[Congressional Record Volume 144, Number 55 (Wednesday, May 6, 1998)]
[Senate]
[Pages S4413-S4428]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998

  The Senate resumed consideration of the bill.


                      Unanimous Consent Agreement

  Mr. ROTH. Madam President, I ask unanimous consent that the following 
list of amendments that I send to the desk be the only remaining first-
degree amendments in order to H.R. 2676, and that they be subject to 
relevant second-degree amendments.
  I further ask unanimous consent that following the final vote on the 
bill, the Senate insist on its amendment, request a conference with the 
House on the disagreeing votes, and the Chair be authorized to appoint 
conferees on the part of the Senate.
  The PRESIDING OFFICER. Is there objection?
  Mr. BAUCUS. I checked with the minority side. It is my understanding 
this has been agreed to by both sides, and his request is consistent 
with the understanding on this side as well.
  Mr. ROTH. That is correct.
  The PRESIDING OFFICER. If there is no objection, without objection, 
it is so ordered.
  The list of amendments follow:


                  Republican Amendments to IRS Reform

       Roth--Effective Dates.
       Roth--Relevant.
       DeWine--Tech. Correction to Sec. 1059 of the Code.
       DeWine--Tax Payer Compliance.
       Collins--Reporting Requirements for Universities.
       Thompson--Relevant.
       Sessions--IRS Oversight Board.
       B. Smith--Upward Reviews of Employees.
       Stevens--Modify tools of trade exemption.
       Craig--Taxpayer notification.
       Craig--Taxpayer notification.
       Craig--Taxpayer notification.
       Ashcroft--electronic verification.
       Coverdell--Random Audits.
       Coverdell--Tax Clinics.
       Coverdell--Tax Clinics.
       Coverdell--Employees.
       Coverdell--Mathematical and Clerical Errors.
       Domenici--Spanish IRS Help Line.
       Domenici--Live Person Help Line Option.
       Domenici--Suspend Interest in Penalties.
       Gramm--Lawsuit Waivers.
       Gramm--Burden of Proof.
       Gramm--Relevant.
       Enzi--Charitable Contribution Technical Corrections.
       Burns--Income Averaging for Farmers.
       Bond--Electronic Filing.
       Mack--Tip Reporting.
       Mack--Treasury Secy.
       Grams--Disasters.
       Lott--Relevant.
       Faircloth--Relevant.


               democratic amendments to irs restructuring

       Moynihan--Delay effective dates of certain provisions to 
     allow IRS to address Y2K problems, per Rossotti request.
       Kerrey--Require annual meeting between Finance and 
     Oversight Board chair.
       Kerrey--Authorize Treasury Secretary to waive signature 
     requirement for electronic filing.
       Kerrey--Require study of willful tax non-compliance by 
     Joint Tax, Treasury, and IRS Commissioner.
       Kerrey--Require IRS to review certain stats on success rate 
     of Criminal Investigation Div.
       Kerrey--Require report on fair debt collection provisions.
       Kerrey--Encourage private/public sector cooperation, not 
     competition, on electronic filing.

[[Page S4414]]

       Graham/Nickles--Interest netting.
       Graham--Innocent spouses.
       Bingaman--Relevant.
       Daschle--Reduce potential for tax compliance problems.
       Daschle--Relevant.
       Bumpers--Taxpayer protection.
       Kohl--Prioritizing cases in Treasury IG.
       Feingold--Milwaukee office of IRS.
       Durbin--Relevant.
       Feinstein--Relevant.

  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Madam President, since no one is here to speak, I thought 
I would go ahead and say a few words. I have several amendments I am 
going to be offering, and I will, obviously, speak at that time. But I 
wanted to let my colleagues know about a story that ran on the 4th of 
this month, which was 2 days ago, on KTVT, Channel 11, a CBS affiliate 
in Dallas.
  What struck me about this story is how symptomatic the story is of 
what we saw consistently in our hearings before the Finance Committee 
and how consistently this kind of thing is happening all over the 
country.
  The story was the lead story on the 10 o'clock news on the 4th of 
May. The story is about tax collectors who aren't paying taxes. 
Basically, what happened is an investigative reporter asked the 
Internal Revenue Service for records related to tax collectors who 
themselves were violating the Tax Code, and did this ever happen, and, 
if so, what did the IRS do about it and what kind of records were kept. 
It is the kind of request that government at all levels gets every day 
from the media. Government officials do not always like to produce the 
requested information but, nonetheless, it is produced.
  Well, the bottom line is, as you might have guessed, the Internal 
Revenue Service stated that it has no such data. Then an IRS employee 
slipped a document to the TV reporter, and the document showed that 
last year nearly 4,000 IRS employees did not file or pay taxes.
  Collectively, according to reporter O'Connor in this story, they owe 
Uncle Sam more than $10 million. And this reporter said that this 
information coming into their hand forced the IRS to break this down 
into local numbers. The reporter then says, ``We have learned that in 
north Texas, between 1993 and 1996, 137 IRS employees did not file or 
pay their taxes. Last year alone, 14 IRS agents owed $400,000'' in 
unpaid taxes in north Texas.
  Then what I wanted to call to my colleagues' attention is an 
extraordinary, at least in my mind, interview which sounds exactly like 
the testimony our committee heard over and over and over again. Listen 
to this. The reporter is asking Mary Durgin, who is Chief of Tax 
Compliance for the IRS--the reporter is asking the Chief of Tax 
Compliance for the IRS the following questions and let me just read the 
transcript.

       Reporter O'Connor. You know of no Federal liens ever being 
     filed against an IRS employee?
       Ms. Durgin. Um, I'm not aware of any.

  The reporter asks the next question.

       Reporter O'Connor. Do you know how many reprimands have 
     been given in the last year?
       Ms. Durgin. I don't.
       Reporter O'Connor. Do you know how many employees have been 
     suspended?
       Ms. Durgin. I don't.
       Reporter O'Connor. Fired?
       Ms. Durgin. I don't. We don't keep those statistics.
       Reporter O'Connor. Why would you not know that if you're 
     the head of--

  Before she can say ``tax compliance,'' Ms. Durgin says, ``because I 
don't count them.''
  Now, I intend to send this to the Internal Revenue Service this 
afternoon and ask them to check this out, but this is exactly the kind 
of answer that we have gotten over and over and over from the Internal 
Revenue Service. And I intend to offer an amendment, probably tomorrow, 
that will give the head of the Internal Revenue Service the power to 
terminate any employee of the Internal Revenue Service who fails to 
file a tax return that should be filed or who willfully violates the 
tax laws of this country.
  Now, I don't know what is behind this story. I have obviously not 
verified what has been said by this reporter. But I would have to say 
that if 4,000 IRS employees last year either didn't file a return or 
didn't pay taxes, that is a very, very serious charge. And I think the 
head of the IRS ought to have the ability to terminate the employment 
of somebody whose job it is to collect taxes from other people and at 
the same time they don't pay their own taxes.
  Now, as you can imagine, this story interviews a businessperson who 
had their assets frozen, had all kinds of problems because there was a 
charge that he had not paid his taxes, and that is contrasted against 
the assertion that 4,000 IRS agents last year either didn't file a tax 
return or didn't pay their taxes.
  I think this is a very serious matter. We ought to have a provision 
in the new law that says without regard to any other provision of law, 
if you work for the Internal Revenue Service and you willfully violate 
the Tax Code, you ought to lose your job.
  I think that is something that is needed. I think it is a provision 
that we were already looking at, but I wanted to make my colleagues 
aware of this story on the CBS affiliate in Dallas night before last 
and about this extraordinary interview with Mary Durgin who, although 
she is the Chief of Tax Compliance at the IRS, doesn't know if any 
action has ever been taken at any time, in any place, under any 
circumstances, against any agent who violated the Tax Code.
  That seems to me to be extraordinary, and, quite frankly, I would 
have trouble believing it had we not had exactly the same thing and the 
same answers given to very similar questions before our committee 
where, in fact, with all of the concerns that were raised last year, 
with all of the statements that were made about wrongdoing, little 
evidence exists that any individuals who had accusations made against 
them in those hearings or related to those hearings has had any 
corrective action taken.
  As I said at the hearing, and it is something that I will certainly 
repeat tomorrow in offering this and other amendments, my concern with 
the Internal Revenue Service is not that you get some bad people when 
you hire 100,000 people. I mean, people are humans. They make mistakes. 
Some people seem to be more prone to them than others. And very smart 
people from time to time do very dumb things. With the IRS employing 
100,000 people we ought not to be surprised that we have some people 
who do bad things and some people who do dumb things. But that is not 
what alarms me about our current situation at the Internal Revenue 
Service.
  What alarms me is we seem to have a system where people who do bad 
things never have bad things happen to them. We have a system where, 
when people do good things like going to their supervisors and saying 
that other people are violating the law or violating the procedures of 
the Internal Revenue Service, bad things tend to happen to those good 
people. The difference between a good system and a bad system is not 
that under the good system you don't have people who do bad things. You 
do. But under a good system, people who do bad things end up being 
punished; people who do good things end up being rewarded, and as a 
result, people learn from rewards and penalties and so you get more 
good behavior and you get less bad behavior. That is the hallmark of a 
good institution.
  Looking at all the abuses that we heard about during the Finance 
Committee hearings, the amazing thing to me was not that these things 
happened. The amazing thing is it doesn't appear that bad things ever 
happened to the people who did the bad things. It doesn't appear that 
people who violated the law, violated procedures, abused taxpayers, 
abused their fellow employees, were penalized. It appeared as if--based 
on the testimony that we heard--the IRS system was set up to protect 
its senior people or to provide an environment in which you reward 
unproductive and undesirable behavior. You would have to conclude that 
the structure has historically been one aimed at protecting its own 
versus protecting the taxpayer instead of creating a system that tries 
to reward productive behavior.
  I think this is something we need to deal with. I think the bill that 
is before us is a dramatic improvement over the bill in the House. I 
congratulate Chairman Roth. I think he has done an outstanding job. I 
think when we started these hearings many people were skeptical about 
them. I certainly was skeptical. But I think the hearings have

[[Page S4415]]

brought to light real abuses. And the important thing, obviously, for a 
legislative body, is not just to find out what is wrong but to try to 
do something about it.
  I think we have a good bill before us. I don't think it solves all 
the problems. I would have to say I am very skeptical about this 
advisory board. I don't understand an advisory board that is supposed 
to advise the Secretary of the Treasury and the IRS Director, and the 
Secretary of the Treasury is a member of the advisory board. I don't 
understand how you advise yourself. It seems to me that gives the 
Secretary of the Treasury two bites out of the apple, and that is 
probably a mistake.
  There are very real ethical problems that have been raised by the 
relevant agencies of Government that deal in ethics in having the head 
of the Treasury Employees Labor Union as a member of this advisory 
board, since that member, by the very nature of his job and source of 
employment, has a constant conflict of interest. I don't understand how 
you can change the ethics rules of the Government to put people in a 
position where they constantly have a conflict of interest and expect 
much to come out of this advisory board. So, frankly, I know many 
people are talking about the advisory board. I know they have high 
hopes for it. I have very little in the way of high hopes that we are 
going to get much out of this advisory board.

  But what I think we are doing in this bill that will dramatically 
change behavior is, No. 1, we are shifting the burden of proof in 
disputes between taxpayers and the IRS. We are going to have some 
people who will say that in doing so we are jeopardizing our ability to 
collect taxes because the taxpayer is the only person who has access to 
the financial data and records that substantiate the claims made on the 
individual tax return. I think we have come up with an innovative way 
of resolving this. Let me give you the argument for shifting the burden 
of proof, and then describe the innovation that I think answers those 
concerns.
  If you commit a crime, the police come out and investigate the crime, 
they gather evidence, they turn the evidence over to the prosecutor, 
the prosecutor evaluates the evidence, and in doing so, evaluates not 
only whether a crime was committed but evaluates the work of the police 
department and any abuse it might have committed along the way. And if 
the prosecutor is convinced there might be a case, he takes it before a 
grand jury that evaluates the work of the police, the work of the 
prosecutor, and the facts. Then, if the grand jury indicts a person for 
a crime, they go into court where people have a jury of their peers, 
they generally have an elected judge or an appointed judge, and they 
have an independent prosecutor.
  Our problem with the Internal Revenue Service is that we are dealing 
with one agency that is literally investigator, prosecutor, judge, and 
jury all wrapped into one so that we have no effective checks and 
balances. As the ancient Greeks once observed, power corrupts. That is 
basically our problem in the Internal Revenue Service.
  We have not fixed that problem, in my opinion. But the way we tried 
to get at it is to at least give you one thing you have if you are 
accused of being a common criminal, basically saying if you are a 
taxpayer you ought to have rights at least equivalent to a common 
criminal in dealing with your Government. The right that we want to 
guarantee is that the burden of proof is on the IRS to prove that you 
did something wrong, whereas now it is literally true that if you are 
accused by the Internal Revenue Service of violating the Code, the 
burden of proof is on you.
  Here is the innovative way we have tried to protect our ability to 
collect taxes and guarantee this right as well. I thank Senator Roth 
for working with me on this and for the solution that he and his staff 
have come up with.
  The way the bill works is, if the Internal Revenue Service accuses 
you of violating the law or violating the rules with regard to the 
collection of taxes, if you present to them on a timely basis the 
financial data that a reasonable person could be expected to have kept, 
if you turn it over to them when requested, at the point that the 
taxpayer has demonstrated compliance with those requirements, and only 
then, the burden of proof shifts from the taxpayer to the Internal 
Revenue Service.
  I think that answers all the concerns that were raised by IRS, all 
the legitimate concerns that were raised by law professors around the 
country about shifting the burden of proof. There were other concerns 
that this would produce endless hearings and rulings before courts. But 
we have dealt with that concern.
  Another reform contained in the bill and which I think is very 
important, and is something that I have been a champion of along with 
our chairman, is strengthening the principle that if you are audited, 
either in your family's tax return or your business tax return, and you 
had to go out and hire lawyers and accountants to defend yourself--and 
you may spend thousands of dollars defending yourself--that at the end 
of the day if you are found to have complied with the law, that the IRS 
is responsible for reimbursement of the costs you have incurred in 
defending yourself.
  So if I am an honest taxpayer and I paid my taxes and the IRS audits 
me and I have to go out and hire an accountant and a lawyer to defend 
myself, and we go through 18 months of contention, and finally there is 
a ruling that says I didn't violate the law, under our bill now, the 
Internal Revenue Service will now find it more difficult to avoid 
having to compensate me for my cost of hiring a lawyer and hiring 
accountants and defending myself.
  Not only is that fair, but that is going to change behavior, because 
we are going to make this data public, we are going to list publicly 
and report to the Congress on the instances where the IRS has had to 
pay people these costs. We are going to force the Internal Revenue 
Service to make better judgments about whom to go after and whom not to 
go after.
  A final wrinkle on this, which I think is very, very helpful, is that 
if you offer to settle with the Internal Revenue Service and you, say, 
offer to pay $15,000 to settle this dispute, and the IRS says, ``No, we 
won't take your $15,000; we are going to take you to court,'' if at the 
end of the proceedings you are found to owe less than $15,000, not 
counting penalty and interest built up during the time where the 
dispute exists, then the IRS will have to pay your legal and accounting 
costs from the time you made the offer until a final settlement is 
eventually reached.
  This is a long way from the checks and balances we have in the 
criminal justice system. I would like to go further in separating the 
functions of the IRS so that we have more checks and balances, but I 
think our bill is a dramatic improvement over the House bill. I am very 
proud of what we have done. I hope we can do more. I congratulate our 
chairman.
  I understand that Senator Thompson is here, so I yield the floor.
  Mr. THOMPSON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized.


                           Amendment No. 2356

(Purpose: Striking the exemptions from criminal conflict laws for board 
                   member from employee organization)

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

       The Senator from Tennessee (Mr. Thompson), for himself and 
     Mr. Sessions, proposes an amendment numbered 2356.
       On page 180, beginning with line 7, strike all through page 
     181, line 17.

  Mr. THOMPSON. Madam President, the amendment I am offering, with 
Senator Sessions and with the support of Chairman Roth, strikes the 
provision of title I of the bill which provides for a special waiver of 
the criminal conflict of interest laws for the employee organization 
representative on the newly organized oversight board.
  As chairman of the Governmental Affairs Committee, I have a specific 
interest in the application of Government ethics laws and any waivers 
of these criminal statutes which might be granted to Federal employees.
  During markup of the measure, the Finance Committee adopted an 
amendment adding a member to the oversight board who would be a 
representative of an employee organization representing substantial 
numbers of IRS employees. However, because of the inherent conflict of 
interest in the new member's

[[Page S4416]]

position, the committee adopted a subsequent amendment waiving four 
essential ethics laws as they would apply to this particular board 
member.
  It is this specific provision that I propose to strike. Under the 
waivers as granted, the employee organization representative would not 
be subject to the same ethics rules as the other members of the 
oversight board and would not be subject to the same ethics that apply 
to other public employees. The bill, as reported, exempts the employee 
organization representative from key ethics laws when the 
representative is acting on behalf of his or her organization.
  The Office of Government Ethics reviewed these waivers and found them 
very troubling. In a letter addressed to the majority leader, Senator 
Lott, minority leader Senator Daschle, and the floor managers of this 
bill, the Director of the Office of Government Ethics, Stephen Potts, 
described these conflict of interest waivers as unprecedented and 
inadvisable and antithetical to sound Government ethics policies and, 
thus, to sound Government.
  I ask unanimous consent to have printed in the Record the referenced 
letter.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                             U.S. Office of Government Ethics,

                                      Washington, DC, May 1, 1998.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, Washington, DC.
       Dear Mr. Leader: This Office has reviewed H.R. 2676, the 
     Internal Revenue Service Restructuring and Reform Act of 
     1998, as it has been reported by the Finance Committee and, 
     we understand, is soon to be taken up by the Senate. At the 
     request of both the majority and minority, we provided 
     technical assistance to the Finance Committee staff with 
     regard to drafting the language of provisions setting forth 
     the ethical considerations for the Members of the Internal 
     Revenue Service Oversight Board. We believe those provisions 
     are written in a clear and technically correct manner.
       However, one provision of the bill, the proposed 26 U.S.C. 
     Sec. 7802(b)(3)(D), provides for waivers of applicable 
     conflict of interest laws for one Member of that Board. We 
     believe that this provision is antithetical to sound 
     Government ethics policy and thus to sound Government. Such 
     across-the-board statutory waivers for someone other than a 
     mere advisor is unprecedented and, we believe, inadvisable.
       We understand and agree that the employees of the Internal 
     Revenue Service should have an opportunity to be heard in any 
     decisions that may affect them. As we stated in a letter to 
     the Finance Committee, there are standard ways of allowing 
     input from interested parties without allowing the interested 
     party to be the actual decision-maker in a Governmental 
     matter. It is the latter role that is fundamentally at odds 
     with the concept that Government decisions should be made by 
     those who are acting for the public interest and not those 
     acting for a private interest. The one private interest that 
     is being waived in each case for this Board Member is the one 
     most fundamentally in conflict with his or her duties to the 
     public.
       On the other hand, we cannot recommend that the waivers be 
     eliminated for the individual appointed to such a position. 
     That elimination would leave this individual extremely 
     vulnerable to charges of criminal conduct for carrying out 
     many Oversight Board actions or for carrying out his or her 
     private duties for the employee organization. The fact this 
     vulnerability exists exposes the pervasiveness of the 
     conflicts for an officer or employee of an employee 
     organization to serve on the Oversight Board.
       Rather, we recommend the elimination of the position on the 
     Board that creates such inherent conflicts. The elimination 
     of the position could be coupled with a requirement that the 
     Board consult with employee organizations. While we think a 
     reasonable Board would consult without that requirement, 
     requiring consultation might provide some assurance to the 
     various employee organizations that they will be heard.
       The criminal conflict of interest laws should not be viewed 
     as impediments to good Government. They are there for a 
     purpose and should not be waived for mere convenience. Some 
     may point out that certain provisions of these laws are 
     waived by agencies quite frequently. That is true. Some of 
     the laws anticipate circumstances where a restriction could 
     be waived and set forth the standards that must be met to 
     issue waivers. Agencies can and do issue such waivers, but 
     the waivers must meet the tests set forth in the statutes. 
     For those conflicts laws that do provide for waivers (not all 
     do), we believe that it would be extremely difficult for a 
     reasonable person to determine that the interests this 
     individual Board Member will undoubtedly have through his or 
     her affiliation with the organization could meet those waiver 
     tests.
       In order to meet our recommendation, we believe the 
     provisions of Subtitle B, sec. 1101(a) should be amended to 
     eliminate proposed sections 7802(b)(1)(D), (b)(3)(A)(ii) and 
     (b)(3)(D). All other references to an individual appointed 
     under section 7802(b)(1)(D) should be removed and wherever a 
     number of members of the Board is indicated (such as a Board 
     composed of nine members or five members for a quorum) that 
     number should be altered to reflect the elimination of this 
     position.
       We appreciate the opportunity to express our concerns and 
     our recommendations. These are the views of the Office of 
     Government Ethics and not necessarily those of the 
     Administration. We are available to answer any questions you 
     or any other Member of the Senate may have with regard to 
     this letter or the conflict of interest laws. We are sending 
     identical letters to Senators Daschle, Roth and Moynihan.
           Sincerely,
                                                 Stephen D. Potts,
                                                         Director.

  Mr. THOMPSON. Madam President, waiving these conflict of interest 
statutes establishes a very bad precedent. We have an opportunity here 
to avoid a serious conflict of interest pitfall, and I hope all 
Senators will agree and approve adoption of this amendment.
  Thank you, Madam President.
  Mr. KERREY. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KERREY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERREY. Madam President, I would like to speak for a minute on 
the amendment just offered by the Senator from Tennessee and the 
Senator from Alabama striking the provision in title I concerning the 
oversight board and specifically concerning the employee representative 
on that board, and even more specifically the language that will enable 
that board member to function on the board; that is to say, language 
which, by the way, is not precedent setting.
  There are many other cases where people have been given protection 
from very specific areas of conflict of interest in order to be able to 
do their work. In this case, the only protection against conflict of 
interest charges is postemployment, since the individual selected from 
the Department of Treasury is working for the IRS.
  Certainly, we want the law to be written so they are able to go back 
to work with the IRS or do whatever work they had in connection with 
the employee's representative association without being prevented from 
doing so. So that is the only protection that this language provides.

  There are really three sort of threshold questions that Members have 
to both ask and answer as they deliberate this particular amendment. 
The first is one that the Senator from Texas just raised a minute ago, 
which is skepticism about the nature of this board.
  Is this board going to be able to get the job done? I believe 
strongly it is. It is not an advisory board. It is a board with a 
considerable amount of power and authority to guide the Commissioner of 
the Internal Revenue Service. It is a board that has been put together, 
under statute, to have the skills necessary to be able to advise the 
Commissioner on a variety of different things and to give the 
Commissioner input. The board will be making a budget recommendation to 
the Treasury Secretary. That is a considerable amount of power.
  The board will forward three names to be Commissioner of the Internal 
Revenue Service to the President. The board can also instruct the 
President they believe the Commissioner should be removed from office. 
There are other powers enumerated in title I. Certainly one can be 
skeptical, as one always needs to be with any kind of a board. I may be 
proven wrong. I think this board will provide a substantial amount of 
guidance and assistance to the Commissioner. I think the powers that we 
have given this board are right.
  I believe it is as well important to remember that what this 
legislation is attempting to do is create some balance in oversight. 
The executive oversight organization, this new board, should give 
taxpayers a sense that the IRS is more accountable, along with the 
taxpayer advocate provisions that are also contained in title I. 
However, it is important for us to make certain that Congress has the 
right amount of oversight.
  The Restructuring Commission that met for over a year--Senator 
Grassley

[[Page S4417]]

and I were both on that Commission--we heard time after time after time 
the taxpayers, and the providers that are assisting the taxpayers, 
saying that the biggest problem is Congress. There is inconsistent 
oversight. There are six committees to whom the Commissioner must come 
to report. The IRS is not Sears and Roebuck; they have 535 elected 
Members who are the board of directors.
  One of the great tests to discover whether or not we understand what 
the IRS is doing is asking yourself the question: Do we know what the 
IRS budget is? Do you know how much we appropriate on an annual basis? 
It is about $7 billion this year, against about $1.6 trillion of tax 
revenue. They collect 95 percent of all the revenue that this Congress 
authorizes. We authorize the moneys that are to be spent and we specify 
with our tax laws how that money is to be collected and who is to be 
exempted.
  I made the point many times that we talk a great deal on this floor 
about the need for simplification. One of the most powerful witnesses 
that the Finance Committee had before us was an individual, a tax 
lawyer who helps taxpayers, who was pointing out some abuse in our Tax 
Code. He was saying to us, as long as you tax income, as long as you 
have a tax on income, it is likely, as income becomes more and more 
complicated, and more and more complex, it is likely the IRS is going 
to become more and more involved in making determinations whether or 
not an individual has voluntarily reported the right amount of income.
  And we change our Tax Code. I guess 2 or 3 weeks ago, when the 
Coverdell IRS bill was passed--I do not want to reargue that bill, but 
no one can argue that that increased not only the complexity of the 
Code and requires the IRS to work harder, but we have asked them to now 
rewrite the Code. That is the 63rd change since 1986.

  In addition to that, the IRS is going to have to make certain that 
people who claim that deduction, claim to be able to use that 
educational IRA, they are going to have to provide receipts. Because 
the law says that you can use the education IRA for any expense that is 
connected to the education of the child in the school, and thus we are 
going to have to have the IRS out there if something is claimed and 
they can be audited and have to produce all those records and produce 
proof. They are not being required to produce the proof and records by 
accident, Mr. President. They are being asked to produce the records 
and proof because we wrote a law that said they had to do it.
  So one of the things we are trying to get with this oversight board 
is some balance and get to a point where both the executive branch and 
the legislative branch can reach agreement on what we want the mission 
of the IRS to be so they can make good investments in tax system 
modernization.
  The Senator from Alabama is on the floor. He and I started this thing 
back in 1995 with our oversight efforts in appropriations. We saw that 
nearly $4 billion had been wasted in the tax system modernization. 
Every witness, public and private, that came before the Restructuring 
Commission said the reason, No. 1, is you do not know what you want to 
use the technology for. You do not get shared consensus. You do not get 
to a point where you agree--the Congress and the executive branch--what 
the purpose of the technology is going to be. And as the man said, ``If 
you don't know where you're going, any road will take you there.''
  That is exactly what the IRS has been doing. They have been deploying 
technology in a very dysfunctional organization, and as a consequence 
the technology will not do what they promised us it was going to do.
  So threshold question No. 1 is, do you think this new oversight board 
is going to get the job done? I think it will. I think it will 
dramatically change the kind of accountability taxpayers get, and 
especially if we combine that with new oversight requirements on the 
part of the Congress. I am confident that oversight board--in 
combination with new oversight requirements of the Congress--I am 
confident that oversight board will increase the accountability and the 
operating efficiency and provide the Commissioner the kinds of guidance 
that the Commissioner needs.
  Threshold question No. 2 is, who do you want to be on the board? What 
sort of composition? What sort of makeup? There is very little 
disagreement. As I hear from colleagues, we ought to have people with 
private sector expertise. The Senator from Florida earlier came to the 
floor and asked for some change in the bill to put somebody with small 
business experience on this board. I think it is very important that we 
do so. Both Chairman Roth and I agreed to accept that. That has been 
altered, accepted, incorporated into the language.
  But in addition, Mr. President, we also heard from people who have 
gone through the restructuring that the IRS is going to go through. And 
make no mistake about it, Mr. Rossotti, with the new powers that 
Chairman Roth has written into this bill that he will have, Mr. 
Rossotti has a lot of work to do. He is going to go from a three-tier 
geographical system that has 10 regional centers and 33 district 
offices--I mean a tremendously complicated geographical organization 
that started in 1952--he is going to go from that to an organization 
that is along functional lines: Small business, individual business, 
large taxpayer and nonprofit; four different functional categories.

  There is going to be a lot of personnel decisions to be made and a 
lot of personnel changes that have to be made. In addition, if he 
deploys the technology correctly, as we insist he do, and as the 
electronic filing section of this title of this bill allows him to do, 
there is going to be a lot of personnel decisions that have to be made.
  As we heard in the Restructuring Commission, if you are going to make 
that kind of tough Restructuring Commission, you are better off having 
a personnel representative on the board. That is why the employee 
representative is on the board. We are not putting an employee 
representative on the board for political reasons, but putting one on 
the board to make sure you have an individual who can sell and who can 
persuade and can help get these kinds of restructuring decisions 
implemented and make certain that there is going to be a minimal amount 
of resistance on the employees' side.
  We heard most eloquently from the new tax authorities in Australia 
that went through a very similar restructuring as we are doing here. 
And we took their example, as well as many other private sector people 
who talked about what happens when you restructure, to say that we 
ought to have an employee representative on the board.
  Now remember, this board lasts for 10 years. It sunsets after 10 
years. Congress may decide that it does not need the board at all 
anymore, may revisit threshold question No. 1 and threshold question 
No. 2. The composition of the board can be revisited at that time as 
well. We may, after these restructuring decisions are made, after you 
have the IRS reorganized along functional lines, and after the 
technology has been fully invested in and implemented, this Congress 
may decide that there is no need to have the representative of the 
employees' association on this board. I feel very strongly going in 
that we need it. That is a threshold question.

  You may find you don't want it. You may have a legitimate belief 
that, no, that ought not to happen. Fine. But if you are going to have 
that person on the board--and I believe a majority of this Senate wants 
an employee representative on the board--if you are going to have an 
employee representative on the board, make it possible for that 
individual to do the job.
  Why would you put somebody on the board and then neuter him with a 
statute that says there will be a conflict of interest? That is what 
this conflict of interest language does. It does not remove this 
representative from all the other conflict of interest laws in every 
one of the other private sectors that people have to abide by. It is 
not a precedent. There are hundreds of individuals throughout 
Government who have been given similar kinds of protection in order to 
be able to do their job.
  I urge colleagues, as they come down and consider this, because it 
will be one of the complicated legal, constitutional issues, you have 
to walk yourself through three questions:
  No. 1, do you think this oversight board will do the job? If you 
don't support the oversight board, it almost doesn't matter what the 
composition is.

[[Page S4418]]

  No. 2, do you think you ought to have an employee representative on 
there to be able to get the support needed to do the tough personnel 
decisions that this Commissioner will have? Look seriously at new 
authorities we are giving the Commissioner. They are almost 
unprecedented. We are giving this Commissioner of the Internal Revenue 
Service, I think quite appropriately, new authorities to be able to 
hire, new authorities to be able to fire.
  The distinguished Senator from Texas earlier indicated he was going 
to offer an amendment adding to the list of reasons that an employee 
can be fired. There are specific lists--I think it is five or six 
items--that if an employee of the IRS does something, they can be fired 
for cause. You don't have to go through the normal personnel 
procedures. Just on the face of it, say if an employee does something 
like that, they ought to be terminated.
  The Commissioner has substantial new authority. They will need the 
full participation and cooperation of the employees of the IRS in order 
to be able to get it done.
  I come to the threshold question No. 2 and say absolutely yes, we 
ought to have an employee representative on this board. If you answer 
that question yes, you have to make certain that the laws are written 
so the individual can do the job.
  What we will have, unfortunately, is a debate about the conflict of 
interest stuff before we have done whether or not the person ought to 
be on the board. It is far better for us to take up the amendment that 
will be offered by some that we not have a Treasury employee 
representative on the board at all.
  If that is your position, if that amendment is successful, we strike 
the employees representative, the conflict of interest thing is 
irrelevant. But if we end up with an employee representative on the 
board--to pass this amendment, which would make it impossible for that 
representative to do their job --it seems to me to put the cart before 
the horse and do something I think no Member wants to do, which is 
basically creating something that will not be able to do the job that 
we wanted to do.
  I hope Members will vote against the Thompson-Sessions amendment. I 
hope they will listen to the arguments that will be offered in detail 
by many people who have great experience with conflict of interest law. 
Listen to the arguments of Senator Levin. Listen to the arguments of 
Senator Glenn. Listen to the arguments of those who understand how it 
is that we deal with conflicts of interest. We deal with them all the 
time.
  This language is in response to the Office of Government Ethics 
concerns about this position. They, frankly, take the position they 
don't want an employee representative on there under any circumstances, 
no matter what you do. Take that position, but that is a policy 
decision that we have to make. We have to decide, Do you want an 
employee representative on? I say yes. Once you have the employee rep, 
we write the law so the individual is able to do the job. That is what 
we are attempting to do with the language that the distinguished 
Senator from Tennessee and the distinguished Senator from Alabama are 
proposing to strike.
  I hope this amendment is defeated. I yield the floor.
  Mr. SHELBY. What is the pending business?
  The PRESIDING OFFICER (Mr. Faircloth). The amendment proposed by the 
Senator from Tennessee and the Senator from Alabama.
  Mr. SHELBY. Mr. President, just for a few minutes I will also talk 
about the IRS reform legislation and a suggestion that I have that I 
think would improve it. I am at this point in time well aware that the 
pending business is another amendment, so I will only speak on this 
subject if I can.
  I think perhaps the most important power given to Congress in the 
Constitution is bestowed to Congress in article I, section 8, the power 
to tax. This authority is vested in Congress, as the President and 
Senate know, because as elected representatives, Congress remains 
accountable to the public, and when they determine tax policy, this 
should be more so.
  Unfortunately, the Internal Revenue Service effectively has the power 
to raise taxes through the use of its interpretive authority. 
Therefore, what I want to talk to the Senate and my colleagues about 
this afternoon for a few minutes is an amendment, which I am not 
offering now but I will in a future time, which will build upon past 
legislative initiatives that afforded protections to taxpayers from 
attempts by the Internal Revenue Service to bypass Congress and raise 
taxes through the regulatory decrees.
  In 1996, Congress passed the Congressional Review Act, which provides 
that when a major agency rule takes effect, Congress has 60 days to 
review it. During this time period, Congress has the option to pass 
what we call a disapproval resolution. The Stealth Tax Prevention Act 
would expand the definition of a ``major rule'' to include any IRS 
regulation which increases Federal revenue.
  For example, if the Office of Management and Budget finds that the 
implementation and the enforcement of a rule has resulted in an 
increase of Federal revenues over current practices for revenues 
anticipated from the rule on the date of the enactment of the statute 
under which the rule is promulgated, the rule will be found to be major 
in scope. Therefore, the amendment, or the legislation that I would 
like to see us adopt, sooner rather than later, would be to allow 
Congress to review the regulation and to prevent back-door tax 
increases on hard-working Americans.
  An excellent example of this occurred last year when the Internal 
Revenue Service attempted to increase taxes through the regulatory 
process. In this instance, the IRS disqualified a taxpayer from being 
considered a limited partner if they ``participated in the 
partnership's business for more than 500 hours during the taxable 
year.'' The effect of this redefinition would have been to make these 
individuals subject to a 2.9 percent Medicare tax. President Clinton 
had included the identical provision in his universal health care 
legislation in 1994. When the administration's plan failed, the IRS 
attempted to subject limited partnerships to the same tax increase by 
using its regulatory powers.
  I believe the intent of the Founding Fathers was to put the power to 
lay and collect taxes in the hands of the elected Members of Congress 
and no one else--not in the hands of the bureaucrats who are shielded 
from public accountability, but in the hands of Congress, who is 
accountable to the American people.
  The proposed Stealth Tax Prevention Act that I want to see become law 
would be particularly helpful in lowering the tax burden on small 
business, which suffers disproportionately from IRS regulations. I 
believe Americans are paying a higher share of their income to the 
Federal Government currently than at any time since the end of World 
War II. Allowing bureaucrats to increase taxes even further at their 
own discretion through the regulatory process, through interpretation 
of the Tax Code, I believe is intolerable.
  I believe this legislation is right and should be passed, and it is 
clearly in the spirit of the IRS reform legislation. This type of 
legislation would help rein in the power of the Internal Revenue 
Service and would leave the tax policy where it belongs, to elected 
Members of Congress, not unelected and not unaccountable IRS 
bureaucrats. I strongly urge my colleagues to get with me, to join me 
in the future in an effort to join the National Federation of 
Independent Business, NFIB, and the National Taxpayers Union, as well 
as a lot of my colleagues who would be supporting this type of 
legislation.

  The bottom line is that the stealth tax legislation that I have been 
talking about would improve accountability and it would put it where it 
belongs--in the hands of Congress and not bureaucrats. I think it is 
something we have to consider and I believe we will consider in the 
future. I have talked to the chairman of the Finance Committee about 
this, as well as other members of the Finance Committee, and they seem 
to be very interested in this. I am going to try to work with them in 
the future.
  I yield to the chairman.
  Mr. ROTH. Mr. President, I say to the distinguished Senator from 
Alabama that I appreciate the fact that he is not raising it on this 
legislation before us, because it is not relevant. But

[[Page S4419]]

I also sympathize very much with the problem he has identified. I, 
indeed, would be happy to work with him because I do not think it is 
appropriate to legislate by regulation. I think that is what he seeks, 
and that is what I would be pleased to work with him on in the future.
  Mr. SHELBY. Mr. President, I appreciate the chairman's statement. I 
have worked with him before. I just think it is very, very important 
for the American people that we, as Members of the U.S. Senate and 
House, should be the people who lay taxes, or reduce taxes, according 
to the Constitution. But that is not what is happening. The Internal 
Revenue Service is doing it through the back door. We should do things 
through the front door because that is the American way, and I think it 
is accountable. I have worked with the distinguished Senator from 
Nebraska on this for several years and got some of this going at his 
suggestion.
  I yield to the Senator from Nebraska.
  Mr. KERREY. Mr. President, I agree with Senator Roth. This is a very 
important matter and issue, and I pledge my full cooperation to work 
with the distinguished Senator from Alabama as well.
  I call to your attention, with the National Taxpayer Advocate, I 
think, we are going to get pretty close to this issue. In addition, by 
organizing--and the law requires it--the IRS along functional lines, we 
will now have small business organized as a single category.
  One of the things Mr. Rossotti has already indicated is that he is 
likely to take some of the secondary recommendations that our 
Commission made. We have large numbers of relatively small businesses 
out there who expend a lot of money and don't pay any taxes at all. 
They have to comply with the code. He believes there may be some 
opportunity for us to significantly relieve a number of individuals--
millions, in his words--that might otherwise have to fill out a form. 
So I think what the Senator has brought to our attention is a very 
important problem; it is taxation without representation. It is 
frustrating. I think we are going to get more accountability with this 
law, and we are going to have vehicles through the taxpayer advocate to 
do the very thing the Senator is talking about. I appreciate it, and I 
pledge my full cooperation to work with him on this.
  Mr. SHELBY. Mr. President, I will wrap it up on this point at this 
time. I am certainly not going to wrap up this issue. I think this 
issue is just now becoming ventilated here and shared with my 
colleagues here in the Senate. A lot of us have known this for a long 
time. But the IRS reform bill that Senator Roth and Senator Kerrey have 
been pushing here is about, among other things, the agency overstepping 
its authority and, in a lot of instances, there are horror stories of 
abusing taxpayers. But I can't think of a worse way to abuse taxpayers 
than when the IRS raises taxes through the back door, by the regulatory 
process, and then we think, how did they do this or why did they do 
this? Why did we give them the authority to do this? Yet, ultimately, 
Mr. President, we are accountable to the voters, as we should be.
  I think this is relevant. I am not going to offer it now in deference 
to the chairman and the Senator from Nebraska. But I want to make it 
clear that this is just the beginning of this fight because this makes 
a lot of sense to the American people.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Iowa.
  Mr. GRASSLEY. Mr. President, I would like to speak to the point that 
the Senator from Alabama just raised. That point would be one of 
agreement. It would be to say that I have had the experience myself of 
having to get corrective legislation through. People would be surprised 
to know that a certain tax law that was in place legally for a long 
period of time was changed by a faceless bureaucrat, who increased the 
revenue and taxed somebody in a way where they hadn't been taxed 
before. And then we have a situation where those of us who want to 
correct what this faceless bureaucrat did find ourselves not only 
getting the bill written, finding all of the cosponsors that one needs, 
but also, then, when you actually get to the point of offering the 
amendment, you have to come up with an offset because there is 
supposedly a cost, not from the original legislation, but because some 
faceless bureaucrat is reinterpreting a tax law, which reinterpretation 
brings more revenue in; and then, if we want to go back to where 
Congress originally was, we have to dig up revenue and have an offset 
to correct something that Congress never intended in the first place.
  So you can see that what the Senator from Alabama is trying to do is 
just to bring a little common sense to the Washington nonsense. I 
applaud him for doing it and also applaud him for not doing it on this 
bill. I commit myself to working with him. I would like to, at this 
point, ask him to see that I am added as a cosponsor to the original 
bill he put in, which has a number already.
  Mr. SHELBY. Will the Senator yield?
  Mr. GRASSLEY. Yes.
  Mr. SHELBY. I would be glad to add you as a cosponsor. I believe we 
are going to pick up a lot of Senators on both sides of the aisle, I 
hope.
  Mr. GRASSLEY. Mr. President, we are just talking about common sense. 
In other words, Congress passes a law. We want to tax at a certain 
level and a certain group of people. A lot of times those laws have 
been in place for a long period of time. Congressional intent was 
followed for a long period of time. And then there is somebody sitting 
in some bureaucracy--in this case, the Treasury Department--that says, 
oh, no, that is not what Congress intended; this is what they intended. 
Then he changes it. We don't have a process for reviewing that. This 
legislation will give a process for that review. But we will not find 
ourselves in a position of having to correct something that is contrary 
to congressional intent, but also with the idiotic situation that we 
somehow have to come up with revenue to offset a change of policy that 
we never intended in the first place.

  So I applaud the Senator and thank him for not bringing it up at this 
point.
  I yield the floor.
  Mr. SESSIONS addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Alabama.
  Mr. SESSIONS. Mr. President, first, I would like to say that I 
appreciate very much Senator Shelby's suggestion for reform of the 
unilateral ability of IRS to increase taxes. I would like to ask my 
fellow Senator from Alabama if he would allow me to be a cosponsor of 
that.
  Mr. SHELBY. Will the Senator from Alabama yield to the other Senator 
from Alabama?
  Mr. SESSIONS. Yes.
  Mr. SHELBY. I would be happy to do that. I think what we need to do 
in the next few weeks, working together with some of my colleagues like 
Senator Kerrey and others on the other side of the aisle, is to let our 
colleagues know what this is and what it does. If we pass this 
legislation in the future, it is going to be another step toward 
accountability for us with the American people. I think it is very 
possible. I will be glad to add the Senator on.
  Mr. SESSIONS. I thank the Senator very much.
  Mr. President, I would like to first congratulate Senator Roth and 
his committee on their effort to reform the Internal Revenue Service. I 
think they have made great progress, and the bill is to be greatly 
praised, is long needed, and I am delighted to see where we are 
discussing this matter.
  I do, however, feel that it is important to join with Senator Fred 
Thompson of Tennessee, who spoke earlier this afternoon on his proposal 
to not waive applicable conflicts of interest laws with regard to 
individuals who sit on the IRS Oversight Board. I do not believe this 
is the appropriate thing to do. I believe we need to deal with this 
forthrightly. It should not be allowed to happen.
  Mr. President, I spent almost 15 years as a Federal prosecutor. I 
prosecuted criminal cases on a regular basis. I personally tried judges 
and public officials for fraud and corruption. My office did many of 
those cases. It was an insidious thing as it occurred.
  We have crafted over the years a series of laws that are designed in 
such a way that those laws protect the public from conflicts of 
interest and other types of unhealthy relationships that would put that 
person in office in a position in which his total fidelity is to

[[Page S4420]]

anything other than the government which he represents. That is what we 
are looking for. Somewhere in the Book of Ecclesiastes the preacher 
said ``A bribe corrupts the mind.'' A conflict of interest corrupts the 
mind. The person is torn. You cannot serve two masters. You can only 
serve one master. A member of a board of the oversight of the Internal 
Revenue Service ought to have a clear mind with one motive, and that is 
to improve and enhance the effectiveness of that institution which is 
fundamentally necessary. At least under the present Tax Code it is 
necessary.
  So I believe this is an important matter. I would like to share with 
the Members of this body the Code sections of the law that would 
apparently be violated and could potentially clearly be violated by an 
appointment of the kind suggested here; that is, a member of the 
Internal Revenue Service Union on the oversight board.
  This is suggested in this fashion: It follows under the rubric of 
bribery, graft, and conflict of interest in the United States Code. It 
is title 18 U.S. Code, section 203. It makes it a crime to seek himself 
or agree to receive any compensation as an agent or attorney for a 
third party when a person is working as an officer for the Federal 
Government.
  We are talking about appointing a member to the board representing 
the Federal Government helping us to develop an effective Internal 
Revenue Service while at the same time receiving compensation as a 
union official in an organization that may well have a conflict of 
interest with the Internal Revenue Service. They are advocates. There 
is nothing wrong with that. Union members are advocates. Their 
commission, their heart and soul is committed to getting the maximum 
return for their members. It is not the same interest as a member of 
the board should have, which is in the public interest. You can't serve 
two masters.
  I suggest that is a potential violation of the law if this member 
were to be on the board. It is not theoretical. We are talking about 
real conflict.
  Section 205 of title 18 of the Criminal Code makes it a crime for any 
Federal employee to appear as an agent or attorney on behalf of anyone 
in a proceedings to which the United States is a party.
  In other words, you can't have a Federal employee of the Government 
appearing in an action against the Government. Frequently the union is 
contesting with the Government. So now we have a person on one side of 
the lawsuit supposedly having his responsibilities solely to the best 
interest of the public of the United States at the same time being paid 
to represent his union members who may well be standing against what 
that interest is.
  Title 18 of section 207 makes it a crime to make certain 
communications to an official of the Federal Government on behalf of 
any other person if the communications are made with intent to 
influence.
  It makes it a crime to make certain communications to an official of 
Government on behalf of any other person if they are made with the 
intent to influence. This section is a dangerous section for any board 
member who is an officer of the union. It was designed really to deal 
with post-employment communications. But in this instance he would 
obviously be making communications both ways.
  Title 18, section 208, is the general conflict of interest provision 
for the United States. It makes it a crime for a Federal employee to 
participate ``personally and substantially'' in any way in a matter 
where he himself, his family, a partner or others have ``a financial 
interest.''
  This individual is paid by the union. It is in his financial interest 
to do the best bargaining he can, the most money and benefits he can 
for his union members. Yet he is serving on the offer side, the board, 
that is supposed to be protecting the public interest.
  I would say, first of all, that I see there is a real danger that 
this member, if appointed as suggested, would in fact be in violation 
of any one or perhaps all four of those criminal statutes. If any of 
these violations are committed--and there are penalties of up to 1 year 
in jail for violation of them, and if any of them were done willfully 
the penalties go up to 5 years in jail, and are a felony. What is 
willful? It is knowingly and with intent to violate the law. I would 
say, first of all, we have four potential violations of criminal law by 
this appointment.
  The Finance Committee to its credit recognized there was a problem. 
Well, they should have. There is a problem. And it is not theoretical. 
It is very real because the member they want to put on this board has a 
conflict of interest.
  They say, ``Well, let's just change this law. Let's pass as part of 
our bill a proposal to exempt them from it, and just say it won't apply 
to this nominee to the board. And that would solve all of our 
problems.'' Well, I wish it were so simple that we could do that. You 
can call a cat a dog but it is still a cat. You can say there is no 
conflict of interest but it is still there under these circumstances. 
That is what the law was passed for.
  I think we need to give some real credit to the Office of Government 
Ethics.
  Mr. President, I serve on the Senate Ethics Committee. We hear 
complaints periodically. Many of them are not well founded at all. But 
we go over them one by one. Staff people analyze them. We read the Code 
and we see if we have a conflict of interest. If we do, we deal with 
that. A lot of Senators have been severely damaged because of founded 
ethics complaints against them over the years.
  But I would just say to you that it is important for this institution 
to make sure that what we are doing is consistent with the highest 
possible standards of ethics and law in this nation.
  The Office of Government Ethics took the extraordinary step on May 
1st of writing a letter dealing with this special project; this very 
special thing. This is what they said.
  First of all, they said the criminal conflict of interest laws should 
not be viewed as impediments to good government. What does that mean? 
Criminal conflict of interest laws should not be viewed as an 
impediment to good government. In other words, what they are saying is 
the criminal ethics laws are for good government. They are not trying 
to stop good government. They are trying to stop conflicts of interest 
that lead people in the position that they cannot effectively carry out 
their duties.
  They go on to say--I am quoting directly--these laws ``are there for 
a purpose and should not be waived for mere convenience.''
  Mr. President, I totally agree. I know it sounds like, well, we just 
have a problem. This is just a technical thing. We can just pass this 
law and exempt this board member from it, and that will be the only 
board member on the Commission exempt from the ethics law, the only 
one, but we will just do that because, well, it is convenient. We would 
like him to be on the Board, and we will just waive the ethics law. But 
you can't do that and expect it to go away. There is a conflict of 
interest that the law legitimately was set up to prohibit to make sure 
that we have an uncorrupted individual on that board. A member who does 
not have influences on them financially or otherwise that would cause 
them to do acts that are not in the public interest. I believe very 
sincerely that we have to deal with this issue and that it will not go 
away.
  We must not do this. It would be a downward slope, a retreat from 
high standards of ethics--actually, a retreat from basic ethics. This 
isn't some gray area; this is flatly prohibited by present criminal law 
for which you can get 5 years in the slammer. U.S. attorneys are 
prosecuting people who do these kinds of things with these kinds of 
conflicts. To pass a law to say everybody else has to adhere to them 
except for one individual because he or she is special is a big 
mistake.
  I can see how people may have not thought it through. I hope all 
Members of this body will give it most serious thought. It would be a 
mistake for us to blithely go along and think this waiver of the ethics 
law is just a mere technicality and see it as somehow an impediment to 
good Government. As the Government Ethics Office said, it is not an 
impediment to good Government; it is good Government. And it is put 
there for a purpose and should not be waived for mere inconvenience.
  Mr. President, I certainly know that the members of this committee, 
the Finance Committee, who worked so hard,

[[Page S4421]]

are determined to reform the Internal Revenue Service. I know they want 
to do what they can. I know they want the influence of the IRS's 
members who have insight into how this enterprise ought to be operated. 
They have some good insight, and they have made some good, constructive 
comments to this legislation. But there are other ways, as the 
Government Ethics Office suggested, to allow them to have input. There 
are other ways to allow them to be able to shape any kind of rules, 
regulations or reforms that are made. There are ways to do this without 
giving up the fundamental principle that a man or woman can only serve 
one master, not two, and should not be holding public office with a 
clear conflict of interest.
  I thank the Chair. I urge my fellow Senators to vote against this 
proposal.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Iowa.
  Mr. GRASSLEY. Mr. President, I find myself this afternoon speaking 
against a lot of my friends with whom I generally agree most of the 
time, and so I am somewhat chagrined that I have to oppose my good 
friend from Alabama and the position he has just taken as he spoke in 
favor of the Thompson amendment. I rise in opposition to it.
  This amendment is not about conflict of interest laws. That is not 
its intent. It is about having an employee representative serve on the 
oversight board. I believe very strongly that we must have the employee 
representative on this oversight board. As you have already heard 
Senator Kerrey say, he agrees with that. We both had the honor of 
serving on this National Commission on the Restructuring of the IRS. We 
were the only two Senators to do so. I think our year's experience 
there taught us something, and that is the value of having people who 
speak for and work with the employees, other than in a management 
capacity, to show their good intent, that they want Government to 
function in an efficient manner and to serve the customers well.
  That would be true of Rob Tobias, who is the current President of the 
National Treasury Employees Union. He served with us on this 
Commission. I was very impressed with him and with his work. With his 
hard work and support, the Commission, by a very strong majority--we 
probably would have had a majority otherwise, but such a slim majority 
that I don't feel we would be here with such a strong piece of 
legislation as we do now--issued a report that calls for far-reaching 
reforms at the IRS. The employees organization and their representative 
contributed substantially to this report and to making sure there were 
strong, substantive recommendations.

  I believe that he or another employee representative will have the 
same effect while serving on the IRS Oversight Board. He and the 
members of his organization want real change at the IRS. The IRS 
employees care about where they work and how they serve the people. 
They want the IRS to run smoothly and their customers to be happy with 
the service they receive. They are caught up today in this culture of 
intimidation, a culture that says, ``We don't care anything about the 
taxpayers, we don't care how we treat the taxpayers,'' whether as a 
taxpayer or just as an American citizen who is doing business with 
them. I believe they want to take pride in where they work and the 
actions of the Internal Revenue Service. The employee representative 
will help ensure that the oversight board makes this happen.
  For this reason, Senator Kerrey and I included an employee 
representative on the IRS Oversight Board when we introduced the first 
IRS restructuring bill last July, S. 1096. For this reason, we offered 
the amendment that put the employee representative back on the 
oversight board during the Finance Committee debate because the 
chairman's mark did not have this in it.
  Now, remember, the House of Representatives passed their bill by a 
vote of 426 to 4--426 to 4--and that bill in the House had an employee 
representative serving on the oversight board. We have strong support 
for this principle. If we are going to have an employee representative 
then on the oversight board, we need to let him do more than just serve 
the coffee while the meetings are going on, because if we do not have 
this language in the bill that the Thompson amendment wants to take 
out, he would not have the same power that we give to other members of 
that oversight board. Otherwise, we lose the benefit of that expertise. 
Otherwise, we lose the benefit of the enthusiasm of the organization 
and its representative to make real change at the Internal Revenue 
Service. Let me say, in short, otherwise, we are just simply wasting 
our time. This is a part-time advisory board. Consequently, it is a 
good place to use his advice.
  The bill before us, as drafted, sets up additional requirements that 
the employee representative must meet. I would like to read from the 
committee report.

       The employee representative is subject to the same public 
     financial disclosure rules as a private life board member. In 
     addition, the employee organization is required to provide an 
     annual financial report with the House Ways and Means 
     Committee and the Senate Finance Committee. Such report is 
     required to include the compensation paid to the individual 
     employee by the employee organization and membership dues 
     collected by that organization.

  In addition, this person must have been confirmed by the Senate of 
the United States before serving on the IRS Oversight Board. These laws 
have been waived for similar purposes before. This is not new; it is 
not landmark. The point being made-- that everybody should abide by the 
same laws--albeit true, but remember, as Senator Kerrey said, we make 
those laws. We are making this policy to make this person an effective 
member of the IRS Oversight Board.
  I conclude by saying that the conflict of interest laws are designed 
to alleviate hidden conflicts of interest. Now, this employee 
representative has no hidden agenda. We know who he works for. And 
guess what. The employee representative on the board works for an 
organization that represents employees. Again, the issue is not waiver 
of laws. The issue is having an employee representative being able to 
serve, and effectively serve, on the oversight board. This, of course, 
is a back-door way, if this amendment were to be adopted, to get rid of 
the employee representative. Or, if he wasn't gotten rid of, it would 
be making him an ineffective member of the oversight board, gutting the 
main intent that we have of his inclusion on the board, because we 
think there can be a contribution, a real contribution, made.

  So, in my opinion, if my colleagues would accept my year's work on 
this issue, being a member of this IRS Restructuring Commission, I ask 
my colleagues to vote against the Thompson amendment. After my work on 
the National Commission on Restructuring, I think, regarding the bill 
we have, and even a much stronger bill that we have now because of the 
work of the Senator from Delaware on the legislation, improving it very 
much as a result of the committee hearings, we need to move forward. 
This would really cause problems if this person is not able to serve on 
this board.
  So I emphasize again, this was in the House Ways and Means bill. It 
was approved by the House of Representatives by 426 to 4, to have an 
employee representative on the board.
  I think all the arguments are very strong. I make no apologies for 
those arguments and would want to have this amendment defeated, the 
Thompson amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Delaware.
  Mr. ROTH. Mr. President, first, I would like to say I regret I cannot 
agree, on this particular issue, with my distinguished friend from 
Iowa, for whom I have the greatest respect. We are, more often than 
not, on the same side of an issue. But, because of the overwhelming 
arguments, at least in my judgment, to the contrary, I must rise in 
strong support of the amendment offered by the Senators from Tennessee 
and Alabama.
  This amendment would strike the special waiver of all the criminal 
conflict of interest laws that were necessary to accommodate having an 
IRS employee representative on the IRS oversight board. Let me say that 
what I say today in no way is in disrespect to the individual who would 
probably be the employee representative, Mr. Tobias. By all reports, he 
is a most dedicated, informed man. But, as I

[[Page S4422]]

said, the problem is that this amendment would strike the special 
waiver of all the criminal conflict of interest laws that were 
necessary to accommodate having such a representative, and waiving all 
the conflict of interest laws is bad policy. It establishes very bad 
precedent.
  When this issue was debated during the Finance Committee markup 
session, the Deputy Director of the Office of Government Ethics, the 
office that was set up and created to ensure that conflicts of interest 
do not arise in the Government, testified that she was not aware of any 
case where all the criminal conflict of interest laws have been 
statutorily waived for a single person.
  Last Friday, the Director of the Office of Government Ethics, in 
identical letters to the majority leader, the minority leader, Senator 
Moynihan, the ranking member, and myself, said that waiving the 
conflict of interest laws for one board member, ``is antithetical to 
sound Government ethics policy and thus to sound Government. Such 
across-the-board statutory waivers for someone other than a mere 
advisor is unprecedented and, we believe, inadvisable.''
  Let me repeat, this statement that it is inadvisable comes from the 
Office of Government Ethics.
  I ask unanimous consent a copy of this letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                    U.S. Office of


                                            Government Ethics,

                                      Washington, DC, May 1, 1998.
     Hon. Trent Lott,
     Majority Leader,
     U.S. Senate, Washington, DC.
       Dear Mr. Leader: This Office has reviewed H.R. 2676, the 
     Internal Revenue Service Restructuring and Reform Act of 
     1998, as it has been reported by the Finance Committee and, 
     we understand, is soon to be taken up by the Senate. At the 
     request of both the majority and minority, we provided 
     technical assistance to the Finance Committee staff with 
     regard to drafting the language of provisions setting forth 
     the ethical considerations for the Members of the Internal 
     Revenue Service Oversight Board. We believe those provisions 
     are written in a clear and technically correct manner.
       However, one provision of the bill, the proposed 26 U.S.C. 
     Sec. 7802(b)(3)(D), provides for waivers of applicable 
     conflict of interest laws for one Member of that Board. We 
     believe that this provision is antithetical to sound 
     Government ethics policy and thus to sound Government. Such 
     across-the-board statutory waivers for someone other than a 
     mere advisor is unprecedented and, we believe, inadvisable.
       We understand and agree that the employees of the Internal 
     Revenue Service should have an opportunity to be heard in any 
     decisions that may affect them. As we stated in a letter to 
     the Finance Committee, there are standard ways of allowing 
     input from interested parties without allowing the interested 
     party to be the actual decision-maker in a Governmental 
     matter. It is the latter role that is fundamentally at odds 
     with the concept that Government decisions should be made by 
     those who are acting for the public interest and not those 
     acting for a private interest. The one private interest that 
     is being waived in each case for this Board Member is the one 
     most fundamentally in conflict with his or her duties to the 
     public.
       On the other hand, we cannot recommend that the waivers be 
     eliminated for the individual appointed to such a position. 
     That elimination would leave this individual extremely 
     vulnerable to charges of criminal conduct for carrying out 
     many Oversight Board actions or for carrying out his or her 
     private duties for the employee organization. The fact this 
     vulnerability exists exposes the pervasiveness of the 
     conflicts for an officer or employee of an employee 
     organization to serve on the Oversight Board.
       Rather, we recommend the elimination of the position on the 
     Board that creates such inherent conflicts. The elimination 
     of the position could be coupled with a requirement that the 
     Board consult with employee organizations. While we think a 
     reasonable Board would consult without that requirement, 
     requiring consultation might provide some assurance to the 
     various employee organizations that they will be heard.
       The criminal conflict of interest laws should not be viewed 
     as impediments to good Government. They are there for a 
     purpose and should not be waived for mere convenience. Some 
     may point out that certain provisions of these laws are 
     waived by agencies quite frequently. That is true. Some of 
     the laws anticipate circumstances where a restriction could 
     be waived and set forth the standards that must be met to 
     issue waivers. Agencies can and do issue such waivers, but 
     the waivers must meet the tests set forth in the statutes. 
     For those conflicts laws that do provide for waivers (not all 
     do), we believe that it would be extremely difficult for a 
     reasonable person to determine that the interests this 
     individual Board member will undoubtedly have through his or 
     her affiliation with the organization could meet those waiver 
     tests.
       In order to meet our recommendation, we believe the 
     provisions of Subtitle B, sec. 1101(a) should be amended to 
     eliminate proposed sections 7802(b)(1)(D), (b)(3)(A)(ii) and 
     (b)(3)(D). All other references to an individual appointed 
     under section 7802(b)(1)(D) should be removed and wherever a 
     number of members of the board is indicated (such as a Board 
     composed of nine members or five members for a quorum) that 
     number should be altered to reflect the elimination of this 
     position.
       We appreciate the opportunity to express our concerns and 
     our recommendations. These are the views of the Office of 
     Government Ethics and not necessarily those of the 
     Administration. We are available to answer any questions you 
     or any other Member of the Senate may have with regard to 
     this letter or the conflict of interest laws. We are sending 
     identical letters to Senators Daschle, Roth and Moynihan.
           Sincerely,
                                                 Stephen D. Potts,
                                                         Director.

  Mr. ROTH. Senators note importantly, I think, how we are a nation of 
laws and we are, indeed, a nation of laws. When it comes to Government 
service, perhaps the most important set of laws is the criminal 
conflict of interest laws. Many of these laws trace their origins back 
to the Civil War era. They were enacted in the 1860s in response to 
misconduct in the procurement process. These laws embodied the 
principle that a Government servant, even a part-time servant, has an 
overriding responsibility to serve the best interests of the American 
public. The punishment for violating this public trust includes 
imprisonment of up to 5 years and penalties of up to $250,000. The 
severity of the penalties reflects the critical importance that these 
laws play in our Government. They serve to protect the public's trust 
in Government employees and the laws are designed to prevent Government 
employees from taking actions that could jeopardize this public trust.
  Let me give a few real-life examples of what could happen if the 
conflict of interest laws are waived for the IRS employee 
representative. Just suppose that a representative of the IRS employees 
union serves on the oversight board and the union files a lawsuit 
against the oversight board. If the conflict of interest laws are 
waived, the union representative could work with the union in preparing 
the lawsuit and at the same time--at the same time--work with the 
oversight board in defending against the lawsuit. Taxpayers would be 
outraged by this conduct, and rightfully so.
  Just suppose the union is asked to make a formal presentation to the 
oversight board. The union representative can make the formal 
presentation and then participate in the oversight board's 
deliberations with respect to the presentation. What message does this 
send to the taxpayer? What does this do to the public trust in 
Government employees and in what Congress is trying to do to improve 
the IRS?
  Let me quote again from the letter by the Office of Government 
Ethics:

       The criminal conflict of interest laws should not be viewed 
     as impediments to good Government. They are there for a 
     purpose and should not be waived for mere convenience.

  Mr. President, the criminal conflict of interest laws should not and 
must not be waived for a single individual. To do so would seriously 
erode the sacred trust that the public has placed in its employees to 
do what is in the Nation's best interests. For these reasons, I 
strongly support this amendment and I urge my colleagues to do the 
same.
  I yield the floor.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Nebraska.
  Mr. KERREY. Mr. President, again, I say to colleagues there is a 
three-part test that one has to go through in this regard: A, do you 
want an oversight board; B, who do you want on the board; and, C, how 
are you going to deal with apparent conflicts of interest?
  The conflict of interest issue is a very serious issue and, indeed, 
our committee, in order to confirm Mr. Rossotti, had to deal with that. 
We wrote an agreement, a letter, I believe, of understanding between 
Mr. Rossotti, a private sector individual with significant private 
sector interests who was willing to come in and serve his country in 
the Government.
  I talk to colleagues all the time about one of the problems we have 
in

[[Page S4423]]

Government today is it is getting harder and harder to get anybody to 
serve. Why? Because there is a perception that as soon as you come in 
and work for the Government that somehow you are going to be the crook.
  I would be real careful with some of the rhetoric on this particular 
issue. We made an exception with Mr. Rossotti as a consequence and 
concerns about conflict of interest, and we didn't ask the Office of 
Government Ethics to comment on him, but we did on this one because 
many in the committee don't like this idea of having an employee 
representative on the board, nor does Government Ethics.
  Let me talk about this idea of conflict of interest. According to the 
Office of Government Ethics, at least 609 exemptions under section 
208(d)(1) were granted in 1997. Why? It is very important to 
understand. Why did we grant an exemption? The answer is because we 
have an interest. There is an important interest involved here, 
something that we want to do. So we find ourselves saying the interest 
is not so substantial as to be deemed likely to affect the integrity of 
the services which a government may expect from such officer or 
employee. That is the standard we use.
  There were 609 exemptions granted because we have an interest in 
making certain that something gets done. That is what we have here. One 
of the worst excuses--I used to be in business before I got into 
politics. One of the reasons I got into politics is I got worn out 
listening to people say, ``I know what you are asking for is right, 
but, gosh, if I have to do it for you, then I have to do it for 
everybody.''
  There is nothing more frustrating than to have somebody say, ``I 
don't want to set a dangerous precedent here.''
  We need to decide what is right. Is it in the Nation's interest in an 
effort to restructure the IRS that is going to require significant and, 
I argue, traumatic personnel decisions, to have a representative of the 
Treasury employees' association on there? They represent 95 percent of 
over 100,000 employees. And we answered yes. The House answered yes. 
The Restructuring Commission answered yes, because there is an interest 
that we have.
  Do we waive all conflict of interest requirements? Members should 
remember, every member of this board has to be recommended by the 
President and confirmed by the Senate. We all know around here, you can 
file a hold on anybody for any reason you want. If there is a conflict 
of interest, file a hold. That individual is likely never to get 
confirmed. In addition, for cause this individual can be removed at any 
time. The President can remove the individual from the board as a 
consequence of something they see they don't like, something they see 
they view as a perception of a conflict of interest, let alone a real 
conflict of interest.

  Lastly, I will say if this individual is guilty of a conflict of 
interest, there will be charges filed against him or her and, indeed, 
every single member of this board is going to have to file an annual 
report indicating what their financial holdings are in order to avoid a 
conflict of interest.
  Again, we all understand it is getting increasingly difficult to get 
people to serve because of the invasive nature of the examination. Talk 
to a friend of yours who has had an FBI background investigation. Gosh, 
they are out there talking to people you knew in the fourth grade. You 
wouldn't want to talk to people I knew in the fourth grade to find out 
whether I am going to be able to serve on some board or commission.
  Let me just list for colleagues who are worried about this conflict 
of interest--we decided there is an overriding interest to have an 
employee representative on there as a consequence of the tremendous and 
traumatic changes that are going to occur over the next couple of years 
as the new authorities of this Commissioner are used to reorganization 
and restructure the IRS.
  In addition, this representative is going to be required to have 
full, public, financial disclosure by the employee organization 
represented. All members of this oversight board will be required to do 
that. In addition, the employee organization is required to file 
detailed financial information with the House Ways and Means Committee 
and the Senate Finance Committee. The information would include 
membership dues and compensation of all employees.
  In addition, it requires the employee representative to be subject to 
all the conflict of interest statutes applicable to special Government 
employees, except to the extent they apply to the employee 
organization.
  Mr. President, as Members no doubt know, we have a bill and a thing 
called a report. It says, ``The Internal Revenue Service Restructuring 
and Reform Act of 1998, April 22, 1998.--Ordered to be printed; Mr. 
Roth, from the Committee on Finance, submitted the following Report.''
  This report describes the rationales and reasons for doing all these 
things. Let me read to colleagues who are wondering about this thing 
and really whether or not you want an employee representative on this 
board. As I said, if you do, you have to give that individual the 
authority and power to be able to do something, and we have made a 
judgment as a consequence of that overriding interest that we are going 
to write language in here that deals with apparent conflict. It doesn't 
waive all other conflicts, as I have just tried to address. But even 
the report does that. Let me read it to you:

       In general, the bill provides that the employee 
     representative or Board member is subject to the same ethical 
     conduct rules as private-life Board members.

  Let me repeat this, because there is an inference in some of the 
statements down here that somehow we are waiving all conflict of 
interest rules. Not true. This individual is going to be subject to the 
same ethical conduct rules as private-life board members.

       However, the bill modifies the otherwise applicable ethical 
     conduct rules so that they do not preclude the 
     employee representative from carrying out his or her 
     duties as a Board member and his or her duties with 
     respect to the employee organization.

  That is all we are doing. We say there is an overriding interest. We 
have to make sure the employee can carry out their job, so we provide 
specifically language in here that enables them to do it. Otherwise, 
why put them on the board?

       In particular, the employee representative is not 
     prohibited from (1) representing the interests of the 
     employee organization before the Federal Government; (2), 
     acting on a Board matter because the employee organization 
     has a financial interest in the matter.

  They are precluded from conflicts dealing with procurements. They are 
precluded from taking bribes. They are precluded from all the other 
things that other board members are precluded from doing. All the rest 
of the things that all the board members are precluded from doing, this 
individual will be as well. Indeed, in the footnote, it says:

       Certain limitations to this exception to the otherwise 
     applicable ethical rules would apply.

  The rules pertaining to bribery would continue to apply. In addition, 
the representative would be acting on a matter in which he or she has a 
financial interest.
  If some U.S. attorney, some prosecutor wants to bring charges against 
any member of this board for violating conflict of interest statutes, 
they are going to be able to do it. Everybody who has asked, whether it 
is by this President or future Presidents, ``Gee, Mr. and Mrs. Jones, 
would you be willing to serve on this board?'' They understand what is 
at stake. They understand the nature of American politics today. They 
understand if you walk into the arena willing to serve your country, 
you may find yourself saying, ``God, I wish I never said yes. All of a 
sudden I am more miserable than I thought I ever would be, because 
somebody has an ax to grind or grudge to fulfill is going after me all 
of a sudden.''
  We have made a decision that we think as a result of the tremendous 
decisions that are going to have to be made by the Commission to 
restructure an organization that has 100,000 human beings--these are 
family people; these are people who have good jobs and are trying to 
get the job done. All they are doing is trying to execute our law.
  One of the most amusing things down here is to hear people talk about 
the IRS as if they think it is a Sears and Roebuck or some private 
organization.

[[Page S4424]]

 It is like the kiss of the Spider Woman. We are the creator of the 
IRS. We write the laws here.
  In response to the OGE's concerns, we put language in here, and even 
OGE says we have adequately taken care of it. They just don't want an 
employee representative on there at all, no matter what you do with the 
law. No matter what you do with the language of the law, they are going 
to take the position that an employee representative shouldn't be on 
there.
  Fine, let them take that decision. We made the decision we want that 
employee representative on there, and once we made that decision, we 
have to make certain we deal in a reasonable way so that with the law, 
that individual can do what we have asked them to do.
  I have great respect for the Senator from Alabama and the Senator 
from Tennessee and, obviously, the distinguished chairman of our 
committee. I hope this amendment will be rejected.
  I ask if the chairman--we have had two votes today, and we have, I 
think, somewhere in the neighborhood of 50 amendments that we are 
likely to deal with. The majority leader indicated he would like to 
wrap this up tomorrow night. I am wondering if we can get a time 
agreement. We have a couple others that are fairly contentious that it 
seems to me we need to get down here.
  I would hazard the guess that nothing I have just said is going to 
persuade anybody one way or the other. This is one where everybody has 
pretty well made their minds up. Maybe they will be persuaded because 
of the eloquence and the logical manner of the chairman, but I think 
this is one where people have made up their minds. So let us insert our 
statements in the Record and go to a rollcall vote so we can get to the 
final passage of the bill, as the majority leader wants to, by tomorrow 
night.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER (Mr. Abraham). The Senator from Delaware.
  Mr. ROTH. Let me say, on this question of completion of consideration 
of this legislation, I strongly agree that we want to move as 
expeditiously as possible. It is my intent that we will complete the 
legislation tomorrow, staying as late as may be necessary.
  Mr. President, I would like to respond to some of the earlier 
comments made on the granting of waivers to the conflict of interest 
laws. I would like to point out that the waiver granted Mr. Rossotti 
was made by the same Office of Ethics that made a very persuasive 
argument here that we should not waive the criminal conflicts of 
interest as has been done under the legislation.
  Let me point out that there is a major difference between receiving a 
specific agency waiver under section 208 of the ethics law, which is 
what the Senator was referring to, and a wholesale statutory waiver of 
all the conflict of interest laws, which is what is contemplated in the 
IRS bill.
  Again, what Mr. Rossotti got was a specific agency waiver under 
section 208. To get a specific agency waiver under section 208, the 
employee must disclose the situation which gives rise to the conflict, 
and the agency need only to determine that the conflict--and I quote--
``is not so substantial to affect the integrity of the services which 
the Government may expect from the employee.''
  The problem with the IRS employee representative is that the 
conflicts are so substantial and pervasive that the representative 
would almost never qualify for a waiver. And that is not my conclusion, 
that is the conclusion of the Office of Government Ethics. Quoting from 
their letter dated March 27, 1998, the director wrote:

       While section 208 does contain a waiver provision, it 
     applies only where the financial interest involved is ``not 
     so substantial'' as to be deemed likely to affect an 
     employee's service. We believe that it would be almost 
     impossible for an officer of a union to legitimately meet the 
     test set forth in the statute because of his own and the 
     union's financial interest that would be affected by the 
     matters before the Board.

  The director repeated this point in his letter dated May 1, 1998, 
saying:

       For those conflicts laws that do provide for waivers (not 
     all do), we believe that it would be extremely difficult for 
     a reasonable person to determine that the interests this 
     individual Board Member will undoubtedly have through his or 
     her affiliation with the organization could meet those waiver 
     tests.

  The quoted language also raises a second important point, which is 
that some of the conflict of interest laws do not provide for waivers 
at all.
  Mr. President, the bottom line is this: A statutory waiver of all the 
criminal conflict of interest laws for one person is simply wrong, it 
is very bad policy, and it establishes a dangerous precedent.
  Mr. SESSIONS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Will the Senator yield for a question?
  Mr. ROTH. Yes. I will be happy to.
  Mr. SESSIONS. I say to the chairman, do you see what we are doing 
here, as a matter of principle, any different than if this body were to 
pass a law to exempt an individual from the bribery laws?
  Mr. KERREY. I hope the answer is no, for gosh sakes. We understand 
what the nature of bribery is.
  Mr. ROTH. Yes. A bribery law is part of the criminal code. I would 
not exempt it.
  Mr. SESSIONS. This is a criminal provision. We have been using the 
word ``ethics,'' but it is really a criminal provision, isn't that 
right, Mr. Chairman?
  Mr. ROTH. That is correct.
  Mr. SESSIONS. Criminal law of the United States. And I can see, 
therefore, why the Ethics Committee would suggest it was unprecedented 
that the U.S. Congress would pass a law to exempt someone from the 
criminal law of the United States. I hope that is unprecedented. And my 
complaint, I say to the chairman, just simply is this--to say that I 
understand what the Senators have been trying to do. I understand their 
good intent. But I think we are confusing ourselves with the law of the 
United States. This is a very bad thing. It is a very bad policy. It 
should not happen. And we need to vote on it. I appreciate the chairman 
yielding.
  Mr. KERREY. Mr. President, I don't know on what basis the 
distinguished Senator from Delaware answers the question that, yes, it 
is like giving an exemption to bribery law. In our own report, we say 
the rules related to bribery would continue to apply. I mean, that is a 
red herring, raising the issue of bribery. Look, I feel like I am 
arguing the red queen here.
  We made a decision as a consequence of an overriding interest that we 
want a Treasury employee representative on this board. Why? What is the 
interest? Do you want to get the restructuring done or not? No? You are 
opposed to it? Fine. Say no. But our Commission heard from people, both 
in the private sector and the public sector, that have done this sort 
of thing. They said, ``Folks, if you want to get the job done''--
understand we're talking about traumatic changes in how people work. 
You can imagine, we would want a Senate representative on a board that 
was going to be restructuring this place. Do you think anybody would 
say, ``Gee, we've got a conflict. We can't sit on a board that might 
reduce the number of people here from 100 to 80"? I don't think so. I 
think one of us would want to be on that board. And we would write to 
the Office of Government Ethics and say, ``To heck with you. We'll 
figure out a way to get it done.''

  That is what we are talking about here. The employee representative 
will enable us to get the job done. We have to have a substantial 
reduction in forces as a consequence of this restructuring. It is going 
to be traumatic. It is going to be difficult. And over and over I have 
said we heard from both public and private sector people: Get somebody 
who's going to have to sell this thing on this board.
  So now you are left with the question, how do I do that? Obviously, 
they still represent the employee's union. Obviously, they still have a 
job responsibility out there in some fashion. Well, we have to deal 
with that specific conflict. It is not a carte blanche, broad-based 
waiver that includes such things as bribery. Come on.
  If you do not want a Treasury representative on there, don't put him 
on there. If you think the law is going to produce a conflict, well 
then, file a complaint, and go down to the Government Ethics Office and 
say this individual has a conflict. Any citizen is going to have the 
opportunity to do that.
  But I caution Members. That is why we are having a tough time getting 
anybody to serve. We go through this

[[Page S4425]]

nominating process all the time around here, and we find ourselves with 
friends saying, ``My gosh, I don't want to serve in that capacity. Look 
at all the things I've got to go through in order to be a public 
servant today.''
  Mr. Rossotti is a very good case in point--a very good case in point. 
A strict interpretation of the ethics rules would have caused us to 
say, ``Mr. Rossotti, I understand that you are willing to say yes to 
the President, but we have to respectfully say no. We are just not 
going to do it. We're not going to allow you. You have all this private 
sector experience, all this management experience, but it's a conflict. 
You've got ownership of stock in a company that does business with the 
IRS, therefore, you're disqualified.''
  That is what we are dealing with here. The Commissioner of the IRS 
has a company that does business with the IRS. Now, can we deal with 
that? The answer is absolutely yes, because it is a compelling interest 
to get it done. Likewise, there is a compelling interest as a result of 
the traumatic change.
  I ask any Member here, again, if there was a board out there that was 
going to make a decision that could reduce in force the number of 
people in the Senate from 100 to 80, would we say, ``Well, we don't 
need to have a representative on there because we have a conflict''? I 
don't think so.

  We asked to be on the board, and we deal with the Office of 
Government Ethics, and we figure out a way to make certain that 
conflict is narrowly drawn, because of the overriding interest of the 
employee representative on the board who will make these decisions.
  If you don't want the board, fine; I understand that. The Senator 
from Texas is skeptical about the board. Skepticism in many ways is 
deserved. You never know if the board will be great or not. I think it 
will be great. If you don't want an employee representative, fine; say 
so. But please don't get down here and say that we are doing something 
comparable to waiving the bribery statute. That is not what we are 
doing.
  We are going to have a very, very difficult time if this degenerates 
into a debate about loosening up our ethics law to allow all kinds of 
criminal conduct. We are not doing that. It is a narrowly drawn 
exception to enable the individual to do a job we want the individual 
to do.
  Mr. BAUCUS. Essentially, the amendment offered by the Senator from 
Tennessee is an amendment to take an employee off the board. That is 
the point. The real question we have to ask ourselves is: Do we want 
this restructuring to work or not? We create a Board, give the Board 
certain powers, and the Restructuring Commission, led by Senator 
Grassley from Iowa and Senator Kerrey of Nebraska, concluded there 
should be among board members an employee representative. That was 
their conclusion. They believed that would help restructuring work.
  Why? Because so many of the problems that we have with the IRS, most 
of the problems that were documented at the Finance Committee hearings, 
are employee problems--that is, rogue employees, employees who were 
covering up, employees doing this or that. Also problems with 
managers--some of them were doing their job, some were not.
  Obviously, an employee who is on the Board will be able to tell the 
Board what is going on, what is not going on, what the views of the 
employees are, and so forth.
  Now some suggest that the Board should just consult with employees. 
That will not work. You need somebody there on the Oversight Board who 
will be able to not only report to the employees what is going on, but 
be able to send back to employees what board policy is if we are going 
to get restructuring to work.
  We need teamwork here. We don't need an adversarial relationship. We 
are not talking about Board versus employees. We are talking about a 
Board which will make restructuring work. Just think about it. An 
employee on the Board will help make this work.
  If you want an employee, you want a good employee; right? You want a 
good representative on the Board. How do you make sure you get a good, 
solid employee on the Board? First, you have the President appoint the 
employee. That is the what the bill provides. Obviously, the President 
will appoint somebody he or she thinks is a person who will do a very 
good job because it is in his interest to make IRS restructuring work.
  What is another check? Confirmation by the Senate. I say to my 
colleagues, if you don't like the employee representative that the 
President nominates to the Board, you can vote against him or her. 
During the confirmation process, you have an opportunity to check into 
the background of this appointee. You can check to see whether this is 
a good or bad person. That is a real good check which will enable you 
to get a sense whether this is a person who has conflicts or who will 
be a public servant--who will be narrowly representing his or her 
private interests or his or her organization. You can get a sense of 
these matters through the confirmation hearings.
  In addition to that, the President can remove any Board member, 
including the employee representative, at will--that is, without cause, 
at will.
  Finally, the employee representative is subject to the same 
restrictions as the private life Board members; examples are 
the disclosure requirements and the 1-year restriction after service on 
the board.

  Now, the main point here is: If you are going to have an employee on 
the Board, how do you make sure that there are no conflicts of 
interest? I remind my colleagues, when this bill passed the House 426-
4, there were no restrictions; there was no waiver provision in the 
bill. They just said, OK, have an employee. Well, we have improved the 
bill by rewriting this provision.
  I remind my colleagues, all the conflict of interest statutes apply 
to the employee representative, except for the very narrowly tailored 
situation where conflicts arise because of his status as employee 
representative. That is, because the employees he represents work for 
the IRS and he or she is compensated by the employee organization. 
Otherwise, all conflict of interest statutes apply.
  The comparison was raised about these waivers being like waiving 
violations for bribery, a criminal offense. Of course, bribery is a 
criminal offense. That is irrelevant. Murder is a criminal offense too. 
There are all kinds of criminal offenses in our criminal law. That is 
totally irrelevant to what we are talking about here.
  The narrow, technical question here is: Are the provisions and the 
safeguards that are written into this statute, in the committee report, 
sufficient to make sure that the employee representative does a good 
job and represents the public interest? Of course, that assumes you 
want an employee on the Board in the first place.
  Frankly, I do believe that most of those who are arguing to remove 
the waiver are really arguing to remove the employee. It is a back-door 
way to get the employee off the Board. That is what is going on here. 
That is what the argument is really all about. It is just a back-door 
way to accomplish an objective instead of dealing with it frontally, 
instead of saying, ``We don't want an employee representative on the 
Board.''
  I feel very strongly that if we want this restructuring Board to 
work, it makes sense to have an employee representative on it. There 
are lots of checks to make sure this employee is performing public 
service instead of some private interest.
  The amendment before the Senate, if it passes, will make it very, 
very difficult for any employee to serve on the Board. I don't think 
that is what we want to do. It is not good for the country.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. It seems the criticism of the amendment, first of all, 
is that there is no conflict anyway with regard to these employees 
serving on this board. Of course, if that is the case, there was no 
reason for the exemption. So by having the exemption in there, it is an 
open admission there is an inherent and obvious conflict of interest.
  The question is whether we want to do something about it. Do we want 
to single out this particular individual and say, ``With regard to 
you--nobody else, but with regard to you--these

[[Page S4426]]

conflict of interest provisions will not apply; we don't care if you 
have a clear and obvious conflict of interest''?
  Secondly, it is said that this is very, very narrow as far as the 
exemption is concerned, but the bill, as reported, exempts a union 
representative from four key ethic laws when the representative is 
acting on behalf of his or her union. Those four laws are a part of 
chapter 11, title 18, United States Code, entitled ``Bribery, Graft, 
and Conflicts of Interest.''
  What are those provisions that we are exempting here? Generally 
speaking, title 18, section 203, makes it a crime to ``demand, seek, 
receive, accept, or agree to receive or accept'' any compensation as an 
agent or attorney for a third party when a person is working as an 
officer or employee of the Federal Government.
  That is one of the things we would be exempting this employee from.
  The other section, section 205 of title 18, which is the criminal 
title, makes it a crime for any Federal employee to appear as an agent 
or attorney on behalf of anyone in a proceeding to which the United 
States is a party.
  So that is the second thing we would be exempting this particular 
member from.
  Thirdly, section 207, makes it a crime to make certain communications 
to an official of the Federal Government on behalf of any other person 
if the communications are made ``with the intent to influence.''
  This is the third exemption that would apply.
  Lastly, section 208, which is a general conflict-of-interest 
provision which makes it a crime for a Federal employee to participate 
``personally and substantially'' in any way in a matter where he, 
himself, his family, a partner, or certain others have ``a financial 
interest.''
  So, one just has to make a decision as to whether or not you feel 
that this particular employee on this particular board--whether or not 
you feel the employee ought to be on the board or not; we are not 
taking them off the board by this amendment; presumably, there are some 
things that this member could decide that would not present a conflict 
of interest--but you simply have to decide whether or not you want to 
take this particular employee and treat him or her differently than 
anybody else in the Government. This is the sort of thing that we have 
spent substantial time in Governmental Affairs on with regard to the 
ethics provisions and their applicability to employees.

  I do not think it would be a good policy to have this exemption. As I 
say, if there is no particular conflict with regard to any particular 
matter that is before the board, all this is irrelevant anyway. There 
is no need for the exemption anyway. But if, in fact, they are on the 
board and they are seeking compensation from a third party while 
working for the Federal Government, or if they are appearing as an 
agent on behalf of anybody else who has a matter before the board, or 
if they are making communications with intent to influence when they 
are on the payroll of somebody else, this basically has to do with 
whether or not it is a good idea to put somebody on the board to make 
decisions with regard to themselves and their fellow employees, who 
they represent. Certainly, they would have the ability to give their 
input in lots of different ways.
  But as far as decisions are concerned, we have seen the problems that 
we have had with regard to IRS employees. Do we think we should place a 
representative of the IRS employees on this board to make decisions as 
to what to do with the people with the problem? Certainly they should 
be heard, but should they be on the board? Number one, OK, put them on 
the board; number two, should we exempt them from all of the ethical 
rules, or these four particular ethical conflict of interest 
provisions? I think we should not.
  I yield the floor.
  Mr. KERREY. Mr. President, first of all, let me once again say that 
we make exceptions in order to accomplish something that we believe is 
important to accomplish. We accommodate the exception in order to stay 
within the guidelines of the Office of Government Ethics. We did that 
for Mr. Rossotti. He would not be the commissioner of the IRS if we 
took a strict interpretation of the conflict of interest law. We just 
would not do it. He would be disqualified, as would anybody with any 
real private sector interest or any real private sector experience.
  It is ridiculous, it seems to me, to suggest that we never make 
exceptions. This is an exceptional case. We make them all the time. We 
measure it carefully, and we take care to make certain that the other 
applicable parts of the conflict of interest law are still enforced. 
That is what we have done here. The Senator from Tennessee is quite 
right when he says, gee, you are making an exception of this 
individual. Yes, we are. Why? He is the only employee representative. 
If there were 7 employee representatives on the board, we would be 
doing the same thing for everybody. That is what is going on. We have 
one representative because there are going to be traumatic changes in 
the IRS as a result of new authorities we are granting the commissioner 
in title I. Look at the new authorities we are granting.
  I draw a parallel to this body. If we were granting some board 
authority to make reductions around here, we would want to be on that 
board. We would want to participate in that decision. And somebody 
would say we have a conflict, but we would figure out a way to deal 
with that, rest assured, if that were the case. That is what we have 
done here. We have not exempted this individual. Just look at the 
statute. We have not exempted this individual from all other conflicts 
of interest--only the conflict that deals with the fact that he works 
for the IRS. That is what we are trying to deal with here. If you have 
some specific ways you want to deal with that so you can get the job 
done, we can do it. To stand out here and say, gee, we are making an 
exception, as if that is remarkable, yes, we are and we are trying to 
deal with an exceptional circumstance, as we did with Mr. Rossotti in 
the first place.

  So, again, I say to colleagues that there is a threshold decision 
here. Do you want an IRS representative on the board at all? If you do, 
you have to deal with the concerns OGE has raised. That is what we have 
done.
  Mr. THOMPSON. Mr. President, I refer to the position of the Office of 
Government Ethics on this. They have considered this matter and wrote 
to the minority leader. One provision of the bill provides for waivers 
of applicable conflict of interest laws for one member of that board. I 
am quoting now:

       We believe that this provision is antithetical to sound 
     Government ethics policy and thus to sound Government. Such 
     across-the-board statutory waivers for someone other than a 
     mere advisor is unprecedented and, we believe, inadvisable.

  So the comparisons to Mr. Rossotti, who formerly had a position in 
the private sector, are inapplicable. As far as this body is concerned, 
we spent a great deal of time answering to perceived conflict of 
interest situations. I doubt if we would ever be in a situation of 
exempting ourselves from any of those considerations here.
  So this is a very narrowly tailored provision. I understand the 
sentiment of having some input, having as broad an input as possible. 
Hopefully, there would be a way to have that kind of input from the 
employees on perhaps a less formalbasis. But there is an overriding 
issue here, Mr. President. I don't think we can willy-nilly say that 
any time we want to make an exception to the ethics rules because we 
want to get the thing done. We can say that in almost every situation.
  So I must agree with the ethics letter that has been made part of 
this Record, which says it is unprecedented and antithetical to good 
Government ethics policy and therefore to good Government.
  I yield the floor.
  Mr. KERREY. Mr. President, I ask unanimous consent that the amendment 
be temporarily laid aside so we can deal with an amendment to be 
offered by the Senators from Wisconsin, Mr. Kohl and Mr. Feingold, who 
have an amendment that both sides have agreed to.
  The PRESIDING OFFICER. Is there objection?
  Mr. SESSIONS. I object, briefly. I wanted to clarify something.
  The PRESIDING OFFICER. Objection is heard. The Senator from Nebraska 
is recognized.

[[Page S4427]]

  Mr. KERREY. Mr. President, I ask unanimous consent that the Senator 
from New York be able to speak as in morning business.
  The PRESIDING OFFICER. Is there objection?
  Mr. SESSIONS. I object. I would like to have 2 minutes.
  The PRESIDING OFFICER. Has the Senator from Nebraska yielded the 
floor?
  The Senator from Alabama----
  Mr. D'AMATO. Mr. President, I have never objected to a person going 
forward for a minute or 2 minutes, but there is a way to try to 
accomplish this.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, with regard to my raising the question 
of bribery as being the same in principle as what we are discussing 
here, I would like to make a statement. Maybe I was misunderstood. I 
would like to just say that, fundamentally, we are waiving the 
applicability of sections 203, 205, 207 of the United States Criminal 
Code. The bribery section is section 201 1.
  As a matter of principle, I just wanted to make the point that what 
we are being asked to do here is to waive the criminal law of the 
United States with regard to this particular individual, and the Ethics 
Committee has said it is unprecedented. That means this body has never 
done this in its entire history. This is a legal mistake. I am not here 
concerning myself with the individuals who make up the board. I am here 
because it was called to my attention that this problem existed. I am a 
former Federal prosecutor and a member of the Ethics Committee of this 
body, and I believe this is a legal mistake--a legal mistake we should 
not make. That is why I am making my comments now. I am very sorry to 
interrupt the Senator from New York, but it was important to clarify 
the record, I thought.
  Mr. BAUCUS. How long will the Senator from New York speak?
  Mr. D'AMATO. No longer than 5 minutes.
  (By unanimous consent, the remarks of Mr. D'Amato are printed in 
today's Record under ``Morning Business.'')
  Mr. SARBANES. Mr. President, while I support H.R. 2676, the Internal 
Revenue Service restructuring bill that is now before the Senate, I 
would like to express my opposition to any amendment that would seek to 
remove an IRS employee representative from the citizens oversight board 
established in that legislation.
  Mr. President, the idea of having an employee representative on the 
oversight board is hardly a novel one. In fact, that idea has been 
incorporated into virtually every IRS reform proposal that has been 
made in the last couple of years, including:
  The recommendation of the bipartisan Commission to Restructure the 
Internal Revenue Service;
  H.R. 2676, the House IRS reform bill that passed that body by a vote 
of 426-4.
  The Senate Finance Committee's version of the IRS bill, which we are 
now considering; and
  The recommendation of the Administration.
  That an employee representative has been deemed an essential part of 
the proposed oversight board in particular--and IRS reform in general--
should not be surprising.
  The IRS is an enormous agency of over 100,000 employees. The IRS 
reform bill we are now considering gives the proposed oversight board 
significant authority to review and approve plans for this agency's 
operation--its strategic plans, its reorganization plans, its budget 
requests, and other fundamental operational matters.
  Without the cooperation and input of the IRS' employees in this 
process, how can we possibly expect the Board's responsibilities to be 
discharged in a manner that will make the oversight board an effective 
instrument of reform?
  Let us not forget that IRS employees have been instrumental in 
bringing to light much of the information that has caused Congress to 
undertake the reform efforts before us now.
  Let us also recall that IRS employees have expertise in the operation 
of the agency that is unique and irreplaceable. This expertise is 
absolutely integral to effecting the kinds of changes that we in 
Congress--and more important, the American people--want and expect.
  Mr. President, the idea of having employee input in the basic 
management decisions of major enterprises is not a novel one. In fact, 
the placement of an employee representative on the IRS oversight board 
mirrors similar steps taken in several private sector businesses. For 
example:
  Northwest Airlines has a union representative on its Board of 
Directors;
  Similarly, the steelworkers union holds a position on the Boards of 
Directors of several of our nation's biggest steel companies.
  Thus, both the private sector and--in this legislation--the public 
sector have recognized the value of having employee input and 
participation in the management of major enterprises.
  Those who seek to eliminate employee participation on the oversight 
board charge that a union representative on the board will have 
conflicting interests that will hinder the board's effectiveness. Mr. 
President, My colleagues should note that this union representative:
  Is subject to nomination by the President and confirmation by the 
Senate;
  Must make full financial disclosure in accordance with current laws, 
like all other Board members;
  Is, unlike other Board members, subject to additional disclosure 
requirements, including requirements to file financial disclosure 
information with the Senate Finance and House Ways and Means 
Committees.
  Will receive a waiver of conflict of interest laws along the lines of 
those granted in over 1000 cases a year, where the public benefit of 
the individual's participation in government decisionmaking outweighs 
the potential benefit arising out of that participation.
  In short, Mr. President, the union representative will face greater 
scrutiny than any other member of the Board; such scrutiny will ensure 
that this representative will discharge his or her duties diligently 
and responsibly. Moreover, the House and the Senate Finance Committee 
have determined that the public benefit of having an employee 
representative on the Board outweighs the potential conflict by having 
him or her on the Board. I think this determination is indisputably 
correct, and should not be disturbed by the full Senate.
  In closing, let me make a few remarks about federal employees in 
general.
  It has become all to fashionable in recent years for Congress to 
berate federal employees and to denigrate the many contributions they 
make to our nation.
  Federal employees render invaluable service to this nation. They work 
hard and are proud of that work. Many of them are highly educated and 
skilled. In short, they bring a great deal of expertise and dedication 
to their roles as civil servants.
  Such dedication ought to be recognized, applauded, and, most 
important in this context, utilized to help the government's efforts 
become more responsive to our constituents. We are now engaged in such 
an effort. To remove federal employees from the oversight board would 
be shortsighted and a disservice to the nation. I therefore urge my 
colleagues to preserve the current composition of the oversight board 
and to defeat any amendment that would change that composition by 
removing the employee representative.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I ask unanimous consent the pending 
amendment be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 2357

(Purpose: To provide for an independent review of the investigation of 
   the equal employment opportunity process of the Internal Revenue 
    Service offices located in the area of Milwaukee and Waukesha, 
                   Wisconsin, and for other purposes)

  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), for Mr. Kohl, and 
     Mr. Feingold, proposes an amendment numbered 2357.


[[Page S4428]]


  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 229, insert between lines 15 and 16 the following 
     new section:

     SEC. 1106. REVIEW OF MILWAUKEE AND WAUKESHA INTERNAL REVENUE 
                   SERVICE OFFICES.

       (a) In General.--
       (1) Review.--The Commissioner of Internal Revenue shall 
     appoint an independent expert in employment and personnel 
     matters to conduct a review of the investigation conducted by 
     the task force, established by the Internal Revenue Service 
     and initiated in January 1998, of the equal employment 
     opportunity process of the Internal Revenue Service offices 
     located in the area of Milwaukee and Waukesha, Wisconsin.
       (2) Content.--The review conducted under paragraph (1) 
     shall include--
       (A) a determination of the accuracy and validity of such 
     investigation; and
       (B) if determined necessary by the expert, a further 
     investigation of such offices relating to--
       (i) the equal employment opportunity process; and
       (ii) any alleged discriminatory employment-related actions, 
     including any alleged violations of Federal law.
       (b) Report.--Not later than July 1, 1999, the independent 
     expert shall report on the review conducted under subsection 
     (a) (and any recommendations for action) to Congress and the 
     Commissioner of Internal Revenue.

  Mr. KERREY. Mr. President, this amendment has been cleared on both 
sides. We believe it is a good amendment.
  I urge its adoption.
  The PRESIDING OFFICER. Is there further debate? If there is no 
objection, the amendment is agreed to.
  The amendment (No. 2357) was agreed to.
  Mr. KERREY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HELMS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________