Tax News

CCH (cch.taxgroup.com) reports:

  The House continued its yearly tax day legislative effort of passing a taxpayer bill of rights measure on April 15. Lawmakers voted 238 to 179 to approve the Taxpayer Assistance and Simplification Bill of 2008 (HR 5719), despite a promised veto from the Bush administration. House Majority Leader Steny Hoyer, D-Md., noted that the measure is needed to undo complexity in the tax code created by the Republican-controlled Congress and the Bush administration. Hoyer said the tax code has grown by more than 10,000 pages during the period of 2001 to 2006.

  The bill, introduced by House Ways and Means Oversight Subcommittee Chairman John Lewis, D-Ga., would provide that distributions from a health savings account (HSA) for qualified medical expenses would be excluded from gross income, only to the extent those expenses are substantiated. Democrats said that provision was geared to stop taxpayers from using HSA funds to pay for luxury goods and services.

  Among the bill's more controversial provisions is one that would prohibit the use of third-party debt collectors by the IRS to collect unpaid tax liability. House Democrats like Rep. Shelly Berkley, D-Nev., said that private debt collectors are not as efficient as IRS employees and they cost more money than they actually collect. Rep. David Scott, D-Ga., cited a Government Accountability Office study that showed debt collectors made unnecessary calls to taxpayers just to meet call volume goals.

  Including those HSA and debt-collector provisions in the legislation practically guaranteed that Republicans would not support the bill and that it will not survive a Senate vote. According to Ways and Means member Tom Reynolds, R-N.Y., the bill falls short of its goal of simplifying the income tax code. The bill fails to reform the Code and lower taxes, said Ways and Means member David Camp, R-Mich. Although he supported some provisions in the bill, Camp criticize the HSA provisions because it would make it harder for Americans to pay for their health care.

  By Stephen K. Cooper, CCH News Staff