Originally created 07/23/98

Clinton signs legislation to overhaul IRS



WASHINGTON -- President Clinton, once an opponent of congressional efforts to overhaul the Internal Revenue Service, signed a bill Wednesday designed to mold the agency into a friendlier, fairer tax collector. Republican lawmakers were at his side, sharing the credit.

"We've all worked hard to give the American people an IRS that reflects America's values and respects America's taxpayers," Clinton said of the popular election-year legislation.

Clinton had resisted IRS overhaul attempts by the Republican-controlled Congress until nationally televised Senate hearings last September featured taxpayers and IRS employees weaving tales of agency abuses. The hearings created unstoppable political momentum for change, and the Clinton administration jumped on board.

Among the Republican lawmakers who attended the bill-signing ceremony in the East Room of the White House were Senate Finance Committee Chairman William Roth of Delaware and Sen. Charles Grassley of Iowa, one of the IRS's harshest critics in Congress.

Roth, a main author of the legislation, issued a statement lauding the bipartisan effort and saying that without last September's hearings by his committee, no bill would have passed.

"Today marks the dawning of a new era for the IRS -- the way it does business, its service orientation, its efficiency and mission," Roth said, calling it the broadest IRS reform ever.

Among the changes the new law requires: the burden of proof in many tax court cases would shift from the taxpayer to the IRS. In addition, a nine-member board -- including six private citizens -- will oversee IRS operations and recommend the hiring and firing of the IRS commissioner, but could not intervene in individual cases.

Just last Friday, the IRS acknowledged that internal audits showed it had improperly seized property from taxpayers in more than 25 percent of cases studied from the 1997 fiscal year.

Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee, said Clinton "deserves credit for changing course and joining the Congress" on IRS reform.

Clinton, in remarks before signing the bill, struck a conciliatory tone toward Congress, which has thwarted some of his top priorities such as campaign finance reform and anti-smoking legislation.

"This bill shows what we can do when we work together, when we put the progress of America ahead of our partisan concerns, when we put our people over politics," he said. "That is how we have balanced the budget for the first time in 30 years while cutting taxes. ... It is how I believe we can continue to make the tax code fairer for our people."

Not missing a chance to address another election-year tax issue, Clinton renewed his call for Congress to hold off on major tax cuts until it has settled on an approach to reforming Social Security.

House Republicans are clamoring for big tax cuts, and House Budget Committee Chairman John Kasich, R-Ohio, wants to use the projected federal budget surplus to reduce taxes by $500 billion or more over the next decade. Clinton, however, insists it is too early for big tax cuts, considering that this year's projected budget surplus would be the first in 29 years.

"After 29 years, it seems to me it's worth taking one year to address the challenge of fixing the Social Security system before we start spending the surplus on tax cuts or new spending programs, however worthy they might be," the president said.

"I know there are many people who think we should spend the surplus now and spend hundreds of billions of dollars on tax cuts before we have the bipartisan plan to save Social Security," he added. "I think it's the wrong course for America."

In touting the IRS reform bill, Clinton said it would make the agency work more like a company.

"It will help the IRS to serve taxpayers as well as the best private companies serve their customers, building on efforts to offer simple, high-tech options for filing taxes and making tax forms more easily available over the Internet," he said.