[Congressional Record Volume 151, Number 33 (Thursday, March 17, 2005)]
[Senate]
[Pages S3011-S3012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Baucus, Mr. Grassley, and Mrs. 
        Lincoln):
  S. 661. A bill to amend the Internal Revenue Code of 1986 to provide 
for the modernization of the United States Tax Court, and for other 
purposes, to the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce the Tax Court 
Modernization Act. I am joined in this legislation by the Chairman and 
Ranking Democrat of the Finance Committee, Senator Grassley and Senator 
Baucus, and my colleague Senator Lincoln.
  The United States Tax Court plays an important role in our tax 
system. However, it has been years since Congress has taken a good hard 
look at the Tax Court. This bipartisan piece of legislation will 
improve this Court in a number of ways, and I would like to take a 
moment to summarize some of its provisions.
  First, the TCMA would make minor changes in the Tax Court's 
jurisdiction. These are small changes that will have a big impact on 
the Court's efficiency. For example, the bill would allow the Tax Court 
to hire employees on its own, just as other courts do. Currently, the 
Tax Court is forced to hire through the Executive Branch's Office of 
Personnel Management, entangling the executive power with the judicial 
power. Restoring the constitutional separation of powers in the hiring 
process will increase the independence of the Tax Court.
  Second, the TCMA would improve the way that Tax Court judges receive 
retirement benefits and other non-salary benefits. I believe that Tax 
Court judges should be treated the same way that bankruptcy, Court of 
Federal Claims, and Article III judges are treated when it comes to 
fringe benefits.
  Tax Court judges are often not provided with the same benefits as 
similarly appointed Article I and Article III judges. For example, 
Congress allows Article III, bankruptcy, and Court of Federal Claims 
judges to participate in the Thrift Savings Plan in addition to the 
Civil Service Retirement System, while Tax Court judges are ineligible 
to participate in this program. These disparities in the treatment of 
our Tax Court judges affect the Court's ability to attract and retain 
seasoned judges, as well as talented employees.
  This legislation is non-controversial and is the result of many years 
of work. The Finance Committee passed the bill three separate times 
during the 108th Congress, but it unfortunately was not included in a 
vehicle that made it to enactment. Hopefully, we will be able to get 
these provisions to the President's desk this year.
  I have spent many years observing the Federal judiciary. I have spent 
many years trying to improve the Judicial Branch of our government and 
to make it the very finest court system the world has ever known. I 
look forward to working with my colleagues on the Senate Finance 
Committee on this important piece of legislation. I urge my colleagues, 
both on the Finance Committee and in the Senate as a whole, to support 
this legislation.
  I ask unanimous consent to print in the Record a summary of the 
provisions of the U.S. Tax Court Modernization Act.

[[Page S3012]]

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         U.S. Tax Court Modernization Act Summary of Provisions

       Jurisdiction of Tax Court over collection due process 
     cases. Currently, if a taxpayer's underlying tax liability 
     does not relate to income taxes or a type of tax over which 
     the Tax Court normally has deficiency jurisdiction, there is 
     no opportunity for Tax Court review and the taxpayer must 
     file in a District Court to obtain review. This provision 
     consolidates judicial review of collection due process 
     activity in the Tax Court.
       Authority for special trial judges to hear and decide 
     certain employment status cases. This provision clarifies 
     that the Tax Court may authorize its special trial judges to 
     enter decisions in employment status cases that are subject 
     to small case proceedings under section 7436(c).
       Confirmation of authority of Tax Court to apply doctrine of 
     equitable recoupment. The common-law principle of equitable 
     recoupment permits a party to assert an otherwise time-barred 
     claim to reduce or defeat an opponent's claim if both claims 
     arise from the same transaction. This provision confirms 
     statutorily that the Tax Court may apply equitable recoupment 
     principles to the same extent as District Courts and the 
     Court of Federal Claims.
       Tax Court filing fee in all cases commenced by filing 
     petition. This provision clarifies, in keeping with current 
     Tax Court procedure, that the Tax Court is authorized to 
     impose a $60 filing fee for all cases commenced by petition. 
     The proposal would eliminate the need to amend section 7451 
     each time the Tax Court is granted new jurisdiction.
       Amendments to appoint employees. Currently, the Tax Court 
     has to go to the executive branch, the Office of Personnel 
     Management, to change a position. It is inappropriate to 
     require the Tax Court to seek permission from the executive 
     since that branch is a party (Commissioner of Internal 
     Revenue) before the Tax Court. This change would allow the 
     Tax Court to be independent in fact and perception from the 
     Executive Branch while ensuring that basic employee rights, 
     protections, and remedies are retained or required in an 
     appropriate way (e.g., whistleblower protection, civil 
     rights, merit system principles, etc.).
       Expanded use of Tax Court practice fee for pro se 
     taxpayers. The Tax Court is authorized to charge 
     practitioners a fee of up to $30 per year and to use these 
     fees to pursue disciplinary matters. The provision expands 
     use of these fees to provide services to pro se taxpayers. 
     Fees could be used for education programs for pro se 
     taxpayers.
       Annuities for survivors of Tax Court judges who are 
     assassinated. The reality is that many people do not like to 
     pay taxes. There is as much risk of a Tax Court judge being 
     assassinated as any other Federal judge. The proposal would 
     conform the treatment of Tax Court judges to District Court 
     judges.
       Cost-of-living adjustments for Tax Court judicial survivor 
     annuities. All Federal employees have this provision except 
     the Tax Court. Survivors of Tax Court judges are subject to 
     an obsolete method of indexing.
       Life insurance coverage for Tax Court judges. This simply 
     codifies current Office of Personnel Management 
     interpretation, as was previously done for District Court 
     judges.
       Cost of life insurance coverage for Tax Court judges age 65 
     or over. Congress established the Tax Court in 1969 and 
     required that Tax Court judges receive the same compensation 
     as District Court judges. The District Court judges were 
     given this benefit to ensure that there was no diminution of 
     their compensation (as required by the Constitution). This 
     provision is in keeping with the original intent of Congress.
       Modification of timing of lump-sum payment of judge's 
     accrued annual leave. District Court judges are allowed to 
     receive a lump-sum payment due to the life-time tenure of 
     Article III judges. Tax Court judges, while they have a 15 
     year term, effectively have a life-time term because they are 
     always subject to recall.
       Participation of Tax Court judges in the Thrift Savings 
     Plan. The proposal would allow Tax Court judges to 
     participate in Thrift Savings Plan. Currently, only 19 
     federal government employees are left out of the Thrift 
     Savings Plan (i.e., Tax Court judges).
       Exemption of teaching compensation of retired judges for 
     limitation on outside earned income. After retirement, Tax 
     Court judges should have the same ability to teach as 
     District Court judges.
       General provisions relating to magistrate judges of the Tax 
     Court. ``Magistrate'' is more recognizable to the American 
     public because it is the term used by Article III courts. The 
     provision changes the term ``Special Trial Judge'' to 
     ``Magistrate Judge of the United States Tax Court'' and 
     provides for alignment of term of office and removal 
     applicable to District Court magistrate judges.
       Annuities to surviving spouses and dependent children of 
     magistrate judges of the Tax Court. This section gives 
     Magistrates/Special Trial Judges the same advantages as Tax 
     Court judges, thus ensuring a greater pool of participants in 
     the fund.
       Retirement and annuity program for magistrate judges. A 
     retirement and annuity program more aligned with District 
     Court Magistrates and the Tax Court judges is key for 
     attracting and retaining qualified judges.
       Incumbent magistrate judges of the Tax Court. The provision 
     provides transition rules similar to those given to the 
     District Court magistrate judges.
       Provisions for recall. Article III judges are ``self-
     recalling'' (i.e., they decide for themselves whether they 
     are recalled). In contrast, Tax Court judges are subject 
     mandatory recall by the Chief Judge. These provisions 
     authorize the recall in a manner similar to those now 
     applicable to the regular judges of the Court.

  Mr. BAUCUS. Mr. President, I rise today to support the United States 
Tax Court Modernization Act. I am pleased to be an original cosponsor 
of this important legislation along with Senators Hatch, Grassley and 
Lincoln.
  In 1969, Congress elevated the U.S. Tax Court as a Federal court of 
record under Article I of the Constitution of the United States. 
Congress created the Tax Court to provide a judicial forum in which 
affected persons could dispute tax deficiencies determined by the 
Commissioner of the Internal Revenue Service prior to payment of the 
disputed amounts. That means that the Tax Court's jurisdictional 
requirements are, in part, a recognition that lower and middle income 
taxpayers cannot necessarily pay the tax deficiency before taking their 
dispute to court.
  Congress also closely linked the legislation governing the Tax Court 
with the laws governing the Article III District Courts. Unfortunately, 
the Congress did not include the Tax Court in the changes made for 
Article III courts.
  This legislation is designed to restore parity between the Tax Court 
and Article III courts, and to modernize their personnel and pension 
systems.
  I thank Senator Hatch for sponsoring the legislation. I also want to 
thank former Senator Breaux, who sponsored the legislation in the last 
Congress and who was a strong advocate for the Tax Court as well as 
this package of modernization provisions.
  This modernization package is non-controversial and long overdue. In 
the 108th Congress, the Finance Committee passed the Tax Court 
legislation three times: as a stand alone bill, as part of the National 
Employee Savings and Trust Equity Guarantee Act, and as part of the Tax 
Administration Good Government Act.
  The Finance Committee intends to mark-up the United States Tax Court 
Modernization Act next month. I fully expect the Committee to once 
again unanimously pass the legislation. I also hope that, soon after 
Committee action, Majority Leader Frist and Minority Leader Reid will 
bring the United States Tax Court Modernization Act to the floor for 
swift passage.
  The Finance Committee and the House Ways & Means Committee fought to 
retain jurisdiction over the Tax Court as an Article I, rather than an 
Article III court. The Committees recognized the benefit to the 
American taxpayer of having a court composed of technical tax law 
experts. History has proven the wisdom of this decision. The Tax Court 
is composed of dedicated, talented, nonpartisan tax experts. Their 
commitment to public service is noble. We should recognize the 
commitment of our Tax Court judges by acting upon the responsibility 
that the Members before us, our predecessors on the Finance Committee 
and the House Ways and Means Committee, fought to retain by ensuring 
that the Tax Court modernization provisions become law during the 109th 
Congress.
                                 ______