Congressional Record United States Th of America PROCEEDINGS and DEBATES of the 105 CONGRESS, SECOND SESSION

E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 105 CONGRESS, SECOND SESSION

Vol. 144 WASHINGTON, MONDAY, MAY 4, 1998 No. 53 House of Representatives The House met at 2 p.m. and was Mr. HORN led the Pledge of Alle- bill to the Committee on Government called to order by the Speaker pro tem- giance as follows: Reform and Oversight. pore (Mr. PEASE). I pledge allegiance to the Flag of the The SPEAKER pro tempore. Is the f United States of America, and to the Repub- gentlewoman opposed to the Senate lic for which it stands, one nation under God, bill? DESIGNATION OF THE SPEAKER indivisible, with liberty and justice for all. Ms. NORTON. Yes, Madam Speaker. PRO TEMPORE f The SPEAKER pro tempore. The The SPEAKER pro tempore laid be- MESSAGE FROM THE SENATE Clerk will report the motion to com- fore the House the following commu- mit. A message from the Senate by Mr. nication from the Speaker: The Clerk read as follows: Lundregan, one of its clerks, an- WASHINGTON, DC, nounced that the Senate had passed a Ms. NORTON moves to commit the bill S. May 4, 1998. 1502 to the Committee on Government Re- bill of the following title, in which con- I hereby designate the Honorable EDWARD form and Oversight. currence of the House is requested: A. PEASE to act as Speaker pro tempore on The SPEAKER pro tempore. The mo- S. 1900. An act to establish a commission this day. tion is not debatable. NEWT GINGRICH, to examine issues pertaining to the disposi- Speaker of the House of Representatives. tion of Holocaust-era assets in the United Without objection, the previous question is ordered on the motion to com- f States before, during, and after World War II, and to make recommendations to the mit. PRAYER President on further action, and for other There was no objection. purposes. The SPEAKER pro tempore. The The Chaplain, Rev. James David f question is on the motion to commit. Ford, D.D., offered the following pray- The question was taken; and the er: ANNOUNCEMENT BY THE SPEAKER Speaker pro tempore announced that As the morning brings light into a PRO TEMPORE the noes appeared to have it. dark world, so may your gifts of love, The SPEAKER pro tempore. The RECORDED VOTE O God, bring light and blessing to all Chair desires to announce that pursu- people. With the frustrations that ant to clause 4 of rule I, the Speaker Ms. NORTON. Madam Speaker, I de- mark anyone’s day we are grateful that signed the following enrolled bill on mand a recorded vote. you illumine our days and comfort our Thursday, April 30, 1998: A recorded vote was ordered. souls. Whether we are living on the H.R. 3579, making emergency supple- The SPEAKER pro tempore. Pursu- mountain top of joyful experience or mental appropriations for the fiscal ant to the provisions of clause 5 of rule walking through the valley of the shad- year ending September 30, 1998, and for XV, the Chair announces that she will ow of death, we know your presence other purposes. reduce to a minimum of 5 minutes the period of time within which a vote by can lead us and give us peace. In your f name we pray. Amen. electronic device, if ordered, will be CORRECTION TO THE CONGRES- taken on the question of passage of the f SIONAL RECORD OF THURSDAY, Senate bill. THE JOURNAL APRIL 30, 1998, PAGES H2669, H2670 The vote was taken by electronic de- The SPEAKER pro tempore. The AND H2671, RECORDED VOTE vice, and there were—ayes 198, noes 224, Chair has examined the Journal of the NUMBERED 118, MOTION TO COM- not voting 11, as follows: last day’s proceedings and announces MIT OFFERED BY MS. NORTON; [Roll No. 118] to the House his approval thereof. AND RECORDED VOTE NUM- AYES—198 BERED 119, PASSAGE OF THE Pursuant to clause 1, rule I, the Jour- Abercrombie Berry Brown (OH) nal stands approved. BILL S. 1502, THE DISTRICT OF Ackerman Bishop Capps COLUMBIA STUDENT OPPOR- Allen Blagojevich Cardin f TUNITY SCHOLARSHIP ACT OF Andrews Blumenauer Carson Baesler Bonior Clay PLEDGE OF ALLEGIANCE 1997 Baldacci Borski Clayton Barcia Boswell Clement The SPEAKER pro tempore. Will the Barrett (WI) Boucher Clyburn gentleman from California (Mr. HORN) MOTION TO COMMIT OFFERED BY MS. NORTON Becerra Boyd Condit come forward and lead the House in the Ms. NORTON. Madam Speaker, I Bentsen Brown (CA) Conyers Pledge of Allegiance. offer a motion to commit the Senate Berman Brown (FL) Costello

b This symbol represents the time of day during the House proceedings, e.g., b 1407 is 2:07 p.m. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor.

H2739 H2740 CONGRESSIONAL RECORD — HOUSE May 4, 1998 Coyne Kildee Pomeroy Lazio Petri Skeen Condit Hunter Radanovich Cramer Kilpatrick Poshard Leach Pickering Smith (NJ) Cook Hyde Redmond Cummings Kind (WI) Price (NC) Lewis (CA) Pickett Smith (OR) Cooksey Inglis Regula Danner Kleczka Rahall Lewis (KY) Pitts Smith (TX) Cox Istook Riggs Davis (FL) Klink Ramstad Linder Pombo Smith, Linda Crane Jenkins Riley Davis (IL) Kucinich Rangel Livingston Porter Snowbarger Cubin Johnson, Sam Rogan DeFazio LaFalce Reyes LoBiondo Portman Solomon Cunningham Jones Rogers DeGette Lampson Rivers Lucas Pryce (OH) Souder Davis (VA) Kasich Rohrabacher Delahunt Lantos Rodriguez Manzullo Quinn Spence Deal Kelly Ros-Lehtinen DeLauro Lee Roemer McCollum Radanovich Stearns DeLay Kim Royce Deutsch Levin Rothman McCrery Redmond Stump Diaz-Balart King (NY) Ryun Dicks Lewis (GA) Roybal-Allard McDade Regula Sununu Dickey Kingston Salmon Dingell Lipinski Rush McInnis Riggs Talent Doolittle Klug Sanford Doggett Lofgren Sabo McIntosh Riley Tauzin Dreier Knollenberg Saxton Dooley Lowey Sanchez McKeon Rogan Taylor (MS) Duncan Kolbe Scarborough Doyle Luther Sanders Metcalf Rogers Taylor (NC) Dunn LaHood Schaefer, Dan Edwards Maloney (CT) Sawyer Mica Rohrabacher Thomas Ehlers Largent Schaffer, Bob Engel Maloney (NY) Schumer Miller (FL) Ros-Lehtinen Thornberry Ehrlich Latham Sensenbrenner Eshoo Manton Scott Moran (KS) Roukema Thune Emerson LaTourette Sessions Etheridge Markey Serrano Moran (VA) Royce Tiahrt Ensign Lazio Shadegg Evans Martinez Sherman Myrick Ryun Upton Everett Lewis (CA) Shaw Farr Mascara Sisisky Nethercutt Salmon Walsh Ewing Lewis (KY) Shays Fattah Matsui Skaggs Neumann Sanford Wamp Foley Linder Shimkus Fazio McCarthy (MO) Skelton Ney Saxton Watkins Forbes Lipinski Shuster Filner McCarthy (NY) Slaughter Northup Scarborough Watts (OK) Fossella Livingston Skeen Ford McDermott Smith, Adam Norwood Schaefer, Dan Weldon (FL) Fowler Lucas Smith (NJ) Frank (MA) McGovern Snyder Nussle Schaffer, Bob Weldon (PA) Fox Manzullo Smith (OR) Frost McHale Spratt Oxley Sensenbrenner Weller Franks (NJ) McCollum Smith (TX) Furse McIntyre Stabenow Packard Sessions White Frelinghuysen McCrery Smith, Linda Gejdenson McKinney Stark Pappas Shadegg Whitfield Gallegly McDade Snowbarger Gephardt McNulty Stenholm Paul Shaw Wicker Ganske McInnis Solomon Gordon Meehan Stokes Paxon Shays Wolf Gekas McIntosh Souder Green Meeks (NY) Strickland Pease Shimkus Young (FL) Gibbons McKeon Spence Gutierrez Menendez Stupak Peterson (PA) Shuster Gilchrest Metcalf Stearns Hall (OH) Millender- Tanner Gillmor Mica Stump Hamilton McDonald Tauscher NOT VOTING—11 Gilman Miller (FL) Sununu Harman Miller (CA) Thompson Bateman Kennelly Sandlin Gingrich Moran (KS) Talent Hastings (FL) Minge Thurman Bunning McHugh Smith (MI) Goode Moran (VA) Tauzin Hefner Mink Tierney Dixon Meek (FL) Young (AK) Goodlatte Myrick Taylor (MS) Hilliard Moakley Torres Gonzalez Parker Goodling Nethercutt Taylor (NC) Hinchey Mollohan Towns Goss Neumann Thomas Hinojosa Morella Traficant Graham Ney Thornberry Holden Murtha Turner b 1453 Granger Northup Thune Hooley Nadler Velazquez The Clerk announced the following Greenwood Norwood Tiahrt Hoyer Neal Vento Gutknecht Nussle Upton Jackson (IL) Oberstar Visclosky pairs: Hansen Oxley Walsh Jackson-Lee Obey Waters On this vote: Hastert Packard Wamp Watt (NC) Hastings (WA) Pappas Watkins (TX) Olver Mrs. Kennelly of Connecticut for, with Mr. Jefferson Ortiz Waxman Hayworth Paxon Watts (OK) John Owens Wexler Young of Arkansas against. Hefley Pease Weldon (FL) Johnson (WI) Pallone Weygand Mrs. Meek of Florida for, with Mr. Smith Herger Peterson (PA) Weldon (PA) Johnson, E. B. Pascrell Wise of Michigan against. Hill Petri Weller Kanjorski Pastor Woolsey Mrs. CHENOWETH changed her vote Hilleary Pickering White Kaptur Payne Wynn Hobson Pitts Whitfield Kennedy (MA) Pelosi Yates from ‘‘aye’’ to ‘‘no.’’ Hoekstra Pombo Wicker Kennedy (RI) Peterson (MN) Mr. VENTO and Mr. ANDREWS Horn Porter Wolf changed their vote from ‘‘no’’ to ‘‘aye.’’ Hostettler Portman Young (FL) NOES—224 Houghton Pryce (OH) So the motion to commit was re- Hulshof Quinn Aderholt Cooksey Goss jected. Archer Cox Graham NOES—206 Armey Crane The result of the vote was announced Granger Abercrombie DeFazio Holden Bachus Crapo as above recorded. Greenwood Ackerman DeGette Hooley Baker Cubin Gutknecht The SPEAKER pro tempore (Mrs. Allen Delahunt Hoyer Ballenger Cunningham Hall (TX) EMERSON). The question is on the pas- Andrews DeLauro Hutchinson Barr Davis (VA) Hansen Baesler Deutsch Jackson (IL) Barrett (NE) Deal sage of the Senate bill. Hastert Baldacci Dicks Jackson-Lee Bartlett DeLay Hastings (WA) The question was taken; and the Barcia Dingell (TX) Barton Diaz-Balart Hayworth Speaker pro tempore announced that Barrett (WI) Doggett Jefferson Bass Dickey Hefley Becerra Dooley John Bereuter Doolittle the ayes appeared to have it. Herger Bentsen Doyle Johnson (CT) Bilbray Dreier RECORDED VOTE Hill Berman Edwards Johnson (WI) Bilirakis Duncan Hilleary Ms. NORTON. Madam Speaker, I de- Berry Engel Johnson, E. B. Bliley Dunn Hobson Bishop English Kanjorski Blunt Ehlers mand a recorded vote. Hoekstra Blagojevich Eshoo Kaptur Boehlert Ehrlich Horn A recorded vote was ordered. Blumenauer Etheridge Kennedy (MA) Boehner Emerson Hostettler The SPEAKER pro tempore. This Boehlert Evans Kennedy (RI) Bonilla English Houghton Bonior Farr Kildee Bono Ensign will be a 5-minute vote. Hulshof Borski Fattah Kilpatrick Brady Everett The vote was taken by electronic de- Hunter Boswell Fawell Kind (WI) Bryant Ewing Hutchinson vice, and there were—ayes 214, noes 206, Boucher Fazio Kleczka Burr Fawell Hyde answered ‘‘present’’ 1, not voting 12, as Brown (FL) Filner Klink Burton Foley Inglis Brown (OH) Ford Kucinich Buyer Forbes follows: Istook Capps Frank (MA) LaFalce Callahan Fossella Jenkins [Roll No. 119] Cardin Frost Lampson Calvert Fowler Johnson (CT) Carson Furse Lantos Camp Fox AYES—214 Johnson, Sam Clay Gejdenson Leach Campbell Franks (NJ) Aderholt Bilirakis Camp Jones Clayton Gephardt Lee Canady Frelinghuysen Archer Bliley Campbell Kasich Clement Gordon Levin Cannon Gallegly Armey Blunt Canady Kelly Clyburn Green Lewis (GA) Castle Ganske Bachus Bonilla Cannon Kim Conyers Gutierrez LoBiondo Chabot Gekas Baker Bono Castle King (NY) Costello Hall (OH) Lofgren Chambliss Gibbons Ballenger Boyd Chabot Kingston Coyne Hamilton Lowey Chenoweth Gilchrest Barr Brady Chambliss Klug Cramer Harman Luther Christensen Gillmor Barrett (NE) Bryant Chenoweth Knollenberg Crapo Hastings (FL) Maloney (CT) Coble Gilman Bartlett Burr Christensen Kolbe Cummings Hefner Maloney (NY) Coburn Gingrich Barton Burton Coble LaHood Danner Hilliard Manton Collins Goode Bass Buyer Coburn Largent Davis (FL) Hinchey Markey Combest Goodlatte Bereuter Callahan Collins Latham Davis (IL) Hinojosa Martinez Cook Goodling LaTourette Bilbray Calvert Combest May 4, 1998 CONGRESSIONAL RECORD — HOUSE H2741 Mascara Pastor Snyder H.R. 3579. An act making emergency sup- 8844. A letter from the Secretary of De- Matsui Payne Spratt plemental appropriations for the fiscal year fense, transmitting an interim report on the McCarthy (MO) Pelosi Stabenow ending September 30, 1998, and for other pur- progress of the Mental Health Wraparound McCarthy (NY) Peterson (MN) Stark McDermott Pickett Stenholm poses. Demonstration Project; to the Committee on McGovern Pomeroy Stokes f National Security. McHale Poshard Strickland 8845. A letter from the Assistant Secretary McHugh Price (NC) Stupak BILLS PRESENTED TO THE for Special Education and Rehabilitative McIntyre Rahall Tanner PRESIDENT Services, Department of Education, trans- McKinney Ramstad Tauscher mitting Final Priorities——Technical Assist- McNulty Rangel Thompson Mr. THOMAS, from the Committee ance and Dissemination to Improve Services Meehan Reyes Thurman on House Oversight, reported that that and Results for Children with Disabilities; Meeks (NY) Rivers Tierney Menendez Rodriguez Torres committee did on the following dates and Research and Innovation to Improve Millender- Roemer Towns present to the President, for his ap- Services and Results for Children with Dis- McDonald Rothman Traficant proval, a bill, and a joint resolution of abilities, pursuant to 20 U.S.C. 1232(f); to the Miller (CA) Roukema Turner the House of the following titles: Committee on Education and the Workforce. Minge Roybal-Allard Velazquez 8846. A letter from the Acting Assistant Mink Rush Vento On April 30, 1998: General Counsel for Regulations, Depart- Moakley Sabo Visclosky H.R. 3579. An act making emergency sup- ment of Education, transmitting the Depart- Mollohan Sanchez Waters plemental appropriations for the fiscal year ment’s final rule—Technical Assistance and Morella Sanders Watt (NC) ending September 30, 1998, and for other pur- Dissemination to Improve Services and Re- Murtha Sawyer Waxman poses. Nadler Schumer Wexler sults for Children with Disabilities—received Neal Scott Weygand On May 1, 1998: April 30, 1998, pursuant to 5 U.S.C. Oberstar Serrano Wise H.J. Res. 102. Joint resolution expressing 801(a)(1)(A); to the Committee on Education Obey Sherman Woolsey the sense of the Congress on the occasion of and the Workforce. Olver Sisisky Wynn the 50th anniversary of the founding of the 8847. A letter from the Director, Office of Ortiz Skaggs Yates modern State of Israel and reaffirming the Rulemaking Coordination, Department of Owens Skelton Young (AK) bonds of friendship and cooperation between Energy, transmitting the Department’s final Pallone Slaughter the United States and Israel. Pascrell Smith, Adam rule—Management of Financial Assistance f Report Deliverables [98–02] received April 17, ANSWERED ‘‘PRESENT’’—1 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Paul ADJOURNMENT Committee on Commerce. NOT VOTING—12 Mr. HORN. Mr. Speaker, I move that 8848. A letter from the Director, Office of the House do now adjourn. Rulemaking Coordination, Department of Bateman Dixon Meek (FL) Energy, transmitting the Department’s final Boehner Gonzalez Parker The motion was agreed to; accord- rule—Environment, Safety and Health Re- Brown (CA) Hall (TX) Sandlin ingly (at 2 o’clock and 3 minutes p.m.), Bunning Kennelly Smith (MI) porting [DOE O 231.1 Chg 2] received April 14, under its previous order, the House ad- 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the b 1504 journed until tomorrow, Tuesday, May Committee on Commerce. The Clerk announced the following 5, 1998, at 12:30 p.m. for morning hour 8849. A letter from the General Counsel, pairs: debates. Department of Transportation, transmitting the Department’s final rule—Parts and Ac- On this vote: f cessories Necessary for Safe Operation; Mr. Bunning for, with Mrs. Kennelly of Antilock Brake Systems [FHWA Docket No. Connecticut against. EXECUTIVE COMMUNICATIONS, ETC. MC–94–31; FHWA–97–2318] (RIN: 2125–AD42) Mr. Smith of Michigan for, with Mrs. Meek received April 30, 1998, pursuant to 5 U.S.C. of Florida against. Under clause 2 of rule XXIV, execu- 801(a)(1)(A); to the Committee on Commerce. Mr. YOUNG of Alaska changed his tive communications were taken from 8850. A letter from the Director, Office of vote from ‘‘aye’’ to ‘‘no.’’ the Speaker’s table and referred as fol- Regulatory Management and Information, So the Senate bill was passed. lows: Environmental Protection Agency, transmitting the Agency’s final rule—Approval and The result of the vote was announced 8839. A letter from the Administrator, Ag- as above recorded. Promulgation of Implementation Plans; New ricultural Marketing Service, transmitting York State Implementations Plan Revision A motion to reconsider was laid on the Service’s final rule—Tart Cherries Grown [Region II Docket No. NY25–2–173b, FRL– the table. in the States of Michigan, et al.; Final Free 5995–4] received April 30, 1998, pursuant to 5 f and Restricted Percentages for the 1997–98 U.S.C. 801(a)(1)(A); to the Committee on Crop Year for Tart Cherries [FV97–930–6 FR] Commerce. EXTENSION OF REMARKS received May 1, 1998, pursuant to 5 U.S.C. 8851. A letter from the Director, Office of By unanimous consent, permission to 801(a)(1)(A); to the Committee on Agri- Regulatory Management and Information, revise and extend remarks was granted culture. Environmental Protection Agency, transmit- 8840. A letter from the Director, Office of to: ting the Agency’s final rule—Technical Regulatory Management and Information, Amendments to OMB Control Numbers Mr. HORN, and to include therein ex- Environmental Protection Agency, transmit- [OPPTS–00191; FRL–5724–3] received April 28, traneous material, notwithstanding ting the Agency’s final rule—Esfenvalerate; 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the the fact that it exceeds 2 pages of the Pesticide Tolerances [OPP–300634; FRL–5781– Committee on Commerce. RECORD and is estimated by the Public 8] (RIN: 2070–AB78) received April 27, 1998, 8852. A letter from the Director, Office of Printer to cost $1,497. pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Regulatory Management and Information, The following Members (at the re- mittee on Agriculture. Environmental Protection Agency, transmit- quest of Mr. HORN) and to include ex- 8841. A letter from the Administrator, ting the Agency’s final rule—Substituted traneous matter: Farm Service Agency, transmitting the Phenol; Significant New Use Rule [OPPTS– Agency’s final rule—Subordination of Direct Mr. FORBES. 50622D; FRL–5782–5] (RIN: 2070–AB27) received Loan Basic Security to Secure a Guaranteed April 27, 1998, pursuant to 5 U.S.C. Mr. WOLF. Line of Credit (RIN: 0560–AE92) received 801(a)(1)(A); to the Committee on Commerce. Mr. HORN. April 30, 1998, pursuant to 5 U.S.C. 8853. A letter from the Director, Office of Mr. SCHUMER. 801(a)(1)(A); to the Committee on Agri- Regulatory Management and Information, Mr. BONIOR. culture. Environmental Protection Agency, transmit- Mr. SERRANO. 8842. A letter from the Administrator, ting the Agency’s final rule—Approval and Mr. PALLONE. Farm Service Agency, transmitting the Promulgation of Implementation Plans Mr. KIND. Agency’s final rule—Dairy Indemnity Pay- Georgia: Approval of Revisions for Transpor- f ment Program (RIN: 0560–AF–30) received tation Control Measures [GA–035–9807a; FRL– April 27, 1998, pursuant to 5 U.S.C. 6004–8] received April 27, 1998, pursuant to 5 ENROLLED BILLS SIGNED 801(a)(1)(A); to the Committee on Agri- U.S.C. 801(a)(1)(A); to the Committee on Mr. THOMAS, from the Committee culture. Commerce. on House Oversight, reported that that 8843. A letter from the Administrator, For- 8854. A letter from the Director, Office of eign Agricultural Service, transmitting the Regulatory Management and Information, committee had examined and found Service’s final rule—Cooperative Marketing Environmental Protection Agency, transmit- truly enrolled a bill of the House of the Associations (RIN: 0560–AF33) received April ting the Agency’s final rule—Hazardous following title, which was thereupon 27, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to Waste Management System; Identification signed by the Speaker: the Committee on Agriculture. and Listing of Hazardous Waste; Recycled H2742 CONGRESSIONAL RECORD — HOUSE May 4, 1998 Used Oil Management Standards [FRL–5969– transmitting the Board’s annual report of 8877. A letter from the General Counsel, 4] received April 27, 1998, pursuant to 5 U.S.C. activities for fiscal year 1997, pursuant to Department of Transportation, transmitting 801(a)(1)(A); to the Committee on Commerce. D.C. Code section 1—732 and 1—734(a)(1)(A); the Department’s final rule—Airworthiness 8855. A letter from the Director, Office of to the Committee on Government Reform Directives; Boeing Model 747–200F and -200C Regulatory Management and Information, and Oversight. Series Airplanes [Docket No. 98–NM–127–AD; Environmental Protection Agency, transmit- 8866. A letter from the Executive Director, Amendment 39–10498; AD 98–09–17] (RIN: 2120– ting the Agency’s final rule—Oklahoma: Committee for Purchase from People Who AA64) received April 27, 1998, pursuant to 5 Final Authorization and Incorporation By Are Blind or Severely Disabled, transmitting U.S.C. 801(a)(1)(A); to the Committee on Reference of State Hazardous Waste Manage- the Committee’s final rule—Additions to the Transportation and Infrastructure. ment Program [FRL–6003–4] received April Procurement List received April 27, 1998, 8878. A letter from the General Counsel, 27, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Department of Transportation, transmitting the Committee on Commerce. mittee on Government Reform and Over- the Department’s final rule—Special Flight 8856. A letter from the Director, Office of sight. Rules in the Vicinity of Grand Canyon Na- Regulatory Management and Information, 8867. A letter from the Executive Director, tional Park [Docket No. 28537; Amendment Environmental Protection Agency, transmit- Committee For Purchase From People Who Nos. 91–257, 121–270, 135–72, 93–76] received ting the Agency’s final rule—Standards of Are Blind Or Severely Disabled, transmitting April 27, 1998, pursuant to 5 U.S.C. Performance for New Stationary Sources: the Committee’s final rule—Procurement 801(a)(1)(A); to the Committee on Transpor- General Provisions; National Emission List Additions and Deletions received April tation and Infrastructure. Standards for Hazardous Air Pollutants for 29, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to 8879. A letter from the General Counsel, Source Categories: General Provisions [AD- the Committee on Government Reform and Department of Transportation, transmitting FRL–6003–7] (RIN: 2060–AH94) received April Oversight. the Department’s final rule—Airworthiness 27, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to 8868. A letter from the Human Resources Directives; EXTRA Flugzeugbau GmbH Mod- the Committee on Commerce. Manager, CoBank, transmitting the annual els EA–300 and EA–300S Airplanes [Docket 8857. A letter from the Director, Office of report of the Comptrollers’ ACB Retirement No. 97–CE–91–AD; Amendment 39–10490; AD Regulatory Management and Information, Plan for the year ending December 31, 1996, 98–09–10] (RIN: 2120–AA64) received April 27, Environmental Protection Agency, transmit- pursuant to 31 U.S.C. 9503(a)(1)(B); to the 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the ting the Agency’s final rule—OMB Approval Committee on Government Reform and Committee on Transportation and Infra- Numbers Under the Paperwork Reduction Oversight. structure. 8869. A letter from the Associate Attorney Act [FRL–5670–1] received April 28, 1998, pur- 8880. A letter from the General Counsel, General, Department of Justice, transmit- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- Department of Transportation, transmitting ting a report of activities under the Freedom tee on Commerce. the Department’s final rule—Airworthiness of Information Act for the calendar year 8858. A letter from the Director, Office of Directives; Avions Pierre Robin Model R3000/ 1997, pursuant to 5 U.S.C. 552(d); to the Com- Regulatory Management and Information, 160 Airplanes [Docket No. 97–CE–97–AD; mittee on Government Reform and Over- Environmental Protection Agency, transmit- Amendment 39–10488; AD 98–09–08] (RIN: 2120– sight. ting the Agency’s final rule—OMB Approval 8870. A letter from the General Counsel, AA64) received April 27, 1998, pursuant to 5 Numbers Under the Paperwork Reduction Department of Transportation, transmitting U.S.C. 801(a)(1)(A); to the Committee on Act [FRL–5807–2] received April 28, 1998, pur- the Department’s final rule—Amendment of Transportation and Infrastructure. suant to 5 U.S.C. 801(a)(1)(A); to the Commit- Department of Transportation Acquisition 8881. A letter from the General Counsel, tee on Commerce. Regulations [48 CFR Parts 1201, 1202, 1203, Department of Transportation, transmitting 8859. A letter from the Director, Office of 1205, 1206, 1209, 1214, 1216, 1217, 1222, 1224, 1225, the Department’s final rule—Airworthiness Regulatory Management and Information, 1236, 1237, 1246, and 1252] received April 30, Directives; Lockheed Model L–1011–385 Series Environmental Protection Agency, transmit- 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Airplanes [Docket No. 98–NM–125–AD; ting the Agency’s final rule—National Emis- Committee on Government Reform and Amendment 39–10492; AD 98–08–09] (RIN: 2120– sion Standards for Hazardous Air Pollutants; Oversight. AA64) received April 27, 1998, pursuant to 5 Final Standards for Hazardous Air Pollutant 8871. A letter from the Chairman, Federal U.S.C. 801(a)(1)(A); to the Committee on Emissions From Wood Furniture Manufac- Election Commission, transmitting a copy of Transportation and Infrastructure. turing Operations; Correction [AD-FRL–5833– the annual report in compliance with the 8882. A letter from the General Counsel, 6] received April 28, 1998, pursuant to 5 U.S.C. Government in the Sunshine Act during the Department of Transportation, transmitting 801(a)(1)(A); to the Committee on Commerce. calendar year 1997, pursuant to 5 U.S.C. the Department’s final rule—Airworthiness 8860. A letter from the Director, Office of 552b(j); to the Committee on Government Re- Directives; McDonnell Douglas Model MD–11 Regulatory Management and Information, form and Oversight. and MD–11F Series Airplanes [Docket No. 98– Environmental Protection Agency, transmit- 8872. A letter from the General Counsel, Of- NM–126–AD; Amendment 39–10491; AD 98–08– ting the Agency’s final rule—National Emis- fice of Management and Budget, transmit- 11] received April 27, 1998, pursuant to 5 sion Standards for Hazardous Air Pollutants; ting the Office’s final rule—Freedom of In- U.S.C. 801(a)(1)(A); to the Committee on Final Standards for Hazardous Air Pollutant formation Act (RIN: 0348–AB42) received May Transportation and Infrastructure. Emissions From Wood Furniture Manufac- 1, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to 8883. A letter from the General Counsel, turing Operations [AD-FRL–5336–2] received the Committee on Government Reform and Department of Transportation, transmitting April 28, 1998, pursuant to 5 U.S.C. Oversight. the Department’s final rule—Airworthiness 801(a)(1)(A); to the Committee on Commerce. 8873. A letter from the Director, Operations Directives; Fokker Model F27 Mark 100, 200, 8861. A letter from the Nuclear Waste and Finance, The American Battle Monu- 300, 400, 500, 600 and 700 Series Airplanes Technical Review Board, transmitting the ments Commission, transmitting a report of [Docket No. 96–NM–186–AD; Amendment 39– Board’s report entitled ‘‘1997 Findings and activities under the Freedom of Information 10486; AD 98–09–07] (RIN: 2120–AA64) received Recommendations,’’ pursuant to 42 U.S.C. Act for the calendar year 1997, pursuant to 5 April 27, 1998, pursuant to 5 U.S.C. 10268; to the Committee on Commerce. U.S.C. 552(d); to the Committee on Govern- 801(a)(1)(A); to the Committee on Transpor- 8862. A letter from the Assistant Secretary ment Reform and Oversight. tation and Infrastructure. for Legislative Affairs, Department of State, 8874. A letter from the Assistant Secretary 8884. A letter from the General Counsel, transmitting certification of a proposed li- for Mine Safety and Health, Department of Department of Transportation, transmitting cense for the export of defense articles or de- Labor, transmitting the Department’s final the Department’s final rule—Airworthiness fense services sold under a contract to the rule—Criteria and Procedures for Proposed Directives; British Aerospace BAe Model Sweden (Transmittal No. DTC–62–98), pursu- Assessment of Civil Penalties (RIN: 1219– ATP Airplanes [Docket No. 97–NM–226–AD; ant to 22 U.S.C. 2776(c); to the Committee on AA49) received April 28, 1998, pursuant to 5 Amendment 39–10484; AD 98–09–05] (RIN: 2120– International Relations. U.S.C. 801(a)(1)(A); to the Committee on Re- AA64) received April 27, 1998, pursuant to 5 8863. A letter from the Assistant Secretary sources. U.S.C. 801(a)(1)(A); to the Committee on for Legislative Affairs, Department of State, 8875. A letter from the Commissioner, Im- Transportation and Infrastructure. transmitting certification of a proposed li- migration and Naturalization Service, trans- 8885. A letter from the General Counsel, cense for the export of defense articles or de- mitting the Service’s final rule—Screening Department of Transportation, transmitting fense services sold under a contract to Tur- Requirements of Carriers [INS No. 1697–95] the Department’s final rule—Modification of key (Transmittal No. DTC–60–98), pursuant (RIN: 1115–AD97) received April 29, 1998, pur- Class E Airspace; Washington Court House, to 22 U.S.C. 2776(c); to the Committee on suant to 5 U.S.C. 801(a)(1)(A); to the Commit- OH [Airspace Docket No. 98–AGL–1] received International Relations. tee on the Judiciary. April 27, 1998, pursuant to 5 U.S.C. 8864. A letter from the Assistant Secretary 8876. A letter from the Commissioner, Im- 801(a)(1)(A); to the Committee on Transpor- for Legislative Affairs, Department of State, migration and Naturalization Service, trans- tation and Infrastructure. transmitting a report on the United States- mitting the Service’s final rule—Amendment 8886. A letter from the General Counsel, Hong Kong Policy Act of 1992, pursuant to 22 of the Regulatory Definition of Arriving Department of Transportation, transmitting U.S.C. 5731; to the Committee on Inter- Alien [INS Order No. 1868–97] (RIN: 1115– the Department’s final rule—Airworthiness national Relations. AE87) received April 27, 1998, pursuant to 5 Directives; Saab Model SAAB SF340A and 8865. A letter from the Executive Director, U.S.C. 801(a)(1)(A); to the Committee on the SAAB 340B Series Airplanes [Docket No. 97– District of Columbia Retirement Board, Judiciary. NM–135–AD; Amendment 39–10485; AD 98–09– May 4, 1998 CONGRESSIONAL RECORD — HOUSE H2743 06] (RIN: 2120–AA64) received April 27, 1998, Committee on Transportation and Infra- 8907. A letter from the General Counsel, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- structure. Department of Transportation, transmitting mittee on Transportation and Infrastruc- 8897. A letter from the General Counsel, the Department’s final rule—Airworthiness ture. Department of Transportation, transmitting Directives; Airbus Model A310 Series Air- 8887. A letter from the General Counsel, the Department’s final rule—Safety Zone; planes [Docket No. 96–NM–248–AD; Amend- Department of Transportation, transmitting Colorado River, Laughlin, Nevada [COTP ment 39–10501; AD 98–09–20] (RIN: 2120–AA64) the Department’s final rule—Airworthiness San Diego; 98–009] (RIN: 2115–AA97) received received April 30, 1998, pursuant to 5 U.S.C. Directives; Airbus Model A310 and A300–600 April 30, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- Series Airplanes [Docket No. 97–NM–337–AD; 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. Amendment 39–10482; AD 98–09–03] (RIN: 2120– tation and Infrastructure. 8908. A letter from the General Counsel, AA64) received April 27, 1998, pursuant to 5 8898. A letter from the General Counsel, Department of Transportation, transmitting U.S.C. 801(a)(1)(A); to the Committee on Department of Transportation, transmitting the Department’s final rule—Airworthiness Transportation and Infrastructure. the Department’s final rule—Drawbridge Op- Directives; Aerospatiale Model ATR42–200, 8888. A letter from the General Counsel, eration Regulations; Atlantic Intracoastal -300, and -320 Series Airplanes [Docket No. Department of Transportation, transmitting Waterway, Hobucken, NC [CGD05–98–030] 97–NM–303–AD; Amendment 39–10503; AD 98– the Department’s final rule—Airworthiness (RIN: 2115–AE47) received April 30, 1998, pur- 09–22] (RIN: 2120–AA64) received April 30, Directives; Aerospatiale Model ATR72 Series suant to 5 U.S.C. 801(a)(1)(A); to the Commit- 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Airplanes [Docket No. 97–NM–263–AD; tee on Transportation and Infrastructure. Committee on Transportation and Infra- Amendment 39–10483; AD 98–09–04] (RIN: 2120– 8899. A letter from the General Counsel, structure. AA64) received April 27, 1998, pursuant to 5 Department of Transportation, transmitting 8909. A letter from the General Counsel, U.S.C. 801(a)(1)(A); to the Committee on the Department’s final rule—Special Anchor- Department of Transportation, transmitting Transportation and Infrastructure. age Area: Special Anchorage, Hudson River, the Department’s final rule—Airworthiness 8889. A letter from the General Counsel, at Hyde Park, NY [CGD01 97–017] (RIN: 2115– Directives; Raytheon Aircraft Company Department of Transportation, transmitting AA98) received April 30, 1998, pursuant to 5 Model 1900D Airplanes [Docket No. 97–CE–68– the Department’s final rule—Revision of U.S.C. 801(a)(1)(A); to the Committee on AD; Amendment 39–10493; AD 98–09–12] (RIN: Class E Airspace; Alice, TX [Airspace Docket Transportation and Infrastructure. 2120–AA64) received April 30, 1998, pursuant 8900. A letter from the General Counsel, No. 97–ASW–27] received April 27, 1998, pursu- to 5 U.S.C. 801(a)(1)(A); to the Committee on Department of Transportation, transmitting ant to 5 U.S.C. 801(a)(1)(A); to the Committee Transportation and Infrastructure. the Department’s final rule—Security Zone on Transportation and Infrastructure. 8910. A letter from the General Counsel, Regulations: New London Harbor, Connecti- 8890. A letter from the General Counsel, Department of Transportation, transmitting cut [CGD01–97–104] (RIN: 2115–AA97) received Department of Transportation, transmitting the Department’s final rule—Airworthiness April 30, 1998, pursuant to 5 U.S.C. the Department’s final rule—Modification of Directives; Diamond Aircraft Industries 801(a)(1)(A); to the Committee on Transpor- Class E Airspace; Athens, OH [Airspace Models HK 36 TTS and HK 36 TTC Sailplanes tation and Infrastructure. Docket No. 98–AGL–3] received April 27, 1998, 8901. A letter from the General Counsel, [Docket No. 97–CE–132–AD; Amendment 39– pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Department of Transportation, transmitting 10495; AD 98–09–14] (RIN: 2120–AA64) received mittee on Transportation and Infrastruc- the Department’s final rule—Safety Zone: April 30, 1998, pursuant to 5 U.S.C. ture. San Diego Bay, CA [COTP San Diego, CA; 97– 801(a)(1)(A); to the Committee on Transpor- 8891. A letter from the General Counsel, 004] (RIN: 2115–AA97) received April 30, 1998, tation and Infrastructure. Department of Transportation, transmitting pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- 8911. A letter from the General Counsel, the Department’s final rule—Modification of mittee on Transportation and Infrastruc- Department of Transportation, transmitting Class E Airspace; Springfield, IL [Airspace ture. the Department’s final rule—Airworthiness Docket No. 98–AGL–4] received April 27, 1998, 8902. A letter from the General Counsel, Directives; Alexander Schleicher pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Department of Transportation, transmitting Segelflugzeugbau Model ASK 21 Sailplanes mittee on Transportation and Infrastruc- the Department’s final rule—Special Local [Docket No. 97–CE–104–AD; Amendment 39– ture. Regulations; Thunderboat Regatta [CGD11– 10494; AD 98–09–13] (RIN: 2120–AA64) received 8892. A letter from the General Counsel, 97–006] (RIN: 2115–AE46) received April 30, April 30, 1998, pursuant to 5 U.S.C. Department of Transportation, transmitting 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the 801(a)(1)(A); to the Committee on Transpor- the Department’s final rule—Airworthiness Committee on Transportation and Infra- tation and Infrastructure. Directives; Aerospatiale Model ATR–42 and structure. 8912. A letter from the General Counsel, ATR–72 Series Airplanes [Docket No. 98–NM– 8903. A letter from the General Counsel, Department of Transportation, transmitting 124–AD; Amendment 39–10497; AD 98–09–16] Department of Transportation, transmitting the Department’s final rule—Airworthiness (RIN: 2120–AA64) received April 27, 1998, pur- the Department’s final rule—Airworthiness Directives; Dornier Luftfahrt GmbH Models suant to 5 U.S.C. 801(a)(1)(A); to the Commit- Directives; Lockheed Model L–1011 Series 228–100, 228–101, 228–200, and 228–201 Airplanes tee on Transportation and Infrastructure. Airplanes Equipped with Rolls Royce Model [Docket No. 97–CE–124–AD; Amendment 39– 8893. A letter from the General Counsel, RB211–22B Engines [Docket No. 96–NM–59– 10391; AD 98–06–13] (RIN: 2120–AA64) received Department of Transportation, transmitting AD; Amendment 39–10504; AD 98–09–23] (RIN: April 30, 1998, pursuant to 5 U.S.C. the Department’s final rule—Airworthiness 2120–AA64) received April 30, 1998, pursuant 801(a)(1)(A); to the Committee on Transpor- Directives; Alexander Schleicher GmbH to 5 U.S.C. 801(a)(1)(A); to the Committee on tation and Infrastructure. Segelflugzeugbau Model ASH–26E Sailplanes Transportation and Infrastructure. 8913. A letter from the General Counsel, [Docket No. 97–CE–118–AD; Amendment 39– 8904. A letter from the General Counsel, Department of Transportation, transmitting 10489; AD 98–09–09] (RIN: 2120–AA64) received Department of Transportation, transmitting the Department’s final rule—Airworthiness April 27, 1998, pursuant to 5 U.S.C. the Department’s final rule—Airworthiness Directives; The New Piper Aircraft, Inc. 801(a)(1)(A); to the Committee on Transpor- Directives; Airbus Industrie Model A320 and Models PA–31, PA–31–300, PA–31–325, and PA tation and Infrastructure. A321 Series Airplanes [Docket No. 95–NM– 31–350 Airplanes [Docket No. 97–CE–48–AD; 8894. A letter from the General Counsel, 143–AD; Amendment 39–10499; AD 98–09–18] Amendment 39–10506; AD 98–09–25] (RIN: 2120– Department of Transportation, transmitting (RIN: 2120–AA64) received April 30, 1998, pur- AA64) received April 30, 1998, pursuant to 5 the Department’s final rule—Two-Way End- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- U.S.C. 801(a)(1)(A); to the Committee on of-Train Telemetry Devices and Certain Pas- tee on Transportation and Infrastructure. Transportation and Infrastructure. senger Train Operations [FRA Docket No. 8905. A letter from the General Counsel, 8914. A letter from the General Counsel, PB–9, Notice No. 11] (RIN: 2130–AB22) re- Department of Transportation, transmitting Department of Transportation, transmitting ceived April 30, 1998, pursuant to 5 U.S.C. the Department’s final rule—Airworthiness the Department’s final rule—Standard In- 801(a)(1)(A); to the Committee on Transpor- Directives; McDonnell Douglas Model DC–9, strument Approach Procedures; Miscellane- tation and Infrastructure. DC–9–80, and C–9 (Military) Series Airplanes, ous Amendments [Docket No. 29199; Amdt. 8895. A letter from the General Counsel, and Model MD–88 Airplanes [Docket No. 96– No.1865] (RIN: 2120–AA65) received April 30, Department of Transportation, transmitting NM–199–AD; Amendment 39–10500; AD 98–09– 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the the Department’s final rule—Passenger 19] (RIN: 2120–AA64) received April 30, 1998, Committee on Transportation and Infra- Train Emergency Preparedness [FRA Docket pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- structure. No. PTEP–1, Notice No. 3] (RIN: 2130–AA96) mittee on Transportation and Infrastruc- 8915. A letter from the General Counsel, received April 30, 1998, pursuant to 5 U.S.C. ture. Department of Transportation, transmitting 801(a)(1)(A); to the Committee on Transpor- 8906. A letter from the General Counsel, the Department’s final rule—Standard In- tation and Infrastructure. Department of Transportation, transmitting strument Approach Procedures; Miscellane- 8896. A letter from the General Counsel, the Department’s final rule—Airworthiness ous Amendments [Docket No. 29198; Amdt. Department of Transportation, transmitting Directives; British Aerospace (Jetstream) No. 1864] (RIN: 2120–AA65) received April 30, the Department’s final rule—Notice of Haz- Model 4101 Airplanes [Docket No. 97–NM–217– 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the ardous Conditions/Immediate Reporting of AD; Amendment 39–10502; AD 98–09–21] (RIN: Committee on Transportation and Infra- Casualties [CGD 94–027 and CGD 94–030] (RIN: 2120–AA64) received April 30, 1998, pursuant structure. 2115–AE82 and 2115–AE89) received April 30, to 5 U.S.C. 801(a)(1)(A); to the Committee on 8916. A letter from the General Counsel, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Transportation and Infrastructure. Department of Transportation, transmitting H2744 CONGRESSIONAL RECORD — HOUSE May 4, 1998 the Department’s final rule—Standard In- 8927. A letter from the Chief, Regulations vide for pension reform, and for other pur- strument Approach Procedures; Miscellane- Unit, Internal Revenue Service, transmitting poses; which was referred to the Committee ous Amendments [Docket No. 29164; Amdt. the Service’s final rule—Trade or Business on Ways and Means, and in addition to the No. 1860] (RIN: 2120–AA65) received April 30, Expenses [Revenue Ruling 98–25] received Committee on Education and the Workforce, 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the April 27, 1998, pursuant to 5 U.S.C. for a period to be subsequently determined Committee on Transportation and Infra- 801(a)(1)(A); to the Committee on Ways and by the Speaker, in each case for consider- structure. Means. ation of such provisions as fall within the ju- 8917. A letter from the General Counsel, 8928. A letter from the Chief, Regulations risdiction of the committee concerned. Department of Transportation, transmitting Unit, U.S. Customs Service, transmitting the f the Department’s final rule—Standard In- Service’s final rule—Abolishment of Boca strument Approach Procedures; Miscellane- Grande as a port of entry [T.D. 98–37] re- MEMORIALS ous Amendments [Docket No. 29163; Amdt. ceived May 1, 1998, pursuant to 5 U.S.C. Under clause 4 of rule XXII, memori- No. 1859] (RIN: 2120–AA65) received April 30, 801(a)(1)(A); to the Committee on Ways and als were presented and referred as fol- 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the Means. lows: Committee on Transportation and Infra- 8929. A letter from the Director, Office of 303. The SPEAKER presented a memorial structure. Thrift Supervision, transmitting the Office of the Legislature of the State of Idaho, rel- 8918. A letter from the General Counsel, of Thrift Supervision’s 1997 Annual Con- ative to House Joint Memorial No. 10 memo- Department of Transportation, transmitting sumer Report to Congress, pursuant to 12 rializing the recognition of state and county the Department’s final rule—Standard In- U.S.C. 1462a(g); jointly to the Committees on rights-of-way under Revised Statute 2477 and strument Approach Procedures; Miscellane- Banking and Financial Services and Com- take appropriate action to invalidate the ous Amendments [Docket No. 29162; Amdt. merce. proposed policy change for forest roadless No. 1858] (RIN: 2120–AA65) received April 30, 8930. A letter from the Secretary of En- areas; to the Committee on Agriculture. 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the ergy, transmitting the fourth annual report Committee on Transportation and Infra- 304. Also, a memorial of the Legislature of on Building Energy Efficiency Standards Ac- the State of Idaho, relative to House Joint structure. tivities, pursuant to Public Law 102—486, 8919. A letter from the General Counsel, Memorial No. 9 memorializing that Congress section 101(a) (106 Stat. 2786); jointly to the Department of Transportation, transmitting amend the Idaho Admission Bill to provide a Committees on Commerce and Transpor- the Department’s final rule—Amendment to reference to the Public School Permanent tation and Infrastructure. Class D and Class E Airspace; Cape Endowment Fund; to the Committee on Edu- 8931. A letter from the Secretary of En- Girardeau, MO [Airspace Docket No. 98–ACE– cation and the Workforce. ergy, transmitting a report entitled ‘‘A Role 2] received April 30, 1998, pursuant to 5 U.S.C. 305. Also, a memorial of the Legislature of 801(a)(1)(A); to the Committee on Transpor- for Federal Purchasing in Commercializing the State of Idaho, relative to House Joint tation and Infrastructure. New Energy-Efficient and Renewable-Energy Memorial No. 14 memorializing the Congress 8920. A letter from the General Counsel, Technologies’’; jointly to the Committees on of the United States to take action imme- Department of Transportation, transmitting Commerce and Science. diately to terminate the Interior Columbia the Department’s final rule—Amendment to 8932. A letter from the Assistant Secretary Basin Ecosystem Managment Project with Class D and Class E Airspace; St. Joseph, MO for Legislative Affairs, Department of State, no RECORD of Decision being Approved; to [Airspace Docket No. 98–ACE–6] received transmitting notification that the President the Committee on Resources. April 30, 1998, pursuant to 5 U.S.C. proposes to exercise his authority under sec- 306. Also, a memorial of the Legislature of 801(a)(1)(A); to the Committee on Transpor- tion 614(a)(1) of the Foreign Assistance Act the State of Idaho, relative to House Joint tation and Infrastructure. of 1961, as amended (the ‘‘Act’’), to authorize Memorial No. 13 memorializing the Congress 8921. A letter from the General Counsel, the furnishing of defense articles and serv- of the United States to adopt, in as timely a Department of Transportation, transmitting ices to the Korean Peninsula Energy Devel- manner as possible, a multiyear federal sur- the Department’s final rule—Amendment to opment Organization, pursuant to 22 U.S.C. face transportation program reauthorization Class E Airspace; Columbia, MO [Airspace 2364(a)(1); jointly to the Committees on legislation; to the Committee on Transpor- Docket No. 98–ACE–3] received April 30, 1998, International Relations and Appropriations. tation and Infrastructure. pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- 8933. A letter from the Secretary of De- f mittee on Transportation and Infrastruc- fense and Acting Secretary of Veterans Af- ture. fairs, transmitting a report on the imple- ADDITIONAL SPONSORS 8922. A letter from the General Counsel, mentation on that portion of the law dealing Under clause 4 of rule XXII, sponsors Department of Transportation, transmitting with sharing of health care resources be- were added to public bills and resolu- the Department’s final rule—Amendment to tween the two departments, pursuant to 38 tions as follows: Class D and Class E Airspace; Joplin, MO; U.S.C. 8111(f); jointly to the Committees on Correction [Airspace Docket No. 98–ACE–4] Veterans’ Affairs and National Security. H.R. 662: Mr. SERRANO and Mr. SHAYS. H.R. 1401: Mr. FOLEY. received April 30, 1998, pursuant to 5 U.S.C. 8934. A letter from the Acting Assistant H.R. 2009: Mrs. MINK of Hawaii, Mr. MAN- 801(a)(1)(A); to the Committee on Transpor- Secretary for Health Affairs, Department of TON, Mr. BOEHLERT, and Mrs. EMERSON. tation and Infrastructure. Defense, transmitting a report to Congress H.R. 2154: Mrs. CLAYTON. 8923. A letter from the General Counsel, describing its plans for the first phase of the H.R. 3033: Mr. GEPHARDT. Department of Transportation, transmitting Medicare subvention demonstration as well H.R. 3099: Mrs. EMERSON. the Department’s final rule—Amendment to as plans regarding subsequent demonstration H.R. 3127: Ms. PRYCE of Ohio, Mr. HUNTER, Class D and Class E Airspace; Joplin, MO; phases; jointly to the Committees on Ways Mr. WATTS of Oklahoma, Mr. KUCINICH, Mr. Correction [Airspace Docket No. 98–ACE–4] and Means, Commerce, and National Secu- HORN, Mr. HULSHOF, Mr. KLECZKA, Mr. STEN- received April 30, 1998, pursuant to 5 U.S.C. rity. HOLM, Mr. EVANS, Mr. PAPPAS, and Mr. HILL- 801(a)(1)(A); to the Committee on Transpor- f IARD. tation and Infrastructure. H.R. 3181: Ms. FURSE and Ms. MILLENDER- 8924. A letter from the Director, Office of TIME LIMITATION OF REFERRED MCDONALD. Rulemaking Coordination, Department of BILL H.R. 3247: Mr. FATTAH, Mr. MALONEY of Energy, transmitting the Department’s final Connecticut, Mr. HUTCHINSON, Ms. SLAUGH- rule—Laboratory Directed Research and De- Pursuant to clause 5 of rule X the fol- TER, Mrs. JOHNSON of Connecticut, and Mr. velopment [DOE O 413.2] received April 14, lowing action was taken by the Speak- TOWNS. 1998, pursuant to 5 U.S.C. 801(a)(1)(A); to the er: H.R. 3269: Ms. KILPATRICK and Ms. SLAUGH- Committee on Science. (The following action occurred on April 30, 1998) TER. 8925. A letter from the Chief Counsel, Bu- H.R. 3341: Mr. SERRANO. reau of Public Debt, transmitting the Bu- (Omitted from the Record of April 30, 1998) H.R. 3538: Ms. PELOSI. reau’s final rule—Regulations Governing H.R. 1778. Referral to the Committees on H.R. 3648: Mr. KING of New York, Mr. Book-Entry Treasury BONDs, Notes, and Government Reform and Oversight, Trans- FOLEY, Mrs. KELLY, and Mr. BOEHLERT. Bills; Determination Regarding State Stat- portation and Infrastructure, and Commerce H. Con. Res. 239: Mr. PORTER and Ms. ute; South Dakota [31 CFR Part 357] received for a period ending not later than June 2, FURSE. H. Con. Res. 264: Mr. COOK, Mrs. MCCARTHY April 21, 1998, pursuant to 5 U.S.C. 1998. of New York, Mr. MATSUI, Mr. TOWNS, Mr. 801(a)(1)(A); to the Committee on Ways and f BENTSEN, Mr. TRAFICANT, and Mr. KENNEDY Means. 8926. A letter from the General Counsel, PUBLIC BILLS AND RESOLUTIONS of Massachusetts. H. Res. 399: Mr. RAMSTAD. Department of Housing and Urban Develop- Under clause 5 of rule X and clause 4 f ment, transmitting the Department’s final of rule XXII, public bills and resolu- rule—Empowerment Zones: Rule for Second AMENDMENTS Round Designations [Docket No. FR–428–I– tions were introduced and severally re- 04] (RIN: 2506–AB97) received April 20, 1998, ferred as follows: Under clause 6 of rule XXIII, pro- pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- Mr. PORTMAN (for himself and Mr. posed amendments were submitted as mittee on Ways and Means. CARDIN) introduced a bill (H.R. 3788) to pro- follows: May 4, 1998 CONGRESSIONAL RECORD — HOUSE H2745 H.R. 6 one grant under this section, but may, sub- ance to eligible individuals described in sub- OFFERED BY: MR. OWENS ject to the requirements of this section, use section (c). the grant to enter into contracts with more ‘‘(B) Entering into a contract with each AMENDMENT NO. 78: Page 349, after line 9, than one community-based organization. A community-based organization selected insert the following: community-based organization shall not be under subparagraph (A) under which the in- TITLE XI—INFORMATION TECHNOLOGY eligible to enter into a contract under this stitution and the organization agree to carry EDUCATION RECRUITMENT section with more than one institution of out the duties respectively required of them SEC. 1101. POSTSECONDARY INFORMATION higher education. under this section with respect to each site TECHNOLOGY EDUCATION RECRUIT- ‘‘(4) PERIOD OF GRANT.—The provision of described in subparagraph (A). MENT. payments under a grant under this section ‘‘(C) With respect to each site described in (a) FINDINGS.—The Congress finds the fol- shall not exceed 5 fiscal years and shall be subparagraph (A)— lowing: subject to the annual approval of the Sec- ‘‘(i) design of a process for the recruitment (1) There are more than 200,000 to 400,000 retary and subject to the availability of ap- of students from the site to enroll in college vacancies in various categories of informa- propriations for each fiscal year involved. courses or matriculate in college programs; tion technology jobs. ‘‘(b) COMMUNITY-BASED ORGANIZATIONS.— ‘‘(ii) provision of such funding for the es- (2) From 1996 to 2005, more than 1,300,000 ‘‘(1) IN GENERAL.—Subject to paragraph (2), tablishment and initial operation of the site new computer scientists, engineers, and sys- a community-based organization described as was specified in the grant application sub- tems analysts will be required in the United in this subsection is an entity that, at the mitted by the institution to the Secretary; States to fill vacant jobs, which equals time the entity enters into a contract with ‘‘(iii) approval of final site selection and 136,800 new workers per year. an institution of higher education for a preparation; (3) Systems analysts will experience the project under this section, and throughout ‘‘(iv) initial orientation and training of largest job growth, accounting for a 103 per- the duration of that contract— personnel employed to manage and operate cent increase in the number of new positions ‘‘(A) is— the site; from 1996 (506,000) to 2005 (1,025,000). ‘‘(i) a governmental agency; or ‘‘(v) design and certification of the instruc- (4) The shortage of information technology ‘‘(ii) an organization described in section tional and academic programs, and oversight workers transcends industries, affecting the 501(c)(3) of the Internal Revenue Code of 1986 of the implementation of the programs; manufacturing, service, transportation, and exempt from tax under section 501(a) of ‘‘(vi) oversight of equipment purchases and health care, education, and government sec- such Code; and contracts for equipment maintenance; and tors. Within each sector, vacancies exist at ‘‘(B) is one of the following: ‘‘(vii) selection of an outside contractor for all levels from aides and mechanics to pro- ‘‘(i) A local partnership (as defined in sec- periodic evaluation of the management and grammers and designers. tion 4 of the School-to-Work Opportunities operation of the site. (5) The information technology worker Act of 1994) receiving a grant under section ‘‘(2) COMMUNITY-BASED ORGANIZATIONS.— shortage is having an adverse effect on the 302 of such Act. ‘‘(A) IN GENERAL.—A community-based or- viability of businesses in the United States ‘‘(ii) An entity organized and operated for ganization implementing a project under and on the Nation’s competitiveness. Indus- religious purposes. this section with an institution of higher try surveys report that half of industry ex- ‘‘(iii) An entity furnishing school-age child education, at one or more sites, shall carry ecutives cite the lack of workers skilled in care services after school. out the duties described in this paragraph, technology as the number one obstacle to ‘‘(iv) A community-based college computer with respect to each such site, subject to the their company’s growth. An additional 20 recruitment center. oversight and guidance of the institution. percent of industry executives identify the ‘‘(v) An entity furnishing adult education. ‘‘(B) GENERAL DUTIES.—The organization— lack of information technology workers as a ‘‘(vi) A library. ‘‘(i) shall undertake final site selection and major obstacle to their company’s growth. ‘‘(vii) A museum. preparation; (6) A major factor affecting the short sup- ‘‘(viii) Any other entity organized and op- ‘‘(ii) shall recruit and hire a site director; ply of information technology workers is the erated for cultural, literary, or educational ‘‘(iii) shall carry out any supplementary mismatch between what universities teach purposes. instructional, academic, or educational activities specified in the contract with the in- and what industry needs. ‘‘(2) LIMITATION.—An entity shall not be stitution of higher education that are not de- (7) It is in the national interest to promote considered a community-based organization scribed in subparagraph (D); special initiatives which effectively educate described in this subsection unless, at the ‘‘(iv) shall assemble an advisory committee and train our domestic workforce to keep time the entity enters into a contract with composed of individuals residing in the com- pace with these expanding job opportunities. an institution of higher education for a munity in which the site is located, as well (8) Institutions of higher education have project under this section, it has dem- as industry representatives, who desire to as- the capacity and resources to provide a role onstrated to the satisfaction of the Sec- sist the organization in ensuring that the of oversight and technical assistance to a retary that— goals of the organization are consistent with wide range of local entities, including com- ‘‘(A) it has the capacity successfully to re- the goals and needs of the community popu- munity-based organizations, participating in cruit eligible individuals described in subsection (c) for participation in a project de- lation; a comprehensive education and training pro- ‘‘(v) shall provide to the institution other gram for potential technology workers. scribed in subsection (a), consistent with the enrollment requirements in subsection evidence of volunteer support from among (9) Higher education institutions must be individuals residing in the community in responsive to the digital environment and (d)(2)(E); ‘‘(B) it is providing an educational service, which the site is located and industry rep- expand both their outreach efforts and on- resentatives; campus activities to train and certify indi- social service, or employment procurement service; and ‘‘(vi) shall recruit eligible individuals for viduals to close the information technology enrollment, subject to subparagraph (E); and worker gap. ‘‘(C) in the case of an entity that independently manages its own finances, it has been ‘‘(vii) shall maintain waiting lists of eligi- (b) AMENDMENT.—Title II is amended by ble individuals desiring to enroll in the adding at the end the following: in existence 2 years or more. ‘‘(c) ELIGIBLE INDIVIDUALS.—An eligible in- project’s programs. ‘‘PART G—INFORMATION TECHNOLOGY dividual described in this subsection is an in- ‘‘(C) SITE REQUIREMENTS.—The organiza- EDUCATION RECRUITMENT dividual who— tion shall ensure that each site— ‘‘SEC. 281. PARTNERSHIPS FOR POSTSECONDARY ‘‘(1) has submitted a satisfactory applica- ‘‘(i) has a minimum of 20 fully functioning INFORMATION TECHNOLOGY EDU- tion to receive postsecondary information computers with sufficient capacity to per- CATION RECRUITMENT. technology education recruitment assistance form all of the computer operations that are ‘‘(a) GRANTS AUTHORIZED.— through a project under this section; and the subject of the curriculum specified in ‘‘(1) IN GENERAL.—The Secretary may make ‘‘(2) has a certificate of graduation from a subparagraph (D); grants under this section, in accordance with school providing secondary education, or the ‘‘(ii) in addition to the space for the com- competitive criteria established by the Sec- recognized equivalent of such a certificate. puters described in clause (i), has— retary, to institutions of higher education, ‘‘(d) DUTIES.— ‘‘(I) a classroom space with the capacity in order to establish, oversee the operation ‘‘(1) INSTITUTIONS OF HIGHER EDUCATION.— for seating a minimum of 30 students; and of, and provide technical assistance to, An institution of higher education receiving ‘‘(II) a separate office for the site director; projects described in paragraph (2). a grant under this section shall use the funds ‘‘(iii) is real property subject to the control ‘‘(2) PROJECTS.—Projects under this section provided under the grant to carry out the of the organization or the institution, shall be projects implemented by a commu- following duties: through a lease or other legal instrument, nity-based organization described in sub- ‘‘(A) Final selection of community-based for a period of not less than 5 years; section (b), or by the institution of higher organizations described in subsection (b) de- ‘‘(iv) is open to enrolled individuals not education receiving the grant, to provide siring to provide, at one or more sites, in ac- less than 12 hours per day; and postsecondary information technology edu- cordance with a contract with the institu- ‘‘(v) is located within walking distance of cation. tion of higher education and this section, public transportation. ‘‘(3) RESTRICTIONS.—An institution of high- postsecondary information technology edu- ‘‘(D) INFORMATION TECHNOLOGY CURRICU- er education shall be eligible to receive only cation and employment procurement assist- LUM.— H2746 CONGRESSIONAL RECORD — HOUSE May 4, 1998

‘‘(i) IN GENERAL.—The organization shall ‘‘(ii) Not less than 50 percent of the eligible and shall include information with respect to ensure that each site offers enrollees a cur- individuals shall be, at the time of enroll- preliminary site selections. riculum that includes a broad range of ment, under 25 years of age. ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.— ‘‘(iii) No prerequisite relating to net worth, course work in information technology. There are authorized to be appropriated to income, or assets may be applied to any eli- ‘‘(ii) COURSES LEADING TO CERTIFICATION.— carry out this section $100,000,000 for fiscal Such curriculum shall include course work gible individual who, at the time of enrollment, is over 50 years of age, except that this year 1999 and such sums as may be necessary leading to a certification of competence in for each of the 4 succeeding fiscal years. areas of information technology recognized requirement shall not be construed to super- by the National Skill Standards Board estab- sede clause (i). ‘‘(h) DEFINITIONS.—For purposes of this sec- ‘‘(e) IMPLEMENTATION OF PROJECTS SOLELY lished under the National Skill Standards tion: BY INSTITUTIONS.—The Secretary may make ‘‘(1) ADULT EDUCATION.—The term ‘adult Act of 1994. a grant under this section to an institution ‘‘(iii) SPECIFIC COURSES.—The computer education’ has the meaning given such term of higher education that desires to imple- in section 312 of the Adult Education Act. training offered shall include courses in ment a project under this section without ‘‘(2) COMMUNITY-BASED COLLEGE COMPUTER basic computer competence, on-the-job up- the participation of a community-based or- RECRUITMENT CENTER.—The term ‘commu- grade assistance, and advanced computer ganization described in subsection (b), if the nity-based college computer recruitment competence. institution agrees to carry out all of the du- center’ means a computer center— ‘‘(E) ENROLLMENT REQUIREMENTS.—The or- ties required of such an organization under ‘‘(A) funded by both the Federal Govern- ganization shall ensure that its enrollment this section, in addition to the duties other- ment and at least one private sector entity; wise required of an institution of higher edu- of eligible individuals at each site is consist- ‘‘(B) located in a low-income community ent with the following: cation. The Secretary shall, in awarding grants under this section, give priority to in- (as determined by the Secretary); and ‘‘(i) Not less than 50 percent of the eligible ‘‘(C) organized and operated for the pur- individuals shall be, at the time of enroll- stitutions of higher education whose grant application includes an assurance that the pose of providing families with access to ment, individuals— computer resources that otherwise would not ‘‘(I) to whom a credit was allowed under institution will contract with one or more community-based organizations in accord- be available to them. section 32 of the Internal Revenue Code of ance with this section. ‘‘(3) FOOD STAMP PROGRAM.—The term ‘food 1986 for the preceding taxable year; ‘‘(f) APPLICATIONS.—To apply for a grant stamp program’ has the meaning given such ‘‘(II) who are recipients of assistance under under this section for any fiscal year, an in- term in section 3(h) of the Food Stamp Act a State program funded under part A of title stitution of higher education shall submit an of 1977. IV of the Social Security Act; application to the Secretary in accordance ‘‘(4) LIBRARY.—The term ‘library’ has the ‘‘(III) who are a member of a household with the procedures established by the Sec- meaning given such term in section 213 of participating in the food stamp program; or retary. The application shall specify the in- the Library Services and Technology Act. ‘‘(IV) who are considered low-income pur- stitution’s preliminary selections for the ‘‘(5) MUSEUM.—The term ‘museum’ has the suant to regulations promulgated by the community-based organizations (if any) with meaning given such term in section 272 of Secretary under this section. which the institution proposes to contract, the Museum and Library Services Act.’’. E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 105 CONGRESS, SECOND SESSION

Vol. 144 WASHINGTON, MONDAY, MAY 4, 1998 No. 53 Senate The Senate met at 11 a.m. and was We also completed action on the sup- audits or for, in one case, an effort to called to order by the President pro plemental appropriations bill, which show that this person had been laun- tempore (Mr. THURMOND). has gone to the President. That way, dering money, and it was not true. Sen- we will have the funds we need for the ator Howard Baker, the great former PRAYER defense of our country and to assist majority leader, came before the com- The Chaplain, Dr. Lloyd John with natural disasters that have hit mittee and told what he had experi- Ogilvie, offered the following prayer: any number of States over the past few enced—by the way, even though he was Dear God, our Creator, Sustainer and months. under a lot of pressure not to do so. Strength, You have given us the gift of Also, on Friday, we did have debate We clearly have a culture of intimi- life, blessed us with this new week, and on the workplace development bill—all dation and misconduct at the IRS. It is given us work to do for Your glory. We debate except for the final 1 hour. All not something that has just developed; admit our need for Your insight and in- amendments were handled. I believe it has been growing and getting worse spiration. You never intended for us to there were five or six amendments that for the past 15 years. We need serious had been pending. So Senator JEF- depend solely on our own intellect and IRS reform. The House-passed legisla- FORDS, Senator DEWINE, and others did understanding. We humbly place our tion made a major step in the right di- a good job getting that debate done on total dependence on Your power to rection last year, but we have found a Friday. We will pick that bill back up maximize the use of the talents You lot more abuses. We have come up with at 4:30 on Tuesday. There will be 1 hour have entrusted to us. Guide us, Lord. more things that need to be done to of debate, followed by final passage on We accept Your absolute reign and rule make the IRS genuinely representative the Workplace Development Act at 5:30 in our minds. of what the people expect them to be— on Tuesday. Thank You for the peace of mind we that is, to do their job, which is not Following morning business this easy, and to protect the truly hard- have when we submit our needs to You. morning, the Senate will begin consid- working and honest IRS agents who are Source of our courage, we unreservedly eration then of H.R. 2676, the IRS re- doing their jobs every day, some who commit to You our lives and the deci- form and restructuring bill, for debate came forward and pointed out where sions to be made this week. We relin- only. It is hoped that Members will problems have been. quish our control and intentionally ask come to the floor to offer opening We have learned a lot and have come You to take charge. Think and speak statements and debate this very impor- up with some good legislation. There through us. Through our Lord and Sav- tant piece of legislation. will be some relevant amendments that ior. Amen. f f will need to be offered and debated and IRS REFORM voted on. I hope we can come to an RECOGNITION OF THE MAJORITY Mr. LOTT. Mr. President, as a mem- agreement that will not allow this bill LEADER ber of the Finance Committee, once to become one that is attacked by poi- The PRESIDENT pro tempore. The again, last week I found the hearings son pills or cause its delay or destruc- able majority leader, Senator LOTT of on IRS enlightening, in fact, horrify- tion. The American people want this Mississippi, is recognized. ing. We had witness after witness come IRS reform. I think to get off in a de- f in and put their own jobs and reputa- bate of unrelated issues—whether it is tions on the line—if they were IRS em- trade issues, many of which I may be SCHEDULE ployees—to talk about the protection for, or health issues, or whatever— Mr. LOTT. Mr. President, I want to system of mismanagement and mis- would be a big mistake. We ought to say once again how much I appreciated conduct within IRS. We had small busi- have a good debate this Monday and the cooperation that I received from nessmen come forward and talk about Tuesday. We ought to complete this Senators on both sides of the aisle last businesses being raided—in one in- IRS debate by Wednesday or Thursday week. I think last week was a very stance, I think by 64 gun-carrying IRS night, at the latest. We were able to good week for the Senate. We com- agents and U.S. marshals—when they get our job done last week. I hope we pleted the NATO enlargement debate, had done nothing wrong. We heard can do it again this week. and I thought it was a good debate. I great detail about the efforts that have Now, in addition to those bills, on thought the Senate showed a great deal been gone to by management to pro- Thursday or Friday we may try to take of seriousness and maturity in the way tect misconduct. up a couple of other issues. It will de- they handled the final phases and cast Finally, we heard of targeting of po- pend on how the debate goes. The agri- their votes on Thursday night. litical officials or public officials for culture research conference report is

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.

S4143 S4144 CONGRESSIONAL RECORD — SENATE May 4, 1998 something we might try to get up was supposed to have been completed issue, and the Senate could well take Thursday night or Friday, or not later last year, but it was not. The highway its cues from the work Senator CONRAD than next Monday. We also have pend- bill was extended until May 1, and then has done. Incidentally, the Senate ing before us a number of other impor- the authorization for the highway bill Commerce Committee took much from tant bills, including the higher edu- expired. the legislation Senator CONRAD intro- cation legislation and nuclear waste. We are now on May 4 without high- duced in the Congress. So there are a number of bills that are way legislation that is authorized, and The reason we are concerned about waiting. the highway officials and Governors the tobacco issue is the targeting of Again, I ask for the cooperation of around the country are wondering, ap- teenagers in this country to get them the Senators on both sides of the aisle propriately, what is going to happen to to smoke. I have said before on the to work with the chairman of the Fi- this highway bill? With what authority floor that almost no one reaches age 30 nance Committee and ranking member can I obligate money? What about the and wonders, ‘‘What more could I do to to get an agreement on how we can projects we have to do in our States to fulfill my life?’’ and decides they proceed. Let’s have a good debate, rel- build roads and repair bridges? should start smoking. Almost no one evant amendments, and let’s complete I don’t blame State and local high- reaches majority age and says, ‘‘Gee, this job. way officials and others who are right- what am I missing?’’ and concludes Even the President, who originally ly furious with the Congress that it has what they have really missed is, they resisted IRS reform, on his radio show not gotten its work done. It is a shame, have not smoked and they need to Saturday said what has been happening in my judgment, that almost a year start smoking cigarettes. The reason they don’t arrive at that answer is that at IRS is outrageous and that we after the legislation should have been by that age, they know that cigarettes should act on this legislation and get it done, not only was the legislation not can kill you. done, but we have already had an ex- to him as quickly as possible. I hope we Mr. President, 300,000 to 400,000 peo- will move forward, now that we have tension and that has expired. Now, here ple a year die in this country from him involved in this effort, and com- we are with no highway bill at all. smoking and smoking-related causes, I ask those who run this Congress plete this important legislation. and the only future customers for to- and those who are convening the con- Mr. President, I note that there are bacco are kids. The only conceivable no Senators waiting to speak. I believe ference on the highway bill, let’s de- future customers for cigarettes are the managers of the legislation will be cide to get this thing done. This isn’t children, and that is why many in this here at noon. From now until noon will rocket science; it is building highways. country, myself included, believe it is be a period of morning business. We know how to do that. If the politi- important for us to say to the tobacco I yield the floor and suggest the ab- cal will doesn’t exist to do what is nec- industry, ‘‘Never again shall you target sence of a quorum. essary to reach a compromise on a America’s children to addict them to The PRESIDING OFFICER (Mr. highway bill, then I suppose that those tobacco, addict them to nicotine. We KYL). The clerk will call the roll. who run the Congress should say to the won’t allow it.’’ That is what the to- The assistant legislative clerk pro- Governors and the highway commis- bacco legislation is all about. ceeded to call the roll. sioners, ‘‘We can’t be counted upon to What did the tobacco companies Mr. DORGAN. Mr. President, I ask do this work.’’ know, and when did they know it about unanimous consent that the order for I hope in the coming days people will the subject of nicotine? We are now the quorum call be rescinded. understand the urgency of this. I come hearing a lot of testimony and discus- The PRESIDING OFFICER. Without from the State of North Dakota, and sion about that. Tobacco companies objection, it is so ordered. we have a relatively short construction have been at the forefront of nicotine f season. It is not fair to our States for research in the last several decades. In this Congress not to do its work on MORNING BUSINESS fact, the tobacco companies, since the time. We should do it, it ought to be early 1960s, claimed that nicotine was The PRESIDING OFFICER. Under done, and it ought to be done soon. not addictive and anyone who smokes the previous order, there will now be a f makes a free choice to smoke. period for the transaction of morning TOBACCO LEGISLATION By the 1960s, however, all of the re- business for not to extend beyond the ports we are now seeing, including con- hour of 12 o’clock noon, at which time, Mr. DORGAN. Mr. President, I came fidential memoranda and data from a under the previous order, the Senate to the floor today to talk for just a mo- tobacco company, showed us they had will proceed, for debate only, to the ment about the tobacco legislation developed a very sophisticated under- consideration of H.R. 2676. that is to be brought to the floor of the standing of nicotine pharmacology and Under the previous order, the Sen- Senate. My understanding is that we they knew very well that nicotine was ator from North Dakota is recognized will consider, in the next perhaps pharmacologically addictive. The re- at this time. month, the tobacco legislation that lease of internal tobacco company doc- Mr. DORGAN. Mr. President, my un- was enacted by the Senate Commerce uments makes it clear. They realize derstanding is the 30 minutes that I am Committee, of which I am a member. the impact and significance of nico- able to use under a previous unanimous The Senate Commerce Committee tine. consent agreement will bump up considered a comprehensive tobacco In 1963, a British American Tobacco against the 12 o’clock time. I ask unan- bill. We passed it, and the vote was 19 document said: imous consent that the 12 o’clock time to 1. The legislation is controversial, to Nicotine is by far the most characteristic be modified so I may use the entire 30 be sure, and the tobacco industry has single constituent in tobacco, and the known minutes. now ratcheted up an enormous amount physiological effects are positively cor- The PRESIDING OFFICER. Without of money and energy directed at trying related with smoker response. objection, it is so ordered. The Senator to kill the bill. In 1969, a draft report to the Philip is permitted to speak until 12:15 p.m. I thought it would be interesting to Morris board of directors said: f read into the RECORD a few comments In the past, we at R&D—that is research here and there dealing with the to- and development—have said that we’re not ISTEA bacco companies and why they are so in the cigarette business, we’re in the smoke Mr. DORGAN. Mr. President, I want interested in killing this tobacco legis- business. It might be more pointed to observe that the cigarette is the vehicle of to visit about a couple of things this lation. We will see an enormous smoke, smoke is the vehicle of nicotine and morning. First, I want to talk about amount of money spent on advertising nicotine is the agent of a pleasurable body the highway bill that is in conference to try to kill this legislation. response. between the House and the Senate. It is My colleague, Senator CONRAD from In a memo from 1978, Brown & now May 4, 1998. The highway bill, or a North Dakota, chaired a task force on Williamson, signed by H.D. Steele says: piece of legislation people commonly the issue of tobacco and created a piece Very few consumers are aware of the ef- refer to as ISTEA (the Intermodal Sur- of legislation. He has done a wonderful fects of nicotine, i.e., its addictive nature face Transportation Efficiency Act) job, in my judgment, dealing this with and that nicotine is a poison. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4145 That is a tobacco industry paper. clined while the share of teenagers who State, but it is receiving very little at- There is little doubt if it were not for the purchased a competitive brand intention. People who are watching and nicotine in tobacco smoke, people would be creased. That concerned the company a my colleagues might recall that last less inclined to smoke than they are to blow great deal. year we had a set of disasters in North bubbles or to light sparklers. Another tobacco industry statement: Dakota that had tremendous national M.A.H. Russell, 1974. It is important to know as much as pos- publicity and national attention. 1983, Brown & Williamson: sible about teenage smoking patterns and at- We had the worst winter in our his- Nicotine is the addicting agent in ciga- titudes. Today’s teenager is tomorrow’s po- tory, followed by the most powerful rettes. tential regular customer. . . . it is during winter storm in 50 years, followed by the teenage years that the initial brand 1983, Brown & Williamson: the worst flood in 500 years; and in the choice is made. midst of that, fire broke out that de- Raleigh and Belair smokers are addicted to And that is the statement from a to- stroyed much of downtown Grand smoking. . . . They smoke primarily to reduce negative feeling states rather than for bacco company. Forks, ND. It was really almost apoca- pleasure. Given their low income, smoking Now, the consequences of tobacco lyptic. But this year we have another represents a financial drain on family re- smoking are quite clear. Tobacco is a disaster occurring, and it is receiving sources. Saving coupons for household items legal product, and in my judgment very little attention. I call it the helps reduce guilt associated with smoking. shall and will be legal in the future. ‘‘stealth disaster,’’ because it is really How about the health effects of to- But it is not a legal product for chil- flying below the radar screen. There bacco? What do the tobacco companies dren. An industry that has record prof- are almost no national stories, no na- know about that? its and has targeted children, because tional attention. In fact, I believe very The vice president of a tobacco com- it believes that children are its future few people know this disaster is occur- pany, in 1963, said: customers, is an industry that, in my ring. But it is occurring and it is an ex- At best, the probabilities are that some judgment, is sadly out of touch with its traordinary disaster that is hurting the combination of constituents of smoke will be responsibilities. farmers of my State. found conducive to the onset of cancer or to The U.S. Senate and the Congress has We are in a wet cycle. This wet cycle create an environment in which cancer is a responsibility to take up the tobacco has bred disease, disease that cost us more likely to occur. bill. We passed it out of the Senate about a third of our crop last year. That is ‘‘at best,’’ he says. That is a Commerce Committee now nearly a That, coupled with very low prices, has fellow who helps run a tobacco com- month ago under the leadership of Sen- meant that our farmers are not cash- pany. ator MCCAIN. I noted today in the flowing. 1970, lung cancer experiments that newspapers that Senator MCCAIN indi- I was just home during a series of were done by the general manager of cated that, I believe he said $50 to $100 farm meetings and in each and every research prepared for the managing di- million is to be spent by the tobacco stop was told we will lose perhaps 3,000 rector of Gallaher Electronic Tele- industry to defeat efforts in Congress farmers this year in North Dakota. We graph: to pass a comprehensive tobacco bill. only have 30,000. So losing 3,000 in 1 year would really be quite extraor- One of the striking features of the I hope the American people take note Auerbach experiment was that practically that this industry is the same industry dinary. But these farmers are facing a cash- every dog which smoked suffered signifi- which said tobacco is not addictive flow crunch as a result of bad policy, as cantly from the effects of the smoke either when in fact they knew it was addict- a result of low prices, as a result of this in terms of severe irritation and bronchitis, ive. They were saying we are not tar- pre-cancerous changes or cancer. incredible disease that has broken out. geting children when in fact they were And again, this is a disaster of really A top research official for the Amer- targeting children. staggering proportions in that it gets ican Tobacco Company, 1970: I hope the American people under- [W]e believe the Auerbach work proves be- very little attention, and there is very stand, as well, that when the tobacco little the Federal Government is pre- yond reasonable doubt that fresh whole ciga- industry launches a massive effort to rette smoke is carcinogenic to dog lungs and pared to do. try to derail the efforts of the Congress It is very interesting, if you have a therefore it is highly likely that it is car- to pass a comprehensive tobacco bill, cinogenic to human beings. disaster like this. Last year when this [T]he results of the research would appear the American people have the capabil- disaster occurred, or these sets of dis- to us to remove the controversy regarding ity in this system of ours to make the asters occurred in North Dakota, and the causation of human lung cancer . .. difference. They can weigh in. They we searched to find if there was Fed- How about tobacco companies target- can make their views known about eral help, we found that indeed there ing kids? whether or not they believe this Con- was. The SBA rushed to help. The Fed- 1981, Philip Morris, a report from a gress shall pass a piece of legislation to eral Emergency Management Agency researcher to the Vice President of Re- stop this industry from targeting was there. The Housing and Urban De- search and Development at Philip Mor- America’s children and from trying to velopment Program was there with ris. He says: addict America’s children to ciga- CDBG funds. There was a marvelous, rettes. Today’s teenager is tomorrow’s potential marvelous response that has helped the regular customer, and the overwhelming ma- Mr. President, my colleague from devastated communities recover. jority of smokers first begin to smoke while North Dakota, Senator CONRAD, is on But now we have a different kind of in their teens. At least a part of the success the floor. I would like to yield to him crisis and a different kind of disaster. of Marlboro Red during its most rapid as much time as he consumes to dis- And when we look for assistance, we growth period was because it became the cuss another issue, and at the conclu- find there is virtually none. What you brand of choice among teenagers who then sion of his remarks, it is my intention will find is, about the only thing that stuck with it as they grew older. to follow up on the issue he is going to is available is low-interest loans. Teenage smokers. A memorandum discuss. Let me yield the time that he Now, additional debt for those who from the tobacco industry: consumes to Senator CONRAD. can’t cash flow because of a terrible To improve our ability to forecast future The PRESIDING OFFICER. The Sen- outbreak of disease and because of low trends, this report examines the demo- ator is recognized. prices and because of weak farm policy, graphics and smoking behavior of 14–17 year Mr. CONRAD. I thank you very saying ‘‘Take on more debt,’’ doesn’t old smokers. much, and my colleague from North sound like a very good deal. But that is This is a company now that is doing Dakota, Senator DORGAN, for this time. exactly what we are faced with, be- detailed research on 14- to 17-year-old f cause we no longer have a disaster pro- smokers. ‘‘Forecasting future trends,’’ gram for farmers; it doesn’t exist. The that means ‘‘they’re our customers. AGRICULTURE DISASTER IN only thing we have is low-interest We’re interested in them. We want to NORTH DAKOTA loans; that is it. When farmers experi- keep them smoking.’’ Mr. CONRAD. I have come to the ence a disaster, the Federal response is One company was concerned because floor this morning to talk about a dis- to help them go further into debt. It their share of teenaged smokers de- aster that is happening in my home doesn’t make much sense. S4146 CONGRESSIONAL RECORD — SENATE May 4, 1998 We have a circumstance that is, as I 1993 to 1997, the crop was about $1 bil- strength of the American economy. described, dramatic. I brought this lion in value; in 1993, it declined some- North Dakota is in the first trench. We chart to show what has happened to what; in 1994, came up handsomely; in are the first ones to experience the de- North Dakota farm income. I say it 1996, it was approaching $1.3 billion. fects of a national policy that was put was washed away in 1997. In 1996, this Look what happened last year—a 41 in place in 1996. But I alert my col- chart shows the farm income of our percent decline. leagues that unless we take action, State, $764 million; but in 1997, farm in- It wasn’t just the wheat crop. The others will follow. When they have a come in our State was reduced to $15 No. 2 crop in North Dakota is barley. disease problem, when they face low million. That is divided among 30,000 Of course, those who are listening prob- prices, they will see enormous eco- farmers. That means the average net ably know that barley is used to feed nomic pressure on farm producers, and income per farm in North Dakota in animals. It is also used to brew beer. they, too, will be in a position to lose 1997 was only $500. That is a reduction The barley crop, same pattern: You a significant chunk of their farm fami- in income of 98 percent from 1996 to saw a pretty good increase from 1993 to lies. 1997. That is a disaster. 1996, and then a steep decline in 1997. That is a tragedy for our State. I be- Let me go to the next chart that Some have said this is just a blip, lieve it is a tragedy for our Nation. I shows farm income from 1996 to 1997, this is just a blip in terms of prices. hope very much my colleagues are lis- quarter by quarter, so that my col- Yes, you have the disease problem. tening and will understand, just as we leagues can see the pattern. In 1996, Hopefully, that will pass at some point. responded to a more visible disaster you could see it was about equivalent But it is disastrous when you lose a last year, we must fashion a Federal from quarter to quarter, but, boy, we third to 40 percent of the crop in one response to this stealth disaster that is came to the end of the year, 1996, and year because of disease and then, on occurring this year. look what happened to farm income. It top of that, you have very low prices. I alert my colleagues that I will be fell off the table. I guess in this case we That leaves farmers in an incredibly coming to the floor on a regular basis can say it fell off the chart. That is a vulnerable position. Some have said, on to bring this matter to their attention the price front that is just a blip. 98 percent reduction, a farm income of in the hopes that we can fashion a I thought I would bring along this only $15 million in the entire State for stronger national policy. So while chart that shows prices from 1996 North Dakota is suffering this year, we the entire year, divided among 30,000 through 1997, month by month, because might prevent other States from expe- farmers. As I say, that is only $500 if you look at that chart, it doesn’t riencing what we are facing in 1998. apiece. look like a blip. In fact, the only blip It is no wonder everywhere I go farm- I thank the Chair and yield the floor. that occurs is right here, a period of ers are saying to me, ‘‘We have a disas- Mr. MOYNIHAN. Mr. President, I rise high prices when we were debating the ter.’’ It is not just farmers. In commu- simply to congratulate the Senator farm bill. At that point, people were nity after community, the bankers are from North Dakota on a clear and per- told, ‘‘We have reached an era of per- taking me aside and saying, ‘‘Senator, suasive presentation of what is not just manently high farm prices because of a North Dakota problem, but a na- there is something radically wrong export demand; farmers can count on a tional problem. The United States is with farm policy.’’ There is something period going forward of high prices.’’ blessed beyond the imaginings of Wil- radically wrong with our disaster pro- You can see how long that lasted. That liam Jennings Bryan by the degree to grams when farmers can go through lasted about 90 days. Instead, prices which a very small farm population these 5 bad years of this incredible wet started coming down. Both wheat and provides the most ample diet the world cycle, and disease develops, and low barley—you can see the wheat prices in has ever known for a global nation. prices come on to the market, and blue, the barley prices in red, on the I might say—and it won’t come as a there is nothing to help these produc- chart, and both of them, from the time surprise to my friend from North Da- ers. They are going to be washed away we debated the farm bill, have gone kota, but not everybody would know— every bit as much as the residents of down, down, down. Grand Forks were washed away by the This represents a disaster to the that New York State is a wheat-grow- flood waters last year. thousands of producers in North Da- ing region. In 62 counties, I think we Some will say North Dakota is a kota who rely on agricultural income have commercial wheat grown in 50. marginal area; when you have bad to sustain themselves. We have a disas- There are parts of the western areas of weather, you will get hurt. I brought ter occurring, and there needs to be a the State where if you travel along the this chart to show the Red River Val- response. I don’t think we want to see Erie Canal, at the level where it is ley. The Red River Valley has the rich- washed away 10 percent of the farmers raised above the surrounding land est farmland in the world. The Red in 1 year—and that is this year. I can looking north and south, you could be River Valley used to be the bottom of tell you, Mr. President, next year is in North Dakota looking at the wheat a great lake, Lake Agassiz. Thousands going to be far worse unless conditions fields. Those prices affect ours, too. of years ago, when the lake was there, change, unless prices firm up, unless The Senator is right to think that the it built up extraordinarily rich soil. there is a Federal response, unless the ’96 legislation should be revisited in When you come to the Red River Val- disease problem changes. And, unfortu- terms of the economic realities facing ley of North Dakota, you see the rich- nately, once you get into a wet cycle, those farmers, upon whom we all de- est farmland anywhere in the world. In these diseases continue as long as the pend, because we eat that bread and places it is 8 feet thick, an incredible wet cycle does. The result is devastat- drink that beer. lode that is so rich. ing, absolutely devastating. I fear that I thank the Chair. When I was growing up, we were told we will face a true calamity next year Mr. CONRAD. Mr. President, I thank there had never been a farm failure; unless there is a Federal response. my colleague from New York. I am there had never been a crop failure in In closing, Mr. President, a troubled honored to serve with him on the Sen- the Red River Valley, ever. These last agricultural economy is dangerous for ate Finance Committee. My wife and I 5 years have seen extraordinary devel- rural communities and for our entire were just telling a colleague the other opments, because even in the Red River Nation. The importance of a strong ag- night that sometimes we have a chance Valley, the richest farmland in the ricultural economy and the mainte- to have dinner with the Senator from world, farm income is down precipi- nance of a rural infrastructure was per- New York, and we always feel that it is tously. You can see from 1996 to 1997 haps best summed up by William Jen- a privilege because it is like a seminar. farm income, the richest farming area nings Bryan when he said, ‘‘Burn down There are very few people that have in the world, down 62 percent. your cities and leave our farms, and the knowledge bank of the senior Sen- Now the next chart, North Dakota is your cities will spring up again as if by ator from New York. It is an honor to a place that produces wheat. Indeed we magic, but destroy our farms and the be able to serve with him on the Fi- do. We are typically the No. 1 or No. 2 grass will grow in the streets of every nance Committee. He has reminded me wheat-producing State. Look what city in the country.’’ on more than one occasion that New happened to the total value of the William Jennings Bryan was right. York is a major agricultural, producing spring wheat crop. This shows from Agriculture is right at the core of the State as well. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4147 I just say to my colleague that our hit in the country. So North Dakota, Sec. 1104. Other personnel. experience with the changes that were unfortunately, leads the pack. We are Sec. 1105. Prohibition on executive branch in- made, in terms of eliminating a disas- at the top of the chart in terms of fluence over taxpayer audits and other investigations. ter program for agriculture, is a very States losing farm income. Unfortu- bitter pill because now we are experi- nately, the State of New York is also Subtitle C—Personnel Flexibilities encing the disaster. The only assist- in that top tier. In fact, they ranked Sec. 1201. Improvements in personnel flexibilities. ance is low-interest loans. When you fourth in terms of reduction and tied Sec. 1202. Voluntary separation incentive pay- have persons that aren’t cash flowing, for third, actually, with 44 percent re- ments. to say that the only help we can extend duction in farm income. So I am cer- Sec. 1203. Termination of employment for mis- to you is for you to go deeper into debt, tain the producers in your State are conduct. that doesn’t seem like much in the way suffering as well. We have had the dou- Sec. 1204. Basis for evaluation of Internal Reve- of a helping hand. And it is so totally ble whammy—not only of low prices, nue Service employees. Sec. 1205. Employee training program. opposite to what we experienced last but low prices coupled with this un- year with those extraordinary natural precedented outbreak of disease. That TITLE II—ELECTRONIC FILING disasters that I think it is important is creating a crisis and we simply must Sec. 2001. Electronic filing of tax and informa- to bring it to the attention of my col- tion returns. respond. I thank the Chair and yield Sec. 2002. Due date for certain information re- leagues. This year we are about to the floor. turns. lose—in North Dakota alone—10 per- I suggest the absence of a quorum. Sec. 2003. Paperless electronic filing. cent of the farmers. In one year. And The PRESIDING OFFICER (Mr. Sec. 2004. Return-free tax system. next year will be far worse, unless we ENZI). The clerk will call the roll. Sec. 2005. Access to account information. take action. The legislative clerk proceeded to TITLE III—TAXPAYER PROTECTION AND I thank my colleague from New call the roll. RIGHTS York. Mr. ROTH. Mr. President, I ask unan- Sec. 3000. Short title. Mr. MOYNIHAN. Mr. President, I will imous consent that the order for the Subtitle A—Burden of Proof add a historical note here because it quorum call be rescinded. Sec. 3001. Burden of proof. suggests the global reach of what The PRESIDING OFFICER. Without Subtitle B—Proceedings by Taxpayers might seem to be local problems. I objection, it is so ordered. Sec. 3101. Expansion of authority to award think it is widely agreed that it was f costs and certain fees. the arrival of wheat from western New Sec. 3102. Civil damages for collection actions. INTERNAL REVENUE SERVICE RE- York in Liverpool through the Erie Sec. 3103. Increase in size of cases permitted on STRUCTURING AND REFORM ACT Canal that led to the repeal of what the small case calendar. OF 1998 Sec. 3104. Expansion of Tax Court jurisdiction British called the ‘‘corn laws’’—the The PRESIDING OFFICER. Under to responsible person penalties. British use the term ‘‘corn’’; we use the Sec. 3105. Actions for refund with respect to term ‘‘wheat’’—which kept the tariffs the previous order, the Senate will now certain estates which have elected on wheat so that the vast landlords proceed for debate only to the consider- the installment method of pay- could remain the vast landlords. Amer- ation of H.R. 2676, which the clerk will ment. ican wheat was so much less expensive report. Sec. 3106. Tax Court jurisdiction to review ad- that the British decided to cease all The legislative clerk read as follows: verse IRS determination of tax-exempt status of bond issue. that and become an industrial nation. A bill (H.R. 2676) to amend the Internal Revenue Code of 1986 to restructure and re- Sec. 3107. Civil action for release of erroneous And then two generations later, it was lien. the arrival in the Baltic of wheat from form the Internal Revenue Service, and for other purposes. Subtitle C—Relief for Innocent Spouses and for North Dakota, South Dakota, and Kan- The Senate proceeded to consider the Taxpayers Unable To Manage Their Finan- sas. The prices were such that the cial Affairs Due to Disabilities bill which had been reported from the local, aristocratical, landed gentry of Sec. 3201. Spousal election to limit joint and Prussia simply could not compete. The Committee on Finance, with an amend- several liability on joint return. next thing you know, you have enor- ment to strike all after the enacting Sec. 3202. Suspension of statute of limitations mous emigration from that part of the clause and inserting in lieu thereof the on filing refund claims during pe- world to the United States through following: riods of disability. Ellis Island. These are not small SECTION 1. SHORT TITLE; AMENDMENT OF 1986 Subtitle D—Provisions Relating to Interest and CODE; TABLE OF CONTENTS. events. Penalties (a) SHORT TITLE.—This Act may be cited as Sec. 3301. Elimination of interest rate differen- The price of food is a very important the ‘‘Internal Revenue Service Restructuring matter. It is a tribute to American tial on overlapping periods of in- and Reform Act of 1998’’. terest on income tax overpayments farmers that we don’t think much (b) AMENDMENT OF 1986 CODE.—Except as oth- and underpayments. about it any longer because it has be- erwise expressly provided, whenever in this Act Sec. 3302. Increase in overpayment rate payable come relatively stable. I can speak to an amendment or repeal is expressed in terms of to taxpayers other than corpora- the fact that when we began the War an amendment to, or repeal of, a section or tions. on Poverty, under President Johnson, other provision, the reference shall be consid- Sec. 3303. Elimination of penalty on individ- ered to be made to a section or other provision ual’s failure to pay for months we used as a measure the ‘‘city workers of the Internal Revenue Code of 1986. food basket’’, which was designed by during period of installment (c) TABLE OF CONTENTS.—The table of con- agreement. the Department of Agriculture and tents for this Act is as follows: Sec. 3304. Mitigation of failure to deposit pen- measured what is necessary to raise a Sec. 1. Short title; amendment of 1986 Code; alty. family of 4 in the city. We said a fam- table of contents. Sec. 3305. Suspension of interest and certain ily needed 3 times that number. Well, TITLE I—REORGANIZATION OF STRUC- penalties where Secretary fails to this quickly became hopelessly out of TURE AND MANAGEMENT OF THE INTER- contact individual taxpayer. date because the price of food kept NAL REVENUE SERVICE Sec. 3306. Procedural requirements for imposition of penalties and additions to going down. Now the price will go up. If Subtitle A—Reorganization of the Internal tax. Revenue Service those prices crash now, prices will rise Sec. 3307. Personal delivery of notice of penalty later. The Senator is on to something Sec. 1001. Reorganization of the Internal Reve- under section 6672. important, and I thank him, as one nue Service. Sec. 3308. Notice of interest charges. Sec. 1002. IRS mission to focus on taxpayers’ Member of this body. Subtitle E—Protections for Taxpayers Subject to needs. Mr. CONRAD. I thank the Senator Audit or Collection Activities Subtitle B—Executive Branch Governance and from New York. Mr. President, I might PART I—DUE PROCESS Senior Management conclude by saying that I was looking Sec. 3401. Due process in IRS collection actions. at the chart here. While North Dakota Sec. 1101. Internal Revenue Service Oversight Board. PART II—EXAMINATION ACTIVITIES suffered a 98 percent reduction in farm Sec. 1102. Commissioner of Internal Revenue; Sec. 3411. Uniform application of confidential- income from 1996 to 1997, New York suf- other officials. ity privilege to taxpayer commu- fered a 44 percent reduction in farm in- Sec. 1103. Treasury Inspector General for Tax nications with federally author- come from 1996 to 1997, one of the worst Administration. ized practitioners. S4148 CONGRESSIONAL RECORD — SENATE May 4, 1998 Sec. 3412. Limitation on financial status audit Sec. 3706. Use of pseudonyms by IRS employees. TITLE I—REORGANIZATION OF STRUC- techniques. Sec. 3707. Conferences of right in the National TURE AND MANAGEMENT OF THE IN- Sec. 3413. Software trade secrets protection. Office of IRS. TERNAL REVENUE SERVICE Sec. 3414. Threat of audit prohibited to coerce Sec. 3708. Illegal tax protester designation. Subtitle A—Reorganization of the Internal tip reporting alternative commit- Sec. 3709. Provision of confidential information Revenue Service ment agreements. to Congress by whistleblowers. Sec. 3415. Taxpayers allowed motion to quash SEC. 1001. REORGANIZATION OF THE INTERNAL Sec. 3710. Listing of local IRS telephone num- REVENUE SERVICE. all third-party summonses. bers and addresses. (a) IN GENERAL.—The Commissioner of Inter- Sec. 3416. Service of summonses to third-party Sec. 3711. Identification of return preparers. nal Revenue shall develop and implement a plan recordkeepers permitted by mail. Sec. 3712. Offset of past-due, legally enforceable to reorganize the Internal Revenue Service. The Sec. 3417. Prohibition on IRS contact of third State income tax obligations plan shall— parties without prior notice. against overpayments. (1) supersede any organization or reorganiza- PART III—COLLECTION ACTIVITIES Sec. 3713. Treatment of IRS notices on foreign tion of the Internal Revenue Service based on SUBPART A—APPROVAL PROCESS tax provisions. any statute or reorganization plan applicable on Sec. 3421. Approval process for liens, levies, and Subtitle I—Studies the effective date of this section; (2) eliminate or substantially modify the exist- seizures. Sec. 3801. Administration of penalties and in- ing organization of the Internal Revenue Serv- SUBPART B—LIENS AND LEVIES terest. Sec. 3431. Modifications to certain levy exemp- ice which is based on a national, regional, and Sec. 3802. Confidentiality of tax return informa- district structure; tion amounts. tion. Sec. 3432. Release of levy upon agreement that (3) establish organizational units serving paramount is uncollectible. TITLE IV—CONGRESSIONAL ACCOUNT- ticular groups of taxpayers with similar needs; Sec. 3433. Levy prohibited during pendency of ABILITY FOR THE INTERNAL REVENUE and refund proceedings. SERVICE (4) ensure an independent appeals function Sec. 3434. Approval required for jeopardy and Sec. 4001. Century date change. within the Internal Revenue Service, including termination assessments and jeop- Sec. 4002. Tax law complexity analysis. the prohibition in the plan of ex parte communications between appeals officers and other In- ardy levies. TITLE V—REVENUE PROVISIONS Sec. 3435. Increase in amount of certain prop- ternal Revenue Service employees to the extent Sec. 5001. Clarification of deduction for de- erty on which lien not valid. that such communications appear to compromise ferred compensation. Sec. 3436. Waiver of early withdrawal tax for the independence of the appeals officers. Sec. 5002. Modification to foreign tax credit IRS levies on employer-sponsored (b) SAVINGS PROVISIONS.— carryback and carryover periods. retirement plans or IRAs. (1) PRESERVATION OF SPECIFIC TAX RIGHTS AND Sec. 5003. Clarification and expansion of math- REMEDIES.—Nothing in the plan developed and SUBPART C—SEIZURES ematical error assessment proce- implemented under subsection (a) shall be con- Sec. 3441. Prohibition of sales of seized property dures. sidered to impair any right or remedy, including at less than minimum bid. Sec. 5004. Termination of exception for certain trial by jury, to recover any internal revenue Sec. 3442. Accounting of sales of seized prop- real estate investment trusts from tax alleged to have been erroneously or illegally erty. the treatment of stapled entities. assessed or collected, or any penalty claimed to Sec. 3443. Uniform asset disposal mechanism. Sec. 5005. Certain customer receivables ineli- have been collected without authority, or any Sec. 3444. Codification of IRS administrative gible for mark-to-market treat- sum alleged to have been excessive or in any procedures for seizure of tax- ment. manner wrongfully collected under the internal payer’s property. Sec. 5006. Inclusion of rotavirus gastroenteritis Sec. 3445. Procedures for seizure of residences revenue laws. For the purpose of any action to to list of taxable vaccines. and businesses. recover any such tax, penalty, or sum, all stat- TITLE VI—TECHNICAL CORRECTIONS utes, rules, and regulations referring to the col- PART IV—PROVISIONS RELATING TO lector of internal revenue, the principal officer Sec. 6001. Short title. EXAMINATION AND COLLECTION ACTIVITIES for the internal revenue district, or the Sec- Sec. 3461. Procedures relating to extensions of Sec. 6002. Definitions. retary, shall be deemed to refer to the officer statute of limitations by agree- Sec. 6003. Amendments related to title I of 1997 whose act or acts referred to in the preceding ment. Act. sentence gave rise to such action. The venue of Sec. 3462. Offers-in-compromise. Sec. 6004. Amendments related to title II of 1997 any such action shall be the same as under ex- Sec. 3463. Notice of deficiency to specify dead- Act. isting law. lines for filing Tax Court petition. Sec. 6005. Amendments related to title III of (2) CONTINUING EFFECT OF LEGAL DOCU- Sec. 3464. Refund or credit of overpayments be- 1997 Act. MENTS.—All orders, determinations, rules, regu- fore final determination. Sec. 6006. Amendment related to title IV of 1997 lations, permits, agreements, grants, contracts, Sec. 3465. IRS procedures relating to appeals of Act. certificates, licenses, registrations, privileges, examinations and collections. Sec. 6007. Amendments related to title V of 1997 and other administrative actions— Sec. 3466. Application of certain fair debt col- Act. (A) which have been issued, made, granted, or lection procedures. Sec. 6008. Amendments related to title VII of allowed to become effective by the President, Sec. 3467. Guaranteed availability of install- 1997 Act. any Federal agency or official thereof, or by a ment agreements. Sec. 6009. Amendments related to title IX of court of competent jurisdiction, in the perform- Subtitle F—Disclosures to Taxpayers 1997 Act. ance of any function transferred or affected by Sec. 6010. Amendments related to title X of 1997 Sec. 3501. Explanation of joint and several li- the reorganization of the Internal Revenue Act. ability. Service or any other administrative unit of the Sec. 6011. Amendments related to title XI of Sec. 3502. Explanation of taxpayers’ rights in Department of the Treasury under this section, 1997 Act. interviews with the Internal Reve- and nue Service. Sec. 6012. Amendments related to title XII of (B) which are in effect at the time this section Sec. 3503. Disclosure of criteria for examination 1997 Act. takes effect, or were final before the effective selection. Sec. 6013. Amendments related to title XIII of date of this section and are to become effective Sec. 3504. Explanations of appeals and collec- 1997 Act. on or after the effective date of this section, tion process. Sec. 6014. Amendments related to title XIV of shall continue in effect according to their terms Sec. 3505. Explanation of reason for refund de- 1997 Act. until modified, terminated, superseded, set nial. Sec. 6015. Amendments related to title XV of aside, or revoked in accordance with law by the Sec. 3506. Statements regarding installment 1997 Act. President, the Secretary of the Treasury, the agreements. Sec. 6016. Amendments related to title XVI of Commissioner of Internal Revenue, or other au- Sec. 3507. Notification of change in tax matters 1997 Act. thorized official, a court of competent jurisdic- partner. Sec. 6017. Amendments related to Small Busi- tion, or by operation of law. ness Job Protection Act of 1996. Subtitle G—Low Income Taxpayer Clinics (3) PROCEEDINGS NOT AFFECTED.—The provi- Sec. 6018. Amendments related to Taxpayer Bill sions of this section shall not affect any pro- Sec. 3601. Low income taxpayer clinics. of Rights 2. ceedings, including notices of proposed rule- Subtitle H—Other Matters Sec. 6019. Amendment related to Omnibus making, or any application for any license, per- Sec. 3701. Cataloging complaints. Budget Reconciliation Act of 1993. mit, certificate, or financial assistance pending Sec. 3702. Archive of records of Internal Reve- Sec. 6020. Amendment related to Revenue Rec- before the Department of the Treasury (or any nue Service. onciliation Act of 1990. administrative unit of the Department, includ- Sec. 3703. Payment of taxes. Sec. 6021. Amendment related to Tax Reform ing the Internal Revenue Service) at the time Sec. 3704. Clarification of authority of Sec- Act of 1986. this section takes effect, with respect to func- retary relating to the making of Sec. 6022. Miscellaneous clerical and deadwood tions transferred or affected by the reorganiza- elections. changes. tion under this section but such proceedings and Sec. 3705. IRS employee contacts. Sec. 6023. Effective date. applications shall continue. Orders shall be May 4, 1998 CONGRESSIONAL RECORD — SENATE S4149 issued in such proceedings, appeals shall be ‘‘(i) Management of large service organiza- ‘‘(III) the Department of Justice with respect taken therefrom, and payments shall be made tions. to litigation involving a matter described in sub- pursuant to such orders, as if this section had ‘‘(ii) Customer service. clause (I) or (II). not been enacted, and orders issued in any such ‘‘(iii) Federal tax laws, including tax adminis- ‘‘(ii) COMPENSATION FOR SERVICES PROVIDED proceedings shall continue in effect until modi- tration and compliance. BY ANOTHER.—For purposes of section 203 of fied, terminated, superseded, or revoked by a ‘‘(iv) Information technology. such title— duly authorized official, by a court of competent ‘‘(v) Organization development. ‘‘(I) such individual shall not be subject to the jurisdiction, or by operation of law. Nothing in ‘‘(vi) The needs and concerns of taxpayers. restrictions of subsection (a)(1) thereof for shar- this paragraph shall be deemed to prohibit the In the aggregate, the members of the Oversight ing in compensation earned by another for rep- discontinuance or modification of any such pro- Board described in paragraph (1)(A) should col- resentations on matters covered by such section, ceeding under the same terms and conditions lectively bring to bear expertise in all of the and ‘‘(II) a person shall not be subject to the re- and to the same extent that such proceeding areas described in the preceding sentence. strictions of subsection (a)(2) thereof for sharing could have been discontinued or modified if this ‘‘(B) TERMS.—Each member who is described such compensation with such individual. section had not been enacted. in subparagraph (A) or (D) of paragraph (1) ‘‘(D) EXEMPTIONS FOR MEMBER FROM EM- (4) SUITS NOT AFFECTED.—The provisions of shall be appointed for a term of 5 years, except this section shall not affect suits commenced be- PLOYEE ORGANIZATION.— that of the members first appointed under para- ‘‘(i) EXEMPTION FROM CRIMINAL CONFLICT fore the effective date of this section, and in all graph (1)(A)— such suits, proceedings shall be had, appeals LAWS.—An individual appointed under para- ‘‘(i) 2 members shall be appointed for a term of graph (1)(D) shall not be subject to— taken, and judgments rendered in the same 2 years, manner and with the same effect as if this sec- ‘‘(I) section 203 or 205 of title 18, United States ‘‘(ii) 2 members shall be appointed for a term Code, for acting as an agent or attorney for (or tion had not been enacted. of 4 years, and (5) NONABATEMENT OF ACTIONS.—No suit, ac- otherwise representing), with or without com- ‘‘(iii) 2 members shall be appointed for a term pensation, the organization described in para- tion, or other proceeding commenced by or of 5 years. against the Department of the Treasury (or any graph (1)(D), ‘‘(C) REAPPOINTMENT.—An individual who is ‘‘(II) section 207 of such title for making, with administrative unit of the Department, includ- described in paragraph (1)(A) may be appointed ing the Internal Revenue Service), or by or the intent to influence, any communication or to no more than two 5-year terms on the Over- appearance before an officer or employee of the against any individual in the official capacity sight Board. of such individual as an officer of the Depart- United States on behalf of the organization ‘‘(D) VACANCY.—Any vacancy on the Over- ment of the Treasury, shall abate by reason of which such individual represented while a mem- sight Board shall be filled in the same manner ber of the Board, or the enactment of this section. as the original appointment. Any member ap- (6) ADMINISTRATIVE ACTIONS RELATING TO ‘‘(III) section 208 of such title for personal pointed to fill a vacancy occurring before the PROMULGATION OF REGULATIONS.—Any adminis- and substantial participation in a particular expiration of the term for which the member’s trative action relating to the preparation or pro- matter in which all financial interests which predecessor was appointed shall be appointed mulgation of a regulation by the Department of would otherwise prohibit the individual’s par- for the remainder of that term. the Treasury (or any administrative unit of the ticipation are interests of such organization. ‘‘(3) ETHICAL CONSIDERATIONS.— OMPENSATION.—Nothing in section 203 Department, including the Internal Revenue ‘‘(ii) C ‘‘(A) FINANCIAL DISCLOSURE.— of title 18, United States Code, shall prohibit an Service) relating to a function transferred or af- ‘‘(i) IN GENERAL.—During the entire period organization represented by the individual ap- fected by the reorganization under this section that an individual appointed under subpara- pointed under paragraph (1)(D) from giving, may be continued by the Department of the graph (A) or (D) of paragraph (1) is a member promising, or offering compensation to the indi- Treasury through any appropriate administra- of the Oversight Board, such individual shall be vidual for acting as its agent or attorney or for tive unit of the Department, including the Inter- treated as serving as an officer or employee re- otherwise representing such organization. nal Revenue Service with the same effect as if ferred to in section 101(f) of the Ethics in Gov- ‘‘(4) QUORUM.—5 members of the Oversight this section had not been enacted. ernment Act of 1978 for purposes of title I of Board shall constitute a quorum. A majority of SEC. 1002. IRS MISSION TO FOCUS ON TAX- such Act, except that section 101(d) of such Act members present and voting shall be required for PAYERS’ NEEDS. the Oversight Board to take action. The Internal Revenue Service shall review shall apply without regard to the number of ‘‘(5) REMOVAL.— and restate its mission to place a greater empha- days of service in the position. EPRESENTED ORGANIZATION.—The orga- ‘‘(A) IN GENERAL.—Any member of the Over- sis on serving the public and meeting taxpayers’ ‘‘(ii) R nization represented by the individual ap- sight Board appointed under paragraph (1) (A) needs. pointed under paragraph (1)(D) shall file an an- or (D) may be removed at the will of the Presi- Subtitle B—Executive Branch Governance nual financial report with the Committee on Fi- dent. and Senior Management nance in the Senate and the Committee on Ways ‘‘(B) SECRETARY AND COMMISSIONER.—An in- SEC. 1101. INTERNAL REVENUE SERVICE OVER- and Means in the House of Representatives. dividual described in subparagraph (B) or (C) of SIGHT BOARD. Such report shall include information regarding paragraph (1) shall be removed upon termi- (a) IN GENERAL.—Section 7802 (relating to the compensation paid to the individual so ap- nation of service in the office described in such Commissioner of Internal Revenue) is amended pointed, other individuals employed by the orga- subparagraph. to read as follows: nization, and membership dues collected by the ‘‘(6) CLAIMS.— ‘‘SEC. 7802. INTERNAL REVENUE SERVICE OVER- organization. ‘‘(A) IN GENERAL.—Members of the Oversight SIGHT BOARD. Board who are described in paragraph (1) (A) or ‘‘(B) RESTRICTIONS ON POST-EMPLOYMENT.— ‘‘(a) ESTABLISHMENT.—There is established For purposes of section 207(c) of title 18, United (D) shall have no personal liability under Fed- within the Department of the Treasury the In- States Code, except as provided in subparagraph eral law with respect to any claim arising out of ternal Revenue Service Oversight Board (here- (D)(i)(II), an individual appointed under sub- or resulting from an act or omission by such after in this subchapter referred to as the ‘Over- paragraph (A) or (D) of paragraph (1) shall be member within the scope of service as a member. ‘‘(B) EFFECT ON OTHER LAW.—This paragraph sight Board’). treated as an employee referred to in section ‘‘(b) MEMBERSHIP.— shall not be construed— 207(c)(2)(A)(i) of such title during the entire pe- ‘‘(1) COMPOSITION.—The Oversight Board ‘‘(i) to affect any other immunities and protec- riod the individual is a member of the Board, ex- shall be composed of 9 members, as follows: tions that may be available to such member cept that subsections (c)(2)(B) and (f) of section ‘‘(A) 6 members shall be individuals who are under applicable law with respect to such trans- 207 of such title shall not apply. not otherwise Federal officers or employees and actions, who are appointed by the President, by and ‘‘(C) PRIVATE MEMBERS WHO ARE SPECIAL GOV- ‘‘(ii) to affect any other right or remedy with the advice and consent of the Senate. ERNMENT EMPLOYEES.—If an individual ap- against the United States under applicable law, ‘‘(B) 1 member shall be the Secretary of the pointed under paragraph (1)(A) is a special Gov- or Treasury or, if the Secretary so designates, the ernment employee, the following additional ‘‘(iii) to limit or alter in any way the immuni- Deputy Secretary of the Treasury. rules apply for purposes of chapter 11 of title 18, ties that are available under applicable law for ‘‘(C) 1 member shall be the Commissioner of United States Code: Federal officers and employees. Internal Revenue. ‘‘(i) RESTRICTION ON REPRESENTATION.—In ad- ‘‘(c) GENERAL RESPONSIBILITIES.— ‘‘(D) 1 member shall be an individual who is dition to any restriction under section 205(c) of ‘‘(1) OVERSIGHT.— a representative of an organization that rep- title 18, United States Code, except as provided ‘‘(A) IN GENERAL.—The Oversight Board shall resents a substantial number of Internal Reve- in subsections (d) through (i) of section 205 of oversee the Internal Revenue Service in its ad- nue Service employees and who is appointed by such title, such individual (except in the proper ministration, management, conduct, direction, the President, by and with the advice and con- discharge of official duties) shall not, with or and supervision of the execution and applica- sent of the Senate. without compensation, represent anyone to or tion of the internal revenue laws or related stat- ‘‘(2) QUALIFICATIONS AND TERMS.— before any officer or employee of— utes and tax conventions to which the United ‘‘(A) QUALIFICATIONS.—Members of the Over- ‘‘(I) the Oversight Board or the Internal Reve- States is a party. sight Board described in paragraph (1)(A) shall nue Service on any matter, ‘‘(B) MISSION OF IRS.—As part of its oversight be appointed without regard to political affili- ‘‘(II) the Department of the Treasury on any functions described in subparagraph (A), the ation and solely on the basis of their profes- matter involving the internal revenue laws or Oversight Board shall ensure that the organiza- sional experience and expertise in 1 or more of involving the management or operations of the tion and operation of the Internal Revenue the following areas: Internal Revenue Service, or Service allows it to carry out its mission. S4150 CONGRESSIONAL RECORD — SENATE May 4, 1998

‘‘(C) CONFIDENTIALITY.—The Oversight Board ‘‘(B) CHAIRPERSON.—In lieu of the amount shall be reported by such officer or employee to shall ensure that appropriate confidentiality is specified in subparagraph (A), the Chairperson the Secretary, the Treasury Inspector General maintained in the exercise of its duties. of the Oversight Board shall be compensated at for Tax Administration, and the Joint Commit- ‘‘(2) EXCEPTIONS.—The Oversight Board shall a rate of $50,000 per year. tee on Taxation. have no responsibilities or authority with re- ‘‘(2) TRAVEL EXPENSES.—The members of the ‘‘(B) EXCEPTION FOR REPORTS TO THE spect to— Oversight Board shall be allowed travel ex- BOARD.—If— ‘‘(A) the development and formulation of Fed- penses, including per diem in lieu of subsistence, ‘‘(i) the Commissioner or the Treasury Inspec- eral tax policy relating to existing or proposed at rates authorized for employees of agencies tor General for Tax Administration prepares internal revenue laws, related statutes, and tax under subchapter I of chapter 57 of title 5, any report or other matter for the Oversight conventions, United States Code, while away from their Board in order to assist the Board in carrying ‘‘(B) specific law enforcement activities of the homes or regular places of business for purposes out its duties, and Internal Revenue Service, including specific of duties as a member of the Oversight Board. ‘‘(ii) the Commissioner or such Inspector Gen- compliance activities such as examinations, col- ‘‘(3) STAFF.— eral determines it is necessary to include any re- lection activities, and criminal investigations, ‘‘(A) IN GENERAL.—The Chairperson of the turn or return information in such report or ‘‘(C) specific procurement activities of the In- Oversight Board may appoint and terminate other matter to enable the Board to carry out ternal Revenue Service, or any personnel that may be necessary to enable such duties, ‘‘(D) except as provided in subsection (d)(3), the Board to perform its duties. such return or return information (other than specific personnel actions. ‘‘(B) DETAIL OF GOVERNMENT EMPLOYEES.— information regarding taxpayer identity) may be ‘‘(d) SPECIFIC RESPONSIBILITIES.—The Over- Upon request of the Chairperson of the Over- disclosed to members, employees, or detailees of sight Board shall have the following specific re- sight Board, a Federal agency shall detail a the Board solely for the purpose of carrying out sponsibilities: Federal Government employee to the Oversight such duties.’’ ‘‘(1) STRATEGIC PLANS.—To review and ap- Board without reimbursement. Such detail shall (c) CONFORMING AMENDMENTS.— prove strategic plans of the Internal Revenue be without interruption or loss of civil service (1) Section 4946(c) (relating to definitions and Service, including the establishment of— status or privilege. special rules for chapter 42) is amended by strik- ‘‘(A) mission and objectives, and standards of ‘‘(4) PROCUREMENT OF TEMPORARY AND INTER- ing ‘‘or’’ at the end of paragraph (5), by striking performance relative to either, and MITTENT SERVICES.—The Chairperson of the the period at the end of paragraph (6) and in- ‘‘(B) annual and long-range strategic plans. Oversight Board may procure temporary and serting ‘‘, or’’, and by adding at the end the fol- ‘‘(2) OPERATIONAL PLANS.—To review the intermittent services under section 3109(b) of lowing new paragraph: operational functions of the Internal Revenue title 5, United States Code. ‘‘(7) a member of the Internal Revenue Service Service, including— ‘‘(f) ADMINISTRATIVE MATTERS.— ‘‘(A) plans for modernization of the tax sys- Oversight Board.’’ ‘‘(1) CHAIR.— (2) The table of sections for subchapter A of tem, ‘‘(A) TERM.—The members of the Oversight chapter 80 is amended by striking the item relat- ‘‘(B) plans for outsourcing or managed com- Board shall elect for a 2-year term a chairperson ing to section 7802 and inserting the following petition, and from among the members appointed under sub- new item: ‘‘(C) plans for training and education. section (b)(1)(A). ‘‘(3) MANAGEMENT.—To— ‘‘(B) POWERS.—Except as otherwise provided ‘‘Sec. 7802. Internal Revenue Service Oversight ‘‘(A) recommend to the President candidates by a majority vote of the Oversight Board, the Board.’’ for appointment as the Commissioner of Internal powers of the Chairperson shall include— (d) EFFECTIVE DATE.— Revenue and recommend to the President the re- ‘‘(i) establishing committees, (1) IN GENERAL.—The amendments made by moval of the Commissioner, ‘‘(ii) setting meeting places and times, this section shall take effect on the date of the ‘‘(B) recommend to the Secretary of the Treas- ‘‘(iii) establishing meeting agendas, and enactment of this Act. ury, after taking into consideration any rec- ‘‘(iv) developing rules for the conduct of busi- (2) INITIAL NOMINATIONS TO INTERNAL REVE- ommendations of the Commissioner, 3 can- ness. NUE SERVICE OVERSIGHT BOARD.—The President didates for appointment as the National Tax- ‘‘(2) MEETINGS.—The Oversight Board shall shall submit the initial nominations under sec- payer Advocate from individuals who have— meet at least quarterly and at such other times tion 7802 of the Internal Revenue Code of 1986, ‘‘(i) a background in customer service as well as the Chairperson determines appropriate. as added by this section, to the Senate not later as tax law, and ‘‘(3) REPORTS.— than 6 months after the date of the enactment ‘‘(ii) experience in representing individual ‘‘(A) ANNUAL.—The Oversight Board shall taxpayers, each year report with respect to the conduct of of this Act. ‘‘(C) recommend to the Secretary of the Treas- its responsibilities under this title to the Presi- (3) EFFECT ON ACTIONS PRIOR TO APPOINTMENT ury the removal of the National Taxpayer Advo- dent, the Committees on Ways and Means, Gov- OF OVERSIGHT BOARD.—Nothing in this section cate, ernment Reform and Oversight, and Appropria- shall be construed to invalidate the actions and ‘‘(D) review the Commissioner’s selection, tions of the House of Representatives and the authority of the Internal Revenue Service prior evaluation, and compensation of Internal Reve- Committees on Finance, Governmental Affairs, to the appointment of the members of the Inter- nue Service senior executives who have program and Appropriations of the Senate. nal Revenue Service Oversight Board. PECIAL RULE FOR REORGANIZATION management responsibility over significant ‘‘(B) ADDITIONAL REPORT.—Upon a deter- (4) S functions of the Internal Revenue Service, mination by the Oversight Board under sub- PLAN.—The authority of the Internal Revenue ‘‘(E) review and approve the Commissioner’s section (c)(1)(B) that the organization and oper- Service Oversight Board under section plans for any major reorganization of the Inter- ation of the Internal Revenue Service are not al- 7802(d)(3)(E) of such Code (as so added) to ap- nal Revenue Service, and lowing it to carry out its mission, the Oversight prove major reorganization plans shall not ‘‘(F) review procedures of the Internal Reve- Board shall report such determination to the apply to the reorganization plan under section nue Service relating to financial audits required Committee on Ways and Means of the House of 1001 of this Act. by law. Representatives, and the Committee on Finance SEC. 1102. COMMISSIONER OF INTERNAL REVE- ‘‘(4) BUDGET.—To— of the Senate. NUE; OTHER OFFICIALS. ‘‘(A) review and approve the budget request of ‘‘(g) TERMINATION OF BOARD.—The Internal (a) IN GENERAL.—Section 7803 (relating to the Internal Revenue Service prepared by the Revenue Service Oversight Board established other personnel) is amended to read as follows: Commissioner, under subsection (a) shall terminate on Septem- ‘‘SEC. 7803. COMMISSIONER OF INTERNAL REVE- ‘‘(B) submit such budget request to the Sec- ber 30, 2008.’’ NUE; OTHER OFFICIALS. retary of the Treasury, and (b) RESTRICTION ON DISCLOSURE OF RETURN ‘‘(a) COMMISSIONER OF INTERNAL REVENUE.— ‘‘(C) ensure that the budget request supports INFORMATION TO OVERSIGHT BOARD MEMBERS.— ‘‘(1) APPOINTMENT.— the annual and long-range strategic plans. Section 6103(h) (relating to disclosure to certain ‘‘(A) IN GENERAL.—There shall be in the De- ‘‘(5) TAXPAYER PROTECTION.—To ensure the Federal officers and employees for purposes of partment of the Treasury a Commissioner of In- proper treatment of taxpayers by the employees tax administration, etc.) is amended by adding ternal Revenue who shall be appointed by the of the Internal Revenue Service. at the end the following new paragraph: President, by and with the advice and consent The Secretary shall submit the budget request ‘‘(5) INTERNAL REVENUE SERVICE OVERSIGHT of the Senate, to a 5-year term. Such appoint- referred to in paragraph (4)(B) for any fiscal BOARD.— ment shall be made from individuals who, year to the President who shall submit such re- ‘‘(A) IN GENERAL.—Notwithstanding para- among other qualifications, have a dem- quest, without revision, to Congress together graph (1), and except as provided in subpara- onstrated ability in management. with the President’s annual budget request for graph (B), no return or return information may ‘‘(B) VACANCY.—Any individual appointed to the Internal Revenue Service for such fiscal be disclosed to any member of the Oversight fill a vacancy in the position of Commissioner year. Board described in subparagraph (A) or (D) of occurring before the expiration of the term for ‘‘(e) BOARD PERSONNEL MATTERS.— section 7802(b)(1) or to any employee or detailee which such individual’s predecessor was ap- ‘‘(1) COMPENSATION OF MEMBERS.— of such Board by reason of their service with pointed shall be appointed only for the remain- ‘‘(A) IN GENERAL.—Each member of the Over- the Board. Any request for information not per- der of that term. sight Board who is described in subsection mitted to be disclosed under the preceding sen- ‘‘(C) REMOVAL.—The Commissioner may be re- (b)(1)(A) shall be compensated at a rate of tence, and any contact relating to a specific tax- moved at the will of the President. $30,000 per year. All other members shall serve payer, made by any such individual to an offi- ‘‘(D) REAPPOINTMENT.—The Commissioner without compensation for such service. cer or employee of the Internal Revenue Service may be appointed to more than one 5-year term. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4151

‘‘(2) DUTIES.—The Commissioner shall have inated by the Oversight Board under section ‘‘(XI) include such other information as the such duties and powers as the Secretary may 7802(d)(3). National Taxpayer Advocate may deem advis- prescribe, including the power to— ‘‘(iii) RESTRICTION ON EMPLOYMENT.—An indi- able. ‘‘(A) administer, manage, conduct, direct, and vidual may be appointed as the National Tax- ‘‘(iii) REPORT TO BE SUBMITTED DIRECTLY.— supervise the execution and application of the payer Advocate only if such individual was not Each report required under this subparagraph internal revenue laws or related statutes and an officer or employee of the Internal Revenue shall be provided directly to the committees de- tax conventions to which the United States is a Service during the 2-year period ending with scribed in clause (i) without any prior review or party, such appointment and such individual agrees comment from the Commissioner, the Secretary ‘‘(B) recommend to the President a candidate not to accept any employment with the Internal of the Treasury, the Oversight Board, any other for appointment as Chief Counsel for the Inter- Revenue Service for at least 5 years after ceas- officer or employee of the Department of the nal Revenue Service when a vacancy occurs, ing to be the National Taxpayer Advocate. Treasury, or the Office of Management and and recommend to the President the removal of ‘‘(2) FUNCTIONS OF OFFICE.— Budget. such Chief Counsel, and ‘‘(A) IN GENERAL.—It shall be the function of ‘‘(C) OTHER RESPONSIBILITIES.—The National ‘‘(C) recommend to the Oversight Board can- the Office of Taxpayer Advocate to— Taxpayer Advocate shall— ‘‘(i) assist taxpayers in resolving problems didates for appointment as National Taxpayer ‘‘(i) monitor the coverage and geographic allo- with the Internal Revenue Service, cation of local offices of taxpayer advocates, Advocate when a vacancy occurs. ‘‘(ii) identify areas in which taxpayers have ‘‘(ii) develop guidance to be distributed to all If the Secretary determines not to delegate a problems in dealings with the Internal Revenue Internal Revenue Service officers and employees power specified in subparagraph (A), (B), or Service, (C), such determination may not take effect ‘‘(iii) to the extent possible, propose changes outlining the criteria for referral of taxpayer in- until 30 days after the Secretary notifies the in the administrative practices of the Internal quiries to local offices of taxpayer advocates, Committees on Ways and Means, Government Revenue Service to mitigate problems identified ‘‘(iii) ensure that the local telephone number Reform and Oversight, and Appropriations of under clause (ii), and for each local office of the taxpayer advocate is the House of Representatives and the Commit- ‘‘(iv) identify potential legislative changes published and available to taxpayers served by tees on Finance, Governmental Affairs, and Ap- which may be appropriate to mitigate such prob- the office, and propriations of the Senate. lems. ‘‘(iv) in conjunction with the Commissioner, develop career paths for local taxpayer advo- ‘‘(3) CONSULTATION WITH BOARD.—The Com- ‘‘(B) ANNUAL REPORTS.— missioner shall consult with the Oversight ‘‘(i) OBJECTIVES.—Not later than June 30 of cates choosing to make a career in the Office of Board on all matters set forth in paragraphs (2) each calendar year, the National Taxpayer Ad- the Taxpayer Advocate. ‘‘(D) PERSONNEL ACTIONS.— and (3) (other than paragraph (3)(A)) of section vocate shall report to the Committee on Ways ‘‘(i) IN GENERAL.—The National Taxpayer Ad- 7802(d). and Means of the House of Representatives and vocate shall have the responsibility and author- ‘‘(b) CHIEF COUNSEL FOR THE INTERNAL REVE- the Committee on Finance of the Senate on the ity to— NUE SERVICE.— objectives of the Office of the Taxpayer Advo- ‘‘(I) appoint at least 1 local taxpayer advocate ‘‘(1) APPOINTMENT.—There shall be in the De- cate for the fiscal year beginning in such cal- for each State, and partment of the Treasury a Chief Counsel for endar year. Any such report shall contain full ‘‘(II) evaluate and take personnel actions (in- the Internal Revenue Service who shall be ap- and substantive analysis, in addition to statis- cluding dismissal) with respect to any employee pointed by the President, by and with the con- tical information. ‘‘(ii) ACTIVITIES.—Not later than December 31 of any local office of a taxpayer advocate de- sent of the Senate. of each calendar year, the National Taxpayer scribed in subclause (I). ‘‘(2) DUTIES.—The Chief Counsel shall be the Advocate shall report to the Committee on Ways ‘‘(ii) CONSULTATION.—The National Taxpayer chief law officer for the Internal Revenue Serv- and Means of the House of Representatives and Advocate may consult with the appropriate su- ice and shall perform such duties as may be pre- the Committee on Finance of the Senate on the pervisory personnel of the Internal Revenue scribed by the Secretary, including the duty— activities of the Office of the Taxpayer Advocate Service in carrying out the National Taxpayer ‘‘(A) to be legal advisor to the Commissioner during the fiscal year ending during such cal- Advocate’s responsibilities under this subpara- and the Commissioner’s officers and employees, endar year. Any such report shall contain full graph. ‘‘(B) to furnish legal opinions for the prepara- and substantive analysis, in addition to statis- ‘‘(3) RESPONSIBILITIES OF COMMISSIONER.—The tion and review of rulings and memoranda of tical information, and shall— Commissioner shall establish procedures requir- technical advice, ‘‘(I) identify the initiatives the Office of the ing a formal response to all recommendations ‘‘(C) to prepare, review, and assist in the Taxpayer Advocate has taken on improving tax- submitted to the Commissioner by the National preparation of proposed legislation, treaties, payer services and Internal Revenue Service re- Taxpayer Advocate within 3 months after sub- regulations, and Executive Orders relating to sponsiveness, mission to the Commissioner. laws which affect the Internal Revenue Service, ‘‘(II) contain recommendations received from ‘‘(4) OPERATION OF LOCAL OFFICES.— ‘‘(D) to represent the Commissioner in cases individuals with the authority to issue Tax- ‘‘(A) IN GENERAL.—Each local taxpayer advo- before the Tax Court, and payer Assistance Orders under section 7811, cate— ‘‘(E) to determine which civil actions should ‘‘(III) contain a summary of at least 20 of the ‘‘(i) shall report directly to the National Tax- be litigated under the laws relating to the Inter- most serious problems encountered by taxpayers, payer Advocate, nal Revenue Service and prepare recommenda- including a description of the nature of such ‘‘(ii) may consult with the appropriate super- tions for the Department of Justice regarding problems, visory personnel of the Internal Revenue Service the commencement of such actions. ‘‘(IV) contain an inventory of the items de- regarding the daily operation of the local office If the Secretary determines not to delegate a scribed in subclauses (I), (II), and (III) for of the taxpayer advocate, power specified in subparagraph (A), (B), (C), which action has been taken and the result of ‘‘(iii) shall, at the initial meeting with any (D), or (E), such determination may not take ef- such action, taxpayer seeking the assistance of a local office ‘‘(V) contain an inventory of the items de- fect until 30 days after the Secretary notifies the of the taxpayer advocate, notify such taxpayer scribed in subclauses (I), (II), and (III) for Committees on Ways and Means, Government that the office operates independently of any which action remains to be completed and the Reform and Oversight, and Appropriations of other Internal Revenue Service office and re- period during which each item has remained on the House of Representatives and the Commit- ports directly to Congress through the National such inventory, tees on Finance, Governmental Affairs, and Ap- ‘‘(VI) contain an inventory of the items de- Taxpayer Advocate, and propriations of the Senate. scribed in subclauses (I), (II), and (III) for ‘‘(iv) may, at the taxpayer advocate’s discre- ‘‘(3) REPORT TO COMMISSIONER.—The Chief which no action has been taken, the period dur- tion, not disclose to the Internal Revenue Serv- Counsel shall report directly to the Commis- ing which each item has remained on such in- ice contact with, or information provided by, sioner of Internal Revenue. ventory, the reasons for the inaction, and iden- such taxpayer. ‘‘(c) OFFICE OF THE TAXPAYER ADVOCATE.— tify any Internal Revenue Service official who is ‘‘(B) MAINTENANCE OF INDEPENDENT COMMU- ‘‘(1) ESTABLISHMENT.— responsible for such inaction, NICATIONS.—Each local office of the taxpayer ‘‘(A) IN GENERAL.—There is established in the ‘‘(VII) identify any Taxpayer Assistance advocate shall maintain a separate phone, fac- Internal Revenue Service an office to be known Order which was not honored by the Internal simile, and other electronic communication ac- as the ‘Office of the Taxpayer Advocate’. Revenue Service in a timely manner, as specified cess, and a separate post office address. ‘‘(B) NATIONAL TAXPAYER ADVOCATE.— under section 7811(b), ‘‘(d) ADDITIONAL DUTIES OF THE TREASURY IN- ‘‘(i) IN GENERAL.—The Office of the Taxpayer ‘‘(VIII) contain recommendations for such ad- SPECTOR GENERAL FOR TAX ADMINISTRATION.— Advocate shall be under the supervision and di- ministrative and legislative action as may be ap- ‘‘(1) ANNUAL REPORTING.—The Treasury In- rection of an official to be known as the ‘Na- propriate to resolve problems encountered by spector General for Tax Administration shall in- tional Taxpayer Advocate’. The National Tax- taxpayers, clude in one of the semiannual reports under payer Advocate shall report directly to the Com- ‘‘(IX) identify areas of the tax law that im- section 5 of the Inspector General Act of 1978— missioner of Internal Revenue and shall be enti- pose significant compliance burdens on tax- ‘‘(A) an evaluation of the compliance of the tled to compensation at the same rate as the payers or the Internal Revenue Service, includ- Internal Revenue Service with— highest level official reporting directly to the ing specific recommendations for remedying ‘‘(i) restrictions under section 1204 of the In- Commissioner of Internal Revenue. these problems, ternal Revenue Service Restructuring and Re- ‘‘(ii) APPOINTMENT.—The National Taxpayer ‘‘(X) identify the 10 most litigated issues for form Act of 1998 on the use of enforcement sta- Advocate shall be appointed by the Secretary of each category of taxpayers, including rec- tistics to evaluate Internal Revenue Service em- the Treasury from among the 3 individuals nom- ommendations for mitigating such disputes, and ployees, S4152 CONGRESSIONAL RECORD — SENATE May 4, 1998 ‘‘(ii) restrictions under section 7521 on directly the Secretary shall by regulations prescribe), the nal Revenue Service Oversight Board and not- contacting taxpayers who have indicated that National Taxpayer Advocate may issue a Tax- withstanding section 7803(c)(1)(B)(ii) of the In- they prefer their representatives be contacted, payer Assistance Order if, in the determination ternal Revenue Code of 1986, as added by this ‘‘(iii) required procedures under section 6320 of the National Taxpayer Advocate— section, the National Taxpayer Advocate shall for approval of a notice of a lien, ‘‘(A) the taxpayer is suffering or about to suf- be appointed by the Secretary of the Treasury ‘‘(iv) required procedures under subchapter D fer a significant hardship as a result of the from among individuals who have a background of chapter 64 for seizure of property for collec- manner in which the internal revenue laws are in customer service as well as tax law and who tion of taxes, including required procedures being administered by the Secretary, or have experience in representing individual tax- under section 6330 for approval of a levy or no- ‘‘(B) the issuance of a Taxpayer Assistance payers. The Commissioner of Internal Revenue tice of levy, and Order is otherwise appropriate considering the shall submit to the Secretary a list of nomina- ‘‘(v) restrictions under section 3708 of the In- circumstances of the taxpayer. tions for consideration under the preceding sen- ternal Revenue Service Restructuring and Re- ‘‘(2) DETERMINATION OF HARDSHIP.—For pur- tence. form Act of 1998 on designation of taxpayers, poses of paragraph (1), a significant hardship (4) CURRENT OFFICERS.— ‘‘(B) a review and a certification of whether shall include— (A) In the case of an individual serving as or not the Secretary is complying with the re- ‘‘(A) an immediate threat of adverse action, Commissioner of Internal Revenue on the date quirements of section 6103(e)(8) to disclose infor- ‘‘(B) a delay of more than 30 days in resolving of the enactment of this Act who was appointed mation to an individual filing a joint return on taxpayer account problems, to such position before such date, the 5-year collection activity involving the other individual ‘‘(C) the incurring by the taxpayer of signifi- term required by section 7803(a)(1) of the Inter- filing the return, cant costs (including fees for professional rep- nal Revenue Code of 1986, as added by this sec- ‘‘(C) information regarding extensions of the resentation) if relief is not granted, or tion, shall begin as of the date of such appoint- statute of limitations for assessment and collec- ‘‘(D) irreparable injury to, or a long-term ad- ment. tion of tax under section 6501 and the provision verse impact on, the taxpayer if relief is not (B) Clauses (ii) and (iii) of section of notice to taxpayers regarding requests for granted. 7803(c)(1)(B) of such Code, as added by this sec- such extension, ‘‘(3) STANDARD WHERE ADMINISTRATIVE GUID- tion, shall not apply to the individual serving as ‘‘(D) an evaluation of the adequacy and secu- ANCE NOT FOLLOWED.—In cases where any In- Taxpayer Advocate on the date of the enact- rity of the technology of the Internal Revenue ternal Revenue Service employee is not follow- ment of this Act. Service, ing applicable published administrative guid- SEC. 1103. TREASURY INSPECTOR GENERAL FOR ‘‘(E) any termination or mitigation under sec- ance (including the Internal Revenue Manual), TAX ADMINISTRATION. tion 1203 of the Internal Revenue Service Re- the National Taxpayer Advocate shall construe (a) ESTABLISHMENT OF 2 INSPECTORS GENERAL structuring and Reform Act of 1998, and the factors taken into account in determining IN THE DEPARTMENT OF THE TREASURY.—Section ‘‘(F) information regarding improper denial of whether to issue a taxpayer assistance order in 2 of the Inspector General Act of 1978 (5 U.S.C. requests for information from the Internal Reve- the manner most favorable to the taxpayer.’’ App.) is amended by striking the matter follow- nue Service identified under paragraph (2). (d) CONFORMING AMENDMENTS RELATING TO ing paragraph (3) and inserting the following: ‘‘(2) SEMIANNUAL REPORTS.— NATIONAL TAXPAYER ADVOCATE.— ‘‘there is established— ‘‘(A) IN GENERAL.—The Treasury Inspector (1) The following provisions are each amended ‘‘(A) in each of such establishments an office General for Tax Administration shall include in by striking ‘‘Taxpayer Advocate’’ each place it of Inspector General, subject to subparagraph each semiannual report under section 5 of the appears and inserting ‘‘National Taxpayer Ad- (B); and Inspector General Act of 1978— vocate’’: ‘‘(B) in the establishment of the Department ‘‘(i) the number of taxpayer complaints during (A) Section 6323(j)(1)(D) (relating to with- of the Treasury— the reporting period; drawal of notice in certain circumstances). ‘‘(i) an Office of Inspector General of the De- ‘‘(ii) the number of employee misconduct and (B) Section 6343(d)(2)(D) (relating to return of partment of the Treasury; and taxpayer abuse allegations received during the property in certain cases). ‘‘(ii) an Office of Treasury Inspector General period from taxpayers, Internal Revenue Service (C) Section 7811(b)(2)(D) (relating to terms of for Tax Administration.’’ employees, and other sources; a Taxpayer Assistance Order). (b) AMENDMENTS TO SECTION 8D OF THE IN- ‘‘(iii) a summary of the status of such com- (D) Section 7811(c) (relating to authority to SPECTOR GENERAL ACT OF 1978.— plaints and allegations; and modify or rescind). (1) LIMITATION ON AUTHORITY OF INSPECTOR ‘‘(iv) a summary of the disposition of such (E) Section 7811(d)(2) (relating to suspension GENERAL.—Section 8D(a) of the Inspector Gen- complaints and allegations, including the out- of running of period of limitation). eral Act of 1978 (5 U.S.C. App.) is amended by come of any Department of Justice action and (F) Section 7811(e) (relating to independent adding at the end the following: ‘‘(4) The Secretary of the Treasury may not any monies paid as a settlement of such com- action of Taxpayer Advocate). plaints and allegations. (G) Section 7811(f) (relating to Taxpayer Ad- exercise any power under paragraph (1) or (2) ‘‘(B) Clauses (iii) and (iv) of subparagraph vocate). with respect to the Treasury Inspector General (B) shall only apply to complaints and allega- (2) Section 7811(d)(1) (relating to suspension for Tax Administration.’’ (2) DUTIES OF INSPECTOR GENERAL OF THE DE- tions of serious employee misconduct. of running of period of limitation) is amended PARTMENT OF THE TREASURY; RELATIONSHIP TO ‘‘(3) OTHER RESPONSIBILITIES.—The Treasury by striking ‘‘Taxpayer Advocate’s’’ and insert- THE TREASURY INSPECTOR GENERAL FOR TAX AD- Inspector General for Tax Administration ing ‘‘National Taxpayer Advocate’s’’. MINISTRATION.—Section 8D(b) of such Act is shall— (3) The headings of subsections (e) and (f) of amended— ‘‘(A) conduct periodic audits of not less than section 7811 are each amended by striking ‘‘TAX- 1 percent of the total number of determinations (A) by inserting ‘‘(1)’’ after ‘‘(b)’’; and PAYER ADVOCATE’’ and inserting ‘‘NATIONAL (B) by adding at the end the following: made by the Internal Revenue Service to deny TAXPAYER ADVOCATE’’. ‘‘(2) The Inspector General of the Department written requests to disclose information to tax- (e) ADDITIONAL CONFORMING AMENDMENTS.— of the Treasury shall exercise all duties and re- payers on the basis of section 6103 of this title (1) The table of sections for subchapter A of sponsibilities of an Inspector General for the De- or section 552(b)(7) of title 5, United States Code, chapter 80 is amended by striking the item relat- partment of the Treasury other than the duties and ing to section 7803 and inserting the following and responsibilities exercised by the Treasury ‘‘(B) establish and maintain a toll-free tele- new item: Inspector General for Tax Administration. phone number for taxpayers to use to confiden- ‘‘(3) The Secretary of the Treasury shall es- tially register complaints of misconduct by In- ‘‘Sec. 7803. Commissioner of Internal Revenue; other officials.’’ tablish procedures under which the Inspector ternal Revenue Service employees and incor- General of the Department of the Treasury and (2) Section 5109 of title 5, United States Code, porate the telephone number in the statement the Treasury Inspector General for Tax Admin- is amended by striking subsection (b) and redes- required by section 6227 of the Omnibus Tax- istration will— payer Bill of Rights (Internal Revenue Service ignating subsection (c) as subsection (b). ‘‘(A) determine how audits and investigations Publication No. 1).’’ (3) Section 7611(f)(1) (relating to restrictions are allocated in cases of overlapping jurisdic- (b) NOTICE OF RIGHT TO CONTACT OFFICE IN- on church tax inquiries and examinations) is tion, and CLUDED IN NOTICE OF DEFICIENCY.—Section amended by striking ‘‘Assistant Commissioner ‘‘(B) provide for coordination, cooperation, 6212(a) (relating to notice of deficiency) is for Employee Plans and Exempt Organizations and efficiency in the conduct of such audits and amended by adding at the end the following: of the Internal Revenue Service’’ and inserting investigations.’’ ‘‘Such notice shall include a notice to the tax- ‘‘Secretary’’. (3) ACCESS TO RETURNS AND RETURN INFORMA- payer of the taxpayer’s right to contact a local (f) EFFECTIVE DATE.— TION.—Section 8D(e) of such Act is amended— office of the taxpayer advocate and the location (1) IN GENERAL.—Except as provided in para- (A) in paragraph (1), by striking ‘‘Inspector and phone number of the appropriate office.’’ graph (2), the amendments made by this section General’’ and inserting ‘‘Treasury Inspector (c) EXPANSION OF AUTHORITY TO ISSUE TAX- shall take effect on the date of the enactment of General for Tax Administration’’; PAYER ASSISTANCE ORDERS.—Section 7811(a) (re- this Act. (B) in paragraph (2), by striking all beginning lating to taxpayer assistance orders) is amended (2) CHIEF COUNSEL.—Section 7803(b)(3) of the with ‘‘(2)’’ through subparagraph (B); to read as follows: Internal Revenue Code of 1986, as added by this (C)(i) by redesignating subparagraph (C) of ‘‘(a) AUTHORITY TO ISSUE.— section, shall take effect on the date that is 90 paragraph (2) as paragraph (2) of such sub- ‘‘(1) IN GENERAL.—Upon application filed by a days after the date of the enactment of this Act. section; and taxpayer with the Office of the Taxpayer Advo- (3) NATIONAL TAXPAYER ADVOCATE.—During (ii) in such redesignated paragraph (2), by cate (in such form, manner, and at such time as the period before the appointment of the Inter- striking ‘‘Inspector General’’ and inserting May 4, 1998 CONGRESSIONAL RECORD — SENATE S4153

‘‘Treasury Inspector General for Tax Adminis- tempts to corrupt or threaten employees of the (d) AUDITS AND REPORTS OF AGENCY FINAN- tration’’; and Internal Revenue Service; and CIAL STATEMENTS.—Subject to section 3521(g) of (D)(i) by redesignating subparagraph (D) of ‘‘(D) may designate any employee in the Of- title 31, United States Code— such paragraph as paragraph (3) of such sub- fice of the Treasury Inspector General for Tax (1) the Inspector General of the Department of section; and Administration to enforce such laws and per- the Treasury shall, subject to paragraph (2)— (ii) in such redesignated paragraph (3), by form such functions referred to under subpara- (A) audit each financial statement in accord- striking ‘‘Inspector General’’ and inserting graphs (A), (B), and (C). ance with section 3521(e) of such title; and ‘‘Treasury Inspector General for Tax Adminis- ‘‘(2)(A) In performing a law enforcement func- (B) prepare and submit each report required tration’’. tion under paragraph (1), the Treasury Inspec- under section 3521(f) of such title; and (4) EFFECT ON CERTAIN FINAL DECISIONS OF tor General for Tax Administration shall report (2) the Treasury Inspector General for Tax THE SECRETARY.—Section 8D(f) of such Act is any reasonable grounds to believe there has Administration shall— amended by striking ‘‘Inspector General’’ and been a violation of Federal criminal law to the (A) audit that portion of each financial state- inserting ‘‘Inspector General of the Department Attorney General at an appropriate time as de- ment referred to under paragraph (1)(A) that re- of the Treasury or the Treasury Inspector Gen- termined by the Treasury Inspector General for lates to custodial and administrative accounts of eral for Tax Administration’’. Tax Administration, notwithstanding section the Internal Revenue Service; and (5) REPEAL OF LIMITATION ON REPORTS TO THE 4(d). (B) prepare that portion of each report re- ATTORNEY GENERAL.—Section 8D of such Act is ‘‘(B) In the administration of section 5(d) and ferred to under paragraph (1)(B) that relates to amended by striking subsection (g). subsection (g)(2) of this section, the Secretary of custodial and administrative accounts of the In- (6) TRANSMISSION OF REPORTS.—Section 8D(h) the Treasury may transmit the required report ternal Revenue Service. of such Act is amended— with respect to the Treasury Inspector General (e) TECHNICAL AND CONFORMING AMEND- (A) by striking ‘‘(h)’’ and inserting ‘‘(g)(1)’’; for Tax Administration at an appropriate time MENTS.— (B) by striking ‘‘and the Committees on Gov- as determined by the Secretary, if the problem, (1) TRANSFER OF FUNCTIONS.—Section 8D(b) of ernment Operations and Ways and Means of the abuse, or deficiency relates to— the Inspector General Act of 1978 (5 U.S.C. House of Representatives’’ and inserting ‘‘and ‘‘(i) the performance of a law enforcement App.) is amended by striking ‘‘and the internal the Committees on Government Reform and function under paragraph (1); and audits and internal investigations performed by Oversight and Ways and Means of the House of ‘‘(ii) sensitive information concerning matters the Office of Assistant Commissioner (Inspec- Representatives’’; and under subsection (a)(1)(A) through (F). tion) of the Internal Revenue Service’’. (C) by adding at the end the following: ‘‘(3) Nothing in this subsection shall be con- (2) AMENDMENTS RELATING TO REFERENCES TO ‘‘(2) Any report made by the Treasury Inspec- strued to affect the authority of any other per- THE INSPECTOR GENERAL OF THE DEPARTMENT OF tor General for Tax Administration that is re- son to carry out or enforce any provision speci- THE TREASURY.— quired to be transmitted by the Secretary of the fied in paragraph (1). (A) LIMITATION ON AUTHORITY.—Section 8D(a) Treasury to the appropriate committees or sub- ‘‘(l)(1) The Treasury Inspector General for of the Inspector General Act of 1978 (5 U.S.C. committees of Congress under section 5(d) shall Tax Administration shall timely conduct an App.) is amended— also be transmitted, within the 7-day period audit or investigation relating to the Internal (i) in the first sentence of paragraph (1), by specified under such subsection, to the Internal Revenue Service upon the written request of the inserting ‘‘of the Department of the Treasury’’ Revenue Service Oversight Board and the Com- Commissioner of Internal Revenue or the Inter- after ‘‘Inspector General’’; missioner of Internal Revenue.’’ nal Revenue Service Oversight Board. (ii) in paragraph (2), by inserting ‘‘of the De- (7) TREASURY INSPECTOR GENERAL FOR TAX ‘‘(2)(A) Any final report of an audit con- partment of the Treasury’’ after ‘‘prohibit the ADMINISTRATION.—Section 8D of the Act is ducted by the Treasury Inspector General for Inspector General’’; and amended by adding at the end the following: Tax Administration shall be timely submitted by (iii) in paragraph (3)— ‘‘(h) The Treasury Inspector General for Tax the Inspector General to the Commissioner of In- (I) in the first sentence, by inserting ‘‘of the Administration shall exercise all duties and re- ternal Revenue and the Internal Revenue Serv- Department of the Treasury’’ after ‘‘notify the sponsibilities of an Inspector General of an es- ice Oversight Board. Inspector General’’; and tablishment with respect to the Department of ‘‘(B) The Treasury Inspector General for Tax (II) in the second sentence, by inserting ‘‘of the Treasury and the Secretary of the Treasury Administration shall periodically submit to the the Department of the Treasury’’ after ‘‘notice, on all matters relating to the Internal Revenue Commissioner and Board a list of investigations the Inspector General’’. Service. The Treasury Inspector General for Tax for which a final report has been completed by (B) DUTIES.—Section 8D(b) of such Act is Administration shall have sole authority under the Inspector General and shall provide a copy amended in the second sentence by inserting ‘‘of this Act to conduct an audit or investigation of of any such report upon request of the Commis- the Department of the Treasury’’ after ‘‘Inspec- the Internal Revenue Service Oversight Board sioner or Board. tor General’’. and the Chief Counsel for the Internal Revenue ‘‘(C) This paragraph applies regardless of (C) AUDITS AND INVESTIGATIONS.—Section 8D Service. whether the applicable audit or investigation is (c) and (d) of such Act are amended by inserting ‘‘(i) In addition to the requirements of the requested under paragraph (1).’’ ‘‘of the Department of the Treasury’’ after ‘‘In- first sentence of section 3(a), the Treasury In- (c) TRANSFER OF FUNCTIONS.— spector General’’ each place it appears. spector General for Tax Administration should (1) IN GENERAL.—Section 9(a)(1) of the Inspec- (3) REFERENCES.—The second section 8G of have experience in tax administration and dem- tor General Act of 1978 (5 U.S.C. App.) is the Inspector General Act of 1978 (relating to onstrated ability to lead a large and complex or- amended in subparagraph (L)— rule of construction of special provisions) is ganization. (A) by inserting ‘‘(i)’’ after ‘‘(L)’’; amended— ‘‘(j) An individual appointed to the position of (B) by inserting ‘‘and’’ after the semicolon; (A) by striking ‘‘SEC. 8G’’ and inserting ‘‘SEC. Treasury Inspector General for Tax Administra- and 8H’’; tion, the Assistant Inspector General for Audit- (C) by adding at the end the following: (B) by striking ‘‘or 8E’’ and inserting ‘‘8E or ing of the Office of the Treasury Inspector Gen- ‘‘(ii) of the Treasury Inspector General for 8F’’; and eral for Tax Administration under section Tax Administration, effective 180 days after the (C) by striking ‘‘section 8F(a)’’ and inserting 3(d)(1), the Assistant Inspector General for In- date of the enactment of the Internal Revenue ‘‘section 8G(a)’’. Service Restructuring and Reform Act of 1998, vestigations of the Office of the Treasury In- (4) AMENDMENT TO INTERNAL REVENUE CODE the Office of Chief Inspector of the Internal spector General for Tax Administration under OF 1986.—Section 7608(b)(1) of the Internal Reve- section 3(d)(2), or any position of Deputy In- Revenue Service;’’. nue Code of 1986 is amended by striking ‘‘or of spector General of the Office of the Treasury In- (2) TERMINATION OF OFFICE OF CHIEF INSPEC- the Internal Security Division’’. spector General for Tax Administration may not TOR.—Effective upon the transfer of functions SEC. 1104. OTHER PERSONNEL. be an employee of the Internal Revenue Serv- under the amendment made by paragraph (1), (a) IN GENERAL.—Section 7804 (relating to the ice— the Office of Chief Inspector of the Internal effect of reorganization plans) is amended to ‘‘(1) during the 2-year period preceding the Revenue Service is terminated. read as follows: date of appointment to such position; or (3) RETENTION OF CERTAIN INTERNAL AUDIT ‘‘(2) during the 5-year period following the PERSONNEL.—In making the transfer under the ‘‘SEC. 7804. OTHER PERSONNEL. date such individual ends service in such posi- amendment made by paragraph (1), the Commis- ‘‘(a) APPOINTMENT AND SUPERVISION.—Unless tion. sioner of Internal Revenue shall designate and otherwise prescribed by the Secretary, the Com- ‘‘(k)(1) In addition to the duties and respon- retain an appropriate number (not in excess of missioner of Internal Revenue is authorized to sibilities exercised by an inspector general of an 300) of internal audit full-time equivalent em- employ such number of persons as the Commis- establishment, the Treasury Inspector General ployee positions necessary for management re- sioner deems proper for the administration and for Tax Administration— lating to the Internal Revenue Service. enforcement of the internal revenue laws, and ‘‘(A) shall have the duty to enforce criminal (4) ADDITIONAL PERSONNEL TRANSFERS.—Ef- the Commissioner shall issue all necessary direc- provisions under section 7608(b) of the Internal fective 180 days after the date of the enactment tions, instructions, orders, and rules applicable Revenue Code of 1986; of this Act, the Secretary of the Treasury shall to such persons. ‘‘(B) in addition to the functions authorized transfer 21 full-time equivalent positions from ‘‘(b) POSTS OF DUTY OF EMPLOYEES IN FIELD under section 7608(b)(2) of such Code, may carry the Office of the Inspector General of the De- SERVICE OR TRAVELING.—Unless otherwise pre- firearms; partment of the Treasury to the Office of the scribed by the Secretary— ‘‘(C) shall be responsible for protecting the In- Treasury Inspector General for Tax Administra- ‘‘(1) DESIGNATION OF POST OF DUTY.—The ternal Revenue Service against external at- tion. Commissioner shall determine and designate the S4154 CONGRESSIONAL RECORD — SENATE May 4, 1998 posts of duty of all such persons engaged in and any employee of the executive office of the ‘‘(b) Notwithstanding section 5307, no allow- field work or traveling on official business out- Vice President, and ance, differential, bonus, award, or similar cash side of the District of Columbia. ‘‘(2) any individual (other than the Attorney payment may be paid to any employee receiving ‘‘(2) DETAIL OF PERSONNEL FROM FIELD SERV- General of the United States) serving in a posi- critical pay at a rate fixed under subsection (a), ICE.—The Commissioner may order any such tion specified in section 5312 of title 5, United in any calendar year if, or to the extent that, person engaged in field work to duty in the Dis- States Code.’’ the employee’s total annual compensation will trict of Columbia, for such periods as the Com- (b) CLERICAL AMENDMENT.—The table of sec- exceed the maximum amount of total annual missioner may prescribe, and to any designated tions for part I of subchapter A of chapter 75 is compensation payable at the salary set in ac- post of duty outside the District of Columbia amended by adding after the item relating to cordance with section 104 of title 3. upon the completion of such duty. section 7216 the following new item: ‘‘§ 9503. Streamlined critical pay authority ‘‘(c) DELINQUENT INTERNAL REVENUE OFFI- ‘‘Sec. 7217. Prohibition on executive branch in- ‘‘(a) Notwithstanding section 9502, and with- CERS AND EMPLOYEES.—If any officer or em- fluence over taxpayer audits and out regard to the provisions of this title govern- ployee of the Treasury Department acting in other investigations.’’ ing appointments in the competitive service or connection with the internal revenue laws fails (c) EFFECTIVE DATE.—The amendments made the Senior Executive Service and chapters 51 to account for and pay over any amount of and 53 (relating to classification and pay rates), money or property collected or received by him by this section shall apply to requests made after the date of the enactment of this Act. the Secretary of the Treasury may, for a period in connection with the internal revenue laws, of 10 years after the date of enactment of this Subtitle C—Personnel Flexibilities the Secretary shall issue notice and demand to section, establish, fix the compensation of, and such officer or employee for payment of the SEC. 1201. IMPROVEMENTS IN PERSONNEL FLEXI- appoint individuals to, designated critical ad- amount which he failed to account for and pay BILITIES. ministrative, technical, and professional posi- over, and, upon failure to pay the amount de- (a) IN GENERAL.—Part III of title 5, United tions needed to carry out the functions of the manded within the time specified in such notice, States Code, is amended by adding at the end Internal Revenue Service, if— the amount so demanded shall be deemed im- the following new subpart: ‘‘(1) the positions— posed upon such officer or employee and as- ‘‘Subpart I—Miscellaneous ‘‘(A) require expertise of an extremely high sessed upon the date of such notice and de- ‘‘CHAPTER 95—PERSONNEL FLEXIBILITIES level in an administrative, technical, or profes- mand, and the provisions of chapter 64 and all RELATING TO THE INTERNAL REVENUE sional field; and other provisions of law relating to the collection SERVICE ‘‘(B) are critical to the Internal Revenue Serv- of assessed taxes shall be applicable in respect of ice’s successful accomplishment of an important such amount.’’ ‘‘Sec. ‘‘9501. Internal Revenue Service personnel flexi- mission; (b) CONFORMING AMENDMENTS.— ‘‘(2) exercise of the authority is necessary to (1) Subsection (b) of section 6344 is amended bilities. ‘‘9502. Pay authority for critical positions. recruit or retain an individual exceptionally by striking ‘‘section 7803(d)’’ and inserting ‘‘sec- ‘‘9503. Streamlined critical pay authority. well qualified for the position; tion 7804(c)’’. ‘‘9504. Recruitment, retention, and relocation ‘‘(3) the number of such positions does not ex- (2) The table of sections for subchapter A of incentives. ceed 40 at any one time; chapter 80 is amended by striking the item relat- ‘‘9505. Performance awards for senior execu- ‘‘(4) designation of such positions are ap- ing to section 7804 and inserting the following tives. proved by the Secretary of the Treasury; new item: ‘‘9506. Limited appointments to career reserved ‘‘(5) the terms of such appointments are lim- ‘‘Sec. 7804. Other personnel.’’ Senior Executive Service posi- ited to no more than 4 years; tions. ‘‘(6) appointees to such positions were not In- (c) EFFECTIVE DATE.—The amendments made ‘‘9507. Streamlined demonstration project au- ternal Revenue Service employees immediately by this section shall take effect on the date of thority. prior to such appointment; the enactment of this Act. ‘‘9508. General workforce performance manage- ‘‘(7) total annual compensation for any ap- SEC. 1105. PROHIBITION ON EXECUTIVE BRANCH ment system. pointee to such positions does not exceed the INFLUENCE OVER TAXPAYER AUDITS ‘‘9509. General workforce classification and pay. highest total annual compensation payable at AND OTHER INVESTIGATIONS. ‘‘9510. General workforce staffing. the rate determined under section 104 of title 3; (a) IN GENERAL.—Part I of subchapter A of and chapter 75 (relating to crimes, other offenses, ‘‘§ 9501. Internal Revenue Service personnel flexibilities ‘‘(8) all such positions are excluded from the and forfeitures) is amended by adding after sec- collective bargaining unit. tion 7216 the following new section: ‘‘(a) Any flexibilities provided by sections 9502 ‘‘(b) Individuals appointed under this section through 9510 of this chapter shall be exercised in ‘‘SEC. 7217. PROHIBITION ON EXECUTIVE BRANCH shall not be considered to be employees for pur- INFLUENCE OVER TAXPAYER AUDITS a manner consistent with— poses of subchapter II of chapter 75. AND OTHER INVESTIGATIONS. ‘‘(1) chapter 23 (relating to merit system principles and prohibited personnel practices); ‘‘§ 9504. Recruitment, retention, and reloca- ‘‘(a) PROHIBITION.—It shall be unlawful for tion incentives any applicable person to request, directly or in- ‘‘(2) provisions relating to preference eligibles; ‘‘For a period of 10 years after the date of en- directly, any officer or employee of the Internal ‘‘(3) except as otherwise specifically provided, actment of this section and subject to approval Revenue Service to conduct or terminate an section 5307 (relating to the aggregate limitation by the Office of Personnel Management, the audit or other investigation of any particular on pay); ‘‘(4) except as otherwise specifically provided, Secretary of the Treasury may provide for vari- taxpayer with respect to the tax liability of such chapter 71 (relating to labor-management rela- ations from sections 5753 and 5754 governing taxpayer. tions); and payment of recruitment, relocation, and reten- ‘‘(b) REPORTING REQUIREMENT.—Any officer ‘‘(5) subject to subsections (b) and (c) of sec- or employee of the Internal Revenue Service re- tion incentives. tion 1104, as though such authorities were dele- ceiving any request prohibited by subsection (a) ‘‘§ 9505. Performance awards for senior execu- gated to the Secretary of the Treasury under shall report the receipt of such request to the tives section 1104(a)(2). Treasury Inspector General for Tax Administra- ‘‘(a) For a period of 10 years after the date of ‘‘(b) The Secretary of the Treasury shall pro- tion. enactment of this section, Internal Revenue vide the Office of Personnel Management with ‘‘(c) EXCEPTIONS.—Subsection (a) shall not Service senior executives who have program any information that Office requires in carrying apply to any written request made— management responsibility over significant out its responsibilities under this section. ‘‘(1) to an applicable person by or on behalf of functions of the Internal Revenue Service may ‘‘(c) Employees within a unit to which a labor the taxpayer and forwarded by such applicable be paid a performance bonus without regard to organization is accorded exclusive recognition person to the Internal Revenue Service, the limitation in section 5384(b)(2) if the Sec- under chapter 71 shall not be subject to any ‘‘(2) by an applicable person for disclosure of retary of the Treasury finds such award war- flexibility provided by sections 9507 through 9510 return or return information under section 6103 ranted based on the executive’s performance. of this chapter unless the exclusive representa- if such request is made in accordance with the ‘‘(b) In evaluating an executive’s performance tive and the Internal Revenue Service have en- requirements of such section, or for purposes of an award under this section, the tered into a written agreement which specifi- ‘‘(3) by the Secretary of the Treasury as a Secretary of the Treasury shall take into ac- cally provides for the exercise of that flexibility. consequence of the implementation of a change count the executive’s contributions toward the Such written agreement may be imposed by the in tax policy. successful accomplishment of goals and objec- Federal Services Impasses Panel under section ‘‘(d) PENALTY.—Any person who willfully vio- tives established under the Government Perform- 7119. lates subsection (a) or fails to report under sub- ance and Results Act of 1993, division E of the section (b) shall be punished upon conviction by ‘‘§ 9502. Pay authority for critical positions Clinger-Cohen Act of 1996 (Public Law 104–106; a fine in any amount not exceeding $5,000, or ‘‘(a) When the Secretary of the Treasury seeks 110 Stat. 679), Revenue Procedure 64–22 (as in imprisonment of not more than 5 years, or both, a grant of authority under section 5377 for criti- effect on July 30, 1997), taxpayer service sur- together with the costs of prosecution. cal pay for 1 or more positions at the Internal veys, and other performance metrics or plans es- ‘‘(e) APPLICABLE PERSON.—For purposes of Revenue Service, the Office of Management and tablished in consultation with the Internal Rev- this section, the term ‘applicable person’ Budget may fix the rate of basic pay, notwith- enue Service Oversight Board. means— standing sections 5377(d)(2) and 5307, at any ‘‘(c) Any award in excess of 20 percent of an ‘‘(1) the President, the Vice President, any rate up to the salary set in accordance with sec- executive’s rate of basic pay shall be approved employee of the executive office of the President, tion 104 of title 3. by the Secretary of the Treasury. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4155 ‘‘(d) Notwithstanding section 5384(b)(3), the 4703(h), the Office of Personnel Management ‘‘(2) A cash award under subchapter I of Secretary of the Treasury shall determine the and the Secretary of the Treasury, except as chapter 45 may be granted to an employee of the aggregate amount of performance awards avail- otherwise provided by this subsection, may Internal Revenue Service without the need for able to be paid during any fiscal year under this waive the termination date of a demonstration any approval under section 4502(b). section and section 5384 to career senior execu- project under section 4703(d). ‘‘(d)(1) In applying sections 4303(b)(1)(A) and tives in the Internal Revenue Service. Such ‘‘(c) At least 90 days before waiving the termi- 7513(b)(1) to employees of the Internal Revenue amount may not exceed an amount equal to 5 nation date under subsection (b)(7), the Office Service, ‘30 days’ may be deemed to be ‘15 days’. percent of the aggregate amount of basic pay of Personnel Management shall publish in the ‘‘(2) Notwithstanding the second sentence of paid to career senior executives in the Internal Federal Register a notice of its intention to section 5335(c), an employee of the Internal Rev- Revenue Service during the preceding fiscal waive the termination date and shall inform in enue Service shall not have a right to appeal the year. The Internal Revenue Service shall not be writing both Houses of Congress of its intention. denial of a periodic step increase under section included in the determination under section ‘‘§ 9508. General workforce performance man- 5335 to the Merit Systems Protection Board. 5384(b)(3) of the aggregate amount of perform- agement system ‘‘§ 9509. General workforce classification and ance awards payable to career senior executives ‘‘(a) In lieu of a performance appraisal system pay in the Department of the Treasury other than established under section 4302, the Secretary of ‘‘(a) For purposes of this section, the term the Internal Revenue Service. the Treasury may establish for all or part of the ‘broad-banded system’ means a system for ‘‘(e) Notwithstanding section 5307, a perform- Internal Revenue Service a performance man- grouping positions for pay, job evaluation, and ance bonus award may not be paid to an execu- agement system that— other purposes that is different from the system tive in a calendar year if, or to the extent that, ‘‘(1) maintains individual accountability by— established under chapter 51 and subchapter III the executive’s total annual compensation will ‘‘(A) establishing 1 or more retention stand- of chapter 53 as a result of combining grades exceed the maximum amount of total annual ards for each employee related to the work of and related ranges of rates of pay in 1 or more compensation payable at the rate determined the employee and expressed in terms of individ- occupational series. under section 104 of title 3. ual performance, and communicating such re- ‘‘(b)(1)(A) The Secretary of the Treasury may, ‘‘§ 9506. Limited appointments to career retention standards to employees; subject to criteria to be prescribed by the Office served Senior Executive Service positions ‘‘(B) making periodic determinations of of Personnel Management, establish 1 or more ‘‘(a) In the application of section 3132, a ‘ca- whether each employee meets or does not meet broad-banded systems covering all or any por- reer reserved position’ in the Internal Revenue the employee’s established retention standards; tion of the Internal Revenue Service workforce. ‘‘(B) With the approval of the Office of Per- Service means a position designated under sec- and sonnel Management, a broad-banded system es- tion 3132(b) which may be filled only by— ‘‘(C) taking actions, in accordance with appli- tablished under this section may either include ‘‘(1) a career appointee, or cable laws and regulations, with respect to any ‘‘(2) a limited emergency appointee or a lim- employee whose performance does not meet es- or consist of positions that otherwise would be ited term appointee— tablished retention standards, including deny- subject to subchapter IV of chapter 53 or section ‘‘(A) who, immediately upon entering the ca- ing any increases in basic pay, promotions, and 5376. ‘‘(2) The Office of Personnel Management reer reserved position, was serving under a ca- credit for performance under section 3502, and may require the Secretary of the Treasury to reer or career-conditional appointment outside taking 1 or more of the following actions: submit information relating to broad-banded the Senior Executive Service; or ‘‘(i) Reassignment. ‘‘(B) whose limited emergency or limited term ‘‘(ii) An action under chapter 43 or chapter 75 systems at the Internal Revenue Service. ‘‘(3) Except as otherwise provided under this appointment is approved in advance by the Of- of this title. ‘‘(iii) Any other appropriate action to resolve section, employees under a broad-banded system fice of Personnel Management. the performance problem; and shall continue to be subject to the laws and reg- ‘‘(b)(1) The number of positions described ‘‘(2) except as provided under section 1204 of ulations covering employees under the pay sys- under subsection (a) which are filled by an ap- the Internal Revenue Service Restructuring and tem that otherwise would apply to such employ- pointee as described under paragraph (2) of Reform Act of 1998, strengthens the system’s ef- ees. such subsection may not exceed 10 percent of fectiveness by— ‘‘(4) The criteria to be prescribed by the Office the total number of Senior Executive Service po- ‘‘(A) establishing goals or objectives for indi- of Personnel Management shall, at a minimum— sitions in the Internal Revenue Service. vidual, group, or organizational performance (or ‘‘(A) ensure that the structure of any broad- ‘‘(2) Notwithstanding section 3132— any combination thereof), consistent with the banded system maintains the principle of equal ‘‘(A) the term of an appointee described under Internal Revenue Service’s performance plan- pay for substantially equal work; subsection (a)(2) may be for any period not to ning procedures, including those established ‘‘(B) establish the minimum and maximum exceed 3 years; and under the Government Performance and Results number of grades that may be combined into ‘‘(B) such an appointee may serve— Act of 1993, division E of the Clinger-Cohen Act pay bands; ‘‘(i) 2 such terms; or of 1996 (Public Law 104–106; 110 Stat. 679), Reve- ‘‘(C) establish requirements for setting mini- ‘‘(ii) 2 such terms in addition to any unex- nue Procedure 64–22 (as in effect on July 30, mum and maximum rates of pay in a pay band; pired term applicable at the time of appoint- 1997), and taxpayer service surveys, and commu- ‘‘(D) establish requirements for adjusting the ment. nicating such goals or objectives to employees; pay of an employee within a pay band; ‘‘§ 9507. Streamlined demonstration project ‘‘(B) using such goals and objectives to make ‘‘(E) establish requirements for setting the pay authority performance distinctions among employees or of a supervisory employee whose position is in a ‘‘(a) The exercise of any of the flexibilities groups of employees; and pay band or who supervises employees whose under sections 9502 through 9510 shall not affect ‘‘(C) using performance assessments as a basis positions are in pay bands; and the authority of the Secretary of the Treasury to for granting employee awards, adjusting an em- ‘‘(F) establish requirements and methodologies implement for the Internal Revenue Service a ployee’s rate of basic pay, and other appropriate for setting the pay of an employee upon conver- demonstration project subject to chapter 47, as personnel actions, in accordance with applica- sion to a broad-banded system, initial appoint- provided in subsection (b). ble laws and regulations. ment, change of position or type of appointment ‘‘(b) In applying section 4703 to a demonstra- ‘‘(b)(1) For purposes of subsection (a)(2), the (including promotion, demotion, transfer, reas- tion project described in section 4701(a)(4) which term ‘performance assessment’ means a deter- signment, reinstatement, placement in another involves the Internal Revenue Service— mination of whether or not retention standards pay band, or movement to a different geographic ‘‘(1) section 4703(b)(1) shall be deemed to read established under subsection (a)(1)(A) are met, location), and movement between a broad-band- as follows: and any additional performance determination ed system and another pay system. ‘‘ ‘(1) develop a plan for such project which made on the basis of performance goals and ob- ‘‘(c) With the approval of the Office of Per- describes its purpose, the employees to be cov- jectives established under subsection (a)(2)(A). sonnel Management and in accordance with a ered, the project itself, its anticipated outcomes, ‘‘(2) For purposes of this title, the term ‘unac- plan for implementation submitted by the Sec- and the method of evaluating the project;’; ceptable performance’ with respect to an em- retary of the Treasury, the Secretary may, with ‘‘(2) section 4703(b)(3) shall not apply; ployee of the Internal Revenue Service covered respect to Internal Revenue Service employees ‘‘(3) the 180-day notification period in section by a performance management system estab- who are covered by a broad-banded system es- 4703(b)(4) shall be deemed to be a notification lished under this section means performance of tablished under this section, provide for vari- period of 30 days; the employee which fails to meet a retention ations from the provisions of subchapter VI of ‘‘(4) section 4703(b)(6) shall be deemed to read standard established under this section. chapter 53. as follows: ‘‘(c)(1) The Secretary of the Treasury may es- ‘‘§ 9510. General workforce staffing ‘‘ ‘(6) provides each House of Congress with tablish an awards program designed to provide ‘‘(a)(1) Except as otherwise provided by this the final version of the plan.’; incentives for and recognition of organizational, section, an employee of the Internal Revenue ‘‘(5) section 4703(c)(1) shall be deemed to read group, and individual achievements by provid- Service may be selected for a permanent ap- as follows: ing for granting awards to employees who, as pointment in the competitive service in the In- ‘‘ ‘(1) subchapter V of chapter 63 or subpart G individuals or members of a group, contribute to ternal Revenue Service through internal com- of part III of this title;’; meeting the performance goals and objectives es- petitive promotion procedures if— ‘‘(6) the requirements of paragraphs (1)(A) tablished under this chapter by such means as a ‘‘(A) the employee has completed, in the com- and (2) of section 4703(d) shall not apply; and superior individual or group accomplishment, a petitive service, 2 years of current continuous ‘‘(7) notwithstanding section 4703(d)(1)(B), documented productivity gain, or sustained su- service under a term appointment or any com- based on an evaluation as provided in section perior performance. bination of term appointments; S4156 CONGRESSIONAL RECORD — SENATE May 4, 1998 ‘‘(B) such term appointment or appointments section 2105 of title 5, United States Code) who means the total amount of basic pay which were made under competitive procedures pre- is employed by the Internal Revenue Service would be payable for a year of service by such scribed for permanent appointments; serving under an appointment without time lim- employee, computed using the employee’s final ‘‘(C) the employee’s performance under such itation, and has been currently employed for a rate of basic pay, and, if last serving on other term appointment or appointments met estab- continuous period of at least 3 years, but does than a full-time basis, with appropriate adjust- lished retention standards, or, if not covered by not include— ment therefor. a performance management system established (1) a reemployed annuitant under subchapter (d) EFFECT OF SUBSEQUENT EMPLOYMENT under section 9508, was rated at the fully suc- III of chapter 83 or chapter 84 of title 5, United WITH THE GOVERNMENT.—An individual who cessful level or higher (or equivalent thereof); States Code, or another retirement system; has received a voluntary separation incentive and (2) an employee having a disability on the payment under this section and accepts any em- ‘‘(D) the vacancy announcement for the term basis of which such employee is or would be eli- ployment for compensation with the Government appointment from which the conversion is made gible for disability retirement under the applica- of the United States, or who works for any stated that there was a potential for subsequent ble retirement system referred to in paragraph agency of the United States Government conversion to a permanent appointment. (1); through a personal services contract, within 5 ‘‘(2) An appointment under this section may (3) an employee who is in receipt of a specific years after the date of the separation on which be made only to a position in the same line of notice of involuntary separation for misconduct the payment is based shall be required to pay, work as a position to which the employee re- or unacceptable performance; prior to the individual’s first day of employ- ceived a term appointment under competitive (4) an employee who, upon completing an ad- ment, the entire amount of the incentive pay- procedures. ditional period of service as referred to in sec- ment to the Internal Revenue Service. ‘‘(b)(1) Notwithstanding subchapter I of chap- tion 3(b)(2)(B)(ii) of the Federal Workforce Re- (e) EFFECT ON INTERNAL REVENUE SERVICE ter 33, the Secretary of the Treasury may estab- structuring Act of 1994 (5 U.S.C. 5597 note), EMPLOYMENT LEVELS.— lish category rating systems for evaluating ap- would qualify for a voluntary separation incen- (1) INTENDED EFFECT.—Voluntary separations plicants for Internal Revenue Service positions tive payment under section 3 of such Act; under this section are not intended to nec- in the competitive service under which qualified (5) an employee who has previously received essarily reduce the total number of full-time candidates are divided into 2 or more quality any voluntary separation incentive payment by equivalent positions in the Internal Revenue categories on the basis of relative degrees of the Federal Government under this section or Service. merit, rather than assigned individual numeri- any other authority and has not repaid such (2) USE OF VOLUNTARY SEPARATIONS.—The In- cal ratings. payment; ternal Revenue Service may redeploy or use the ‘‘(2) Each applicant who meets the minimum (6) an employee covered by statutory reem- full-time equivalent positions vacated by vol- qualification requirements for the position to be ployment rights who is on transfer to another untary separations under this section to make filled shall be assigned to an appropriate cat- organization; or other positions available to more critical loca- egory based on an evaluation of the applicant’s (7) any employee who, during the 24-month tions or more critical occupations. knowledge, skills, and abilities relative to those period preceding the date of separation, has received a recruitment or relocation bonus under SEC. 1203. TERMINATION OF EMPLOYMENT FOR needed for successful performance in the posi- MISCONDUCT. section 5753 of title 5, United States Code, or tion to be filled. (a) IN GENERAL.—Subject to subsection (c), the ‘‘(3) Within each quality category established who, within the 12-month period preceding the Commissioner of Internal Revenue shall termi- under paragraph (1), preference eligibles shall date of separation, received a retention allow- nate the employment of any employee of the In- be listed ahead of individuals who are not pref- ance under section 5754 of title 5, United States ternal Revenue Service if there is a final admin- erence eligibles. For other than scientific and Code. istrative or judicial determination that such em- (b) AUTHORITY TO PROVIDE VOLUNTARY SEPA- professional positions at or higher than GS–9 (or ployee committed any act or omission described RATION INCENTIVE PAYMENTS.— equivalent), preference eligibles who have a under subsection (b) in the performance of the compensable service-connected disability of 10 (1) IN GENERAL.—The Commissioner of Inter- nal Revenue may pay voluntary separation in- employee’s official duties. Such termination percent or more, and who meet the minimum shall be a removal for cause on charges of mis- qualification standards, shall be listed in the centive payments under this section to any employee to the extent necessary to carry out the conduct. highest quality category. CTS OR OMISSIONS.—The acts or omissions plan to reorganize the Internal Revenue Service (b) A ‘‘(4) An appointing authority may select any referred to under subsection (a) are— under section 1001. applicant from the highest quality category or, (1) failure to obtain the required approval sig- if fewer than 3 candidates have been assigned to (2) AMOUNT AND TREATMENT OF PAYMENTS.—A voluntary separation incentive payment— natures on documents authorizing the seizure of the highest quality category, from a merged cat- a taxpayer’s home, personal belongings, or busi- egory consisting of the highest and second high- (A) shall be paid in a lump sum after the employee’s separation; ness assets; est quality categories. (2) providing a false statement under oath ‘‘(5) Notwithstanding paragraph (4), the ap- (B) shall be paid from appropriations or funds available for the payment of the basic pay of the with respect to a material matter involving a pointing authority may not pass over a pref- taxpayer; erence eligible in the same or higher category employees; (C) shall be equal to the lesser of— (3) violation of the civil rights of a taxpayer or from which selection is made unless the require- (i) an amount equal to the amount the em- other employee of the Internal Revenue Service; ments of section 3317(b) or 3318(b), as applicable, ployee would be entitled to receive under section (4) falsifying or destroying documents to con- are satisfied. 5595(c) of title 5, United States Code; or ceal mistakes made by the employee with respect ‘‘(c) The Secretary of the Treasury may detail (ii) an amount determined by an agency head to a matter involving a taxpayer; employees among the offices of the Internal Rev- not to exceed $25,000; (5) assault or battery on a taxpayer or other enue Service without regard to the 120-day limi- (D) may not be made except in the case of any employee of the Internal Revenue Service; tation in section 3341(b). qualifying employee who voluntarily separates (6) violations of the Internal Revenue Code of ‘‘(d) Notwithstanding any other provision of (whether by retirement or resignation) before 1986, Department of Treasury regulations, or law, the Secretary of the Treasury may establish January 1, 2003; policies of the Internal Revenue Service (includ- a probationary period under section 3321 of up (E) shall not be a basis for payment, and shall ing the Internal Revenue Manual) for the pur- to 3 years for Internal Revenue Service positions not be included in the computation, of any pose of retaliating against, or harassing, a tax- if the Secretary of the Treasury determines that other type of Government benefit; and payer or other employee of the Internal Revenue the nature of the work is such that a shorter pe- (F) shall not be taken into account in deter- Service; and riod is insufficient to demonstrate complete pro- mining the amount of any severance pay to (7) willful misuse of the provisions of section ficiency in the position. which the employee may be entitled under sec- 6103 of the Internal Revenue Code of 1986 for ‘‘(e) Nothing in this section exempts the Sec- tion 5595 of title 5, United States Code, based on the purpose of concealing information from a retary of the Treasury from— any other separation. congressional inquiry. ‘‘(1) any employment priority established (c) ADDITIONAL INTERNAL REVENUE SERVICE (c) DETERMINATION OF COMMISSIONER.— under direction of the President for the place- CONTRIBUTIONS TO THE RETIREMENT FUND.— (1) IN GENERAL.—The Commissioner of Inter- ment of surplus or displaced employees; or (1) IN GENERAL.—In addition to any other nal Revenue may take a personnel action other ‘‘(2) any obligation under a court order or de- payments which it is required to make under than termination for an act or omission under cree relating to the employment practices of the subchapter III of chapter 83 of title 5, United subsection (a). Internal Revenue Service or the Department of States Code, the Internal Revenue Service shall (2) DISCRETION.—The exercise of authority the Treasury.’’. remit to the Office of Personnel Management for under paragraph (1) shall be at the sole discre- (b) CLERICAL AMENDMENT.—The table of sec- deposit in the Treasury of the United States to tion of the Commissioner of Internal Revenue tions for part III of title 5, United States Code, the credit of the Civil Service Retirement and and may not be delegated to any other officer. is amended by adding at the end the following: Disability Fund an amount equal to 15 percent The Commissioner of Internal Revenue, in his ‘‘Subpart I—Miscellaneous of the final basic pay of each employee who is sole discretion, may establish a procedure which ‘‘95. Personnel flexibilities relating to covered under subchapter III of chapter 83 or will be used to determine whether an individual the Internal Revenue Service ...... 9501’’. chapter 84 of title 5, United States Code, to should be referred to the Commissioner of Inter- SEC. 1202. VOLUNTARY SEPARATION INCENTIVE whom a voluntary separation incentive has been nal Revenue for a determination by the Commis- PAYMENTS. paid under this section. sioner under paragraph (1). (a) DEFINITION.—In this section, the term (2) DEFINITION.—In paragraph (1), the term (3) NO APPEAL.—Any determination of the ‘‘employee’’ means an employee (as defined by ‘‘final basic pay’’, with respect to an employee, Commissioner of Internal Revenue under this May 4, 1998 CONGRESSIONAL RECORD — SENATE S4157 subsection may not be appealed in any adminis- tives from the small business community and digital or other electronic form. Until such time trative or judicial proceeding. from the tax practitioner, preparer, and comput- as such procedures are in place, the Secretary SEC. 1204. BASIS FOR EVALUATION OF INTERNAL erized tax processor communities and other rep- may provide for alternative methods of subscrib- REVENUE SERVICE EMPLOYEES. resentatives from the electronic filing industry. ing all returns, declarations, statements, or (a) IN GENERAL.—The Internal Revenue Serv- (c) PROMOTION OF ELECTRONIC FILING AND IN- other documents required or permitted to be ice shall not use records of tax enforcement re- CENTIVES.—Section 6011 is amended by redesig- made or written under internal revenue laws sults— nating subsection (f) as subsection (g) and by and regulations. (1) to evaluate employees and their immediate inserting after subsection (e) the following new ‘‘(2) TREATMENT OF ALTERNATIVE METHODS.— supervisors; or subsection: Notwithstanding any other provision of law, (2) to impose or suggest production quotas or ‘‘(f) PROMOTION OF ELECTRONIC FILING.— any return, declaration, statement, or other doc- goals with respect to individuals described in ‘‘(1) IN GENERAL.—The Secretary is authorized ument filed and verified, signed, or subscribed paragraph (1). to promote the benefits of and encourage the use under any method adopted under paragraph (1) (b) TAXPAYER SERVICE.—The Internal Reve- of electronic tax administration programs, as shall be treated for all purposes (both civil and nue Service shall use the fair and equitable they become available, through the use of mass criminal, including penalties for perjury) in the treatment of taxpayers by employees as one of communications and other means. same manner as though signed and subscribed. the standards for evaluating employee perform- ‘‘(2) INCENTIVES.—The Secretary may imple- Any such return, declaration, statement, or ance. ment procedures to provide for the payment of other document shall be presumed to have been (c) CERTIFICATION.—Each appropriate super- appropriate incentives for electronically filed re- actually submitted and subscribed by the person visor shall certify quarterly by letter to the Com- turns.’’ on whose behalf it was submitted. missioner of Internal Revenue that tax enforce- (d) ANNUAL REPORTS.—Not later than June 30 ‘‘(3) PUBLISHED GUIDANCE.—The Secretary ment results are not used in a manner prohib- of each calendar year after 1998, the Chair- shall publish guidance as appropriate to define ited by subsection (a). person of the Internal Revenue Service Over- and implement any method adopted under para- (d) TECHNICAL AND CONFORMING AMEND- sight Board, the Secretary of the Treasury, and graph (1).’’ MENT.—Section 6231 of the Technical and Mis- the Chairperson of the electronic commerce ad- (b) ACKNOWLEDGMENT OF ELECTRONIC FIL- cellaneous Revenue Act of 1988 (Public Law 100– visory group established under subsection (b)(2) ING.—Section 7502(c) is amended to read as fol- 647; 102 Stat. 3734) is repealed. shall report to the Committees on Ways and lows: (e) EFFECTIVE DATE.—This section shall apply Means, Appropriations, and Government Reform ‘‘(c) REGISTERED AND CERTIFIED MAILING; to evaluations conducted on or after the date of and Oversight of the House of Representatives ELECTRONIC FILING.— the enactment of this Act. and the Committees on Finance, Appropriations, ‘‘(1) REGISTERED MAIL.—For purposes of this SEC. 1205. EMPLOYEE TRAINING PROGRAM. and Governmental Affairs of the Senate on— section, if any return, claim, statement, or other (1) the progress of the Internal Revenue Serv- document, or payment, is sent by United States (a) IN GENERAL.—Not later than 90 days after ice in meeting the goal of receiving electroni- the date of the enactment of this Act, the Com- registered mail— cally 80 percent of tax and information returns ‘‘(A) such registration shall be prima facie evi- missioner of Internal Revenue shall implement by 2007; dence that the return, claim, statement, or other an employee training program and shall submit (2) the status of the plan required by sub- document was delivered to the agency, officer, an employee training plan to the Committee on section (b); and or office to which addressed, and Finance of the Senate and the Committee on (3) the legislative changes necessary to assist ‘‘(B) the date of registration shall be deemed Ways and Means of the House of Representa- the Internal Revenue Service in meeting such the postmark date. tives. goal. ‘‘(2) CERTIFIED MAIL; ELECTRONIC FILING.— (b) CONTENTS.—The plan submitted under The Secretary is authorized to provide by regu- subsection (a) shall— SEC. 2002. DUE DATE FOR CERTAIN INFORMA- TION RETURNS. lations the extent to which the provisions of (1) detail a comprehensive employee training (a) INFORMATION RETURNS FILED ELECTRONI- paragraph (1) with respect to prima facie evi- program to ensure adequate customer service CALLY.—Section 6071 (relating to time for filing dence of delivery and the postmark date shall training; returns and other documents) is amended by re- apply to certified mail and electronic filing.’’ (2) detail a schedule for training and the fis- designating subsection (b) as subsection (c) and (c) ESTABLISHMENT OF PROCEDURES FOR cal years during which the training will occur; by inserting after subsection (a) the following OTHER INFORMATION.—In the case of taxable pe- (3) detail the funding of the program and rel- riods beginning after December 31, 1998, the Sec- evant information to demonstrate the priority new subsection: ‘‘(b) ELECTRONICALLY FILED INFORMATION RE- retary of the Treasury or the Secretary’s dele- and commitment of resources to the plan; TURNS.—Returns made under subparts B and C gate shall, to the extent practicable, establish (4) review the organizational design of cus- of part III of this subchapter which are filed procedures to accept, in electronic form, any tomer service; other information, statements, elections, or (5) provide for the implementation of a per- electronically shall be filed on or before March schedules, from taxpayers filing returns elec- formance development system; and 31 of the year following the calendar year to tronically, so that such taxpayers will not be re- (6) provide for at least 16 hours of conflict which such returns relate.’’ (b) STUDY RELATING TO TIME FOR PROVIDING quired to file any paper. management training during fiscal year 1999 for NOTICE TO RECIPIENTS.— (d) PROCEDURES FOR AUTHORIZING DISCLO- employees conducting collection activities. (1) IN GENERAL.—The Secretary of the Treas- SURE ELECTRONICALLY.—The Secretary shall es- TITLE II—ELECTRONIC FILING ury shall conduct a study evaluating the effect tablish procedures for taxpayers to designate, SEC. 2001. ELECTRONIC FILING OF TAX AND IN- of extending the deadline for providing state- on electronically filed returns, persons to whom FORMATION RETURNS. ments to persons with respect to whom informa- information may be disclosed under section (a) IN GENERAL.—It is the policy of the Con- tion is required to be furnished under subparts 6103(c) of the Internal Revenue Code of 1986. gress that— B and C of part III of subchapter A of chapter (e) EFFECTIVE DATE.—The amendments made (1) paperless filing should be the preferred 61 of the Internal Revenue Code of 1986 (other by this section shall take effect on the date of and most convenient means of filing tax and in- than section 6051 of such Code) from January 31 the enactment of this Act. formation returns, and to February 15 of the year in which the return SEC. 2004. RETURN-FREE TAX SYSTEM. (2) it should be the goal of the Internal Reve- to which the statement relates is required to be (a) IN GENERAL.—The Secretary of the Treas- nue Service to have at least 80 percent of all filed. ury or the Secretary’s delegate shall develop such returns filed electronically by the year (2) REPORT.—Not later than December 31, procedures for the implementation of a return- 2007. 1998, the Secretary of the Treasury shall submit free tax system under which appropriate indi- (b) STRATEGIC PLAN.— a report on the study under paragraph (1) to the viduals would be permitted to comply with the (1) IN GENERAL.—Not later than 180 days after Committee on Ways and Means of the House of Internal Revenue Code of 1986 without making the date of the enactment of this Act, the Sec- Representatives and the Committee on Finance the return required under section 6012 of such retary of the Treasury or the Secretary’s dele- of the Senate. Code for taxable years beginning after 2007. gate (hereafter in this section referred to as the (c) EFFECTIVE DATE.—The amendment made (b) REPORT.—Not later than June 30 of each ‘‘Secretary’’) shall establish a plan to eliminate by subsection (a) shall apply to returns required calendar year after 1999, such Secretary shall barriers, provide incentives, and use competitive to be filed after December 31, 1999. report to the Committee on Ways and Means of market forces to increase electronic filing gradu- SEC. 2003. PAPERLESS ELECTRONIC FILING. the House of Representatives and the Committee ally over the next 10 years while maintaining (a) IN GENERAL.—Section 6061 (relating to on Finance of the Senate on— processing times for paper returns at 40 days. To signing of returns and other documents) is (1) what additional resources the Internal the extent practicable, such plan shall provide amended— Revenue Service would need to implement such that all returns prepared electronically for tax- (1) by striking ‘‘Except as otherwise provided a system, able years beginning after 2001 shall be filed by’’ and inserting the following: (2) the changes to the Internal Revenue Code electronically. ‘‘(a) GENERAL RULE.—Except as otherwise of 1986 that could enhance the use of such a (2) ELECTRONIC COMMERCE ADVISORY GROUP.— provided by subsection (b) and’’, and system, To ensure that the Secretary receives input from (2) by adding at the end the following new (3) the procedures developed pursuant to sub- the private sector in the development and imple- subsection: section (a), and mentation of the plan required by paragraph ‘‘(b) ELECTRONIC SIGNATURES.— (4) the number and classes of taxpayers that (1), the Secretary shall convene an electronic ‘‘(1) IN GENERAL.—The Secretary shall develop would be permitted to use the procedures devel- commerce advisory group to include representa- procedures for the acceptance of signatures in oped pursuant to subsection (a). S4158 CONGRESSIONAL RECORD — SENATE May 4, 1998

SEC. 2005. ACCESS TO ACCOUNT INFORMATION. (1) IN GENERAL.—Section 7430(c)(1) (relating to ‘‘(I) the determination under clause (i) shall (a) IN GENERAL.—Not later than December 31, reasonable litigation costs) is amended— be made by reference to the last qualified offer 2006, the Secretary of the Treasury or the Sec- (A) by striking clause (iii) of subparagraph made with respect to the tax liability at issue in retary’s delegate shall develop procedures under (B) and inserting: the proceeding, and which a taxpayer filing returns electronically ‘‘(iii) reasonable fees paid or incurred for the ‘‘(II) reasonable administrative and litigation (and their designees under section 6103(c) of the services of attorneys in connection with the costs shall only include costs incurred on and Internal Revenue Code of 1986) would be able to court proceeding.’’, and after the date of such offer. review the taxpayer’s account electronically, (B) by striking the last 2 sentences. ‘‘(iv) COORDINATION.—This subparagraph but only if all necessary safeguards to ensure (2) CONFORMING AMENDMENT.—Section shall not apply to a party which is a prevailing the privacy of such account information are in 7430(c)(2)(B) is amended by striking ‘‘or (iii)’’. party under any other provision of this para- place. (b) AWARD OF ADMINISTRATIVE COSTS IN- graph.’’ (b) REPORT.—Not later than December 31, CURRED AFTER 30-DAY LETTER.—Paragraph (2) (2) QUALIFIED OFFER.—Section 7430 is amend- 2003, the Secretary of the Treasury shall report of section 7430(c) is amended by striking the last ed by adding at the end the following new sub- on the progress the Secretary is making on the sentence and inserting the following new flush section: development of procedures under subsection (a) sentence: ‘‘(g) QUALIFIED OFFER.—For purposes of sub- to the Committee on Ways and Means of the ‘‘Such term shall only include costs incurred on section (c)(4)— House of Representatives and the Committee on or after whichever of the following is the earli- ‘‘(1) IN GENERAL.—The term ‘qualified offer’ Finance of the Senate. est: (i) the date of the receipt by the taxpayer of means a written offer which— ‘‘(A) is made by the taxpayer to the United TITLE III—TAXPAYER PROTECTION AND the notice of the decision of the Internal Reve- States during the qualified offer period, RIGHTS nue Service Office of Appeals, (ii) the date of the notice of deficiency, or (iii) the date on ‘‘(B) specifies the amount of the taxpayer’s li- SEC. 3000. SHORT TITLE. which the 1st letter of proposed deficiency ability (determined without regard to interest), This title may be cited as the ‘‘Taxpayer Bill which allows the taxpayer an opportunity for ‘‘(C) is designated at the time it is made as a of Rights 3’’. administrative review in the Internal Revenue qualified offer for purposes of this section, and Subtitle A—Burden of Proof Service Office of Appeals is sent.’’ ‘‘(D) remains open during the period beginning on the date it is made and ending on the SEC. 3001. BURDEN OF PROOF. (c) AWARD OF FEES FOR CERTAIN ADDITIONAL earliest of the date the offer is rejected, the date (a) IN GENERAL.—Chapter 76 (relating to judi- SERVICES.—Paragraph (3) of section 7430(c) is the trial begins, or the 90th day after the date cial proceedings) is amended by adding at the amended to read as follows: the offer is made. end the following new subchapter: ‘‘(3) ATTORNEYS FEES.— ‘‘(A) IN GENERAL.—For purposes of para- ‘‘(2) QUALIFIED OFFER PERIOD.—For purposes ‘‘Subchapter E—Burden of Proof graphs (1) and (2), fees for the services of an in- of this subsection, the term ‘qualified offer pe- ‘‘Sec. 7491. Burden of proof. dividual (whether or not an attorney) who is riod’ means the period— ‘‘SEC. 7491. BURDEN OF PROOF. authorized to practice before the Tax Court or ‘‘(A) beginning on the date on which the 1st ‘‘(a) BURDEN SHIFTS WHERE TAXPAYER PRO- before the Internal Revenue Service shall be letter of proposed deficiency which allows the DUCES CREDIBLE EVIDENCE.— treated as fees for the services of an attorney. taxpayer an opportunity for administrative re- ‘‘(1) GENERAL RULE.—If, in any court proceed- ‘‘(B) PRO BONO SERVICES.—The court may view in the Internal Revenue Service Office of ing, a taxpayer introduces credible evidence award reasonable attorneys fees under sub- Appeals is sent, and with respect to any factual issue relevant to section (a) in excess of the attorneys fees paid or ‘‘(B) ending on the date which is 30 days be- ascertaining the income tax liability of the tax- incurred if such fees are less than the reason- fore the date the case is first set for trial.’’ payer, the Secretary shall have the burden of able attorneys fees because an individual is rep- (f) AWARD OF ATTORNEYS FEES IN UNAUTHOR- proof with respect to such issue. resenting the prevailing party for no fee or for IZED INSPECTION AND DISCLOSURE CASES.—Sec- ‘‘(2) LIMITATIONS.—Paragraph (1) shall apply a fee which (taking into account all the facts tion 7431(c) (relating to damages) is amended by with respect to an issue only if— and circumstances) is no more than a nominal striking the period at the end of paragraph (2) ‘‘(A) the taxpayer has complied with the re- fee. This subparagraph shall apply only if such and inserting ‘‘, plus’’, and by adding at the quirements under this title to substantiate any award is paid to such individual or such indi- end the following new paragraph: item, vidual’s employer.’’ ‘‘(3) in the case of a plaintiff which is de- ‘‘(B) the taxpayer has maintained all records (d) DETERMINATION OF WHETHER POSITION OF scribed in section 7430(c)(4)(A)(ii), reasonable required under this title and has cooperated UNITED STATES IS SUBSTANTIALLY JUSTIFIED.— attorneys fees, except that if the defendant is with reasonable requests by the Secretary for Subparagraph (B) of section 7430(c)(4) is amend- the United States, reasonable attorneys fees may witnesses, information, documents, meetings, ed by redesignating clause (iii) as clause (iv) be awarded only if the plaintiff is the prevailing and interviews, and and by inserting after clause (ii) the following party (as determined under section 7430(c)(4)).’’ (g) EFFECTIVE DATE.—The amendments made ‘‘(C) in the case of a partnership, corporation, new clause: by this section shall apply to costs incurred or trust, the taxpayer is described in section ‘‘(iii) EFFECT OF LOSING ON SUBSTANTIALLY (and, in the case of the amendment made by 7430(c)(4)(A)(ii). SIMILAR ISSUES.—In determining for purposes of subsection (c), services performed) more than 180 ‘‘(3) COORDINATION.—Paragraph (1) shall not clause (i) whether the position of the United apply to any issue if any other provision of this States was substantially justified, the court days after the date of the enactment of this Act. title provides for a specific burden of proof with shall take into account whether the United SEC. 3102. CIVIL DAMAGES FOR COLLECTION AC- respect to such issue. States has lost in courts of appeal for other cir- TIONS. (a) EXTENSION TO NEGLIGENCE ACTIONS.— ‘‘(b) USE OF STATISTICAL INFORMATION ON UN- cuits on substantially similar issues.’’ (1) IN GENERAL.—Section 7433 (relating to civil RELATED TAXPAYERS.—In the case of an individ- (e) TAXPAYER TREATED AS PREVAILING IF ual taxpayer, the Secretary shall have the bur- JUDGMENT IS LESS THAN TAXPAYER’S OFFER.— damages for certain unauthorized collection ac- den of proof in any court proceeding with re- (1) IN GENERAL.—Section 7430(c)(4) (defining tions) is amended— (A) in subsection (a), by inserting ‘‘, or by spect to any item of income which was recon- prevailing party) is amended by adding at the reason of negligence,’’ after ‘‘recklessly or in- structed by the Secretary solely through the use end the following new subparagraph: tentionally’’, and of statistical information on unrelated tax- ‘‘(E) SPECIAL RULES WHERE JUDGMENT LESS (B) in subsection (b)— payers. THAN TAXPAYER’S OFFER.— ‘‘(i) IN GENERAL.—A party to a court proceed- (i) in the matter preceding paragraph (1), by ‘‘(c) PENALTIES.—Notwithstanding any other inserting ‘‘($100,000, in the case of negligence)’’ provision of this title, the Secretary shall have ing meeting the requirements of subparagraph after ‘‘$1,000,000’’, and the burden of production in any court proceed- (A)(ii) shall be treated as the prevailing party if (ii) in paragraph (1), by inserting ‘‘or neg- ing with respect to the liability of any individ- the liability of the taxpayer pursuant to the ligent’’ after ‘‘reckless or intentional’’. ual for any penalty, addition to tax, or addi- judgment in the proceeding (determined without (2) REQUIREMENT THAT ADMINISTRATIVE REM- tional amount imposed by this title.’’ regard to interest) is equal to or less than the liability of the taxpayer which would have been EDIES BE EXHAUSTED.—Paragraph (1) of section (b) CONFORMING AMENDMENT.—The table of 7433(d) is amended to read as follows: subchapters for chapter 76 is amended by add- so determined if the United States had accepted ‘‘(1) REQUIREMENT THAT ADMINISTRATIVE REM- ing at the end the following new item: a qualified offer of the party under subsection (g). EDIES BE EXHAUSTED.—A judgment for damages ‘‘SUBCHAPTER E. Burden of proof.’’ ‘‘(ii) EXCEPTIONS.—This subparagraph shall shall not be awarded under subsection (b) unless the court determines that the plaintiff has (c) EFFECTIVE DATE.—The amendments made not apply to— exhausted the administrative remedies available by this section shall apply to court proceedings ‘‘(I) any judgment issued pursuant to a settle- to such plaintiff within the Internal Revenue arising in connection with examinations comment, or ‘‘(II) any proceeding in which the amount of Service.’’ mencing after the date of the enactment of this tax liability is not in issue, including any de- (b) DAMAGES ALLOWED IN CIVIL ACTIONS BY Act. claratory judgment proceeding, any proceeding PERSONS OTHER THAN TAXPAYERS.—Section 7426 Subtitle B—Proceedings by Taxpayers to enforce or quash any summons issued pursu- is amended by redesignating subsection (h) as SEC. 3101. EXPANSION OF AUTHORITY TO AWARD ant to this title, and any action to restrain dis- subsection (i) and by adding after subsection (g) COSTS AND CERTAIN FEES. closure under section 6110(f). the following new subsection: (a) AWARD OF ALL REASONABLE ATTORNEYS ‘‘(iii) SPECIAL RULES.—If this subparagraph ‘‘(h) RECOVERY OF DAMAGES PERMITTED IN FEES.— applies to any court proceeding— CERTAIN CASES.— May 4, 1998 CONGRESSIONAL RECORD — SENATE S4159

‘‘(1) IN GENERAL.—Notwithstanding subsection evade or defeat tax) is amended by redesignat- spect thereto) solely because the full amount of (b), if, in any action brought under this section, ing subsections (c), (d), and (e) as subsections such liability has not been paid by reason of an there is a finding that any officer or employee of (d), (e), and (f), respectively, and by inserting election under section 6166 with respect to such the Internal Revenue Service recklessly or inten- after subsection (b) the following new sub- estate. tionally, or by reason of negligence, disregarded section: ‘‘(2) ESTATES TO WHICH SUBSECTION APPLIES.— any provision of this title the defendant shall be ‘‘(c) PETITION FOR REVIEW BY TAX COURT.— This subsection shall apply to any estate if, as liable to the plaintiff in an amount equal to the ‘‘(1) IN GENERAL.—A person may petition the of the date the action is filed— lesser of $1,000,000 ($100,000 in the case of neg- Tax Court (and the Tax Court shall have juris- ‘‘(A) no portion of the installments payable ligence) or the sum of— diction) to determine the person’s liability under under section 6166 have been accelerated, ‘‘(A) actual, direct economic damages sus- subsection (a) if such petition is filed during the ‘‘(B) all such installments the due date for tained by the plaintiff as a proximate result of 90-day period beginning on the day on which which is on or before the date the action is filed the reckless or intentional or negligent actions notice and demand of the penalty under sub- have been paid, of the officer or employee (reduced by any section (a) is made on such person. ‘‘(C) there is no case pending in the Tax Court amount of such damages awarded under sub- ‘‘(2) RESTRICTIONS APPLICABLE TO COLLECTION with respect to the tax imposed by section 2001 section (b)), and OF ASSESSMENT.— on the estate and, if a notice of deficiency under ‘‘(B) the costs of the action. ‘‘(A) IN GENERAL.—Except as otherwise pro- section 6212 with respect to such tax has been ‘‘(2) REQUIREMENT THAT ADMINISTRATIVE REM- vided in section 6851 or 6861, no levy or proceed- issued, the time for filing a petition with the EDIES BE EXHAUSTED.—A judgment for damages ing in court for collection of any assessment of Tax Court with respect to such notice has ex- shall not be awarded under this section unless any penalty under subsection (a) shall be made, pired, and the court determines that the plaintiff has ex- begun, or prosecuted until the expiration of the ‘‘(D) no proceeding for declaratory judgment hausted the administrative remedies available to 90-day period described in paragraph (1), or, if under section 7479 is pending. such plaintiff within the Internal Revenue Serv- a petition has been filed with the Tax Court, ‘‘(3) PROHIBITION ON COLLECTION OF DIS- ice.’’ until the decision of the Tax Court has become ALLOWED LIABILITY.—If the court redetermines (c) CIVIL DAMAGES FOR IRS VIOLATIONS OF final. Rules similar to the rules of section 7485 under paragraph (1) the estate tax liability of BANKRUPTCY PROCEDURES.— shall apply with respect to the collection of such an estate, no part of such liability which is dis- (1) IN GENERAL.—Section 7433 (relating to civil assessment. allowed by a decision of such court which has damages for certain unauthorized collection ac- become final may be collected by the Secretary, tions) is amended by adding at the end the fol- ‘‘(B) AUTHORITY TO ENJOIN COLLECTION AC- TIONS.—Notwithstanding the provisions of sec- and amounts paid in excess of the installments lowing new subsection: determined by the court as currently due and ‘‘(e) ACTIONS FOR VIOLATIONS OF CERTAIN tion 7421(a), the beginning of any levy or pro- payable shall be refunded.’’ BANKRUPTCY PROCEDURES.— ceeding in court for collection of any assessment (b) EXTENSION OF TIME TO FILE REFUND ‘‘(1) IN GENERAL.—If, in connection with any of any penalty under subsection (a) during the SUIT.—Section 7479 (relating to declaratory collection of Federal tax with respect to a tax- time the prohibition under subparagraph (A) is judgments relating to eligibility of estate with payer, any officer or employee of the Internal in force may be enjoined by a proceeding in the respect to installment payments under section Revenue Service willfully violates any provision proper court, including the Tax Court. The Tax 6166) is amended by adding at the end the fol- of section 362 (relating to automatic stay) or 524 Court shall have no jurisdiction under this sub- lowing new subsection: (relating to effect of discharge) of title 11, paragraph to enjoin any action or proceeding ‘‘(c) EXTENSION OF TIME TO FILE REFUND United States Code, or any regulation promul- unless a timely petition has been filed under SUIT.—The 2-year period in section 6532(a)(1) gated under such section, such taxpayer may paragraph (1) and then only in respect of the for filing suit for refund after disallowance of a petition the bankruptcy court to recover dam- amount of the assessment to which such petition claim shall be suspended during the 90-day pe- ages against the United States. relates. riod after the mailing of the notice referred to in ‘‘(2) REMEDY TO BE EXCLUSIVE.— ‘‘(3) SUSPENSION OF RUNNING OF PERIOD OF subsection (b)(3) and, if a pleading has been ‘‘(A) IN GENERAL.—Except as provided in sub- LIMITATIONS.—The running of the period of lim- paragraph (B), notwithstanding section 105 of itations in section 6502 on the collection of the filed with the Tax Court under this section, such title 11, such petition shall be the exclusive assessment to which the petition under para- until the decision of the Tax Court has become remedy for recovering damages resulting from graph (1) relates shall be suspended for the pe- final.’’ (c) EFFECTIVE DATE.—The amendments made such actions. riod during which the Secretary is prohibited by by this section shall apply to any claim for re- ‘‘(B) CERTAIN OTHER ACTIONS PERMITTED.— paragraph (2)(A) from collecting by levy or a fund filed after the date of the enactment of this Subparagraph (A) shall not apply to an action proceeding in court and for 60 days thereafter. Act. under section 362(h) of such title 11 for a viola- ‘‘(4) APPLICABLE RULES.— tion of a stay provided by section 362 of such ‘‘(A) CREDIT OR REFUND ALLOWED.—Notwith- SEC. 3106. TAX COURT JURISDICTION TO REVIEW title; except that— standing any other law or rule of law (other ADVERSE IRS DETERMINATION OF TAX-EXEMPT STATUS OF BOND ‘‘(i) administrative and litigation costs in con- than section 6512(b), 7121, or 7122), credit or re- nection with such an action may only be award- ISSUE. fund shall be allowed or made to the extent at- (a) IN GENERAL.—Section 7478 (relating to deed under section 7430, and tributable to the application of this subsection. ‘‘(ii) administrative costs may be awarded claratory judgments relating to status of certain ‘‘(B) LIMITATION ON TAX COURT JURISDIC- only if incurred on or after the date that the governmental obligations) is amended— TION.—If a suit for refund is begun, the Tax (1) by striking ‘‘prospective obligations will bankruptcy petition is filed.’’ Court shall lose jurisdiction of the action under (2) CONFORMING AMENDMENT.—Subsection (b) be’’ both places it appears in subsection (a) and this subsection to whatever extent jurisdiction is of section 7433 is amended by inserting ‘‘or peti- inserting ‘‘previously issued or prospective obli- acquired by the district court or the United tion filed under subsection (e)’’ after ‘‘sub- gations is or will be’’, and section (a)’’. States Court of Federal Claims over the taxable (2) by striking subsection (b)(1) and inserting (d) EFFECTIVE DATE.—The amendments made periods that are the subject of the suit for re- the following: by this section shall apply to actions of officers fund.’’ ‘‘(1) PETITIONER.—Except as provided in sub- or employees of the Internal Revenue Service (b) CONFORMING AMENDMENTS.— section (c), a pleading may be filed under this after the date of the enactment of this Act. (1) Section 7103(a)(4) is amended by striking section only by the issuer or prospective issuer.’’ ‘‘6672(b)’’ and inserting ‘‘6672(d)’’. SEC. 3103. INCREASE IN SIZE OF CASES PER- (b) NOTICE REQUIREMENT.—Section 7478(b) is MITTED ON SMALL CASE CALENDAR. (2) Section 7421(a) is amended by striking amended by adding at the end the following: (a) IN GENERAL.—Section 7463 (relating to dis- ‘‘6672(b)’’ and inserting ‘‘6672 (c) and (d)’’. ‘‘(4) NOTICE TO HOLDERS OF PREVIOUSLY putes involving $10,000 or less) is amended by (c) EFFECTIVE DATE.—The amendments made ISSUED OBLIGATIONS.— striking ‘‘$10,000’’ each place it appears (includ- by this section shall apply to penalties imposed ‘‘(A) IN GENERAL.—If an issuer of previously ing the section heading) and inserting after the date of the enactment of this Act. issued obligations files a pleading under this ‘‘$50,000’’. SEC. 3105. ACTIONS FOR REFUND WITH RESPECT section, the court shall not issue a declaratory (b) CONFORMING AMENDMENTS.— TO CERTAIN ESTATES WHICH HAVE judgment or decree under this section unless it (1) Sections 7436(c)(1) and 7443A(b)(3) are ELECTED THE INSTALLMENT METH- determines that the petitioner has provided ade- each amended by striking ‘‘$10,000’’ and insert- OD OF PAYMENT. quate notice to holders of such obligations with- ing ‘‘$50,000’’. (a) IN GENERAL.—Section 7422 is amended by in 10 days of the filing of the pleading. (2) The table of sections for part II of sub- redesignating subsection (j) as subsection (k) ‘‘(B) DELIVERY OF NOTICE.—The notice under chapter C of chapter 76 is amended by striking and by inserting after subsection (i) the follow- subparagraph (A) shall be given using the most ‘‘$10,000’’ in the item relating to section 7463 ing new subsection: practicable of the following methods: and inserting ‘‘$50,000’’. ‘‘(j) SPECIAL RULE FOR ACTIONS WITH RE- ‘‘(i) In person. (c) EFFECTIVE DATE.—The amendments made SPECT TO ESTATES FOR WHICH AN ELECTION ‘‘(ii) By certified or registered mail sent to the by this section shall apply to proceedings com- UNDER SECTION 6166 IS MADE.— holder’s last known address. mencing after the date of the enactment of this ‘‘(1) IN GENERAL.—The district courts of the ‘‘(iii) By printing in appropriate publications. Act. United States and the United States Court of ‘‘(C) CONTENTS OF THE NOTICE.—The notice SEC. 3104. EXPANSION OF TAX COURT JURISDIC- Federal Claims shall not fail to have jurisdiction under subparagraph (A) shall include a state- TION TO RESPONSIBLE PERSON over any action brought by the representative of ment of the holder’s right to intervene in, and PENALTIES. an estate to which this subsection applies to de- participate in, any proceeding under this sec- (a) IN GENERAL.—Section 6672 (relating to termine the correct amount of the estate tax li- tion with respect to obligations held or formerly failure to collect and pay over tax, or attempt to ability of such estate (or for any refund with re- held by the holder.’’ S4160 CONGRESSIONAL RECORD — SENATE May 4, 1998

(c) INTERVENTION; OTHER RULES.—Section therefor, the Secretary shall, within 60 days ‘‘(B) the date that the judgment secured 7478 is amended by adding at the end the follow- after the expiration of such period— under section 7426(b)(5) becomes final. ing: ‘‘(i) apply the amount deposited, or collect on The running of such period shall be suspended ‘‘(c) BONDHOLDER INTERVENTION.—If an such bond, to the extent necessary to satisfy the under this paragraph only with respect to the issuer of previously issued obligations files a unsatisfied liability secured by the lien, and amount of such assessment equal to the value of pleading under this section, then the Tax Court ‘‘(ii) refund (with interest as described in sub- the interest of the United States in the property shall permit any person who demonstrates to the paragraph (B)) any portion of the amount de- plus interest, penalties, additions to the tax, satisfaction of the court that such person was or posited which is not used to satisfy such liabil- and additional amounts attributable thereto.’’ ity. is a holder of any of such previously issued obli- (c) EFFECTIVE DATE.—The amendments made ‘‘(D) EXCEPTION.—Subparagraph (A) shall not gations to intervene in, and participate in, the by this section shall take effect on the date of apply if the owner of the property is the person proceedings before the court with respect to the enactment of this Act. such pleading, on such terms and conditions as whose unsatisfied liability gave rise to the lien.’’ shall be established by the court. (b) CIVIL ACTION TO RELEASE ERRONEOUS Subtitle C—Relief for Innocent Spouses and ‘‘(d) PERIOD OF LIMITATIONS, COLLECTION, LIEN.— for Taxpayers Unable To Manage Their Fi- AND IMPOSITION OF INTEREST AND PENALTIES (1) IN GENERAL.—Subsection (a) of section 7426 nancial Affairs Due to Disabilities STAYED PENDING CONCLUSION OF PROCEED- (relating to civil actions by persons other than SEC. 3201. SPOUSAL ELECTION TO LIMIT JOINT INGS.— taxpayers) is amended by adding at the end the AND SEVERAL LIABILITY ON JOINT ‘‘(1) IN GENERAL.—If an issuer of previously following new paragraph: RETURN. issued obligations files a pleading under this ‘‘(4) SUBSTITUTION OF VALUE.—If a certificate (a) IN GENERAL.—Subpart B of part II of subsection— of discharge is issued to any person under sec- chapter A of chapter 61 is amended by inserting ‘‘(A) the running of the period of limitations tion 6325(b)(4) with respect to any property, after section 6014 the following new section: in sections 6501 and 6502 on the assessment and such person may, within 120 days after the day ‘‘SEC. 6015. ELECTION TO LIMIT JOINT AND SEV- the collection of any tax due by a person on which such certificate is issued, bring a civil ERAL LIABILITY ON JOINT RETURN. (whether or not a party to a proceeding under action against the United States in a district ‘‘(a) ELECTION TO LIMIT LIABILITY.— this section) on the interest paid on such pre- court of the United States for a determination of ‘‘(1) IN GENERAL.—Notwithstanding section viously issued obligations, whether the value of the interest of the United 6013(d)(3), and except as provided in paragraphs ‘‘(B) the collection of such tax due, and States (if any) in such property is less than the (2) and (3), if an individual who has made a ‘‘(C) the imposition of any interest, penalties, value determined by the Secretary. No other ac- joint return for any taxable year elects the ap- additions to tax, or additional amounts in re- tion may be brought by such person for such a plication of this section— spect to any such unpaid tax, determination.’’ ‘‘(A) the individual’s liability for any tax shall be suspended from the date of such filing (2) FORM OF RELIEF.— shown on the return which remains unpaid as (A) IN GENERAL.—Subsection (b) of section until the date on which the decision of the Tax of the payment due date shall not exceed the in- 7426 is amended by adding at the end the follow- Court becomes final. dividual’s separate return amount determined ing new paragraph: ‘‘(2) CROSS REFERENCE.— under subsection (b), and ‘‘(5) SUBSTITUTION OF VALUE.—If the court de- ‘‘(B) the individual’s liability for any defi- ‘‘For additional suspension of running of termines that the Secretary’s determination of ciency which is assessed shall not exceed the period of limitation, see section 6503.’’ the value of the interest of the United States in portion of such deficiency properly allocable to (d) EFFECTIVE DATE; SPECIAL RULE.— the property for purposes of section 6325(b)(4) the individual under subsection (c). (1) EFFECTIVE DATE.—Except as provided in exceeds the actual value of such interest, the ‘‘(2) BURDEN OF PROOF.—Except as provided paragraph (2), the amendments made by this court shall grant a judgment ordering a refund in paragraph (3) (B) or (C), each individual who section shall apply to determinations made after of the amount deposited, and a release of the elects the application of this section shall have the date of the enactment of this Act. bond, to the extent that the aggregate of the the burden of proof with respect to establishing (2) SPECIAL RULE.—Notwithstanding section amounts thereof exceeds such value determined the individual’s separate return amount and the 7478(b)(3) of the Internal Revenue Code of 1986, by the court.’’ portion of any deficiency allocable to such indi- in the case of a technical advice memorandum (B) INTEREST ALLOWED ON REFUND OF DE- vidual. which— POSIT.—Subsection (g) of section 7426 is amend- ‘‘(3) ELECTION.— (A) provides that any interest on any obliga- ed by striking ‘‘and’’ at the end of paragraph tion which is part of an issue (or portion there- (1), by striking the period at the end of para- ‘‘(A) IN GENERAL.—An election under this sub- of) is not exempt from taxation under the Inter- graph (2) and inserting ‘‘; and’’, and by adding section for any taxable year shall be made not nal Revenue Code of 1986, and at the end the following new paragraph: later than 2 years after the date on which the (B) was publicly released within 1 year of the ‘‘(3) in the case of a judgment pursuant to Secretary has begun collection activities with re- date of the enactment of this Act, subsection (b)(5) which orders a refund of any spect to the individual making the election. a pleading may be filed under section 7478 of amount, from the date the Secretary received ‘‘(B) CERTAIN TAXPAYERS INELIGIBLE TO such Code with respect to such memorandum such amount to the date of payment of such ELECT.—If the Secretary demonstrates that as- not later than the 90th day after such date. judgment.’’ sets were transferred between individuals filing a joint return as part of a fraudulent scheme by SEC. 3107. CIVIL ACTION FOR RELEASE OF ERRO- (3) SUSPENSION OF RUNNING OF STATUTE OF NEOUS LIEN. LIMITATION.—Subsection (f) of section 6503 is such individuals, an election under this section (a) RIGHT OF SUBSTITUTION OF VALUE.—Sub- amended to read as follows: by either individual shall be invalid (and sec- section (b) of section 6325 (relating to release of ‘‘(f) WRONGFUL SEIZURE OF OR LIEN ON PROP- tion 6013(d)(3) shall apply to the joint return). lien or discharge of property) is amended by ERTY OF THIRD PARTY.— ‘‘(C) ELECTION NOT VALID WITH RESPECT TO adding at the end the following new paragraph: ‘‘(1) WRONGFUL SEIZURE.—The running of the CERTAIN DEFICIENCIES.—If the Secretary dem- ‘‘(4) RIGHT OF SUBSTITUTION OF VALUE.— period under section 6502 shall be suspended for onstrates that an individual making an election ‘‘(A) IN GENERAL.—At the request of the owner a period equal to the period from the date prop- under this section had actual knowledge of any of any property subject to any lien imposed by erty (including money) of a third party is item giving rise to a deficiency (or portion there- this chapter, the Secretary shall issue a certifi- wrongfully seized or received by the Secretary to of) which is not allocable to such individual cate of discharge of such property if such the date the Secretary returns property pursu- under subsection (c), such election shall not owner— ant to section 6343(b) or the date on which a apply to such deficiency (or portion). ‘‘(i) deposits with the Secretary an amount of judgment secured pursuant to section 7426 with ‘‘(b) SEPARATE RETURN AMOUNT.—For pur- money equal to the value of the interest of the respect to such property becomes final, and for poses of this section— United States (as determined by the Secretary) 30 days thereafter. The running of such period ‘‘(1) IN GENERAL.—The term ‘separate return in the property, or shall be suspended under this paragraph only amount’ means, with respect to an individual, ‘‘(ii) furnishes a bond acceptable to the Sec- with respect to the amount of such assessment an amount equal to the excess (if any) of— retary in a like amount. equal to the amount of money or the value of ‘‘(A) the tax liability of the individual which ‘‘(B) REFUND OF DEPOSIT WITH INTEREST AND specific property returned. would have been determined (on the basis of the RELEASE OF BOND.—The Secretary shall refund ‘‘(2) WRONGFUL LIEN.—In the case of any as- items shown on the joint return) for the taxable the amount so deposited (and shall pay interest sessment for which a lien was made on any year if the individual had filed a separate re- at the overpayment rate under section 6621), property, the running of the period under sec- turn, over and shall release such bond, to the extent that tion 6502 shall be suspended for a period equal ‘‘(B) the aggregate payments of such tax prop- the Secretary determines that— to the period beginning on the date any person erly allocable to such individual. ‘‘(i) the unsatisfied liability giving rise to the becomes entitled to a certificate under section ‘‘(2) SPECIAL RULES FOR COMPUTING TAX LI- lien can be satisfied from a source other than 6325(b)(4) with respect to such property and ABILITIES AND PAYMENT.— such property, or ending on the date which is 30 days after the ‘‘(A) TREATMENT OF CERTAIN CREDITS.—The ‘‘(ii) the value of the interest of the United earlier of— credits allowed by sections 31, 33, and 34 for any States in the property is less than the Sec- ‘‘(A) the earliest date on which the Secretary taxable year— retary’s prior determination of such value. no longer holds any amount as a deposit or ‘‘(i) shall not be taken into account in deter- ‘‘(C) USE OF DEPOSIT, ETC., IF ACTION TO CON- bond provided under section 6325(b)(4) by reason mining the amount of tax shown on a return or TEST LIEN NOT FILED.—If no action is filed under of such deposit or bond being used to satisfy the the tax liability of an individual filing a sepa- section 7426(a)(4) within the period prescribed unpaid tax or being refunded or released, or rate return, but May 4, 1998 CONGRESSIONAL RECORD — SENATE S4161

‘‘(ii) shall be taken into account in determin- ‘‘(ii) AUTHORITY TO ENJOIN COLLECTION AC- between the spouses appropriately. A similar ing the aggregate payments of tax of the indi- TIONS.—Notwithstanding the provisions of sec- rule shall apply for purposes of section 86. vidual to whom such credits are properly allocation 7421(a), the beginning of such levy or pro- ‘‘(3) CHILD’S LIABILITY.—If the liability of a ble. ceeding during the time the prohibition under child of a taxpayer is included on a joint return, ‘‘(B) MATHEMATICAL AND CLERICAL ERRORS.— clause (i) is in force may be enjoined by a pro- such liability shall be disregarded in computing Tax shown on a return shall include any tax as- ceeding in the proper court, including the Tax the separate liability of either spouse and such sessed on account of a mathematical or clerical Court. The Tax Court shall have no jurisdiction liability shall be allocated appropriately be- error (within the meaning of section 6213(g)(2)) under this subparagraph to enjoin any action or tween the spouses. appearing on the return. proceeding unless a timely petition has been ‘‘(g) LIABILITY INCREASED BY REASON OF ‘‘(3) PAYMENT DUE DATE.—The term ‘payment filed under subparagraph (A) and then only in TRANSFERS OF PROPERTY TO AVOID TAX.— due date’ means the date prescribed for payment respect of the amount of the assessment to ‘‘(1) IN GENERAL.—Notwithstanding any other of the tax (determined with regard to any exten- which the election under subsection (a) relates. provision of this section, any limitation on the sion of time for payment). ‘‘(2) SUSPENSION OF RUNNING OF PERIOD OF tax liability of an individual electing the appli- ‘‘(c) ALLOCATION OF DEFICIENCY.—For pur- LIMITATIONS.—The running of the period of lim- cation of this section shall be increased by the poses of subsection (a)(1)(B)— itations in section 6502 on the collection of the value of any disqualified asset transferred to the ‘‘(1) IN GENERAL.—The portion of any defi- assessment to which the petition under para- individual. ciency on a joint return allocated to an individ- graph (1)(A) relates shall be suspended for the ‘‘(2) DISQUALIFIED ASSET.—For purposes of ual shall be the amount which bears the same period during which the Secretary is prohibited this subsection— ratio to such deficiency as the net amount of by paragraph (1)(B) from collecting by levy or a ‘‘(A) IN GENERAL.—The term ‘disqualified items taken into account in computing the defi- proceeding in court and for 60 days thereafter. asset’ means any property or right to property ciency and allocable to the individual under ‘‘(3) APPLICABLE RULES.— transferred to an individual making the election paragraph (3) bears to the net amount of all ‘‘(A) ALLOWANCE OF CREDIT OR REFUND.—Ex- under this section with respect to a joint return items taken into account in computing the defi- cept as provided in subparagraph (B), notwith- by the other individual filing such joint return ciency. standing any other law or rule of law (other if the principal purpose of the transfer was the ‘‘(2) SEPARATE TREATMENT OF CERTAIN than section 6512(b), 7121, or 7122), credit or re- avoidance of tax or payment of tax. ITEMS.—If a deficiency (or portion thereof) is at- fund shall be allowed or made to the extent at- ‘‘(B) PRESUMPTION.— tributable to— tributable to the application of this section. ‘‘(i) IN GENERAL.—For purposes of subpara- ‘‘(A) the disallowance of a credit, or ‘‘(B) RES JUDICATA.—In the case of any elec- graph (A), except as provided in clause (ii), any ‘‘(B) any tax (other than tax imposed by section under subsection (a), if a decision of the transfer which is made after the date which is tion 1 or 55) required to be included with the Tax Court in any prior proceeding for the same 1 year before— joint return, taxable year has become final, such decision ‘‘(I) in the case of any unpaid tax to which and such item is allocated to 1 individual under shall be conclusive except with respect to the subsection (a)(1)(A) applies, the payment due paragraph (3), such deficiency (or portion) shall qualification of the individual for relief which date of such unpaid tax, and be allocated to such individual. Any such item was not an issue in such proceeding. The excep- ‘‘(II) in the case of any deficiency to which shall not be taken into account under para- tion contained in the preceding sentence shall subsection (a)(1)(B) applies, the date on which graph (1). not apply if the Tax Court determines that the the 1st letter of proposed deficiency which al- ‘‘(3) ALLOCATION OF ITEMS GIVING RISE TO THE individual participated meaningfully in such lows the taxpayer an opportunity for adminis- DEFICIENCY.—For purposes of this subsection— prior proceeding. trative review in the Internal Revenue Service ‘‘(A) IN GENERAL.—Any item giving rise to a ‘‘(C) LIMITATION ON TAX COURT JURISDIC- Office of Appeals is sent, deficiency on a joint return shall be allocated to TION.—If a suit for refund is begun by either in- individuals filing the return in the same manner shall be presumed to have as its principal pur- dividual filing the joint return pursuant to sec- pose the avoidance of tax or payment of tax. as it would have been allocated if the individ- tion 6532— uals had filed separate returns for the taxable ‘‘(ii) EXCEPTIONS.—Clause (i) shall not apply ‘‘(i) the Tax Court shall lose jurisdiction of to any transfer— year. the individual’s action under this section to ‘‘(B) EXCEPTION WHERE OTHER SPOUSE BENE- ‘‘(I) pursuant to a decree of divorce or sepa- whatever extent jurisdiction is acquired by the FITS.—Under rules prescribed by the Secretary, rate maintenance or a written instrument inci- district court or the United States Court of Fed- an item otherwise allocable to an individual dent to such a decree, or eral Claims over the taxable years that are the under subparagraph (A) shall be allocated to ‘‘(II) which an individual establishes did not subject of the suit for refund, and the other individual filing the joint return to the have as its principal purpose the avoidance of ‘‘(ii) the court acquiring jurisdiction shall extent the item gave rise to a tax benefit on the tax or payment of tax. have jurisdiction over the petition filed under joint return to the other individual. ‘‘(h) REGULATIONS.—The Secretary shall pre- this subsection. ‘‘(C) EXCEPTION FOR FRAUD.—The Secretary scribe such regulations as are necessary to carry ‘‘(4) NOTICE TO OTHER SPOUSE.—The Tax may provide for an allocation of any item in a out the provisions of this section, including— Court shall establish rules which provide the in- manner not prescribed by subparagraph (A) if ‘‘(1) regulations providing methods for alloca- dividual filing a joint return but not making the the Secretary establishes that such allocation is tion of items other than the methods under sub- election under subsection (a) with adequate no- appropriate due to fraud of 1 or both individ- section (c)(3), and tice and an opportunity to become a party to a uals. ‘‘(2) regulations providing the opportunity for proceeding under this subsection. ‘‘(d) PETITION FOR REVIEW BY TAX COURT.— an individual to have notice of, and an oppor- ‘‘(e) EQUITABLE RELIEF.—Under procedures ‘‘(1) IN GENERAL.—In the case of an individual tunity to participate in, any administrative pro- who elects to have this section apply— prescribed by the Secretary, if— ceeding with respect to an election made under ‘‘(A) IN GENERAL.—The individual may peti- ‘‘(1) a separate return amount determined subsection (a) by the other individual filing the tion the Tax Court (and the Tax Court shall under subsection (b) or an allocation of defi- joint return.’’ have jurisdiction) to determine the appropriate ciency under subsection (c) is attributable to an (b) SEPARATE FORM FOR APPLYING FOR SPOUS- relief available to the individual under this sec- item being allocated to an individual, AL RELIEF.—Not later than 180 days after the tion if such petition is filed during the 90-day ‘‘(2) the individual establishes that he or she date of the enactment of this Act, the Secretary period beginning on the date on which the Sec- did not know, and had no reason to know, of of the Treasury shall develop a separate form retary mails by certified or registered mail a no- such item, and with instructions for use by taxpayers in apply- tice to such individual of the Secretary’s deter- ‘‘(3) taking into account all the facts and cir- ing for relief under section 6015(a) of the Inter- mination of relief available to the spouse. Not- cumstances, it is inequitable to hold the individ- nal Revenue Code of 1986, as added by this sec- withstanding the preceding sentence, an indi- ual liable for any unpaid tax or any deficiency tion. vidual may file such petition at any time after (or any portion of either) attributable to such (c) SEPARATE NOTICE TO EACH FILER.—The the date which is 6 months after the date such item, Secretary of the Treasury shall, wherever prac- election is filed with the Secretary and before the Secretary may provide that, for purposes of ticable, send any notice relating to a joint re- the close of such 90-day period. this section, such item shall not be allocated to turn under section 6013 of the Internal Revenue ‘‘(B) RESTRICTIONS APPLICABLE TO COLLEC- such individual but shall be allocated to the Code of 1986 separately to each individual filing TION OF ASSESSMENT.— other individual filing the joint return. the joint return. ‘‘(i) IN GENERAL.—Except as otherwise pro- ‘‘(f) OTHER RULES.—For purposes of this sec- (d) CONFORMING AMENDMENTS.— vided in section 6851 or 6861, no levy or proceed- tion— (1) Section 6013 is amended by striking sub- ing in court shall be made, begun, or prosecuted ‘‘(1) COMMUNITY PROPERTY LAWS DIS- section (e). against the spouse making an election under REGARDED.—Any determination under this sec- (2) Subparagraph (A) of section 6230(c)(5) is subsection (a) for collection of any assessment to tion shall be made without regard to community amended by striking ‘‘section 6013(e)’’ and in- which such election relates until the expiration property laws. serting ‘‘section 6015’’. of the 90-day period described in subparagraph ‘‘(2) LIMITATIONS ON SEPARATE RETURNS DIS- (3) Section 7421(a) is amended by inserting (A), or, if a petition has been filed with the Tax REGARDED.—If an item of deduction or credit is ‘‘6015(d),’’ after ‘‘sections’’. Court, until the decision of the Tax Court has disallowed in its entirety solely because a sepa- (e) CLERICAL AMENDMENT.—The table of sec- become final. Rules similar to the rules of sec- rate return is filed, such disallowance shall be tions for subpart B of part II of subchapter A of tion 7485 shall apply with respect to the collec- disregarded and the item shall be computed as if chapter 61 is amended by inserting after the item tion of such assessment. a joint return had been filed and then allocated relating to section 6014 the following new item: S4162 CONGRESSIONAL RECORD — SENATE May 4, 1998 ‘‘Sec. 6015. Election to limit joint and several li- SEC. 3302. INCREASE IN OVERPAYMENT RATE the return (including extensions), if the Sec- ability on joint return.’’ PAYABLE TO TAXPAYERS OTHER retary does not provide a notice of deficiency to THAN CORPORATIONS. (f) EFFECTIVE DATES.— the taxpayer before the close of the 1-year pe- (a) IN GENERAL.—Subparagraph (B) of section riod beginning on the later of— (1) IN GENERAL.—Except as provided in para- 6621(a)(1) (defining overpayment rate) is amend- graph (2), the amendments made by this section ‘‘(A) the date on which the return is filed, or ed to read as follows: ‘‘(B) the due date of the return without re- shall apply to any liability for tax arising after ‘‘(B) 3 percentage points (2 percentage points gard to extensions, the date of the enactment of this Act and any li- in the case of a corporation).’’ ability for tax arising on or before such date but the Secretary shall suspend the imposition of (b) EFFECTIVE DATE.—The amendment made any interest, penalty, addition to tax, or addi- remaining unpaid as of such date. by this section shall apply to interest for cal- (2) 2-YEAR PERIOD.—The 2-year period under tional amount with respect to any failure relat- endar quarters beginning after the date of the ing to the return which is computed by reference section 6015(a)(3)(A) of the Internal Revenue enactment of this Act. Code of 1986 shall not expire before the date to the period of time the failure continues to SEC. 3303. ELIMINATION OF PENALTY ON INDI- which is 2 years after the date of the first collec- exist and which is properly allocable to the sus- VIDUAL’S FAILURE TO PAY FOR pension period. tion activity after the date of the enactment of MONTHS DURING PERIOD OF IN- ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not this Act. STALLMENT AGREEMENT. apply to— SEC. 3202. SUSPENSION OF STATUTE OF LIMITA- (a) IN GENERAL.—Section 6651 (relating to ‘‘(A) any penalty imposed by section 6651, TIONS ON FILING REFUND CLAIMS failure to file tax return or to pay tax) is amend- DURING PERIODS OF DISABILITY. ‘‘(B) any interest, penalty, addition to tax, or ed by adding at the end the following new sub- additional amount in a case involving fraud, or (a) IN GENERAL.—Section 6511 (relating to lim- section: ‘‘(C) any criminal penalty. itations on credit or refund) is amended by re- ‘‘(h) LIMITATION ON PENALTY ON INDIVIDUAL’S ‘‘(3) SUSPENSION PERIOD.—For purposes of this designating subsection (h) as subsection (i) and FAILURE TO PAY FOR MONTHS DURING PERIOD subsection, the term ‘suspension period’ means by inserting after subsection (g) the following OF INSTALLMENT AGREEMENT.—In the case of an the period— new subsection: individual who files a return of tax on or before ‘‘(A) beginning on the day after the close of ‘‘(h) RUNNING OF PERIODS OF LIMITATION SUS- the due date for the return (including exten- the 1-year period under paragraph (1), and PENDED WHILE TAXPAYER IS UNABLE TO MAN- sions), no addition to the tax shall be imposed ‘‘(B) ending on the date which is 21 days after AGE FINANCIAL AFFAIRS DUE TO DISABILITY.— under paragraph (2) or (3) of subsection (a) with the date on which notice and demand for pay- ‘‘(1) IN GENERAL.—In the case of an individ- respect to the individual’s liability for tax relat- ment of tax relating to such return is made by ual, the running of the periods specified in sub- ing to the return for any month during which the Secretary.’’ sections (a), (b), and (c) shall be suspended dur- an installment agreement under section 6159 is (b) EFFECTIVE DATE.—The amendments made ing any period of such individual’s life that in effect for the payment of such tax.’’ by this section shall apply to taxable years end- such individual is financially disabled. (b) EFFECTIVE DATE.—The amendment made ing after the date of the enactment of this Act. ‘‘(2) FINANCIALLY DISABLED.— by this section shall apply for purposes of deter- SEC. 3306. PROCEDURAL REQUIREMENTS FOR IM- ‘‘(A) IN GENERAL.—For purposes of paragraph mining additions to the tax for months begin- POSITION OF PENALTIES AND ADDI- (1), an individual is financially disabled if such ning after the date of the enactment of this Act. TIONS TO TAX. individual is unable to manage his financial af- SEC. 3304. MITIGATION OF FAILURE TO DEPOSIT (a) IN GENERAL.—Chapter 68 (relating to addi- fairs by reason of a medically determinable PENALTY. tions to the tax, additional amounts, and assess- physical or mental impairment of the individual (a) TAXPAYER MAY DESIGNATE PERIODS TO able penalties) is amended by adding at the end which can be expected to result in death or WHICH DEPOSITS APPLY.—Section 6656 (relating the following new subchapter: which has lasted or can be expected to last for to underpayment of deposits) is amended by ‘‘Subchapter C—Procedural Requirements a continuous period of not less than 12 months. adding at the end the following new subsection: ‘‘Sec. 6751. Procedural requirements. An individual shall not be considered to have ‘‘(e) DESIGNATION OF PERIODS TO WHICH DE- ‘‘SEC. 6751. PROCEDURAL REQUIREMENTS. such an impairment unless proof of the exist- POSITS APPLY.— ‘‘(a) COMPUTATION OF PENALTY INCLUDED IN ence thereof is furnished in such form and man- ‘‘(1) IN GENERAL.—A person may designate the ner as the Secretary may require. period or periods to which a deposit is to be ap- NOTICE.—The Secretary shall include with each ‘‘(B) EXCEPTION WHERE INDIVIDUAL HAS plied for purposes of this section. notice of penalty under this title information with respect to the name of the penalty, the sec- GUARDIAN, ETC.—An individual shall not be ‘‘(2) TIME FOR MAKING DESIGNATION.—A per- treated as financially disabled during any pe- son shall make any designation under para- tion of this title under which the penalty is im- riod that such individual’s spouse or any other graph (1) on or before the later of— posed, and a computation of the penalty. ‘‘(b) APPROVAL OF ASSESSMENT.— person is authorized to act on behalf of such in- ‘‘(A) the date the deposit is made, or ‘‘(1) IN GENERAL.—No penalty under this title dividual in financial matters.’’ ‘‘(B) the 90th day after the earlier of the dates shall be assessed unless the initial determination (b) EFFECTIVE DATE.—The amendment made determined under subsection (b)(1)(B) with re- of such assessment is personally approved (in by subsection (a) shall apply to periods of dis- spect to a notice covering the period to which writing) by the immediate supervisor of the indi- ability before, on, or after the date of the enact- the deposit would be applied but for a designa- vidual making such determination or such high- ment of this Act but shall not apply to any tion under this subsection.’’ er level official as the Secretary may designate. claim for credit or refund which (without regard (b) EXPANSION OF EXEMPTION FOR FIRST-TIME ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not to such amendment) is barred by the operation DEPOSITS.— apply to— of any law or rule of law (including res judi- (1) IN GENERAL.—Paragraph (2) of section cata) as of January 1, 1998. ‘‘(A) any addition to tax under section 6651, 6656(c) (relating to exemption for first-time de- 6654, or 6655, or Subtitle D—Provisions Relating to Interest positors of employment taxes) is amended to ‘‘(B) any other penalty automatically cal- and Penalties read as follows: culated through electronic means. SEC. 3301. ELIMINATION OF INTEREST RATE DIF- ‘‘(2) such failure— ‘‘(c) PENALTIES.—For purposes of this section, FERENTIAL ON OVERLAPPING PERI- ‘‘(A) occurs during the 1st quarter that such the term ‘penalty’ includes any addition to tax ODS OF INTEREST ON INCOME TAX person was required to deposit any employment or any additional amount.’’ OVERPAYMENTS AND UNDERPAY- tax, or (b) CONFORMING AMENDMENT.—The table of MENTS. ‘‘(B) if such person is required to change the subchapters for chapter 68 is amended by add- (a) IN GENERAL.—Section 6621 (relating to de- frequency of deposits of any employment tax, re- ing at the end the following new item: termination of rate of interest) is amended by lates to the first deposit to which such change adding at the end the following new subsection: applies, and’’. ‘‘SUBCHAPTER C. Procedural requirements.’’ ‘‘(d) ELIMINATION OF INTEREST ON OVERLAP- (c) EFFECTIVE DATE.—The amendments made (c) EFFECTIVE DATE.—The amendments made PING PERIODS OF INCOME TAX OVERPAYMENTS by this section shall apply to deposits required by this section shall apply to notices issued, and AND UNDERPAYMENTS.—To the extent that, for to be made after the 180th day after the date of penalties assessed, after the 180th day after the any period, interest is payable under subchapter the enactment of this Act. date of the enactment of this Act. A and allowable under subchapter B on equiva- SEC. 3305. SUSPENSION OF INTEREST AND CER- SEC. 3307. PERSONAL DELIVERY OF NOTICE OF lent underpayments and overpayments by the TAIN PENALTIES WHERE SECRETARY PENALTY UNDER SECTION 6672. same taxpayer of tax imposed by chapters 1 and FAILS TO CONTACT INDIVIDUAL TAX- (a) IN GENERAL.—Paragraph (1) of section 2, the net rate of interest under this section on PAYER. 6672(b) (relating to failure to collect and pay such amounts shall be zero for such period.’’ (a) IN GENERAL.—Section 6404 (relating to over tax, or attempt to evade or defeat tax) is (b) CONFORMING AMENDMENT.—Subsection (f) abatements) is amended by redesignating sub- amended by inserting ‘‘or in person’’ after ‘‘sec- of section 6601 (relating to satisfaction by cred- section (g) as subsection (h) and by inserting tion 6212(b)’’. its) is amended by adding at the end the follow- after subsection (f) the following new sub- (b) CONFORMING AMENDMENTS.— ing new sentence: ‘‘The preceding sentence shall section: (1) Paragraph (2) of section 6672(b) is amend- not apply to the extent that section 6621(d) ap- ‘‘(g) SUSPENSION OF INTEREST AND CERTAIN ed by inserting ‘‘(or, in the case of such a notice plies.’’ PENALTIES WHERE SECRETARY FAILS TO CON- delivered in person, such delivery)’’ after ‘‘para- (c) EFFECTIVE DATE.—The amendments made TACT TAXPAYER.— graph (1)’’. by this section shall apply to interest for cal- ‘‘(1) IN GENERAL.—In the case of an individual (2) Paragraph (3) of section 6672(b) is amend- endar quarters beginning after the date of the who files a return of tax imposed by subtitle A ed by inserting ‘‘or delivered in person’’ after enactment of this Act. for a taxable year on or before the due date for ‘‘mailed’’ each place it appears. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4163

(c) EFFECTIVE DATE.—The amendments made (c), (d) (other than paragraph (2)(B) thereof), ‘‘(A) challenges to the underlying tax liability by this section shall take effect on the date of and (e) of section 6330 shall apply. as to existence or amount, the enactment of this Act. ‘‘PART II—LIENS’’. ‘‘(B) appropriate spousal defenses, ‘‘(C) challenges to the appropriateness of col- SEC. 3308. NOTICE OF INTEREST CHARGES. (b) NOTICE AND OPPORTUNITY FOR HEARING (a) IN GENERAL.—Chapter 67 (relating to in- lection actions, and BEFORE LEVY.—Subchapter D of chapter 64 (re- ‘‘(D) offers of collection alternatives, which terest) is amended by adding at the end the fol- lating to seizure of property for collection of lowing new subchapter: may include the posting of a bond, the substi- taxes) is amended by inserting before the table tution of other assets, an installment agreement, ‘‘Subchapter D—Notice requirements of sections the following: or an offer-in-compromise. ‘‘Sec. 6631. Notice requirements. ‘‘Part I. Due process for collections. ‘‘(3) BASIS FOR THE DETERMINATION.—The de- ‘‘SEC. 6631. NOTICE REQUIREMENTS. ‘‘Part II. Levy. termination by an appeals officer under this ‘‘The Secretary shall include with each notice subsection shall take into consideration— ‘‘PART I—DUE PROCESS FOR ‘‘(A) the verification presented under para- to an individual taxpayer which includes an COLLECTIONS amount of interest required to be paid by such graph (1), ‘‘Sec. 6330. Notice and opportunity for hearing taxpayer under this title information with re- ‘‘(B) the issues raised under paragraph (2), before levy. spect to the section of this title under which the and ‘‘(C) whether the proposed collection action interest is imposed and a computation of the in- ‘‘SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY. balances the need for the efficient collection of terest.’’ ‘‘(a) REQUIREMENT OF NOTICE BEFORE taxes with the legitimate concern of the person (b) CONFORMING AMENDMENT.—The table of subchapters for chapter 67 is amended by add- LEVY.— that the collection action be no more intrusive ‘‘(1) IN GENERAL.—No levy may be made on ing at the end the following new item: than necessary. any property or right to property of any person ‘‘(4) CERTAIN ISSUES PRECLUDED.—An issue ‘‘SUBCHAPTER D. Notice requirements.’’ unless the Secretary has notified such person in may not be raised at the hearing if— (c) EFFECTIVE DATE.—The amendments made writing of the Secretary’s intention to make ‘‘(A) the issue was raised at a previous hear- by this section shall apply to notices issued after such a levy. ing under this section or section 6320 or in any June 30, 2000. ‘‘(2) TIME AND METHOD FOR NOTICE.— other previous administrative or judicial pro- ‘‘(A) IN GENERAL.—The notice required under ceeding, and Subtitle E—Protections for Taxpayers Subject paragraph (1) shall be— ‘‘(B) the person seeking to raise the issue par- to Audit or Collection Activities ‘‘(i) given in person, ticipated meaningfully in such hearing or pro- PART I—DUE PROCESS ‘‘(ii) left at the dwelling or usual place of ceeding. SEC. 3401. DUE PROCESS IN IRS COLLECTION AC- business of such person, or This paragraph shall not apply to any issue TIONS. ‘‘(iii) sent by certified or registered mail to with respect to which subsection (d)(2)(B) ap- (a) NOTICE AND OPPORTUNITY FOR HEARING such person’s last known address, plies. BEFORE FILING OF NOTICE OF LIEN.—Subchapter not less than 30 days before the day of the levy. ‘‘(d) PROCEEDING AFTER HEARING.— C of chapter 64 (relating to lien for taxes) is ‘‘(B) LONGER PERIOD FOR LIFE INSURANCE AND ‘‘(1) JUDICIAL REVIEW OF DETERMINATION.— amended by inserting before the table of sections ENDOWMENT CONTRACTS.—In the case of a levy The person may appeal a determination under the following: on an organization with respect to a life insur- this subsection to the Tax Court within 30 days ‘‘Part I. Due process for liens. ance or endowment contract issued by such or- of the date of such determination. ‘‘(2) JURISDICTION RETAINED AT IRS OFFICE OF ‘‘Part II. Liens. ganization, subparagraph (A) shall be applied by substituting ‘90 days’ for ‘30 days’. APPEALS.—The Internal Revenue Service Office ‘‘PART I—DUE PROCESS FOR LIENS ‘‘(3) INFORMATION INCLUDED WITH NOTICE.— of Appeals shall retain jurisdiction with respect ‘‘Sec. 6320. Notice and opportunity for hearing The notice required under paragraph (1) shall to any determination made under this section, before filing of notice of lien. include in simple and nontechnical terms— including subsequent hearings requested by the ‘‘SEC. 6320. NOTICE AND OPPORTUNITY FOR ‘‘(A) the amount of unpaid tax, person who requested the original hearing on HEARING BEFORE FILING OF NOTICE ‘‘(B) the right of the person to request a hear- issues regarding— OF LIEN. ing during the applicable period under para- ‘‘(A) collection actions taken or proposed with ‘‘(a) REQUIREMENT OF NOTICE.— graph (2), and respect to such determination, and ‘‘(1) IN GENERAL.—No notice of lien may be ‘‘(C) the proposed action by the Secretary and ‘‘(B) after the person has exhausted all ad- filed under section 6323 unless the Secretary has the rights of the person with respect to such ac- ministrative remedies, a change in circumstances notified in writing the person described in section, including a brief statement which sets with respect to such person which affects such tion 6321 of the Secretary’s intention to file such forth— determination. a notice of lien. ‘‘(i) the provisions of this title relating to levy ‘‘(e) SUSPENSION OF COLLECTIONS AND STAT- ‘‘(2) TIME AND METHOD FOR NOTICE.—The no- and sale of property, UTE OF LIMITATIONS.—If a hearing is requested tice required under paragraph (1) shall be— ‘‘(ii) the procedures applicable to the levy and under subsection (a)(3)(B), the levy actions ‘‘(A) given in person, sale of property under this title, which are the subject of the requested hearing ‘‘(B) left at the dwelling or usual place of ‘‘(iii) the administrative appeals available to and the running of any period of limitations business of such person, or the taxpayer with respect to such levy and sale under section 6502 (relating to collection after ‘‘(C) sent by certified or registered mail to and the procedures relating to such appeals, assessment), section 6531 (relating to criminal such person’s last known address, ‘‘(iv) the alternatives available to taxpayers prosecutions), or section 6532 (relating to other not less than 30 days before the day of the filing which could prevent levy on the property (in- suits) shall be suspended for the period during of the notice of lien. cluding installment agreements under section which such hearing, and appeals therein, are ‘‘(3) INFORMATION INCLUDED WITH NOTICE.— 6159), and pending. In no event shall any such period ex- The notice required under paragraph (1) shall ‘‘(v) the provisions of this title and procedures pire before the 90th day after the day on which include in simple and nontechnical terms— relating to redemption of property and release of there is a final determination in such hearing. ‘‘(A) the amount of unpaid tax, liens on property. ‘‘(f) JEOPARDY COLLECTION.—If the Secretary ‘‘(B) the right of the person to request a hear- ‘‘(b) RIGHT TO FAIR HEARING.— has made a finding under the last sentence of ing during the 30-day period described in para- ‘‘(1) IN GENERAL.—If the person requests a section 6331(a) that the collection of tax is in graph (2), hearing under subsection (a)(3)(B), such hear- jeopardy, this section shall not apply, except ‘‘(C) the administrative appeals available to ing shall be held by the Internal Revenue Serv- that the taxpayer shall be given the opportunity the taxpayer with respect to such lien and the ice Office of Appeals. for the hearing described in this section within procedures relating to such appeals, and ‘‘(2) IMPARTIAL OFFICER.—The hearing under a reasonable period of time after the levy. ‘‘(D) the provisions of this title and proce- this subsection shall be conducted by an officer ‘‘PART II—LEVY’’. dures relating to the release of liens on prop- or employee who has had no prior involvement (c) REVIEW BY SPECIAL TRIAL JUDGES AL- erty. with respect to the unpaid tax specified in sub- LOWED.— ‘‘(b) RIGHT TO FAIR HEARING.— section (a)(3)(A) before the first hearing under (1) IN GENERAL.—Section 7443(b) (relating to ‘‘(1) IN GENERAL.—If the person requests a this section or section 6320. A taxpayer may proceedings which may be assigned to special hearing under subsection (a)(3)(B), such hear- waive the requirement of this paragraph. trial judges) is amended by striking ‘‘and’’ at ing shall be held by the Internal Revenue Serv- ‘‘(c) MATTERS CONSIDERED AT HEARING.—In the end of paragraph (3), by redesignating para- ice Office of Appeals. the case of any hearing conducted under this graph (4) as paragraph (5), and by inserting ‘‘(2) IMPARTIAL OFFICER.—The hearing under section— after paragraph (3) the following: this subsection shall be conducted by an officer ‘‘(1) REQUIREMENT OF INVESTIGATION.—The ‘‘(4) any proceeding under section 6320 or or employee who has had no involvement with Secretary shall verify at the hearing that the re- 6330, and’’. respect to the unpaid tax specified in subsection quirements of any applicable law or administra- (2) AUTHORITY TO MAKE DECISIONS.—Section (a)(3)(A) before the first hearing under this sec- tive procedure have been met. 7443(c) (relating to authority to make court deci- tion. A taxpayer may waive the requirement of ‘‘(2) ISSUES AT HEARING.—The person may sions) is amended by striking ‘‘or (3)’’ and in- this paragraph. raise at the hearing any relevant issue relating serting ‘‘(3), or (4)’’. ‘‘(c) CONDUCT OF HEARING; REVIEW; SUSPEN- to the unpaid tax or the proposed levy, includ- (d) CONFORMING AMENDMENT.—Section 6331 is SIONS.—For purposes of this section, subsections ing— amended by striking subsection (d). S4164 CONGRESSIONAL RECORD — SENATE May 4, 1998

(e) EFFECTIVE DATE.—The amendments made shall be subject to the safeguards under sub- a written list of the names of all individuals by this section shall apply to collection actions section (c). who will analyze or otherwise have access to the initiated after the date which is 180 days after ‘‘(b) CIRCUMSTANCES UNDER WHICH COMPUTER software, the date of the enactment of this Act. SOFTWARE SOURCE CODE MAY BE PROVIDED.— ‘‘(C) the software shall be maintained in a se- PART II—EXAMINATION ACTIVITIES ‘‘(1) IN GENERAL.—Subsection (a)(1) shall not cure area or place, and, in the case of computer apply to any portion, item, or component of software source code, shall not be removed from SEC. 3411. UNIFORM APPLICATION OF CONFIDEN- TIALITY PRIVILEGE TO TAXPAYER computer software source code if— the owner’s place of business unless the owner COMMUNICATIONS WITH FEDERALLY ‘‘(A) the Secretary is unable to otherwise rea- permits, or a court orders, such removal, AUTHORIZED PRACTITIONERS. sonably ascertain the correctness of any item on ‘‘(D) the software may not be copied except as (a) IN GENERAL.—Chapter 77 (relating to mis- a return from— necessary to perform such analysis, and the Sec- cellaneous provisions) is amended by adding at ‘‘(i) the taxpayer’s books, papers, records, or retary shall number all copies made and certify the end the following new section: other data, or in writing that no other copies have been (or ‘‘(ii) the computer software executable code ‘‘SEC. 7525. UNIFORM APPLICATION OF CON- will be) made, FIDENTIALITY PRIVILEGE TO TAX- (and any modifications thereof) to which such ‘‘(E) at the end of the period during which the PAYER COMMUNICATIONS WITH FED- source code relates and any associated data software may be used under subparagraph (A)— ERALLY AUTHORIZED PRACTITION- which, when executed, produces the output to ‘‘(i) the software and all copies thereof shall ERS. ascertain the correctness of the item, be returned to the person from whom they were ‘‘(a) GENERAL RULE.—With respect to tax ad- ‘‘(B) the Secretary identifies with reasonable obtained and any copies thereof made under vice, the same common law protections of con- specificity the portion, item, or component of subparagraph (D) on the hard drive of a ma- fidentiality which apply to a communication be- such source code needed to verify the correct- chine or other mass storage device shall be per- tween a taxpayer and an attorney shall also ness of such item on the return, and manently deleted, and apply to a communication between a taxpayer ‘‘(C) the Secretary determines that the need ‘‘(ii) the Secretary shall obtain from any per- and any federally authorized tax practitioner to for the portion, item, or component of such son who analyzes or otherwise had access to the extent the communication would be consid- source code with respect to such item outweighs such software a written certification under pen- ered a privileged communication if it were be- the risks of unauthorized disclosure of trade se- alty of perjury that all copies and related mate- tween a taxpayer and an attorney. crets. rials have been returned and that no copies ‘‘(b) LIMITATIONS.—Subsection (a) may only ‘‘(2) EXCEPTIONS.—Subsection (a)(1) shall not were made of them, be asserted in— apply to— ‘‘(F) the software may not be decompiled or ‘‘(1) any noncriminal tax matter before the In- ‘‘(A) any inquiry into any offense connected disassembled, and ternal Revenue Service, and with the administration or enforcement of the ‘‘(G) the Secretary shall provide to the tax- ‘‘(2) any noncriminal tax proceeding in Fed- internal revenue laws, payer and the owner of any interest in such eral court with respect to such matter. ‘‘(B) any computer software source code de- software, as the case may be, a written agree- ‘‘(c) DEFINITIONS.—For purposes of this sec- veloped by the taxpayer or a related person for ment, between the Secretary and any person tion— internal use by the taxpayer or such person, or who is not an officer or employee of the United ‘‘(1) FEDERALLY AUTHORIZED TAX PRACTI- ‘‘(C) any communications between the owner States and who will analyze or otherwise have TIONER.—The term ‘federally authorized tax of the source code and the taxpayer or related access to such software, which provides that practitioner’ means any individual who is au- persons. such person agrees not to— thorized under Federal law to practice before ‘‘(3) COOPERATION REQUIRED.—For purposes ‘‘(i) disclose such software to any person other the Internal Revenue Service if such practice is of paragraph (1), the Secretary shall be treated than authorized employees or agents of the Sec- subject to Federal regulation under section 330 as meeting the requirements of subparagraphs retary during and after employment by the Sec- of title 31, United States Code. (A) and (B) of such paragraph if— retary, or ‘‘(2) TAX ADVICE.—The term ‘tax advice’ ‘‘(A) the Secretary determines that it is not ‘‘(ii) participate for 2 years in the development means advice given by an individual with re- feasible to determine the correctness of an item of software which is intended for a similar pur- spect to a matter which is within the scope of without access to the computer software execut- pose as the software examined. the individual’s authority to practice described able code and associated data described in para- in paragraph (1).’’ graph (1)(A)(ii), For purposes of subparagraph (C), the owner (b) CONFORMING AMENDMENT.—The table of ‘‘(B) the Secretary makes a formal request to shall make available any necessary equipment sections for such chapter 77 is amended by add- the taxpayer for such code and data and to the or materials for analysis of computer software ing at the end the following new item: owner of the computer software source code for source code required to be conducted on the owner’s premises. The owner of any interest in ‘‘Sec. 7525. Uniform application of confidential- such executable code, and ‘‘(C) such code and data is not provided with- the software shall be considered a party to any ity privilege to taxpayer commu- agreement described in subparagraph (G). nications with federally author- in 180 days of such request. ‘‘(4) RIGHT TO CONTEST SUMMONS.—In any ‘‘(d) DEFINITIONS.—For purposes of this sec- ized practitioners.’’ proceeding brought under section 7604 to enforce tion— (c) EFFECTIVE DATE.—The amendments made a summons issued under the authority of this ‘‘(1) SOFTWARE.—The term ‘software’ includes by this section shall apply to communications subsection, the court shall, at the request of any computer software source code and computer made on or after the date of the enactment of party, hold a hearing to determine whether the software executable code. this Act. applicable requirements of this subsection have ‘‘(2) COMPUTER SOFTWARE SOURCE CODE.—The SEC. 3412. LIMITATION ON FINANCIAL STATUS been met. term ‘computer software source code’ means— AUDIT TECHNIQUES. ‘‘(c) SAFEGUARDS TO ENSURE PROTECTION OF ‘‘(A) the code written by a programmer using Section 7602 (relating to examination of books TRADE SECRETS AND OTHER CONFIDENTIAL IN- a programming language which is comprehen- and witnesses) is amended by adding at the end FORMATION.— sible to appropriately trained persons, is not ma- the following new subsection: ‘‘(1) ENTRY OF PROTECTIVE ORDER.—In any chine readable, and is not capable of directly ‘‘(d) LIMITATION ON EXAMINATION ON UNRE- court proceeding to enforce a summons for any being used to give instructions to a computer, PORTED INCOME.—The Secretary shall not use portion of software, the court may receive evi- ‘‘(B) related programmers’ notes, design docu- financial status or economic reality examination dence and issue any order necessary to prevent ments, memoranda, and similar documentation, techniques to determine the existence of unre- the disclosure of trade secrets or other confiden- and ported income of any taxpayer unless the Sec- tial information with respect to such software, ‘‘(C) related customer communications. retary has a reasonable indication that there is including –requiring that any information be ‘‘(3) COMPUTER SOFTWARE EXECUTABLE a likelihood of such unreported income.’’ placed under seal to be opened only as directed CODE.—The term ‘computer software executable SEC. 3413. SOFTWARE TRADE SECRETS PROTEC- by the court. code’ means— TION. ‘‘(2) PROTECTION OF SOFTWARE.—Notwith- ‘‘(A) any object code, machine code, or other (a) IN GENERAL.—Subchapter A of chapter 78 standing any other provision of this section, code readable by a computer when loaded into (relating to examination and inspection) is and in addition to any protections ordered pur- its memory and used directly by such computer amended by redesignating section 7612 as sec- suant to paragraph (1), in the case of software to execute instructions, and tion 7613 and by inserting after 7611 the follow- that comes into the possession or control of the ‘‘(B) any related user manuals. ing: Secretary in the course of any examination with ‘‘(4) OWNER.—The term ‘owner’ shall, with re- ‘‘SEC. 7612. SPECIAL PROCEDURES FOR SUM- respect to any taxpayer— spect to any software, include the developer of MONSES FOR COMPUTER SOFTWARE. ‘‘(A) the software may be used only in connec- the software. ‘‘(a) GENERAL RULE.—For purposes of this tion with the examination of such taxpayer’s re- ‘‘(5) RELATED PERSON.—A person shall be title— turn, any appeal by the taxpayer to the Inter- treated as related to another person if such per- ‘‘(1) except as provided in subsection (b), no nal Revenue Service Office of Appeals, any judi- sons are related persons under section 267 or summons may be issued under this title, and the cial proceeding (and any appeals therefrom), 707(b).’’ Secretary may not begin any action under sec- and any inquiry into any offense connected (b) UNAUTHORIZED DISCLOSURE OF SOFT- tion 7604 to enforce any summons, to produce or with the administration or enforcement of the WARE.—Section 7213 (relating to unauthorized analyze any computer software source code, and internal revenue laws, disclosure of information) is amended by redes- ‘‘(2) any software and related materials which ‘‘(B) the Secretary shall provide, in advance, ignating subsection (d) as subsection (e) and by are provided to the Secretary under this title to the taxpayer and the owner of the software inserting after subsection (c) the following: May 4, 1998 CONGRESSIONAL RECORD — SENATE S4165

‘‘(d) DISCLOSURE OF SOFTWARE.—Any person ‘‘(B) issued to determine whether or not ‘‘(A) any mutual savings bank, cooperative who willfully divulges or makes known software records of the business transactions or affairs of bank, domestic building and loan association, or (as defined in section 7612(d)(1)) to any person an identified person have been made or kept, other savings institution chartered and super- in violation of section 7612 shall be guilty of a ‘‘(C) issued solely to determine the identity of vised as a savings and loan or similar associa- felony and, upon conviction thereof, shall be any person having a numbered account (or simi- tion under Federal or State law, any bank (as fined not more than $5,000, or imprisoned not lar arrangement) with a bank or other institu- defined in section 581), or any credit union more than 5 years, or both, together with the tion described in section 7603(b)(2)(A), (within the meaning of section 501(c)(14)(A)); costs of prosecution.’’ ‘‘(D) issued in aid of the collection of— ‘‘(B) any consumer reporting agency (as de- (c) APPLICATION OF SPECIAL PROCEDURES FOR ‘‘(i) an assessment made or judgment rendered fined under section 603(f) of the Fair Credit Re- THIRD-PARTY SUMMONSES.—Paragraph (2) of against the person with respect to whose liabil- porting Act (15 U.S.C. 1681a(f))); section 7603(b), as amended by section 3416(a), is ity the summons is issued, or ‘‘(C) any person extending credit through the ‘‘(ii) the liability at law or in equity of any amended by striking ‘‘and’’ at the end of sub- use of credit cards or similar devices; transferee or fiduciary of any person referred to paragraph (H), by striking a period at the end ‘‘(D) any broker (as defined in section 3(a)(4) in clause (i), of subparagraph (I) and inserting ‘‘, and’’, and ‘‘(E)(i) issued by a criminal investigator of the of the Securities Exchange Act of 1934 (15 U.S.C. by adding at the end the following: Internal Revenue Service in connection with the 78c(a)(4))); ‘‘(J) any owner or developer of a computer investigation of an offense connected with the ‘‘(E) any attorney; software source code (as defined in section administration or enforcement of the internal ‘‘(F) any accountant; 7612(d)(2)). revenue laws, and ‘‘(G) any barter exchange (as defined in sec- Subparagraph (J) shall apply only with respect ‘‘(ii) served on any person who is not a third- tion 6045(c)(3)); to a summons requiring the production of the party recordkeeper (as defined in section ‘‘(H) any regulated investment company (as source code referred to in subparagraph (J) or 7603(b)), or defined in section 851) and any agent of such the program and data described in section ‘‘(F) described in subsection (f) or (g). regulated investment company when acting as 7612(b)(1)(A)(ii) to which such source code re- ‘‘(3) RECORDS.—For purposes of this section, an agent thereof, and lates.’’ the term ‘records’ includes books, papers, and ‘‘(I) any enrolled agent.’’ (d) CONFORMING AMENDMENT.—The table of other data.’’ (b) EFFECTIVE DATE.—The amendment made sections for subchapter A of chapter 78 is (3) Paragraph (2) of section 7609(e) is amended by this section shall apply to summonses served amended by striking the item relating to section by striking ‘‘third-party recordkeeper’s’’ and all after the date of the enactment of this Act. 7612 and by inserting the following: that follows through ‘‘subsection (f)’’ and in- SEC. 3417. PROHIBITION ON IRS CONTACT OF serting ‘‘summoned party’s response to the sum- ‘‘Sec. 7612. Special procedures for summonses for THIRD PARTIES WITHOUT PRIOR NO- mons’’. TICE. computer software. (4) Subsection (f) of section 7609 is amended— (a) IN GENERAL.—Section 7602 (relating to ex- ‘‘Sec. 7613. Cross references.’’ (A) by striking ‘‘described in subsection (c)’’ amination of books and witnesses), as amended (e) EFFECTIVE DATE.— and inserting ‘‘described in subsection (c)(1)’’, by section 3412, is amended by redesignating (1) IN GENERAL.—The amendments made by and subsections (c) and (d) as subsections (d) and this section shall apply to summonses issued, (B) by inserting ‘‘or testimony’’ after (e), respectively, and by inserting after sub- and software acquired, after the date of the en- ‘‘records’’ in paragraph (3). section (b) the following new subsection: (5) Subsection (g) of section 7609 is amended actment of this Act. ‘‘(c) LIMITATION OF AUTHORITY TO CONTACT by striking ‘‘In the case of any summons de- (2) SOFTWARE PROTECTION.—In the case of THIRD PARTIES.—An officer or employee of the scribed in subsection (c), the provisions of sub- any software acquired on or before such date of Internal Revenue Service may not contact any sections (a)(1) and (b) shall not apply if’’ and enactment, the requirements of section 7612(a)(2) person other than the taxpayer with respect to inserting ‘‘A summons is described in this sub- of the Internal Revenue Code of 1986 (as added the determination or collection of the tax liabil- section if’’. by such amendments) shall apply after the 90th ity of such taxpayer without providing reason- (6)(A) Subsection (i) of section 7609 is amend- day after such date. The preceding sentence able notice to the taxpayer that such contact ed by striking ‘‘THIRD-PARTY RECORDKEEPER shall not apply to the requirement under section will be made. This subsection shall not apply— 7612(c)(2)(G)(ii) of such Code (as so added). AND’’ in the subsection heading. (B) Paragraph (1) of section 7609(i) is amend- ‘‘(1) to any contact which the taxpayer has SEC. 3414. THREAT OF AUDIT PROHIBITED TO CO- ed by striking ‘‘described in subsection (c), the authorized, ERCE TIP REPORTING ALTERNATIVE ‘‘(2) if the Secretary determines for good cause COMMITMENT AGREEMENTS. third-party recordkeeper’’ and inserting ‘‘to which this section applies for the production of shown that such notice would jeopardize collec- The Secretary of the Treasury or the Sec- tion of any tax, or retary’s delegate shall instruct employees of the records, the summoned party’’. (C) Paragraph (2) of section 7609(i) is amend- ‘‘(3) with respect to any pending criminal in- Internal Revenue Service that they may not ed— vestigation.’’ threaten to audit any taxpayer in an attempt to (i) by striking ‘‘RECORDKEEPER’’ in the head- (b) EFFECTIVE DATE.—The amendments made coerce the taxpayer into entering into a Tip Re- ing and inserting ‘‘SUMMONED PARTY’’, and by this section shall apply to contacts made porting Alternative Commitment Agreement. (ii) by striking ‘‘the third-party recordkeeper’’ after the 180th day after the date of the enact- SEC. 3415. TAXPAYERS ALLOWED MOTION TO and inserting ‘‘the summoned party’’. ment of this Act. QUASH ALL THIRD-PARTY SUM- (D) Paragraph (3) of section 7609(i) is amend- PART III—COLLECTION ACTIVITIES MONSES. ed to read as follows: (a) IN GENERAL.—Paragraph (1) of section ‘‘(3) PROTECTION FOR SUMMONED PARTY WHO Subpart A—Approval Process 7609(a) (relating to summonses to which section DISCLOSES.—Any summoned party, or agent or SEC. 3421. APPROVAL PROCESS FOR LIENS, LEV- applies) is amended by striking so much of such employee thereof, making a disclosure of records IES, AND SEIZURES. paragraph as precedes ‘‘notice of the summons’’ or testimony pursuant to this section in good (a) IN GENERAL.—The Commissioner of Inter- and inserting the following: faith reliance on the certificate of the Secretary nal Revenue shall develop and implement proce- ‘‘(1) IN GENERAL.—If any summons to which or an order of a court requiring production of dures under which— this section applies requires the giving of testi- records or the giving of such testimony shall not (1) a determination by an employee to file a mony on, or the production of any portion of be liable to any customer or other person for notice of lien or levy with respect to, or to levy records made or kept on, any person (other than such disclosure.’’ or seize, any property or right to property the person summoned) who is identified in the (c) EFFECTIVE DATE.—The amendments made would, where appropriate, be required to be re- summons, then’’. by this section shall apply to summonses served viewed by a supervisor of the employee before (b) CONFORMING AMENDMENTS.— after the date of the enactment of this Act. the action was taken, and (1) Subsection (a) of section 7609 is amended SEC. 3416. SERVICE OF SUMMONSES TO THIRD- (2) appropriate disciplinary action would be by striking paragraphs (3) and (4), by redesig- PARTY RECORDKEEPERS PER- taken against the employee or supervisor where nating paragraph (5) as paragraph (3), and by MITTED BY MAIL. the procedures under paragraph (1) were not striking in paragraph (3) (as so redesignated) (a) IN GENERAL.—Section 7603 (relating to followed. ‘‘subsection (c)(2)(B)’’ and inserting ‘‘subsection service of summons) is amended by striking ‘‘A (b) REVIEW PROCESS.—The review process (c)(2)(D)’’. summons issued’’ and inserting ‘‘(a) IN GEN- under subsection (a)(1) may include a certifi- (2) Subsection (c) of section 7609 is amended to ERAL.—A summons issued’’ and by adding at cation that the employee has— read as follows: the end the following new subsection: (1) reviewed the taxpayer’s information, ‘‘(c) SUMMONS TO WHICH SECTION APPLIES.— ‘‘(b) SERVICE BY MAIL TO THIRD-PARTY REC- (2) verified that a balance is due, and ‘‘(1) IN GENERAL.—Except as provided in para- ORDKEEPERS.— (3) affirmed that the action proposed to be graph (2), this section shall apply to any sum- ‘‘(1) IN GENERAL.—A summons referred to in taken is appropriate given the taxpayer’s cir- mons issued under paragraph (2) of section subsection (a) for the production of books, pa- cumstances, considering the amount due and 7602(a) or under section 6420(e)(2), 6421(g)(2), or pers, records, or other data by a third-party rec- the value of the property or right to property. 6427(j)(2). ordkeeper may also be served by certified or reg- ‘‘(2) EXCEPTIONS.—This section shall not istered mail to the last known address of such Subpart B—Liens and Levies apply to any summons— recordkeeper. SEC. 3431. MODIFICATIONS TO CERTAIN LEVY EX- ‘‘(A) served on the person with respect to ‘‘(2) THIRD-PARTY RECORDKEEPER.—For pur- EMPTION AMOUNTS. whose liability the summons is issued, or any of- poses of paragraph (1), the term ‘third-party (a) FUEL, ETC.—Section 6334(a)(2) (relating to ficer or employee of such person, recordkeeper’ means— fuel, provisions, furniture, and personal effects) S4166 CONGRESSIONAL RECORD — SENATE May 4, 1998 is amended by striking ‘‘$2,500’’ and inserting ‘‘(ii) any proceeding relating to a proceeding (2) by striking ‘‘, evidenced by a passbook,’’, ‘‘$10,000’’. under such paragraph. and (b) BOOKS, ETC.—Section 6334(a)(3) (relating ‘‘(B) AUTHORITY TO ENJOIN.—Notwithstanding (3) by striking all that follows ‘‘secured by to books and tools of a trade, business, or pro- section 7421(a), a levy or collection proceeding such account’’ and inserting a period. fession) is amended by striking ‘‘$1,250’’ and in- prohibited by this subsection may be enjoined (c) EFFECTIVE DATE.—The amendments made serting ‘‘$5,000’’. (during the period such prohibition is in force) by this section shall take effect on the date of (c) CONFORMING AMENDMENT .—Section by the court in which the proceeding under the enactment of this Act. 6334(g)(1) (relating to inflation adjustment) is paragraph (1) is brought. SEC. 3436. WAIVER OF EARLY WITHDRAWAL TAX amended— ‘‘(5) SUSPENSION OF STATUTE OF LIMITATIONS FOR IRS LEVIES ON EMPLOYER- (1) by striking ‘‘1997’’ and inserting ‘‘1999’’, ON COLLECTION.—The period of limitations SPONSORED RETIREMENT PLANS OR and under section 6502 shall be suspended for the pe- IRAS. (2) by striking ‘‘1996’’ in subparagraph (B) riod during which the Secretary is prohibited (a) IN GENERAL.—Section 72(t)(2)(A) (relating and inserting ‘‘1998’’. under this subsection from making a levy. to subsection not to apply to certain distribu- (d) EFFECTIVE DATE.—The amendments made ‘‘(6) PENDENCY OF PROCEEDING.—For purposes tions) is amended by striking ‘‘or’’ at the end of by this section shall take effect with respect to of this subsection, a proceeding is pending be- clauses (iv) and (v), by striking the period at the levies issued after the date of the enactment of ginning on the date such proceeding commences end of clause (vi) and inserting ‘‘, or’’, and by this Act. and ending on the date the decision in such pro- adding at the end the following new clause: ‘‘(vii) made on account of a levy under section SEC. 3432. RELEASE OF LEVY UPON AGREEMENT ceeding becomes final.’’ THAT AMOUNT IS UNCOLLECTIBLE. (b) EFFECTIVE DATE.—The amendment made 6331 on the qualified retirement plan.’’ (b) EFFECTIVE DATE.—The amendments made (a) IN GENERAL.—Section 6343 (relating to au- by this section shall apply to unpaid tax attrib- thority to release levy and return property) is utable to taxable periods beginning after Decem- by this section shall apply to levies made after amended by adding at the end the following ber 31, 1998. the date of the enactment of this Act. new subsection: SEC. 3434. APPROVAL REQUIRED FOR JEOPARDY Subpart C—Seizures AND TERMINATION ASSESSMENTS ‘‘(e) IMMEDIATE RELEASE OF LEVY UPON SEC. 3441. PROHIBITION OF SALES OF SEIZED AND JEOPARDY LEVIES. AGREEMENT THAT AMOUNT IS NOT COLLECT- PROPERTY AT LESS THAN MINIMUM (a) IN GENERAL.—Paragraph (1) of section IBLE.—In the case of a levy on the salary or BID. 7429(a) (relating to review of jeopardy levy or wages payable to or received by the taxpayer, (a) IN GENERAL.—Section 6335(e)(1)(A)(i) (re- upon agreement with the taxpayer that the tax assessment procedures) is amended to read as lating to determinations relating to minimum is not collectible, the Secretary shall imme- follows: price) is amended by striking ‘‘a minimum price ‘‘(1) ADMINISTRATIVE REVIEW.— diately release such levy before any intervening for which such property shall be sold’’ and in- ‘‘(A) PRIOR APPROVAL REQUIRED.—No assess- salary or wage payment period.’’ serting ‘‘a minimum price below which such ment may be made under section 6851(a), (b) EFFECTIVE DATE.—The amendment made property shall not be sold’’. 6852(a), 6861(a), or 6862, and no levy may be by this section shall apply to levies imposed (b) REFERENCE TO PENALTY FOR VIOLATION.— made under section 6331(a) less than 30 days after the date of the enactment of this Act. Section 6335(e) is amended by adding at the end after notice and demand for payment is made, the following new paragraph: SEC. 3433. LEVY PROHIBITED DURING PENDENCY unless the Chief Counsel for the Internal Reve- ‘‘(4) CROSS REFERENCE.— OF REFUND PROCEEDINGS. nue Service (or such Counsel’s delegate) person- (a) IN GENERAL.—Section 6331 (relating to levy ally approves (in writing) such assessment or ‘‘For provision providing for civil damages and distraint) is amended by redesignating sub- levy. for violation of paragraph (1)(A)(i), see sec- section (i) as subsection (j) and by inserting ‘‘(B) INFORMATION TO TAXPAYER.—Within 5 tion 7433.’’ after subsection (h) the following new sub- days after the day on which such an assessment SEC. 3442. ACCOUNTING OF SALES OF SEIZED section: or levy is made, the Secretary shall provide the PROPERTY. ‘‘(i) NO LEVY DURING PENDENCY OF PROCEED- taxpayer with a written statement of the infor- (a) IN GENERAL.—Section 6340 (relating to INGS FOR REFUND OF DIVISIBLE TAX.— mation upon which the Secretary relied in mak- records of sale) is amended— ‘‘(1) IN GENERAL.—No levy may be made under ing such assessment or levy.’’ (1) in subsection (a)— subsection (a) on the property or rights to prop- (b) EFFECTIVE DATE.—The amendment made (A) by striking ‘‘real’’, and erty of any person with respect to any unpaid by this section shall apply to taxes assessed and (B) by inserting ‘‘or certificate of sale of per- divisible tax during the pendency of any pro- levies made after the date of the enactment of sonal property’’ after ‘‘deed’’, and ceeding brought by such person in a proper this Act. (2) by adding at the end the following new court for the recovery of any portion of such di- SEC. 3435. INCREASE IN AMOUNT OF CERTAIN subsection: visible tax which was paid by such person if— PROPERTY ON WHICH LIEN NOT ‘‘(c) ACCOUNTING TO TAXPAYER.—The tax- ‘‘(A) the decision in such proceeding would be VALID. payer with respect to whose liability the sale res judicata with respect to such unpaid tax, or (a) CERTAIN PROPERTY.— was conducted or who redeemed the property ‘‘(B) such person would be collaterally es- (1) IN GENERAL.—Subsection (b) of section 6323 shall be furnished— topped from contesting such unpaid tax by rea- (relating to validity and priority against certain ‘‘(1) the record under subsection (a) (other son of such proceeding. persons) is amended— than the names of the purchasers), ‘‘(2) DIVISIBLE TAX.—For purposes of para- (A) by striking ‘‘$250’’ in paragraph (4) (relat- ‘‘(2) the amount from such sale applied to the graph (1), the term ‘divisible tax’ means— ing to personal property purchased in casual taxpayer’s liability, and ‘‘(A) any tax imposed by subtitle C, and sale) and inserting ‘‘$1,000’’, and ‘‘(3) the remaining balance of such liability.’’ ‘‘(B) the penalty imposed by section 6672 with (B) by striking ‘‘$1,000’’ in paragraph (7) (re- (b) EFFECTIVE DATE.—The amendments made respect to any such tax. lating to residential property subject to a me- by this section shall apply to seizures occurring ‘‘(3) EXCEPTIONS.— chanic’s lien for certain repairs and improve- after the date of the enactment of this Act. ‘‘(A) CERTAIN UNPAID TAXES.—This subsection ments) and inserting ‘‘$5,000’’. SEC. 3443. UNIFORM ASSET DISPOSAL MECHA- shall not apply with respect to any unpaid tax (2) INFLATION ADJUSTMENT.—Subsection (i) of NISM. if— section 6323 (relating to special rules) is amend- Not later than the date which is 2 years after ‘‘(i) the taxpayer files a written notice with ed by adding at the end the following new para- the date of the enactment of this Act, the Sec- the Secretary which waives the restriction im- graph: retary of the Treasury or the Secretary’s dele- posed by this subsection on levy with respect to ‘‘(4) COST-OF-LIVING ADJUSTMENT.—In the gate shall implement a uniform asset disposal such tax, or case of notices of liens imposed by section 6321 mechanism for sales under section 6335 of the ‘‘(ii) the Secretary finds that the collection of which are filed in any calendar year after 1998, Internal Revenue Code of 1986. The mechanism such tax is in jeopardy. each of the dollar amounts under paragraph (4) should be designed to remove any participation ‘‘(B) CERTAIN LEVIES.—This subsection shall or (7) of subsection (b) shall be increased by an in such sales by revenue officers of the Internal not apply to— amount equal to— Revenue Service and should consider the use of ‘‘(i) any levy to carry out an offset under sec- ‘‘(A) such dollar amount, multiplied by outsourcing. tion 6402, and ‘‘(B) the cost-of-living adjustment determined SEC. 3444. CODIFICATION OF IRS ADMINISTRA- ‘‘(ii) any levy which was first made before the under section 1(f)(3) for the calendar year, de- TIVE PROCEDURES FOR SEIZURE OF date that the applicable proceeding under this termined by substituting ‘calendar year 1996’ for TAXPAYER’S PROPERTY. subsection commenced. ‘calendar year 1992’ in subparagraph (B) there- (a) IN GENERAL.—Section 6331 (relating to levy ‘‘(4) LIMITATION ON COLLECTION ACTIVITY; AU- of. and distraint), as amended by section 3401(c), is THORITY TO ENJOIN COLLECTION.— If any amount as adjusted under the preceding amended by inserting after subsection (c) the ‘‘(A) LIMITATION ON COLLECTION.—No pro- sentence is not a multiple of $10, such amount following new subsection: ceeding in court for the collection of any unpaid shall be rounded to the nearest multiple of $10.’’ ‘‘(d) NO LEVY BEFORE INVESTIGATION OF STA- tax to which paragraph (1) applies shall be (b) EXPANSION OF TREATMENT OF PASSBOOK TUS OF PROPERTY.— begun by the Secretary during the pendency of LOANS.—Paragraph (10) of section 6323(b) is ‘‘(1) IN GENERAL.—For purposes of applying a proceeding under such paragraph. This sub- amended— the provisions of this subchapter, no levy may paragraph shall not apply to— (1) by striking ‘‘PASSBOOK LOANS’’ in the be made on any property or right to property ‘‘(i) any counterclaim in a proceeding under heading and inserting ‘‘DEPOSIT-SECURED until a thorough investigation of the status of such paragraph, or LOANS’’, such property has been completed. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4167

‘‘(2) ELEMENTS IN INVESTIGATION.—For pur- (1) IN GENERAL.—The amendments made by (1) IN GENERAL.—Section 7122 (relating to com- poses of paragraph (1), an investigation of the this section shall apply to requests to extend the promises), as amended by subsection (a), is status of any property shall include— period of limitations made after the date of the amended by adding at the end the following: ‘‘(A) a verification of the taxpayer’s liability, enactment of this Act. ‘‘(d) ADMINISTRATIVE REVIEW.—The Secretary ‘‘(B) the completion of an analysis under sub- (2) PRIOR REQUEST.—If, in any request to ex- shall establish procedures— section (f), tend the period of limitations made on or before ‘‘(1) for an independent administrative review ‘‘(C) the determination that the equity in such the date of the enactment of this Act, a tax- of any rejection of a proposed offer-in-com- property is sufficient to yield net proceeds from payer agreed to extend such period beyond the promise or installment agreement made by a tax- the sale of such property to apply to such liabil- 10-year period referred to in section 6502(a) of payer under this section or section 6159 before ity, and the Internal Revenue Code of 1986, such exten- such rejection is communicated to the taxpayer, ‘‘(D) a thorough consideration of alternative sion shall expire on the later of— and collection methods.’’ (A) the last day of such 10-year period, or ‘‘(2) which allow a taxpayer to appeal any re- (b) EFFECTIVE DATE.—The amendments made (B) the date which is 180 days after such date jection of such offer or agreement to the Inter- by this section shall take effect on the date of of the enactment. nal Revenue Service Office of Appeals.’’ the enactment of this Act. SEC. 3462. OFFERS-IN-COMPROMISE. (2) CONFORMING AMENDMENT.—Section 6159 (relating to installment agreements) is amended SEC. 3445. PROCEDURES FOR SEIZURE OF RESI- (a) STANDARDS FOR EVALUATION OF OFFERS- by adding at the end the following new sub- DENCES AND BUSINESSES. IN-COMPROMISE.—Section 7122 (relating to of- (a) IN GENERAL.—Section 6334(a)(13) (relating fers-in-compromise) is amended by adding at the section: ‘‘(d) CROSS REFERENCE.— to property exempt from levy) is amended to end the following new subsection: read as follows: ‘‘(c) STANDARDS FOR EVALUATION OF OF- ‘‘For rights to administrative review and ‘‘(13) RESIDENCES EXEMPT IN SMALL DEFI- FERS.— appeal, see section 7122(d).’’ CIENCY CASES AND PRINCIPAL RESIDENCES AND ‘‘(1) IN GENERAL.—The Secretary shall pre- (d) PREPARATION OF STATEMENT RELATING TO CERTAIN BUSINESS ASSETS EXEMPT IN ABSENCE OF scribe guidelines for officers and employees of OFFERS-IN-COMPROMISE.—The Secretary of the CERTAIN APPROVAL OR JEOPARDY.— the Internal Revenue Service to determine Treasury shall prepare a statement which sets ‘‘(A) RESIDENCES IN SMALL DEFICIENCY whether an offer-in-compromise is adequate. forth in simple, nontechnical terms the rights of CASES.—If the amount of the levy does not ex- ‘‘(2) ALLOWANCES FOR BASIC LIVING EX- a taxpayer and the obligations of the Internal ceed $5,000, any real property used as a resi- PENSES.— Revenue Service relating to offers-in-com- dence by the taxpayer or any other individual. ‘‘(A) IN GENERAL.—In prescribing guidelines promise. Such statement shall— ‘‘(B) PRINCIPAL RESIDENCES AND CERTAIN BUSI- under paragraph (1), the Secretary shall develop (1) advise taxpayers who have entered into a NESS ASSETS.—Except to the extent provided in and publish schedules of national and local al- compromise of the advantages of promptly noti- subsection (e), the principal residence of the lowances designed to provide that taxpayers en- fying the Internal Revenue Service of any taxpayer (within the meaning of section 121), tering into a compromise have an adequate change of address or marital status, and assets used in the trade or business of an means to provide for basic living expenses. (2) provide notice to taxpayers that in the case individual taxpayer.’’ ‘‘(B) USE OF SCHEDULES.—The guidelines shall of a compromise terminated due to the actions of (b) CONFORMING AMENDMENTS.—Section provide that officers and employees of the Inter- 1 spouse or former spouse, the Internal Revenue 6334(e) is amended— nal Revenue Service shall determine, on the Service will, upon application, reinstate such (1) by striking ‘‘subsection (a)(13)’’ and insert- basis of the facts and circumstances of each tax- compromise with the spouse or former spouse ing ‘‘subsection (a)(13)(B)’’, payer, whether the use of the schedules pub- who remains in compliance with such com- (2) by adding at the end the following new lished under subparagraph (A) is appropriate promise, and flush sentence: and shall not use the schedules to the extent (3) provide notice to the taxpayer that the tax- ‘‘An official may not approve a levy under such use would result in the taxpayer not hav- payer may appeal the rejection of an offer-in- paragraph (1) unless the official determines that ing adequate means to provide for basic living compromise to the Internal Revenue Service Of- the taxpayer’s other assets subject to collection expenses. fice of Appeals. are insufficient to pay the amount due, together ‘‘(3) SPECIAL RULES RELATING TO TREATMENT (e) EFFECTIVE DATES.— N GENERAL with expenses of the proceedings.’’, and OF OFFERS.—The guidelines under paragraph (1) (1) I .—The amendments made by (3) by inserting ‘‘AND CERTAIN BUSINESS AS- shall provide that— this section shall apply to proposed offers-in- SETS’’ after ‘‘PRINCIPAL RESIDENCE’’ in the ‘‘(A) an officer or employee of the Internal compromise and installment agreements submit- heading. Revenue Service shall not reject an offer-in-com- ted after the date of the enactment of this Act. (2) SUSPENSION OF COLLECTION BY LEVY.—The (c) EFFECTIVE DATE.—The amendments made promise from a low-income taxpayer solely on by this section shall take effect on the date of the basis of the amount of the offer, and amendment made by subsection (b) shall apply the enactment of this Act. ‘‘(B) in the case of an offer-in-compromise to offers-in-compromise pending on or made which relates only to issues of liability of the after the 60th day after the date of the enact- PART IV—PROVISIONS RELATING TO EX- ment of this Act. AMINATION AND COLLECTION ACTIVI- taxpayer— SEC. 3463. NOTICE OF DEFICIENCY TO SPECIFY TIES ‘‘(i) such offer shall not be rejected solely because the Secretary is unable to locate the tax- DEADLINES FOR FILING TAX COURT SEC. 3461. PROCEDURES RELATING TO EXTEN- PETITION. payer’s return or return information for ver- SIONS OF STATUTE OF LIMITATIONS (a) IN GENERAL.—The Secretary of the Treas- ification of such liability, and BY AGREEMENT. ury or the Secretary’s delegate shall include on ‘‘(ii) the taxpayer shall not be required to pro- (a) REPEAL OF AUTHORITY TO EXTEND 10- each notice of deficiency under section 6212 of vide a financial statement.’’ YEAR COLLECTION PERIOD AFTER ASSESSMENT.— the Internal Revenue Code of 1986 the date de- (b) LEVY PROHIBITED WHILE OFFER-IN-COM- Section 6502(a) (relating to length of period after termined by such Secretary (or delegate) as the PROMISE PENDING.—Section 6331 (relating to collection) is amended— last day on which the taxpayer may file a peti- levy and distraint), as amended by section 3433, (1) by striking paragraph (2) and inserting: tion with the Tax Court. is amended by redesignating subsection (j) as ‘‘(2) if there is a release of levy under section (b) LATER FILING DEADLINES SPECIFIED ON subsection (k) and by inserting after subsection 6343 after such 10-year period, prior to the expi- NOTICE OF DEFICIENCY TO BE BINDING.—Sub- (i) the following new subsection: ration of any period for collection agreed upon section (a) of section 6213 (relating to restric- ‘‘(j) NO LEVY WHILE CERTAIN OFFERS PEND- in writing by the Secretary and the taxpayer be- tions applicable to deficiencies; petition to Tax ING.— fore such release.’’, and Court) is amended by adding at the end the fol- ‘‘(1) OFFER IN COMPROMISE PENDING.—No levy (2) by striking the first sentence in the matter lowing new sentence: ‘‘Any petition filed with may be made under subsection (a) on the prop- following paragraph (2). the Tax Court on or before the last date speci- erty or rights to property of any person with re- (b) NOTICE TO TAXPAYER OF RIGHT TO REFUSE fied for filing such petition by the Secretary in spect to any unpaid tax— OR LIMIT EXTENSION.—Paragraph (4) of section the notice of deficiency shall be treated as time- ‘‘(A) during the period that an offer by such 6501(c) (relating to the period for limitations on ly filed.’’ person in compromise under section 7122 of such assessment and collection) is amended— (c) EFFECTIVE DATE.—Subsection (a) and the (1) by striking ‘‘Where’’ and inserting the fol- unpaid tax is pending with the Secretary, and amendment made by subsection (b) shall apply lowing: ‘‘(B) if such offer is rejected by the Secretary, to notices mailed after December 31, 1998. ‘‘(A) IN GENERAL.—Where’’, and during the 30 days thereafter (and, if an appeal of such rejection is filed within such 30 days, SEC. 3464. REFUND OR CREDIT OF OVERPAY- (2) by adding at the end the following new MENTS BEFORE FINAL DETERMINA- subparagraph: during the period that such appeal is pending). TION. ‘‘(B) NOTICE TO TAXPAYER OF RIGHT TO For purposes of subparagraph (A), an offer is (a) TAX COURT PROCEEDINGS.—Subsection (a) REFUSE OR LIMIT EXTENSION.—The Secretary pending beginning on the date the Secretary ac- of section 6213 is amended— shall notify the taxpayer of the taxpayer’s right cepts such offer for processing. (1) by striking ‘‘, including the Tax Court.’’ to refuse to extend the period of limitations, or ‘‘(2) CERTAIN RULES TO APPLY.—Rules similar and inserting ‘‘, including the Tax Court, and a to limit such extension to particular issues or to to the rules of paragraphs (3), (4), and (5) of refund may be ordered by such court of any a particular period of time, on each occasion subsection (i) shall apply for purposes of this amount collected within the period during when the taxpayer is requested to provide such subsection.’’ which the Secretary is prohibited from collecting consent.’’ (c) REVIEW OF REJECTIONS OF OFFERS-IN-COM- by levy or through a proceeding in court under (c) EFFECTIVE DATE.— PROMISE AND INSTALLMENT AGREEMENTS.— the provisions of this subsection.’’, and S4168 CONGRESSIONAL RECORD — SENATE May 4, 1998 (2) by striking ‘‘to enjoin any action or pro- ‘‘SEC. 6304. FAIR TAX COLLECTION PRACTICES. ‘‘(A) failed to file any return of tax imposed ceeding’’ and inserting ‘‘to enjoin any action or ‘‘(a) COMMUNICATION WITH THE TAXPAYER.— by subtitle A, proceeding or order any refund’’. Without the prior consent of the taxpayer given ‘‘(B) failed to pay any tax required to be (b) OTHER PROCEEDINGS.—Subsection (a) of directly to the Secretary or the express permis- shown on any such return, or section 6512 is amended by striking the period at sion of a court of competent jurisdiction, the ‘‘(C) entered into an installment agreement the end of paragraph (4) and inserting ‘‘, and’’, Secretary may not communicate with a taxpayer under this section for payment of any tax im- and by inserting after paragraph (4) the follow- in connection with the collection of any unpaid posed by subtitle A, ing new paragraphs: tax— ‘‘(3) the Secretary determines that the tax- ‘‘(5) As to any amount collected within the pe- ‘‘(1) at any unusual time or place or a time or payer is financially unable to pay such liability riod during which the Secretary is prohibited place known or which should be known to be in- in full when due (and the taxpayer submits such from making the assessment or from collecting convenient to the taxpayer; information as the Secretary may require to by levy or through a proceeding in court under ‘‘(2) if the Secretary knows the taxpayer is make such determination), the provisions of section 6213(a), and represented by any person authorized to prac- ‘‘(4) the agreement requires full payment of ‘‘(6) As to overpayments the Secretary is au- tice before the Internal Revenue Service with re- such liability within 3 years, and thorized to refund or credit pending appeal as spect to such unpaid tax and has knowledge of, ‘‘(5) the taxpayer agrees to comply with the provided in subsection (b).’’ or can readily ascertain, such person’s name provisions of this title for the period such agree- (c) REFUND OR CREDIT PENDING APPEAL.— and address, unless such person fails to respond ment is in effect.’’ Paragraph (1) of section 6512(b) is amended by within a reasonable period of time to a commu- (b) EFFECTIVE DATE.—The amendment made adding at the end the following new sentence: nication from the Secretary or unless such per- by this section shall take effect on the date of ‘‘If a notice of appeal in respect of the decision son consents to direct communication with the the enactment of this Act. of the Tax Court is filed under section 7483, the taxpayer; or Subtitle F—Disclosures to Taxpayers Secretary is authorized to refund or credit the ‘‘(3) at the taxpayer’s place of employment if SEC. 3501. EXPLANATION OF JOINT AND SEVERAL overpayment determined by the Tax Court to the the Secretary knows or has reason to know that LIABILITY. extent the overpayment is not contested on ap- the taxpayer’s employer prohibits the taxpayer (a) IN GENERAL.—The Secretary of the Treas- peal.’’ from receiving such communication. ury or the Secretary’s delegate shall, as soon as (d) EFFECTIVE DATE.—The amendments made In the absence of knowledge of circumstances to practicable, but not later than 180 days after the by this section shall take effect on the date of the contrary, the Secretary shall assume that date of the enactment of this Act, establish pro- the enactment of this Act. the convenient time for communicating with a cedures to clearly alert married taxpayers of SEC. 3465. IRS PROCEDURES RELATING TO AP- taxpayer is after 8 a.m. and before 9 p.m., local their joint and several liabilities on all appro- PEALS OF EXAMINATIONS AND COL- time at the taxpayer’s location. priate publications and instructions. LECTIONS. ‘‘(b) PROHIBITION OF HARASSMENT AND (b) RIGHT TO LIMIT LIABILITY.—The proce- (a) DISPUTE RESOLUTION PROCEDURES.— ABUSE.—The Secretary may not engage in any dures under subsection (a) shall include require- (1) IN GENERAL.—Chapter 74 (relating to clos- conduct the natural consequence of which is to ments that notice of an individual’s right to ing agreements and compromises) is amended by harass, oppress, or abuse any person in connec- limit joint and several liability under section redesignating section 7123 as section 7124 and by tion with the collection of any unpaid tax. 6015 of the Internal Revenue Code of 1986 shall inserting after section 7122 the following new Without limiting the general application of the be included in the statement required by section section: foregoing, the following conduct is a violation of 6227 of the Omnibus Taxpayer Bill of Rights ‘‘SEC. 7123. APPEALS DISPUTE RESOLUTION PRO- this subsection: (Internal Revenue Service Publication No. 1) CEDURES. ‘‘(1) The use or threat of use of violence or and in any collection-related notices. ‘‘(a) EARLY REFERRAL TO APPEALS PROCE- other criminal means to harm the physical per- SEC. 3502. EXPLANATION OF TAXPAYERS’ RIGHTS DURES.—The Secretary shall prescribe proce- son, reputation, or property of any person. IN INTERVIEWS WITH THE INTERNAL dures by which any taxpayer may request early ‘‘(2) The use of obscene or profane language REVENUE SERVICE. referral of 1 or more unresolved issues from the or language the natural consequence of which is The Secretary of the Treasury or the Sec- examination or collection division to the Inter- to abuse the hearer or reader. retary’s delegate shall, as soon as practicable, nal Revenue Service Office of Appeals. ‘‘(3) Causing a telephone to ring or engaging but not later than 180 days after the date of the ‘‘(b) ALTERNATIVE DISPUTE RESOLUTION PRO- any person in telephone conversation repeatedly enactment of this Act, revise the statement re- CEDURES.— or continuously with intent to annoy, abuse, or quired by section 6227 of the Omnibus Taxpayer ‘‘(1) MEDIATION.—The Secretary shall pre- harass any person at the called number. Bill of Rights (Internal Revenue Service Publi- scribe procedures under which a taxpayer or the ‘‘(4) Except as provided under rules similar to cation No. 1) to more clearly inform taxpayers of Internal Revenue Service Office of Appeals may the rules in section 804 of the Fair Debt Collec- their rights— request non-binding mediation on any issue un- tion Practices Act (15 U.S.C. 1692b), the place- (1) to be represented at interviews with the In- resolved at the conclusion of— ment of telephone calls without meaningful dis- ternal Revenue Service by any person author- ‘‘(A) appeals procedures, or closure of the caller’s identity. ized to practice before the Internal Revenue ‘‘(B) unsuccessful attempts to enter into a ‘‘(c) CIVIL ACTION FOR VIOLATIONS OF SEC- Service, and closing agreement under section 7121 or a com- TION.— (2) to suspend an interview pursuant to sec- promise under section 7122. ‘‘For civil action for violations of this section 7521(b)(2) of the Internal Revenue Code of ‘‘(2) ARBITRATION.—The Secretary shall estab- tion, see section 7433.’’ 1986. lish a pilot program under which a taxpayer (b) CLERICAL AMENDMENT.—The table of sec- SEC. 3503. DISCLOSURE OF CRITERIA FOR EXAM- and the Internal Revenue Service Office of Ap- tions for subchapter A of chapter 64 is amended INATION SELECTION. peals may jointly request binding arbitration on by inserting after the item relating to section (a) IN GENERAL.—The Secretary of the Treas- any issue unresolved at the conclusion of— 6303 the following new item: ury or the Secretary’s delegate shall, as soon as ‘‘(A) appeals procedures, or practicable, but not later than 180 days after the ‘‘(B) unsuccessful attempts to enter into a ‘‘Sec. 6304. Fair tax collection practices.’’ date of the enactment of this Act, incorporate closing agreement under section 7121 or a com- (c) EFFECTIVE DATE.—The amendments made into the statement required by section 6227 of promise under section 7122.’’ by this section shall take effect on the date of the Omnibus Taxpayer Bill of Rights (Internal (2) CONFORMING AMENDMENT.—The table of the enactment of this Act. Revenue Service Publication No. 1) a statement sections for chapter 74 is amended by striking SEC. 3467. GUARANTEED AVAILABILITY OF IN- which sets forth in simple and nontechnical the item relating to section 7123 and inserting STALLMENT AGREEMENTS. terms the criteria and procedures for selecting the following new items: (a) IN GENERAL.—Section 6159 (relating to taxpayers for examination. Such statement shall ‘‘Sec. 7123. Appeals dispute resolution proce- agreements for payment of tax liability in in- not include any information the disclosure of dures. stallments) is amended by redesignating sub- which would be detrimental to law enforcement, but shall specify the general procedures used by ‘‘Sec. 7124. Cross references.’’ section (c) as subsection (d) and by inserting after subsection (b) the following new sub- the Internal Revenue Service, including whether (b) APPEALS OFFICERS IN EACH STATE.—The section: taxpayers are selected for examination on the Commissioner of Internal Revenue shall ensure ‘‘(c) SECRETARY REQUIRED TO ENTER INTO IN- basis of information available in the media or on that an appeals officer is regularly available STALLMENT AGREEMENTS IN CERTAIN CASES.—In the basis of information provided to the Internal within each State. the case of a liability for tax of an individual Revenue Service by informants. (c) APPEALS VIDEOCONFERENCING ALTER- under subtitle A, the Secretary shall enter into (b) TRANSMISSION TO COMMITTEES OF CON- NATIVE FOR RURAL AREAS.—The Commissioner an agreement to accept the payment of such tax GRESS.—The Secretary shall transmit drafts of of Internal Revenue shall consider the use of the in installments if, as of the date the individual the statement required under subsection (a) (or videoconferencing of appeals conferences be- offers to enter into the agreement— proposed revisions to any such statement) to the tween appeals officers and taxpayers seeking ‘‘(1) the aggregate amount of such liability Committee on Ways and Means of the House of appeals in rural or remote areas. (determined without regard to interest, pen- Representatives and the Committee on Finance SEC. 3466. APPLICATION OF CERTAIN FAIR DEBT alties, additions to the tax, and additional of the Senate on the same day. COLLECTION PROCEDURES. amounts) does not exceed $10,000, SEC. 3504. EXPLANATIONS OF APPEALS AND COL- (a) IN GENERAL.—Subchapter A of chapter 64 ‘‘(2) the taxpayer (and, if such liability relates LECTION PROCESS. (relating to collection) is amended by inserting to a joint return, the taxpayer’s spouse) has not, The Secretary of the Treasury or the Sec- after section 6303 the following new section: during any of the preceding 5 taxable years— retary’s delegate shall, as soon as practicable May 4, 1998 CONGRESSIONAL RECORD — SENATE S4169

but not later than 180 days after the date of the lished by the Director of the Office of Manage- ‘‘(17) DISCLOSURE TO NATIONAL ARCHIVES AND enactment of this Act, include with any 1st let- ment and Budget, and RECORDS ADMINISTRATION.—The Secretary shall, ter of proposed deficiency which allows the tax- ‘‘(ii) the amount in controversy for any tax- upon written request from the Archivist of the payer an opportunity for administrative review able year generally does not exceed the amount United States, disclose or authorize the disclo- in the Internal Revenue Service Office of Ap- specified in section 7463. sure of returns and return information to offi- peals an explanation of the entire process from ‘‘(2) CLINIC.—The term ‘clinic’ includes— cers and employees of the National Archives and examination through collection with respect to ‘‘(A) a clinical program at an accredited law, Records Administration for purposes of, and such proposed deficiency, including the assist- business, or accounting school in which stu- only to the extent necessary in, the appraisal of ance available to the taxpayer from the Na- dents represent low income taxpayers in con- records for destruction or retention. No such of- tional Taxpayer Advocate at various points in troversies arising under this title, and ficer or employee shall, except to the extent au- the process. ‘‘(B) an organization described in section thorized by subsections (f), (i)(7), or (p), disclose 501(c) and exempt from tax under section 501(a) SEC. 3505. EXPLANATION OF REASON FOR RE- any return or return information disclosed FUND DENIAL. which satisfies the requirements of paragraph under the preceding sentence to any person (1) through representation of taxpayers or refer- (a) IN GENERAL.—Section 6402 (relating to au- other than to the Secretary, or to another officer thority to make credits or refunds) is amended ral of taxpayers to qualified representatives. or employee of the National Archives and UALIFIED REPRESENTATIVE.—The term by adding at the end the following new sub- ‘‘(3) Q Records Administration whose official duties re- ‘qualified representative’ means any individual section: quire such disclosure for purposes of such ap- (whether or not an attorney) who is authorized ‘‘(j) EXPLANATION OF REASON FOR REFUND praisal.’’ to practice before the Internal Revenue Service DENIAL.—In the case of a denial of a claim for (b) CONFORMING AMENDMENTS.—Section refund, the Secretary shall provide the taxpayer or the applicable court. 6103(p) is amended— ‘‘(c) SPECIAL RULES AND LIMITATIONS.— with an explanation for such denial.’’ (1) in paragraph (3)(A), by striking ‘‘or (16)’’ ‘‘(1) AGGREGATE LIMITATION.—Unless other- FFECTIVE DATE.—The amendment made and inserting ‘‘(16), or (17)’’, (b) E wise provided by specific appropriation, the Sec- by this section shall apply to denials issued (2) in paragraph (4), by striking ‘‘or (14)’’ and retary shall not allocate more than $3,000,000 after the 180th day after the date of the enact- inserting ‘‘, (14), or (17)’’ in the matter preced- per year (exclusive of costs of administering the ment of this Act. ing subparagraph (A), and program) to grants under this section. (3) in paragraph (4)(F)(ii), by striking ‘‘or SEC. 3506. STATEMENTS REGARDING INSTALL- ‘‘(2) LIMITATION ON ANNUAL GRANTS TO A CLIN- (15)’’ and inserting ‘‘, (15), or (17)’’. MENT AGREEMENTS. IC.—The aggregate amount of grants which may (c) EFFECTIVE DATE.—The amendments made The Secretary of the Treasury or the Sec- be made under this section to a clinic for a year by this section shall apply to requests made by retary’s delegate shall, as soon as practicable shall not exceed $100,000. the Archivist of the United States after the date but not later than 180 days after the date of the ‘‘(3) MULTI-YEAR GRANTS.—Upon application of the enactment of this Act. enactment of this Act, provide each taxpayer of a qualified low income taxpayer clinic, the SEC. 3703. PAYMENT OF TAXES. who has an installment agreement in effect Secretary is authorized to award a multi-year The Secretary of the Treasury or the Sec- under section 6159 of the Internal Revenue Code grant not to exceed 3 years. retary’s delegate shall establish such rules, reg- of 1986 an annual statement setting forth the ‘‘(4) CRITERIA FOR AWARDS.—In determining ulations, and procedures as are necessary to initial balance at the beginning of the year, the whether to make a grant under this section, the allow payment of taxes by check or money order payments made during the year, and the re- Secretary shall consider— made payable to the United States Treasury. maining balance as of the end of the year. ‘‘(A) the numbers of taxpayers who will be SEC. 3704. CLARIFICATION OF AUTHORITY OF SEC. 3507. NOTIFICATION OF CHANGE IN TAX served by the clinic, including the number of SECRETARY RELATING TO THE MAK- MATTERS PARTNER. taxpayers in the geographical area for whom ING OF ELECTIONS. (a) IN GENERAL.—Section 6231(a)(7) (defining English is a second language, Subsection (d) of section 7805 is amended by tax matters partner) is amended by adding at ‘‘(B) the existence of other low income tax- striking ‘‘by regulations or forms’’. payer clinics serving the same population, the end the following new sentence: ‘‘The Sec- SEC. 3705. IRS EMPLOYEE CONTACTS. ‘‘(C) the quality of the program offered by the retary shall, within 30 days of selecting a tax (a) NOTICE.—The Secretary of the Treasury or low income taxpayer clinic, including the quali- matters partner under the preceding sentence, the Secretary’s delegate shall provide that any fications of its administrators and qualified rep- notify all partners required to receive notice correspondence or notice received by a taxpayer resentatives, and its record, if any, in providing under section 6223(a) of the name and address from the Internal Revenue Service shall include service to low income taxpayers, and of the individual selected.’’ in a prominent manner the name and telephone ‘‘(D) alternative funding sources available to (b) EFFECTIVE DATE.—The amendment made number of an Internal Revenue Service em- the clinic, including amounts received from by this section shall apply to selections of tax ployee the taxpayer may contact with respect to other grants and contributions, and the endow- matters partners made by the Secretary of the the correspondence or notice. ment and resources of the institution sponsoring Treasury after the date of the enactment of this (b) SINGLE CONTACT.—The Secretary of the the clinic. Act. Treasury or the Secretary’s delegate shall de- ‘‘(5) REQUIREMENT OF MATCHING FUNDS.—A velop a procedure under which, to the extent Subtitle G—Low Income Taxpayer Clinics low income taxpayer clinic must provide match- practicable and if advantageous to the tax- SEC. 3601. LOW INCOME TAXPAYER CLINICS. ing funds on a dollar for dollar basis for all payer, one Internal Revenue Service employee (a) IN GENERAL.—Chapter 77 (relating to mis- grants provided under this section. Matching shall be assigned to handle a taxpayer’s matter cellaneous provisions), as amended by section funds may include— 3411, is amended by adding at the end the fol- ‘‘(A) the salary (including fringe benefits) of until it is resolved. (c) EFFECTIVE DATE.—This section shall take lowing new section: individuals performing services for the clinic, effect 60 days after the date of the enactment of ‘‘SEC. 7526. LOW INCOME TAXPAYER CLINICS. and ‘‘(B) the cost of equipment used in the clinic. this Act. ‘‘(a) IN GENERAL.—The Secretary may, subject SEC. 3706. USE OF PSEUDONYMS BY IRS EMPLOY- to the availability of appropriated funds, make Indirect expenses, including general overhead of EES. the institution sponsoring the clinic, shall not grants to provide matching funds for the devel- (a) IN GENERAL.—Any employee of the Inter- opment, expansion, or continuation of qualified be counted as matching funds.’’ nal Revenue Service may use a pseudonym only LERICAL AMENDMENT.—The table of sec- low income taxpayer clinics. (b) C if— ‘‘(b) DEFINITIONS.—For purposes of this sections for chapter 77 is amended by adding at the (1) adequate justification for the use of a tion— end the following new section: pseudonym is provided by the employee, includ- ‘‘(1) QUALIFIED LOW INCOME TAXPAYER CLIN- ‘‘Sec. 7526. Low income taxpayer clinics.’’ ing protection of personal safety, and IC.— (2) such use is approved by the employee’s su- (c) EFFECTIVE DATE.—The amendments made ‘‘(A) IN GENERAL.—The term ‘qualified low in- by this section shall take effect on the date of pervisor before the pseudonym is used. come taxpayer clinic’ means a clinic which— (b) EFFECTIVE DATE.—Subsection (a) shall the enactment of this Act. ‘‘(i) does not charge more than a nominal fee apply to requests made after the date of the en- for its services (except for reimbursement of ac- Subtitle H—Other Matters actment of this Act. tual costs incurred), and SEC. 3701. CATALOGING COMPLAINTS. SEC. 3707. CONFERENCES OF RIGHT IN THE NA- ‘‘(ii)(I) represents low income taxpayers in In collecting data for the report required TIONAL OFFICE OF IRS. controversies with the Internal Revenue Service, under section 1211 of Taxpayer Bill of Rights 2 (a) IN GENERAL.—In any conference of right or (Public Law 104–168), the Secretary of the in the National Office of the Internal Revenue ‘‘(II) operates programs to inform individuals Treasury or the Secretary’s delegate shall main- Service, participation in such conference shall, for whom English is a second language about tain records of taxpayer complaints of mis- upon request of the taxpayer, be limited to per- their rights and responsibilities under this title. conduct by Internal Revenue Service employees sonnel of the National Office. ‘‘(B) REPRESENTATION OF LOW INCOME TAX- on an individual employee basis. (b) EFFECTIVE DATE.—Subsection (a) shall PAYERS.—A clinic meets the requirements of sub- SEC. 3702. ARCHIVE OF RECORDS OF INTERNAL apply to requests made after the date of the en- paragraph (A)(ii)(I) if— REVENUE SERVICE. actment of this Act. ‘‘(i) at least 90 percent of the taxpayers rep- (a) IN GENERAL.—Subsection (l) of section 6103 SEC. 3708. ILLEGAL TAX PROTESTER DESIGNA- resented by the clinic have incomes which do (relating to confidentiality and disclosure of re- TION. not exceed 250 percent of the poverty level, as turns and return information) is amended by (a) PROHIBITION.—The officers and employees determined in accordance with criteria estab- adding at the end the following new paragraph: of the Internal Revenue Service— S4170 CONGRESSIONAL RECORD — SENATE May 4, 1998 (1) shall not designate taxpayers as illegal tax ‘‘(B) pay the amount by which such overpay- retary for the cost of applying such procedure. protesters (or any similar designation), and ment is reduced under subparagraph (A) to such Any fee paid to the Secretary pursuant to the (2) in the case of any such designation made State and notify such State of such person’s preceding sentence shall be used to reimburse on or before the date of the enactment of this name, taxpayer identification number, address, appropriations which bore all or part of the cost Act— and the amount collected; and of applying such procedure. (A) shall remove such designation from the in- ‘‘(C) notify the person making such overpay- ‘‘(7) ERRONEOUS PAYMENT TO STATE.—Any dividual master file, and ment that the overpayment has been reduced by State receiving notice from the Secretary that an (B) shall disregard any such designation not an amount necessary to satisfy a past-due, le- erroneous payment has been made to such State located in the individual master file. gally enforceable State income tax obligation. under paragraph (1) shall pay promptly to the (b) DESIGNATION OF NONFILERS ALLOWED.— If an offset is made pursuant to a joint return, Secretary, in accordance with such regulations An officer or employee of the Internal Revenue as the Secretary may prescribe, an amount Service may designate any appropriate taxpayer the notice under subparagraph (B) shall include the names, taxpayer identification numbers, and equal to the amount of such erroneous payment as a nonfiler, but shall remove such designation (without regard to whether any other amounts addresses of each person filing such return. once the taxpayer has filed income tax returns payable to such State under such paragraph ‘‘(2) OFFSET PERMITTED ONLY AGAINST RESI- for 2 consecutive taxable years and paid all have been paid to such State).’’. DENTS OF STATE SEEKING OFFSET.—Paragraph taxes shown on such returns. (b) DISCLOSURE OF CERTAIN INFORMATION TO (1) shall apply to an overpayment by any person (c) EFFECTIVE DATE.—The provisions of this STATES REQUESTING REFUND OFFSETS FOR PAST- for a taxable year only if the address shown on section shall take effect on the date of the en- DUE, LEGALLY ENFORCEABLE STATE INCOME TAX the return for such taxable year is an address actment of this Act. OBLIGATIONS.— SEC. 3709. PROVISION OF CONFIDENTIAL INFOR- within the State seeking the offset. (1) Paragraph (10) of section 6103(l) is amend- MATION TO CONGRESS BY WHISTLE- ‘‘(3) PRIORITIES FOR OFFSET.—Any overpay- ed by striking ‘‘(c) or (d)’’ each place it appears BLOWERS. ment by a person shall be reduced pursuant to and inserting ‘‘(c), (d), or (e)’’. (a) IN GENERAL.—Paragraph (1) of section this subsection— (2) The paragraph heading for such para- 6103(f) (relating to disclosure of confidential in- ‘‘(A) after such overpayment is reduced pur- graph (10) is amended by striking ‘‘SECTION formation to committees of Congress) is amend- suant to— 6402(c) OR 6402(d)’’ and inserting ‘‘SUBSECTION ed— ‘‘(i) subsection (a) with respect to any liability (c), (d), OR (e) OF SECTION 6402’’. (1) by striking ‘‘Upon written’’ and inserting for any internal revenue tax on the part of the (c) CONFORMING AMENDMENTS.— the following: person who made the overpayment, (1) Subsection (a) of section 6402 is amended ‘‘(A) WRITTEN REQUEST BY CHAIRMAN.—Upon ‘‘(ii) subsection (c) with respect to past-due by striking ‘‘(c) and (d)’’ and inserting ‘‘(c), (d), written’’; and support, and and (e)’’. (2) by adding at the end the following new ‘‘(iii) subsection (d) with respect to any past- (2) Paragraph (2) of section 6402(d) is amend- subparagraph: due, legally enforceable debt owed to a Federal ed by striking ‘‘and before such overpayment’’ ‘‘(B) WHISTLEBLOWER INFORMATION.—Any agency, and and inserting ‘‘and before such overpayment is person who otherwise has or had access to any ‘‘(B) before such overpayment is credited to reduced pursuant to subsection (e) and before return or return information under this section the future liability for any Federal internal rev- such overpayment’’. may disclose such return or return information enue tax of such person pursuant to subsection (3) Subsection (f) of section 6402, as redesig- to a chairman of a committee referred to in sub- (b). nated by subsection (a), is amended— paragraph (A) or the chief of staff of the Joint (A) by striking ‘‘(c) or (d)’’ and inserting ‘‘(c), Committee of Taxation only if— If the Secretary receives notice from 1 or more agencies of the State of more than 1 debt subject (d), or (e)’’, and ‘‘(i) the disclosure is for the purpose of alleg- (B) by striking ‘‘Federal agency’’ and insert- to paragraph (1) that is owed by such person to ing an incident of employee misconduct or tax- ing ‘‘Federal agency or State’’. payer abuse, and such an agency, any overpayment by such per- (4) Subsection (h) of section 6402, as redesig- ‘‘(ii) the chairman of the committee to which son shall be applied against such debts in the nated by subsection (a), is amended by striking the disclosure is made (or either chairman in the order in which such debts accrued. ‘‘subsection (c)’’ and inserting ‘‘subsection (c) or case of disclosure to the chief of staff) gives ‘‘(4) NOTICE; CONSIDERATION OF EVIDENCE.— (e)’’. prior written approval for the disclosure.’’ No State may take action under this subsection (d) EFFECTIVE DATE.—The amendments made (b) EFFECTIVE DATE.—The amendments made until such State— by this section (other than subsection (d)) shall by this section shall take effect on the date of ‘‘(A) notifies the person owing the past-due apply to refunds payable under section 6402 of the enactment of this Act. State income tax liability that the State proposes the Internal Revenue Code of 1986 after Decem- SEC. 3710. LISTING OF LOCAL IRS TELEPHONE to take action pursuant to this section, ber 31, 1998. NUMBERS AND ADDRESSES. ‘‘(B) gives such person at least 60 days to SEC. 3713. TREATMENT OF IRS NOTICES ON FOR- The Secretary of the Treasury or the Sec- present evidence that all or part of such liability EIGN TAX PROVISIONS. retary’s delegate shall, as soon as practicable, is not past-due or not legally enforceable, (a) NOTICE 98–11.— but not later than 180 days after the date of the ‘‘(C) considers any evidence presented by such (1) MORATORIUM.—The Secretary of the enactment of this Act, provide that the local person and determines that an amount of such Treasury or his delegate shall not implement telephone numbers and addresses of Internal debt is past-due and legally enforceable, and final or temporary regulations with respect to Revenue Service offices located in any particu- ‘‘(D) satisfies such other conditions as the Internal Revenue Service Notice 98–11 during lar area be listed in the telephone book for that Secretary may prescribe to ensure that the de- the period— area. termination made under subparagraph (C) is (A) beginning on January 16, 1998, and SEC. 3711. IDENTIFICATION OF RETURN PREPAR- valid and that the State has made reasonable ef- (B) ending on the date which is 6 months after ERS. forts to obtain payment of such State income tax the date of the enactment of this Act. (a) IN GENERAL.—The last sentence of section obligation. (2) SENSE OF SENATE REGARDING NOTICE.—It is 6109(a) (relating to identifying numbers) is ‘‘(5) PAST-DUE, LEGALLY ENFORCEABLE STATE the sense of the Senate that— amended by striking ‘‘For purposes of this sub- INCOME TAX OBLIGATION.—For purposes of this (A) the Secretary of the Treasury or his dele- section’’ and inserting ‘‘For purposes of para- subsection, the term ‘past-due, legally enforce- gate should withdraw Internal Revenue Service graphs (1), (2), and (3)’’. able State income tax obligation’ means a debt— Notice 98–11 and the regulations issued with re- (b) EFFECTIVE DATE.—The amendment made ‘‘(A) which resulted from a judgment which— spect to such notice, and by this section shall take effect on the date of ‘‘(i) was rendered by a court of competent ju- (B) Congress, not the Department of the the enactment of this Act. risdiction which has determined an amount of Treasury or the Internal Revenue Service, SEC. 3712. OFFSET OF PAST-DUE, LEGALLY EN- State income tax to be due, and should determine the policy issues with respect FORCEABLE STATE INCOME TAX OB- ‘‘(ii) is no longer subject to judicial review, to the treatment of hybrid transactions under LIGATIONS AGAINST OVERPAY- and subpart F of part III of subchapter N of chapter MENTS. ‘‘(B) which has not been delinquent for more 1 of the Internal Revenue Code of 1986. (a) IN GENERAL.—Section 6402 (relating to au- than 10 years. (b) NOTICE 98–5.—It is the sense of the Senate thority to make credits or refunds) is amended that— by redesignating subsections (e) through (i) as For purposes of this paragraph, the term ‘State (1) the Secretary of the Treasury or his dele- subsections (f) through (j), respectively, and by income tax’ includes any local tax administered gate should limit any regulations issued with re- inserting after subsection (d) the following new by the chief tax administration agency of the spect to Internal Revenue Service Notice 98–5 to subsection: State. the specific transactions contained in such no- ‘‘(e) COLLECTION OF PAST-DUE, LEGALLY EN- ‘‘(6) REGULATIONS.—The Secretary shall issue tice, and FORCEABLE STATE INCOME TAX OBLIGATIONS.— regulations prescribing the time and manner in (2) such regulations should— ‘‘(1) IN GENERAL.—Upon receiving notice from which States must submit notices of past-due, (A) not affect transactions undertaken in the any State that a named person owes a past-due, legally enforceable State income tax obligations ordinary course of business, legally enforceable State income tax obligation and the necessary information that must be con- (B) not have an effective date before the ear- to such State, the Secretary shall, under such tained in or accompany such notices. The regu- lier of the dates described in subparagraph (A) conditions as may be prescribed by the Sec- lations shall specify the types of State income or (B) of section 7805(b)(1) of the Internal Reve- retary— taxes and the minimum amount of debt to which nue Code of 1986, and ‘‘(A) reduce the amount of any overpayment the reduction procedure established by para- (C) be issued in accordance with normal regu- payable to such person by the amount of such graph (1) may be applied. The regulations may latory procedures which include an opportunity State income tax obligation; require States to pay a fee to reimburse the Sec- for comment. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4171 Nothing in the preceding sentence shall be con- (E) areas in which revenue officers make fre- ‘‘(B) when deferred compensation is paid, strued as expressing any intent by the Senate to quent errors interpreting or applying the law, no amount shall be treated as received by the limit the Secretary’s ability to address abusive (F) the impact of recent legislation on com- employee, or paid, until it is actually received transactions. plexity, and by the employee.’’ Subtitle I—Studies (G) forms supplied by the Internal Revenue (b) EFFECTIVE DATE.— Service, including the time it takes for taxpayers SEC. 3801. ADMINISTRATION OF PENALTIES AND (1) IN GENERAL.—The amendment made by INTEREST. to complete and review forms, the number of subsection (a) shall apply to taxable years end- taxpayers who use each form, and how recent The Joint Committee on Taxation and the Sec- ing after the date of the enactment of this Act. legislation has affected the time it takes to com- retary of the Treasury shall each conduct a sep- (2) CHANGE IN METHOD OF ACCOUNTING.—In plete and review forms. arate study— the case of any taxpayer required by the amend- EPORT.—The Commissioner shall each (1) reviewing the administration and imple- (2) R ment made by subsection (a) to change its meth- year report the results of the analysis conducted mentation by the Internal Revenue Service of od of accounting for its first taxable year ending under paragraph (1) to the Committee on Ways the interest and penalty provisions of the Inter- after the date of the enactment of this Act— and Means of the House of Representatives and nal Revenue Code of 1986 (including the penalty (A) such change shall be treated as initiated the Committee on Finance of the Senate, includ- reform provisions of the Omnibus Budget Rec- by the taxpayer, ing any recommendations for reducing the com- onciliation Act of 1989), and (B) such change shall be treated as made with (2) making any legislative and administrative plexity of the administration of the Federal tax the consent of the Secretary of the Treasury, recommendations the Committee or the Secretary laws. and deems appropriate to simplify penalty or interest (b) ANALYSIS TO ACCOMPANY CERTAIN LEGIS- (C) the net amount of the adjustments re- administration and reduce taxpayer burden. LATION.— quired to be taken into account by the taxpayer (1) IN GENERAL.—The Joint Committee on Tax- Such studies shall be submitted to the Committee under section 481 of the Internal Revenue Code ation, in consultation with the Internal Reve- of 1986 shall be taken into account in such first on Ways and Means of the House of Represent- nue Service and the Department of the Treas- atives and the Committee on Finance of the Sen- taxable year. ury, shall include a tax complexity analysis in SEC. 5002. MODIFICATION TO FOREIGN TAX CRED- ate not later than 9 months after the date of the each report for legislation, or provide such anal- enactment of this Act. IT CARRYBACK AND CARRYOVER PE- ysis to members of the committee reporting the RIODS. SEC. 3802. CONFIDENTIALITY OF TAX RETURN IN- legislation as soon as practicable after the re- (a) IN GENERAL.—Section 904(c) (relating to FORMATION. port is filed, if— limitation on credit) is amended— The Joint Committee on Taxation and the Sec- (A) such legislation is reported by the Commit- (1) by striking ‘‘in the second preceding tax- retary of the Treasury shall each conduct a sep- tee on Finance in the Senate, the Committee on able year,’’, and arate study of the scope and use of provisions Ways and Means of the House of Representa- (2) by striking ‘‘or fifth’’ and inserting ‘‘fifth, regarding taxpayer confidentiality, and shall re- tives, or any committee of conference, and sixth, or seventh’’. port the findings of such study, together with (B) such legislation includes a provision (b) EFFECTIVE DATE.—The amendment made such recommendations as the Committee or the which would directly or indirectly amend the by subsection (a) shall apply to credits arising Secretary deems appropriate, to the Congress Internal Revenue Code of 1986 and which has in taxable years ending after the date of the en- not later than one year after the date of the en- widespread applicability to individuals or small actment of this Act. actment of this Act. Such study shall examine— businesses. (1) the present protections for taxpayer pri- SEC. 5003. CLARIFICATION AND EXPANSION OF (2) TAX COMPLEXITY ANALYSIS.—For purposes MATHEMATICAL ERROR ASSESS- vacy, of this subsection, the term ‘‘tax complexity MENT PROCEDURES. (2) any need for third parties to use tax return analysis’’ means, with respect to any legisla- (a) TIN DEEMED INCORRECT IF INFORMATION information, tion, a report on the complexity and administra- ON RETURN DIFFERS WITH AGENCY RECORDS.— (3) whether greater levels of voluntary compli- tive difficulties of each provision described in Section 6213(g)(2) (defining mathematical or ance may be achieved by allowing the public to paragraph (1)(B) which— clerical error) is amended by adding at the end know who is legally required to file tax returns, (A) includes— the following flush sentence: but does not file tax returns, and (i) an estimate of the number of taxpayers af- ‘‘A taxpayer shall be treated as having omitted (4) the interrelationship of the taxpayer con- fected by the provision, and a correct TIN for purposes of the preceding sen- fidentiality provisions in the Internal Revenue (ii) if applicable, the income level of taxpayers tence if information provided by the taxpayer on Code of 1986 with such provisions in other Fed- affected by the provision, and the return with respect to the individual whose eral law, including section 552a of title 5, United (B) should include (if determinable)— TIN was provided differs from the information States Code (commonly known as the ‘‘Freedom (i) the extent to which tax forms supplied by the Secretary obtains from the person issuing of Information Act’’). the Internal Revenue Service would require revi- the TIN.’’ TITLE IV—CONGRESSIONAL ACCOUNT- sion and whether any new forms would be re- (b) EXPANSION OF MATHEMATICAL ERROR PRO- ABILITY FOR THE INTERNAL REVENUE quired, CEDURES TO CASES WHERE TIN ESTABLISHES IN- SERVICE (ii) the extent to which taxpayers would be re- DIVIDUAL NOT ELIGIBLE FOR TAX CREDIT.—Sec- quired to keep additional records, SEC. 4001. CENTURY DATE CHANGE. tion 6213(g)(2), as amended by title VI of this (iii) the estimated cost to taxpayers to comply (a) SENSE OF CONGRESS.—It is the sense of Act, is amended by striking ‘‘and’’ at the end of Congress that the Internal Revenue Service with the provision, (iv) the extent to which enactment of the pro- subparagraph (J), by striking the period at the should place a high priority on resolving the end of the subparagraph (K) and inserting ‘‘, century date change computing problems. vision would require the Internal Revenue Serv- ice to develop or modify regulatory guidance, and’’, and by adding at the end the following (b) REPORT ON EFFECT OF LEGISLATION ON new subparagraph: CENTURY DATE CHANGE.—The Commissioner of (v) the extent to which the provision may result in disagreements between taxpayers and the ‘‘(L) the inclusion on a return of a TIN re- Internal Revenue shall expeditiously submit a quired to be included on the return under sec- report to Congress on— Internal Revenue Service, and (vi) any expected impact on the Internal Reve- tion 21, 24, or 32 if— (1) the overall impact of this Act on the ability ‘‘(i) such TIN is of an individual whose age of the Internal Revenue Service to resolve the nue Service from the provision (including the impact on internal training, revision of the In- affects the amount of the credit under such sec- century date change computing problems, and tion, and (2) provisions of this Act that will require sig- ternal Revenue Manual, reprogramming of computers, and the extent to which the Internal ‘‘(ii) the computation of the credit on the re- nificant amounts of computer programming turn reflects the treatment of such individual as prior to December 31, 1999, in order to carry out Revenue Service would be required to divert or redirect resources in response to the provision). being of an age different from the individual’s such provisions. age based on such TIN.’’ (3) EFFECTIVE DATE.—This subsection shall SEC. 4002. TAX LAW COMPLEXITY ANALYSIS. apply to legislation considered on or after Janu- (c) EFFECTIVE DATE.—The amendments made (a) COMMISSIONER STUDY.— ary 1, 1999. by this section shall apply to taxable years end- (1) IN GENERAL.—The Commissioner of Inter- ing after the date of the enactment of this Act. TITLE V—REVENUE PROVISIONS nal Revenue shall conduct each year an analy- SEC. 5004. TERMINATION OF EXCEPTION FOR sis of the sources of the complexity of the ad- SEC. 5001. CLARIFICATION OF DEDUCTION FOR CERTAIN REAL ESTATE INVESTMENT ministration of the Federal tax laws. Such anal- DEFERRED COMPENSATION. TRUSTS FROM THE TREATMENT OF ysis may include an analysis of— (a) IN GENERAL.—Section 404(a) (relating to STAPLED ENTITIES. (A) questions frequently asked by taxpayers deduction for contributions of an employer to an (a) IN GENERAL.—Notwithstanding paragraph with respect to return filing, employee’s trust or annuity plan and compensa- (3) of section 136(c) of the Tax Reform Act of (B) common errors made by taxpayers in fill- tion under a deferred-payment plan) is amended 1984 (relating to stapled stock; stapled entities), ing out their returns, by adding at the end the following new para- the REIT gross income provisions shall be ap- (C) areas of law which frequently result in graph: plied by treating the activities and gross income disagreements between taxpayers and the Inter- ‘‘(11) DETERMINATIONS RELATING TO DEFERRED of members of the stapled REIT group properly nal Revenue Service, COMPENSATION.—For purposes of determining allocable to any nonqualified real property in- (D) major areas of law in which there is no (or under this section— terest held by the exempt REIT or any stapled incomplete) published guidance or in which the ‘‘(A) whether compensation of an employee is entity which is a member of such group (or law is uncertain, deferred compensation, and treated under subsection (c) as held by such S4172 CONGRESSIONAL RECORD — SENATE May 4, 1998 REIT or stapled entity) as the activities and held by a 10-percent subsidiary entity of an ex- but only so long as such obligation is secured by gross income of the exempt REIT in the same empt REIT or stapled entity shall be treated as such interest. The preceding sentence shall not manner as if the exempt REIT and such group a nonqualified real property interest. cease to apply by reason of the refinancing of were 1 entity. (B) EXCEPTION FOR INTERESTS IN REAL PROP- the obligation if (immediately after the refinanc- (b) NONQUALIFIED REAL PROPERTY INTER- ERTY HELD ON MARCH 26, 1998, ETC.—In the case ing) the principal amount of the obligation re- EST.—For purposes of this section— of an entity which was a 10-percent subsidiary sulting from the refinancing does not exceed the (1) IN GENERAL.—The term ‘‘nonqualified real entity of an exempt REIT or stapled entity on principal amount of the refinanced obligation property interest’’ means, with respect to any March 26, 1998, and at all times thereafter, an (immediately before the refinancing). exempt REIT, any interest in real property ac- interest in real property held by such subsidiary (5) TREATMENT OF ENTITIES WHICH ARE NOT quired after March 26, 1998, by the exempt REIT entity shall be treated as a qualified real prop- STAPLED, ETC. ON MARCH 26, 1998.—A rule similar or any stapled entity. erty interest if such interest would be so treated to the rule of subsection (b)(4) shall apply for (2) EXCEPTION FOR BINDING CONTRACTS, ETC.— if held directly by the exempt REIT or the sta- purposes of this subsection. Such term shall not include any interest in real pled entity. (6) INCREASE IN AMOUNT OF NONQUALIFIED OB- property acquired after March 26, 1998, by the (3) REDUCTION IN QUALIFIED REAL PROPERTY LIGATIONS IF INCREASE IN OWNERSHIP OF SUBSIDI- exempt REIT or any stapled entity if— INTERESTS IF INCREASE IN OWNERSHIP OF SUBSIDI- ARY.—A rule similar to the rule of subsection (A) the acquisition is pursuant to a written ARY.—If, after March 26, 1998, an exempt REIT (c)(3) shall apply for purposes of this subsection. agreement which was binding on such date and or stapled entity increases its ownership interest (7) COORDINATION WITH SUBSECTION (a).—This at all times thereafter on such REIT or stapled in a subsidiary entity to which paragraph (2)(B) subsection shall not apply to the portion of any entity, or applies above its ownership interest in such sub- interest in real property that the exempt REIT (B) the acquisition is described on or before sidiary entity as of such date, the additional or stapled entity holds or is treated as holding such date in a public announcement or in a fil- portion of each interest in real property which under this section without regard to this sub- ing with the Securities and Exchange Commis- is treated as held by the exempt REIT or stapled section. sion. entity by reason of such increased ownership (e) DEFINITIONS.—For purposes of this sec- (3) IMPROVEMENTS AND LEASES.— shall be treated as a nonqualified real property tion— (A) IN GENERAL.—Except as otherwise pro- interest. (1) REIT GROSS INCOME PROVISIONS.—The vided in this paragraph, the term ‘‘nonqualified (4) SPECIAL RULES FOR DETERMINING OWNER- term ‘‘REIT gross income provisions’’ means— real property interest’’ shall not include— SHIP.—For purposes of this subsection— (A) paragraphs (2), (3), and (6) of section (i) any improvement to land owned or leased (A) percentage ownership of an entity shall be 856(c) of the Internal Revenue Code of 1986, and by the exempt REIT or any member of the sta- determined in accordance with subsection (e)(4), (B) section 857(b)(5) of such Code. pled REIT group, and (B) interests in the entity which are acquired (2) EXEMPT REIT.—The term ‘‘exempt REIT’’ (ii) any repair to, or improvement of, any im- by the exempt REIT or stapled entity in any ac- means a real estate investment trust to which provement owned or leased by the exempt REIT quisition described in an agreement, announce- section 269B of the Internal Revenue Code of or any member of the stapled REIT group, ment, or filing described in subsection (b)(2) 1986 does not apply by reason of paragraph (3) if such ownership or leasehold interest is a shall be treated as acquired on March 26, 1998, of section 136(c) of the Tax Reform Act of 1984. qualified real property interest. and (3) STAPLED REIT GROUP.—The term ‘‘stapled (B) LEASES.—Such term shall not include any (C) except as provided in guidance prescribed REIT group’’ means, with respect to an exempt lease of a qualified real property interest. by the Secretary, any change in proportionate REIT, the group consisting of— (C) TERMINATION WHERE CHANGE IN USE.— ownership which is attributable solely to fluc- (A) all entities which are stapled entities with (i) IN GENERAL.—Subparagraph (A) shall not tuations in the relative fair market values of dif- respect to the exempt REIT, and apply to any improvement placed in service ferent classes of stock shall not be taken into ac- (B) all entities which are 10-percent subsidi- after December 31, 1999, which is part of a count. ary entities of the exempt REIT or any such sta- change in the use of the property to which such (d) TREATMENT OF PROPERTY SECURED BY pled entity. improvement relates unless the cost of such im- MORTGAGE HELD BY EXEMPT REIT OR MEMBER (4) 10-PERCENT SUBSIDIARY ENTITY.— provement does not exceed 200 percent of— OF STAPLED REIT GROUP.— (A) IN GENERAL.—The term ‘‘10-percent sub- (I) the cost of such property, or (1) IN GENERAL.—In the case of any non- sidiary entity’’ means, with respect to any ex- (II) if such property is substituted basis prop- qualified obligation held by an exempt REIT or empt REIT or stapled entity, any entity in erty (as defined in section 7701(a)(42) of the In- any member of the stapled REIT group, the which the exempt REIT or stapled entity (as the ternal Revenue Code of 1986), the fair market REIT gross income provisions shall be applied case may be) directly or indirectly holds at least value of the property at the time of acquisition. by treating the exempt REIT as having imper- a 10-percent interest. (ii) BINDING CONTRACTS.—For purposes of missible tenant service income equal to— (B) EXCEPTION FOR CERTAIN C CORPORATION clause (i), an improvement shall be treated as (A) the interest income from such obligation SUBSIDIARIES OF REITS.—A corporation which placed in service before January 1, 2000, if such which is properly allocable to the property de- would, but for this subparagraph, be treated as improvement is placed in service before January scribed in paragraph (2), and a 10-percent subsidiary of an exempt REIT shall 1, 2004, pursuant to a binding contract in effect (B) the income of any member of the stapled not be so treated if such corporation is taxable on December 31, 1999, and at all times there- REIT group from services described in para- under section 11 of the Internal Revenue Code after. graph (2) with respect to such property. of 1986. (4) TREATMENT OF ENTITIES WHICH ARE NOT If the income referred to in subparagraph (A) or (C) 10-PERCENT INTEREST.—The term ‘‘10-per- STAPLED, ETC. ON MARCH 26, 1998.—Notwithstand- (B) is of a 10-percent subsidiary entity, only the cent interest’’ means— ing any other provision of this section, all inter- portion of such income which is properly alloca- (i) in the case of an interest in a corporation, ests in real property held by an exempt REIT or ble to the exempt REIT’s or the stapled entity’s ownership of 10 percent (by vote or value) of the any stapled entity with respect to such REIT (or interest in the subsidiary entity shall be taken stock in such corporation, treated under subsection (c) as held by such into account. (ii) in the case of an interest in a partnership, REIT or stapled entity) shall be treated as non- (2) NONQUALIFIED OBLIGATION.—Except as ownership of 10 percent of the assets or net prof- qualified real property interests unless— otherwise provided in this subsection, the term its interest in the partnership, and (A) such stapled entity was a stapled entity ‘‘nonqualified obligation’’ means any obligation (iii) in any other case, ownership of 10 percent with respect to such REIT as of March 26, 1998, secured by a mortgage on an interest in real of the beneficial interests in the entity. and at all times thereafter, and property if the income of any member of the sta- (5) OTHER DEFINITIONS.—Terms used in this (B) as of March 26, 1998, and at all times pled REIT group for services furnished with re- section which are used in section 269B or section thereafter, such REIT was a real estate invest- spect to such property would be impermissible 856 of such Code shall have the respective mean- ment trust. tenant service income were such property held ings given such terms by such section. (5) QUALIFIED REAL PROPERTY INTEREST.—The by the exempt REIT and such services furnished (f) GUIDANCE.—The Secretary may prescribe term ‘‘qualified real property interest’’ means by the exempt REIT. such guidance as may be necessary or appro- any interest in real property other than a non- (3) EXCEPTION FOR CERTAIN MARKET RATE OB- priate to carry out the purposes of this section, qualified real property interest. LIGATIONS.—Such term shall not include any ob- including guidance to prevent the avoidance of (c) TREATMENT OF PROPERTY HELD BY 10-PER- ligation— such purposes and to prevent the double count- CENT SUBSIDIARIES.—For purposes of this sec- (A) payments under which would be treated ing of income. tion— as interest if received by a REIT, and (g) EFFECTIVE DATE.—This section shall apply (1) IN GENERAL.—Any exempt REIT and any (B) the rate of interest on which does not ex- to taxable years ending after March 26, 1998. stapled entity shall be treated as holding their ceed an arm’s length rate. SEC. 5005. CERTAIN CUSTOMER RECEIVABLES IN- proportionate shares of each interest in real (4) EXCEPTION FOR EXISTING OBLIGATIONS.— ELIGIBLE FOR MARK-TO-MARKET property held by any 10-percent subsidiary en- Such term shall not include any obligation— TREATMENT. tity of the exempt REIT or stapled entity, as the (A) which is secured on March 26, 1998, by an (a) CERTAIN RECEIVABLES NOT ELIGIBLE FOR case may be. interest in real property, and MARK TO MARKET.—Section 475(c) (relating to (2) PROPERTY HELD BY 10-PERCENT SUBSIDI- (B) which is held on such date by the exempt definitions) is amended by adding at the end the ARIES TREATED AS NONQUALIFIED.— REIT or any entity which is a member of the following new paragraph: (A) IN GENERAL.—Except as provided in sub- stapled REIT group on such date and at all ‘‘(4) SPECIAL RULES FOR CERTAIN RECEIV- paragraph (B), any interest in real property times thereafter, ABLES.— May 4, 1998 CONGRESSIONAL RECORD — SENATE S4173

‘‘(A) IN GENERAL.—Paragraph (2)(C) shall not ‘‘(ii) the credit allowed under section 32 (de- ‘‘(3) except as provided in regulations, which include any note, bond, debenture, or other evi- termined without regard to subsection (n)) for is engaged in a trade or business and, in the dence of indebtedness which is nonfinancial the taxable year. course of which, receives from any individual customer paper. The amount of the credit allowed under this interest aggregating $600 or more for any cal- ‘‘(B) NONFINANCIAL CUSTOMER PAPER.—For subsection shall not be treated as a credit al- endar year on 1 or more qualified education purposes of subparagraph (A), the term ‘non- lowed under this subpart and shall reduce the loans, financial customer paper’ means any receiv- amount of credit otherwise allowable under sub- shall make the return described in subsection (b) able— section (a) without regard to section 26(a). with respect to the individual at such time as ‘‘(i) arising out of the sale of goods or services ‘‘(2) REDUCTION OF CREDIT TO TAXPAYER SUB- the Secretary may by regulations prescribe.’’ by a person the principal activity of which is JECT TO ALTERNATIVE MINIMUM TAX.—The credit (3) Subparagraph (A) of section 201(c)(2) of the selling or providing of nonfinancial goods determined under this subsection for the taxable the 1997 Act is amended to read as follows: and services, and year shall be reduced by the excess (if any) of— ‘‘(A) Subparagraph (B) of section 6724(d)(1) ‘‘(ii) held by such person (or a person who ‘‘(A) the amount of tax imposed by section 55 (relating to definitions) is amended by redesig- bears a relationship to such person described in (relating to alternative minimum tax) with re- nating clauses (x) through (xv) as clauses (xi) section 267(b) or 707(b)) at all times since issue.’’ spect to such taxpayer for such taxable year, through (xvi), respectively, and by inserting (b) EFFECTIVE DATE.— over after clause (ix) the following new clause: (1) IN GENERAL.—The amendments made by ‘‘(B) the amount of the reduction under sec- ‘‘ ‘(x) section 6050S (relating to returns relat- this section shall apply to taxable years ending tion 32(h) with respect to such taxpayer for such ing to payments for qualified tuition and related after the date of the enactment of this Act. taxable year.’’ expenses),’ ’’. (2) CHANGE IN METHOD OF ACCOUNTING.—In (2) Paragraph (3) of section 24(d) of the 1986 (b) AMENDMENT RELATED TO SECTION 202 OF the case of any taxpayer required by the amend- Code (as redesignated by paragraph (1)) is 1997 ACT.—Paragraph (1) of section 221(e) of the ments made by this section to change its method amended by striking ‘‘paragraph (3)’’ and in- 1986 Code is amended by inserting ‘‘by the tax- of accounting for its first taxable year ending serting ‘‘paragraph (1)’’. payer’’ after ‘‘incurred’’ the first place it ap- after the date of the enactment of this Act— (b) AMENDMENTS RELATED TO SECTION 101(b) pears. (A) such change shall be treated as initiated OF 1997 ACT.— (c) AMENDMENTS RELATED TO SECTION 211 OF by the taxpayer, (1) The subsection (m) of section 32 of the 1986 1997 ACT.— (B) such change shall be treated as made with Code added by section 101(b) of the 1997 Act is (1) Paragraph (3) of section 135(c) of the 1986 the consent of the Secretary of the Treasury, amended to read as follows: Code is amended to read as follows: and ‘‘(n) SUPPLEMENTAL CHILD CREDIT.— ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— (C) the net amount of the adjustments re- ‘‘(1) IN GENERAL.—In the case of a taxpayer The term ‘eligible educational institution’ has quired to be taken into account by the taxpayer with respect to whom a credit is allowed under the meaning given such term by section under section 481 of the Internal Revenue Code section 24(a) for the taxable year, the credit oth- 529(e)(5).’’ of 1986 shall be taken into account ratably over erwise allowable under this section shall be in- (2) Subparagraph (A) of section 529(c)(3) of the 4-taxable year period beginning with such creased by the lesser of— the 1986 Code is amended by striking ‘‘section first taxable year. ‘‘(A) the excess of— 72(b)’’ and inserting ‘‘section 72’’. SEC. 5006. INCLUSION OF ROTAVIRUS ‘‘(i) the credits allowed under subpart A (de- (3) Paragraph (2) of section 529(e) of the 1986 GASTROENTERITIS TO LIST OF TAX- termined after the application of section 26 and Code is amended to read as follows: ABLE VACCINES. without regard to this subsection), over ‘‘(2) MEMBER OF FAMILY.—The term ‘member (a) IN GENERAL.—Section 4132(1) (defining ‘‘(ii) the credits which would be allowed under of the family’ means, with respect to any des- taxable vaccine) is amended by adding at the subpart A after the application of section 26, de- ignated beneficiary— ‘‘(A) the spouse of such beneficiary, end the following new subparagraph: termined without regard to section 24 and this ‘‘(B) an individual who bears a relationship ‘‘(K) Any vaccine against rotavirus subsection, or to such beneficiary which is described in para- gastroenteritis.’’ ‘‘(B) the excess of— graphs (1) through (8) of section 152(a), and (b) EFFECTIVE DATE.— ‘‘(i) the sum of the credits allowed under this ‘‘(C) the spouse of any individual described in (1) SALES.—The amendment made by this sec- part (determined without regard to sections 31, subparagraph (B).’’ tion shall apply to sales after the date of the en- 33, and 34 and this subsection), over (d) AMENDMENTS RELATED TO SECTION 213 OF actment of this Act. ‘‘(ii) the sum of the regular tax and the social (2) DELIVERIES.—For purposes of paragraph 1997 ACT.— security taxes (as defined in section 24(d)). (1), in the case of sales on or before the date of (1) Section 530(b)(1) of the 1986 Code (defining the enactment of this Act for which delivery is The credit determined under this subsection education individual retirement account) is made after such date, the delivery date shall be shall be allowed without regard to any other amended by inserting ‘‘an individual who is’’ considered the sale date. provision of this section, including subsection before ‘‘the designated beneficiary’’ in the mate- (d). TITLE VI—TECHNICAL CORRECTIONS rial preceding subparagraph (A). ‘‘(2) COORDINATION WITH OTHER CREDITS.— (2)(A) Section 530(b)(1)(E) of the 1986 Code SEC. 6001. SHORT TITLE. The amount of the credit under this subsection (defining education individual retirement ac- This title may be cited as the ‘‘Tax Technical shall reduce the amount of the credits otherwise count) is amended to read as follows: Corrections Act of 1998’’. allowable under subpart A for the taxable year ‘‘(E) Except as provided in subsection (d)(7), SEC. 6002. DEFINITIONS. (determined after the application of section 26), any balance to the credit of the designated ben- For purposes of this title— but the amount of the credit under this sub- eficiary on the date on which the beneficiary at- (1) 1986 CODE.—The term ‘‘1986 Code’’ means section (and such reduction) shall not be taken tains age 30 shall be distributed within 30 days the Internal Revenue Code of 1986. into account in determining the amount of any after such date to the beneficiary or, if the bene- (2) 1997 ACT.—The term ‘‘1997 Act’’ means the other credit allowable under this part.’’. ficiary dies before attaining age 30, shall be dis- Taxpayer Relief Act of 1997. SEC. 6004. AMENDMENTS RELATED TO TITLE II OF tributed within 30 days after the date of death SEC. 6003. AMENDMENTS RELATED TO TITLE I OF 1997 ACT. of such beneficiary.’’ 1997 ACT. (a) AMENDMENTS RELATED TO SECTION 201 OF (B) Paragraph (7) of section 530(d) of the 1986 (a) AMENDMENTS RELATED TO SECTION 101(a) 1997 ACT.— Code is amended by inserting at the end the fol- OF 1997 ACT.— (1) The item relating to section 25A in the lowing new sentence: ‘‘In applying the preced- (1) Subsection (d) of section 24 of the 1986 table of sections for subpart A of part IV of sub- ing sentence, members of the family of the des- Code is amended— chapter A of chapter 1 of the 1986 Code is ignated beneficiary shall be treated in the same (A) by striking paragraphs (3) and (4), amended to read as follows: manner as the spouse under such paragraph (B) by redesignating paragraph (5) as para- (8).’’ ‘‘Sec. 25A. Hope and Lifetime Learning credits.’’ graph (3), and (C) Subsection (d) of section 530 of the 1986 (C) by striking paragraphs (1) and (2) and in- (2) Subsection (a) of section 6050S of the 1986 Code is amended by adding at the end the fol- serting the following new paragraphs: Code is amended to read as follows: lowing new paragraph: ‘‘(1) IN GENERAL.—In the case of a taxpayer ‘‘(a) IN GENERAL.—Any person— ‘‘(8) DEEMED DISTRIBUTION ON REQUIRED DIS- with 3 or more qualifying children for any tax- ‘‘(1) which is an eligible educational institu- TRIBUTION DATE.—In any case in which a dis- able year, the aggregate credits allowed under tion— tribution is required under subsection (b)(1)(E), subpart C shall be increased by the lesser of— ‘‘(A) which receives payments for qualified any balance to the credit of a designated bene- ‘‘(A) the credit which would be allowed under tuition and related expenses with respect to any ficiary as of the close of the 30-day period re- this section without regard to this subsection individual for any calendar year, or ferred to in such subsection for making such dis- and the limitation under section 26(a), or ‘‘(B) which makes reimbursements or refunds tribution shall be deemed distributed at the close ‘‘(B) the amount by which the aggregate (or similar amounts) to any individual of quali- of such period.’’ amount of credits allowed by this subpart (with- fied tuition and related expenses, (3)(A) Paragraph (1) of section 530(d) of the out regard to this subsection) would increase if ‘‘(2) which is engaged in a trade or business of 1986 Code is amended by striking ‘‘section 72(b)’’ the limitation imposed by section 26(a) were in- making payments to any individual under an and inserting ‘‘section 72’’. creased by the excess (if any) of— insurance arrangement as reimbursements or re- (B) Subsection (e) of section 72 of the 1986 ‘‘(i) the taxpayer’s social security taxes for the funds (or similar amounts) of qualified tuition Code is amended by inserting after paragraph taxable year, over and related expenses, or (8) the following new paragraph: S4174 CONGRESSIONAL RECORD — SENATE May 4, 1998

‘‘(9) EXTENSION OF PARAGRAPH (2)(B) TO QUALI- ‘‘(i) the distributions out of the accounts for (A) by inserting ‘‘or a married individual fil- FIED STATE TUITION PROGRAMS AND EDU- the taxable year which are included in gross in- ing a separate return’’ after ‘‘joint return’’ in CATIONAL INDIVIDUAL RETIREMENT ACCOUNTS.— come, and subparagraph (A)(ii), Notwithstanding any other provision of this ‘‘(ii) the excess (if any) of the maximum (B) in subparagraph (B)— subsection, paragraph (2)(B) shall apply to amount which may be contributed to the ac- (i) by inserting ‘‘, for the taxable year of the amounts received under a qualified State tuition counts for the taxable year (other than excess distribution to which such contribution relates’’ program (as defined in section 529(b)) or under contributions within the meaning of subpara- after ‘‘if’’, and an education individual retirement account (as graphs (A) and (B)) over the amount contrib- (ii) by striking ‘‘for such taxable year’’ in defined in section 530(b)). The rule of paragraph uted to the accounts for the taxable year.’’ clause (i), and (8)(B) shall apply for purposes of this para- (e) AMENDMENTS RELATED TO SECTION 224 OF (C) by striking ‘‘and the deduction under sec- graph.’’ 1997 ACT.— tion 219 shall be taken into account’’ in sub- (4) Paragraph (2) of section 135(d) of the 1986 (1) Clauses (vi) and (vii) of section 170(e)(6)(B) paragraph (C)(i). Code is amended to read as follows: of the 1986 Code are each amended by striking (3)(A) Section 408A(d)(2) of the 1986 Code (de- ‘‘(2) COORDINATION WITH OTHER HIGHER EDU- ‘‘entity’s’’ and inserting ‘‘donee’s’’. fining qualified distribution) is amended by CATION BENEFITS.—The amount of the qualified (2) Clause (iv) of section 170(e)(6)(B) of the striking subparagraph (B) and inserting the fol- higher education expenses otherwise taken into 1986 Code is amended by striking ‘‘organization lowing: account under subsection (a) with respect to the or entity’’ and inserting ‘‘donee’’. ‘‘(B) DISTRIBUTIONS WITHIN NONEXCLUSION PE- (3) Subclause (I) of section 170(e)(6)(C)(ii) of education of an individual shall be reduced (be- RIOD.—A payment or distribution from a Roth fore the application of subsection (b)) by— the 1986 Code is amended by striking ‘‘an en- IRA shall not be treated as a qualified distribu- ‘‘(A) the amount of such expenses which are tity’’ and inserting ‘‘a donee’’. tion under subparagraph (A) if such payment or (4) Section 170(e)(6)(F) of the 1986 Code (relat- taken into account in determining the credit al- distribution is made within the 5-taxable year ing to termination) is amended by striking lowable to the taxpayer or any other person period beginning with the 1st taxable year for ‘‘1999’’ and inserting ‘‘2000’’. under section 25A with respect to such expenses, which the individual made a contribution to a (f) AMENDMENTS RELATED TO SECTION 225 OF and Roth IRA (or such individual’s spouse made a 1997 ACT.— ‘‘(B) the amount of such expenses which are contribution to a Roth IRA) established for such taken into account in determining the exclusion (1) The last sentence of section 108(f)(2) of the 1986 Code is amended to read as follows: individual.’’ under section 530(d)(2).’’ (B) Section 408A(d)(2) of the 1986 Code is (5) Section 530(d)(2) (relating to distributions ‘‘The term ‘student loan’ includes any loan amended by adding at the end the following for qualified higher education expenses) is made by an educational organization described new subparagraph: amended by adding at the end the following in section 170(b)(1)(A)(ii) or by an organization ‘‘(C) DISTRIBUTIONS OF EXCESS CONTRIBUTIONS new subparagraph: exempt from tax under section 501(a) to refi- AND EARNINGS.—The term ‘qualified distribution’ ‘‘(D) DISALLOWANCE OF EXCLUDED AMOUNTS nance a loan to an individual to assist the indi- shall not include any distribution of any con- AS CREDIT OR DEDUCTION.—No deduction or vidual in attending any such educational orga- tribution described in section 408(d)(4) and any credit shall be allowed to the taxpayer under nization but only if the refinancing loan is pur- net income allocable to the contribution.’’ any other section of this chapter for any quali- suant to a program of the refinancing organiza- (4) Section 408A(d)(3) of the 1986 Code (relat- fied education expenses to the extent taken into tion which is designed as described in subpara- ing to rollovers from IRAs other than Roth account in determining the amount of the exclu- graph (D)(ii).’’ sion under this paragraph.’’ (2) Section 108(f)(3) of the 1986 Code is amend- IRAs) is amended— (6) Section 530(d)(4)(B) of the 1986 Code (related by striking ‘‘(or by an organization described (A) by striking clause (iii) of subparagraph ing to exceptions) is amended by striking ‘‘or’’ in paragraph (2)(E) from funds provided by an (A) and inserting: at the end of clause (ii), by striking the period organization described in paragraph (2)(D))’’. ‘‘(iii) unless the taxpayer elects not to have at the end of clause (iii) and inserting ‘‘, or’’, (g) AMENDMENTS RELATED TO SECTION 226 OF this clause apply for any taxable year, any and by adding at the end the following new 1997 ACT.— amount required to be included in gross income clause: (1) Section 226(a) of the 1997 Act is amended for such taxable year by reason of this para- ‘‘(iv) an amount which is includible in gross by striking ‘‘section 1397E’’ and inserting ‘‘sec- graph for any distribution before January 1, income solely because the taxpayer elected tion 1397D’’. 1999, shall be so included ratably over the 4-tax- under paragraph (2)(C) to waive the application (2) Section 1397E(d)(4)(B) of the 1986 Code is able year period beginning with such taxable of paragraph (2) for the taxable year.’’ amended by striking ‘‘local education agency as year. (7) So much of section 530(d)(4)(C) of the 1986 defined’’ and inserting ‘‘local educational agen- Any election under clause (iii) for any distribu- Code as precedes clause (ii) thereof is amended cy as defined’’. tions during a taxable year may not be changed to read as follows: (3) Section 1397E is amended by adding at the after the due date for such taxable year.’’; and ‘‘(C) CONTRIBUTIONS RETURNED BEFORE DUE end the following new subsection: (B) by adding at the end the following: DATE OF RETURN.—Subparagraph (A) shall not ‘‘(h) CREDIT TREATED AS ALLOWED UNDER ‘‘(F) SPECIAL RULES FOR CONTRIBUTIONS TO apply to the distribution of any contribution PART IV OF SUBCHAPTER A.—For purposes of WHICH 4-YEAR AVERAGING APPLIES.—In the case made during a taxable year on behalf of the des- subtitle F, the credit allowed by this section of a qualified rollover contribution to a Roth ignated beneficiary if— shall be treated as a credit allowable under part IRA of a distribution to which subparagraph ‘‘(i) such distribution is made on or before the IV of subchapter A of this chapter.’’ (A)(iii) applied, the following rules shall apply: day prescribed by law (including extensions of SEC. 6005. AMENDMENTS RELATED TO TITLE III ‘‘(i) ACCELERATION OF INCLUSION.— time) for filing the beneficiary’s return of tax for OF 1997 ACT. ‘‘(I) IN GENERAL.—The amount required to be the taxable year or, if the beneficiary is not re- (a) AMENDMENTS RELATED TO SECTION 301 OF included in gross income for each of the first 3 quired to file such a return, the 15th day of the 1997 ACT.— taxable years in the 4-year period under sub- 4th month of the taxable year following the tax- (1) Section 219(g) of the 1986 Code is amend- paragraph (A)(iii) shall be increased by the ag- able year, and’’. ed— gregate distributions from Roth IRAs for such (8) Subparagraph (C) of section 135(c)(2) of (A) by inserting ‘‘or the individual’s spouse’’ taxable year which are allocable under para- the 1986 Code is amended— after ‘‘individual’’ in paragraph (1), and graph (4) to the portion of such qualified roll- (A) by inserting ‘‘AND EDUCATION INDIVIDUAL (B) by striking paragraph (7) and inserting: over contribution required to be included in RETIREMENT ACCOUNTS’’ in the heading after ‘‘(7) SPECIAL RULE FOR SPOUSES WHO ARE NOT gross income under subparagraph (A)(i). ‘‘PROGRAM’’, and ACTIVE PARTICIPANTS.—If this subsection applies ‘‘(II) LIMITATION ON AGGREGATE AMOUNT IN- (B) by striking ‘‘section 529(c)(3)(A)’’ and in- to an individual for any taxable year solely be- CLUDED.—The amount required to be included serting ‘‘section 72’’. cause their spouse is an active participant, in gross income for any taxable year under sub- (9) Paragraph (1) of section 4973(e) of the 1986 then, in applying this subsection to the individ- paragraph (A)(iii) shall not exceed the aggre- Code is amended to read as follows: ual (but not their spouse)— ‘‘(1) IN GENERAL.—In the case of education in- ‘‘(A) the applicable dollar amount under gate amount required to be included in gross individual retirement accounts maintained for the paragraph (3)(B)(i) shall be $150,000, and come under subparagraph (A)(iii) for all taxable benefit of any 1 beneficiary, the term ‘excess ‘‘(B) the amount applicable under paragraph years in the 4-year period (without regard to contributions’ means the sum of— (2)(A)(ii) shall be $10,000.’’ subclause (I)) reduced by amounts included for ‘‘(A) the amount by which the amount con- (2) Paragraph (2) of section 301(a) of the 1997 all preceding taxable years. tributed for the taxable year to such accounts Act is amended by inserting ‘‘after ‘$10,000’ ’’ be- ‘‘(ii) DEATH OF DISTRIBUTEE.— exceeds $500 (or, if less, the sum of the maximum fore the period. ‘‘(I) IN GENERAL.—If the individual required amounts permitted to be contributed under sec- (b) AMENDMENTS RELATED TO SECTION 302 OF to include amounts in gross income under such tion 530(c) by the contributors to such accounts 1997 ACT.— subparagraph dies before all of such amounts for such year), (1) Section 408A(c)(3)(A) of the 1986 Code is are included, all remaining amounts shall be in- ‘‘(B) if any amount is contributed during such amended by striking ‘‘shall be reduced’’ and included in gross income for the taxable year year to a qualified State tuition program for the serting ‘‘shall not exceed an amount equal to which includes the date of death. benefit of such beneficiary, any amount contrib- the amount determined under paragraph (2)(A) ‘‘(II) SPECIAL RULE FOR SURVIVING SPOUSE.—If uted to such accounts for any taxable year, and for such taxable year, reduced’’. the spouse of the individual described in sub- ‘‘(C) the amount determined under this sub- (2) Section 408A(c)(3) of the 1986 Code (relat- clause (I) acquires the individual’s entire inter- section for the preceding taxable year, reduced ing to limits based on modified adjusted gross est in any Roth IRA to which such qualified by the sum of— income) is amended— rollover contribution is properly allocable, the May 4, 1998 CONGRESSIONAL RECORD — SENATE S4175

spouse may elect to treat the remaining amounts ‘‘(7) DUE DATE.—For purposes of this sub- ‘‘(i) the unrecaptured section 1250 gain (or, if described in subclause (I) as includible in the section, the due date for any taxable year is the less, the net capital gain), over spouse’s gross income in the taxable years of the date prescribed by law (including extensions of ‘‘(ii) the excess (if any) of— spouse ending with or within the taxable years time) for filing the taxpayer’s return for such ‘‘(I) the sum of the amount on which tax is of such individual in which such amounts taxable year.’’ determined under subparagraph (A) plus the net would otherwise have been includible. Any such (8)(A) Section 4973(f) of the 1986 Code is capital gain, over election may not be made or changed after the amended— ‘‘(II) taxable income, and due date for the spouse’s taxable year which in- (i) by striking ‘‘such accounts’’ in paragraph ‘‘(E) 28 percent of the amount of taxable includes the date of death. (1)(A) and inserting ‘‘Roth IRAs’’, and come in excess of the sum of the amounts on ‘‘(G) SPECIAL RULE FOR APPLYING SECTION (ii) by striking ‘‘to the accounts’’ in para- which tax is determined under the preceding 72.— graph (2)(B) and inserting ‘‘by the individual to subparagraphs of this paragraph. ‘‘(i) IN GENERAL.—If— all individual retirement plans’’. ‘‘(2) REDUCED CAPITAL GAIN RATES FOR QUALI- ‘‘(I) any portion of a distribution from a Roth (B) Section 4973(b) of the 1986 Code is amend- FIED 5-YEAR GAIN.— IRA is properly allocable to a qualified rollover ed— ‘‘(A) REDUCTION IN 10-PERCENT RATE.—In the contribution described in this paragraph, and (i) by inserting ‘‘a contribution to a Roth IRA case of any taxable year beginning after Decem- ‘‘(II) such distribution is made within the 5- or’’ after ‘‘other than’’ in paragraph (1)(A), and ber 31, 2000, the rate under paragraph (1)(B) taxable year period beginning with the taxable (ii) by inserting ‘‘(including the amount con- shall be 8 percent with respect to so much of the year in which such contribution was made, tributed to a Roth IRA)’’ after ‘‘annuities’’ in amount to which the 10-percent rate would oth- then section 72(t) shall be applied as if such por- paragraph (2)(C). erwise apply as does not exceed qualified 5-year tion were includible in gross income. (C) Section 302(b) of the 1997 Act is amended gain, and 10 percent with respect to the remain- ‘‘(ii) LIMITATION.—Clause (i) shall apply only by striking ‘‘Section 4973(b)’’ and inserting der of such amount. to the extent of the amount of the qualified roll- ‘‘Section 4973’’. ‘‘(B) REDUCTION IN 20-PERCENT RATE.—The over contribution includible in gross income (9) Section 408A of the 1986 Code is amended rate under paragraph (1)(C) shall be 18 percent under subparagraph (A)(i).’’ by adding at the end the following new sub- with respect to so much of the amount to which (5)(A) Section 408A(d)(4) of the 1986 Code is section: the 20-percent rate would otherwise apply as amended to read as follows: ‘‘(f) INDIVIDUAL RETIREMENT PLAN.—For pur- does not exceed the lesser of— ‘‘(4) AGGREGATION AND ORDERING RULES.— poses of this section— ‘‘(i) the excess of qualified 5-year gain over ‘‘(A) AGGREGATION RULES.—Section 408(d)(2) ‘‘(1) a simplified employee pension or a simple the amount of such gain taken into account shall be applied separately with respect to Roth retirement account may not be designated as a under subparagraph (A) of this paragraph, or IRAs and other individual retirement plans. Roth IRA, and ‘‘(ii) the amount of qualified 5-year gain (de- ‘‘(B) ORDERING RULES.—For purposes of ap- ‘‘(2) contributions to any such pension or ac- termined by taking into account only property plying this section and section 72 to any dis- count shall not be taken into account for pur- the holding period for which begins after De- tribution from a Roth IRA, such distribution poses of subsection (c)(2)(B).’’ cember 31, 2000), shall be treated as made— (c) AMENDMENTS RELATED TO SECTION 303 OF ‘‘(i) from contributions to the extent that the and 20 percent with respect to the remainder of 1997 ACT.— amount of such distribution, when added to all such amount. For purposes of determining (1) Section 72(t)(8)(E) of the 1986 Code is previous distributions from the Roth IRA, does under the preceding sentence whether the hold- amended— not exceed the aggregate contributions to the ing period of property begins after December 31, (A) by striking ‘‘120 days’’ and inserting 2000, the holding period of property acquired Roth IRA, and ‘‘120th day’’, and ‘‘(ii) from such contributions in the following pursuant to the exercise of an option (or other (B) by striking ‘‘60 days’’ and inserting ‘‘60th order: right or obligation to acquire property) shall in- ‘‘(I) Contributions other than qualified roll- day’’. clude the period such option (or other right or (2)(A) Section 402(c)(4) of the 1986 Code is over contributions to which paragraph (3) ap- obligation) was held. amended by striking ‘‘and’’ at the end of sub- plies. ‘‘(3) NET CAPITAL GAIN TAKEN INTO ACCOUNT ‘‘(II) Qualified rollover contributions to which paragraph (A), by striking the period at the end AS INVESTMENT INCOME.—For purposes of this paragraph (3) applies on a first-in, first-out of subparagraph (B) and inserting ‘‘, and’’, by subsection, the net capital gain for any taxable basis. inserting at the end the following new subpara- year shall be reduced (but not below zero) by graph: Any distribution allocated to a qualified rollover the amount which the taxpayer takes into ac- ‘‘(C) any hardship distribution described in contribution under clause (ii)(II) shall be allo- count as investment income under section section 401(k)(2)(B)(i)(IV).’’ cated first to the portion of such contribution 163(d)(4)(B)(iii). (B) Section 403(b)(8)(B) of the 1986 Code is ‘‘(4) ADJUSTED NET CAPITAL GAIN.—For pur- required to be included in gross income.’’ amended by inserting ‘‘(including paragraph (B) Section 408A(d)(1) of the 1986 Code is poses of this subsection, the term ‘adjusted net (4)(C) thereof)’’ after ‘‘section 402(c)’’. amended to read as follows: capital gain’ means net capital gain reduced (C) The amendments made by this paragraph ‘‘(1) EXCLUSION.—Any qualified distribution (but not below zero) by the sum of— from a Roth IRA shall not be includible in gross shall apply to distributions after December 31, ‘‘(A) unrecaptured section 1250 gain, and income.’’ 1998. ‘‘(B) 28 percent rate gain. (6)(A) Section 408A(d) of the 1986 Code (relat- (d) AMENDMENTS RELATED TO SECTION 311 OF ‘‘(5) 28 PERCENT RATE GAIN.—For purposes of ing to distribution rules) is amended by adding 1997 ACT.— this subsection— at the end the following: (1) Subsection (h) of section 1 of the 1986 Code ‘‘(A) IN GENERAL.—The term ‘28 percent rate ‘‘(6) TAXPAYER MAY MAKE ADJUSTMENTS BE- (relating to maximum capital gains rate) is gain’ means the excess (if any) of— FORE DUE DATE.— amended to read as follows: ‘‘(i) the sum of— ‘‘(A) IN GENERAL.—Except as provided by the ‘‘(h) MAXIMUM CAPITAL GAINS RATE.— ‘‘(I) the aggregate long-term capital gain from Secretary, if, on or before the due date for any ‘‘(1) IN GENERAL.—If a taxpayer has a net property held for more than 1 year but not more taxable year, a taxpayer transfers in a trustee- capital gain for any taxable year, the tax im- than 18 months, to-trustee transfer any contribution to an indi- posed by this section for such taxable year shall ‘‘(II) collectibles gain, and vidual retirement plan made during such tax- not exceed the sum of— ‘‘(III) section 1202 gain, over able year from such plan to any other individ- ‘‘(A) a tax computed at the rates and in the ‘‘(ii) the sum of— ual retirement plan, then, for purposes of this same manner as if this subsection had not been ‘‘(I) the aggregate long-term capital loss (not chapter, such contribution shall be treated as enacted on the greater of— described in subclause (IV)) from property re- having been made to the transferee plan (and ‘‘(i) taxable income reduced by the net capital ferred to in clause (i)(I), not the transferor plan). gain, or ‘‘(II) collectibles loss, ‘‘(B) SPECIAL RULES.— ‘‘(ii) the lesser of— ‘‘(III) the net short-term capital loss, and ‘‘(i) TRANSFER OF EARNINGS.—Subparagraph ‘‘(I) the amount of taxable income taxed at a ‘‘(IV) the amount of long-term capital loss (A) shall not apply to the transfer of any con- rate below 28 percent, or carried under section 1212(b)(1)(B) to the tax- tribution unless such transfer is accompanied by ‘‘(II) taxable income reduced by the adjusted able year. any net income allocable to such contribution. net capital gain, ‘‘(B) SPECIAL RULES.— ‘‘(ii) NO DEDUCTION.—Subparagraph (A) shall ‘‘(B) 10 percent of so much of the adjusted net ‘‘(i) SHORT SALE GAINS AND HOLDING PERI- apply to the transfer of any contribution only to capital gain (or, if less, taxable income) as does ODS.—Rules similar to the rules of section the extent no deduction was allowed with re- not exceed the excess (if any) of— 1233(b) shall apply where the substantially iden- spect to the contribution to the transferor ‘‘(i) the amount of taxable income which tical property has been held more than 1 year plan.’’ would (without regard to this paragraph) be but not more than 18 months; except that, for (B) Section 408A(d)(3) of the 1986 Code, as taxed at a rate below 28 percent, over purposes of such rules— amended by this subsection, is amended by ‘‘(ii) the taxable income reduced by the ad- ‘‘(I) section 1233(b)(1) shall be applied by sub- striking subparagraph (D) and by redesignating justed net capital gain, stituting ‘18 months’ for ‘1 year’ each place it subparagraphs (E), (F), and (G) as subpara- ‘‘(C) 20 percent of the adjusted net capital appears, and graphs (D), (E), and (F), respectively. gain (or, if less, taxable income) in excess of the ‘‘(II) the holding period of such property shall (7) Section 408A(d) of the 1986 Code, as amount on which a tax is determined under sub- be treated as being 1 year on the day before the amended by paragraph (6), is amended by add- paragraph (B), earlier of the date of the closing of the short sale ing at the end the following new paragraph: ‘‘(D) 25 percent of the excess (if any) of— or the date such property is disposed of. S4176 CONGRESSIONAL RECORD — SENATE May 4, 1998

‘‘(ii) LONG-TERM LOSSES.—Section 1233(d) ‘‘(G) a foreign investment company which is mined with the application of the last sentence shall be applied separately by substituting ‘18 described in section 1246(b)(1) and for which an of section 1(h)(2)(B)), the preceding sentence months’ for ‘1 year’ each place it appears. election is in effect under section 1247, and shall be applied by substituting ‘28 percent’ for ‘‘(iii) OPTIONS.—A rule similar to the rule of ‘‘(H) a qualified electing fund (as defined in ‘42 percent’.’’ section 1092(f) shall apply where the stock was section 1295). (4) Paragraphs (11) and (12) of section 1223, held for more than 18 months. ‘‘(13) SPECIAL RULES FOR PERIODS DURING and section 1235(a), of the 1986 Code are each ‘‘(iv) SECTION 1256 CONTRACTS.—Amounts 1997.— amended by striking ‘‘1 year’’ each place it ap- treated as long-term capital gain or loss under ‘‘(A) DETERMINATION OF 28 PERCENT RATE pears and inserting ‘‘18 months’’. section 1256(a)(3) shall be treated as attributable GAIN.—In applying paragraph (5)— (e) AMENDMENTS RELATED TO SECTION 312 OF to property held for more than 18 months. ‘‘(i) the amount determined under subclause 1997 ACT.— ‘‘(6) COLLECTIBLES GAIN AND LOSS.—For pur- (I) of paragraph (5)(A)(i) shall include long- (1) Paragraph (2) of section 121(b) of the 1986 poses of this subsection— term capital gain (not otherwise described in Code is amended to read as follows: ‘‘(A) IN GENERAL.—The terms ‘collectibles paragraph (5)(A)(i)) which is properly taken ‘‘(2) SPECIAL RULES FOR JOINT RETURNS.—In gain’ and ‘collectibles loss’ mean gain or loss into account for the portion of the taxable year the case of a husband and wife who make a (respectively) from the sale or exchange of a col- before May 7, 1997, joint return for the taxable year of the sale or lectible (as defined in section 408(m) without re- ‘‘(ii) the amounts determined under subclause exchange of the property— gard to paragraph (3) thereof) which is a capital (I) of paragraph (5)(A)(ii) shall include long- ‘‘(A) $500,000 LIMITATION FOR CERTAIN JOINT asset held for more than 18 months but only to term capital loss (not otherwise described in RETURNS.—Paragraph (1) shall be applied by the extent such gain is taken into account in paragraph (5)(A)(ii)) which is properly taken substituting ‘$500,000’ for ‘$250,000’ if— computing gross income and such loss is taken into account for the portion of the taxable year ‘‘(i) either spouse meets the ownership re- into account in computing taxable income. before May 7, 1997, and quirements of subsection (a) with respect to such ‘‘(B) PARTNERSHIPS, ETC.—For purposes of ‘‘(iii) clauses (i)(I) and (ii)(I) of paragraph property, subparagraph (A), any gain from the sale of an (5)(A) shall be applied by not taking into ac- ‘‘(ii) both spouses meet the use requirements of interest in a partnership, S corporation, or trust count any gain and loss on property held for subsection (a) with respect to such property, which is attributable to unrealized appreciation more than 1 year but not more than 18 months and in the value of collectibles shall be treated as which is properly taken into account for the ‘‘(iii) neither spouse is ineligible for the bene- gain from the sale or exchange of a collectible. portion of the taxable year after May 6, 1997, fits of subsection (a) with respect to such prop- Rules similar to the rules of section 751 shall and before July 29, 1997. erty by reason of paragraph (3). apply for purposes of the preceding sentence. ‘‘(B) OTHER SPECIAL RULES.— ‘‘(B) OTHER JOINT RETURNS.—If such spouses ‘‘(7) UNRECAPTURED SECTION 1250 GAIN.—For ‘‘(i) DETERMINATION OF UNRECAPTURED SEC- do not meet the requirements of subparagraph purposes of this subsection— TION 1250 GAIN NOT TO INCLUDE PRE-MAY 7, 1997 (A), the limitation under paragraph (1) shall be ‘‘(A) IN GENERAL.—The term ‘unrecaptured GAIN.—The amount determined under para- the sum of the limitations under paragraph (1) section 1250 gain’ means the excess (if any) of— graph (7)(A)(i) shall not include gain properly to which each spouse would be entitled if such ‘‘(i) the amount of long-term capital gain (not taken into account for the portion of the taxable spouses had not been married. For purposes of otherwise treated as ordinary income) which year before May 7, 1997. the preceding sentence, each spouse shall be would be treated as ordinary income if— ‘‘(ii) OTHER TRANSITIONAL RULES FOR 18- treated as owning the property during the pe- ‘‘(I) section 1250(b)(1) included all deprecia- MONTH HOLDING PERIOD.—Paragraphs (6)(A) riod that either spouse owned the property.’’ tion and the applicable percentage under sec- and (7)(A)(i)(II) shall be applied by substituting (2) Section 121(c)(1) of the 1986 Code is amend- tion 1250(a) were 100 percent, and ‘1 year’ for ‘18 months’ with respect to gain ed to read as follows: ‘‘(II) only gain from property held for more properly taken into account for the portion of ‘‘(1) IN GENERAL.—In the case of a sale or ex- than 18 months were taken into account, over the taxable year after May 6, 1997, and before change to which this subsection applies, the ‘‘(ii) the excess (if any) of— July 29, 1997. ownership and use requirements of subsection ‘‘(I) the amount described in paragraph (a), and subsection (b)(3), shall not apply; but ‘‘(C) SPECIAL RULES FOR PASS-THRU ENTI- (5)(A)(ii), over the dollar limitation under paragraph (1) or (2) TIES.—In applying this paragraph with respect ‘‘(II) the amount described in paragraph to any pass-thru entity, the determination of of subsection (b), whichever is applicable, shall (5)(A)(i). when gains and loss are properly taken into ac- be equal to— ‘‘(B) LIMITATION WITH RESPECT TO SECTION ‘‘(A) the amount which bears the same ratio count shall be made at the entity level.’’ 1231 PROPERTY.—The amount described in sub- to such limitation (determined without regard to (2) Paragraph (3) of section 55(b) of the 1986 paragraph (A)(i) from sales, exchanges, and this paragraph) as Code is amended to read as follows: conversions described in section 1231(a)(3)(A) for ‘‘(B)(i) the shorter of— ‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL any taxable year shall not exceed the net sec- ‘‘(I) the aggregate periods, during the 5-year GAIN OF NONCORPORATE TAXPAYERS.—The tion 1231 gain (as defined in section 1231(c)(3)) period ending on the date of such sale or ex- amount determined under the first sentence of for such year. change, such property has been owned and used paragraph (1)(A)(i) shall not exceed the sum ‘‘(8) SECTION 1202 GAIN.—For purposes of this by the taxpayer as the taxpayer’s principal resi- of— subsection, the term ‘section 1202 gain’ means dence, or ‘‘(A) the amount determined under such first an amount equal to the gain excluded from ‘‘(II) the period after the date of the most re- sentence computed at the rates and in the same gross income under section 1202(a). cent prior sale or exchange by the taxpayer to manner as if this paragraph had not been en- ‘‘(9) QUALIFIED 5-YEAR GAIN.—For purposes of which subsection (a) applied and before the date acted on the taxable excess reduced by the lesser this subsection, the term ‘qualified 5-year gain’ of such sale or exchange, bears to of— means the aggregate long-term capital gain from ‘‘(ii) 2 years.’’ ‘‘(i) the net capital gain, or property held for more than 5 years. The deter- (3) Section 312(d)(2) of the 1997 Act (relating ‘‘(ii) the sum of— mination under the preceding sentence shall be to sales before date of the enactment) is amend- ‘‘(I) the adjusted net capital gain, plus made without regard to collectibles gain, gain ed by inserting ‘‘on or’’ before ‘‘before’’ each ‘‘(II) the unrecaptured section 1250 gain, plus described in paragraph (7)(A)(i), and section place it appears in the text and heading. ‘‘(B) 10 percent of so much of the adjusted net 1202 gain. (f) AMENDMENT RELATED TO SECTION 313 OF capital gain (or, if less, taxable excess) as does ‘‘(10) COORDINATION WITH RECAPTURE OF NET 1997 ACT.—Section 1045 of the 1986 Code is not exceed the amount on which a tax is deter- ORDINARY LOSSES UNDER SECTION 1231.—If any amended by adding at the end the following mined under section 1(h)(1)(B), plus amount is treated as ordinary income under sec- new subsection: ‘‘(C) 20 percent of the adjusted net capital tion 1231(c), such amount shall be allocated ‘‘(c) LIMITATION ON APPLICATION TO PARTNER- gain (or, if less, taxable excess) in excess of the among the separate categories of net section SHIPS AND S CORPORATIONS.—Subsection (a) amount on which tax is determined under sub- 1231 gain (as defined in section 1231(c)(3)) in shall apply to a partnership or S corporation for paragraph (B), plus such manner as the Secretary may by forms or a taxable year only if at all times during such ‘‘(D) 25 percent of the amount of taxable ex- regulations prescribe. taxable year all of the partners in the partner- cess in excess of the sum of the amounts on ‘‘(11) REGULATIONS.—The Secretary may pre- ship, or all of the shareholders of the S corpora- scribe such regulations as are appropriate (in- which tax is determined under the preceding tion, are natural persons, estates, or trusts cluding regulations requiring reporting) to subparagraphs of this paragraph. (other than trusts having any beneficiary which apply this subsection in the case of sales and ex- In the case of taxable years beginning after De- is a C corporation).’’ changes by pass-thru entities and of interests in cember 31, 2000, rules similar to the rules of sec- SEC. 6006. AMENDMENT RELATED TO TITLE IV OF such entities. tion 1(h)(2) shall apply for purposes of subpara- 1997 ACT. ‘‘(12) PASS-THRU ENTITY DEFINED.—For pur- graphs (B) and (C). Terms used in this para- (a) AMENDMENT RELATED TO SECTION 401 OF poses of this subsection, the term ‘pass-thru en- graph which are also used in section 1(h) shall 1997 ACT.—Paragraph (1) of section 55(e) of the tity’ means— have the respective meanings given such terms 1986 Code is amended to read as follows: ‘‘(A) a regulated investment company, by section 1(h) but computed with the adjust- ‘‘(1) IN GENERAL.— ‘‘(B) a real estate investment trust, ments under this part.’’ ‘‘(A) $7,500,000 GROSS RECEIPTS TEST.—The ‘‘(C) an S corporation, (3) Section 57(a)(7) of the 1986 Code is amend- tentative minimum tax of a corporation shall be ‘‘(D) a partnership, ed by adding at the end the following new sen- zero for any taxable year if the corporation’s ‘‘(E) an estate or trust, tence: ‘‘In the case of stock the holding period average annual gross receipts for all 3-taxable- ‘‘(F) a common trust fund, of which begins after December 31, 2000 (deter- year periods ending before such taxable year May 4, 1998 CONGRESSIONAL RECORD — SENATE S4177

does not exceed $7,500,000. For purposes of the ‘‘(2) MAXIMUM DEDUCTION.—The deduction ‘‘For purposes of the preceding sentence, a dece- preceding sentence, only taxable years begin- allowed by this section shall not exceed $675,000. dent shall be treated as engaged in a trade or ning after December 31, 1993, shall be taken into ‘‘(3) COORDINATION WITH UNIFIED CREDIT.— business if any member of the decedent’s family account. ‘‘(A) IN GENERAL.—Except as provided in sub- is engaged in such trade or business.’’ ‘‘(B) $5,000,000 GROSS RECEIPTS TEST FOR FIRST paragraph (B), if this section applies to an es- (B) Subsection (f) of section 2057 of the 1986 3-YEAR PERIOD.—Subparagraph (A) shall be ap- tate, the applicable exclusion amount under sec- Code (as so redesignated) is amended by adding plied by substituting ‘$5,000,000’ for ‘$7,500,000’ tion 2010 shall be $625,000. at the end the following new paragraph: for the first 3-taxable-year period (or portion ‘‘(B) INCREASE IN UNIFIED CREDIT IF DEDUC- ‘‘(3) USE IN TRADE OR BUSINESS BY FAMILY thereof) of the corporation which is taken into TION IS LESS THAN $675,000.—If the deduction al- MEMBERS.—A qualified heir shall not be treated account under subparagraph (A). lowed by this section is less than $675,000, the as disposing of an interest described in sub- ‘‘(C) FIRST TAXABLE YEAR CORPORATION IN EX- amount of the applicable exclusion amount section (e)(1)(A) by reason of ceasing to be en- ISTENCE.—If such taxable year is the first tax- under section 2010 shall be increased (but not gaged in a trade or business so long as the prop- able year that such corporation is in existence, above the amount which would apply to the es- erty to which such interest relates is used in a the tentative minimum tax of such corporation tate without regard to this section) by the excess trade or business by any member of such indi- for such year shall be zero. of $675,000 over the amount of the deduction al- vidual’s family.’’ ‘‘(D) SPECIAL RULES.—For purposes of this lowed.’’ (6) Paragraph (1) of section 2057(g) of the 1986 paragraph, the rules of paragraphs (2) and (3) (C) Subparagraph (A) of section 2057(b)(2) of Code (as so redesignated) is amended by striking of section 448(c) shall apply.’’ the 1986 Code (as so redesignated) is amended by ‘‘or (M)’’. (b) AMENDMENT RELATED TO SECTION 402 OF striking ‘‘(without regard to this section)’’. (7) Paragraph (3) of section 2057(i) of the 1986 1997 ACT.—Subsection (c) of section 168 of the (D) Subsection (c) of section 2057 of the 1986 Code (as so redesignated) is amended by redesig- 1986 Code is amended— Code (as so redesignated) is amended by striking nating subparagraphs (L), (M), and (N) as sub- (1) by striking paragraph (2), and ‘‘(determined without regard to this section)’’. paragraphs (N), (O), and (P), respectively, and (2) by striking the portion of such subsection (E) The table of sections for part III of sub- by inserting after subparagraph (K) the follow- preceding the table in paragraph (1) and insert- chapter A of chapter 11 of the 1986 Code is ing new subparagraphs: ing the following: amended by striking the item relating to section ‘‘(L) Section 2032A(g) (relating to application ‘‘(c) APPLICABLE RECOVERY PERIOD.—For 2033A. to interests in partnerships, corporations, and purposes of this section, the applicable recovery (F) The table of sections for part IV of such trusts). period shall be determined in accordance with subchapter is amended by adding at the end the ‘‘(M) Subsections (h) and (i) of section the following table:’’. following new item: 2032A.’’ SEC. 6007. AMENDMENTS RELATED TO TITLE V OF MENDMENTS RELATED TO SECTION 503 OF ‘‘Sec. 2057. Family-owned business interests.’’ (c) A 1997 ACT. THE 1997 ACT.— (a) AMENDMENTS RELATED TO SECTION 501 OF (2) Section 2057(b)(3) of the 1986 Code (as so (1) Clause (iii) of section 6166(b)(7)(A) of the 1997 ACT.— redesignated) is amended to read as follows: 1986 Code is amended to read as follows: (1) Paragraph (2) of section 2001(c) of the 1986 ‘‘(3) INCLUDIBLE GIFTS OF INTERESTS.—The ‘‘(iii) for purposes of applying section 6601(j), Code is amended by striking ‘‘$10,000,000’’ and amount of the gifts of qualified family-owned the 2-percent portion (as defined in such sec- all that follows and inserting ‘‘$10,000,000. The business interests determined under this para- tion) shall be treated as being zero.’’ amount of the increase under the preceding sen- graph is the sum of— (2) Clause (iii) of section 6166(b)(8)(A) of the tence shall not exceed the sum of the applicable ‘‘(A) the amount of such gifts from the dece- 1986 Code is amended to read as follows: credit amount under section 2010(c) (determined dent to members of the decedent’s family taken ‘‘(iii) 2-PERCENT INTEREST RATE NOT TO without regard to section 2057(a)(3), and into account under section 2001(b)(1)(B), plus APPLY.—For purposes of applying section $359,200.’’ ‘‘(B) the amount of such gifts otherwise ex- 6601(j), the 2-percent portion (as defined in such (2) Subsection (c) of section 2631 of the 1986 cluded under section 2503(b), section) shall be treated as being zero.’’ Code is amended to read as follows: to the extent such interests are continuously (d) AMENDMENT RELATED TO SECTION 505 OF ‘‘(c) INFLATION ADJUSTMENT.— held by members of such family (other than the THE 1997 ACT.—Paragraphs (1) and (2) of sec- ‘‘(1) IN GENERAL.—In the case of any calendar decedent’s spouse) between the date of the gift tion 7479(a) of the 1986 Code are each amended year after 1998, the $1,000,000 amount contained and the date of the decedent’s death.’’ by striking ‘‘an estate,’’ and inserting ‘‘an es- in subsection (a) shall be increased by an (3)(A) Section 2057(e)(2)(C) of the 1986 Code tate (or with respect to any property included amount equal to— (as so redesignated) is amended by striking ‘‘(as therein),’’. ‘‘(A) $1,000,000, multiplied by defined in section 543(a))’’ and inserting ‘‘(as (e) AMENDMENTS RELATED TO SECTION 506 OF ‘‘(B) the cost-of-living adjustment determined defined in section 543(a) without regard to para- THE 1997 ACT.— under section 1(f)(3) for such calendar year by graph (2)(B) thereof) if such trade or business (1) Paragraph (1) of section 506(e) of the 1997 substituting ‘calendar year 1997’ for ‘calendar were a corporation’’. Act is amended by striking ‘‘and (c)’’ and in- year 1992’ in subparagraph (B) thereof. (B) Clause (ii) of section 2057(e)(2)(D) of the serting ‘‘, (c), and (d)’’. If any amount as adjusted under the preceding 1986 Code (as so redesignated) is amended by (2)(A) Paragraph (9) of section 6501(c) of the sentence is not a multiple of $10,000, such striking ‘‘income of which is described in section 1986 Code is amended by striking the last sen- amount shall be rounded to the next lowest mul- 543(a) or’’ and inserting ‘‘personal holding com- tence. tiple of $10,000. pany income (as defined in subparagraph (C)) (B) Subsection (f) of section 2001 of the 1986 ‘‘(2) ALLOCATION OF INCREASE.—Any increase or income described’’. Code is amended to read as follows: under paragraph (1) for any calendar year shall (4) Paragraph (2) of section 2057(f) of the 1986 ‘‘(f) VALUATION OF GIFTS.— apply only to generation-skipping transfers Code (as so redesignated) is amended— ‘‘(1) IN GENERAL—If the time has expired made during or after such calendar year; except (A) by striking ‘‘(as determined under rules under section 6501 within which a tax may be that no such increase for calendar years after similar to the rules of section 2032A(c)(2)(B))’’, assessed under chapter 12 (or under correspond- the calendar year in which the transferor dies and ing provisions of prior laws) on— shall apply to transfers by such transferor.’’ (B) by adding at the end the following new ‘‘(A) the transfer of property by gift made (3) Subsection (f) of section 501 of the 1997 Act subparagraph: during a preceding calendar period (as defined is amended by inserting ‘‘(other than the ‘‘(C) ADJUSTED TAX DIFFERENCE.—For pur- in section 2502(b)), or amendment made by subsection (d))’’ after ‘‘this poses of subparagraph (A)— ‘‘(B) an increase in taxable gifts required section’’. ‘‘(i) IN GENERAL.—The adjusted tax difference under section 2701(d), (b) AMENDMENTS RELATED TO SECTION 502 OF attributable to a qualified family-owned busi- the value thereof shall, for purposes of comput- 1997 ACT.— ness interest is the amount which bears the same ing the tax under this chapter, be the value as (1)(A) Section 2033A of the 1986 Code is hereby ratio to the adjusted tax difference with respect finally determined for purposes of chapter 12. moved to the end of part IV of subchapter A of to the estate (determined under clause (ii)) as ‘‘(2) FINAL DETERMINATION.—For purposes of chapter 11 of the 1986 Code and redesignated as the value of such interest bears to the value of paragraph (1), a value shall be treated as fi- section 2057. all qualified family-owned business interests de- nally determined for purposes of chapter 12 if— (B) So much of such section 2057 (as so redes- scribed in subsection (b)(2). ‘‘(A) the value is shown on a return under ignated) as precedes subsection (b) thereof is ‘‘(ii) ADJUSTED TAX DIFFERENCE WITH RESPECT such chapter and such value is not contested by amended to read as follows: TO THE ESTATE.—For purposes of clause (i), the the Secretary before the expiration of the time ‘‘SEC. 2057. FAMILY-OWNED BUSINESS INTER- term ‘adjusted tax difference with respect to the referred to in paragraph (1) with respect to such ESTS. estate’ means the excess of what would have return, ‘‘(a) GENERAL RULE.— been the estate tax liability but for the election ‘‘(B) in a case not described in subparagraph ‘‘(1) ALLOWANCE OF DEDUCTION.—For pur- under this section over the estate tax liability. (A), the value is specified by the Secretary and poses of the tax imposed by section 2001, in the For purposes of this clause, the term ‘estate tax such value is not timely contested by the tax- case of an estate of a decedent to which this sec- liability’ means the tax imposed by section 2001 payer, or tion applies, the value of the taxable estate shall reduced by the credits allowable against such ‘‘(C) the value is determined by a court or be determined by deducting from the value of tax.’’ pursuant to a settlement agreement with the the gross estate the adjusted value of the quali- (5)(A) Paragraph (1) of section 2057(e) of the Secretary.’’ fied family-owned business interests of the dece- 1986 Code (as so redesignated) is amended by (B) Subsection (c) of section 2504 of the 1986 dent which are described in subsection (b)(2). adding at the end the following: Code is amended to read as follows: S4178 CONGRESSIONAL RECORD — SENATE May 4, 1998

‘‘(c) VALUATION OF GIFTS.—If the time has ex- (2) Paragraph (1) of section 1400C(c) of the (e) AMENDMENT RELATED TO SECTION 971 OF pired under section 6501 within which a tax may 1986 Code is amended to read as follows: 1997 ACT.—Clause (ii) of section 280F(a)(1)(C) is be assessed under this chapter 12 (or under cor- ‘‘(1) IN GENERAL.—The term ‘first-time home- amended by striking ‘‘subparagraph (A)’’ and responding provisions of prior laws) on— buyer’ means any individual if such individual inserting ‘‘subparagraphs (A) and (B)’’. ‘‘(1) the transfer of property by gift made dur- (and if married, such individual’s spouse) had (f) AMENDMENT RELATED TO SECTION 976 OF ing a preceding calendar period (as defined in no present ownership interest in a principal res- 1997 ACT.—Section 6103(d)(5) of the 1986 Code is section 2502(b)), or idence in the District of Columbia during the 1- amended by striking ‘‘section 967 of the Tax- ‘‘(2) an increase in taxable gifts required year period ending on the date of the purchase payer Relief Act of 1997.’’ and inserting ‘‘section under section 2701(d), of the principal residence to which this section 976 of the Taxpayer Relief Act of 1997. Sub- the value thereof shall, for purposes of comput- applies.’’ sections (a)(2) and (p)(4) and sections 7213 and ing the tax under this chapter, be the value as (3) Subparagraph (B) of section 1400C(e)(2) of 7213A shall not apply with respect to disclosures finally determined (within the meaning of sec- the 1986 Code is amended by inserting before the or inspections made pursuant to this para- tion 2001(f)(2)) for purposes of this chapter.’’ period ‘‘on the date the taxpayer first occupies graph.’’ such residence’’. (f) AMENDMENTS RELATED TO SECTION 507 OF (g) AMENDMENT RELATED TO SECTION 977 OF (4) Paragraph (3) of section 1400C(e) of the 1997 ACT.— 1997 ACT.—Paragraph (2) of section 977(e) of the 1986 Code is amended by striking all that follows (1) Paragraph (3) of section 1(g) of the 1986 1997 Act is amended to read as follows: ‘‘principal residence’’ and inserting ‘‘on the Code is amended by striking subparagraph (C) ‘‘(2) NON-AMTRAK STATE.—The term ‘non-Am- date such residence is purchased.’’ and by redesignating subparagraph (D) as sub- trak State’ means any State which is not receiv- (5) Subsection (i) of section 1400C of the 1986 ing intercity passenger rail service from the Cor- paragraph (C). Code is amended to read as follows: (2) Section 641 of the 1986 Code is amended by poration as of the date of the enactment of this ‘‘(i) APPLICATION OF SECTION.—This section Act.’’ striking subsection (c) and by redesignating sub- shall apply to property purchased after August section (d) as subsection (c). SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 4, 1997, and before January 1, 2001.’’ 1997 ACT. (3) Paragraph (4) of section 1361(e) of the 1986 (6) Subsection (c) of section 23 of the 1986 (a) AMENDMENTS RELATED TO SECTION 1001 OF Code is amended by striking ‘‘section 641(d)’’ Code is amended by inserting ‘‘and section 1997 ACT.— and inserting ‘‘section 641(c)’’. 1400C’’ after ‘‘other than this section’’. (1) Paragraph (2) of section 1259(b) of the 1986 (4) Subparagraph (A) of section 6103(e)(1) of (7) Subparagraph (C) of section 25(e)(1) of the Code is amended— the 1986 Code is amended by striking clause (ii) 1986 Code is amended by striking ‘‘section 23’’ (A) by striking ‘‘debt’’ each place it appears and by redesignating clauses (iii) and (iv) as and inserting ‘‘sections 23 and 1400C’’. clauses (ii) and (iii), respectively. in subparagraph (A) and inserting ‘‘position’’, SEC. 6009. AMENDMENTS RELATED TO TITLE IX (B) by striking ‘‘and’’ at the end of subpara- (g) AMENDMENTS RELATED TO SECTION 508 OF OF 1997 ACT. graph (A), and 1997 ACT.— (a) AMENDMENT RELATED TO SECTION 901 OF (C) by redesignating subparagraph (B) as sub- (1) Subsection (c) of section 2031 of the 1986 1997 ACT.—Section 9503(c)(7) of the 1986 Code is paragraph (C) and by inserting after subpara- Code is amended by redesignating paragraph (9) amended— as paragraph (10) and by inserting after para- (1) by striking ‘‘resulting from the amend- graph (A) the following new subparagraph: ‘‘(B) any hedge with respect to a position de- graph (8) the following new paragraph: ments made by’’ and inserting ‘‘(and transfers scribed in subparagraph (A), and’’. ‘‘(9) TREATMENT OF EASEMENTS GRANTED to the Mass Transit Account) resulting from the (2) Section 1259(d)(1) of the 1986 Code is AFTER DEATH.—In any case in which the quali- amendments made by subsections (a) and (b) of amended by inserting ‘‘(including cash)’’ after fied conservation easement is granted after the section 901 of’’, and date of the decedent’s death and on or before (2) by inserting before the period ‘‘and depos- ‘‘property’’. (3) Subparagraph (D) of section 475(f)(1) of the due date (including extensions) for filing the its in the Highway Trust Fund (and transfers to the 1986 Code is amended by adding at the end return of tax imposed by section 2001, the deduc- the Mass Transit Account) shall be treated as the following new sentence: ‘‘Subsection (d)(3) tion under section 2055(f) with respect to such made when they would have been required to be shall not apply under the preceding sentence for easement shall be allowed to the estate but only made without regard to section 901(e) of the purposes of applying sections 1402 and 7704.’’ if no charitable deduction is allowed under Taxpayer Relief Act of 1997’’. (4) Subparagraph (C) of section 1001(d)(3) of chapter 1 to any person with respect to the (b) AMENDMENT RELATED TO SECTION 907 OF the 1997 Act is amended by striking ‘‘within the grant of such easement.’’ 1997 ACT.—Paragraph (2) of section 9503(e) of 30-day period beginning on’’ and inserting ‘‘be- (2) The first sentence of paragraph (6) of sec- the 1986 Code is amended by striking the last fore the close of the 30th day after’’. tion 2031(c) of the 1986 Code is amended by sentence and inserting the following new sen- (b) AMENDMENT RELATED TO SECTION 1011 OF striking all that follows ‘‘shall be made’’ and in- tence: ‘‘For purposes of the preceding sentence, 1997 ACT.—Paragraph (1) of section 1059(g) of serting ‘‘on or before the due date (including ex- the term ‘mass transit portion’ means, for any the 1986 Code is amended by striking ‘‘and in tensions) for filing the return of tax imposed by fuel with respect to which tax was imposed the case of stock held by pass-thru entities’’ and section 2001 and shall be made on such return.’’ under section 4041 or 4081 and deposited into the inserting ‘‘, in the case of stock held by pass- Highway Trust Fund, the amount determined at SEC. 6008. AMENDMENTS RELATED TO TITLE VII thru entities, and in the case of consolidated OF 1997 ACT. the rate of— ‘‘(A) except as otherwise provided in this sen- groups’’. (a) AMENDMENT RELATED TO SECTION 1400 OF (c) AMENDMENTS RELATED TO SECTION 1012 OF 1986 CODE.—Section 1400(b)(2)(B) of the 1986 tence, 2.86 cents per gallon, ‘‘(B) 1.43 cents per gallon in the case of any 1997 ACT.— Code is amended by inserting ‘‘as determined on (1) Paragraph (1) of section 1012(d) of the 1997 the basis of the 1990 census’’ after ‘‘percent’’. partially exempt methanol or ethanol fuel (as defined in section 4041(m)) none of the alcohol Act is amended by striking ‘‘1997, pursuant’’ (b) AMENDMENT RELATED TO SECTION 1400A in which consists of ethanol, and inserting ‘‘1997; except that the amendment OF 1986 CODE.—Subsection (a) of section 1400A ‘‘(C) 1.86 cents per gallon in the case of lique- made by subsection (a) shall apply to such dis- of the 1986 Code is amended by inserting before fied natural gas, tributions only if pursuant’’. the period ‘‘and section 1394(b)(3)(B)(iii) shall ‘‘(D) 2.13 cents per gallon in the case of lique- (2) Subparagraph (A) of section 355(e)(3) of be applied without regard to the employee resi- fied petroleum gas, and the 1986 Code is amended— dency requirement’’. ‘‘(E) 9.71 cents per MCF (determined at stand- (A) by striking ‘‘shall not be treated as de- (c) AMENDMENTS RELATED TO SECTION 1400B ard temperature and pressure) in the case of scribed in’’ and inserting ‘‘shall not be taken OF 1986 CODE.— compressed natural gas.’’ into account in applying’’, and (1) Section 1400B(b) of the 1986 Code is amend- (c) AMENDMENT RELATED TO SECTION 908 OF (B) by striking clause (iv) and inserting the ed by inserting after paragraph (4) the following 1997 ACT.—Paragraph (6) of section 5041(b) of following new clause: new paragraph: the 1986 Code is amended by inserting ‘‘which is ‘‘(iv) The acquisition of stock in the distribut- ‘‘(5) TREATMENT OF DC ZONE TERMINATION.— a still wine’’ after ‘‘hard cider’’. ing corporation or any controlled corporation to The termination of the designation of the DC (d) AMENDMENT RELATED TO SECTION 964 OF the extent that the percentage of stock owned Zone shall be disregarded for purposes of deter- 1997 ACT.— directly or indirectly in such corporation by mining whether any property is a DC Zone (1) IN GENERAL.—Subparagraph (C) of section each person owning stock in such corporation asset.’’ 7704(g)(3) of the 1986 Code is amended by strik- immediately before the acquisition does not de- (2) Paragraph (6) of section 1400B(b) of the ing the period at the end and inserting ‘‘and crease.’’ 1986 Code is amended by striking ‘‘(4)(A)(ii)’’ shall be paid by the partnership. Section 6655 (3)(A) Subsection (c) of section 351 of the 1986 and inserting ‘‘(4)(A)(i) or (ii)’’. shall be applied to such partnership with re- Code is amended to read as follows: (3) Section 1400B(c) of the 1986 Code is amend- spect to such tax in the same manner as if the ‘‘(c) SPECIAL RULES WHERE DISTRIBUTION TO ed by striking ‘‘entity which is an’’. partnership were a corporation, such tax were SHAREHOLDERS.— (4) Section 1400B(d)(2) of the 1986 Code is imposed by section 11, and references in such ‘‘(1) IN GENERAL.—In determining control for amended by inserting ‘‘as determined on the section to taxable income were references to the purposes of this section, the fact that any cor- basis of the 1990 census’’ after ‘‘percent’’. gross income referred to in subparagraph (A).’’ porate transferor distributes part or all of the (d) AMENDMENTS RELATED TO SECTION 1400C (2) EFFECTIVE DATE.—The second sentence of stock in the corporation which it receives in the OF 1986 CODE.— section 7704(g)(3)(C) of the 1986 Code (as added exchange to its shareholders shall not be taken (1) Paragraph (1) of section 1400C(b) of the by paragraph (1)) shall apply to taxable years into account. 1986 Code is amended by inserting ‘‘and sub- beginning after the date of the enactment of this ‘‘(2) SPECIAL RULE FOR SECTION 355.—If the re- section (d)’’ after ‘‘this subsection’’. Act. quirements of section 355 (or so much of section May 4, 1998 CONGRESSIONAL RECORD — SENATE S4179

356 as relates to section 355) are met with respect (h) AMENDMENTS RELATED TO SECTION 1032 OF all that follows and inserting ‘‘except that, in to a distribution described in paragraph (1), 1997 ACT.— the case of a master contract (within the mean- then, solely for purposes of determining the tax (1) Section 1032(a) of the 1997 Act is amended ing of section 264(f)(4)(E) of the Internal Reve- treatment of the transfers of property to the by striking ‘‘Subsection (a) of section 4083’’ and nue Code of 1986), the addition of covered lives controlled corporation by the distributing cor- inserting ‘‘Paragraph (1) of section 4083(a)’’. shall be treated as a new contract only with re- poration, the fact that the shareholders of the (2) Section 1032(e)(12)(A) of the 1997 Act shall spect to such additional covered lives.’’ distributing corporation dispose of part or all of be applied as if ‘‘gasoline, diesel fuel,’’ were the (4)(A) Clause (iv) of section 264(f)(5)(A) of the the distributed stock shall not be taken into ac- material proposed to be stricken. 1986 Code is amended by striking the second sen- count in determining control for purposes of this (3) Paragraph (1) of section 4101(e) of the 1986 tence. section.’’ Code is amended by striking ‘‘dyed diesel fuel (B) Subparagraph (B) of section 6724(d)(1) of (B) Clause (ii) of section 368(a)(2)(H) of the and kerosene’’ and inserting ‘‘such fuel in a the 1986 Code is amended by striking ‘‘or’’ at the 1986 Code is amended to read as follows: dyed form’’. end of clause (xv), by striking the period at the ‘‘(ii) in the case of a transaction with respect (i) AMENDMENT RELATED TO SECTION 1034 OF end of clause (xvi) and inserting ‘‘, or’’, and by to which the requirements of section 355 (or so 1997 ACT.—Paragraph (3) of section 4251(d) of adding at the end the following new clause: much of section 356 as relates to section 355) are the 1986 Code is amended by striking ‘‘other ‘‘(xvii) section 264(f)(5)(A)(iv) (relating to re- met, the fact that the shareholders of the dis- similar arrangement’’ and inserting ‘‘any other porting with respect to certain life insurance tributing corporation dispose of part or all of similar arrangement’’. and annuity contracts).’’ the distributed stock shall not be taken into ac- (j) AMENDMENTS RELATED TO SECTION 1041 OF (C) Paragraph (2) of section 6724(d) of the count.’’ 1997 ACT.— 1986 Code is amended by striking ‘‘or’’ at the (d) AMENDMENTS RELATED TO SECTION 1013 OF (1) Subparagraph (A) of section 512(b)(13) of end of subparagraph (Y), by striking the period 1997 ACT.— the 1986 Code is amended by inserting ‘‘or ac- at the end of subparagraph (Z) and inserting (1) Paragraph (5) of section 304(b) of the 1986 crues’’ after ‘‘receives’’. ‘‘or’’, and by adding at the end the following Code is amended by striking subparagraph (B) (2) Subclause (I) of section 512(b)(13)(B)(i) of new subparagraph: and by redesignating subparagraph (C) as sub- the 1986 Code is amended by striking ‘‘(as de- ‘‘(AA) section 264(f)(5)(A)(iv) (relating to re- paragraph (B). fined in section 513A(a)(5)(A))’’. porting with respect to certain life insurance (2) Subsection (b) of section 304 of the 1986 (3) Paragraph (2) of section 1041(b) of the 1997 and annuity contracts).’’ Code is amended by adding at the end the fol- Act is amended to read as follows: (p) AMENDMENTS RELATED TO SECTION 1085 OF lowing new paragraph: ‘‘(2) BINDING CONTRACTS.—The amendments 1997 ACT.— ‘‘(6) AVOIDANCE OF MULTIPLE INCLUSIONS, made by this section shall not apply to any (1) Paragraph (5) of section 32(c) of the 1986 ETC.—In the case of any acquisition to which amount received or accrued during the first 2 Code is amended— subsection (a) applies in which the acquiring taxable years beginning on or after the date of (A) by inserting before the period at the end corporation or the issuing corporation is a for- the enactment of this Act if such amount is re- of subparagraph (A) ‘‘and increased by the eign corporation, the Secretary shall prescribe ceived or accrued pursuant to a written binding amounts described in subparagraph (C)’’, such regulations as are appropriate in order to contract in effect on June 8, 1997, and at all (B) by adding ‘‘or’’ at the end of clause (iii) eliminate a multiple inclusion of any item in in- times thereafter before such amount is received of subparagraph (B), and come by reason of this subpart and to provide or accrued. The preceding sentence shall not (C) by striking all that follows subclause (II) appropriate basis adjustments (including modi- apply to any amount which would (but for the of subparagraph (B)(iv) and inserting the fol- fications to the application of sections 959 and exercise of an option to accelerate payment of lowing: 961).’’ such amount) be received or accrued after such ‘‘(III) other trades or businesses. (e) AMENDMENTS RELATED TO SECTION 1014 OF 2 taxable years.’’ For purposes of clause (iv), there shall not be 1997 ACT.— (k) AMENDMENTS RELATED TO SECTION 1053 OF taken into account items which are attributable (1) Paragraph (1) of section 351(g) of the 1986 1997 ACT.— to a trade or business which consists of the per- Code is amended by adding ‘‘and’’ at the end of (1) Section 853 of the 1986 Code is amended by formance of services by the taxpayer as an em- subparagraph (A) and by striking subpara- redesignating subsection (e) as subsection (f) ployee. graphs (B) and (C) and inserting the following and by inserting after subsection (d) the follow- ‘‘(C) CERTAIN AMOUNTS INCLUDED.—An new subparagraph: ing new subsection: amount is described in this subparagraph if it ‘‘(B) if (and only if) the transferor receives ‘‘(e) TREATMENT OF TAXES NOT ALLOWED AS A is— stock other than nonqualified preferred stock— CREDIT UNDER SECTION 901(k).—This section ‘‘(i) interest received or accrued during the ‘‘(i) subsection (b) shall apply to such trans- shall not apply to any tax with respect to which taxable year which is exempt from tax imposed feror, and the regulated investment company is not al- by this chapter, or ‘‘(ii) such nonqualified preferred stock shall lowed a credit under section 901 by reason of ‘‘(ii) amounts received as a pension or annu- be treated as other property for purposes of ap- section 901(k).’’ ity, and any distributions or payments received plying subsection (b).’’ (2) Subsection (c) of section 853 of the 1986 from an individual retirement plan, by the tax- (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by striking the last sentence. payer during the taxable year to the extent not Code is amended by adding at the end the fol- (l) AMENDMENT RELATED TO SECTION 1055 OF included in gross income. lowing new subclause: 1997 ACT.—Section 6611(g)(1) of the 1986 Code is Clause (ii) shall not include any amount which ‘‘(III) EXTENSION OF STATUTE OF LIMITA- amended by striking ‘‘(e), and (h)’’ and insert- is not includible in gross income by reason of a TIONS.—The statutory period for the assessment ing ‘‘and (e)’’. trustee-to-trustee transfer or a rollover distribu- of any deficiency attributable to a corporation (m) AMENDMENT RELATED TO SECTION 1061 OF tion.’’ failing to be a family-owned corporation shall 1997 ACT.—Subsection (c) of section 751 of the not expire before the expiration of 3 years after 1986 Code is amended by striking ‘‘731’’ each (2) Clause (v) of section 32(c)(2)(B) of the 1986 the date the Secretary is notified by the corpora- place it appears and inserting ‘‘731, 732,’’. Code is amended by inserting ‘‘shall be taken into account’’ before ‘‘, but only’’. tion (in such manner as the Secretary may pre- (n) AMENDMENT RELATED TO SECTION 1083 OF (3) The text of paragraph (3) of section 1085(a) scribe) of such failure, and such deficiency may 1997 ACT.—Section 1083(a)(2) of the 1997 Act is of the 1997 Act is amended to read as follows: be assessed before the expiration of such 3-year amended— ‘‘Paragraph (2) of section 6213(g) (relating to period notwithstanding the provisions of any (1) by striking ‘‘21’’ and inserting ‘‘20’’, and the definition of mathematical or clerical errors) other law or rule of law which would otherwise (2) by striking ‘‘22’’ and inserting ‘‘21’’. is amended by striking ‘‘and’’ at the end of sub- prevent such assessment.’’ (o) AMENDMENT RELATED TO SECTION 1084 OF paragraph (I), by striking the period at the end (f) AMENDMENT RELATED TO SECTION 1024 OF 1997 ACT.— of subparagraph (J) and inserting ‘‘, and’’, and 1997 ACT.—Section 6331(h)(1) of the 1986 Code is (1) Paragraph (3) of section 264(a) of the 1986 amended by striking ‘‘The effect of a levy’’ and Code is amended by striking ‘‘subsection (c)’’ by inserting after subparagraph (J) the follow- inserting ‘‘If the Secretary approves a levy and inserting ‘‘subsection (d)’’. ing new subparagraph: ‘‘(K) an omission of information required by under this subsection, the effect of such levy’’. (2) Paragraph (4) of section 264(a) of the 1986 (g) AMENDMENTS RELATED TO SECTION 1031 OF Code is amended by striking ‘‘subsection (d)’’ section 32(k)(2) (relating to taxpayers making 1997 ACT.— and inserting ‘‘subsection (e)’’. improper prior claims of earned income credit).’’ (1) Subsection (l) of section 4041 of the 1986 (3)(A) Paragraph (4) of section 264(f) of the (q) AMENDMENT RELATED TO SECTION 1088 OF Code is amended by striking ‘‘subsection (e) or 1986 Code is amended by adding at the end the 1997 ACT.—Section 1088(b)(2)(C) of the 1997 Act (f)’’ and inserting ‘‘subsection (f) or (g)’’. following new subparagraph: is amended by inserting ‘‘more than 1 year’’ be- (2) Subsection (b) of section 9502 of the 1986 ‘‘(E) MASTER CONTRACTS.—If coverage for fore ‘‘after’’. Code is amended by moving the sentence added each insured under a master contract is treated (r) AMENDMENT RELATED TO SECTION 1089 OF at the end of paragraph (1) to the end of such as a separate contract for purposes of sections 1997 ACT.—Paragraphs (1)(C) and (2)(C) of sec- subsection. 817(h), 7702, and 7702A, coverage for each such tion 664(d) of the 1986 Code are each amended (3) Subsection (c) of section 6421 of the 1986 insured shall be treated as a separate contract by adding ‘‘, and’’ at the end. Code is amended— for purposes of subparagraph (A). For purposes SEC. 6011. AMENDMENTS RELATED TO TITLE XI (A) by striking ‘‘(2)(A)’’ and inserting ‘‘(2)’’, of the preceding sentence, the term ‘master con- OF 1997 ACT. and tract’ shall not include any group life insurance (a) AMENDMENT RELATED TO SECTION 1103 OF (B) by adding at the end the following sen- contract (as defined in section 848(e)(2)).’’ 1997 ACT.—The paragraph (3) of section 59(a) tence: ‘‘Subsection (a) shall not apply to gaso- (B) The second sentence of section 1084(d) of added by section 1103 of the 1997 Act is redesig- line to which this subsection applies.’’ the 1997 Act is amended by striking ‘‘but’’ and nated as paragraph (4). S4180 CONGRESSIONAL RECORD — SENATE May 4, 1998

(b) AMENDMENTS RELATED TO SECTION 1121 OF ‘‘(3) Section 6103(p)(3)(A), as amended by sec- 7430(c)(4) of the 1986 Code is amended by strik- 1997 ACT.— tion 1026(b)(1)(A) of the 1997 Act, is amended by ing ‘‘subparagraph (A)(iii)’’ and inserting ‘‘sub- (1) Subsection (e) of section 1297 of the 1986 striking ‘‘or (8)’’ and inserting ‘‘(8), or (9)’’. paragraph (A)(ii)’’. Code is amended by adding at the end the fol- (5) Section 1213(b) of the 1997 Act is amended SEC. 6015. AMENDMENTS RELATED TO TITLE XV lowing new paragraph: by striking ‘‘section 6724(d)(1)(A)’’ and inserting OF 1997 ACT. ‘‘(4) TREATMENT OF HOLDERS OF OPTIONS.— ‘‘section 6724(d)(1)’’. (a) AMENDMENT RELATED TO SECTION 1501 OF Paragraph (1) shall not apply to stock treated (c) AMENDMENT RELATED TO SECTION 1221 OF 1997 ACT.—The paragraph (8) of section 408(p) as owned by a person by reason of section 1997 ACT.—Paragraph (2) of section 774(d) of the of the 1986 Code added by section 1501(b) of the 1298(a)(4) (relating to the treatment of a person 1986 Act is amended by inserting before the pe- 1997 Act is redesignated as paragraph (9). that has an option to acquire stock as owning riod ‘‘or 857(b)(3)(D)’’. (b) AMENDMENT RELATED TO SECTION 1505 OF such stock) unless such person establishes that (d) AMENDMENT RELATED TO SECTION 1226 OF 1997 ACT.—Section 1505(d)(2) of the 1997 Act is such stock is owned (within the meaning of sec- 1997 ACT.—Section 1226 of the 1997 Act is amended by striking ‘‘(b)(12)’’ and inserting tion 958(a)) by a United States shareholder (as amended by striking ‘‘ending on or’’ and insert- ‘‘(b)(12)(A)(i)’’. defined in section 951(b)) who is not exempt ing ‘‘beginning’’. (c) AMENDMENTS RELATED TO SECTION 1529 OF from tax under this chapter.’’ (e) AMENDMENT RELATED TO SECTION 1231 OF 1997 ACT.— (2) Section 1298(a)(2)(B) of the 1986 Code is 1997 ACT.—Subsection (c) of section 6211 of the (1) Section 1529(a) of the 1997 Act is amended amended by adding at the end the following 1986 Code is amended— to read as follows: new sentence: ‘‘Section 1297(e) shall not apply (1) by striking ‘‘SUBCHAPTER C’’ in the head- ‘‘(a) GENERAL RULE.—Amounts to which this in determining whether a corporation is a pas- ing and inserting ‘‘SUBCHAPTERS C AND D’’, and section applies which are received by an individ- sive foreign investment company for purposes of (2) by striking ‘‘subchapter C’’ in the text and ual (or the survivors of the individual) as a re- this subparagraph.’’ inserting ‘‘subchapters C and D’’. sult of hypertension or heart disease of the indi- (c) AMENDMENTS RELATED TO SECTION 1122 OF (f) AMENDMENT RELATED TO SECTION 1256 OF vidual shall be excludable from gross income 1997 ACT.— 1997 ACT.—Subparagraph (A) of section under section 104(a)(1) of the Internal Revenue (1) Section 672(f)(3)(B) of the 1986 Code is 857(d)(3) of the 1986 Code is amended by striking Code of 1986.’’ amended by striking ‘‘section 1296’’ and insert- ‘‘earliest accumulated earnings and profits (2) Section 1529(b)(1)(B) of the 1997 Act is ing ‘‘section 1297’’. (other than earnings and profits to which sub- amended to read as follows: (2) Paragraph (1) of section 1291(d) of the 1986 section (a)(2)(A) applies)’’ and inserting ‘‘earli- ‘‘(B) under— Code is amended by adding at the end the fol- est earnings and profits accumulated in any ‘‘(i) a State law (as amended on May 19, 1992) lowing new sentence: ‘‘In the case of stock taxable year to which the provisions of this part which irrebuttably presumed that heart disease which is marked to market under section 475 or did not apply’’. and hypertension are work-related illnesses but any other provision of this chapter, this section (g) AMENDMENT RELATED TO SECTION 1285 OF only for employees hired before July 1, 1992, or shall not apply, except that rules similar to the 1997 ACT.—Section 7430(b) of the 1986 Code is ‘‘(ii) any other statute, ordinance, labor rules of section 1296(j) shall apply.’’ amended by redesignating paragraph (5) as agreement, or similar provision as a disability (3) Subsection (d) of section 1296 of the 1986 paragraph (4). pension payment or in the nature of a disability Code is amended by adding at the end the fol- SEC. 6013. AMENDMENTS RELATED TO TITLE XIII pension payment attributable to employment as lowing new sentence: ‘‘In the case of a regu- OF 1997 ACT. a police officer or fireman, but only if the indi- lated investment company which elected to mark (a) AMENDMENTS RELATED TO SECTION 1305 OF vidual is referred to in the State law described to market the stock held by such company as of 1997 ACT.— in clause (i); and’’. the last day of the taxable year preceding such (1) Section 646 of the 1986 Code is redesignated (d) AMENDMENT RELATED TO SECTION 1530 OF company’s first taxable year for which such as section 645. 1997 ACT.—Subparagraph (C) of section company elects the application of this section, (2) The item relating to section 646 in the table 404(a)(9) of the 1986 Code (as added by section the amount referred to in paragraph (1) shall of sections for subpart A of part I of subchapter 1530 of the 1997 Act) is redesignated as subpara- include amounts included in gross income under J of chapter 1 of the 1986 Code is amended by graph (D) and is amended by striking ‘‘A quali- such mark to market with respect to such stock striking ‘‘Sec. 646’’ and inserting ‘‘Sec. 645’’. fied’’ and inserting ‘‘QUALIFIED GRATUITOUS for prior taxable years.’’ (3) Paragraph (1) of section 2652(b) of the 1986 TRANSFERS.—A qualified’’. (d) AMENDMENT RELATED TO SECTION 1123 OF Code is amended by striking ‘‘section 646’’ and (e) AMENDMENT RELATED TO SECTION 1531 OF 1997 ACT.—The subsection (e) of section 1297 of inserting ‘‘section 645’’. 1997 ACT.—Subsection (f) of section 9811 of the the 1986 Code added by section 1123 of the 1997 (4)(A) Paragraph (1) of section 2652(b) of the 1986 Code (as added by section 1531 of the 1997 Act is redesignated as subsection (f). 1986 Code is amended by striking the second sen- Act) is redesignated as subsection (e). tence. (e) AMENDMENTS RELATED TO SECTION 1131 OF SEC. 6016. AMENDMENTS RELATED TO TITLE XVI 1997 ACT.— (B) Subsection (b) of section 2654 of the 1986 OF 1997 ACT. Code is amended by adding at the end the fol- (1) Section 991 of the 1986 Code is amended by (a) AMENDMENTS RELATED TO SECTION 1601(d) lowing new sentence: ‘‘For purposes of this sub- striking ‘‘except for the tax imposed by chapter OF 1997 ACT.— 5’’. section, a trust shall be treated as part of an es- (1) AMENDMENTS RELATED TO SECTION (2) Section 6013 of the 1986 Code is amended tate during any period that the trust is so treat- 1601(d)(1)— by striking ‘‘chapters 1 and 5’’ each place it ap- ed under section 645.’’ (A) Section 408(p)(2)(D)(i) of the 1986 Code is pears in paragraphs (1)(A) and (5) of subsection (b) AMENDMENTS RELATED TO SECTION 1309 OF amended by striking ‘‘or (B)’’ in the last sen- (g) and in subsection (h)(1) and inserting 1997 ACT.— tence. ‘‘chapter 1’’ . (1) Subsection (b) of section 685 of the 1986 (B) Section 408(p) of the 1986 Code is amended (f) AMENDMENT RELATED TO SECTION 1144 OF Code is amended by adding at the end the fol- by adding at the end the following: 1997 ACT.—Paragraphs (1) and (2) of section lowing flush sentence: ‘‘(10) SPECIAL RULES FOR ACQUISITIONS, DIS- 1144(c) of the 1997 Act are each amended by ‘‘A trust shall not fail to be treated as meeting POSITIONS, AND SIMILAR TRANSACTIONS.— striking ‘‘6038B(b)’’ and inserting ‘‘6038B(c) (as the requirement of paragraph (6) by reason of ‘‘(A) IN GENERAL.—An employer which fails to redesignated by subsection (b))’’. the death of an individual but only during the meet any applicable requirement by reason of an SEC. 6012. AMENDMENTS RELATED TO TITLE XII 60-day period beginning on the date of such acquisition, disposition, or similar transaction OF 1997 ACT. death.’’ shall not be treated as failing to meet such re- (a) AMENDMENT RELATED TO SECTION 1204 OF (2) Subsection (f) of section 685 of the 1986 quirement during the transition period if— 1997 ACT.—The last sentence of section 162(a) of Code is amended by inserting before the period ‘‘(i) the employer satisfies requirements similar the 1986 Code is amended by striking ‘‘inves- at the end ‘‘and of trusts terminated during the to the requirements of section 410(b)(6)(C)(i)(II), tigate’’ and all that follows and inserting ‘‘in- year’’. and vestigate or prosecute, or provide support serv- SEC. 6014. AMENDMENTS RELATED TO TITLE XIV ‘‘(ii) the qualified salary reduction arrange- ices for the investigation or prosecution of, a OF 1997 ACT. ment maintained by the employer would satisfy Federal crime.’’ (a) AMENDMENT RELATED TO SECTION 1422 OF the requirements of this subsection after the (b) AMENDMENTS RELATED TO SECTION 1205 OF 1997 ACT.—Section 5364 of the 1986 Code is transaction if the employer which maintained 1997 ACT.— amended by striking ‘‘Wine imported or brought the arrangement before the transaction had re- (1) Section 6311(e)(1) of the 1986 Code is into’’ and inserting ‘‘Natural wine (as defined mained a separate employer. amended by striking ‘‘section 6103(k)(8)’’ and in section 5381) imported or brought into’’. ‘‘(B) APPLICABLE REQUIREMENT.—For pur- inserting ‘‘section 6103(k)(9)’’. (b) AMENDMENT RELATED TO SECTION 1434 OF poses of this paragraph, the term ‘applicable re- (2) Paragraph (8) of section 6103(k) of the 1986 1997 ACT.—Paragraph (2) of section 4052(f) of quirement’ means— Code (as added by section 1205(c)(1) of the 1997 the 1986 Code is amended by striking ‘‘this sec- ‘‘(i) the requirement under paragraph (2)(A)(i) Act) is redesignated as paragraph (9). tion’’ and inserting ‘‘such section’’. that an employer be an eligible employer, (3) The subsection (g) of section 7431 of the (c) AMENDMENT RELATED TO SECTION 1436 OF ‘‘(ii) the requirement under paragraph (2)(D) 1986 Code added by section 1205 of the 1997 Act 1997 ACT.—Paragraph (2) of section 4091(a) of that an arrangement be the only plan of an emis redesignated as subsection (h) and is amended the 1986 Code is amended by inserting ‘‘or on ployer, and by striking ‘‘(8)’’ in the heading and inserting which tax has been credited or refunded’’ after ‘‘(iii) the participation requirements under ‘‘(9)’’. ‘‘such paragraph’’. paragraph (4). (4) Section 1205(c)(3) of the 1997 Act shall be (d) AMENDMENT RELATED TO SECTION 1453 OF ‘‘(C) TRANSITION PERIOD.—For purposes of applied as if it read as follows: 1997 ACT.—Subparagraph (D) of section this paragraph, the term ‘transition period’ May 4, 1998 CONGRESSIONAL RECORD — SENATE S4181 means the period beginning on the date of any 501(d), this subsection shall not apply to copies in the amendments made by section 701(b) of the transaction described in subparagraph (A) and referred to in section 6031(b) with respect to Tax Reform Act of 1986. ending on the last day of the second calendar such organization.’’ SEC. 6022. MISCELLANEOUS CLERICAL AND DEAD- year following the calendar year in which such (b) PUBLIC INSPECTION.—Subparagraph (C) of WOOD CHANGES. transaction occurs.’’ section 6104(e)(1) of the 1986 Code is amended by (1) The heading for subparagraph (B) of sec- (C) Section 408(p)(2) of the 1986 Code is adding at the end the following new sentence: tion 45A(b)(1) of the 1986 Code is amended by amended— ‘‘In the case of an organization described in sec- striking ‘‘TARGETED JOBS CREDIT’’ and inserting (i) by striking ‘‘the preceding sentence shall tion 501(d), subparagraph (A) shall not require ‘‘WORK OPPORTUNITY CREDIT’’. apply only in accordance with rules similar to the disclosure of the copies referred to in section (2) The subsection heading for section 59(b) of the rules of section 410(b)(6)(C)(i)’’ in the last 6031(b) with respect to such organization.’’ the 1986 Code is amended by striking ‘‘SECTION sentence of subparagraph (C)(i)(II) and insert- (c) EFFECTIVE DATE.—The amendments made 936 CREDIT’’ and inserting ‘‘CREDITS UNDER SEC- ing ‘‘the preceding sentence shall not apply’’, by this section shall take effect on the date of TION 30A OR 936’’. and the enactment of this Act. (3) Subsection (n) of section 72 of the 1986 (ii) by striking clause (iii) of subparagraph SEC. 6019. AMENDMENT RELATED TO OMNIBUS Code is amended by inserting ‘‘(as in effect on (D). BUDGET RECONCILIATION ACT OF the day before the date of the enactment of the (2) AMENDMENT TO SECTION 1601(d)(4).—Section 1993. Small Business Job Protection Act of 1996)’’ 1601(d)(4)(A) of the 1997 Act is amended— (a) IN GENERAL.—Section 196(c) of the 1986 after ‘‘section 101(b)(2)(D)’’. (A) by striking ‘‘Section 403(b)(11)’’ and in- Code is amended by striking ‘‘and’’ at the end (4) Subparagraph (A) of section 72(t)(3) of the serting ‘‘Paragraphs (7)(A)(ii) and (11) of sec- of paragraph (6), by striking the period at the 1986 Code is amended by striking ‘‘(A)(v),’’ and tion 403(b)’’, and end of paragraph (7), and insert ‘‘, and’’, and inserting ‘‘(A)(v)’’. (B) by striking ‘‘403(b)(1)’’ in clause (ii) and by adding at the end the following new para- (5) Clause (ii) of section 142(f)(3)(A) of the inserting ‘‘403(b)(10)’’. graph: 1986 Code is amended by striking ‘‘1997, (’’ and (b) AMENDMENT RELATED TO SECTION ‘‘(8) the employer social security credit deter- inserting ‘‘1997 (’’. 1601(f)(4) OF 1997 ACT.—Subsection (d) of section mined under section 45B(a).’’ (6) The last sentence of paragraph (3) of sec- 6427 of the 1986 Code is amended— (b) EFFECTIVE DATE.—The amendment made tion 501(n) of the 1986 Code is amended by strik- (1) by striking ‘‘HELICOPTERS’’ in the heading by this section shall take effect as if included in ing ‘‘subparagraph (C)(ii)’’ and inserting ‘‘sub- and inserting ‘‘OTHER AIRCRAFT USES’’, and the amendments made by section 13443 of the paragraph (E)(ii)’’. (2) by inserting ‘‘or a fixed-wing aircraft’’ Revenue Reconciliation Act of 1993. (7) The heading for subclause (II) of section after ‘‘helicopter’’. SEC. 6020. AMENDMENT RELATED TO REVENUE 512(b)(17)(B)(ii) of the 1986 Code is amended by SEC. 6017. AMENDMENTS RELATED TO SMALL RECONCILIATION ACT OF 1990. striking ‘‘RULE’’ and inserting ‘‘RULE’’. BUSINESS JOB PROTECTION ACT OF (a) IDENTIFICATION REQUIREMENT FOR INDI- (8) Clause (ii) of section 543(d)(5)(A) of the 1996. VIDUALS ELIGIBLE FOR EARNED INCOME CRED- 1986 Code is amended by striking ‘‘section (a) AMENDMENT RELATING TO SECTION 1116.— IT.—Subparagraph (F) of section 32(c)(1) of the 563(c)’’ and inserting ‘‘section 563(d)’’. Subparagraph (C) of section 1116(b)(2) of the 1986 Code is amended by striking ‘‘The term ‘eli- (9) Subparagraph (B) of section 871(f)(2) of Small Business Job Protection Act of 1996 is gible individual’ does not include any individual the 1986 Code is amended by striking ‘‘(19 U.S.C. amended by striking ‘‘chapter 68’’ and inserting who does not include on the return of tax for 2462)’’ and inserting ‘‘19 U.S.C. 2461 et seq.)’’. ‘‘chapter 61’’. the taxable year—’’ and inserting ‘‘No credit (10) Paragraph (2) of section 1017(a) of the (b) AMENDMENT RELATING TO SECTION 1421.— 1986 Code is amended by striking ‘‘(b)(2)(D)’’ Section 408(d)(7) of the 1986 Code is amended— shall be allowed under this section to an eligible individual who does not include on the return and inserting ‘‘(b)(2)(E)’’. (1) by inserting ‘‘or 402(k)’’ after ‘‘section (11) Subparagraph (D) of section 1250(d)(4) of 402(h)’’ in subparagraph (B) thereof, and of tax for the taxable year—’’. (b) IDENTIFICATION REQUIREMENT FOR QUALI- the 1986 Code is amended by striking ‘‘the last (2) by inserting ‘‘OR SIMPLE RETIREMENT AC- sentence of section 1033(b)’’ and inserting ‘‘sec- COUNTS’’ after ‘‘PENSIONS’’ in the heading there- FYING CHILDREN UNDER EARNED INCOME CRED- IT.— tion 1033(b)(2)’’. of. (12) Paragraph (5) of section 3121(a) of the (c) AMENDMENT RELATING TO SECTION 1431.— (1) IN GENERAL.—Clause (i) of section 32(c)(3)(D) of the 1986 Code is amended— 1986 Code is amended— Subparagraph (E) of section 1431(c)(1) of the (A) by striking the semicolon at the end of Small Business Job Protection Act of 1996 is (A) by striking ‘‘The requirements of this subparagraph are met’’ and inserting ‘‘A qualifying subparagraph (F) and inserting a comma, amended to read as follows: (B) by striking ‘‘or’’ at the end of subpara- ‘‘(E) Section 414(q)(5), as redesignated by sub- child shall not be taken into account under subsection (b)’’, graph (G), and paragraph (A), is amended by striking ‘under (C) by striking the period at the end of subparagraph (4) or the number of officers taken (B) by striking ‘‘each’’ and inserting ‘‘the’’, and paragraph (I) and inserting a semicolon. into account under paragraph (5)’ ’’. (13) Paragraph (19) of section 3401(a) of the (C) by striking ‘‘(without regard to this sub- (d) AMENDMENT RELATING TO SECTION 1604.— 1986 Code is amended by inserting ‘‘for’’ before paragraph)’’. Paragraph (3) of section 1604(b) of such Act is ‘‘any benefit provided to’’. (2) INDIVIDUALS WHO DO NOT INCLUDE TIN, amended— (14) Paragraph (21) of section 3401(a) of the ETC., OF ANY QUALIFYING CHILD.—Paragraph (1) (1) by striking ‘‘such Code’’ and inserting 1986 Code is amended by inserting ‘‘for’’ before of section 32(c) of the 1986 Code is amended by ‘‘the Internal Revenue Code of 1986’’, and ‘‘any payment made’’. adding at the end the following new subpara- (2) by striking ‘‘such date of enactment’’ and (15) Sections 4092(b) and 6427(q)(2) of the 1986 graph: inserting ‘‘the date of the enactment of this Code are each amended by striking ‘‘section ‘‘(G) INDIVIDUALS WHO DO NOT INCLUDE TIN, Act’’. 4041(c)(4)’’ and inserting ‘‘section 4041(c)(2)’’. ETC., OF ANY QUALIFYING CHILD.—No credit shall (e) AMENDMENT RELATING TO SECTION 1609.— (16) Sections 4221(c) and 4222(d) of the 1986 be allowed under this section to any eligible in- Paragraph (1) of section 1609(h) of such Act is Code are each amended by striking ‘‘4053(a)(6)’’ dividual who has 1 or more qualifying children amended by striking ‘‘paragraph (3)(A)(i)’’ and and inserting ‘‘4053(6)’’. if no qualifying child of such individual is taken inserting ‘‘paragraph (3)(A)’’. (17)(A) The heading of section 4973 of the 1986 into account under subsection (b) by reason of (f) AMENDMENTS RELATING TO SECTION 1807.— Code is amended to read as follows: (1) Subparagraph (A) of section 23(b)(2) of the paragraph (3)(D).’’ ‘‘SEC. 4973. TAX ON EXCESS CONTRIBUTIONS TO (3) CONFORMING AMENDMENT.—Subparagraph 1986 Code (relating to income limitation on cred- CERTAIN TAX-FAVORED ACCOUNTS it for adoption expenses) is amended by insert- (A) of section 32(c)(3) is amended by inserting AND ANNUITIES.’’ ing ‘‘(determined without regard to subsection ‘‘and’’ at the end of clause (ii), by striking ‘‘, (B) The item relating to section 4973 in the (c))’’ after ‘‘for any taxable year’’. and’’ at the end of clause (iii) and inserting a table of sections for chapter 43 of the 1986 Code (2) Paragraph (3) of section 1807(c) of the period, and by striking clause (iv). is amended to read as follows: Small Business Job Protection Act of 1996 is (c) EFFECTIVE DATES.— amended by striking ‘‘Clause (i)’’ and inserting (1) ELIGIBLE INDIVIDUALS.—The amendment ‘‘Sec. 4973. Tax on excess contributions to cer- ‘‘Clause (ii)’’. made by subsection (a) shall take effect as if in- tain tax-favored accounts and an- (g) AMENDMENT RELATING TO SECTION 1903.— cluded in the amendments made by section 451 nuities.’’ Subsection (b) of section 1903 of such Act shall of the Personal Responsibility and Work Oppor- (18) Section 4975 of the 1986 Code is amend- be applied as if ‘‘or’’ in the material proposed to tunity Reconciliation Act of 1996. ed— be stricken were capitalized. (2) QUALIFYING CHILDREN.—The amendments (A) in subsection (c)(3) by striking ‘‘exempt for (h) EFFECTIVE DATE.—The amendments made made by subsection (b) shall take effect as if in- the tax’’ and inserting ‘‘exempt from the tax’’, by this section shall take effect as if included in cluded in the amendments made by section 11111 and the provisions of the Small Business Job Protec- of Revenue Reconciliation Act of 1990. (B) in subsection (i) by striking ‘‘Secretary of tion Act of 1996 to which they relate. SEC. 6021. AMENDMENT RELATED TO TAX RE- Treasury’’ and inserting ‘‘Secretary of the SEC. 6018. AMENDMENTS RELATED TO TAXPAYER FORM ACT OF 1986. Treasury’’. BILL OF RIGHTS 2. (a) IN GENERAL.—Section 6401(b)(1) of the 1986 (19) Paragraph (1) of section 6039(a) of the (a) IN GENERAL.—Subsection (b) of section Code is amended by striking ‘‘and D’’ and in- 1986 Code is amended by inserting ‘‘to any per- 6104 of the 1986 Code is amended by adding at serting ‘‘D, and G’’. son’’ after ‘‘transfers’’. the end the following new sentence: ‘‘In the (b) EFFECTIVE DATE.—The amendment made (20) Subparagraph (A) of section 6050R(b)(2) case of an organization described in section by subsection (a) shall take effect as if included of the 1986 Code is amended by striking the S4182 CONGRESSIONAL RECORD — SENATE May 4, 1998 semicolon at the end thereof and inserting a I further ask unanimous consent that operation between Congress and the ex- comma. Eric Thorson of the Finance Commit- ecutive branch. But anyone who reads (21) Subparagraph (A) of section 6103(h)(4) of tee staff also be granted floor privi- all this legislation proposes will realize the 1986 Code is amended by inserting ‘‘if’’ before ‘‘the taxpayer is a party to’’. leges during the consideration of this that it is a strong product of a collec- (22) Paragraph (5) of section 6416(b) of the bill. tive effort. If this legislation were a 1986 Code is amended by striking ‘‘section The PRESIDING OFFICER. Without collegiate athlete, it would be consid- 4216(e)(1)’’ each place it appears and inserting objection, it is so ordered. ered a blue-chip recruit. While it is not ‘‘section 4216(d)(1)’’. Mr. ROTH addressed the Chair. perfect, it is ready to play and includes (23)(A) Section 6421 of the 1986 Code is amend- The PRESIDING OFFICER. The Sen- numerous provisions that strengthen ed by redesignating subsections (j) and (k) as ator from Delaware. taxpayer protections. It makes IRS subsections (i) and (j), respectively. Mr. ROTH. Mr. President, the need (B) Subsection (b) of section 34 of the 1986 employees more accountable, provides Code is amended by striking ‘‘section 6421(j)’’ for this Internal Revenue Service re- enhanced oversight, gives the Commis- and inserting ‘‘section 6421(i)’’. structuring legislation is clear. Last sioner the tools necessary to bring the (C) Subsections (a) and (b) of section 6421 of summer, the National Commission on IRS into the next century, and offers the 1986 Code are each amended by striking Restructuring—following an extensive greater due process to taxpayers who ‘‘subsection (j)’’ and inserting ‘‘subsection (i)’’. review of the IRS—issued a report to are trying to comply with our complex (24) Paragraph (3) of section 6427(f) of the revamp the agency. tax laws. 1986 Code is amended by striking ‘‘, (e),’’. Last September, the Finance Com- (25)(A) Section 6427 of the 1986 Code, as The legislation pending before us amended by paragraph (2), is amended by redes- mittee held 3 days of hearings regard- today allows Commissioner Rossotti to ignating subsections (n), (p), (q), and (r) as sub- ing practices and procedures of the In- eliminate the current national office, sections (m), (n), (o), and (p), respectively. ternal Revenue Service, which raised regional office, and the district office (B) Paragraphs (1) and (2)(A) of section even more startling problems that have structure of the IRS. It gives him the 6427(i) of the 1986 Code are each amended by been festering within the IRS for years. authority to replace these antiquated striking ‘‘(q)’’ and inserting ‘‘(o)’’. Following these hearings, the agen- management models with operating (26) Subsection (m) of section 6501 of the 1986 cy’s new Commissioner, Charles Code is amended by striking ‘‘election under’’ units that will directly serve particular and all that follows through ‘‘(or any’’ and in- Rossotti, released a report that vali- groups of taxpayers, better meeting serting ‘‘election under section 30(d)(4), 40(f), 43, dated the concerns we raised, and he their needs and making the agency 45B, 45C(d)(4), or 51(j) (or any’’. made a commitment to reform the much more efficient and user friendly. (27) The paragraph heading of paragraph (2) Service. Likewise, in response to these Commissioner Rossotti should be of section 7702B(e) of the 1986 Code is amended hearings, the House considered and complimented on his tremendous work by inserting ‘‘SECTION’’ after ‘‘APPLICATION OF’’. passed an IRS restructuring bill in No- and managerial skills. His plan to re- (28) Paragraph (3) of section 7435(b) of the vember, and the Finance Committee 1986 Code is amended by striking ‘‘attorneys structure the agency is as bold as it is fees’’ and inserting ‘‘attorneys’ fees’’. began the new year with a series of five necessary, and this legislation gives (29) Subparagraph (B) of section 7872(f)(2) of hearings on restructuring, which in- him the authority he needs to move the 1986 Code is amended by striking ‘‘foregone’’ cluded testimony from past IRS Com- forward. and inserting ‘‘forgone’’. missioners. Those restructuring hear- One of the major concerns we’ve lis- (30) Subsection (e) of section 9502 of the 1986 ings were followed with what can only tened to throughout our oversight ini- Code is amended to read as follows: be considered the most in-depth IRS ‘‘(e) CERTAIN TAXES ON ALCOHOL MIXTURES tiative—a theme that repeated itself TO REMAIN IN GENERAL FUND.—For purposes of oversight hearings ever, which con- over and over again—was that the tax- this section, the amounts which would (but for cluded only last Friday. Throughout payers who get caught in the IRS hall this subsection) be required to be appropriated this extensive effort at oversight re- of mirrors have no place to turn that is under subparagraphs (A), (C), and (D) of sub- structuring, my colleagues and I have truly independent and structured to section (b)(1) shall be reduced by— been working on the legislation before represent their concerns. With this leg- ‘‘(1) 0.6 cent per gallon in the case of taxes im- us today. Our staffs have been meeting. islation, we require the agency to es- posed on any mixture at least 10 percent of There have been countless hours, late which is alcohol (as defined in section tablish an independent Office of Ap- 4081(c)(3)) if any portion of such alcohol is etha- nights, and early mornings spent to de- peals—one that may not be influenced nol, and velop a restructured bill that is strong, by tax collection employees or audi- ‘‘(2) 0.67 cent per gallon in the case of fuel thorough, and workable. I appreciate tors. Appeals officers will be made used in producing a mixture described in para- these efforts. I also compliment the available in every state, and they will graph (1).’’ House on its swift action on the earlier be better able to work with taxpayers (31)(A) Clause (i) of section 9503(c)(2)(A) of version, and recognize the very effec- the 1986 Code is amended by adding ‘‘and’’ at who proceed through the appeals proc- the end of subclause (II), by striking subclause tive leadership of Ways and Means ess. (III), and by redesignating subclause (IV) as Committee Chairman BILL ARCHER. We heard a lot about the need for subclause (III). Their efforts provided a solid founda- independence in our hearings. Agency (B) Clause (ii) of such section is amended by tion for restructuring the agency, and employees themselves made it clear striking ‘‘gasoline, special fuels, and lubricating made it clear that Congress is ready to that there is no dependable and con- oil’’ each place it appears and inserting ‘‘fuel’’. respond to the demands of the Amer- sistent mechanism in place to rep- (32) The amendments made by this section ican people and reform the IRS. That, shall take effect on the date of the enactment of resent taxpayer interests. Just as this this Act. again, became clear when the Senate bill will give the appeals process great- SEC. 6023. EFFECTIVE DATE. Finance Committee voted 20 to nothing er independence, it will also make the Except as otherwise provided in this title, the in support of the legislation which we Office of Taxpayer Advocate as well as amendments made by this title shall take effect are about to consider—legislation that local problem resolution officers more as if included in the provisions of the Taxpayer takes a major step toward changing independent. In the future, the Sec- Relief Act of 1997 to which they relate. the way that the IRS does business retary of Treasury, rather than the PRIVILEGE OF THE FLOOR with the American people. Commissioner will appoint the Na- Mr. ROTH. Mr. President, I ask unan- I call this legislation a major step be- tional Taxpayer Advocate. And the imous consent that the following staff cause it provides greater protections Taxpayer Advocate will be just that. from the Joint Committee on Taxation and reforms that were included in the Criteria to fill this position will in- be granted floor privileges during con- House bill. It goes much further than clude that the Advocate must not be an sideration of the IRS restructuring the House bill, offering powerful provi- IRS employee two years before and five bill, H.R. 2676: Thomas A. Barthold, sions to correct the abuses and ineffi- years after holding this position. In ad- Lauralee A. Matthews, Alysa M. ciencies our extensive investigation dition, this bill provides the Advocate McDaniel, John F. Navratil, Joseph W. and oversight efforts have uncovered. with much greater discretion to issue Nega, Judy K. Owens, Lindy L. Paull, But I also want to refer to this effort an assistance order to help taxpayers. Oren S. Penn, Cecily W. Rock, Melbert as a step, because I believe reform of In an effort to ensure that independ- E. Schwarz, Carolyn E. Smith, Maxine the IRS must be an ongoing process. It ent review and accountability become B. Terry, Michael A. Udell, and Barry must be a process of continued vigi- part of the IRS culture—top to bot- L. Wold. lance, constructive hearings, and co- tom—our legislation creates a nine- May 4, 1998 CONGRESSIONAL RECORD — SENATE S4183 member IRS Oversight Board—a board This change is one of the most impor- Our legislation also allows an em- composed of six experts from various tant distinctions between the House ployee to be fired for willfully misusing professional fields in the private sec- bill and the Senate bill, and it is of section 6103 authority to conceal infor- tor, the Commissioner, the Secretary critical importance. mation from Congress. of Treasury, and a representative of Our bill creates a new Treasury IG With this legislation, we show that IRS employees. for Tax Administration which will have we mean business. An environment As we heard in our oversight hear- greater independence than the IRS that allows employees guilty of these ings, one of the key elements missing Chief Inspector. This provision is sup- kinds of behaviors to continue to work in the current agency is a powerful in- ported by Commissioner Rossotti, and within the system is not acceptable to fluence independent enough from man- will create a structure where the new me, the Finance Committee, or to the agement and the senior executive corps Treasury IG for Tax Administration American people. We have heard that it can monitor and hold managers will not allow oversight to fall through enough excuses. And Commissioner and executives accountable for their the cracks, and will provide a seamless Rossotti agrees that enough is enough! actions, and the actions of their em- check on how tax laws are being ad- One of the most troubling issues ployees. Under our legislation, the ministered. raised in our September hearings was Oversight Board will have broad re- This new Treasury IG for Tax Admin- the widespread use of enforcement sta- sponsibility and will ensure that the istration will provide independent in- tistics to evaluate front line IRS em- IRS has procedures in place to carry vestigations of alleged IRS employee ployees and their supervisors. out its mission. misconduct without management in- Subsequent reports by the IRS Chief In order to help prevent the types of terference. The new Treasury IG will Inspector substantiated our findings abuses disclosed in our Finance Com- also respond in a timely manner to re- that the agency was, in fact, illegally mittee hearings, the Board will have quests to investigate or audit made by evaluating employees based on enforce- ‘‘big picture’’ authority over law en- the Commissioner or the IRS Oversight ment statistics. Then, in our hearings forcement and collection activities. Board. just last week, we heard that such While the Board may not intervene in I believe that an intimidating edge evaluations continue. In my mind, Mr. particular taxpayer or employee cases, now exists in the current management President, this mocks Congress. It it will have access to information in structure. The statistics I’ve just dis- demonstrates that the IRS believes it order to help prevent the types of closed confirm that this is true. is above the law. It is indicative of a abuses that are brought to the Board’s One of the problems is that the Com- culture that believes that if it will sim- attention. If the Commissioner does missioner does not have the kind of au- ply hold on long enough oversight and not respond to issues raised by the thority that is necessary to eliminate accountability will go away and the Board, the Board may contact the those managers who contaminate the managers and executives who have chairmen of the tax writing commit- culture of the agency. And the Com- made careers out of bending the law tees. missioner does not have sufficient au- can get back to business as usual. The bill pending before us strength- We discovered in our hours and hours thority to hire those who will work to- ens the law against this. It prohibits of testimony from IRS employees, and ward making the kinds of changes that the use of enforcement statistics to in the countless letters we received, are necessary. This legislation gives evaluate any IRS employee, not merely that part of the intimidating culture of the Commissioner the tools he needs to front line collection employees and the agency is sustained by the fact hire top-flight managers who are ex- their supervisors. And the new Treas- that they feel there are no independent perts in their field. ury IG would be required to report on protections for them if they report It gives him the wherewithal to whether the IRS is abiding by the law. wrong-doing. I was most disturbed to transform the agency’s workforce by Each of the measures I have outlined find in our investigation that there is a providing bonuses and other incentives, thus far demonstrates just how serious dangerous kill-the-messenger syn- and to sufficiently discipline employ- we are in our effort to change the In- drome within the agency. Over 50% of ees whose inappropriate actions are a ternal Revenue Service. employees servicewide believe that plague on the agency. Each will go a long way towards pro- management does not communicate As we have seen—even this past tecting the taxpayer and honest em- honestly with the rank-and-file. Fifty- week—the Finance Committee has dis- ployees who are working to make the four percent were adamant that there closed egregious conduct by IRS em- IRS a true service-oriented agency. But is distrust between management and ployees. We have received thousands of we don’t stop here. We offer much more employees. letters relating the same. in the way of taxpayer protections. We When asked if there is adequate pro- They have come from taxpayers and shift the burden of proof to the IRS if tection from retaliation against em- agency employees, alike. The stories the taxpayer maintains records, co- ployees who report misconduct, 72% ei- we have heard are outrageous, as is the operates with the agency, and provides ther disagreed, strongly disagreed, or fact that many of those who perpetrate credible evidence to the court. In addi- did not care to comment. More than these abuses do so without con- tion, the IRS will have the burden of one in four indicated that they believe sequence. This will not stand. Our bill providing a taxpayer’s income if it uses management fails to treat employees requires the IRS to terminate an em- arbitrary statistics to determine that with respect. And 30% strongly dis- ployee if it is proven that the employee income. agree that, ‘‘Disciplinary actions are failed to obtain required authorization This legislation also allows taxpayers applied fairly to employees.’’ If we are to seize a taxpayer’s property, commit- to recover attorney fees and costs from to have an agency that the public ted perjury material to a taxpayer’s the date the taxpayer rightfully ap- trusts and that the employees are matter, or falsified or destroyed docu- peals an audit, and it eliminates the proud of, these statistics must change. ments to conceal the employee’s mis- $110 per hour cap on recoverable attor- In an effort to do this, our legislation takes with respect to a taxpayer’s case. ney fees. Taxpayers should not be eliminates the IRS Office of Chief In- This legislation allows terminations forced to litigate if the IRS is unrea- spector. It transfers its full time to take place if an IRS employee en- sonable. In order to level the playing equivalents to a new Treasury Inspec- gages in abuses or egregious mis- field, if the agency forces a taxpayer to tor General for Tax Administration. conduct. Conditions for which an em- litigate and go to trial, our bill allows There have been too many allegations ployee can be dismissed include, but a taxpayer to recover all attorney fees that the current IRS Office of Chief In- are not limited to, assaulting or bat- and costs from the time the taxpayer spector does not have sufficient inde- tering a taxpayer or other IRS em- makes a qualified offer if the amount pendence from the IRS to adequately ployee, violating the civil rights of a of the court judgment is equal to or fulfill its obligation. Likewise, the cur- taxpayer or other IRS employee, or less than the taxpayer’s offer. rent Treasury Inspector General, which breaking the law, regulations, or IRS Taxpayers should not have to foot lacks resources and has experienced policies for the purpose of retaliating the bill if the IRS is unreasonable. Be- problems of its own, does not provide or harassing a taxpayer or other IRS yond this, our legislation includes var- seamless oversight over the IRS. employee. ious provisions which allow taxpayers S4184 CONGRESSIONAL RECORD — SENATE May 4, 1998 and third parties to recover against the Currently there is a woeful lack of other measures to protect the tax- IRS for civil damages. It also estab- protection in this area, particularly payer. It is surprising how long some lishes procedures for third parties to during collection activity, where the IRS cases remain open and how long have erroneous liens removed from IRS is the judge and jury, and where some taxpayers remain in the cross- their property. some agency employees take a cavalier hairs of the agency. This is accom- Another major taxpayer protection approach to issuing a notice of lien, plished when the IRS pressures tax- in this legislation is our provision to levy, or seizure of a taxpayer’s home, payers, often by threatening them, to strengthen innocent spouse relief. This personal belongings, or business prop- waive the 10-year statute of limitations legislation overhauls the current inno- erty. In order to ensure due process to on collection. Mr. President, 10 years is cent spouse relief which is wholly inad- taxpayers, our bill requires the IRS to long enough, and to protect these tax- equate. provide 30-days notice to a taxpayer be- payers, our bill would prohibit waivers We do this by limiting a spouse’s tax fore it may issue a notice of lien, levy, of the collection statute. It would also liability to the proportion of his or her or seizure. make it easier for taxpayers, who dis- income reported on the tax return, or If the taxpayer requests a hearing, pute the amount of their tax liability returns, in question. As a result of con- all collection activity must stop. If the or can’t pay the full amount, to com- cerns raised by members of the Finance taxpayer disputes the findings of the promise with the IRS or enter into in- Committee, relief would not be avail- appeals officer, the taxpayer may peti- stallment agreements. able in cases of fraud, or if the IRS tion the tax court for relief. The legislation that we introduce proves the taxpayer claiming innocent Our legislation requires the IRS to today also provides taxpayers with an spouse relief had actual knowledge of implement a review process under enhanced mechanism to appeal an an item giving rise to the tax liability. which liens, levies, and seizures would audit, request early referral to appeals, Some of the most tragic stories our be approved by a supervisor who would and request alternative dispute resolu- committee heard concerned innocent review the taxpayer’s information, ver- tion. It includes various routine re- spouses whose economic lives have ify that a balance is due, and affirm quirements, including an explanation been ruined by the unrelenting pursuit that a lien, levy, or seizure is appro- of the reason for denial of a refund and of IRS collections officers. priate under the circumstances, includ- annual statement to taxpayers regard- What we propose here are needed ing the amount due and the value of changes—changes that will bring a ing the amount remaining on their in- the asset. semblance of sanity to the current sys- stallment agreement. Failure to follow these procedures, The bill also requires IRS notices to tem and protect honest spouses who, under our legislation, would result in include the name and phone number of under no circumstances, should be held disciplinary action against the revenue an IRS employee the taxpayer should accountable for the liabilities of their officer and his or her supervisor. We former spouses just because they are contact to resolve any issue on the no- also require the Treasury Inspector easier to find or more vulnerable to in- tice. In order to protect innocent tax- timidation. Many of the innocent General to collect this information and payers who are improperly labeled as spouses we listened to in our hear- annually report to the tax writing ‘‘illegal tax protesters,’’ this bill will, ings—and many of the letters I have re- committees of Congress. On those occasions when the IRS viewed since—told us how they have out and out, prohibit such designation. been placed under terrible burdens be- makes seizures, the agency will be re- It will also take an important step to- cause of interest and penalties that quired to follow certain procedures and wards helping Congress simplify the continue to grow as their cases age. provide an accounting to the tax- law by requiring the Joint Tax Com- Again, with this legislation, we do payers. It is unbelievable that the IRS mittee to prepare a complexity analy- something about that. We make nec- does not currently provide a receipt to sis on tax legislation. essary and important changes to how taxpayers when their property is seized As you can see, Mr. President, this is penalties and interest are applied. In and sold. a very thorough, comprehensive piece order to prevent IRS employees from Revenue Officers have incredible dis- of legislation. It is extremely impor- arbitrarily using penalties as leverage cretion. As such, this bill requires the tant. There is no question that it is against taxpayers, our legislation re- IRS to implement a uniform asset dis- well worth the wait. When our hearing quires non-computer determined pen- posal system for sales of seized prop- began last September, an agency em- alties to be approved by management. erty to prevent revenue officers from ployee made a complaint that lodged Furthermore, each notice to taxpayers conducting sales. itself in my mind, one that I have not which includes a penalty or interest It would prohibit the IRS from seiz- been able to forget. He said, ‘‘If the must specify how the amount was cal- ing real property used as a residence if true number of incidents of taxpayer culated. Our legislation disallows the the unpaid tax liability is less than abuse was ever known, the public imposition of the failure-to-pay pen- $5,000. Also, a principal residence or would be appalled. If the public also alty while the taxpayer is in an install- business property would only be seized knew the number of abuses covered up ment agreement. as a last resort. by the IRS, there would be a taxpayer It allows the taxpayer to designate In the area of examination, our bill revolt.’’ deposits for each payroll period rather expands the attorney-client privilege What we bring with this important than using the first-in-first-out— to other tax practitioners to the extent legislation is a new era of openness to ‘‘FIFO’’—method that results in cas- such communications would be privi- an agency that for too long has been cading penalties. leged between an attorney and his cli- able to operate beyond the view of Con- Under this bill, if the IRS does not ent. gress. provide a notice of deficiency within It limits IRS authority to require the We bring a new era of accountability one year after a return is timely filed, production of computer source code to an agency marked by a culture that then interest and penalties will be sus- and establishes a number of protec- protects even the most lawless employ- pended until 21 days after demand for tions against the disclosure and im- ees from the consequences of their ac- payment. Of course, this increased pro- proper use of trade secrets and con- tions. tection—as all increased protections— fidential information of any computer We bring a new era of efficiency and are meant to protect honest taxpayers. software program or source code that modern management to an organiza- We will not excuse those who evade comes into the possession of the IRS as tional structure that dates back to be- their responsibility or cheat on their part of an examination of a taxpayer. fore the industrial age. income tax returns. These protections The legislation allows taxpayers to We bring forward a promise of hope exclude the failure to file, failure to bring an action to quash all third-party to honest taxpayers and valued em- pay, and penalties related to fraud. summonses by informing the taxpayers ployees who have waited too long. With Increased protections for honest tax- of such summonses before the IRS con- this legislation, Commissioner Rossotti payers will also affect due process. This tacts the third party. will be able to transform the IRS, pro- was one of the glaring issues raised in Beyond these important changes, vide accountability, and establish our IRS hearings. this legislation introduces several much-needed taxpayer protection. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4185 Americans, for the first time ever, will Some, mind you, contend that the The legislation before us represents a have a tax collection agency marked IRS is out of control and somehow second major step. It would establish by a sincere dedication to service. should be abolished. In truth, we sim- an Internal Revenue Service oversight Mr. President, I yield the floor. ply need to get it under control and board consisting of six private citizens, Mr. MOYNIHAN addressed the Chair. shaped in the mode of modern manage- a representative of the IRS employees’ The PRESIDING OFFICER. The ment. union, the Secretary of the Treasury, Chair recognizes the Senator from New Last November, the Senate took an and the Commissioner of the IRS itself. York. important first step to getting the The board will be responsible for cer- Mr. MOYNIHAN. Mr. President, I agency in such a working mode by tifying the strategic direction and rise, in the first instance, to commend unanimously confirming Charles O. goals of the agency, while the Commis- our chairman for his commitment to Rossotti as Commissioner of Internal sioner will continue to manage all day- restoring public confidence in the In- Revenue. We have previously, for gen- to-day operations. The Finance Com- ternal Revenue Service and for the leg- erations, had tax lawyers as the Com- mittee specifically voted to include the islation he has so ably crafted and now missioners. They were superb tax law- Secretary and a union representative so succinctly set forth in the opening yers, gifted and committed, but not on the board, making the composition statement of this debate, which I think necessarily managers for the manage- of that board identical to that of the will probably consume the better part ment problem that needed to be ad- House bill reported out of the Commit- of the Senate’s time for this week. dressed. And particularly not tech- He, of course, stood on the shoulders tee on Ways and Means, which passed nologies. The Service had a huge prob- of giants, you might say. In the report the House of Representatives by an ex- lem bringing itself along into the com- of the National Commission on Re- traordinary vote of 426–4. puter age. Vast amounts have been structuring the Internal Revenue Serv- But now it should be clear in antici- spent with systems that do not inter- ice, ‘‘A Vision for a New IRS,’’ which pation of some amendments, not nec- was a statutory commission estab- act well. And now, of course, we have essary but in anticipation of the possi- lished in 1996, and which reported in the year 2000 problem, which all agen- bility, it should be clear that if this June of 1997—chaired by our distin- cies of Government face. All activities board is to have any stature within the guished and gallant committee mem- you can imagine compounding that Government and with the public, the earlier difficulty. ber BOB KERREY, J. ROBERT KERREY, Secretary of the Treasury must be on Commissioner Rossotti has already whom I will ask to manage this legisla- it. That is basic management practice. made a visible difference. He has put in tion in the days ahead, he having been As Senator BREAUX aptly stated during motion a plan to modernize the agency the principal author here, along with the Finance Committee markup, it is by reorganizing according to type of his colleague from the other side of the also far better to have the union work- taxpayer, such as the individual payer, aisle, Senator CHUCK GRASSLEY, ing cooperatively on the inside rather the small business, the large corpora- CHARLES GRASSLEY, ‘‘CHUCK’’ to his than working in opposition on the out- tion, or the exempt organization, of friends. They anticipated the work we side. did, although I don’t think they could which there are so many, rather than according to the simple organization of I would also point out that the bill have anticipated some of the things we includes a number of provisions to cre- encountered in those hearings. Those regional offices that do everything. In addition to establishing programs ate flexibility for the Commissioner in two Senators have been indefatigable the area of personnel. In recognition of in their endeavor to transform the IRS to improve the treatment of taxpayers, the great disparity between the salary into a consumer-based agency. such as problem-solving days and ex- structures in Government and those in As two rounds of hearings held by the tended telephone service, Commis- Finance Committee illustrate, there is sioner Rossotti has done two things the private sector on parallel activi- much room for improvement at the very specifically addressed to the con- ties, the legislation provides a stream- IRS. There is much room for improve- cerns of the Finance Committee. He lined process by which the Commis- ment in almost any of our Government has appointed former Comptroller Gen- sioner can appoint up to 40 individuals agencies, but few, other than the So- eral Charles Bowsher to conduct an designated critical technical and pro- cial Security Administration, so di- independent review of the IRS internal fessional positions for up to 4-year rectly affect the citizenry, and none Inspection Service. It was remarkable terms at an annual compensation other has the capacity to be punitive, that the Comptroller General, after 15 equivalent to the pay of the Vice Presi- to extract resources, to impose fines. years of dealing with the Congress’ dent, currently $175,400. There is no other agency such as this. often unfortunate demands on the Gen- The Commissioner can go out and It is extraordinary, the fact that we eral Accounting Office, came back to find this person to do this particular have paid so little attention to the public service to do this. A more quali- job and make it a 4-year appointment. management of the Service. fied person you could not imagine. Persons who obviously are in the pri- The Internal Revenue Service was Secondly, and again an achievement vate sector will come into Government created in 1862 in the administration of of some considerable measure, Mr. at not too large a sacrifice, and for President Lincoln, at the time when an Rossotti has persuaded Judge William most it would be a considerable one. I income tax was established to help fi- Webster, formerly the Director of the do not want to use the word ‘‘sac- nance the Civil War. President Lincoln Central Intelligence Agency, and prior rifice’’—lachrymose, perhaps—just a signed the Civil War Income Tax Act to that the Federal Bureau of Inves- large reduction in income for the kinds into law July 1, 1862. However, it was tigation, to look into the activities and of persons that will be sought after, not until last September, nearly a cen- the operations of the Criminal Inves- but not so large that they cannot man- tury and a half later, that the full Fi- tigation Division of the Internal Reve- age the transition. nance Committee exercised its over- nue Service. Other provisions will permit the es- sight jurisdiction, and no credit can be This is, obviously, a troubled branch tablishment of a new performance too great to be given Senator ROTH as of the agency. We do not associate the management system focused on indi- the new chairman for this effort. Internal Revenue Service with men in It is our duty to know what is going body armor carrying automatic weap- vidual accountability and will allow on in this large public agency. It has ons, breaking into offices and telling for the creation of an award system to more than 100,000 employees. In 1997, it everyone to freeze, if you will. Yet, we provide incentives for and recognition collected $1.5 trillion and processed 210 heard testimony that could not be of individual group and organizational million tax returns. We get used to doubted that just such things are hap- achievements. Additional measures these numbers, Mr. President, but to pening, and they need to be very care- call for the termination of IRS employ- give a sense of dimension, 1 billion fully controlled and obviously have not ees for violations committed in connec- minutes ago, Julius Caesar ruled the been. How widespread that behavior is, tion with the performance of their offi- Roman Empire. If that is what 1 billion we do not know. But we will learn from cial duties. minutes is, think what 1.5 trillion min- Judge Webster, and not a moment too The bill contains two provisions of utes would be. soon. special interest to this Senator, the S4186 CONGRESSIONAL RECORD — SENATE May 4, 1998 first of which Senator KERREY and I Commissioner Rossotti, in his testi- Two final points: The bill requires particularly supported, and Senator mony before the Finance Committee the Joint Committee and the Treasury ROTH mentioned in his opening state- on Friday, stated that tax evasion is to study the issue of taxpayer confiden- ment. It would require the staff of the now at an estimated $195 billion a year. tiality. We must strike a balance be- Joint Committee on Taxation to pro- If we were to do no more than collect tween taxpayer privacy on the one vide an analysis of complexity and ad- half the taxes now owed and delib- hand and the ability of Government to ministrability issues associated with erately not paid, our revenue situation function on the other. In our hearings all pending tax legislation. would be profoundly changed. And that we have had a matter where IRS offi- Many of the problems faced by the can be done, and I think Commissioner cials, faced with specific charges, will IRS arise from the Tax Code itself. One Rossotti intends to at least attempt it. often seem evasive or unresponsive in of the clearest visions of the National We are talking about laws here. If we their answers. What they are doing is Commission on Restructuring the In- are a nation of laws, not only do tax- responding to the law that forbids ternal Revenue Service was simplifica- payers have rights, but they have re- them to discuss things they know, but tion of the tax law which says it is nec- sponsibilities. Both should be pursued which are confidential. Some balancing essary to reduce taxpayer burden and with energy and effectiveness. of that is in order, and I hope we can facilitate improved tax administration. A second provision has to do with the see it brought about. One has to note, regrettably perhaps, so-called year 2000 problem or the cen- Finally, Mr. President, a comment on that our proposal for simplification tury date change, as Commissioner the cost of the legislation. Through the goes on some 511 pages. This is a pat- Rossotti terms it. The IRS has had ingenuity of the chairman, we have tern we have gotten into which we some well-publicized difficulties with fully funded this measure for the first ought to avoid. its computer modernization efforts. 5 years of its operation. It is under- If enacted, and this bill will be en- These problems have been exacerbated funded by $10 billion in the second 5 acted, it will be the 64th public law to by programming changes required by years. We hope to do something about amend the Internal Revenue Code since the Taxpayer Relief Act last year and this. I think it is unseemly of us to the great Tax Reform Act of 1986. In by the year 2000 problem. bring tax reform legislation to the Sen- 1986, led by Senator Packwood, we It is beginning to sink in that we ate and fully ignore the fact that we greatly simplified the Code. We low- have a real problem here. Our majority aren’t paying for it. We can pay for it; ered tax rates, we broadened the base, leader and the minority leader are it is not an impossible sum, and it is we got rid of all manner of absurdities much to be congratulated. We have surely incumbent upon the committee and irrational provisions in the Code. now created a special committee on and the managers of the legislation to The core group, as we called our- this matter with our distinguished col- selves, would meet each morning in see if we can’t find that extra $10 bil- league, Senator BENNETT, as the chair- Senator Packwood’s office and talk lion. man. This is not a problem in the ordi- Mr. ROTH. Will the Senator yield for about the day’s plans. It would be my nary sense, a difficulty to be looked particular job to provide a reading a comment? after or endured. No. The General Ac- from the Wall Street Journal. I would Mr. MOYNIHAN. I am happy to; yes. counting Office testified before us Sep- find—never failed—an advertisement Mr. ROTH. I want to make it clear tember of last year that the computer somewhere in the Journal of that day that it is the intent of the chairman to conversion problem could be cata- talking about mountain sheep or billy fully pay for both the first 5 years and strophic. The whole system could goats, or what have you, in which it the second 5 years. crash. We are not alone in this regard. would say ‘‘losses guaranteed.’’ Such Mr. MOYNIHAN. Yes. I am not sur- The IRS is just another large informa- were the provisions of the Tax Code at prised. We pay our bills—or we ought tion center dependent on information that time—you made money by invest- to pay our bills. As I said, it would be processing which it cannot do if the ing in activities that lost money. We unseemly to bring a measure of this cleared all that out, or thought we did, computers are not changed in time. kind to the floor saying, ‘‘Let’s manage and we brought rates down and hoped The adjustments are not that com- these matters better,’’ and not manage they would stay there. plicated but the pressure of time is ex- to pay for it. That is welcome news, This will be the 64th law since that traordinary. and the Senator has my cooperation on time amending and complexifying. I re- I recently had the occasion of intro- that, to be sure. call last year we passed a bill, 802 ducing the Chairman of the Securities Finally, Mr. President, I am going to pages, called the Taxpayer Relief Act and Exchange Commission, our distin- ask Senator KERREY to manage the leg- of 1997, and the only copy on the Sen- guished Chairman Arthur Levitt, who islation on our side. As I said, he was ate floor was here at this desk. The was nominated for a second term. We co-chairman of the National Commis- copy for the chairman was spirited were talking while we were waiting for sion on Restructuring the Internal away to be examined in the Budget the hearing in the Banking Committee Revenue Service. Their superb report, Committee for violations of the Byrd to begin. He mentioned this issue and ‘‘A New Vision for the IRS,’’ which was rule, as I recall. And Senators would said that for the banks and such he is issued last June—11 months ago—has come up and ask the Senator from New responsible for, if they do not get this led to the work we are doing now, York if there were certain provisions in done it is terminal. Not just that the which we bring to the floor with pride the bill. They had no way of knowing profits drop a bit or some activities and with the expectation that we will because there was no copy on the floor. can’t survive—it is terminal. be successful. This sort of analysis will take time The Defense Department has un- On that note, sir, I yield the floor. to do it, but 20 years from now we may imaginable difficulties. They will get it Mr. JOHNSON addressed the Chair. look back and think that one of the done or they hope they will get it done, The PRESIDING OFFICER (Mr. most important provisions that was or our missiles won’t be aimed in the SMITH of Oregon). The Senator from contained in this measure was the re- right direction, things like that. And South Dakota is recognized. port by the Joint Committee on Tax- the Commissioner has asked that some Mr. JOHNSON. I ask unanimous con- ation of the complexity of a tax meas- of the provisions in this bill be delayed sent to speak for such time as I may ure, and how well, in fact, the IRS not for a long time but until after the consume. could handle its administration. Be- year 2000 so he can have the year 2000 The PRESIDING OFFICER. Without cause if we failed to simplify the Code, problem solved before he puts in these objection, it is so ordered. we failed to address the heart of this new provisions. It is a very reasonable, Mr. JOHNSON. Mr. President, I problem. Complexity contributes to orderly, sane recommendation and we thank the ranking member, Senator taxpayer frustration, obviously, and to would be disorderly not to heed it. He MOYNIHAN of New York, and the chair- tax evasion, as well. has already sent us a six-page letter man, Senator ROTH of Delaware, for We look forward to working with the that tells us when he can have this pro- their excellent work on this legislation chairman to try to reduce tax evasion, vision in place, when he can have that and for bringing this to the floor. which is a much larger matter than we provision in place. He knows what he is I rise today to express my qualified have tended to assume. talking about. I hope we will listen. support for this legislation that is long May 4, 1998 CONGRESSIONAL RECORD — SENATE S4187 overdue, the IRS Reform and Restruc- today. That agency, as we all know of the Tax Code on the one hand, but turing Act. When I say ‘‘qualified,’’ very well, has antiquated computer never miss an opportunity to worsen that qualification is primarily over the systems, customer service phone lines the situation by supporting every con- question of paying for this legislation that typically have busy signals, and ceivable tax provision complication in full. As a member of the Senate many other operational inefficiencies. that comes along. Budget Committee, it is a matter of Furthermore, we have all heard about I do have a serious reservation al- great importance to me. I am very the large number of complaints about ready expressed at the outset, and that heartened that Chairman ROTH has ex- overzealous enforcement, rude service, is the Senate version of the bill as it pressed very clearly on the floor here and simple inability to get a clear an- now stands is expected to cost the today that there will, in fact, be offsets swer. These are problems that clearly Treasury $19.3 billion over the next 10 sufficient to pay for this legislation must be addressed. years. The proposed offsets are nearly not only during the first 5 years but Of course, it should be recognized $10 billion short of paying for this cost, the remaining 5 years as well. I look that during the course of Senate hear- meaning this bill, until it is amended, forward to reviewing those offsets, of ings, the IRS was not in a position to is in violation of the pay-as-you-go course. But I am very heartened by refute individual cases brought before rules in the Budget Act, and costing that, because I think that is a key un- the committee because of their con- three times the cost of the House- derlying requirement for this body to fidentiality restrictions, and so the passed IRS reform legislation. As a responsibly take up IRS reform legisla- ‘‘rest of the story,’’ as is sometimes member of the Senate Budget Commit- tion. heard, went untold. Nonetheless, it is tee, I believe it is extremely important The road bringing us to this day has clear, both through hearings and indi- that we maintain the budget discipline been long indeed. It was, after all, in vidual complaints to our respective of- that has brought us the first balanced the fall of 1995 that the legislation was fices, that there have been abuses. unified budget in three decades, and enacted calling for the establishment There is no room for that, and there not jeopardize even as worthy a cause of a commission on restructuring the ought to be zero tolerance for that as this. I look forward, again, to re- IRS. Nearly 1 year ago, this commis- abuse. viewing the chairman’s offers that he sion submitted its report to Congress. This bill will create an IRS govern- will raise later on in this debate. After a period of congressional hear- ance and oversight board, which will be Additionally, I would be remiss if I ings and negotiation, compromise leg- charged with overseeing the long-term failed to point out there are, in fact, a islation was agreed upon by President strategic and operational plans for the great number of IRS employees who de- Clinton, Secretary of Treasury Rubin, agency. Personnel policies will be made serve to be recognized for the exem- and the minority leadership of both more flexible. Expanded use of elec- plary service they provide for this Na- Houses of Congress. With this support, tronic filing will become a significant tion. Although I have certainly heard it is not surprising that the House goal, with the hope that by the year my share of complaints about the IRS, passed H.R. 2676 last November by an 2007 only 20 percent of the tax returns I have also heard from constituents overwhelming margin of 424–6. The ad- will be filed on paper. who relate their stories of problems ministration, since that time, has ap- Additionally, this bill will expand they have had. I am also very much pointed former FBI and CIA Director taxpayer rights. The burden of proof in aware of IRS employees who go about William H. Webster to review the prac- Tax Court proceedings will lie with the their duties every day as public serv- tices of the IRS and its Criminal Inves- IRS rather than with the taxpayer. ants in a professional and competent tigation Division. I think that is a very Penalties will be allowed for IRS col- and able manner. We in Congress must important and responsible step on the lection activities that negligently vio- be careful not to use too broad a brush part of the administration, which is late the Internal Revenue Code. Relief in the heat of this debate. The vast ma- consistent with the direction and con- will be granted to spouses who are in- jority of IRS employees are good and cerns expressed by both the House and nocent of an underpayment filed on a capable public servants with a tough the Senate. return. Taxpayers will be granted ex- job on their hands. The fact is that fact It has been frustrating that it has panded confidentiality protection as has been lost as we listened to one side taken so long to bring this legislation well as explicit notice of their rights. of the story, one side that does indeed, to the floor. During the State of the One of the more overlooked provi- however, need to be corrected. Union Address at the beginning of the sions of this bill, however, is perhaps But I think it is important for us to year, President Clinton called for pas- one of the most important. The bill go about this debate and recognize that sage of this bill as his first item of states—albeit in a sense of the Con- on the one hand elected officials have business. One week later, the majority gress, nonetheless an important expres- created a complex Tax Code, though we leader pledged that IRS reform would sion of the point of view of this body— want aggressive tax collection in order be considered on this floor by March 30. that front-line IRS technical experts to address the problem of tax evasion Once again, unfortunately, the Senate should be heard during congressional in this country, which costs the tax- did nothing. We spent days debating consideration of tax legislation in an payers $100 billion a year in uncol- such items as renaming airports, but effort to avoid additional complexity lected taxes, an unfair tax on those there was no action on this critical leg- to the Tax Code. It has been Congresses Americans who fairly and legally pay islation. March 30 came and went, and and Presidents, after all, not the IRS, their taxes. So on the one hand we so did an even more significant date for that have been responsible for creating want the IRS to be aggressive about over 100 million Americans, and that a Tax Code which is overly complex making those collections, but on the was April 15, tax day. As the American and difficult to enforce. other hand we also want an IRS with a people met the deadline for filing their In a sense, the IRS has been an easy human face on it that recognizes that tax forms, the Senate had not yet target for this whole debate, as has al- intimidation and overaggressiveness taken this legislation up on the floor. ways been the case, I suppose. Few peo- has no place. This is a fine line to Finally, after much delay, this meas- ple like an agency responsible for col- walk—a line that has been crossed in ure has reached the Senate floor. It has lecting taxes. numerous instances about unfortunate often been said that, ‘‘It is better late We must instead recognize, however, situations with the IRS—but one that than never.’’ This week’s Congressional that a great deal of the responsibility is difficult to walk in some instances. Quarterly, a respected nonpartisan po- for this problem rests on the doorstep Mr. President, I look forward to the litical publication, observes that one of Congress itself. The Taxpayer Relief debate on this legislation. It is a posi- reason for the delay may have been a Act of 1997, for example, while an excel- tive step forward in our efforts to cre- desire to raise campaign money. I cer- lent piece of legislation in very many ate a tax system that is simpler and tainly hope that was not the case. I be- respects, contains hundreds of new tax less burdensome on taxpayers. We can- lieve that this legislation could, in provisions, most of which increased the not rest with the debate on this bill, fact, go a long way toward addressing complexity of the Tax Code. We have in however, since the more difficult and many of the fundamental organiza- this debate the remarkable inconsist- more complex job lies ahead. To truly tional problems that we see in the IRS ency of those who decry the complexity resolve this problem, we will need to S4188 CONGRESSIONAL RECORD — SENATE May 4, 1998 get to the ultimate source, which is the the kind of changes which will benefit They are our neighbors. They are our complexity and the difficulty of the the American public and which Demo- friends. They are involved in the civic Tax Code itself, and there the guilty crats and Republicans alike are pre- culture of our community. They are in- party is not the IRS but the Congress pared to embrace. volved in Little League and all of the itself. Already, in the few short months other activities that make up a com- I yield the floor. that he has served as our Commis- munity. But this kind of conduct is Mr. President, I suggest the absence sioner, he has demonstrated a commit- egregious, it is unacceptable, and it of a quorum. ment to reform and change, and I be- cannot be allowed to continue. The PRESIDING OFFICER. The lieve that is highly encouraging. I believe that the chairman and the clerk will call the roll. Our responsibility as Members of committee have produced a strong bill The assistant legislative clerk pro- Congress, in my view, is to give Com- that will give the Commissioner the ceeded to call the roll. missioner Rossotti the tools that he tools he needs to make real reforms in Mr. BRYAN. Mr. President, I ask needs to do the job, and the legislation the IRS possible. I would like to spend unanimous consent that the order for before the Senate today does just that. a couple of minutes addressing several the quorum call be rescinded. Thanks to the leadership of Chairman of those reforms. The PRESIDING OFFICER. Without ROTH and the ranking member, Senator Establishing an IRS oversight board objection, it is so ordered. MOYNIHAN, the public today is more to provide input and oversight from the Mr. BRYAN. I thank the Chair. aware than ever of the types of abuses customers of the IRS, the American Mr. President, April 15, the day on we need to correct in the IRS. taxpayer, in addition to those who which we pay our annual tribute to the Last week’s hearings in particular re- have responsibility for enforcing the IRS, will never be one of the happiest veal that the agency is in serious need Code, I believe, broadens the perspec- days on the calendar for Americans. It of reform. I think all Americans were tive of the oversight, and I fully sup- is a time in which all of us are required truly shocked and outraged by the tes- port that provision. Providing some kind of continuity to pay that which we owe to the Fed- timony that we heard. eral Government by way of the tax sys- The task of collecting taxes is always for the Commissioner, as this legislation provides a 5-year term, I think is tem that we, as Members of the Con- a difficult one, but little, if any, cir- important for the stability and man- gress, have imposed upon the American cumstances would dictate the strong- agement of the agency. If, as I suspect, people. armed, police-style tactics that we lis- many of the agency’s problems are We have heard in the past few days a tened to last week were necessary in deep-seated, institutional and cultural number of the abuses that have been dealing with the taxpayers who testi- in nature, it is very difficult for an IRS foisted upon the American public, and I fied before the Finance Committee. Commissioner, no matter what his en- will speak to those issues in more de- The IRS, like any other agency, thusiasm or her enthusiasm for reform tail in a moment. In the meantime, we should attempt to use the least intru- might be, to make those kinds of have an opportunity to pass a reform sive, the least confrontational method changes in a couple of years. It takes a and restructuring piece of legislation available to carrying out its duties. longer period of time to turn around a which, as a member of the Senate Fi- Having said that, the abuses that we bureaucracy that is as large and en- nance Committee, I am pleased to sup- heard last week, I think, engendered crusted as the IRS. port and endorse, and I hope we can get the justifiable outrage by all of us, but It will strengthen the Office of the this to the President for his signature there are those who are part of our Taxpayer Advocate by ensuring that as soon as possible. country who are involved in criminal the taxpayer advocate is truly inde- Many of us believe that it would have and other kind of nefarious activities, pendent from the IRS bureaucracy and been possible to have passed this legis- and so we must, at the time we reform increasing the ability of the taxpayer lation last year so that the benefits this agency, not deprive the agency of advocate to provide relief to taxpayers. that are provided in this legislation to the ability to move against those who We have sought in the past, by estab- the American taxpayer could have been are truly involved in either criminal lishing such an office, to provide that available in the early part of this year conspiracies or other kind of activities kind of assistance to the American tax- before this year’s tax collections went in which they are underpaying their payer, but I believe candor requires us into effect. Nevertheless, we do have an taxes. to acknowledge that we have fallen opportunity to move forward on this Each of us who pay our taxes on time short of the mark, because the percep- important piece of legislation. as required—and that is the vast mation, if not the reality, is that the tax- Reform of the IRS is not a partisan jority of the American people—will suf- payer advocate of the past is still part issue. In my judgment, by acting fer the consequences if changes that we of the IRS structure, and the individ- quickly on this legislation, we can pro- bring into the system makes it more ual who holds that position looks to vide some much-needed protections difficult to collect from those who his or her future—the IRS itself—and and service improvements to the Amer- would evade the taxes. therefore has been reluctant to aggres- ican taxpayers. The consequence of that course of ac- sively intervene on behalf of the Amer- I think it is fair to acknowledge that tion will mean that all of us will pay ican taxpayer who has a legitimate the problems with the IRS are not of more, not less, as a result of failing to grievance or issue to raise. recent origin or vintage. They have ex- collect taxes that are lawfully due pur- It will enhance oversight of IRS ac- isted for many years. But it does seem suant to the IRS Code. So we clearly tivities by strengthening the Treasury to me that the timing for change is need to be mindful of that. Inspector General Office. We heard most fortuitous an opportunity for us That testimony, nevertheless, I think much in the last week about employees to pass a broad, far-reaching IRS re- was shocking to most Americans and who have complained about mis- form bill in a time when we have a certainly to the members of the com- conduct on the part of some of their co- Commissioner of the Internal Revenue mittee where dozens of armed, flak- employees, reporting this misconduct Service, Mr. Rossotti, who has a unique jacketed agents raided well-established only to be ignored. Hopefully, a more and, I believe, highly qualified back- businesses and individuals. This clearly effective oversight responsibility on ground to help us implement these appears to be an agency, at least in re- the part of the inspector general’s of- changes. spect to those circumstances that we fice will provide assurance that those Mr. Rossotti, unlike his distin- were informed about last week, that is comments and concerns—shared, as I guished predecessors, is not a man with out of control. Nothing that we heard, have indicated, by the vast majority of a tax or an accounting background, but assuming that there was a tax liability employees of the IRS who are respon- brings a distinctive business perspec- owed by the taxpayers who testified, sible, dedicated public servants who, as tive. Many of the problems of the IRS justified that kind of egregious con- we were abhorred by what we heard, deal with fundamental change of struc- duct. they, too, are greatly troubled by that ture, so I believe that his background That kind of conduct gives a bad kind of misconduct on the part of the provides a unique opportunity, com- name to those 100,000 IRS employees few employees who engage in that type bined with this legislation, to produce who are decent, law-abiding citizens. of excessive conduct. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4189 This legislation requires the IRS to it has the effect of leveling the playing will have made a major improvement. I use fair and equitable treatment of tax- field for the taxpayer in an issue of dis- do not mean to suggest that by simply payers as a basis for employee evalua- pute or controversy with the IRS. passing this legislation we will solve tion. Expanding the opportunity for tax- every problem with the IRS. Of course, Mr. President, one of the ongoing payers to recover reasonable costs and that is not the case. concerns in my own State has been the attorney’s fees when a taxpayer pre- A great part of the problems with the so-called quota system. This Congress vails over the IRS—this, too, levels the IRS rests with this body, the Congress has in the past attempted to send a playing field and is in the essence of itself. The code is extraordinarily com- message indicating that the quota sys- fair play. plex, difficult to administer, ambigu- tem can no longer be used either to Enhancing the ability of taxpayers to ous in parts, uncertain in terms of its evaluate employees or as part of a col- recover civil damages when they are intended consequence. With every good lection tool. victims of IRS abuse or negligence— intention Congress has had, for many, Unhappily, notwithstanding those this provision that we have added to many years the IRS Tax Code has be- earlier directions from the Congress, the code treats taxpayers more equi- come more complicated, not less so. I we found last year as we were begin- tably by eliminating interest rate dif- want to be clear that I supported the ning our discussion of the reform meas- ferentials between many overpayments changes in the Tax Code that were part ures in the Finance Committee that in- and underpayments so that the tax- of the balanced budget agreement last deed, in the district in Nevada, such payer is treated as the IRS is treated year. But last year’s tax bill is a good quotas were in fact being used, al- for purposes of interest payments that example of the code becoming more though they were not described as may be due as a result of money owed complex. quotas. From all appearances, those to the taxpayer. While I believe that there were many who are part of the evaluating process The bill that we have before us pro- solid policy reasons for every provision could, in my judgment, have reached vides relief from certain penalties of last year’s bill, no one can argue no other conclusion but that their per- when a taxpayer is making a good-faith that last year’s legislative enactment formance would be judged by the effort to pay past due taxes. will provide for tax simplification. It amount of money that would be ex- This legislation enhances due process has made the code more complex. And tracted from each taxpayer who came rights prior to seizures and levies and in recent weeks on the floor of this to the office by reason of some conflict improves the ability of taxpayers to Chamber, we have heard proposals or disagreement as to the amount of take advantage of ‘‘offers in com- being offered on behalf of some of the revenue that the taxpayer owed. promise’’ and installment agreements. educational issues that have been de- A quota system is inherently wrong This legislation increases disclosure bated that will make the code even and unfair because it engenders a to taxpayers of reasons for IRS actions, more complicated. confrontational attitude. That is to including providing reasons for denying The bill before the Senate today will, say, the IRS revenue officer looks at a refund and clearly informing tax- however, provide great improvements the taxpayer not as a consumer, one payers of their rights during audits or in the management of the IRS. And who has a problem that needs to be ad- other IRS procedures, thereby making until such time as we can provide for a dressed, but basically as an individual the process less mystifying and secre- simpler Tax Code that can be more ef- that the revenue agent must collect a tive but more open and understood by fectively administered, we have a re- certain amount of taxes from in order the American taxpayer. sponsibility to provide the necessary to be evaluated positively by his or her It requires all IRS correspondence to tools so that the code can be more fair- superiors for purposes of tenure or pro- identify by name, phone number, and ly enforced and implemented. motion within the system. address, and to provide the IRS contact Mr. President, I strongly support this I have to say that once we called this regarding the correspondence, and to legislation and hope the Senate will practice to the attention of the Acting require the Joint Tax Committee to pass this bill in the near future. IRS Commissioner at the time, he was analyze the change in tax complexity I note that the distinguished senior forceful in his denunciation, as is Mr. of legislation being considered by the Senator from Nebraska joins us on the Rossotti, our new director. But, never- Congress. floor and undoubtedly will have much theless, notwithstanding directions Mr. President, there is plenty of to say. I would like to pay tribute to from the past, these quotas were still blame to spread around regarding the him and his congressional counterparts there. That needs to be changed. And I many problems with the IRS. It is cer- for the years that they spent as part of believe that we provide not only the tainly clear that for far too long a cul- a review of this Tax Code, the testi- specifics, but the tenure in this legislature has existed within the agency that mony they heard, the stories that were tion that directs that to be accom- views the taxpayer as the adversary told to them. The genesis for this re- plished. rather than as the customer. Over- form lies largely with the action of the This legislation establishes goals for coming this taxpayer-hostile culture is distinguished senior Senator from Ne- increased electronic filing, which offers not something that we can accomplish braska, Mr. KERREY. I acknowledge benefits to both the taxpayers and the instantaneously through legislative that. All of us ought to be grateful. IRS. If there is a part of this cloud that fiat, but I believe if we give Commis- He and Senator GRASSLEY and others, has a shining moment, it is in the sys- sioner Rossotti the tools he needs to do in a bipartisan way, during the in- tem that has been created that allows his job, problems in this agency can be terim, took the many hours out of for telefiling. It is a system available resolved and long-entrenched attitudes their time to canvas some of the more to millions of taxpayers, a paperless can be changed. outrageous and objectionable provi- system that allows the taxpayer to get Most of the more than 100,000 em- sions of the code, some of the practices his or her refund, if one is due, much ployees of the IRS are conscientious that have occurred over the years, the quicker than the old process. It republic servants dedicated to doing injustices that have occurred. The leg- lieves an enormous paperwork burden their job in a fair, impartial, and effec- islation that they framed, which is the on the part of the IRS. So it is a win- tive manner. With strong leadership basis for action today, moves us a long win, a win for the taxpayer and a win from the top, increased taxpayer pro- way in the direction of reform. for the IRS. I am pleased to see that tections and increased flexibility to re- The American people ought to be more taxpayers are availing them- ward employees who do their job well very grateful to him, Senator GRASS- selves of this. And electronic filing also and to, conversely, penalize those who LEY, and others, for their efforts in provides simplification for the tax- do not, I think, are what this agency moving this reform along the way. payer as well as for the IRS, and that needs before it can be turned around. I yield the floor. practice has increased as well. The IRS will never be the most popu- Mr. ENZI address the Chair. By shifting the burden of proof in lar Federal agency. But if, by passing The PRESIDING OFFICER. The Sen- certain cases where the taxpayer has this legislation, we ensure that honest, ator from Wyoming. cooperated with the IRS in providing hard-working taxpayers are treated Mr. ENZI. Mr. President, I rise this all documentation to a tax case, again, fairly and with respect by the IRS, we afternoon in support of this bill that S4190 CONGRESSIONAL RECORD — SENATE May 4, 1998 we have been addressing since noon, ancing process down to a record 3 Then there is the problem of random H.R. 2637, the Internal Revenue Service weeks and then to 13 days. I was pretty audits. The IRS has been randomly au- Restructuring and Reform Act of 1998. excited when I got elected to come diting people in extreme detail. No rea- By passing this legislation, Congress back to Washington. I thought that son showed up for the need for the will take an important step in reform- was one of the things that the Federal audit. It was to get an estimate of how ing what many Americans believe to be Government could do—have a mission many dollars they might be missing. the most feared agency in the United process. But when I got back here, I Those people were required to produce States. was excited to find that it already ex- more documents than if they had been I want to congratulate Chairman isted. We have a Government Perform- chosen for an audit. They had to find ROTH of the Finance Committee for the ance and Results Act. It requires every the documents for every single line of tremendous effort he made last year to Federal agency to have a mission their audit. What would it achieve? It begin some oversight hearings. We statement, to have goals, to define would give us a better state of how heard earlier today those may be the them, so that they are measurable and much money is not being collected. It first oversight hearings in the history prioritized, and then to see that the wouldn’t collect a dime. We have asked of the IRS, an IRS that was formed goals match up with the budget so they for that process to be stopped, and we during the Civil War. are spending the money on what they have been told it is, but you will hear The hearings that we heard last year said they would. numbers still brought out about the were frightening, revealing, and to As a result of my excitement over possibility that we are doing random most of the American public, not sur- that act, I got copies of a number of audits. prising, unfortunately. We learned a agencies I was interested in to see what I congratulate the new Commis- lot from that process. It provided em- they said they were doing and how we sioner. The new Commissioner brings a phasis and timing to be able to do the would know if they got it done. One of management perspective instead of a reform bill that we are presently debat- those agencies was the IRS. Something tax perspective to an agency that needs ing, a reform bill that will bring a lit- else I did was to go on a field trip to some management perspective. He has tle bit of a sense of security to the hon- those agencies and let them explain to already changed some of the phone est American taxpayer. me, through their government perform- overflow so that people who may not Last year I had so much interest in ance and results, what it was they have as heavy a work load can be an- the hearings that were going on that thought they were doing. It was an in- swering questions. He is looking at a we arranged for each day’s hearings to teresting trip to the IRS. I will admit lot of things that need to be done. be on our web site, the web site for my to say they were extremely cooperative I have to admit that Congress has a office, each day. Those were available and had a lot of insights they were big task ahead of it because part of the within 24 hours. We have also been tak- willing to share with me on problems problem is the Tax Code itself. It is too ing the hearings that were just held they have and solutions they are arriv- cumbersome, too hard to understand, and getting them posted on the web ing at. too many provisions, too many excep- site so they would be accessible to One of the things that I asked about tions, too many interpretations. every American in the United States. I was when a taxpayer calls in and asks So it is up to Congress to take a look think that access to that will lend a question about their taxes, how do at the Tax Code and the American tax- more urgency to the work before the they know they can rely on that? I payers to demand that we take a look Senate today. The bill before the Senate today, and want to tell you there isn’t a good an- at that Tax Code. We have to decide if I appreciate the very detailed expla- swer to that. I have asked for written it is going to be a Tax Code of policy or confirmation when that answer is just one of collecting money. So far, we nation that Chairman ROTH gave earlier this afternoon, this bill will first given so you can put that with your say it is a tax policy. But we really overhaul the IRS organizational struc- tax records and then show that to the haven’t taken the step of sitting down ture; secondly, it will provide nec- agent if you are audited. and determining tax policy and what We talked about having error notices essary protections for American tax- we are trying to achieve. We always that are easier to read. I don’t know payers; and third, it will require great- jump to the solution without agree- er accountability from the IRS em- how many people have received an ment on the problem. I think the vot- ployees. error notice, but they are computer- ers would buy and be excited over a I will talk about that in a little more generated letters, and the computer- clearly defined problem. They would depth. First, the IRS Reform Act will generated letter generates a series of hope for a solution. overhaul the organizational structure codes that might be the reason you are We talk about the American dream. of the IRS. In order for any organiza- being audited. You can take those se- We talk about strong families. We talk tion to perform its function well, it is ries of codes and you can look in an ex- about home ownership. We talk about necessary for it to know what that tremely long document that comes health care for everyone. We talk function is, to know its mission. When with the letter and see what the range about the need and importance for in- I was in the Wyoming State Legisla- of possibilities are on what may have vestment and savings. We take about ture, I worked with a number of agen- been done wrong and what is not right. the role that small business plays as cies as they implemented strategic It is computer generated. The com- the backbone of our economy and the plans. We passed a bill that forced each puter is spewing out a series of letters. economic hope and dream for individ- of them to say what they do and how It could at least transform those let- uals across this country. In the land of we could tell if they got it done. I ters into the exact words from the text freedom, we hide taxes. And it gets think that is key to anything in gov- of what those possibilities are. We are worse. We double tax some people. I ernment. There is no bottom line, but suggesting they ought to tell you what ask you, with the exception of home there is a mission. the problem is that brought you up for ownership, where are those things re- I watched that process as they did it an audit. flected in the Tax Code? in the State. We heard from directors, There are also problems with dollar Stronger families? No, we penalize from the agencies, and we heard from thresholds. I remember when one of my marriage. We discourage parents from the employees as it got down to their clients—and I am the only accountant raising their own children. We only level on what they do and how we could in the U.S. Senate—one of my clients, give big corporations a health care tax tell if they got it done. I have to say I on a $3 million report, was told they break. We don’t even give the same was so pleased, there were employees were off by 58 cents. It took 3 months break to individuals paying their por- that came forward and said, ‘‘My job and about nine letters to get that tion of health care. We tax investment shouldn’t exist. It doesn’t fit with what straightened out. I suggest that when and interest and at an escalated rate, we say we are doing.’’ It is my earnest the IRS sent that very first letter they unearned income. Our current tax sys- hope that every one of those people had already used as much money as tem discourages the small, the begin- were promoted, not eliminated. they had the possibility of correcting— ning businesses, particularly those be- It worked so well in our State that 58 cents. It turned out they had made a ginning in the home, which brings us we were able to get our budget bal- mistake in their addition—58 cents. back to families. America has become May 4, 1998 CONGRESSIONAL RECORD — SENATE S4191 the home of the ‘‘tax trap,’’ and the with experience in the private sector, I stop it? Can I clean it up and spend IRS gets to spring it. Let’s see, the way will help the agency better meet the the money myself and not be penal- the tax trap works is, the harder you needs and concerns of the agency’s cus- ized? work, the more taxes you pay. The tomers—the American taxpayer. OSHA is another one of those, where more taxes you have to pay, the longer Secondly, the IRS reform legislation the small businessman lives in fear of and harder you have to work. You end provides important safeguards for the asking the right question for fear it up with more work, and Washington American taxpayers. For too long, the will result in a penalty and not an an- ends up with more money. I don’t IRS has actively filled the roles of swer. Sometimes they are not even al- think that is how our forefathers saw judge, jury, and executioner in collec- lowed to give an answer, but they are the system happening. tion actions against taxpayers. This allowed to penalize. We in Congress have to make filing Reform Act would shift the burden of So what we are talking about in this easier, and that means less forms, that proof from the taxpayer to the IRS in bill is allowing the taxpayer to ask his means less instructions, that means most court proceedings, as long as the accountant the right question to see if less chance of making a mistake, and taxpayer introduces credible evidence that is what he really owes and not that means less chance of an audit. relevant to determining his or her in- have that become a road map for the When I was at the IRS on the field come tax liability. It would also place IRS for future action. I believe these trip, I asked about paperwork sim- the burden of proof on the IRS in deter- changes will help rein in many of the plification—a major effort by the Fed- mining whether penalties should be im- intimidation tactics used to target the eral Government. We have to reduce posed. The bill expands a taxpayer’s unsuspecting taxpayers. the amount of paperwork Americans ability to collect attorney fees when Thirdly, and lastly, the IRS reform have to do. Well, I want to tell you how the IRS brings unwarranted action bill will bring and demand greater ac- they told me how that is rated. The against them and allows taxpayers to countability from the more than 100,000 IRS generates more paperwork than recover civil damages when an IRS em- employees who work for the Internal the other agencies combined; 75 per- ployee is negligent in collection ac- Revenue Service. cent of all Government paperwork tions. Taxpayers may also recover at- It requires all IRS notices and cor- comes through the IRS. torney fees in civil actions against the respondence to include the name, We had some suggestions for ways IRS when the IRS engages in unauthor- phone number, and address of the IRS the tax forms could be a little easier to ized browsing or disclosure of taxpayer employee whom the taxpayer should fill out. A couple of those required add- information. It would also provide sub- contact regarding the notice. Imagine ing another line so that you knew how stantial relief for innocent spouses in that—being able to talk to the person the number got from here to here. collection actions based on past joint that knows the problem. Moreover, Can’t do that. The way the Paperwork returns by allowing spouses to be liable this bill requires the IRS to maintain Reduction Act works is, to get any only for tax attributable to their in- complaints of any employee mis- credit under paperwork reduction, you come. conduct on an individual employee have to remove lines from the tax Many of the taxpayer provisions in basis. This won’t be just the IRS. Each forms or any other Government form, the IRS Reform Act are a direct result person will have accountability. It will regardless of whether that makes it of the abuses uncovered last year by prohibit the IRS from labeling individ- more difficult or not. That will give the Senate Finance Committee hear- ual taxpayers as ‘‘illegal tax protest- you a little explanation why the EZ– ings. Many people were shocked to ers’’ and maintaining lists of these in- 1040 form—the simplest form we are learn that a number of the due process dividuals. The IRS will also have to supposed to fill out—has a 33-page in- protections Americans take for granted disclose to taxpayers in simple terms struction manual. You have to be a in other legal proceedings do not apply the criteria and procedures for select- lawyer to read the detail to figure out to actions involving the IRS. The bill ing taxpayers for audit. I believe this what to put on this ‘‘simplified’’ tax corrects many of these injustices. Once will decrease the ability of the IRS to form. That is not right. But that is this bill becomes law, the IRS will be target innocent taxpayers and innocent why we have it. required to provide notice to taxpayers small businesses for audit. The Paperwork Reduction Act only 30 days before the Service files a notice Mr. President, the IRS Reform Act gives credit for taking lines off the of a Federal tax lien. A taxpayer would will go a long way in reforming our form, not for building millions of pages then have 30 days to request a hearing Government’s tax collection practices. of explanation for the lines that you do by IRS appeals. No collection activity By returning customer services and ac- not understand. I thought of an ‘‘Enzi would be allowed until after the hear- countability to the IRS, this legisla- Form 1040,’’ a 1-page form. It would ing. The taxpayer would likewise be tion helps ensure that the American still provide the auditing capability able to petition the Tax Court to con- taxpayers are treated with the decency that the IRS would need. It can be done test the appeals decision. Finally, the and respect they deserve. if we go to tax policy and if we get to- communications privilege now granted Again, I want to thank the chairman gether and work on simplification. only to attorneys would be extended to for the hearings that he held to lend Now, the IRS reform bill makes some accountants and other tax practition- emphasis to the need for this bill and important structural changes, which I ers. This charge would provide tax- the desire to have this bill. believe will help to focus the agency’s payers with the necessary confidential- I appreciate the bipartisan effort mission. This legislation creates a sep- ity in communications with their tax that has been made to get this bill arate board to oversee the management preparers, whether or not they are li- moving through the process this week and operations of the IRS. This board censed attorneys. and look forward to the debate that we would include six private life experts, I hope this reform activity will will have on it. who will bring their collective private spread to some of the other agencies. I urge my colleagues to join me in sector experience to such tasks as re- We have people across America who are supporting the IRS Restructuring and viewing and approving the agency’s living in fear of the Government that Reform Act of 1998. strategic plans and budget requests. they vote for, that they pay for, that is I thank the Chair. The board would also have big picture supposed to be working for them—peo- I yield the floor. authority over IRS enforcement and ple who really want to do the right Mr. KERREY addressed the Chair. collection activities. Board members thing, but are afraid to ask the right The PRESIDING OFFICER. The Sen- would not, however, be permitted to in- questions for fear that question will be ator from Nebraska is recognized. tervene in particular tax disputes. used to penalize them, for fear that Mr. KERREY. Mr. President, I thank Moreover, in order to ensure the agen- question will put them in the public my friend from Wyoming for his excel- cy’s autonomy from improper influ- spotlight and embarrass them. It isn’t lent statement about the need for this ence, these board members would be just the IRS; the Environmental Pro- legislation. All of us involved in this governed by conflict of interest restric- tection Agency is one that a number of over the years, including the distin- tions. I believe this new board, which small businesses live in fear of asking a guished chairman, hope the debate that will be comprised largely of people question about: Is it pollution? How do we are having will be constructive and S4192 CONGRESSIONAL RECORD — SENATE May 4, 1998 lead to enactment and passage by this cinnati, Omaha, and Des Moines, the lenges presented to the IRS and to give body as quickly as possible after con- Commission met privately with over this agency credit for the successes it ference with the House and the signa- 500 individuals, including senior level has achieved. ture of the President for substantial and front-line IRS employees across Mr. President, it is also useful to renew powers, and the reason to believe the country. member that a majority of Americans that this change in the law will im- Mr. President, let me also congratu- (including those who testified before prove the quality of service that every late the men and women who served on the National Commission) believe that single American taxpayer gets, and the National Commission beginning when it comes time to apportion cause all of us to want to make certain with Senator GRASSLEY and Congress- blame, Congress is more at fault than that this bill passes as quickly as pos- man BEN CARDIN who cosponsored the the IRS. And, given our enthusiasm for sible. House legislation. Together, we worked constantly changing the tax code and Mr. President, the legislation we hard to ensure this effort remained bi- inconsistent oversight, the American begin debate on today—the Internal partisan and bicameral. Restructuring people have figured this one out right. Revenue Service Reform and Restruc- this agency so that taxpayer satisfac- The just passed Education IRA bill turing Act of 1998—will touch the lives tion becomes paramount at the new for K–12 expenses, would be the 64th tax of every taxpaying American. The law IRS by making certain this agency ini- law added to the books since 1986 and which authorizes the federal agency tiates contact with a taxpayer only if will add significantly to the nearly $75 known as the IRS to collect taxes af- the agency is prepared to devote the re- billion spent annually by taxpayers in fects more Americans than any other. sources necessary for a proper and an effort to comply with the tax code. Before I discuss what is in this legis- timely resolution of the matter is not It is also an example of how Congress lation I must offer praise to several a partisan issue. Americans of all polit- passes tax law without considering the who have played key roles in develop- ical persuasions are demanding we cost of administering this new tax law ing the bill before us today. First change this law. and its real impact on the American among them is Senator BILL ROTH, Finally, I want to extend my thanks taxpayers it is supposed to help. The prospects are dizzying. I am not Chairman of the Senate’s Finance and appreciation to Secretary of the on the floor to argue the merits of this Committee. Chairman ROTH’s enthu- Treasury Bob Rubin and President legislation, but I would like to discuss siasm for protecting American tax- Clinton. While our early disagreements instead the facts of its results. This payers who fear this agency, his desire about governance were getting public legislation allows for tax-free with- to make certain the Commissioner of attention, Secretary Rubin was mak- drawals from education accounts for this agency has the statutory author- ing substantial changes in the oper- room and board, uniforms, transpor- ity to manage it, and his willingness to ation of IRS in response to the Na- tation expenses, or supplementary accommodate the ideas of all members tional Commission’s work. Most nota- items or services, but only if these of his committee made it possible to ble was the decision to break with things are required or provided by the precedent and nominate a person with produce a unanimous vote of support. school. So this new law will not only Likewise, Senator MOYNIHAN, our business and management experience require families to have a pretty so- ranking member stood steadfastly with to be the IRS Commissioner, Mr. phisticated understanding of the law our Chairman to make certain our rhe- Charles Rossotti. before they take their money out but torical excesses did not lead to changes The last time this law was changed will require the IRS to become even in the law which would have the per- was in 1952 in response to the problem more invasive in their efforts to make verse effect of increasing the tax bur- of widespread fraud and allegations of certain that parents can justify their bribery. This time a key reason for tax- den on law abiding Americans who ex- expenditures with detailed records. perience no difficulty with the IRS. payer frustration with the IRS is the Anyone who expresses surprise that One of the most difficult judgments we lack of appropriate attention to tax- the IRS will be asking taxpayers to have to make is to separate the legiti- payer needs especially when compared submit busfare receipts and clothing mate and constructive complaint from with service from comparable private bills with their tax returns is not pay- those who simply do not want to pay sector financial institutions. To in- ing attention to the connection be- their taxes. To paraphrase H.L. Menc- crease customer service without caus- tween the tax law and the actions of ken: ‘‘Injustice is not so difficult to ing a deterioration in the IRS’s ability the IRS. bear as people say; it is justice that is to collect the taxes Congress has di- And the confusion does not end there, difficult to bear.’’ rected the agency to collect is not as because when the bill sunsets in 2002, In addition I want to thank Senator simple as it appears. Multiple changes we will have established three separate RICHARD SHELBY, Chairman of the are needed. rules governing education savings ac- Treasury Postal Subcommittee of the The key areas where this legislation counts. This year, we have education Senate’s Appropriations Committee. makes changes are in executive branch savings accounts that can be used for His support in 1995 for the creation of governance and management of the higher education but not K through 12. the National Commission of Restruc- IRS, Congressional oversight of the Next year and through the year 2002, turing the Internal Revenue Service— IRS, personnel flexibilities, customer we have different rules which allow along with Congressmen Jim Ross service and compliance, technology tax-free withdrawals from these ac- Lightfoot and STENY HOYER—was in re- modernization, electronic filing, tax counts. After 2003, K through 12 with- sponse to the IRS having wasted $4 bil- law simplification, taxpayer rights and drawals could be made, but only from lion of taxpayers’ money on a failed in- financial accountability. Each add to a the contributions and earnings from vestment known as Tax Systems Mod- whole which I believe will be noted by 1999 and 2002. ernization. taxpayers as improving the service So how will the taxpayers know what Mr. President, I also want to praise they receive and reducing the abuses they are to take out is tax free? How the work done by Congressman ROB they report. will the IRS know and how will the PORTMAN, who was my co-chair of the As we debate this legislation remem- IRS attempt to explain these new rules National Commission. ber that the IRS collects 95% of the tax to taxpayers, and who will understand Congressman PORTMAN and I became revenue this Congress uses to pay for them? Indeed, will anybody understand partners in this year long effort during spending this Congress has authorized. them? But that is the challenge the which we received extensive input from Last year we appropriated $7 billion to IRS will face. We pass a law; they have American taxpayers and experts on the the IRS to collect $1.6 billion. This rep- to write the changes in the code; they IRS and tax system, holding 12 days of resents less than half of one percent of have to disseminate those changes to public hearings and spending hundreds total revenues and makes the U.S. Tax the taxpayer; and then they have to of hours in private sessions with public collection agency the most efficient judge whether or not the taxpayer is and private sector experts, academics, amongst all our industrial competitors. abiding by the new rules and abiding and citizen’s groups to review IRS op- We would not be debating this bill if we by the new code as written, as dictated erations and services. In addition to believed that we could not do better, by changes in the law that we have just holding three field hearings in Cin- but it is useful to understand the chal- passed. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4193

There are no shortages of examples of Mr. President, this three-tier struc- ROTH had. We heard repeatedly from actions taken by Congress to change ture was created in 1952, and what the taxpayers that they just didn’t know our tax laws that result in increased Commissioner has proposed to do is fol- what was going on; something would burdens on the American taxpayers low the lead, the recommendation, of start and stop. They did not get con- coupled—and I say it again. It isn’t the Restructuring Commission to orga- tinuity and accountability under just an increased burden on the tax- nize by four functional categories— present law. payer, but every change we make in that is to say, individual taxpayers, For example, if a taxpayer moves— the tax law says to the IRS: We want small businesses, large businesses, and let’s say a taxpayer decides that they you to invade even more and find out the tax-exempt sector. would rather live in Omaha, NE, than more of what the American people are Under this structure, each unit will Portland, OR—a logical move, it seems doing before you allow this tax break be charged with end-to-end responsibil- to me. They decide they want to go to occur. ity for serving a particular group of from Oregon to Nebraska. Responsibil- I urge citizens, if they are in doubt— taxpayers. Today, each of the 33 dis- ity for the taxpayer’s account would we have the bill itself. That is what we trict offices and then 10 service centers move to another geographical area. It are debating, a change in the law— are required to deal with every kind of would transfer to the Nebraska area. Title VI of this law, this bill before us taxpayer and every type of issue. The Every taxpayer is served by a service today, is called Technical Corrections. proposed plan would enable IRS person- center in at least one district. So in ad- Now, most of these technical correc- nel to understand the needs and prob- dition to the new service area, there is tions are to the Balanced Budget Act of lems affecting and protecting groups of a new service center. Thus, many tax- 1997. And lest anybody think I am down taxpayers and better address those payers have to work with different of- here taking a shot at someone who issues. fices on the same issue. Thus, again, voted for it, I voted for the Balanced I am going to digress a bit and talk they fail to provide the continuity. Budget Act of 1997. With an interest in about an amendment that is going to They fail to provide the accountability saying that we balance our budget, I come before this floor to knock out a that everybody expects when they are voted for the bill. But all the provi- provision that would have on the nine- dealing with any private sector organi- sions and technical corrections are member oversight board a member of zation. technical corrections as a consequence the Treasury Employees Union or The proposed structure would elimi- of confusion in the law, and that confu- someone who represents a large num- nate many of these problems. Not only sion increases the burden on the tax- ber of employees. This provision is why would this proposed structure elimi- payer, increases their requirement to there needs to be a Treasury employee nate that problem, but it is much more go to accountants to figure out what representative on there. This will re- likely the Commissioner is going to be the Tax Code is, and increases the like- quire significant personnel changes. able to come to us with some real ex- lihood when there is a dispute between This is not an easy thing for the Com- citing changes. For example, by put- the IRS and the taxpayer, the taxpayer missioner to do. We, I think, are quite ting all small businesses together, I be- is going to come to us with a complaint correct in putting in statute that we lieve it is likely—every other tax com- about the invasive nature of the IRS. want him to do that, that we direct missioner that talked to us about this I urge citizens to read what is called him to either eliminate or substan- said that its likely the Commissioner ‘‘Explanation of Provision’’ in the Fi- tially eliminate this three-tier system. will come and say, We have got 35, 40, nance Committee report, the much But this will require significant per- maybe 50 percent of our small busi- smaller document that is available to sonnel structuring. I believe we need to nesses that are paying no taxes but citizens as they follow this debate, es- have that representative on the inside they are spending $1 billion or so, they pecially those who are staff of Mem- of the tent when these decisions are are spending a lot of money, comply- bers on the floor. Read the ‘‘Expla- made. It is much more likely that a ing. We can reduce the cost of compli- nation of Provision.’’ You get an un- satisfactory result will occur. ance without reducing the amount of derstanding of the difficulty that the So my colleagues will understand, money coming in to us by simply ex- American people are having and why both Congressman PORTMAN and I sup- empting a significant number of peo- they are right to conclude that, in port this. And support for the idea ple. spite of our rhetoric, we have created came from a number of other people Likewise, if there is a huge difference many of the problems they experience who have gone through this, most no- between the problems faced in collect- with the IRS. table of which is Australia. When they ing taxes from individuals, most of Now, Mr. President, I would like to restructured their tax collection agen- whom have withholding accounts—and go briefly through the provisions of cy, they found lots of personnel issues 99 percent of the American people who this proposed new law to make the that were surfacing, and they made the have withholding comply with the Tax point that Congress has finally got the decision early on. They testified that it Code. They are the easiest to collect message from the American people. was a sound decision to put that em- taxes from. They are just trying to fig- With the enactment of this legislation, ployee representative on the governing ure out what the amount is so they can we will make dealing with the IRS board. get it paid in an expeditious fashion to much easier than it has been in the Mr. WELLSTONE. Will the Senator factor it into the family budget. past. yield? Whereas a large business, $600,000 to $1 The first of the four titles is the most Mr. KERREY. Yes. million or more, they have a com- relevant. Title I, Mr. President, deals Mr. WELLSTONE. I am in the Cham- plicated set of circumstances, much with executive branch governance and ber now, and I wanted to make it clear more labor intensive, much more like- management of the IRS. In addition to to the Senator that I am learning a lot ly to have accountants and lawyers, directing the IRS to revise its mission as I hear him go through the bill, and and so forth, working with them. statement to provide greater emphasis I hope the Senator will take his time in What the Commissioner is proposing on serving the public and meeting the explaining the provisions. This is an to do is get rid of this three-tiered needs of taxpayers, there are five major important piece of legislation, and I structure, and what we have done with changes in this title that deserve at- just want to make that clear out of this legislation is incorporate it into tention. courtesy. law. First, the IRS Commissioner would Please go forward with the argu- Let me say the chairman and I have be directed under law to restructure ments. I am learning in the Chamber. had many disagreements about the the IRS by eliminating or substan- Mr. KERREY. I appreciate it. I thank timing of this thing. The Senate has tially modifying the present law three- the Senator. made substantial improvements to its tier geographic area structure and re- The present-law structure impedes bill, and this is one of them. This is an placing it with an organizational struc- continuity and accountability. I em- area where we have substantially im- ture that features operating units serv- phasize this. This is one of the big com- proved what the House passed by incor- ing four groups of taxpayers with simi- plaints to the Restructuring Commis- porating the recommendation of the lar needs. sion and the hearings that Senator Restructuring Commission to knock S4194 CONGRESSIONAL RECORD — SENATE May 4, 1998 out this three-tiered system and go to the Commissioner, have, over the last finding out who is responsible, going to a functionalized system. I predict that 10 years, been on the job somewhere point the finger back and forth as to for small business, large business, as like an average of 2 or 3 years. This who had the authority. This makes it well as nonprofit, they are going to presents serious continuity problems. clear who does and who does not have find a big improvement in the way they We establish a 5-year term for the the authority for doing IG reports and get services from the IRS. I think we Commissioner and we require the Com- investigations of the Internal Revenue are going to find happier customers missioner to have demonstrated ability Service. and we are going to find ourselves with in management. This title also gives As the committee report notes, an IRS that costs even less on a unit the Commissioner a great amount of Madam President, this will give the basis than it currently does. flexibility in hiring those persons nec- IRS Office of the Chief Inspector ‘‘suffi- (Ms. COLLINS assumed the Chair.) essary to administer and enforce the cient structural and actual autonomy Another major change made by this Nation’s tax laws. from the agency it is charged with law, Madam President, is the creation Another important part of title I is monitoring and overseeing.’’ That is of a new executive branch oversight the way that this title beefs up and the goal. It is the hope of the chair- board. This bill sets up a nine-member, makes more independent, the taxpayer man, and indeed the hope of the entire public-private board to oversee the IRS advocate. Later, if the floor is vacated, committee, this provision will improve in the ‘‘administration, management, I may come down here, I may stand the quality as well as the credibility of conduct, direction and supervision of here and read the various provisions in IRS oversight. the execution and application of the in- this part of title I. Colleagues need to Madam President, in title II we deal ternal revenue laws.’’ There are some understand that this taxpayer advocate with an arcane issue that I consider to specific references to what is not cov- is going to be completely different be quite important, and that is the ered in this legislation, what this board than the current taxpayer advocate. issue of electronic filing, where the potential for increasing efficiency and de- would not be doing. It is not expected The bill gives the IRS oversight board creasing complaints is substantial. In- to be micromanaging. It will not be input into the selection of the taxpayer deed, I envision the IRS in this legisla- given information about taxpayers’ re- advocate. It limits prior and future em- tion being the first of a long line of turns, except in unusual circumstances ployment of the advocate with the IRS, Government agencies migrating from where they need to know. They are not and gives the advocate broad discretion the old world of paper transactions to going to be involved in procurement. to provide relief with regard to tax- the new world of electronic commerce. They are not going to be involved in payers. It provides a problem resolu- Indeed, my vision also includes the law personnel issues. There are lots of tion system with local taxpayer advo- enabling the Commissioner to establish things that are specifically excluded. cates who report directly to the na- rules and regulations so the private They are going to be subject to all the tional taxpayer advocate. sector has a substantial opportunity to Currently, we have a thing called a conflict-of-interest laws that any exec- compete for businesses from the cus- taxpayer advocate. We are going to utive branch appointment would be. tomers who it is already handling. We have a national taxpayer advocate and All these things have been laid out in had some very exciting testimony in I guarantee every single Member is the legislation and are worth reviewing this regard from the IRS in the Na- going to find that this taxpayer advo- by Members who are wondering how tional Restructuring Commission cate provides a much different kind of this new oversight board is going to op- about what the private sector is doing erate. service, much more independent serv- already to try to help taxpayers reduce Specifically, Madam President, the ice than with what we are currently the cost to comply with the tax law. board will review and approve strategic dealing. The advocate is required to re- It is very important to point out that plans for the IRS, review the oper- port to Congress on a variety of com- for most American taxpayers, if not all ational functions of the IRS—including pliance problems, identify those repet- American taxpayers, the largest bill plans for tax administration systems itive problems that may be there as a they pay every year is their tax bill. It modernization, review and approve result of the code, may be there as a re- is important for them to understand major reorganizations and review oper- sult of the law. what that tax bill is and to get it paid ations of the IRS to ensure the proper This is a very, very powerful new po- for in an efficient fashion in order for treatment of taxpayers. sition, Madam President. I thank Sen- them to do financial planning for their Madam President, we tried to avoid ator BREAUX of Louisiana. He is the families. what I think is a common mistake principal author of this change. I would I hope that this electronic filing pro- when creating boards like this, and put it second on the list of things that vision, by stating the goal of pro- that is to specify precisely what each the Senate changed in the House bill motion of electronic filing and setting member has to be in order to be nomi- that are substantial improvements. My a long-range goal of 80 percent of all nated. What we did was we set out a guess is Congressman PORTMAN and the tax returns by the year 2007, will make half a dozen or so different areas that others on the House side, Chairman it more likely that taxpayers, as they we think are important, different ARCHER, will accept these changes. migrate to this electronic field of com- knowledge bases that we think are im- Senator BREAUX made it a point to fig- merce, will have lower costs and an portant in order for this board to be ure out how to better help taxpayers easier time of complying. able to do its job, and we give the with a complaint about their treat- Title III is a portion that has been President a substantial amount of au- ment by the IRS. This section is a sub- given a lot of attention. As I said at thority to make those decisions. We stantial improvement. the beginning, there are lots of parts to stagger the appointment terms so that Another improvement was made by this overall whole. There is no question eventually you get to a point where ev- the chairman, which establishes a new, that taxpayer rights are important. erybody is on a 5-year term. They can independent Treasury inspector gen- Senator GRASSLEY and Senator Pryor, be extended for 5 years. We stagger the eral for tax administration within the while he was still in the Senate, were Chair as well. I think we have created Department of Treasury. Currently, we sort of alternating chair and ranking an administrative structure that will have two. We have an inspection divi- members of the Subcommittee on Fi- dramatically increase the accountabil- sion in the IRS; we have an IG over nance that dealt with a piece of legisla- ity and will make it much easier for us Treasury. We still have an IG at Treas- tion called the Taxpayer Bill of Rights in Congress to do good oversight of the ury under this new law, but we move I, Taxpayer Bill of Rights II. This is ef- IRS. the IG for tax administration over to fectively Taxpayer Bill of Rights III. This title I also, Madam President, Treasury. We leave the audit function Also, I want to call attention to the establishes a 5-year term for the Com- in the IRS. There will be two IGs. The fact that for an entire year, Congress- missioner of the IRS. That has been IG for Treasury will be responsible for man PORTMAN, who was my cochair of discussed before. We need increased Treasury items and the tax administra- this Commission, steadily made me a continuity. Both the Commissioner and tion IG will be responsible for the IRS. convert of the need to extend addi- the Assistant Treasury Secretary, who It is a big improvement over the cur- tional powers to taxpayers. There are has principal first line authority over rent status quo. We have had difficulty lots of them in this title III. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4195 The goal of this change in the law is Fourth, the bill gives the taxpayer committees that may have good inten- to reach a point where all taxpayers new protections against the piling on tions but also may make it difficult for are presumed to be law-abiding citizens of interest and penalties. us to achieve consensus. We rec- who just want to know the amount of Fifth, title III contains protections ommended in our bill and the House- their tax so they can pay, rather than for taxpayers subject to audit or collec- passed bill that some kind of super- presuming that all taxpayers are crimi- tion activities. oversight occur on a biennial basis nals or cheats. But the goal is also to Sixth, this title requires better dis- with these consolidated committees. It preserve the important law enforce- closures to taxpayers. One of the most may be the Finance Committee can ment functions of reducing the threat important things we heard repetitively simply change its internal rules. I of drugs, money laundering, and fraud- was that the taxpayer simply didn’t made a recommendation last week in ulent commercial transactions. None of know what the case was, didn’t under- the Finance Committee. It may be us want to change the law and then stand what was going on. This requires there is some way we can deal with find out 2 years later that we made it the IRS to make full disclosure so that that. But let’s not pass a bill which re- easier for drug dealers, money the taxpayer can better accommodate structures the executive branch and launderers, and commercial cheats out the needs of the IRS. then doesn’t restructure anything we there to do business as a result of de- Seventh, the bill authorizes estab- do. Remember, if you ask the American creasing the power of the criminal in- lishment of low-income taxpayer clin- people who the problem is, 70 percent vestigation division of the IRS. We ics. This is very important. There are say it is Congress. We write the laws must also make certain that the IRS an awful lot of Americans who simply and determine what kind of oversight has the authority and the resources to don’t have the resources to either hire IRS gets, and one of the problems is in- go after those citizens who inten- a private sector individual or to do it consistent oversight. My hope is we tionally avoid paying taxes. We need to themselves. They are confused about can take a look at title IV and look for make certain the IRS has the full force it. Our law ought to always be written ways to strengthen the congressional of law to leverage against them. so that everybody has a shot at the oversight. Madam President, there are seven American dream, and they should not There is a tax complexity analysis in provisions in title III that are worthy be precluded from achieving that title IV which I consider to be terribly of comment at this time. First is the American dream because they don’t important. I cited earlier the example burden of proof. Once a dispute reaches have enough resources to understand of the education IRA. There was no dis- Tax Court under this new law, the bur- how the IRS works. cussion of the impact upon the tax- den of proof in a civil case shifts from Title IV of this legislation deals with payers, no discussion of complexity the taxpayer to the IRS. There are a congressional accountability. Most of analysis, no attempt to measure lot of concerns expressed about this the changes which the Senate Finance whether or not the IRS is going to be from the standpoint of actually in- Committee has made in the House bill more invasive or less invasive. There creasing the cost to complying tax- have made the legislation better. I in- was no cost analysis done at all. payers. We have limited the oppor- dicated several of them already. How- The Commissioner is not at the table tunity for this shift. I think it is a re- ever, I don’t believe title IV represents when the tax laws are written. Under sponsible provision in the legislation, an improvement over the House bill. this new law, the Commissioner will be and I am hopeful it will be retained as The goal of congressional oversight empowered to comment. It could be the is. must be to overcome two substantial President stands up and has some new Second, the bill increases the lever- barriers that the Restructuring Com- tax law idea—HOPE scholarships, for age of taxpayers in civil proceedings by mission found. Barrier No. 1 is that the example. It could be ‘‘Senator expanding the authority to award costs IRS has 535 members of its board of di- Blowhard’’ giving a speech about some and certain fees and increasing poten- rectors, many of whom don’t know new idea that he or she has. Whoever it tial civil damages for collection ac- what the IRS does or what the budget is who has some change in the Tax tions. is. It is easy to complain about what Code, typically it is designed to give an A lot of people on the administration the IRS does, but the IRS gets incon- audience some sense of, we are doing side, not this administration but who sistent signals—we want you to go out something without spending any administer tax law, were concerned and collect the taxes; we don’t want money. We have to be very careful that about this provision. I think it is a ter- you to be too aggressive; we want you we don’t, in the process of doing some- ribly important provision if we are to be more aggressive, less aggressive; thing that is earning a round of ap- going to try to get to a point where, Congress changes, new Members come plause, do something that will increase when collection notices are send out, on board with new ideas, and it is in- the cost to the taxpayer to comply, as the IRS knows with certainty they are consistent oversight that comes as a well, Madam President, as increasing going to be able to devote enough re- consequence of all these kind of the invasiveness of the IRS. sources to be able to get the collection, changes. I appreciate very much there is a tax because very often what happens is The second barrier is that the Com- complexity analysis and the Commis- they send a collection notice out, start missioner, now required to have man- sioner is given new authorities to com- an action, and then they don’t have agement expertise, when he or she ment on tax bills, but I believe we can enough resources, they stop, it drags comes to Congress with their plan of go a bit further in increasing the over- on for years and years and years, and what they want to do, they have to go sight and the accountability of the that is where you end up with tax- to six different oversight committees— Congress. In title VI, as I said, these payers spending an enormous amount three in the Senate and three in the are mostly what are called technical of money trying to comply with some- House. corrections, but it is a real window thing the IRS, at the end of the day, What the Commission found repeat- into this problem of tax complexity. finds out they didn’t think was much edly—again, remember, we started this I don’t know what the vote was— of a case anyway. whole thing with Senator SHELBY and I maybe the Senator from Minnesota re- This will, I think, create a healthy saying $4 billion wasted on tax system members—but there was a big vote on amount of constraint on the IRS from modernization is a call for action. One the Balanced Budget Act, with 80 sending collection notices out knowing of the things we heard both from public votes. I voted for it. We passed this there is an expanded right of action sector and private sector people is that thing, issued press releases, ‘‘The budg- and expanded right, as well, to collect if you can’t get shared consensus about et is balanced.’’ Most of these technical civil damages if negligence can be where it is you want to go with tech- corrections in title IV deal with the proved. nology—as the man said, any road is complexity that we created and the Third, the bill provides significant likely to take you there—you are apt confusion that we created. It is an ef- relief for what are known as ‘‘innocent then, as a consequence, to make mis- fort to clarify what we tried to do last spouses’’ and for taxpayers who are un- takes. fall. able to manage their financial affairs It is this increased activity from all I want to point out that the members because of disabilities. the different congressional oversight of the Finance Committee and the staff S4196 CONGRESSIONAL RECORD — SENATE May 4, 1998 of the Finance Committee, both on the communities. I could list many. What nocent-spouse relief easier to obtain, majority and minority side, have we have now in the bill is the assur- and to make it available retroactively, scrubbed this section very carefully to ance from last year that Minnesotans or at least to all cases pending on the ensure that all the provisions in this who have been hit by tornadoes, com- date of enactment of the bill. title are appropriate and relatively munities that have been hit by torna- So obviously, I am delighted that the noncontroversial. We have not added does, can again extend the filing of Finance Committee has focused on the new loopholes or some new, special pro- their tax return and when they make issue of innocent-spouse protection and vision. These are only technical correc- their payments, but we don’t have any has included provisions that better pro- tions that clarify what we intended to provision that would allow them for- tect my constituent and women across do mostly, as I said, in 1997. giveness on the interest. the country in similar situations. In brief, these are the provisions of I will have an amendment that will The Finance Committee has im- the bill that we are considering today. give them forgiveness on the interest proved upon the bill in other ways, too. I no doubt will have plenty of oppor- payment. It will be a huge help to peo- For example, it would suspend interest tunity to come down again and de- ple who have really been through it, charges and penalties after one year if scribe some further detail that is in colleagues. I think there will be strong the IRS fails to notify a taxpayer of a this proposed law. I will end as I began, support for this. What I will essentially deficiency. Without that provision, by praising the outstanding leadership say in this amendment, for the next taxpayers can find that penalties and and work of Senators ROTH and MOY- year what we will do is for all citizens interest started accruing years before NIHAN as well as the longstanding work across the country, including Minneso- they were ever made aware that there on taxpayers’ rights performed by Sen- tans who have been hit with these dis- was a problem with their tax returns. ator GRASSLEY. With the 426-to-4 vote asters, that they will, No. 1, have an The bill would make the Taxpayer last fall by the House of Representa- extension again on the filing and pay- Advocate’s office independent of the tives and the support of President Clin- ment of tax; and for those that have agency to ensure that it represents the ton, we should be able to change the been personally affected—not every- taxpayers’ interest, not just the agen- law and achieve our objective of giving one, because the cost runs up—but for cy’s interest. It would give the IRS the American people an IRS that is those personally affected, they will Commissioner the statutory authority more user friendly and customer ori- again be forgiven the interest on this he needs to restructure the agency. It ented. payment. would hold IRS employees accountable I yield the floor. It is not a huge expenditure. We will for their actions by requiring the agen- Mr. WELLSTONE addressed the have an offset. I say to colleagues it is cy to terminate employees who com- Chair. terribly important to a lot of people in mit perjury, falsify documents, or vio- The PRESIDING OFFICER. The Sen- Minnesota and I think a lot of people late the rules to retaliate against a ator from Minnesota. around the country. I hope this amend- taxpayer. It would make the offers-in- Mr. WELLSTONE. Madam President, ment will be approved. I think other compromise program more fair to tax- first, I thank the Senator from Ne- colleagues will come to the floor with payers. And it would ensure due proc- braska. He has really led the way on similar amendments. We can do this ess in collections activities. this issue. He is well known for his out- together, Democrats and Republicans, These are important things—changes spokenness as a Senator, and he has Republicans and Democrats. I am try- worth taking the time to make. We been outspoken on this question long ing to make sure we get help to people. have got to try to get things right. Too before the rest of us. Mr. KYL. Madam President, I rise in many past attempts to rein in the IRS I think we will pass this bill this support of the Internal Revenue Serv- have come up short, and once week. I think it will be a very strong, ice Restructuring and Reform Act. Congress’s attention turns to other bipartisan effort. Senator KERREY men- This is a much stronger and much things, the agency has gone back to tioned Senator GRASSLEY and Senator more effective bill because of the time business as usual. ROTH, Senator MOYNIHAN, but on any that the chairman of the Finance Com- This is a good bill. It deserves an one piece of legislation or any one mittee, Senator BILL ROTH, has taken ‘‘aye’’ vote. But let us be under no illu- issue, at least it is my view as a Sen- to thoroughly investigate problems at sion that even a good reform bill will ator, you need a Senator who is a cata- the agency and identify meaningful so- solve the myriad problems that exist. lyst, you need someone who is out lutions. I want to commend him for his Our nation’s Tax Code, as currently there ahead of other people, who is work. written, amounts to thousands of pages willing to be very outspoken and push The politically easy thing to do of confusing, seemingly contradictory very hard. The Senator from Nebraska would have been to rush the original tax-law provisions. We need to reform has done just that. bill to a vote, as many on the other the IRS, but unless that reform is fol- TAX RETURN FILING EXTENSION side tried to do on numerous occasions. lowed up with a more fundamental Mr. WELLSTONE. Madam President, But by taking the time to do the job overhaul of the Internal Revenue Code, let me just say to the authors of this right, we have a much better bill. For problems with collections and enforce- legislation, and I thank them for their one thing, we now have far stronger ment are likely to persist. If the Tax fine support, I will have one amend- provisions to protect innocent spouses. Code cannot be deciphered, it does not ment that is terribly important to my The legislation would ensure that inno- matter what kind of personnel or proc- State of Minnesota. cent spouses are responsible only for ess changes we make at the agency. Last year, we were hit by floods that their own tax liability. Complexity invites different interpre- had a devastating effect on our commu- Madam President, it was two and a tations of the tax laws from different nity. I think people all over the coun- half months ago that I came before the people, and that is where most of the try know about Grand Forks and East Senate to discuss the plight of a con- problems at the IRS arise. Grand Forks and other communities. stituent of mine, a woman who di- Replacing the existing code with a Last year, we said to people who were vorced in late 1995. She paid her taxes simpler, fairer, flatter tax would facili- struggling because of what happened in full and on time during the last two tate compliance by taxpayers, offer that we would extend the time for years of her marriage, but her husband fewer occasions for intrusive IRS inves- them to file their tax returns, and apparently did not. The IRS ultimately tigations, and eliminate the need for when they had to pay their taxes. We came after her for the taxes that her special interests to lobby for com- also were willing to forgive them on former spouse did not pay. It did not plicated tax loopholes. the interest they would have to pay for aggressively pursue the tax bill with There are a variety of approaches to late filing and late payment. him. fundamental reform that are pending This time around, this past year, just After two weeks after hearing from before Congress: a flat-rate income tax; a few months ago, we were hit with tor- my constituent, I sent Chairman ROTH a national sales tax, the Kemp Com- nadoes that were just devastating to a letter identifying ways of improving mission’s simpler single-rate tax. Each communities like Saint Peter and Le the IRS reform bill, and on that short has its passionate advocates in Con- Center and a number of other different list was a recommendation to make in- gress and around the country, and any May 4, 1998 CONGRESSIONAL RECORD — SENATE S4197 one of these options would be pref- some facts about the nominee, Mr. ginia Institute of Autism, Breast Can- erable to the existing income-tax sys- Hormel, and his background. cer Action, the American Foundation tem. Last fall, following a hearing on his for AIDS Research, the American In- So why, many people will ask, have nomination, the Senate Foreign Rela- dian College Fund, the United Negro we not been able to settle on one of tions Committee voted 16 to 2 in favor College Fund, the NAACP, the Insti- them and act on fundamental tax re- of Mr. Hormel. This vote took place tute for International Education, the form? The answer is that, while there November 4, 1997. Originally, it was a Human Rights Campaign Foundation, is overwhelming public consensus in voice vote. It was approved. That Catholic Youth Organization, Jewish favor of an overhaul of the Tax Code, a means by unanimous vote. Two Sen- Family and Child Services, the San public consensus has yet to emerge in ators then requested to have a recorded Francisco Museum of Modern Art, the favor of a sales tax over a flat tax or vote and went on record in opposition. San Francisco Public Library, the San some alternative. And given President So it was a 16–2 vote in the Senate For- Francisco Ballet, and the San Fran- Clinton’s lack of support for fundamen- eign Relations Committee. That is a cisco Symphony. tal tax reform, it is likely to take a very strong vote. Many of these organizations have public consensus, the likes of which we The nomination was placed on the honored him with awards. His commit- have not seen in recent years, to drive Executive Calendar. And despite the ment to public service and his commit- such a tax-overhaul plan through Con- fact that the Senate confirmed every ment to the cause of human rights gress, past the President, and into law. other Foreign Relations Committee came together when he was named as a Steve Forbes made tax reform the nominee before the close of the first member of the United States delega- central theme of his campaign for the session—some 50 nominees in total— tion to the 51st U.N. Human Rights presidency two years ago. He carried Jim Hormel’s nomination was left lan- Commission in Geneva in 1995. And Arizona in the Republican presidential guishing because of ‘‘holds’’ placed on there he helped the United States press primary, in large part because his tax it by a few Senators. its case for improved human rights in plan resonated among the people in my Madam President, that such a distin- nations as diverse as China, Cuba, and state. Yet he failed to win the nomina- guished and qualified nominee would Iraq. tion, and neither Bill Clinton nor Bob face opposition is on its face hard to Finally, he was nominated in 1977 to Dole pursued the issue with as much understand. serve as an alternative representative passion or conviction. And it will take Jim Hormel is first and foremost a on the U.S. delegation to the 51st Gen- a national campaign to build the kind loving and devoted father of five and a eral Assembly. of consensus that will be needed to grandfather of 13. His entire family has There is an irony because on May 23, move forward with fundamental tax re- been unfailingly supportive of his nom- 1997, the same U.S. Senate that opposes form, which is probably the most mo- ination. And people who know him well his nomination, not letting us have a mentous undertaking of the century. say he is decent, patient and a very vote, unanimously confirmed James The IRS reform bill, Finance Com- gentle person. Hormel to represent this country at mittee hearings about taxpayer abuse Madam President, I was very moved the United Nations. by the IRS, the Kemp Commission’s by a letter from Alice Turner, former Madam President, it seems clear to recommendations in favor of fun- wife of James Hormel, a letter written many of us why some Senators do not damental tax reform, new proposals to to the majority leader, Senator LOTT, want to allow a vote on James sunset the IRS Code, and the debate supporting her ex-husband’s nomina- Hormel’s nomination. It is because that sponsors of the flat tax and sales tion. And I quote: James Hormel is gay. In a queer, un- tax have taken on the road in recent I have known Jim for 46 years and for ten questionable case of discrimination, months, will all help to move the dis- of those years I was married to him . . . I these Senators refuse to let the full cussion forward. grew to understand the terrible prejudice Senate vote on a qualified nominee be- and hatred that he knew he would have to In conclusion, we can pass an IRS re- cause of his sexual orientation. Surely, form bill to try to rein in the IRS and face . . . and is facing as he goes through the difficult process this nomination and its op- the U.S. Senate does not want to be make sure that it treats taxpayers fair- party to this kind of discrimination. ly, reasonably, and respectfully. But ponents have put him through . . . I share with you these personal things because I James Hormel is exactly the kind of let us not fool ourselves. The IRS can- gather his personal ethics have been ques- person who should be encouraged to en- not be faulted for a Tax Code that is tioned. If anyone on this earth could come gage in public service. He is intel- too complex and filled with contradic- close to judging that it would be me. He is a ligent, civic-minded, generous, and he tory provisions. wonderful father, grandfather and friend . .. is a person of proven accomplishment Until the Tax Code is simplified, Jim Hormel has given enormously to his who wants to serve our country. We problems in one form or another are family, his community and to this country. need people like him in public service. likely to persist. We must use this op- He is just asking to be allowed to give one We cannot afford to drive him away be- portunity to begin the debate about more time. This is a good man. Give him a chance. cause of his sexual orientation. fundamental tax reform. Mr. WELLSTONE. Madam President, End of quote to Senator LOTT. So, Madam President, this is a mat- I ask unanimous consent to speak as in His professional credentials are ter of simple fairness. We have before morning business. equally impressive. He is an accom- us a qualified nominee, with broad sup- The PRESIDING OFFICER. Without plished businessman. He serves as port, approved by the committee of ju- objection, it is so ordered. chairman of Equidex, an investment risdiction. We should at least be al- f firm, and he serves as a member of the lowed a vote on the floor of the U.S. board of directors of the San Francisco Senate. If people have concerns, let NOMINATION OF JAMES C. Chamber of Commerce. them express them. Let us have a de- HORMEL He has also spent time as a lawyer bate, and let us address them, but let Mr. WELLSTONE. Madam President, and as an educator. He served as a dean us give James Hormel a chance. Let us I rise today with a little bit of sense of and assistant dean of students at the have a vote. sadness to bring to my colleagues’ at- University of Chicago Law School. In So I call on the majority leader to tention the nomination—I guess I will addition, he currently serves as a mem- schedule a vote on James Hormel’s add, and indignation—the nomination ber of the board of members of his alma nomination. I call upon those who have of James C. Hormel to be U.S. Ambas- mater, Swarthmore College. a hold to allow the nomination to sador to Luxembourg. As is the case Let me just give my colleagues a reach the floor. If other Senators wish, too often up here, the nomination has sampling of the kind of organizations let us debate the qualifications. But it been put on the shelf, held by a ‘‘hold’’ he served on, impressive in its breadth is wrong to prevent the Senate from at the request of a few Senators. as well as its diversity. In addition to having an up-or-down vote on this Before I talk about the reasons for his support for Swarthmore and the nomination. the ‘‘hold,’’ I want to talk briefly about University of Chicago, he has provided Some of the Senators who have holds the history of the nomination and resources and assistance to the Vir- on this nomination claim that it is not S4198 CONGRESSIONAL RECORD — SENATE May 4, 1998 because he is gay. They claim it is be- ment that I will bring to the floor if fighting their health plan to get the cause of his views on certain issues in- that is what is necessary. I think it is care their child needs. volving gay rights or something to time for all of us to speak up. Let me just simply say that, again, that effect. The truth is, I do not know Madam President, I just have one Jenna has had to struggle with the ill- exactly what their objections are. other matter that I want to cover in ness. Again, the Johnsons had to try to But there is a more important truth. morning business. figure out how to get additional help. If Senators disagree with this nomina- f And again, after many appeals, the tion, let them come to the floor. Let us care was first denied and finally given debate this out in the open. That is HEALTH CARE care. what the tradition of the U.S. Senate Mr. WELLSTONE. Mr. President, let I want to simply point out what has about deliberative action is all about. me just briefly speak to one major pub- now happened is that the Johnsons So I challenge my colleagues who have lic policy question that we will deal have been switched to another HMO holds on this nomination to come to with in the U.S. Senate. I want to talk and they have been told that any addi- this very floor, explain why they be- about something that has happened in tional care that Jenna might need will lieve James Hormel is unfit to become the past couple of years which has had be denied outright. Any additional care an American Ambassador because he a major impact on the lives of people this courageous 15-year-old young happens to be gay. Let other Senators in Minnesota and across the country. I woman will need will be denied. They and the American people judge on the think people are scratching their head are out of luck. The Johnson’s family merits of this argument. and trying to figure out when we had a is at their wit’s end. Jenna’s family has The issue is a very simple one. We referendum on this or when we voted. joined several HMOs and they can still have a qualified nominee who was re- The topic is all the ways in which not find one that will provide the most soundingly approved by the Senate large insurance companies are domi- basic of medical needs without dealing Foreign Relations Committee. He is en- nating managed health care plans, all with an overly burdensome corporate titled to a vote. And as a United States the ways the pendulum has swung so review. Senator, I am entitled to cast my vote far in the other direction. Many citi- Now, let me just quote Jenna’s moth- for him. zens that need the care cannot get the er, if I could, because I think this gets Madam President, I have language care they needed. to what we are dealing with. Her moth- which would be a sense of the Senate to Jenna Johnson is only 15 years old. er, Cynthia, stated, ‘‘Why, at a time of express the intention of the Senate to She suffers from cerebral palsy, sei- crisis, is emergency medical care de- consider the nomination of James zures and a deteriorating condition nied? . . . If my daughter should have Hormel as United States Ambassador called dystonia, which causes her to another emergency, what will we do?’’ to Luxembourg, that the Senate would lose most of the muscle control in her She feels vulnerable. She wants to make clear its intention to consider body. She takes multiple prescription get the care for her daughter, and be- this nomination before a certain date medications, undergoes countless hours cause of the current situation in our and to vote. I will not bring this of physical therapy, and relies on spe- country, she can’t do it. Now, Madam President, the pen- amendment up on this bill. But this is cial medical equipment to live her life. dulum has swung way too far. We an amendment that I will bring to the Her treatments have nearly broken her talked about containing costs. Fine. floor of the U.S. Senate on another bill. body, colleagues, but her spirit and de- But where is the protection for con- termination remain firmly intact. It is time for us to speak up. It is time sumers? What happens to families that In the spring of 1966 Jenna’s dystonia for us to deal with what is an injustice. are dealing with chronic illnesses? Mr. President, I will work with my worsened. She was fragile from weight What happens to families that need colleagues from California, Senator loss caused from the 22 pills she took specialty care? What happens to fami- FEINSTEIN and Senator BOXER. And I daily to combat her symptoms. The lies who are trying to get the best pos- will work with other colleagues as medication caused serious side effects, sible care for their children? well. ranging from damage to her stomach We have now moved to a system in Let me just conclude by reading on lining to psychotic episodes. The John- our country which is increasingly this matter—and I say to my colleague sons found a specialist, a world-re- corporatized and bureaucracized, where from Arkansas, I have just one other nowned pediatric surgeon in Pittsburgh the bottom line has become the only matter in morning business to cover, that was an expert in treating condi- line. We need to make sure that there and I shall be brief—from the Fort tions similar to Jenna’s. He had the ex- is some protection for consumers. Worth Star-Telegram, ‘‘Senate Should pertise in testing and surgery to place I think there are three issues, and I Be Allowed To Vote.’’ In an editorial an internal pump and catheter to de- will summarize them: One, who gets to calling for Republicans to let the Sen- liver medication. define ‘‘medical necessity?’’ It is out- ate vote on James Hormel, the Fort To make a long and very painful rageous that doctors, nurses, nurse Worth Star-Telegram writes: story short, this procedure was Jenna’s practitioners and nurse assistants, who Conservatives, like Sens. Gordon Smith of only hope. She was slipping away be- know what needs to be done in treating Oregon and Orrin Hatch of Utah take him at fore her parents’ eyes. a child like Jenna, or an adult, today his word and support his nomination. Some Minnesota is a great health care find themselves unable to provide the others, harking to conservative groups that State. We have the University of Min- are part of the GOP constituency, do not. kind of care they thought they would Yet they say the issue is not his sexual ori- nesota. We have the Mayo Clinic. Many be able to provide to people when they entation. If it is not, then the Senate should people from other States—Delaware, were in medical and nursing school. be allowed to vote, yea or nay. If sexual ori- Nebraska or Arkansas—quite often are They should be making the decision. entation actually is the issue, then the Sen- referred to our State. But in this par- Secondly, it is just outrageous—we ate needs to take a look at itself in the mir- ticular case, the expert that could help are talking about something called ror. was a pediatric surgeon in Pittsburgh. point-of-service option; people find I repeat that. ‘‘If sexual orientation The doctor was out of the plan and out themselves moved from one plan to an- actually is the issue’’—I say this to the of the State and the Johnsons were out other, from one year to another, and majority leader. I call on the majority of luck. all of a sudden you have seen a doctor leader to bring this matter before the The request for the procedure was or have been to a clinic with your chil- Senate for a vote. I quote the Fort immediately denied. After an appeals dren and you are canceled out. You no Worth Star-Telegram, the conclusion: process of more than 30 days and longer have an option of being able to If sexual orientation actually is the issue, countless visits to local doctors and see a doctor or a clinic that has taken then the Senate needs to take a look at itself letters to doctors in Pittsburgh and the care of you and your children for a dec- in the mirror. HMO, the Johnson’s plan finally al- ade plus. All the trust, all the rapport, We will not know until we have this lowed Jenna to undergo the procedure. all of what makes for good medicine, nomination out on the floor. And we It is wrong, Madam President, when goes out the window. must do that. I hope the majority lead- a sick child and her family have to Finally, we have to make sure that if er will take action. I have an amend- spend all of their time and energy we are going to pass a strong Patient May 4, 1998 CONGRESSIONAL RECORD — SENATE S4199 Protection Act we have offices of con- Hormel, but rather will bring that to audience of thousands, and the nation- sumer affairs in every State. They are the floor and make sure we do that as wide television audience of millions, independent with ombudsman that can well. that we need not be concerned about be advocating for people. Family USA Mr. HUTCHINSON addressed the China’s capability to launch missiles has done some fine work on this. It is Chair. that might place American cities at not just an 800 number for people to The PRESIDING OFFICER. The Sen- risk. He said, in fact, it would be a cou- call. People need to call a number, ator from Arkansas. ple of decades before China was any- there needs to be an office that is there f where near having the technology that could place the United States and for consumers, where people can say, ‘‘I THE GROWING THREAT OF CHINA American citizens at risk. Well, now we was denied care, what do I do,’’ and you TO THE UNITED STATES have a skillful person that can be there find that because of our own aid, and as an advocate for people. Mr. HUTCHINSON. Madam Presi- because of our own technology trans- I am saying to my colleagues, espe- dent, the headlines in last week’s news- fers to China, already we are seeing cially my colleagues on the other side papers ought to bring pause to this these missiles targeting American cit- of the aisle, I don’t know how many body and to all of us as Americans. The ies, and that this advanced technology days we have left, probably fewer than Washington Times, on Friday, had the is very much now at their disposal. 50 days or thereabouts. We have to get headline ‘‘China Targets Nukes at How did China get this technology? going on this. We have to get going on U.S.’’ The inside part of that article, Two U.S. companies—the Loral Space this. on a graphic, it says ‘‘China’s Long- and Communications Company and the We have an important effort on the Range Missiles,’’ quoting a CIA report Hughes Electronic Company—are under floor this week, bipartisan effort, last May that ‘‘13 of China’s 18 CSS–4 investigation by the State Department which I think reflects some very fine missiles are now targeted at cities in following a classified Pentagon report work. But overall we have not been the United States of America.’’ that concluded that the two companies doing a lot. We have not been doing a This report was followed by a report illegally gave China space expertise lot about making sure there is good in the Washington Times today, head- during cooperation on a Chinese com- health care for people. We have not lined ‘‘U.S. Firms Make China More mercial satellite launch. This report been doing a lot by way of being there Dangerous: Technology Aid Helps Mis- concluded that ‘‘the United States na- for consumers. We have not been doing siles Reach America.’’ I will say that tional security has been harmed.’’ a lot by way of making sure that chil- again. ‘‘Technology Aid Helps Missiles Here are the details: In 1996, during dren come to school at age 5, kinder- Reach America.’’ This was also re- the course of an investigation of a Chi- garten, knowing the alphabet, knowing ported in the New York Times, another nese rocket carrying a $200 million colors, shapes and sizes, knowing how major newspaper in the United States. Loral satellite, scientists allegedly to spell their name, having been read These stories are based on a new CIA shared with their Chinese counterparts to, and ready to learn. report released last week that noted a report explaining the cause of the ac- We have not been doing much by way that 13 of China’s 18 long-range strate- cident, which turned out to be an elec- of making sure that we move toward gic missiles have single nuclear war- trical flaw in the flight control system. some system of universal health care heads aimed at U.S. cities. These mis- This system is similar to those used on coverage. There are over 40 million siles, with a range of over 8,000 miles, ICBM launch-guidance systems. people that are uninsured. There are prove convincingly that China views In February, with the investigation other families that are paying more the United States as its most serious of this incident underway, President than they should pay. There needs to adversary. This is further proof, I be- Clinton permitted Loral to launch an- be some income protection for them. lieve, that the current administration’s other satellite on a Chinese rocket and What about a package of benefits for policy of so-called constructive engage- to provide the Chinese with the same every citizen in the country comment has failed, and failed terribly, as expertise that is at issue in the crimi- parable to what we have? What ever China continues to go this route, as nal case, officials have said. A senior happened to the battle cry that we China continues to take provocative official said the administration recog- should pass legislation to make sure actions and actions that seriously en- nized the sensitivity of the decision but the people we serve have as good a danger the security of the United approved the launch because the inves- health care as what we have? What States. It is important to note that tigation had reached no conclusions, about the strong patient protection? these missiles are in addition to Chi- and Loral had properly handled acci- I have a bill called the Healthy na’s 25 CSS–3 missiles, with ranges of dent launches. The administration, he Americans Act, which I am introducing more than 3,400 miles, and its 18 CSS– said, still could take administrative this week, which is a strategy to move 4 missiles, with ranges exceeding 8,000 action against the companies if they toward universal coverage and says to miles, and its planned DF–31, with a were found to have violated export Arkansas, Nebraska or Minnesota, if range exceeding 7,000 miles. laws in their earlier dealings with the you agree to the national framework, Until last year, China lacked even Chinese. there will be Federal grant money the intelligence, and certainly they Another company—Motorola—is also available to you to reach universal cov- lacked the technology necessary to involved in upgrading China’s missile erage. You decide how you want to con- manufacture boosters that could reli- system. The chairman of the House tain costs. You decide how you want to ably strike at such long distances. In Science Subcommittee on Space and deliver the care. We have to move to- fact, it is reported that in a launch test Technology received word from an ward that system of care. We haven’t of the boosters, their technology failed unnamed official from Motorola that done that. We are not there on health to launch the boosters three out of five they, too, have been involved in up- care. We are not there on investment times. That is a 60-percent failure rate. grading China’s missile capability. In- in children and education. We are not Likewise, they were years from devel- terestingly, this executive claims the there on strong consumer protection, oping the space technology necessary work is being done under a waiver—a and we are not there on a lot of issues to launch multiple, independently tar- waiver granted from the Clinton ad- that are very important to working getable reentry vehicles, otherwise ministration—thus, circumventing all families and communities. known as MIRVs, multiple warhead of the bans and restrictions on such This issue of whether or not the U.S. missiles. Now they are only years technology transfers. This technology Senate is on the side of big insurance away, if not months, from having such was supposed to be controlled, re- companies or the consumers will be a technology. stricted. Madam President, trade in litmus test for all of us. After we get Some time ago, I participated in a missile and space technology to China done with this bill, let’s get a lot of firing-line debate on the campus of the was supposed to be severely restricted this substantive legislation on the University of Mississippi. During that under the sanctions related to the floor. My hope is—and I will finish on debate, when the issue of national se- crackdown of the Tiananmen Square this—that I won’t have to have an curity was raised, former Secretary of massacre. Unfortunately, this adminis- amendment calling for a vote on James State Henry Kissinger reassured the tration has implemented a give-give S4200 CONGRESSIONAL RECORD — SENATE May 4, 1998 strategy of appeasement, which has speech that I gave at the Fulbright In- three out of the thousands upon thou- weakened or eliminated most of these stitute on the campus of the University sands of political and religious dis- restrictions. of Arkansas in Fayetteville, with many sidents currently held in Chinese pris- Politics must not supersede national visitors there from outside the State of ons. security concerns. Why did this admin- Arkansas, and their disbelief and skep- I would suggest to my colleagues in istration make such an incredible and ticism was expressed to me that this in the Senate that we need to imme- risky decision? Loral has numerous fact was factual. diately respond in two ways. First of business deals with China. Loral has Well, it is factual. It is beyond dis- all, the Senate should immediately close ties to the White House. Its chair- pute that two indictments have been pass the 8 House-passed bills on China, man and chief executive officer, Ber- brought down regarding the sale of bills that the House of Representatives nard Schwartz, was the largest individ- human body parts and harvesting of adopted on huge bipartisan margins, by ual contributor to the Democratic Na- these body parts from Chinese pris- huge margins last year, usually from tional Committee last year. Motorola’s oners with the full cooperation of the 350 votes to 400-plus votes on these var- involvement and ties with this admin- Chinese Government, and in some in- ious bills, short of denying most-fa- istration are just now being inves- stances U.S. businesses. In this case, vored-nation status but at least taking tigated. This raises serious questions U.S. industry is alleged to have pro- targeted measures to tell this repres- and puts a dark cloud over these deal- vided the Chinese Government with a sive government in Beijing that the ings, particularly in light of the CIA dialysis machine to assist the harvest- United States is serious when it an- report indicating China is now targeting of organs in their prison hospitals. nounces its concerns about the abuses ing American cities. On the policy of appeasement—the that are ongoing in China. Eight bills— In addition to legally getting this administration calls it ‘‘constructive ten bills passed the House. Two of them technology through these waivers from engagement’’—I think indisputably we have adopted in the Senate, but the current administration, China has today a policy of appeasement to the eight continue to languish without ac- twice violated its agreement to follow Chinese Government is obviously fail- tion. the principles of the missile technology ing. According to a report in the Wash- I asked our majority leader. I talked and control regime. Yet, under this ad- ington Post on Friday titled ‘‘U.S.- with him. He has given positive indica- ministration’s policy of appeasement, China Talks Make Little Progress on tions that we will bring these eight the administration is asking China to Summit Agenda,’’ the United States, House bills to the floor for a vote in sign on to the missile technology re- we find, is getting few concessions from the U.S. Senate prior to the President’s gime. This is like stacking new prom- China relating to the inspection of trip to Beijing in June. ises on top of broken promises and then technology that we share with them; These bills include H.R. 2195 regard- calling it progress. It is important to we are getting few concessions on lim- ing slave labor, which passed the House note that China’s inclusion in the mis- iting proliferation of technology to by a vote of 419 to 2. H.R. 2195 was de- sile regime would allow even greater third-party states like Iran; and we are signed to keep slave-labor products out technology transfers to be made, thus, getting few concessions on the most of the United States, authorizing need- putting more Americans at even great- important issue of all—that of human ed funding for genuine enforcement of er risk. rights conditions, particularly in the ban on slave-labor products, calling Madam President, most importantly, Tibet. China continues to repress and oppress As the President prepares to travel upon the President to strengthen inter- its own people, in violation of inter- to China, as he prepares to continue national agreements to improve mon- national law. The latest State Depart- this policy of so-called ‘‘constructive itoring of slave-labor imports. If it ment Report on Human Rights in engagement,’’ we find that even as we passed by this overwhelming margin in China shows that China is still a seek concessions in line with inter- the House, I suspect if we had an oppor- major, if not the major, offender of national norms, that we meet a stone tunity to vote on that in the Senate, it internationally recognized human wall. Our only token concessions are would pass by an equally large margin. rights in the world today. the release of high-profile prisoners. It is something we need to do before This report from our own State De- Despite this very obvious failure, we the President travels to China. partment notes that China continues continue to give, and give under the H.R. 967, the ‘‘Free the Clergy’’ bill, to engage in ‘‘torture, extrajudicial guise of ‘‘constructive engagement.’’ which passed the House on November 6 killings, arbitrary arrest and deten- We have provided key technology of last year by a 366 to 54 margin: H.R. tion, forced abortion and sterilization, that puts our own country at risk. We 967 targets those Communist officials crackdowns on independent Catholic have set up a hot line that reaches who engage in religious persecution, and Protestant bishops and believers, from the White House to China. We banning their travel to the United brutal oppression of ethnic minorities have begun assisting China in its ef- States by prohibiting the expenditure and religions in Tibet and Xinjiang forts to gain membership into the of any U.S. taxpayer dollars in support and, of course, absolute intolerance of World Trade Organization, even as our of their travel and subjecting it to a free political speech or free press’’— balance of trade with China reaches Presidential waiver allowing them to from our State Department report. new levels, new highs. Yet we try to or- be denied their visas. I think that is a These are not new charges. The trag- chestrate their efforts to get into the simple step, a very modest step, that edy is not that we are hearing these WTO. We dropped our annual push for a we should, that we must, do to ensure charges repeated; the tragedy is that resolution condemning China’s human that United States statements of con- we continue the same policy that has rights record at the United Nations. cern about religious persecution in allowed these kinds of repression and This is something we have done year in China have some validity—even the de- repressive practices to exist. We con- and year out. We called upon the nial of visas, travel opportunities, for tinue along the same line as if every- United Nations to condemn the abuses those officials in China who continue thing is fine. Human rights abuses, re- that are ongoing in China. This admin- to practice and implement the policy ligious persecution, forced abortion, istration has dropped even that kind of of religious persecution. and slavery are all raised at the staff symbolic gesture that has been a part H.R. 2570 regarding forced abortions level, with only token concern ex- of our foreign policy. passed the House on November 6, 1997, pressed by senior officials in this ad- We failed to do that in spite of the with a 415-to-1 margin, yet the Senate ministration. adoption of the sense-of-the-Senate these many months later has not yet In addition to this report from the resolution asking this administration had an opportunity to vote on this bill. State Department, there are well docu- to do that. And we continue to provide This bill, H.R. 2570, targets those Com- mented abuses. The U.S. Attorney for China most-favored-nation status. In munist officials involved in forced the Southern District of New York has return for this, we have witnessed the abortion sterilization, banning once indicted two Chinese immigrants for release of three—we have witnessed the again their travel to the United States. the sale and marketing of human body release of three—high-profile prisoners I think that, once again, is a very mod- parts. I raised this allegation at a of conscience from China’s prisons, est move. It is about the most modest May 4, 1998 CONGRESSIONAL RECORD — SENATE S4201 move that we could possibly take re- itor, to provide a list and authorize the voice for freedom or raise their voice garding Communist government offi- President to restrict and seize the as- for their own conscience. cials who are implementing a policy of sets of such companies. And then the resolution states that forced abortion and sterilizations in H.R. 2386, this legislation, passing by the President should not offer to lift China today and prohibiting them from a vote of 301 to 116, provides that the the sanctions imposed on China after traveling to the United States. United States shall help Taiwan to de- the 1989 crackdown in Tiananmen H.R. 2358 on human rights monitors velop and deploy an effective theater Square, and those measures should not passed the House by a 416-to-5 vote. It missile defense system. It has been ob- be reversed until we see substantive would increase six-fold the number of vious by some of the actions and some and real changes in the policies of the U.S. diplomats at the Beijing Embassy of the statements of the Beijing regime Chinese Government. I am not anti- assigned to monitor human rights. that they had designs on free Taiwan. Chinese. I was thrilled while I was in I visited China in January. I know This would simply be a step in ensuring China to meet scores of individuals in firsthand how short-handed our State that Taiwan would be able to defend China who are going about their daily Department officials and diplomatic of- themselves against any overt military lives making a living. I was glad to see ficials are and how limited they are in action by the mainland Chinese Com- the progress in moving toward a mar- their ability to monitor the ongoing munist government. ket system. I was glad to see the human rights abuses in China. If we are The second step I believe that we churches that are, though regulated to have the knowledge, if we as a body should take as a body, the Senate stringently by the government, filled are to have the information that we so should support the resolution that I in- to the brim every Sunday. I was glad to desperately need, these human rights troduced on releasing the remaining see the Buddhist temples, though, once monitors are needed. In addition, the dissidents in China. Senate Resolution again, strictly regulated by the govern- new law will add at least one human 212, which I introduced on April 22, last ment, seeking to operate and continu- rights monitor to each U.S. consulate month, with six cosponsors, has been ing to operate. But I was chagrined to in Communist China. referred to the Senate Foreign Rela- see that the government’s fundamental H.R. 2232 on Radio Free Asia passed tions Committee and expresses the policy towards its own people has not the House by a 401-to-21 margin and sense of the Senate that at the upcom- changed, that their concept of freedom would fund a 24-hour-a-day broadcast ing United States-China summit the is not that which is embedded in the throughout Communist China in each President should demand the release of founding documents envisioned by our of the major dialects spoken in China. all persons remaining imprisoned in Founding Fathers and appreciated and This Radio Free Asia bill will allow the China and Tibet for political or reli- admired and accepted by the inter- truth of freedom to penetrate Com- gious reasons. national community all over this munist China. And, in fact, the truth I hope that as our President journeys world. will set them free. And, as we are al- to China these most important issues— This is not a case of the United lowed to give the story of freedom and human rights, religious persecution, States seeking to impose its ideas of the story of democracy, the democracy weapons proliferation—would not be democracy upon another culture. It, movement, which was so alive almost 9 relegated to staff level discussions but, rather, is seeking to have our country, years ago on Tiananmen Square, will in fact, the President himself would as it always has, reflect in our foreign be alive and evident again in China. It elevate them and would ensure that policy the underlying values of free- passed by an overwhelming margin. these issues become the primary focus dom that are not American but are H.R. 2605 on World Bank loans passed of our relationship with China and that human, that transcend every national the House by a 354-to-59 margin. This progress on these fronts is directly boundary, that transcend every culture bill would direct U.S. representatives linked to the trade opportunities that and society and are fundamental for at the World Bank to vote against China seeks. This resolution states basic respect of human dignity and below-market subsidies for Communist that in the upcoming proposed summit human rights. China. This is far short of denying between President Clinton and Presi- It is that, I think, President Reagan MFN. I have heard all of the arguments dent Jiang of China, President Clinton had in mind when he spoke of this against denying MFN in China. Indeed, should demand the immediate and un- country as a shining city on a hill, a this is not a blunt instrument. This is conditional release, consistent with es- nation that could be admired and re- a very sharp scalpel, a very small in- tablished principles of human rights, of spected the world over because of a for- strument that can be used, simply de- all persons remaining in China and eign policy, reflected in its attitude nying subsidized loans by the American Tibet for political or religious reasons. and in its policies toward our neighbors taxpayer to the Government of Com- It says, secondly, the President around the world, of fundamental re- munist China, which continues to prac- should submit a report to Congress as spect for human rights. It was almost 9 tice these horrendous abuses against soon as possible after the proposed years ago when the massacre at their own people. summit in China concerning his Tiananmen occurred—June 8 and June H.R. 2647, the People’s Liberation progress in securing the release of per- 9, almost 9 years ago. Those students, Army companies, corporations—com- sons imprisoned in China and Tibet. hundreds of them that were massacred, panies and businesses and enterprises Third, it says one prisoner released looked to the United States as its em- owned and operated by the People’s into exile does not change the fun- blem, as its symbol of freedom in the Liberation Army, which passed the damental flaws within the Chinese ju- world. It was Lady Liberty that they House by a vote of 405 to 10, would re- dicial and penal system. erected that stood there in Tiananmen quire the Defense Department, the Jus- Fourth, it states that the U.S. policy Square day after day, week after week, tice Department, the FBI, and the CIA of granting concessions to the Chinese testimony to the desire of Chinese peo- to compile a list of known PLA com- Government in exchange for the re- ple for greater freedom. Now it is our mercial fronts operating in the United lease of high-profile prisoners is an of- time to stand with them. It is time for States and would authorize the Presi- fense to the thousands of dissidents re- our President as he journeys to China dent to monitor, to restrict, and to maining in prison. to take this stand forcefully and to ele- seize the assets of and ban such PLA I, as all Americans, rejoice and am vate this as the primary reason, the companies within the United States. thrilled at the release of any prisoner primary purpose in his journey to that For my colleagues, I would say these of conscience in China. Wang Dan’s re- important nation in the world. And as are companies predominantly owned lease, I am glad for that. Wei’s release, he is willing to do that, this body will and operated by the military of Com- I am glad for that. But I also know stand with him. I hope, once again, munist China. These companies should that the release of a handful of well- that the Senate will adopt the House- not be free to operate and to trade free- known dissidents is no substitute for passed bills, that we will adopt the ly in the United States. So this would change in the fundamental policy of sense of the Senate, and in so doing we authorize our various agencies—the the Chinaese Government, which con- will arm the President with the force- Defense Department, Justice Depart- tinues to be one of repression and per- ful opinion of the American people that ment, FBI, CIA, and so forth—to mon- secution of those who would raise their fundamental change needs to take S4202 CONGRESSIONAL RECORD — SENATE May 4, 1998 place in the Chinese Communist gov- I hope that some of my colleagues take maybe one case a year just so I ernment in its attitudes and its poli- who may be listening will go back and would have to stay boned up on what cies toward its own people. look at my full remarks that were en- the Supreme Court had ruled on, most- Madam President, I yield the floor. tered in the RECORD at the time I intro- ly rules of evidence and defendants’ Mr. BUMPERS addressed the Chair. duced that bill. rights. And, yes, I defended a man one The PRESIDING OFFICER. The Sen- f time that in my own mind I felt sure ator from Arkansas is recognized. was guilty and the jury acquitted him. EXCULPATORY EVIDENCE AND Mr. BUMPERS. I ask unanimous con- That sounds terrible to a lot of people GRAND JURIES sent that I be permitted to proceed as who do not understand the criminal if in morning business. Mr. BUMPERS. Madam President, on justice system. Everybody is entitled The PRESIDING OFFICER. Without a separate matter, I want to inform my to a trial. objection, it is so ordered. colleagues that I am also working on So all I am saying is the crime rates (The remarks of Mr. BUMPERS per- legislation that will require prosecu- are coming down. People ought to be in taining to the introduction of S. 2030 tors, before they ask for an indictment, a little more circumspect mood about are located in today’s record under to also give the grand jury any excul- what the Founding Fathers meant. The ‘‘Statements on Introduced Bills and patory evidence they may possess. most important thing I said in my Joint Resolutions.’’) Prosecutors, as I previously outlined former remarks a moment ago about f in some detail, have such an advan- the bill I am introducing today is that tage, such an upper hand. Some of it is TELEPHONE PRIVACY ACT the law is supposed to be a shield as legitimate, and some of it is not. As Mr. BUMPERS. Madam President, I well as a sword. It is supposed to pro- one New York judge said, ‘‘A grand tect the liberty of people in this coun- recently introduced S. 1968, the Tele- jury will indict a ham sandwich’’ if the try as well as to prosecute the guilty. phone Privacy Act. This bill, which has prosecutor asked them to. It also has an obligation to defend and bipartisan support, has nothing to do I had a prosecutor tell me one time, with Linda Tripp or anybody else. ‘‘This is the best grand jury I ever saw; free the innocent. So that is all these I first proposed legislation regarding it indicted everybody I asked them to proposals I am making are calculated telephone privacy in 1984 when it was indict.’’ Of course they indicted every- to do; keep a firm commitment to our revealed that Charles Wick, who was body. They are putty in his hands. elemental belief in fairness, in the head of the United States Information I will just give you an illustration of rights of the innocent and, yes, to pros- Agency, had tape-recorded President the kind of case that I am trying to get ecute and convict the guilty. Reagan and President Carter and sev- at. Madam President, I yield the floor eral Cabinet officials 84 times without Let’s assume that you are a prosecu- and suggest the absence of a quorum. their knowledge. tor and you are getting ready to ask The PRESIDING OFFICER. The Can you remember when you were a the grand jury to indict somebody for clerk will call the roll. kid and you used to listen to telephone capital murder. Assume further that The legislative clerk proceeded to conversations? The announcer would all the testimony that has been taken call the roll. call somebody or somebody would call in that case said that the man who Mr. DORGAN. Madam President, I in because they had the answer to a pulled the trigger and committed the ask unanimous consent that the order question, and you would hear beeping murder was wearing a green jacket. for the quorum call be rescinded. in the background. In those days, that Assume further that the prosecutor The PRESIDING OFFICER. Without was a sign that you were being re- has had information come to him per- objection, it is so ordered. corded. Somewhere along the line, that sonally, though it has never been pre- Mr. DORGAN. Madam President, I practice was discontinued. Today, you sented to the grand jury, that it was, in ask unanimous consent to speak for 10 can tape-record your very best friend fact, a red jacket. minutes as in morning business. and not tell that friend and hand it to I am making a rather extreme case The PRESIDING OFFICER. Without all three networks for use on the here, but I ask you, in the spirit of ele- objection, it is so ordered. evening news and no federal crime has mental fairness, do you believe that f the prosecutor, before he asks some- been committed. COMPREHENSIVE TOBACCO body to go on trial and possibly end up Not too long ago, Attorney General LEGISLATION Reno testified before the Appropria- in the electric chair, is beholden in any Mr. DORGAN. Madam President, be- tions Subcommittee on State, Justice, way to tell the grand jury of totally ex- fore I begin talking about an amend- Commerce, on which I sit. At that culpatory evidence that he may have in ment I intend to offer on the piece of time, we were working on this bill, and his possession? legislation we will consider this week I asked her about it. She said, ‘‘Well, There is a Supreme Court decision, dealing with the IRS, let me say that Florida already has such a law that the name of which I forget, in which the Congress Daily this afternoon indi- makes it a criminal offense to tape- the Supreme Court ruled 5–4 that the cates the Senate majority leader says record a conversation without telling prosecutor is absolutely under no com- ‘‘the compromise tobacco bill devel- somebody.’’ pulsion to tell the grand jury of any ex- I said, ‘‘How long have they had the culpatory evidence in his possession. If oped by Commerce Chairman MCCAIN law?’’ that isn’t a betrayal of everything that may not be the base bill considered by She said, ‘‘Since around 1970.’’ we Americans believe, including fun- the Senate when it takes up the to- I said, ‘‘Were you the prosecutor in damental fairness, if that is not a be- bacco issue. . .’’ Dade County at the time that hap- trayal of everything I was taught in I am quoting: pened?’’ law school, I cannot think of a more When asked whether he plans to bring the She said she was. egregious case. McCain bill to the floor, Lott said: ‘‘I am re- I said, ‘‘Well, how did you feel about Madam President, one of the reasons ferring to a bill; it could be McCain, a ver- the bill when it was being debated?’’ we have not had these debates in the sion of McCain, it could be something else.’’ She said, ‘‘I favored it.’’ past is because the crime rate in this Again, I was quoting. As usual, Congress doesn’t get the country was soaring. And everybody I would hope that Senator LOTT, the message until after the States have was in a put-them-in-jail and throw- majority leader, would understand that acted—16 States have already enacted away-the-key mode. But I wanted my when the Senate Commerce Committee legislation almost identical to S. 1968 , colleagues to stop and just reflect for a marks up a piece of legislation and and here we sit still allowing people to moment. God knows, I am not suggest- passes it with only one dissenting vote, invade our privacy, the most fun- ing any guilty person should go free, a piece of legislation that is embraced damental privacy when people have but you heard that old story: Better by Republicans and Democrats in the their guard down the most, by tape-re- that 1,000 guilty people go free than Senate Commerce Committee, that cording conversations which can later one innocent person be convicted. that would not be work that is dis- be used for any purpose they choose. It I did not do very much criminal trial carded as we move to begin consider- is not an offense, and it ought to be. work when I practiced law. I used to ation of a comprehensive tobacco bill. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4203 There is a reason for a committee I spoke last week about hearings on owe and do the best job they can of ac- system in the Congress, and that is to IRS misconduct and abuse. I indicated counting for it. work through committees to develop a that, while I think the IRS has many But transfer pricing means that you proposal, and bring that proposal to good people who work very hard to col- overprice an import into the United the floor of the Senate. I would be very lect the taxes that our laws require to States in order to inflate the cost of disappointed if the majority leader in- be collected in this country, it is clear goods sold, and therefore reduce, if not tends one way or the other to bring a from the hearings that there have also wipe out, their profit here. Or the al- piece of legislation to the floor which been abuses that ought never be toler- ternative would be to underprice some- is vastly different than that which was ated. I commend the Chairman for thing you are exporting to another passed out of the Senate Commerce holding last week’s hearings. We must country in order that your subsidiary Committee. use these hearings as the occasion to in the other country earns a very large Again, I know there is a tremendous understand what went wrong and make income which would be subject low or amount of lobbying going on in this sure it never goes wrong again. The no taxes in the other country. Because town and around the country by the to- American people don’t ever deserve an you priced it so low as you exported it bacco industry to try to resist and IRS that is not fully accountable and here in this country, you end up mak- fight this kind of tobacco legislation. I an IRS that in some cases will harass ing no money. understand that and I understand why and badger taxpayers in ways disclosed Let me give you an example of how they are doing that. Literally hundreds during the hearings last week. this works. There are a couple of proof millions—billions of dollars, hun- Let me just tackle one other aspect fessors employed at Florida Inter- dreds of billions of dollars are at stake. of the Internal Revenue Code and the national University. Their names are But we must, it seems to me, in dis- behavior of the IRS. The IRS is re- Simon Pak and John Zdanowicz. I have charging our responsibility, pass a quired to collect the taxes needed to met them. They have done a lot of in- comprehensive tobacco bill. A good run the Government. Now the question teresting work on the issue of transfer start in doing that would be to take is from whom does the IRS collect the pricing. It is a Byzantine, complicated the piece of legislation that we have amounts that are due? The people who area of tax law, so complicated that drafted and marked up in the Senate go to work every day? The families very few people pay any attention to Commerce Committee and bring that that make a salary at work, and when it. Yet billions and billions of dollars of to the floor of the U.S. Senate. they earn that salary, they have with- tax avoidance occur every single year. In response, I think, to the aggres- holding taken out of their paychecks. ‘‘U.S. Government is Cheated out of sive initiative around this country by Their taxes are sent to the U.S. Gov- $42.6 Billion in Tax Revenues in 1997, the tobacco industry, some are saying, ernment. They don’t have a choice. Study Reveals.’’ Pak and Zdanowicz re- ‘‘Maybe we ought to back off. Maybe There is no flexibility. They work, they cently released a study showing a con- we ought to not be quite as aggres- receive a paycheck, and they have servative estimate of tax loss during sive.’’ withholding. 1997 due to abnormal pricing in inter- The fact is the origin of the tobacco But there are others doing business national trade was $42.6 billion. legislation comes from our determina- in America that are not quite so com- Let me give some examples. Tweez- tion to see that this industry stops tar- pliant. We need an IRS that cares ers—everybody knows what tweezers geting America’s children. And if about what they are doing as well and are. Tweezers are tiny little things you someone thinks that they have not tar- makes sure they pay their fair share of buy at the drugstore for $1, $2, or $3. geted America’s children, then I say the tax load in this country. Let me Tweezers were imported from Switzer- read the evidence. The Supreme Court give you an example. In a recent year, land at $218 each. Now, did somebody has just ruled in a manner that re- we had a study completed by the Gen- really pay $218 for a pair of tweezers? quires thousands of pages of evidence eral Accounting Office (GAO), the in- Sure—a U.S. subsidiary of a foreign- to be disclosed. That evidence from the vestigative watchdog of Congress. One based corporation. The foreign-based tobacco industry itself demonstrates of the GAO’s main findings was that 46 corporation sells the tweezers at $218 that the only source of new smokers percent of the largest foreign-based apiece, and they are a controlled U.S. has been to addict America’s children. Smoking is legal. Tobacco use is multinational firms—that is, firms subsidiary. They can never, ever make legal, and will remain legal in this with over $100 million in assets—are a profit, if they so desire. So whatever country. But it is not legal and should transacting hundreds of billions of dol- that corporation decides to do in the not be legal to attempt to addict Amer- lars of business in this country and United States, they control their pric- ica’s children. That is why a com- paying zero in income taxes to our ing back and forth. They will do a lot prehensive tobacco bill needs to be country. That is right—not 10 percent of business, make a lot of profit, but by brought to the floor of the Senate. I or 5 percent or 1 percent, they paid zero overpricing tweezers to the tune of $218 urge the majority leader in the strong- in income taxes to this country. apiece, they will never pay an income est terms possible to use the process Now how, you ask, would a company tax to the U.S. Government. that we have started here in the Sen- based overseas do business in America, So they can come here and they can ate, bring to the floor the piece of leg- do tens of billions of dollars’ worth of compete against a U.S. business that islation I and others, with the leader- business, earn billions of dollars’ worth doesn’t do business in 10 countries, just ship of Senator MCCAIN, have devel- of profit and pay zero in taxes? I men- does business here, and when they oped, and use that as a starting point tioned 46 percent of the largest compa- make a profit, they must pay a tax. on the Senate floor to deal with com- nies with over $100 million in assets How about bulldozers? Everybody prehensive tobacco legislation. paid no taxes; 74 percent of all foreign- knows what a bulldozer is. You drive f based corporations in the U.S. paid down the road and see a construction nothing, zero, in Federal income taxes. project, you can identify a bulldozer at INTERNAL REVENUE SERVICE RE- Let me say that again: 74 percent of all first glance. It is one of the biggest STRUCTURING AND REFORM ACT foreign-based corporations doing busi- things you will see. Bulldozers ex- OF 1998 ness in the United States paid zero in ported to Belize for $551. Does anybody The Senate continued with the con- Federal income taxes to this country. know where you can buy a $551 bull- sideration of the bill. How do they do it? Something called dozer? Mr. DORGAN. Mr. President, the transfer pricing. Let me go through some of the rest agenda for the Senate this week will be It is not only the foreign-based cor- of the examples. Safety razor blades, to discuss the bill that deals with the porations, incidentally, that have a $13 a piece. Television antennas—ev- Internal Revenue Service. Among other problem here. Most corporations that erybody knows what a television an- things, this piece of legislation creates are doing business all around the globe tenna is—$1,738 from the United King- an Internal Revenue Service oversight are finding ways to minimize their tax dom. Venetian blinds—most everybody board to help take a look at the man- burden through transfer pricing. Of has priced venetian blinds at some agement of various things with respect course, not all of them do that. Many point. This would be a company that to the running of the IRS. corporations pay exactly what they sold venetian blinds abroad and sold S4204 CONGRESSIONAL RECORD — SENATE May 4, 1998 them at a price that guarantees they will say: It happens, but we have done THE VERY BAD DEBT BOXSCORE can’t make a profit here. They do it such a great job there is very little tax Mr. HELMS. Mr. President, at the through controlled companies, so it is avoidance. close of business Friday, May 1, 1998, not real, just the way they price their But, of course, neither is true. The the federal debt stood at transactions. Venetian blinds, 3 cents. fact is that we have a very serious $5,501,155,718,728.09 (Five trillion, five How about a toothbrush for $18? Or bet- problem in this area, one that needs to hundred one billion, one hundred fifty- ter yet, a tractor tire shipped to be corrected, and it will not be cor- five million, seven hundred eighteen France for $7.65? rected with the current enforcement thousand, seven hundred twenty-eight All of this represents tax avoidance method used by the Internal Revenue dollars and nine cents). in sophisticated swindles designed to Service and the Treasury Department. One year ago, May 1, 1997, the federal prevent the U.S. Government from tax- As we talk now about how to recast the debt stood at $5,338,453,000,000 (Five ing a profit as they would do with a do- Internal Revenue Service, develop new trillion, three hundred thirty-eight bil- mestic corporation. procedures, develop new protections for lion, four hundred fifty-three million). The reason I mention all of this so- taxpayers, develop an IRS oversight Twenty-five years ago, May 1, 1973, phisticated tax avoidance that is that board, I am asking that the Internal the federal debt stood at $456,190,000,000 it is almost impossible to detect. When Revenue Service and the Treasury De- (Four hundred fifty-six billion, one you have companies—a company want- partment—especially at the direction hundred ninety million) which reflects ing to do business in this country, in of this new oversight board—take a a debt increase of more than $5 tril- most cases it will be a large foreign- fresh, new look at this issue and try to lion—$5,044,965,718,728.09 (Five trillion, based corporation that creates a U.S. determine how we can do better. forty-four billion, nine hundred sixty- subsidiary. In America, when someone decides to five million, seven hundred eighteen They will do business with their own begin to do business and risk their cap- thousand, seven hundred twenty-eight subsidiary. And to try to construct ital in order to hold themselves out to dollars and nine cents) during the past their transactions back to some rea- do business and earn a profit, when and 25 years. sonable market prices is like trying to if they earn that profit, they must pay f connect two plates of spaghetti to- an income tax. The reason for that is, gether. It is impossible. Yet, that is we tax profits and we tax income in MESSAGES FROM THE HOUSE what the IRS is attempting to do. It order to pay for our common defense, RECEIVED DURING ADJOURNMENT doesn’t do very well; can’t do very well. in order to build roads, and do a whole ENROLLED BILL SIGNED Enforcement here is abysmal. In fact, series of things in this country that we Under the authority of the order of depending on who you ask, the tax need to do together. But we have some the Senate of January 7, 1997, the Sec- avoidance per year is $40 billion, some who do business in this country that retary of the Senate, on May 1, 1998, say $25 billion, and some say $15 bil- pay no taxes. I especially point to the during the adjournment of the Senate, lion. There has been a study that says foreign-based multinational firms. The received a message from the House of $4 billion and the IRS says only $1 bil- GAO report says they come to this Representatives announcing that the lion. What is the truth? The truth is country and approximately 74 percent Speaker has signed the following en- that it is far more than $1 billion or $4 of them doing business here pay no rolled bill: billion that the IRS and Treasury are U.S. income taxes. Those who are lis- H.R. 3579. An act making supplemental ap- talking about. It is far closer to the tening to this will be surprised to learn propriations for the fiscal year ending Sep- numbers put together by Professors that the brand names they are well fa- tember 30, 1998, and for other purposes. Pak and Zdanowicz. miliar with every single day, often the Under the authority of the order of Well, I will speak more about the brand names on foreign products sold the Senate of January 7, 1997, the en- amendment at some point during this in the U.S., mean that someone has rolled bill was signed on May 1, 1998, week when I offer it. The amendment I done a lot of business here, made a lot during the adjournment of the Senate, will offer is very simple. of profit here, and ended up paying zero by the President pro tempore (Mr. The amendment I will offer is to say in income taxes. In my judgment this the newly established IRS Oversight THURMOND). means they are unfairly competing in f Board will review whether the IRS has this marketplace. the resources needed to prevent tax U.S. businesses with whom they com- EXECUTIVE AND OTHER avoidance by companies using unlawful pete in this marketplace, if they are COMMUNICATIONS transfer pricing methods. In order to doing so only in the U.S., must pay a The following communications were enable the board to carry out this duty, tax on their income, and so, too, should laid before the Senate, together with IRS shall conduct a study relating to foreign-based corporations doing busi- accompanying papers, reports, and doc- its enforcement of transfer pricing ness in the United States through their uments, which were referred as indi- abuses by multinational companies. subsidiaries. cated: Specifically, the IRS will review the ef- Madam President, with that, I yield fectiveness of current enforcement EC–4690. A communication from the Ad- the floor and I suggest the absence of a ministrator of the Farm and Foreign Agri- tools used by the IRS to ensure compli- quorum. cultural Services, Department of Agri- ance under Section 482 of the Internal The PRESIDING OFFICER. The culture, transmitting, pursuant to law, the Revenue Code and determine the scope clerk will call the roll. report of a rule entitled ‘‘Dairy Indemnity of nonpayment of U.S. taxes caused by The legislative clerk proceeded to Payment Program’’ (RIN0560–AF30) received both foreign and U.S.-based multi- call the roll. on April 23, 1998; to the Committee on Agri- national firms operating in the United Ms. COLLINS. Mr. President, I ask culture, Nutrition, and Forestry. States. unanimous consent that the order for EC–4691. A communication from the Ad- Then the Board will report back to ministrator of the Farm and Foreign Agri- the quorum call be rescinded. cultural Services, Department of Agri- Congress its findings on the IRS en- The PRESIDING OFFICER (Mr. SES- culture, transmitting, pursuant to law, the forcement of transfer pricing abuses SIONS). Without objection, it is so or- report of a rule entitled ‘‘Cooperative Mar- and make recommendations for im- dered. keting Associations’’ (RIN0560–AF33) re- proving IRS enforcement tools. f ceived on April 23, 1998; to the Committee on I understand what the response to Agriculture, Nutrition, and Forestry. this is by corporations who are engaged MORNING BUSINESS EC–4692. A communication from the Ad- in tax avoidance by transfer pricing. I Ms. COLLINS. Mr. President, I ask ministrator of the Farm and Foreign Agri- understand what the response is by the unanimous consent that there now be a cultural Services, Department of Agri- Treasury Department and the Internal period for the transaction of morning culture, transmitting, pursuant to law, the report of a rule entitled ‘‘Subordination of Revenue Service. Corporations will business with Senators permitted to Direct Loan Basic Security to Secure a say: Well, none of this goes on, this speak for up to 5 minutes each. Guaranteed Line of Credit’’ (RIN0560–AE92) doesn’t happen. The Internal Revenue The PRESIDING OFFICER. Without received on April 28, 1998; to the Committee Service and the Treasury Department objection, it is so ordered. on Agriculture, Nutrition, and Forestry. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4205 EC–4693. A communication from the Con- ceived on April 28, 1998; to the Committee on EC–4712. A communication from the Acting gressional Review Coordinator of the Animal Agriculture, Nutrition, and Forestry. Director, Office of Sustainable Fisheries, De- and Plant Health Inspection Service, Depart- EC–4702. A communication from the Ad- partment of Commerce, transmitting, pursu- ment of Agriculture, transmitting, pursuant ministrator of the Agricultural Marketing ant to law, the report of a rule entitled to law, the report of a rule entitled ‘‘Medi- Service, Department of Agriculture, trans- ‘‘Fisheries of the Exclusive Economic Zone terranean Fruit Fly; Addition to Quar- mitting, pursuant to law, the report of a rule Off Alaska; Groundfish Fisheries by Vessels antined Areas’’ (Docket #98–046–1) received entitled ‘‘Cantaloupes; Grade Standards’’ Using Hook-and-Line Gear in the Gulf of on April 21, 1998; to the Committee on Agri- (Docket #FV–98–301) received on April 28, Alaska’’ (Docket #971208297–8054–02; ID culture, Nutrition, and Forestry. 1998; to the Committee on Agriculture, Nu- 041498A) received on April 24, 1998; to the EC–4694. A communication from the Con- trition, and Forestry. Committee on Commerce, Science, and gressional Review Coordinator of the Animal EC–4703. A communication from the Ad- Transportation. and Plant Health Inspection Service, Depart- ministrator of the Agricultural Marketing EC–4713. A communication from the Acting ment of Agriculture, transmitting, pursuant Service, Department of Agriculture, trans- Director, Office of Sustainable Fisheries, De- to law, the report of a rule entitled ‘‘Brucel- mitting, pursuant to law, the report of a rule partment of Commerce, transmitting, pursu- losis in Cattle; State and Area Classifica- entitled ‘‘Tart Cherries Grown in the States ant to law, the report of a rule entitled tions; Georgia’’ (Docket #98–018–1) received of Michigan, et al.; Final Free and Restricted ‘‘Fisheries of the Exclusive Economic Zone on April 21, 1998; to the Committee on Agri- Percentages for the 1997–98 Crop Year for Off Alaska; Atka Mackerel in the Central culture, Nutrition, and Forestry. Tart Cherries’’ (Docket #FV–97–930–6 FR) re- Aleutian District of the Bering Sea and EC–4695. A communication from the Con- ceived on April 28, 1998; to the Committee on Aleutian Islands’’ (Docket #971208298–8055–02; gressional Review Coordinator of the Animal Agriculture, Nutrition, and Forestry. ID 033098B) received on April 24, 1998; to the and Plant Health Inspection Service, Depart- EC–4704. A communication from the Direc- Committee on Commerce, Science, and ment of Agriculture, transmitting, pursuant tor of the Office of Thrift Supervision, De- Transportation. to law, the report of a rule entitled ‘‘Medi- partment of the Treasury, transmitting, pur- EC–4714. A communication from the Acting terranean Fruit Fly; Removal of Quar- suant to law, the annual consumer report for Director, Office of Sustainable Fisheries, De- antined Area’’ (Docket #97–102–2) received on calendar year 1997; to the Committee on partment of Commerce, transmitting, pursu- April 21, 1998; to the Committee on Agri- Banking, Housing, and Urban Affairs. ant to law, the report of a rule entitled EC–4705. A communication from the Sec- culture, Nutrition, and Forestry. ‘‘Fisheries of the Exclusive Economic Zone EC–4696. A communication from the Con- retary of Housing and Urban Development, Off Alaska; Pacific Cod in the Gulf of Alas- gressional Review Coordinator of the Animal transmitting, pursuant to law, a report of ka’’ (Docket #971208297–8054–02; ID 041098A) and Plant Health Inspection Service, Depart- Comprehensive Needs Assessments; to the received on April 24, 1998; to the Committee ment of Agriculture, transmitting, pursuant Committee on Banking, Housing, and Urban on Commerce, Science, and Transportation. to law, the report of a rule entitled ‘‘Medi- Affairs. EC–4715. A communication from the Acting EC–4706. A communication from the Sec- terranean Fruit Fly; Removal of Quar- Director, Office of Sustainable Fisheries, De- retary of Housing and Urban Development, antined Area’’ (Docket #97–056–9) received on partment of Commerce, transmitting, pursu- transmitting, pursuant to law, a report enti- April 21, 1998; to the Committee on Agri- ant to law, the report of a rule entitled tled ‘‘Dissemination of Building Technology ‘‘Fisheries Off West Coast States and in the culture, Nutrition, and Forestry. ‘Best Practices’ ’’; to the Committee on EC–4697. A communication from the Ad- Western Pacific; West Coast Salmon Fish- Banking, Housing, and Urban Affairs. ministrator of the Agricultural Marketing eries; In season Adjustments, Cape Falcon, EC–4707. A communication from the Direc- OR, to Point Mugu, CA’’ (Docket #970429101– Service, Department of Agriculture, trans- tor of the Office of Management and Budget, mitting, pursuant to law, the report of a rule 7101–01; ID 032798B) received on April 20, 1998; Executive Office of the President, transmit- to the Committee on Commerce, Science, entitled ‘‘Oranges, Grapefruit, Tangerines, ting, pursuant to law, a report on direct and Tangelos Grown in Florida and Imported and Transportation. spending or receipts legislation within seven EC–4716. A communication from the Acting Grapefruit; Relaxation of the Minimum Size days of enactment dated April 23, 1998; to the Director, Office of Sustainable Fisheries, De- Requirement for Red Seedless Grapefruit’’ Committee on the Budget. partment of Commerce, transmitting, pursu- (Docket #FV98–905–2 FIR) received on April EC–4708. A communication from the Acting ant to law, the report of a rule entitled 24, 1998; to the Committee on Agriculture, Director, Office of Sustainable Fisheries, De- ‘‘Fisheries of the Exclusive Economic Zone Nutrition, and Forestry. partment of Commerce, transmitting, pursu- EC–4698. A communication from the Ad- off Alaska; Offshore Component Pacific Cod ant to law, the report of a rule entitled in the Central Regulatory Area’’ (Docket ministrator of the Agricultural Marketing ‘‘Fisheries of the Northeastern United Service, Department of Agriculture, trans- #971208297–8054–02; ID 033098A) received on States; Summer Flounder and Scup Fish- April 20, 1998; to the Committee on Com- mitting, pursuant to law, the report of a rule eries; Readjustments to 1998 Quotas; Com- entitled ‘‘Tart Cherries Grown in the States merce, Science, and Transportation. mercial Summer Period Scup Quota Har- EC–4717. A communication from the Acting of Michigan, et al.; Temporary Suspension of vested for Maryland’’ (Docket #971015246– Director, Office of Sustainable Fisheries, De- a Proviso for Exporting Juice and Juice Con- 7293–02; ID 041398A) received on May 1, 1998; partment of Commerce, transmitting, pursu- centrate; Establishment of Rules and Regu- to the Committee on Commerce, Science, ant to law, the report of a rule entitled lations Concerning Exemptions From Cer- and Transportation. ‘‘Fisheries of the Caribbean, Gulf of Mexico, tain Order Provisions; and Establishment of EC–4709. A communication from the Acting and South Atlantic; Coastal Migratory Pe- Regulations for Handler Diversion’’ (Docket Director, Office of Sustainable Fisheries, De- lagic Resources of the Gulf of Mexico and #FV97–930–4 FIR) received on April 27, 1998; partment of Commerce, transmitting, pursu- South Atlantic; Closure’’ (Docket #970930235– to the Committee on Agriculture, Nutrition, ant to law, the report of a rule entitled 8028–02; ID 032598D) received on April 20, 1998; and Forestry. ‘‘Fisheries of the Economic Exclusive Zone to the Committee on Commerce, Science, EC–4699. A communication from the Ad- Off Alaska; Deep-water Species Fishery by ministrator of the Agricultural Marketing and Transportation. Vessels Using Trawl Gear in the Gulf of Alas- EC–4718. A communication from the Acting Service, Department of Agriculture, trans- ka’’ (Docket #971208297–8054–02) received on Director, Office of Sustainable Fisheries, De- mitting, pursuant to law, the report of a rule May 1, 1998; to the Committee on Commerce, partment of Commerce, transmitting, pursu- entitled ‘‘Tart Cherries Grown in the States Science, and Transportation. ant to law, the report of a rule entitled of Michigan, New York, Pennsylvania, Or- EC–4710. A communication from the Acting ‘‘Fisheries of the Caribbean, Gulf of Mexico, egon, Utah, Washington, and Wisconsin; Director, Office of Sustainable Fisheries, De- and South Atlantic; Coastal Migratory Pe- Issuance of Grower Diversion Certificates’’ partment of Commerce, transmitting, pursu- lagic Resources of the Gulf of Mexico and (Docket #FV97–930–5 FIR) received on April ant to law, the report of a rule entitled South Atlantic; Closure’’ (Docket #970930235– 27, 1998; to the Committee on Agriculture, ‘‘Fisheries of the Exclusive Economic Zone 8028–02; ID 032598E) received on April 20, 1998; Nutrition, and Forestry. Off Alaska; Species in the Rock Sole/Flat- EC–4700. A communication from the Ad- head Sole/‘‘Other Flatfish’’ Fishery Category to the Committee on Commerce, Science, ministrator of the Agricultural Marketing by Vessels Using Trawl Gear in the Bering and Transportation. Service, Department of Agriculture, trans- Sea and Aleutian Islands’’ (Docket f mitting, pursuant to law, the report of a rule #971208298–8055–02) received on May 1, 1998; to REPORTS OF COMMITTEES entitled ‘‘Olives Grown in California; In- the Committee on Commerce, Science, and creased Assessment Rate’’ (Docket #FV98– Transportation. The following reports of committees 932–1 FR) received on April 28, 1998; to the EC–4711. A communication from the Acting were submitted: Committee on Agriculture, Nutrition, and Director, Office of Sustainable Fisheries, De- By Mr. JEFFORDS, from the Committee Forestry. partment of Commerce, transmitting, pursu- on Labor and Human Resources, with an EC–4701. A communication from the Ad- ant to law, the report of a rule entitled amendment in the nature of a substitute: ministrator of the Agricultural Marketing ‘‘Fisheries of the Exclusive Economic Zone S. 1882. A bill to reauthorize the Higher Service, Department of Agriculture, trans- Off Alaska; Pollock in the Eastern Regu- Education Act of 1965, and for other purposes mitting, pursuant to law, the report of a rule latory Area of the Gulf of Alaska’’ (Docket (Rept. No. 105–181). entitled ‘‘Dried Prunes Produced in Califor- #971208297–8054–02; ID 041498B) received on By Mr. D’AMATO, from the Committee on nia; Undersized Regulation for the 1998–99 April 24, 1998; to the Committee on Com- Banking, Housing, and Urban Affairs, with Crop Year’’ (Docket #FV98–993–1 FR) re- merce, Science, and Transportation. an amendment in the nature of a substitute: S4206 CONGRESSIONAL RECORD — SENATE May 4, 1998 S. 1260. A bill to amend the Securities Act better justice than any country in the subpoena to testify before the grand of 1933 and the Securities Exchange Act of history of civilization. The rights of jury on a criminal case, even though 1934 to limit the conduct of securities class American citizens evolved over cen- the grand jury is supposedly inves- actions under State law, and for other pur- turies of English and American history tigating somebody else, would you poses (Rept. No. 105–182). are now enshrined in the Bill of Rights want the right to have your own law- f and are the standards of freedom and yer in the room? Would you feel the INTRODUCTION OF BILLS AND liberty all over the world. We must not process was a fair one if you were told JOINT RESOLUTIONS allow those rights to be eroded. No that you were not legally entitled to American would claim that our system have a lawyer present? What if you or The following bills and joint resolu- is perfect, nor do I so claim. I am con- your loved one were called before the tions were introduced, read the first vinced beyond a doubt that our system grand jury for a second, third, or fourth and second time by unanimous con- has serious flaws, one of which most time? Would you begin to feel that you sent, and referred as indicated: people are probably not even aware and might be under suspicion for some- By Mr. GRASSLEY: many might find hard to believe in this thing? And would you feel comfortable S. 2029. A bill to reduce temporarily the day and age. A witness summoned be- answering endless questions without duty on sodium bentazon; to the Committee your lawyer present? on Finance. fore a grand jury has no right to the presence of his lawyer in the grand The grand jury is the only cir- By Mr. BUMPERS: cumstance I can imagine in life where S. 2030. A bill to amend the Federal Rules jury room. Depriving anybody of the of Civil Procedure, relating to counsel for right to counsel is fundamentally a free person does not have a complete witnesses in grand jury proceedings, and for wrong. No person should be required to legal right to hire a lawyer and have other purposes; to the Committee on the Ju- face any part of the criminal justice that lawyer accompany him in any diciary. system without the presence of his or kind of proceeding. No matter how se- f her lawyer if he or she chooses. rious the matter under consideration, Think of it this way. Police have ab- no matter what the question—from the SUBMISSION OF CONCURRENT AND solutely no right to question an ar- most complex matter of tax accounting SENATE RESOLUTIONS restee without his lawyer in the room to the most personal, intimate family The following concurrent resolutions unless the individual waives that right. concerns—no matter how hazy your and Senate resolutions were read, and The police even have a constitutional recollection might be, you have no referred (or acted upon), as indicated: duty under the Miranda decision to ad- right to a lawyer before the grand jury. By Mr. TORRICELLI (for himself and vise people of their rights to a lawyer, The grand jury room is the one and Mr. COVERDELL): even though anybody who has watched only room in the courthouse, the very S. Con. Res. 93. A concurrent resolution ex- television in the last 35 years ought to temple of justice, where the proceeding pressing the sense of the Congress with re- know that they are entitled to a law- is entirely one-sided. spect to documentation requirements for yer. If the police fail to observe this Under existing law, there could be a physicians who submit claims to Medicare constitutional requirement, the state- sign on the grand jury room saying, for office visits and for other evaluation and ment by the accused is inadmissible in ‘‘No lawyers allowed.’’ The Govern- management services; to the Committee on ment has as many lawyers as the Finance. court. But when an ordinary citizen is Treasury can pay. The witness has f called before a grand jury, no lawyer— zero. Notwithstanding that he or she STATEMENTS ON INTRODUCED no lawyers are allowed to be present. may be there against his or her will, BILLS AND JOINT RESOLUTIONS The prosecutor and the grand jury have notwithstanding the power of the the unlimited ability to question the grand jury and the prosecutor to in- By Mr. BUMPERS: witness, who is not even under arrest, dict, a witness before a grand jury is S. 2030. A bill to amend the Federal without an attorney present. This defenseless. He or she has no friend in rules of Civil Procedure, relating to gross inconsistency can only be de- the room. Surely, nobody feels so alone counsel for witnesses in grand jury pro- scribed as Byzantine, an anachronism. as a grand jury witness, knowing that ceedings, and for other purposes; to the I have never been one to say that the weight of the Federal criminal jus- Committee on the Judiciary. criminal defendants have too many tice system rests on his or her every THE GRAND JURY DUE PROCESS ACT rights. They have no more than the word. Give the wrong answer, you can Mr. BUMPERS. Madam President, I Constitution entitles them. In this in- be accused of perjury, obstruction of am today introducing legislation which stance, however, a criminal defendant justice, or any other of a number of will remedy a longstanding injustice in has more rights than the average ordi- crimes. If you refuse to answer, you our criminal justice system by grant- nary citizen called before a grand jury. can go directly to jail without benefit ing to grand jury witnesses the right to A criminal defendant cannot be ques- of a trial, being held in contempt. the presence of counsel when testifying tioned without a lawyer present, and Madam President, I ask you to con- before the grand jury. he or she may invoke his or her right sider, What kind of atmosphere is cre- In our legal system, the right to not to testify under the fifth amend- ated in this one-sided proceeding? Is it counsel is fundamental. Every person, ment privilege against self-incrimina- one of fairness or is it one of intimida- no matter how guilty or innocent, de- tion. tion? Bear in mind that there is no serves to have an advocate. So fun- But a witness, a witness in the grand limit on the number of times a person damental is this right to counsel that jury room who may later become a tar- may be called to testify before the it was recognized by the founders and get under criminal investigation, has same grand jury. In recent news re- enshrined in the sixth amendment to no such rights. He or she must testify ports—we have all read them—some the Constitution. Along with the right fully and truthfully, no matter how people have been called to testify for to an impartial jury, public trial, and burdensome or embarrassing or imper- the fifth or sixth time—no lawyer al- the right to confront witnesses, it is a tinent or irrelevant the questions may lowed—before the same grand jury. If universal element of fundamental fair- be, and without the assistance of coun- you were in this position, or a member ness recognized by every civilized sys- sel. The rules of evidence which nor- of your family were, how would you tem of justice. Lawyers may never be mally require that questions be rel- feel about being called for the sixth popular, said William Shakespeare in evant and material do not apply in the time to testify without your lawyer Henry VI, Act III Scene II: ‘‘The first grand jury room. On the contrary, so- present? Would you feel threatened or we do, let’s kill all the lawyers.’’ called ‘‘fishing expeditions’’ have be- intimidated? And this kind of proceed- But lawyers are a necessity. No one come commonplace. No matter how ir- ing not only does not provide justice in his right mind wants to confront the relevant or outrageous the questions, and fairness, it doesn’t even provide judicial system without the benefit of a the witness must answer. the appearance of justice and fairness, lawyer. Madam President, I ask you or any which is essential if citizens are to The Anglo-American criminal justice American to consider whether, if you have confidence in our criminal justice system has given us more freedom and or your son or daughter were served a system. May 4, 1998 CONGRESSIONAL RECORD — SENATE S4207 This system needs changing. The bill the innocent. This is what the Supreme some comfort to be able to ask his or I am introducing is a modest proposal Court said in U.S. v. Dionisio: her lawyer for advice before answering to give some balance to a very unlevel The grand jury may not always serve its a complex question. That right is pro- playing field. The main purpose of the historic role as a protective bulwark stand- vided today, but the witness has to go original grand jury was probably helping solidly between the ordinary citizen and outside the courtroom to see his or her ing in the collection of taxes. These an- an overzealous prosecutor. counselor because the counsel is not al- cient roots precede even the right to Those were the words of Justice lowed in the grand jury room. jury trial, because in the earliest Douglas. Douglas said in dissent in My bill will thus allow for grand ju- times, trial was by ordeal. The accused that case—he was much more explicit: ries to operate more smoothly and effi- was required to put his hand in boiling It is, indeed, common knowledge that the ciently, reducing the need to stop pro- water or was tested by drowning. Need- grand jury, having been conceived as a bul- ceedings so the witness can go out of less to say, there weren’t very many wark between the citizen and the govern- the room and talk to his or her lawyer. acquittals. ment, is now a tool of the Executive. This bill goes to the very reason law- The grand jury has always symbol- Despite its ancient origins, the grand yers exist. It may give the public more ized the power of the criminal justice jury remains one of the most con- confidence that the proceedings are system to bring any person before the troversial aspects of our judiciary sys- fair and balanced at a time when public bar of justice. No one is beyond the tem. Most States have abandoned or confidence in the judicial system is power of the grand jury to seek evi- abolished grand juries in favor of the about as low as it has ever been. If any dence and to indict if there is probable filing of information by prosecutors. of these purposes are met, my legisla- cause to believe that a crime has been That is the way we do it in my home tion will have served a noble purpose. committed. Even before the right to State of Arkansas. Many would argue Mr. President, I hope that all Sen- trial by jury was secured, English that the grand jury is an anachronism ators will take note of this bill and grand juries had power to investigate which costs more than it is worth. In that they will support it. It will be re- and to accuse. Composed of ordinary one of the most famous critiques of the ferred to the Judiciary Committee, and citizens, grand juries had the power to institution, the Chief Judge of the I hope that the committee will sched- compel any person to appear and give State of New York stated that most ule hearings very promptly. testimony or evidence. Historically, grand juries would ‘‘indict a ham sand- I ask unanimous consent that the bill the grand jury was a guarantor of lib- wich’’ if the prosecutor requested it. be printed in the RECORD. erty—a guarantor of liberty. While some have argued for eliminat- There being no objection, the bill was The courts have often stated that the ing the grand jury, I am not one to sec- ordered to be printed in the RECORD, as grand jury has a dual function. Listen ond-guess the wisdom of our Founding follows: to this. The courts have said that the Fathers. Rather, I believe we should S. 2030 grand jury has a dual function, ‘‘to make the system work as intended—as Be it enacted by the Senate and House of Rep- clear the innocent, no less than to a protector of freedom—by reforming resentatives of the United States of America in bring to trial those who may be the grand jury system so as to ensure Congress assembled, guilty.’’ The grand juries exist ‘‘as a due process of law for all concerned. SECTION 1. SHORT TITLE. means of protecting the citizen against In the 1970s, there was considerable This Act may be cited as the ‘‘Grand Jury Due Process Act’’. unfounded accusation, whether it debate in Congress over the merits of SEC. 2. GRAND JURIES. comes from the government, or be the grand jury following revelations of (a) IN GENERAL.—Rule 6 of the Federal prompted by partisan passion or pri- abuses of the system under the Nixon administration. There has been no seri- Rules of Criminal Procedure is amended— vate enmity.’’ (1) in subdivision (d), by inserting ‘‘and We just saw what private enmity is ous congressional debate over the counsel for that witness (as provided in sub- when somebody tried to set up Howard grand jury system for over 10 years. division (h))’’ after ‘‘under examination’’; Baker in a tax fraud case. The time for that debate has come. and The Founding Fathers so respected Over 30 years ago, the Supreme Court (2) by adding at the end the following: the institution that they enshrined the said in Gideon v. Wainwright that ‘‘(h) COUNSEL FOR GRAND JURY WIT- counsel must be appointed for those NESSES.— right to indictment by a grand jury in ‘‘(1) IN GENERAL.— the sixth amendment to the Constitu- who cannot afford a lawyer before any criminal trial in which a prison sen- ‘‘(A) RIGHT OF ASSISTANCE.—Each witness tion. Here it is: subpoenaed to appear and testify before a tence may result. No person shall be held to answer for a cap- grand jury in a district court, or to produce ital, or otherwise infamous crime, [and that The bill I am introducing today is a books, papers, documents, or other objects has been interpreted many times to mean a logical extension of the sixth amend- before that grand jury, shall be allowed the felony] unless on presentment or indictment ment to the Constitution, as well as assistance of counsel during such time as the of a Grand Jury, except in cases arising in the fifth amendment’s promise of due witness is questioned in the grand jury room. the land or naval forces, or in the Militia, process of law. Granted, a witness be- ‘‘(B) RETENTION OR APPOINTMENT.—Counsel when in actual service in time of War or pub- fore a grand jury is not under imme- for a witness described in subparagraph (A)— lic danger * * *. diate threat of indictment, but most of ‘‘(i) may be retained by the witness; or That is amendment 5 to the Constitu- ‘‘(ii) in the case of a witness who is deter- them are there against their will, and mined by the court to be financially unable tion. The grand jury should be both a they are certainly looking over the to obtain counsel, shall be appointed as pro- sword and a shield, a powerful tool in abyss. vided in section 3006A of title 18, United the hands of prosecutors and a defender Let me emphasize that my bill, al- States Code. of liberty by protecting against though a departure from historical ‘‘(2) POWERS AND DUTIES OF COUNSEL.—A meritless or overzealous prosecutions. practice, is still a modest proposal. counsel retained by or appointed for a wit- In colonial America, a grand jury in This bill would not in any way change ness under paragraph (1)— Boston helped signal the beginning of criminal procedure except for allowing ‘‘(A) shall be allowed to be present in the the end of colonial government when grand jury room only during the questioning a witness’ lawyer to be present in the of the witness and only to advise the witness; the jurors refused the Government’s re- grand jury room. The lawyer would not ‘‘(B) shall not be permitted to address the quest to indict the Stamp Act rioters. be allowed to speak to the jury or to attorney for the government or any grand In modern times, however, the grand examine witnesses. He or she would be juror, or otherwise participate in the pro- jury has become almost exclusively a able to advise his or her client and no ceedings before the grand jury; and sword and not a shield. Examples of the more. ‘‘(C) shall not represent more than 1 client grand jury as a shield are hard to come Allowing the mere presence of a wit- in a grand jury proceeding, if the exercise of by. In short, we have allowed the pro- ness’ lawyer will in no way disrupt or the independent judgment of the counsel on tection intended by the founders to slow the grand jury proceedings. What behalf of 1 or both clients will be, or is likely to be, adversely affected by the representa- take a 180-degree turn. it might do is to deter a prosecutor tion of another client. The Supreme Court has conceded from doing something improper simply ‘‘(3) POWERS OF THE COURT.— that the grand jury does not always because he knows there is no other ‘‘(A) IN GENERAL.—If the court determines serve its intended purpose of protecting lawyer watching. It may give a witness that counsel retained by or appointed for a S4208 CONGRESSIONAL RECORD — SENATE May 4, 1998 witness under this subdivision has violated S. 1286 (Mr. HOLLINGS) was added as a cospon- paragraph (2), or that such action is nec- At the request of Mr. JEFFORDS, the sor of S. 1737, a bill to amend the Inter- essary to ensure that the activities of the names of the Senator from California nal Revenue Code of 1986 to provide a grand jury are not unduly delayed or im- (Mrs. BOXER) and the Senator from uniform application of the confiden- peded, the court may— tiality privilege to taxpayer commu- ‘‘(i) remove the counsel and either appoint Massachusetts (Mr. KENNEDY) were new counsel or order the witness to obtain added as cosponsors of S. 1286, a bill to nications with federally authorized new counsel; and amend the Internal Revenue Code of practitioners. ‘‘(ii) with respect to a violation of para- 1986 to exclude from gross income cer- S. 1879 graph (2)(C), order separate representation of tain amounts received as scholarships At the request of Mr. BURNS, the the witnesses at issue, giving appropriate by an individual under the National names of the Senator from Oklahoma weight to the right of each witness to coun- Health Corps Scholarship Program. (Mr. INHOFE), the Senator from Utah sel of his or her own choosing. S. 1348 (Mr. BENNETT), the Senator from Mon- ‘‘(B) NO EFFECT ON OTHER SANCTIONS.— tana (Mr. BAUCUS), the Senator from Nothing in this paragraph shall be construed At the request of Mr. LIEBERMAN, the Idaho (Mr. KEMPTHORNE), and the Sen- to affect the contempt powers of the court or name of the Senator from Louisiana ator from North Carolina (Mr. HELMS) the power of the court to impose other ap- (Ms. LANDRIEU) was added as a cospon- propriate sanctions. sor of S. 1348, a bill to provide for inno- were added as cosponsors of S. 1879, a ‘‘(4) NOTICE.—Upon service of any subpoena vative strategies for achieving superior bill to provide for the permanent extension of income averaging for farm- requiring any witness to testify or produce environmental performance, and for information at any proceeding before a grand ers. other purposes. jury impaneled before a district court, the S. 1903 S. 1360 witness shall be given adequate and reason- At the request of Mr. THOMAS, the able notice of the right to the presence of At the request of Mr. ABRAHAM, the names of the Senator from New York counsel in the grand jury room, as provided name of the Senator from Ohio (Mr. (Mr. D’AMATO) and the Senator from in this subdivision.’’. GLENN) was added as a cosponsor of S. Oklahoma (Mr. INHOFE) were added as f 1360, a bill to amend the Illegal Immi- cosponsors of S. 1903, a bill to prohibit gration Reform and Immigrant Respon- ADDITIONAL COSPONSORS the return of veterans memorial ob- sibility Act of 1996 to clarify and im- jects to foreign nations without spe- S. 850 prove the requirements for the develop- cific authorization in law. At the request of Mr. AKAKA, the ment of an automated entry-exit con- S. 1924 name of the Senator from Michigan trol system, to enhance land border At the request of Mr. MACK, the name (Mr. LEVIN) was added as a cosponsor of control and enforcement, and for other of the Senator from Ohio (Mr. DEWINE) S. 850, a bill to amend the Packers and purposes. was added as a cosponsor of S. 1924, a Stockyards Act, 1921, to make it un- S. 1391 bill to restore the standards used for lawful for any stockyard owner, mar- At the request of Mr. DODD, the name determining whether technical workers ket agency, or dealer to transfer or of the Senator from California (Mrs. are not employees as in effect before market nonambulatory livestock, and BOXER) was added as a cosponsor of S. the Tax Reform Act of 1986. for other purposes. 1391, a bill to authorize the President SENATE CONCURRENT RESOLUTION 88 S. 1069 to permit the sale and export of food, At the request of Mr. ASHCROFT, the At the request of Mr. MURKOWSKI, the medicines, and medical equipment to names of the Senator from Colorado names of the Senator from Iowa (Mr. Cuba. (Mr. ALLARD), the Senator from North GRASSLEY) and the Senator from Ohio S. 1464 Dakota (Mr. DORGAN), the Senator (Mr. DEWINE) were added as cosponsors At the request of Mr. HATCH, the from Iowa (Mr. GRASSLEY), the Senator of S. 1069, a bill entitled the ‘‘National name of the Senator from Alabama from Utah (Mr. HATCH), the Senator Discovery Trails Act of 1997.’’ (Mr. SESSIONS) was added as a cospon- from South Dakota (Mr. JOHNSON), the Senator from Alaska (Mr. MURKOWSKI), S. 1141 sor of S. 1464, a bill to amend the Inter- and the Senator from Oregon (Mr. At the request of Mr. ROBERTS, his nal Revenue Code of 1986 to permanently extend the research credit, and WYDEN) were added as cosponsors of name was added as a cosponsor of S. Senate Concurrent Resolution 88, a for other purposes. 1141, a bill to amend the Energy Policy concurrent resolution calling on Japan Act of 1992 to take into account newly S. 1677 to establish and maintain an open, developed renewable energy-based fuels At the request of Mr. CHAFEE, the competitive market for consumer pho- and to equalize alternative fuel vehicle name of the Senator from Illinois (Mr. tographic film and paper and other sec- acquisition incentives to increase the DURBIN) was added as a cosponsor of S. tors facing market access barriers in flexibility of controlled fleet owners 1677, a bill to reauthorize the North Japan. and operators, and for other purposes. American Wetlands Conservation Act f S. 1180 and the Partnerships for Wildlife Act. SENATE CONCURRENT RESOLU- At the request of Mr. CRAIG, his name S. 1724 TION 93 EXPRESSING THE SENSE was added as a cosponsor of S. 1180, a At the request of Ms. COLLINS, the OF CONGRESS WITH RESPECT TO bill to reauthorize the Endangered Spe- name of the Senator from Arizona (Mr. MEDICARE DOCUMENTATION RE- cies Act. MCCAIN) was added as a cosponsor of S. QUIREMENTS S. 1220 1724, a bill to amend the Internal Reve- Mr. TORRICELLI (for himself and At the request of Mr. DODD, the name nue Code of 1986 to repeal the informa- of the Senator from California (Mrs. tion reporting requirement relating to Mr. COVERDELL) submitted the following concurrent resolution; which was FEINSTEIN) was added as a cosponsor of the Hope Scholarship and Lifetime referred to the Committee on Finance: S. 1220, a bill to provide a process for Learning Credits imposed on edu- declassifying on an expedited basis cer- cational institutions and certain other S. CON. RES. 93 tain documents relating to human trades and businesses. Whereas adequate documentation is necessary to assure quality and appropriateness rights abuses in Guatemala and Hon- S. 1733 of services; duras. At the request of Mr. ROBERTS, his Whereas effective strategies to eliminate S. 1264 name was added as a cosponsor of S. waste, fraud, and abuse in the Medicare pro- At the request of Mr. HARKIN, the 1733, a bill to require the Commissioner gram should not result in excessive docu- name of the Senator from Connecticut of Social Security and food stamp mentation requirements being imposed on (Mr. DODD) was added as a cosponsor of State agencies to take certain actions physicians that will interfere with patient S. 1264, a bill to amend the Federal to ensure that food stamp coupons are care; not issued for deceased individuals. Whereas if the documentation in the medi- Meat Inspection Act and the Poultry cal record does not meet program require- Products Inspection Act to provide for S. 1737 ments, payments for such claims may be de- improved public health and food safety At the request of Mr. MACK, the name nied and an investigation into potential through enhanced enforcement. of the Senator from South Carolina fraud and abuse may result; May 4, 1998 CONGRESSIONAL RECORD — SENATE S4209 Whereas the administrative complexity of tion (AMA), who helped draft the ‘‘Sec. 4. Deduction for home acquisition in- the documentation requirements may in- guidelines, warns that they may im- debtedness. crease the risk that physicians will make in- pose an undue burden on physicians ‘‘Sec. 5. Definitions and special rules. advertent coding errors; and that may detract from patient care. ‘‘SECTION 1. TAX IMPOSED. Whereas inadvertent errors or legitimate ‘‘(a) IMPOSITION OF TAX.—There is hereby differences of opinion on coding and docu- These concerns have prompted the AMA to commit to make changes in imposed on every individual a tax equal to 20 mentation of physician services under cur- percent of the taxable earned income of such rent law are not grounds for concluding that the guidelines that address concerns individual. fraud has occurred: Now, therefore, be it about their complexity. ‘‘(b) TAXABLE EARNED INCOME.—For pur- Resolved by the House of Representatives (the The resolution I rise to submit today poses of this section, the term ‘taxable Senate concurring), That it is the sense of the expresses the sense of Congress that earned income’ means the excess (if any) of— Congress that the Health Care Financing Ad- HCFA should postpone its plan to im- ‘‘(1) the earned income received or accrued ministration should— plement the documentation guidelines during the taxable year, over (1) further postpone its plans to implement ‘‘(2) the sum of— the documentation guidelines for evaluation and continue consultation with physicians organizations on how to reduce ‘‘(A) the standard deduction, and management services, as currently con- ‘‘(B) the deduction for cash charitable constituted; the complexity of E/M guidelines. The tributions, and (2) continue consultation with organiza- resolution also expresses the sense of ‘‘(C) the deduction for home acquisition in- tions representing physicians on how to re- Congress that HCFA should conduct a debtedness, duce the complexity of any such guidelines pilot study of any documentation re- prior to their use by Medicare or its agents for such taxable year. quirements prior to their implementa- ‘‘(c) EARNED INCOME.—For purposes of this in review of claims submitted to the pro- section— gram; tion to assure that they contribute to, ‘‘(1) IN GENERAL.—The term ‘earned in- (3) conduct a pilot study of any such docu- rather than detract from, quality pa- come’ means wages, salaries, or professional mentation requirements prior to use in au- tient care. fees, and other amounts received from dits and other review activities; and It is well settled that adequate docu- sources within the United States as com- (4) assure that any such documentation mentation is necessary to assure qual- pensation for personal services actually ren- guidelines, if applied by Medicare or its ity and appropriateness of Medicare dered, but does not include that part of com- agents in review activities, contribute to services. It is also needed to prevent pensation derived by the taxpayer for per- quality care and do not detract from good waste, fraud and abuse. However, we in sonal services rendered by the taxpayer to a patient care by requiring physicians to spend corporation which represents a distribution undue time documenting their services—at Congress have a responsibility to en- of earnings or profits rather than a reason- the expense of spending less time with pa- sure that strategies to address these able allowance as compensation for the per- tients—or lead to sanctions being imposed issues not result in burdensome re- sonal services actually rendered. for unintentional coding and documentation quirements that interfere with patient ‘‘(2) TAXPAYER ENGAGED IN TRADE OR BUSI- errors. care. NESS.—In the case of a taxpayer engaged in a Mr. TORRICELLI. Mr. President, I f trade or business in which both personal rise today on behalf of myself and my AMENDMENTS SUBMITTED services and capital are material income- colleague from Georgia, Senator producing factors, under regulations pre- COVERDELL, to submit a concurrent scribed by the Secretary, a reasonable allow- resolution expressing the sense of Con- THE INTERNAL REVENUE SERVICE ance as compensation for the personal services rendered by the taxpayer, not in excess gress with respect to documentation RESTRUCTURING AND REFORM requirements for physicians who sub- of 30 percent of the taxpayer’s share of the ACT OF 1998 net profits of such trade or business, shall be mit claims to Medicare for office visits considered as earned income. and other evaluation and management ‘‘SEC. 2. STANDARD DEDUCTION. services. SPECTER AMENDMENT NO. 2336 ‘‘(a) IN GENERAL.—For purposes of this sub- In May of last year, the Health Care (Ordered to lie on the table.) title, the term ‘standard deduction’ means Financing Administration (HCFA) re- Mr. SPECTER submitted an amend- the sum of— leased revised Medicare documentation ment intended to be proposed by him ‘‘(1) the basic standard deduction, plus guidelines for evaluation and manage- ‘‘(2) the additional standard deduction. to the bill (H.R. 2676) to amend the In- ment (E/M) services. The guidelines ‘‘(b) BASIC STANDARD DEDUCTION.—For pur- ternal Revenue Code of 1986 to restruc- were intended to provide physicians poses of subsection (a), the basic standard and claims reviewers advice about pre- ture and reform the Internal Revenue deduction is— Service, and for other purposes; as fol- ‘‘(1) $17,500 in the case of— paring and reviewing documentation ‘‘(A) a joint return, and for E/M services. They were also ex- lows: At the end, add the following: ‘‘(B) a surviving spouse (as defined in sec- pected to improve the quality of medi- tion 5(a)), ll cal records and continuity of patient TITLE —FLAT TAX ‘‘(2) $15,000 in the case of a head of house- care. SEC. ll01. SHORT TITLE; TABLE OF CONTENTS. hold (as defined in section 5(b)), and It is clear now, nearly eight months (a) SHORT TITLE.—This title may be cited ‘‘(3) $10,000 in the case of an individual— after the guidelines were implemented, as the ‘‘Flat Tax Act of 1998’’. ‘‘(A) who is not married and who is not a that the guidelines’ intent has not been (b) TABLE OF CONTENTS.—The table of con- surviving spouse or head of household, or fulfilled. Rather than improving the tents for this title is as follows: ‘‘(B) who is a married individual filing a separate return. quality of patient care, the new E/M Sec. ll01. Short title; table of contents. ll ‘‘(c) ADDITIONAL STANDARD DEDUCTION.— guidelines have caused patient care to Sec. 02. Flat tax on individual taxable earned income and business For purposes of subsection (a), the additional suffer. taxable income. standard deduction is $5,000 for each depend- I have received hundreds of letters Sec. ll03. Repeal of estate and gift taxes. ent (as defined in section 5(d))— from physicians in my state of New Sec. ll04. Additional repeals. ‘‘(1) whose earned income for the calendar Jersey telling me that they spend so Sec. ll05. Effective dates. year in which the taxable year of the taxpayer begins is less than the basic standard much time trying to figure out how to SEC. ll02. FLAT TAX ON INDIVIDUAL TAXABLE bill Medicare under the new guidelines EARNED INCOME AND BUSINESS deduction specified in subsection (b)(3), or TAXABLE INCOME. ‘‘(2) who is a child of the taxpayer and that they have little time left for their who— patients. There are 42 choices a physi- (a) IN GENERAL.—Subchapter A of chapter 1 of subtitle A is amended to read as follows: ‘‘(A) has not attained the age of 19 at the cian must consider before selecting the close of the calendar year in which the tax- ‘‘Subchapter A—Determination of Tax proper E/M code for a given service. able year of the taxpayer begins, or Liability These kind of highly complicated and ‘‘(B) is a student who has not attained the excessive billing guidelines force physi- ‘‘Part I. Tax on individuals. age of 24 at the close of such calendar year. cians to spend less time with their pa- ‘‘Part II. Tax on business activities. ‘‘(d) INFLATION ADJUSTMENT.— tients and more time on their charts. ‘‘PART I—TAX ON INDIVIDUALS ‘‘(1) IN GENERAL.—In the case of any taxable year beginning in a calendar year after ‘‘Sec. 1. Tax imposed. The result is a diversion of the physi- 1997, each dollar amount contained in sub- cians’ attention away from patient ‘‘Sec. 2. Standard deduction. sections (b) and (c) shall be increased by an care and medical decision-making. ‘‘Sec. 3. Deduction for cash charitable con- amount equal to— Even the American Medical Associa- tributions. ‘‘(A) such dollar amount, multiplied by S4210 CONGRESSIONAL RECORD — SENATE May 4, 1998

‘‘(B) the cost-of-living adjustment under purpose, if such company or corporation is ‘‘(1) IN GENERAL.—Subject to the limita- section 1(f)(3) for the calendar year in which not operated for profit and no part of the net tions provided by paragraph (2), amounts the taxable year begins, determined by sub- earnings of such company or corporation in- paid by the taxpayer to maintain an individ- stituting ‘calendar year 1996’ for ‘calendar ures to the benefit of any private share- ual (other than a dependent, as defined in year 1992’ in subparagraph (B) of such sec- holder or individual. section 5(d), or a relative of the taxpayer) as tion. For purposes of this section, the term ‘chari- a member of such taxpayer’s household dur- ‘‘(2) ROUNDING.—If any increase determined table contribution’ also means an amount ing the period that such individual is— under paragraph (1) is not a multiple of $50, treated under subsection (d) as paid for the ‘‘(A) a member of the taxpayer’s household such amount shall be rounded to the next use of an organization described in para- under a written agreement between the tax- lowest multiple of $50. graph (2), (3), or (4). payer and an organization described in para- ‘‘SEC. 3. DEDUCTION FOR CASH CHARITABLE ‘‘(c) DISALLOWANCE OF DEDUCTION IN CER- graph (2), (3), or (4) of subsection (b) to im- CONTRIBUTIONS. TAIN CASES AND SPECIAL RULES.— plement a program of the organization to ‘‘(a) GENERAL RULE.—For purposes of this ‘‘(1) SUBSTANTIATION REQUIREMENT FOR CER- provide educational opportunities for pupils part, there shall be allowed as a deduction TAIN CONTRIBUTIONS.— or students in private homes, and any charitable contribution (as defined in ‘‘(A) GENERAL RULE.—No deduction shall be ‘‘(B) a full-time pupil or student in the subsection (b)) not to exceed $2,500 ($1,250, in allowed under subsection (a) for any con- twelfth or any lower grade at an educational the case of a married individual filing a sepa- tribution of $250 or more unless the taxpayer organization located in the United States rate return), payment of which is made with- substantiates the contribution by a contem- which normally maintains a regular faculty in the taxable year. poraneous written acknowledgment of the and curriculum and normally has a regularly ‘‘(b) CHARITABLE CONTRIBUTION DEFINED.— contribution by the donee organization that enrolled body of pupils or students in attend- For purposes of this section , the term ‘char- meets the requirements of subparagraph (B). ance at the place where its educational ac- itable contribution’ means a contribution or ‘‘(B) CONTENT OF ACKNOWLEDGMENT.—An tivities are regularly carried on, gift of cash or its equivalent to or for the use acknowledgment meets the requirements of shall be treated as amounts paid for the use of the following: this subparagraph if it includes the following of the organization. ‘‘(1) A State, a possession of the United information: ‘‘(2) LIMITATIONS.— States, or any political subdivision of any of ‘‘(i) The amount of cash contributed. ‘‘(A) AMOUNT.—Paragraph (1) shall apply to the foregoing, or the United States or the ‘‘(ii) Whether the donee organization pro- amounts paid within the taxable year only District of Columbia, but only if the con- vided any goods or services in consideration, to the extent that such amounts do not ex- tribution or gift is made for exclusively pub- in whole or in part, for any contribution de- ceed $50 multiplied by the number of full cal- lic purposes. scribed in clause (i). endar months during the taxable year which ‘‘(2) A corporation, trust, or community ‘‘(iii) A description and good faith estimate fall within the period described in paragraph chest, fund, or foundation— of the value of any goods or services referred (1). For purposes of the preceding sentence, if ‘‘(A) created or organized in the United to in clause (ii) or, if such goods or services 15 or more days of a calendar month fall States or in any possession thereof, or under consist solely of intangible religious bene- within such period such month shall be con- the law of the United States, any State, the fits, a statement to that effect. sidered as a full calendar month. District of Columbia, or any possession of For purposes of this subparagraph, the term ‘‘(B) COMPENSATION OR REIMBURSEMENT.— the United States; ‘intangible religious benefit’ means any in- Paragraph (1) shall not apply to any amount ‘‘(B) organized and operated exclusively for tangible religious benefit which is provided paid by the taxpayer within the taxable year religious, charitable, scientific, literary, or by an organization organized exclusively for if the taxpayer receives any money or other educational purposes, or to foster national or religious purposes and which generally is not property as compensation or reimbursement international amateur sports competition sold in a commercial transaction outside the for maintaining the individual in the tax- (but only if no part of its activities involve donative context. payer’s household during the period described in paragraph (1). the provision of athletic facilities or equip- ‘‘(C) CONTEMPORANEOUS.—For purposes of ment), or for the prevention of cruelty to subparagraph (A), an acknowledgment shall ‘‘(3) RELATIVE DEFINED.—For purposes of children or animals; be considered to be contemporaneous if the paragraph (1), the term ‘relative of the tax- ‘‘(C) no part of the net earnings of which taxpayer obtains the acknowledgment on or payer’ means an individual who, with respect inures to the benefit of any private share- before the earlier of— to the taxpayer, bears any of the relation- holder or individual; and ‘‘(i) the date on which the taxpayer files a ships described in subparagraphs (A) through ‘‘(D) which is not disqualified for tax ex- return for the taxable year in which the con- (H) of section 5(d)(1). emption under section 501(c)(3) by reason of tribution was made, or ‘‘(4) NO OTHER AMOUNT ALLOWED AS DEDUC- attempting to influence legislation, and ‘‘(ii) the due date (including extensions) for TION.—No deduction shall be allowed under which does not participate in, or intervene in filing such return. subsection (a) for any amount paid by a taxpayer to maintain an individual as a member (including the publishing or distributing of ‘‘(D) SUBSTANTIATION NOT REQUIRED FOR of the taxpayer’s household under a program statements), any political campaign on be- CONTRIBUTIONS REPORTED BY THE DONEE ORGA- described in paragraph (1)(A) except as pro- half of (or in opposition to) any candidate for NIZATION.—Subparagraph (A) shall not apply public office. to a contribution if the donee organization vided in this subsection. ‘‘(e) DENIAL OF DEDUCTION FOR CERTAIN A contribution or gift by a corporation to a files a return, on such form and in accord- TRAVEL EXPENSES.—No deduction shall be al- trust, chest, fund, or foundation shall be de- ance with such regulations as the Secretary lowed under this section for traveling ex- ductible by reason of this paragraph only if may prescribe, which includes the informa- penses (including amounts expended for it is to be used within the United States or tion described in subparagraph (B) with re- meals and lodging) while away from home, any of its possessions exclusively for pur- spect to the contribution. whether paid directly or by reimbursement, poses specified in subparagraph (B). Rules ‘‘(E) REGULATIONS.—The Secretary shall unless there is no significant element of per- similar to the rules of section 501(j) shall prescribe such regulations as may be nec- sonal pleasure, recreation, or vacation in apply for purposes of this paragraph. essary or appropriate to carry out the pur- such travel. ‘‘(3) A post or organization of war veterans, poses of this paragraph, including regula- ‘‘(f) DISALLOWANCE OF DEDUCTIONS IN CER- or an auxiliary unit or society of, or trust or tions that may provide that some or all of TAIN CASES.—For disallowance of deductions foundation for, any such post or organiza- the requirements of this paragraph do not for contributions to or for the use of Com- tion— apply in appropriate cases. munist controlled organizations, see section ‘‘(A) organized in the United States or any ‘‘(2) DENIAL OF DEDUCTION WHERE CONTRIBU- 11(a) of the Internal Security Act of 1950 (50 of its possessions, and TION FOR LOBBYING ACTIVITIES.—No deduction U.S.C. 790). ‘‘(B) no part of the net earnings of which shall be allowed under this section for a con- ‘‘(g) TREATMENT OF CERTAIN AMOUNTS PAID inures to the benefit of any private share- tribution to an organization which conducts TO OR FOR THE BENEFIT OF INSTITUTIONS OF holder or individual. activities to which section 11(d)(2)(C)(i) ap- HIGHER EDUCATION.— ‘‘(4) In the case of a contribution or gift by plies on matters of direct financial interest ‘‘(1) IN GENERAL.—For purposes of this sec- an individual, a domestic fraternal society, to the donor’s trade or business, if a prin- tion, 80 percent of any amount described in order, or association, operating under the cipal purpose of the contribution was to paragraph (2) shall be treated as a charitable lodge system, but only if such contribution avoid Federal income tax by securing a de- contribution. or gift is to be used exclusively for religious, duction for such activities under this section ‘‘(2) AMOUNT DESCRIBED.—For purposes of charitable, scientific, literary, or edu- which would be disallowed by reason of sec- paragraph (1), an amount is described in this cational purposes, or for the prevention of tion 11(d)(2)(C) if the donor had conducted paragraph if— cruelty to children or animals. such activities directly. No deduction shall ‘‘(A) the amount is paid by the taxpayer to ‘‘(5) A cemetery company owned and oper- be allowed under section 11(d) for any or for the benefit of an educational organiza- ated exclusively for the benefit of its mem- amount for which a deduction is disallowed tion— bers, or any corporation chartered solely for under the preceding sentence. ‘‘(i) which is described in subsection burial purposes as a cemetery corporation ‘‘(d) AMOUNTS PAID TO MAINTAIN CERTAIN (d)(1)(B), and and not permitted by its charter to engage in STUDENTS AS MEMBERS OF TAXPAYER’S ‘‘(ii) which is an institution of higher edu- any business not necessarily incident to that HOUSEHOLD.— cation (as defined in section 3304(f)), and May 4, 1998 CONGRESSIONAL RECORD — SENATE S4211 ‘‘(B) such amount would be allowable as a amount of outstanding pre-October 13, 1987, ‘‘SEC. 5. DEFINITIONS AND SPECIAL RULES. deduction under this section but for the fact indebtedness. ‘‘(a) DEFINITION OF SURVIVING SPOUSE.— that the taxpayer receives (directly or indi- ‘‘(3) PRE-OCTOBER 13, 1987, INDEBTEDNESS.— ‘‘(1) IN GENERAL.—For purposes of this The term ‘pre-October 13, 1987, indebtedness’ rectly) as a result of paying such amount the part, the term ‘surviving spouse’ means a means— right to purchase tickets for seating at an taxpayer— athletic event in an athletic stadium of such ‘‘(A) any indebtedness which was incurred ‘‘(A) whose spouse died during either of the institution. on or before October 13, 1987, and which was taxpayer’s 2 taxable years immediately pre- secured by a qualified residence on October If any portion of a payment is for the pur- ceding the taxable year, and chase of such tickets, such portion and the 13, 1987, and at all times thereafter before the interest is paid or accrued, or ‘‘(B) who maintains as the taxpayer’s home remaining portion (if any) of such payment a household which constitutes for the tax- shall be treated as separate amounts for pur- ‘‘(B) any indebtedness which is secured by the qualified residence and was incurred able year the principal place of abode (as a poses of this subsection. member of such household) of a dependent— ‘‘(h) OTHER CROSS REFERENCES.— after October 13, 1987, to refinance indebtedness described in subparagraph (A) (or refi- ‘‘(i) who (within the meaning of subsection ‘‘(1) For treatment of certain organizations (d)) is a son, stepson, daughter, or step- providing child care, see section 501(k). nanced indebtedness meeting the requirements of this subparagraph) to the extent daughter of the taxpayer, and ‘‘(2) For charitable contributions of part- ‘‘(ii) with respect to whom the taxpayer is ners, see section 702. (immediately after the refinancing) the principal amount of the indebtedness resulting entitled to a deduction for the taxable year ‘‘(3) For treatment of gifts for benefit of or under section 2. use in connection with the Naval Academy from the refinancing does not exceed the as gifts to or for the use of the United principal amount of the refinanced indebted- For purposes of this paragraph, an individual States, see section 6973 of title 10, United ness (immediately before the refinancing). shall be considered as maintaining a house- ‘‘(4) LIMITATION ON PERIOD OF REFINANC- States Code. hold only if over one-half of the cost of main- ING.—Subparagraph (B) of paragraph (3) shall ‘‘(4) For treatment of gifts accepted by the taining the household during the taxable not apply to any indebtedness after— Secretary of State, the Director of the Inter- year is furnished by such individual. ‘‘(A) the expiration of the term of the in- national Communication Agency, or the Di- ‘‘(2) LIMITATIONS.—Notwithstanding para- debtedness described in paragraph (3)(A), or rector of the United States International De- graph (1), for purposes of this part a taxpayer ‘‘(B) if the principal of the indebtedness development Cooperation Agency, as gifts to or shall not be considered to be a surviving scribed in paragraph (3)(A) is not amortized for the use of the United States, see section spouse— over its term, the expiration of the term of 25 of the State Department Basic Authorities ‘‘(A) if the taxpayer has remarried at any the first refinancing of such indebtedness (or Act of 1956. time before the close of the taxable year, or if earlier, the date which is 30 years after the ‘‘(B) unless, for the taxpayer’s taxable year ‘‘(5) For treatment of gifts of money ac- date of such first refinancing). cepted by the Attorney General for credit to during which the taxpayer’s spouse died, a ‘‘(e) OTHER DEFINITIONS AND SPECIAL joint return could have been made under the the ‘Commissary Funds, Federal Prisons’ as RULES.—For purposes of this section— gifts to or for the use of the United States, provisions of section 6013 (without regard to ‘‘(1) QUALIFIED RESIDENCE.—For purposes of subsection (a)(3) thereof). see section 4043 of title 18, United States this subsection— ‘‘(3) SPECIAL RULE WHERE DECEASED SPOUSE Code. ‘‘(A) IN GENERAL.—Except as provided in WAS IN MISSING STATUS.—If an individual was ‘‘(6) For charitable contributions to or for subparagraph (C), the term ‘qualified resi- the use of Indian tribal governments (or sub- in a missing status (within the meaning of dence’ means the principal residence of the section 6013(f)(3)) as a result of service in a divisions of such governments), see section taxpayer. combat zone and if such individual remains 7871. ‘‘(B) MARRIED INDIVIDUALS FILING SEPARATE in such status until the date referred to in ‘‘SEC. 4. DEDUCTION FOR HOME ACQUISITION IN- RETURNS.—If a married couple does not file a subparagraph (A) or (B), then, for purposes of DEBTEDNESS. joint return for the taxable year— paragraph (1)(A), the date on which such in- ‘‘(a) GENERAL RULE.—For purposes of this ‘‘(i) such couple shall be treated as 1 tax- dividual dies shall be treated as the earlier of part, there shall be allowed as a deduction payer for purposes of subparagraph (A), and the date determined under subparagraph (A) all qualified residence interest paid or ac- ‘‘(ii) each individual shall be entitled to or the date determined under subparagraph crued within the taxable year. take into account 1⁄2 of the principal resi- (B): ‘‘(b) QUALIFIED RESIDENCE INTEREST DE- dence unless both individuals consent in ‘‘(A) The date on which the determination FINED.—The term ‘qualified residence inter- writing to 1 individual taking into account est’ means any interest which is paid or ac- the principal residence. is made under section 556 of title 37 of the United States Code or under section 5566 of crued during the taxable year on acquisition ‘‘(C) PRE-OCTOBER 13, 1987, INDEBTEDNESS.— indebtedness with respect to any qualified In the case of any pre-October 13, 1987, in- title 5 of such Code (whichever is applicable) residence of the taxpayer. For purposes of debtedness, the term ‘qualified residence’ that such individual died while in such miss- the preceding sentence, the determination of has the meaning given that term in section ing status. whether any property is a qualified residence 163(h)(4), as in effect on the day before the ‘‘(B) Except in the case of the combat zone of the taxpayer shall be made as of the time date of enactment of this subparagraph. designated for purposes of the Vietnam conflict, the date which is 2 years after the date the interest is accrued. ‘‘(2) SPECIAL RULE FOR COOPERATIVE HOUS- designated as the date of termination of ‘‘(c) ACQUISITION INDEBTEDNESS.— ING CORPORATIONS.—Any indebtedness se- ‘‘(1) IN GENERAL.—The term ‘acquisition in- cured by stock held by the taxpayer as a ten- combatant activities in that zone. debtedness’ means any indebtedness which— ant-stockholder in a cooperative housing ‘‘(b) DEFINITION OF HEAD OF HOUSEHOLD.— ‘‘(A) is incurred in acquiring, constructing, corporation shall be treated as secured by ‘‘(1) IN GENERAL.—For purposes of this or substantially improving any qualified res- the house or apartment which the taxpayer part, an individual shall be considered a head idence of the taxpayer, and is entitled to occupy as such a tenant-stock- of a household if, and only if, such individual ‘‘(B) is secured by such residence. holder. If stock described in the preceding is not married at the close of such individ- Such term also includes any indebtedness se- sentence may not be used to secure indebted- ual’s taxable year, is not a surviving spouse cured by such residence resulting from the ness, indebtedness shall be treated as so se- (as defined in subsection (a)), and either— refinancing of indebtedness meeting the re- cured if the taxpayer establishes to the satis- ‘‘(A) maintains as such individual’s home a quirements of the preceding sentence (or this faction of the Secretary that such indebted- household which constitutes for more than sentence); but only to the extent the amount ness was incurred to acquire such stock. one-half of such taxable year the principal of the indebtedness resulting from such refi- ‘‘(3) UNENFORCEABLE SECURITY INTERESTS.— place of abode, as a member of such house- nancing does not exceed the amount of the Indebtedness shall not fail to be treated as hold, of— refinanced indebtedness. secured by any property solely because, ‘‘(i) a son, stepson, daughter, or step- ‘‘(2) $100,000 LIMITATION.—The aggregate under any applicable State or local home- daughter of the taxpayer, or a descendant of amount treated as acquisition indebtedness stead or other debtor protection law in effect a son or daughter of the taxpayer, but if such for any period shall not exceed $100,000 on August 16, 1986, the security interest is in- son, stepson, daughter, stepdaughter, or de- ($50,000 in the case of a married individual effective or the enforceability of the security scendant is married at the close of the tax- filing a separate return). interest is restricted. payer’s taxable year, only if the taxpayer is ‘‘(d) TREATMENT OF INDEBTEDNESS IN- ‘‘(4) SPECIAL RULES FOR ESTATES AND entitled to a deduction for the taxable year CURRED ON OR BEFORE OCTOBER 13, 1987.— TRUSTS.—For purposes of determining wheth- for such person under section 2 (or would be ‘‘(1) IN GENERAL.—In the case of any pre- er any interest paid or accrued by an estate so entitled but for subparagraph (B) or (D) of October 13, 1987, indebtedness— or trust is qualified residence interest, any subsection (d)(5)), or ‘‘(A) such indebtedness shall be treated as residence held by such estate or trust shall ‘‘(ii) any other person who is a dependent acquisition indebtedness, and be treated as a qualified residence of such es- of the taxpayer, if the taxpayer is entitled to ‘‘(B) the limitation of subsection (b)(2) tate or trust if such estate or trust estab- a deduction for the taxable year for such per- shall not apply. lishes that such residence is a qualified resi- son under section 2, or ‘‘(2) REDUCTION IN $100,000 LIMITATION.—The dence of a beneficiary who has a present in- ‘‘(B) maintains a household which con- limitation of subsection (b)(2) shall be re- terest in such estate or trust or an interest stitutes for such taxable year the principal duced (but not below zero) by the aggregate in the residuary of such estate or trust. place of abode of the father or mother of the S4212 CONGRESSIONAL RECORD — SENATE May 4, 1998 taxpayer, if the taxpayer is entitled to a de- a child who is a member of an individual’s ‘‘(ii) such child is in the custody of 1 or duction for the taxable year for such father household, if placed with such individual by both of such child’s parents for more than or mother under section 2. an authorized placement agency for legal one-half of the calendar year, For purposes of this paragraph, an individual adoption by such individual), or a foster such child shall be treated, for purposes of shall be considered as maintaining a house- child of an individual (if such child satisfies paragraph (1), as receiving over one-half of hold only if over one-half of the cost of main- the requirements of paragraph (1)(I) with re- such child’s support during the calendar year taining the household during the taxable spect to such individual), shall be treated as from the parent having custody for a greater year is furnished by such individual. a child of such individual by blood. portion of the calendar year (hereafter in ‘‘(2) DETERMINATION OF STATUS.—For pur- ‘‘(C) CITIZENSHIP.—The term ‘dependent’ this paragraph referred to as the ‘custodial poses of this subsection— does not include any individual who is not a parent’). ‘‘(A) a legally adopted child of a person citizen or national of the United States un- ‘‘(B) EXCEPTION WHERE CUSTODIAL PARENT shall be considered a child of such person by less such individual is a resident of the RELEASES CLAIM TO EXEMPTION FOR THE blood; United States or of a country contiguous to YEAR.—A child of parents described in sub- ‘‘(B) an individual who is legally separated the United States. The preceding sentence paragraph (A) shall be treated as having re- from such individual’s spouse under a decree shall not exclude from the definition of ‘de- ceived over one-half of such child’s support of divorce or of separate maintenance shall pendent’ any child of the taxpayer legally during a calendar year from the noncustodial not be considered as married; adopted by such taxpayer, if, for the taxable parent if— ‘‘(C) a taxpayer shall be considered as not year of the taxpayer, the child has as such ‘‘(i) the custodial parent signs a written married at the close of such taxpayer’s tax- child’s principal place of abode the home of declaration (in such manner and form as the able year if at any time during the taxable the taxpayer and is a member of the tax- Secretary may by regulations prescribe) that year such taxpayer’s spouse is a nonresident payer’s household, and if the taxpayer is a such custodial parent will not claim such alien; and citizen or national of the child as a dependent for any taxable year be- ‘‘(D) a taxpayer shall be considered as mar- United States. ginning in such calendar year, and ried at the close of such taxpayer’s taxable ‘‘(D) ALIMONY, ETC.—A payment to a wife ‘‘(ii) the noncustodial parent attaches such year if such taxpayer’s spouse (other than a which is alimony or separate maintenance written declaration to the noncustodial par- spouse described in subparagraph (C)) died shall not be treated as a payment by the ent’s return for the taxable year beginning during the taxable year. wife’s husband for the support of any depend- during such calendar year. ‘‘(3) LIMITATIONS.—Notwithstanding para- ent. For purposes of this paragraph, the term graph (1), for purposes of this part, a tax- ‘‘(E) UNLAWFUL ARRANGEMENTS.—An indi- ‘noncustodial parent’ means the parent who payer shall not be considered to be a head of vidual is not a member of the taxpayer’s is not the custodial parent. a household— household if at any time during the taxable ‘‘(C) EXCEPTION FOR MULTIPLE-SUPPORT ‘‘(A) if at any time during the taxable year year of the taxpayer the relationship be- AGREEMENT.—This paragraph shall not apply the taxpayer is a nonresident alien; or tween such individual and the taxpayer is in in any case where over one-half of the sup- ‘‘(B) by reason of an individual who would violation of local law. port of the child is treated as having been re- not be a dependent for the taxable year but ‘‘(3) MULTIPLE SUPPORT AGREEMENTS.—For ceived from a taxpayer under the provisions for— purposes of paragraph (1), over one-half of of paragraph (3). ‘‘(i) subparagraph (I) of subsection (d)(1), or the support of an individual for a calendar ‘‘(D) EXCEPTION FOR CERTAIN PRE-1985 IN- ‘‘(ii) paragraph (3) of subsection (d). year shall be treated as received from the STRUMENTS.— ‘‘(c) CERTAIN MARRIED INDIVIDUALS LIVING taxpayer if— ‘‘(i) IN GENERAL.—A child of parents de- APART.—For purposes of this part, an indi- ‘‘(A) no one person contributed over one- scribed in subparagraph (A) shall be treated vidual shall be treated as not married at the half of such support; as having received over one-half such child’s close of the taxable year if such individual is ‘‘(B) over one-half of such support was re- support during a calendar year from the non- so treated under the provisions of section ceived from persons each of whom, but for custodial parent if— 7703(b). the fact that such person did not contribute ‘‘(I) a qualified pre-1985 instrument be- ‘‘(d) DEPENDENT DEFINED.— over one-half of such support, would have tween the parents applicable to the taxable ‘‘(1) GENERAL DEFINITION.—For purposes of been entitled to claim such individual as a year beginning in such calendar year pro- this part, the term ‘dependent’ means any of dependent for a taxable year beginning in vides that the noncustodial parent shall be the following individuals over one-half of such calendar year; entitled to any deduction allowable under whose support, for the calendar year in ‘‘(C) the taxpayer contributed over 10 per- section 2 for such child, and which the taxable year of the taxpayer be- cent of such support; and ‘‘(II) the noncustodial parent provides at gins, was received from the taxpayer (or is ‘‘(D) each person described in subparagraph least $600 for the support of such child during treated under paragraph (3) or (5) as received (B) (other than the taxpayer) who contrib- such calendar year. from the taxpayer): uted over 10 percent of such support files a For purposes of this clause, amounts ex- ‘‘(A) A son or daughter of the taxpayer, or written declaration (in such manner and pended for the support of a child or children a descendant of either. form as the Secretary may by regulations shall be treated as received from the non- ‘‘(B) A stepson or stepdaughter of the tax- prescribe) that such person will not claim custodial parent to the extent that such par- payer. such individual as a dependent for any tax- ent provided amounts for such support. ‘‘(C) A brother, sister, stepbrother, or step- able year beginning in such calendar year. ‘‘(ii) QUALIFIED PRE-1985 INSTRUMENT.—For sister of the taxpayer. ‘‘(4) SPECIAL SUPPORT TEST IN CASE OF STU- purposes of this subparagraph, the term ‘‘(D) The father or mother of the taxpayer, DENTS.—For purposes of paragraph (1), in the ‘qualified pre-1985 instrument’ means any de- or an ancestor of either. case of any individual who is— cree of divorce or separate maintenance or ‘‘(E) A stepfather or stepmother of the tax- ‘‘(A) a son, stepson, daughter, or step- written agreement— payer. daughter of the taxpayer (within the mean- ‘‘(I) which is executed before January 1, ‘‘(F) A son or daughter of a brother or sis- ing of this subsection), and 1985, ter of the taxpayer. ‘‘(B) a student, ‘‘(II) which on such date contains the pro- ‘‘(G) A brother or sister of the father or vision described in clause (i)(I), and mother of the taxpayer. amounts received as scholarships for study ‘‘(III) which is not modified on or after ‘‘(H) A son-in-law, daughter-in-law, father- at an educational organization described in such date in a modification which expressly in-law, mother-in-law, brother-in-law, or sis- section 3(d)(1)(B) shall not be taken into ac- provides that this subparagraph shall not ter-in-law of the taxpayer. count in determining whether such individ- apply to such decree or agreement. ‘‘(I) An individual (other than an individual received more than one-half of such indi- ‘‘(E) SPECIAL RULE FOR SUPPORT RECEIVED ual who at any time during the taxable year vidual’s support from the taxpayer. FROM NEW SPOUSE OF PARENT.—For purposes was the spouse, determined without regard ‘‘(5) SUPPORT TEST IN CASE OF CHILD OF DI- of this paragraph, in the case of the remar- to section 7703, of the taxpayer) who, for the VORCED PARENTS, ETC.— riage of a parent, support of a child received taxable year of the taxpayer, has as such in- ‘‘(A) CUSTODIAL PARENT GETS EXEMPTION.— from the parent’s spouse shall be treated as dividual’s principal place of abode the home Except as otherwise provided in this para- received from the parent. of the taxpayer and is a member of the tax- graph, if— payer’s household. ‘‘(i) a child receives over one-half of such ‘‘PART II—TAX ON BUSINESS ACTIVITIES ‘‘(2) RULES RELATING TO GENERAL DEFINI- child’s support during the calendar year ‘‘Sec. 11. Tax imposed on business activities. TION.—For purposes of this section— from such child’s parents— ‘‘SEC. 11. TAX IMPOSED ON BUSINESS ACTIVITIES. ‘‘(A) BROTHER; SISTER.—The terms ‘broth- ‘‘(I) who are divorced or legally separated ‘‘(a) TAX IMPOSED.—There is hereby im- er’ and ‘sister’ include a brother or sister by under a decree of divorce or separate mainte- posed on every person engaged in a business the halfblood. nance, activity located in the United States a tax ‘‘(B) CHILD.—In determining whether any ‘‘(II) who are separated under a written equal to 20 percent of the business taxable of the relationships specified in paragraph (1) separation agreement, or income of such person. or subparagraph (A) of this paragraph exists, ‘‘(III) who live apart at all times during ‘‘(b) LIABILITY FOR TAX.—The tax imposed a legally adopted child of an individual (and the last 6 months of the calendar year, and by this section shall be paid by the person May 4, 1998 CONGRESSIONAL RECORD — SENATE S4213 engaged in the business activity, whether which is exempt from tax under this subtitle ‘‘(A) such excess, plus such person is an individual, partnership, which the organization notifies the taxpayer ‘‘(B) the product of such excess and the 3- corporation, or otherwise. under section 6033(e)(1)(A)(ii) is allocable to month Treasury rate for the last month of ‘‘(c) BUSINESS TAXABLE INCOME.— expenditures to which clause (i) applies. such taxable year. ‘‘(1) IN GENERAL.—For purposes of this sec- ‘‘(iv) INFLUENCING LEGISLATION.—For pur- ‘‘(2) 3-MONTH TREASURY RATE.—For pur- tion, the term ‘business taxable income’ poses of this subparagraph— poses of paragraph (1), the 3-month Treasury means gross active income reduced by the ‘‘(I) IN GENERAL.—The term ‘influencing rate is the rate determined by the Secretary deductions specified in subsection (d). legislation’ means any attempt to influence based on the average market yield (during ‘‘(2) GROSS ACTIVE INCOME.—For purposes of any legislation through communication with any 1-month period selected by the Sec- paragraph (1), the term ‘gross active income’ any member or employee of a legislative retary and ending in the calendar month in means gross income other than investment body, or with any government official or em- which the determination is made) on out- income. ployee who may participate in the formula- standing marketable obligations of the ‘‘(d) DEDUCTIONS.— tion of legislation. United States with remaining periods to ma- ‘‘(1) IN GENERAL.—The deductions specified ‘‘(II) LEGISLATION.—The term ‘legislation’ turity of 3 months or less.’’ in this subsection are— has the meaning given that term in section (b) CONFORMING REPEALS AND REDESIGNA- ‘‘(A) the cost of business inputs for the 4911(e)(2). TIONS.— business activity, ‘‘(v) OTHER SPECIAL RULES.— (1) REPEALS.—The following subchapters of ‘‘(B) the compensation (including contribu- ‘‘(I) EXCEPTION FOR CERTAIN TAXPAYERS.— chapter 1 of subtitle A and the items relating tions to qualified retirement plans but not In the case of any taxpayer engaged in the to such subchapters in the table of sub- including other fringe benefits) paid for em- trade or business of conducting activities de- chapters for such chapter 1 are repealed: ployees performing services in such activity, scribed in clause (i), clause (i) shall not (A) Subchapter B (relating to computation and apply to expenditures of the taxpayer in con- of taxable income). ‘‘(C) the cost of personal and real property ducting such activities directly on behalf of (B) Subchapter C (relating to corporate used in such activity. another person (but shall apply to payments distributions and adjustments). ‘‘(2) BUSINESS INPUTS.— by such other person to the taxpayer for con- (C) Subchapter D (relating to deferred ‘‘(A) IN GENERAL.—For purposes of para- ducting such activities). compensation, etc.). graph (1)(A), the term ‘cost of business in- (D) Subchapter G (relating to corporations ‘‘(II) DE MINIMIS EXCEPTION.— puts’ means— used to avoid income tax on shareholders). ‘‘(aa) IN GENERAL.—Clause (i) shall not ‘‘(i) the actual cost of goods, services, and apply to any in-house expenditures for any (E) Subchapter H (relating to banking in- materials, whether or not resold during the taxable year if such expenditures do not ex- stitutions). taxable year, and ceed $2,000. In determining whether a tax- (F) Subchapter I (relating to natural re- ‘‘(ii) the actual cost, if reasonable, of trav- payer exceeds the $2,000 limit, there shall not sources). el and entertainment expenses for business (G) Subchapter J (relating to estates, be taken into account overhead costs other- purposes. trusts, beneficiaries, and decedents). wise allocable to activities described in sub- ‘‘(B) PURCHASES OF GOODS AND SERVICES EX- (H) Subchapter L (relating to insurance clauses (I) and (IV) of clause (i). CLUDED.—Such term shall not include pur- companies). ‘‘(bb) IN-HOUSE EXPENDITURES.—For purchases of goods and services provided to em- (I) Subchapter M (relating to regulated in- poses of provision (aa), the term ‘in-house ployees or owners. vestment companies and real estate invest- expenditures’ means expenditures described ‘‘(C) CERTAIN LOBBYING AND POLITICAL EX- ment trusts). in subclauses (I) and (IV) of clause (i) other PENDITURES EXCLUDED.— (J) Subchapter N (relating to tax based on than payments by the taxpayer to a person ‘‘(i) IN GENERAL.—Such term shall not in- income from sources within or without the engaged in the trade or business of conduct- clude any amount paid or incurred in con- United States). nection with— ing activities described in clause (i) for the (K) Subchapter O (relating to gain or loss ‘‘(I) influencing legislation, conduct of such activities on behalf of the on disposition of property). ‘‘(II) participation in, or intervention in, taxpayer, or dues or other similar amounts (L) Subchapter P (relating to capital gains any political campaign on behalf of (or in op- paid or incurred by the taxpayer which are and losses). position to) any candidate for public office, allocable to activities described in clause (i). (M) Subchapter Q (relating to readjust- ‘‘(III) any attempt to influence the general ‘‘(III) EXPENSES INCURRED IN CONNECTION ment of tax between years and special limi- public, or segments thereof, with respect to WITH LOBBYING AND POLITICAL ACTIVITIES.— tations). elections, legislative matters, or referen- Any amount paid or incurred for research (N) Subchapter S (relating to tax treat- dums, or for, or preparation, planning, or coordination ment of S corporations and their sharehold- ‘‘(IV) any direct communication with a of, any activity described in clause (i) shall ers). covered executive branch official in an at- be treated as paid or incurred in connection (O) Subchapter T (relating to cooperatives tempt to influence the official actions or po- with such activity. and their patrons). sitions of such official. ‘‘(vi) COVERED EXECUTIVE BRANCH OFFI- (P) Subchapter U (relating to designation ‘‘(ii) EXCEPTION FOR LOCAL LEGISLATION.— CIAL.—For purposes of this subparagraph, the and treatment of empowerment zones, enter- In the case of any legislation of any local term ‘covered executive branch official’ prise communities, and rural development council or similar governing body— means— investment areas). ‘‘(I) clause (i)(I) shall not apply, and ‘‘(I) the President, (Q) Subchapter V (relating to title 11 ‘‘(II) such term shall include all ordinary ‘‘(II) the Vice President, cases). ‘‘(III) any officer or employee of the White and necessary expenses (including, but not (2) REDESIGNATIONS.—The following sub- limited to, traveling expenses described in House Office of the Executive Office of the chapters of chapter 1 of subtitle A and the subparagraph (A)(iii) and the cost of prepar- President, and the 2 most senior level offi- items relating to such subchapters in the ing testimony) paid or incurred during the cers of each of the other agencies in such Ex- table of subchapters for such chapter 1 are taxable year in carrying on any trade or ecutive Office, and redesignated: business— ‘‘(IV) any individual serving in a position (A) Subchapter E (relating to accounting ‘‘(aa) in direct connection with appear- in level I of the Executive Schedule under periods and methods of accounting) as sub- ances before, submission of statements to, or section 5312 of title 5, United States Code, chapter B. sending communications to the committees, any other individual designated by the Presi- (B) Subchapter F (relating to exempt orga- or individual members, of such council or dent as having Cabinet level status, and any nizations) as subchapter C. body with respect to legislation or proposed immediate deputy of such an individual. (C) Subchapter K (relating to partners and legislation of direct interest to the taxpayer, ‘‘(vii) SPECIAL RULE FOR INDIAN TRIBAL GOV- partnerships) as subchapter D. ERNMENTS.—For purposes of this subpara- or SEC. ll03. REPEAL OF ESTATE AND GIFT TAXES. graph, an Indian tribal government shall be ‘‘(bb) in direct connection with commu- Subtitle B (relating to estate, gift, and nication of information between the tax- treated in the same manner as a local coun- generation-skipping taxes) and the item re- payer and an organization of which the tax- cil or similar governing body. lating to such subtitle in the table of sub- payer is a member with respect to any such ‘‘(viii) CROSS REFERENCE.— titles is repealed. legislation or proposed legislation which is ‘‘For reporting requirements and alter- SEC. ll04. ADDITIONAL REPEALS. of direct interest to the taxpayer and to such native taxes related to this subsection, see Subtitles H (relating to financing of presi- organization, and that portion of the dues so section 6033(e). dential election campaigns) and J (relating paid or incurred with respect to any organi- ‘‘(e) CARRYOVER OF EXCESS DEDUCTIONS.— to coal industry health benefits) and the zation of which the taxpayer is a member ‘‘(1) IN GENERAL.—If the aggregate deduc- items relating to such subtitles in the table which is attributable to the expenses of the tions for any taxable year exceed the gross of subtitles are repealed. activities carried on by such organization. active income for such taxable year, the SEC. ll05. EFFECTIVE DATES. ‘‘(iii) APPLICATION TO DUES OF TAX-EXEMPT amount of the deductions specified in sub- (a) IN GENERAL.—Except as provided in ORGANIZATIONS.—Such term shall include the section (d) for the succeeding taxable year subsection (b), the amendments made by this portion of dues or other similar amounts (determined without regard to this subtitle apply to taxable years beginning after paid by the taxpayer to an organization section) shall be increased by the sum of— December 31, 1997. S4214 CONGRESSIONAL RECORD — SENATE May 4, 1998 (b) REPEAL OF ESTATE AND GIFT TAXES.— This places state and local busi- season recently completed by the Lady The repeal made by section ll03 applies to nesses, which have no choice but to Tigers of Campbellsville University, lo- estates of decedents dying, and transfers collect sales tax on the merchandise cated in the town of Campbellsville, made, after December 31, 1997. they sell, at a severe competitive dis- Kentucky. While many are more famil- (c) TECHNICAL AND CONFORMING CHANGES.— The Secretary of the Treasury or the Sec- advantage. This is especially damaging iar with the Kentucky basketball dy- retary’s delegate shall, as soon as prac- to small businesses, which are the nasties built in places like Louisville ticable but in any event not later than 90 backbone of our nation’s economy. and Lexington, Campbellsville has a days after the date of enactment of this Over the last five years, Florida busi- pretty impressive run of its own going. title, submit to the Committee on Ways and nesses with less than 20 employees Nationally ranked all year, the Lady Means of the House of Representatives and have created 71 percent of all new jobs Tigers completed their regular season the Committee on Finance of the Senate a in the state—775,000 in total. Our bill with a record of 21–7. Winning both the draft of any technical and conforming will put main street merchants on the Mid-South Conference Regular Season changes in the Internal Revenue Code of 1986 same competitive footing as mail order which are necessary to reflect throughout and Tournament titles earned Camp- such Code the changes in the substantive businesses. bellsville an automatic bid to the Na- provisions of law made by this title. Second, this bill protects consumers. tional Association of Intercollegiate f It prevents them from experiencing an Athletics (NAIA) championship tour- unexpected and unwelcome tax sur- nament in Jackson, Tennessee. This is NOTICES OF HEARINGS prise. Many mail order shoppers are the ninth consecutive season that COMMITTEE ON LABOR AND HUMAN RESOURCES unaware that most states are empow- Campbellsville has qualified for the na- Mr. JEFFORDS. Mr. President, I ered to assess a sales tax on the pur- tional tournament. would like to announce for information chase of goods sold across state lines. The Lady Tigers opened the NAIA of the Senate and the public that a They are surprised when states like national tournament by defeating Big hearing of the Senate Committee on Florida come around to collect sales State Conference Tournament Cham- Labor and Human Resources will be tax due on particularly expensive pion LeTourneau University 95–56 in held on Tuesday, May 5, 1998, 10 a.m., goods. the first round and then defeated Okla- in SD–430 of the Senate Dirksen Build- Third, this bill preserves states’ homa City University in the Second ing. The subject of the hearing is ‘‘10 rights. Mr. President, there is no state Round by a score of 69–51. The Lady Ti- Years of the SAFE KIDS Campaign.’’ right that is more fundamental than gers were finally stopped in the quar- For further information, please call the the right to decide how to raise reve- terfinals by four-time defending Na- committee, 202/224–5375. nue. Because the federal government tional Champion, Southern Nazarene has not protected this right, Florida SUBCOMMITTEE ON CHILDREN AND FAMILIES University of Oklahoma, in a heart- currently loses an estimated $168.9 mil- Mr. JEFFORDS. Mr. President, I breaker, 72–67. lion each year in potential revenues. would like to announce for information Throughout the season, the Lady Ti- Nationwide, states have lost more than gers were led by Mid South Conference of the Senate and the public that a $3.3 billion as a result of Washington’s Player of the Year Shannon Wathen, hearing of the Senate Committee on handcuffs. If we are determined to and All-Conference teammates Julie Labor and Human Resources, Sub- make good on our promise to return Jeffries and Farrah Sullivan. Together, committee on Children and Families, more power and responsibility to states this senior triumvirate combined to av- will be held on Tuesday, May 5, 1998, 2 and local communities—and I think we erage over thirty nine-points and fif- p.m., in SD–430 of the Senate Dirksen must be—it makes no sense to dictate teen rebounds per game. Post-season Building. The subject of the hearing is how Governors and legislators raise honors were also bestowed on Coach ‘‘Community Services Block Grant: Ex- money. That’s their job, not ours. panding Opportunities for Community Mr. President, state officials from Donna Wise, who has led Campbells- and Neighborhood Partnerships.’’ For across the nation are asking for our ville to nine consecutive national tour- further information, please call the help. But don’t take my word for it. nament births and ranks second in committee, 202/224–5375. Ask the National Governors Associa- wins among active NAIA coaches with COMMITTEE ON LABOR AND HUMAN RESOURCES tion, which once again passed a resolu- 475. Mr. JEFFORDS. Mr. President, I tion supporting this kind of federal leg- Mr. President, Coach Wise has built a would like to announce for information islation at its Winter 1997 meetings. national powerhouse women’s basket- of the Senate and the public that a Finally, this bill provides fairness to ball program in Campbellsville, a small hearing of the Senate Committee on mail order firms. Most companies with town in Central Kentucky. I hope my Labor and Human Resources will be nationwide sales of less than $3 million colleagues will join me in offering con- held on Thursday, May 7, 1998, 10 a.m., are exempt. The act gives companies gratulations to Coach Wise, her play- in SD–430 of the Senate Dirksen Build- the option of collecting a single blend- ers, and everyone associated with the ing. The subject of the hearing is ‘‘Bet- ed rate for each state rather than the Campbellsville Lady Tigers on another ter Teachers for Today’s Classroom: myriad of different state and local great season.∑ How to Make it Happen.’’ For further rates. Out of state companies only have f information, please call the commit- to file tax returns once per quarter. COSPONSORSHIP OF S. 1180, EN- tee, 202/224–5375. And states participating in the Act DANGERED SPECIES REAUTHOR- f must establish a toll-free number for IZATION ACT out-of-state companies to obtain infor- ADDITIONAL STATEMENTS mation and forms. ∑ Mr. CRAIG. Mr. President, I would Mr. President, it is time that the fed- like to take a few minutes today to eral government remove the strait- talk about S. 1180, the Endangered Spe- CONSUMER AND MAIN STREET jacket from states and restore to Gov- cies Act reauthorization bill, and why I PROTECTION ACT OF 1998 ernors and state legislators their power have decided to cosponsor it at this ∑ Mr. GRAHAM. Mr. President, I rise to raise revenue. I commend Senator time. to announce my cosponsorship of Sen- BUMPERS for his efforts to preserve As our colleagues know, this bill was ator BUMPERS’ ‘‘Consumer and Main states’ rights in these important fiscal passed by the Environment and Public Street Protection Act of 1998.’’ My sup- matters.∑ Works Committee last fall, and it is port for this legislation is based on f currently on the calendar, ready for four important principles: consideration by the full Senate. I have First, this bill promotes tax fairness. TRIBUTE TO THE CAMPBELLS- been slow to cosponsor S. 1180 because Mail order businesses unfairly benefit VILLE UNIVERSITY LADY TI- of some reservations I had—and still from their unique status. They can en- GERS: 1998 MID-SOUTH CON- have—about the bill. I will talk in gage in interstate commerce—sell FERENCE BASKETBALL TOUR- more detail about those reservations products to customers in any state of NAMENT CHAMPIONS later. the nation—but are not responsible for ∑ Mr. MCCONNELL. Mr. President, I However, I am absolutely convinced collecting state and local sales taxes. rise today to celebrate the remarkable that the current Endangered Species May 4, 1998 CONGRESSIONAL RECORD — SENATE S4215 Act is not only a dismal failure at sav- ingly ignored these rights. President very heart of our economy. It is the ing species, but is actually working Clinton rejected the Constitution’s ability to allocate this precious re- against that goal. Furthermore, every- guarantee outright when he pledged to source (water) for uses that allows us day we tolerate this defective law, its veto any ‘‘compensation entitlement to exist. unfair and unnecessary burdens in- legislation’’ intended to strengthen It is for this reason we westerners be- crease on citizens and the economy. Americans’ private property rights. come particularly agitated when the Yet at the same time, the American Representatives of this Administration federal government tries to disrupt people continue to believe that con- have even suggested that the idea of this principle or to ‘‘take’’ our water. serving fish and wildlife species for the private property is an outmoded no- Does this legislation create a federal enjoyment of future generations is the tion. reserved water right? There are those right thing to do and I agree. They Nowhere is the Administration’s hos- who would say ‘‘no,’’ and there are want to make changes to the law, but tility to private property rights more those who would press to assert such a don’t want to see the Endangered Spe- evident than in the area of endangered right. cies Act thrown out. species regulation. Let’s take a look at It is for this reason that this legisla- That’s why for the last three years, Secretary Babbitt’s ‘‘no surprises’’ pol- tion should clearly state the Congress’ my colleague and friend from Idaho, icy, for example. The basic idea is that intent. For the record, this Senator Senator KEMPTHORNE, has been work- if landowners surrender control over does not intend for the endangered spe- ing mightly to improve this complex the use of part of their property for cies reauthorization legislation to cre- law. He has held hearings, built coali- ESA purposes, then the federal govern- ate a federal reserved water right. This tions, drafted and re-drafted language ment will let them use the rest of it is why I believe S. 1180 must state to correct the problems while still ad- without interference. To put it another clearly that no implied or express fed- vancing the goals of the Endangered way, Secretary Babbitt proposes that eral water right is created in this legis- Species Act. I congratulate him, as you pay the government for the right lation. I will support and vote for such well as our other Senate colleagues to use your own land. By comparison, an amendment. who have worked with him to produce the Constitution of the United States With these areas of concern in mind, this bill. promises that if the federal govern- I am also inclined to support a shorter S. 1180 would make some positive re- ment wants your land used a certain term of reauthorization than S. 1180 forms to the current system. It would way, the federal government has to pay provides. As I mentioned previously, it re-focus the process on actually saving you for it. species. It would create opportunities Mr. President, even more outrageous is my goal to build additional improve- and benefits for people who are affected than Secretary Babbitt’s program is ments on the foundation laid by this by the government’s actions in these the fact that many landowners think legislation. Accelerating the oppor- areas. it’s actually a pretty good deal. How tunity for Congress to re-open the issue For example, the bill emphasizes oppressive and tyrannical has ESA reg- would only advance that goal. sound science—instead of politics—to ulation become, when citizens are will- In closing, Mr. President, let me re- guide actions taken to conserve and re- ing—even eager—to give up their prop- peat my endorsement for the goals that cover species. It requires independent erty and their constitutionally-pro- Senator KEMPTHORNE and the other peer review for listing and delisting de- tected right to compensation, just to supporters of this bill set out to ahieve cisions, and for the establishment of a get the government to leave them in reauthorizing the Endangered Spe- biological recovery goal in a recovery alone? cies Act. I think the bill will make im- plan. Specific time limits would have I applaud S. 1180’s goal of reducing provements that are critical to ongoing to be observed, and States and local regulatory burdens and improving the ESA efforts in my state and elsewhere citizens would have a larger role in the certainty and finality of government in the nation, and amendments in the process. action in protecting endangered spe- areas I have discussed today will en- I believe these provisions and others cies. It is bad policy to require the hance those improvements.∑ would make significant improvements American people to sacrifice their con- in our current process, to the benefit of stitutionally-protected rights for any f both our wildlife and our citizenry. federal program—even this one. I would While additional corrections could be like to see S. 1180 strengthen and pro- TRIBUTE TO VERMONT’S FEDERAL made, those who drafted this bill be- tect the Fifth Amendment right to EMPLOYEES lieve that a more comprehensive over- compensation. I will vote for amend- ∑ Mr. JEFFORDS. Mr. President, the haul of ESA is not going to pass this ments and or legislation that strength- week of May 4, 1998 is Public Service Congress. I tend to agree with that as- ens our citizen’s private property Recognition Week. It is a time to ap- sessment and am willing to pursue the rights. Private property rights are not the plaud the tremendous efforts and ac- strategy of trying to pass these re- complishments of government employ- forms now as a foundation for further only critical issue that concerns me in this legislation. I also had hoped that ees, and to educate the public about reforms in the future. That is the mes- the far reaching capabilities and serv- sage I would like to send with my co- S. 1180 would directly address the issue of water rights, and specifically deny ices provided by government employ- sponsorship of S. 1180. ees. It is also a time for public servants Having said all that, Mr. President, I that any of its provisions create an ex- to remind ourselves why we chose to cannot endorse each and every provi- press or implied federal water right. serve society through careers in public sion of this legislation. I will be sup- Mr. President, the paramount natu- service. porting amendments that will change ral resource issue for the American or add to the bill in a number of areas. West is the sovereignty of the states This year’s theme is ‘‘Working for For instance, while I support S. 1180’s over the water that flows and exists You, Working for America’’, highlight- stated goal of providing incentives to within their borders. It is easy to say ing the commitment of public employ- promote voluntary habitat conserva- that all we need to do is remain silent ees to work for the benefit of each indi- tion by private landowners, I am very on this issue and all will be well. In vidual, and for the collective benefit to concerned about what the bill as a fact, however, preserving state water improve the quality of life across our whole will fail to do in the area of pro- sovereignty is not so easy. The reality great nation. tecting private property rights. of how federal water rights are created, In Vermont, over 6,000 members of This is no small matter. The right to or not created, requires that we speak our workforce are federal employees. own and use property goes to the very to the question in legislation. We provide technical assistance to heart of our American democracy. It The appropriation doctrine is the farmers, respond to disasters, manage was so important to our founding fa- water law of western states and has as forest land, and deliver mail. We ad- thers that they enshrined the protec- its central premise that the first per- minister federal funds to provide edu- tion of private property in the Con- son to claim a water right has priority cational benefits, housing assistance, stitution’s Bill of Rights. on its use over those water claimants job training, and school breakfast and It is equally important today. Yet who assert claims at later dates. In the lunch programs. We process social se- our federal government has increas- arid West, this principle lies at the curity survivors benefits, veterans S4216 CONGRESSIONAL RECORD — SENATE May 4, 1998 compensation, and small business dation has let individuals afflicted Twin Cities and St. Cloud participated loans. We are the faces of govern- with breast cancer know that they are in a number of Worker Memorial Day ment—caseworkers, nurses, adminis- not alone in their struggle. It is impor- activities including the broadcast of a trators, law enforcement officers. Day tant for the family to understand that Workers Memorial Day message from to day, our jobs are rarely front page their feelings are shared by others in the Metro Division Engineer over the news. We are on the front line and be- their same situation and that they MnDOT Public address and radio com- hind the scenes, working hard to re- should find strength in numbers. munication systems. This message pre- solve problems and make systems more Awareness campaigns like ‘‘It’s My ceded the observance of a moment of effective. Fight Too,’’ are extremely important silence at 2 p.m. Yet during this one week of the year, to foster an environment where sup- Mr. President, this year also marks we hope to let people know how we port for both the individual with breast the 28th anniversary of the enactment touch their lives. We’d like the media cancer and their family and friends is of the Occupational Safety and Health to highlight the successes: thousands encouraged. Awareness is the key to al- Act. In 1970, President Nixon signed of tax refunds processed on time, hun- lowing people to understand and iden- legislation which created the Occupa- dreds of packages delivered the night tify with those suffering around them. tional Safety and Health Administra- before Christmas, dozens of checks We can all, as community members, tion (OSHA) to establish and enforce issued for crop assistance after a spring provide support and strength to those labor standards and the National Insti- flood, thousands of affordable housing in need. tute for Occupational Safety Health units for the elderly and disabled, and As Mother’s Day approaches, the (NIOSH) to conduct research investiga- upkeep of a hiking trail from one end Northeast Health Care Quality Founda- tions. of the state to the other providing un- tion will be holding their annual event At the Department of Labor bill sign- paralleled vistas. to recognize the important women in ing, President Nixon underscored the Federal employees tout years of ex- our lives who may or may not be suf- goal of this historic legislation. Presi- perience and commitment, investing fering from this disease but who never dent Nixon noted how the bill’s enact- themselves to bring about positive the less, need to know that breast can- ment, ‘‘. . . Represents in its culmina- change. Continuously striving to be cer is not just a women’s disease but a tion the American system at its best: more efficient, more effective and more struggle that can be fought by all of us Democrats, Republicans, the House, customer-service oriented, public serv- together. Their event, ‘‘Family and the Senate, the White House, business, ants care, and know government has a Friends Against Breast Cancer, It’s My labor, all cooperating in a common role to empower citizens to make life Fight Too, A Night of Hope, Song and goal—the saving of lives, the avoiding better. Federal employees contribute Love’’ will bring people from across the of injuries, making the places of work to our one-of-a-kind democracy. I rise Northeast together to express the same for 55 million Americans safer and to salute Vermont’s federal employees support the Senate expressed with the more pleasant places.’’ .. . you truly make a difference.∑ passage of S. Res. 85. I commend the ef- Mr. President, the goal of the Occu- f forts of the Northeast Health Care pational Safety and Health Act is to Quality Foundation and encourage or- prevent injuries, illnesses, and fatali- ‘‘IT’S MY FIGHT, TOO’’ ganizations across the country to fol- ties in the workplace. Through statis- ∑ Mr. GREGG. Mr. President, I rise low their leadership and example.∑ tics provided by the Department of today to pay tribute to women, men, f Labor it appears as though the intent and their families who are fighting the of this Act has achieved some level of scourge of breast cancer. As many of WORKER MEMORIAL DAY success. Unfortunately, these numbers my colleagues may remember, last ∑ Mr. GRAMS. Mr. President, I rise to are still too high. Spring, I submitted S. Res. 85, with my remember the American workers who According to Bureau of Labor Statis- fellow Senator from New Hampshire, have suffered injuries or died while at tics, there were over 6,000 workplace fa- recognizing the family and friends of the work places in my home state of talities in 1996, the lowest level in five breast cancer patients in the struggle Minnesota and across the country. years. There were 6.2 million workplace to cope with this disease. The Senate As my colleagues may know, since injuries or illnesses among private sec- passed my Resolution by unanimous 1989 the unions of the AFL-CIO have tor firms with more than 11 or more consent and expressed their over- recognized April 28 as ‘‘Worker Memo- employees, about 400,000 fewer than in whelming support for individuals who rial Day’’ to commemorate the mil- 1995. In my home state alone, 92 Min- provide strength and support for loved lions of workplace injuries, illnesses nesotans lost their lives, and 138,000 ones fighting breast cancer. I come to and deaths that occur each year. In ad- suffered injuries or illnesses on the job the floor today to again note the im- dition, many unions throughout the in 1996. portance of this expression and to rec- world now mark April 28 as an ‘‘Inter- I have always supported employers ognize a very important organization national Day of Mourning.’’ and employees in their effort to create in my home state of New Hampshire In Minnesota, AFL-CIO affiliates safe and healthy work places without that is spreading this message to commemorated Worker Memorial Day cumbersome federal regulations. Work- breast cancer patients across the coun- with a wide variety of events around ers are a business’ most valuable asset try. the state. This past Tuesday at noon, and they deserve safe and healthy work The American Cancer Society esti- members of Minneapolis and St. Paul places that will enable them to better mates that in 1998, 178,700 new cases of building trades met near the State perform their jobs. Safe working envi- invasive breast cancer will be diag- Capitol in St. Paul to remember work- ronments, achieved by restoring com- nosed among women in the United ers who have been killed or injured in mon sense and cooperation among States and 1,600 cases will be diagnosed the job. A bell tolled once for each workers, job providers and the federal among men. These numbers more than local construction worker who died in government, result in smart business. triple in size when you consider the the past year of job-related causes. I strongly believe we need to con- family and friends who are also im- In Grand Forks, the Northern Valley tinue to promote better safety and pub- pacted by the disease. With each and Labor Council and the Grand Forks lic health standards. One way this can every one of these cases comes family Building and Construction Trades be accomplished is through comprehen- and friends who are looked upon to pro- Council placed Workers Memorial Day sive reform of the Federal regulatory vide the caring and loving needed to stickers on their clothing at work. process. For this reason, I am proud to overcome such a terrifying disease. Statewide, a ‘‘Minnesota’s Workforce be a cosponsor of S. 981, the ‘‘Regu- The Northeast Health Care Quality Minute’’ Message about Workers’ Me- latory Improvement Act of 1997’’ spon- Foundation, in Dover, New Hampshire, morial Day aired several times over sored by Senator CARL LEVIN, one of has done an excellent job of expressing the 29 stations of Minnesota News Net- the leading health, safety and environ- this notion to the people of New Hamp- work’s Lifestyle Network. mental experts in the Senate. shire and beyond. With their campaign Lastly, the Minnesota Department of In my view, legislation such as the titled, ‘‘It’s My Fight, Too,’’ the Foun- Transportation and local unions in the Regulatory Improvement Act of 1997 May 4, 1998 CONGRESSIONAL RECORD — SENATE S4217 will ensure a more open and account- Mr. President, I hope all my col- (F) United States membership in NATO re- able regulatory process which will im- leagues will join me in offering our mains a vital national security interest of prove our health, safety and environ- congratulations to Captain Harry the United States. (2) STRATEGIC RATIONALE FOR NATO EN- mental protections while reducing the Adams, Co-Captain Richie Schoolcraft, LARGEMENT.—The Senate finds that— regulatory burden on those subject to Treasurer and Secretary Brian Sexton, (A) notwithstanding the collapse of com- those laws. It will not compromise First Lieutenant Derek Calhoun and munism in most of Europe and the dissolu- health or safety protections. I recently Second Lieutenant Lee Schoolcraft and tion of the Soviet Union, the United States wrote the Majority Leader urging that all the volunteers of the Floyd County and its NATO allies face threats to their sta- this legislation receive consideration Rescue Squad. They carry on the bility and territorial integrity, including on the Senate floor, and I am hopeful those common threats described in section Squad’s rich tradition of volunteering 3(1)(A)(v); that we will have a debate on how to their time and risking their lives to (B) the invasion of Poland, Hungary, or the best ensure safe and healthy work help the people of their community, Czech Republic, or their destabilization aris- places in the coming weeks. and they are all worthy of our admira- ing from external subversion, would threaten On each Workers Memorial Day, I tion and thanks.∑ the stability of Europe and jeopardize vital urge my colleagues to remember those f United States national security interests; American workers who have lost their (C) Poland, Hungary, and the Czech Repub- lives or were injured on the job. Con- PROTOCOLS TO THE NORTH AT- lic, having established democratic govern- gress, the Administration, labor and LANTIC TREATY OF 1949 ON THE ments and having demonstrated a willing- ACCESSION OF POLAND, HUN- ness to meet all requirements of member- business, must work together as they ship, including those necessary to contribute did nearly 30 years ago, to ensure that GARY, AND THE CZECH REPUB- to the territorial defense of all NATO mem- there are adequate protections to pre- LIC bers, are in a position to further the prin- vent unnecessary injuries and fatalities (The text of resolution of ratification ciples of the North Atlantic Treaty and to in the future and improve the lives of to the Protocols to the North Atlantic contribute to the security of the North At- all of our nation’s workers.∑ lantic area; and Treaty of 1949 on the Accession of Po- (D) extending NATO membership to Po- f land, Hungary, and the Czech Republic land, Hungary, and the Czech Republic will TRIBUTE TO THE FLOYD COUNTY as agreed to by the Senate on April 30, strengthen NATO, enhance security and sta- EMERGENCY AND RESCUE 1998, reads as follows:) bility in Central Europe, deter potential ag- SQUAD: THIRTY YEARS OF VOL- Resolved, (two-thirds of the Senators present gressors, and thereby advance the interests concurring therein), of the United States and its NATO allies. UNTEER SERVICE IN EASTERN (3) SUPREMACY OF THE NORTH ATLANTIC KENTUCKY SECTION 1. SENATE ADVICE AND CONSENT SUB- JECT TO DECLARATIONS AND CON- COUNCIL IN NATO DECISION-MAKING.—The Sen- ∑ Mr. McCONNELL. Mr. President, I DITIONS. ate understands that— rise today to recognize the anniversary The Senate advises and consents to the (A) as the North Atlantic Council is the supreme decision-making body of NATO, the of the Floyd County Emergency and ratification of the Protocols to the North At- lantic Treaty of 1949 on the Accession of Po- North Atlantic Council will not subject its Rescue Squad. Thirty years ago this decisions to review, challenge, or veto by week, this squad of volunteers was land, Hungary, and the Czech Republic (as defined in section 4(7)), which were opened any forum affiliated with NATO, including formed to help the people of Eastern for signature at Brussels on December 16, the Permanent Joint Council or the Euro-At- Kentucky in times of emergency and 1997, and signed on behalf of the United lantic Partnership Council, or by any non- disaster, and have been doing so ever States of America and other parties to the member state participating in any such since. North Atlantic Treaty, subject to the dec- forum; (B) the North Atlantic Council does not re- The Floyd County Emergency and larations of section 2 and the conditions of quire the consent of the United Nations, the Rescue Squad was founded in April, section 3. Organization for Security and Cooperation in 1958, as a result of a tragic accident in SEC. 2. DECLARATIONS. Europe, or any other international organiza- Prestonsburg, Kentucky, in which a The advice and consent of the Senate to tion in order to take any action pursuant to school bus plunged into the Big Sandy ratification of the Protocols to the North At- the North Atlantic Treaty in defense of the River, killing 26 students and the driv- lantic Treaty of 1949 on the Accession of Po- North Atlantic area, including the deploy- er. As a result of this tragedy, dozens land, Hungary, and the Czech Republic is ment, operation, or stationing of forces; and subject to the following declarations: of community members came together (C) the North Atlantic Council has direct (1) REAFFIRMATION THAT UNITED STATES responsibility for matters relating to the to form the Squad and the late Graham MEMBERSHIP IN NATO REMAINS A VITAL NA- Burchett became the first Captain, a basic policies of NATO, including develop- TIONAL SECURITY INTEREST OF THE UNITED ment of the Strategic Concept of NATO (as position he held for twenty years. STATES.—The Senate declares that— defined in section 3(1)(F)), and a consensus Since that time, over 300 community (A) for nearly 50 years the North Atlantic position of the North Atlantic Council will members have served on the Squad— Treaty Organization (NATO) has served as precede any negotiation between NATO and doctors and lawyers, coal miners and the preeminent organization to defend the non-NATO members that affects NATO’s re- factory workers—people from all walks territory of the countries in the North At- lationship with non-NATO members partici- of life have worked side-by-side in vol- lantic area against all external threats; pating in fora such as the Permanent Joint (B) through common action, the estab- Council. unteer service to their community. The lished democracies of North America and Eu- Squad operates without any public sup- (4) FULL MEMBERSHIP FOR NEW NATO MEM- rope that were joined in NATO persevered BERS.— port. The members are all volunteers and prevailed in the task of ensuring the sur- (A) IN GENERAL.—The Senate understands and all their equipment is paid for vival of democratic government in Europe that Poland, Hungary, and the Czech Repub- through private donations and grants. and North America throughout the Cold lic, in becoming NATO members, will have The Squad currently maintains a ros- War; all the rights, obligations, responsibilities, ter of thirty active members and doz- (C) NATO enhances the security of the and protections that are afforded to all other ens of reserve members. The Squad is United States by embedding European states NATO members. called on for auto extrication, water in a process of cooperative security planning, (B) POLITICAL COMMITMENTS.—The Senate by preventing the destabilizing renational- endorses the political commitments made by rescue and drowning recovery, lost or ization of European military policies, and by missing persons, and assistance to coal NATO to the Russian Federation in the ensuring an ongoing and direct leadership NATO-Russia Founding Act, which are not mine rescue teams. In the last month role for the United States in European secu- legally binding and do not in any way pre- alone, they have assisted in the evacu- rity affairs; clude any future decisions by the North At- ation of flood victims, recovered a (D) the responsibility and financial burden lantic Council to preserve the security of drowning victim and have assisted on of defending the democracies of Europe and NATO members. four auto accidents. North America can be more equitably shared (5) NATO-RUSSIA RELATIONSHIP. The Senate Despite the fact that the Squad must through an alliance in which specific obliga- finds that it is in the interest of the United labor mightily for every dollar they tions and force goals are met by its mem- States for NATO to develop a new and con- get, they have managed to secure bers; structive relationship with the Russian Fed- (E) the security and prosperity of the eration as the Russian Federation pursues ultra-modern equipment, and are United States is enhanced by NATO’s collec- democratization, market reforms, and peace- called frequently to assist in recovery tive defense against aggression that may ful relations with its neighbors. activities outside the county and even threaten the territory of NATO members; (6) THE IMPORTANCE OF EUROPEAN INTEGRA- outside the state. and TION.— S4218 CONGRESSIONAL RECORD — SENATE May 4, 1998 (A) Sense of the senate. It is the sense of (i) increased transparency in the national ate understands that the policy of the United the Senate that— defense planning and budgeting processes; States is that the core concepts contained in (i) the central purpose of NATO is to pro- (ii) ensuring democratic control of defense the 1991 Strategic Concept of NATO (as de- vide for the collective defense of its mem- forces; fined in subparagraph (F)), which adapted bers; (iii) maintaining the capability and readi- NATO’s strategy to the post-Cold War envi- (ii) the Organization for Security and Co- ness of Partnership for Peace countries to ronment, remain valid today, and that the operation in Europe is a fundamental insti- contribute to operations of the United Na- upcoming revision of that document will re- tution for the promotion of democracy, the tions and the Organization for Security and flect the following principles: rule of law, crisis prevention, and post-con- Cooperation in Europe; (i) FIRST AND FOREMOST A MILITARY ALLI- flict rehabilitation and, as such, is an essen- (iv) developing cooperative military rela- ANCE.—NATO is first and foremost a military tial forum for the discussion and resolution tions with NATO; and alliance. NATO’s success in securing peace is of political disputes among European mem- (v) enhancing the interoperability between predicated on its military strength and stra- bers, Canada, and the United States; and forces of the Partnership for Peace countries tegic unity. (iii) the European Union is an essential or- and forces of NATO members; (ii) PRINCIPAL FOUNDATION FOR DEFENSE OF ganization for the economic, political, and (C) NATO has undertaken new initiatives SECURITY INTERESTS OF NATO MEMBERS.— social integration of all qualified European to further strengthen the Partnership for NATO serves as the principal foundation for countries into an undivided Europe. Peace with the objectives of collectively defending the security interests (B) POLICY OF THE UNITED STATES. The pol- (i) strengthening the political consultation of its members against external threats. (iii) PROMOTION AND PROTECTION OF UNITED icy of the United States is— mechanism in the Partnership for Peace STATES VITAL NATIONAL SECURITY INTER- (i) to utilize fully the institutions of the through the Euro-Atlantic Partnership ESTS.—Strong United States leadership of Organization for Security and Cooperation in Council; NATO promotes and protects United States Europe to reach political solutions for dis- (ii) enhancing the operational role of the putes in Europe; and vital national security interests. Partnership for Peace; and (iv) UNITED STATES LEADERSHIP ROLE.—The (ii) to encourage actively the efforts of the (iii) providing for expanded involvement of European Union to expand its membership, United States maintains its leadership role members of the Partnership for Peace in de- in NATO through the stationing of United which will help to stabilize the democracies cision-making and planning within the Part- of Central and Eastern Europe. States combat forces in Europe, providing nership; military commanders for key NATO com- (7) FUTURE CONSIDERATION OF CANDIDATES (D) enhancement of the Partnership for FOR MEMBERSHIP IN NATO. mands, and through the presence of United Peace promotes the security of the United States nuclear forces on the territory of Eu- (A) SENATE FINDINGS. The Senate finds States by strengthening stability and secu- that— rope. rity throughout the North Atlantic area; (v) COMMON THREATS.—NATO members will (i) Article 10 of the North Atlantic Treaty (E) the accession to the North Atlantic provides that NATO members by unanimous face common threats to their security in the Treaty of new NATO members in the future post-Cold War environment, including— agreement may invite the accession to the must not undermine the ability of NATO and (I) the potential for the re-emergence of a North Atlantic Treaty of any other Euro- the Partnership for Peace countries to hegemonic power confronting Europe; pean state in a position to further the prin- achieve the objectives of the Partnership for (II) rogue states and non-state actors pos- ciples of the North Atlantic Treaty and to Peace; and sessing nuclear, biological, or chemical contribute to the security of the North At- (F) membership in the Partnership for weapons and the means to deliver these lantic area; Peace does not in any way prejudice applica- weapons by ballistic or cruise missiles, or (ii) in its Madrid summit declaration of tion or consideration for accession to the other unconventional delivery means; July 8, 1997, NATO pledged to ‘‘maintain an North Atlantic Treaty. (III) threats of a wider nature, including open door to the admission of additional Al- (9) REGARDING PAYMENTS OWED BY EURO- the disruption of the flow of vital resources, liance members in the future’’ if those coun- PEAN COUNTRIES TO VICTIMS OF THE NAZIS.— and other possible transnational threats; and tries satisfy the requirements of Article 10 of (A) DECLARATION.—The Senate declares (IV) conflict in the North Atlantic area the North Atlantic Treaty; that, in future meetings and correspondence stemming from ethnic and religious enmity, (iii) other than Poland, Hungary, and the with European governments, the Secretary the revival of historic disputes, or the ac- Czech Republic, the United States has not of State should tions of undemocratic leaders. consented to invite, or committed to invite, (vi) CORE MISSION OF NATO.—Defense plan- (i) raise the issue of insurance benefits any other country to join NATO in the fu- ning will affirm a commitment by NATO owed to victims of the Nazis (and their bene- ture; and members to a credible capability for collec- ficiaries and heirs) by these countries as a (iv) the United States will not support the tive self-defense, which remains the core result of the actions taken by any com- accession to the North Atlantic Treaty of, or mission of NATO. All NATO members will munist predecessor regimes in nationalizing the invitation to begin accession talks with, contribute to this core mission. foreign insurance companies and confis- any European state (other than Poland, Hun- (vii) CAPACITY TO RESPOND TO COMMON cating their assets in the aftermath of World gary, or the Czech Republic), unless— THREATS.—NATO’s continued success re- War II; (I) the President consults with the Senate quires a credible military capability to deter (ii) seek to secure a commitment from the consistent with Article II, section 2, clause 2 and respond to common threats. Building on governments of these countries to provide a of the Constitution of the United States (reits core capabilities for collective self-de- full accounting of the total value of insur- lating to the advice and consent of the Sen- fense of its members, NATO will ensure that ance company assets that were seized by any ate to the making of treaties); and its military force structure, defense plan- communist predecessors and to share all doc- (II) the prospective NATO member can ful- ning, command structures, and force goals uments relevant to unpaid insurance claims fill the obligations and responsibilities of promote NATO’s capacity to project power that are in their possession; and membership, and its inclusion would serve when the security of a NATO member is (iii) seek to secure a commitment from the the overall political and strategic interests threatened, and provide a basis for ad hoc governments of these countries to contribute of NATO and the United States. coalitions of willing partners among NATO to the payment of these unpaid insurance (B) REQUIREMENT FOR CONSENSUS AND RATI- members. This will require that NATO mem- claims in an amount that reflects the FICATION.—The Senate declares that no ac- bers possess national military capabilities to present value of the assets seized by any tion or agreement other than a consensus de- rapidly deploy forces over long distances, communist governments (and for which no cision by the full membership of NATO, ap- sustain operations for extended periods of compensation had previously been paid). proved by the national procedures of each time, and operate jointly with the United (B) DEFINITION.—As used in this paragraph, NATO member, including, in the case of the States in high intensity conflicts. United States, the requirements of Article the term ‘‘victims of the Nazis’’ means per- (viii) INTEGRATED MILITARY STRUCTURE.— II, section 2, clause 2 of the Constitution of sons persecuted during the period beginning The Integrated Military Structure of NATO the United States (relating to the advice and on March 23, 1933 and ending on May 8, 1945, underpins NATO’s effectiveness as a military consent of the Senate to the making of trea- by, under the direction of, on behalf of, or alliance by embedding NATO members in a ties), will constitute a security commitment under authority granted by the Nazi govern- process of cooperative defense planning and pursuant to the North Atlantic Treaty. ment of Germany or any country allied with ensuring unity of command. (8) PARTNERSHIP FOR PEACE.—The Senate that government. (ix) NUCLEAR POSTURE.—Nuclear weapons declares that— SEC. 3. CONDITIONS. will continue to make an essential contribu- (A) the Partnership for Peace between The advice and consent of the Senate to tion to deterring aggression, especially ag- NATO members and the Partnership for the ratification of the Protocols to the North gression by potential adversaries armed with Peace countries is an important and endur- Atlantic Treaty of 1949 on the Accession of nuclear, biological, or chemical weapons. A ing complement to NATO in maintaining and Poland, Hungary, and the Czech Republic is credible NATO nuclear deterrent posture re- enhancing regional security; subject to the following conditions, which quires the stationing of United States nu- (B) the Partnership for Peace serves a crit- shall be binding upon the President: clear forces in Europe, which provides an es- ical role in promoting common objectives of (1) THE STRATEGIC CONCEPT OF NATO.— sential political and military link between NATO members and the Partnership for (A) POLICY OF THE UNITED STATES TOWARD Europe and North America, and the wide- Peace countries, including THE STRATEGIC CONCEPT OF NATO.—The Sen- spread participation of NATO members in May 4, 1998 CONGRESSIONAL RECORD — SENATE S4219

nuclear roles. In addition, the NATO deter- ings to the appropriate congressional com- BUDGETS.—It is the sense of the Senate that, rent posture will continue to ensure uncer- mittees on proposed changes to the Strategic beginning with fiscal year 1999, and for each tainty in the mind of any potential aggressor Concept of NATO, including— fiscal year thereafter through the fiscal year about the nature of the response by NATO (i) an explanation of the manner in which 2003, the President should— members to military aggression. specific revisions to the Strategic Concept of (I) propose to NATO a limitation on the (x) BURDENSHARING.—The responsibility NATO will serve United States national se- United States percentage share of the com- and financial burden of defending the democ- curity interests and affect United States mon-funded budgets of NATO for that fiscal racies of Europe will be more equitably military requirements both within and out- year equal to the United States percentage shared in a manner in which specific obliga- side the North Atlantic area; share of those budgets for the preceding fis- tions and force goals are met by NATO mem- (ii) a timetable for implementation of new cal year, minus one percent; and bers. force goals by all NATO members under any (II) not later than 60 days after the date of (B) THE FUNDAMENTAL IMPORTANCE OF COL- revised Strategic Concept of NATO; the United States proposal under subclause LECTIVE DEFENSE.—The Senate declares (iii) a description of any negotiations re- (I), submit a report to Congress describing that— garding the revision of the nuclear weapons the action, if any, taken by NATO to carry (i) in order for NATO to serve the security policy of NATO; and out the United States proposal. interests of the United States, the core pur- (iv) a description of any proposal to condi- (ii) ANNUAL LIMITATION ON UNITED STATES pose of NATO must continue to be the collection decisions of the North Atlantic Council EXPENDITURES FOR NATO.—Unless specifically tive defense of the territory of all NATO upon the approval of the United Nations, the authorized by law, the total amount of ex- members; and Organization for Security and Cooperation in penditures by the United States in any fiscal (ii) NATO may also, pursuant to Article 4 Europe, or any NATO-affiliated forum. year beginning on or after October 1, 1998, for of the North Atlantic Treaty, on a case-by- (F) DEFINITION.—For the purposes of this payments to the common-funded budgets of case basis, engage in other missions when paragraph, the term ‘‘Strategic Concept of NATO shall not exceed the total of all such there is a consensus among its members that NATO’’ means the document agreed to by payments made by the United States in fis- there is a threat to the security and inter- the Heads of State and Government partici- cal year 1998. ests of NATO members. pating in the meeting of the North Atlantic (iii) DEFINITIONS.—In this subparagraph: (C) DEFENSE PLANNING, COMMAND STRUC- Council in Rome on November 7–8, 1991, or (I) COMMON-FUNDED BUDGETS OF NATO.—The TURES, AND FORCE GOALS.—The Senate de- any subsequent document agreed to by the term ‘‘common-funded budgets of NATO’’ clares that NATO must continue to pursue North Atlantic Council that would serve a means— (aa) the Military Budget, the Security In- defense planning, command structures, and similar purpose. vestment Program, and the Civil Budget of force goals to meet the requirements of Arti- (2) COSTS, BENEFITS, BURDENSHARING, AND NATO; and cle 5 of the North Atlantic Treaty as well as MILITARY IMPLICATIONS OF THE ENLARGEMENT (bb) any successor or additional account or the requirements of other missions agreed OF NATO.— (A) PRESIDENTIAL CERTIFICATION.—Prior to program of NATO. upon by NATO members, but must do so in a (II) UNITED STATES PERCENTAGE SHARE OF manner that first and foremost ensures the deposit of the United States instrument of ratification, the President shall certify to THE COMMON-FUNDED BUDGETS OF NATO.—The under the North Atlantic Treaty the ability term ‘‘United States percentage share of the of NATO to deter and counter any signifi- the Senate that— (i) the inclusion of Poland, Hungary, and common-funded budgets of NATO’’ means cant military threat to the territory of any the Czech Republic in NATO will not have the percentage that the total of all United NATO member. the effect of increasing the overall percent- States payments during a fiscal year to the (D) REPORT.—Not later than 180 days after age share of the United States in the com- common-funded budgets of NATO represents the date of adoption of this resolution, the to the total amounts payable by all NATO President shall submit to the President of mon budgets of NATO; (ii) the United States is under no commit- members to those budgets during that fiscal the Senate and the Speaker of the House of ment to subsidize the national expenses nec- year. Representatives a report on the Strategic essary for Poland, Hungary, or the Czech Re- (D) REQUIREMENT OF PAYMENT OUT OF Concept of NATO. The report shall be sub- public to meet its NATO commitments; and FUNDS SPECIFICALLY AUTHORIZED.—No cost in- mitted in both classified and unclassified (iii) the inclusion of Poland, Hungary, and curred by NATO, other than through the form and shall include— the Czech Republic in NATO does not detract common-funded budgets of NATO, in connec- (i) an explanation of the manner in which from the ability of the United States to meet tion with the admission to membership, or the Strategic Concept of NATO affects or to fund its military requirements outside participation, in NATO of any country that United States military requirements both the North Atlantic area. was not a member of NATO as of March 1, within and outside the North Atlantic area, (B) ANNUAL REPORTS.—Not later than April 1998, may be paid out of funds available to including the broader strategic rationale of 1 of each year during the five-year period fol- any department, agency, or other entity of NATO; lowing the date of entry into force of the the United States unless the funds are spe- (ii) an analysis of all potential threats to Protocols to the North Atlantic Treaty of cifically authorized by law for that purpose. the North Atlantic area (meaning the entire 1949 on the Accession of Poland, Hungary, (E) REPORTS ON FUTURE ENLARGEMENT OF territory of all NATO members) up to the and the Czech Republic, the President shall NATO.— year 2010, including the consideration of a re- submit to the appropriate congressional (i) REPORTS PRIOR TO COMMENCEMENT OF AC- constituted conventional threat to Europe, committees a report, which may be submit- CESSION TALKS.—Prior to any decision by the emerging capabilities of non-NATO countries ted in an unclassified and classified form, North Atlantic Council to invite any country to use nuclear, biological, or chemical weap- and which shall contain the following infor- (other than Poland, Hungary, or the Czech ons affecting the North Atlantic area, and mation: Republic) to begin accession talks with the emerging ballistic missile and cruise (i) The amount contributed to the common NATO, the President shall submit to the ap- missile threat affecting the North Atlantic budgets of NATO by each NATO member dur- propriate congressional committees a de- area; ing the preceding calendar year. tailed report regarding each country being (iii) the identification of alternative sys- (ii) The proportional share assigned to, and actively considered for NATO membership, tem architectures for the deployment of a paid by, each NATO member under NATO’s including— NATO missile defense for the entire territory cost-sharing arrangements. (I) an evaluation of how that country will of all NATO members that would be capable (iii) The national defense budget of each further the principles of the North Atlantic of countering the threat posed by emerging NATO member, the steps taken by each Treaty and contribute to the security of the ballistic and cruise missile systems in coun- NATO member to meet NATO force goals, North Atlantic area; tries other than declared nuclear powers, as and the adequacy of the national defense (II) an evaluation of the eligibility of that well as in countries that are existing nuclear budget of each NATO member in meeting country for membership based on the prin- powers, together with timetables for devel- common defense and security obligations. ciples and criteria identified by NATO and opment and an estimate of costs; (iv) Any costs incurred by the United the United States, including the military (iv) a detailed assessment of the progress States in connection with the membership of readiness of that country; of all NATO members, on a country-by-coun- Poland, Hungary, or the Czech Republic in (III) an explanation of how an invitation to try basis, toward meeting current force NATO, including the deployment of United that country would affect the national secu- goals; and States military personnel, the provision of rity interests of the United States; (v) a general description of the overall ap- any defense article or defense service, the (IV) an up-to-date United States Govern- proach to updating the Strategic Concept of funding of any training activity, or the ment analysis of the common-funded mili- NATO. modification or construction of any military tary requirements and costs associated with (E) BRIEFINGS ON REVISIONS TO THE STRATE- facility. integrating that country into NATO, and an GIC CONCEPT.—Not less than twice in the 300- (v) The status of discussions concerning analysis of the shares of those costs to be day period following the date of adoption of NATO membership for countries participat- borne by NATO members, including the this resolution, each at an agreed time to ing in the Partnership for Peace. United States; and precede each Ministerial meeting of the (C) UNITED STATES FUTURE PAYMENTS TO (V) a preliminary analysis of the implica- North Atlantic Council, the Senate expects THE COMMON-FUNDED BUDGETS OF NATO.— tions for the United States defense budget the appropriate officials of the executive (i) SENSE OF THE SENATE REGARDING UNITED and other United States budgets of integrat- branch of Government to offer detailed brief- STATES SHARE OF NATO’S COMMON-FUNDED ing that country into NATO. S4220 CONGRESSIONAL RECORD — SENATE May 4, 1998

(ii) UPDATED REPORTS PRIOR TO SIGNING (B) REPORTS REGARDING PROTECTION OF IN- SEC. 4. DEFINITIONS. PROTOCOLS OF ACCESSION.—Prior to the sign- TELLIGENCE SOURCES AND METHODS.—Not In this resolution: ing of any protocol to the North Atlantic later than January 1, 1999, and again not (1) APPROPRIATE CONGRESSIONAL COMMIT- Treaty on the accession of any country, the later than the date that is 90 days after the TEES.—The term ‘‘appropriate congressional President shall submit to the appropriate date of accession to the North Atlantic Trea- committees’’ means the Committee on For- congressional committees a report, in classi- ty by Poland, Hungary, and the Czech Repub- eign Relations, the Committee on Armed fied and unclassified forms— lic, the Director of Central Intelligence shall Services, and the Committee on Appropria- (I) updating the information contained in submit a detailed report to the congressional tions of the Senate and the Committee on the report required under clause (i) with re- intelligence committees— International Relations, the Committee on spect to that country; and (i) identifying the latest procedures and re- National Security, and the Committee on (II) including an analysis of that country’s quirements established by Poland, Hungary, Appropriations of the House of Representa- ability to meet the full range of the financial and the Czech Republic for the protection of tives.— burdens of NATO membership, and the likely intelligence sources and methods; and (2) NATO.—The term ‘‘NATO’’ means the impact upon the military effectiveness of (ii) including an assessment of how the North Atlantic Treaty Organization. NATO of the country invited for accession overall procedures and requirements of Po- (3) NATO MEMBERS.—The term ‘‘NATO talks, if the country were to be admitted to land, Hungary, and the Czech Republic for members’’ means all countries that are par- NATO. the protection of intelligence sources and ties to the North Atlantic Treaty. (F) REVIEW AND REPORTS BY THE GENERAL methods compare with the procedures and (4) NATO-RUSSIA FOUNDING ACT.—The term ACCOUNTING OFFICE.—The Comptroller Gen- requirements of other NATO members for ‘‘NATO-Russia Founding Act’’ means the eral of the United States shall conduct a re- the protection of intelligence sources and document entitled the ‘‘Founding Act on view and assessment of the evaluations and methods. Mutual Relations, Cooperation and Security analyses contained in all reports submitted (C) DEFINITIONS.—In this paragraph: Between NATO and the Russian Federation’’, under subparagraph (E) and, not later than (i) CONGRESSIONAL INTELLIGENCE COMMIT- dated May 27, 1997. 90 days after the date of submission of any TEES.—The term ‘‘congressional intelligence (5) NORTH ATLANTIC AREA.—The term report under subparagraph (E)(ii), shall subcommittees’’ means the Select Committee ‘‘North Atlantic area’’ means the area cov- mit a report to the appropriate congressional on Intelligence of the Senate and the Perma- ered by Article 6 of the North Atlantic Trea- committees setting forth the assessment re- nent Select Committee on Intelligence of the ty, as applied by the North Atlantic Council. sulting from that review. House of Representatives. (6) NORTH ATLANTIC TREATY.—The term (3) THE NATO-RUSSIA FOUNDING ACT AND THE (ii) DATE OF ACCESSION TO THE NORTH AT- ‘‘North Atlantic Treaty’’ means the North PERMANENT JOINT COUNCIL.—Prior to the de- LANTIC TREATY BY POLAND, HUNGARY, AND Atlantic Treaty, signed at Washington on posit of the United States instrument of THE CZECH REPUBLIC.—The term ‘‘date of ac- April 4, 1949 (63 Stat. 2241; TIAS 1964), as ratification, the President shall certify to cession to the North Atlantic Treaty by Po- amended. the Senate the following: land, Hungary, and the Czech Republic’’ (7) PROTOCOLS TO THE NORTH ATLANTIC (A) IN GENERAL.—The NATO-Russia Found- means the latest of the following dates: TREATY OF 1949 ON THE ACCESSION OF POLAND, ing Act and the Permanent Joint Council do (I) The date on which Poland accedes to HUNGARY, AND THE CZECH REPUBLIC. The term not provide the Russian Federation with a the North Atlantic Treaty. ‘‘Protocols to the North Atlantic Treaty of veto over NATO policy. (II) The date on which Hungary accedes to 1949 on the Accession of Poland, Hungary, (B) NATO DECISION-MAKING.—The NATO- the North Atlantic Treaty, and the Czech Republic’’ refers to the follow- Russia Founding Act and the Permanent (III) The date on which the Czech Republic ing protocols transmitted by the President Joint Council do not provide the Russian accedes to the North Atlantic Treaty. to the Senate on February 11, 1998 (Treaty Federation any role in the North Atlantic (5) REQUIREMENT OF FULL COOPERATION WITH Document No. 105–36): Council or NATO decision-making, includ- UNITED STATES EFFORTS TO OBTAIN THE FULL- (A) The Protocol to the North Atlantic ing— EST POSSIBLE ACCOUNTING OF CAPTURED AND Treaty on the Accession of the Republic of (i) any decision NATO makes on an inter- MISSING UNITED STATES PERSONNEL FROM PAST Poland, signed at Brussels on December 16, nal matter; or MILITARY CONFLICTS OR COLD WAR INCI- 1997.— (ii) the manner in which NATO organizes DENTS.—Prior to the deposit of the United (B) The Protocol to the North Atlantic itself, conducts its business, or plans, pre- States instrument of ratification, the Presi- Treaty on the Accession of the Republic of pares for, or conducts any mission that af- dent shall certify to Congress that each of Hungary, signed at Brussels on December 16, fects one or more of its members, such as the governments of Poland, Hungary, and 1997. collective defense, as stated under Article 5 the Czech Republic are fully cooperating (C) The Protocol to the North Atlantic of the North Atlantic Treaty. with United States efforts to obtain the full- Treaty on the Accession of the Czech Repub- (C) NATURE OF DISCUSSIONS IN THE PERMA- est possible accounting of captured and miss- lic, signed at Brussels on December 16, NENT JOINT COUNCIL.—In discussions in the ing United States personnel from past mili- 1997.— Permanent Joint Council— tary conflicts or Cold War incidents, to in- (8) UNITED STATES INSTRUMENT OF RATIFICA- (i) the Permanent Joint Council will not be clude— TION.—The term ‘‘United States instrument a forum in which NATO’s basic strategy, (A) facilitating full access to relevant ar- of ratification’’ means the instrument of doctrine, or readiness is negotiated with the chival material; and ratification of the United States of the Pro- Russian Federation, and NATO will not use (B) identifying individuals who may pos- tocols to the North Atlantic Treaty of 1949 the Permanent Joint Council as a substitute sess knowledge relative to captured and on the Accession of Poland, Hungary, and for formal arms control negotiations such as missing United States personnel, and encour- the Czech Republic.— the adaptation of the Treaty on Conven- aging such individuals to speak with United f tional Armed Forces in Europe, done at States Government officials. Paris on November 19, 1990; (6) TREATY INTERPRETATION.— REMOVAL OF INJUNCTION OF (ii) any discussion with the Russian Fed- (A) PRINCIPLES OF TREATY INTERPRETA- SECRECY eration of NATO doctrine will be for explana- TION.—The Senate affirms the applicability Ms. COLLINS. Mr. President, as in tory, not decision-making purposes; to all treaties of the constitutionally-based (iii) any explanation described in clause principles of treaty interpretation set forth executive session, I ask unanimous (ii) will not extend to a level of detail that in condition (1) in the resolution of ratifica- consent that the Injunction of Secrecy could in any way compromise the effective- tion of the INF Treaty, approved by the Sen- be removed from the following conven- ness of NATO’s military forces, and any such ate on May 27, 1988. tion transmitted to the Senate on May explanation will be offered only after NATO (B) CONSTRUCTION OF SENATE RESOLUTION OF 1, 1998, by the President of the United has first set its policies on issues affecting RATIFICATION.—Nothing in condition (1) of States: Convention on Combating Brib- internal matters; the resolution of ratification of the INF ery of Foreign Public Officials in Inter- (iv) NATO will not discuss any agenda item Treaty, approved by the Senate on May 27, national Business Transactions (Treaty with the Russian Federation prior to agree- 1988, shall be construed as authorizing the ing to a NATO position within the North At- President to obtain legislative approval for Document No. 105–43). I further ask lantic Council on that agenda item; and modifications or amendments to treaties that the convention be considered as (v) the Permanent Joint Council will not through majority approval of both Houses of having been read the first time; that it be used to make any decision on NATO doc- Congress. be referred with accompanying papers trine, strategy, or readiness. (C) DEFINITION.—As used in this paragraph, to the Committee on Foreign Relations (4) REPORTS ON INTELLIGENCE MATTERS.— the term ‘‘INF Treaty’’ refers to the Treaty and ordered to be printed; and that the (A) PROGRESS REPORT.—Not later than Jan- Between the United States of America and President’s message be printed in the uary 1, 1999, the President shall submit a re- the Union of Soviet Socialist Republics on port to the congressional intelligence com- the Elimination of Their Intermediate- RECORD. mittees on the progress of Poland, Hungary, Range and Shorter Range Missiles, together The PRESIDING OFFICER. Without and the Czech Republic in satisfying the se- with the related memorandum of under- objection, it is so ordered. curity requirements for membership in standing and protocols, done at Washington The message of the President is as NATO. on December 8, 1987. follows: May 4, 1998 CONGRESSIONAL RECORD — SENATE S4221 To the Senate of the United States: While the Convention is largely con- ness, the Senate resume consideration With a view to receiving the advice sistent with existing U.S. law, my Ad- of H.R. 2676, the IRS reform bill, with and consent of the Senate to ratifica- ministration will propose certain debate only in order prior to the policy tion, I transmit herewith the Conven- amendments to the FCPA to bring it luncheon recess, except for the offering tion on Combating Bribery of Foreign into conformity with and to implement of a managers’ amendment. Public Officials in International Busi- the Convention. Legislation will be The PRESIDING OFFICER. Without ness Transactions (the ‘‘Convention’’), submitted separately to the Congress. objection, it is so ordered. adopted at Paris on November 21, 1997, I recommend that the Senate give Ms. COLLINS. Mr. President, I fur- by a conference held under the auspices early and favorable consideration to ther ask unanimous consent that the of the Organization for Economic Co- the Convention, and that it give its ad- Senate stand in recess from the hours operation and Development (OECD). vice and consent to ratification. of 12:30 to 2:15 p.m. for the weekly pol- The Convention was signed in Paris on WILLIAM J. CLINTON. icy conferences to meet tomorrow. December 17, 1997, by the United States THE WHITE HOUSE, May 1, 1998. The PRESIDING OFFICER. Without and 32 other nations. f objection, it is so ordered. I transmit also, for the information of the Senate, interpretive Com- AUTHORITY TO CORRECT TREATY f mentaries on the Convention, adopted DOCUMENT NO. 105–36 by the negotiating conference in con- Ms. COLLINS. Mr. President, as in PROGRAM junction with the Convention, that are executive session, I ask unanimous Ms. COLLINS. Mr. President, tomor- relevant to the Senate’s consideration consent that the Secretary of the Sen- row, following the morning business of the Convention. I transmit also, for ate be authorized to make a correction period, the Senate will resume consid- the information of the Senate, the rein section 3.2(D) of the Resolution of eration of the IRS reform bill. It is port of the Department of State with Ratification of Executive Treaty Docu- hoped that the managers’ amendment respect to the Convention. ment No. 105–36 by inserting the word will be offered during Tuesday’s ses- Since the enactment in 1977 of the ‘‘specifically’’ before ‘‘authorized.’’ Foreign Corrupt Practices Act (FCPA), The PRESIDING OFFICER. Without sion. In addition, Members who desire the United States has been alone in objection, it is so ordered. to debate this legislation are encouraged to do so tomorrow so that the specifically criminalizing the business- f related bribery of foreign public offi- Senate can complete action on the IRS cials. United States corporations have ORDERS FOR TUESDAY, MAY 5, reform bill as early as possible this contended that this has put them at a 1998 week. significant disadvantage in competing Ms. COLLINS. Mr. President, I ask As a reminder, there will be a rollcall for international contracts with re- unanimous consent that when the Sen- vote tomorrow at 5:30 p.m. on passage spect to foreign competitors who are ate completes its business today, it of the workforce development legisla- not subject to such laws. Consistent stand in adjournment until 9:30 a.m. on tion, H.R. 1385. Any votes ordered with with the sense of the Congress, as ex- Tuesday, May 5. I further ask that on respect to the IRS reform bill will be pressed in the Omnibus Trade and Com- Tuesday, immediately following the stacked to occur following that 5:30 petitiveness Act of 1988, encouraging prayer, the routine requests through vote. negotiation of an agreement within the the morning hour be granted and that f OECD governing the type of behavior the Senate then begin a period of that is prohibited under the FCPA, the morning business until 10:30 a.m., with ADJOURNMENT UNTIL 9:30 A.M. United States has worked assiduously Senators permitted to speak for up to 5 TOMORROW within the OECD to persuade other minutes each with the following excep- countries to adopt similar legislation. tions: Senator HATCH, 30 minutes; Sen- Ms. COLLINS. Mr. President, if there Those efforts have resulted in this Con- ator DORGAN, 15 minutes; Senator is no further business to come before vention that once in force, will require CONRAD, 15 minutes; and Senator CRAIG the Senate, I now ask unanimous con- that the Parties enact laws to crim- for 10 minutes. sent that the Senate stand in adjourn- inalize the bribery of foreign public of- The PRESIDING OFFICER. Without ment under the previous order. ficials to obtain or retain business or objection, it is so ordered. There being no objection, the Senate, other improper advantage in the con- Ms. COLLINS. Mr. President, I fur- at 5:17 p.m., adjourned until Tuesday, duct of international business. ther ask that following morning busi- May 5, 1998, at 9:30 a.m. May 4, 1998 CONGRESSIONAL RECORD — Extensions of Remarks E745 EXTENSIONS OF REMARKS

THE NATIONAL ACADEMY OF and Public Policy, known as COSEPUP, published special user-friendly guides for SCIENCES A NATIONAL TREASURE under the leadership of Academy member parents. And just this month we released a Phil Griffiths. Their analysis of President new type of product for the Academy—a Clinton’s 1999 budget was released last week. book produced for teachers to help them HON. STEPHEN HORN This report focuses on the federal science teach evolution and the nature of science. OF CALIFORNIA and technology component of that budget, Some 15,000 free copies of this book have IN THE HOUSE OF REPRESENTATIVES an important concept that was developed in been sent to science teachers across the the 1995 report of an Academy committee country, and anyone in the world can also Monday, May 4, 1998 chaired by Frank Press. COSEPUP will pro- get it free from the Web. Academy member Mr. HORN. Mr. Speaker, one of America's vide this analysis every year, making sure Don Kennedy, who led this highly successful great treasures is the National Academy of that this crucial part of the federal invest- effort, is encouraging us to produce more documents along these lines. Please take a Sciences. Its distinguished members have ren- ment in science is closely watched. COSEPUP also is deeply engaged in a very close look at the evolution book, and then dered service to our government and the important study dealing with the implica- send us your ideas for further projects. American people since the early years of the tions that the Government Performance and As I left California in 1993 to assume my Civil War. President Lincoln saw the need for Results Act has for basic research. This new job at the Academy, the state was complet- the availability of talented scientists to help law, known as GPRA, requires all agencies ing its elaborate process of adopting new their nation whether they are recommending to set goals and to use performance measures science textbooks. This event, which occurs every eight years, culminates with a small various policies and to provide specific advice for management and budgeting. It is intended to encourage greater efficiency and list of state-approved science teaching mate- on complex scientific and technological prob- rials, determining what each school district lems both military and civilian. accountability in Federal programs. But if not implemented wisely, it could have a neg- can purchase with state funds. I watched this At its 135th Annual Meeting earlier this ative effect on the research enterprise—an process closely in San Francisco and was ap- week, Dr. Bruce Alberts, the President of the effect that we are working hard to avoid. palled to see what happened at the middle Academy reported on its work. I believe my For the remainder of this talk, I want to school level. Despite all of the expensive and colleagues and citizens generally will be inter- focus on just two issues: education, and time-consuming effort involved, San Fran- ested in the work of the Academy to encour- science in its international context. I start cisco’s middle schools were left with, as an with the education imperative. example, a sixth-grade human biology text- age a better scientific base by students book with mindless chapters devoid of any throughout our land. Half of Dr. Alberts' report At this session last year, I discussed the eighth-grade results in the Third Inter- context that could enable readers to under- expresses a major concern as to whether our national Mathematics and Science Study stand the content. What is tragic about this country will be able to educate the two million (TIMSS), where U.S. students ranked about is that many of San Francisco’s elementary new teachers which we will need in the next average in both science and math among 41 school students are benefiting from an excel- decade. Those new teachers must have a countries. This spring, the test results for lent hands-on science curriculum, composed solid base in mathematics and science if the our high school seniors showed that they had of modules similar to those produced by our National Science Resources Center, a part- United States is to remain the leader in done even worse in this international comparison. Many Americans didn’t believe it. nership between the Academy and the science and technology throughout the 21st Smithsonian Institution. When these stu- Century. Column after column ran on the opinion pages of the nation’s major newspapers, chal- dents leave the fifth grade, many say that The Academy has consistently built working lenging the results. How can the world’s un- science is their favorite subject. But in mid- relationships with other scientists and their disputed leader in science and technology dle school, textbooks such as the one I have just described make them lose all interest in academies throughout the world. That type of produce a population of young people with science. collaboration is essential if the countriesÐboth such poor science and mathematics skills? Outstanding teachers have told us repeat- large and smallÐare to meet the needs of Recall that this was a test in which students edly that the Science Standards are not their people and to provide the opportunities at the end of secondary school from 21 coun- enough. In order to teach effectively, teach- for a better life than is now possible in all too tries participated, and U.S. students out-per- ers need both curriculum materials that many places. formed only two countries. Could these poor match the Standards and high-quality train- results reflect either a flaw in the exam, or The report of Dr. Alberts should be reassur- ing in how to use them. The Academy has an unusual bimodal distribution in the U.S. been attempting to help by examining all of ing. His remarks entitled ``Moving from Analy- performance—with the top 10 percent of our sis to Action'' show that our brightest minds the science curricula commercially available students doing very well? Unfortunately, the and compiling analyses of the best available are devoted to dealing with the very real prob- answer is no. TIMSS also included a com- teaching materials. In 1995, the National lems that confront all humankind. I submit parison across countries of the very best stu- Science Resources Center published a book these wise remarks for the RECORD. dents in both advanced mathematics and titled, ‘‘Resources for Teaching Elementary physics. The results are shown on the next MOVING FROM ANALYSIS TO ACTION School Science,’’ and this month they pub- slide. Here, there was not a single nation lished a sequel, ‘‘Resources for Teaching Welcome to this 135th annual meeting of that we outperformed! Middle School Science.’’ Again, these two the Academy. We had a very exciting year in If we examine U.S. scores on our own na- documents are available on our Web site, at Washington in 1997. When I spoke last April, tional examinations, we find that the per- no cost. our role as an independent adviser to the na- formance of our students has been improving We also have begun a new project, orga- tion was threatened by a legal ruling that at a gradual pace since 1970. What the TIMSS nized by our Center for Science, Mathe- applied the Federal Advisory Committee Act results mean in fact is that, while we have matics, and Engineering Education. Here a to the operations of the Academy. Because of been improving our science and mathematics committee chaired by NAS member Maxine a great deal of very hard work by many peo- education slowly, many other nations of the Singer is bringing scientists and science ple, the crises that started in January 1997 world have been doing so at a faster rate. teachers together to produce an easy-to-use, ended in November, when Congress passed a Clearly, we can and must do better if we effective guide for school districts on how to bill that ensures our committees are kept are to remain a strong and productive nation select curriculum materials that match the free from government control. The tremen- throughout the next century. This Academy Science Standards. Through such devices, we dous support we received from the federal ad- has been trying to play a major role in hope to create a more sophisticated market, ministration and from so many members of science and math education for many years. which should in turn drive the production of Congress is deeply appreciated, and it is I would like to talk about some ways in higher-quality curricula. great testimony to the value they place on which we can be even more effective, given Unfortunately, multiple forces have cre- the objective advice that we provide to the that there is so much that needs to be done. ated within our education system a very sta- nation. As you know, through the National Re- ble equilibrium that resists change. The next As is appropriate, much of the advice we search Council, we led the development of slide shows a diagram of the entire system, provide focuses on the policies needed to sup- this nation’s first-ever set of National based on a figure that was published in one port our vigorous scientific research enter- Science Education Standards. We have made of our education reports. The system is in prise. Especially influential are the reports these voluntary Standards freely available gridlock, with most of the arrows pointed di- of our Committee on Science, Engineering, on the World Wide Web, and we also have rectly at the teachers. Over the next few

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. E746 CONGRESSIONAL RECORD — Extensions of Remarks May 4, 1998 minutes, I will explain what the Academy can transform themselves into effective or- the Teach for America Program, which re- hopes to be able to do in specific areas. ganizations that spread good instruction cruits talented undergraduates to spend two I start with state and national examina- throughout all of their schools. Our Center years teaching in some of our nation’s most tions. As indicated by the next slide, at on Science, Mathematics, and Engineering desperate schools. Remarkably, studies show present the tests support the vocabulary- Education is in the midst of a planning proc- that these teachers perform very well despite laden textbooks, and the textbooks support ess that focuses on school-district improve- an initial handicap stemming from their the tests. Students are taught to memorize ment. A small group—led by Ray Cortines, having received only six weeks of summer terms and regurgitate definitions, and per- previously San Francisco’s school super- ‘‘boot camp’’ training in how to teach. About form procedures without meaning in order to intendent and former chancellor of the New half of these individuals stay on after their do well on the exams. Having them learn for York City schools, and by Robert Waterman, two-year commitment, and many become meaning is not the main goal—and some- an expert in corporate management who co- leaders in their schools and school districts. times not a goal at all. Biology is my field, authored ‘‘In Search of Excellence’’—is at- In my opinion, we need many more path- and I can state with confidence that it is to- tempting to see what can be learned from ways that allow people who know science tally unrealistic to try to teach anyone all of studies of the 20 or so effective school dis- and mathematics well to readily enter the biology in one year. But such broad survey tricts in the United States and Canada that teaching profession. courses are exactly what is taught in most might serve as organizational models. My Let me now change topics completely, and high schools, and this type of teaching is personal belief is that we will not be able to move on to an equally important challenge: strongly reinforced by the national SAT II make major progress in U.S. education until the need for a greatly expanded role of U.S. biology subject test offered by the College we can successfully attack this issue head- scientists in the developing world. In the early 1990s, the Carnegie Commis- Board. The result is pressure on teachers to on. cover all of biology, with little opportunity I want to end this part of my discussion by sion on Science, Technology, and Govern- to develop concepts, or to give students any focusing on the education and recruitment of ment published a series of reports emphasiz- feeling for the nature of science. teachers. We know that far too few of them ing the need for a greatly increased role for Consider this quote from a popular 1997 have the understanding of science or math science and scientists in international af- study guide called ‘‘Cracking the SAT II: Bi- that they need to be able to teach these sub- fairs. Several of the members of the Acad- ology Subject Test’’: ‘‘We’ll show you that jects effectively in schools today. We also emy were leaders in that effort. As the Com- you don’t really have to understand any- know that the preparation for teaching pro- mission pointed out, there are tremendous thing. You just have to make a couple of vided in most education schools is inad- unexploited opportunities for the scientific simple associations, like these. Aerobic res- equate. Teachers are generally taught peda- community in the international arena. In a piration with: presence of oxygen more ATP gogy, divorced from any subject matter, world full of conflicting cultural values and produced. . . . Anaerobic respiration with: whereas to be a good math teacher, one competing needs, scientists everywhere absence of oxygen, less ATP produced. . . . needs focused preparation on how to teach share a powerful common culture that re- When we get through, you may not really mathematics. And to be a good science spects honesty, generosity, and ideas inde- understand much about the difference be- teacher, one needs focused preparation on pendent of their source, while rewarding tween aerobic and anaerobic respiration. But how to teach science. Moreover, we seem to merit. A major aim of this Academy is to you don’t have to, and we’ll prove it. . . . assume that a science or moth teacher will strengthen the ties between scientists and Whether or not you understand your answer- learn everything that he or she needs to their institutions around the world. Our goal ers, the scoring machines at the Educational know during their college years, but in re- is to create a scientific network that be- Testing Service will think you did. Their ality a teacher should be provided with an comes a central element in the interactions scoring machines don’t look for brilliant sci- experienced, expert mentor, along with con- between nations—increasing the level of ra- tionality in international discourse, while entists and they don’t look for understand- tinuous professional development. Doctors enhancing the influence of scientists every- ing. . . . Stick with us, and you’ll make the don’t graduate from medical school and where in the decision-making processes of scoring machines very happy.’’ practice medicine for 30 years with only The textbooks that teach to such tests, as their initial training. Similarly, with science their own governments. I am pleased to announce that we recently well as the tests themselves, stand in power- evolving at an ever-increasing rate, the pro- received a letter from the Department of ful contrast to our view of education as a fessional development of science teachers State in which Secretary Madeleine Albright valuable experience. Is it any wonder that an must become a non-ending process that is requests that we help the State Department extensive analysis of the attitudes toward deeply embedded in each school district. determine ‘‘the contributions that science, schooling of 20,000 middle-class American An enormous turnover of teachers will technology, and health can make to foreign adolescents shows that 40 percent of them occur during the next 10 years, when it is es- policy, and how the Department might bet- are completely disengaged from what is timated that some 2 million new teachers will be needed. What might the Academy do ter carry out its responsibilities to that going on in the classroom? These young end.’’ This effort has been encouraged by our Americans place no value on what is being to address the urgent national need for talented teachers? For education, I believe that Public Welfare Medalist, William Golden, taught, and they correspondingly pay no at- whose advice and help on this matter has tention to it. The blame for this has often the World Wide Web has an unexploited potential for creating dynamic change. This been crucial. been placed on a decline of parental and What are the main principles that should summer, the Center on Science, Mathe- community values. But when one looks at underlie our response to the State Depart- matics, and Engineering Education is plan- the science curriculum and the science tests ment? I would like to suggest consideration ning to try an experiment in which we bring that these students are subjected to, one has of the four ideas shown on the next slide, to wonder whether a great deal of the blame together the nation’s best teacher educators which I will briefly discuss in turn. does not instead belong the excruciatingly in middle school mathematics. We propose to Science Can Be A Powerful Force for Promot- boring material that they are expected to have these individuals attend a revolving ing Democracy. The vitality of a nation’s learn. ‘‘summer camp’’ where they demonstrate science and technology enterprise is increas- The Academy has been working to improve how they do what they do in teacher ingly becoming the main driver of economic the science achievement tests used for col- develpment—using their very best video- advancement around the world. Success re- lege admissions for more than six years. We tapes, teaching lessons, and student exer- quires a free exchange of ideas, as well as began by engaging both the College Board cises. The aim is to pool the best of these universal access to the world’s great store of and the Educational Testing Service in dis- materials to create high-quality knowledge. Historically, the growth of cussions about their science exams. More re- ‘‘shareware’’ for teacher preparation that science has helped to spread democracy, and cently, we have been working with the can be made freely accessible on the Web. We this is even more true today. American College Testing Program and with have not yet been able to reform teacher Many governments around the world exert the Association of American Universities to education through policy studies and books power over their citizens through the control encourage them to require different, more aimed at university facility and deans. But of information. But restricting access to meaningful measures of science achieve- perhaps we can drive reform from below by knowledge has proven to be self-destructive ment. I am pleased to say that we are now using such Web sites to make all students to the economic vitality of nations in the seeing some progress in all of these endeav- aware of the preparation they should expect modern world. The reason is a simple one: ors. from their colleges and universities, if they The world is too complex for a few leaders to Let’s turn now to the districts that govern are to become effective teachers. make wise decisions about all aspects of pub- our schools. What can be done about the fact If the Academy is going to have a profound lic policy. Thus, in a recent article in the that so many of our school systems are dys- impact on the quality of science education, Washington Post titled, ‘‘Beijing Spring: functional organizations that not only fail to we need to encourage all senior scientists Talk of Reform,’’ I was pleased to read that support teachers with the incentives, re- who discuss career options with young sci- the following public statement had just been sources, and training that they need, but entists and mathematicians to stress the im- published in an official Chinese weekly: place burdens upon teachers that make it al- portance of teaching as one career option. ‘‘Only in a democratic environment can peo- most impossible for them to do their job Simultaneously, we need to lower the bar- ple dare to voice new opinions and can their well? riers that presently prevent many talented intelligence, wisdom, and ability be fully We will never have quality education for young scientists from even considering brought into play. If we don’t encourage peo- most of our children unless school systems teaching as a career. Here I cite as a model ple to think freely and voice new opinions, May 4, 1998 CONGRESSIONAL RECORD — Extensions of Remarks E747 our society will actually be utterly stagnant, The communications revolution also is coming year, we will attempt to prepare an though it may seem tranquil.‘‘ driving a great transformation in education. international science road map to help our New Scientific and Technical Advances Are Already, the Web is being used as a direct State Department. My discussions with the Essential To Accommodate the World’s Rapidly teaching tool, providing virtual classrooms leaders of Academies from developing coun- Expanding Population. The rapid rise in the of interacting students and faculty. This tool tries convinces me that they will need to de- human population in the second half of this allows a course taught at one site to be velop their own road maps in the form of na- century has led to a crowded world—one that taken by students anywhere in the world. tional science policies. To quote Jose´ will require all of the ingenuity available Such technologies present an enormous op- Goldemberg, a distinguished scientific leader from science and technology to maintain portunity to spread the ability to use sci- from Brazil: ‘‘What my scientist colleagues stability in the face of increasing demands entific and technical knowledge every- and national leaders alike failed to under- on natural resources. Thus, for example, a where—an ability that will be absolutely es- stand was that development does not nec- potential disaster is looming in Africa. Tra- sential if we are to head for a more rational essarily coincide with the possession of nu- ditionally, farmers had enough land avail- and sustainable world in the 21st century. clear weapons or the capability to launch able to practice shifting cultivation, in Science Academies Can Be a Strong Force For satellites. Rather, it requires modern agri- which fields were left fallow for 10 or so Wide Policy-making. In preparing for the fu- culture, industrial systems, and education. years between cycles of plantings. But now, ture, we need to remember that we are only .. . This scenario means that we in develop- because of Africa’s dramatically increasing a tiny part of the world’s people. In 1998, ing countries should not expect to follow the population, there is not enough land to allow seven out of every eight children born will be research model that led to the scientific en- these practices. The result is a continuing growing up in a developing nation. As the terprise of the United States and elsewhere. process of soil degradation that reduces Carnegie Commission emphasized, we need Rather, we need to adapt and develop tech- yields, and will make it nearly impossible more effective mechanisms for providing sci- nologies appropriate to our local cir- for Africa to feed itself. The best estimates entific advice internationally—particularly cumstances, help strengthen education, and for the year 2010 predict that fully one-third in view of the overwhelming needs of this expand our roles as advisers in both govern- of the people in Sub-Saharan Africa will huge population. ment and industry.’’ have great difficulty obtaining food, versus In 1993, the scientific academies of the The Need to Learn From Action-Oriented Re- 12 percent of the people in South Asia and 5 world met for the first time in New Delhi in search and Experience. In his work for the percent in East Asia. order to address world population issues. The Carnegie Commission, Jimmy Carter made It has been argued that the ethnic conflicts report developed by this group of 60 Acad- the following observations about global de- that led to the massacres in Rwanda were in emies was presented a year later at the 1994 velopment: ‘‘Hundreds of well-intentioned large part triggered by conflicts over limited U.N. Conference at Cairo. Its success has now international aid agencies, with their own food resources. We can expect more of such led to a more formal collaboration between priorities and idiosyncrasies, seldom cooper- conflicts in the future, unless something dra- Academies, known as the InterAcademy ate or even communicate with each other. matic is done now. How might the tremen- Panel (IAP). The next slide shows the coun- Instead, they compete for publicity, funding, dous scientific resources of the developed tries thus far represented in this group. A and access to potential recipients. Overbur- world be brought to bear on increasing the common Web site for the entire group will dened leaders in developing countries, whose African food supply? At present, I see large soon be online, overseen by this Academy. As governments are often relatively disorga- numbers of talented, idealistic young people you will hear on Tuesday from Foreign Sec- nized, confront a cacophony of offers and de- in our universities who would welcome the retary Sherry Rowland, the IAP is working mands from donors.’’ challenge of working on such urgent sci- toward a major conference in Tokyo in May Replace a few words, and exactly the same entific problems. But the many opportuni- of 2000, focused on the challenges for science could be said about most of our nation’s past ties to use modern science in behalf of the and technology in the transition to a more attempts at education reform. developing world remain invisible to most sustainable world. My contacts with education projects in the scientists on our university campuses. As a Inspired by a successful joint study with United States and with international devel- result, a great potential resource for improv- the Mexican Academy that produced a report opment projects in agriculture have made ing the human condition is being ignored. on Mexico City’s water supply, we began a me aware of a common failing in these im- Electronic Communication Networks Make study in 1996 titled, ‘‘Sustaining Freshwater portant human endeavors. Many experiments Possible a New Kind of World Science. In look- Resources in the Middle East,’’ as a collabo- are carried out to try to improve these sys- ing to the future, it is important to recog- ration between our Academy, the Royal Sci- tems. A few are very successful, but many nize that we are only at the very beginning entific Society of Jordan, the Israel Acad- turn out to be failures. The natural inclina- of the communications revolution. For ex- emy of Sciences and Humanities, and the tion is to hide all of the failures. But as ample, by the year 2002, we are promised by Palestine Health Council. The final version every experimental scientists knows, several commercial partnerships that good of this report is now in review, and we expect progress is made from learning from what connectivity to the World Wide Web will be- it to be released this summer. I would also did not work, and then improving the proc- come available everywhere in the world, at a like to highlight a new energy study that we ess by incorporating this knowledge into a modest cost through satellite communica- initiated this year with China. Here, four general framework for moving forward. As tions. Moreover, at least some of these part- Academies, two from the United States and scientists, I would hope that we could lead nerships have promised to provide heavily two from China, are collaborating to produce the world toward more rational approaches subsidized connections for the developing a major, forward-looking study of the energy to improving both education and inter- world. options for our two countries. Recently, the national development efforts. Developing countries have traditionally Indian Science and Engineering Academies The Need to Rethink How We Measure had very poor access to the world’s store of have indicated an interest in carrying out a Progress. As I speak, the U.S. economy is scientific knowledge. With the electronic similar energy study with us. I believe that booming. But as I look around our plush publication of scientific journals, we now these Indian and Chinese collaborations are shopping malls, observing the rush of our have the potential to eliminate this lack of likely to lead us all toward a wiser use of citizens to consume more and more, I wonder access. The Academy has decided to lead the global energy resources. whether this is really progress. In thinking way with our flagship journal, the Proceed- My dream for the IAP is to have it become about how our nation can prove itself as the ings of the National Academy of Sciences, mak- recognized as a major provider of inter- world leader it purports to be, we might do ing it free on the Web for developing nations. national advice—for developing nations, the well to consider the words of Franklin Roo- We also are hoping to spread this practice World Bank, and the many similar agencies sevelt that are engraved on his new memo- widely among other scientific and technical that require expert scientific and technical rial, a short distance from this Academy: journals, since there is almost no cost in- assistance. Through an IAP mechanism, any ‘‘The test of our progress is not whether we volved in providing such free electronic ac- country or organization seeking advice could add more to the abundance of those who cess. immediately call on a small group of Acad- have much; it is whether we provide enough The next problem that scientists in devel- emies of its choosing to provide it with po- for those who have little.’’ oping countries will face is that of finding litically balanced input coupled with the ap- As many others have pointed out, every the information they need in the mass of propriate scientific and technical expertise. year the inequities of wealth are becoming published literature. In 1997, the U.S. govern- I would like to end my talk by briefly de- greater, both within our nation and around ment set an important precedent. We an- scribing three common challenges that we the world. At the national level, improving nounced that the National Library of Medi- face in reaching out boldly in the two main education for all Americans is the best way cine’s indexing of the complete biomedical areas I have emphasized—education and to reduce such inequities. Likewise, the literature would be made electronically international science. spread of scientific and technological infor- available for free around the world, at their The Importance of a Clear Vision. For both mation throughout the world, involving a cleverly named Web site, ‘‘PubMed.’’ A simi- education and international science, we need generous sharing of knowledge resources by lar ability to search the complete agricul- a strong consensus for where we are heading our nation’s scientists and engineers, can tural and environmental literature should and how we want to get there. I would argue improve the lives of those who are most in follow. The director of the PubMed effort, that we now have that vision for science edu- need around the globe. David Lipman, is presently investigating cation in the United States in the form of As I have tried to emphasize in this talk, what can be done to produce such a site. the Science Education Standards. In the these are not only challenges for science, E748 CONGRESSIONAL RECORD — Extensions of Remarks May 4, 1998 they are also major challenges for this Acad- the Port Huron Museum of Arts and History. In USA*Engage to deal with these countries hav- emy. Because of your stature and your the beginning, the Museum relied solely on ing a History of repressing their own people. achievements, the people in this room have volunteers to operate the institution. Even The list of these firms reads like a Who's Who the potential to change the world profoundly. I urge you to view this organization though the Museum now employs a small staff of big business. I know these companies are as a lever through which you can exert a of full-time, part-time, and seasonal help; more run by good and decent people who are prob- beneficial, lasting influence on both the na- than 24,000 volunteer hours were contributed ably not aware of the range of activities in tion and the world. in 1997. Throughout the past 30 years, many which the Wexler Group is intensely involved f people have worked together and dedicated on behalf of USA*Engage. I am sure that the their talents to create a lasting cultural and stockholders and customers are not aware of IN HONOR OF FATHER C. DAVID educational resource for the Port Huron area. them and would be shocked and angered if WILLIAMS Located inside the 1904 Carnegie Library, they were. the Port Huron Museum of Arts and History is Anne Wexler has assembled a daunting HON. CHARLES E. SCHUMER the home of many exhibits dedicated to local army for her assault on Washington that in- OF NEW YORK history, natural history, and art. The Museum cludes a former U.S. Trade Representative, IN THE HOUSE OF REPRESENTATIVES is committed to bringing a variety of events to former Members of Congress, a former close the public such as the Festival of International staffer of the President, the former law firm of Monday, May 4, 1998 Cultures and the Blue Water Native American the State Department official who heads up Mr. SCHUMER. Mr. Speaker, I would like to Pow Wow. In 1990, the Museum was proud to the committee charged with reviewing pro- take a few minutes today to recognize the dedicate the Huron Lightship, a National Land- posed sanctions, and others. And look at what work and accomplishments of Father C. David mark, as its first offsite facility. Not only is Port they have accomplished: Williams on the occasion of his 56th birthday. Huron Museum a valuable resource to the Instant access to Congress and the ear of Father Williams will soon be crowning a long Port Huron community, it is also recognized State Department officials charged with as- list of accomplishments with a D. Min in Pas- throughout the State of Michigan and the na- sessing human rights violations. toral Counseling. This distinction recognizes tion as center for research in folk arts, archae- ``Pro-trade'' studies from pricey and pres- the immense devotion to this faith which the ology, and Great Lakes marine lore. tigious think tanks. Father has displayed throughout his work and Throughout the past 30 years, the Museum The matching-up and contact of religious study. of Arts and History has contributed greatly to groups and leaders interested in human rights Father Williams has served as Rector of the the cultural diversity of Port Huron. The staff around the world by business representatives historic St. George's Episcopal Church in Bed- and volunteers of the Port Huron Museum thought to have special sway or influence. ford Stuyvesant since September 4, 1984. have worked hard to encourage an apprecia- ``Spin control.'' MoJo says USA*Engage Previously, Father Williams served as the tion and understanding for art and history in boasts that of 242 newspaper editorials, 180 Senior Chaplain of the House of Detention at our community. I would like to congratulate all were favorable, 36 neutral and only 26 were Riker's Island, New York City from 1979 to the people who have made the 30th Anniver- hostile. 1984. During that time, from 1982 to 1984, the sary of the Port Huron Museum of Arts and MoJo quotes human rights advocate Simon Father also served as Convener of the Black Sciences a reality. Billenness, talking about the important role Caucus of the Episcopal Diocese of New f economic sanctions played in ending South York. Father Williams is currently the Con- Africa's apartheid regime, ``If USA*Engage had vener of the Black Caucus of the Diocese of THE LOUDEST VOICE succeeded with these tactics during the apart- Long Island. heid years, Nelson Mandela might still be in Father Williams will receive his Doctorate HON. FRANK R. WOLF prison.'' I recognize that these companies can from the Graduate Theological Foundation in OF VIRGINIA hire whomever they choose, but there are Donaldson Indiana under the auspices of the IN THE HOUSE OF REPRESENTATIVES consequences. Look at what they are doing. Look at the Roman Catholic Archdiocese of Milwaukee, Monday, May 4, 1998 Oxford University in England, and the Diocese real issue. We are talking about countries of Canterbury, England. Father Williams has Mr. WOLF. Mr. Speaker, I want to begin by which are committing the very worst atrocities just recently finished his studies at Oxford Uni- talking for a moment about two groups that on their own people for simply believing in versity. aren't widely discussed here on the House God. In Sudan, starvation is the weapon of In his quest to serve his community, the Fa- floor. The first is Mother Jones and the second choice, spiced with high altitude bombing, ther organizes the growing Community Devel- is USA*Engage. Then I want to focus a little mass murder and selling their own people into opment Corporation out of St. George's bit on how things get done in this town and slavery. In Sudan, over the past decade, Church and has led a group of St. George's suggest that we, as stewards of government, about 1.1 million people have been killed or parishioners on a pilgrimage to Israel and must take care that we represent the Amer- allowed to starve. Egypt. ican people and not narrowly focused special In China, Catholic bishops and priests, The hard work and study of Father C. David interests. Protestant lay-ministers, Buddhist monks and Williams has left a lasting impression upon the Mother Jones or ``MoJo'' is a national maga- nuns as well as many Muslims are jailedÐfor parishioners of St. George's Episcopal zine of investigative journalism focusing on po- years and years. And their jails are not pat- Church. In recognition of these accomplish- litical reporting. It is named after and in the terned after those in this country. Starvation, ments, I ask my colleagues today to join me spirit of the legendary Mary Harris (Mother) torture, filth and darkness are the steady diet. in giving tribute to a man who has taken time Jones who was one of the most effective or- The fate of the prisoner is up to the whim of not just to study, but also to work at improving ganizers of her time. Before passing on at the the guard. Brutal working conditions and brutal the lives of those around him. ripe old age of 100, this spirited mother of four hours are the norm. Sometimes death is the f effectively led fights against child labor, and only friend they can hope for. on behalf of coal miners and other labor Tibet is in danger of losing its religion, its TRIBUTE TO THE PORT HURON groups during the early years of this century. culture, its language and even its identity. It MUSEUM OF ARTS AND SCIENCES Ken Silverstein wrote an article in the June has already lost thousands of Buddhist mon- 1998 issue of Mother Jones detailing the cre- asteries and too many monks and nuns. HON. DAVID E. BONIOR ation of USA*Engage. This group hired Wash- In Iraq, the Kurds have been used for target OF MICHIGAN ington lobbyist Anne Wexler to try and make practice and guinea pigs for toxic killing. MoJo IN THE HOUSE OF REPRESENTATIVES sure nothing gets in the way of promoting talks about the track record of Burma and Ni- international trade with countries around the geria. Monday, May 4, 1998 world whose governments are renown for bru- The victims of these outrages and more are Mr. BONIOR. Mr. Speaker, I am honored to tal, fear-based, repression of their own people. Anne Wexler's targets. When she and her have the opportunity to recognize the 30th an- The human rights records of these countries other well connected friends are successful in niversary of the Port Huron Museum of Arts are made more dismal by widespread torture, changing a legislative clause here and writing and History. The Port Huron community will terror, imprisonment, persecution and killing of a Dear Colleague there, when they urge an- celebrate this historic event on May 3, 1998. all who do not walk the line. other Member to sign on to a ``gutting amend- In 1968, the Port Huron community orga- According to MoJo, some of America's larg- ment,'' do they think about the Catholic bishop nized a volunteer effort to open the doors of est businesses have given their proxy to starting his third decade in a brutal Chinese May 4, 1998 CONGRESSIONAL RECORD — Extensions of Remarks E749 prison? Or the young boys on the slave block ongoing service to the community, and, par- Under the leadership of Dr. Joyne Bloom, in southern Sudan? ticularly for their recognition of outstanding citi- Administrator, and Mr. Guy Hughes, Activity I know these are harsh thoughts. But we are zens of our state for their contributions in Director, over four hundred boys and girls an- dealing with harsh dictators and regimes. many walks of life. With the support of numer- nually have benefited from their participation in What we do here matters. What we say and ous corporate sponsors, particularly event co- this program, which assists economically dis- the content of legislation we pass have real sponsors PSE&G and Dun & Broadstreet, City advantaged young people through summer consequences. In this case, innocent people, News is continuing its fine tradition of leader- educational and sports experiences on the clear on the other side of the world, pay an ship. I anxiously await to hear the names of College's campus. enormous price. the winners, all of whom I am sure will be very The curriculum consists of comprehensive Please think about this. Did these compa- well deserving of this great honor. team and individual lifetime sports instruction nies mean to give Anne Wexler this much f as well as aquatics, dance and martial arts. power? If you are a government official work- There is an academic component of the in- ing on these matters, do you think about what TO COMMEMORATE MONSIGNOR struction in drug and alcohol abuse preven- your actions mean to those who have no one JOHN A. BURNS ON HIS 50TH AN- tion, nutrition and personal health, career looking out for them? And if you are a Mem- NIVERSARY OF ORDINATION TO goals and opportunities, and job responsibil- ber of Congress, do you remember when THE PRIESTHOOD ities. Anne Wexler and company stops by, that no A healthy meal and snack are offered on a one is speaking for those on the other endÐ HON. CHARLES E. SCHUMER daily basis. Students learn the values of team- those in Sudan, in Iraq and in China? Just be- OF NEW YORK work, sharing group cohesion, respect and citi- cause Anne Wexler is the only voice, she IN THE HOUSE OF REPRESENTATIVES zenship. Awards are given for exemplary shouldn't be the loudest voice. achievement. Boys and girls ages ten through Monday, May 4, 1998 Perhaps the worse thing they have done sixteen learn to become contributing members with their access is to deliberately misstate the Mr. SCHUMER. Mr. Speaker, I ask my col- of their communities. moderate nature of the Wolf-Specter Freedom leagues to join me in sending warm wishes to In 1994 this program received a proclama- from Religious Persecution bill. At its root it Monsignor John A. Burns on the occasion of tion from the Bronx Borough President's office calls for withdrawal of non-humanitarian tax- his 50th Anniversary of Ordination to the and in 1994 and 1995 the Office of the Mayor payer subsidies to hardcore persecuting coun- priesthood. of the City of New York also presented the tries and gives the president total discretion to Monsignor Burns was ordained as a priest program with a proclamation. maintain the subsidies. on May 22, 1948. He celebrated his first Mass And, today, Mr. Speaker, it is an honor and In the end, however, Members will read the at Incorporation Parish, where he had pre- a privilege for me to ask my colleagues to join bill and understand its moderate character and viously served faithfully as an alter boy for me in recognizing Dr. Joyce Bloom, Mr. Guy people in the pews will hear that this biparti- over a decade. Msgr. Burn's first assignment Hughes and the National Youth Sports Pro- san effort gives the persecuted people of the was to St. Ephrem's in Bay Ridge. He spent gram at Bronx Community College. world a needed voice. 17 years there. After that the Monsignor spent f f four years at the Guardian Angel Parish and five years at St. Sebastion's in Woodside. SENSE OF CONGRESS ON 50TH AN- CITY NEWS 100 MOST Then in June 1974 Monsignor Burns re- NIVERSARY OF FOUNDING OF INFLUENTIAL AWARD ceived his first pastorate at Mary Queen of MODERN STATE OF ISRAEL Heaven. Over the next 23 years he helped HON. FRANK PALLONE, JR. create many social as well as spiritual groups, SPEECH OF OF NEW JERSEY including strong senior citizen groups, a sports HON. MICHAEL P. FORBES IN THE HOUSE OF REPRESENTATIVES program for children from grammer school OF NEW YORK through high school, a drama club, travel Monday, May 4, 1998 IN THE HOUSE OF REPRESENTATIVES group, and an arts and ceramic group. On Tuesday, April 28, 1998 Mr. PALLONE. Mr. Speaker, on Thursday, May 22, 1988 Msgr. Burns was elevated to May 7, 1998, the City News Publishing Com- Monsignor on the same day he celebrated his Mr. FORBES. Mr. Speaker, on May 14th, pany of Plainfield, NJ will present the City fortieth anniversary of priestly ordination. Over 1948 the modern state of Israel was pro- News 100 Most Influential. According to the the years of his priestly endeavors as pastor claimed, creating a homeland for the world- parameters of the 100 Most Influential, the of Mary Queen of Heaven Church have been wide Jewish diaspora from the ancient land of awards are presented for the purpose of ``hon- spent in unceasing efforts to imbue the com- Abraham and David. In the life of any country, oring individuals for their tireless efforts in fur- munity with a rich spiritual life, as well as a 50th anniversary is a notable milestone of thering the progress of black people in New beautify the church. historical achievement. In the case of Israel, a Jersey and rebuilding New Jersey's urban I would like to take this time to say that we half-century of life exemplifies nothing less communities.'' should not let this anniversary be a celebration than an enduring miracle. Mr. Speaker, City News is the largest Afri- of how many years Monsignor has served. The Jewish people, drawn to their country can American newspaper in New Jersey. It Rather it should be a celebration of the events by a sacred relationship and a divine promise, created the 100 Most Influential Award to and actions that the Monsignor has been a flourished in ancient times. Their history is a honor and celebrate the efforts of people and part of over the years. He has been an inspi- seemingly never-ending succession of mir- corporations that have supported efforts to in- rational figure to us all. acles, punctuated by the painful sting of suf- fuse economic, social, cultural, scientific, spir- Congratulations, Monsignor Burns, on the fering. A poor, enslaved people in the Land of itual and political vitality into New Jersey's occasion of your 50th anniversary of ordina- Egypt, the Israelites were led by God out of urban centers. Individuals are honored for tion to the priesthood. Egypt and into the desert and freedom. It was their work in the following categories; civil f there in the barren desert that their leader, rights; corporate community involvement; com- Moses, went up to Mt. Sinai and came down munity development; community service; edu- TRIBUTE TO THE NATIONAL wit the Torah, the word of God. In the midst cation; economic development; entertainment YOUTH SPORTS PROGRAM AT of their escape and suffering in the barren wil- and sports; health, science and technology; BRONX COMMUNITY COLLEGE derness, the Jewish people provided the world media, arts and culture; minority business en- with the Ten Commandments, the foundation terprise; politics, law and government; and reli- HON. JOSE´ E. SERRANO of all western morality. gion. Nominations for the 100 Most Influential OF NEW YORK Back in their own country, the Jewish peo- are received from former nominees and honor- IN THE HOUSE OF REPRESENTATIVES ple ultimately realized the greatness that the ees, the corporate community and from the Lord had promised. From King David, the poet readers of City News. While honorees are no- Monday, May 4, 1998 warrior, to Solomon, the model of wisdom, the tified of their awards, the names are kept con- Mr. SERRANO. Mr. Speaker, it is with joy Jews gave us heroes that stir our hearts and fidential until the night of the award cere- that I rise to pay tribute to the National Youth souls still. monies. Sports Program at Bronx Community College, Sadly, though, Jewish suffering was not at Mr. Speaker, it is an honor for me to salute which is dedicated to improving the lives of its end. IN 722 B.C.E. the Assyrians van- the City News Publishing Company for their young people in the Bronx. quished ten of their twelve tribes and sent the E750 CONGRESSIONAL RECORD — Extensions of Remarks May 4, 1998 Israelites into exile. Only two small groups re- the Holocaust, the most monstrous and inhu- However, to this day, many Arabs have not mained, fortified only by an undying faith in man evil that mankind has ever inflicted upon reconciled themselves to the permanent exist- God and a refusal to surrender to the fate itself. Six million Jews, one and a half million ence of Israel. Terrorists, rogue nations, and their enemies planned for them. They refused of them children, were systematically mur- bitter and implacable enemies continue to to give up hope. They refused to give up their dered. One-third of the Jewish people in the threaten Israel Yet at 50, Israel has never faith. world died during the Holocaust. been stronger. Even during these darkest hours of the Hol- In 586 B.C.E., this small remnant was cap- Perhaps, especially for the Jews, but finally ocaust, when all hope for the Jewish people tured. Their temple, built by Solomon, was de- for all decent people, the very existence of seemed to have disappeared, when their very stroyed. Forced into exile to Babylonia, again Israel remains a symbol. Israel's historic return future hung on the edge of despair, they per- the Jewish people thrived. Without a temple, as a nation offers hope and reassurance for they developed houses of worshipÐthe histor- severed. Then came Israel. The modern vision of a Jewish state, nour- people the world over who are struggling to ical beginning of synagogues. Unable to offer realize their own homeland. Israel's refusal to sacrifices, their religious leaders developed ished by an historic attachment to the land of Israel, was given expression by the Viennese surrender to enduring horrors provides a prayers as a way to reach the Almighty. For- model of courage for those in need of bidden to publicly worship or have priests, journalist Theodor Herzl, who organized the First Zionist Congress in 1897. When the Con- strength. Israel's commitment to democracy they developed a new way of thinking of reli- and religious freedom is a wonderful example gious leaders as teachers. This was how the gress was ended, Herzl noted in his diary that the Jewish state would come into being in 50 for those who believe that nations can be both title rabbi came to be. strong and decent. Miraculously returning from their exile, the years. It was exactly 50 years later that Israel was born. Israel will always possess a special place in Jewish people rebuilt their Temple in Jerusa- On May 14, 1948, David Ben Gurion an- the heart and mind of the United States. Israel lem. They wanted nothing more than simply to nounced the birth of the modern Jewish na- is, of course, a vital military ally, paramount in live under the grace and peace of God. tion. A day later, Arab armies attacked in full its support of the U.S. in the United Nations, But then in the year 70 of the Common Era, force, in an attempt to kill it before it had a and a dependable military source of informa- the Second Temple was destroyed by the Ro- chance to be born. After a bitter struggle for tion and support. Beyond these prudential rea- mans. During a final revolt against the Ro- its very life, against overwhelming odds and sons, however, Israel means much more to mans, at Masada, the sheared plain that trained armies, Israel prevailed. Their nation us. Sentinels of democracy, both nations were stands in the Judean desert, brave Jews sac- would not die. Masada would not fall again. founded in pursuit of the righteous cause of rificed their lives rather than endure as slaves. David Ben-Gurion, the first Prime Minister and liberty and human dignity. Citizens of both The Romans forced Jews to leave and even Menachem Begin, who would later become great nations have sacrificed their own lives in re-named the country ``Palestine'' named after Prime Minister, both contributed mightily to defense of freedom and in battle against tyr- the Phoenicians, the enemies of the Jews. Israel's birth. The number of heroes in Israel's anny. Neither America nor Israel is willing to The Jewish people had lost their country and birth is innumerable. accept the exploitation and oppression of inno- would not recover for nearly two millennia. Over the course of the past 50 years, Israel cent people by despotic rulers. By any realistic view of history, the has had to continually fight for its survival. In The truth is that Israel is not just another Israelites, few in number, robbed their home- both 1956 and 1967, Israel had to defend nation; it is part of our family. As one brother land and set apart by the cruelest of persecu- itself against the attacks of its antagonistic to another, we in the United States rejoice as tions, should have disappeared. neighbors. The Six Day War of `67 was par- we celebrate Israel's 50th birthday. Let us use But history is not able to reckon with the ticularly difficult for Israel. When the war was Jewish people. Instead of disappearing, the over, Israel gained control over all of Jerusa- this moment to vow to stand forever by Jews flourished under the Lord's protective lem including the Western Wall, the most sa- Israel's side. Let every enemy of Israel know eye, developing a vast treasure of religious lit- cred site in Jewish life because it is the last that the United States stands firmly beside erature and a way of life that stressed lifelong remaining part of the Second Temple. The Israel. We will never be silent when Israel is learning and a striving to lead a moral life. Jews had returned to their land and to their in danger. We will never let Israel's enemies Through inquisition and torture, through reli- holy city. In many ways, they returned to his- win. gious coercion and unendurable pain, the tory itself. We stand with Israel. We wait in excitement Jewish people held firm to their religious foun- Still, wars followed, though some Arab na- to witness the miraculous achievements that dations. Here, in our own century, occurred tions have come to see the need for peace. Israel will have in the next 50 years. May 4, 1998 CONGRESSIONAL RECORD — Extensions of Remarks E751 SENATE COMMITTEE MEETINGS Special on Aging invigorate, and protect the National To hold hearings on the status of the Park System. Title IV of Senate Resolution 4, Health Care Financing Administra- SD–366 agreed to by the Senate on February 4, tion’s development of its information 2:15 p.m. 1977, calls for establishment of a sys- campaign and recommendations on Commerce, Science, and Transportation tem for a computerized schedule of all how to make seniors better aware of Aviation Subcommittee meetings and hearings of Senate com- this and other health care resources. To hold hearings on S. 1089, to terminate mittees, subcommittees, joint commit- SD–562 the effectiveness of certain amend- tees, and committees of conference. 2:30 p.m. ments to the foreign repair station This title requires all such committees Energy and Natural Resources rules of the Federal Aviation Adminis- Forests and Public Land Management Sub- tration, focusing on a recent GAO re- to notify the Office of the Senate Daily committee port regarding aviation repair stations. Digest—designated by the Rules Com- To hold hearings on S. 94 and H.R. 449, SR–253 mittee—of the time, place, and purpose bills to provide for the orderly disposal 2:30 p.m. of the meetings, when scheduled, and of Federal lands in Nevada, and for the Foreign Relations any cancellations or changes in the acquisition of certain environmentally International Economic Policy, Export and meetings as they occur. sensitive lands in Nevada. Trade Promotion Subcommittee As an additional procedure along SD–366 To hold oversight hearings to examine with the computerization of this infor- activities of the Overseas Private In- MAY 7 vestment Corporation. mation, the Office of the Senate Daily SD–419 Digest will prepare this information for 9:00 a.m. Agriculture, Nutrition, and Forestry printing in the Extensions of Remarks To hold hearings to examine agricultural MAY 8 section of the CONGRESSIONAL RECORD trade policies. 9:30 a.m. on Monday and Wednesday of each SR–332 Joint Economic week. 9:30 a.m. To hold hearings to examine the employ- Meetings scheduled for Tuesday, May Appropriations ment-unemployment situation for 5, 1998, may be found in the Daily Di- VA, HUD, and Independent Agencies Sub- April. gest of today’s RECORD. committee 1334 Longworth Building To hold hearings on proposed budget es- MEETINGS SCHEDULED timates for fiscal year 1999 for the Na- MAY 11 tional Science Foundation, Office of 2:00 p.m. Science and Technology Policy, Coun- Appropriations MAY 6 cil on Environmental Quality, and Of- Defense Subcommittee 9:30 a.m. fice of Environmental Quality. To hold hearings on proposed budget es- Commerce, Science, and Transportation SD–138 timates for fiscal year 1999 for the De- Communications Subcommittee Appropriations partment of Defense. To hold oversight hearings on the Com- Treasury, Postal Service, and General Gov- SD–192 mon Carrier Bureau of the Federal ernment Subcommittee Communications Commission. To hold hearings on proposed budget es- MAY 12 SR–253 timates for fiscal year 1999 for the Ex- 9:30 a.m. 10:00 a.m. ecutive Office of the President. Indian Affairs Appropriations SD–192 To hold hearings on proposed legislation Defense Subcommittee Labor and Human Resources to revise the Indian Gaming Regu- To hold hearings on proposed budget es- To hold hearings on organ allocation and latory Act of 1988, focusing on lands timates for fiscal year 1999 for the De- the Organ Procurement Transplant into trust for purposes of gaming. partment of Defense, focusing on the Network (OPTN) regulation. Room to be announced U.S. Pacific Command. SD–430 2:00 p.m. SD–192 10:00 a.m. Foreign Relations Armed Services Armed Services Closed business meeting, To hold hearings on S. 1868, to express Closed business meeting, to mark up a to continue to mark up a proposed Na- United States foreign policy with re- proposed National Defense Authoriza- tional Defense Authorization Act for spect to, and to strengthen United tion Act for Fiscal Year 1999. Fiscal Year 1999. States advocacy on behalf of, individ- SR–222 SR–222 uals persecuted for their faith world- Judiciary Banking, Housing, and Urban Affairs wide, to authorize United States ac- To hold hearings to examine the con- Housing Opportunity and Community De- tions in response to religious persecu- sequences of raising tobacco prices. velopment Subcommittee tion worldwide, to establish an Ambas- SD–226 To hold hearings to examine issues relat- sador at Large on International Reli- Indian Affairs ing to the implementation of the De- gious Freedom within the Department To resume hearings to examine the sta- partment of Housing and Urban Devel- of State, a Commission on Inter- tus of tribal sovereign immunity and opment’s ‘‘HUD 2020’’ Management Re- national Religious Persecution, and a the role its plays to preserve the Fed- form Plan. Special Adviser on International Reli- eral Government’s protection of tribal SD–538 gious Freedom within the National Se- self-government, and its impact on In- Foreign Relations curity Council. dian economic development, commer- To hold hearings on the nominations of SD–419 cial dealings, and taxation, focusing on William Joseph Burns, of Pennsyl- S. 1691, to provide for for Indian legal vania, to be Ambassador to the MAY 13 reform. Hashemite Kingdom of Jordan, and SD–106 Ryan Clark Crocker, of Washington, to 9:30 a.m. Select on Intelligence be Ambassador to the Syrian Arab Re- Labor and Human Resources Closed business meeting, to mark up a public. Business meeting, to consider pending proposed National Intelligence Author- SD–419 calendar business. ization Act for Fiscal Year 1999. Judiciary SD–430 SH–219 Business meeting, to consider pending 10:00 a.m. 10:30 a.m. calendar business. Appropriations Foreign Relations SD–226 Defense Subcommittee Near Eastern and South Asian Affairs Sub- Labor and Human Resources To hold hearings on proposed budget es- committee To hold hearings to examine proposals timates for fiscal year 1999 for the De- To hold hearings to examine United for providing more qualified teachers partment of Defense. States policy toward Iran. in the American classroom. SD–192 SD–419 SD–430 2:00 p.m. 2:00 p.m. MAY 14 Foreign Relations Energy and Natural Resources 9:00 a.m. European Affairs Subcommittee National Parks, Historic Preservation, and Agriculture, Nutrition, and Forestry To hold hearings to examine the crisis in Recreation Subcommittee To hold hearings on the Department of Kosovo. To hold hearings on titles VI, VII, VIII, Agriculture’s Year 2000 compliance. SD–419 and XI of S. 1693, to renew, reform, re- SR–332 E752 CONGRESSIONAL RECORD — Extensions of Remarks May 4, 1998 9:30 a.m. MAY 18 2:00 p.m. Governmental Affairs 2:00 p.m. Energy and Natural Resources Permanent Subcommittee on Investiga- Governmental Affairs Energy Research and Development, Pro- tions Oversight of Government Management, Re- duction and Regulation Subcommittee To hold hearings on S. 1141, to amend the To hold hearings to examine the safety structuring and the District of Colum- Energy Policy Act of 1992 to take into of food imports. bia Subcommittee account newly developed renewable en- SD–342 To hold hearings to examine the role of ergy-based fuels and to equalize alter- Small Business faith-based charities in the District of To hold hearings on the nomination of native fuel vehicle acquisition incen- Columbia. tives to increase the flexibility of con- Fred P. Hochberg, of New York, to be SD–342 trolled fleet owners and operators, and Deputy Administrator of the Small S. 1418, to promote the research, identi- Business Administration. MAY 19 fication, assessment, exploration, and SR–428A 10:00 a.m. development of methane hydrate re- 2:00 p.m. Labor and Human Resources sources. Energy and Natural Resources To hold hearings to examine grievance SD–366 National Parks, Historic Preservation, and procedures in the health care industry. Recreation Subcommittee SD–430 OCTOBER 6 To hold hearings on titles IX and X of S. 9:30 a.m. 1693, to renew, reform, reinvigorate, MAY 20 Veterans’ Affairs and protect the National Park System, To hold joint hearings with the House and S. 1614, to require a permit for the 10:00 a.m. Indian Affairs Committee on Veterans Affairs on the making of motion picture, television legislative recommendations of the Business meeting, to mark up S. 1691, to program, or other forms of commercial American Legion. provide for Indian legal reform. visual depiction in a unit of the Na- 345 Cannon Building tional Park System or National Wild- SR–485 life Refuge System. MAY 21 SD–366 POSTPONEMENTS 10:00 a.m. Labor and Human Resources MAY 5 To hold hearings on genetic information 10:30 a.m. issues. Appropriations SD–430 Foreign Operations Subcommittee To hold hearings on proposed budget estimates for fiscal year 1999 for foreign assistance programs. SD–138 Monday, May 4, 1998 Daily Digest

HIGHLIGHTS See Re´sume´ of Congressional Activity. Senate passed Job Training Partnership Act. Senate first time, and referred, with accompanying papers, Chamber Action to the Committee on Foreign Relations and was Routine Proceedings, pages S4143–S4221 ordered to be printed. Pages S4220±21 Measures Introduced: Two bills and one resolution Messages From the House: Page S4204 were introduced, as follows: S. 2029 and 2030 and Communications: Pages S4204±05 S. Con. Res. 93. Page S4206 Statements on Introduced Bills: Pages S4206±08 Measures Reported: Reports were made as follows: S. 1882, to reauthorize the Higher Education Act Additional Cosponsors: Page S4208 of 1965, with an amendment in the nature of a sub- Amendments Submitted: Pages S4209±14 stitute. (S. Rept. No. 105–181) S. 1260, to amend the Securities Act of 1933 and Notices of Hearings: Page S4214 the Securities Exchange Act of 1934 to limit the Additional Statements: Pages S4214±20 conduct of securities class actions under State law, Adjournment: Senate convened at 11 a.m., and ad- with an amendment in the nature of a substitute. (S. journed at 5:17 p.m., until 9:30 a.m., on Tuesday, Rept. No. 105–182) Pages S4205±06 May 5, 1998. (For Senate’s program, see the remarks IRS Reform: Senate began consideration of of the Acting Majority Leader in today’s Record on H.R. 2676, to amend the Internal Revenue Code of Page S4221.) 1986 to restructure and reform the Internal Revenue Service, with a committee amendment in the nature Committee Meetings of a substitute. Pages S4147±97, S4203±04 Senate will continue consideration of the bill on (Committees not listed did not meet) Tuesday, May 5, 1998. Removal of Injunction of Secrecy: The injunction AUTHORIZATION—DEFENSE of secrecy was removed for the following treaty: Committee on Armed Services: Subcommittee on Person- Convention on Combating Bribery of Foreign nel met in closed session and approved for full com- Public Officials in International Business Trans- mittee consideration those provisions which fall actions. (Treaty Doc. 105–43) within the subcommittee’s jurisdiction of the pro- The Convention was transmitted to the Senate on posed National Defense Authorization Act for Fiscal May 1, 1998, considered as having been read for the Year 1999.

D450 May 4, 1998 CONGRESSIONAL RECORD — DAILY DIGEST D451 House of Representatives committee’s jurisdiction of a proposed National Defense Chamber Action Authorization Act for Fiscal Year 1999, 11 a.m., Bills Introduced: 1 public bill, H.R. 3788 was in- SR–222. troduced. Page H2744 Subcommittee on Readiness, closed business meeting, to mark up those provisions which fall within the sub- Speaker pro Tempore: Read a letter from the committee’s jurisdiction of a proposed National Defense Speaker wherein he designated Representative Pease Authorization Act for Fiscal Year 1999, 2:30 p.m., to act as Speaker pro tempore for today. Page H2739 SR–222. Senate Messages: Message received from the Senate Subcommittee on Acquisition and Technology, closed today appears on page H2739. business meeting, to mark up those provisions which fall within the subcommittee’s jurisdiction of a proposed Na- Amendments: Amendments ordered printed pursu- tional Defense Authorization Act for Fiscal Year 1999, ant to the rule appear on pages H2744–46. 3:15 p.m., SR–232A. Quorum Calls—Votes: No quorum calls or re- Subcommittee on Strategic Forces, closed business corded votes developed during the proceedings of the meeting, to mark up those provisions which fall within the subcommittee’s jurisdiction of a proposed National House today. Defense Authorization Act for Fiscal Year 1999, 6 p.m., Adjournment: Met at 2:00 p.m. and adjourned at SR–232A. 2:03 p.m. Committee on Commerce, Science, and Transportation, to hold hearings on the nomination of Deborah K. Kilmer, of Idaho, to be an Assistant Secretary of Commerce, 9:30 Committee Meetings a.m., SR–253. UNION DEMOCRACY IMPEDIMENTS Committee on Energy and Natural Resources, Subcommittee Committee on Education and the Workforce: Subcommit- on Forests and Public Land Management, to resume hear- tee on Employer-Employee Relations held a hearing ings on S. 1253, to provide to the Federal land management agencies the authority and capability to manage ef- on Impediments to Union Democracy. Testimony fectively the federal lands in accordance with the prin- was heard from public witnesses. ciples of multiple use and sustained yield, 2 p.m., OVERSIGHT—FEDERAL REAL PROPERTY SD–366. POLICY Committee on Governmental Affairs, Subcommittee on Oversight of Government Management, Restructuring Committee on Government Reform and Oversight: Sub- and the District of Columbia, to hold hearings on the committee on Government Management, Informa- proposed D.C. Student Opportunity Scholarship Act, 9:30 tion, and Technology held a oversight hearing on a.m., SD–342. Federal Real Property Policy. Testimony was heard Committee on Labor and Human Resources, to hold hear- from Representative Pombo; David Barram, Admin- ings on the success of the SAFE KIDS Campaign after its istrator, GSA; Ida Ruben, member, Senate, State of 10 years of implementation, 10 a.m., SD–430. Maryland; Dan Bilbrey, Mayor, City of Tracy, Cali- Subcommittee on Children and Families, to hold hear- fornia; and public witnesses. ings to examine proposals to expand opportunities for f community and neighborhood partnerships through the Community Services Block Grant program, 2 p.m., COMMITTEE MEETINGS FOR TUESDAY, SD–430. MAY 5, 1998 Select Committee on Intelligence, closed business meeting, to consider intelligence matters, 2:30 p.m., SH–219. (Committee meetings are open unless otherwise indicated) Senate NOTICE Committee on Appropriations, Subcommittee on Transpor- For a listing of Senate committee meetings sched- tation, to hold hearings to examine aviation competition, uled ahead, see pages E751–52 in today’s Record. focusing on airline ticketing practices and antitrust enforcement, 9 a.m., SD–192. House Committee on Armed Services, Subcommittee on Airland Committee on Education and the Workforce, hearing on Forces, closed business meeting, to mark up those provi- H.R. 3248, Dollars to the Classroom Act, 2 p.m., 2175 sions which fall within the subcommittee’s jurisdiction of Rayburn. a proposed National Defense Authorization Act for Fiscal Committee on Government Reform and Oversight, Sub- Year 1999, 9:30 a.m., SR–232A. committee on the Census, oversight hearing on 2000 Subcommittee on SeaPower, closed business meeting, Census: Revisiting the 1990 Census, 3 p.m., 2247 Ray- to mark up those provisions which fall within the sub- burn. D452 CONGRESSIONAL RECORD — DAILY DIGEST May 4, 1998

Committee on International Relations, Subcommittee on Committee on Rules, to consider H.R. 1872, Communica- International Operations and Human Rights, hearing on tions Satellite Competition and Privatization Act of 1997, Rwanda: Genocide and the Continuing Cycle of Violence, 2 p.m., H–313 Capitol. 10 a.m., 2172 Rayburn. Committee on Ways and Means, Subcommittee on Over- Committee on National Security, Subcommittee on Mili- sight, to continue oversight hearings on various pension tary Procurement, to mark up H.R. 3616, National De- issues, 2 p.m., 1100 Longworth. fense Authorization Act for Fiscal Year 1999, 1 p.m., 2118 Rayburn. Joint Meetings Subcommittee on Military Research and Development, Joint Economic Committee, to hold hearings on the Inter- to mark up H.R. 3616, National Defense Authorization national Monetary Fund (IMF) and international eco- Act for Fiscal Year 1999, 4 p.m., 2118 Rayburn. nomic policy, 10 a.m., 2237 Rayburn Building. May 4, 1998 CONGRESSIONAL RECORD—DAILY DIGEST D453

Re´sume´ of Congressional Activity

SECOND SESSION OF THE ONE HUNDRED FIFTH CONGRESS The first table gives a comprehensive re´sume´ of all legislative business transacted by the Senate and House. The second table accounts for all nominations submitted to the Senate by the President for Senate confirmation.

DATA ON LEGISLATIVE ACTIVITY DISPOSITION OF EXECUTIVE NOMINATIONS January 27 through April 30, 1998 January 27 through April 30, 1998

Senate House Total Civilian nominations, totaling 236, (including 124 nominations car- Days in session ...... 51 37 . . ried over from the First Session), disposed of as follows: Time in session ...... 393 hrs., 21′′ 276 hrs., 57′′ . . Confirmed ...... 63 Congressional Record: Unconfirmed ...... 162 Pages of proceedings ...... 3,960 2,737 . . Withdrawn ...... 11 Extensions of Remarks ...... 731 . . Public bills enacted into law ...... 11 8 19 Civilian nominations (FS, PHS, CG, NOAA), totaling 1,036, (includ- Private bills enacted into law ...... ing 86 nominations carried over from the First Session), disposed Bills in conference ...... 3 4 . . of as follows: Measures passed, total ...... 60 139 199 Confirmed ...... 307 Senate bills ...... 5 13 . . Unconfirmed ...... 729 House bills ...... 11 56 . . Senate joint resolutions ...... Air Force nominations, totaling 2,194, (including 21 nominations House joint resolutions ...... 1 2 . . carried over from the First Session), disposed of as follows: Senate concurrent resolutions ...... 6 2 . . Confirmed ...... 2,119 House concurrent resolutions ...... 4 11 . . Unconfirmed ...... 75 Simple resolutions ...... 33 55 . . Measures reported, total ...... *42 *94 136 Army nominations, totaling 1,525, (including 2 nominations carried Senate bills ...... 21 1 . . over from the First Session), disposed of as follows: House bills ...... 9 57 . . Confirmed ...... 1,251 Senate joint resolutions ...... Unconfirmed ...... 274 House joint resolutions ...... Senate concurrent resolutions ...... 3 . . . . Navy nominations, totaling 374, (including 4 nominations carried House concurrent resolutions ...... 2 . . over from the First Session), disposed of as follows: Simple resolutions ...... 9 34 . . Confirmed ...... 76 Special reports ...... 5 1 . . Unconfirmed ...... 298 Conference reports ...... 3 . . Measures pending on calendar ...... 146 44 . . Marine Corps nominations, totaling 1,742, disposed of as follows: Measures introduced, total ...... 543 864 1,407 Confirmed ...... 876 Bills ...... 455 699 . . Unconfirmed ...... 866 Joint resolutions ...... 7 11 . . Concurrent resolutions ...... 22 70 . . Simple resolutions ...... 59 84 . . Summary Quorum calls ...... 1 5 . . Total nominations carried over from the First Session ...... 237 Yea-and-nay votes ...... 118 58 . . Total nominations received this session ...... 6,870 Recorded votes ...... 58 . . Total confirmed ...... 4,692 Bills vetoed ...... Total unconfirmed ...... 2,404 Vetoes overridden ...... 1 1 . . Total withdrawn ...... 11

* These figures include all measures reported, even if there was no accompanying report. A total of 21 reports have been filed in the Senate, a total of 98 reports have been filed in the House. D454 CONGRESSIONAL RECORD — DAILY DIGEST May 4, 1998

Next Meeting of the SENATE Next Meeting of the HOUSE OF REPRESENTATIVES 9:30 a.m., Tuesday, May 5 12:30 p.m., Tuesday, May 5

Senate Chamber House Chamber Program for Tuesday: After the recognition of four Sen- Program for Tuesday: Consideration of 4 Suspensions: ators for speeches and the transaction of any morning (1) H.R. 567, Madrid Protocol Implementation Act; business (not to extend beyond 10:30 a.m.), Senate will (2) H. Res. 372, Expressing the Sense of the House of continue consideration of H.R. 2676, IRS Reform, and Representatives that Marijuana is a Dangerous and Ad- complete consideration of H.R. 1385/S. 1186, Employ- dictive Drug and Should not be Legalized for Medicinal ment Training and Literacy Act, with a vote to occur Use; thereon at 5:30 p.m. (3) H. Res. 267, Expressing the Sense of the House of (Senate will recess from 12:30 p.m. until 2:15 p.m. for re- Representatives that the Citizens of the United States spective party conferences.) must Remain Committed to Combat the Distribution, Sale, and Use of Illegal Drugs by the Nation’s Youth; and (4) H. Con. Res. 220, Regarding American Victims of Terrorism; and Continue consideration of H.R. 6, Higher Education Amendments of 1998 (Open rule). NOTE: The House Will Meet at 12:30 p.m. for Morn- ing Hour and 2:00 p.m. for Legislative Business. No Re- corded Votes Are Expected Before 5:00 p.m.

Extensions of Remarks, as inserted in this issue

HOUSE

Bonior, David E., Mich., E748 Forbes, Michael P., N.Y., E749 Horn, Stephen, Calif., E745 Pallone, Frank, Jr., N.J., E749 Schumer, Charles E., N.Y., E748, E749 Serrano, Jose´ E., N.Y., E749 Wolf, Frank R., Va., E748

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