[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)''.
       On page 177, strike lines 7 and 8, and insert the 
     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.
       On page 178, line 10, strike ``or (D)''.
       On page 182, line 1, strike ``or (D)''.
       On page 182, line 11, strike ``or (D)''.
       On page 190, line 12, strike ``or (D)''.

  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.

                          ____________________