[Congressional Record Volume 153, Number 153 (Wednesday, October 10, 2007)]
[House]
[Pages H11400-H11410]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 3056, TAX COLLECTION RESPONSIBILITY
ACT OF 2007
Mr. CARDOZA. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 719 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 719
Resolved, That upon the adoption of this resolution it
shall be in order to consider in the House the bill (H.R.
3056) to amend the Internal Revenue Code of 1986 to repeal
the authority of the Internal Revenue Service to use private
debt collection companies, to delay implementation of
withholding taxes on government contractors, to revise the
tax rules on expatriation, and for other purposes. All points
of order against consideration of the bill are waived except
those arising under clause 9 or 10 of rule XXI. The amendment
in the nature of a substitute recommended by the Committee on
Ways and Means now printed in the bill, modified by the
amendment printed in the report of the Committee on Rules
accompanying this resolution, shall be considered as adopted.
The bill, as amended, shall be considered as read. All points
of order against provisions of the bill, as amended, are
waived. The previous question shall be considered as ordered
on the bill, as amended, to final passage without intervening
motion except: (1) one hour of debate equally divided and
controlled by the chairman and ranking minority member of the
Committee on Ways and Means; and (2) one motion to recommit
with or without instructions.
Sec. 2. During consideration of H.R. 3056 pursuant to this
resolution, notwithstanding the operation of the previous
question, the Chair may postpone further consideration of the
bill to such time as may be designated by the Speaker.
The SPEAKER pro tempore (Mr. Pastor). The gentleman from California
is recognized for 1 hour.
Mr. CARDOZA. Mr. Speaker, for the purposes of debate only I yield the
customary 30 minutes to the gentleman from Texas (Mr. Sessions). All
time yielded during consideration of the rule is for debate only.
General Leave
Mr. CARDOZA. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days within which to revise and extend their remarks
on House Resolution 719.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
[[Page H11401]]
Mr. CARDOZA. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, House Resolution 719 provides for consideration of H.R.
3056, the Tax Collection Responsibility Act of 2007 under the
traditional closed rule. The rule provides 1 hour of general debate
equally divided and controlled by the chairman and ranking member of
the Committee on Ways and Means. The rule waives all points of order
against consideration of the bill except for clause 9 and 10 of rule
XXI. Finally, the rule provides one motion to recommit with or without
instructions.
Mr. Speaker, the bill before us today, H.R. 3056, implements several
measures to protect the interest of taxpayers and the integrity of our
tax system. First, it would once and for all repeal the IRS's authority
to contract with private debt collection companies. The collection of
Federal income taxes is inherently a governmental function and at the
crux of what governmental responsibilities should be. This was stated
as early as 1819 by Chief Justice Marshall. It was reaffirmed by
Congress in 1874, when the Ways and Means Committee said that ``any
system of farming the collection of any portion of the revenue of the
government is fundamentally wrong.''
Tax farming, giving a private entity the right to collect taxes on a
commission basis, has created modern-day bounty hunters who have no
regard for the taxpayer, only regard for their company's bottom line.
Taxpayers are heavily pressured to reveal their Social Security
numbers, last known address, date of birth, and other confidential
information over the telephone to private contractors working on
commissions of up to 25 percent of their take.
In this modern day and age where identity theft runs rampant, why
would we want to turn over people's Social Security numbers and who
knows what other confidential information to someone who is only out to
protect their own bottom line? Noted Princeton economist Paul Krugman
recently penned in the New York Times, ``Tax farming went out with the
French Revolution; now the tax farmers are back.'' How right he is.
The irony is that we tried this private tax collection scheme in 1996
and promptly abandoned it. Why? Because the IRS's Inspector General
found that private contractors regularly violated our own Fair Debt
Collection Practices Act, threatened the confidentiality of taxpayers'
personal information, and on top of all that, cost the government a net
revenue loss of $17 million.
Despite this past history, the Republican Congress renewed this
authority in 2004. What has happened since that renewal? Well, the
Federal Government has spent an additional $71 million of taxpayers'
hard-earned money and they have collected a grand total of $20 million
in tax revenue. That is right, Mr. Speaker; we have lost another $50
million on an inefficient program that experts readily admit does not
work. Even more absurd is that had the IRS been given that money, the
$71 million, instead, it would have collected almost $1.5 billion.
The House has long recognized that this program simply does not work.
In fact, language to stop private debt collection has passed on a
strong bipartisan basis twice but has not made it into law. But don't
just take my word for it. The National Taxpayer Advocate, appointed by
the Treasury Secretary, reported to Congress that ``the money spent on
the IRS Private Debt Collection initiative is an inefficient use of
government dollars.'' Even past and present IRS Commissioners have
repeatedly admitted before Congress that IRS employees could perform
this task at far less cost than the private agencies.
I firmly believe that when the government actually does something
better than the private sector, cheaper and more efficiently than the
private sector, then the government should do that job. The reality,
Mr. Speaker, is that IRS employees are better trained, better equipped
and better prepared to handle these important responsibilities. They
also protect American citizens' privacy.
H.R. 3056 recognizes this reality and restores this fundamental
responsibility to the Federal Government, as our Founding Fathers
intended. Second, H.R. 3056 includes language based on legislation
introduced by my friend and colleague from Florida (Mr. Meek), which
provides tax relief to small businesses and administrative relief to
local jurisdictions by delaying implementation of an onerous tax
burden.
Section 511 of the Tax Increase Prevention and Reconciliation Act of
2005, passed by the then-Republican Congress to raise revenue, requires
tax withholding of 3 percent on payments to vendors providing property
or services to the government beginning in January of 2011. The 3
percent withholding requirement presents a number of administrative and
practical challenges for businesses, including reducing the cash flow
they need to meet operating expenses, pay suppliers or subcontractors,
or meet payroll. They also present several problems for governments,
including how State and local governments will be able to comply with
this law, much less how the IRS will be able to afford and administer
such a requirement.
H.R. 3056 takes a commonsense approach to this issue and delays the
implementation of the 3 percent withholding requirement for 1 year. It
further calls on the Department of the Treasury to study the compliance
issues confronting businesses and government and report the findings to
Congress. This measure is supported by State and local governments and
a broad array of business organizations, including the United States
Chamber of Commerce, the Financial Services Roundtable, the American
Bankers Association, the American Farm Bureau Federation, the National
Association of Manufacturers, the National Federation of Independent
Business, among others.
H.R. 3056 also clarifies that U.S. citizens who claim to be bona fide
residents of the U.S. Virgin Islands receive the same procedural and
administrative rights afforded to other U.S. taxpayers.
Finally, Mr. Speaker, H.R. 3056 strictly adheres to the House PAYGO
rule. This bill is paid for primarily by eliminating a tax loophole
that currently allows wealthy individuals to avoid paying U.S. taxes
simply by renouncing their citizenship or terminating their U.S.
residency. Despite what you may hear today, let me be clear, closing
this loophole has broad, bipartisan support and has been supported by
my Republican colleagues.
I would like to thank Chairman Rangel, Mr. Van Hollen, Mr. Meek, and
the Ways and Means Committee members for their hard work in bringing
this legislation to the floor today.
Mr. Speaker, this commonsense bill protects taxpayers, preserves the
integrity of our tax system, and makes our tax system fairer for all.
It deserves strong support of all the Members of this House floor
today.
Mr. Speaker, I reserve the balance of my time.
{time} 1045
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am not sure that there is anything even left to say
about the depths to which the House has sunk under the ``broken
promise'' Democrat majority. Today, once again, the American people are
being forced to endure the results of yet another evening spent in the
``broken promise'' Democrat Rules Committee, with nothing to show for
it except for yet another closed rule, which was referred to today as a
``traditionally closed rule'' on the floor of the United States House
of Representatives.
Mr. Speaker, I rise today in strong opposition to this completely
closed rule, which denies the minority even with a basic substitute
amendment in this process, and to the fiscally irresponsible underlying
legislation.
I also rise with great regret to report to the American people that,
once again, as I have been forced to report on multiple occasions over
the course of this year, the Democrat leadership is bringing
legislation to the House floor which stacks the deck in favor of big
labor bosses at someone else's expense. Today, that expense is on the
American taxpayer, who is being targeted on behalf of big public sector
union bosses to the tune of $2.2 billion, to be exact.
I would like to take a few minutes to discuss a number of the myths
that will be discussed surrounding this legislation and provide my
colleagues and the American people who are tuning in
[[Page H11402]]
on C-SPAN with some of the facts about the real effect of this special
interest legislation and what it would mean to the taxpayer.
In 2004, Congress gave the IRS the ability to utilize the best
practices and advantages created by the private sector to address its
growing backlog of unpaid debt. Today, it is estimated that $345
billion of these unpaid taxes exist. That means that every year the
average taxpayer who plays by the rules must pay an extra $2,700 to
cover taxes not being paid by those who should legally be paying their
taxes.
This new program, which began as a small pilot program that grows as
it continues to succeed, is estimated to bring in about $2.2 billion in
its first 10 years. And under this agreement, the IRS would get the
first 25 cents of every single new dollar to hire new collections
professionals, a provision that would have a positive, compound effect
by helping to bring in even greater amounts of this uncollected revenue
for the government into the future.
The program, even in its beginning stages and despite numerous
attempts by the Democrat majority to kill it before it could succeed,
has been hugely successful, bringing in over $30 million worth of
unpaid taxes. It has received a 98 percent rating from the IRS for
regulatory and procurement accuracy, as well a 100 percent rating for
professionalism. Additionally, less than 1 percent of the taxpayers
contacted by these private agencies have filed complaints with the IRS,
none which have ever been validated.
Despite this program's track record of success on behalf of taxpayers
who do play by the rules and pay their designated share, not to mention
the increased revenue that it brings in to fund the Democrats' other
new, big-spending legislation, there are many opponents on the other
side of the aisle that want to prevent it from continuing to work,
supposedly to protect the dues of the big government union bosses.
They have claimed, despite the fact that 40 out of the 50 States in
America already use these same contract services, that this is
something that only the government can do. You don't have to take my
word for it that this is untrue. Even the nonpartisan Government
Accountability Office, the GAO, has found that ``the IRS may benefit
from using private collectors, and it is reasonable to assume that the
IRS could learn from their best practices as it works to resolve long-
standing problems with its debt collection activities.''
Opponents have also incorrectly claimed that private debt collectors
do not follow the same rules as IRS collectors. Well, this one is
partially true, because these private collection agencies are subject
to both Federal and State laws that are collectively more restrictive
than the laws that Federal employees must follow. Private collectors
follow the same privacy protections, undergo the same background checks
and are subject to the same penalties if they violate any of these
laws.
Opponents have also claimed that allowing for private debt collection
would cost untold union jobs, a statement which is also based in an
alternate reality. The private collection agencies working in this
program did not and do not replace a single IRS worker.
As of this past July, over 51,667 ``cold cases'' that the IRS was
incapable of collecting were given to private agencies, resulting in
over 5,300 full repayments to the Treasury and almost 2,000 agreements
to repay these debts incrementally. This means that the government
received over $24 million of gross revenue that it would not have
received otherwise, of which only about one in eight went to pay for
these otherwise nonexistent services. In fact, the IRS has publicly
stated that no government employee will lose his or her job as a result
of this highly effective private contracting. Instead, they will
benefit from the opportunity to focus their talent, expertise and
resources on high priority, more complex cases.
Mr. Speaker, I encourage all of my colleagues to understand all of
the facts regarding this legislation before they are influenced by the
scare tactics of a few Members who are determined to kill this highly-
effective program that has already proven to be cost-effective in
closing the ``tax gap'' of unpaid, hard-to collect taxes.
I wish I could say they would have plenty of time to learn all the
facts surrounding this legislation that is being rushed to the floor
today under a completely closed process. Unfortunately, last night in
the ``Graveyard of Good Ideas in the House of Representatives,'' the
majority Rules Committee Democrats voted three times along party lines
to prevent any amendment authored by a Republican from being considered
today. Despite numerous campaign promises by the highest ranking
Democrats in the House to run the most ``transparent, open and honest''
House in history, this Democrat majority once again has provided the
House with something which is a rule that is none of the above, which
is the historical tradition. Instead, we have what is referred to as a
closed rule. I wish I could say I am surprised by the Democrat
leadership allowing politics to triumph over policy or fair procedure.
Unfortunately, this is precisely what we have come to expect from the
new ``broken promise'' Democrat majority.
Mr. Speaker, I oppose this ill-conceived and costly legislation, and
I encourage all my colleagues on both sides of the aisle to stand up
for taxpayers by voting against this rule and the underlying
legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. CARDOZA. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, as we said in our opening statement, tax bills are
traditionally closed due to their complexity. Under Democrats, before
1994, they were closed. Under Mr. Dreier's administration in the House
Rules Committee under the Republican leadership, they were
traditionally closed. Now we continue to maintain that practice.
Because tax laws are so complex, late amendments that have not been
fully vetted and analyzed are simply too complex to insert into the Tax
Code without knowing their full ramifications.
Secondly, Mr. Speaker, Mr. Sessions, my colleague from Texas,
mentioned that the McCrery substitute was not made in order. He is
correct about that. It was not made in order because it violates the
PAYGO provisions of our House rules. I have a copy of it right here. It
simply does not meet the PAYGO statutory requirements of the House
rules.
Finally, the Republican privatization bill that had passed in a prior
Congress, when it was implemented it spent $71 million to collect $20
million. That is a loss of $50 million. Even with the creative
accounting of the Republican ``voodoo math,'' I cannot believe that
they are advocating continuation of this program that has lost money.
Further, the use of private contractors to collect Federal taxes
violates a confidential and fundamental relationship between American
taxpayers and the Federal Government. IRS employees have access to a
taxpayer's complete tax history, including personal information that is
ready identifiable. That should be restricted only to IRS employees. By
prohibiting the IRS from hiring private debt collectors, this bill will
ensure that the privacy rights of Americans and other confidential
information of taxpayers is protected from bounty hunters working on
commissions of up to 25 percent.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we continue to hear arguments from my good friends about
how this just won't work. But for 10 years it has worked very well,
with a 99 percent accuracy, in providing billions of dollars to the
taxpayer.
The bottom line is that Treasury simply focuses their activities on
major accounts, and the others on smaller accounts, which is who have
been handling these accounts and been very good at it, which is what we
are asking to continue today. What is happening is that we found out
the unions simply don't like that. They don't like somebody else
perhaps getting something that they in fact never wanted to work on
themselves.
So we are trying to say to the American people today, don't take away
this stream of revenue. Don't take away this opportunity. Because the
private sector is working on these accounts. They are not given any
advantage. The
[[Page H11403]]
people who really end up winning is not only the Treasury Department,
but, more specifically, the taxpayer.
Mr. Speaker, I yield such time as he may consume to the gentleman
from San Dimas, California (Mr. Dreier), the ranking member of the
Rules Committee.
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Mr. Speaker, I thank my friend from Dallas for yielding,
and I want to buttress his argument, which is a very clear one.
Obviously, we want to ensure that every American pays their fair share
of taxes.
We have had a dramatic increase in collection success by virtue of
this program, and here we are gutting it because a very small group of
people seems to oppose it. It happens to be union opposition.
As a taxpayer, I pay my fair share of taxes. I want to make sure that
every other American pays their fair share of taxes, and that is
exactly what this 10-year-old program has done, and has done with
success.
Mr. Speaker, I really am very, very puzzled as we begin today with
the debate on two rules that will lead to legislation being considered
here on the House floor. The reason I am perplexed is we are dealing
with two very important issues.
The majority leadership clearly has its right and its responsibility
to move their agenda. They want to do what they are planning to do now
on this issue of private sector collection of taxes, and they want to
dramatically expand housing programs. Those are the two things that the
majority is planning to move to the floor today. But I just don't
understand, Mr. Speaker. I just don't understand why it is that we are
doing what we are doing.
My friend from California, Mr. Cardoza, just described how the Rules
Committee was run when I had the privilege of serving as chairman of
the committee. He said we have what is a customary closed rule, I think
is the term that he used. Is that the term? I would be happy to yield
to my friend.
Mr. CARDOZA. I called it traditional.
Mr. DREIER. I thank my friend for clarifying that. He described it as
a traditional closed rule.
I will say that it is true that on tax bills both parties recognize
that the notion of completely opening up a Tax Code measure in the Ways
and Means Committee is not the wisest thing to do, so neither party has
done that.
But I will tell you this, Mr. Speaker: We, when we were in the
majority, regularly ensured that the ranking minority member, Mr.
Rangel, had a substitute that he could offer. In fact, on numerous
occasions we offered Mr. Rangel the chance to propose a sight-unseen
substitute to measures that were coming forward, and I will admit, I
will admit that on occasion, but a very rare occasion, we did not
provide that substitute to Mr. Rangel.
Mr. Speaker, I will say when that happened, Mr. Rangel clearly let us
know how unhappy he was that he did not have a substitute.
We all know that at the beginning of this Congress we had this
document put forward by the new majority called ``a New Direction for
America.'' In this document, the item titled ``Regular Order For
Legislation'' under ``A Congress Working For All Americans,'' paragraph
2 reads as follows, Mr. Speaker. It says, ``Bills should generally come
to the floor under a procedure that allows open, full and fair debate,
consisting of a full amendment process that grants the minority the
rights to offer its alternatives, including a substitute.'' This is the
commitment that was made to the American people under ``A New Direction
for America.''
Mr. Speaker, I recognize that having a completely open rule on a
measure that emerges from the Ways and Means Committee is not the
wisest thing for us to do. But, Mr. Speaker, what we are doing here
today on this rule is absolutely outrageous and a complete violation of
this commitment that was made at the beginning of this Congress for a
new era of openness, transparency and accountability.
{time} 1100
Mr. Speaker, in fact, as I said last night in the Rules Committee, we
have now almost completed the first session of the 110th Congress. Our
target adjournment date is October 26, just a couple of weeks away. On
not one occasion in this entire session of Congress has the
distinguished ranking minority member of the Ways and Means Committee,
the gentleman from Louisiana (Mr. McCrery), been offered the chance to
propose a substitute to any measure that has emerged from the Ways and
Means Committee.
I will say, Mr. Speaker, as we regularly get criticized for when we
were in the majority, we never did anything close to that.
Now, I am saddened greatly by the fact that we are not only doing
this on this rule, Mr. Speaker, but on the next measure that we are
about to bring up. It is going to be another item that will have come
from the Committee on Financial Services. It's a plan to dramatically
increase housing.
Last week we had a measure that came from the Committee on Financial
Services and it was a flood insurance bill. Not a terribly partisan
issue, a measure that has impacted Democrats and Republicans on the
gulf coast, Florida, along the eastern seaboard and other parts of our
country. Democrats and Republicans.
As we all know, last week in the measure that emerged from the
Committee on Financial Services, the Rules Committee had a wide range
of amendments that were proposed by both Democrats and Republicans. In
fact, the chairman of the Committee on Financial Services talked about
a commitment that had been made to allow a number of Republican
amendments to be considered, so those Members withdrew their amendments
when they were debating this in the Committee on Financial Services on
flood insurance.
The day before the committee reported that out, we happened to have
unveiled, as Members of the minority, our report providing an
assessment of basically the first 9 months of the Pelosi Speakership
and the way the Speaker's Rules Committee has been run. This report,
very brief, lots of graphs in it, 10 pages long, I would commend it to
my colleagues. They can get a copy by going to rules-
Republicans.house.gov. I would recommend that they look at this, Mr.
Speaker, and the reason is, if you compare this performance, whether it
is denying Members a chance to even submit amendments to the Rules
Committee, which is something we would have never comprehended, to
having double the number of closed rules as we did at this point in the
109th Congress, you will see, Mr. Speaker, that this report shows that
the performance of the first session of the 110th Congress has been 180
degrees from what was promised the American people.
So last week when we had this flood insurance measure that came
forward, as I said, an agreement had been struck between the chairman
of the Committee on Financial Services and a number of Republicans on
that committee to have their amendments considered. And what happened?
There were 13 amendments made in order, Mr. Speaker. Not one single
Republican amendment was made in order. Not one single Republican
amendment was made in order. This is not just a party thing; this is
the American people who are not allowed to be heard because these
representatives represent people along the eastern seaboard, the gulf
coast, Florida, areas impacted by floods and hurricanes. We have
flooding in California and all across the country.
Here is what happened. The American people whose representatives had
thoughtful proposals, and the chairman of the committee thought those
proposals should be heard, were denied by this Rules Committee, and it
just happened the day after this report which we hoped would lead the
new majority to help keep the promises made in a new direction for
America. And what happened? They did even worse.
And so where do we stand today, Mr. Speaker. Well, Mr. Sessions has
just pointed out what has happened in this rule. Again, not one chance
in this entire Congress for the ranking minority member of the Ways and
Means Committee to offer a proposal.
And in the next bill we will have before us, unfortunately, there is
not a single Republican amendment made in order. Yes, there is a
substitute, the Neugebauer substitute; but not one Republican amendment
made in order,
[[Page H11404]]
and all seven of the amendments that the Democrats proposed have been
made in order.
Now, I had an exchange with the chairman of the Committee on
Financial Services, and while he did not support most or any of these
amendments that I know of, unfortunately what happened was, when the
committee chairman said we ought to consider some of these, the
committee chose to completely shut out Members of the minority from
having an opportunity other than the Neugebauer substitute.
Mr. Speaker, let me say I am puzzled and I am saddened, both, as I
look at this performance. When we are promised a new direction for
America and greater transparency, disclosure and accountability, and
generally a full and open debate, including a substitute, which is the
exact wording that Speaker Pelosi had in this new direction for
America, and here we are doing the exact opposite.
Now, on this measure itself, I hope very much we will defeat the
previous question so the very thoughtful work Mr. English has done
dealing with relief for the American people from the onerous burden of
the alternative minimum tax can be addressed. Unfortunately, that is
not allowed. But I do believe if we defeat the previous question, we
can allow the American people to have a chance to have some kind of
relief from the onerous alternative minimum tax.
Mr. Speaker, I thank my friend for yielding me so much time, but I
felt compelled to make these arguments on this bill and the next bill
that will be coming forward. I hope, and I am very sincere about this,
as an institutionalist, I hope and pray that we will do better for the
American people when it comes to structuring and allowing full and fair
and free debate on the House floor.
Mr. CARDOZA. Mr. Speaker, my colleague from California is a very
skilled orator, and I appreciate his speaking ability. I will tell you,
however, one of the great tools that people use when they are as
talented as Mr. Dreier is, when they don't want to talk about the bill
at hand, they talk about everything else around it.
The reality is that the bill at hand, the rule that we are trying to
move forward to bring a bill to the House floor today, eliminates
privatization of tax collection.
Now, my Republican colleagues on the other side of the aisle love
privatization. They love it in Iraq where it has not worked and our
military is struggling under the burden of having privatization and
contractors, war contractors not doing what they should be doing and
charging four times what they should be charging to do it. We see all
of the problems that have happened there.
We have seen the same thing happen here in the United States where
Federal contracts have been let. Mr. Waxman's committee has done
incredible work rooting out waste, fraud and abuse in the private
contractor system.
And then they want to turn over the collection system of the IRS to
private hands, putting at risk all Americans' private information and
documents. They like privatization; they just don't like protecting
your privacy.
The gentleman from California talked about all kinds of issues but he
didn't talk about the root problem that we are trying to address here,
and that is stopping bounty hunters from harassing American taxpayers.
Finally, Mr. Dreier talked at great length about the McCrery
substitute and the fact that Mr. McCrery has not gotten a substitute
this year.
Mr. Speaker, this is the second time this year that I have managed a
rule where the Republican substitute has violated the House rules. I am
a member of the Blue Dog Coalition as well as being a member of the
Rules Committee. I am very proud that for the whole time I have been
here as a member of the Blue Dog Coalition, we advocated for
advancement of the PAYGO rule. We believe in fiscal responsibility. We
believe we need to pay our debts. So we got, when we took over the
majority, inserted into the House rules a clause that says we have to
pay as we go. We have to do it like every American taxpayer has to run
their own home. We have to run this House in a fiscally responsible
way. And so we mandated the PAYGO rules.
The substitute put forward by the Republicans, for the second time
that I have managed a rule anyway, has violated those PAYGO rules. When
you don't follow the House rules, you can't expect your amendment to be
made in order, Mr. Speaker. I encourage my colleagues to abide by those
rules and honor the process.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I don't know if this is a blatant attempt
to mislead Members or not, but the gentleman, Mr. English, his bill is
compliant with PAYGO rules. And to suggest on this floor that the
Republican Party presented the bill, the amendment----
Mr. CARDOZA. Mr. Speaker, will the gentleman yield?
Mr. SESSIONS. I yield to the gentleman from California.
Mr. CARDOZA. I wasn't referring to Mr. English's bill.
Mr. SESSIONS. Which one were you referencing, sir?
Mr. CARDOZA. I was referring to Mr. McCrery's substitute.
Mr. SESSIONS. Reclaiming my time, and I will continue this dialogue,
you know that we asked to have made in order one that would be in
compliance with the PAYGO rules, and you and your colleagues turned
that down. You specifically stated: We want an amendment that would be
in compliance with the PAYGO rules; will you please give it to us. And
we were turned down by the Rules Committee. I would engage the
gentleman on that issue.
It was my amendment that I made, and I know how the gentleman voted,
along with all of his colleagues. And to stand up on this floor and to
say, Well, we would if they would abide by the rules, but they have to
abide by the rules, is a blatant, blatant miscalculation and I think
untrue and insincere. When we asked for that in the Rules Committee, we
were turned down.
When we said, Give us an amendment we will make sure that the
Parliamentarian and others say is compliant, we were turned down.
The gentleman, Mr. English, and I am getting ready to allow him to
speak on this floor, he is in compliance with PAYGO rules. So there was
not an opportunity that was given by the Rules Committee to allow us to
do that. And then you stand up and say, Well, if Republicans played by
the same rules as we do, then they would find them in order, that is
not true.
Mr. Speaker, at this time I yield 4 minutes to the co-chairman of the
Zero AMT Caucus, the distinguished gentleman who has an amendment that
would be compliant, the gentleman from Pennsylvania (Mr. English).
Mr. ENGLISH of Pennsylvania. Mr. Speaker, I thank the gentleman for
yielding to me and certifying in the process that I am PAYGO compliant,
something that will come as a source of great relief to my wife, among
others.
Mr. Speaker, I rise in strong opposition to the rule before us today.
Very simply, it puts protecting deadbeat taxpayers ahead of shielding
unsuspecting citizens from additional taxes and penalties resulting
from the majority's inaction on the AMT.
Yesterday, I offered an amendment in the nature of a substitute to
the underlying bill. My amendment would have addressed the severe
consequences to middle-class taxpayers come next April as a result of
the majority's inaction on the alternative minimum tax. As has been
noted here, this amendment was fully compliant with PAYGO rules of the
House, but it was dismissed out of hand by the majority. As a result, I
am here today to strongly urge my colleagues to defeat the previous
question on the rule so it can be amended to incorporate consideration
of the English substitute.
The fact remains that the clock is ticking, and without a minimum
amount of effort by this majority in Congress, millions of taxpayers
will not only be socked with an unsuspected bill from the tax man in
the form of the AMT, they will also be slapped with punitive penalties
by the IRS for not withholding enough as AMT taxpayers.
My amendment would have created a safe harbor for those taxpayers and
not penalized them for something that they did not know they would be
subjected to; and, frankly, something they never should have been
subject to in the first place.
[[Page H11405]]
{time} 1115
Let's put this in more concrete terms, Mr. Speaker. There are now
less than 30 legislative days left in this Congress. So far a bill has
yet to be introduced by the majority to spare 23 million American
taxpayers from unintentionally being subject to the alternative minimum
tax.
Now, after having 10 months of the year to deal with this impending
explosion of increased taxes on working families, the majority has done
absolutely nothing.
This is the longest period of time the AMT has been pushed aside, and
it is incomprehensible that we're not addressing the fallout from this
inaction today, even as forms are being prepared to send out to
taxpayers.
Working families should not have to pay the price for the majority's
inaction on the AMT. In fact, Mr. Speaker, they can't afford to.
I oppose this rule because it embraces the misplaced priorities of
the majority to chase phantasms rather than deliver real and meaningful
legislation to spare working families from a huge tax increase that was
never intended for them.
My substitute would strike the repeal of the private debt collection
program and put in place a safe harbor for unsuspecting taxpayers about
to be clobbered by the AMT and then again by penalties. Otherwise, my
substitute would leave the bill unchanged.
Mr. Speaker, we have to come to grips with the fact that we have to
address the AMT. We must do it now. I urge my colleagues to defeat the
previous question and bring a rule to the floor that addresses the
immediate and pressing needs of working families in this country.
Mr. CARDOZA. Mr. Speaker, I yield myself such time as I may consume.
I wish to commend my colleague Mr. English. He is a very thoughtful
individual and a very good legislator, and I would just say that while
his amendment was PAYGO compliant, we were not aware of that until this
morning when the tax tables were submitted to the Ways and Means
Committee. So last night when the Rules Committee was dealing with this
issue, we had no way of knowing whether his substitute was, in fact,
PAYGO compliant or not.
With regard to Mr. McCrery's substitute, I have it here with me. The
substitute that was submitted by Mr. McCrery was, in fact, not PAYGO
compliant. Now, Mr. Sessions says that he made the motion to allow it
to be PAYGO compliant, but the bill before us at that point in the
Rules Committee was not.
I would like to say, also, that Mr. English's substitute doesn't deal
with the base bill, which is to stop the privatization of tax
collection, and that is what the majority is trying to get at today.
Now, certainly there are other issues that are worthy of
consideration in this institution. AMT is certainly one of them. But in
this provision today, the majority wants to bring forward a bill that
would stop American taxpayers from being harassed by private bounty
hunters. That's the issue before us today. And all the other issues
that people are trying to discuss one way or another, they have nothing
to do with this base bill and really don't apply to the debate we want
to have in the next hour.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. I would like to inquire upon the time remaining on both
sides, Mr. Speaker.
The SPEAKER pro tempore. The gentleman from Texas has 4 minutes, and
the gentleman from California has 15 minutes.
Mr. SESSIONS. Mr. Speaker, let's go to the heart of this.
$30 million worth of uncollected taxes that, by the IRS's own
admission, never would have been collected because they were accounts
they did not want to or were not working, which are the only accounts
that ever go to private debt collectors, who as private collectors
receive a 98 percent rating from the IRS for regulatory procedural
accuracy, as well as a 100 percent rating for professionalism, and less
than 1 percent of those accounts have any sort of complaints that are
filed with the IRS, and none which have been validated. That's the
substance of the case. That's why we oppose this bill and this rule. It
makes no sense unless you're simply trying to do what union bosses ask
you to do, which is evidently what this bill is doing.
I would also like to point out that what's very interesting is that
this bill is supported by the chairman of the Ways and Means Committee
and has a whopping nine cosponsors, a whopping nine cosponsors, and
we're bringing that to the floor of the House today. Utterly amazing.
Mr. Speaker, I insert into the Record at this time the Statement of
Administration Policy by the President, which this White House says
that they will veto.
Statement of Administration Policy
H.R. 3056--To amend the Internal Revenue Code of 1986 to repeal the
authority of the Internal Revenue Service to use private debt
collection companies, to delay implementation of withholding taxes on
government contractors, to revise the tax rules on expatriation, and
for other purposes
The Administration strongly opposes House passage of H.R.
3056. The bill is not consistent with the Administration's
commitment to a balanced approach toward improving taxpayer
compliance and collecting outstanding tax liabilities. If
H.R. 3056 were presented to the President, his senior
advisors would recommend that he veto the bill.
The Administration strongly opposes the provisions of the
bill that would repeal the current statutory authorization
for the Internal Revenue Service, IRS, private debt
collection program. Terminating this program would result in
a loss of significant revenue over the next 10 years. These
are tax dollars that are legally owed to the Government and
that are otherwise not likely to be collected by the IRS. It
is a disservice to all taxpayers who properly pay their taxes
to terminate this program that is efficiently recovering a
portion of the extra burden they shoulder from the ``tax
gap'' caused by those who do not pay their taxes. Moreover,
the Government Accountability Office, GAO, recently reported
that the IRS has made ``major progress'' in addressing
critical success factors for the private debt collection
program, including ensuring that both taxpayer rights and the
security of taxpayer information are protected.
The Administration also has concerns with the provision of
the bill that would impose additional tax rules on
individuals relinquishing U.S. citizenship or terminating
long-term residency. The Administration strongly supports
efforts to ensure that individuals renouncing their U.S.
citizenship pay their fair share of U.S. taxes. The bill's
``mark-to-market'' approach to valuation of expatriates'
property for taxation purposes, however, overrides existing
tax treaties and raises concerns about tax complexity.
Mr. Speaker, I reserve the balance of my time.
Mr. CARDOZA. I would like to inquire from my colleague if he has any
remaining speakers.
Mr. SESSIONS. I thank the gentleman for asking. In fact, I do not
have additional speakers at this time.
Mr. CARDOZA. Would the gentleman like to close?
Mr. SESSIONS. I would be very pleased to do that. I would like to ask
the question back, does the gentleman have any additional speakers?
Mr. CARDOZA. I do not.
Mr. SESSIONS. Mr. Speaker, we have had a good debate here on the
floor. We talked about from the Republican perspective, we're trying to
follow the rules, not only of the House, but also the statements that
have been made by our new Speaker, the Honorable Nancy Pelosi, who said
she would have the most honest, open and ethical House in history and
that that would also extend to processes of amendments.
We are here on the floor of the House saying today, that's not
happening, has not happened all year, and I would predict to say today
probably is not about to happen. Still on the Web site for the Speaker
it says this. The American people are waiting for this promise to be
made.
Today, we are debating a rule and a bill that would say to the
American taxpayer that the IRS and their ability to collect taxes on
behalf of the American people is going to be changed, changed from
accounts that the IRS has no reasonable reason to believe that they
will be chasing after or trying to collect. And that's why in the first
place we said from doing audits, you've got all these accounts, please
pass them to someone who will do it on behalf of the taxpayer. Because
if you're not trying to collect these bills, it means that people will
never pay.
The result has been over $30 million worth of uncollected taxes that
never would have been collected, not by the IRS, and they're done by
someone, these private collection agencies, that receive a 98 percent
rating by the IRS for regulatory and procedural accuracy, as well as a
100 percent rating for
[[Page H11406]]
professionalism and less than a 1 percent complaint rate of which not
one has turned out to be validated.
Mr. Speaker, this is an assault on not just the taxpayer. This is an
assault on really good and effective and proper government, where the
IRS utilizes best practice. They're utilized by over 40 State
governments today to have help in collecting money that is owed not
just to the government but to the taxpayers of this Nation. And today,
despite the success, overwhelming success, that is occurring, the
Democrat majority, with nine cosponsors plus the chairman, is
interested in taking away this opportunity for the taxpayers, I will
assume, because the taxpayer union of the Treasury Department does not
like this happening.
Mr. Speaker, we need to have best practices. The President is right.
He will veto this bill. This is a valiant effort by this Democrat
majority to pay back AFL-CIO and the labor unions for their support,
but it is not in the best interests of not only the taxpayer but of
good and proper government.
The Republican Party is here on the floor of the House today saying
that what has happened with best practices that is happening today
should continue. We should have these private services that work in
concert with the IRS. We should continue to give the IRS and those
particular departments that do go after this money to receive directly
more money that is collected that would help them hire more tax
collectors, but we should not stop this process dead in its tracks
because not only is it successful, but it is working as a best practice
would for other people to see how important a public/private
partnership is.
Mr. Speaker, I ask unanimous consent to have the text of the
amendment and extraneous material to appear in the Record just prior to
the vote on the previous question.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. SESSIONS. Mr. Speaker, I yield back the balance of my time.
Mr. CARDOZA. Mr. Speaker, I yield myself such time as I may consume
to close.
Mr. Speaker, the bill before us today, the Tax Collection
Responsibility Act of 2007, stops wasting taxpayer money on programs
that cost too much, gives away confidential taxpayer information, and
results in taxpayer harassment by bounty hunters and simply never has
and never will work. It didn't work in the early 1800s, it didn't work
in the late 1800s, and it doesn't work in the year 2007.
Mr. Sessions mentioned that there are these Republican best practices
that would enhance our collection methods. Well, let's talk about that.
The Republican bill spent $71 million to collect $20 million,
resulting in a $51 million loss. If Mr. Sessions wants to claim those
as Republican best practices, he can do that. However, if the Federal
Government employees, the traditional men and women who have served our
country honorably, if they had had the ability to use that same $71
million, they would have collected $1.5 billion in taxes owed to this
Treasury, $1.5 billion that could be used to, well, maybe fund SCHIP so
that our poor young children could get the health care they deserve.
Mr. Sessions talks about that this bill only has 11 cosponsors. Well,
this bill is a compilation of bills that was put together in the last
few weeks, and, in fact, the base bills that this bill is based upon,
Mr. Van Hollen's bill has 156 coauthors and Mr. Meek of Florida's bill
has over 100. So there is wide support for this bill. The public should
not believe that there are just a few folks thinking this is a good
idea. This has wide support. It has had a number of hearings in the
Ways and Means Committee, and there has been great testimony with
regard to the fact that the current program put in by the Republicans
in the last few years has not and will not work and should not continue
to be allowed as the law of the land.
H.R. 3056 does something very fundamental. It protects taxpayers and
ensures their privacy. It addresses withholding concerns raised by
business and local government. It cracks down on yet another tax
loophole for the wealthy that has been left open under the prior
Congresses for far too long, and, most importantly, it continues to
make our taxes fair for all.
Mr. Speaker, this is a good bill. It deserves this House's strong
support. I urge a ``yes'' vote on the rule and on the previous
question.
Mr. HERGER Mr. Speaker, I rise in opposition to the Rule on H.R.
3056, the Tax Collection Responsibility Act. This rule, on legislation
to halt collection of previously uncollected tax debts, wrongly
prohibits any Republican amendments. An Amendment in the Nature of a
Substitute by Ways and Means Ranking Member Jim McCrery, would have
allowed for consideration of full repeal of the 3 percent withholding
burden, which is so important to thousands of U.S. businesses. This was
rejected by the Rules Committee on Tuesday evening. This rule stifles
debate and is counter-productive to the bipartisanship we've worked for
this year on the 3 percent withholding repeal. I urge my colleagues to
reject the rule.
The material previously referred to by Mr. Sessions is as follows:
Amendment to H. Res. 719 Offered by Mr. Sessions of Texas
Strike all after the resolved clause and insert the
following: That upon the adoption of this resolution it shall
be in order to consider in the House the bill (H.R. 3056) to
amend the Internal Revenue Code of 1986 to repeal the
authority of the Internal Revenue Service to use private debt
collection companies, to delay implementation of withholding
taxes on government contractors, to revise the tax rules on
expatriation, and for other purposes. All points of order
against consideration of the bill are waived except those
arising under clause 9 or 10 of rule XXI. The amendment in
the nature of a substitute recommended by the Committee on
Ways and Means now printed in the bill, modified by the
amendment printed in the report of the Committee on Rules
accompanying this resolution, shall be considered as adopted.
The bill, as amended, shall be considered as read. All points
of order against provisions of the bill, as amended, are
waived. The previous question shall be considered as ordered
on the bill, as amended, to final passage without intervening
motion except: (1) one hour of debate equally divided and
controlled by the chairman and ranking minority member of the
Committee on Ways and Means; (2) the further amendment
printed in section 3 of this resolution, if offered by
Representative English of Pennsylvania or his designee, which
shall be in order without intervention of any point of order
except those arising under clause 10 of rule XXI, shall be
considered as read, and shall be separately debatable for one
hour equally divided and controlled by the proponent and an
opponent; and (3) one motion to recommit with or without
instructions.
Sec. 2. During consideration of H.R. 3056 pursuant to this
resolution; notwithstanding the operation of the previous
question, the Chair may postpone further consideration of the
bill to such time as may be designated by the Speaker.
Sec. 3. The further amendment referred to in section 1 of
this resolution, to be offered by Representative English of
Pennsylvania or his designee, is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Tax
Collection Responsibility Act of 2007''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Estimated tax safe harbor for increase in 2007 alternative
minimum tax liability.
Sec. 3. Delay of application of withholding requirement on certain
governmental payments for goods and services.
Sec. 4. Clarification of entitlement of Virgin Islands residents to
protections of limitations on assessment and collection
of tax.
Sec. 5. Revision of tax rules on expatriation.
Sec. 6. Repeal of suspension of certain penalties and interest.
Sec. 7. Increase in information return penalties.
Sec. 8. Time for payment of corporate estimated taxes.
SEC. 2. ESTIMATED TAX SAFE HARBOR FOR INCREASE IN 2007
ALTERNATIVE MINIMUM TAX LIABILITY.
(a) In General.--Section 6654 is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) 2007 AMT Liability Increase.--
``(1) In general.--In the case of any taxable year
beginning in 2007--
``(A) any required payment under subsection (d)(1),
``(B) any annualized income installment under subsection
(d)(2), and
[[Page H11407]]
``(C) any tax under subsection (e)(1),
shall be determined without regard to any 2007 AMT liability
increase.
``(2) 2007 amt liability increase.--For purposes of
paragraph (1), the term `2007 AMT liability increase' means
the excess (if any) of--
``(A) the tax imposed by section 55 for the first taxable
year beginning in 2007, over
``(B) the tax imposed by section 55 for the first taxable
year beginning in 2006.
``(3) Limitation.--Under guidance prescribed by the
Secretary, the excess determined under paragraph (2) shall be
reduced (but not below zero) by an amount determined by the
Secretary to result, when added to all other revenue amounts
forgone by reason of paragraph (1), in the total amount
forgone under paragraph (1) being equal to $1,000,000,000.''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3. DELAY OF APPLICATION OF WITHHOLDING REQUIREMENT ON
CERTAIN GOVERNMENTAL PAYMENTS FOR GOODS AND
SERVICES.
(a) In General.--Subsection (b) of section 511 of the Tax
Increase Prevention and Reconciliation Act of 2005 is amended
by striking ``December 31, 2010'' and inserting ``December
31, 2011''.
(b) Report to Congress.--Not later than 6 months after the
date of the enactment of this Act, the Secretary of the
Treasury shall submit to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of
the Senate a report with respect to the withholding
requirements of section 3402(t) of the Internal Revenue Code
of 1986, including a detailed analysis of--
(1) the problems, if any, which are anticipated in
administering and complying with such requirements,
(2) the burdens, if any, that such requirements will place
on governments and businesses (taking into account such
mechanisms as may be necessary to administer such
requirements), and
(3) the application of such requirements to small
expenditures for services and goods by governments.
SEC. 4. CLARIFICATION OF ENTITLEMENT OF VIRGIN ISLANDS
RESIDENTS TO PROTECTIONS OF LIMITATIONS ON
ASSESSMENT AND COLLECTION OF TAX.
(a) In General.--Subsection (c) of section 932 (relating to
treatment of Virgin Islands residents) is amended by adding
at the end the following new paragraph:
``(5) Treatment of income tax return filed with virgin
islands.--An income tax return filed with the Virgin Islands
by an individual claiming to be described in paragraph (1)
for the taxable year shall be treated for purposes of
subtitle F in the same manner as if such return were an
income tax return filed with the United States for such
taxable year. The preceding sentence shall not apply where
such return is false or fraudulent with the intent to avoid
tax or otherwise is a willful attempt in any manner to defeat
or evade tax.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after 1986.
SEC. 5. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--All property of a covered expatriate
shall be treated as sold on the day before the expatriation
date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into
account under the preceding sentence, determined without
regard to paragraph (3).
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which would (but for this
paragraph) be includible in the gross income of any
individual by reason of paragraph (1) shall be reduced (but
not below zero) by $600,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2008, the dollar amount in
subparagraph (A) shall be increased by an amount equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.
``(ii) Rounding.--If any amount as adjusted under clause
(i) is not a multiple of $1,000, such amount shall be rounded
to the nearest multiple of $1,000.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as
sold by reason of subsection (a), the time for payment of the
additional tax attributable to such property shall be
extended until the due date of the return for the taxable
year in which such property is disposed of (or, in the case
of property disposed of in a transaction in which gain is not
recognized in whole or in part, until such other date as the
Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a)
applies.
``(3) Termination of extension.--The due date for payment
of tax may not be extended under this subsection later than
the due date for the return of tax imposed by this chapter
for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security
provided with respect to the property fails to meet the
requirements of paragraph (4), unless the taxpayer corrects
such failure within the time specified by the Secretary).
``(4) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond which is furnished to, and accepted by,
the Secretary, which is conditioned on the payment of tax
(and interest thereon), and which meets the requirements of
section 6325, or
``(ii) it is another form of security for such payment
(including letters of credit) that meets such requirements as
the Secretary may prescribe.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer makes an irrevocable
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable.
``(7) Interest.--For purposes of section 6601, the last
date for the payment of tax shall be determined without
regard to the election under this subsection.
``(c) Exception for Certain Property.--Subsection (a) shall
not apply to--
``(1) any deferred compensation item (as defined in
subsection (d)(4)),
``(2) any specified tax deferred account (as defined in
subsection (e)(2)), and
``(3) any interest in a nongrantor trust (as defined in
subsection (f)(3)).
``(d) Treatment of Deferred Compensation Items.--
``(1) Withholding on eligible deferred compensation
items.--
``(A) In general.--In the case of any eligible deferred
compensation item, the payor shall deduct and withhold from
any taxable payment to a covered expatriate with respect to
such item a tax equal to 30 percent thereof.
``(B) Taxable payment.--For purposes of subparagraph (A),
the term `taxable payment' means with respect to a covered
expatriate any payment to the extent it would be includible
in the gross income of the covered expatriate if such
expatriate continued to be subject to tax as a citizen or
resident of the United States. A deferred compensation item
shall be taken into account as a payment under the preceding
sentence when such item would be so includible.
``(2) Other deferred compensation items.--In the case of
any deferred compensation item which is not an eligible
deferred compensation item--
``(A)(i) with respect to any deferred compensation item to
which clause (ii) does not apply, an amount equal to the
present value of the covered expatriate's accrued benefit
shall be treated as having been received by such individual
on the day before the expatriation date as a distribution
under the plan, and
``(ii) with respect to any deferred compensation item
referred to in paragraph (4)(D), the rights of the covered
expatriate to such item shall be treated as becoming
transferable and not subject to a substantial risk of
forfeiture on the day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the plan to reflect such treatment.
``(3) Eligible deferred compensation items.--For purposes
of this subsection, the term `eligible deferred compensation
item' means any deferred compensation item with respect to
which--
``(A) the payor of such item is--
``(i) a United States person, or
``(ii) a person who is not a United States person but who
elects to be treated as a United States person for purposes
of paragraph (1) and meets such requirements as the Secretary
may provide to ensure that the
[[Page H11408]]
payor will meet the requirements of paragraph (1), and
``(B) the covered expatriate--
``(i) notifies the payor of his status as a covered
expatriate, and
``(ii) makes an irrevocable waiver of any right to claim
any reduction under any treaty with the United States in
withholding on such item.
``(4) Deferred compensation item.--For purposes of this
subsection, the term `deferred compensation item' means--
``(A) any interest in a plan or arrangement described in
section 219(g)(5),
``(B) any interest in a foreign pension plan or similar
retirement arrangement or program,
``(C) any item of deferred compensation, and
``(D) any property, or right to property, which the
individual is entitled to receive in connection with the
performance of services to the extent not previously taken
into account under section 83 or in accordance with section
83.
``(5) Exception.--Paragraphs (1) and (2) shall not apply to
any deferred compensation item which is attributable to
services performed outside the United States while the
covered expatriate was not a citizen or resident of the
United States.
``(6) Special rules.--
``(A) Application of withholding rules.--Rules similar to
the rules of subchapter B of chapter 3 shall apply for
purposes of this subsection.
``(B) Application of tax.--Any item subject to the
withholding tax imposed under paragraph (1) shall be subject
to tax under section 871.
``(C) Coordination with other withholding requirements.--
Any item subject to withholding under paragraph (1) shall not
be subject to withholding under section 1441 or chapter 24.
``(e) Treatment of Specified Tax Deferred Accounts.--
``(1) Account treated as distributed.--In the case of any
interest in a specified tax deferred account held by a
covered expatriate on the day before the expatriation date--
``(A) the covered expatriate shall be treated as receiving
a distribution of his entire interest in such account on the
day before the expatriation date,
``(B) no early distribution tax shall apply by reason of
such treatment, and
``(C) appropriate adjustments shall be made to subsequent
distributions from the account to reflect such treatment.
``(2) Specified tax deferred account.--For purposes of
paragraph (1), the term `specified tax deferred account'
means an individual retirement plan (as defined in section
7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition
program (as defined in section 529), a Coverdell education
savings account (as defined in section 530), a health savings
account (as defined in section 223), and an Archer MSA (as
defined in section 220).
``(f) Special Rules for Nongrantor Trusts.--
``(1) In general.--In the case of a distribution (directly
or indirectly) of any property from a nongrantor trust to a
covered expatriate--
``(A) the trustee shall deduct and withhold from such
distribution an amount equal to 30 percent of the taxable
portion of the distribution, and
``(B) if the fair market value of such property exceeds its
adjusted basis in the hands of the trust, gain shall be
recognized to the trust as if such property were sold to the
expatriate at its fair market value.
``(2) Taxable portion.--For purposes of this subsection,
the term `taxable portion' means, with respect to any
distribution, that portion of the distribution which would be
includible in the gross income of the covered expatriate if
such expatriate continued to be subject to tax as a citizen
or resident of the United States.
``(3) Nongrantor trust.--For purposes of this subsection,
the term `nongrantor trust' means the portion of any trust
that the individual is not considered the owner of under
subpart E of part I of subchapter J. The determination under
the preceding sentence shall be made immediately before the
expatriation date.
``(4) Special rules relating to withholding.--For purposes
of this subsection--
``(A) rules similar to the rules of subsection (d)(6) shall
apply, and
``(B) the covered expatriate shall be treated as having
waived any right to claim any reduction under any treaty with
the United States in withholding on any distribution to which
paragraph (1)(A) applies.
``(g) Definitions and Special Rules Relating to
Expatriation.--For purposes of this section--
``(1) Covered expatriate.--
``(A) In general.--The term `covered expatriate' means an
expatriate who meets the requirements of subparagraph (A),
(B), or (C) of section 877(a)(2).
``(B) Exceptions.--An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of
section 877(a)(2) if--
``(i) the individual--
``(I) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(II) has been a resident of the United States (as defined
in section 7701(b)(1)(A)(ii)) for not more than 10 taxable
years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or
``(ii)(I) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(II) the individual has been a resident of the United
States (as so defined) for not more than 10 taxable years
before the date of relinquishment.
``(C) Covered expatriates also subject to tax as citizens
or residents.--In the case of any covered expatriate who is
subject to tax as a citizen or resident of the United States
for any period beginning after the expatriation date, such
individual shall not be treated as a covered expatriate
during such period for purposes of subsections (d)(1) and (f)
and section 2801.
``(2) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes his
citizenship, and
``(B) any long-term resident of the United States who
ceases to be a lawful permanent resident of the United States
(within the meaning of section 7701(b)(6)).
``(3) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date on which the individual ceases to be a
lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).
``(4) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
earliest of--
``(A) the date the individual renounces his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(5) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(6) Early distribution tax.--The term `early distribution
tax' means any increase in tax imposed under section 72(t),
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
``(h) Other Rules.--
``(1) Termination of deferrals, etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(A) any time period for acquiring property which would
result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall
terminate on the day before the expatriation date, and
``(B) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the
unpaid portion of such tax shall be due and payable at the
time and in the manner prescribed by the Secretary.
``(2) Step-up in basis.--Solely for purposes of determining
any tax imposed by reason of subsection (a), property which
was held by an individual on the date the individual first
became a resident of the United States (within the meaning of
section 7701(b)) shall be treated as having a basis on such
date of not less than the fair market value of such property
on such date. The preceding sentence shall not apply if the
individual elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(3) Coordination with section 684.--If the expatriation
of any individual would result in the recognition of gain
under section 684, this section shall be applied after the
application of section 684.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Tax on Gifts and Bequests Received by United States
Citizens and Residents From Expatriates.--
(1) In general.--Subtitle B (relating to estate and gift
taxes) is amended by inserting after chapter 14 the following
new chapter:
``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES
``Sec. 2801. Imposition of tax.
``SEC. 2801. IMPOSITION OF TAX.
``(a) In General.--If, during any calendar year, any United
States citizen or resident receives any covered gift or
bequest, there is hereby imposed a tax equal to the product
of--
``(1) the highest rate of tax specified in the table
contained in section 2001(c) as in effect on the date of such
receipt (or, if greater, the highest rate of tax specified in
the table applicable under section 2502(a) as in effect on
the date), and
[[Page H11409]]
``(2) the value of such covered gift or bequest.
``(b) Tax To Be Paid by Recipient.--The tax imposed by
subsection (a) on any covered gift or bequest shall be paid
by the person receiving such gift or bequest.
``(c) Exception for Certain Gifts.--Subsection (a) shall
apply only to the extent that the value of covered gifts and
bequests received by any person during the calendar year
exceeds $10,000.
``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax
imposed by subsection (a) on any covered gift or bequest
shall be reduced by the amount of any gift or estate tax paid
to a foreign country with respect to such covered gift or
bequest.
``(e) Covered Gift or Bequest.--
``(1) In general.--For purposes of this chapter, the term
`covered gift or bequest' means--
``(A) any property acquired by gift directly or indirectly
from an individual who, at the time of such acquisition, is a
covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who, immediately before
such death, was a covered expatriate.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Such term shall not include--
``(A) any property shown on a timely filed return of tax
imposed by chapter 12 which is a taxable gift by the covered
expatriate, and
``(B) any property included in the gross estate of the
covered expatriate for purposes of chapter 11 and shown on a
timely filed return of tax imposed by chapter 11 of the
estate of the covered expatriate.
``(3) Transfers in trust.--
``(A) Domestic trusts.--In the case of a covered gift or
bequest made to a domestic trust--
``(i) subsection (a) shall apply in the same manner as if
such trust were a United States citizen, and
``(ii) the tax imposed by subsection (a) on such gift or
bequest shall be paid by such trust.
``(B) Foreign trusts.--
``(i) In general.--In the case of a covered gift or bequest
made to a foreign trust, subsection (a) shall apply to any
distribution attributable to such gift or bequest from such
trust (whether from income or corpus) to a United States
citizen or resident in the same manner as if such
distribution were a covered gift or bequest.
``(ii) Deduction for tax paid by recipient.--There shall be
allowed as a deduction under section 164 the amount of tax
imposed by this section which is paid or accrued by a United
States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on
the portion of such distribution which is included in the
gross income of such citizen or resident.
``(iii) Election to be treated as domestic trust.--Solely
for purposes of this section, a foreign trust may elect to be
treated as a domestic trust. Such an election may be revoked
with the consent of the Secretary.
``(f) Covered Expatriate.--For purposes of this section,
the term `covered expatriate' has the meaning given to such
term by section 877A(g)(1).''.
(2) Clerical amendment.--The table of chapters for subtitle
B is amended by inserting after the item relating to chapter
14 the following new item:
``Chapter 15. Gifts and Bequests From Expatriates.''.
(c) Definition of Termination of United States
Citizenship.--
(1) In general.--Section 7701(a) is amended by adding at
the end the following new paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to be
treated as a United States citizen before the date on which
the individual's citizenship is treated as relinquished under
section 877A(g)(4).
``(B) Dual citizens.--Under regulations prescribed by the
Secretary, subparagraph (A) shall not apply to an individual
who became at birth a citizen of the United States and a
citizen of another country.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 877(e) is amended to read as
follows:
``(1) In general.--Any long-term resident of the United
States who ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6))
shall be treated for purposes of this section and sections
2107, 2501, and 6039G in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.''.
(B) Paragraph (6) of section 7701(b) is amended by adding
at the end the following flush sentence:
``An individual shall cease to be treated as a lawful
permanent resident of the United States if such individual
commences to be treated as a resident of a foreign country
under the provisions of a tax treaty between the United
States and the foreign country, does not waive the benefits
of such treaty applicable to residents of the foreign
country, and notifies the Secretary of the commencement of
such treatment.''.
(C) Section 7701 is amended by striking subsection (n) and
by redesignating subsections (o) and (p) as subsections (n)
and (o), respectively.
(d) Information Returns.--Section 6039G is amended--
(1) by inserting ``or 877A'' after ``section 877(b)'' in
subsection (a), and
(2) by inserting ``or 877A'' after ``section 877(a)'' in
subsection (d).
(e) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:
``Sec. 877A. Tax responsibilities of expatriation.''.
(f) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(as defined in section 877A(g) of the Internal Revenue Code
of 1986, as added by this section) whose expatriation date
(as so defined) is on or after the date of the enactment of
this Act.
(2) Gifts and bequests.--Chapter 15 of the Internal Revenue
Code of 1986 (as added by subsection (b)) shall apply to
covered gifts and bequests (as defined in section 2801 of
such Code, as so added) received on or after the date of the
enactment of this Act, regardless of when the transferor
expatriated.
SEC. 6. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND
INTEREST.
(a) In General.--Section 6404 is amended by striking
subsection (g) and by redesignating subsection (h) as
subsection (g).
(b) Effective Date.--The amendment made by subsection (a)
shall apply to notices provided by the Secretary of the
Treasury, or his delegate, after the date which is 6 months
after the date of the enactment of the Small Business and
Work Opportunity Tax Act of 2007.
SEC. 7. INCREASE IN INFORMATION RETURN PENALTIES.
(a) Failure To File Correct Information Returns.--
(1) In general.--Subsections (a)(1), (b)(1)(A), and
(b)(2)(A) of section 6721 are each amended by striking
``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a)(1),
(d)(1)(A), and (e)(3)(A) of section 6721 are each amended by
striking ``$250,000'' and inserting ``$600,000''.
(b) Reduction Where Correction Within 30 Days.--
(1) In general.--Subparagraph (A) of section 6721(b)(1) is
amended by striking ``$15'' and inserting ``$25''.
(2) Aggregate annual limitation.--Subsections (b)(1)(B) and
(d)(1)(B) of section 6721 are each amended by striking
``$75,000'' and inserting ``$200,000''.
(c) Reduction Where Correction on or Before August 1.--
(1) In general.--Subparagraph (A) of section 6721(b)(2) is
amended by striking ``$30'' and inserting ``$60''.
(2) Aggregate annual limitation.--Subsections (b)(2)(B) and
(d)(1)(C) of section 6721 are each amended by striking
``$150,000'' and inserting ``$400,000''.
(d) Aggregate Annual Limitations for Persons With Gross
Receipts of Not More Than $5,000,000.--Paragraph (1) of
section 6721(d) is amended--
(1) by striking ``$100,000'' in subparagraph (A) and
inserting ``$250,000'',
(2) by striking ``$25,000'' in subparagraph (B) and
inserting ``$75,000'', and
(3) by striking ``$50,000'' in subparagraph (C) and
inserting ``$150,000''.
(e) Penalty in Case of Intentional Disregard.--Paragraph
(2) of section 6721(e) is amended by striking ``$100'' and
inserting ``$250''.
(f) Failure To Furnish Correct Payee Statements.--
(1) In general.--Subsection (a) of section 6722 is amended
by striking ``$50'' and inserting ``$100''.
(2) Aggregate annual limitation.--Subsections (a) and
(c)(2)(A) of section 6722 are each amended by striking
``$100,000'' and inserting ``$600,000''.
(3) Penalty in case of intentional disregard.--Paragraph
(1) of section 6722(c) is amended by striking ``$100'' and
inserting ``$250''.
(g) Failure To Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$100'', and
(2) by striking ``$100,000'' and inserting ``$600,000''.
(h) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.
SEC. 8. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
Subparagraph (B) of section 401(1) of the Tax Increase
Prevention and Reconciliation Act of 2005 is amended by
striking ``115 percent'' and inserting ``115.50 percent''.
____
(The information contained herein was provided by
Democratic Minority on multiple occasions throughout the
109th Congress.)
The Vote on the Previous Question: What It Really Means
This vote, the vote on whether to order the previous
question on a special rule, is not merely a procedural vote.
A vote against ordering the previous question is a vote
against the Democratic majority agenda and a vote to allow
the opposition, at least for
[[Page H11410]]
the moment, to offer an alternative plan. It is a vote about
what the House should be debating.
Mr. Clarence Cannon's Precedents of the House of
Representatives, (VI, 308-311) describes the vote on the
previous question on the rule as ``a motion to direct or
control the consideration of the subject before the House
being made by the Member in charge.'' To defeat the previous
question is to give the opposition a chance to decide the
subject before the House. Cannon cites the Speaker's ruling
of January 13, 1920, to the effect that ``the refusal of the
House to sustain the demand for the previous question passes
the control of the resolution to the opposition'' in order to
offer an amendment. On March 15, 1909, a member of the
majority party offered a rule resolution. The House defeated
the previous question and a member of the opposition rose to
a parliamentary inquiry, asking who was entitled to
recognition. Speaker Joseph G. Cannon (R-Illinois) said:
``The previous question having been refused, the gentleman
from New York, Mr. Fitzgerald, who had asked the gentleman to
yield to him for an amendment, is entitled to the first
recognition.''
Because the vote today may look bad for the Democratic
majority they will say ``the vote on the previous question is
simply a vote on whether to proceed to an immediate vote on
adopting the resolution . . . [and] has no substantive
legislative or policy implications whatsoever.'' But that is
not what they have always said. Listen to the definition of
the previous question used in the Floor Procedures Manual
published by the Rules Committee in the 109th Congress, (page
56). Here's how the Rules Committee described the rule using
information form Congressional Quarterly's ``American
Congressional Dictionary'': ``If the previous question is
defeated, control of debate shifts to the leading opposition
member (usually the minority Floor Manager) who then manages
an hour of debate and may offer a germane amendment to the
pending business.''
Deschler's Procedure in the U.S. House of Representatives,
the subchapter titled ``Amending Special Rules'' states: ``a
refusal to order the previous question on such a rule [a
special rule reported from the Committee on Rules] opens the
resolution to amendment and further debate.'' (Chapter 21,
section 21.2) Section 21.3 continues: Upon rejection of the
motion for the previous question on a resolution reported
from the Committee on Rules, control shifts to the Member
leading the opposition to the previous question, who may
offer a proper amendment or motion and who controls the time
for debate thereon.''
Clearly, the vote on the previous question on a rule does
have substantive policy implications. It is one of the only
available tools for those who oppose the Democratic
majority's agenda and allows those with alternative views the
opportunity to offer an alternative plan.
Mr. CARDOZA. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SESSIONS. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
The point of no quorum is considered withdrawn.
____________________