Statement on reforms to establish taxpayer safeguards and protect taxpayer rights.

• Position: Tax Executives Institute

Tax Executives Institute is pleased to submit the following comments in connection with the Subcommittee on Oversight of the House Committee on Ways and Means's consideration of proposals to establish taxpayer safeguards in dealing with the Internal Revenue Service and to protect the rights of taxpayers under the Internal Revenue Code. The Subcommittee held its first hearing on this subject on July 19, 1991.

1. Scope of Comments

   Tax Executives Institute commends the Subcommittee for addressing the critical issue of taxpayer rights. As the principal organization of corporate tax professionals in North America, the Institute has long been an advocate for the rational and even-handed administration of tax laws. Our approximately 4,700 members represent more than 2,000 of the leading corporations in the United States and Canada. TEI represents a cross-section of the business community, and is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. TEI is firmly committed to maintaining a tax system that works -- one that is consistent with sound tax policy, one that taxpayers can comply with, and one in which the Internal Revenue Service can effectively perform its audit function.

   In announcing the hearings, Congressman Pickle expressed the Subcommittee's interest in 'finding ways to more efficiently administer the tax system," pointing out that in recent years" the tax laws have become more complex as we have sought to close loopholes and distribute the burden of taxation more equitably." The Subcommittee has announced an ambitious agenda, including issues of taxpayer fairness, penalties and interest, and taxpayer procedural and appeal rights. As an active participant in this Subcommittee's reform of the penalty provisions two years ago, TEI has firsthand knowledge of the Subcommittee's dedication to a fair and workable tax system. The current hearings clearly demonstrate the Subcommittee's recognition that tax fairness or equity is properly measured not only by comparing the relative treatment of similarly situated taxpayers, but also by examining the relationship between taxpayers and the tax collector. If the taxpayer's relationship with the IRS is viewed as unfair or one-sided -- if taxpayers perceive that "the deck is stacked against them" -- then the public's confidence in the tax system will be eroded. We encourage the Subcommittee to continue refining the Code's interest and penalty provisions to safeguard taxpayer's rights and to balance the legitimate interests of taxpayers and the government.

   The Institute pledges its support of the Subcommittee's efforts. In the comments that follow, we discuss three areas touched upon in the press release announcing the Subcommittee's hearings (Press Release No. 13): the expansion of the IRS's authority to abate interest in certain circumstances; the equalization of interest rates charged on tax deficiencies and paid on overdue tax refunds; and the...