[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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \3\Sec. 7803(a).
    \4\Sec. 7804.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

                           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]