We are here today to resume discussion of a very important issue: restructuring the Internal Revenue Service (IRS). As my colleagues know, I have worked very hard on this issue. I served on the National Commission on Restructuring the IRS in 1996 and 1997. Last summer, I joined Senator Bob Kerrey to introduce the first comprehensive proposal to reform the IRS in over 50 years. I also have long worked to expand taxpayer rights. In 1988, Senator David Pryor and I won approval for the first-ever Taxpayer Bill of Rights. Our sequel to that legislation, T2 or the Taxpayer Bill of Rights II, was passed by Congress and signed by the President in 1996.
Today, I urge Chairman Roth to move quickly on reform of the IRS. Indeed, I had hoped that we could pass a bill last fall. Our goal now must be to pass legislation and have it signed into law by April 15.
In addition, what we pass must represent solid and real reform. As the Chairman has said, we get one chance at this legislation, so we must get it right. There are real problems for taxpayers in dealing with the IRS, and there are serious problems internally at the IRS. During the oversight hearings conducted by this committee last September, we heard horror stories about our government's treatment of taxpayers. And when I am home in Iowa, constituents tell me their first- hand experiences with the IRS. Rarely are those stories good news. Without a doubt, it is not good enough for Congress and the President to just try reform. We must try and succeed.
To meet that challenge, I advocate passage of a reform bill that achieves these seven goals.
- Expand Taxpayer Rights and Ensure Fairness for Taxpayers Specifically, IRS reform must increase the independence of taxpayer advocates at both the local and national levels and make sure taxpayers can locate these advocates. We also must substantially reform the penalty system so that taxpayer penalties are not accruing unfairly. Finally, we must seriously consider increasing innocent spouse protections and eliminating the interest differential between overpayments and underpayments.
- Focus on Customer Service, Instead of Consumer Abuse IRS reform must restructure the IRS so that the agency views the taxpayer as a customer and aims to give this customer the highest quality and most helpful service possible. This means we must reorganize with the taxpayer in mind. For example, there could be divisions to target assistance to small businesses, large businesses, and so on. This concept was considered by the National Commission on Restructuring the IRS, and the Commission said that the idea deserves further exploration. Now, Commissioner Rossotti has embraced the idea. This kind of reorganization may be a good first step to achieving a focus on customer service rather than consumer abuse.
- Provide for Sustained and Effective Congressional Oversight of the IRS In addition to making a commitment to exercise sustained and aggressive oversight of the IRS, Congress must help the public and the media assist us in this effort by making it easier to access information about the practices and procedures of the IRS.
- Establish an IRS Culture Reflective of Business, Rather Oversized Government Bureaucracy This means creating an effective, tough-minded and fully independent Board of Directors, with the support of a full-time, independent staff.
- Ensure the IRS Meets the Same High Standards It Sets for Taxpayers The IRS expects taxpayers to be financially accountable and to justify expenditures that they claim as deductions. Yet, the IRS spends $4 billion of taxpayer money for computer modernization and has little to show for it. The General Accounting Office has been unable to express an opinion on the reliability of the IRS financial statements for any of the four fiscal years from 1992 through 1995. In order to have credibility with the American people, the IRS must itself be financially accountable and justify its expenditures.
- Restore Public Confidence in the IRS The bottom line in restoring public confidence in the agency is to improve IRS employee training so that frontline IRS employees respond consistently to questions asked by taxpayers.
- Make the Tax Code More User-Friendly Congress must dramatically improve its effort to make the tax code more understandable and to give taxpayers the necessary resources and information about the law. The vast majority of Americans willingly pay their fair share of taxes. Policy makers must be willing to help these honest, hardworking taxpayers be better able to understand the tax code.
In 1998, we have an opportunity and an obligation to reform the IRS, an enormous and intimidating agency that touches the lives of more Americans than any other part of the federal government. I intend to continue my dedicated effort to achieve comprehensive and dramatic reform of the IRS. As I see it, if Congress and the administration stick to these seven fundamental principles when developing the IRS reform bill, then we will achieve real IRS reform that works for taxpayers, not against them. In far too many cases, the IRS has without merit devastated individuals and families across the country. As representatives of the people, we in Congress must use a firm hand to put a stop to such abuses. It cannot be tolerated.
