[Congressional Record (Bound Edition), Volume 155 (2009), Part 21]
[Senate]
[Pages 27945-27947]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           HEALTH CARE REFORM

  Mr. ROBERTS. Madam President, I come to the floor today to join my 
good friend from Iowa, Senator Grassley, who is our ranking member on 
the Senate Finance Committee, to raise concerns about a too-little-
discussed aspect of the health care bill the Senate will soon debate. 
While much of the health reform debate to date has focused on the 
health care side of the bill and the $500 billion in higher taxes, 
fees, and fines that will be required to pay for it, very little 
attention has been paid to how these taxes and fines will be 
implemented and administered and, most importantly, enforced. I think 
that is a very critical discussion. We need to have that discussion, 
and it is one the American people fully need to understand as this 
debate gets underway. This is important stuff.
  Senator Grassley has already sounded the alarm about how the Senate 
Finance Committee bill expands the size and reach of the Internal 
Revenue Service, the IRS, further into the lives of every American. But 
listen up: All the health care bills we have seen so far call for 
reforms to be carried out to a great extent by the Internal Revenue 
Service--that is right, the IRS, the Nation's tax collector.
  This isn't CMS, the Department of Health and Human Services; this is 
the IRS. So the Nation's tax collector will be in charge of 
implementing, administering, and enforcing a significant portion of 
this bill.

[[Page 27946]]

  Under the various bills, the IRS is given unprecedented authority to 
obtain information about your family's health care decisions. The IRS 
is authorized to collect new information--information that is unrelated 
to an individual or a family's tax liability--in order to carry out 
health care reform.
  This information will be used to implement, administer, and enforce 
several controversial provisions. For example, the IRS--again, not the 
Department of Health and Human Services--is the government agency that 
will determine whether everyone has insurance and will assess a tax 
penalty on anyone without insurance. The IRS will have to collect 
additional information from individuals and families in order to make 
this determination. We don't know how this information will be 
collected or how it may be used.
  The IRS would assess taxes on employers who do not provide affordable 
coverage for their employees. Since affordability would be determined 
on an individual's total income, an employer would have to collect 
income information from all of his or her employees. This will require 
employers to provide additional information about their employees to 
the IRS--information I am sure that an employer would just as soon not 
ask about. We don't know how an employer would use this information or 
how it would be protected.
  In addition, the IRS will have to work with the new health care 
exchanges to verify whether an individual is eligible for a subsidy and 
will have to share information about taxpayers with those exchanges. 
However, we still don't know if the exchange will be a State agency or 
a private entity, so we don't know how the IRS will collect and 
safeguard taxpayer information.
  Yet even as the health care bill creates new responsibilities for the 
IRS, consider that the IRS is having a lot of trouble doing its No. 1 
job--tax administration--efficiently and effectively. Two reports were 
issued recently that I think raise questions about the IRS's ability to 
carry out its new responsibilities in this bill, let alone its original 
responsibilities.
  Last week, the Government Accountability Office, or GAO, released its 
annual audit of the IRS's financial statements for 2008 and 2009.
  In the report, the GAO found that while the IRS has made progress in 
addressing internal control deficiencies, the report also states that 
deficiencies remain with regard to the IRS's internal control over 
unpaid tax assessments and over information security. The report states 
that ``the serious challenges IRS faces as a result of these remaining 
deficiencies adversely affect the IRS's ability to . . . obtain 
current, complete, and accurate information it needs to make well-
informed decisions.''
  Then, on Monday, the Treasury Inspector General for Tax 
Administration found that because of the way the Making Work Pay 
credit--the credit created in this year's stimulus bill to provide 
workers with a one-time tax credit of up to $400--has been implemented 
and administered by the IRS, more than 15 million taxpayers may 
actually end up having to pay back some of their credit to the IRS.
  Similar administrative problems with the home buyer tax credit have 
led to waste and abuse of taxpayer dollars.
  The IG's audit of the IRS's administration of the credit found that 
the IRS may have allowed thousands of taxpayers to claim millions of 
dollars in credits to which they were not entitled to despite 
recommendations made a year ago by the IG that the IRS take steps to 
verify eligibility for the credit.
  In its audit, the inspector general found that more than 19,000 
taxpayers claimed $139.4 million in credits for homes they had not yet 
purchased but would allegedly purchase. In addition, over 70,000 
taxpayers claimed more than $479 million in credits despite indications 
that they were not first-time home buyers. The IG also identified 582 
taxpayers under 18 years of age who claimed almost $4 million worth of 
credits. By the way, the youngest taxpayers receiving the credit were 4 
years old.
  Mr. President, the problems the IRS has encountered in administering 
these credits and the issues raised by the GAO about the security of 
taxpayer information--I will repeat that: the security of taxpayer 
information, your taxes--raise serious questions about whether the IRS 
is up to the task of implementing and enforcing the far-reaching tax 
proposals that are called for in the health care bill.
  Wait, there is more. We know the IRS will need additional funding and 
employees--employees with expertise and training--if they are to 
implement, administer, and enforce the dozen or so new tax provisions 
called for in the health care bill.
  How much will that cost? That is a good question. Nobody knows. These 
costs are not included in estimates provided by either the 
Congressional Budget Office or the Joint Committee on Taxation.
  The bill as passed by the Senate Finance Committee--I don't know what 
is in the bill that will be considered, just announced by my friends 
across the aisle. They are doing that behind closed doors. But the bill 
as passed by the Finance Committee doesn't include any funding for the 
IRS for any administrative or personnel costs associated with this 
bill. We will see if the leader's bill that will be announced sometime 
tomorrow, which is being talked about in the hallways, contains such 
estimates.
  Estimates of a more narrow bill by an independent group found that 
the IRS administration alone would cost several billion dollars--never 
mind the costs for the Department of Health and Human Services or CMS 
or other new Federal offices that will be created. We can only assume 
the cost to administer and enforce the taxes, fees, and fines in this 
bill will be significantly higher.
  Americans need to understand what health care reform means for their 
health care, but they also need to know what the IRS's significant and 
intrusive new role would be in implementing and enforcing such health 
care reform.
  All the proposals we have seen so far expand the reach of the IRS 
even further into the lives of ordinary Americans, allowing them to 
collect more information than ever before about you and your health 
care choices in order to tax you based on those choices.
  Do Americans want the IRS to collect even more information about them 
and their families than it already does? I don't think so. Do they want 
the IRS having access to information about their health care decisions? 
Again, I doubt it.
  Furthermore, would the IRS be able to do the job? Will they get it 
right? Recent reports by the IRS's own IG and the GAO cast doubt on the 
agency's ability to effectively administer the wide-reaching provisions 
in the health care bill.
  Americans should be very concerned about putting the IRS in charge of 
administering more than $500 billion in new taxes, fees, and fines in 
this bill and expanding its reach further into Americans' lives.
  Americans should be concerned about this path that the Senate 
leadership and the White House is taking us down, placing this very 
complex health care bill in the hands of the IRS, especially when they 
have not provided the resources the IRS will need to get the job done--
not to the funding.
  Madam President, the bottom line is that Americans need to know, need 
to understand, and need to question whether they want the Internal 
Revenue Service more involved in their daily lives and their health 
care decisions. Under the proposals we have seen, that is the case.
  Sit up, America, and take notice. I think if we took a poll or had 
yet another townhall meeting, most Americans would say no to any 
further IRS involvement in their lives and no to IRS intrusion into 
their health care.
  I yield the floor. I see the distinguished ranking member of the 
committee, a distinguished Senator who has been an expert on the IRS 
and basically bringing reform almost on an individual basis to that 
agency.
  I yield to Senator Grassley.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. I thank my friend, the Senator from Kansas, for his 
kind

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remarks. I am very happy to join him in sounding an alarm about the 
role of the Internal Revenue Service in America's health care choices.
  The various health care bills being considered before Congress would 
task the IRS with administering several new and very controversial 
provisions. This would include things such as the individual mandate--
or another way to say that is a government-run insurance mandate, a 
government-required insurance mandate. It would also affect the 
employer free rider penalty. The IRS would be involved with the premium 
subsidy for low-income individuals. It would be involved with the small 
business tax credit. The IRS would be involved in working with 
exchanges to verify income information, and it would be involved in 
figuring out how to calculate and collect several new fees, which are 
in fact excise taxes.
  Senator Roberts has just explained some of this. Also, during debate 
in the Finance Committee--when the Senate Finance Committee bill was up 
in that committee, some people joked that CMS stands for ``it's a 
mess.'' The same could be said of the IRS. As many of us know all too 
well, the tax gap is a very serious problem. The hundreds of billions 
of dollars owed that the IRS isn't collecting suggests that the IRS 
isn't effective at executing its primary mission: the enforcement of 
our revenue laws.
  The IRS is just now starting to increase its enforcement efforts, 
which had declined significantly after the restructuring of that agency 
a decade ago. But just like many other Federal agencies, it is facing a 
human resource crisis because more than 50 percent of its workforce is 
expected to retire in the near future. So it doesn't have the resources 
it needs to do its presently described job, never mind a whole new one, 
such as administering health care reform--or at least helping 
administer health care reform.
  One independent report after another highlights IRS's enforcement 
problems. Senator Roberts mentioned the recent reports on the Making 
Work Pay credit, home buyer tax credit, and the IRS's financial 
statements. In addition to those, we have problems with the earned-
income tax credit and the health coverage tax credit.
  In February, the Treasury Inspector General for Tax Administration 
issued a report on fraud in the earned-income tax credit. Then today, 
the administration reports that waste of taxpayer dollars from improper 
payments has increased from $72 billion in 2008 to $98 billion in 2009. 
Over $12 billion--almost 12 percent--of the $98 billion in improper 
payments was because of the earned-income tax credit.
  In another tax inspector general report from earlier this month on 
the health coverage tax credit, that inspector general reviewed a valid 
sample of individuals who claimed this credit on their 2006 Federal tax 
return. The tax inspector general found that 72 percent did not have 
the required documentation to get that credit. In addition, the 
inspector general states that the IRS does not effectively identify or 
prevent individuals from erroneously claiming the health credit on 
their Federal tax return.
  The inspector general identified over 1,200 individuals who appeared 
to have wrongly claimed $1.8 million of these credits on their Federal 
tax returns. This report is particularly relative since the premium 
subsidy in the Finance Committee health reform bill is modeled after 
this credit.
  The earned-income tax credit, the health coverage tax credit, and the 
making work pay tax credit are all examples of social welfare programs 
that presently are being administered by the Internal Revenue Service, 
and this despite the fact that we have a whole separate agency--the 
Department of Health and Human Services--that is supposed to be 
concerned with social welfare.
  In a recent interview with tax analysts about current health reform 
proposals, a former IRS Assistant Commissioner had this to say about 
IRS' role in the health reform issue:

       These kinds of programs require social welfare expertise. 
     IRS agents are not recruited or trained to do that. . . . The 
     IRS record is mixed and sometimes abysmal with regard to 
     effectively administering these kinds of programs.

  I couldn't have said it better myself.
  Aside from the costs and the problems with enforcing these types of 
credits, there are opportunity costs associated with requiring the IRS 
to administer programs outside its expertise. The Government 
Accountability Office and the tax inspector general issued reports 
discussing the IRS' poor performance in providing telephone customer 
service during the 2009 filing season because of stimulus legislation. 
That was passed in February of this year. The reports state that 
customer service declined significantly, despite the fact that 
collection employees were assigned to staff the phones.
  So honest and diligent taxpayers do not get the help they need when 
they need it, and tax cheats and tax evaders increasingly get away with 
not paying their fair share, and the tax gap widens.
  From a tax administration perspective, the provisions in the various 
health reform bills will create infinite new problems for the Internal 
Revenue Service. The Internal Revenue Service is likely to be tasked 
with implementing provisions for which it actually must go out and 
collect new data--data that is unrelated to the taxpayer's tax 
liability.
  In addition to the provisions Senator Roberts highlighted, the 
Internal Revenue Service would have to develop new processes and 
procedures for insurance companies and employers to challenge and 
appeal the calculations of the high-cost premiums tax and the employer 
free rider excise tax, both new provisions in the Senate Finance 
Committee bill. Both these taxes are calculated by a third party, other 
than the IRS or the individual taxpayer. The IRS would have to develop 
a method for calculating the new excise taxes on medical devices and 
pharmaceuticals, also a new provision in that bill, the basis for which 
is unprecedented.
  In light of these issues, I think it is fair to consider a couple 
questions.
  Assuming that an individual mandate is constitutional, do we want the 
IRS checking up on whether everyone has health insurance?
  Another question: Do we want to facilitate the dissemination of tax 
information to third parties, such as employers or an insurance 
exchange? We have always been very cautious about maintaining the 
privacy of individual tax returns.
  Another question: Shouldn't we be providing more resources to the 
Department of Health and Human Services to ensure that it can receive 
and process the necessary data if this bill is going to be implemented 
instead of having the IRS do it?
  My Democratic colleagues in the Congress and the administration have 
many ideas for new and complex ways to tax individuals and, of course, 
tax small businesses as well, to fund all sorts of new spending. It 
would seem wise to make sure the IRS can enforce the tax laws before 
being charged with administering new social programs created because of 
health reform.
  I ask my colleagues on the other side of the aisle to consider these 
questions as we debate the health care reform bill over the next 
several weeks.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. CANTWELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Begich). Without objection, it is so 
ordered.

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