[Congressional Record Volume 146, Number 110 (Monday, September 18, 2000)]
[Extensions of Remarks]
[Pages E1516-E1517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 MARRIAGE TAX RELIEF RECONCILIATION ACT OF 2000--VETO MESSAGE FROM THE 
                     PRESIDENT OF THE UNITED STATES

                                 ______
                                 

                               speech of

                            HON. BILL ARCHER

                                of texas

                    in the house of representatives

                     Wednesday, September 13, 2000

  Mr. ARCHER. Mr. Speaker, pursuant to section 4022(b) of the Internal 
Revenue Service Reform and Restructuring Act of 1998, I am submitting 
for the Record the complexity analysis for H.R. 4810, the Marriage Tax 
Reconciliation Act of 2000 prepared by the Internal Revenue Service.


[[Page E1517]]


                                       Department of the Treasury,


                                     Internal Revenue Service,

                                    Washington, DC, July 31, 2000.
     Ms. Lindy L. Paull,
     Chief of Staff, Joint Committee on Taxation, Washington, DC.
       Dear Ms. Paull: I am writing to comment on your complexity 
     analysis of the conference agreement on H.R. 4810, the 
     Marriage Tax Reconciliation Act of 2000 (the ``Act''). 
     Because time constraints prevented your staff from consulting 
     the Internal Revenue Service (IRS) and the Department of the 
     Treasury prior to issuing the Conference Report, I would like 
     to take this opportunity to point out two additional issues 
     concerning the conference agreement.
       First, having the increased standard deduction, wider 15-
     percent bracket, and higher Earned Income Tax Credit (EITC) 
     phaseout range apply to tax year 2000 will require 
     significant changes to the IRS 2000 tax forms and processing 
     programs. If the legislation is enacted before mid-September 
     2000, we should have no problem in timely implementing the 
     required changes. Later enactment could adversely impact 
     distribution and processing of individual income tax returns 
     for tax year 2000.
       Second, Section 6 of the Act relating to estimated taxes 
     creates complications for both taxpayers and the IRS. 
     Taxpayers are generally required to make quarterly payments 
     of estimated taxes and/or withholding at least equal to 25 
     percent of the lesser of (i) 90 percent of the tax shown on 
     their return for the taxable year or (ii) 100 percent (108.6 
     percent for certain high income taxpayers) of the tax shown 
     on the tax return for the prior year. Estimated tax penalties 
     are imposed on underpayments of required installations.
       Section 6 of the Act prevents tax year 2000 changes from 
     being taken into account in determining the amount of any 
     estimated tax installments due before October 1, 2000. 
     Therefore, the required installments for married taxpayers 
     for the first three quarters of tax year 2000 (and the 
     penalties for their underpayment) will not be based on the 
     tax shown on the taxpayer's 2000 tax return. Instead, they 
     will be based on the tax that ``would have been'' shown on 
     the taxpayer's 2000 tax return had the bill not been enacted. 
     Section 6 will create confusion and complexity for taxpayers 
     who must determine the amount of estimated tax payments due 
     for the remainder of tax year 2000 and who want to make 
     adjustments in the amount of their taxes withheld. It also 
     presents a trap for taxpayers who know about their reduced 
     liability due to the Act but who are not aware of Section 6 
     of the Act.
       The biggest problem with Section 6, however, is the burden 
     imposed on married taxpayers who wish to do their own 
     computation of their estimated tax penalty for tax year 2000 
     (even if only to determine whether they have a penalty), or 
     to verify the IRS' computation of the penalty. These 
     taxpayers will need to complete Form 2210, Underpayment of 
     Estimated Tax by Individuals, Estates, and Trusts. They will 
     not be able to use the Short Method, but will be required to 
     use the much more complicated Regular Method. Married 
     taxpayers will be directed to complete Part II of Form 2210 
     twice. First, they will compute their required installments 
     for the first three quarters of 2000 using their ``would have 
     been'' 2000 tax. Next, they will compute their required 
     installment for the fourth quarter using their actual 2000 
     tax. The instructions for Form 2210 will be expected to 
     include the tax rate schedules, worksheets, EITC phase-out 
     adjustments, etc. that married taxpayers will need to compute 
     their ``would have been'' tax for 2000.
       In addition, to the above-mentioned modifications to the 
     2000 Form 2210, the IRS will need to modify its tax year 2000 
     Form 1040 processing and estimated tax penalty processing to 
     take into account the ``would have been'' 2000 tax for 
     married taxpayers in determining their required installments 
     for the first three quarters. While these modifications are 
     not difficult, they will consume a significant amount of our 
     programming resources over a short period of time (three 
     staff years before the end of 2000). Since our programming 
     resources for tax year 2000 processing (in 2001) are already 
     fully committed, implementing Section 6 presents problems for 
     the IRS.
       If you have any questions, please call. I will be happy to 
     meet with you to discuss any of these issues.
           Sincerely,

                                          Charles O. Rossotti.

     

                          ____________________