September 23, 1976
Page 32184
Mr. MUSKIE. Mr. President, earlier this afternoon I interposed an objection to Senator GOLDWATER's unanimous consent request that his amendment to the Senate text of the Civil Rights Attorneys' Fees bill be considered as well as an amendment to Senator KENNEDY's pending amendment in the nature of a substitute. This objection was lodged in Senator KENNEDY's absence to preserve the option of the Senate to consider Senator KENNEDY's amendment on its own, without the Internal Revenue Service amendment included. As I understand, the objections of the IRS and certain Members of the House of Representatives to the Goldwater amendment would inevitably mean that this bill would die if it went to the House with that amendment intact. I certainly would not want that to happen, and I know that Senator GOLDWATER shares this view. I likewise share his frustration that we cannot get the House to focus constructively on his proposal.
But the future of the Civil Rights Attorneys' Fees bill is at stake. This is clearly reflected in two letters received by Senator KENNEDY today, from House Judiciary Committee Chairman PETER RODINO and Internal Revenue Service Commissioner Alexander. I ask unanimous consent that these two letters to Senator KENNEDY, which I think help explain why Senator GOLDWATER's amendment would threaten the viability of the underlying legislation, be included in the RECORD at this point.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
COMMITTEE ON THE JUDICIARY,
HOUSE OF REPRESENTATIVES,
Washington, D.C.
September 23, 1976.
Hon. EDWARD M. KENNEDY,
U.S. Senate, Russell Building,
Washington, D.C.
DEAR TED: I understand that the Senate is debating S. 2278, the Civil Rights Attorney's Fees Awards Act of 1976, which is substantially identical to H.R. 15460, which the Committee on the Judiciary has approved, and which is awaiting the Suspension Calendar. I have reviewed the amendment Senator Goldwater offered on September 22 1976, to allow the reimbursement of attorney's fees to a prevailing taxpayer in Internal Revenue Service cases in which an audit was ordered. (Cong. Record 31846-47).
It is important to note that during House-Senate conference on H.R. 10612, Tax Reform Act of 1976, a provision for reimbursement of attorney's fees in all IRS cases, which was offered by the Senate, was deleted by the conferees after Commissioner Alexander testified in opposition to it, (see p. 492, House Report 94-1515, Sections omitted from Senate amendment No. 25) Although the Administration has not been specifically asked to take a position on Senator Goldwater's amendment, he stated on September 22, 1976, that his amendment though more limited in the type of cases covered, would allow recovery of accounting fees as well as costs and would cover administrative proceedings as well as courts (Cong. Record, 31847).
I fear that Senator Goldwater's amendment — lacking a careful analysis by the Administration, and in light of the Administration's prior position on another IRS attorney fee provision — will jeopardize the Civil Rights Attorney's Fees Awards Act of 1978. S. 2278 presently is a very narrow bill intended to enable private enforcement of civil rights acts. It does not involve federal spending, and has specifically been supported by the Administration at a hearing before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice on December 3, 1976.
The Committee is presently studying other bills, like Senator Goldwater's, which would go far beyond the "American Rule," or the "private attorney general" exception to it, and which may allow recovery against the Federal Government. We hope to take action next Congress on such bills. However, I fear that quick action on the Goldwater amendment, which goes far beyond the narrow provisions of S. 278, would defeat the bill.
Sincerely yours,
PETER W. RODINO, Jr.
Chairman
DEPARTMENT OF THE TREASURY,
INTERNAL REVENUE SERVICE,
Washington, D.C.,
September 23,1976
Hon. EDWARD M. KENNEDY,
U.S. Senate, Washington, D.C.
DEAR SENATOR KENNEDY: This is in response to your letter of September 28, in which you ask for the views of the Internal Revenue Service on an amendment offered by Senator Goldwater to S.2273, the Civil Rights Attorneys' Fees Awards Act.
Briefly stated, this amendment would provide for the reimbursement of expenses incurred by a taxpayer in connection with a deficiency which is proposed subsequent to a deficiency which the taxpayer accepted, or subsequent to notification to the taxpayer that there would be no change in tax liability, when the action of the Service, after final administrative or judicial review, results in no increase in tax from that previously agreed to.
It is our view that existing administrative safeguards afford taxpayers adequate protection against the reopening of cases to raise frivolous issues.
The Service will not reopen any case closed after examination by a district office or service center to make an adjustment unfavorable to the taxpayer unless: (1) there is evidence of fraud, malfeasance, collusion, concealment or misrepresentation of a material fact; or (2) the prior closing involved clearly defined substantial error based on an established Service position existing at the time of the previous examination; or (3) other circumstances exist which indicate
failure to reopen would be a serious administrative omission.
However, our most serious objection is to the concept itself — that taxpayers should be reimbursed by the Government for expenses incurred in the settlement of a tax dispute.The proposal will set a precedent which may lead to further and more costly demands for legislation extending the principle of reimbursement under other circumstances. FY 1975, IRS audited 2.465 million tax returns and close audited 2. 9 million delinquent accounts. Once the concept of reimbursement is introduced, it will be very difficult to limit its application to a particular taxpayer or tax action.
It is hoped that the Congress would defer its action on this very important matter until it has been more thoroughly considered. We will be pleased to study this matter in greater depth and submit a report of our vtews if that is desired.
With kind regards,
Sincerely,
DONALD C. ALEXANDER,
Commissioner.