In the matter of the consideration of S. 2400 - Taxpayers' Procedural Safeguard Act - Scheduled for a Hearing before the Subcommittee on Oversight of the Internal Revenue Service of the Senate Committee on Finance on March 19, 1984

Submitted in lieu of oral testimony to be included in the official hearing records of the Subcommittee on Oversight of the Internal Revenue Service of the Senate Committee on Finance

Mr. Chairman, I would like to express my thanks to this distinguished Subcommittee for allowing me to submit a written summation of my views on the proposed legislation this committee has before it, which is designated as S. 2400 and known as the "Taxpayers' Procedural Safeguard Act."

When the House Ways and Means Committee and Senate Finance Committee were considering the enactment of what finally became Section 7430 of the Internal Revenue Code - Awarding of Court Cost and Certain Fees - I testified before a subcommittee of the Finance Committee and the House Ways and Means Committee, I believe, on two different occasions on behalf of such bill.

Again, I am glad to see that our Congress is concerned to the extent that it wishes to consider further safeguards against unwarranted and unnecessary abuses of taxpayer's rights by the Internal Revenue Service.

Although the aforementioned Section 7430 has not been in the law for a sufficient time to produce any substantially noticeable results, nevertheless, in time, it undoubtedly will. Also, I think at the proper time, the Congress should consider extending that particular bill beyond it's expiration.

The subject matter to be dealt with in the proposed S. 2400 is one that is very delicate, insofar as protecting a taxpayer's day-to-day economic rights, and is a very important step in the right direction to maintain and restore, to an extent, taxpayer public confidence in the Internal Revenue Service. Basically, I think one of the problems is that if we believe the Internal Revenue Service and their various testimonies through their representatives, they are not sufficiently aware of what actually happens on a day-to-day basis down in the grassroots of their operations. I have said many times, and say again here, that it is highly necessary to maintain a great degree of public confidence in the self-assessment system in order that we not fall in the same trap that the tax collection agencies in some of the Governmental units in Europe have done, i.e., to an extent, take tax collection as a joke. This can be done, in my opinion, only one way, and that is by being honest, deal with integrity with the taxpaying public, and have a proper independent safeguard. I particularly like one content of the Bill which proposes a new statutory office of taxpayer ombudsman headed by an independent presidential appointee approved by the Senate. This, in my opinion, is about as close as independence can be made into the system. If nothing else, the very structure of such would greatly improve, in my opinion, the respect the taxpaying public has for our Government and it's tax collection personnel and functions. I have always said that down in the ranks of the Internal Revenue Service personnel, where we find the day-to-day contact with the public, it is highly important that a good, fair attitude be manifested with the public because that is about all they see, except to have some arbitrary form letter written to them, which, in many instances, does not even respond to a question which may have arisen.

No intelligent American can quarrel too seriously with our tax collection system because, despite all of it's flaws, it is about the best system in existence in that it apportions the tax bill based on the amount of a citizen's property, which the Government supposedly protects and secures. Offhand, I know of no other country with our freedom and the security we enjoy with it. With the armament requirements being as great as they are, taxes have to be high to finance such protective operations. Among the exemplary provisions which I believe are in the proposed bill, is the matter of the exemptions provided of various classes of property in the matter of levies and would provide new rights of review of the Internal Revenue Service actions. That, we do not, in my opinion, have under the present system. The independent control of the Internal Revenue Service through something such as a presidentially appointed ombudsman would seem to be a very logical and fair solution to the problem.

A most commendable proposal, in addition to the foregoing, is to change the "prevailing party" requirement that the prevailing party must demonstrate that the position of the United States was unreasonable. Under the new bill, awards would be made if the position of the United States was not substantially justified and the specific requirement that the prevailing party carry the burden of proof on the issue, would be deleted. This, in my opinion, goes a long way toward establishing more rights for the taxpayers and reassuring them of fair and just treatment.

With respect to provisions extending the period of levy and restraint to 30 days, except where jeopardy of collection was involved, I would think it would still be better to let the matter of the jeopardy be determined by an application to a cognizant Federal District Court, rather than have a unilateral determination made by some collection officer in the Internal Revenue Service. To leave them with this authority, i.e., to levy in case jeopardy in collection was indicated, does not remedy one of the bigger means of abuse of power.

With respect to the installment payment of taxes, this would greatly alleviate some of the problems which occur, particularly as long as the installments were being met, if the Government was prohibited from filing liens.

With respect to the increase in property exempt from levy, this is extremely appropriate in view of our expanding economic situation and inflationary prices. This would merely give some recognition to that.

In conclusion, Mr. Chairman, let me say that I think this distinguished Committee has embarked on yet another mission of great importance to the taxpaying public at a time when maintaining the confidence of such public is becoming more essential each day. This Committee is indeed to be commended for taking up such a fine and much needed piece of legislation to continue the attempt to restore confidence of the taxpaying public. I sincerely thank you, Mr. Chairman, and the remaining members of this Committee for allowing me this opportunity to present my views.

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