Senate Overwhelmingly OKs IRS Reform Measure

WASHINGTON —  The Senate, by an overwhelming vote of 96-2, gave final congressional approval Thursday to an election-year bill revamping the Internal Revenue Service and expanding the rights of Americans in dealing with the tax collector.

The Senate vote echoed the House’s 402-8 margin of two weeks ago, and Clinton, who opposed initial congressional efforts to overhaul the agency, said he would sign it.

“All we seek is an agency that provides service, civility and fairness to the American people,” said Senate Finance Committee Chairman William V. Roth Jr. (R-Del.).

It was the finance committee’s televised hearings last September that produced tales of alleged IRS abuses that made congressional action politically inevitable.

Voting against the measure were Sens. Paul Wellstone (D-Minn.) and John D. “Jay” Rockefeller IV (D-W.Va.), who complained about provisions easing capital gains taxes for some investors and cementing cuts in veterans’ benefits that had been made in an unrelated bill. GOP Sens. Jon Kyl of Arizona and Kay Bailey Hutchison of Texas did not vote.

A nine-member board, including six private citizens, would oversee agency operations and recommend the hiring and firing of an IRS commissioner but could not intervene in individual cases. Agency employees would be fired for covering up mistakes. And to attract talented executives, the commissioner could hire up to 40 people at salaries up to $175,400, the same as the vice president.

To make experts more available, IRS offices would be restructured according to categories of taxpayers, instead of their current geographic lines. The agency would have to explain why it was denying a person’s refund, provide the phone number of the IRS worker handling each case and list phone numbers of local IRS offices in telephone directories.

“There’s a tremendous potential in the long term to benefit the taxpayer by making the service more customer-friendly,” said Clint Stretch, director of tax policy for the Deloitte & Touche accounting firm.

But Stretch and others said only a small proportion of Americans would benefit from the bill’s many provisions enhancing the rights of taxpayers in disputes with the IRS.

These include language giving the IRS, not the taxpayer, the burden of proof in many tax cases; helping people avoid penalties for tax problems caused by former spouses; reducing the interest and penalties some people would owe; and making it harder for the agency to seize a taxpayer’s home or other property.