Back to the Room Where it Happens

Today’s guest post by Chris Rizek and Leila Carney In The Room Where It Happens, It Doesn’t Always Happen Exactly Right was originally posted on May 3rd, but updated today to correct a reference in the original post that had identified the jurisdictional parenthetical in Section 6015(e)(1)(A) as originating in Conference; the House had inserted that provision in its earlier proposed legislation.

In The Room Where It Happens, It Doesn’t Always Happen Exactly Right

Today we continue our series highlighting the recent publication of the Pittsburgh Tax Review edition focusing on the Restructuring & Reform Act of 1998 a quarter century after enactment.  Guest bloggers Leila Carney and Chris Rizek wrote one of the articles as well as today’s post.  Both practice with Caplin & Drysdale in Washington, DC.  Leila focuses on tax disputes and tax litigation.  Like me, she has her undergraduate degree from William and Mary.  Chris was a trial attorney in the Tax Division of the Department of Justice early in his career.  His service as Associate Tax Legislative Counsel with the Treasury Department’s Office of Tax Legislative Counsel in the mid to late 1990s provides the background for today’s post and offered me the first opportunity to meet him.  In that meeting, which took place in another of the rooms where it happened, he discussed the 25 legislative proposals that Chris Sterner and I had drafted.  I remember Chris (Rizek) rejected one of the proposals which sought to codify the reach of the federal tax lien to tenancy by the entireties property because he thought it was an issue for the courts to decide.  His rejection of that proposal seemed prescient when the Supreme Court held the federal tax lien reached T by E property a few years later in United States v. Craft, 535 U.S. 274 (2002).  His practice focuses on tax disputes and tax litigation.  He is well known in the tax procedure community and an early guest blogger for PT

This post was originally posted on May 3rd, but has been updated on May 8th to correct a reference in the original post that had identified the jurisdictional parenthetical in Section 6015(e)(1)(A) as originating in Conference; the House had inserted that provision in its earlier proposed legislation.


Keith Fogg’s article in the Pittsburgh Tax Review’s recent issue, The IRS Restructuring and Reform Act [“RRA”] Twenty-Five Years Later,Vol. 20, No. 1 (2022), is entitled “In the Rooms Where it Happened,” and several authors of posts on this blog have likewise discussed how exciting, and even fun, it can be to be involved in the legislative or regulatory decision-making process.  So, since we’re on that subject, I have a story to relate as well.  The very last items resolved in the conference held to reconcile the House and Senate versions of the RRA were the competing provisions for “innocent spouse” reform.  I was in the room(s) where that happened, and here’s how it happened.


A bit of background first.  Under a provision in the Taxpayer Bill of Right II (1996), Congress had required the Treasury to study proposals to amend the statute governing relief from joint and several liability for “innocent spouses.”  That study, which was finished in early 1998, recommended changes in the existing law to broaden the criteria to qualify for relief, but it did not endorse complete “separation of liability,” due to several perceived conceptual difficulties in correctly allocating liability that had been identified.  See Report to the Congress on Joint Liability and Innocent Spouse Issues (U.S. Treasury Dept., February 1998) at 24-29, 53-55, 57.  Buried at the end in a few brief sentences, the Treasury study also recommended that “Congress expand the Tax Court’s jurisdiction to allow it to review any denial (or failure to rule) by the IRS regarding an application for innocent spouse status.”  Id. at 55.

As described in the article Leila Carney and I co-authored for the same Pittsburgh Tax Review, the House version of the taxpayer rights title of RRA consisted primarily of consensus items, mostly improvements to existing provisions in the Internal Revenue Code that were acceptable both to Treasury and the IRS and to members of the House who wanted strong reforms.  The House bill thus included several agreed-upon changes to the existing innocent spouse rules in section 6013, generally making it easier to obtain relief.  The Senate bill, by contrast, included an entirely new elective scheme of separation of liability.  Innocent spouse reform was the last open item in the conference, due in part to Treasury’s opposition to complete separation of liability and to the perceived incompatibility of the two schemes for relief. 

Senator Roth, Chairman of the Senate Finance Committee, and Rep. Archer, Chairman of the House Ways and Means Committee, were also chairing the conference committees for their two houses.  At the conference, staffers from both committees, as well as the Joint Committee on Taxation, the offices of some other principals, and Treasury (including me) were as usual not sitting right at the table with the members but were scattered around in chairs against the walls.  As the conference was finishing successfully, with hardly any controversy or even hard decisions, the two chairmen’s bonhomie increased, and they began cheerfully calling each other by their first names – Bill and Bill.  So, with only one item remaining – the innocent spouse provision – one Bill suggested to the other Bill, “Bill, why don’t we just do both, put the House version and the Senate version together somehow?”  And the other Bill responded that he thought that was “a splendid idea, Bill,” and they promptly agreed they would just do that.  

And then they looked around the room at the staff – who were exchanging nervous glances with each other and even recoiling in horror.  It had taken months to draft the Senate’s separation of liability provision and work out the problems with successive editions, and it still wasn’t perfect; and now the members wanted the staff to put the two versions together, with no real instructions on how to do it.  And the bill was expected to go to the floors of both houses in less than a week!

As usual after a conference, there ensued several long days of furious drafting and revising of the whole bill, with the pen being held by the Legislative Counsel’s office(s), and drafts of the conference provisions being commented on by the various interested staffers on a daily basis.  Not surprisingly there was a lot of discussion of the innocent spouse revisions (especially new section 6015), which had been joined by keeping separation of liability elective but adding a number of restrictions to it.  In particular, I and some other staffers expressed concerns over the provision granting judicial review of appeals from full or partial denials of separation of liability (placed in section 6015(e)),  with the parenthetical, “(and the Tax Court shall have jurisdiction).”  But the drafters left it that way.

The drafters took a similar approach to granting the Tax Court jurisdiction over another brainchild of the RRA, collection due process (“CDP”) determinations, employing much the same parenthetical: “(and the Tax Court shall have jurisdiction with respect to such matter).”  Code §§ 6330(d)(1) (initially 6330(d)(1)(A)).  Et voilà: ever since, a taxpayer may petition the Tax Court no later than 30 days after a final CDP determination and no later than 90 days after a final determination regarding relief from joint liability including innocent spouse status.

These 30- and 90-day deadlines were taken at face value for a long time, being generally understood to carry the weight of jurisdiction—the deadlines each being in the same sentence as the parenthetical granting jurisdiction.  See Code §§ 6330(d)(1), 6015(e)(1)(A).  But I was reminded of this drafting issue while discussing with Ms. Carney a recent CDP case, Boechler, P.C. v. Commissioner, 142 S.Ct. 1493 (2022), in which the Supreme Court opened the door for applying equitable doctrines to entertain untimely petitions in extreme cases.  In Boechler, the Supreme Court put significant weight on the syntax of the jurisdictional grant in section 6330(d)(1) and the additional phrase “with respect to such matter,” which is present in section 6330(d)(1) but not in section 6015(e)(1)(A).  Boechler, 142 S.Ct. at 1498-99.  In holding that the CDP petition deadline is not jurisdictional, but merely procedural and therefore may be equitably tolled, the Supreme Court contrasted the two parentheticals, hinting that the text of section 6015(e)(1)(A) is more clearly jurisdictional and would not allow for equitable tolling.  Id.  

This somewhat surprising holding drew the attention of the National Taxpayer Advocate, whose 2023 legislative recommendations report (the “Purple Book”) offers the critique that interpreting certain deadlines as jurisdictional and others as merely procedural, without a substantive justification, can result in “harsh and unfair results.”  The Purple Book thus recommends that Congress enact an entirely new section that clarifies that court filing deadlines are not jurisdictional.  Id. (Legislative Recommendation #45). 

While such legislation could create its own set of issues, arguably it would at least be in keeping with the impetus behind section 6015, which itself contains an equitable relief provision in section 6015(f).  In fact, the grant of jurisdiction in section 6015(e)(1) spells out that “an individual who requests equitable relief . . . may petition the Tax Court . . . .”  It certainly is odd that a person may be entitled to equitable relief under the substance of section 6015 but could be denied relief because the Tax Court’s jurisdictional grant precludes equitable tolling.  And while I and perhaps some other staffers were not overly enthusiastic about the ad hoc approach to Tax Court jurisdiction taken in the RRA, we all know that Congress’s goal was to expand, not limit, jurisdiction to review IRS determinations.  Even if it only helps a few individuals in extreme cases—after all, equitable relief is rarely granted—interpreting the deadlines as nonjurisdictional for both sections 6330 and 6015 would at least treat with consistency provisions enacted at the same time for the same reasons (and with about the same amount of forethought). 

What is the moral of the story?  Casual drafting sometimes causes years’ worth of problems.  A more egregious recent example is shown by the Tax Court’s ruling in Farhy v. Commissioner, 160 T.C. No. 6 (April 3, 2023), which held that section 6038(b) penalties are not assessable because they were put in the wrong part of the Code—chapter 61 of subtitle F rather than with the assessable penalties contained in chapter 68.  The Tax Court pointed out that unlike other penalty provisions in other areas of the Code, no separate provision was made for assessing section 6038(b) penalties, nor was there even a cross-reference to chapter 68.  Id. at *4.  My best guess is that when this penalty was being drafted, no one asked, how will that be assessed?  The Congressional habit of rushing legislation through and drafting provisions hurriedly sometimes yields weird and inconsistent results.  Certainly I could not have imagined that tax practitioners and courts, including even the Supreme Court, would spend twenty-five years and hundreds of pages parsing parentheticals that were drafted with little scrutiny.  Put differently, the excitement of being in the room where it happens may be long gone (for me), but the “fun” sometimes continues for years.

CDP At 25: My Contribution To The Pitt Tax Review Symposium on RRA 98

Behavioral economists have a term to describe the cognitive bias that flows from the first information that one is given about a topic: anchoring bias. What one experiences or learns first about a topic is often influential, as we tend to interpret newer information from that anchoring point.

What does that have to do with tax procedure? I think it helps explain some of the resistance to the collection due process provisions, one of the most significant and controversial parts of the 1998 IRS Restructuring and Reform Act and the topic of my contribution to the Pittsburgh Tax Review’s outstanding symposium issue commemorating RRA 98’s 25th anniversary.

In Collection Due Process At Twenty-Five: A Still Important and Needed Check on IRS Collection Power I discuss how CDP, by allowing for limited judicial review in the tax collection process, radically nudged the IRS toward the mainstream of administrative agencies. Most final agency actions that have a significant impact on a regulated party’s rights, including property, are subject to limited judicial review.

Prior to RRA 98, that was not the case for much of the tax collection landscape; sure, there were some exceptions that allowed taxpayers access to court when the IRS did something really rotten, but barriers like the still formidable Anti-Injunction Act deprived courts of jurisdiction to consider things like perhaps an arbitrary denial of a collection alternative or the decision to levy on a taxpayer despite experiencing extreme financial hardship.

When I work with nontax practitioners in pro bono litigation or research projects, they are often shocked at the process in the tax world. “What—the IRS can deny a person’s claim for a refundable credit without clearly explaining why and burying notice of the right to challenge on the bottom of a hard to read notice?” (See, e.g., math error process). “What, the IRS can impose a ten-year ban on someone claiming a tax benefit without an established process for challenging that ban administratively or a clear path to court review?” (See. e.g., the ban on claiming a host of credits following a determination of fraud).

When RRA 98 through CDP opened the door, albeit just a crack, to allow a court to see if the IRS followed the law when it sought to use its vast administrative collection powers, it seemed radical. After all, our starting point in the tax world had been that following an assessment, the IRS had almost unfettered discretion to collect and to deny a taxpayer’s request for a collection alternative.

My article in the Pittsburgh Tax Review builds on the work of others, like Professor Christopher Walker, who have explored how limited abuse of discretion judicial review, backstopped by a court’s ability to order a remand, provides a needed form of oversight to check on arbitrary agency actions (Professors Walker and Stephanie Hoffer explored similar themes in an article they discussed in a series on PT The Somewhat Counterintuitive Policy Case Against Tax Court Exceptionalism). Viewed from that light, what was radical was not that CDP exposed some IRS collection actions to court review, but that prior to CDP the IRS was exempt from the kind of oversight that other agencies routinely experience.

IS CDP perfect? Of course not. Did it inject some additional costs for the IRS at a time when it was hamstrung with tight budgets and much on its plate? Yes. But CDP represents progress for a tax system that often 1) ignored the legitimate interest that taxpayers have in the tax collection process and 2) failed to balance the government’s interest with the individual’s interest.

Rooms Where it Happened

When Tony Infanti and Phil Hackney approached Les and me about partnering between Procedurally Taxing and the Pittsburgh Tax Review for an edition on tax procedure, we decided fairly quickly to focus on the 25th Anniversary of the Restructuring and Reform Act of 1998 (RRA 98).  As we talked about people who were involved in RRA 98 in a significant way and who are still involved in tax procedure, I thought it would be interesting to have them write about their personal experiences.  Instead, we got something better, these individuals reflected on the legislation from a policy perspective with their deep knowledge of both tax procedure and the history of what happened in 1998 and the years leading up to the legislation.

I wrote an article about Section 1203 of the legislation which bothers me because it was a very personal slap at the employees of the IRS and not really at the people who shape the tax laws and policies that seemed to aggravate Congress.  IRS employees are probably the most rule following group of federal employees around.  If the policy makers can craft the right rules, the IRS employees will follow those rules – for better or worse.  You can see a discussion of my article here.

In addition to writing a policy article, I took the opportunity to write about my personal experiences during the period immediately before and after RRA 98 as an attorney in IRS Chief Counsel’s Office.  My post today highlights those experiences.


One of the highlights for me of my experiences during the RRA 98 period and one I do not write about in the article was the opportunity to occupy the office of the former Chief Judge of the Tax Court.  Many readers may not realize that for a long period of its history which will be highlighted next year as it celebrates 100 years, the IRS national office headquarters at 1111 Constitution Avenue served also as the location of the Tax Court.  When Congress elevated the Tax Court to an Article I Court in 1969, the Court felt a need to physically divorce itself from the IRS in order to demonstrate its independence.  That separation resulted in the construction of the current Tax Court building in the Judiciary Square section of Washington, DC a few years later.

During the time the Tax Court was co-located with the IRS, it occupied much  of the second floor of the building at 1111 Constitution Avenue and the Chief Judge had an office at the corner of 12th and Constitution immediately below the office of the Commissioner.  The offices of the Chief Judge and the Commissioner are quite large and come with their own private half bath.  Both offices have nice views of the Washington Monument and other buildings on the National Mall.  I occupied the office during the fall of 1998 while I was on assignment as the head of the General Litigation Division.  It was, by far, the best office I ever occupied.

 That office was one of the “rooms” where RRA 98 happened for me.  In a short article in the Pittsburgh Tax Review, I recount four episodes from that period that were particularly memorable.  I will briefly mention them in this post.  Read them in greater detail here.

Senate Testimony

Senator Roth and the Senate Finance staff chose 10 IRS collection cases that appeared abusive and subpoenaed the IRS employees to come to the Senate and testify about those cases before Senate staffers who were looking to pick cases for testimony before the Finance Committee.  The first case up before the staffers was a case from Virginia where I was the District Counsel back in the days when the IRS operated geographically with districts around the country.  The District Director asked me to look into the case to determine if the IRS had done something wrong and later asked me to accompany the four employees from the district on their trip to the Hill.

Working with my colleagues in the Richmond office, John McDougal and Chris Sterner, I didn’t find anything wrong with the way the IRS had handled the case.  Ultimately, I think the Senate staffers agreed but going to the Senate and representing clients at the preliminary hearing was a memorable experience.  It certainly heightened my interest in all that was to follow in this legislation.

The Call from the Chief Counsel

As the legislative process heated up it became clear that the collection practices of the IRS were at the heart of the concerns on Capital Hill.  One day I received a call from the Chief Counsel, Stuart Brown, asking me to draft proposed legislation that would improve the collection provisions of the code without crippling the ability of the IRS to collect.  Chris Sterner and I spent a frantic few days drafting 25 proposed changes to the code six of which made it into the legislation.  None of our proposed changes were earth shattering but the process was quite memorable.

The Case with Nina Olson

Most of you know Nina as the long serving National Taxpayer Advocate but before she assumed that role she founded and ran the Community Tax Law Project (CTLP) in Richmond.  She started CTLP not long after I became the District Counsel in Richmond.  My office and I worked with her on many cases as CTLP represented low income taxpayers in Virginia.  One of the cases resulted in an offer in compromise, but Nina did not like my view of how much a taxpayer should pay in order to receive a compromise.  After we resolved the case, she testified before Congress about how unfair the compromise provisions were to low income taxpayers and persuaded Congress to change the law to eliminate the IRS’s ability to reject an offer solely on the basis of the amount of the offer, a provision that is found in Section 7122(d)(3)(A).

The Aftermath of RRA 98

Following the passage of RRA 98, it was clear that the IRS needed to publish a significant amount of guidance.  Much of that guidance needed to be written about the collection provisions of the code.  The new Collection Due Process (CDP) provision was the law that created the largest change in the way the IRS operated.  (As part of this series, stay tuned for additional blog posts from Les and Bryan Camp that offer differing perspectives on the value of CDP). Writing the regulations for this somewhat radical change to the collection provisions of the code, created the biggest challenge.

I had the opportunity to go from Richmond to DC to temporarily occupy the position at the head of the General Litigation Division.  I worked with the attorneys in that division to write the CDP and other regulations working during a very compressed time period.  During this time I occupied the office I described above.  Because of the long hours worked to get out these regulations I became more familiar with that office than I might have preferred.


A quarter century later the time surrounding the passage of RRA 98 still stands out to me as a critical period of my legal career.  The laws passed during that legislation provided some good and some less good changes to the way the tax system operates.  The articles in the recently published edition of the Pittsburgh Tax Review give you an opportunity to reflect on those laws and for any readers old enough to have practiced before RRA 98 to remember the way it was.

Simplicity Lost

We welcome guest bloggers Josh Blank and Leigh Osofsky who write today about their article on tax law simplification in the Pittsburgh Tax Review. 

Joshua Blank is a Professor of Law and the Faculty Director of Strategic Initiatives at the University of California, Irvine School of Law.  Prior to joining UCI Law in 2018, Blank was a member of the full-time faculty of NYU School of Law, where he served as Professor of Tax Law, Vice Dean for Technology-Enhanced Education, and Faculty Director of its Graduate Tax Program.  Blank’s scholarship focuses on tax administration and compliance, taxpayer privacy, and taxation of business entities.  He is currently working on two books under contract with Cambridge University Press.  

Leigh Osofsky is the William D. Spry III Distinguished Professor of Law at University of North Carolina School of Law. Osofsky has previously served as a tax lawyer in private practice and a clerk on the Second Circuit Court of Appeals, and has previously taught tax law at NYU School of Law and the University of Miami School of Law.  Osofsky’s scholarship focuses on tax policy, administrative law, and how federal agencies communicate complex legal regimes. 

This is a great pairing of tax scholars who found a forgotten provision of RRA 98 and remind us of one of the important goals of that legislation that got lost along the way.  Perhaps their article will rekindle both Congressional and administrative interest in this important topic and set us again on a path toward better tax administration both in legislation and implementation.  Keith

Scholars, policymakers, and taxpayers themselves often cite complexity as one of the worst problems plaguing the tax system. Complaints include, among other things, that the Internal Revenue Code (the “Code”) is too long, too difficult to read, very complicated, and, often, unclear.  Among the many costs of tax complexity are (1) billions of hours of paperwork and stress that taxpayers face each year, (2) monetary costs that taxpayers bear when they hire advisors and purchase software to report their tax liability and file their tax returns, (3) difficulty that taxpayers encounter when attempting to claim tax credits and other benefits, and (4) challenges the IRS confronts when attempting to deter tax avoidance and evasion opportunities that tax complexity often creates.


As we have discussed extensively, one way in which the IRS manages tax law complexity is through a phenomenon we have called “simplexity” – the presentation of complex law to the public as if it is simple, without actual simplification of the underlying tax law. The IRS relies on simplexity in many plain language explanations of the tax law, such as IRS Publications and automated legal guidance (in the form of the Interactive Tax Assistant). Simplexity enables the IRS to explain the tax law in ways the public is more likely to understand, thereby fulfilling the IRS’s duty to help taxpayers comply with the tax law. However, simplexity has its own problems, including oversimplifying the tax law, and, ultimately creating a two-tier system, whereby sophisticated parties enjoy benefits from the underlying, complex law, which benefits are not available to the general public.

What is often missed in the discussion of the complexity of the tax law (and the simplexity that flows from it) is that the Internal Revenue Service Restructuring and Reform Act of 1998 (“RRA 98”) embraced tax simplification as a real possibility. While typically better known for its structural changes to the IRS, RRA 98 also made some real promises regarding tax law simplification. However, as we detail in our article in the Pittsburgh Tax Review symposium on the 25th anniversary of RRA 98, this tax simplicity promise faded over time.  We uncover the history of the tax simplicity promise of RRA 98, and how this promise was lost over time. We draw out lessons we might take away for future tax simplicity efforts.

RRA 98 placed burdens on the IRS, JCT, and Congress itself, in furtherance of its tax simplicity promise. RRA 98 required the IRS to analyze the sources of complexity in federal tax law, and annually report its analysis to Congress. Congress also tasked JCT with providing Congress with regular reports on the state of the federal tax system. Moreover, JCT was required to provide Congress with a tax complexity analysis for proposed tax legislation. Indeed, RRA 98 provided that it would not be in order for Congress to consider tax legislation that was not subject to the required tax complexity analysis. Congress also placed some obligations on itself. RRA 98 provided that, going forward, the tax legislative process should be informed by front-line technical experts at the IRS. Together, these provisions indicated a serious commitment of resources to the project of tax law simplification.

Initially, the IRS and JCT made significant efforts to comply with RRA 98’s simplification provisions. In June 2000, the IRS provided the first tax law complexity report to Congress, and Congress held a hearing on the matter. In its report, the IRS identified systemic problems with the tax law that yielded tax law complexity, and identified specific ways to reduce tax law complexity. With both this report, and another that followed in 2002, the IRS took seriously its potential role in reducing tax law complexity, and Congress members heralded the work as some of the most important to follow from RRA 98. JCT likewise issued a study of the federal tax system in 2001, which offered recommendations for simplification. The over 1,000-page report represented a herculean effort on JCT’s part.

However, these efforts soon proved to be the apex of compliance with RRA 98’s simplification promise. After these reports, the IRS failed to fulfill its annual tax complexity reporting obligation, though it argued that the objective was achieved in other ways. JCT also never again undertook anywhere near as careful an examination of the complexity of the federal tax system. JCT has generally provided tax complexity analysis of proposed tax legislation. However, the quality and utility of this analysis has been inconsistent. As evident from the recent Tax Cuts and Jobs Act of 2017, JCT often provides analysis that is cursory, and sometimes misses entirely important tax complexity costs of proposed legislation. As for the involvement of IRS officials in the legislative process, the opposite appears to have been the trend since RRA 98, with the IRS having less of a seat at the legislative table as time has passed since 1998.

A fair amount of the blame for the loss of RRA 98’s simplification efforts can be laid at Congress’s feet. Congress failed to provide the funding needed for the IRS and JCT to sustain its tax complexity reporting over time (while also fulfilling all their other obligations). Congress also failed to take meaningful action on the early reports, or hold the IRS and JCT accountable for not following through in later years, undermining incentives to continue with them. Congress also structured the legislative process in a way that often excluded the possibility of meaningful input from IRS officials, and made it difficult for JCT to provide robust tax complexity analysis on proposed legislation. In this regard, the story regarding the lost simplification efforts can be seen as another iteration of a common perception of RRA 98: a congressional scapegoating of the IRS for tax system problems beyond the IRS’s own making.

However, there are also important lessons specific to RRA 98’s tax simplification promise, which can inform future simplification efforts. One big takeaway is that tax simplification cannot be achieved through a mere promise at a moment in time, but rather must be sustained, through dedicated congressional will, over time. Congress’s promises to involve the IRS in the legislative process, for instance, were not enough to ensure this outcome, especially as political headwinds changed. Instead, Congress may have to regularize the IRS’s involvement in the legislative process, including through potential, formal reporting requirements. Congress would also have to be willing to actually give the IRS and JCT the time they need to provide thorough complexity analysis of tax legislation, and would have to be willing to respond to it with real legislative change. Congress may consider other, more broad-based efforts, such as formalizing the Code, to make it easier for the general public to apply the tax law.  Redoubling efforts and adopting some of these reforms may be able to recover some of the simplicity lost with the abandonment of RRA 98’s tax complexity commitments.

In short, our article offers both some hope and some caution about efforts to simplify the tax law. The RRA 98 story is a hopeful one, in that it shows a moment in time in which there was real, political will to prioritize simplification in the creation and administration of the tax law. It also serves as a cautionary tale in how easy it is for legislative and regulatory actors to abandon simplification efforts as time moves on, and other priorities take precedence. The RRA 98 story thus illustrates the combination of political will, and sustained, concrete efforts that will be necessary to yield real tax law simplification.

Looking back and looking forward: The National Commission on Restructuring the IRS

Armando Gomez is a partner with Skadden, Arps, Slate, Meagher & Flom LLP, resident in the firm’s Washington, D.C. office.  He is a past chair of the ABA Section of Taxation and past president of the American College of Tax Counsel.  From 1996-1997, he served as chief counsel to the National Commission on Restructuring the IRS, and advised the Co-Chairs of the Commission on the development of legislation implementing the Commission’s recommendations. Keith

A quarter century ago I had the honor of advising then-Senator Bob Kerrey and then-Congressman Rob Portman, the Co-Chairs of the National Commission on Restructuring the IRS, as they crafted a bipartisan report laying out a vision to transform the IRS into a responsive service organization for the 21st century.  Although progress has been made, the agency has yet achieve that vision.

Those who followed the debates around the Restructuring Commission will recall that a big issue was the recommendation for an independent oversight board.  As I wrote in the Pittsburgh Tax Review, the board established by Congress has been left to wither on the vine.  Whether it can be resuscitated is questionable.  But in the meantime, what’s really important is that all four of the key Presidentially-appointed tax positions be filled.  The Chief Counsel role has been empty for the first half of the Biden Administration, just as it was for the first half of the prior Administration.  Even worse, the Tax Division head has been vacant for almost nine years now.  These are critical positions that should be filled as soon as possible.   And while the Administration is thinking about appointments, there presently are three (soon to be five) vacancies on the Tax Court that also should be addressed promptly.

One thing that has changed remarkably in the past 25 years has been the focus in the tax world on the Administrative Procedure Act.  Back then, Treasury and the IRS took the view that most tax regulations were not subject to the APA.  Although the courts in recent years have set aside regulations, notices and other IRS rules for failure to comply with the APA, in many ways the agency continues to circumvent regular use of notice and comment.  For example, by issuing CCAs, GLAMs and other written determinations and FAQs, and then relying on those documents to make audit determinations and convincing IRS Appeals to follow them, the Chief Counsel’s office is effectively making outcome determinative rules.  In my paper I suggested two reforms to address this problem. 

First, the agency should provide Treasury with a quarterly report of all written determinations issued in the preceding calendar quarter, and Treasury would then have 90 days to decide whether to open a new guidance project to formalize any of those determinations.  This would ensure that the Office of Tax Policy would have visibility into newly issued positions of the Office of Chief Counsel, and that any new rules would be subjected to the formal rulemaking procedures.

Second, Congress should amend § 7803(e), or the Commissioner should issue a directive to the Chief of Appeals, to ensure that in evaluating cases referred to Appeals, no weight should be given to any FAQs, written determinations or other internal directives addressing how the agency or its lawyers would interpret the Code or regulations.  This would ensure that when evaluating the relative hazards of litigation, Appeals would treat such documents the same as any arguments made in the taxpayer’s protest.

Separately, I offered two recommendations to make the dispute resolution process more efficient.  In my view, the JCT refund review process harms taxpayers by significantly delaying resolution of their cases.  This was not what Congress had in mind when it enacted this process nearly a century ago, and it can be fixed easily.  The threshold for reviews should be increased significantly, strict time limits should be imposed on the JCT refund reviews, and the purpose of those reviews should be clarified to ensure that the reviews serve to inform Congress about significant refunds but not to infringe on the IRS’s role in administering the tax laws.

Finally, I suggest greater use of alternative dispute resolution to resolve tax disputes.  The rest of the world has learned that arbitration often can be more efficient that litigating cases in court.  And particularly in the case of valuation and transfer pricing disputes, “baseball” arbitration could lead parties to abandon extreme positions and thereby end up much closer to the “right” answer. 

These recommendations won’t solve everything, but implementing them will help ensure that the tax system is administered more fairly and efficiently, which would be a great thing for taxpayers and the IRS alike.