[Congressional Record Volume 153, Number 153 (Wednesday, October 10, 2007)]
[House]
[Pages H11446-H11464]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX COLLECTION RESPONSIBILITY ACT OF 2007
Mr. RANGEL. Mr. Speaker, pursuant to H. Res. 719, I call up 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, and ask for its immediate consideration in the
House.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 3056
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
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. Repeal of authority to enter into private debt collection
contracts.
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. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT
COLLECTION CONTRACTS.
(a) In General.--Subchapter A of chapter 64 is amended by
striking section 6306.
(b) Conforming Amendments.--
(1) Subchapter B of chapter 76 is amended by striking
section 7433A.
(2) Section 7811 is amended by striking subsection (g).
(3) Section 1203 of the Internal Revenue Service
Restructuring Act of 1998 is amended by striking subsection
(e).
(4) The table of sections for subchapter A of chapter 64 is
amended by striking the item relating to section 6306.
(5) The table of sections for subchapter B of chapter 76 is
amended by striking the item relating to section 7433A.
[[Page H11447]]
(c) 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 were subject to the tax imposed by this chapter. A
deferred compensation item referred to in paragraph (4)(D)
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) an amount equal to the present value of the
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,
``(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 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.
``(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.
[[Page H11448]]
``(6) Special rules.--For purposes of this subsection--
``(A) Application of withholding rules.--Rules similar to
the rules of subchapter B of chapter 3 shall apply.
``(B) 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 such
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 were subject to the tax imposed by this
chapter.
``(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.
``(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
``(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, was
a covered expatriate, and
``(B) any property acquired directly or indirectly by
reason of the death of an individual who 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
[[Page H11449]]
``(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
13 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 ``114.50 percent'' and inserting ``114.75 percent''.
The SPEAKER pro tempore. Pursuant to House Resolution 719, the
amendment in the nature of a substitute printed in the bill, modified
by the amendment printed in House Report 110-368, is adopted and the
bill, as amended, is considered read.
The text of the bill, as amended, is as follows:
H.R. 3056
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
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. Repeal of authority to enter into private debt collection
contracts.
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. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT
COLLECTION CONTRACTS.
(a) In General.--Subchapter A of chapter 64 is amended by
striking section 6306.
(b) Conforming Amendments.--
(1) Subchapter B of chapter 76 is amended by striking
section 7433A.
(2) Section 7811 is amended by striking subsection (g).
(3) Section 1203 of the Internal Revenue Service
Restructuring Act of 1998 is amended by striking subsection
(e).
(4) The table of sections for subchapter A of chapter 64 is
amended by striking the item relating to section 6306.
[[Page H11450]]
(5) The table of sections for subchapter B of chapter 76 is
amended by striking the item relating to section 7433A.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Exception for existing contracts, etc.--The amendments
made by this section shall not apply to any contract which
was entered into before July 18, 2007, and is not renewed or
extended on or after such date.
(3) Unauthorized contracts and extensions treated as
void.--Any qualified tax collection contract (as defined in
section 6306 of the Internal Revenue Code of 1986, as in
effect before its repeal) which is entered into on or after
July 18, 2007, and any extension or renewal on or after such
date of any qualified tax collection contract (as so defined)
shall be void.
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 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
[[Page H11451]]
``(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
``(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
[[Page H11452]]
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 ``115.25 percent''.
The SPEAKER pro tempore. The gentleman from New York (Mr. Rangel) and
the gentleman from Louisiana (Mr. McCrery) each will control 30
minutes.
The Chair recognizes the gentleman from New York.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 3056, the Tax
Collection Responsibility Act of 2007. The bill has seven provisions
and is revenue neutral.
First, the bill will repeal this excursion into private companies
collecting the debt for the Internal Revenue Service. We've had many
hearings, and the Internal Revenue Service, on more than one occasion,
had indicated that, given the resources, they could do a more effective
job than having to subcontract out to private firms.
There's nothing magic about privatization. Just saying that it's
privatized doesn't mean that it's more effective or that you're doing
the right thing. And I think, in this great country of ours, there is a
special relationship between the Internal Revenue Service and the
taxpayer.
No one would ever like the tax collector, but you do feel a little
more secure when you know that a public servant is doing his or her
job, rather than this job being sold out or given out to somebody
that's income is going to be based on how much taxes they collect
today.
No, if you've got to call the office and ask the taxpayer to pay, or
call his home, let it not be a ride-by-night firm that is just getting
involved in tax collection of Federal indebtedness. Let it be someone
that you can trust, let it be a civil servant, and let it be the people
that, over the years, have done the job, and no good reason has been
given by anybody as to why they should not continue to do this.
The only sad thing that you can say about the collection of taxes by
the IRS is that, admittedly, we never gave them the money; we never
gave them the resources. But no one can challenge that there's no one
better trained to do the job than the Internal Revenue Service.
[[Page H11453]]
And then, of course, I want to thank Representative Meek and
Representative Herger for providing leadership in repealing this
provision that would address the 3 percent withholding rate on certain
government payments for goods and service. It didn't look good then; it
doesn't look good now.
The bill also provides some equity to our citizens in the Virgin
Islands to ensure fairness in tax collection there, and eliminates the
restrictions on the statute of limitations, which means that their
statute of limitations is our statute of limitations, that we're all
citizens in this together, and they're not second class in this.
In addition, of course, we want to say that this bill is revenue
neutral.
I ask unanimous consent to yield the remainder of my time to the
gentleman from North Dakota (Mr. Pomeroy) and give him the opportunity
to control that time.
The SPEAKER pro tempore (Mr. Ross). Is there objection to the request
of the gentleman from New York?
There was no objection.
Mr. McCRERY. Mr. Speaker, I yield myself such time as I might
consume.
I'm pleased that the chairman and I have forged a good working
relationship. That relationship has allowed us to work together on
several important issues, including trade and some tax bills. Just last
week, for example, I stood on the floor and joined with the vast
majority of Members on both sides of the aisle to approve a bill
helping relieve homeowners of the tax burden that comes with having a
mortgage written down or foreclosed.
But the chairman and I know that there are times when we will not
agree, and today is just such an occasion. The central feature of this
bill is a repeal of a program at the Internal Revenue Service that
allows the service to contract with private collection agencies, known
as PCAs, to secure payment of unpaid taxes from individuals who have
admitted they owe the government money, but simply have not actually
paid the money.
It's true, as the majority likes to argue, that the IRS's own
taxpayer advocate has urged Congress to repeal the PCA program. But
some of her reasons are a bit suspect. For example, her report
criticized the use of private collection agencies because, by doing so,
``the IRS has separated taxpayers from its world class customer
service.''
And while I agree that IRS employees are competent, hardworking
public servants, and I commend them for the job they do, surely the
person who wrote that did so with tongue firmly planted in cheek. After
all, how many of us, in conversations with our constituents, have heard
from them that the IRS is known for their customer service?
More importantly, though, IRS reviews of the PCA program show that
customer service satisfaction with those PCA programs is, in fact, very
high. In their comments on the taxpayer advocate's report, the IRS
noted that ``of the nearly 19,000 cases assigned to PCAs, only 108
taxpayers have requested that their accounts be handled by the IRS.
There have been 31 reported contractual complaints, all of which have
been reviewed in depth. There have been no instances of fraud or misuse
of taxpayer information.''
That record is not surprising, considering the extensive training PCA
employees receive and the limited information they are provided. That,
I should point out, stands in sharp contrast to the many documented
lapses of the IRS in protecting confidential taxpayer information.
Program opponents often suggest that there is something intrinsic
about tax collection that should preclude it being contracted out to
the private sector. This argument is hard to reconcile with a few basic
facts.
First, the PCAs are not adjudicating tax liability. They are merely
helping to ensure the government receives the amounts the individuals
have already admitted they owe in taxes but have not paid.
Second, PCAs are used throughout the Federal Government to collect
unpaid obligations. According to the IRS, since 1982, PCAs have been
used by various branches of the Federal Government, collecting nearly
$700 million in fiscal year 2005 alone.
Third, of the 43 States with a personal income tax, the vast majority
of those use private agencies to help collect from delinquent
taxpayers.
A hearing on this issue showed the members of the committee the skill
and patience PCA employees use to avoid disclosing any confidential
taxpayer information.
{time} 1600
In fact, Mr. Speaker, I would urge the PCA program be modified to
provide these contractors with additional tools that will both improve
their recovery rate and reduce the possibility of taxpayer confusion
about the purpose of calls and letters from the PCAs.
Even though these agencies lack many of the tools of the IRS, such as
lien and levy, they are successfully collecting millions of dollars in
unpaid taxes that the IRS has not and very likely would not ever get
around to collecting.
The majority will no doubt argue that the cost to the taxpayers would
be even less if the IRS went after these obligations. But the fact is
they are not, and any such comparisons are apples to oranges. The IRS
is currently ill-equipped to engage in the massive outbound call
operation the PCAs use to collect these obligations.
In the first year of the program's operation, more than 90,000 cases
have been placed with the PCAs. More than 7,300 have resulted in full
payment, and more than 2,600 taxpayers have entered into installment
agreements. The PCAs have already collected $32 million in gross
revenue that would not have been collected otherwise, making this a
tax-gap closing program with a proven track record. The Joint Tax
Committee estimates that killing this program will result in the loss
of over $1 billion in revenue over the coming decade.
Considering the difficulty of meeting the terms of PAYGO, it's rather
disappointing that the majority would actually find it necessary to
raise taxes elsewhere in order to terminate a program that is helping
to close the tax gap. In fact, during committee markup, members of the
Ways and Means Committee suggested a number of ways to use the money
that the majority is spending today by killing this program, including
delaying the implementation of a withholding rule on Federal
contractors or providing penalty relief to taxpayers who are
underwithholding their 2007 taxes because they are unaware of the
coming hit of the AMT, which the majority has yet to pass, but I'm sure
that we will get around to that. Unfortunately, those amendments were
rejected on party-line votes in the committee, and, of course, we are
not being given a chance to vote on those today in this House.
Mr. Speaker, at this time I yield the balance of my time to Mr. Brady
and ask unanimous consent that he be allowed to control that time.
The SPEAKER pro tempore (Mr. Salazar). Without objection, the
gentleman from Texas (Mr. Brady) will control the time.
There was no objection.
General Leave
Mr. POMEROY. Mr. Speaker, I ask unanimous consent to give Members 5
legislative days to revise and extend their remarks on this bill, H.R.
3056.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Dakota?
There was no objection.
Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
We are in a time where there is a complete fascination in this
administration with contracting out. If you are happy with Blackwater
in Iraq, then I expect you are perfectly fine with contracting the debt
collection of IRS debt to private bill collectors. But there are some
essential facts at issue which should give us pause to reconsider.
First, the start-up costs. We were told, in testimony by the IRS
Commissioner, this venture was going to cost about $14 million to get
up and running. The tab so far, $70 million, five times the anticipated
cost to begin this venture.
Now, you might say, well, okay, start-up costs are a little more than
expected, but how are we doing on receipts now that we have got them
fully going, collecting these receipts? We don't have a very good story
on that one either.
It was anticipated that $46 million to maybe $63 million would be
collected. Coming in at about half of that anticipation, $32 million
in. It costs five times more to start and bringing in about half as
much as advertised.
[[Page H11454]]
Well, okay, $32 million. It still sounds like a lot. Well, not really
when you consider the fact they have been given 118,000 cases with an
unpaid debt of $512 million. For the kind of money we have invested, do
you know what we are getting back? We are getting about a 6 percent
return from this experiment in private debt collection.
You might be asking yourself, look, there must be some more efficient
way to do this. Well, there sure is. Let's fund the IRS, hire, train,
manage the debt collection. My gosh, if there is one government
responsibility, it ought to be in making certain that the revenue owed
is the revenue raised.
And the statistics show by the IRS themselves that for $1 spent on
IRS staff collecting debt, you get a 20 to 1 return, $20 back for every
$1 spent. Private debt collection, the IRS again projecting, at best,
$4 back for every $1 spent. That's $20 if we hire to $1 spent, $4 if we
hire to every $1 spent under contracting. And that's their projection.
Look, at $32 million collected and $70 million spent, we are
collecting 50 cents for every dollar spent so far. That's pretty bad
business. If we had spent the $71 million to hire a Federal collection
staff, we would have already collected $1.4 billion. That is the total
amount they project over 10 years under this experiment of private debt
collection.
I sit on the Ways and Means Committee. And as we considered this
notion before it became operative, I thought this is the most expensive
way to do this. It reminded me of that $600 toilet seat that the
Department of Defense paid for awhile back. I call this a $600 toilet
seat of tax collection. Well, when you look at it, they have taken $70
million to build this gold-plated throne and they flushed away $50
million on this foolish experiment.
There are many reasons to end this ill-advised endeavor, and the
speakers we present are going to offer those reasons. But the
fundamental is it's a matter of dollars and sense, and this don't make
sense.
Mr. Speaker, I reserve the balance of my time.
Mr. BRADY of Texas. Mr. Speaker, I yield myself such time as I may
consume.
Well, it's appropriate that we talk about a $600 toilet seat because,
indeed, this bill smells to high heaven.
The truth of the matter is you will hear a lot of wild claims made on
the House floor today, but in truth the Joint Taxation Committee,
Congressional Budget Office, and every other independent agency has
testified that passing this bill will cost the American taxpayers more
than $1 billion. It is a testament that this program is working and
will continue to work to save dollars for the American taxpayer by
going after those who owe their taxes on behalf of those of us who pay
our taxes.
Mr. Speaker, I rise today in strong opposition to H.R. 3056. This
bill would eliminate a program that is actually making money for the
government: overdue tax bills collected by qualified private companies
from people that owe too little for the IRS to use up valuable
resources in going after them. To date, the IRS has turned over 90,000
cases worth nearly half a billion dollars. And the dollars add up to
the tune of $32 million collected since last month, and there's more to
come. As I said, more than $1 billion over the next decade.
This is money that is helping to close the tax gap and is revenue
that the Treasury Department can use to hire more employees. Under the
program the IRS can retain up to a quarter of the collection to hire
additional enforcement workers, and already some $5.7 million has been
designated by the IRS for collection activities and $20 million has
gone toward deficit reduction. So it is helping reduce the Federal
deficit.
Some argue that collection agents have harassed taxpayers. The
reality is that these agents are held to the same standards as IRS
employees when it comes to protecting taxpayer rights. As a matter of
fact, out of 51,000 cases, it was testified at our recent Ways and
Means Committee hearing there were no, zero, violations of taxpayer
privacy, zero.
These companies do face difficulties in finding the correct person,
as the IRS does not provide the collectors with the taxpayers' last
known phone numbers. This might be an area to look for reforming,
rather than killing, this important program.
Some argue that the IRS could collect the same debts more cheaply if
they could hire more employees. But the truth of the matter is these
taxpayers have already been contacted four times by the IRS and they
have not had luck in collecting them.
A GAO report in 2004, General Accountability Office, says that these
private companies can recover $4.60 for every $1 spent while additional
IRS employees would recover less, would be less efficient in
recovering.
The bottom line is that the program is working, taxpayer rights and
privacy are being protected. The program allows IRS to do what they are
good at: enforcement of higher profile debts while allowing private
collection agents who have to be qualified to collect smaller debts
owed by tens of thousands of taxpayers.
And private debt collectors aren't a novel idea. Other Federal
agencies and many States, 40 States, and thousands of local government
agencies use private agents to collect everything from overdue income
taxes, alcohol and cigarette taxes, to local property taxes. It's
working, and it would be a disservice to taxpayers who actually pay
their taxes on time to discontinue it now.
The bottom line truly, Mr. Speaker, is are we serious about closing
the tax gap. Are we serious about collecting the debts that are owed?
People here tend to always see things in black and white, and you will
hear this in the debate today. You are either for or against the IRS,
for or against private debt collectors.
The truth of the matter is our goal is to collect the taxes the most
efficient way. It will take a partnership of our IRS employees, who do
an excellent job, and private debt collectors, who do an excellent job
in the tougher debts, to collect in order for the taxpayers to truly
get the dollars that they are owed and this country the dollars that
are truly owed.
Mr. Speaker, I reserve the balance of my time.
Mr. POMEROY. Mr. Speaker, the unrefuted data is that IRS collection
with IRS staff is five times more efficient in terms of dollars
received than contracting out. If we are worrying about IRS efficiency,
do it on the staff model.
And I might say that their cost estimate about this bill contemplates
that the IRS would hire no staff, would just forget hiring out
contractors, hire no staff, and just walk away from them.
No. We have got a very different notion. We want to take the money we
are sending to these private bill collectors and hire IRS staff that
are going to collect on this five-to-one ratio. We have got a much
better, more efficient model to address this issue of unpaid balances
owed to the United States.
Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr.
Lewis).
Mr. LEWIS of Georgia. Mr. Speaker, I want to thank my friend for
yielding.
Mr. Speaker, I rise today in support of H.R. 3056, the Tax Collection
Responsibility Act, a bill to eliminate the IRS's private debt
collection program.
The private debt collection program is an insult to the American
taxpayer and our Federal tax system. The collection of taxes is a core
government function. It is the mission of the IRS.
The Ways and Means Committee held a hearing on this program, and we
found that it has no business, no place in the collection of taxes.
This program violates the public trust.
Taxpayers trust the IRS with their personal information. When
taxpayers put information on their tax returns, they expect that the
IRS will see that information, and only the IRS. Taxpayers do not
expect their personal information could be given to private debt
collectors. It should never ever happen.
Taxpayers have been harassed under this program. Thousands of
innocent taxpayers are being called on the phone and asked for their
Social Security numbers. They are afraid that their identity will be
stolen. In some cases, the calls are never-ending. We found that one
elderly couple was called 150 times over 30 days. That's not right.
That's not fair.
This program targets low-income taxpayers, and these private debt
collectors have even gone after nursing
[[Page H11455]]
home residents and military personnel serving in Iraq.
{time} 1615
That is unbelievable. Use of private debt collectors erodes the
Federal tax system, the public trust and the Treasury.
I say, Mr. Speaker, enough is enough. We must stand with the
taxpayers, and we must stand up for the IRS employees. Pass this bill
and end this program.
Mr. BRADY of Texas. Mr. Speaker, I would point out that the General
Accountability Office has testified that, in fact, private debt
collectors are more efficient per dollars than the IRS employees with
these types of debts, which is what we are comparing. And, again, we
have IRS employees with the ability to levy liens and fines, they are
able to compel certain types of taxpayers to pay efficiently, and they
can go after the larger, more complex cases very well. It is this group
here that we've had difficulty collecting taxes from in the past that
these proven tax collectors across 40 States have done such a good job
collecting. And that is the bottom line; are we going to collect the
taxes of the American people or not?
With that, I would yield 2 minutes to the ranking member of the Trade
Subcommittee, the gentleman from California (Mr. Herger), who has
worked very hard on behalf of American taxpayers.
Mr. HERGER. Mr. Speaker, I rise in strong opposition to the Tax
Collection Responsibility Act. This legislation would unwisely
eliminate an IRS program which collects otherwise uncollected tax
debts, refusing as much as $2.2 billion in Federal revenue. In
addition, this partisan measure does a disservice to the overwhelmingly
bipartisan effort to repeal the 3 percent withholding burden before it
takes effect.
In less than 4 years, 3 percent of all payments made by a government
to a business or individual providing goods or services will be
unfairly withheld as a prepayment on taxes. This will needlessly reduce
cash flows for thousands of small businesses across the U.S. Today's
bill merely delays 3 percent withholding implementation for 1 year, but
that does not solve this real and pressing problem.
What Congress should do is follow the broader proposal my friend
Kendrick Meek of Florida and I have introduced, repealing this
withholding tax outright. Pairing a scaled-back 1-year delay with the
majority's repeal of the private collection agency program wrongly
splits the bipartisan, broad-based full repeal initiative.
Mr. Speaker, the Meek-Herger proposal has 219 cosponsors from both
parties. Further, the closed rule prohibits a Republican substitute
that would have provided for consideration of the full 3 percent
withholding repeal alone and on its own merit.
I urge Members to reject this flawed bill.
Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentleman from
Oregon (Mr. Blumenauer).
Mr. BLUMENAUER. I appreciate the gentleman's courtesy.
Make no mistake, we're talking about uncollected taxes that are
uncollected because of a systematic effort by this Republican
administration and a Republican Congress to undermine the ability of
the IRS to do its job, cranking up the audits on the poorest of
citizens while stopping the IRS from oversight of those who are more
wealthy.
As my good friend from North Dakota pointed out, we're talking about
a 6 percent rate of return, when the independent officer, who has been
set up within the IRS to give the independent judgment, has pointed out
that this same $71 million would collect over 1.4 billion uncollected
tax dollars. Independent observers know that investing in the IRS and
its employees rather than unaccountable private contractors will get
more money and will do so in a more humane fashion.
It was shocking for the committee to listen to some of the phone
calls, to the abuse that has been subjected to American taxpayers who
are caught in the ``Alice in Wonderland'' of these private collectors.
I would urge my colleagues, if they have any doubt, to try an
experiment. I have done this at home. I have met with CPAs, tax
attorneys and with financial advisers. All of them suggest investing
more in the IRS infrastructure to improve customer service, and it will
collect more money.
I would strongly suggest that it is time to stop this dark chapter of
emasculating the IRS, giving money to private contractors, and instead,
do a better job for the taxpayer.
I for one support the notion of the 1-year suspension of the 3
percent contractor withholding. I think it makes sense to try and sort
this out. I think it needs more examination. I think we can have a
better proposal. This got slipped in in the Senate without any House
consideration in the last Congress. I think a delay makes sense. I
support it. I support the underlying bill, and I urge my colleagues to
do the same.
Mr. BRADY of Texas. Mr. Speaker, I would point out that this practice
has already generated nearly $6 million for additional IRS agents in
collection activities at the agency.
At this time, I would like to yield 3 minutes to the gentleman from
Florida (Mr. Boyd).
Mr. BOYD of Florida. Mr. Speaker, I thank Mr. Brady for yielding, and
I rise to oppose H.R. 3056.
Let me start, Mr. Speaker, by saying that I strongly support the
right of public and private employees to organize and to work for
better working conditions and to improve the quality of life in their
workplaces and in their communities, and my record reflects that.
However, I think there is something that we all agree upon, as
Democrats, as Republicans, as public employees, private sector
employees, and that is that there is a huge tax gap in this Nation, and
that tax gap is to the tune of $345 billion. It adds, on the average
taxpayer, about $2,700 to its tax bill on an annual basis. These are
tax dollars, most of them having been acknowledged by the taxpayer that
they owe, but the IRS has not been able to go after them for whatever
reason. And so the IRS private debt collection program is putting money
back in the pockets of hardworking Americans.
I would like to tell you that the private collection agencies working
on this contract do not replace a single IRS worker, and no IRS jobs
are lost through this program. To date, this program has recovered
about $30 million in delinquent taxes. Through this pilot project, the
IRS has turned over about 77,000 cases worth nearly $450 million in
unpaid taxes.
Now, I heard some speak about harassment, undue harassment by private
collectors. I have to tell you, Mr. Speaker, that this program is
closely scrutinized by the IRS. And the IRS program has, according to
the Internal Revenue Service itself, received a 98 percent favorable
rating from the IRS for regulatory and procedural accuracy, and a 100
percent rating for professionalism.
This program has also received at or above a 96 percent rating for
taxpayer satisfaction. Less than 1 percent of those taxpayers collected
by the private collection agencies have filed complaints with the IRS,
and none of those complaints against the companies currently
participating in the program have been validated.
Mr. Speaker, this program is bringing in money to the U.S. Treasury
without raising taxes and closing that tax gap, and will be able to
close that tax gap if we can keep the programs and improve them, money
that otherwise would never be collected. To this end, it would be a
very bad message to send that we are not serious about closing the tax
gap.
I urge my colleagues to vote down H.R. 3056.
Mr. POMEROY. We had hearing testimony on the survey that was
referenced by my friend from Florida. Basically, the GAO testified that
the survey was fundamentally flawed. Of 300,000 conversations that have
taken place, 1,000 were the subject of the survey for getting taxpayer
satisfaction, and the private debt collectors were able to pick which
ones got the survey. So a 1,000 survey sample out of a 300,000
universe, with those stakeholders picking the ones that get to say it,
was not deemed as credible by the GAO and not deemed as credible by the
majority on Ways and Means.
With that, I yield 2\1/2\ minutes to the gentleman from New Jersey
(Mr. Pascrell).
[[Page H11456]]
Mr. PASCRELL. Mr. Speaker, this is a cooked-up survey that was just
referred to. In the words of the former IRS Commissioner, Mark Iverson,
appointed by President Bush, he testified that the IRS can collect
Federal taxes more cheaply, more efficiently than private companies. I
rest my case.
I rise in strong support of H.R. 3056. This legislation is designed
to protect taxpayers by repealing the authorization for the IRS to use
private contractors to collect Federal income taxes.
Few would disagree that the collection of Federal taxes is an
inherent government function. We have seen, through multiple hearings
in Ways and Means, that privatizing and outsourcing this fundamental
role has been a mistake on many levels. We've learned of numerous cases
of harassment, not overexaggeration, on the record, abusive calling,
violations of the rights of taxpayers. We've discovered that some
taxpayers, many of whom were elderly, have had to endure literally
hundreds of phone calls from private collectors. We listened to those
phone calls. We had them on tape. Tapes are a terrible thing, you know.
They don't lie.
Other cases involve people in nursing homes, those who have served in
Iraq, and low-income taxpayers facing economic hardships. And as if
taxpayer harassment was not enough, we have also seen that the program
is inefficient. So far, privatizing tax collection has actually cost us
money. Currently, we are $50 million in the hole. The IRS has spent $71
million to collect a net of $20 million. This is just like the postal
department with the privatizing of providing mail throughout the United
States. Now they're backing off, finally. It has been a disaster.
After paying $5.5 million in commissions to the private debt
collectors, they make a commission of $5.5 million, and they can't do
the job. This just doesn't make sense.
Mr. Speaker, if $70 million was spent on IRS employees instead of
private contractors, statistics project that they would have collected
over $1.4 billion. That's quite a difference, indeed. And taxpayers
deserve more. They expect to deal with their government when they have
a tax problem.
Private debt collection must end, and today we do that. I thank
Chairman Rangel and John Lewis, chairman of the Ways and Means
Oversight. I thank Congressman Rothman from the State of New Jersey for
his persistence. I implore all of my colleagues to vote in favor of
this legislation.
Mr. BRADY of Texas. Mr. Speaker, I would point out that at the Ways
and Means hearings, the Government Accountability Office testified they
had looked for but could not find any evidence that the private
collection agency selected individuals for the survey based on their
perception of what the responses would be. I would point out that the
same agency testified that there were zero, no violations of any
privacy rights through 51,000, and growing, cases, zero violations. And
I do wish that those telephone tapes could be played here on the House
floor so members of the public as well as Congress could hear the
professionalism of those phone calls as they seek to identify
sensitively the individuals who do owe dollars to the American
taxpayers.
I will point out, too, that if these debts were so easy to collect by
the IRS, why did the IRS already have four opportunities to collect
them from each taxpayer before they were turned over to these agencies,
who have done such a good job, a solid job of collecting them?
With that, I would yield 6 minutes to the gentleman from New York
(Mr. Reynolds) who has not only fought on behalf of taxpayers but has a
number of women and minority workers and professionals in his district
who have done a wonderful job in this arena.
(Mr. REYNOLDS asked and was given permission to revise and extend his
remarks.)
{time} 1630
Mr. REYNOLDS. Mr. Speaker, I rise in strong opposition to the bill
before us today. I thank the ranking member of the Ways and Means
Committee for his ongoing efforts to defeat this misguided proposal and
other members of the Ways and Means Committee who have also carried a
strong voice, such as the gentleman from Texas.
For some Members of this body and both sides of the debate, this
issue is simply about policy. We understand that. For them, it is an
abstract question about whether private collection agencies or so-
called PCAs should be able to play a limited, supplementary role in the
IRS's efforts to collect delinquent tax debt. But for me and the area I
represent in western New York, it is about both policy and much more
than that. It is about jobs.
As a Member of Congress who represents rural Wyoming County in
western New York, I am actually more familiar than most with the work
that PCAs do. After all, the largest single private employer in Wyoming
County is Pioneer Credit Recovery. It is one of only two companies
nationwide that the IRS has selected to help get its important program
underway.
Mr. Speaker, Pioneer Credit is a highly respected, local business
that has created more than 1,400 high-paying jobs for families living
in either my district or neighboring districts around Buffalo and
Rochester. As my fellow members of the western New York's congressional
delegation know, these jobs have been created in a region that has
faced serious economic challenges. As I have listened today to this
debate, sometimes you wonder just exactly who might be on that phone.
These are highly trained rural folks coming from communities much like
the gentleman from North Dakota has in North Dakota. It just happens to
be a rural area of a large State of New York. For some people, that is
their only income to the household. For some it is a supplement to farm
income or manufacturing income. And I have looked at some of these
people I have known for years. I have seen some of these people where I
have just met them the day they went to work to have a meaningful job,
after maybe a manufacturing shop closed down in Wyoming County. Or they
weren't able to stay on the family farm.
But they are hardworking, decent people who subscribe to Federal and
State laws that this honorable body actually has set forth in the past
that deliberated and said, you will function as collectors. I know one
thing about the people's House: We have had a lot of people from a lot
of different backgrounds, but you know, as a small businessman myself,
I promise you the only time I send out, in the days I was in business,
to a private collection agency was when I couldn't collect that money
for an insurance premium or commissions owed and I had no other
recourse but to look in private collection. They professionally got the
job done to bring back money that was owed.
As my colleague, Mr. Brady, has pointed out, the IRS sometimes had
four chances to kind of get this money and still didn't come back with
it. We looked at an opportunity, could we gain over 10 years over $1
billion in order to increase the revenues or address the tax gap that
my colleague from Florida talked about.
So when the IRS contract was allowed to Pioneer Credit to turn an
empty warehouse in Perry, New York, into a thriving job center for
newly hired employees, it has been a great economic success story for
part of western New York that desperately needed it, and it began to
produce the results that the Congress and the IRS expected. So as
someone who has fought to give the IRS the authority to partner with
these private companies in the first place, I am deeply troubled that
the new majority is now threatening to deauthorize this important
program just as it gets underway. If this program is allowed to
continue, Pioneer Credit will be given the opportunity to compete for
future IRS contracts that could create many additional jobs in the area
I represent. Killing this program, on the other hand, would cost my
constituents real jobs at a time when Congress should be working to
expand employment opportunities, particularly in hard-hit areas that
are struggling economically.
I would also note, Mr. Speaker, that under the Democrats' PAYGO
rules, proposals that reduce anticipated Federal revenues must be
offset by other provisions that raise revenue. Thus their proposal to
eliminate the PCA tax collection program, which is expected to net at
least that billion dollars over the next decade, also requires them to
raise $1 billion in new taxes somewhere else.
[[Page H11457]]
This bill is wrong on policy. It is wrong on job creation. It is
wrong on tax hikes. I urge a ``no'' vote.
Mr. POMEROY. Mr. Speaker, the gentleman has spoken passionately about
the jobs in his district, and I look forward to working with him on
economic revitalization issues so vitally important to rural areas like
the ones he and I both represent. But this is really not a jobs program
before us. What is the best way for taxpayers to have collected what
they owed? We want to collect what we are owed. We believe for every
IRS employee, we are going to collect $20. For every private debt
collector, the optimistic projection is you are going to collect $4.
The reality has been much less than that. So when we are talking about
the issue before us, what is the best way to get the money we are owed?
The best way to do it is hire the personnel, train the personnel, run
an IRS capable of getting its job done.
I yield 2 minutes to my friend from Nevada, Congresswoman Berkley.
Ms. BERKLEY. I thank the gentleman for yielding.
Mr. Speaker, I rise today in support of the Tax Collection
Responsibility Act. This bill will prevent the IRS from using private
debt collectors to collect Federal income taxes when current contracts
have expired.
Private debt collectors have proven to be very poorly equipped for
the job. This change is important to protect taxpayers' privacy. Coming
from Las Vegas, I have never been a great fan of the IRS. IRS abuse in
Las Vegas is legendary. The only thing worse are private debt
collectors that have harassed, threatened and intimidated the taxpayers
in my district and throughout the United States to collect back taxes
and to also collect a hefty fee. The IRS ought to do its job of
collecting taxes and Congress ought to do our job by giving them the
resources the IRS needs to do its job.
The bill also proposes implementation of a 3 percent withholding
requirement on government payments to vendors. This requirement will
cause significant administrative and financial burdens on local
governments. As a local government that spends more than $100 million
per year on vendor products and services, Clark County, Nevada, would
be required to withhold 3 percent of payments to businesses. Under the
new requirement, companies that contract with local government would be
terribly and unfairly penalized. This could result, it will result in
cash flow problems for small businesses and ultimately higher prices
for all consumers. This bill will postpone the 3 percent withholding
requirement to give the Treasury Department time to study the impact of
this provision on local governments and taxpayers before it is
implemented.
Mr. Speaker, I urge my colleagues to support this important
legislation for both reasons that I have stated.
Mr. BRADY of Texas. Mr. Speaker, I would point out that while the
claim has been made that our taxpayers have been harassed, IRS itself
has testified there is a 97 percent satisfaction rate with the process
that is already in place with these private collection agencies. I must
point out, too, that while a claim is made that past Congresses starved
the IRS, the truth is actually the opposite. The agency last year added
over 200 new field collection personnel. This year's budget will add
even more agents to the IRS. This program that is being sought to be
eliminated has already generated almost $6 million for more IRS agents
in a collection agency.
Mr. Speaker, I would like to inquire how much time does each side
have remaining.
The SPEAKER pro tempore. The gentleman has 6 minutes remaining; the
gentleman from North Dakota has 11\1/2\ minutes.
Mr. BRADY of Texas. At this time, I would reserve the balance of my
time.
Mr. POMEROY. Mr. Speaker, it is my pleasure to yield 4 minutes to the
bill's prime sponsor, the gentleman from Maryland (Mr. Van Hollen).
Mr. VAN HOLLEN. Mr. Speaker, I thank my colleague from North Dakota
for his long-time efforts on behalf of fair treatment for taxpayers in
this country. I rise in strong support of this legislation, the Tax
Collection Responsibility Act of 2007.
In addition to endorsing the practices that this bill provides for
better collection and fairer collection for small businesses, I also
believe it is high time we repeal an abusive and misguided debt
collection program at the IRS. I am pleased to have worked on this
issue for a number of years with my colleague from New Jersey (Mr.
Rothman) and others.
I think we all know that it is not a new issue to this body. We tried
private tax collection in 1996 and promptly abandoned it a year later,
after which time the IRS Office of Inspector General found that private
contractors regularly violated the Fair Debt Collection Practices Act,
jeopardized the confidentiality of taxpayers personal information, and
cost the government a net revenue loss of $17 million.
Under the Republican Congress, this program was revived and came to
the floor actually in a form that we did not have a chance to vote
separately on it, because when the House has had an opportunity over
the last 3 years to vote separately on this issue, this body on a
bipartisan basis has said no to private debt collection. That bill
never made it to the President's desk. But there is a good reason this
House has said no to this program. That is because IRS officials
themselves have acknowledged that using private debt collectors is much
more expensive than having the IRS do the job. Today on the program
that we are talking about, the IRS has spent $71 million and collected
a net of $20 million. That is a losing proposition on its face.
Moreover, in her testimony before the Ways and Means Committee, the
National Taxpayer Advocate, Nina Olson, whose job at the IRS is to look
out for the fair treatment of taxpayers, recommended that we end this
program and further pointed out, as others have said, that if you took
the same amount of money and invested it in allowing IRS agents to
collect the revenue, you would collect $1.4 billion instead of the $20
million collected so far in this program.
In addition, and I think this is an important point to make, when
this Congress in the 1990s passed the IRS Restructuring and Reform Act,
we specifically said that our public employees, our IRS agents, could
not receive bonuses, could not receive special rewards for collecting
more taxes because we want to avoid an incentive for abuse; yet that is
exactly the premise this entire program is based on. It is based on
bigger rewards in the sense for more taxes collected. That is what
leads in turn to abusive tax practices that we have said we don't want
our IRS agents to comply. In addition to the fact, the result is for
every dollar collected under the private tax collection, 25 cents goes
to a private company; whereas, with IRS agents, that dollar collected
goes to the Federal Treasury for debt reduction and for investment in
important public purposes. So it is a much better return for the
taxpayer.
I would argue, Mr. Speaker, that it is very clear over the years that
our repeated experiments in private debt collection have failed. If the
IRS needs additional resources to collect uncollected revenues, and I
think it does, we have heard from the IRS Commissioners in Republican
and Democratic administrations alike, that a much better investment is
to put those dollars into our public IRS agents. It results in less
abusive practices. It makes sure that you also have the dollars come
back where it belongs to the taxpayer and the public benefit.
Mr. BRADY of Texas. I would point out it is difficult to have an
abusive program when there is 97 percent customer satisfaction and zero
privacy violations and zero Fair Debt Collection Act violations. Zero.
I point out as far as efficiency, you don't have to take anyone's word
on this floor if this program is working. Attached to this bill is
testimony that says eliminating it will cost the U.S. taxpayers $1
billion.
{time} 1645
So you don't have to take our word for it. The experts who are
independent, who have looked at this issue, know this is an efficient
program for the U.S. taxpayers.
Mr. Speaker, I reserve the balance of my time.
MR. POMEROY. Mr. Speaker, our information is somewhat different from
the information just propounded. We believe indeed the record would
show there have been 83 complaints. These complaints include taxpayers
who have
[[Page H11458]]
received letters with another taxpayer's information inside. Now, if
this isn't a taxpayer privacy violation, I don't know what is. At least
one fine has been assessed, and this is in the early going of the
program.
Mr. Speaker, I will acknowledge perfection is a pretty hard standard
to meet, but they have not met perfection and they have not generated
the money in collection that was advertised at the beginning of this
endeavor.
With that, I yield 2\1/2\ minutes to my friend the gentleman from New
Jersey (Mr. Rothman), who has long had concerns about this initiative
and worked hard to end it.
Mr. ROTHMAN. I thank the gentleman from North Dakota for all his
wonderful work on this. I want to thank Mr. Van Hollen. I want to thank
my chairman on the appropriations subcommittee, Mr. Serrano, and so
many people who were so outraged at this private collection of taxpayer
money that is owed to the IRS.
Mr. Speaker, here's the problem. About $300 billion is owed to the
American taxpayers by those income earners who refuse to pay their
taxes. They admit they owe the money, but they refuse to pay. That is
about $300 billion. That is the problem.
Now, what is the solution to the problem? Well, the Republicans here
say, let's privatize this, give it to private people, private companies
who will make a profit on collecting these tax moneys, and they will
collect about $4 for every $1 we spend on them. They will collect $4.
The other solution is to hire more IRS agents, and for every $1 we
invest in them, we will get $20. Not the $4 that goes to the private
debt collectors that they produce, but $20. We will collect five times
more.
So why would we give away the taxpayers' money by letting private
debt collectors collect our debts, just so we can collect five times
less? They say, ``Well, we don't want to support big government.''
Well, do they want to waste all those tens or hundreds of billions of
dollars by giving it to private debt collectors to collect at five
times less effectiveness? It makes no sense. But this is nothing new.
Mr. Speaker, they wanted to privatize Social Security. They
privatized the prescription drug program for seniors. They wanted to
privatize the collection of our mail. They wanted to privatize, and
they did, security contracting in Iraq, There is Halliburton,
Blackwater. And they did so at Walter Reed Army Hospital.
So this ideology of the Republican Party and this President that we
need to privatize everything doesn't make sense, it wastes taxpayer
dollars, and in fact is an opportunity for a very select few in our
society to profit at the expense of everybody else. Not only is it un-
American, it is wasteful, it is wrong.
Mr. Speaker, we can do better with this solution. That is why I have
been fighting for this for years, and I am so proud to support H.R.
3056. If they say the choice is do nothing or something, do it the
right way and pass H.R. 3056.
Mr. BRADY of Texas. Mr. Speaker, I would point out that private debt
collection is used by 40 different States, whose Governors are
Republican and Democrat, and thousands of local government agencies and
organizations, again, both Republican and Democrat. This isn't an issue
of privatization, it is an issue of efficiency. This partnership
between the IRS and private debt collectors for this group of taxpayers
who are hard to collect those taxes from will yield an additional $1
billion for the American people.
With that, I reserve the balance of my time.
Mr. POMEROY. Mr. Speaker, as part of the IRS appropriation, we fund
the National Taxpayer Advocate. In her 2006 annual report, she writes,
``We are concerned that private collectors are using trickery, device
and belated Fair Debt Collection Practices Act warnings to take
advantage of taxpayers. We are concerned private collectors are taking
advantage of taxpayers.'' That is from the National Taxpayer Advocate.
With that, I yield 2 minutes to the gentleman from New York (Mr.
Serrano), who has advanced the prohibition of this ill-advised endeavor
in the Appropriations Committee.
(Mr. SERRANO asked and was given permission to revise and extend his
remarks.)
Mr. SERRANO. I thank the gentleman.
Mr. Speaker, this has to be one of the worst ideas ever put forth.
Just think of it: Instead of getting the IRS to collect the tax
dollars, we go and tell someone else that they can collect 24 cents on
the dollar, instead of hiring more folks to collect what they have been
doing for so many years. So we lose 24 cents on every dollar, rather
than have someone take care of this.
Now, the IRS has spent $71 million in money we have given them on
this program and have collected in return somewhere between $20 and $25
million. The IRS Taxpayer Advocate, as was mentioned by the gentleman,
calculated that if this money had been spent by the IRS to collect,
they would have collected $1.4 billion.
Mr. Speaker, we have also heard here about the harassment tactics.
Now, we can deny it as much as we would like, but when you give me an
incentive of 24 cents on the dollar to collect from taxpayers, things
can get out of hand. That is why senior citizens have been called 150
times in a month's time, looking for their son. My friends, these kind
of tactics would make a great comeback episode for ``The Sopranos,''
and I think one might be in the works.
Mr. Speaker, the IRS can do this work. We tried to do this, as you
know, in our committee, and it was defeated, basically with the
minority party saying on a point of order they would pull it out of the
bill. But it was our intent to do that in our bill. In addition, we put
in $400 million in fiscal year 2008. With this funding, the IRS should
be able to start working on these cases themselves, without
outsourcing.
I know, as Mr. Rothman has said, that there is a madness in this
House about taking everything that American workers do and sending it
somewhere else, overseas usually, and then what government employees
do, they send it to another agency or to somebody else. I can't wait
for the day when you decide that the whole Congress should be
outsourced overseas and we should have people doing our work.
Mr. Speaker, this is a bad idea. We should pass this bill and stop
this program immediately.
The SPEAKER pro tempore. The Chair would advise that the gentleman
from North Dakota has 2 minutes and the gentleman from Texas has 5
minutes.
Mr. BRADY of Texas. Mr. Speaker, I would remind the Chamber that more
than 40 States, not just this administration, more than 40 States,
Democrat Governors and Republican Governors, use the exact same type of
collection techniques, the same partnerships, to do what is right for
the American people.
I would point out that we have heard claims today of literally tens
of thousands of people who have been harassed by these private debt
collectors, all the abuses. I would simply challenge you to name one.
In this debate today, name one. Name the person, name the case where
there was a privacy abuse or thousands of harassing phone calls. I
would predict there will be no name mentioned.
Mr. Speaker, I reserve the balance of my time.
Mr. POMEROY. Mr. Speaker, I would just again read from the National
Taxpayer Advocate report: ``We are concerned private collectors are
taking advantage of taxpayers.'' I will submit this for the Record.
With that, I will yield 1 minute to the gentleman from Pennsylvania
(Mr. Sestak).
Mr. SESTAK. Mr. Speaker, I rise in support of this bill for three
reasons. First is the cost. As my colleagues have previously said, we
should have raised from these private agencies at least $44 million to
$63 million to date. In fact, it has only been $25 million, with a sum
cost of $51 million.
Second is the more cost-effective way that another agency, the IRS,
might do this. We know that they have collected this year alone $5.3
million from the Automated Call Service. Imagine if we had not
decreased the number of IRS officers from 8,500 during the nineties
down to only 5,200 today and we had put the money into them or into the
Automated Call Service. That 20-to-1 return that the government gets
far exceeds the 4-to-1 return of private agencies.
Third, however, after 31 years in the military, it pained me to see
us outsource our security operations to
[[Page H11459]]
private agencies in Iraq. At times there is abuse, not dissimilar to
what we hear today, such as seniors and those in Iraq being called. In
fact, a senior couple was called 150 times, five times a day. Then we
learned they had the wrong number.
Mr. Speaker, I therefore rise in support of this bill because of the
cost-effectiveness of the IRS and because of the abuses that can occur
if it is not within a government agency.
Mr. BRADY of Texas. Mr. Speaker, I would point out that attached to
the majority's bill that this House is considering today, according to
the majority's bill, the Joint Tax Group testifies and asserts that
this program, that is working today, will collect $1 billion more. You
can hear every claim you want on this House floor, but their own bill
says to the American public that this program will collect $1 billion
more than if it were to be eliminated. That is not at dispute today.
Mr. Speaker, I reserve the balance of my time.
Mr. POMEROY. Mr. Speaker, the cost cited assumes that not a nickel is
spent on IRS capacity. Indeed, if we spend it on IRS capacity, the
unrefuted evidence is that it would be a 5-to-1 return relative to
private collectors.
Mr. Speaker, I reserve the balance of my time.
Mr. BRADY of Texas. Mr. Speaker, I yield 2 minutes to the gentleman
from New York (Mr. Reynolds).
Mr. REYNOLDS. Mr. Speaker, this won't be the first or last time that
debate on the floor comes on disagreements of policy or well-crafted
rhetoric that goes to the extreme of bringing forth one's position. But
I think that my colleague, Mr. Brady, and others who have spoken in the
aspect that private collection has worked in the portion that has been
assigned in their mission as they get underway, that the complexity of
collecting taxes of the tax gap, which, if you recognize the tax gap as
a challenge of revenue, one that this Congress very quickly and gladly
put forth, that $1 billion of collections through private collection
agencies would be achieved, and as we now embark on that, we have
listened to tough language and rhetoric, and I sat through most of
those public hearings, crafting today the reflection of what they
thought they heard in those hearings. I think that if we look at
results as we move towards the opportunity of seeing private
collection, because one thing that has been omitted, if I am not
mistaken, regardless of what this body does, the other body will have a
serious challenge in seeing legislation passed, and there is a
Presidential veto that says that it will not occur.
So as we measure in the future the work that has been done that has
been assigned to the PCAs, and we look at the aspect of a goal that all
of us would have, that the IRS has tools to do their job so that
collection continues, I think we will also see in short time that
private collection agencies have done the mission they were asked to do
in the pilot out in Iowa and in western New York, and I think as we
give that a chance, not only will this legislation not be needed, but
it will not see the light of day.
Mr. BRADY of Texas. Mr. Speaker, may I inquire as to the time
remaining.
The SPEAKER pro tempore. The gentleman has 1\1/2\ minutes.
Mr. BRADY of Texas. I will be brief, Mr. Speaker.
We hear a lot of claims today about the efficiency of this program.
But our agencies, the independent agencies, the Government
Accountability Office and Joint Tax, make the point attached to this
legislation that this program has worked, is working efficiently, and
will save U.S. taxpayers more than $1 billion.
You will hear today about abuses. But the fact of the matter is they
can name not one in any independent agency, including the IRS, the
Treasury. Examination of the program has showed 97 percent customer
satisfaction, zero privacy violations, and zero Fair Debt Collection
Act violations, zero, no matter what is talked about.
Mr. Speaker, the truth of the matter is, the question before us today
is not about privatization. This is about credibility. This majority
has talked about closing the tax gap, what is owed and what is paid.
Yet today we will widen that tax gap by over $1 billion. So the
question is will we walk the walk, or just talk the talk about the tax
gap.
This partnership between the IRS and these private collection
agencies is working for the American public. We ought to let it
continue to work for the American public, because we can use that $1
billion for health care, for education, for helping our veterans, for a
number of important priorities in this budget.
{time} 1700
And we will have some type of a financial standoff here in a few
months, yet we let $1 billion escape our grasp. I urge a ``no'' vote on
the bill.
Mr. Speaker, I yield back the balance of my time.
Mr. POMEROY. Mr. Speaker, we believe private debt collection of IRS
debt is a terrible idea and an important matter, which is why the
majority leader will close for our side. I yield the balance of our
time to the majority leader, Mr. Hoyer, from Maryland.
Mr. HOYER. Mr. Speaker, I thank my friend for yielding.
First, let me respond to a point Mr. Brady has made a number of
times. The point I am referring to is if we did not spend any money on
private collection, we would not collect $1 billion. We can accept that
as accurate. But the assumption is that we wouldn't spend any money in
the public sector to collect that money. But I will read figures that
say if we did that, we would geometrically collect more than a billion
dollars by a factor of two or three or four or five. I will read that
figure, Mr. Brady. But you keep reading the figure, the assumption of
which is we are simply going to drop collection. We are not going to
drop collection.
Today, through this important legislation, the Tax Collection
Responsibility Act, this House will reiterate that the collection of
taxes is a core governmental function that should not be contracted out
to private companies.
But no one, no one should be mistaken. Our objection to the private
collection of taxes is not simply philosophical; it is practical, as
well.
First, there simply is no evidence that private tax collectors are
more efficient. In fact, the opposite is true.
IRS Commissioners of both parties repeatedly have testified before
Congress that IRS employees could do this work more efficiently. In
fact, according to the IRS, the return on investment for IRS employees
doing work similar to private collection agencies is 13:1. The private
collection agency return is about 4:1, or approximately one-third as
effective in the private sector as it is in the public sector. That is
what the IRS Commissioners say.
Secondly, with Americans legitimately concerned about the privacy of
their personal information and identity theft, I don't believe, and I
hope this House does not believe, that it is good policy to turn over
Social Security identification numbers and tax information to private
collection companies.
Third, the National Taxpayer Advocate has raised concerns about the
tactics used by private collection agencies, including intimidation and
harassment. The fact is that private tax collectors are keeping 21 to
24 percent of what they collect, and are allowed to keep up to 25
percent under the law. Thus, with the compensation of private
collection agencies directly tied to what they collect, they are
incentivized to use aggressive tactics. Ironically, however, and let me
go back to that figure, they are less effective in collecting, 13-to-1
versus 4-to-1, than the public sector.
Finally, let me say too many of my Republican friends want it both
ways. On the one hand, Republican-controlled Congresses have cut the
IRS workforce by 20,000 people since 1995. In fact, just this year they
offered an amendment to the Financial Services Appropriations bill that
would cut IRS funding by 8.9 percent; yet they come to the floor and
say we are not aggressively collecting sufficient funds so we have to
privatize it, contract it out. That expense, of course, is an
additional expense, which, by the way, escalates more rapidly than does
the public sector expense.
As I said, they complain that we must allow the government to hire
private collection agencies because the IRS does not have the resources
to recover all income tax that is owed. So
[[Page H11460]]
on the one hand, cut their resources, and then come to the floor and
say they don't have sufficient resources to do the job so we will
contract it out, which will require, of course, contract resources
while eliminating salary resources.
I think we all know the most effective solution: We need to provide
the IRS with the resources it needs to ensure that all taxpayers pay
their fair share under the law, so that no taxpayer has to pay more
than their fair share or have rates greater than they need to be, which
would be the case if everybody paid their fair share.
Mr. Speaker, this legislation is an important step in that effort. I
urge all of my colleagues, Mr. Speaker, to vote for this important
bill.
Mrs. CHRISTENSEN. Mr Speaker, I rise in strong support of 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.
I want to begin by thanking the gentleman from New York, the chairman
of the Ways and Means Committee, Charles Rangel, for including language
to address the question of the statute of limitations for residents of
the U.S. Virgin Islands.
As you know Mr. Speaker, residents of the Virgin Islands, as citizens
of the United States, are required to pay Federal income tax like any
other citizen living outside the United States. However, section 932 of
the Internal Revenue Code, ``Code'', states that bona fide residents of
the Virgin Islands are not required filing an income tax return with
the IRS. Instead, they are required to file their income tax return
with, and pay the applicable tax to, the government of the Virgin
Islands. The amount of the liability to the Virgin Islands, determined
under the ``mirror code'' system, in most cases is exactly the same
amount that they would otherwise have been required to pay to the
Federal Government.
In response to concerns that some U.S. citizens claimed tax benefits
who neither lived nor worked in the Territory, Congress tightened the
income and residency rules of the Virgin Islands Economic Development
Commission, EDC, program as part of the American Jobs Creation Act of
2004.
The U.S. Internal Revenue Service subsequently initiated a
comprehensive series of audits not only of individuals who participated
in the Territory's EDC program, but also many taxpayers who had moved
years earlier to the Virgin Islands and who did not participate in the
EDC program as well as taxpayers who were born in the Virgin Islands
but who had spent periods of their working life outside the Territory
due to the lack of opportunities in the Virgin Islands.
In the course of these audits, the IRS reversed its long-standing
administrative practice and published position, and now claims that the
statute of limitations never runs for V.I. taxpayers who reasonably and
in good faith file their tax returns with, and pay their tax to, the
Virgin Islands Bureau of Internal Revenue, ``BIR'', as the law requires
them to do. In a General Counsel Advisory Memorandum, the IRS announced
its new position that it has the right to audit the returns of a V.I.
taxpayer as far back as they like and, if the IRS determines under the
subjective pre-Jobs Act test that the taxpayer was not a bona fide V.I.
resident, that it can assess full tax and penalties even if the
taxpayer has paid the correct amount to the Virgin Islands. Because the
Virgin Islands statute of limitations will have run in many of these
circumstances, the taxpayer will be precluded from seeking a refund of
tax paid to the Virgin Islands, and thus be subject to double taxation.
Moreover, since the IRS position reverses a previously issued IRS
advisory memorandum and also ran counter to the general rule that
persons can be audited for up to 3 years after filing a return, many
taxpayers who are being audited no longer have the records to defend
themselves.
The bill before us today would end this heavy handed and unfair
practice and treat bona fide U.S. Virgin Islands residents who files a
return in the territory in the same manner as if the return were an
income tax return filed with the United States.
I urge my colleagues to support adoption of H.R. 3056.
Mr. UDALL of Colorado. Mr. Speaker, I strongly support this bill but
must oppose the effort to add a provision dealing with the estate tax.
I have long supported reform of the estate tax, not its complete
repeal.
I think we should change it in a way that will strike the right
balance, protecting family-owned ranches, farms, and other small
businesses while recognizing the need for fiscal responsibility in a
time of war.
But the motion to recommit would have simply added to the bill a
permanent repeal of the estate tax. I do not support that and cannot
vote for it.
However, I can and will vote for the underlying bill, which will
repeal the use of private debt collection companies to collect Federal
income taxes, delay the application of an onerous 3 percent withholding
requirement on Government payments, and discourage individuals who
renounce their U.S. citizenship to avoid paying taxes.
I am a cosponsor of H.R. 695, the Taxpayer Abuse and Harassment
Prevention Act of 2007. Like the bill now before the House, it would
amend the Internal Revenue Code to repeal the authority of the
Secretary of the Treasury to enter into contracts with private
collection agencies to collect unpaid taxes. I support that because of
the numerous instances in which private collection agencies have been
guilty of taxpayer harassment, abusive calling, and violations of
taxpayer rights, the Fair Debt Collection Act, and taxpayer return
disclosure protections. I understand that right now the Federal Trade
Commission has 130 complaints likely to involve the private tax debt
contractors, and the Taxpayer Advocate has many more.
In addition, H.R. 3056 would delay until December 31, 2011, the
application of a recently-enacted provision requiring withholding of 3
percent of the value of government payments to contractors and small
businesses for goods and services. Local governments from across
Colorado have contacted me to urge that the requirement be repealed--
and while this delay falls short of that, it will provide additional
time for Congress to consider repeal or drastic revision of the
requirement.
Finally, the bill would impose an immediate tax on individuals who
renounce their U.S. citizenship in order to avoid paying their taxes
and enact a scaled-back version of the Treasury Department's proposal
to increase penalties on failures by independent contractors to provide
Form 1099 information returns. I think these are reasonable and
appropriate provisions that deserve support.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today in support of
H.R. 3056, the Tax Collection Act of 2007. This legislation will 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. I would
like to thank my colleague, the distinguished chairman of the Ways and
Means Committee, Mr. Rangel, for introducing this legislation, as well
as for his leadership in bringing this important issue to the floor
today.
Mr. Speaker, this legislation strengthens Government accountability
and protects taxpayers and confidential tax information. It will repeal
the IRS's authority to enter into, renew, or extend contracts with
private companies to collect Federal income taxes. Currently, the
private debt collection program exposes taxpayers to harassment, wastes
tax dollars by paying a bounty of up to 24 percent to debt collectors,
and jeopardizes long-term taxpayer compliance. The collection of
Federal income taxes is an inherently governmental function that should
be restricted to IRS employees. Furthermore, the use of private
contractors violates the special and confidential relationship between
taxpayers and the Federal Government, and could jeopardize the privacy
of taxpayers, possibly undermining long-term taxpayer compliance. In
addition, private debt collection is an extremely inefficient way to
collect Federal income taxes.
Since the authority to enter into private debt collection contracts
was first granted in 2004, the Federal Government has spent $71 million
to collect a net of $20 million in tax receipts. If this money was
spent hiring IRS employees, the National Taxpayer Advocate estimates
the Federal Government could have collected $1.4 billion. This
provision is estimated to cost $1.054 billion over 10 years.
In addition, this legislation delays the application of the
withholding requirement on certain governmental payments for goods and
services. For payments made after December 31, 2010, the Code requires
withholding at a 3 percent rate on certain payments to persons
providing property or services made by Federal, State, and local
governments. The withholding is required regardless of whether the
government entity making the payment is the recipient of the property
or services, those with less than $100 million in annual expenditures
for property or services are exempt. Numerous government entities and
taxpayers have raised concerns about the application of this provision.
The provision would delay for 1 year, through December 31, 2011, the
application of the 3 percent withholding requirement on Government
payments for goods and services in order to provide time for the
Treasury Department to study the impact of this provision on government
entities and other taxpayers.
Mr. Speaker, this legislation stops the tax benefits for expatriates
who renounce their citizenship. U.S. citizens and long-term U.S.
[[Page H11461]]
residents are subject to tax on their worldwide income. Taxpayers can
avoid taxes by renouncing their U.S. citizenship or terminating their
residence. It would immediately impose a tax on these individuals,
strengthening current law to ensure that certain high net-worth
taxpayers cannot renounce their U.S. citizenship or terminate U.S.
residence in order to avoid paying taxes. Under this provision, high
net-worth individuals will be treated as if they sold all of their
property for its fair market value on the day before such individual
expatriates or terminates their residency. Gain will be recognized to
the extent that the aggregate gain recognized exceeds $600,000, which
will be adjusted for cost of living in the future.
Finally, H.R. 3056 increases information return penalties. This
provision would increase the penalties for failing to file correct
returns, failing to furnish correct payee statements, and failing to
comply with other information reporting requirements. If a taxpayer
fails to file a correct information return before August 1, current law
imposes a $50 penalty. This bill would increase this penalty to $100
per information return, with a maximum penalty of $600,000 per calendar
year, $250,000 in the case of small businesses. Where a taxpayer files
a correct information return after the filing date but before 30 days
after the filing date, the current law $15 penalty will be increased to
$25, with a maximum penalty of $200,000 per calendar year, $75,000 in
the case of small businesses.
Where a taxpayer files a correct information return more than 30 days
after the filing date but before August 1, the penalty for information
returns will be increased from $30 to $60, with a maximum penalty of
$500,000, $150,000 in the case of small businesses. The provision is a
scaled-back version of the Treasury Department's proposal to increase
penalties on failures to provide information returns.
Mr. Speaker, we can reduce the tax gap and make sure that taxpayers
pay their fair share by having the IRS collect unpaid Federal taxes
compared to private debt collectors. The American people demanded a new
direction for America in the 2006 elections, and I believe that
Congress must stand up for the American taxpayer. The current program's
practice of giving unaccountable private contractors unfettered access
to the personal financial data of American citizens poses an
unnecessary and unacceptable risk.
Mr. Speaker, I urge my colleagues to join me in support of H.R. 3056,
the Tax Collection Responsibility Act of 2007.
Mr. HONDA. Mr. Speaker, I rise today in support of H.R. 3056, the Tax
Collection Responsibility Act of 2007. Among other provisions, this
bill would repeal the authority of the Internal Revenue Service, IRS,
to use private debt collection companies to collect overdue taxes.
I would also like to voice my support for an initiative being led by
Senator Ben Nelson of Nebraska to provide disabled veterans and persons
with disabilities with gainful employment as tax collectors. The
Disability Preference Program for Tax Collection Contracts would give
an incentive to private collection companies to employ people with
disabilities. Despite the pending repeal of these debt collecting
contracts by the IRS, I sincerely believe this initiative can provide
immediate benefits to people with disabilities and be used as a model
program for other services and industries to encourage similar hires.
Even after enactment of H.R. 3056, complete repeal of private debt
collection authority would still take a couple of years while the
existing private contracts expire. In that time, Sen. Nelson's
initiative could provide disabled Americans invaluable training and
experience to help continue their careers in similar services, likely
with the same debt collecting company or even with the IRS. Since much
of the same background scrutiny in hiring and job training are used for
both the debt collection companies and the IRS, these disabled
Americans would have an advantage for employment in the IRS.
Additionally, under current Federal law, the disabled veterans would
have right of first refusal to become IRS collectors.
The extraordinarily large number of returning disabled veterans from
Iraq and Afghanistan are facing new, unexpected challenges to restoring
their lives in America. These disabled veterans face an unemployment
rate three times that of the general population. After their personal
and their families' sacrifices for their country, it is Congress's
responsibility to open doors to the largest number of jobs for the
disabled, and these debt collecting jobs are exceptionally suited for
people with disabilities. Even multiple amputees returning from Iraq,
with only a high school education and expecting their career is over,
could easily perform and excel in this profession.
Mr. Speaker, while I do not generally support the privatization of
Federal tax collecting, I applaud Senator Ben Nelson's initiative to
provide career paths for disabled veterans and people with severe
disabilities.
Mr. PASTOR. Mr. Speaker, I rise today to talk about a proposal that
would be impacted by the repeal of the Internal Revenue Service, IRS,
program to collect unpaid taxes. The Disability Preference Program for
Tax Collection Contracts is an initiative championed by the Senator
from Nebraska, Ben Nelson. It would give an incentive to private third-
party collection companies to hire people with severe disabilities and
give them high-paying jobs.
The Disability Preference Program is worth supporting even under the
assumption that the IRS contracting law should later be repealed. A
closer look at the Disability Preference Program and the repeal of
current IRS contracting law clearly shows that the two are not mutually
exclusive. Until such time as a repeal is passed, workers with
disabilities (including service disabled veterans) employed by
contractors are gaining valuable vocational training and work
experience on-the-job.
Disabled veterans and other disabled workers would most likely
``retain employment'' with the contractor through reassignment to
another project within the company if the IRS contract were to expire
or be terminated. Private sector collection contractors strive to lower
attrition and training costs by reassigning exiting staff as projects
are gained and lost.
In addition, employees assigned to the IRS contract work at the
private collection contractor must pass the same level of scrutiny and
background checks as IRS employees, and undergo IRS-approved project
training and testing. Therefore, contractor employees will be the
``best available applicants for job opportunities with the IRS'' when
the IRS hires internal collectors to do the work before or after
repeal.
Under the Disability Preference Program, disabled workers would
receive valuable training, certification, and job experience to seek
gainful employment at private sector or government offices performing
telephone collection work, and therefore would be much ``better
qualified and prepared to continue a career'' in the collection
industry than they otherwise would have been if the program was not
available.
Although even for a temporary time period, use of this employment
initiative will provide a much needed demonstration to government
contracting entities that similar contracting requirements should be
used to provide good job opportunities for disabled veterans and other
persons with disabilities.
I strongly support enactment of the Disability Preference Program for
Tax Collection Contracts.
Mr. MEEK of Florida. Mr. Speaker, I rise today in general support for
H.R. 3056, which as a primary mission puts a stop to the harassing
nature of private tax collection on a targeted group of American
citizens, those least responsible for the ever-growing tax gap problem.
However, I rise to speak in particular about section 3 of the
Chairman's mark which delays implementation of the 3 percent
withholding requirement made by section of 511 of last year's Tax
Increase Prevention and Reconciliation Act of 2005, also known as
TIPRA.
Section 511 requires all levels of government with at least $100
million in annual procurements to withhold 3 percent of payment on most
procurement contracts.
The Conference Report for the Tax Increase Prevention and
Reconciliation Act of 2005 states that section 511 would impose an
intergovernmental mandate not previously considered by either the House
or the Senate.
The costs of this mandate on government would likely exceed the $64
million threshold established in the Unfunded Mandates Reform Act for
public-sector mandates.
The costs of this mandate would also likely exceed the annual $128
million threshold established in the Unfunded Mandates Reform Act for
private-sector mandates.
I am concerned this provision will seriously impact small businesses
that routinely provide goods and services to the Federal, State and
local governments, and those governments themselves.
For example, withholding 3 percent of payments to a primary
contractor could hamper cash flows needed to meet operating expenses,
pay suppliers or subcontractors, or meet payroll.
Any loss of small business involvement in government contracting is
likely to have a negative effect on government costs associated with
procurement contracts.
The withholding requirement would also create a new financial burden
on the local governments responsible for administering withholding and
forwarding these types of payments to the IRS, both in the increased
need for new software and manpower, and in the likely increase in
contract values as businesses seek to pass the 3 percent on to their
government clients.
The 3 percent withholding was originally approved in an effort to
narrow the ``tax gap.'' Like most, I believe that Congress should
ferret out non-compliance to the best of our ability. Still, efforts to
bridge the ``tax gap'' should
[[Page H11462]]
be weighed first against the potential for ``collateral damage to
honest taxpayers and local governments.''
Annual procurements by Federal, State, and local governments add up
to hundreds of billions of dollars, yet a one year delay, as mandated
in the legislation before us, costs only $44 million, hardly the amount
that would be expected if there was rampant noncompliance among
contractors.
The language also requires the Department of the Treasury to study
the negative affects that section 511 would have and report those to
Congress.
There are too many questions left unanswered to go forward with the
implementation of section 511, questions that we have a pretty good
idea of the answers to.
I applaud and thank my Chairman, Congressman Rangel, for giving this
issue a spotlight on a bill that is of high priority to him.
We know that this is a starting point to full repeal of section 511
and with the continued grassroots support from the Government
Withholding Coalition of private industry and the many public sector
groups like the National Association of Counties, I feel confident that
we will find the Ways and the Means to do away with this onerous
requirement.
Mr. POMEROY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 719, the previous question is ordered on
the bill, as amended.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. Hulshof
Mr. HULSHOF. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. HULSHOF. I am opposed to the bill in its current form.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Hulshof of Missouri moves to recommit the bill H.R.
3056 to the Committee on Ways and Means with instructions to
report the same back to the House promptly with the following
amendment:
At the end of the bill, add the following:
SEC. 9. ESTATE TAX REPEAL MADE PERMANENT.
Section 901 of the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall not apply to title V of such
Act or to amendments made by title V of such Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Missouri is recognized for 5 minutes in support of his motion.
Mr. HULSHOF. Mr. Speaker, I rise to offer this motion to recommit to
the underlying bill, the Tax Collection Responsibility Act.
The motion to recommit would actually incorporate H.R. 2380, which is
a bill for which I am the original sponsor. It is a bipartisan bill,
and I would hope that my colleagues on the other side of the aisle,
especially those who have cosponsored the bill, would see fit to
support this motion to recommit.
Since I have these few moments, and I see the distinguished chairman
of the committee who may be responding, let me anticipate some points
or questions perhaps and try to respond to them.
We may hear the question: Why are we doing the death tax repeal now?
Well, three times in the last session of Congress did we have the
opportunity to debate this issue and vote on it. Again, this House in a
bipartisan fashion voted to completely, permanently repeal the death
tax.
I am not certain under the new majority that we will have that
opportunity or not. There is a policy rationale for considering this
measure now. One is the certainty.
As the Speaker knows, right now there is a $2 million exemption, a 45
percent rate, a very punitive rate. That exemption in 2010 goes up to a
complete repeal, and there is lack of certainty, especially those
family businesses that are looking to plan on how to dispose of those
assets. So I think now is an appropriate time.
We may hear from my good friend, the chairman of the Ways and Means
Committee, is this bill paid for. And I would suggest first of all that
there is no budgetary impact in fiscal year 2009. We are looking beyond
January 1, 2011, before any budgetary impact. And I would quote the
chairman of the Ways and Means Committee who at least has been quoted
in the paper as saying he is ready to tackle some big, tough issues,
like the alternative minimum tax. The permanent death tax repeal is
significantly less loss of revenue to the government than repealing the
AMT.
He has talked about fairness and equity. I can think of nothing
fairer than to get rid of this very punitive tax.
We may hear from the other side, as traditionally we do, this is
something that only a handful of individuals face, or that this is for
millionaires only. My rejoinder to that is then why is every small
business group in America, whether it be the National Federation of
Independent Business, whether it be every business group that
represents minority interests, the Hispanic Chamber of Commerce, the
African American Chamber of Commerce in the past, all have supported
complete repeal, final repeal of this very punitive tax.
Let me talk a little bit about the values of this.
This is the land of opportunity, is it not? The old adage is, if you
build a better mousetrap, the world will beat a path to your door. The
only thing guaranteed, of course, in America is the guarantee of
freedom and liberty and the opportunity to achieve whatever it is you
dream about.
Let me tell you a very personal story of a dream of a young couple. A
young, strapping man left home in 1956 with his new bride in tow. They
had $1,000 to their name. That is what his father had given him to go
make his way into the world. And so they settled in Mrs. Emerson's
district in southeast Missouri, and they worked very hard to build a
farm.
Over the course of those many years, this couple had a son, an only
son. That individual is the one the Chair has recognized here today.
They built this family business, a family-owned farm, 500 acres,
three tractors, a used combine, the farmhouse where I grew up. And so
it was, of course, the unfortunate reality of life, and that is we meet
our heavenly reward. My dad passed on the anniversary of John F.
Kennedy's death on November 22, 5 years ago this November. Mom survived
another 17 months after that.
I am sitting there across the mahogany desk from our old, long-time
family accountant who had an old adding machine with a tape in it, and
he is plugging in a value for all of these assets that my parents had
already been taxed on, whose assets were to help put food on the table.
Suddenly I broke out in a cold sweat because I knew when he hit the
total button, that figure was going to be above or below an arbitrary
line, a line set by this body.
Mr. Speaker, death of a family member should not be a taxable event,
and the fact is if Congress fails to do anything with the current
regime, virtually every small business in America in 2011 is going to
be facing this very punitive tax. I urge an ``aye'' vote on the motion
to recommit.
Mr. POMEROY. Mr. Speaker, I rise to claim the time in opposition to
the motion.
The SPEAKER pro tempore. The gentleman from North Dakota is
recognized for 5 minutes.
Mr. POMEROY. Mr. Speaker, my friend is an articulate and forceful
advocate. And we are all moved by the story of his time with the
accountant, but they did not owe a tax. And basically, there is a
figure missing from the motion to recommit he brings before us today, a
very important figure: the cost of what the underlying motion to
recommit would require. That figure is $498.8 billion. Now, we are a
Nation of $9 trillion of debt, $9 trillion of debt, and they bring
forward a proposal that would add another $498.8 billion, and they fail
to say anything about how they are going to pay for it in their motion.
Well, obviously serious-minded legislators like my friend would not
bring forward a serious proposal about repeal of the estate tax without
some means of paying for it, and that is really what the heart of this
motion is. It is not a real estate tax motion. This is a kill-the-
underlying-bill motion.
The other side has some different priorities. Last week they were
against SCHIP, expanding health insurance to uninsured kids. This week
they are basically for privatizing debt collection of IRS debt. You
like what Blackwater is doing in Iraq; you're going to love sending IRS
debt to private bill collectors here.
[[Page H11463]]
{time} 1715
Because they aren't going to prevail on the debate itself, they want
to keep the vote from happening at all, which is what the underlying
motion to recommit does, sends it promptly back to the Ways and Means
Committee, which means the underlying bill is not before the House for
a vote.
Mr. Speaker, to further use the time in our opposition to the motion
to recommit, it is my honor to yield to the chairman of the Ways and
Means Committee, Mr. Rangel from New York.
Mr. RANGEL. Mr. Speaker, I came to the floor to hear the gentleman
from Missouri (Mr. Hulshof) who's an outstanding member of the Ways and
Means Committee and I appreciate his contribution to the committee. I
was moved by his story of the hardship that he felt as a result of the
estate tax.
What the heck that has got to do with collecting debts that is owed
to the Internal Revenue, I have no idea. If you're suggesting that we
kill the bill that eliminates bounty hunters from working on commission
and unfairly leaning and putting pressure on people who owe the Federal
Government, that's one thing. If you want us to just substitute that
and take back to the committee your idea about what we should do with
the estate tax, well, you know as well as I do that we have to find out
how much money do we lose, where do we raise the money, and do it in a
Republican-Democratic fiscal fashion to say, hey, I want to reduce
taxes here and raise it someplace else, maybe on the kids, maybe on a
little tobacco, maybe whatever makes you feel good, but don't kill
something with a parliamentary motion. It's not the right thing to do.
I think the subject matter that you discuss does warrant some
discussion, someplace, at some time, but to imply that we should report
back promptly, how promptly should we deal with the question of estate
tax or estate tax repeal? Where do we get the half a billion dollars?
These are things that I think should be in another day and another
time.
Right now, we're talking about a great bill that if you kill this
bill through a parliamentary procedure, which is all we're talking
about, then the small business people that have been collecting
government taxes, they're going to get hit. The citizens that we have
in the Virgin Islands that are treated unfairly with the statute of
limitations, they're going to get hit.
And the people who really believe that if you have to deal with your
government, if you have to deal with the Treasury Department, if you
have to deal with the Internal Revenue, for God's sake, deal with a
civil servant whose mortgage payment is not dependent on how much money
he can get out of you. Deal with someone that's been trained by the
United States Government to collect money that's owed to the United
States Government and not some company that has been created to fill
the need because some people believe that the private sector can always
but always do it best.
I do hope that when the committee has something to discuss as
important as estate tax, why not discuss estate tax when it's time to
do it.
Mr. POMEROY. Mr. Speaker, I yield back my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. HULSHOF. 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. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Pursuant to clause 9 of rule XX, the Chair will reduce to 5 minutes
the minimum time for any electronic vote on the question of passage of
the bill.
The vote was taken by electronic device, and there were--yeas 196,
nays 212, not voting 23, as follows:
[Roll No. 959]
YEAS--196
Aderholt
Akin
Altmire
Bachmann
Bachus
Barrett (SC)
Barrow
Bartlett (MD)
Barton (TX)
Biggert
Bilbray
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehner
Bonner
Bono
Boozman
Boustany
Brady (TX)
Broun (GA)
Brown (SC)
Brown-Waite, Ginny
Buchanan
Burgess
Burton (IN)
Buyer
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capito
Carter
Castle
Chabot
Coble
Cole (OK)
Conaway
Crenshaw
Culberson
Davis (KY)
Davis, David
Davis, Tom
Deal (GA)
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Drake
Dreier
Duncan
Ehlers
Ellsworth
Emerson
English (PA)
Fallin
Feeney
Ferguson
Flake
Forbes
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Giffords
Gilchrest
Gingrey
Gohmert
Goode
Goodlatte
Granger
Graves
Hall (TX)
Hastings (WA)
Hayes
Heller
Hensarling
Herger
Hobson
Hoekstra
Hulshof
Hunter
Inglis (SC)
Issa
Johnson, Sam
Jones (NC)
Jordan
Kagen
Keller
King (IA)
King (NY)
Kingston
Kirk
Kline (MN)
Knollenberg
Kuhl (NY)
LaHood
Lamborn
Lampson
Latham
LaTourette
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas
Lungren, Daniel E.
Mack
Mahoney (FL)
Manzullo
Marchant
Matheson
McCarthy (CA)
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris Rodgers
McNerney
Mica
Miller (FL)
Miller (MI)
Moran (KS)
Murphy, Tim
Musgrave
Myrick
Neugebauer
Paul
Pearce
Pence
Petri
Pickering
Pitts
Platts
Poe
Porter
Price (GA)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roskam
Royce
Ryan (WI)
Sali
Saxton
Schmidt
Sensenbrenner
Sessions
Shadegg
Shays
Shimkus
Shuster
Smith (NE)
Smith (NJ)
Smith (TX)
Souder
Space
Stearns
Sullivan
Tancredo
Terry
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walberg
Walden (OR)
Walsh (NY)
Wamp
Weldon (FL)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NAYS--212
Abercrombie
Ackerman
Allen
Andrews
Arcuri
Baca
Baird
Baldwin
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd (FL)
Boyda (KS)
Brady (PA)
Braley (IA)
Brown, Corrine
Butterfield
Capps
Capuano
Cardoza
Carnahan
Carney
Castor
Chandler
Clarke
Clay
Cleaver
Clyburn
Cohen
Conyers
Cooper
Costa
Costello
Courtney
Cramer
Crowley
Cuellar
Davis (AL)
Davis (CA)
Davis (IL)
Davis, Lincoln
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Donnelly
Doyle
Edwards
Ellison
Emanuel
Engel
Eshoo
Etheridge
Farr
Fattah
Filner
Frank (MA)
Gillibrand
Gonzalez
Gordon
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall (NY)
Hare
Harman
Hastings (FL)
Herseth Sandlin
Higgins
Hill
Hinchey
Hinojosa
Hirono
Hodes
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (GA)
Jones (OH)
Kanjorski
Kaptur
Kennedy
Kildee
Kilpatrick
Kind
Klein (FL)
Kucinich
Langevin
Lantos
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Loebsack
Lofgren, Zoe
Lowey
Lynch
Markey
Marshall
Matsui
McCarthy (NY)
McCollum (MN)
McDermott
McGovern
McIntyre
McNulty
Meek (FL)
Meeks (NY)
Melancon
Michaud
Miller (NC)
Miller, George
Mitchell
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Perlmutter
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Richardson
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sarbanes
Schakowsky
Schiff
Schwartz
Scott (GA)
Scott (VA)
Serrano
Sestak
Shea-Porter
Sherman
Shuler
Sires
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stupak
Tanner
Tauscher
Taylor
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Walz (MN)
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch (VT)
Wexler
Woolsey
Wu
Wynn
Yarmuth
NOT VOTING--23
Alexander
Baker
Bean
Boren
Calvert
Carson
Cubin
Cummings
Everett
Hastert
Jindal
Johnson (IL)
Johnson, E. B.
Larsen (WA)
Maloney (NY)
Miller, Gary
Nunes
[[Page H11464]]
Peterson (PA)
Reichert
Rogers (KY)
Simpson
Sutton
Wilson (OH)
{time} 1742
Messrs. CARNEY, LOEBSACK, MELANCON, MURPHY of Connecticut, ROTHMAN,
CUELLAR and Ms. SCHAKOWSKY changed their vote from ``yea'' to ``nay.''
Mr. KAGEN and Ms. GIFFORDS changed their vote from ``nay'' to
``yea.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Mr. RYAN of Wisconsin. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 232,
noes 173, not voting 26, as follows:
[Roll No. 960]
AYES--232
Abercrombie
Ackerman
Allen
Altmire
Andrews
Arcuri
Baca
Baird
Baldwin
Barrow
Becerra
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Bishop (UT)
Blumenauer
Boswell
Boucher
Boyda (KS)
Brady (PA)
Brown, Corrine
Butterfield
Capito
Capps
Capuano
Carnahan
Carney
Castor
Chandler
Clarke
Clay
Cleaver
Clyburn
Cohen
Conaway
Conyers
Cooper
Costa
Costello
Courtney
Crowley
Cuellar
Davis (AL)
Davis (CA)
Davis (IL)
Davis, Tom
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Donnelly
Doyle
Edwards
Ellison
Ellsworth
Emanuel
Engel
Eshoo
Etheridge
Farr
Fattah
Ferguson
Filner
Frank (MA)
Gerlach
Giffords
Gillibrand
Gohmert
Gonzalez
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall (NY)
Hare
Harman
Hastings (FL)
Hayes
Higgins
Hill
Hinchey
Hinojosa
Hirono
Hodes
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (GA)
Jones (NC)
Jones (OH)
Kagen
Kanjorski
Kaptur
Kennedy
Kildee
Kind
Klein (FL)
Kucinich
LaHood
Langevin
Lantos
Larson (CT)
LaTourette
Lee
Levin
Lewis (GA)
Lipinski
LoBiondo
Loebsack
Lofgren, Zoe
Lowey
Lynch
Mahoney (FL)
Manzullo
Markey
Matheson
Matsui
McCarthy (NY)
McCollum (MN)
McCotter
McDermott
McGovern
McHugh
McIntyre
McNerney
McNulty
Meek (FL)
Meeks (NY)
Melancon
Michaud
Miller (MI)
Miller (NC)
Miller, George
Mitchell
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Murphy, Tim
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Pallone
Pascrell
Pastor
Payne
Perlmutter
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Richardson
Rodriguez
Rogers (MI)
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Salazar
Sanchez, Linda T.
Sanchez, Loretta
Sarbanes
Saxton
Schakowsky
Schiff
Schwartz
Scott (GA)
Scott (VA)
Serrano
Sestak
Shea-Porter
Sherman
Shimkus
Shuler
Sires
Skelton
Slaughter
Smith (NJ)
Smith (WA)
Snyder
Solis
Space
Spratt
Stark
Stupak
Tauscher
Taylor
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Walz (MN)
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Welch (VT)
Wexler
Wolf
Woolsey
Wu
Wynn
Yarmuth
NOES--173
Aderholt
Akin
Bachmann
Bachus
Barrett (SC)
Bartlett (MD)
Barton (TX)
Biggert
Bilbray
Bilirakis
Blackburn
Blunt
Boehner
Bonner
Bono
Boozman
Boustany
Boyd (FL)
Brady (TX)
Braley (IA)
Broun (GA)
Brown (SC)
Brown-Waite, Ginny
Buchanan
Burgess
Burton (IN)
Buyer
Camp (MI)
Campbell (CA)
Cannon
Cantor
Carter
Castle
Chabot
Coble
Cole (OK)
Cramer
Crenshaw
Culberson
Davis (KY)
Davis, David
Davis, Lincoln
Deal (GA)
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Drake
Dreier
Duncan
Ehlers
Emerson
English (PA)
Fallin
Feeney
Flake
Forbes
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gilchrest
Gingrey
Goode
Goodlatte
Gordon
Granger
Graves
Hall (TX)
Hastings (WA)
Heller
Hensarling
Herger
Herseth Sandlin
Hobson
Hoekstra
Hulshof
Hunter
Inglis (SC)
Issa
Johnson, Sam
Jordan
Keller
King (IA)
King (NY)
Kingston
Kirk
Kline (MN)
Knollenberg
Kuhl (NY)
Lamborn
Lampson
Latham
Lewis (CA)
Lewis (KY)
Linder
Lucas
Lungren, Daniel E.
Mack
Marchant
Marshall
McCarthy (CA)
McCaul (TX)
McCrery
McHenry
McKeon
McMorris Rodgers
Mica
Miller (FL)
Moran (KS)
Musgrave
Myrick
Neugebauer
Paul
Pearce
Pence
Petri
Pickering
Pitts
Platts
Poe
Porter
Price (GA)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rohrabacher
Ros-Lehtinen
Roskam
Royce
Ryan (WI)
Sali
Schmidt
Sensenbrenner
Sessions
Shadegg
Shays
Shuster
Smith (NE)
Smith (TX)
Souder
Stearns
Sullivan
Tancredo
Tanner
Terry
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walberg
Walden (OR)
Walsh (NY)
Wamp
Weldon (FL)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Young (AK)
Young (FL)
NOT VOTING--26
Alexander
Baker
Bean
Boren
Calvert
Cardoza
Carson
Cubin
Cummings
Doggett
Everett
Hastert
Jindal
Johnson (IL)
Johnson, E. B.
Kilpatrick
Larsen (WA)
Maloney (NY)
Miller, Gary
Nunes
Peterson (PA)
Reichert
Rogers (KY)
Simpson
Sutton
Wilson (OH)
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). Members are advised that 2
minutes remain in this vote.
{time} 1750
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________