Clinton, Lawmakers Finally Agree on Measure to Overhaul the IRS

Lawmakers agreed Tuesday on a compromise Internal Revenue Service overhaul that would extend taxpayer rights in tax collection cases and improve oversight of the agency. President Clinton said he will sign the measure.

“We need an IRS that reflects American values and respects American taxpayers,” Clinton said in a statement Tuesday night. “This bill goes a long way toward that goal, and I look forward to signing it into law.”

Earlier in the day, lawmakers agreed on how to pay for the overhaul, and both Republicans and Democrats predicted correctly that Clinton would not veto it over a controversial capital gains provision that had drawn fire from Democrats.

Under current law, an investor must hold onto an asset for 18 months to qualify for a reduced 20% capital gains tax. The legislation would shorten that to 12 months.

House Ways and Means Chairman Bill Archer (R-Texas) said the capital gains issue had been attached to the IRS bill as House and Senate negotiators wrapped up final work on the $13-billion bill.

The agreement was being circulated for signatures of Senate and House lawmakers appointed to iron out differences in the chambers’ separate versions of the legislation.

Lawmakers also reached agreement on how to pay for the measure. One item to finance the IRS bill would permit wealthy investors to convert their existing IRA accounts into Roth IRAs, a new retirement account created in last year’s tax bill. Such conversions are now available only to people of lesser means.