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Congress of the United States

Honorable Charles H. Taylor

U.S. House of Representatives
Page 6

JOINT COMMITTEE ON TAXATION

Washington, DC 20513–6453

expenses relating to implementation of this new document tracking system during fiscal year 2001. For example, the Joint Committee staff hopes to be able to convert existing files of Member requests and responses to this new system. This will be a longer term project that will require some expense in fiscal year 2001.

C. Review of Joint Committee on Taxation Operations During Calendar Year 1999

As is demonstrated below, the Joint Committee staff faced a significantly greater workload in 1999 compared to 1998. The Joint Committee staff saw substantial increases in the number of revenue estimate requests received from Members during 1999. In addition, the Joint Committee staff devoted significant staff resources to its work on two studies mandated by the IRS Reform Act.

Attachments A through E provide a summary of the activity of the Joint Committee staff for calendar year 1999. The attachments include the following information:

Attachment A -- information relating to the legislative tax reports (Committee and
Conference Reports) on which the Joint Committee staff worked for the revenue-related
legislation considered by the House Committee on Ways and Means and/or the Senate
Committee on Finance;

Attachment B -- a listing of all documents published by the Joint Committee staff during calendar year 1999;

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Attachment C a graph showing the number of Joint Committee requests received by the Joint Committee from Members of Congress for revenue estimates and other assistance during the period 1985 through 1999;

Attachment D -- a table providing information on revenue estimate requests and Joint
Committee staff responses to various categories of requesting Members; and

Attachment E -- information relating to the Joint Committee staff's statutorily mandated

Congress of the United States

Honorable Charles H. Taylor
U.S. House of Representatives
Page 7

Tax legislative reports

JOINT COMMITTEE ON TAXATION

Washington, DC 20513–6433

The Joint Committee staff prepared 12 Committee and Conference reports relating to tax legislation considered by the Congress in 1999 and provided assistance on 5 trade Committee reports. The Joint Committee staff also prepares committee reports for the Senate Foreign Relations Committee relating to negotiated treaties and protocols for consideration by the Senate. During 1999, the Joint Committee assisted the Senate Foreign Relations Committee in its consideration of nine income tax treaties and protocols. A complete listing of these reports is included at Attachment A.

Joint Committee staff publications

In addition to its work on committee and conference reports, the Joint Committee staff published 99 documents during 1999, including pamphlets and other documents prepared for committee hearings and markups and conference action (see Attachment B). All Joint Committee staff publications are accessible from the Joint Committee's web page.

Among the documents published by the Joint Committee staff in 1999 was a 629-page study of present-law penalty and interest provisions mandated by the IRS Reform Act. The Joint Committee staff was able to meet the statutorily imposed deadline of July 22, 1999, for transmitting this study to the Congress despite the tremendous demands on Joint Committee staff resources made in connection with the consideration at the same time of H.R. 2488 (the "Taxpayer Refund and Relief Act of 1999").

At the beginning of 1999, the Joint Committee staff published a document providing background information relating to the Joint Committee on Taxation. This document was recently updated for 2000. An updated version of this document is included as Attachment F.

The Joint Committee staff plays an active role in formulating and presenting Congressional views on issues raised by the Administration's negotiation of tax treaties and other tax-related agreements. The Joint Committee staff prepares pamphlets for the Senate Foreign Relations Committee containing detailed descriptions of the provisions of negotiated tax treaties and protocols, including comparisons with the current U.S. model treaty, which reflects preferred U.S. treaty policy, and with other recent U.S. tax treaties. The pamphlets also contain detailed discussions of issues raised by the proposed agreements. During 1999, the Joint Committee staff prepared 8 documents for the Senate Committee on Foreign Relations in connection with

Congress of the United States

Honorable Charles H. Taylor
U.S. House of Representatives
Page 8

JOINT COMMITTEE ON TAXATION

Washington, DC 20513–6453

extensively with the staff of the Senate Foreign Relations Committee in analyzing the proposed treaties and protocols and in preparing pamphlets and committee reports for the Committee.

The Joint Committee staff's annual report on estimates of Federal tax expenditures (for fiscal years 1999-2003) was published in December 1999.

Revenue estimates and related analysis

Attachments C and D show data relating to the Joint Committee staff's revenue estimating activity for calendar year 1999. Attachment C shows the number of revenue estimate requests received by the Joint Committee staff each year from 1985 through 1999. Since 1985, when the Congress was actively considering legislative proposals that led to enactment of the Tax Reform Act of 1986, and when data on revenue estimate requests was first compiled, the number of requests received annually has increased by 1,116 percent.

The Joint Committee received 4,234 requests for revenue estimates and other assistance from Members during 1999, an increase of 55 percent over the requests received in 1998. During 1999, the Joint Committee staff received more requests from Members than the total number of requests received for the entire 105th Congress (3,871). The Joint Committee staff disposed of 77.9 percent (3,297) of the requests received in 1999 and has approximately 1,000 requests currently pending. During 1999, the Joint Committee staff responded to 1,000 more requests than the average number of responses for each of 1997 and 1998, demonstrating an enormous increase in Joint Committee staff productivity.

Attachment D shows the Joint Committee staff's response rate to various categories of Members requesting revenue estimates. While it appears that certain categories of Members received a lower percentage response rate than other categories, the approximately 1,000 requests pending at the close of 1999 will be addressed during 2000 (i.e., they continue to be treated as pending requests). Thus, a more accurate picture of the Joint Committee staff's response rate to Members will be demonstrated by the final statistics at the end of 2000 for the entire 106th Congress. The Joint Committee staff is cognizant of its responsibility to provide service to all Members requesting it and intends to continue to monitor its response rates to ensure that the Joint Committee staff responds to non-tax-writing Committee Members as well as the taxwriting Committee Members. Furthermore, the Joint Committee staff's new document tracking software, which is being installed at this time, will assist in monitoring Member requests and

Congress of the United States

Honorable Charles H. Taylor

U.S. House of Representatives

Page 9

JOINT COMMITTEE ON TAXATION

Washington, DC 20313–6433

ICT staff studies, investigations, and refund review

As noted above, the Joint Committee staff timely completed in 1999 a study of the present-law penalty and interest provisions mandated by the IRS Reform Act. In addition, the IRS Reform Act also mandated that the Joint Committee conduct a study of the present-law protections relating to disclosure of tax returns and tax return information, which is due January 22, 2000. The Joint Committee staff will meet the deadline for completion of this study. While no amounts were separately appropriated to the Joint Committee staff to complete these studies, studies of this nature place significant demands on limited personnel resources particularly during periods of high legislative activity such as that experienced during 1999.

An ongoing, statutorily mandated function of the Joint Committee is the review of IRS refunds or credits of income tax, estate and gift tax, or any tax on public charities, foundations, pension plans, or real estate investment trusts in excess of $1 million. The Joint Committee staff reviews and reports on such refund cases and makes comments or recommendations with respect to the proposed refund case to the IRS. Attachment E contains information concerning the Joint Committee staff refund review work. During fiscal year 1999, the Joint Committee refund staff reviewed 577 cases involving $5.81 billion in proposed refunds and 64 large deficiency cases. The Joint Committee staff raised concerns in 65 refund cases (or approximately 11.3 percent of the cases) and in 4 of the large deficiency cases. Errors identified by the Joint Committee staff produced a net reduction in refunds of $18.3 million in fiscal year 1999. The average annual reduction in refunds for the last 8 years is $11.9 million.

During 1999, the Joint Committee staff continued its investigation of whether the IRS selection of tax-exempt organizations (described in Code sections 501(c)(3) and 501(c)(4)) and individuals associated with such organizations for audit has been politically motivated, including an analysis of the selection of such tax-exempt organizations for audit for reasons related to their alleged political or lobbying activities. This investigation represents an important exercise of the Joint Committee's statutorily prescribed duty of oversight of the administration of the Federal tax system.

The Joint Committee staff began work in 1999 on a study of the effectiveness of the

Congress of the United States

JOINT COMMITTEE ON TAXATION
Washington, DC 20313–6433

maruble Charles H. Taylor

SH

House of Representatives

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D Anticipated Workload of the Joint Committee on Taxation for Calendar Year 2000

During 2000, the Joint Committee staff's workload will be at least equivalent to what it was heen in the past several years. The Joint Committee staff will be extensively involved in the egletitive process to provide tax relief to the American taxpayers. Health-related revenue proses are also expected to be considered as are a variety of pension-related provisions. The Joint Committee staff will (1) develop legislative proposals, (2) assist in the drafting of such proposals 3) provide revenue estimates for numerous legislative options and amendments, (4) pre markup documents and committee reports, and (5) provide additional economic analysis to the Members.

In addition to this anticipated legislative activity, the Joint Committee staff will continue sy its new responsibilities under the IRS Reform Act. The Joint Committee staff is now required to prepare a complexity analysis for inclusion in Committee and Conference reports for a” revenue legislation. The Joint Committee staff is required to prepare materials for the use of the Congress in connection with joint reviews relating to the operations of the Internal Revenue Service that will occur during calendar years 1999-2003. The Joint Committee staff will comptere work on its study of the effectiveness of the present-law tax rules in deterring taxmotivated expatmation The Joint Committee staff will begin work on a comprehensive study relating to the complexity of the present-law tax system. The Joint Committee staff's experience he other studies mandated by the IRS Reform Act indicates that this study will require 1* staff resources that may exceed the additional amounts appropriated to the Joint

- mas for fiscal year 2000. The Joint Committee staff hopes to complete a study that will provide the Congress with relevant information on the sources of complexity in the present-iaw tax system and ways in which such complexity could be addressed.

F. Summary

Mi Chgienge, we hope that you will approve the appropriation request of the Joint
Maë që Preshing. We believe that this request is the minimum amount necessary to fund
jë ka kuat Comminge furing fiscal year 2001 The Joint Committee staff
b. 2002 peceeded as workioad for 1908 by more than 50 percent. There is no reason
etrad w it na akced any time soon. If the requested funding is not
cserne will be required concaming what staff activites can and should be

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