December 06,2004

Grassley, Baucus Assert Finance Committee Jurisdiction to Appropriators

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen.Max Baucus, ranking member, today expressed concern that appropriators have attempted tolegislate in areas under the Finance Committee’s jurisdiction.

Grassley and Baucus sent a letter toappropriators; the text follows.

December 6, 2004

The Honorable Ted Stevens 
Chairman
Committee on Appropriations
S-128 Capitol Building
Washington, D.C. 20510

The Honorable Robert C. Byrd
Ranking Member
Committee on Appropriations
S-126 Capitol Building
Washington, D.C. 20510

The Honorable Richard C. Shelby 
Chairman 
Subcommittee on Transportation,
Treasury, and General Government
SD-133 Dirksen Office Building
Washington, DC 20510 

The Honorable Patty Murray
Ranking Member
Subcommittee on Transportation,
Treasury, and General Government 
SD-144 Dirksen Office Building
Washington, DC 20510


Dear Chairmen and Ranking Members:

We are writing to express our grave concerns regarding the inclusion of a number of provisions in the fiscal year 2005 omnibus appropriations bill that are within the jurisdiction of the Senate Finance Committee. As you know, one of those provisions – which granted the chairmen ofthe House and Senate Appropriations Committees unrestricted access to tax returns – jeopardized the completion of the omnibus appropriations bill. Passage of the omnibus bill was only achievedfollowing the passage of a resolution that ensured that the bill would not be enrolled and sent to thePresident for his signature until the tax return access provision was removed. Fortunately, the Houseis expected to agree to the resolution.

On September 10, 2004, we sent you a letter asking for “renewed diligence in respecting thejurisdiction of the Finance Committee.” Prior and subsequent thereto, Finance Committee staff maderegular and numerous inquiries with Appropriations Committee staff regarding the status ofappropriations legislation and specific subject matter areas which could implicate the jurisdictionof the Finance Committee. While we appreciate that Appropriations Committee staff did consultwith Finance Committee staff on a preliminary basis on a number of provisions that are within theFinance Committee’s jurisdiction and worked to keep several objectionable provisions out of the bill,a great deal of harm could have been avoided by communicating more openly.

There is no better example of the shortcomings in communication between our twoCommittees than the inclusion of section 222 in the omnibus bill. Section 222 states:

Hereafter, notwithstanding any other provision of law governing the disclosure ofincome tax returns or return information, upon written request of the Chairman of theHouse or Senate Committee on Appropriations, the Commissioner of the InternalRevenue Service shall allow agents designated by such Chairman access to InternalRevenue Service facilities and any tax returns or return information contained therein.

Essentially, section 222 gives the chairmen of the Appropriations Committees unrestrictedaccess to tax returns, and bypasses the taxpayer protections included in tax code section 6103.Section 6103 was enacted in response to the Nixon Watergate scandal and Nixon's attempts to usethe IRS to go after those on his enemies list. Section 6103 embodies the policy that returns areconfidential, and provides that returns and return information may not be disclosed by the IRS, otherFederal employees, State employees, and certain others having access to the information except asprovided in section 6103.

While there are exceptions to 6103, there are also many safeguards to protect taxpayerprivacy. Unauthorized disclosures of tax return information under section 6103 are subject tocriminal penalties of up to $5,000 and five years in jail. These are powerful penalties that ensurepowerful protections for taxpayers. The chairmen and ranking members of the tax writingcommittees are subject to these penalties. In contrast, section 222 gives the chairmen of theappropriations committees unrestricted access to taxpayer data, unrestricted ability to give otherssuch access, and unrestricted ability to subsequently disclose such information. This provisionseverely damages the integrity of our voluntary tax system.

Unfortunately, section 222 was not the only infringement by the appropriators into thejurisdiction of the Senate Finance Committee. Specifically, the following tax, trade, and entitlementprogram policy provisions were also included:

Transportation Treasury Section 221 – Directing Treasury to submit a report to the Appropriations Committee describing how statutory provisions addressing currency manipulationby our trading partners can be "better clarified administratively", etc.

Transportation Treasury, Sec. 223 – Provides the Banking Committee with approval rightsfor Finance Committee nominations of the new Under Secretary for Enforcement and his or her newassistants.

Transportation Treasury, Sec. 643 – Original language amended Internal Revenue Codesection 6402 to offset refunds to collect unemployment overpayments. As amended by H. Con. Res.528, the final language amends 42 USC 653(j) to require the Department of Treasury (via the IRS)to share tax return information with the Department of Health and Human Services for purposes ofcollecting past due child support.

Labor Health Human Services, Sec. 219 – Suspends enforcement of a final rule forclassifying hospitals under Medicare as inpatient rehabilitation facilities.

Other Matters, Section 110 - Amends ERISA to reverse a recent Supreme Court decision onretirement benefits paid under a multiemployer plan that primarily covers Alaskan employees.

Commerce – Providing that negotiations shall be conducted within the World TradeOrganization to recognize the right of members to distribute monies collected from antidumping andcountervailing duties.

Commerce – Establish a position of Chief Negotiator for Intellectual Property Enforcement.

Commerce, Sec. 623 – With the consent of the President, the Secretary of Commerce shallrepresent the United States Government in negotiating and monitoring international agreementsregarding fisheries, marine mammals, or sea turtles.

Commerce, International Trade Administration Section – Negotiations shall be conductedwithin the World Trade Organization to recognize the right of members to distribute moniescollected from antidumping and countervailing duties.

Congressional committees have specific jurisdictional authority. Such authority promotesexpertise in specific areas by the members of those committees. For the Senate Finance Committeeand the House Ways and Means Committee, this means that the members of such committees haveor acquire expertise in tax, trade, and health policy. Not surprisingly, mistakes are made whenjurisdictional divisions are violated without approval from the authorizing committee.

While Subcommittee Chairman Istook expressed his frustrations with an appropriations committee “chain of command problem over whether the subcommittee staff are ultimately accountable to the full committee staff—who represent the full committee chairman—or to the subcommittee chairman,” we are concerned with an apparent disregard for authorization committee jurisdiction and expertise. We have received copies of several pieces of communication dated November 18, 2004, initiated by a member of Chairman Istook’s staff, requesting inclusion of thetax return access provision. It is clear that the staff members of the full Committee andSubcommittees were aware of the provision and knew that it was a tax provision more appropriatelyin U.S. Code Title 26 but revised it to conceal the tax provision from the tax-writing Committees.

Failure to give advance warning of the provision to Senate Finance Committee staff is inconsistentwith prior oral communications between staff. The process which resulted in the fiscal year 2005omnibus appropriations bill fiasco demands that we take tangible steps to change the process.

As such, we respectfully request that the Senate Finance Committee receive a copy of all appropriations conference reports prior to filing and with sufficient time for changes to be made to the bill. We do not intend for our request to unduly delay the appropriations process. Therefore, wegive you our commitment to review each conference report within 24 hours. We hope in turn thatyou will give your commitment to provide the Finance Committee with the ability to ensure that taxpolicy is no longer changed in an appropriations measure without the authorization of the chairmanand ranking member of the Senate Finance Committee.

Sincerely yours,

Charles E. Grassley 
Chairman

Max Baucus
Ranking Member