I want to thank you, Mr. Chairman, for the opportunity to testify this morning. My name is Robert Capozzi and I am a policy analyst for the National Taxpayers Legal Fund, a grassroots taxpayers advocacy group with over 30,000 sponsors nationwide. Our chairman is former Senator Eugene J. McCarthy Our organization is very much concerned about the issue of how to reduce taxpayer burdens and with taxpayers' rights in general.

We at the Legal Fund believe that the issue of taxpayers' rights is of great importance to all Americans. Our revolutionary beginnings were founded upon a taxpayer revolt, one which was in response to capricious and arbitrary taxation. In order for the government of the United States to operate with the support of the American people, the one agency with which we all must deal -- the Internal Revenue Service -- should not act as Ring George did. The American tax system should be as fair and evenhanded as possible.

However, the fact of the matter is that the IRS is seen by many Americans as nothing short of a new Gestapo. This perception must be dealt with by Congress.

Part of the problem is the level of debate in Washington Unfortunate as it may be, the debate in Washington has shifted away from the size of the federal budget to thinking of new "revenue enhancement" techniques. And when the issue of revenue enhancement comes up, the notion of tougher compliance measures inevitably enters the discussion.

The Tax Equity and Fiscal Responsibility Act of 1982, known as TEFRA, was an example of questionable revenue enhancement. The increased compliance measures which were in TEFRA will tend to increase friction between the IRS and taxpayers. One compliance measure -- withholding of interest and dividends -- has already been repealed by overwhelming popular demand. The vote in the Senate was 91 to 5, and in the House 382 to 41. Withholding was as issue which hurt everyone, particularly the little guy, and so the public outcry for its repeal was heard far and wide.

The pro-taxpayer measures in TEFRA were seen as a positive development. However, they did not go far enough.

If there is a message from all of this it is that the American people want tax simplification, not further tax receiving complications. Large numbers of people are now receiving some kind of professional help in preparing their income taxes. This is wrong. It is a wasteful and inefficient and unfair method of tax collection.

We at the Legal Fund have found that there is strong grassroots support for the flat-rate tax. If a pure form is impossible, then certainly a move toward tax simplification, like abolishing many tax preferences and reducing the number of income tax brackets, would be a step in the right direction.

However, even if we cannot get sweeping reform like the flat-rate, we have several suggestions on how to alter the present Internal Revenue Code in order to give the American taxpayer the same kind of rights that he has when he is involved with the criminal justice system. There are too many horror stories of the IRS running roughshod over taxpayers.

Of course, we believe that taxpayer assistance programs should be maintained, but we don't believe that the IRS budget should be increased. Instead, funds should be transferred from administrative and collection divisions to these assistance programs.

Now I'd like to devote the rest of my statement to specific changes in the IRS Code and IRS tactics which I believe are vitally important.

NTLF commissioned Mr. Jack Warren Wade, Jr., a former IRS agent and a co-author of the IRS training manual, to help us formulate about 20 recommendations which would help reduce friction between the IRS and the taxpayer. (I would like to insert the text of our book, The Power to Tax, by Mr. Wade, into the record, and to outline some of the recommendations which we spell out in the book.)

The vast majority of our recommendations involve the IRS's power of seizing and levying of the property an allegedly delinquent taxpayer.

For instance, currently the IRS can seize everything a taxpayer owns up to $1,500 worth or possessions. This paltry sum is primarily based on a 19th century precedent. It should be raised to $20.000.

Another problem is the IRS's inflexibility regarding repayment of taxes due. Once a taxpayer has had his salary levied by the IRS, the installment payment provisions should be made as flexible as possible. If a taxpayer's shows good faith in his desire to pay due taxes, the IRS should not be in the business of collecting retribution. Instead, the IRS should simply make sure that the taxes are paid.

Similarly, if there is property which the IRS wishes to levy, or has levied, and that same property in the hands of the taxpayer would facilitate the taxpayer's ability to pay his taxes, the IRS's levy should be released. The same is true in cases of financial hardship.

Once a taxpayer's property has been levied, the IRS should present the taxpayer with a written form saying that the taxpayer has the right of redemption of such property. Unfortunately, many taxpayers believe that once their property has been seized by the IRS, that the seized property is lost forever, which is not the case. This right should be made explicit by the IRS.

Perhaps our most important recommendation...We believe that a taxpayer and third party rights section should be added to the IRS Code. This section should include a strong statement to the effect that IRS employees have the dual responsibility to protect the interests of the IRS and to guard the rights of the taxpayer and third parties. Taxpayers should have the right to appeal to a supervisory employee of the IRS when their case reaches an impasse with a collection employee. If necessary, the taxpayer should be able to go to the district Problem Resolution Officer. Taxpayers should be advised as a matter of course that they have these rights of appeal.

Excluded property which is levied by the IRS is to be appraised and evaluated by collection employees. If the taxpayer objects to these evaluations, three disinterested parties should be secured to make a determination on the value of the property.

In the case of a wrongful levy, the property should be returned to its rightful owner along with a letter of apology.

Taxpayers should have the right to refuse the entry of an IRS agent, unless a warrant is presented.

Taxpayers should have the right to file a claim for a refund or a credit if they believe that their tax bill is erroneous or excessive.

One problem which some taxpayers have encountered is that once their property has been seized in a jeopardy situation, the IRS has threatened to sell the taxpayers property before final determination has even been made in Tax Court. This is an option which the IRS should definitely not have. They are fallible, and if an innocent taxpayers property is sold off because of an IRS mistake, that taxpayer would have been unfairly victimized.

One IRS tactic which borders on harassment is called "successive seizures." The IRS agent will make a seizure, release the taxpayer's property, and then seize it again.

We propose that a limit be put on successive seizures. We believe that a period of 90 days should elapse before another seizure can be made of the same property.

Amazingly, there are no real guidelines for the IRS specifying the circumstances, conditions, and situations under which a levy will be made. This ought to be rectified. In order to ensure that the IRS fairly and equitably deals with taxpayers, guidelines governing levies should be drafted and enforced.

Many seizures which the IRS makes are totally unnecessary. Sometimes the value of the property seized is so small that the expenses involved in seizing and selling the property are greater than their sale price. These small seizures are only valuable as harassment tactics, and should therefore be discounted.

My last major recommendation is for the creation of a new position in the Internal Revenue hierarchy. A new Office of Ombudsman should be maintained in the IRS. This Ombudsman should be a political appointee of the President, and his powers should include the right to intervene in any enforcement proceeding or activity when a taxpayer has made a petition to the Ombudsman, in the case of an alleged improper or illegal assessment, or an IRS violation of the Tax Code. As a political appointee, the Ombudsman would have the incentive to be responsive to taxpayers as opposed to career IRS employees, who are frequently judged on how "tough" they can be on taxpayers.

Of course, as I said at the beginning of my testimony, the best and most effective way to make life easier for the taxpayer is to move in the direction of tax simplification and tax abatement. A flat-rate type of approach is the most preferable way of doing this. Most of the IRS abuse problems would go away if Congress were to move in this direction.

However, IRS abuse can be controlled if Congress were to enact the changes to the IRS Code which I have just outlined and are contained in our book, The Power to Tax.

Mr. Chairman, I want to thank you for the opportunity to speak before your committee on the issue of efforts to reduce taxpayer burdens.