White House cautious on IRS reform

The Clinton administration is treading lightly around concerns expressed last week by a Treasury Department official over an IRS reform bill approved by the Senate Finance Committee last month.

Christopher Rizek, the Treasury Department's associate tax legislative counsel, presented negative views of key taxpayer rights provisions in the bill, including provisions to limit interest and penalties on delinquent taxes and to shift the burden of proof from the taxpayer to the IRS in disputes over tax obligations.

The comments led Sen. Charles Grassley, R-Iowa, to send a letter to Treasury Secretary Rubin asserting congressional interest in a substantial reform measure.

"This legislation is about the American taxpayer's rights. Not about the IRS' rights," the letter stated.

Treasury spokesman Howard Schloss responded that Rizek "gave the impression that our concerns are more than they are." Schloss, like Rizek, underscored the Clinton administration's interest in reform legislation, but acknowledged that Treasury officials are continuing to convey questions and recommendations about some of the provisions to members of Congress and their staffs.

The administration in the past has voiced concerns about many details of the legislation, and Treasury Department officials have testified that interest and penalty reforms, if not carefully drafted, could lead taxpayers to engage in creative accounting to avoid paying taxes they owe.

Also, there are questions about what obligation taxpayers would have in keeping accurate records once the burden of proof is shifted to the IRS.

But Senate Finance Chairman William Roth, R-Del., hailed some of these reforms as the most important components of his bill. Roth said hearings he held last fall demonstrated taxpayer rights could not be safeguarded if some of the prime areas of abuse by some IRS agents are allowed to continue.

The administration supported a milder version of the bill passed overwhelmingly by the House last fall. Although the Senate bill is more sweeping than the House bill, IRS Commissioner Charles Rossotti offered his support for the Senate measure last week, and expressed confidence that differences on some details can be worked out.