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TBOR TAOsM:\WPCORP\WPWIN61\TEMPLATE\JC1TMPLT.WPTM:\WPCORP\WPWIN61\TEMPLATE\JC1TMPLT.WPT  ATF OCC MOUs MOU FTEsredesignated SESproactive UNAXmitigations secs _Ý ƒ ·–$ÝÓ  Óà  àòòÚ  Ú16Ú  ÚóóÝ  Ý€€The€Treasury€Department€organization€includes€the€Departmental€offices€as€well€as€theÐ ° ÐBureau€of€Alcohol,€Tobacco€and€Firearms€(ð ðATFðð),€the€Office€of€the€Comptroller€of€theÏCurrency€(ð ðOCCðð),€the€U.S.€Customs€Service€(ð ðCustomsðð),€the€Bureau€of€Engraving€andÏPrinting,€the€Federal€Law€Enforcement€Training€Center,€the€Financial€Management€Service,€theÏU.S.€Mint,€the€Bureau€of€the€Public€Debt,€the€U.S.€Secret€Service€(ð ðSecret€Serviceðð),€the€OfficeÏof€Thrift€Supervision,€and€the€IRS. Ý ƒ ·–$ÝÓ  Óà  àòòÚ  Ú17Ú  ÚóóÝ  Ý€€The€first€MOU€was€entered€into€in€1990€and€the€second€in€1994. DÝ ƒ ·–$ÝÓ  Óà  àòòÚ  Ú18Ú  ÚóóÝ  Ý€€Treasury€Directive€40„01€(September€21,€1992)€reiterates€that€the€Treasury€IG€isÐ ° Ðresponsible€for€investigating€alleged€misconduct€on€the€part€of€IRS€employees€at€the€grade€15Ïlevel€and€above,€all€employees€of€the€Office€of€the€Chief€Inspector.€€In€addition,€TreasuryÏDirective€40„01€states€that€the€Treasury€IG€is€responsible€for€investigating€alleged€misconduct€onÏthe€part€of€Office€of€Chief€Counsel€employees€(excluding€employees€of€the€National€Director,ÏOffice€of€Appeals). ÙÝ ƒ ·–ÿÝÓ  ÓÑT@RY”3Ø'c$"Small Circleð"ðà0 àÝ ƒz]!ÝÓ  ÓÑTRY3Ø' Ž Ðà@ÏÏìàAND€REFORM€ACT€OF€1998ˆÌÌÌÌà@ÆÆ%ìàó ó___________ˆÐ Ð  ÐÌÌà@ê ê ìàApril€__,€1998.„„Ordered€to€be€printedˆÌÌÌÌà@ÆÆ%ìà___________ˆÌÌÌÓ  ÓMr.€Roth,€from€the€Committee€on€FinanceÌÓ‹Óà@00ìàsubmitted€the€followingˆÌÌÌà@ØØ$ìàR€E€P€O€R€T€ˆÌÌÌà@ssìà[To€accompany€H.R.€2676]€€ˆÌÌÌÌà  àThe€Committee€on€Finance,€to€which€was€referred€the€bill€(H.R.€2676)€to€amend€theÏInternal€Revenue€Code€of€1986€to€restructure€and€reform€the€Internal€Revenue€Service,€and€forÏother€purposes,€having€considered€the€same,€reports€favorably€thereon€with€an€amendment€andÏrecommends€that€the€bill€as€amended€do€pass.òòÐ  ¨%ø % ÐÔ_ÔØØò òÓ  ÓÑ  ÑCONTENTSóóÐ ° ÐÓÔÓó óÌòòà  àà ` àà ¸ àà  àà h àà À àà  àà p àà È àà  àà x àà Ð àóóÌÌÓ0°XFܤü!€%ŒX°œX0Óà‘ÆÆ Fàò òI.ˆà Ü àLEGISLATIVE€BACKGROUNDó óàÓ¤¤C¤..."àˆà‘ü!ü!Hü!àˆÐ pÀ Ðà‘FF FàˆÌò òà‘xxFàII.ˆà Ü àEXPLANATION€OF€THE€BILLó óàÓ¤¤C¤.ÖÖ#àˆÐ P   ÐÌÓK%° XFÜž` ¤ü!€%ŒX°XFܤü!€%ŒXKÓà‘FF Fàˆà Ü àTITLE€I.à ` àEXECUTIVE€BRANCH€GOVERNANCE€AND€MANAGEMENTÐ 0 € Ðà‘FF Fàˆà Ü àà  àà ž àà ` àOF€THE€IRSàÓ¤¤C¤.€ € àˆà‘ü!ü!Hü!àˆÐ  p  Ðà‘FF FàˆÌà‘FF Fàˆà Ü àA.à  àIRS€Restructuring€and€Creation€of€IRS€Oversight€BoardàÓ¤¤C¤.ˆˆDàˆà‘ü!ü!Hü!àˆÐ P  ÐÌà‘FF Fàˆà Ü àà  à1.€€IRS€restructuring€and€mission€(secs.€1001„1002)àÓ¤¤C¤.$$BàˆÐ à0  Ðà‘FF Fàˆà Ü àà  à2.€€Establishment€and€duties€of€IRS€Oversight€Board€(sec.€1101)àÓ¤¤C¤.NàˆÐ Ð  ÐÌà‘FF Fàˆà Ü àB.à  àAppointment€and€Duties€of€IRS€Commissioner€and€Chief€Counsel€andÐ ° Ðà‘FF Fàˆà Ü àà  àOther€PersonnelàÓ¤¤C¤.  àˆÐ  ð ÐÌà‘FF Fàˆà Ü àà  à1.€€IRS€Commissioner€and€other€personnel€(secs.€1102(a)€and€1104)àÓ¤¤C¤.::PàˆÐ €Ð Ðà‘FF Fàˆà Ü àà  à2.€€IRS€Chief€Counsel€(sec.€1102(a))àÓ¤¤C¤.nn3àˆÐ pÀ ÐÌà‘FF Fàˆà Ü àC.à  àStructure€and€Funding€of€the€Employee€Plans€and€Exempt€OrganizationsÐ P  Ðà‘FF Fàˆà Ü àà  àDivision€(ð ðEP/EOðð)€(sec.€1101)àÓ¤¤C¤.ôô-àˆà‘ü!ü!Hü!àˆÐ @ ÐÌà‘FF Fàˆà Ü àD.à  àTaxpayer€Advocate€(secs.€1102(a),€(c),€and€(d))àÓ¤¤C¤.ÖÖ>àˆà‘ü!ü!Hü!àˆÐ  p ÐÌà‘FF Fàˆà Ü àE.à  àTreasury€Office€of€Inspector€General;€IRS€Office€of€the€ChiefÐ P Ðà‘FF Fàˆà Ü àà  àInspector€(secs.€1102(a)€and€1103)àÓ¤¤C¤.ÔÔ1àˆÐ ð@ ÐÌà‘FF Fàˆà Ü àF.à  àProhibition€on€Executive€Branch€Influence€Over€Taxpayer€AuditsÐ Ð  Ðà‘FF Fàˆà Ü àà  à(sec.€1105)àÓ¤¤C¤.~ ~ àˆà‘ü!ü!Hü!àˆÐ À! 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ÐÌà‘FF Fàˆà Ü àL.à  àAmendments€to€Title€XIII€of€the€1997€Act€Relating€to€Estate,€Gift€andÐ ((Ð # Ðà‘FF Fàˆà Ü àà  àTrust€SimplificationàÓ¤¤C¤.Z Z #àˆà‘ü!ü!Hü!àˆÐ )À!$ ÐÌà‘FF Fàˆà Ü àà  à1.à 4 àClarification€of€treatment€of€revocable€trusts€for€purposes€of€the€Ð ø* #& Ðà‘FF Fàˆà Ü àà  àà 4 àgeneration„skipping€transfer€tax€(sec.€6013(a))àÓ¤¤C¤.®®@àˆà‘ü!ü!Hü!àˆÐ è+$' Ðà‘FF Fàˆà Ü àà  à2.à 4 àProvision€of€regulatory€authority€for€simplified€reporting€of€funeral€trusts€Ð X Ðà‘FF Fàˆà Ü àà  àà 4 àterminated€during€taxable€year€(sec.€6013(b))àÓ¤¤C¤.PP>àˆà‘ü!ü!Hü!àˆÐ Hð ÐÌà‘FF Fàˆà Ü àÔ& ° ÔM.à  àAmendment€to€Title€XIV€of€the€1997€Act€Relating€to€Excise€Tax€Ð ( Ð Ðà‘FF Fàˆà Ü àà  àSimplificationàÓ¤¤C¤.‚ ‚ àˆà‘ü!ü!Hü!àˆÐ  À ÐÌà‘FF Fàˆà Ü àà  à1.à 4 àClarification€of€provision€allowing€wine€imported€in€bulk€to€be€transferred€Ð ø   Ðà‘FF Fàˆà Ü àà  àà 4 àto€a€U.S.€winery€without€payment€of€tax€(sec.€6014)àÓ¤¤C¤.jjDàÔ'°( ê½Ôˆà‘ü!ü!Hü!àˆÐ è  ÐÌà‘FF Fàˆà Ü àN.à  àAmendments€to€Title€XV€of€the€1997€Act€Relating€to€Pensions€andÐ Èp  Ðà‘FF Fàˆà Ü àà  àEmployee€BenefitsàÓ¤¤C¤.þ þ àˆà‘ü!ü!Hü!àˆÐ ¸`  ÐÌà‘FF Fàˆà Ü àà  à1.à 4 àTreatment€of€certain€disability€payments€to€public€safety€employeesÐ ˜@  Ðà‘FF Fàˆà Ü àà  àà 4 à(sec.€6015(c))àÓ¤¤C¤.† † àˆà‘ü!ü!Hü!àˆÐ ˆ0  ÐÌà‘FF Fàˆà Ü àO.à  àAmendments€to€Title€XVI€of€the€1997€Act€Relating€to€TechnicalÐ h Ðà‘FF Fàˆà Ü àà  àCorrectionsàÓ¤¤C¤.¬ ¬ àˆà‘ü!ü!Hü!àˆÐ X ÐÌà‘FF Fàˆà Ü àà  à1.à 4 àApplication€of€requirements€for€SIMPLE€IRAs€in€the€case€ofÐ 8à Ðà‘FF Fàˆà Ü àà  àà 4 àmergers€and€acquisitions€(sec.€6016(a))àÓ¤¤C¤.zz8àˆà‘ü!ü!Hü!àˆÐ (Ð Ðà‘FF Fàˆà Ü àà  à2.à 4 àTreatment€of€Indian€tribal€governments€under€section€403(b)Ð À Ðà‘FF Fàˆà Ü àà  àà 4 à(sec.€6016(a))àÓ¤¤C¤.† † àˆà‘ü!ü!Hü!àˆÐ ° ÐÌà‘FF Fàˆà Ü àòòTECHNICAL€CORRECTIONS€TO€OTHER€TAX€LEGISLATIONóóàÓ¤¤C¤.þþ:àˆà‘ü!ü!Hü!àˆÐ è ÐÌà‘FF Fàˆà Ü àA.à  àTreatment€of€Adoption€Tax€Credit€Ô_ÔCarryoversÔ_Ô€(sec.€6017)àÓ¤¤C¤.Fàˆà‘ü!ü!Hü!àˆÐ Èp ÐÌà‘FF Fàˆà Ü àB.à  àDisclosure€Requirements€for€Apostolic€Organizations€(sec.€6018)àÓ¤¤C¤.vvNàˆà‘ü!ü!Hü!àˆÐ ¨ P ÐÌà‘FF Fàˆà Ü àC.à  àAllow€Deduction€for€Unused€Employer€Social€Security€Credit€(sec.€6019)àÓ¤¤C¤.""Uàˆà‘ü!ü!Hü!àˆÐ ˆ"0 ÐÌà‘FF Fàˆà Ü àD.à  àEarned€Income€Credit€Qualification€Rules€(sec.€6020)àÓ¤¤C¤.ÜÜCàˆà‘ü!ü!Hü!àˆÐ h$ ÐÌà‘**Fàò òIII.ˆà Ü àBUDGET€EFFECTS€OF€THE€BILLó óàÓ¤¤C¤.&àˆÐ H&ð! ÐÌà‘FF Fàˆà Ü àA.à  àCommittee€EstimatesàÓ¤¤C¤.¾ ¾ "àˆÐ ((Ð # ÐÌà‘FF Fàˆà Ü àB.à  àBudget€Authority€and€Tax€ExpendituresàÓ¤¤C¤.4àˆÐ *°"% ÐÌà‘FF Fàˆà Ü àC.à  àConsultation€with€Congressional€Budget€OfficeàÓ¤¤C¤.êê<àˆÐ è+$' Їò òà‘66FàIV.ˆà Ü àVOTES€OF€THE€COMMITTEEó óàÓ¤¤C¤.ââ"àˆÐ X ÐÌò òÔ& À Ôà‘„„ FàV.ˆà Ü àREGULATORY€IMPACT€AND€OTHER€MATTERSó óàÓ¤¤C¤.ÊÊ/àˆÐ 8 à ÐÌà‘FF Fàˆà Ü àA.à  àRegulatory€ImpactàÓ¤¤C¤.Ü Ü àˆÐ  À ÐÔ'À8 _ËÔÌà‘FF Fàˆà Ü àB.à  àUnfunded€Mandates€StatementàÓ¤¤C¤.²²*àˆÐ ø   ÐÌò òVI.à  àCHANGES€IN€EXISTING€LAW€MADE€BY€THE€BILL,€ASР؀ Ðà‘FF Fàˆà Ü àà  àREPORTEDó óàÓ¤¤C¤.` ` àˆÐ  Èp  ÐÙÙØ ØÓ6 °§X° X„FÜ‚,¤ü!(#X6ÓÑ€ÑÖ€àÖÑ  Ñà@Ñ Ñ ìàò òI.€€LEGISLATIVE€BACKGROUNDˆÐ ° ÐÌà@OO ìàA.€€Committee€ActionˆÌÌòòCommittee€considerationó óóóÐ pÀ ÐÌà  àThe€Committee€on€Finance€marked€up€H.R.€2676€(the€"Internal€Revenue€ServiceÏRestructuring€and€Reform€Act€of€1998")€on€March31,€1998.€€The€Committee€adopted€ChairmanÏRothððs€amendment€in€the€nature€of€a€substitute,€as€amended,€and€ordered€the€bill,€as€amended,Ïfavorably€reported€by€a€roll€call€vote€of€12„0€(20„0€including€proxy€votes).€€The€bill€also€includesÏtax€technical€corrections€provisions.ÌÌò òòòCommittee€and€Subcommittee€hearingsóóó óÐ ð@  ÐÌà  àThe€Committee€held€several€public€hearings€during€the€105th€Congress€as€part€of€itsÏinvestigation€of€the€operations€and€structure€of€the€Internal€Revenue€Service€(ð ðIRSðð).€€A€series€ofÏinvestigative€hearings€were€held€by€the€full€committee€on€September23„25,€1997,€whichÏexamined€both€the€internal€and€public€conduct€of€the€IRS.€€The€Finance€CommitteeððsÏSubcommittee€on€Taxation€and€IRS€Oversight€held€a€field€hearing€in€Oklahoma€City,€OklahomaÏon€December3,€1997,€regarding€IRS€management€and€operations€in€the€Oklahoma„ArkansasÏDistrict.ÌÌà  àThe€Finance€Committee€continued€public€hearings€on€IRS€administration,€includingÏtaxpayer€rights,€on€January€28€and€29€and€on€February5,€11,€and€25,€1998.€€The€hearing€onÏFebruary11,€1998,€focused€on€the€tax€treatment€of€"innocent€spouses."ÌÌò òÓ  ÓB.€€Commission€Reportó óÐ ` ÐÓßÓÓÌà  àThe€National€Commission€on€Restructuring€the€Internal€Revenue€Service€(theÏð ðCommissionðð)€was€established€to€review€the€practices€of€the€IRS€and€to€make€recommendationsÏfor€modernizing€and€improving€its€efficiency€and€taxpayer€services.€€The€Commission€report€wasÏissued€on€June25,€1997,׃×Ý ƒ #ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€and€contained€recommendations€relating€to€executive€branchÐ À! Ðgovernance€and€management€of€the€IRS,€Congressional€oversight€of€the€IRS,€personnelÏflexibilities,€customer€service€and€compliance,€technology€modernization,€electronic€filing,€taxÏlaw€simplification,€taxpayer€rights€and€financial€accountability.Ð  $à" Ðà  àS.1096€(the€ð ðInternal€Revenue€Service€Restructuring€and€Reform€Act€of€1997"),Ïintroduced€on€July30,€1997,€by€Senators€Kerrey€and€Ô_ÔGrassleyÔ_Ô,€generally€followed€theÏCommissionððs€recommendations.€€A€similar€bill,€H.R.€2676,€was€passed€by€the€House€onÏNovember5,€1997.׃×Ý ƒ #ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×Ð  €Ð ÐÓ  Óò òII.€€EXPLANATION€OF€THE€BILLÐ ° ÐÌTITLE€I.€€EXECUTIVE€BRANCH€GOVERNANCEÌAND€MANAGEMENT€OF€THE€IRSÌÓ«ØÓòòÌÓ  ÓóóA.€€IRS€Restructuring€and€Creation€of€IRS€Oversight€Boardó óÐ ` ° ÐÓ@ÙÓÌò ò1.€€IRS€mission€and€restructuring€(secs.€1001€and€1002€of€the€bill)Ð @  ÐÌà@ÕÕ%ìàòòPresent€Lawóóó óˆÐ  p  ÐÌòòò òIRS€mission€statementóóó óÐ P  ÐÌà  àThe€IRS€mission€statement€provides€that:ÌÌà0  àThe€purpose€of€the€Internal€Revenue€Service€is€to€collect€the€proper€amount€of€taxÏrevenue€at€the€least€cost;€serve€the€public€by€continually€improving€the€quality€of€ourÏproducts€and€services;€and€perform€in€a€manner€warranting€the€highest€degree€of€publicÏconfidence€in€our€integrity€and€fairness.Ð (#(# ÐÌòòò òIRS€organizational€planó óóóÐ pÀ ÐÌà  àUnder€Reorganization€Plan€No.€1€of€1952,€the€Internal€Revenue€Service€(ð ðIRSðð)€isÏorganized€into€a€3„tier€geographic€structure€with€a€multi„functional€National€Office,€RegionalÏOffices,€and€District€Offices.€€A€number€of€IRS€reorganizations€have€occurred€since€then,€but€noÏmajor€changes€have€been€made€to€the€basic€3„tier€structure.€€Presently,€as€a€result€of€a€1995Ïreorganization,€there€is€a€Regional€Commissioner,€a€Regional€Counsel€and€a€Regional€DirectorÏof€Appeals€for€each€of€the€following€4€regions:€(1)€the€Northeast€Region€(headquartered€in€NewÏYork);€(2)€the€Southeast€Region€(Atlanta);€(3)€the€Midstates€Region€(Dallas);€and€(4)€the€WesternÏRegion€(San€Francisco).€€There€are€33€District€Offices,€10€service€centers,€and€3€computingÏcenters.ÌÌò òòòà@••!ìàReasons€for€Changeóóó óˆÐ °"  ÐÌà  àThe€Committee€believes€that€a€key€reason€for€taxpayer€frustration€with€the€IRS€is€the€lackÏof€appropriate€attention€to€taxpayer€needs.€€At€a€minimum,€taxpayers€should€be€able€to€receiveÏfrom€the€IRS€the€same€level€of€service€expected€from€the€private€sector.€€For€example,€taxpayerÏinquiries€should€be€answered€promptly€and€accurately;€taxpayers€should€be€able€to€obtain€timelyÏresolutions€of€problems€and€information€regarding€activity€on€their€accounts;€and€taxpayersÏshould€be€treated€fairly€and€courteously€at€all€times.€€The€Commissioner€of€Internal€Revenue€hasÏindicated€his€interest€in€improving€customer€service.€€The€Committee€believes€that€taxpayerÏservice€is€of€such€importance€that€the€Committee€should€not€only€support€the€CommissionerððsÏefforts,€but€also€mandate€that€a€key€part€of€the€IRS€mission€must€be€taxpayer€service.€Ð ,`'* ÐÔ_Ô‡à  àThe€Commissioner€has€announced€a€broad€outline€of€a€plan€to€reorganize€the€structure€ofÏthe€IRS€in€order€to€help€make€the€IRS€more€oriented€toward€assisting€taxpayers€and€providingÏbetter€taxpayer€service.€€Under€this€plan,€the€present€regional€structure€would€be€replaced€with€aÏstructure€based€on€units€that€serve€particular€groups€of€taxpayers€with€similar€needs.€€TheÏCommissioner€has€currently€identified€four€different€groups€of€taxpayers€with€similar€needs:Ïindividual€taxpayers,€small€businesses,€large€businesses,€and€the€tax„exempt€sector€(includingÏemployee€plans,€exempt€organizations€and€State€and€local€governments).€€Under€this€structure,Ïeach€unit€would€be€charged€with€end„to„end€responsibility€for€serving€a€particular€group€ofÏtaxpayers.€€The€Commissioner€believes€that€this€type€of€structure€will€solve€many€of€theÏproblems€taxpayers€encounter€now€with€the€IRS.€€For€example,€each€of€the€33€district€offices€andÏ10€service€centers€are€now€required€to€deal€with€every€kind€of€taxpayer€and€every€type€of€issue.€ÏThe€proposed€plan€would€enable€IRS€personnel€to€understand€the€needs€and€problems€affectingÏparticular€groups€of€taxpayers,€and€better€address€those€issues.€€The€present„law€structure€alsoÏimpedes€continuity€and€accountability.€€For€example,€if€a€taxpayer€moves,€the€responsibility€forÏthe€taxpayerððs€account€moves€to€another€geographical€area.€€Further,€every€taxpayer€is€servicedÏby€both€a€service€center€and€at€least€one€district.€€Thus,€many€taxpayers€have€to€deal€withÏdifferent€IRS€offices€on€the€same€issues.€€The€proposed€structure€would€eliminate€many€of€theseÏproblems.ÌÌà  àThe€Committee€believes€that€the€current€IRS€organizational€structure€is€one€of€the€factorsÏcontributing€to€the€inability€of€the€IRS€to€properly€serve€taxpayers€and€the€proposed€structureÏwould€help€enable€the€IRS€to€better€serve€taxpayers€and€provide€the€necessary€level€of€servicesÏand€accountability€to€taxpayers.€€The€Committee€supports€the€Commissioner€in€his€efforts€toÏmodernize€and€update€the€IRS€and€believes€it€appropriate€to€provide€statutory€direction€for€theÏreorganization€of€the€IRS.€€ÌÌà@ÅÅìàò òòòExplanation€of€ProvisionˆÐ ` ÐÌóóó óà  àThe€IRS€is€directed€to€revise€its€mission€statement€to€provide€greater€emphasis€on€servingÐ ð@ Ðthe€public€and€meeting€the€needs€of€taxpayers.ÌÌà  àThe€IRS€Commissioner€is€directed€to€restructure€the€IRS€by€eliminating€or€substantiallyÏmodifying€the€present„law€three„tier€geographic€structure€and€replacing€it€with€an€organizationalÏstructure€that€features€operating€units€serving€particular€groups€of€taxpayers€with€similar€needs.€ÏThe€plan€is€also€required€to€ensure€an€independent€appeals€function€within€the€IRS.€€As€part€ofÏensuring€an€independent€appeals€function,€the€reorganization€plan€is€to€prohibit€ex€parteÏcommunications€between€appeals€officers€and€other€IRS€employees€to€the€extent€suchÏcommunications€appear€to€compromise€the€independence€of€the€appeals€officers.€€The€legality€ofÏIRS€actions€will€not€be€affected€pending€further€appropriate€statutory€changes€relating€to€such€aÏreorganization€(e.g.,€eliminating€statutory€references€to€obsolete€positions).ÌÌà@””#ìàò òòòEffective€Dateóóó óˆÐ  +p&) ÐÐ ,`'* Ðà  àThe€provision€is€effective€on€the€date€of€enactment.ÌÌò ò2.€€Establishment€and€duties€of€IRS€Oversight€Board€(sec.€1101€of€the€bill€and€sec.€7802€ofÐ à Ðthe€Code)ó óÐ €Ð ÐÌà@ÕÕ%ìàò òòòPresent€Lawó óóóˆÐ ` ° ÐÌà  àUnder€present€law,€the€administration€and€enforcement€of€the€internal€revenue€laws€areÏperformed€by€or€under€the€supervision€of€the€Secretary€of€the€Treasury.׃,×Ý ƒ #ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€The€Secretary€hasÐ 0 € Ðdelegated€the€responsibility€to€administer€and€enforce€the€Internal€Revenue€laws€to€theÏCommissioner.€€The€Commissioner€has€the€final€authority€of€the€IRS€concerning€the€substantiveÏinterpretation€of€the€tax€laws€as€reflected€in€legislative€and€regulatory€proposals,€revenue€rulings,Ïletter€rulings,€and€technical€advice€memoranda.€€Under€present€law,€the€duties€of€the€ChiefÏCounsel€of€the€IRS€are€prescribed€by€the€Secretary.€€The€Secretary€has€delegated€authority€overÏthe€Chief€Counsel€to€General€Counsel€of€the€Treasury.€€The€General€Counsel€has€delegatedÏauthority€to€serve€as€the€legal€adviser€to€the€Commissioner€to€the€Chief€Counsel.ÌÌà  àFederal€employees€are€subject€to€rules€designed€to€prevent€conflicts€of€interest€or€theÏappearance€of€conflicts€of€interest.€€The€rules€applicable€to€any€particular€employee€depend€inÏpart€on€whether€the€employee€is€a€regular,€full„time€Federal€Government€employee€or€a€specialÏgovernment€employee,€the€length€of€service€of€the€employee€and€the€pay€grade€of€the€employee.€ÏA€"special€government€employee"€is,€in€general,€an€officer€or€employee€of€the€executive€orÏlegislative€branch€of€the€U.S.€government€who€is€appointed€or€employed€to€perform€(with€orÏwithout€compensation)€for€not€to€exceed€130€days€during€any€period€of€365€days,€temporaryÏduties€either€on€a€full„time€or€intermittent€basis.€€Violations€of€the€ethical€conduct€rules€areÏgenerally€punishable€by€imprisonment€for€up€to€1€year€(5€years€in€the€case€of€wilful€conduct),€aÏcivil€fine,€or€both.€€€The€amount€of€the€fine€with€respect€to€each€violation€cannot€exceed€theÏgreater€of€$50,000€or€the€compensation€received€by€the€employee€in€connection€with€theÏprohibited€conduct.ÌÌà  àUnder€the€ethical€conduct€rules,€all€Federal€Government€employees€(including€specialÏgovernment€employees)€are€precluded€from€participating€in€a€matter€in€which€the€employee€(or€aÏrelated€party)€has€a€financial€interest.€€In€addition,€special€government€employees€cannotÏrepresent€a€party€(whether€or€not€for€compensation)€or€receive€compensation€for€representation€ofÏa€party׃-€×Ý ƒ #ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€in€relation€to€a€matter€(1)€in€which€the€employee€has€at€any€time€participated€personallyÐ $à" Ðand€substantially,€or€(2)€which€is€pending€in€the€department€or€agency€of€the€Government€inÏwhich€the€special€government€employee€is€serving.€€In€the€case€of€a€special€governmentÏemployee€who€has€served€in€a€department€no€more€than€60€days€during€the€immediatelyÏpreceding€365€days,€item€(2)€does€not€apply.€€Thus,€for€example,€such€an€individual€can€receiveÏcompensation€for€representational€services€with€respect€to€matters€pending€in€the€department€inÏwhich€the€employee€serves,€as€long€as€it€is€not€a€matter€involving€parties€in€which€the€employeeÏpersonally€and€substantially€participated.׃.×Ý ƒ #ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×Ð P   ÐÌà  àThe€conflict€of€interest€rules€also€impose€restrictions€on€what€a€Federal€GovernmentÏemployee€can€do€after€leaving€the€Government.€Under€these€rules,€senior€level€officers€andÏemployees€(including€special€government€employees)€who€served€at€least€60€days€cannotÏrepresent€anyone€other€than€the€United€States€before€the€individual's€former€department€orÏagency€for€1€year€after€terminating€employment.€€Whether€an€employee€is€a€senior€level€officerÏor€employee€is€determined€by€pay€grade.€€The€one„year€post€employment€restriction€does€notÏapply€to€special€government€employees€who€serve€less€than€60€days€during€the€365„day€periodÏbefore€termination€of€employment.׃/ ×Ý ƒ #ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×Ð À ÐÌà  àFederal€employees€with€pay€grades€above€certain€levels€(and€who€have€at€least€60€days€ofÏservice)€are€required€to€file€annually€public€financial€disclosures.ÌÌò òòòà@••!ìàReasons€for€Changeó óóóˆÐ pÀ Ðâ âÔ_Ôò òÐ `° Ðó óà  àThe€Committee€believes€that€a€well„run€IRS€is€critical€to€the€operation€of€our€tax€system.€Ð ° Ðâ âPublic€confidence€in€the€IRS€must€be€restored€so€that€our€system€of€voluntary€compliance€willÏnot€be€compromised.€€The€Committee€believes€that€most€Americans€are€willing€to€pay€their€fairÏshare€of€taxes,€and€that€public€confidence€in€the€IRS€is€key€to€maintaining€that€willingness.ÌÌà  àThe€National€Commission€on€Restructuring€the€IRS€(the€ð ðRestructuring€Commissionðð)€Ïconducted€a€year„long€study€of€the€IRS€and€found€that€a€number€of€factors€contribute€to€currentÏIRS€management€problems.€€The€Restructuring€Commission€found€that,€while€the€Treasury€isÏresponsible€for€IRS€oversight,€it€has€generally€provided€little€consistent€strategic€oversight€orÏguidance€to€the€IRS.€€The€Secretary€and€Deputy€Secretary€have€many€other€broad€responsibilitiesÏand€generally€leave€the€IRS€largely€independent.€€The€average€tenure€of€an€IRS€Commissioner€isÏunder€3€years,€as€is€the€average€tenure€of€senior€Treasury€officials€responsible€for€IRS€oversight.€ÏMany€of€the€issues€that€need€to€be€addressed€by€the€IRS€require€expertise€in€various€areas,Ïparticularly€management€and€technology.ÌÌà  àThe€Restructuring€Commission€concluded€the€following:ÌÌà0  àð ðproblems€throughout€the€IRS€cannot€be€solved€without€focus,€consistency€and€directionÏfrom€the€top.€€The€current€structure,€which€includes€Congress,€the€President,€theÏDepartment€of€the€Treasury,€and€the€IRS€itself,€does€not€allow€the€IRS€to€set€and€maintainÏconsistent€long„term€strategy€and€priorities,€nor€to€develop€and€execute€focused€plans€forÏimprovement.€€Additionally,€the€structure€does€not€ensure€that€the€IRS€budget,€staffingÏand€technology€are€targeted€toward€achieving€organizational€success.ððÐ (#(# ÐÌà  àThe€Committee€shares€the€concerns€of€the€Commission,€and€believes€that€fundamentalÏchange€in€IRS€management€and€oversight€is€essential.€€The€Committee€believes€that€a€newÏmanagement€structure€that€will€bring€greater€expertise€in€needed€areas,€and€more€focus€andÏcontinuity€will€help€the€IRS€to€become€an€efficient,€responsive,€and€respected€agency€that€actsÏappropriately€in€carrying€out€its€functions.€Ìà  àÌà  àThe€Committee€believes€that€private€sector€input€is€a€necessary€part€of€any€newÏmanagement€structure.€€The€Committee€believes€that€appropriate€ethics€rules€should€be€applied€toÏthe€private€sector€members€of€the€new€IRS€management€in€order€to€enhance€the€ability€of€suchÏmembers€to€demonstrate€impartiality€in€the€performance€of€their€duties,€while€not€undulyÏrestricting€the€available€pool€of€potential€candidates.Ìà  à€Ìà  àThe€Committee€is€aware€that€the€taxpaying€public€does€not€relish€contacts€with€theÏagency€responsible€for€collecting€taxes.€€Nevertheless,€by€establishing€a€new€managementÏstructure€that€will€better€enable€the€IRS€to€develop€and€fulfill€long„term€goals,€the€CommitteeÏbelieves€the€IRS€will€provide€better€service€and€reduce€IRS€contact€with€taxpayers.€€TheÏCommittee€is€also€aware€that€changes€being€made€to€IRS€management€structure€are€not€the€finalÏstep,€and€that€continued€oversight€of€the€IRS,€by€Congress€as€well€as€the€Administration,€isÏnecessary€in€order€to€ensure€long„term€progress.à@ìì*ìàˆÐ  ,`'* ÐÓ  Óòòò òExplanation€of€Provisionó óóóÐ ° ÐÓ'ÓÌò òòòDuties,€responsibilities,€and€powers€of€the€IRS€Oversight€Boardóóó óÐ à ÐÌà  àThe€bill€provides€for€the€establishment€within€the€Treasury€Department€of€the€InternalÏRevenue€Service€Oversight€Board€(referred€to€as€the€ð ðBoardðð).€€The€general€responsibilities€ofÏthe€Board€are€to€oversee€the€IRS€in€the€administration,€management,€conduct,€direction,€andÏsupervision€of€the€execution€and€application€of€the€internal€revenue€laws.€€As€part€of€its€oversightÏresponsibilities,€the€Board€has€the€responsibility€to€ensure€that€the€organization€and€operation€ofÏthe€IRS€allows€it€to€carry€out€its€mission.€€The€Board€will€sunset€September€30,€2008.ÌÓ*°X‚X4¸ —X°§X*ÓÌà  àThe€Board€has€the€following€specific€responsibilities:€(1)€to€review€and€approve€strategicÏplans€of€the€IRS,€including€the€establishment€of€mission€and€objectives€(and€standards€ofÏperformance)€and€annual€and€long„range€strategic€plans;€(2)€to€review€the€operational€functionsÏof€the€IRS,€including€plans€for€modernization€of€the€tax€administration€system,€outsourcing€orÏmanaged€competition,€and€training€and€education;€(3)€to€review€and€approve€the€CommissionerððsÏplans€for€major€reorganization€of€the€IRS€(except€that€the€approval€authority€does€not€apply€toÏthe€reorganization€provided€for€under€the€bill);€and€(4)€to€review€operations€of€the€IRS€in€order€toÏensure€the€proper€treatment€of€taxpayers.€€The€Board€also€has€the€following€specificÏresponsibilities€relating€to€management:€(1)€to€recommend€to€the€President€candidates€forÏCommissioner€(and€to€recommend€the€removal€of€the€Commissioner);€(2)€taking€into€account€theÏrecommendations,€if€any,€of€the€Commissioner,€to€recommend€to€the€Secretary€3€candidates€forÏappointment€as€the€National€Taxpayer€Advocate€from€individuals€who€have€a€background€inÏcustomer€service€and€tax€law,€and€experience€representing€individual€taxpayers€(and€toÏrecommend€the€removal€of€the€National€Taxpayer€Advocate);€(3)€to€review€the€CommissionerððsÏselection,€evaluation,€and€compensation€of€IRS€senior€executives€who€have€programÏmanagement€responsibility€over€significant€functions€of€the€IRS;€(4)€and€to€review€procedures€ofÏthe€IRS€relating€to€financial€audits.ÌÌà  àIn€addition,€the€Board€will€review€and€approve€the€budget€request€of€the€IRS€prepared€byÏthe€Commissioner,€submit€such€budget€request€to€the€Secretary,€and€ensure€that€the€budgetÏrequest€supports€the€annual€and€long„range€strategic€plans€of€the€IRS.€€The€Secretary€is€requiredÏto€submit€the€budget€request€approved€by€the€Board€to€the€President,€who€is€required€to€submitÏsuch€request,€without€revision,€to€the€Congress€together€with€the€Presidentððs€annual€budgetÏrequest€for€the€IRS.€€The€bill€does€not€affect€the€ability€of€the€President€to€include,€in€addition,Ïhis€own€budget€request€relating€to€the€IRS.€ÌÌà  àIt€is€intended€that€the€Board€will€reach€a€formal€decision€on€all€matters€subject€to€itsÏreview.€€With€respect€to€those€matters€over€which€the€Board€has€approval€authority,€the€BoardððsÏdecisions€will€be€determinative.€€Ì€Ìà  àThe€Board€has€no€responsibilities€or€authority€with€respect€to€the€development€andÏformulation€of€Federal€tax€policy€relating€to€existing€or€proposed€internal€revenue€laws.€€InÐ ,`'* Ðaddition,€the€Board€has€no€authority€(1)€to€intervene€in€specific€taxpayer€cases,€includingÏÔ_Ôcompliance€activities€involving€specific€taxpayers€such€as€criminal€investigations,€examinations,Ïand€collection€activities,€(2)€to€engage€in€specific€procurement€activities€of€the€IRS€(e.g.,Ïselecting€vendors€or€awarding€contracts),€or€(3)€to€intervene€in€specific€individual€personnelÏmatters.ÌÌà  àBoard€members€would€have€limited€access€to€confidential€tax€return€and€returnÏinformation€under€section€6103.€€This€limited€access€would€permit€the€Board€to€receive€suchÏinformation€(i.e.,€information€that€has€not€been€redacted€to€remove€confidential€tax€return€andÏreturn€information)€from€the€Treasury€IG€for€Tax€Administration€or€the€Commissioner€inÏconnection€with€reports€made€to€the€Board.€€This€access€to€section€6103€information€does€notÏinclude€the€taxpayerððs€name,€address,€or€taxpayer€or€employer€identification€number.€€The€BoardÏmembers€are€subject€to€the€anti„browsing€rules€applicable€to€IRS€employees€under€present€law.׃0×Ý ƒ #ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×Ð ð@  ÐÌà  à€€In€exercising€its€duties,€it€is€expected€that€the€members€of€the€Board€shall€maintainÏappropriate€confidentiality€(e.g.,€regarding€enforcement€matters).Ìà  àÌà  àThe€Board€is€required€to€report€each€year€regarding€the€conduct€of€its€responsibilities.€ÏThe€annual€report€shall€be€provided€to€the€President€and€the€House€Committees€on€Ways€andÏMeans,€Government€Reform€and€Oversight,€and€Appropriations€and€the€Senate€Committees€onÏFinance,€Governmental€Affairs,€and€Appropriations.€€In€addition,€the€Board€is€required€to€reportÏto€the€Ways€and€Means€and€Finance€Committees€if€the€IRS€does€not€address€problems€identifiedÏby€the€Board.ÌÌ€à  àIt€is€expected€that€the€Treasury€Department€will€no€longer€utilize€the€IRS€ManagementÐ 0€ ÐBoard€once€the€new€Board€created€by€the€bill€is€in€place,€as€the€functions€of€the€IRS€ManagementÏBoard€would€be€taken€over€by€the€new€Board.ÌÌòòò òComposition€of€the€Boardóóó óÐ ð@ ÐÌà  àThe€Board€is€composed€of€9€members.€€Six€of€the€members€are€so„called€ð ðprivate„lifeððÏmembers€who€are€not€otherwise€Federal€officers€or€employees.€€These€private„life€members€are€Ïappointed€by€the€President,€with€the€advice€and€consent€of€the€Senate.€€The€other€members€are:Ì(1)€the€Secretary€(or,€if€the€Secretary€so€designates,€the€Deputy€Secretary);€(2)€the€Commissioner;Ïand€(3)€a€representative€from€an€employee€organization€that€represents€a€substantial€number€ofÏIRS€employees€and€who€is€appointed€by€the€President,€with€the€advice€and€consent€of€the€Senate.€Ïâ âIn€appointing€the€representative€of€an€employee€organization,€the€President€is€not€required€toÐ p&À!$ Ðchoose€an€individual€recommended€by€the€employee€organization,€but€may€choose€whoever€theÏPresident€determines€to€be€an€appropriate€representative€of€the€employee€organization.Ìâ âÌà  àThe€private„life€members€of€the€Board€will€be€appointed€without€regard€to€politicalÏaffiliation€and€based€solely€on€their€expertise€in€the€following€areas:€(1)€management€of€largeÏservice€organizations;€(2)€customer€service;€(3)€the€Federal€tax€laws,€including€administrationÏand€compliance;€(4)€information€technology;€(5)€organization€development;€and€(6)€the€needsÏand€concerns€of€taxpayers.€€In€the€aggregate,€the€private„life€members€of€the€Board€shouldÏcollectively€bring€to€bear€expertise€in€these€enumerated€areas.€ÌÌà  àA€private„life€Board€member€and€the€employee€representative€Board€member€may€beÏremoved€at€the€will€of€the€President.€€In€addition,€the€Secretary€(or€Deputy€Secretary)€and€theÏIRS€Commissioner€are€automatically€removed€from€the€Board€upon€his€or€her€termination€ofÏemployment€as€such.€Ì€€Ìò òòòCompensation€of€Board€membersóóó óÐ À ÐÌà  àThe€private„life€members€of€the€Board€will€be€compensated€at€a€rate€of€$30,000€per€year,Ïexcept€that€the€Chair€would€be€compensated€at€a€rate€of€$50,000€a€year.€€The€other€BoardÏmembers€will€receive€no€compensation€for€their€services€as€a€Board€member.€€€All€members€ofÏthe€Board€are€entitled€to€travel€expenses€for€purposes€of€attending€Board€meetings€or€visiting€IRSÏoffices€in€connection€with€Board€functions.ÌÌò òòòEthical€conduct€rulesÐ @ ÐÌà  àà 4 àó óPrivate„life€membersóóÐ  p ÐÌà  àUnder€the€bill,€the€private„life€Board€members€are€subject€to€the€public€financialÏdisclosure€rules€applicable€to€Federal€government€employees€above€certain€pay€grades€and€whoÏhave€at€least€60€days€of€service.€€Thus,€the€private„life€Board€members€are€required€to€file€aÏpublic€financial€disclosure€report€for€purposes€of€confirmation,€annually€during€their€tenure€onÏthe€Board,€and€upon€termination€of€appointment.ÌÌà  àThe€ethical€conduct€rules€applicable€to€private„life€Board€members€depend€on€whether€orÏnot€such€members€are€determined€to€be€ð ðspecial€government€employeesðð€under€the€present„lawÏrules.€€It€is€expected€that€they€generally€will€be.€€In€that€case,€they€will€be€subject,€at€a€minimum,Ïto€the€ethical€conduct€rules€applicable€to€special€government€employees.€€In€addition,€during€theirÏterm€as€a€Board€member,€a€private„life€Board€member€cannot€represent€any€party€(whether€or€notÏfor€compensation)€with€respect€to€(1)€any€matter€before€the€Board€or€the€IRS,€€(2)€any€tax„relatedÏmatter€before€the€Treasury€Department€or€(3)€any€court€proceeding€with€respect€to€a€matterÏdescribed€in€(1)€or€(2).€€Thus,€for€example,€the€day€after€appointment€to€the€Board,€a€private„lifeÏBoard€member€could€not€meet€with€representatives€of€the€IRS€or€Treasury€on€behalf€of€a€client€orÏthe€Board€memberððs€corporate€employer€with€respect€to€proposed€tax€regulations.€€On€the€otherÐ ,`'* Ðhand,€the€Board€member€could,€for€example,€represent€clients€before€the€U.S.€Customs€Service.€ÏThe€special€rules€applicable€to€private„life€Board€members€generally€do€not€preclude€the€BoardÏmember€from€sharing€in€compensation€from€representation€of€clients€by€another€person€(e.g.,€aÏpartner€of€the€Board€member)€before€the€IRS€or€Treasury.׃1×Ý ƒ #ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×€€Ð €Ð ÐÌà  àIn€addition,€private„life€Board€members€are€subject€to€the€1„year€post€employmentÏrestriction€applicable€to€individuals€above€certain€pay€grades€and€who€have€served€at€least€60Ïdays€(whether€or€not€the€members€are€special€government€employees€under€the€present„lawÏrules).ÌÌà  àIf€the€Board€members€are€determined€not€to€be€special€government€employees€under€theÏpresent„law€rules,€then€they€will€be€subject€to€the€ethical€conduct€rules€relating€to€regular€FederalÏGovernment€employees.ÌÌà  àà 4 àòòRepresentative€of€employee€organizationóóÐ Ð  ÐÌà  àIn€general,€the€bill€provides€that€the€employee€representative€or€Board€member€is€subjectÏto€the€same€ethical€conduct€rules€as€the€private„life€Board€members.€€However,€the€bill€modifiesÏthe€otherwise€applicable€ethical€conduct€rules€so€that€they€do€not€preclude€the€employeeÏrepresentative€from€carrying€out€his€or€her€duties€as€a€Board€member€and€his€or€her€duties€withÏrespect€to€the€employee€organization.€€In€particular,€the€employee€representative€is€not€prohibitedÏfrom€(1)€representing€the€interests€of€the€employee€organization€before€the€Federal€GovernmentÏon€any€matter,€or€(2)€acting€on€a€Board€matter€because€the€employee€organization€has€a€financialÏinterest€in€the€matter.€€In€addition,€the€employee€representative€can€continue€to€receive€his€or€herÏcompensation€from€the€employee€organization.׃2@×Ý ƒ #ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ×Ð 0€ ÐÌà  àThe€employee€representative€is€subject€to€the€same€public€financial€disclosure€rules€as€theÏprivate„life€Board€members.€€In€addition,€the€employee€organization€is€required€to€provide€anÏannual€financial€report€with€the€House€Ways€and€Means€Committee€and€the€Senate€FinanceÏCommittee.€€Such€report€is€required€to€include€the€compensation€paid€to€the€individual€servingÏon€the€Board,€the€compensation€of€individuals€employed€by€the€employee€organization,€andÏmembership€dues€collected€by€the€Ô_Ôorganization.Ð À! Їà  àThe€employee€representative€is€subject€to€the€same€1„year€post€employment€restrictionÏapplicable€to€the€private„life€Board€members,€except€to€the€extent€the€representative€is€acting€inÏhis€capacity€as€a€representative€of€the€employee€organization.ÌÌòòò òÔ& ° ÔAdministrative€mattersÐ pÀ ÐÌà  àó óà 4 àTerm€of€appointmentsóóÐ P   ÐÌà  àThe€6€private„life€Board€members€will€beÔ'°px>Ô€appointed€for€5„year€terms.€€The€private„lifeÏmembers€may€serve€no€more€than€two€5„year€terms.€€Board€member€terms€will€be€staggered,€as€aÏresult€of€a€special€rule€providing€that€some€private„life€members€first€appointed€to€the€BoardÏwould€serve€terms€of€less€than€5€years.€€Under€this€rule,€2€members€first€appointed€will€have€aÏterm€of€2€years,€2€for€a€term€of€€4€years,€and€2€for€a€term€of€5€years.€€The€terms€of€the€initialÏBoard€members€will€run€from€the€date€of€employment.€€Subsequent€terms€will€run€fromÏexpiration€of€the€previous€term.€€A€Board€member€appointed€to€fill€a€vacancy€before€theÏexpiration€of€a€term€will€be€appointed€to€the€remainder€of€the€term.€€Of€course,€such€a€memberÏcould€be€appointed€to€subsequent€5„year€term.ÌÌà  àà 4 àòòChair€of€the€BoardóóÐ à ÐÌà  àThe€members€of€the€Board€are€to€elect€a€Chair€from€the€private„life€members€for€a€2„yearÏterm.€€€Except€as€otherwise€provided€by€a€majority€of€the€Board,€the€authority€of€the€ChairÏincludes€the€authority€to€hire€appropriate€staff,€call€meetings,€establish€committees,€establish€theÏagenda€for€meetings,€and€develop€rules€for€the€conduct€of€business.ÌÌà  àà 4 àòòMeetingsóóÐ  p ÐÌà  àThe€Board€is€required€to€meet€on€a€regular€basis€(as€determined€necessary€by€the€Chair),Ïbut€no€less€frequently€than€quarterly.€€The€Board€can€meet€privately,€and€is€not€subject€to€publicÏdisclosure€laws.Ì€Ìà  à€A€quorum€of€5€members€is€required€in€order€for€the€Board€to€conduct€business.€€ActionsÏof€the€Board€can€be€taken€by€a€majority€vote€of€those€members€present€and€voting.ÌÌà  àà 4 àòòStaffingóóÐ $à" ÐÌà  àThe€Chair€is€authorized€to€hire€(and€terminate)€such€personnel€as€the€Chair€findsÏnecessary€to€enable€the€Board€to€carry€out€its€duties.€€In€addition,€the€Board€will€have€such€staffÏas€detailed€by€the€Commissioner€or€from€another€Federal€agency€at€the€request€of€the€Chair€ofÏthe€Board.€€The€Chair€can€procure€temporary€and€intermittent€services€under€section€3109(b)€ofÏtitle€5€of€the€U.S.€Ô_ÔCode.Ô_ÔÔ_ÔÔ_ÔÔ_ÔÔ_ÔÐ  0*€%( Ðà  àà 4 àòòClaims€against€Board€membersóóÐ ° ÐÌà  àThe€private„life€members€of€the€Board€have€no€personal€liability€under€Federal€law€withÏrespect€to€any€claim€arising€out€of€or€resulting€form€an€act€or€omission€by€the€Board€memberÏwithin€the€scope€of€service€as€a€Board€member.€€The€bill€does€not€limit€personal€liability€forÏcriminal€acts€or€omissions,€wilful€or€malicious€conduct,€acts€or€omissions€for€private€gain,€or€anyÏother€act€or€omission€outside€the€scope€of€service€as€a€Board€member.€€The€bill€does€not€affectÏany€other€immunities€and€protections€that€may€be€available€under€applicable€law€or€any€otherÏright€or€remedy€against€the€United€States€under€applicable€law,€or€limit€or€alter€the€immunitiesÏthat€are€available€under€applicable€law€for€Federal€officers€and€employees.€€ÌÌò òòòÓ  ÓEffective€Dateóóó óÐ P  ÐÓ5KÓÌà  àThe€provision€relating€to€the€Board€is€effective€on€the€date€of€enactment.€€The€President€isÏdirected€to€submit€nominations€for€Board€members€to€the€Senate€within€6€months€of€the€date€ofÏenactment.€€The€legality€of€the€actions€of€the€IRS€are€not€affected€pending€appointment€of€theÏBoard.ÌÌà@ÕÕìàò òB.€€Appointment€and€Duties€of€IRS€Commissioner€and€Chief€Counsel€and€Other€PersonnelˆÐ à ÐÌ1.€€IRS€Commissioner€and€other€personnel€(secs.€1102(a)€and€1104€of€the€bill€and€secs.€7803Ïand€7804€of€the€Code)ó óÐ `° ÐÌà@ÕÕ%ìàò òòòPresent€Lawóóó óˆÐ @ ÐÌà  àWithin€the€Department€of€the€Treasury€is€a€Commissioner€of€Internal€Revenue,€who€isÏappointed€by€the€President,€with€the€advice€and€consent€of€the€Senate.€€The€Commissioner€hasÏsuch€duties€and€powers€as€may€be€prescribed€by€the€Secretary.׃3×Ý ƒ #ÃÝòòÚ  Ú10Ú  ÚóóÝ  Ý×  ×€€The€Secretary€has€delegated€toÐ P Ðthe€Commissioner€the€administration€and€enforcement€of€the€internal€revenue€laws.׃5€×Ý ƒ #ÃÝòòÚ  Ú11Ú  ÚóóÝ  Ý×  ×€€TheÐ ð@ ÐCommissioner€generally€does€not€have€authority€with€respect€to€tax€policy€matters.׃68×Ý ƒ #ÃÝòòÚ  Ú12Ú  ÚóóÝ  Ý×  ×Ð à0 Ðâ âÐ Ð  ÐÔ_Ôà  àThe€Secretary€is€authorized€to€employ€such€persons€as€the€Secretary€deems€appropriateÏâ âfor€the€administration€and€enforcement€of€the€internal€revenue€laws€and€to€assign€posts€of€duty.ÌÌò òòòà@ÅÅìàExplanation€of€ProvisionˆÐ €Ð Ðóóó óÌà  à€As€under€present€law,€the€Commissioner€is€appointed€by€the€President,€with€the€adviceÏand€consent€of€the€Senate,€and€may€be€removed€at€will€by€the€President.€€Under€the€bill,€one€ofÏthe€qualifications€of€the€Commissioner€is€demonstrated€ability€in€management.€€TheÏCommissioner€is€appointed€to€a€5„year€term,€beginning€with€the€date€of€appointment.€€TheÏCommissioner€may€be€reappointed€for€more€than€one€5„year€term.€€The€Board€recommendsÏcandidates€to€the€President€for€the€position€of€Commissioner;€however,€the€President€is€not€Ïrequired€to€nominate€for€Commissioner€a€candidate€recommended€by€the€Board.€€The€Board€hasÏthe€authority€to€recommend€the€removal€of€the€Commissioner.€ÌÌà  àThe€Commissioner€has€such€duties€and€powers€as€prescribed€by€the€Secretary.€€UnlessÏotherwise€specified€by€the€Secretary,€such€duties€and€powers€include€the€power€to€administer,Ïmanage,€conduct,€direct,€and€supervise€the€execution€and€application€of€the€internal€revenue€lawsÏor€related€statutes€and€tax€conventions€to€which€the€United€States€is€a€party,€to€exercise€the€IRSððÏfinal€authority€concerning€the€substantive€interpretation€of€the€tax€laws,€to€recommend€to€theÏPresident€a€candidate€for€Chief€Counsel€(and€recommend€the€removal€of€the€Chief€Counsel),€andÏto€recommend€candidates€for€the€position€of€National€Taxpayer€Advocate€to€the€IRS€Board.€€IfÏthe€Secretary€determines€not€to€delegate€such€specified€duties€to€the€Commissioner,€suchÏdetermination€will€€not€take€effect€until€30€days€after€the€Secretary€notifies€the€HouseÏCommittees€on€Ways€and€Means,€Government€Reform€and€Oversight,€and€Appropriations,€andÏthe€Senate€Committees€on€Finance,€Governmental€Affairs,€and€Appropriations.€€TheÏCommissioner€is€to€consult€with€the€Board€on€all€matters€within€the€Boardððs€authority€(other€thanÏthe€recommendation€of€candidates€for€Commissioner€and€the€recommendation€to€remove€theÏCommissioner).ÌÌà  àUnless€otherwise€specified€by€the€Secretary,€the€Commissioner€is€authorized€to€employÏsuch€persons€as€the€Commissioner€deems€proper€for€the€administration€and€enforcement€of€theÏinternal€revenue€laws€and€is€required€to€issue€all€necessary€directions,€instructions,€orders,€andÏrules€applicable€to€such€persons.€€Unless€otherwise€provided€by€the€Secretary,€the€CommissionerÏwill€determine€and€designate€the€posts€of€duty.ÌÌòòÓ  Óò òEffective€Dateó óóóÐ €%Ð # ÐÓp[ÓÌà  àThe€provisions€relating€to€the€Commissioner€are€effective€on€the€date€of€enactment.€€TheÏprovision€relating€to€the€5„year€term€of€office€applies€to€the€Commissioner€in€office€on€the€dateÏof€enactment.€€The€5„year€term€runs€from€the€date€of€appointment.€ÌÌò ò2.€€IRS€Chief€Counsel€(sec.€1102(a)€and€sec.€7803€of€the€Code)ó óÐ  +p&) ÐÐ ,`'* Ðà@ÕÕ%ìàò òòòPresent€Lawóóó óˆÐ ° ÐÌà  àThe€President€is€authorized€to€appoint,€by€and€with€the€consent€of€the€Senate,€an€AssistantÏGeneral€Counsel€of€the€Treasury,€who€is€the€Chief€Counsel€of€the€IRS.€€The€Chief€Counsel€is€theÏchief€law€officer€for€the€IRS€and€has€such€duties€as€may€be€prescribed€by€the€Secretary.€€TheÏSecretary€has€delegated€authority€over€the€Chief€Counsel€to€the€Treasury€General€Counsel.€€TheÏChief€Counsel€does€not€report€to€the€Commissioner,€but€to€the€Treasury€General€Counsel.€€AsÏdelegated€by€the€Treasury€General€Counsel,€the€duties€of€the€Chief€Counsel€include:€(1)€to€be€theÏlegal€advisor€to€the€Commissioner€and€his€or€her€officers€and€employees;€(2)€to€furnish€such€legalÏopinions€as€may€be€required€in€the€preparation€and€review€of€rulings€and€memoranda€of€technicalÏadvice€and€the€performance€of€other€duties€delegated€to€the€Chief€Counsel;€(3)€to€prepare,Ïreview,€or€assist€in€the€preparation€of€proposed€legislation,€treaties,€regulations€and€ExecutiveÏOrders€relating€to€laws€affecting€the€IRS;€(4)€to€represent€the€Commissioner€in€cases€before€theÏTax€Court;€(5)€to€determine€what€civil€actions€should€be€brought€in€the€courts€under€the€lawsÏaffecting€the€IRS€and€to€prepare€recommendations€to€the€Department€of€Justice€for€theÏcommencement€of€such€actions€and€to€authorize€or€sanction€commencement€of€such€actions.ÌÌà@ÅÅìàò òòòExplanation€of€ProvisionˆÐ  ð Ðóóó óÌà  àAs€under€present€law,€the€Chief€Counsel€is€appointed€by€the€President,€with€the€adviceÏand€consent€of€the€Senate.€€Under€the€bill,€the€Chief€Counsel€is€not€an€Assistant€General€CounselÏof€the€Treasury€and€reports€directly€to€the€Commissioner.ÌÌà  àThe€Chief€Counsel€has€such€duties€and€powers€as€prescribed€by€the€Secretary.€€UnlessÏotherwise€specified€by€the€Secretary,€these€duties€include€the€duties€currently€delegated€to€theÏChief€Counsel€as€described€above.€€If€the€Secretary€determined€not€to€delegate€such€specifiedÏduties€to€the€Chief€Counsel,€such€determination€is€subject€to€the€same€notice€requirementÏapplicable€to€changes€in€the€delegation€of€authority€with€respect€to€the€Commissioner.ÌÌà@””#ìàò òòòEffective€Dateóóó óˆÐ à0 ÐÌà  àThe€provision€is€generally€effective€on€the€date€of€enactment.€€The€provision€providingÏthat€the€Chief€Counsel€reports€directly€to€the€Commissioner€is€effective€90€days€after€the€date€ofÏenactment.ÌÌò òà@‹‹ìàC.€€Structure€and€Funding€of€the€Employee€Plans€and€Exemptà@@ìà€Organizations€Division€à@@H H ìàˆÐ €%Ð # Ð(ð ðEP/EOðð)€(sec.€1102€of€the€bill€and€sec.€7803€of€the€Code)ó óÐ p&À!$ ÐÌà@ÕÕ%ìàò òòòPresent€Lawó óóóˆÐ P( #& ÐÌà  àPrior€to€1974,€no€one€specific€office€in€the€IRS€had€primary€responsibility€for€employeeÏplans€and€tax„exempt€organizations.€€As€part€of€the€reforms€contained€in€the€EmployeeÏRetirement€Income€Security€Act€of€1974€(ð ðERISAðð),€Congress€statutorily€created€the€Office€ofÐ ,`'* ÐEmployee€Plans€and€Exempt€Organizations€(ð ðEP/EOðð)€under€the€direction€of€an€AssistantÏCommissioner.׃:×Ý ƒ #ÃÝòòÚ  Ú13Ú  ÚóóÝ  Ý×  ×€€EP/EO€was€created€to€oversee€deferred€compensation€plans€governed€byÐ  ð Ðsections€401„414€of€the€Code€and€organizations€exempt€from€tax€under€Code€section€501(a).€ÌÌà  àIn€general,€EP/EO€was€established€in€response€to€concern€about€the€level€of€IRSÏresources€devoted€to€oversight€of€employee€plans€and€exempt€orga