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-H.R. 4738 (Extension of Expiring Provisions and Other Tax Relief), which was

passed by the House. -$. 1133 (Parent and Student Savings Account Plus Act), which was reported by

the Finance Committee and passed by the Senate as an amendment to H.R.

2646 (see below). -H.R. 2646 (Education Savings and School Excellence Act of 1998), the con

ference report for which was passed by the House and the Senate in 1998 but

vetoed by the President. -S. 1415 (Tobacco Settlement), which was reported by the Finance Committee

and considered by the Senate. JCT staff publications

In addition to its work on committee and conference reports, the Joint Committee staff published 82 documents during 1998, including pamphlets and other documents prepared for committee hearings and markups and conference action (see Attachment B). Included in these documents was the General Explanation of Tax Legislation Enacted in 1998, a 320-page comprehensive explanation of tax legislation enacted in 1998, and also a Summary of Revenue Provisions Contained in Legislation Enacted During the 105th Congress.

The 1998 staff publications included the Joint Committee staff's annual report on estimates of Federal tax expenditures (for fiscal years 1999–2003). Other publications included a staff study on tax amnesty proposals, analysis of proposals for restructuring of the Internal Revenue Service, analysis of individual effective marginal tax rates, proposals to reduce the marriage tax penalty, revenue provisions contained in the President's fiscal year 1999 budget, and issues relating to estate and gift taxes, the individual alternative minimum tax, capital gains, tax incentives for savings, tax provisions relating to health care and qualified pension plans, and tax complexity for small business. JCT staff investigations and refund review

During 1998, the Joint Committee staff continued its investigation (started in 1997) of whether the Internal Revenue Service's (“IRS”) selection of tax-exempt organizations (Code secs. 501(c)(3) and 501(c)(4)) and individuals associated with such organizations for audit has been politically motivated, including an analysis of the selection of such tax-exempt organizations for audit for reasons related to their alleged political or lobbying activities. This investigation represents an important exercise of the Joint Committee's statutorily prescribed duty of oversight of the administration of the Federal tax system.

An on-going, statutorily mandated function of the Joint Committee is the review of IRS refunds or credits of income tax, estate and gift tax, or any tax on public charities, foundations, pension plans, or real estate investment trusts in excess of $1,000,000. The Joint Committee staff reviews and reports on such refund cases and makes comments or recommendations with respect to the proposal refund case to the IRS. The Joint Committee is moving from a calendar year to fiscal year reporting of refund activity. Therefore, statistics for 1998 contained in Attachment E are presented for the period January through September. During this period of 1998, the Joint Committee refund staff reviewed 439 cases involving $4.8 billion in proposed refunds. The Joint Committee staff raised concerns in 55 cases (or approximately 12.9 percent of the cases). Errors identified by the Joint Committee staff produced a net reduction in refunds of $20.4 million in 1998, as compared to $14.3 million in 1997. The average annual reduction in refunds for the last 8 years is $11.1 million. Revenue estimates and related analysis

Attachments C and D show data relating to the Joint Committee's revenue estimating activity for calendar year 1998. The Joint Committee received 2,729 requests for revenue estimates during 1998, the largest number of requests ever received in a single year. These requests represent a 32 percent increase in the number of requests over 1997. The Joint Committee staff disposed of 85 percent of the requests received.

Since 1985, when data on revenue estimate requests was first compiled, the number of requests received annually has increased by 684 percent.

ANTICIPATED WORKLOAD OF THE JOINT COMMITTEE ON TAXATION FOR CALENDAR YEAR

1999

During 1999, the Joint Committee's workload will be at least equivalent to what it has been in the past several years. The Joint Committee will be extensively involved in legislative proposals to provide broad-based tax relief to the American taxpayers, expiring tax provisions, and social security reform. The Joint Committee staff will (1) develop legislative proposals, (2) assist in the drafting of such proposals, (3) provide revenue estimates for numerous legislative options and amendments, (4) prepare markup documents and committee reports, and (5) provide additional economic analysis to the Members.

In addition to this anticipated legislative activity, beginning in 1999, the Joint Committee will assume new responsibilities under the IRS Reform Act. The Joint Committee staff is now required to prepare a complexity analysis for inclusion in Committee and Conference reports for all revenue legislation. In addition, the Joint Committee staff is required under the IRS Reform Act to conduct two studies during 1999. The first study relates to the present-law system of penalties and interest and is required to be completed by July 22, 1999. The second study relates to the rules governing disclosure of tax return information and is due by January 22, 2000. Finally, the Joint Committee is required to prepare materials for the use of the Congress in connection with joint hearings relating to the operations of the Internal Revenue Service that will occur during calendar years 1999–2003. These additional responsibilities will require significant staff resources.

SUMMARY

Mr. Chair an, we hope that you will approve the appropriation request of the Joint Committee on Taxation. We believe that this request is the minimum amount necessary to fund the operations of the Joint Committee during fiscal year 2000. These resources will not only fund the day-to-day operations of the Joint Committee staff, but will also be used to continue our efforts to develop macroeconomic estimating capabilities and to perform the additional responsibilities of the Joint Committee mandated by the IRS Reform Act. If the requested funding is not provided, then difficult decisions will be required concerning what staff activities can and should be funded. We hope that this Subcommittee will not force the Joint Committee to make these decisions. Mr.

Chairman, we recognize fully the budgetary constraints that make your work so difficult. At the same time, we hope that you will appreciate the important role the Joint Committee on Taxation plays in the analysis and development of tax legislation. We firmly believe that the nonpartisan technical tax experts on the Joint Committee staff provide a service to the Congress that is not and cannot be duplicated by any other Congressional office. Their work every year proves this.

We respectfully urge the Members of the Subcommittee to respond favorably to the Joint Committee's funding request for fiscal year 2000.

ATTACHMENT A.—1998 TAX-RELATED LEGISLATIVE REPORTS WORKED ON BY THE

STAFF OF THE JOINT COMMITTEE ON TAXATION

A. TAX COMMITTEE REPORT EXPLANATIONS H.R. 1432 (African Growth and Opportunity Act). H. Rept. 105–423, Part 2. (House Ways and Means Committee report on revenue provision for the bill relating to employer deduction for severance pay).

H.R. 2400 (Surface Transportation Revenue Act of 1998). H. Rept. 105–467, Part 3. (House Ways and Means Committee report on extension and modification of Highway Trust Fund tax provisions).

H.R. 2676 (Internal Revenue Service Restructuring and Reform Act of 1998). S. Rept 105–174. (Senate Finance Committee report on IRS restructuring provisions and tax technical corrections).

H.R. 3249 (Federal Retirement Coverage Corrections Act). H. Rept. 105–625, Part 2. (House Ways and Means Committee report on the bill).

H.R. 4250 (Patient Protection Act of 1998). Technical explanation of tax provisions for House Floor consideration of the bill (see JCX-56–98).

H.R. 4579 (Tax Relief Act of 1998). H. Rept. 105–739. (House Ways and Means Committee report on tax reduction and tax technical corrections provisions).

H.R. 4738 (Extension of Expiring Provisions and Other Tax Relief). H. Rept. 105– 817. (House Ways and Means Committee report on extension of expiring tax provisions, revenue offsets, and tax technical corrections).

S. 442 (Internet Tax Freedom Act). S. Rept. 105–276, (Finance Committee report on amendment to the bill).

S. 1133 (Parent and Student Savings Account Plus Act). S. Rept. 105–164. (Senate Finance Committee report on education savings accounts, other education-related tax provisions, and revenue offsets).

S. 1415 (Tobacco Settlement). No official report. (Technical explanation of Finance Committee amendment to the bill).

54-224 99-4

B. TAX-RELATED CONFERENCE REPORT EXPLANATIONS H.R. 2400 (Transportation Equity Act for the 21st Century). H. Rept. 105–550. (Conference report on the revenue provisions of the bill).

H.R. 2646 (Education Savings and School Excellence Act of 1998). H. Rept. 105– 577. (Conference report on the bill).

H.R. 4328 (Tax and Trade Relief Extension Act of 1998). H. Rept. 105–825 (Division J of Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999). (Conference report on revenue provisions of the bill).

ATTACHMENT B.-1998 JOINT COMMITTEE ON TAXATION DOCUMENTS

JCS-98 DOCUMENTS JCS-1-98—Description And Analysis Of Proposals Relating To The Recommendations Of The National Commission On Restructuring The Internal Revenue Service, S. 1096, And H.R. 2676 As Passed By The House Scheduled for Public Hearings Before the Senate Committee on Finance Beginning on January 28, 1998. January 23, 1998

JCS-2–98_Tax Amnesty. January 30, 1998

JCS–3–98—Present Law And Analysis Relating To Individual Effective Marginal Tax Rates. Scheduled for a Public Hearing by the House Committee on Ways and Means on February 4, 1998. February 3, 1998

JCS_4-98 Description Of Revenue Provisions Contained In The President's fiscal year 1999 Budget Proposal. February 24, 1998

JCS_5_98_Comparison Of Provisions Of H.R. 2676 Relating To IRS Restructuring And Reform As Passed By The House And The Senate. May 18, 1998

JCS–6–98_General Explanation Of Tax Legislation Enacted In 1998. November 24, 1998

JCS_7–98_Estimates Of Federal Tax Expenditures For fiscal years 1999–2003. December 14, 1998

JCX-98 DOCUMENTS JCX-1-98—Present Law And Background Relating To Proposals To Reduce The Marriage Tax Penalty. Scheduled for a Public Hearing Before the House Committee on Ways and Means on January 28, 1998. January 27, 1998

JCX-2–98Present Law And Background Relating To Estate And Gift Taxes. Scheduled for a Public Hearing Before the House Committee on Ways and Means on January 28, 1998. January 27, 1998 JCX-3-98

Present Law And Issues Relating To The Individual Alternative Minimum Tax (“AMT"). Scheduled for a Hearing Before the House Committee on Ways and Means on February 4, 1998. February 2, 1998

JCX4-98—Present Law And Background Relating To Taxation Of Capital Gains. Scheduled for a Public Hearing Before the House Committee on Ways and Means on February 12, 1998. February 6, 1998

JCX-5–98Description Of Chairman's Mark Of An Amendment To S. 1133 (“Parent And Student Savings Account Plus Act”). Scheduled for Markup by the Senate Committee on Finance on February 10, 1998. February 6, 1998

JCX-6-98Present Law And Background Relating To Tax Treatment Of “Innocent Spouses”. Scheduled for a Public Hearing Before the Senate Committee on Finance on February 11, 1998. February 9, 1998

JCX-7-98Description Of Modifications To Chairman's Mark Of An Amendment To S. 1133 (“Parent And Student Savings Account Plus Act”). Scheduled for Markup by the Senate Committee on Finance on February 10, 1998. February 10, 1998

JCX-8-98-Estimated Revenue Effects Of Chairman's Mark With Modifications Of An Amendment In The Nature Of A Substitute To S. 1133, The “Parent And Student Savings Account Plus Act”. February 10, 1998

JCX-9-98—Description Of Revised Modifications To Chairman's Mark Of An Amendment To S. 1133 (“Parent And Student Savings Account Plus Act”). Scheduled for Markup by the Senate Committee on Finance on February 10, 1998. February 10, 1998

JCX-10–98-Estimated Revenue Effects Of A Revised Chairman's Mark With Modifications Of An Amendment In The Nature Of A Substitute To S. 1133, The “Parent And Student Savings Account Plus Act”. February 10, 1998

JCX-11-98—Present Law And Background Relating To Tax Incentives For Savings. Scheduled for a Public Hearing Before the House Committee on Ways and Means on February 12, 1998. February 11, 1998

JCX-12–98—Description Of Revenue Provision In Chairman's Amendment In The Nature Of A Substitute To H.R. 1432, The “African Growth And Opportunity Act”. Scheduled for Markup by the House Committee on Ways and Means on February 25, 1998. February 23, 1998

JCX-13-98—Estimated Revenue Effects Of A Chairman's Amendment In The Nature Of A Substitute To H.R. 1432, The “African Growth And Opportunity Act”. February 23, 1998

JCX-14-98Estimated Budget Effects Of The Revenue Provisions Contained In The President's fiscal year 1999 Budget Proposal. February 24, 1998

JCX-15–98_Chairman's Amendment Relating To Extension Of Highway Trust Fund Excise Taxes And Related Trust Fund Provisions (Revenue Title To H.R. 2400). March 25, 1998

JCX-16–98—Estimated Budget Effects Of A Chairman's Amendment Relating To An Extension Of Highway Trust Fund Excise Taxes And Related Trust Fund Provisions (Revenue Title To H.R. 2400) On March 26, 1998. March 25, 1998

JCX-17-98Description Of Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring Of The Internal Revenue Service. Scheduled for Markup by the Senate Committee on Finance on March 31, 1998. March 26, 1998

JCX-18-98Description Of Senate Finance Committee Chairman's Mark Of Tax Technical Corrections Provisions. Scheduled for Markup by the Senate Committee on Finance on March 31, 1998. March 26, 1998

JCX-19-98-Estimated Revenue Effects Of The Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring Of The Internal Revenue Service (5-year numbers) March 27, 1998

JCX-20-98Estimated Revenue Effects Of The Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring Of The Internal Revenue Service (10-year numbers). March 27, 1998

JCX-21-98—Description Of Modifications To Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring Of The Internal Revenue Service And Tax Technical Corrections Provisions. Scheduled for Markup by the Senate Committee on Fiance on March 31, 1998. March 31, 1998

JCX-22–98—Estimated Revenue Effects Of The Senate Finance Committee Chairman's Mark, With Modifications, Relating To Reform And Restructuring Of The Internal Revenue Service. March 31, 1998

JCX-23-98_Description Of Additional Modifications To Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring of The Internal Revenue Service And Tax Technical Corrections Provisions. March 31, 1998

JCX-24–98_Description Of Accepted Amendments To Senate Finance Committee Chairman's Mark Relating To Reform And Restructuring Of The Internal Revenue Service And Tax Technical Corrections Provisions, As Modified. March 31, 1998

JCX-25–98_Estimated Revenue Effects Of Reform And Restructuring Of The Internal Revenue Service As Ordered To Be Reported By The Senate Committee On Finance On March 31, 1998. April 1, 1998

JCX-26-98-Present Law And Background On Federal Tax Provisions Relating To Health Care. Scheduled for a Public Hearing Before the Subcommittee on Oversight of the House Committee on Ways and Means on April 23, 1998. April 22, 1998

JCX-27-98_Comparison Of Transportation Revenue And Related Provisions Of H.R. 2400, As Passed By The House And The Senate. April 27, 1998

JCX-28-98_Comparison Of The Estimated Budget Effects Of Transportation Revenue And Related Provisions Of H.R. 2400, As Passed By The House And The Senate. April 27, 1998

JCX-29-98_Estimated Budget Effects Of S. 1133, The Parent And Student Savings Account Plus Act,” As Passed By The Senate On April 23, 1998. May 4, 1998

JCX-30–98_Overview Of Present-Law Tax Rules Relating To Qualified Pension Plans. Scheduled for a Public Hearing Before the Subcommittee on Oversight of the House Committee on Ways and Means on May 5, 1998. May 4, 1998

JCX-31-98—Description Of Roth Financing Amendment To The “Internal Revenue Service Restructuring And Reform Act Of 1998” As Reported By The Senate Committee On Finance. May 5, 1998

JCX-32–98Estimated Revenue Effects Of H.R. 2676, The "Internal Revenue Service Restructuring And Reform Act Of_1998,” As Reported By The Senate Committee On Finance And Modified By The Roth Financing Amendment. May 5, 1998

JCX-33–98_Comparison Of Revenue Provisions Of H.R. 2646 Relating To Certain Education Savings Tax Incentives As Passed By The House And The Senate. May 11, 1998

JCX-34-98—Comparison Of The Estimated Budget Effects Of The Revenue Provisions Of H.R. 2646, As Passed By The House And The Senate. May 11, 1998

JCX-35–98—Description Of Present Law And Proposals Relating To Tobacco Tax And Trust Fund And Other Provisions. Scheduled for Consideration by the Senate Committee on Finance on May 14, 1998. May 14, 1998

JCX-36–98_Estimated Revenue Effects Of A Chairman's Mark For Senate Finance Committee Markup Of S. 1415 On May 14, 1998. May 14, 1998a

JCX-37–98—Errata—“Description Of Present Law And Proposals Relating To Tobacco Tax And Trust Fund And Other Provisions. May 14, 1998

JCX-38-98_Estimated Revenue Effects Of An Amendment To S. 1415, As Agreed To By The Senate Committee On Finance On May 14, 1998. May 14, 1998

JCX-39–98–Comparison Of Tax Technical Corrections Contained In H.R. 2676 As Passed By The House And The Senate. May 18, 1998

JCX-40-98—Distributional Effects Of S. 1415, As Reported By The Senate Committee On Commerce, Science, And Transportation. May 18, 1998

JCX-41-98Distributional Effects Of An Amendment To S. 1415 As Reported By The Senate Committee On Finance. May 18, 1998

JCX-42-98_Estimated Revenue Effects Of H.R. 2676, The "Internal Revenue Service Restructuring And Reform Act Of 1998,” As Passed By The Senate On May 7, 1998. May 20, 1998

JCX-43–98_Estimated Budget Effects Of The Conference Agreement Relating To The Transportation Revenue And Trust Fund Provisions Of H.R. 2400 (Title IX). May 22, 1998

JCX-44–98/Comparison Of The Estimated Budget Effects Of H.R. 2676, The "Internal Revenue Service Restructuring And Reform Act Of 1998,” As Passed By The House And The Senate. May 28, 1998

JCX-45–98—Description And Analysis Of Revenue-Related Provisions Of S. 1415 Relating To National Tobacco Policy As Modified By The Manager's Amendment. June 3, 1998

JCX-46–98/Estimated Budget Effects Of The Conference Agreement On The Revenue Provisions Of H.R. 2646. June 16, 1998

JCX-47–98/Disclosure Report For Public Inspection Pursuant To Internal Revenue Code Section 6103(p)(3)(C) For Calendar Year 1997. June 16, 1998

JCX-48–98_Description Of Possible Proposals Relating To The Individual Alternative Minimum Tax ("AMT"). Scheduled for a Public Hearing Before the Subcommittee on Oversight of the House Committee on Ways and Means on June 23, 1998. June 22, 1998

JCX-49–98Description Of Possible Proposals To Reduce Tax Complexity For Small Business. Scheduled for a Public Hearing Before the House Committee on Ways and Means on June 23, 1998. June 22, 1998

JCX-50–98R-Summary Of The Conference Agreement On H.R. 2676, The Internal Revenue Service Restructuring And Reform Act Of 1998. June 24, 1998

JCX-51-98_Estimated Budget Effects Of Titles I–VIII Of The Conference Agreement Relating To H.R. 2676, The “Internal Revenue Service Restructuring And Reform Act Of 1998”. June 24, 1998

JCX-52–98—Description Of Revenue And Social Security Provisions Included In The Chairman's Amendment In The Nature Of A Substitute To H.R. 3249, The "Federal Retirement Coverage Corrections Act”. June 24, 1998

JCX-53R-98_Listing Of Expiring Tax Provisions, 1998–2007. June 30, 1998 JCX-54-98Description Of Revenue Provisions To Be Considered In Connection With A Markup Of Trade Matters. Scheduled for Markup by the Senate Committee on Finance on July 21, 1998. July 20, 1998

JCX-55–98_Estimated Budget Effects Of Revenue And Trade Provisions To Be Considered In Connection With A Markup Of Trade Matters. Scheduled For Markup By The Senate Committee On Finance On July 21, 1998. July 21, 1998

JCX-56–98Description Of Revenue Offsets For Medical Savings Account Provisions Contained In H.R. 4250, The “Patient Protection Act Of 1998”. July 23, 1998

JCX-57–98—Estimated Budget Effects Of Medical Savings Account Provisions In H.R. 4250, The “Patient Protection Act Of 1998,” And Revenue-Offset Provisions of An Amendment To Be Offered To The Bill. July 23, 1998

JCX-58–98—Description Of S. 442, The “Internet Tax Freedom Act,” And A Proposed Chairman's Amendment In The Nature Of A Substitute. Scheduled for Markup by the Senate Committee on Finance on July 28, 1998. July 24, 1998

JCX-59–98_Background And Present Law Relating To Funding Mechanisms Of The “E-Rate" Telecommunications Program. July 31, 1998

JCX-60–98—Description Of Major Provisions Contained In The “Taxpayer Relief Act Of 1998”. Scheduled for a Markup by the House Committee on Ways and Means on September 17, 1998. September 15, 1998

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