[House Report 114-499]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-499
======================================================================
NO HIRES FOR THE DELINQUENT IRS ACT
_______
April 18, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1206]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1206) to prohibit the hiring of additional Internal
Revenue Service employees until the Secretary of the Treasury
certifies that no employee of the Internal Revenue Service has
a seriously delinquent tax debt, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 3
C. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................4
III. VOTES OF THE COMMITTEE...........................................5
IV. BUDGET EFFECTS OF THE BILL.......................................6
A. Committee Estimate of Budgetary Effects............. 6
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 6
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......7
A. Committee Oversight Findings and Recommendations.... 7
B. Statement of General Performance Goals and
Objectives......................................... 7
C. Information Relating to Unfunded Mandates........... 7
D. Applicability of House Rule XXI 5(b)................ 8
E. Tax Complexity Analysis............................. 8
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 8
G. Duplication of Federal Programs..................... 8
H. Disclosure of Directed Rule Makings................. 8
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............9
VII. DISSENTING VIEWS.................................................9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``No Hires for the Delinquent IRS Act''.
SEC. 2. PROHIBITION ON IRS HIRING OF NEW EMPLOYEES UNTIL CERTIFICATION
THAT NO IRS EMPLOYEE HAS A SERIOUSLY DELINQUENT TAX
DEBT.
(a) In General.--No officer or employee of the United States may
extend an offer of employment in the Internal Revenue Service to any
individual until after the Secretary of the Treasury has submitted to
Congress either the certification described in subsection (b) or the
report described in subsection (c).
(b) Certification.--
(1) In general.--The certification referred to in subsection
(a) is a written certification by the Secretary that the
Internal Revenue Service does not employ any individual who has
a seriously delinquent tax debt.
(2) Seriously delinquent tax debt.--For purposes of this
section, the term ``seriously delinquent tax debt'' means an
outstanding debt under the Internal Revenue Code of 1986 for
which a notice of lien has been filed in public records
pursuant to section 6323 of such Code, except that such term
does not include--
(A) a debt that is being paid in a timely manner
pursuant to an agreement under section 6159 or section
7122 of such Code;
(B) a debt with respect to which a collection due
process hearing under section 6330 of such Code, or
relief under subsection (a), (b), or (f) of section
6015 of such Code, is requested or pending;
(C) a debt with respect to which a levy has been made
under section 6331 of such Code (or a debt with respect
to which the individual agrees to be subject to a levy
made under such section); and
(D) a debt with respect to which relief under section
6343(a)(1)(D) of such Code is granted.
(c) Report.--The report referred to in subsection (a) is a report
that--
(1) states that the certification described in subsection (b)
cannot be made;
(2) provides an explanation of why such certification is not
possible;
(3) outlines the remedial actions that would be required for
the Secretary to be in a position to so certify; and
(4) provides an indication of the time that would be required
for those actions to be completed.
(d) Effective Date.--This section shall apply to offers of employment
extended after December 31, 2016.
SEC. 3. NO ADDITIONAL FUNDS AUTHORIZED.
No additional funds are authorized to carry out the requirements of
this Act. Such requirements shall be carried out using amounts
otherwise authorized.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 1206, as reported by the Committee on Ways and Means,
prohibits the Internal Revenue Service (IRS) from hiring new
employees after December 31, 2016 unless the Secretary of the
Treasury (1) certifies that the IRS does not employ any
individual with a seriously delinquent tax debt or (2) issues a
report to Congress explaining why the certification cannot be
made, the remedial actions necessary to permit the Secretary to
make the certification, and the timeframe for completing such
remedial actions. The bill defines ``seriously delinquent tax
debt'' as any outstanding Federal tax liability for which a
notice of lien has been filed in public records, subject to
certain exceptions.
B. Background and Need for Legislation
The Commissioner of the IRS is required under current law
to terminate any IRS employee if the employee willfully fails
to file a Federal tax return or willfully understates his
Federal tax liability, unless noncompliance is due to
reasonable cause. In April 2015, the Treasury Inspector General
for Tax Administration (TIGTA) reported that the IRS
consistently reduced penalties for current employees found to
have willfully violated the tax law, choosing a lesser penalty
over termination.\1\ Specifically, TIGTA reported that of the
1,580 employees found to be willfully noncompliant with tax
laws between 2004 and 2013, only 39 percent were terminated,
resigned, or retired.\2\ TIGTA found that the basis for the
Commissioner's decision to forgo the higher penalty in a
majority of cases was not clearly identified in the case file,
resulting in inconsistent penalties for similar violations. The
IRS is the primary agency responsible for administering Federal
tax laws. American taxpayers expect IRS employees to be fully
compliant with our nation's tax law and that cases of willful
noncompliance are handled by the IRS in an appropriate manner.
H.R. 1206 ensures that the IRS addresses its employee
compliance problems before hiring new employees who are charged
with enforcing our nation's tax laws.
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\1\Review of the Internal Revenue Service's Process to Address
Violations of Tax Law by Its Own Employees, Treasury Inspector General
for Tax Administration, Final Report Issued on April 14, 2015, Ref.
Num.: 2015-10-002 available at https://www.treasury.gov/tigta/
auditreports/2015reports/201510002fr.html.
\2\Ibid.
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C. Legislative History
Background
The ``No Hires for the Delinquent IRS Act,'' H.R. 1206, was
introduced on March 2, 2015, and was referred to the Committee
on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 1206, the No
Hires for the Delinquent IRS Act, on April 13, 2016, and
ordered the bill, as amended, favorably reported (with a quorum
being present).
Committee hearings
The need for improved IRS hiring practices and employee
conduct was discussed at an Oversight Subcommittee hearing on
the 2015 Tax Filing Season (April 22, 2015).
II. EXPLANATION OF THE BILL
A. Prohibition on Hiring of Additional Internal Revenue Service
Employees Until the Secretary of the Treasury Certifies That No
Employee of the Internal Revenue Service Has a Seriously Delinquent Tax
Debt
PRESENT LAW
The Internal Revenue Code\3\ (Code) provides that the
Commissioner of the IRS has such duties and powers as
prescribed by the Secretary. Unless otherwise specified by the
Secretary, such duties and powers include the power to
administer, manage, conduct, direct, and supervise the
execution and application of the internal revenue laws or
related statutes and tax conventions to which the United States
is a party and to recommend to the President a candidate for
Chief Counsel (and recommend the removal of the Chief Counsel).
Unless otherwise specified by the Secretary, the Commissioner
is authorized to employ such persons as the Commissioner deems
proper for the administration and enforcement of the internal
revenue laws and is required to issue all necessary directions,
instructions, orders, and rules applicable to such persons,\4\
including determination and designation of posts of duty.
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\3\Sec. 7803(a).
\4\Sec. 7804.
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Employees of the IRS are subject to rules governing Federal
employment generally.\5\ As part of the basic obligation of
public service, all Federal employees are required to comply
with all legal and financial obligations, ``especially those--
such as Federal, State, or local taxes--that are imposed by
law.''\6\ Failure to do so can result in disciplinary action.
An employee of the IRS is subject to termination for willful
failure to file any tax return required under the Code on or
before the due date (including extensions), unless such failure
is due to reasonable cause, and for willful understatement of
Federal tax liability, unless such understatement is due to
reasonable cause.\7\
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\5\Part III of Title 5 of the United States Code prescribes rules
for Federal employment, including employment, retention, and management
and employee issues.
\6\5 C.F.R. 2635.101(b)(12).
\7\The IRS Restructuring and Reform Act of 1998, (``the IRS Reform
Act'') Pub. L. No. 105-206, sec. 1203(b), July 22, 1998.
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Standards of Ethical Conduct for Employees of the Executive
Branch are supplemented by additional rules applicable to
employees of the Department of the Treasury.\8\ To enforce
these standards, the IRS requires pre-employment audits of all
employees and reviews employee compliance with filing
requirements. Examinations of IRS employees are accorded high
priority and are subject to mandatory review.\9\
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\8\Standards of Ethical Conduct for Employees of the Executive
Branch, 5 C.F.R. 735. 5 CFR Part 3101, Supplemental Standards of
Ethical Conduct for Employees of the Department of the Treasury; 31 CFR
Part 0, Department of the Treasury Employee Rules of Conduct.
\9\See, Policy Statement 4-9, Highest Integrity Expected, IRM
1.2.13.1.7; ``Examination of Employee Returns,'' IRM 4.2.6, available
at https://www.irs.gov/irm/part4/irm_04-002-006. html#d0e550.
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REASONS FOR CHANGE
Despite the clear intent of the IRS Reform Act to require
that IRS employees be dismissed if found to be willfully
noncompliant in their Federal tax obligations, only 39 percent
of IRS employees found to have violated the tax laws were
terminated or forced to resign or retire, according to reports
from the Treasury Inspector General for Tax Administration. The
Committee believes that the public perception of the IRS
workforce is undermined when the IRS tolerates such behavior.
Only the IRS can provide the information needed to fully
evaluate the problem presented in the report from the Treasury
Inspector General for Tax Administration. In order to restore
trust in the integrity of IRS employees and hold IRS officials
accountable for their hiring practices, the Committee believes
it is necessary to require that the IRS certify that IRS
employees are current in their Federal tax obligations, or
explain why it cannot do so. The requirement of such a
certification or report will enable the Committee to evaluate
whether additional measures are needed to achieve the level of
accountability that the public has a right to expect from the
IRS.
EXPLANATION OF PROVISION
The provision requires that the Secretary either certify to
Congress that there are no IRS employees with seriously
delinquent tax debt as defined in the provision, or submit a
report to Congress explaining why it is unable to provide such
certification. Failure to provide such certification or report
results in a prohibition on extending offers of employment at
the IRS.
``Seriously delinquent tax debt'' is any outstanding
Federal tax liability (including interest and penalties) for
which a notice of lien has been filed. Even if a tax debt
otherwise meets the statutory threshold, it may not be
considered seriously delinquent if (1) the debt is being paid
in a timely manner pursuant to an installment agreement or
offer-in-compromise, (2) collection action with respect to the
debt is suspended because a collection due process hearing or
innocent spouse relief has been requested or is pending, (3)
the debt is subject to a levy under section 6331 (or the
individual has agreed to be subject to a levy under section
6331), or (4) the debt was released from levy under the
authority of section 6343(a)(1)(D) based on a determination
that levy on such debt was creating economic hardship.
No additional funds are authorized to enable the Secretary
to comply with the requirements of this provision.
EFFECTIVE DATE
The provision is effective after the date of enactment for
offers of employment made after December 31, 2016.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 1206, ``No Hires for the Delinquent IRS
Act,'' on April 13, 2016.
The Chairman's amendment in the nature of a substitute was
adopted by a voice vote (with a quorum being present).
The bill, H.R. 1206, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 1206, as
reported.
The bill, as reported, is estimated to have no effect on
Federal fiscal year budget receipts for the period 2016-2026.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: The gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that there are no new or increased tax
expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 18, 2016.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1206, the No Hires
for the Delinquent IRS Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
H.R. 1206--No Hires for the Delinquent IRS Act
H.R. 1206 would prohibit the Internal Revenue Service (IRS)
from hiring new employees if any current IRS employees have
seriously delinquent tax debt. Specifically, the IRS would have
to certify that the agency does not have any employees with
seriously delinquent tax debt or submit a report to the
Congress explaining why it is unable to provide such a
certification before any new employees could be hired.
Based on information from the IRS and the staff of the
Joint Committee on Taxation (JCT), CBO estimates that
implementing H.R. 1206 would increase IRS administrative costs
by less than $500,000 annually to provide the report; such
spending would be subject to the availability of appropriated
funds. CBO and JCT estimate that enacting the bill would not
affect direct spending or revenues; therefore, pay-as-you-go
procedures do not apply.
Under current law, all federal employees are expected to
satisfy their obligations as citizens of the United States,
including financial obligations to federal, state, and local
governments. IRS employees may be disciplined or terminated for
violations of tax law. However, because the IRS has almost
80,000 employees, CBO does not expect the agency could easily
certify that none of its employees have any seriously
delinquent tax debt. Consequently, CBO expects that the IRS
would opt to provide the required report to the Congress.
CBO and JCT estimate that enacting H.R. 1206 would not
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2027.
CBO and JCT have determined that H.R. 1206 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Matthew
Pickford. This estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 1206 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill contains no
unfunded mandate on the private sector, nor does it impose a
Federal intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code of 1986 and has widespread applicability
to individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
With respect to clause 3(e) of rule XIII of the Rules of
the House of Representatives, the bill, as reported, includes
no provisions proposing to repeal or amend an existing statute
or part thereof. Therefore, no additional materials otherwise
required to be included in this report or an accompanying
document under that clause are required to be included with
respect to this bill.
VII. DISSENTING VIEWS
We oppose H.R. 1206, the No Hires for the Delinquent IRS
Act, which would prohibit IRS from extending employment offers
to new hires unless the Secretary of the Treasury can certify
that no IRS employee has a seriously delinquent federal tax
debt.
This bill is not necessary because section 1203 of the
Internal Revenue Service Restructuring and Reform Act of 1998
already provides for termination of IRS employees if they fail
to file a federal tax return or understate their federal tax
liability. According to a recent TIGTA report, over 600 IRS
employees have been dismissed under section 1203 in the past 10
years.
In fact, out of the 18 executive departments, Treasury has
the lowest employee tax delinquency rate--a rate of 1.19%. This
is one-fourth of the tax delinquency rate for the U.S. House of
Representatives--which is 5.04%.
Democrats offered an amendment during the markup to expand
the hiring ban to Congress, which was ruled out of order on
procedural grounds by the Majority. Democrats do not believe
that the Majority should pass bills that apply a separate set
of laws to the IRS than apply to the Congress (or, at a
minimum, the Congressional tax-writing committees), especially
given the noncompliance rate of the House of Representatives.
Legislation that singles out the IRS does not advance tax
administration in any meaningful way.
Sander M. Levin,
Ranking Member.
[all]