[House Report 114-501]
[From the U.S. Government Publishing Office]


114th Congress   }                                       {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                       {     114-501

======================================================================

 
TO IMPOSE A BAN ON THE PAYMENT OF BONUSES TO EMPLOYEES OF THE INTERNAL 
   REVENUE SERVICE UNTIL THE SECRETARY OF THE TREASURY DEVELOPS AND 
          IMPLEMENTS A COMPREHENSIVE CUSTOMER SERVICE STRATEGY

                                _______
                                

 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. 4890]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4890) to impose a ban on the payment of bonuses to 
employees of the Internal Revenue Service until the Secretary 
of the Treasury develops and implements a comprehensive 
customer service strategy, 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.................     2
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................3
III. VOTES OF THE COMMITTEE...........................................4
 IV. BUDGET EFFECTS OF THE BILL.......................................5
          A. Committee Estimate of Budgetary Effects.............     5
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     5
          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)................     7
          E. Tax Complexity Analysis.............................     7
          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............8
VII. DISSENTING VIEWS.................................................9

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. BAN ON IRS BONUSES UNTIL IRS DEVELOPS COMPREHENSIVE CUSTOMER 
                    SERVICE STRATEGY.

  (a) In General.--The Secretary of the Treasury, and the Secretary's 
delegate, may not pay a bonus, award, or similar cash payment to any 
employee of the Internal Revenue Service until the Secretary, or the 
Secretary's delegate, develops and submits to Congress a comprehensive 
customer service strategy that has been reviewed and approved by the 
Treasury Inspector General for Tax Administration. Such strategy shall 
include--
          (1) appropriate telephone and correspondence levels of 
        service, which shall be based on service provided by the best 
        in business and customer expectations;
          (2) a thorough assessment of which services the Internal 
        Revenue Service can shift to self-service options; and
          (3) proposals to improve customer service in the short term 
        (the current and following fiscal year), medium term 
        (approximately three to five fiscal years), and long term 
        (approximately ten fiscal years).
  (b) Progress Reports.--The Secretary of the Treasury, or the 
Secretary's delegate, shall submit reports to the Congress on the 
status of its customer service strategy and actions taken to improve 
customer service. Such reports shall be submitted on a semiannual basis 
until the comprehensive customer service strategy under subsection (a) 
is fully implemented.

SEC. 2. NO ADDITIONAL FUNDS AUTHORIZED.

  No additional funds are authorized to be appropriated or otherwise 
made available to carry out the requirements of this Act. Such 
requirements shall be carried out using amounts otherwise authorized to 
be appropriated or made available.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H.R. 4890, reported by the Committee on Ways and Means, 
prohibits the Internal Revenue Service (IRS) from paying 
bonuses to any employee until the agency creates and submits to 
Congress a comprehensive strategy to improve customer service. 
The bill also requires the IRS to submit semiannual reports to 
Congress on its progress in implementing the strategy.

                 B. Background and Need for Legislation

    The IRS has a responsibility to provide assistance to 
taxpayers who endeavor to meet their tax filing obligations. 
The U.S. Government Accountability Office (GAO), however, has 
reported that the IRS does not have a comprehensive customer-
service strategy to ensure that the agency is providing 
effective and efficient service to American taxpayers.\1\ The 
IRS' mission statement is to ``provide America's taxpayers top 
quality service by helping them understand and meet their tax 
responsibilities.'' Since Federal tax administration relies on 
voluntary compliance, it is extremely important that all 
Americans have access to competent assistance from the IRS. 
However, the IRS' level of service for fiscal year 2015 was 
unacceptably low. In a review conducted by the U.S. Government 
Accountability Office (GAO), the IRS' level of telephone 
service in fiscal year 2015 was the lowest in years, with only 
38 percent of callers wanting to speak to an IRS representative 
able to reach one.\2\ Additionally, the GAO found that wait 
times were more than 30 minutes, more than ten minutes longer 
than in fiscal year 2014.\3\ H.R. 4890 requires the IRS to 
develop and submit to Congress the comprehensive customer-
service strategy to determine appropriate levels of service as 
recommended by the GAO.
---------------------------------------------------------------------------
    \1\2015 Tax Filing Season: Deteriorating Taxpayer Service 
Underscores Need for a Comprehensive Strategy and Process Efficiencies. 
GAO-16-151, available at: http://www.gao.gov/assets/680/674248.pdf.
    \2\Ibid.
    \3\Ibid.
---------------------------------------------------------------------------

                         C. Legislative History


Background

    H.R. 4890 was introduced on April 11, 2016, and was 
referred to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 4890, To 
impose a ban on the payment of bonuses to employees of the 
Internal Revenue Service until the Secretary of the Treasury 
develops and implements a comprehensive customer service 
strategy, on April 13, 2016, and ordered the bill, as amended, 
favorably reported (with a quorum being present).

Committee hearings

    The need for improved taxpayer service by the IRS was 
discussed at an Oversight Subcommittee hearing on the 2015 Tax 
Filing Season (April 22, 2015).

                      II. EXPLANATION OF THE BILL


   A. Ban on Payment of Bonuses to Employees of the Internal Revenue 
 Service Until the Secretary of the Treasury Develops and Implements a 
                Comprehensive Customer Service Strategy


                              PRESENT LAW

    The Code\4\ provides that the Commissioner of the Internal 
Revenue Service (``the Commissioner'') 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. In executing these duties, the Commissioner 
depends upon strategic plans that prioritize goals and manage 
its resources. In the current strategic plan, the delivery of 
high quality and timely service to reduce taxpayer burden and 
encourage compliance is identified as Goal I.\5\
---------------------------------------------------------------------------
    \4\Sec. 7803(a).
    \5\See Internal Revenue Service Strategic Plan FY2014-2017, 
Publication 3744 (Rev. 6-2014), available at https://www.irs.gov/pub/
irs-pdf/p3744.pdf.
---------------------------------------------------------------------------
    The Commissioner is also 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,\6\ including determination and 
designation of posts of duty. Compensation to employees of the 
Internal Revenue Service is generally paid in accordance with 
the rules governing Federal employment generally.\7\
---------------------------------------------------------------------------
    \6\Sec. 7804.
    \7\Part III of Title 5 of the United States Code prescribes rules 
for Federal employment, including employment, retention, and management 
and employee issues.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    During recent tax filing seasons, the level of IRS customer 
service has resulted in few taxpayers able to obtain telephone 
assistance when needed, often waiting over one-half hour to 
speak with a customer service representative. During the same 
years, the IRS devoted substantial amounts of its budget to 
employee awards and bonuses. The Committee believes that the 
IRS must develop a long-term strategic plan for identifying the 
types of service the public needs and for implementing such 
plan before additional spending on bonuses and employee awards 
is permitted.

                        EXPLANATION OF PROVISION

    The provision bars payment of any bonus, award or other 
similar cash payment to any employee of the Internal Revenue 
Service until the Secretary or his delegate develops a 
comprehensive strategy for customer service and submits such 
plan to Congress. The plan must determine appropriate levels of 
telephone and correspondence service, based on best practices 
of businesses and customer expectations. In addition, the 
provision requires that all services be assessed to determine 
those which may be provided by offering self-service operations 
to taxpayers. The plan must include proposals for long-term 
improvements over the next ten fiscal years, with appropriate 
short-term and mid-term goals.
    The ban on employee bonuses remains in effect until a plan 
is developed, reviewed and approved by the Treasury Inspector 
General for Tax Administration, and submitted to Congress. 
Until such plan for a comprehensive strategy for customer 
service has been submitted to Congress and fully implemented, 
the Secretary or his delegate is required to submit semiannual 
reports on the status of efforts to develop and implement such 
a plan.
    No additional funds are authorized to be appropriated or 
otherwise made available for development and implementation of 
the plan.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

                      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. 4890, a bill to impose a ban on the 
payment of bonuses to employees of the IRS until the Secretary 
of the Treasury develops and implements a comprehensive 
customer service strategy.
    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. 4890, as amended, was ordered favorably 
reported to the House of Representatives by a roll call vote of 
24 yeas to 15 nays (with a quorum being present).

----------------------------------------------------------------------------------------------------------------
          Representative             Yea      Nay     Present      Representative      Yea      Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................       X   .......  .........  Mr. Levin..........  .......       X   .........
Mr. Johnson......................       X   .......  .........  Mr. Rangel.........  .......       X   .........
Mr. Nunes........................       X   .......  .........  Mr. McDermott......  .......       X   .........
Mr. Tiberi.......................       X   .......  .........  Mr. Lewis..........  .......       X   .........
Mr. Reichert.....................       X   .......  .........  Mr. Neal...........  .......       X   .........
Mr. Boustany.....................       X   .......  .........  Mr. Becerra........  .......       X   .........
Mr. Roskam.......................       X   .......  .........  Mr. Doggett........  .......       X   .........
Mr. Price........................       X   .......  .........  Mr. Thompson.......  .......       X   .........
Mr. Buchanan.....................       X   .......  .........  Mr. Larson.........  .......       X   .........
Mr. Smith (NE)...................       X   .......  .........  Mr. Blumenauer.....  .......       X   .........
Ms. Jenkins......................       X   .......  .........  Mr. Kind...........  .......       X   .........
Mr. Paulsen......................       X   .......  .........  Mr. Pascrell.......  .......       X   .........
Mr. Marchant.....................       X   .......  .........  Mr. Crowley........  .......       X   .........
Mrs. Black.......................       X   .......  .........  Mr. Davis..........  .......       X   .........
Mr. Reed.........................       X   .......  .........  Ms. Sanchez........  .......       X   .........
Mr. Young........................       X
Mr. Kelly........................       X
Mr. Renacci......................       X
Mr. Meehan.......................       X
Mrs. Noem........................       X
Mr. Holding......................       X
Mr. Smith (MO)...................       X
Mr. Dold.........................       X
Mr. Rice.........................       X
----------------------------------------------------------------------------------------------------------------

                     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. 4890, 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. 4890, a bill to 
impose a ban on the payment of bonuses to employees of the 
Internal Revenue Service until the Secretary of the Treasury 
develops and implements a comprehensive customer service 
strategy.
    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. 4890--A bill to impose a ban on the payment of bonuses to 
        employees of the Internal Revenue Service until the Secretary 
        of the Treasury develops and implements a comprehensive 
        customer service strategy

    H.R. 4890 would prohibit the Internal Revenue Service (IRS) 
from paying a bonus or cash award to any employee until the 
agency develops and submits a comprehensive customer service 
strategy to the Congress that has been reviewed and approved by 
the Treasury Inspector General for Tax Administration (TIGTA). 
The bill also would require the IRS to submit semiannual 
reports to the Congress on its progress to complete the 
strategy.
    The current strategic plan for the IRS identifies as a 
priority the delivery of quality and timely service to reduce 
taxpayer burden and encourage tax compliance. However, CBO is 
unaware of a comprehensive customer service strategy for the 
IRS. Based on the cost of similar efforts, CBO estimates that 
implementing H.R. 4890 would cost about $2 million in 2017 for 
additional administrative and personnel costs to prepare the 
required strategy; such spending would be subject to the 
availability of appropriated funds.
    CBO expects that TIGTA and the IRS would come to an 
agreement about the comprehensive strategy that would allow the 
IRS to continue to pay bonuses and cash awards. However, given 
the independent relationship between TIGTA and the IRS the 
timing of such an agreement is unclear. If the two agencies did 
not come to an agreement personnel costs, which are subject to 
appropriation, could be reduced by tens of millions of dollars 
in 2017--less than 1 percent of projected spending for the IRS. 
(The longer a prohibition on paying cash awards exists, the 
more likely it becomes that decreased spending for such awards 
would be offset by additional IRS spending for other 
activities.)
    Because enacting the bill would not affect direct spending 
or revenues, pay-as-you-go procedures do not apply. CBO and the 
staff of the Joint Committee on Taxation (JCT) estimate that 
enacting H.R. 4890 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 the bill 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. The 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. 4890 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

    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. 4890, which would impose a ban on the 
payment of bonuses to IRS employees until the Secretary of the 
Treasury develops and implements a comprehensive customer 
service strategy.
    It is true that IRS customer service levels have been poor 
for the last several years. For example, only 38% of taxpayers 
who tried to call the agency during FY15 were actually able to 
reach a live IRS employee--and those who were able to get 
through faced average wait times of over 30 minutes.
    However, this abysmal customer service is a direct 
consequence of the Majority's efforts to defund the IRS. IRS 
funding has declined by approximately $1 billion since 2010. As 
a result, the agency has been forced to cut 12,000 full-time 
jobs, has reduced employee training, and has delayed critical 
upgrades to information technology. Furthermore, the agency is 
auditing fewer and fewer taxpayers, with less than 1% of 
taxpayers being audited--the lowest level in a decade.
    This is a dangerous level of underfunding for a critical 
government agency that ensures our government has enough 
revenue to function. We all benefit from the services and 
revenue provided by a well-funded tax collection agency.
    If the Majority would like improved customer service from 
the IRS, then they should fully fund the agency. It is no 
surprise that providing the IRS with an additional $290 million 
for FY 2016 for customer service has led, thus far, to reduced 
telephone wait times during this year's tax filing season. The 
percentage of callers seeking and receiving live assistance 
during this year's filing season has increased by 33 percentage 
points to 76 percent--compared to 43 percent during the same 
period last year.
    H.R. 4890 is not the solution to the Majority's self-
created IRS customer service problem.
                                                   Sander M. Levin.

                                  [all]