Supplemental statement on H.R. 2628.

• Position: Tax Executives Institute statement filed with members of House Committee on Ways and Means

Supplemental Statement on H.R. 2528

June 16, 1989

Tax Executives Institute (TEI) is the principal association of corporate tax executives in North America and is dedicated to maintaining a tax system that works - one that is fair and administrable and with which taxpayers can comply. TEI strongly supports the enactment of H.R. 2528, the Improved Penalty Administration and Compliance Tax Act, which the Subcommittee on Oversight reported to the full Ways and Means Committee earlier this week.

TEI has been an active participant in the penalty reform process for more than a year and is pleased to have testified in favor of H.R. 2528 at the Subcommittee's June 6 hearing. We believe that the bill sets forth a credible framework for obtaining true reform of the tax law's penalty provisions. In essence, TEI's position is:

The bill represents a definite

improvement over current law

and, although we believe some

refinements are necessary, we

are convinced that H.R. 2528

represents a long and much

needed step forward.

For your information, there are enclosed copies of the Institute's testimony before the Oversight Subcommittee as well as a supplemental letter we filed on the bill on June 14. These documents explain why we believe the full Committee should act favorably on H.R. 2528 (as reported by the Subcommittee) and why we believe certain refinements would underscore the Congress's commitment to true penalty reform.

In this regard, we call your attention to two particular issues.

Secretarial List. H.R. 2528 would require the Secretary of the Treasury to prescribe (not less than annually) a list of positions affecting a significant number of taxpayers for which the Secretary believes there is not substantial authority. TEI supports the Secretarial list provision of the bill and recommends that the provision be revised to accord taxpayers the right to rely on the list. Our reasoning is set forth in detail in our June 14 letter to the Oversight Subcommittee. If the Committee concludes that taxpayers who are otherwise unaware of tax law issues should not be permitted to rely on the IRS's published list, then the committee report should confirm that the statute's reasonable cause and good faith standards can be met without requiring the taxpayer to discover all the tax law issues that may exist in respect of his return.

The committee report should

provide that, in determining

whether the standards have

been satisfied, the focus will

be on whether the...