Clinton ends wrangling, supports IRS reform bill

Until last week, administration officials had refused to consider the idea of ceding
the administration's authority over IRS operations.

The House Ways and Means Committee passed the revised IRS reform bill last week, giving
the independent board the power to design and oversee the tax agency's long term strategy.

If the bill becomes law, the agency's massive Tax Systems Modernization program would
get a new watchdog. Given that TSM is the big-ticket item on IRS' agenda, it seems likely
that the new management board's members would hold the project's future in their hands.

The board, made up of three government officials and eight industry officials, would
not have procurement authority. But it would review and approve all strategic plans and
operational designs, which are central to the TSM work.

The White House reversal on the House bill, HR 2292, came after a week of closed-door
meetings and conference calls between Treasury Secretary Robert Rubin and a trio of
lawmakers: Rep. Bill Archer (R-Texas), Ways and Means chairman, Rep. Rob Portman (R-Ohio)
and Rep. Ben Cardin (D-Md.).

Portman and Cardin sponsored the bill, which is based on the findings of a
congressionally sponsored blue-ribbon commission.

Also sitting in on the negotiations was Sen. Bob Kerrey (D-Neb.), who with Sen. Charles
Grassley (R-Iowa) sponsored an identical bill, S 1087, in the Senate.

Portman and Kerrey co-chaired the National Commission on Restructuring the IRS.

In arguing in favor of an independent board, Portman and Cardin said IRS needs hands-on
managers with expertise in information technology.

The administration's change of heart came after Portman and Kerrey agreed to change a
provision that would let the president appoint and fire IRS commissioners. Previously, the
bills gave this power to the board that would have approval authority over IRS programs.

Rubin said the administration now can work with the bill.

"We support the bill in its current form, but we also believe there are changes
that can be made and should be made," he said.

Meanwhile, the Senate Finance Committee last week began the confirmation hearings for
Charles Rossotti, Clinton's nominee as the next IRS commissioner. Rossotti is chairman of
American Management Systems Inc. of Fairfax, Va.

Although the administration and IRS officials have touted Rossotti as a new kind of IRS
commissioner because he is a businessman rather than a tax lawyer, he still faces a
challenge on Capitol Hill.

Before the confirmation hearings, Sen. William Roth (R-Del.), the Finance chairman,
said the Senate would approve Rossotti's nomination only if he commits to overhauling
"the IRS culture."

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