In an abrupt reversal that clears the way for the first major overhaul of the Internal Revenue Service in decades, the Clinton administration dropped it opposition Tuesday to legislation to restructure the agency.
The White House turnabout came after congressional support for reforming the IRS - roundly criticized of late for abuse of taxpayers and mismanagement - suddenly snowballed into a seemingly unstoppable bipartisan force.
Legislation to revamp the agency formally was unveiled early in the day by Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee. A key provision that had been at the core of the dispute over the bill would establish an independent oversight board - dominated by private sector representatives to monitor the agency’s budget and operations.
Key Democrats, including House Minority Leader Richard Gephardt, D-Mo., immediately queued up to pledge their support for the bill, which also would bolster taxpayer rights in dealing with the IRS and shift the burden of proof from the taxpayer to the IRS in cases that go to civil tax court.
After weeks of vehemently opposing the creation of the oversight board, Treasury Secretary Robert Rubin late Tuesday said the administration would support the bill because of changes to it to accommodate White House concerns. In particular, Rubin welcomed elimination of a proposal to transfer the power to hire and fire the IRS commissioner from the president to the oversight board.
The administration’s shift was viewed by many as a measure of how dramatically the momentum for IRS reform has built in recent weeks. That threatened to leave the White House on the wrong side of a popular issue - and opposite from Gephardt, who is seen as Vice President Al Gore’s principal rival for the Democratic presidential nomination in 2000.
Republicans welcomed the administration’s support, even as they derided it as an example of political opportunism.
“This is classic Clinton,” said Ari Fleischer, Ways and Means Committee spokesman. “He recognized his position was going to be overridden, so instead of standing for his position he simply changed it.”
The politics surrounding the issue began to shift earlier this fall when a series of hearings by the Senate Finance Committee broadcast emotional personal accounts of taxpayer harassment and mistreatment by the IRS.
Archer’s bill, drafted in the wake of the hearings, is expected to be approved by the Ways and Means Committee today and to move along a legislative path well greased by the public anger toward the IRS. GOP leaders want the House to act on the bill before Congress adjourns for the year, probably Nov. 8.
The Senate may not act until next year, although proponents are hoping that decisive House action could step up pressure for a quicker vote on the matter.
Archer’s legislation is based on the bipartisan recommendations of a yearlong IRS review commission co-chaired by Rep. Rob Portman, R-Ohio, and Sen. Bob Kerrey, D-Neb.
In keeping with the panel’s recommendations, the bill would strengthen the taxpayer’s hand in disputes with the agency by, for example, establishing a new right to sue the IRS for damages caused by negligence and making it easier to recover legal fees in disputes arising from an IRS error. The bill also calls for steps to increase the use of electronic filing and to otherwise modernize the agency’s operations.
The controversial oversight board proposed by the bill would consist of 11 members - eight private citizens appointed by the president, as well as the Treasury secretary, the IRS commissioner and an IRS labor union representative. The panel would have the power to review and approve the IRS budget, reorganization proposals and the agency’s long-range strategic planning.
The board’s supporters say it is needed to bring much needed expertise to an agency that has been hobbled by mismanagement, such as a recent decision to spend $4 billion on computer modernization that instead hobbled the IRS with obsolete technology that limits its ability to deal with taxpayer problems.
Rubin had raised concerns about potential for conflicts of interest in tax issues among the board’s private sector members. He said Tuesday those concerns were eased when Archer agreed to drop the earlier proposal giving the board personnel power over the IRS commissioner.
Also, he said he been reassured that the legislation would not authorize the board to have a role in the agency’s law enforcement activities.
This sidebar appeared with the story: IRS overhaul The IRS overhaul measure introduced in the House Tuesday has three principal provisions: The burden of proof in proceedings will be shifted from taxpayers to the IRS. Some 28 taxpayer rights will be created, including the right to sue the IRS for damages caused by negligence. An independent government board will be created to oversee the agency’s operations. - From wire reports