Senate Panel OKs IRS Reform

Senate Panel OKs IRS Reform

The Senate Finance Committee Tuesday night passed a historic IRS reform bill on a 20-0 vote, leaving aside the question of finding offsets worth $9.8 billion.

"How can you put a price on protecting the taxpayer?" asked Finance chairman William Roth, R-Del., at the beginning of the long-awaited markup.

But some members of his committee wondered how the Finance panel could send a bill to conference that has offsets for only five years.

"This is something I find very nagging," said Sen. Kent Conrad, D-N.D. "It sends all the wrong signals."

Roth said providing offsets for the full 10 years is a Senate rule only and assured the panel that Senate Budget Committee chairman Pete Domenici, R-N.M., has pledged to work to find the money.

Roth was less than successful on the composition of an independent advisory board the bill would create. Sen. Charles Grassley, R-Iowa, pushed through an amendment, by a vote of 12-8, that would provide a seat on that board for a representative from the Treasury employees union.

"They care about their work," Grassley said. "They want the IRS to run smoothly."

Roth countered with a letter from the Office of Government Ethics, which concluded that the addition could create a conflict of interest and subordinate taxpayers' concerns to those of the union.

Similarly, Finance ranking member Daniel Patrick Moynihan, D- N.Y., proposed inclusion of the Treasury secretary on the board, likening the idea to having the CEO of a company on its board of directors.

Senate Majority Whip Nickles asserted that Treasury Secretary Rubin had opposed the structure of the board in the first place and suggested that a Treasury secretary might not want to be told what to do.

Moynihan fired back, "May I point out that the vote in the House was 426-4 and the secretary was on that board."

Moynihan prevailed on a vote of 12-8, but a Senate leadership aide said, "Clearly there will be a floor fight."

The committee also rejected, on a vote of 12-8, an amendment offered by Sen. Bob Kerrey, D-Neb., that would have essentially replaced Roth's mark with the bill passed by the House last fall, and used changes in tax rules on vacation pay and foreign tax credits to fully pay for it.

Republicans immediately criticized the idea because it lacked innocent spouse protection and penalty and interest reform, both of which Roth considered the most important elements of his bill.

"What Kerrey is asking us to do is to throw out a month's work at 6:11 tonight and start all over again," laughed Sen. Phil Gramm, R-Texas. "I just think that's a mistake."

NEXT STORY: GAO Rips USFS Finances

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