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Treasury and General Government Appropriations for Fiscal Year 2001

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S. HRG. 106±712 TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2001 HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS SECOND SESSION ON H.R. 4871/S. 2900 AN ACT MAKING APPROPRIATIONS FOR THE TREASURY DEPARTMENT, THE UNITED STATES POSTAL SERVICE, THE EXECUTIVE OFFICE OF THE PRESIDENT, AND CERTAIN INDEPENDENT AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2001, AND FOR OTHER PUR- POSES Department of the Treasury Executive Office of the President Nondepartmental witnesses Printed for the use of the Committee on Appropriations ( Available via the World Wide Web: http://www.access.gpo.gov/congress/senate U.S. GOVERNMENT PRINTING OFFICE 62±810 cc WASHINGTON : 2000 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 COMMITTEE ON APPROPRIATIONS TED STEVENS, Alaska, Chairman THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont SLADE GORTON, Washington FRANK R. LAUTENBERG, New Jersey MITCH MCCONNELL, Kentucky TOM HARKIN, Iowa CONRAD BURNS, Montana BARBARA A. MIKULSKI, Maryland RICHARD C. SHELBY, Alabama HARRY REID, Nevada JUDD GREGG, New Hampshire HERB KOHL, Wisconsin ROBERT F. BENNETT, Utah PATTY MURRAY, Washington BEN NIGHTHORSE CAMPBELL, Colorado BYRON DORGAN, North Dakota LARRY CRAIG, Idaho DIANNE FEINSTEIN, California KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois JON KYL, Arizona STEVEN J. CORTESE, Staff Director LISA SUTHERLAND, Deputy Staff Director JAMES H. ENGLISH, Minority Staff Director SUBCOMMITTEE ON TREASURY AND GENERAL GOVERNMENT BEN NIGHTHORSE CAMPBELL, Colorado, Chairman RICHARD C. SHELBY, Alabama BYRON L. DORGAN, North Dakota JON KYL, Arizona BARBARA A. MIKULSKI, Maryland TED STEVENS, Alaska ROBERT C. BYRD, West Virginia (ex officio) (ex officio) Professional Staff PATRICIA A. RAYMOND TAMMY PERRIN LULA EDWARDS CHIP WALGREN (Minority) Administrative Support LIS BLEVINS (Minority) (II) CONTENTS THURSDAY, MARCH 23, 2000 Page Department of the Treasury: Internal Revenue Service ...................................... 1 THURSDAY, MARCH 30, 2000 Department of the Treasury ................................................................................... 85 Bureau of Alcohol, Tobacco and Firearms ...................................................... 115 U.S. Customs Service ....................................................................................... 100 U.S. Secret Service ........................................................................................... 126 Federal Law Enforcement Training Center ................................................... 148 Financial Crimes Enforcement Network ........................................................ 155 TUESDAY, APRIL 4, 2000 Department of the Treasury: Office of the Secretary ........................................... 199 THURSDAY, APRIL 6, 2000 Executive Office of the President: Office of National Drug Control Policy ......... 231 Material submitted subsequent to the conclusion of hearing: Merit Systems Protection Board ..................................................................... 285 Office of Personnel Management ..................................................................... 289 Nondepartmental witnesses .................................................................................... 295 (III) TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2001 THURSDAY, MARCH 23, 2000 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 10 a.m., in room SD±124, Dirksen Sen- ate Office Building, Hon. Ben Nighthorse Campbell (chairman) pre- siding. Present: Senators Campbell, Stevens, and Dorgan. DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE STATEMENT OF CHARLES ROSSOTTI, COMMISSIONER OPENING REMARKS Senator CAMPBELL. Good morning, the committee will be in order. This morning we will be talking with the Commissioner of the Internal Revenue Service, Mr. Charles Rossotti. Welcome, Com- missioner. Glad to see you again. The IRS is requesting a 9 percent increase for fiscal year 2001, almost $729 million more than this year. Over half of that is for inflationary increases to allow the agency to at least maintain cur- rent levels. The Commissioner has requested $119 million as the next installment for the information technology investments ac- count. Congress has already provided $506 million for this com- puter modernization project with stringent requirements for the re- lease of funds. We have approved the release of only $68 million so far and we are reviewing a third request to release $176.3 mil- lion. I am sure we will be talking about this in greater detail this morning. The Commissioner is also asking for $42 million more to reorga- nize the agency. Commissioner, the agency has come a long way, and we are very proud of it. I also have no doubt that the ongoing reorganization needs to be done, but I would like to know how they are going to spend the $140 million provided so far. Last, but certainly not least, the Commissioner is asking for a total of $217 million in supplemental and regular appropriations for staffing tax administration for balance and equity, also known as STABLE. As I understand it, this initiative would provide al- most 2,000 additional staff throughout the IRS. Each of these re- (1) 2 quests might certainly be justified on their own merits. The prob- lem arises when there just is not enough money to go around. It should be noted that the requested level for the Treasury and General Government bill is almost 20 percent more than last year, and last year was a good year for agencies under our jurisdiction I believe. As everyone is aware, Congress has not yet passed a budget resolution and therefore has not made a decision about the funding levels for fiscal year 2001. I think it is safe to assume that the allocation this subcommittee will receive will not be sufficient to fund all the requests made by agencies under our jurisdiction. Having said that however, I would like to note that the Commis- sioner is to be commended for what he has already accomplished at the Internal Revenue Service. Effecting changes at an agency the size of the IRS is like trying to turn an aircraft carrier around on a dime. I certainly appreciate the trips you have made to Colo- rado, as I am sure Senator Dorgan appreciates your trips to North Dakota. You have envisioned an agency which you believe can ac- complish competing goals, and that is not easy. Being customer friendly, while at the same time collecting taxes due is a tough thing to do. It is my hope that we will be able to provide sufficient funding to help you in your efforts. With that I would like to turn to Senator Dorgan. STATEMENT OF SENATOR BYRON L. DORGAN Senator DORGAN. Mr. Chairman, thank you very much. Let me also thank the Commissioner for being here today with your staff. Last year, Mr. Commissioner, you talked about the efforts that you were undertaking to put the word service back in the Internal Revenue Service in a real way, and I must say that you have kept your word. In North Dakota, for example, we have tax-mobiles moving around the State, and I met one of your employees in an airport recently and I could just see the excitement in her eyes as she was telling me about being out in the tax-mobile. She liked that. She liked it because she felt that as an employee of the Fed- eral Government she was actually able to go out and help people and extend service. That is one of the employees down in the ranks someplace who appreciated it, not even discussing the appreciation I am sure the taxpayers in North Dakota and around the country have. You have done a number of other things, problem-solving days and a range of other changes in hours, and I think that is very im- portant. As a former tax administrator I know, and you especially know, that this tax system of ours is still ``voluntary.'' If 10 million people decide they are not paying taxes, you do not have a ghost of a chance to enforce 10 million actions in court against them. Peo- ple pay taxes on a voluntary basis in this country because they un- derstand they have an obligation to do so and feel a responsibility to do so. As long as we have widespread compliance in this system, this system will work. Part of that is for the Internal Revenue Service to extend a help- ing hand through expanded service to taxpayers. So I want to just say, thanks for keeping your word and moving down the road in that direction. That I think is helpful to us and helpful to our tax system. 3 I have some of the same comments that Senator Campbell has made. I do not know exactly how we are going to be able to deal with all of the interests and needs with respect to the allocations of the subcommittee, but we are going to do the best we can. Let me just include the rest of my statement in the record with just one additional statement. I remain interested, Mr. Commis- sioner, in a range of issues on enforcement, the aggressive use of tax shelters is very troubling these days. I have read a great deal about it. I continue to be very troubled by the issue of transfer pric- ing and wonder whether you have the resources to deal with that. So we will talk about a few of these issues, but let me put the rest of my statement in the record and welcome you and your staff to the subcommittee this morning. [The statement follows:] PREPARED STATEMENT OF SENATOR BYRON L. DORGAN Thank you, Mr. Chairman. As occurred last year, Commissioner Rossotti is the first witness before this subcommittee for this year's round of budget hearings. And as the Internal Revenue Service is the largest single component of this subcommit- tee's budgetÐin terms of both level of appropriations as well as total employeesÐ it is only fitting that the IRS Commissioner go first. I want to first recognize the efforts that the Commissioner has undertaken to put ``service'' back into the Internal Revenue Service since we met approximately 13 months ago.
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