A Deeply Flawed Process

A DEEPLY FLAWED PROCESS -- (Senate - November 20, 2004)

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Mr. GRASSLEY. Mr. President, I speak in strong opposition to a very troubling provision in this bill that will potentially take away American taxpayers' right to privacy regarding their personal income tax return.

The section I refer to is Section 222 of the bill. This section will allow any agent designated by the chairman of the Appropriations Committee access to tax returns and tax return information.

Section 222 provides this sweeping new authority while at the same time it throws aside years of detailed strict statutory protections for taxpayers that also ensure the privacy of taxpayer information.

Given that the language in this section can be interpreted to eliminate all restrictions on access to taxpayer information and publication of taxpayer information, there is nothing to prohibit the Appropriations Committee from obtaining taxpayer information, information about a corporation, information about an individual and releasing it to the press without fear of penalty.

There is no reason that the Appropriations Committee cannot obtain taxpayer information, your 1040, and just posting it on the Web.

This poorly drafted and even more poorly conceived legislation will bring us back to the doorstep of the days of Nixon, Truman and similar dark periods in our tax history when tax return information was used as a club against political enemies.

My colleagues may find these concerns over the top but I can assure you that when it comes to protection of taxpayer information the history has been a very troubling one and it is only through constant vigilance that we have been able to give Americans confidence that their tax return information will be protected and private.

I find it especially troubling that this language which will harm the volunteer tax system and make the work of the IRS harder comes in an appropriations bill that fails to even provide the the full funding requested for the IRS by President Bush.

What is more important, providing more money to the IRS to combat tax shelters, or allowing Appropriations staffers the right to dance through private citizens' tax returns at will? This is an outrage.

Just so my colleagues understand the claim for this language is that it is to allow the appropriations committee with access to IRS facilities for oversight purposes but not the ability to examine individual tax returns, data or information.

This is the statement that was made in colloquy between the chairman of the Ways and Means Committee and the Chairman of the Appropriations Committee in the other body.

The statement between the two members further states that it is the intent of the Appropriations Committees that all access to taxpayer information remains governed by the disclosure and privacy rules of Section 6103 of the Internal Revenue Code.

For my colleagues information, Section 6103 of the Internal Revenue Code generally governs and protects taxpayer information.

What is particularly frustrating is that Section 6103 already provides the Appropriations Committee a means to have access to taxpayer information-within the protections and limitations provided by law to protect taxpayer privacy.

The Appropriations Committee can seek permission for access to taxpayer information from the chairman of the Ways and Means Committee or myself, in the Senate, the chairman of the Finance Committee. I have received no request for access to taxpayer information from the Appropriations Committee during my time as chairman.

However, I would say that my colleagues know my reputation for oversight and encouraging oversight and I have been very open minded about granting such requests. In addition, any committee can appeal for such authority to the House or Senate for authority-that also has never taken place by the Appropriations Committee to my knowledge. Again, if that authority is granted the protections provided under Section 6103 are still in place.

This provision in the omnibus bill reflects a mindset that Members or, more likely, their staff-don't want to be bothered with such longstanding successful mechanisms to provide access for legitimate congressional oversight and have instead opted for the "easy way out."

And let me be clear, the "easy way out" contained in this bill will jeopardize taxpayer privacy and taxpayer information.

Let me make a final point. This section places the Commissioner of the IRS in the position of possibly forcing him to violate the law under Section 6103. The Commissioner of the IRS is still covered by Section 6103 and the penalties for improper disclosure.

It is my early review of this language that this Section 222 will put the Commissioner in the position of an improper release of tax information in violation of 6103. In such a case it is my view that the Commissioner should not release any tax information under this Section 222.

They say haste makes waste. In this case, with Section 222, haste has made a hash of years of efforts to protect taxpayer information and ensuring that taxpayer information is kept private. It is disgraceful that all this is being done because some Members of the Congress can't be bothered with following the simple rules in place to protect taxpayer information.

Now, I have been satisfied since this has come to our attention that this goes much further than what the chairman of the Appropriations Committee has desired, or even more so, that he was not aware of the sweep of this legislation and that it will be corrected shortly in other action taken by this body under the leadership of the Senate Appropriations Committee-and presumably, I am also told, with the adherence of the chairman of the House Appropriations Committee. So this may no longer be an issue.

Mr. STEVENS. Will the Senator yield?

Mr. GRASSLEY. I yield.

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Mr. McCAIN. Will the Senator from Iowa yield for a question?

Mr. GRASSLEY. Yes.

Mr. McCAIN. Would this not be, the explanation just provided by the chairman of the Appropriations Committee, incredibly disturbing, that we would have a bill before us, that we would have a few hours of debate, and if it had not been for the alert staff, one of the staffers over here, this would have been passed into law?

This would have been passed into law. Now we find out how it happened. One staffer had an agreement with another staffer, and it was placed into a multithousand-page document that none of us had ever seen or read.

Doesn't the Senator from Iowa find this incredibly disturbing, that there will be all kinds of pressure we vote as soon as possible on this bill because we all want to get out of here, that it is just discovered, but it was done by two staffers?

Has this system broken down completely here in the U.S. Senate?

Mr. GRASSLEY. To the Senator from Arizona, I cannot disagree with what he says. But we do have a bill before us. And the fact is, the chairman of the Senate Appropriations Committee has assured me-and he is a man of his word-that he is going to take action to get this out of here. That does not detract anything from what the Senator from Arizona said about the bill, but I am satisfied as far as this egregious provision being taken care of.

Mr. STEVENS. Will the Senator yield further?

Mr. GRASSLEY. Yes, I do. But I want to say thank you.

Mr. STEVENS. The Senator from Arizona is absolutely warranted in his comments. As I said, I apologize to the Senate. We thought we had these bills read through twice. Both sides read them through twice by people who are involved in them.

I have to tell the Senator from Arizona, I do not sit there for 10 hours as that is being read. I rely on the people who have been with us now for years and years to tell us that it has been checked properly, that there is nothing in the bill that has not been approved by the bodies respectively and in conference.

But this error happened. I do apologize to the Senate. It is unfortunate. And it is more than a mistake; it is a terrible disaster, and we will have to examine our whole procedures to see if there is any way we can prevent it in the future. But it has happened now, and we do apologize.

Congressman Young is as disturbed about it as I am, and his statement was: "Take it out now." And that is what we are going to do.

Mr. GRASSLEY. I think the Senate should be assured.

I yield the floor.

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