Congressional Record, Volume 144 Issue 56 (Thursday, May 7, 1998)

[Congressional Record Volume 144, Number 56 (Thursday, May 7, 1998)]
[Senate]
[Pages S4452-S4460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998

The PRESIDING OFFICER. Under the previous order, the Senate will now
resume consideration of H.R. 2676, which the clerk will report.
The assistant legislative clerk read as follows:

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

The Senate resumed consideration of the bill.
Pending:

Thompson/Sessions amendment No. 2356, to strike the
exemptions from criminal conflict laws for board member from
employee organization.

Amendment No. 2356

The PRESIDING OFFICER. Under the previous order, the time until 10
a.m. shall be equally divided on the Thompson-Sessions amendment No.
2356.
The Senator from Tennessee.
Mr. THOMPSON. Mr. President, we brought this amendment up yesterday
and had a brief discussion. My understanding is we have 30 minutes
equally divided; is that correct?
The PRESIDING OFFICER. There are 12 minutes on each side and the time
is equally divided until 10 a.m.
Mr. THOMPSON. Mr. President, as you know, part of the IRS reform bill
has to do with the creation of an IRS Oversight Board. One of the new
members of the IRS Oversight Board is delineated as a representative of
an IRS employees union. However, because of the inherent conflict of
interest in this new member's position, the union representative was
exempted from four essential ethics laws in the criminal code. That is
what our amendment addresses, because the ethics experts in the Office
of Government Ethics say these provisions are unprecedented and
inadvisable and antithetical to sound Government ethics policy; thus,
to sound Government.
In an era in which we seem to receive an awful lot of very general
and hazy messages from the bureaucracy, we are getting a quite
definitive, clear-cut opinion out of the Office of Government Ethics
with regard to this exemption, and that is that these provisions are
unprecedented and, therefore, inadvisable.
I think it makes common sense. I must say that my primary interest in
this as chairman of the Governmental Affairs Committee has to do with
the rules under which our Federal employees operate. We do have an
Office of Government Ethics. We do have ethics provisions. They are for
good reason. We could talk about these provisions in some detail, but,
generally speaking, one of the main things they try to address is to
keep people from being compensated by outside entities and outside
groups while they are on the Federal Government's payroll. In other
words, if an employee is going to be on the Federal Government payroll,
they should not be compensated by some outside group when they come and
lobby the Federal Government. That is just sound common sense.
I understand that an agreement was reached, or at least it was voted
on in the committee, to have this representative on this nine-member
board. We could debate back and forth whether or not that is a good
idea. But this amendment does not say that a person of this kind cannot
be on the board. All it says is that this person is going to be treated
like every other member of the board, and that is that they will not be
exempt from the ethics laws. The private members who are on this board
are certainly going to have to live under the ethics laws.
For example, the day after appointment of the board, the private
board member could not meet with representatives of the IRS or Treasury
on behalf of a client or the board members' corporate employer with
respect to proposed tax regulations. These prohibitions apply across
the board to all members. It said that it creates somewhat of a
hardship on the union representative. Perhaps in all cases there will
not be a conflict.
As I look at some of the provisions that were discussed in committee
in terms of the reasons for the creation of the board and the various
functions that the board will have, I see where part of the function is
to review and approve IRS strategic plans; for example, including the
establishment of mission and objectives and long-range plans. I can see
an argument being made that this union representative would not have a
conflict of interest regarding that particular function of this board.
Another function is to review the operational functions of the IRS.
Another is to recommend to the President candidates for the Commission.
I can see an argument being made that this would not create a
conflict of interest. So it is indeed arguable that there will be
certain functions in which this board member could participate. It is
not our position to sit and factually delineate every possibility that
might come up. Quite frankly, it is going to be primarily on the board
member to determine that themselves. I see other functions where, to
me, there is a clear conflict of interest, and that is, to review the
operation of the IRS to ensure the treatment of taxpayers, to review
procedures of IRS relating to financial audits.
I can see where someone representing the IRS employees union --a paid
employee of the employees union would have a real problem in sitting on
this board and trying to determine what the rules ought to be with
regard to those employees concerning the way they conduct their audits.
That is just common sense.
Now, there is one thing I think we need to keep in mind. We all know
that we have many--certainly the great majority--IRS employees who are
loyal, dedicated public servants. But let's not forget the reason why
we have this IRS reform bill on the floor to start with; and that is,
we saw an absolutely appalling, unprecedented array of rogue
activities, which you would not see in a lot of good police states,
conducted by some of these IRS agents out in the field. We saw people
like Howard Baker and Former Congressman Quillen, who were actually
targeted, and they attempted to set up these individuals. These are the
kinds of things that are part of the reason that we have the bill and
part of the reason that we have this oversight board.
So in order to say that a union member is going to have some problem
some time about sitting on this board as they represent those very
employees--the ones that are good, bad and indifferent--is no reason to
carve them out and exempt them from these ethics provisions.
So I think it is a bad step, Mr. President, if the very first thing
we do in starting out and trying to reform IRS is to say that with
regard to some of these employees we are going to exempt them from the
ethics laws. I might point out also that as I read the bill, it doesn't
seem to me like it necessarily has to be a paid employee, a paid union
official of the IRS employees union. In other words, I would think that
a member could serve on this board who would simply be a union member
and could be a representative. If they were not taking payment and
compensation from the union, as a professional union representative,
then perhaps a lot of these conflicts would be alleviated.
So we are trying to work out something reasonable here on the front
end. But make no mistake about it, it would be a terrible mistake in
the face of the clear advice of the Office of Government Ethics to say
the first thing we are going to do is exempt these people who are, in
some cases the source of their problem, from the ethics laws under
which everybody else is going to have to live.
I yield the floor.
Mr. KERREY. Mr. President, I would like to ask the Senator from
Tennessee if he would answer a question. For the purpose of engaging in
this debate, does he support having a union rep on the board, an
employee rep on the board? That would be an amendment that will come
up, I believe, later on, trying the individual on the board.
Mr. THOMPSON. I do not think it is wise to have such a representative
on the board. That is another question. In fact, I think the Office of
Government Ethics has the same opinion. They do not think it is wise to
have a union

[[Page S4453]]

member on the board. My position is that if there is a union member on
the board, they should not be exempt from the ethics laws.
Mr. KERREY. I appreciate the Senator's conclusion. However, I have
reached the opposite conclusion. That really is the question for the
body. Do you think an employee representative needs to be on this
board?
Let me tell you why the Restructuring Commission reached the
conclusion ``yes,'' and why the Finance Committee reached the
conclusion ``yes.'' We heard from private sector individuals, as well
as public sector people, who have gone through the sorts of things IRS
is likely to go through. Let me be clear what the IRS is going to be
going through. This is not about some cosmetic changes.
In this law, we give the Commissioner of the IRS new authorities to
restructure the IRS, and we direct the Commissioner to restructure to
eliminate the old three-tier system. I don't know how familiar
everybody is with the three-tier system. There is a national, regional,
and a district office. It is a system that was established in 1952. It
means that if taxpayers move or decide they want to move from Salina,
KS, to Grand Island, NB, which I think would be a sound thing for
anybody to do--but if they decide they want to go from Kansas to
Nebraska, they are OK. But if they move from, let's say, Chattanooga,
TN, to Salina or Grand Island, they are going to be under a new
district and regional office. As a consequence, their taxes are going
to be handled by entirely different people.

What the law directs the Commissioner to do and gives him authority
to do is organize along functional lines. There is going to be
traumatic change for employees--traumatic change. We may have few
numbers of people. This kind of restructuring is very difficult to get
done. From people both in the public and private sector, individuals
who have gone through this, we heard strong advice that an employee
representative should be on the Commission.
For members, the board itself sunsets in 10 years. We may decide we
don't need a board in 10 years. We might need a different composition
for the board. That is the first question. Do you believe that as a
consequence of what the Commissioner has been given--the authority to
dramatically restructure this agency--there ought to be an employee
representative on the board? The authors of this amendment don't;
neither does the Office of Government Ethics. They sent a letter
indicating some problems which they had with having a representative
on. We accommodated those concerns by putting this language in here.
Now the language is being attacked. But the question really is not do
you support the language, but do you want a rep on there? If you do,
you have to have that representative able to participate in the
decisionmaking.
To be clear, they are not given blanket ethics waivers. They are
still under all the same ethics requirements of every other member of
the board; indeed, somewhat higher. The annual disclosure requirements
of this individual will be greater than for other members of the board.
All board members are appointed by the President and confirmed by the
Senate. If for some reason a member of this Chamber thinks that person
should not be confirmed, they can put a hold on it and likely make it
impossible for that person to be confirmed. And if the President
believes, for any reason at all, this individual is not doing a good
job, he or she can be removed by the President.
So there are lots of checks against problems this individual might
have for any reason, including some ethical problems, as I said. All
other ethics statutes still fall against this individual. Indeed, we
are requiring this individual to disclose more. We have all kinds of
situations. We asked the Office of Government Ethics about acceptance
and they have made over 600 of them, including the Commissioner of the
IRS. The Commissioner, Mr. Rossotti, has private sector holdings,
private sector business experience, and does business with the IRS. So
the question for us is, oh, my gosh, is he excluded or precluded from
serving? The answer is no. We reached a conclusion that we have an
overriding interest to have him serve as Commissioner. And so we draft
very carefully an agreement that has him doing a certain number of
things in order to be able to comply with our ethics laws.
So I urge colleagues, as they examine this amendment, to understand
that no blanket exemption is being granted.
The authors of the amendment do not want a Treasury employee
representative on the board. If you want a Treasury employee
representative on the board, you have to have language in there that
satisfies the ethical concerns about what will happen when an issue
comes up that has an impact upon the people he represents.
Mr. President, we are granting the Commissioner the authority to
reorganize and restructure and get the IRS to operate in a much more
efficient fashion, and that will cause traumatic changes inside of the
ranks of the IRS. For those who wonder whether or not an employee rep
ought to be on there, imagine if we had an oversight board that was
going to be making a decision to restructure the Senate and one of the
possibilities was, instead of having 100 Members, we have 80. Would we
ask to have Members on the board? Obviously, we would. And it would be
right to do, and we would have to draft some sort of language to make
certain that we wouldn't violate ethics laws as well.
I hope the Members will reject this amendment.
I see the distinguished Senator from Michigan is on the floor. I am
pleased to yield 2 minutes for him to speak against this amendment as
well.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Mr. President, I oppose the amendment. I think the effect
of this amendment will be to make it impossible for an employee
representative to sit on the board. The Commission should have that
representation, according to the recommendation of the Commission that
is recommending this Commission. If we want an employee representative
to sit on this board, as a practical matter there is no way to do it
without exempting that person from these laws. There is an inherent
conflict which that person will have. And we might as well be very open
about it, and face it, and say, ``Yes, providing it is disclosed.'' And
it is known that the benefits of having that perspective on the board
outweighs any precedent that would be set by this kind of a waiver.
The IRS Oversight Board itself is unprecedented. I don't know of a
board quite like this that we have in the Government.
So to suggest that as we are creating a new board like this that we
cannot, with our eyes open, make an exemption from our conflict of
interest laws in order to permit a very critical person to serve on the
board it seems to me is unduly restricting our options and, more
importantly, is making this board less useful. This oversight board
will be more useful with an employee representative on it. There is a
certain perspective, an important experience, which that person can
bring to this board.
So we have to weigh the value, the benefit, of that against the
precedent we would be setting. It is like a cost-benefit analysis which
we recommend that others do. We have to look at the precedent and the
value, and we are the policymakers.
I have great respect for the Office of Government Ethics. They
enforce and implement the law. But we make policy. When we decide, with
an unprecedented new board, that we will permit a representative of the
employees to sit there because we want that experience, we want that
perspective, we then are making a policy judgment that we want an
effective IRS oversight board and that the effectiveness of that board
is to rein in the IRS to overcome the abuses which have disgusted us
which we have all heard about for so many years which outweighs any
precedent we might be setting.
I oppose the amendment and hope we will defeat it.
Mr. SESSIONS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, I want to congratulate the Senator from
Nebraska, Senator Roth, and others for introducing an outstanding bill.
I know they have worked hard and dealt with a number of difficult
issues. This is, I am sure, a good-faith effort to involve the union in
the process. But the truth is, as we have had a chance to look at

[[Page S4454]]

the law, it just won't work. Senator Fred Thompson has made the point
eloquently and clearly. His amendment is the only way we can handle
this circumstance. We should not, and must not, agree to allow a clear
conflict of interest to be waived, according to the Office of
Government Ethics. If the Office of Government Ethics were to decide
this issue, a waiver would not be granted. It is because such a
fundamental conflict exists that we should not expect it to.
The truth of the matter is that if you sit on the Government
Oversight Board and are also a paid union representative, you are being
paid by two masters. You can't serve two masters. That is a paid
position. It is not a union member serving on the board but a person
whose salary is paid by an outside group who is not part of the
process.
I know many people would like to involve an employees union
representative in the IRS restructuring effort. I support this idea.
There are many ways a union representative could be involved in the
process. I have had many friends over the years who have been members
of the Treasury Union. I think they do a good job and help to
contribute positively to our Nation's Government. But this is a
powerful board that sets administrative rules and principles throughout
the agency.
I would suggest that the waiver is not of some ethics rule, it is a
waiver of the Criminal Code of the United States of America. At least
four sections are implicated. It is quite possible that if this union
member were to participate as a board member, he would be in violation
of perhaps four different criminal codes--statutes. To ask us in this
legislation to just blithely waive these statutes, would be a mistake
and unwise and would undermine the Office of Government Ethics ability
to effectively manage and uphold ethics in government.
I was a Federal prosecutor for almost 15 years. I serve on the Senate
Ethics Committee. I understand what my colleagues are trying to
accomplish. But this waiver is unprecedented, according to the Office
of Government Ethics. That means that this has never been done before--
that the U.S. Senate, in a legislative act, has never granted exemption
to one person from the Criminal Code of the United States. It is
something we ought not to do.
I urge my colleagues in this body to vote yes on this amendment.
I yield what time is remaining.
Mr. THOMPSON addressed the Chair.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, how much time remains?
The PRESIDING OFFICER. The Senator from Tennessee controls 40
seconds, and the Senator from Nebraska controls 2 minutes.
Mr. THOMPSON. Mr. President, very briefly, it is not unusual to have
an oversight board or an agency or a panel that does not have on it the
subjects of that panel's inquiry; in other words, the comparable
situation with regard to this oversight board would be U.S. taxpayers.
That is whose lives we are really affecting. We don't have any taxpayer
members on this particular board.
I would also point out, as the Senator from Alabama did, that these
are criminal laws. We are waiving four primary criminal laws of title
18 of the United States Code with regard to one individual who
represents some of those who have caused the problem.
I yield the floor.
Mr. KERREY addressed the Chair.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. KERREY. Mr. President, briefly, we are doing something that is
unprecedented. The distinguished Senator from Alabama says that the
Office of Government Ethics is unprecedented. It is the only venture
that is unprecedented; never in the history of Government have we
created an oversight board with these kinds of powers. And we are doing
it in order to be able to restructure the IRS in a relatively short
period of time. The implications would be rather traumatic for the
employees of the IRS. Every private sector person whom we asked the
question of--when you go through restructuring--and every public person
we asked the advice of said put the rep on the board.
This board sunsets in 10 years. We may decide we don't want the board
and have another composition. We can revisit it, if you don't want a
Treasury employee rep on the board. The Office of Ethics said there are
problems here. We have corrected those problems, but they don't want a
rep on the board under any circumstances. If you want a rep on the
board, you have to vote no on this amendment. Otherwise, this
individual is not going to be able to do the job. If you don't have the
rep on the board, I think this venture is likely to run aground and not
be as successful as all of us want it to be.
Mr. President, I yield the remainder of my time. I urge the defeat of
this amendment.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There appears to
be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Hawaii (Mr. Akaka) is
absent due to a death in the family.
The result was announced--yeas 42, nays 57, as follows:

[Rollcall Vote No. 122 Leg.]

YEAS--42

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Burns
Chafee
Coats
Cochran
Coverdell
Craig
DeWine
Enzi
Faircloth
Frist
Gorton
Gramm
Grams
Gregg
Helms
Hutchinson
Hutchison
Inhofe
Kempthorne
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Sessions
Shelby
Smith (NH)
Smith (OR)
Thomas
Thompson
Thurmond

NAYS--57

Baucus
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Byrd
Campbell
Cleland
Collins
Conrad
D'Amato
Daschle
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Graham
Grassley
Hagel
Harkin
Hatch
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Santorum
Sarbanes
Snowe
Specter
Stevens
Torricelli
Warner
Wellstone
Wyden

NOT VOTING--1

Akaka

The amendment (No. 2356) was rejected.
Mr. KERREY. Mr. President, I move to reconsider the vote by which the
amendment was rejected.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. KERREY. Mr. President, we are down on the Democratic side to just
one or two amendments that may require rollcall votes, and those we may
be able to work out. We have a longer list on the Republican side.
Mr. President, may we have order in the Chamber?
The PRESIDING OFFICER. The Senate is not in order. The Senate will be
in order.
Mr. KERREY. Mr. President, I am hopeful that on the Republican side,
Members will come down and start talking to us or, if we can't work
them out, get them offered. Senator Faircloth has an amendment which he
is going to offer just as soon as I get two accepted that we have
worked out with the chairman. I think we can run through this
relatively rapidly.
The previous amendment that was just defeated is one of the
controversial ones. Senator Faircloth has one that is controversial. I
think Senator Mack does. There are a few others. After that, most of
the controversy is out of this bill. I am hopeful we can get Members to
come down here so we don't end up, as the majority leader said, staying
here longer than is warranted, given the general agreement that is on
the legislation.

Amendments Nos. 2358 and 2359, en bloc

Mr. KERREY. Mr. President, I send two amendments to the desk and ask
for their immediate consideration.

[[Page S4455]]

The PRESIDING OFFICER (Mr. Hutchinson). Without objection, the clerk
will report the amendments en bloc.
The legislative clerk read as follows:

The Senator from Nebraska [Mr. Kerrey] proposes amendments
numbered 2358 and 2359, en bloc.

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

Amendment No. 2358

(Purpose: To require a study on the willful noncompliance with internal
revenue laws by taxpayers to be conducted jointly by the Joint
Committee on Taxation, Secretary of the Treasury, and Commissioner of
Internal Revenue)

On page 394, between lines 15 and 16, insert the following:

SEC. --. WILLFUL NONCOMPLIANCE WITH INTERNAL REVENUE LAWS BY
TAXPAYERS.

Not later than 1 year after the date of enactment of this
Act, the Joint Committee on Taxation, the Secretary of the
Treasury, and the Commissioner of Internal Revenue shall
conduct jointly a study of the willful noncompliance with
internal revenue laws by taxpayers and report the findings of
such study to Congress.
____

Amendment No. 2359

(Purpose: To amend the Internal Revenue Code of 1986 to require the
Inspector General for Tax Administration to report to Congress on
administrative and civil actions taken with respect to fair debt
collection provisions)

On page 369, strike line 1 and insert the following:
``(c) Annual Report.--The Inspector General for Tax
Administration shall report annually to Congress on any
administrative or civil actions with respect to violations of
the fair debt collection provisions of section 6304 of the
Internal Revenue Code of 1986, as added by this section,
including--
''(1) a summary of such actions initiated since the date of
the last report, and
``(2) a summary of any judgments or awards granted as a
result of such actions.
``(d) Effective Date.--The amendments made by this''.

Mr. KERREY. Mr. President, these are two amendments on which I worked
very closely with the chairman. They deal with two problems, one of
which is a longstanding problem that we have had with the Internal
Revenue Service, and that is how to deal with taxpayers who are
willfully noncompliant. This requires the Commissioner to do a study of
this issue and report back to the Finance Committee. Members need to
understand, approximately the average for all taxpayers is nearly
$1,600 per taxpayer for noncompliance, with penalty for willful
noncompliance.

The second amendment came as a consequence of a witness that we had
in the hearings that the chairman held, Mr. Earl Epstein of
Philadelphia. He was talking about putting teeth in the provision
dealing with violations of fair debt collection practices. And at the
chairman's suggestion, what we have asked for in this study is that the
new Treasury inspector general for tax administration also look at this
and provide Congress with a report, an annual report outlining any
violations of the fair debt collection practices that we have included
in this bill.
Mr. Epstein notes, this is likely to result in better attention being
paid to collection abuses as ``no Commissioner would be happy to report
significant abuses, to say nothing of awards for damages [or] for
failures to enforce proper authority over collection agents.'' It is an
important amendment. I appreciate the source of it was the chairman's
hearings, and I appreciate a chance to work with the chairman to get
this worked out.
Mr. ROTH. Mr. President, I say that both of these amendments are
acceptable to the majority side. We have worked with Senator Kerrey on
them and we think they are acceptable.
So I urge that they be accepted by voice vote.
Mr. FORD. En bloc.
The PRESIDING OFFICER. Without objection, the amendments are agreed
to.
The amendments (Nos. 2358 and 2359) were agreed to en bloc.
Mr. FORD. I move to reconsider the vote.
Mr. KERREY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, I want to echo what was just said by Senator
Kerrey. We do intend to complete this legislation today. So it is
critically important that those who have amendments, if they want to
have them offered, that they do so promptly because time is slipping
by. We will stay here until we complete the legislation.
It is my understanding that Senator Faircloth wants to go next. We
would like to get a time agreement. I mentioned that to Senator Kerrey,
as well as to Senator Faircloth. I would like to have 30 minutes
divided equally between the two sides.
Mr. FAIRCLOTH. That will be fine. I will not need 15.
Mr. ROTH. Shall we make it 20 minutes?
Mr. FAIRCLOTH. That is fine.
Mr. ROTH. Twenty minutes.
Mr. KERREY. Mr. President, I have not seen the amendment yet. Can we
get a copy of the amendment before we agree to a time limitation?
May I ask the Senator, this strikes several lines, inserts several
lines. It is not clear to me from the amendment what it does. Can you
just----
Mr. FAIRCLOTH. Yes, what the amendment does, I say to Senator Kerrey,
is it prohibits putting union men on the--
Mr. KERREY. Strikes the union representative from the board?
Mr. FAIRCLOTH. Strikes the union representative from the control
panel.
Mr. KERREY. I thank the distinguished Senator from North Carolina,
and I do not object to the time agreement.
Mr. ROTH. Mr. President, I ask unanimous consent that for the
Faircloth amendment there be a time limit of 20 minutes equally divided
between the two sides and no second-degree amendments.
Mr. KERREY. Reserving the right to object, Mr. President, I
momentarily suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceed to call the roll.
Mr. KERREY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERREY. Mr. President, I ask unanimous consent that the unanimous
consent be modified so no second-degree amendments be in order. Is that
in the UC?
Mr. ROTH. That is part of the proposal.
Mr. KERREY. I do not object.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FAIRCLOTH addressed the Chair.
The PRESIDING OFFICER. The Senator from North Carolina.

Amendment No. 2360

(Purpose: To strike the representative of Internal Revenue Service
employees from the Internal Revenue Service Oversight Board)

Mr. FAIRCLOTH. I send an amendment to the desk and ask for its
immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from North Carolina [Mr. Faircloth], for
himself and Mr. Smith of New Hampshire, proposes an amendment
numbered 2360.

Mr. FAIRCLOTH. 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 174, line 23, strike ``9'' and insert ``8''.
On page 175, strike lines 8 through 13.
On page 176, line 10, strike ``or (D)''.
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following:
``(A) Financial disclosure.--During the entire--
On page 177, line 10, strike ``or (D)''.
Beginning on page 177, strike line 19 and all that follows
through page 178, line 5.
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Mr. KERREY. Mr. President, I wonder if the Senator would yield and
the time not be charged to either side.
Mr. FAIRCLOTH. Sure.
Mr. KERREY. I have a question. The distinguished Senator from West
Virginia has an annual speech he gives on Mother's Day. And I wonder if
the Senator from North Carolina wants a rollcall vote on this
amendment. And, second, if you want a rollcall vote, can we

[[Page S4456]]

do it after the Senator from West Virginia delivers his remarks?
Mr. FAIRCLOTH. I will want a rollcall vote. And we can certainly do
it after the Senator from West Virginia gives his speech.
Mr. KERREY. I thank the Senator.
The PRESIDING OFFICER. The Senator from North Carolina.
Mr. FAIRCLOTH. Mr. President, I ask unanimous consent that two
letters from the Office of Government Ethics, dated March 27 and May 1,
1998, and one letter from the Senior Executives Association, dated
April 17, 1998, be printed in the Record immediately following my
remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. FAIRCLOTH. Mr. President, the amendment I am offering today
corrects a flaw in an otherwise fine bill that was offered by Senator
Roth, and that is to reform the Internal Revenue Service. And no
organization ever needed reforming more.
My amendment, which is supported by Chairman Roth, would remove the
union representative for the IRS employees from the oversight board
established by this reform bill.
The reason for establishing the oversight board was that the union
was out of control. That is very simply the reason we did not put it up
there, that it is composed of private citizens--the oversight board--
and not to be run by the union and the IRS bureaucracy. That is the
problem we have been facing.
If ever there was a case of hiring Willie Sutton to guard the bank,
when we put a union representative on the board that is exactly what we
have done.
I just want to take a minute--and I will do it quickly--to explain
why it would be difficult, if not impossible, for the IRS Oversight
Board to accomplish its intended task of reforming the IRS as long as
you have a union representative on the board.
Mr. President, it was said in hearings last fall again and again, and
last week, where we heard shocking and terrible testimony about abuses
of taxpayers at the hands of IRS employees. These have been well
documented, and the American people are outraged at what they have
seen. I hear it on a daily basis.
The American people are calling and telling the Congress that the IRS
is an agency out of control and it must be reined in. Control must be
established. And several of my colleagues, I have heard, have come up
with the same thing.
An oversight board, if it is truly a private citizen oversight board,
could go a long way to rooting out the problems that are plaguing the
IRS and will ultimately destroy it if they are not corrected.
But the same employees who have been abusing taxpayers are certainly
not going to like changes proposed by the oversight board, because it
is going to change the way they have been doing business, and they do
not want to change the way they have been doing business. That is the
reason we are creating the oversight board, to change the way that the
IRS union has been operating.
Can you imagine what would happen if any decision which was opposed
by the union IRS employees could be vetoed by the representative of the
union? In effect, that is what we will have if a union representative
is appointed a member of the board. You are going to negate the effects
of the board.
Some have suggested that unless a union representative is a member of
the board, there will be no one to persuade the employees to go along
with the reforms. All I can say is that anybody who says that has never
run a business. I think that is the most foolish argument I have ever
heard. I do not think IRS reform should be held hostage to what the
union members like.

If employees resist reform, and we have heard time after time in
hearings about the abuses of these employees, then those employees
should be removed from the IRS. We should not put the new oversight
board in the position of begging the IRS employees, through their
union, to agree to a change. If that is the way we are going to do it,
there will be no change. It will be business as usual.
Furthermore, it is common sense that the union representative should
not be in a position to argue the case of the employees who pay his
salary. I cannot think of anything more ludicrous than putting in an
oversight board and then putting on it the man who works for the people
who have created the abuses that the oversight board is intended to
correct. It goes round and round. The union representative would be
voting on issues which affect his own pocketbook--a clear conflict of
interest.
As Senator Sessions and Senator Thompson have already pointed out,
putting the union representative on the oversight board does not just
violate common sense, it violates Federal criminal law. Whether those
laws are waived or not, we should not go down the road of disregarding
criminal laws that are inconvenient for one person. We are waiving
criminal laws because one person, a union representative, wants them
waived.
Let me share with my colleagues what the Office of Government Ethics
had to say on the matter of including the IRS employee union
representative on the oversight board. In a letter to the Senate
Finance Committee, Chairman Roth and the ranking member, Senator
Moynihan, dated March 27, the Office of Government Ethics said the
following: ``We recommended that the IRS reform bill not include an
individual who is a representative of an organization,'' which
represents a substantial number of the IRS employees.
Now, that is a nice way of saying don't put the union boss on the
board. If you do, you might as well not create the board.
The Office of Government Ethics, in another letter to the majority
leader, dated May 1, 1998, said that putting the union representative
on the oversight board 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
private interest being referred to is the IRS employees union. So it is
clear that the union representative will be in a position of violating
criminal laws concerning conflict of interest if he or she serves on
the oversight board, unless those criminal statutes are waived, and
that is what we just did.
Some of my colleagues who support including the IRS employee union
representative on the board have tried to fix it by waiving the
criminal laws, but we should not have waived a criminal law for one
union representative. Both the Senior Executives Association and the
Office of Government Ethics recommended removing the union boss rather
than removing the waiver. I agree.
On April 9, 1998, the Senior Executives Association, a nonpartisan,
nonprofit organization which represents career executives throughout
the Federal Government, wrote to me to express their serious concerns
about including an IRS employee union representative on the oversight
board. The Senior Executives believe as long as the union
representative is on the board, it will be impossible for IRS managers,
the Commissioners, and the oversight board, and even the President, to
implement the personnel reforms affecting IRS employees. In other
words, as long as their ``boss man'' is sitting on the board, he isn't
going to do anything to allow any reform. He will, in effect, veto the
actions of the board.
To quote the Senior Executives Association: ``The inclusion of the
union representative on the IRS Oversight Board threatens the ability
of IRS management to manage and control the IRS workforce.''
It would seem to me the last thing that Congress should do is make
IRS employees even less accountable for their actions than they
currently are. That would be hard to do.
In summary of my amendment, take some good advice of the Office of
Government Ethics and the Senior Executives Association and remove the
union representative from the oversight board. I urge my colleagues to
support the amendment.

[[Page S4457]]

Exhibit No. 1

U.S. Office of Government Ethics,

Washington, DC, March 27, 1998.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance, U.S. Senate, Washington, DC.
Hon. Daniel Patrick Moynihan,
Ranking Minority Member, Committee on Finance, U.S. Senate,
Washington, DC.
Dear Chairman Roth and Senator Moynihan: We understand that
your Committee is reviewing the provisions of H.R. 2676 in
anticipation of developing a Senate bill, regarding the
Internal Revenue Service (IRS). As Commissioner Rossotti
indicated in his testimony before your Committee earlier this
year, the Administration believes that the conflict of
interest and financial disclosure provisions that section 101
of that bill would make applicable to the Members of the
newly created IRS Oversight Board are in need of technical
revision and, we believe, should be made more consistent with
the standard ethics systems applicable within the executive
branch. We recognize that this part-time Board is being given
far more than advisory duties, and we believe that conduct
and compensation restrictions and financial disclosure
requirements should be commensurate with those additional
duties. Because time is of concern, we have chosen to set
forth the type of requirements we believe would be most
appropriate and consistent with sound ethics policies. We
would be happy to work with your staff and the legislative
counsel in developing the exact legislative language.
1. Status of the private sector members. The House bill
specifies that the private sector members, other than the
individual representing the union, are to be special
Government employees ``during the entire period'' each
individual holds appointment. We believe this language will
cause unnecessary hardships on the Members of the Board and
will substantially inhibit the Government in attracting the
types of individuals you might wish to serve on the Board.
Briefly, this will occur because more onerous criminal
conflict of interest restrictions (particularly those
applying to private compensation arrangements and matters
unrelated to tax or IRS issues or policies) will apply to
Members after 60 days of service. Under the House language,
those restrictions will apply 60 calendar days after
appointment, not after 60 days of actual service as is
ordinarily the case for special Government employees.
We recommend that the bill be silent as to the status of
the Members as special Government employees. We understand
that it is not expected that these individuals will actually
serve more than 60 days in a 365-day period, so that the
regime for less than 60 days of service would apply. Then the
bill can include additional restrictions and requirements
that are tailored specifically to service on this Board
rather than simply service anywhere in the executive branch
as a special Government employee. Recommendations for those
restrictions and requirements are in points 2 and 3.
2. Additional conflict restrictions. Given the duties of
the Board anticipated by the House bill, we would recommend
that Board Members be subject to the following restrictions
in addition to the standard criminal conflict of interest
provisions applicable to special Government employees.
In addition to the restrictions in 18 U.S.C. Sec. Sec. 203
and 205, members of the Board should be prohibited from
representing anyone before the IRS or the Department of the
Treasury on any matter involving the management or operations
of the Internal Revenue Service or the internal revenue laws
(or more narrowly, tax matters) or before the Board or the
IRS on any particular matter.
In addition to the restrictions in 18 U.S.C. 207(a)(1) and
(2), members of the Board should be prohibited from
representing anyone before the IRS (or possibly the entire
Department of the Treasury as are former IRS Commissioners)
for one year following termination of Board service. We would
not suggest that there is any need to apply the restrictions
of section 207(f) to the members of the Board who do not
serve more than 60 days.
In drafting these additional restrictions, we recommend
that all of the exemptions and procedural mechanisms
presently in sections 203, 205 and 207 apply to these
additional restrictions.
3. Financial disclosure requirements. Given the substantial
authorities of the board as set forth in the House bill, we
recommend that the statute be drafted clearly to reflect that
the Members of the Board are required to file new entrant,
annual and termination public financial disclosure statements
regardless of the number of days in a calendar year that the
individual actually serves. If the Senate determines that the
Board should be purely advisory, we recommend that the
bill be silent so that the standard nomination form which
can be made public by the confirming committee and the
annual non-public financial disclosure forms will be
required.
4. Union member. We recommend that the bill not include an
individual who is a representative of an organization which
represents a substantial number of IRS employees. Given the
duties of the Board, this individual cannot serve as a
``representative''--a status recognized in applying conflicts
laws to certain individuals carrying out purely advisory
duties. We believe that the basic criminal financial conflict
of interest statute, 18 U.S.C. Sec. 208, will be applicable
to this individual and will substantially limit that
individual's ability to carry out any meaningful service on
the Board. More importantly to the individual, such service
will expose him or her to constant scrutiny for even the
smallest official acts. 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 interests that would be
affected by the matters before the Board. In addition, we
believe that such a member will also be substantially
inhibited from carrying out his or her duties on behalf of
the union by the restrictions of 18 U.S.C. Sec. 203. There
are no applicable waivers for these restrictions.
As an alternative, we suggest that the Board be directed by
statute to consult with, but not seek the approval of,
representatives of organizations which represent substantial
numbers of IRS employees when the matters before the Board
would have a substantial effect upon IRS employees. It is
crucial to sound government ethics policy that those who have
approval authority be accountable to the public for their
actions. Those who only provide the views of interested
parties for the decision makers' consideration need not be
subject to an array of ethics restrictions.
5. Pay. We recommend that the pay for the members of the
Board be rewritten so that it references some standard
Government pay schedule. Since many ethics statutes make
reference to those schedules for purposes of applying
provisions, this would be much simpler under the present
system and most probably for any future restrictions or
regulations that might be enacted or promulgated. We suggest
that the reference be made to the Executive Level Schedule,
which is typical for advise and consent appointees. However,
we would not recommend a reference to Level I of that
Schedule because positions listed at that Level (Cabinet-
level positions) have unique post-employment restrictions
that would not be appropriate for these members.
We believe that this Board is a very important Government
body and that the ethics and conflicts of interest
restrictions applicable to the Board should be clear, correct
and appropriate. We look forward to working with your staff
to address the changes to the language of the House bill that
we believe are necessary to clearly meet the obvious intent
of the House as well as our recommendations.
Sincerely,
Stephen D. Potts,
Director.
____

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.

[[Page S4458]]

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.
____

Senior Executives Association,

Washington, DC, April 17, 1998.
In re: S. 1096, the IRS restructuring and reform bill.

Hon. Lauch Faircloth,
U.S. Senate, Attn: David Landers, Legislative Counsel, Hart
Senate Office Bldg, Washington, DC.
Dear Senator Faircloth: The Senior Executives Association
(SEA) is a non-partisan, non-profit, professional association
representing the interests of career members of the Senior
Executive Service and other career executives in equivalent
positions in the federal government.
As you know, the Senate Finance Committee reported out S.
1096, the IRS Restructuring and Reform Bill. In the
Chairman's mark that was considered by the committee,
Chairman Roth had excluded from membership on the IRS
Oversight Board both the Secretary of Treasury and the
representative of the National Treasury Employees Union, the
union that represents many IRS employees.
In response, Senator Robert Kerry (D-Neb) sponsored an
amendment to put the union representative and the Secretary
of Treasury back on the Oversight Board, and that amendment
passed the Committee. Senator Kerry's amendment was proposed
in the face of an opinion from the U.S. Office of Government
Ethics (copy attached) that having the union representative
occupy a position on the IRS Oversight Board would place that
individual in a position of potentially violating two
criminal statutes which apply to all persons occupying
similar positions in the federal government. Senator Kerry
dismissed this opinion, stating that the union representative
could simply be exempted from coverage of these two criminal
provisions in S. 1096. Senator Kerry's amendment was passed
by the full committee.
The Senior Executives Association strongly opposes
inclusion of both the union representative and the Secretary
of Treasury on an IRS Oversight Board for the reasons stated
below.

Background

The Internal Revenue Service plays a unique and important
role in the federal government. It is one of the few federal
agencies whose employees interact on a daily basis with tens
of thousands of U.S. citizens. It is the law enforcement
agency which, in contrast to other law enforcement agencies,
must often deal with citizens who are neither criminals nor
accused of crimes. However, it is a law enforcement agency
forced to deal with negligent or willful refusal by 15%-20%
of citizens to comply with Internal Revenue laws. The
complaints of some taxpayers, and the alleged actions of some
IRS employees, must be viewed against the background of the
frustration of dealing, for example, with wrongdoers who have
spent the withholding dollars belonging to their employees
for their own purposes, rather than paying them into the
Social Security Trust Fund or the Treasury Department for
their employees' portion of payroll withholding taxes.
This is not to say that there are no examples of abuse by
individual IRS employees. In an agency of over 100,000
employees who deal with tens of thousands of citizens on a
daily basis, even when they are correct 99.9% of the time,
the 1/10th of 1% of mistakes or abuses of authority are
enough to ensure headlines. We agree that perpetrators of the
small numbers of abuses of authority and power by IRS
employees should be seriously dealt with, and the guilty
employees disciplined or discharged.
IRS employees are deeply imbued with a few principles from
the time they are first hired, during their training, and
continuing throughout their employment. These principles
include (1) the absolute integrity required of all IRS
employees; (2) the fair, non-political, and non-partisan
enforcement of the tax laws; (3) the fair treatment of all
taxpayers; and (4) the equality of treatment of all similarly
situated taxpayers.
In the 1950's, major reorganizations took place within the
Internal Revenue Service because the principles stated above
were violated. At that time, political appointees were
appointed by each Administration as chief collectors in each
state. These political appointees, it was found, were
sometimes involved in partisan political enforcement of the
tax laws and, as a result, corruption of the tax system, as
well as personal corruption of some IRS employees, was found
to be a major problem throughout the Internal Revenue
Service. Hearings were held in Congress, and legislation was
enacted reforming the IRS, establishing only two political
appointees to provide leadership of the IRS (the IRS
Commissioner and the IRS Chief Counsel) and creating of the
``Inspection Service'' within the agency, which performed
both internal audit and internal security functions in the
agency to ensure the integrity of IRS operations and its
employees.
The IRS was also separated in large part from the control
of the Department of the Treasury, under the theory that the
Department, with its numerous politically appointed
officials, should not be involved in the day-to-day
administration and enforcement of the tax laws. Of course,
Treasury continued as a major player in the establishment of
federal tax policy, as well as other areas. But Congress
intentionally divorced the Department of the Treasury from
interpretation, implementation, and enforcement of the
Internal Revenue laws enacted by Congress.

the secretary of the treasury on the irs oversight board

Against this background and the principles first enumerated
(of ensuring the non-partisan administration of the tax laws)
must be weighed the advantages and disadvantages of the
Secretary of the Treasury being on the IRS Oversight Board.
The citizens of this nation must believe that the tax laws
are being fairly enforced for everyone, and that similarly
situated taxpayers are being treated equally. In large part,
our government depends on the voluntary compliance by
citizens with the tax laws. If the appearance or the reality
of partisan politics ever crept, once again, into the
nation's perception of the enforcement of tax laws, it could
destroy belief in the integrity and fairness of the tax
system that has been developed in the IRS by its largely
career workforce over the last forty years. Our concern is
that placing the Secretary of the Treasury on the IRS
Oversight Board could once again breach the appearance and
the reality of the wall of impartiality that has been so
carefully constructed.
We recognize that Secretary of the Treasury Rubin (and this
Administration) would take great pains to ensure that the
perception or reality of political interference in the
enforcement of tax laws would not occur. However, federal
government policies should not depend on individuals who
serve in particular positions, but on the laws enacted by
Congress. This is, after all, a nation of laws, not of men.
While Secretary Rubin and even his immediate successors
might never abuse their power or authority, it is not to say
that some such abuse might not occur in the future. In recent
history, the Nixon Administration, in the 1970's, established
an enemies list and sought to have the IRS audit particular
individuals and organizations for political purposes. The
nation became outraged by these allegations, and it was one
of the reasons that President Nixon ultimately resigned from
office. In the current Administration, the allegation that a
number of FBI files on previous Republican appointees were
being retained in the White House became an issue of extreme
concern. Again, even if this was, indeed, an innocent
mistake, the perception created in the public's mind becomes
the reality of the public's attitude.
For the above reasons, we believe that it is imperative
that the Treasury Department continue its arms-length
dealings with the Internal Revenue Service, and that the
Secretary not be provided a seat on the IRS Oversight Board.
Obviously, the Secretary of the Treasury has line authority
over the Commissioner and Chief Counsel of the Internal
Revenue Service, who are appointed by the President and the
Secretary. If the Secretary believes that these officials are
not properly performing their jobs or that improper policy
decisions are being made, the Secretary can seek removal of
these officials by the President. This kind of Power gives
the Secretary of the Treasury sufficient authority to ensure
that his opinions or policy positions are seriously
considered and, in most cases, followed. The Secretary does
not need to be on the IRS Oversight Board to have appropriate
influence on the agency. We believe that the possibility of
an appearance of partisan political influence that could be
engendered by the Treasury Department's deeper penetration
into the operations of the IRS clearly outweighs the benefits
of having the Secretary of the Treasury on the IRS Oversight
Board. Our conversations with, and surveys of, IRS employees
reinforce this belief. The consensus

[[Page S4459]]

of career officials is that they would much rather have the
intrusion of an independent IRS Oversight Board into their
management decision making processes than they would have the
additional intrusion of the Treasury Department.

inclusion of the nteu representative on the irs oversight board

From the outset of the proposal by the Kerry-Portman
Commission (which studied the IRS) to include the IRS union
president on the IRS Oversight Board, we have been inundated
with objections from managers of the Internal Revenue Service
and throughout the federal community.
IRS supervisors, managers and executives must deal with
union stewards and unionized employees at the IRS in
thousands of different situations each work day. In many
instances, these dealings are extremely cooperative. In
others, they are not. The labor management provisions of law
that were enacted by Congress in 1978 for the federal
government struck a careful balance between the union's
rights and management responsibilities in the labor-
management context (see Chapter 71, Title 5, U.S. Code). The
law sets forth the rights of employees to union
representation, the subjects of bargaining, and establishes
the Federal Labor Relations Authority and the Impasses Panel
to decide various disputes between the labor and management
positions when negotiations cannot solve the issues. It is a
carefully constructed process which has served the federal
community well for over 20 years.
However, the placement of the IRS employee union president
on the Oversight Board, and the provision in the House and
Senate bills which gives the union absolute veto power over
any attempt by the Oversight Board, the Commissioner, IRS
manager, or even the President, to implement personnel
reforms which would affect bargaining unit employees
represented by the union stands this law on its head.
First, the placement of the union president on the
Oversight Board would alter the balance of power between
labor and management. A supervisor or a district director at
an IRS district office trying to negotiate with the local
union could be totally bypassed, and the union's position
conveyed to the IRS Oversight Board by the union president in
such a way that distorted the merits of management's position
at the district office. This would prevent the entire IRS
management structure from being able to negotiate on an equal
basis with the union. The House and Senate bills give the
Oversight Board the authority to oversee the selection,
evaluation, and compensation of IRS career executives. The
union's presence on this Board, and its resultant ability to
influence the selection, evaluation, and compensation of IRS
managers is a direct conflict of interest, one which would
eviscerate the IRS executive's ability to deal with the union
on any but a subservient basis.
In addition, the union's participation on the Board, which
will prepare and present a recommended budget for IRS to
Congress puts the union in a position to be able to benefit
itself as an organization, as well as the IRS employees which
it represents, in violation of current criminal law. As the
attached opinion from the Office of Government Ethics
explains:
``Given the duties of the Board, this individual [union
representative] cannot serve as a `representative'--a status
recognized in applying conflicts laws to certain individuals
carrying out purely advisory duties. We believe that the
basic criminal financial conflict of interest statute, 18
U.S.C. Sec. 208, will be applicable to this individual and
will substantially limit that individual's ability to carry
out any meaningful service on the Board. . . . In addition,
we believe that such a member will also be substantially
inhibited from carrying out his or her duties on behalf of
the union by the restrictions of 18 U.S.C. Sec. 203. There
are no applicable waivers for these [two] restrictions.''
Even in the face of the opinion of the Office of Government
Ethics (the interpreter of the application and enforcement of
ethics laws in the Executive Branch), the Administration and
Senator Bob Kerry continued to insist that the IRS union
representative be placed on the Oversight Board. Senator
Kerry directed the Committee staff (at the time he sponsored
his amendment before the Senate Finance Committee) to work
with the Office of Government Ethics to provide in S. 1096
for waivers of these two criminal statutes as applied to the
union representative on the IRS Oversight Board.
In our view, this would be an outrageous action by the
Congress. To exempt a specific individual who is serving as a
union representative from the application of two criminal
laws for which there are no waivers available in law, is
unprecedented, so far as we can determine. At the very least,
the waiver of the application of criminal laws should at
least have full consideration by the United States Senate,
and, we believe, should require hearings by the Senate and
House Judiciary Committees before being enacted. We cannot
believe that the American people would be willing for
Congress to selectively exempt a union representative from
the application of criminal laws which apply to other
citizens. If anything, these two criminal statutes should be
repealed for all, rather than providing immunity from
prosecution for one individual.

summary

For the reasons stated above, we strongly urge that you
sponsor an amendment in the Senate to strike the provision
from S. 1096 authorizing and/or requiring that the
representative of the IRS employees union and the Secretary
of the Treasury be placed on the IRS Oversight Board. The
placement of the Secretary of the Treasury on the Oversight
Board threatens, in our view, to erode the necessary
confidence of the American people in the non-partisan
administration and enforcement of the tax laws. The inclusion
of the union representative on the IRS Oversight Board
threatens the ability of IRS management to manage and control
the IRS workforce. In addition, the provision granting the
union representative immunity from two criminal laws which
apply to every other citizen threatens not only the
appearance but the actuality of the integrity and non-
partisan impartiality of the Internal Revenue Service.
Sincerely,
Carol A. Bonosaro,
President.
G. Jerry Shaw,
General Counsel.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, on behalf of Mr. Kerrey, who is the manager,
the ranking manager on this side, I have been asked by him to state
that the vote on the Faircloth amendment is a vote, in essence, quite
similar to the vote that has already occurred on the amendment by Mr.
Fred Thompson of Tennessee. Mr. Kerrey asked me to state that he would
suggest, or even urge, Members to vote against the Faircloth amendment,
the case already having been made, and in accordance with the request
by Mr. Kerrey, I am authorized to yield back the time on this side.
Mr. FAIRCLOTH. If I have time remaining, I yield it back.
Mr. KERREY. I ask for the yeas and nays on this amendment.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
Mr. ROTH. I yield back our time.
Mr. FAIRCLOTH. I am ready to call for the yeas and nays, but I
understood that Senator Byrd was going to speak.
Mr. KERREY. Earlier we did request that. We have some Members who
will leave at 11 o'clock, so I asked Senator Byrd if he would speak
after the rollcall vote.
Does the Senator still want a rollcall vote on this amendment?
Mr. FAIRCLOTH. Yes.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered. The clerk will call the roll. The
yeas and nays have been ordered.
The legislative clerk called the roll.
Mr. FORD. I announce that the Senator from Hawaii (Mr. Akaka) is
absent because of a death in the family.
The PRESIDING OFFICER (Mr. Grams). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 35, nays 64, as follows:

[Rollcall Vote No. 123 Leg.]

YEAS--35

Allard
Ashcroft
Bond
Brownback
Chafee
Coats
Cochran
Coverdell
Enzi
Faircloth
Frist
Gorton
Gramm
Grams
Gregg
Helms
Hutchinson
Inhofe
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Sessions
Shelby
Smith (NH)
Smith (OR)
Thomas
Thompson
Thurmond

NAYS--64

Abraham
Baucus
Bennett
Biden
Bingaman
Boxer
Breaux
Bryan
Bumpers
Burns
Byrd
Campbell
Cleland
Collins
Conrad
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Ford
Glenn
Graham
Grassley
Hagel
Harkin
Hatch
Hollings
Hutchison
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Santorum
Sarbanes
Snowe
Specter
Stevens
Torricelli
Warner
Wellstone
Wyden

NOT VOTING--1

Akaka

The amendment (No. 2360) was rejected.
Mr. KERREY. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BYRD addressed the Chair.

[[Page S4460]]

The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, I ask unanimous consent that I may yield to
the manager of the bill for the purpose of transacting three
amendments, after which I be again recognized.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. I thank my esteemed colleague for his courtesy as it is
very helpful in moving this legislation forward. I first yield to
Senator Kerrey to offer one amendment.

Amendment No. 2361

(Purpose: To express the policy of Congress that the Internal Revenue
Service should work cooperatively with the private sector to increase
electronic filing)

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

The Senator from Nebraska [Mr. Kerry] proposes an amendment
numbered 2361.

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 256, line 15, strike ``and''.
On page 256, line 18, strike ``2007.'' and insert ``2007,
and''.
On page 256, between lines 18 and 19, insert the following:
(3) the Internal Revenue Service should cooperate with the
private sector by encouraging competition to increase
electronic filing of such returns, consistent with the
provisions of the Office of Management and Budget Circular A-
76.

Mr. KERREY. Mr. President, this amendment has been agreed to on both
sides. It strengthens the electronic filing section, title II of this
bill. I appreciate very much the Chairman's support.
Mr. ROTH. As Senator Kerrey indicated, this amendment is acceptable
to us, and I urge its adoption.
The PRESIDING OFFICER. Is there further debate on this amendment? If
not, the question is on agreeing to the amendment.
The amendment (No. 2361) was agreed to.
Mr. ROTH. I now yield to Senator Grassley.
The PRESIDING OFFICER. The Senator from Iowa.

Amendments Nos. 2362 and 2363, en bloc

Mr. GRASSLEY. Mr. President, I send two amendments to the desk and
ask that they be considered en bloc.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Iowa [Mr. Grassley] proposes amendments
numbered 2362 and 2363, en bloc.

The amendments are as follows:

AMENDMENT NO. 2362

(Purpose: To add a counsel to the Office of the Taxpayer Advocate who
reports directly to the National Taxpayer Advocate)

On page 203, line 5, strike ``and''.
On page 203, line 10, strike the period and insert ``,
and''.
On page 203, between lines 10 and 11, insert:
``(III) appoint a counsel in the Office of the Taxpayer
Advocate to report directly to the National Taxpayer
Advocate.''
____

AMENDMENT NO. 2363

(Purpose: to authorize the Secretary of the Treasury to provide a
combined employment tax reporting demonstration project)

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

SEC. . COMBINED EMPLOYMENT TAX REPORTING DEMONSTRATION
PROJECT.

(a) In General.--The Secretary of the Treasury shall
provide for a demonstration project to assess the feasibility
and desirability of expanding combined Federal and State tax
reporting.
(b) Description of Demonstration Project.--The
demonstration project under subsection (a) shall be--
(1) carried out between the Internal Revenue Service and
the State of Iowa for a period ending with the date which is
5 years after the date of the enactment of this Act,
(2) limited to the reporting of employment taxes, and
(3) limited to the disclosure of the taxpayer identity (as
defined in section 6103(b)(6) of such Code) and the signature
of the taxpayer.
(c) Conforming Amendment.--Section 6103(d)(5), as amended
by section 6009(f), is amended by striking ``project
described in section 976 of the Taxpayer Relief Act of
11997.'' and inserting ``projects described in section 976 of
the Taxpayer Relief Act of 1997 and section---- of the
Internal Revenue Service Restructuring and Reform Act of
1998.''.

Mr. GRASSLEY. Mr. President, the first amendment that I am offering
today will simply place a counsel--a lawyer--in the National Taxpayer
Advocate's office.
The purpose of doing this is to give the Taxpayer Advocate ready
access to legal opinions and legal judgments, Currently, the Taxpayer
Advocate must put requests into the Office of Chief Counsel.
In order to make the Taxpayer Advocate more independent, which is
what this bill does, it logically follows that the Taxpayer Advocate
should have its own legal counsel. This will guarantee it fast,
confidential legal advice to help those taxpayers in greatest need.
Because it is the taxpayers in greatest need who go to the Taxpayer
Advocate.
The second amendment should not be controversial. It applies only to
Iowa. It is only a pilot project. We created an identical pilot project
in Montana last year. A nationwide project like this was recommended by
the IRS Restructuring Commission. My amendment is only a pilot program
and it is only for Iowa.
This project would simplify reporting for some Iowa businesses. It
would give a try to a program that would allow them to report taxes on
one form. This gives businesses more time to conduct business, and
spend less time on paperwork.
Mr. President, these amendments have been cleared by the other side,
and I ask that they be adopted by consent.
The PRESIDING OFFICER. Is there further debate on the amendments? If
not, the question is on agreeing to the amendments.
The amendments (Nos. 2362 and 2363) were agreed to.
Mr. GRASSLEY. I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from West Virginia.

____________________