December 14, 2005 

Honorable Donald A. Manzullo, Chair
Small Business Committee
House of Representatives
Washington, D.C. 20515 

Dear Congressman Manzullo: 

 I am herein writing to request your assistance and input on a very important matter that pertains to taxpayers in this country. In 1997, a series of hearings were held by the Ways and Means Committee in which many cases of IRS abuse had been provided by testimony. As a result, the 1998 IRS Restructuring and Reform Act was enacted by the Congress and it was our intent to correct many of the problems outlined in the “IRS hearings”.  

However, in 1999, the Treasury Department proposed temporary rules that violated the congressional intent. In 1999, Ms. Nancy Johnson, Mr. Rob Portman, and Mr. Bill Archer, all Members of Congress, signed a letter that was addressed to then Treasury Secretary Summers castigating his department for violating congressional intent with regards to interest abatement. The Treasury Department backed off from implementing these rules until July 2002, when it filed the rules into the Federal Register, even after the Treasury Department was provided clarity on the issue of congressional intent with respects to interest abatement on long standing cases.

 The Conference Agreement provides clarity on the issue of what the Congress had intended with respect to abatement of interest on long standing cases. It states in part…”the IRS, in certain circumstances, to consider additional factors (i.e., factors other than doubt as to liability or collectibility) in determining whether to compromise the income tax liabilities of individual taxpayers”. The Conference Agreement on page 289 makes it very clear that the Congress wanted interest abatement beyond the usual two forms of interest abatement (doubt as to collectibility and doubt as to liability). The Conferees added a third tier of interest abatement that would “promote effective tax administration”, which would be done regardless of collectibility or as to liability. The Conference Agreement adds that the “IRS may utilize this new authority to resolve longstanding cases by forgoing penalties and interest which have accumulated as a result of delay in determining the taxpayer’s liability”.

 Has the IRS ever implemented this third tier of interest abatement, to “promote an effective tax administration” on any longstanding cases, with total disregard as to liability or collectibility? NO! Has the IRS ever abated interest for limited partners on any longstanding partnership cases where the individual partners have large interest bills due because the case has been ongoing for more than seven years? NO!  

In one case that the IRS is familiar with (the “Amcor” cases), the IRS held onto company records for several years and delayed the process by which partners could have paid the tax and avoided interest but the IRS waited many years to issue a final tax bill. Has the IRS abated interest for any Amcor limited partner under the third tier of interest abatement as spelled out on page 289 of the Conference Agreement to the IRS Restructuring and Reform Act of 1998? NO! The IRS has continually failed to implement this form of interest abatement since it is what the Congress intended and passed into law. 

I would appreciate your assistance on this matter. I believe that a formal hearing in the Small Business Committee is the perfect avenue to get answers to this fiasco and to determine what happened and why the IRS has been allowed to violate Congressional intent. Most of the Amcor investors are small business owners who have been ravaged by this atrocity within the system. I respectfully request a formal hearing as soon as possible so that we can demonstrate our case in this matter and the need for revised legislation to correct this deficiency.   

Sincerely,
Michael R. Bradle