March 06,2000

Committee to Hold Hearings on Penalties and Interest

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today announced the Committee will meet on Wednesday, March 8, 2000 at 10:00 a.m. and Thursday, March 9, 2000 at 10:00 a.m. in 215 Dirksen Senate Office Building to hear testimony regarding penalty and interest provisions in the Internal Revenue Code.

The following witnesses are expected to appear before the Committee:


I. A panel consisting of:

Mr. Jonathan Talisman, Acting Assistant Secretary for Tax Policy, Department of the Treasury; Washington, D.C.

Ms. Lindy Paull, Chief of Staff, Joint Committee on Taxation; Washington, D.C.

II. A panel consisting of:

Mr. Peter L. Faber, Partner, McDermott, Will & Emery; New York, NY.

Mr. Kenneth J. Kies, Managing Partner, Washington National Tax Services, PricewaterhouseCoopers LLP; Washington, D.C.


I. A panel consisting of:

Ms. Judith Akin, EA, National Association of Enrolled Agents; Oklahoma City, OK.

Mr. David A. Lifson, Chair, Tax Executive Committee, American Institute of Certified Public Accountants; New York, NY.

Mr. Paul J. Sax, Chair, Section of Taxation, American Bar Association; San Francisco, CA.

Mr. Robert H. Scarborough, Chair, Tax Section, New York State Bar Association; New York, NY.

Mr. Charles W. Shewbridge, III, President, Tax Executives Institute, Inc., and Chief Tax Executive, BellSouth Corporation; Atlanta, GA.

II. A panel consisting of:

Mr. Mark A. Ernst, President and Chief Operating Officer, H&R Block, Inc.; Kansas City, MO.

Ms. Nina E. Olson, Executive Director, Community Tax Law Project; Richmond, VA.


Penalties are necessary and important to ensure a high degree of voluntary compliance and to impose appropriate sanctions on taxpayers who are noncompliant. Interest is a charge for the time value of money. Over the years, the penalty and interest provisions in the Internal Revenue Code of 1986, have become increasingly complicated and in some cases dysfunctional.

The Internal Revenue Service Restructuring and Reform Act of 1998 ("Restructuring Act") included several provisions that addressed some of the concerns relating to penalties and interest in the Code. Mindful it could not enact a comprehensive reform of the penalty and interest regime during the consideration of the Restructuring Act, Congress required the Treasury Department and the staff of the Joint Committee on Taxation to each conduct studies on the administration of penalties and interest in the Code. The studies were due by July 22, 1999.

Joint Tax completed its study on July 22, 1999, and Treasury completed its study on October 25, 1999, before Congress adjourned. Prior to completing its penalty and interest study, Treasury issued its "white paper" entitled "The Problem of Corporate Tax Shelters" in July 1999. The Joint Tax penalty and interest study included an analysis and recommendations relating to corporate tax shelters.

The purpose of the Finance Committee hearings is to discuss the Treasury and Joint Tax penalty and interest studies and recommendations. The corporate tax shelter issue will be discussed within the context of the penalty and interest regime.