House, Senate to hash out IRS reform

Now that the Senate has joined the House in passing sweeping IRS reform by overwhelming majorities, congressional sources said last week that a conference on the bill could get underway as early as this week.

The Senate approved a $19.3 billion package of structural reforms and a litany of new taxpayer rights Thursday night by a vote of 97-0. The House approved its package last fall by a vote of 426-4. Those resounding votes for reform should be helpful to conferees when they tackle some fairly significant differences in the two bills.

The Senate's bill is more ambitious than the House measure. Its penalty and interest reform provisions, innocent spouse protections and limits on IRS seizure powers added nearly $10 billion to the cost of the legislation. Much of the money to pay for the added cost would come from expanding eligibility for special individual retirement accounts named for Senate Finance Chairman William Roth, R-Del.

House Ways and Means Chairman Bill Archer, R-Texas, declined to comment on specific issues that will come up at conference or which members would likely serve as conferees. Archer's spokesman said the chairman will be "looking to keep the conference pretty small."

Roth's spokeswoman also declined to speculate about who would be appointed to the conference, but noted that conferees could include members of the Senate Governmental Affairs Committee because of the agency personnel changes in the bill. She said Roth would like to have a bill on the president's desk "as soon as possible."

For its part, the Clinton administration has alerted Congress that shifting the burden of proof to the IRS in its disputes with taxpayers could create a disincentive for taxpayers to keep accurate financial records. The administration has also suggested that new accountant-client confidentiality privileges could undermine compliance.

Perhaps more importantly, IRS Commissioner Charles Rossotti has warned that complying with the new law could make it impossible for the agency to meet the challenge of readying its computers for the year 2000. On the other hand, the administration has backed away from earlier reservations about the composition and powers of an independent oversight board, and other provisions. "The White House will agree to anything that has the letters I, R, S," Archer's spokesman said.

Finally, individual members who could be named to conference have made it clear there are issues they want addressed in the final package. For example, Rep. Rob Portman, R-Ohio, who co- chaired the national commission which provided the framework for the legislation, remains concerned the Senate version does not contain congressional and IRS consultation provisions. The House bill provides that the IRS be included in writing tax laws so Congress would have a sense of the administrative and compliance burdens both on the taxpayer and the agency before it passes a law.