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Treasury and General Government Appropriations for Fiscal Year 2000 Hearings

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Treasury and General Government Appropriations for Fiscal Year 2000 Hearings S. HRG. 106±314 TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2000 HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS FIRST SESSION ON H.R. 2490/S. 1282 AN ACT MAKING APPROPRIATIONS FOR THE TREASURY DEPARTMENT, THE UNITED STATES POSTAL SERVICE, THE EXECUTIVE OFFICE OF THE PRESIDENT, AND CERTAIN INDEPENDENT AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2000, AND FOR OTHER PUR- POSES Department of the Treasury Executive Office of the President Nondepartmental witnesses Printed for the use of the Committee on Appropriations ( Available via the World Wide Web: http://www.access.gpo.gov/congress/senate U.S. GOVERNMENT PRINTING OFFICE 54±236 cc WASHINGTON : 2000 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0±16±060084±7 COMMITTEE ON APPROPRIATIONS TED STEVENS, Alaska, Chairman THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont SLADE GORTON, Washington FRANK R. LAUTENBERG, New Jersey MITCH MCCONNELL, Kentucky TOM HARKIN, Iowa CONRAD BURNS, Montana BARBARA A. MIKULSKI, Maryland RICHARD C. SHELBY, Alabama HARRY REID, Nevada JUDD GREGG, New Hampshire HERB KOHL, Wisconsin ROBERT F. BENNETT, Utah PATTY MURRAY, Washington BEN NIGHTHORSE CAMPBELL, Colorado BYRON DORGAN, North Dakota LARRY CRAIG, Idaho DIANNE FEINSTEIN, California KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois JON KYL, Arizona STEVEN J. CORTESE, Staff Director LISA SUTHERLAND, Deputy Staff Director JAMES H. ENGLISH, Minority Staff Director SUBCOMMITTEE ON TREASURY AND GENERAL GOVERNMENT BEN NIGHTHORSE CAMPBELL, Colorado, Chairman RICHARD C. SHELBY, Alabama BYRON L. DORGAN, North Dakota JON KYL, Arizona BARBARA A. MIKULSKI, Maryland TED STEVENS, Alaska ROBERT C. BYRD, West Virginia (ex officio) (ex officio) Professional Staff PATRICIA A. RAYMOND TAMMY PERRIN LULA EDWARDS Administrative Support BARBARA A. RETZLAFF (Minority) ELIZABETH BLEVINS (Minority) (II) CONTENTS THURSDAY, FEBRUARY 25, 1999 Page Department of the Treasury: Internal Revenue Service ...................................... 1 THURSDAY, MARCH 4, 1999 Executive Office of the President: Office of National Drug Control Policy ......... 53 THURSDAY, MARCH 25, 1999 Department of the Treasury: Office of the Secretary ........................................... 111 THURSDAY, APRIL 15, 1999 Department of the Treasury ................................................................................... 159 U.S. Customs Service ....................................................................................... 183 Bureau of Alcohol, Tobacco and Firearms ...................................................... 213 U.S. Secret Service ........................................................................................... 239 Federal Law Enforcement Training Center ................................................... 253 Financial Crimes Enforcement Network ........................................................ 269 Material submitted subsequent to the conclusion of hearing: General Services Administration .................................................................... 283 Office of Personnel Management ..................................................................... 284 Office of Management and Budget .................................................................. 288 Merit Systems Protection Board ..................................................................... 291 Nondepartmental witnesses .................................................................................... 295 (III) TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2000 THURSDAY, FEBRUARY 25, 1999 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 10:02 a.m., in room SD±138, Dirksen Senate Office Building, Hon. Ben Nighthorse Campbell (chairman) presiding. Present: Senators Campbell and Dorgan. DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE STATEMENT OF CHARLES O. ROSSOTTI, COMMISSIONER ACCOMPANIED BY: JOHN LAFAVER, DEPUTY COMMISSIONER, MODERNIZATION BOB WENZEL, DEPUTY COMMISSIONER OPERATIONS JOHN DALRYMPLE, CHIEF OPERATIONS OFFICER OPENING REMARKS Senator CAMPBELL. The Treasury Subcommittee will come to order. This will be the first fiscal year 2000 budget hearing for the Subcommittee on Treasury and General Government. Commissioner, did you bring all those notebooks with you. Mr. ROSSOTTI. Yes, just a few props. Senator CAMPBELL. We will not be here long enough for you to go through all of them. Mr. ROSSOTTI. I do not intend to review them in any detail. Senator CAMPBELL. You are well-prepared. First, I would like to take this opportunity to welcome a colleague and friend, Senator Dorgan, as a member of the subcommittee. Senator Dorgan and I came in as freshmen together on the House side, as I remember, and served on several committees together on both sides of the Hill, and I certainly welcome you to this committee. Senator DORGAN. Mr. Chairman, thank you. Senator CAMPBELL. I might also mention, we both just came from a hearing where there were so many opening statements, we ran out of time and never did get to ask any questions of the people that were making the presentation, Secretary Richardson. We will not go through that lengthy opening here, but I would like to say a few things. (1) 2 This morning we will be discussing the fiscal year 2000 budget for the Internal Revenue Service, and the current status of changes at the agency. Appearing before us today, of course, is Commis- sioner Rossotti. I certainly appreciate the new energy you have brought to the IRS, and your personal commitment to get around the country to talk to people who have felt, for all kinds of real or imaginary reasons, about the behavior that they feel they have re- ceived at the IRS. I know that you are making some rapid and good changes. That is not the kind of thing that gets turned around overnight, but I know you have put your best energy toward it and I certainly do appreciate that. As one of the largest Government users of computer technology, the IRS is faced with a huge task of correcting the year 2000 rec- ognition problem. Emergency funding was provided last year for the IRS Y2K conversion costs, $483 million in fact. The fiscal year 2000 budget requests a little more than half as much again. Hope- fully, that will be enough to finish the job before the clock changes. We are certainly interested in knowing how that process is going. So I think with that, in the interest of time, Commissioner Rossotti, I will ask Senator Dorgan if he has an opening statement and get right to your comments. SENATOR DORGAN'S STATEMENT Senator DORGAN. Mr. Chairman, thank you very much. I appre- ciate your work on this subcommittee and I am pleased to join you. You do know that I was a tax administrator in North Dakota for a good number of years, so I understand some of the job that the commissioner has in administering a tax code that seems at times quite complex, and trying to make sure that administration is fair and collects the revenue for this country that it expects to get from the system. I would expect that I speak on behalf of the chairman and my- self, that we want the Internal Revenue Service to succeed. We want the Internal Revenue Service to have the resources and the capability to succeed. I would say, as I have told Commissioner Rossotti, I was dis- turbed by the hearings last year. I think everyone understood that those hearings disclosed some practices that had occurred with some people in the Internal Revenue Service. And I know the In- ternal Revenue Service was disturbed as well by some of those dis- closures, and the Service has taken action to respond to it. We think that, Mr. Commissioner, your stewardship of this agency is refreshing, and I know that you bring a reform-minded notion of wanting to do the right thing, and to make changes in the Internal Revenue Service to see that the Service does what it is supposed to do for this country. Especially because I was a tax administrator at one point, I un- derstand, as you well do, any time anyone alleges inappropriate or improper behavior on the part of those who have the enforcement capability, especially in the tax area where we deal with people's most sensitive information, it is very serious. I know that you have taken it that way and have taken immediate steps to respond to it, and for that I am appreciative. 3 I want to mention a couple of items that are of special concern to me. Obviously one is that one of the words in the Internal Rev- enue Service is service. I have spoken to you, Mr. Commissioner, and many of your predecessors about that. Notwithstanding the Code that we create here in Congress, the Tax Code, whether it is more or less complicated, notwithstanding that, one way or another the Internal Revenue Service must be involved in providing service. Not just enforcement, but service. Because part of compliance with the Tax Code for the taxpayers is to be able to understand and take reasonable steps on their own behalf to comply with the code. I have made the point to many commissioners that the Internal Revenue Service, like the rest of the world, seems intent on consoli- dating. You take folks out of the rural parts of the country and move them into
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