Hopkins, Bruce R., Baker & Hostetler, Washington, D.C... Kurtz, Jerome (former Commissioner of Internal Revenue), Paul, Weiss, Rif- 227 545 161 Merritt, James E., American Bar Association, Section of Taxation Muller, Charles J., American Bar Association, Section of Taxation National Association of Enrolled Agents, David J. Silverman National Association of Manufacturers, Paul R. Huard. National Council of Savings Institutions, Nelson L. Stephenson. National Federation of Independent Business, Abraham Schneier. National Society of Public Accountants, Louis Mirman Saltzman, Michael I., American Bar Association, Section of Taxation,. Schneier, Abraham, National Federation of Independent Business. Silverman, David J., National Association of Enrolled Agents 121 Skadden, Donald H., presenting statement of Herbert J. Lerner, American 117 U.S. Department of the Treasury, Internal Revenue Service, Michael J. Murphy, Acting Commissioner of Internal Revenue, letter enclosing com- REVIEW OF THE CIVIL PENALTY PROVISIONS CONTAINED IN THE INTERNAL REVENUE CODE THURSDAY, MARCH 31, 1988 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, The subcommittee met, pursuant to call, at 8:30 a.m., in room 2212, Rayburn House Office Building, Hon. J.J. Pickle (chairman of the subcommittee) presiding. [The press releases announcing the hearings follow:] (1) FOR IMMEDIATE RELEASE PRESS RELEASE #14 SUBCOMMITTEE ON OVERSIGHT U.S. HOUSE OF REPRESENTATIVES THE HONORABLE J. J. PICKLE (D., TEXAS), CHAIRMAN ANNOUNCES HEARINGS TO REVIEW THE CIVIL PENALTY PROVISIONS The Honorable J. J. Pickle (D., Texas), Chairman of the Subcommittee on Oversight, Committee on Ways and Means, U.S. House of Representatives, announced today that the Subcommittee will conduct a series of hearings to review the structure, fairness, effectiveness, and application of the civil penalty provisions contained in the Internal Revenue Code. This initial hearing will be the first in a series of hearings conducted throughout the second session of the 100th Congress in which the Subcommittee will comprehensively examine present law civil penalties. The Subcommittee plans to provide a report with recommendations to the full Committee upon completion of its review. The first hearing is scheduled for Thursday, March 31, 1988, beginning at 9:00 a.m., in the main Committee hearing room, 1100 Longworth House Office Building. The Subcommittee will receive testimony from invited witnesses including representatives of the Department of the Treasury and the Internal Revenue Service (IRS). Additional hearings will be scheduled in the future at which time public witnesses will be given an opportunity to testify. hearings will be announced in subsequent press releases. These The Subcommittee hearings will focus on approximately 150 penalty provisions contained in the Internal Revenue Code. The current tax penalty system is designed to improve taxpayer compliance and to deter specific forms of behavior by penalizing those who do not conform to the requirements of the laws relating to Federal taxes. These penalties cover a wide range of activities and are of concern to varying segments of the population. Over the years, numerous penalties have been added to the Code as part of various Revenue Acts. This piece-meal legislation, however, has resulted in a complex penalty system that is often difficult for the IRS to administer and for the taxpayer to comprehend. The first hearing will focus on the existing penalty structure. With nearly 150 penalties in the Code, the IRS, taxpayers, tax practitioners, and information providers face substantial compliance and administrative burdens resulting from the complexities involved with implementation of these provisions. Subcommittee will address the following issues: 1. What is, or should be, the purpose of the tax penalty system? What is the penalty structure designed to accomplish? What factors or framework of issues should the Subcommittee consider in evaluating the current penalty structure? What are the projections for the future if the current system remains the same? 2. The Are How might the current penalty structure be reformed? existing civil penalties fair and equitable? Are the current penalties consistent, necessary, and understandable? Are existing penalties realistic in relation to the offenses to which they relate? Are they effective deterrents to noncompliance? What are the effects of the current level of penalties on taxpayer morale and compliance? (over) 3. How is the IRS administering the current penalty provisions? Which penalties are frequently assessed and abated? What internal procedural changes has the IRS adopted to improve the administration of the penalty provisions? What efforts can be taken to make the penalty provisions more understandable to the taxpayer? In announcing the first hearing, Chairman Pickle stated: "Over the past decade, the number and scope of tax penalties and other sanctions have increased dramatically. As a result, the current penalty system has become entirely too complex. In order for penalties to be effective, they must be clear to the taxpayer and easy for the IRS to administer. My "The purpose of these hearings is to thoroughly review the penalty system and look for ways to improve and strengthen it. goal is to develop a penalty framework that is fairer, simpler, and easier to administer. It is important to maintain the trust of honest taxpayers by ensuring that there are proper penalties for those who fail to comply with the tax laws." DETAILS FOR SUBMISSION OF REQUESTS TO BE HEARD: Individuals and organizations interested in presenting oral testimony before the Subcommittee at future hearings must submit their requests to be heard no later than Friday, April 8, 1988, by formal written request to Robert J. Leonard, Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, Room 1102 Longworth House Office Building, Washington, D.C. 20515. It Requests should indicate the specific issues and points the DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: Persons submitting written comments for the printed record of the hearings should submit six (6) copies by the close of business, Friday, July 1, 1988, to Robert J. Leonard, Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, Room 1102 Longworth House Office Building, Washington, D.C. 20515. The deadline for submission of written comments will be extended for thirty (30) days after the conclusion of the Subcommittee's series of hearings. Subsequent press releases will announce the final deadline for submission of written comments. SEE FORMATTING REQUIREMENTS BELOW: Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed but will be maintained in the Committee files for review and use by the Committee. 1 All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages. 2. Copies of whole documents submitted as exhibit material will not be accepted for printing Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee. 3 Statements must contain the name and capacity in which the witness will appear or, for written comments. the name and capacity of the person submitting the statement, as well as any clients or persons. or any organization for whom the witness appears or for whom the statement is submitted. 4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may he reached and a topic. Jutline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and public during the course of a public hearing. may be submitted in other forms. THE HONORABLE J. J. PICKLE (D., TEXAS), CHAIRMAN, ANNOUNCES A TIME CHANGE IN THE HEARING TO REVIEW The Honorable J. J. Pickle (D., Texas), Chairman of the Subcommittee on Oversight, Committee on Ways and Means, U.S. House of Representatives, announced today that the Subcommittee's hearing scheduled on Thursday, March 31, 1988, will begin at 8:30 a.m., instead of the previously scheduled 9:00 a.m. The hearing will review the civil penalty provisions contained in the Internal Revenue Code. Background information and an outline of the scope of the Subcommittee's review are contained in the Subcommittee on Oversight Press Release #14, dated March 7, 1988. |