Roth to Unveil IRS Reform Bill

When he unveils an IRS reform bill this week, Senate Finance Chairman William Roth, R-Del., will have a chance to turn back criticism that he needlessly delayed the bill--and disprove predictions the committee had run aground in search of ways to pay for it.

Roth's spokeswoman said Friday that he would begin to meet privately with committee members on Tuesday and give them until March 30 to submit amendments, with a potentially lengthy markup tentatively scheduled to begin April 1.

Roth, Finance ranking member Daniel Patrick Moynihan, D-N.Y., and others have advocated so-called innocent spouse relief, and Roth has insisted--along with Sen. Christopher (Kit) Bond, R-Mo.--that the bill include substantial penalty and interest reform. These provisions could add billions of dollars to the $2.6 billion cost of the already passed House bill. Among the possible offsets are so-called loophole closers proposed by President Clinton, including some highly unpopular items aimed the insurance industry.

However, Roth's spokeswoman Friday insisted that "we have no offset problems." She said Roth may seek a waiver from budget rules so that 60 votes would not be needed to overcome a budget point of order.

Senior aides said this week that one way to diminish the bill's cost is to phase in or delay the penalty and interest reform or innocent spouse relief. "This is always one way of doing it whenever you have a tax bill," the spokeswoman said. "Until we know the final revenue impact, everything is in play."

In addition, Sen. Charles Grassley, R-Iowa, pointed out that the innocent spouse provision might not lose that much revenue, since it has been assumed the IRS could not collect the money in the first place.

Other matters that have delayed the bill include an independent advisory panel approved by the House and whether to provide statutory direction on reorganization of the IRS.

Aides say senators regard the House language on the advisory panel, to which the Clinton administration agreed only after intense negotiations, as weak. What remains to be seen is whether the Senate bill's provisions would draw a veto threat.

In addition, committee members appear to be coalescing around the idea advocated by IRS Commissioner Charles Rossotti, and contained in a bill offered by Bond, which would redesign the agency by functions rather than geographical regions. A senior Republican aide said senators recognize that a future commissioner could undo the redesign unless it is part of the law.