Providing for Consideration of H.R. 5719, Taxpayer Assistance and Simplification Act of 2008

Floor Speech

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Mr. SESSIONS. Mr. Speaker, I rise in opposition to this 52nd closed rule of the 110th Congress, a new record for the United States Congress. And I oppose, also, the underlying legislation which would have been passed by this House in a bipartisan fashion without the inclusion of two partisan and controversial measures that have already drawn veto threats from President Bush's senior advisers.

Mr. Speaker, I will insert a Statement of Administrative Policy for H.R. 5719 in the Congressional Record outlining the administration's oppositions to these two provisions.

STATEMENT OF ADMINISTRATION POLICY, H.R. 5719--Taxpayer Assistance and Simplification Act of 2008

(Rep. Rangel (D) New York and 16 cosponsors.)

The Administration strongly opposes H.R. 5719, the so-called ``Taxpayer Assistance and Simplification Act of 2008.'' The bill includes provisions that would impose new administrative burdens on the trustees of Health Savings Accounts (HSAs). These new burdens on HSA administrators are unnecessary for efficient tax administration, inconsistent with the flexibility purposely afforded HSAs at their inception, and could undermine efforts by employers, individuals, and insurers to reduce health care costs and improve health outcomes by empowering consumers to take greater control of health care decision-making. If H.R. 5719 were presented to the President with these provisions, his senior advisors would recommend he would veto the bill.

Also, the Administration strongly opposes the provisions of the bill that would repeal the current statutory authorization for the Internal Revenue Service (IRS) private debt collection program. As of February 2008, over 98,000 cases have been referred to contractors, representing over $910 million in delinquent accounts. Terminating this program would result in a loss of $578 million in revenue over the next ten years, according to Congress' Joint Committee on Taxation. These are tax dollars that are legally owed to the Government and are otherwise very unlikely to be collected by the IRS due to workload demands. As noted in previous Statements of Administration Policy, the Administration strongly opposes elimination of this program, which is not consistent with the Administration's commitment to a balanced approach toward improving taxpayer compliance and collecting outstanding tax liabilities. If H.R. 5719 were presented to the President with these provisions, his senior advisors would recommend that he veto the bill.

The first partisan provision unnecessarily included by our friends, the Democrats, in this otherwise noncontroversial measure would require all HSA account holders to verify independently the qualified nature of medical expenses for all withdrawals subject to those transactions not substantiated to income taxes.

In theory, it is extremely important to make sure that health savings accounts are being used for qualified medical expenses and not for everyday use. Unfortunately, this language takes the reporting process way too far and risks discouraging health savings accounts enrollment, limiting patient choice, and further burdening our banks and financial organizations with implementing the substantial requirements.

The current system requires that nonqualified withdrawals from a health savings account are subject to individual income taxes as well as a 10 percent penalty. If the Internal Revenue Service is not enforcing these penalties, it should be, and it would make sense that Congress would take the necessary steps to ensure the appropriate audits take place. Our constituents' health and our Nation's financial institutions should not suffer from the Federal Government's inefficiency.

The Joint Committee on Taxation has said that this provision would save money, though they are unable to determine how much savings would result from the newly captured penalties and taxes that make HSAs, health savings accounts, less attractive to consumers, in turn, giving them less health care choices.

I might add that HSAs are there to provide consumers that do not have the tax advantages that corporate employees have, it gives employees health care on a pretax basis and is very important to families across this country.

But consumers are not the only ones who would suffer. Introducing a new step of independent substantiation would increase costs for banks and account administrators. Should that happen, it is very possible that they will pass on these costs to employees, and ultimately, consumers.

Over the past several weeks, Democrats have loudly complained about the charges that banks and other commercial lending institutions pass on to their customers, yet provisions allow for the possibility of increasing those costs further when it now applies to an HSA. I think Members of this body should be opposed to that.

The other controversial and partisan provisions included in this legislation would revoke the Internal Revenue Service's authority to contract out collection authority for those small accounts that in the private sector would often be referred to as ``old and cold.'' In 2004, Congress gave the IRS the ability to utilize the best practices and advantages created by the private sector to address its growing backlog of unpaid debt. Today, it is estimated that $345 billion of these unpaid taxes exist, meaning that every year the average taxpayer who plays by the rules must pay an extra $2,700 to cover the taxes not paid for by these people who are not paying.

This new practice, which begins as a small pilot program that grows as it continues to succeed, is estimated to bring in approximately $2.2 billion in the first 10 years alone. And under this agreement, the IRS would get the first 25 cents of every dollar to hire new collections professionals, a provision that will have a positive, compound effect by helping to bring in even greater amounts of this uncollected revenue for the government in the future.

The program, even in its beginning stages and despite numerous attempts by the Democrat majority to kill it before it could succeed, has been hugely successful, bringing in over $30 million worth of uncollected taxes. Mr. Speaker, that means that $30 million worth of taxes that the IRS chose not to collect has been brought in as a result of what these outside collectors have done. It has received a 98 percent rating from the IRS for regulatory and procedural accuracy as well as a 100 percent rating for professionalism. Additionally, less than 1 percent of the taxpayers contacted by these private agencies have filed complaints with the IRS, not one of which has been validated.

Despite this program's track record of success on behalf of taxpayers who play by the rules and pay their designated share, not to mention the increased revenues that it brings in to fund the Democrats' other new, big spending legislation, there are many opponents on the other side of the aisle that want to prevent it from continuing to work, supposedly to protect the dues of big government union bosses.

They have claimed, despite the fact that 40 out of the 50 States in America already contract out their services, that this is something that only the government can do. You don't have to take my word for it to be said that this is untrue. Even the nonpartisan Government Accounting Office found that ``the IRS may benefit from using private collectors ..... and it is reasonable to assume that the IRS could learn from their best practices as it works to resolve longstanding problems with its debt collection activities.''

As well, in July of 2007, over 51,667 ``cold cases'' that the IRS was incapable of collecting were given to private agencies, resulting in over 5,300 full repayments to the Treasury and almost 2,000 full agreements to repay these debts incrementally. This means that the government received over $24 million of gross revenue that it would not have otherwise received, which was about one-eighth of what it cost for these nonexisting services to be paid for.

In fact, the IRS has publicly stated that no government employee will lose his or her job as a result of this highly efficient private contracting. Instead, the IRS will benefit from the opportunity to focus their talent, expertise, and resources on higher priority, more complex cases.

Last night in the most-closed-Congress-in-history Rules Committee, I offered an amendment coauthored by my friend Congressman Kevin Brady of Texas to strike this unfortunate provision, which was unsurprisingly defeated by the Democrat majority along party lines.

I encourage all my colleagues to vote against this closed rule and the underlying legislation that includes these two provisions.

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