FOR IMMEDIATE RELEASE Press Release #105-312
May 5, 1998

The bill was reported out of the Senate Finance Committee on March 31 with the first five years fully offset in compliance with the Budget Act, but without full funding for the second five years. Under the Senate's pay-as-you-go budget rules, legislation must be fully paid for over ten years, or else a budget point of order can be brought against the bill on the Senate floor.

"It has been critically important to me that we reform the IRS in a comprehensive manner, and fully address the serious problems that have been brought before the Finance Committee. It is also important to me that we completely offset the legislation without getting bogged down in a firefight over controversial revenue raisers. Today, I am happy to report that those goals don't have to be mutually exclusive," Roth stated.

The additional offsets for the legislation that Roth intends to offer in an amendment Tuesday evening are:

€ A provision to tighten the definition of operating losses that are eligible for a special ten year carry back;
€ A provision that would modify the rollover rules for Roth IRAs; € A four year extension of the current law user fees charged by the IRS for private letter rulings;
€ A dedication of the balance on the pay go scorecard;
€ A change in the effective date of the foreign tax credit revenue raiser, already part of the legislation, to tax years beginning after 1998.

The text of Roth's statement scheduled for delivery on the Senate floor follows:

"Mr. President, I send an amendment to the desk and ask for its immediate consideration.

"Mr. President, under the Senate's budget rules, the first year, first five years, and second five years of revenue losses in a tax bill must be offset with either mandatory savings or revenue increases.

"When the Finance Committee marked up the underlying bill, the first five years of revenue loss were offset. The second five years of revenue loss were not fully offset. The IRS restructuring bill was short in excess of $9 billion in the last five years. During the markup, I indicated that I would work with the Budget Committee to attempt to find offsets so that the bill would be fully paid for over the last five years.

"Finding offsets was not an easy task. Every major revenue raiser I considered brought forth opposition from different members. After several weeks of reviewing options, I have developed a package, in consultation with my Ranking Member, Senator Moynihan, and the leadership.

"Mr. President, this pay-for package contains three new revenue raisers and a change to a revenue raiser in the underlying bill.

"The first revenue raiser comes from the Administration's budget. This proposal would tighten the definition of operating losses that are eligible for a special ten year carry back. Congress intended this treatment to be limited to a narrow category of activities. This proposal simply clarifies the types of losses eligible for this special treatment. This proposal is noncontroversial.

"The second new revenue raiser would modify the rollover rules for Roth IRAs. Under current law, individuals or married couples with adjusted gross income over $100,000 cannot rollover a traditional IRA into a Roth IRA. For purposes of the $100,000 test, minimum distributions which are required when an IRA beneficiary reaches 70 and 1/2 are counted as income.

"This second new raiser would modify current law by excluding minimum distributions from the $100,000 test. The effect of this proposal is to allow more taxpayers, at age 70 and 1/2 and above, to rollover from a traditional IRA to a Roth IRA. This proposal will enlarge the group of taxpayers who can enjoy the benefits of the Roth IRA.

"The third new raiser would extend the current law user fees charged by the IRS for private letter rulings. This extension would be effective for four years.

"Let me note that the IRS Restructuring bill uses the balance on the pay-go scorecard of approximately $400 million in the last five years as an offset. We have been informed by the Budget Committee staff that the use of the pay-go balance is appropriate in this instance.

"Finally, this amendment modifies an effective date of a revenue raiser in the Finance Committee bill. The proposal modified is the proposal to limit the carry back period of the foreign tax credit. Under this amendment, the effective date of the foreign tax credit raiser has been moved out one year to tax years beginning after 1998.

"Mr. President, I ask unanimous consent that a technical description of this amendment, and a revised revenue table for the IRS restructuring bill, prepared by the Joint Committee on Taxation, be inserted in the record."