Good morning ladies and gentlemen. I welcome you to our hearing
to explore the development of a Taxpayer Bill of Rights II during
the 104th Congress.
The Subcommittee's primary focus today will be to examine
measures to better protect the rights of taxpayers in their dealings
with the Internal Revenue Service. However, before turning to the
discussion of improved taxpayer rights, I want to talk for a moment
about the enormous responsibilities that are placed upon the IRS
under our current tax system.
The primary mission of the IRS is enforcing our nation's tax
laws and collecting the taxes that are legally owed. This is a very
important responsibility because the functioning of the federal
government depends on the American public's willingness to pay the
taxes they owe. However, it is also a very difficult responsibility
because it necessarily interjects the IRS into our private lives.
In carrying out its mission, the IRS faces three major
challenges. First is the massive job of processing the over $1
trillion in taxes paid each year by the taxpayers. Second is
collecting the over $150 billion in unpaid taxes which are currently
outstanding. Third, is how to accomplish the first two jobs with
outmoded and inefficient computer systems which date back to the
1960s.
These challenges are extraordinarily difficult and I certainly
don't envy the IRS Commissioner's job. Based on my experience, I
firmly believe that most of the IRS's 114,000 employees carry out
their responsibilities in a professional and helpful manner.
Unfortunately, those of us who serve on the Oversight Subcommittee
hear far too often of cases where the IRS has acted in a
heavy-handed or unfair manner in its dealings with the taxpayers.
That is why we are here today -- to examine changes to our tax
laws which will help ensure that honest, hard-working Americans are
treated fairly by the IRS.
The original Taxpayer Bill of Rights was enacted in 1988. It
sought to level the playing field between taxpayers and the IRS by
creating over a dozen procedural safeguards for taxpayers. For
example, it gave those in financial hardship the statutory right to
pursue installment payment plans with the IRS. It also gave
taxpayers who prevail over the IRS the right to have the IRS
reimburse their attorneys' fees in some circumstances.
The 1988 Taxpayer Bill of Rights was a good first step, but it
soon became apparent that more needed to be done. In 1991, the
Subcommittee on Oversight held two public hearings in order to
examine additional taxpayer safeguards. Those hearings led to the
development of H.R. 3838. In 1992, a modified version of H.R. 3838
passed Congress as part of H.R. 11, a bill that was vetoed by
President Bush for reasons unrelated to the Taxpayer Bill of Rights
II provisions.
It is now time for this Subcommittee to return to its
investigation of measures that are needed to assist taxpayers in
their dealings with the IRS. Naturally, the first place to look for
ideas is to the bill developed in the 102nd Congress. There are
plenty of good provisions in H.R. 3838 and H.R. 11 for us to review.
In addition, several bills have been introduced in the 104th
Congress which offer new proposals for helping taxpayers.
While we can build on the work that took place in 1992, our
Subcommittee should be open to new ways to help taxpayers. I commend
the work that occurred in 1992, but I do not feel limited by it. New
problems have been brought to our attention. For example, what
rights do taxpayers need to protect themselves from inaccurate
information collected by the IRS from third party data in the course
of an "economic reality" audit? What rights should taxpayers have if
the IRS computers make a mistake and accidentally release
confidential tax return data to the public?
The need for new taxpayer protections may be even more acute
than is was in 1992. For example, the IRS is increasing its audits
of taxpayers and increasing its overall compliance and collection
program. This effort may bring in extra revenue to help reduce the
deficit, but it is also likely to increase the level of friction
between taxpayers and the IRS.
The nation's taxpayers probably won't ever enjoy paying their
taxes, but they shouldn't feel powerless and defenseless in dealing
with the IRS. The IRS headquarters personnel always seem to be the
most reasonable persons on the face of the earth. They always show
great common sense. Unfortunately, not all the IRS agents in the
field possess these noble qualities.
When the average taxpayer goes up against the IRS, it's often
like a contest between David and Goliath. Taxpayers have a duty to
pay the taxes they legally owe, but they shouldn't be put at a
disadvantage by procedural rules and IRS policies which make the
David and Goliath contest any more one-sided than it already is.
I welcome all our witnesses today and thank them for their
willingness to testify before our Subcommittee.