November 6, 1997 in Nation/World

House Approves Irs Overhaul Bill Senate Might Delay Action Until ‘98 To Get Even Tougher

David Hess Knight-Ridder
 

Riding a wave of anti-tax sentiment, the House overwhelmingly approved Wednesday an overhaul of the Internal Revenue Service that would shift the burden of proof in tax disputes away from taxpayers.

Grudgingly accepted by the Clinton administration, the bill gained irresistible momentum after congressional hearings in September revealed serious abuses of taxpayers by IRS enforcers.

The measure now goes to the Senate, where it could be delayed until early next year.

Senate Finance Committee Chairman William Roth, R-Del., has indicated he wants to impose even stricter limits on the IRS’ investigative practices.

In extolling the House bill, House Ways and Means Committee Chairman Bill Archer, R-Texas, said it “will give David the taxpayer a bigger slingshot to use against the IRS Goliath.”

On the final 426-4 vote, only four Democrats opposed the legislation. Maryland Rep. Steny Hoyer, one of the four, blamed Congress - which writes the tax laws, including all the special-interest tax breaks and other loopholes that complicate the tax code - for much of the public anger toward the IRS.

While the legislation addresses many of the IRS’ purported shortcomings, it does not deal with the structure and complexity of the federal tax code. Taxpayers still will have to wrestle annually with the difficulties of decrypting the rules and definitions for computing their taxes.

Much of next year, however, is expected to be consumed by a national debate over proposals to replace the progressive income tax with a national sales tax, a flat tax on income or a combination of both. Proponents of such changes say they would lessen the tax bite and simplify the tax code by eliminating most, if not all, deductions.

Archer made clear his intentions during the House debate, saying, “We must rip the income tax out by its roots and throw it away so that it will not grow back.”

At a cheerleading rally, the IRS overhaul bill was heralded by congressional Republicans as only the first step in a major offensive against the federal tax system - a fight the GOP plans to press in House and Senate election campaigns next year.

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HIGHLIGHTS OF BILL

Creates an 11-member oversight board, including the treasury secretary and private citizens, to review Internal Revenue Service management and handling of long-term projects.

Requires Congress’ Joint Committee on Taxation to develop a “tax complexity analysis” for all tax-related legislation so lawmakers will better understand how proposed bills might make the tax code more complex.

Shifts burden of proof in some U.S. Tax Court cases from taxpayers to the IRS.

Extends the confidentiality privilege in attorney-client discussions to accountants and other nonlawyers appearing before the IRS.

Expands protection for a spouse when tax problems are caused by a former husband or wife without the spouse’s knowledge.

Lets taxpayers sue the IRS for negligence in collection actions.

Suspends statute of limitations on tax refunds for people suffering mental disability, such as Alzheimer’s disease.

Caps penalty for late payment of taxes at 9.5 percent for people who have reached repayment agreements.

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