[Congressional Record Volume 144, Number 56 (Thursday, May 7, 1998)]
[Senate]
[Pages S4478-S4485]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1998

  The Senate continued with the consideration of the bill.


                           Amendment No. 2372

  (Purpose: To strike the Secretary of the Treasury from the Internal 
                    Revenue Service Oversight Board)

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

       The Senator from Florida [Mr. Mack], for himself, Mr. 
     Faircloth, and Mr. Murkowski, proposes an amendment numbered 
     2372.

  Mr. MACK. 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 3 through 5.
       On page 175, line 6, strike ``(C)'' and insert ``(B)''.
       On page 175, line 8, strike ``(D)'' and insert ``(C)''.
       On page 176, line 10, strike ``(D)'' and insert ``(C)''.
       On page 177, line 10, strike ``(D)'' and insert ``(C)''.
       On page 177, line 21, strike ``(1)(D)'' and insert 
     ``(1)(C)''.
       On page 178, line 10, strike ``(D)'' and insert ``(C)''.
       On page 180, line 11, strike ``(1)(D)'' and insert 
     ``(1)(C)''.
       On page 180, line 18, strike ``(1)(D)'' and insert 
     ``(1)(C)''.
       On page 181, line 14, strike ``(1)(D)'' and insert 
     ``(1)(C)''.
       On page 182, strike lines 3 through 7, and insert the 
     following:
       ``(B) Commissioner.--The Commissioner of Internal Revenue 
     shall be removed upon termination of service in the office.''
       On page 182, line 11, strike ``(D)'' and insert ``(C)''.

  Mr. MACK. I thank the Chair.
  Last week, thanks to the leadership of Finance Committee Chairman 
Roth, Congress resumed the first meaningful IRS oversight hearings we 
have conducted in decades. The testimony we heard reinforced the 
impression of a rogue agency that is literally out of control. As was 
the case when the oversight hearings began in September, some of what 
we heard was shocking, much of it was saddening, and all of it was 
angering. Witnesses testified to incidents of IRS abuse and of blatant 
misuse of IRS power that are simply unacceptable.
  I recall in particular the story of one taxpayer who could not be at 
the hearings in person but was represented by his former attorney. The 
reason the taxpayer could not attend was that he was literally hounded 
to death by the IRS. The 61-year-old taxpayer had been suffering from 
severe health problems. He had heart disease and was weakened by 
cancer. The IRS revenue officer assigned to his case was informed that 
the taxpayer could not physically withstand stressful situations but, 
with the support of his supervisor and the chief of collections, 
persisted in aggressive and intimidating tactics.
  I want to make this clear now about the IRS being well aware of the 
health conditions of the taxpayer. They had a letter, I believe, from 
the physician that was sent to them informing them of the condition of 
the taxpayer, and yet they persisted in aggressive and intimidating 
tactics. The IRS, disregarding this humanitarian appeal, sent the 
taxpayer a notice of intent to levy.
  By the way, let me back up for a moment as well. Notice I talked 
about that taxpayer going to his attorney. The request on the part of 
the attorney was that further contacts in this case be with the 
attorney, not the taxpayer, again because of the health condition. They 
totally ignored that request. And so 2 days after this levy, the man 
died from a heart attack.
  This story highlights, perhaps better than any other we heard, the 
fundamental and disgraceful problems at the IRS, an agency which never 
seems to consider the interests and perspective of the taxpayer. This 
attitude is entirely unacceptable and cannot be tolerated. The IRS 
Criminal Investigations Division has apparently learned from the FBI 
and the DEA criminal investigative techniques that are appropriate for 
dealing with violent and dangerous criminals and now uses these in 
routine criminal tax investigations of taxpayers who are neither 
dangerous nor violent. Taxpayers have had their businesses raided by 
armed agents, their lives turned upside down, and their reputations 
ruined.
  In listening to hours of compelling testimony, members of the Finance 
Committee could not help but wonder how in the world could such things 
be happening. Why would the IRS send 10 special agents to a woman's 
home at 7:30 in the morning to serve a search warrant and spend 8 hours 
in her home not to search for drugs or illegal contraband but, instead, 
so that a furniture appraiser could value items from her grandmother's 
estate? Who could have approved such a blatantly intrusive act? Why 
would the IRS send 64 agents to raid a man's family business with 35 
employees at the home office? The taxpayer was not a violent or 
dangerous criminal. What purpose could be served by the use of 64 
agents in this raid other than to intimidate and oppress the taxpayer?

[[Page S4479]]

  The villains of the horror stories that were presented to the Finance 
Committee last week were not just frontline, low-level employees of the 
IRS. None of these abuses could have taken place without either the 
approval of management or of failure in supervision. Last week's 
hearings exposed a corrupt culture permeating IRS management which will 
require a major housecleaning at the Service.
  The current oversight of the Service is just not working. The 
Treasury inspector general has the power to investigate IRS operations, 
but we learned last week that the inspector general is being ignored by 
the IRS. The inspector general investigated and substantiated 
allegations of travel fraud, abuse of subordinates, sexual harassment, 
fraudulent performance appraisals, and others to cover up illegal 
actions, all against IRS executives. Yet in each and every one of these 
cases the report from the inspector general was sent to the Deputy 
Commissioner's desk and no disciplinary action was taken. In other 
cases, the IRS has hindered oversight by keeping information from the 
inspector general.
  Now, this particular problem of inspector general oversight is 
addressed in the IRS reform bill that we have before us through the 
creation of a new inspector general for tax administration. But the 
problem underscores the corrupt culture at the IRS, a culture in which 
the decent, honest IRS employees who report abuses of their coworkers 
receive not thanks but retaliation.
  At the IRS, an individual who sexually harasses his subordinates can 
end up being the National Director of Equal Employment Opportunity. At 
the IRS, midlevel managers can decide to close the audits of major 
corporations and determine that no extra taxes are owed even when the 
corporation concedes that it owes more taxes. At the IRS, a renegade 
special agent with a drinking and substance abuse problem can 
fabricate allegations of political corruption and be protected rather 
than punished by his supervisors.

  This culture must change, and it is not happening. We heard last week 
that some IRS managers have been bragging that they have no regard for 
the Finance Committee's oversight hearings and that they intend to go 
back to business as usual once the spotlight is off. Even after we 
exposed the illegal use of enforcement statistics to evaluate IRS 
employees and offices, it seems that the southern region is still 
ranking their district offices based on property seizures.
  Many IRS bureaucrats appear to have concluded that we are not serious 
about oversight and that we are not serious about reform. We in the 
Congress must prove them wrong and send a strong message to the IRS and 
to the taxpayer that business as usual will not be tolerated.
  Since our hearings last September exposed numerous instances of 
taxpayer abuse, it seems that not one person has been fired at the IRS. 
It is my hope that the provisions in the IRS reform bill that require 
the termination of employees who commit certain acts such as taxpayer 
abuse will help correct this problem.
  Commissioner Rossotti has made a number of positive moves since 
taking office. He has ordered an independent review of the IRS 
Inspection Service, and now he has enlisted Judge William Webster for a 
much needed review of the Criminal Investigations Division. In order to 
change the corrupt culture at the IRS, it is necessary that outside 
people with a perspective different from that of the IRS bureaucracy be 
given a prominent role.
  It is for this reason that I have offered this amendment. My 
amendment, cosponsored by Senator Faircloth and Senator Murkowski, 
would move us closer to Chairman Roth's vision of a private sector 
oversight board by removing the Secretary of the Treasury from this 
board.
  The purpose of the oversight board is to reform the IRS from the 
outside. The board will be composed of people from the private sector, 
people with management and information systems expertise, people who 
still have the interest of the taxpayer in mind. To change the culture 
of the IRS, we need to replace the law enforcement mentality with a 
customer service mentality. The independent oversight board will play a 
vital role in changing this culture. There is no place on such a board 
for a Government official, such as the Secretary of the Treasury. The 
board must be the voice of the taxpayer, not the voice of the status 
quo. For this new board to have any credibility with the public, it 
must not be under the influence of the Cabinet Member who already has 
responsibility for the agency.
  We must prove that we are serious about reform of the IRS. Making the 
oversight board a private sector check on the IRS is essential for 
reform. Otherwise, it is just Washington business as usual with another 
Washington-controlled commission. That is not what we need. We need an 
oversight board of the taxpayers, by the taxpayers, and for the 
taxpayers.
  Mr. President, I want to make it clear, because I realize that in 
these kinds of situations the impression could be drawn that I am 
focusing my concerns personally at the Secretary of the IRS. That is 
not the point at all. The Secretary of the Treasury is, frankly, 
reflecting the views of the bureaucracy. I find it troubling that we 
would have changed the legislation from the markup document that we 
began with, which Senator Roth proposed, which did not include members 
other than private sector individuals. Again, I want to stress this 
point. This is not directed personally at the Secretary of the 
Treasury, but it is a response in essence to an attempt by the 
bureaucracy to protect itself.
  Here is what the Secretary has said in the past with respect to this 
issue. In the Cincinnati Inquirer, on September 17, 1997, Secretary 
Rubin said:

       The fact that the agency was being run by private sector 
     individuals would almost surely have what lawyers call a 
     chilling effect on IRS employees and influence audit policy, 
     enforcement policy, and the like.

  You bet it would. I think that is exactly the reason we had called 
for a board in which there were only private sector representatives on 
that oversight board.
  The ultimate concern that I have here is that if we are going to make 
a change, it should not be business as usual. It should not be a 
commission dominated by Washington insiders. Why do I say it would be 
dominated when this is a board that would be, under its present 
organization, nine members, six from the private sector, three not? The 
six private sector members, as I recall, are part-time members of this 
commission, this oversight board. When you add the Secretary of the 
Treasury, the Commissioner of the IRS, and a representative of the 
employees at IRS, what you have done is totally changed the makeup in 
this sense. There are huge bureaucracies that the Secretary of the 
Treasury and the other members from Government can call on who will 
dominate, in my opinion, the six individuals who are serving from the 
private sector on a part-time basis with very limited staffs.
  I want to conclude my comments by saying to those Members of the 
Senate who participated in hearings, not just in the Senate but also in 
the process outside the committee, in no way do I try to lessen the 
significance of the work that you have done. But this is not an issue 
of what we hear at hearings. This is an issue of how Washington works 
and how the bureaucracy will do whatever is necessary in order to 
protect itself. And to put the Secretary of the Treasury and a 
representative of the employees on this board is just business as 
usual, Washington protecting itself.
  With that, Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, I compliment my good friend from 
Florida relative to this particular issue concerning the IRS evaluation 
and the oversight board, in particular the position of the Secretary on 
this board.
  First of all, in this amendment that my friend from Florida has 
proposed, we would give the IRS Advisory and Oversight Board a far 
greater capacity to exercise its oversight and advisory functions, 
ensuring taxpayers are treated fairly. That is the object of this 
entire exercise.
  Our friends on the Finance Committee, and I am a member of that 
committee, as we discussed in the makeup of the nine-member board, we 
reflected on the debate yesterday where the Senate rejected the idea of 
making the board a full-time board consisting exclusively of private 
citizens. However,

[[Page S4480]]

in my view, this board will have a very, very hard time fulfilling its 
oversight and advisory functions because, I think, as does the Senator 
from Florida, that its composition is basically unbalanced.
  First of all, let's examine the board. We have six private sector 
members to be selected based on their expertise in such areas as 
management, customer service, information technology, and, most 
important, the needs and concerns of the taxpayer. If those were the 
only members of the board, the board would be basically free to take an 
unbiased and objective view of how to improve the operations of this 
agency, with the goal of ensuring the proper treatment of the American 
taxpayer and the efficient and courteous delivery of services.
  But let's look at it realistically. Unfortunately, the board is not 
made up that way. As the board has emerged, it will likely be dominated 
by three additional people who are required to be members. First of 
all, we have added the Internal Revenue Service Commissioner. A 
representative of the employees of the IRS is the second member. And 
third, the Secretary of the Treasury.
  Does anyone in this body really believe that this board, consisting 
of three of the most important people--these are policy people--most 
important people involved in the operation of the IRS, will be free to 
exercise real oversight of the IRS? Why do we even need an advisory 
board to make recommendations to the Secretary of the Treasury and the 
Commissioner of the IRS when these two individuals already serve on the 
board? What kind of advisory group are we talking about here? You have 
insiders on the advisory group. These insiders are very powerful--the 
Commissioner of the Internal Revenue Service, a union employee 
representative of the Internal Revenue Service, and the Secretary of 
the Treasury. So where is the objectivity? These people will control 
the direction and policy of this board. So where does this advisory 
board stand independently? It does not. That is the fallacy in the 
makeup. That is why I encourage my colleagues to consider the amendment 
offered by the Senator from Florida, which I wholeheartedly support.

  We have heard the horror stories of taxpayer abuse described in the 
Finance Committee last September and at last week's hearings. Mind you, 
Mr. President, this occurred on the watch of the Treasury Secretaries 
appointed by both Republican and Democratic Presidents. What kind of 
oversight did these Treasury Secretaries perform on the IRS during 
their tenure in office? It appears there was very little, if any, 
oversight. Why? We would like to think because we don't have an 
independent board. But, if you put the insiders on the board, you don't 
have objectivity. If we allow the Secretary of the Treasury to 
participate on this board, along with the IRS Commissioner, I fear we 
will have business as usual in the IRS. That is what the Finance 
Committee attempted to address: no longer business as usual.
  I assume many of my colleagues are out there now making their sound 
bites, appealing to the folks back home that this is a major step 
forward, this legislation, in making the IRS accountable. But it is 
not. It is business as usual. You have the same insiders, only this 
time they are on the board that is supposed to oversee the IRS.
  Mr. President, let's stop kidding ourselves around here. The 
Secretary has a staff of thousands of people. They can provide him with 
any number of reasons to dissuade the board from recommending and 
implementing significant changes to the Internal Revenue Service. The 
Secretary and the IRS Commissioner work together. They have to. They 
work together on a regular basis and will form a powerful team that 
could prevent real and meaningful changes at the IRS.
  I have seen it in my own business career, where people of knowledge 
and responsibility who are insiders direct the activities of an 
objective group of outsiders simply because they have the power and 
influence of their position. This board should have as its No. 1 goal 
finding ways to improve services by the Internal Revenue Service to the 
American taxpayer. If the Treasury Secretary who oversees the IRS is on 
this board, I fear the interests of the bureaucracy--and I noted my 
friend from Florida mentioned time and again in his presentation 
``don't underestimate business as usual''--and the power of the 
bureaucracy. And, don't kid yourself, it is in the Internal Revenue 
Service as well.
  So I fear the interests of the bureaucracy and the Government are 
simply going to be put ahead of the interests of the taxpayers because 
it has always been that way in the past. It is inherent in the nature 
of his high position and his large and sophisticated staff that the 
Secretary of the Treasury will dominate this board and the interests of 
the taxpayer will not be adequately represented.
  I have the utmost respect and admiration for the Treasury Secretary, 
Bob Rubin. He has done, and is doing, an admirable job as Secretary of 
the Treasury. I differed with him on the Mexican bailout, but he proved 
to be right. He has done, and is doing, an admirable job as Secretary 
of the Treasury. My support for this amendment has nothing to do with 
Mr. Rubin, in the interests of full disclosure. But it is my concern 
that the official in charge of Treasury and the IRS operations cannot 
bring an objective view to oversight of his own operations. I urge the 
adoption of the Mack amendment.
  Finally, I have been in the business community for 25 years. Many of 
my colleagues here have not. I can tell you how it works in that kind 
of environment, where you have insiders with positions of influence, 
not that they are not well meaning, but it is the very nature of the 
beast that you lose the objectivity that you are going to have if you 
have this board set up without considering the implications of the 
influence of the Secretary of the Treasury.
  I encourage my colleagues to consider the merits of this amendment 
and act accordingly. Mr. President, I yield the floor.
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I have very much appreciated listening to 
the arguments for this amendment. However, I think it is important for 
us to step back a little bit and look at this issue a little more 
broadly. The first point I would make is to remind my colleagues that 
the IRS Restructuring Commission recommended that the Treasury 
Secretary serve on the Board, as well as recommend there be a 
representative of an employee organization.
  The Restructuring Commission spent a lot of time thinking about this. 
This is not something they willy-nilly recommended to the Congress. 
Just as we in the Senate voted to honor the Restructuring Commission's 
inclusion of a representative of an employee organization, I submit it 
makes sense for us to honor the Restructuring Commission's 
recommendations to continue to include the Treasury Secretary. The 
Restructuring Commission spent a lot of time thinking about this, and 
they did conclude that the Treasury Secretary should be a member of the 
Board.
  Why did they do that? I think for a number of reasons. First, the 
Treasury Secretary has responsibility for the IRS. After all, that is a 
large part of his job. In fact, 80 percent of Treasury's resources and 
people are in the IRS--over 100,000 employees.
  Second, there is an analogy with corporations. Corporate boards 
include chairmen. Corporate boards include CEOs. Why do they do so? 
Because they want communication between the governing board on the one 
hand, and the operation management on the other. You have to have 
direct communication; you have to have guidance. If the Treasury 
Secretary is not on the Board, that certainly diminishes communication 
between the Board and the Treasury Secretary. It is just obvious and 
also does something else which is the exact opposite of what we are 
trying to do here. It tends to create an adversarial relationship 
between the Treasury Secretary and the Board.
  The analogy which someone alluded to earlier of having `the fox guard 
the chicken coop' to have the Treasury Secretary on the Board, is 
totally inapplicable. Why? Simply because the other board members, the 
six private board members, are going to be pretty strong-willed people 
if they are going to agree to serve on this Board. Any President who 
wants to make IRS restructuring work is going to get pretty

[[Page S4481]]

strong people. These are not people who are going to roll over willy-
nilly at the insistence of the Treasury Secretary.
  First of all, they don't work for the Treasury Secretary. These are 
private sector people. The only working relationships between the 
Secretary and Board members is with the Commissioner, Mr. Rossotti, and 
in some indirect way, the employees representative. There are six 
private sector people on the Board who are going to be strong-willed, 
strong-minded people. They are not going to roll over and play dead.
  In addition, the Treasury Secretary is going to want to be a two-way 
messenger, both to and from the Board, to the President's Cabinet, to 
the President himself. If we want IRS restructuring to work, we want 
him to participate in the Board's deliberations. He will be able to 
share information with the other members of the Board that they might 
not otherwise know about, and that no one else would know. At the same 
time, he would learn things about the IRS by serving on the Board that 
he might not otherwise discover.
  Another way to see that we have ensured independence of the Board is 
that each of the six private sector members is subject to the 
confirmation process in the Senate. When we are talking to these 
nominees as they go before our committees in the Senate, we have ample 
opportunity to insist upon the independence of these board members. We 
have ample opportunity for commitment from these nominees. They are not 
going to kowtow to any Secretary.
  To sum up, Mr. President, the Restructuring Commission recommended 
the Treasury Secretary. It makes sense to keep the communication 
flowing between the Board and the Treasury Department and the 
President's Cabinet. The private sector Board members are going to be 
strong-willed people. They are not going to just acquiesce to the 
suggestions of the Treasury Secretary. In fact, there are provisions in 
this legislation to help assure that independence. One is having the 
Board send a separate budget to the Congress, for example, independent 
of the Treasury Secretary. It makes good sense to follow the 
recommendations of the Restructuring Commission on this matter. I urge 
my colleagues to keep the Treasury Secretary on the Board.

  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, how much time remains?
  The PRESIDING OFFICER. There are 22 minutes 56 seconds for the 
Senator from Florida and 39 minutes 38 seconds for the Senator from New 
York.
  Mr. McCAIN. I ask to be recognized for 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Mr. President, I rise in support of this legislation. 
Again, I thank the chairman and other members of the Finance Committee 
for their work in crafting this measure.
  The vast majority of Americans comply with our country's tax laws. In 
the same vein, most IRS workers do their jobs in a conscientious 
fashion.
  We have heard numerous accounts of abuses and mismanagement at the 
IRS. We have had months of hearings and hours of debate. Some of the 
reported incidents of taxpayer abuse have been so outrageous that it is 
hard to believe that they actually took place. Clearly, the system that 
guides and directs workflow at the IRS needs to be overhauled.
  Today, we are poised to go beyond talking about IRS reform. We are 
actually doing something about IRS abuse of innocent individuals.
  The reforms in this bill are carefully crafted structural reforms. 
They are reforms that will not only change the practices and procedures 
of the IRS, but its fundamental culture as well. These reforms will 
ensure that the IRS treats taxpayers fairly and with the respect they 
deserve.
  As with any proposal, there are improvements that can be made. Our 
colleagues have sponsored several amendments to make this bill even 
better.
  I am a strong advocate of IRS initiatives which provide increased 
customer service, fiscally responsible computer modernization, 
management and employee accountability and overall protection of 
citizens' rights. I support measures that would remove the union 
representative and the Secretary of the Treasury from the IRS Oversight 
Board, as well as a measure to create a full-time oversight board for 
the IRS.
  I also support a measure that would establish a Spanish-language help 
line at the IRS to ensure that all citizens can get needed assistance 
in paying the taxes they owe.
  I support an amendment that would greatly reduce unnecessary and 
onerous reporting requirements on colleges and universities that were 
imposed in last year's Taxpayer Relief Act in support of two new 
educational tax credits.
  I support an amendment to suspend interest and penalties on deferred 
taxes due from individuals who are in officially declared disaster 
areas.
  In addition, I support amendments to protect innocent spouses from 
undue harassment in an effort to collect taxes from their spouse.
  Finally, Mr. President, I am a cosponsor of a Coverdell amendment to 
this bill which outlaws random audits. Numerical quotas and random 
audits are inherently unfair. A culture that permits and encourages 
such practices is counterproductive to overall fairness and 
accountability. It is difficult to find another area of American 
society where you become subject to such intense Government scrutiny 
based solely on a random selection process.
  It is fundamentally unfair to impose the burden of a tax audit on an 
individual taxpayer for no reason other than his or her name was 
randomly selected.
  Reforming the tax collection and enforcement agency is only part of 
the solution of reducing the burden of excessive taxation on Americans. 
We still must continue our efforts to simplify the existing Tax Code 
and provide additional tax relief to all Americans.
  I am an original cosponsor of the Coverdell-McCain Middle Class Tax 
Relief Act of 1998, which is a step toward a simpler, flatter, fairer 
Tax Code. The Middle Class Tax Relief Act would deliver sweeping tax 
relief to lower- and middle-income taxpayers by increasing the number 
of individuals who pay the lowest tax rate, which is 15 percent. In 
1998 alone, this bill will place approximately 10 million taxpayers, 
now in the 28 percent tax bracket, into the 15 percent tax bracket. 
Preliminary estimates by the Tax Foundation indicate that 23 million 
taxpayers would benefit from this broad-based middle-class tax relief 
in 1998 alone.
  Mr. President, I supported the Middle Class Tax Relief Act because it 
is a step forward to further reform, it helps ordinary middle-class 
families who are struggling to make ends meet without asking the 
Government to help out, and it promotes future economic prosperity by 
increasing the amount of money taxpayers have available for their own 
savings and investments.
  In addition, this bill significantly lessens the effect of one of the 
Tax Code's most inequitable provisions--the marriage penalty. Our 
current Tax Code taxes a married couple's income more heavily than it 
taxes a single individual earning the same amount of income as the 
married couple. This bill reduces this inequity by taxing a married 
couple's joint income and a single individual earning the same income 
as the married couple at essentially the same effective rates.
  It is essential that we provide American families with relief from 
the excessive rate of taxation that saps job growth and robs them of 
the opportunity to provide for their needs and save for the future.
  Mr. President, I ask unanimous consent for 2 additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. This measure permits individuals to keep more of the 
money they earn. This extra income will allow individuals to save and 
invest more. The increased savings and investment are key to sustaining 
our current economic growth.
  In sum, the Coverdell-McCain measure is a win for individuals and a 
win for America as a whole. The Middle Class Tax Relief Act is a good 
bill, and I am hopeful that we can move forward on this bill during 
this Congress.
  Mr. President, regarding action taken yesterday on the IRS reform 
bill, let me note that I supported the chairman's amendment to fully 
offset the costs of implementing these reforms. However, I do have some 
concerns

[[Page S4482]]

about one of the funding sources. Specifically, the relaxed IRA 
rollover rule may create greater long-term revenue losses than 
anticipated. Because we cannot accurately score a bill beyond 10 years, 
it is difficult to determine how much additional revenue we may lose in 
the future as more individuals take advantage of the relaxed IRA 
rollover rules and make tax-free withdrawals from their accounts. I 
raise this concern simply to bring it to the attention of the managers 
of the bill as an item to be considered in conference with the House.
  Mr. President, let me close by saying that the IRS Restructuring Act 
of 1998 illustrates our continuing effort to change the way we collect 
our taxes and, on a larger note, the role of Government in our everyday 
lives. This bill reinstates the principles of fundamental fairness and 
overall efficiency to the operation of the IRS.
  We should pass this bill today and move forward to provide additional 
tax relief to all Americans.
  Mr. President, I yield back the remainder of my time.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. I yield myself 6 minutes.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I rise in support of the bill which, of 
course, creates the IRS Oversight Board and follows exactly the 
proposal made by the report of the National Commission on Restructuring 
the Internal Revenue Service: ``A Vision for the New IRS.'' This 
exceptional document is the work of an extraordinarily able public and 
private group, including the distinguished Senator from Iowa and the 
Senator from Nebraska, who is managing this legislation today. Their 
report called for the inclusion of the Secretary or Deputy Secretary on 
the board.
  The Secretary of the Treasury is not a bureaucrat, sir. He is the 
second-ranking member of the American Government; third if you want to 
include the Vice President. At any given moment there is the Secretary 
of State and the Secretary of the Treasury. Their predecessors begin 
with Thomas Jefferson and Alexander Hamilton, and the sequence since 
has been extraordinary.
  Now, I speak from personal experience. I have known every Secretary 
of the Treasury since the Honorable C. Douglas Dillon of New Jersey, 
who served President Kennedy so well and then stayed on with President 
Johnson--Secretary Dillon; Henry Fowler; Joseph Barr; David Kennedy; 
John Connally; George Shultz; William Simon; Michael Blumenthal; 
William Miller; Donald Regan; James A. Baker, III; Nicholas Brady; 
Lloyd Bentsen--our own Lloyd Bentsen--and now Robert E. Rubin.
  They have been among the principal officers of the American 
Government. And a board that includes such is an important institution. 
Absent that, sir, it is inevitably one of the myriad advisory 
commissions which do useful work but are never and cannot be central to 
the concerns of the American Government.
  The House of Representatives voted 426-4 for a bill that included the 
Secretary for the obvious reason that absent his membership or her 
membership on the board, nothing comes back to the Secretary with the 
force of his or her own endorsement. The board does not know what only 
the Secretary can know. If you prefer the model of a corporate board 
and the chief executive officer, do so. I prefer the model of American 
Government with a Cabinet officer chosen in a two-century succession, 
chosen by an elected President, confirmed by the U.S. Senate, 
responsible for this high and solemn responsibility.
  If the Secretary is on the board, the board will know things it 
cannot otherwise learn. And the Treasury Department in turn will have 
the advice and counsel of persons, we hope, not next year but 50 years 
from now and will continue to think of this as a public service of 
importance and consequence.
  The Secretary of the Treasury is a world figure. This very moment our 
Secretary is on his way to London to again engage in the increasingly 
institutionalized international economic deliberations which are so 
important to the world. If he is on this board, it becomes an important 
one; if he is not, it becomes a marginal advisory committee.
  The idea that there are concerns that a board might have, that 
private members might have, which the Secretary would not have, does 
not speak well to our understanding of the centuries of occupants of 
this high office.
  Nor, sir, does it address a slight matter, but little noted in this 
debate, which is the information we received from the Treasury 
Department that in a given year there are some $195 billion in taxes 
owed but not paid. Anyone who wishes to describe ours as a tyrannical, 
unfeeling, and ruthless tax collection administration might ponder how 
it comes about that $195 billion a year--$2 trillion a decade--of 
legitimately owed taxes go unpaid.
  That will be a part of the responsibility of this panel as well, and 
properly so, so let us do what the wise judgment of the Commission 
proposed that we do. We are here in response to that effort. Let us do 
what clearly is in the interests of this institution and include the 
Secretary, as the Finance Committee did in the measure now before the 
Senate.
  I see my friend from Florida. Is there any Member wishing to speak in 
favor of the amendment?
  Mr. MACK. I say to the Senator, I do not know if there are additional 
Senators who wish to speak in favor. I ask the Senator the same 
question, whether there are others who wish to speak.
  Mr. MOYNIHAN. There is on the floor now Senator Dorgan, and I yield 5 
minutes to my friend.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Let me associate myself with the remarks just made by the 
Senator from New York, and let me also say that the work that has been 
done by Senator Roth and Senator Moynihan to bring this legislation to 
the floor is work that will benefit all of America. I think this 
legislation has a great deal to commend it to the Congress and the 
American people.
  It is true that in recent hearings evidence of misconduct and 
mismanagement, and, yes, in some cases the abuse of taxpayers by the 
Internal Revenue Service by a few employees of the Internal Revenue 
Service, has cast a shadow over that organization.
  A recent speaker indicated, I believe it was Senator McCain, that he 
was certain--and I share that view--that by far the majority of the men 
and women who work in the Internal Revenue Service are good people who 
do good work and try to do the best job they can. But because of the 
abuse by some few agents in the Internal Revenue Service, we must take 
steps to make sure it never happens again.
  This piece of legislation brought to the floor of the Senate creates 
a nine-member oversight board. The purpose of that board and its duties 
is to oversee the administration, the management, the conduct, to 
provide some assistance and some guidance and some additional 
management, to make certain that we never again convene a hearing and 
hear of abuses by IRS agents of the American taxpayers. In short, this 
legislation, in many ways, is an attempt to restore credibility by 
restructuring the Internal Revenue Service and creating an oversight 
board.
  The two goals, it seems to me, are: One, to make the changes 
necessary to make certain that this behavior never again occurs, and to 
prevent this kind of taxpayer abuse from surfacing again, because we 
want to prevent it from ever happening again; No. 2, to enforce the tax 
laws so that the many citizens in America who pay their taxes will have 
some confidence that the few who try to avoid them will be required to 
meet their responsibility. Those are the two elements that are 
important here.
  The amendment offered by the Senator from Florida would strike from 
the nine-member oversight board the Treasury Secretary. I agree with 
the Senator from New York, who says that this board will not be a 
significant and important board unless it has as part of its membership 
the Secretary of the Treasury. Part of it is about accountability, but 
part of it is about whether or not this will be a significant oversight 
board. I believe very strongly that the membership on this board is 
going to contribute to the effective

[[Page S4483]]

workings of the Internal Revenue Service, but it must include the 
Treasury Secretary.
  For all of the reasons I think that have been articulated by others 
who have spoken before, let me just again say that I hope we will 
defeat this amendment and I hope we will pass this underlying piece of 
legislation with a very significant vote today.
  I must say as well, I regret opposing an amendment offered by my 
friend from Florida, for whom I have the greatest respect. I know he 
supports the purpose of this bill, to give assurance to the American 
people that we have an agency that can do what we expect a tax 
collection agency ought to do, while at the same time protecting the 
rights of all the American people.
  I will vote against this amendment but will be pleased to vote for 
the underlying bill.
  Again, I commend Senator Roth and Senator Moynihan for the work they 
have done to bring this to the floor of the Senate.
  I yield back the remainder of my time.
  Mr. MOYNIHAN. Mr. President, my friend will not mind adding Senator 
Grassley and Senator Kerrey, whose work on the original Commission 
brings us here today.
  Mr. MACK. Mr. President, my intention now is to make a few closing 
remarks, and then I am prepared to yield back the remainder of my time 
and go to a vote.
  Mr. KERREY. How much time remains on this side?
  The PRESIDING OFFICER. 27 minutes 28 seconds.
  Mr. KERREY. I think I will go for about 27 minutes and yield back 28 
seconds.
  Mr. President, 30 seconds, and then I will yield it all back.
  Likewise, I have great respect for the Senator from Florida. I 
believe his amendment is well intended but, if it is accepted, it will 
significantly weaken this board. This board needs to be more than 
advisory; it needs to have a sufficient amount of authority and power 
when it meets with Congress and we pay attention to it. If it advises 
and works with the IRS Commissioner, the IRS Commissioner, as well, 
listens and pays attention.
  So, this amendment will weaken the board. I understand what the 
Senator from Florida is trying to do, but I hope this amendment will be 
defeated.
  I yield back the remaining time.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. MACK. I appreciate the kind comments that my colleagues have made 
in their disagreement over the amendment I offer today.
  Let me go to the heart of the matter as I see the argument that the 
Senators are making. What they are saying is that this oversight board, 
in essence, has no authority without the Secretary of the Treasury. I 
fundamentally disagree with that. The power comes from the law, not the 
presence of the Secretary. The authority is written into the 
legislation that is before the Senate today. Having the Secretary of 
the Treasury on that Commission does not add power. In fact, I say it 
reduces the power of the taxpayer, which is the intention behind, at 
least from my perspective, the oversight board.
  The reason we need an oversight board is because there have been 
decades of inadequate oversight by the people empowered to oversee the 
IRS--Commissioners, Secretaries, Presidents, and Congresses. The entire 
purpose of the oversight board is to provide to private citizens, to 
taxpayers, some power over the IRS. If the Secretary of the Treasury is 
on the board, his oversight power is not enhanced but the power of the 
private citizens on the board will be diluted.
  There is no guarantee that the staff of the board will be of any size 
at all. My fear would be that they might be detailees from the IRS and 
from the Treasury.
  It is not very realistic to assume that the private sector members of 
the oversight board can escape the dominance of the Treasury Secretary.
  There is one last argument I will respond to and then yield the 
floor. Should the Secretary be on the board so the board has the 
advantage of his knowledge and access to information? Nothing prevents 
the Treasury Secretary from submitting his views to the oversight 
board. It should be expected that the oversight board will consult with 
the Treasury Secretary. Input from within the Treasury Department is 
already guaranteed by the Commission's representation on the board.
  I think the amendment that I have offered and the perspective that I 
have argued, frankly, have great power. I hope my colleagues on both 
sides of the aisle will support this amendment.
  I yield back the remaining time. I believe the yeas and nays have 
been called for.
  The PRESIDING OFFICER. They have not been ordered.
  Mr. MACK. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant 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. Gorton). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 40, nays 59, as follows:

                      [Rollcall Vote No. 124 Leg.]

                                YEAS--40

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

                                NAYS--59

     Baucus
     Bennett
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     D'Amato
     Daschle
     Dodd
     Domenici
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Hagel
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lugar
     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. 2372) was rejected.
  Mr. BOND. Mr. President, I move to reconsider the vote.
  Mr. KERREY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Missouri.


                           Amendment No. 2373

 (Purpose: To improve electronic filing of tax and information returns)

  Mr. BOND. Mr. President, I rise today to offer an amendment which I 
offer for myself and my colleague, Senator Moseley-Braun, to improve 
electronic filing of tax and information returns. Working with the 
manager of the bill, I believe we have an agreement on the amendment.
  Mr. President, I send the amendment to the desk and ask for its 
immediate consideration.
  The PRESIDING OFFICER. If there is no objection, the pending 
amendment will be set aside and the clerk will report.
  The legislative clerk read as follows:

       The Senator from Missouri [Mr. Bond], for himself and Ms. 
     Moseley-Braun, proposes an amendment numbered 2373.

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

       Beginning on page 256, strike line 11 and all that follows 
     through line 18, and insert the following:
       ``(a) In General.--It is the policy of Congress that--
       ``(1) paperless filing should be the preferred and most 
     convenient means of filing Federal tax and information 
     returns,

[[Page S4484]]

       ``(2) electronic filing should be a voluntary option for 
     taxpayers, and
       ``(3) it should be the goal of the Internal Revenue Service 
     to have at least 80 percent of all such returns filed 
     electronically by the year 2007.''
       On page 258, line 12, strike ``and Government Reform and 
     Oversight'' insert ``Government Reform and Oversight, and 
     Small Business''.
       On page 258, line 14, strike ``and Governmental Affairs'' 
     insert ``Government Affairs, and Small Business''.
       On page 258, line 19, strike ``and''.
       On page 258, line 21, strike ``such goal.'' and insert 
     ``such goal; and''.
       On page 258, line 21, insert the following:
       ``(4) the effects on small businesses and the self-employed 
     of electronically filing tax and information returns.''.

  Mr. BOND. Mr. President, I rise today with an amendment, which I 
offer for myself and my colleague, Senator Moseley-Braun, to improve 
electronic filing of tax and information returns. After working with 
the managers, I believe we now have an agreement on this amendment, and 
I send that amendment to the desk.
  The bill we are now considering contains far-reaching provisions that 
will encourage the Internal Revenue Service to expand the use of 
electronic filing. My amendment improves those provisions in two ways. 
First, my amendment makes it absolutely clear that electronic filing of 
tax returns should be voluntary--not another burdensome government 
mandate on American taxpayers. While the bill calls on the IRS to make 
electronic filing the ``preferred and most convenient means for 
filing,'' it also establishes a goal of 80 percent electronic filing of 
tax returns by 2007. Without a clear statement of congressional intent, 
it will be too easy for the IRS to interpret those provisions as 
requiring electronic filing by certain taxpayers or in certain 
circumstances.
  As the Chairman of the Committee on Small Business, I have heard over 
the past 2 years from hundreds of small businesses about a similar 
government mandate--the Electronic Federal Tax Payment System or EFTPS. 
Under the statute establishing this system, the Treasury is required to 
collect certain percentages of tax electronically each year. To 
implement that requirement, the IRS established thresholds based on a 
business' past employment tax deposits. Regrettably, the IRS 
established the thresholds to serve its convenience rather than the 
taxpayer's. As a result, it now appears that far more taxpayers are 
required to pay their taxes electronically than the law requires.
  While EFTPS deals with electronic payment of taxes, as opposed to 
filing of tax returns as we are addressing in this bill, it is a clear 
example of how the intent of Congress can be misinterpreted and result 
in an onerous mandate, in this case on America's small businesses. My 
amendment cuts that misunderstanding off at the pass. As the IRS 
develops new programs and procedures for electronic filing, they must 
not be forced down the throats of the country's taxpayers. If they are 
truly convenient and cost effective, taxpayers will volunteer in droves 
to file their tax returns electronically, just as they have with the 
IRS' TeleFile program. And those taxpayers who, for one reason or 
another, decide that electronic filing is not practical, should be 
permitted to continue filing paper returns.
  Second, my amendment expands the reporting requirements under the 
bill to ensure that the IRS pays particular attention to electronic-
filing issues pertaining to small business. The bill currently requires 
that the Treasury Secretary, the IRS Commissioner, and the advisory 
group on electronic filing to report annually to the Congress on the 
progress made in expanding the use of electronic filing.
  I commend the distinguished Chairman of the Finance Committee for 
including representatives of small business on the advisory group as I 
proposed. My amendment capitalizes on that small business voice, by 
requiring that the report to Congress include an analysis of the 
effects of electronic filing on small enterprises. If we are to prevent 
another burdensome program like EFTPS, I believe we must require the 
IRS to focus on how electronic-filing programs will affect small 
business. It will be of little benefit to the government if new 
electronic-filing programs include new requirements, like a substantial 
investment in new equipment, since most small businesses will not be 
able to participate. In addition, if the IRS pays particular attention 
to the issues facing small businesses in this areas, the agency will be 
better equipped to market and promote the benefits of electronic 
filing--a 100 percent improvement over the agency's initial efforts to 
encourage small firms to use EFTPS.
  I fully endorse the intent of this legislation to make electronic 
filing widely available, cost effective, and an attractive option. My 
amendment fine tunes the bill to ensure that the intent becomes a 
reality. With the continuing advances in technology, we have an 
enormous opportunity to make all taxpayers' lives easier. But with 
technological advances comes the risk of imposing even more burdens on 
taxpayers, and Congress must make sure that these improvements are not 
implemented at the expense of the taxpayers, and especially the small 
businesses, who are expected to benefit from them. My amendment is 
designed to achieve that goal.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I congratulate the distinguished Senator on 
his amendment. It has been cleared on both sides of the aisle. I think 
it better states the policy of Congress and I urge its adoption.
  The PRESIDING OFFICER. Are there further remarks? The Senator from 
Nebraska.
  Mr. KERREY. Mr. President, the amendment has been cleared on this 
side as well. It is a good amendment and I appreciate the fine work of 
the distinguished Senator from Missouri.
  THE PRESIDING OFFICER. If there be no further debate, the question is 
on agreeing to the amendment.
  The amendment (No. 2373) was agreed to.
  Mr. BOND. 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.
  The PRESIDING OFFICER. The Senator from Texas.


                           Amendment No. 2374

   (Purpose: To expand the shift in burden of proof from income tax 
                   liability to all tax liabilities)

  Mr. GRAMM. Mr. President, I send an amendment to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. If there is no objection, the pending 
amendment will be set aside. The clerk will report the amendment of the 
Senator from Texas.
  The legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm] proposes an amendment 
     numbered 2374.

  Mr. GRAMM. 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 265, between lines 21 and 22, insert:
       ``(4) Expansion to tax liabilities other than income tax.--
     In the case of court proceedings arising in connection with 
     examinations commencing 6 months after the date of the 
     enactment of this paragraph and before June 1, 2001, this 
     subsection shall, in addition to income tax liability, apply 
     to any other tax liability of the taxpayer.''

  Mr. GRAMM. Mr. President, this is a very simple amendment. We have a 
provision in the bill, a very important provision, that sets up a set 
of criteria where, if the taxpayer meets a test of keeping prudent 
records and of turning those records over to the IRS on a timely basis, 
that once that transfer of records has occurred and the other 
requirements have been met, then the burden of proof shifts to the 
Internal Revenue Service when someone is accused of having violated the 
IRS code by not being in compliance on their income taxes.
  This was a provision that was included in the bill under the 
leadership of the chairman. We, I think, generally wanted to extend it 
to all tax cases but because of revenue constraints we were unable to 
do it. I have constructed this amendment in a fashion which does permit 
the expanded burden of proof transfer. It delays the expansion for 6 
months and sunsets it at the end of 5 years, so it fits within the 
revenue cap we have.
  I believe that once we provide this protection that we will end up 
not taking it back or allowing it to expire. I

[[Page S4485]]

think this is an important protection, because on gift and estate 
issues, we have the same problem as income taxes, where the Internal 
Revenue Service enters into a dispute with the taxpayer and, in a 
system unlike any other system in American society, under existing law, 
you are guilty until you prove yourself innocent.
  This amendment would simply say that if you keep all the records that 
a prudent person could be expected to keep, and if you turn those 
substantiation records over to the Internal Revenue Service so there is 
no question about the fact that you have shared the information you 
have with them, at that point the burden of proof shifts from the 
taxpayer to the IRS not only in cases dealing with income tax disputes 
but in all other types of tax cases as well.
  I hope this amendment will be accepted. I have discussed it with both 
sides of the aisle. I believe it is strongly supported. It does fit 
within the budget constraint we have in the bill, so I commend this to 
my colleagues.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, both of these amendments are good 
amendments. I urge their adoption. I appreciate very much the burden of 
proof amendment. I think it is very important it apply to all income, 
and I appreciate the fine work the distinguished Senator from Texas has 
done.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I, too, congratulate the distinguished 
Senator from Texas for this amendment. It was our desire that this 
burden of proof be extended to all types of taxes. I urge the adoption 
of the amendment.
  THE PRESIDING OFFICER. If there be no further debate, the question is 
on agreeing to the amendment.
  The amendment (No. 2374) was agreed to.
  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. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.


                           Amendment No. 2375

(Purpose: To prohibit Government officers and employees from requesting 
               taxpayers to give up their rights to sue)

  Mr. GRAMM. Mr. President, I send another amendment to the desk.
  The PRESIDING OFFICER. Without objection, the pending amendment will 
be set aside, and the clerk will report the amendment of the Senator 
from Texas.
  The legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm] proposes an amendment 
     numbered 2375.

  Mr. GRAMM. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 370, between lines 18 and 19, insert:

     SEC. 3468. PROHIBITION ON REQUEST TO TAXPAYERS TO GIVE UP 
                   RIGHTS TO BRING ACTIONS.

       (a) Prohibition.--No officer or employee of the United 
     States may request a taxpayer to waive the taxpayer's right 
     to bring a civil action against the United States or any 
     officer or employee of the United States or any action taken 
     in connection with the internal revenue laws.
       (b) Exceptions.--Subsection (a) shall not apply in any case 
     where--
       (1) a taxpayer waives the right described in subsection (a) 
     knowingly and voluntarily or
       (2) the request by the officer or employee is made in 
     person and the taxpayer's attorney or other federally 
     authorized tax practitioner (within the meaning of section 
     7525(c)(1)) is present, or the request is made in writing to 
     the taxpayer's attorney or other representative.

  Mr. GRAMM. Mr. President, in the hearings that we held in the Finance 
Committee, over and over again taxpayers, who made compelling cases 
that they had been abused by the IRS, told us that in response to their 
efforts to try to stop what they considered to be unfair treatment--
whether it was seizure of their home or their business or being accused 
of things they claim not to have done--one thing that they were 
consistently required to do by the IRS in order to end the dispute, 
even though the Internal Revenue Service may have turned up no 
wrongdoing, was to sign a statement whereby the taxpayers gave up their 
right to sue the IRS for the abuses that had been imposed on them.
  I have talked to Commissioner Rossotti. He has said that he has no 
objection to this amendment. In addition, my staff has met with the 
staff of the Treasury Department, and they have suggested some changes 
which we have made.
  Basically, what this says is that if I am in a dispute with the 
Internal Revenue Service, they can't force me, as part of that dispute, 
to give up my rights. At the end of the process, if I have done nothing 
wrong, they can't force me to give up my right to sue them if I feel my 
rights have been violated.
  They can notify my attorney that this is something that could be part 
of the negotiation. I can voluntarily propose that if we can settle the 
case today, for example, I would be willing to pay so much and give up 
this right. But what this amendment does is prohibit the Internal 
Revenue Service from forcing this provision as part of any settlement. 
I think it is an important protection.
  With these changes, it is my understanding it is supported by my 
colleagues and I hope it can be accepted at this point.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, again, I congratulate the Senator from Texas 
for offering the amendment. This addresses a question that became very 
clear in our hearings last week that it was a serious problem.
  It is my understanding this has been cleared by both sides of the 
aisle. I urge its adoption.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I also support this amendment. The Senator 
from Texas has carefully drafted this amendment to make certain that 
the waiver of the right to sue can still be granted. It is a very 
important provision in all kinds of negotiations, not just with the 
IRS. The Senator from Texas drafted it so that right is still 
preserved, but it just can't be coerced. It can't be coerced.
  The IRS supports this amendment. They do not believe it is going to 
have any impact on the capacity to reach agreements with taxpayers or 
get noncompliant taxpayers to comply. I urge its adoption.
  The PRESIDING OFFICER. Is there any further debate on the amendment? 
If not, the question is on agreeing to the amendment.
  The amendment (No. 2375) was agreed to.
  Mr. GRAMM. Mr. President, I move to reconsider the vote by which the 
amendment was agreed to.
  Mr. KERREY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. KERREY. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BYRD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________