Hill, Treasury clash over bills to restructure IRS

Sen. Bob Kerrey (D-Neb.) and Rep. Rob Portman (R-Ohio) introduced identical IRS
Restructuring and Reform Act bills based on the recommendations of the bipartisan National
Commission on Restructuring the IRS. Kerrey and Portman were commission co-chairmen.

At least three House and Senate committees, the Senate Finance Committee and the House
Ways and Means and Finance committees, will review the bills. They will schedule hearings
after Congress returns from its August recess.

Among other items, the bills, S 1087 and HR 2292, call for appointing an independent
board to supervise IRS' tax administration duties. The bills would leave tax policy and
budget planning to Treasury.

Treasury officials have said they are opposed to the board. In the wake of the panel's
report, the administration established its own management board that will be under
Treasury's auspices and will not be an independent group.

A hearing of House Ways and Means Subcommittee on Oversight last month marked the
beginning of what appears will be an intense skirmish between Congress and Treasury over
how to implement the panel's recommendations.

The hearing also showed that the Kerrey and Portman bills might not be received in as
much as of a bipartisan spirit as their authors had hoped. Though Republicans on the
committee questioned Treasury officials for opposing the idea of establishing an
independent board, Democrats supported the department's views on the issue.

In what one House aide called the "ugly bloodbath," deputy secretary Lawrence
Summers was on the receiving end of hostile comments and questions during the hearing.

Portman led the questioning, and several Republicans on the committee, including Rep.
Phil English (R-Penn.) and subcommittee chairwoman Rep. Nancy Johnson (R-
Conn.), also asked Summers for explanations of the department's response to the
commission's findings.

As he had in the past, Summers said the commission's recommendation that a board of
mostly business leaders should run the tax agency might be unconstitutional, pose ethical
questions and jeopardize IRS' ability to collect revenues.

He said the administration is concerned that board members might use their position to
benefit their personal businesses.

In its report, the commission said board members would be nominated by the president
and approved by the Senate. They would be subject to the same ethical standards other
federal appointees are.

But Summers said they might slash IRS' enforcement and auditing budget to lessen the
chance of their companies being audited.

A visibly agitated Portman said, "You know full well that under our proposal, the
Treasury secretary is in charge of the IRS budget, and he is one of the board members. If
he sees something he does not like, he can say so."

What provoked Portman into questioning Summers was the deputy secretary's suggestion
that Treasury started making many changes at IRS before the Portman-Kerrey commission made
similar suggestions. Portman then asked Summers if he agreed with the majority of the

"I have not counted out the recommendations, but I would say, aside from the
governance issue, we are going in the same direction," Summers said.

Portman responded, "It shocks me to hear that you would not say you agree with the
majority of the recommendations we made and that most of the changes you are talking about
were the commission's recommendations."

Outside the committee room, Summers said he did not mean to diminish the commission's

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