRS to deliver 
better service to the American people. Our nation's taxpayers deserve 
no less.
  Today, Senator Ashcroft and I are offering an amendment to H.R. 2676 
based on the Taxpayers Internet Assistance Act of 1998, S. 1901. Our 
bipartisan legislation requires the IRS to provide taxpayers with 
speedy access to tax forms, publications and other published guidance 
via the Internet.
  Mr. President, I want to praise the Senate Finance Committee, 
Chairman Roth, Senator Moynihan, Senator Kerrey and Senator Grassley 
for their leadership in moving the IRS reform legislation to the full 
Senate. I strongly support the bill approved by the Finance Committee.
  As the Senate prepares to debate IRS reforms, we must use technology 
to make the IRS more effective for all taxpayers. What better way to do 
that then to require the IRS to maintain online access to the latest 
tax information. Every citizen in the United States, no matter if he or 
she lives in a small town or big city, should be able to receive 
electronically the latest published tax guidance or download the most 
up-to-date tax form.
  The IRS web page at >http://irs.ustreas.gov< provides timely service 
to taxpayers by increasing electronic access to some tax forms and 
publications. I commend the IRS for its use of Internet technology to 
improve its services. More information and services should be offered 
online and not just as a passing fad. Our legislation is needed to 
build on this electronic start and lock into the law for today and 
tomorrow comprehensive online taxpayer services.
  For Tax Forms, Instructions and Publications, our legislation 
provides for online posting of documents created during the most recent 
five years, the same period of time that the IRS now keeps these 
documents on CD-ROM for Congressional offices. With these common sense 
requirements, the IRS will be able to enhance its web page with 
comprehensive tax guidance in a matter of days at little cost to 
taxpayers under our bipartisan bill. In fact, the Congressional Budget 
Office has scored our legislation as adding no new direct spending.
  Thomas Jefferson observed that, ``Information is the currency of 
democracy.'' Let's harness the power of the information age to make the 
IRS a truly democratic institution, open to all our citizens all the 
time. We strongly believe that the IRS must prepare itself for the next 
millennium now.
  I thank Senator Ashcroft for his support and urge my colleagues to 
support our amendment.
  The PRESIDING OFFICER. Without objection, the amendment is agreed to.
  The amendment (No. 2343) was agreed to.
  Mr. KERREY. 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. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 2342, as modified

  Mr. REID. Is the Reid amendment still the pending business?
  The PRESIDING OFFICER. The Reid amendment is the pending business.
  Mr. REID. I send a modification to the desk.
  The PRESIDING OFFICER. The amendment will be modified.
  The amendment (No. 2342), as modified, is as follows:

       At the end of subtitle H of title III, add the following:

     SEC.   . STUDY OF PAYMENTS MADE FOR DETECTION OF UNDERPAYMENT 
                   AND FRAUD.

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary of the Treasury shall conduct a study and 
     report to Congress on the use of section 7623 of the Internal 
     Revenue Code of 1986 including--
       (1) an analysis of the present use of such section and the 
     results of such use, and
       (2) any legislative or administrative recommendations 
     regarding the provisions of such section and its application.

  Mr. KERREY. Mr. President, this amendment addresses a very important 
problem that we saw in the oversight hearings that the chairman 
conducted, and that is sometimes the payment made to induce an 
individual to provide evidence against a taxpayer who is violating the 
law becomes an incentive to provide evidence that is faulty and the 
taxpayers end up being abused as a consequence. Normally, a request for 
a study would not necessarily go very far. In this case, Commissioner 
Rossotti has already launched an investigation by the Criminal 
Investigation Division, using Mr. Webster,

[[Page S4402]]

former FBI Director, as the lead who has indicated he wants to get to 
the bottom of this problem as well. So I believe this modification is a 
good modification. I am prepared to accept it on this side.
  Mr. ROTH. Mr. President, we have reviewed the proposed change in this 
amendment. As I understand it, it requires a study to be made on 
informant payment, that the study must be completed within a year. As I 
said earlier, we found there are some serious problems in this area, 
and the modified amendment is satisfactory to this side.
  The PRESIDING OFFICER. Without objection, the amendment is agreed to.
  The amendment (No. 2342), as modified, was agreed to.


                           Amendment No. 2341

  The PRESIDING OFFICER. The question recurs on the Bond amendment with 
2 minutes equally divided.
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BOND. Mr. President, we all know the problems of the IRS. They 
are well known. This is a troubled agency. It needs to be turned 
around. This is a good bill, but I think we need to do one thing to 
make it better. When has a part-time board ever turned around a 
troubled agency? A part-time board will not do the job. We need a full-
time board if they want to change the culture of the agency. A full-
time board such as the FTC, the SEC, even the Federal Reserve, can draw 
the people from all walks of life across the country to make sure the 
culture of the IRS is changed.
  If you want to do something about the IRS, you have to put into the 
field a big dog that can back up his bark. Otherwise you have a little 
puppy on the porch that is meowing with the cats. It is not going to 
change the IRS to put a toothless puppy in as an advisory board. I 
believe a full-time board can give us the strength we need for vital 
reform. I ask for support of my amendment.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. I was concerned as to where that animal analogy was going 
to go. Again, I appreciate very much what the Senator from Missouri is 
trying to do. I think the intent is shared both by myself and the 
chairman of the committee. We believe very strongly that this amendment 
would actually reduce the President's ability to find qualified people 
to come and bring their considerable expertise to assist the 
Commissioner who will be granted new authority to manage the Internal 
Revenue Service to restructure and improve customer service, improve 
the use of technology, and increase the satisfaction that customers of 
the IRS get.
  So although it is well intended--I actually started out where the 
Senator from Missouri is--I believe it will make it more difficult for 
us to get the kind of people the Commissioner needs to serve on this 
board.
  The PRESIDING OFFICER. The question is on agreeing to the Bond 
amendment. The yeas and nays have been ordered. The clerk will call the 
roll.
  The bill clerk called the roll.
  Mr. FORD. I announce that the Senator from Hawaii (Mr. Akaka) is 
absent due to a death in the family.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The result was announced--yeas 25, nays 74, as follows:

                      {Rollcall Vote No. 121 Leg.}

                                YEAS--25

     Abraham
     Ashcroft
     Bond
     Burns
     Campbell
     Coverdell
     Craig
     D'Amato
     DeWine
     Faircloth
     Frist
     Gramm
     Hollings
     Hutchinson
     Inhofe
     Kempthorne
     Kyl
     McCain
     McConnell
     Nickles
     Shelby
     Smith (NH)
     Stevens
     Thomas
     Thurmond

                                NAYS--74

     Allard
     Baucus
     Bennett
     Biden
     Bingaman
     Boxer
     Breaux
     Brownback
     Bryan
     Bumpers
     Byrd
     Chafee
     Cleland
     Coats
     Cochran
     Collins
     Conrad
     Daschle
     Dodd
     Domenici
     Dorgan
     Durbin
     Enzi
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchison
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Sessions
     Smith (OR)
     Snowe
     Specter
     Thompson
     Torricelli
     Warner
     Wellstone
     Wyden

                             NOT VOTING--1

       
     Akaka
       
  The amendment (No. 2341) was rejected.
  Mr. ROTH. I move to reconsider the vote.
  Mr. KERREY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GREGG addressed the Chair.
  The PRESIDING OFFICER (Mr. Burns). The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I know there are a number of Members who 
wish to speak, so I will keep my comments brief. But first I want to 
congratulate the chairman of the committee, Chairman Roth, for bringing 
forward this really excellent bill to try to address what have been 
some extraordinary abuses which have been testified to before his 
committee and testified to in other arenas.
  In my own case, I held a meeting in New Hampshire--a number of 
meetings, and found that we have had over 75 cases involving complaints 
involving the Internal Revenue Service since I have been in the Senate, 
which is an extremely high percentage.
  We held a number of meetings. In one of the meetings, we had a 
presentation that was really disturbing--two presentations, in fact. 
The first was a fellow who practiced tax law and tax preparation for 
over 27 years who brought in a memo, an actual memo that he had taken 
off the desk of an agent. And the memo stated very bluntly that the IRS 
agents in that arena, in that area, were to collect a specific amount 
of dollars. Not only were they to collect a specific amount of dollars, 
but they were to collect a specific amount of dollars every month. In 
fact, it went further. It said how much they were supposed to collect 
every day, almost down to every hour--how much money the agents in that 
area were supposed to collect. It was not collection on the basis of 
people who legitimately owed taxes; it was collection on the basis of a 
quota system. It was outrageous that such a memo should exist or such 
direction should occur with this agency.
  The second instance, which was even more disturbing because it led to 
a death, involved a fairly well known case now in New Hampshire of Mrs. 
Barron and Mr. Barron. Mrs. Barron's husband was essentially driven to 
suicide as a result of the abusive and totally inappropriate tactics 
that the Service, and a specific member of the Service, used in 
pursuing Mr. Barron for collection of taxes that were owed.
  It was so terrible and so outrageous that it did lead to Mr. Barron's 
death and has disrupted and destroyed really Mrs. Barron and her 
family. As of today--in fact, I believe it will be announced today--
Mrs. Barron has now finally received, after 5 or 6 years, some slight 
recompensation from the Internal Revenue Service in that they have 
dropped all action against her and against her husband's estate, and 
stated that they will no longer pursue the liability which they 
originally alleged was due and which drove this family into such 
despair. The manner of the collection was just horrific. The way in 
which they proceeded was horrific.
  Of course, we have seen testimony before the Senate committee on 
which Chairman Roth has been holding hearings which reflected agents 
coming into slumber parties and forcing young children to get dressed 
in front of them, at gunpoint essentially, and throwing a household 
into chaos in that manner.
  Even a former majority leader of this Senate, Senator Baker, was 
subject to what amounted to extortion as a result of the activities of 
what I think was then a rogue agent pursuing Senator Baker.
  The instances go on and on. And almost every Member of this Senate, I 
suspect, has cases in their home State of abuse, of action taken by 
specific agents which went beyond anything which we in a democracy 
should tolerate.
  Thus, this bill is absolutely appropriate because this bill puts the 
taxpayer back on a level playing field. Instead of treating the 
taxpayers as if

[[Page S4403]]

they are guilty until proven innocent--just the exact opposite of the 
way our culture proceeds--this bill puts the burden back on the 
Internal Revenue Service, where the taxpayer can present a reasonable 
case.

  In addition, this bill says to the spouse, who is just a bystander, 
that they will not end up being treated unfairly or abused as a result 
of the misdeeds of their husband. And in most instances where the 
spouse simply signs the return, the innocent spouse language in this 
bill is very, very appropriate. And the chance to recover from the IRS 
for damages which are caused as a result of excessive activity on the 
part of agents who may act outside the reasonable course of collection 
of taxes is also very appropriate in this bill.
  So this is truly a strong bill. It is dedicated to the purpose of 
trying to rein in the Internal Revenue Service management activities 
and make the Internal Revenue Service a more responsible agency as it 
deals with our citizenry. Because the bottom line, quite honestly, in 
our tax collection service, in our tax collection system as a 
democracy, is that people have to have confidence; they have to have 
confidence in the system. They have to have confidence that when they 
pay their taxes, they are paying, No. 1, their fair share and, No. 2, 
they are going to get fair treatment in the manner in which their taxes 
are reviewed. And as people lose that confidence, we will lose 
compliance.
  What we have seen basically is that people have lost their confidence 
in the manner in which the Internal Revenue Service pursues the 
collection of taxes in this country. This bill will hopefully move a 
large step down the road towards reestablishing faith in the collection 
process that we pursue in this Nation for our tax obligations.
  It does not get to the underlying problem, of course, which is that 
the tax laws have become far too complex, far too intricate, have 
gotten to a point of legal mumbo jumbo that very few people can 
understand what the tax laws actually say or can even comply with them 
without the assistance of professionals. That issue we also need to 
address as a Congress.
  We need to simplify, make fairer, make flatter our tax system; make 
it a more comprehensible and understandable tax system. Pending doing 
that, which I hope we will do in the next year or so, this bill is a 
major stride forward in giving the taxpayers fairer and better 
treatment under the Internal Revenue Service procedures and allowing 
taxpayers to be treated like citizens of a democracy rather than 
citizens of a police state.
  Mr. President, I yield back such time as I may have.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I ask Senator Allard, do you want to proceed with your 
comments?
  Mr. ALLARD. Thank you, Mr. Chairman.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.
  Mr. ALLARD. Mr. President, I rise in support of H.R. 2676.
  Mr. President, I also want to talk about reform of the Internal 
Revenue Service. The Senate Finance Committee examined this issue last 
year, and they recently conducted a careful reexamination. I commend my 
colleagues, particularly the chairman of the Finance Committee, for 
their vigilance on this issue.
  They have worked very hard to identify problems with the Internal 
Revenue Service and to craft legislation to correct the problems that 
were pointed out during committee hearings.
  As we saw in the hearings last fall, the IRS has lacked 
accountability for years. The most recent hearings remind us of the 
importance of reforming this institution.
  No one can dispute the fact that we must end business as usual at the 
IRS.
  We must bring accountability and integrity back to the IRS.
  American citizens should not live in fear of their government.
  Certainly most IRS employees work diligently and honestly to insure 
that they administer the nation's tax laws accurately and fairly.
  But as we have seen, the IRS as an institution has fostered a culture 
that tolerates and at times even encourages those few who operate 
outside the law.
  We desperately need reforms to bring to justice those agents and 
elements within the IRS that have so far flauted the law.
  The best way to curtail the power of the IRS is to simplify our 
nation's tax laws.
  Congress is the principal entity responsible for the tax code.
  Frankly, I believe Congress should scrap the current tax system and 
start fresh with a simple and fair system.
  The federal tax burden on hard working Americans is excessive and 
overly intrusive, and reform is long overdue.
  By striking at the heart of the problem with a fairer, flatter tax 
system, Congress will put an end to abusive IRS practices.
  Until Congress is able to pass substantive changes to the nation's 
tax system that the President is willing to sign, we must reform the 
IRS.
  Senator Roth's bill would create an independent oversight board that 
would redefine IRS accountability.
  The board would provide desperately needed oversight of the 
management and operation of the IRS, as well as its enforcement and 
collection activities.
  Taxpayers have a right to expect honesty and integrity in their 
dealings with the IRS.
  In fact, the mission statement of the IRS calls on its employees to 
perform in a manner warranting the highest degree of public confidence 
in their integrity, efficiency, and fairness. Let me repeat that. The 
mission statement of the IRS calls on its employees to perform in a 
manner warranting the highest degree of public confidence in their 
integrity, efficiency, and fairness.
  When this fundamental trust is breached, taxpayers must have adequate 
recourse.
  The Senate IRS reform bill gives them the necessary recourse.
  Taxpayers would have expanded ability to collect damages and expenses 
when they are the target of improper IRS actions.
  Also, agents who take improper actions, such as improper seizures we 
have heard on this floor, false statements under oath, which was heard 
in the committee, falsifying documents, we heard those before, 
violation of taxpayer confidentiality, and even harassing a taxpayer, 
would be terminated under the Senate bill.
  While it is important to make whole those who have been injured by 
the IRS, it is even more important to prevent abuses from ever 
happening.
  Senator Roth's bill would provide this important protection for 
taxpayers.
  Innocent spouses could no longer be held liable for the tax debts of 
their spouse, and spousal liability would be limited on joint returns.
  Thanks to this bill, taxpayers will finally receive due process in 
their dealings with the IRS, which I think is a significant part of 
this bill.
  IRS agents would have to follow specific procedures before seizing 
assets or filing liens, and they would be prevented from seizing 
someone's home for a minor tax liability.
  The IRS would also be subject to the same Fair Debt collection 
standards that all other bill collectors in America are required to 
follow.
  This year I have met with citizens in all 63 counties of Colorado.
  In many of those meetings I had, I constantly heard about how 
frustrating and intimidating it can be to deal with the IRS. The Senate 
IRS reform bill would make it easier for citizens to communicate with 
the IRS.
  The bill would require all IRS notices and correspondence to include 
the name, phone number, and address of an IRS employee that the 
taxpayer should contact regarding the notice.
  It would also be easier to contact the IRS with general questions 
since they would finally be required to publish local phone numbers and 
addresses in the phone book.
  Unfortunately a few agents have elected to use the IRS as their 
personal weapon, but the abuse of taxpayers must stop.
  The IRS must recommit itself to serving the taxpayers.
  The Senate IRS reform bill is a significant step towards that goal.
  According to Judge William Downes,

       The conduct of our Nation's affairs always demands that 
     public servants discharge their duties under the Constitution 
     and the laws of this Republic with fairness and a proper 
     spirit of subservience to the people whom they are sworn to 
     serve. Respect for the law can only be fostered if citizens 
     believe that those responsible for implementing and enforcing 
     the law are themselves acting in conformity with the law.


[[Page S4404]]


  I conclude by saying Congress must pass this legislation to end 
abusive practices and restore American confidence in the IRS.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.


                           Amendment No. 2344

 (Purpose: To examine the transfer pricing enforcement efforts of the 
                       Internal Revenue Service)

  Mr. DORGAN. Mr. President, I rise to offer an amendment on behalf of 
myself and Senator Reid from Nevada. I believe the amendment has been 
worked out.
  Let me describe it briefly. As I describe this amendment, let me say 
that the issue that is addressed in this bill dealing with the behavior 
of the Internal Revenue Service is an important issue. Stories with 
respect to hearings that have been held here in recent months, stories 
of abuse and taxpayer harassment, are stories that reflect horrible 
mismanagement, in my judgment, at the Internal Revenue Service.
  This bill serves notice that that kind of behavior will not ever be 
tolerated at the Internal Revenue Service. This piece of legislation 
gives taxpayers some muscle to fight back when and if this occurs, and 
this piece of legislation makes some management changes at the Internal 
Revenue Service, some structural changes, to make sure the 
mismanagement does not occur again.
  Now, there is another issue, however, that is important and this 
issue has not been the subject of hearings. That is the issue of 
enforcement. You must have a tax system to collect the money to do the 
things we need to do as a country--provide for our common defense, to 
pay for roads, to pay for health research, to pay for food safety, to 
pay for environment protection. So who pays those taxes? What kind of 
agency collects them and who pays the taxes?
  We want to make sure our tax laws are enforced sufficiently so that 
some of the largest economic interests are not getting by paying zero 
taxes while the working families, who get out, go to work and work all 
day, and have a salary or a wage and have withholding taken out of 
their check, pay their taxes because they have no choice and no 
flexibility.
  A recent study done by the GAO says foreign-controlled corporations 
doing business in the United States and not paying taxes equal 73 
percent of all foreign corporations doing business here. Let me say 
that another way. If you think of the brand names of foreign products 
that you purchase in this country, just the most common brand names of 
companies who sell billions of dollars' worth of products in this 
country, and make billions of dollars in net income in this country, 
you can be sure that some of those names you just thought of are part 
of this 73 percent who do business here, make money here, and pay no 
taxes here--none, none at all. Seventy-three percent of foreign-
controlled corporations doing business in the United States pay zero in 
Federal income taxes.
  Now when they come here and compete against a U.S. corporation that 
does business only here and must pay taxes only here, they are engaged 
in unfair competition because they do business here tax free while our 
domestic business pays a tax to our country. This deals with tax 
enforcement.
  The reason I offer this amendment is I want to just describe in a 
moment how tax avoidance occurs in this area and why it is important to 
have an Internal Revenue Service that is making sure these corporations 
pay their fair share of taxes in this country as well.
  There have been a number of studies--a GAO study, a Treasury study, 
an IRS study, a study by two professors from Florida, Pak and 
Zdanowicz. Let me show Members what these studies have told us. 
Corporations, in this case foreign corporations doing business in this 
country, can simply inflate the cost of what they are selling to their 
U.S. subsidiary that they wholly own, and when they inflate the cost of 
the product they are selling to their wholly owned subsidiary, their 
subsidiary in the United States ends up doing a lot of business but 
ends up paying no taxes because they say they made no profits.
  Let me give you an example of pricing. Tweezers. A pair of tweezers 
for $218. You have been to a drugstore or a grocery store and bought 
tweezers. Did you pay that for tweezers? I don't think so. Tweezers are 
priced at $218 so that a foreign corporation can overcharge to the 
domestic subsidiary and, therefore, take all the profit out of that 
subsidiary and claim they made no profit in the United States.
  How about safety pins for $29 each? That is $29 for a safety pin. 
That is another way to price your profit out of the United States and 
show no income and pay no taxes to the United States.
  How about a toothbrush imported into the United States from France 
for $18 apiece? Has anybody here bought a toothbrush for $18 apiece 
lately?
  There is another way to do this, by the way, which is that 
corporations can have a foreign subsidiary in another country and they 
underprice their export to that foreign subsidiary, and that tends to 
move profits away from the United States as well.
  Let me tell you what they do there. How about a piano, selling a 
piano to a company in Brazil for $50? Or what about tractor tires, 
selling a tractor tire to France for $7.69? Do you think U.S. farmers 
are able to buy a tractor tire for $7.69? How about a bulldozer for 
$551? You all know what a bulldozer looks like. Do you think you can 
buy that for $551? How about a missile-rocket launcher for $58? That is 
the way you move income around and end up not paying income tax to the 
United States of America, when all the rest of the taxpayers here pay 
the tax.
  My point is very simple. How do you enforce what is called arms-
length transactions between related corporations? Well, you take all 
their transactions and try to put them back together and measure 
whether they are priced in a way that would represent fair market 
prices. That is like taking two plates of spaghetti and trying to 
attach the ends of the spaghetti. It cannot be done. The result is 
billions and billions and billions of dollars--some estimates are over 
$40 billion a year--are lost to the U.S. Treasury through massive tax 
avoidance, while we are worried about whether people who go to work 
every day pay their taxes--and they do pay them because they don't have 
any flexibility; they can't get out of it and they can't overprice 
tweezers to $18 and tractor tires to $7.60. They pay their tax.
  I want the IRS to worry about enforcement of our tax laws with 
respect to those who are doing business here to the tune of tens of 
billions of dollars, earning income here to the tune of tens of 
billions of dollars, and paying zero to this country in taxes. American 
firms that do business here must pay taxes; so too should foreign 
companies.
  The amendment I offered is very simple. It simply requires the 
Internal Revenue Service Oversight Board that we are creating to 
conduct a study of whether the IRS has the resources needed to prevent 
the tax avoidance by these companies. In other words, do they have the 
resources to enforce in this area, No. 1; and No. 2, to analyze how 
much we are losing in this area of tax avoidance.
  It is, in my judgment, scandalous. I refer anybody who is interested 
to the study by Pak and Zdanowicz, released not long ago. They are two 
Florida doctors who say that the U.S. Government was cheated out of 
$42.6 billion in tax revenues in 1997. That is a huge area.
  I heard all this discussion on the floor about the IRS targeting low-
income folks. That represents a different sort of enforcement. That 
deals with the earned-income tax credit. That is why that is happening. 
What about targeting the folks doing business here and not paying taxes 
here, who are earning billions of dollars every year in the United 
States in profits and using price transfers to price their income out 
of this country and shield it from the U.S. taxpayer? Shouldn't they 
have to pay income tax on their profit as well?
  My amendment requires the oversight board to do certain things and 
report back to Congress within a year. I hope that perhaps this will 
stimulate some activity to take a look at this area and to see if we 
can't get the taxes that are owed this country by foreign corporations 
doing business in this country, making a great deal of money and paying 
nothing--literally zero--in Federal income taxes. My understanding is 
that this amendment has been cleared on both sides and, if so, I would 
only need a voice vote.
  Mr. KERREY. Mr. President, we are prepared to accept this amendment. 
It

[[Page S4405]]

requires a study to be done. I think it is a very important amendment. 
I appreciate the Senator bringing it onto this bill and bringing it to 
our attention. There is a problem with noncompliance; it is a big 
problem. Indeed, there is a problem in the IRS with noncompliant 
taxpayers, and Americans believe a problem with the IRS is that people 
who are complying are being harassed by the IRS. We have spent a lot of 
time, as is appropriate, dealing with the second category. I appreciate 
what the Senator is asking for very much.
  Mr. ROTH. Mr. President, likewise, I am willing to accept the 
amendment of the Senator from North Dakota.
  The PRESIDING OFFICER (Mr. Hutchinson). Will the Senator call up his 
amendment?
  Mr. DORGAN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan], for himself and 
     Mr. Reid, proposes an amendment numbered 2344.

  Mr. DORGAN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 394, between lines 15 and 16, insert:

     SEC. 3803. STUDY OF TRANSFER PRICING ENFORCEMENT.

       (1) In general.--The Internal Revenue Service Oversight 
     Board shall study whether the Internal Revenue Service has 
     the resources needed to prevent tax avoidance by companies 
     using unlawful transfer pricing methods.
       (2) Assistance.--The Internal Revenue Service shall assist 
     the Board in its study by analyzing and reporting to the 
     Board on its enforcement of transfer pricing abuses, 
     including a review of the effectiveness of the current 
     enforcement tools used by the Internal Revenue Service to 
     ensure compliance under section 482 of the Internal Revenue 
     Code of 1986 and to determine the scope of nonpayment of 
     United States taxes by reason of such abuses.
       (3) Report.--The Board shall report to Congress, not later 
     than 12 months after the date of enactment of this act, on 
     the results of the study conducted under this subsection, 
     including recommendations for improving the Internal Revenue 
     Service's enforcement tools to ensure that multinational 
     companies doing business in the United States pay their fair 
     share of United States taxes.

  Mr. DORGAN. Mr. President, I urge adoption of my amendment.
  The PRESIDING OFFICER. Without objection, the amendment is agreed to.
  The amendment (No. 2344) was agreed to.
  Mr. REED. Mr. President, I ask unanimous consent to proceed as in 
morning business.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. KERREY. I wonder if the Senator would specify an amount of time. 
Senator Graham of Florida is going to offer an amendment, and we would 
like to keep moving on the bill. Do you have a period of time in mind?
  Mr. REED. I will finish within 10 minutes, or maybe much less.
  Mr. KERREY. Fifteen minutes is fine with me.
  Mr. REED. Mr. President, it will be way under that.

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