COMMITTEE EXAMINES IRS IMPLEMENTATION OF REFORM LAW
WASHINGTON -- The Senate Finance Committee today heard from IRS Commissioner Charles Rossotti on the status of the implementation of the 1998 IRS Restructuring and Reform Act. Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) delivered the following opening statement:
"I feel compelled to begin this hearing by asking: Do you still want this job? There is no question that you are in the eye of the storm. But as I've been saying, I can think of no one better qualified than you to lead this important agency into the new millennium. I am impressed by your vision, your management skills, and your sincere desire to implement the revolutionary new changes that were passed into law in the IRS Restructuring and Reform Act of 1998.
"While the IRS has been the subject of intense focus by this committee, the purpose of our hearing today is to ensure that Congress and the Administration continue to move ahead to implement the IRS restructuring bill and reform the IRS. The IRS restructuring bill provides the blueprint for change. The law requires the Commissioner to reorganize the IRS into functional divisions rather than on a geographic basis. It provides for additional accountability and oversight with the establishment of an Oversight Board, the creation of a new Treasury Inspector General for Tax Administration, a more independent National Taxpayer Advocate, as well as a more independent appeals function.
"The law also includes a new arsenal of taxpayer protections. These include due process protections, expanded innocent spouse relief, examination and collection protections, as well as penalty and interest protections. To help the Commissioner reform the IRS and oversee this major changes, the law allows for additional personnel flexibilities to allow the Commissioner to hire and retain experts in their fields.
"There is no question that the IRS restructuring bill was enormous and will take time to implement. The purpose of our hearing today is to discuss where the IRS is and where it is going -- how the legislation has been embraced and what we can do to push forward. I appreciate the open and frequent dialogue between us, Commissioner Rossotti, and the fact that we share many similar concerns. As you know, we have discussed allegations of retaliation against witnesses who testified before this committee. We have discussed our concern that some within the agency and administration are reluctant regarding the changes mandated by Congress, and may even be working against the reforms.
"I am disappointed that the IRS Oversight Board nominees have not been submitted by the President to the Senate as required by law. Nominees were required to be submitted by January 22, 1999. But today we are still waiting.
"I will say, Commissioner Rossotti, that despite these obstacles you are moving forward. You have begun to reorganize the IRS into functional groups based on taxpayer needs, eliminating the archaic geographically based system. While you first mentioned this concept less than 15 months ago, the IRS recently announced the future headquarters of each of the divisions and hopes to have the Small Business & Self-Employed Operating Division and Tax Exempt Operating Division groups in operation sometime later this year.
"This is a step in the right direction. This structure will provide better expertise, information, and service capabilities.
"Likewise, I am impressed with the new National Taxpayer Advocate who has enhanced authority to assist taxpayers in their dealings with the IRS. I appreciate the way that he, too, has embraced the spirit as well as the letter of the '98 law. Tomorrow, the new Taxpayer Advocate will testify before our committee on the complexity of the individual income tax, as we begin to look at what can be done to make it simpler for Americans everywhere.
"I will be interested in your thoughts regarding the Taxpayer Advocate and what we can do to make that position even more meaningful in meeting the needs of taxpayers. Likewise, I want to hear your views concerning the newly created office of Treasury Inspector General for Tax Administration. It is extremely important to have an independent auditor and investigator to keep an eye on the IRS and ensure that the law is being followed. Independence is the key. And we want to be sure that that is what we are getting with the new organization in this area.
"These are all positive changes. But they will only have relevance if they are appropriately implemented -- if they are effective in changing the culture of the agency to one that is intolerant of abuses -- abuses of taxpayers and abuses of employees. I am concerned about reports that I'm hearing that much of the culture remains the same -- that many have a wait and see attitude -- concerning the changes included in the restructuring and reform legislation. I am concerned that the important new laws concerning innocent spouse, offers in compromise, installment agreements -- and even practices related to due process protections -- are not being adequately instructed and embraced in the field.
"The bill included numerous provisions relating to interest and penalties to prevent taxpayers from being buried in debt to the extent that they cannot pay their tax liability. While more needs to be done in this area, the bill required Joint Tax and Treasury to each conduct studies on the administration of penalties and interest. I look forward to receiving the report in July and hope to pursue legislation to ensure that unfair penalties and interest are eliminated.
"These, I realize, Commissioner Rossotti, represent a full plate. And I have not even mentioned the need to prepare for Y2K. Nor have I addressed the concerns about the Criminal Investigation Division that were raised in Judge Webster's review of that organization. These also need our best attention, and I look forward to our addressing them today.
"For now, let me express my gratitude to you and to the countless others within the Internal Revenue Service who are working constructively with Congress to bring about needed change. This is an historic moment. The work that is done in the months ahead will have a profound influence on the future. It will demonstrate what can be accomplished to make even the largest bureaucracies more effective, more efficient, fairer, and more civil in their interaction with the people who matter most -- the taxpayers who pay for them. To those who may yet wonder if Congress is serious, let me say that, 'Yes. We are serious. And yes. We are here to stay.' This work shall be finished. It's what Congress intends; it's what the people deserve."
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