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| May 4, 1998 |
The Ethics Exceptions in the IRS Reform Bill
Union Rep Exempted from Regular Criminal Ethics Laws
During markup of the IRS reform bill, the Finance Committee adopted an amendment to add a member to the IRS Oversight Board. That new member will be a representative of an IRS employees' union. However, because of the inherent conflicts-of-interest in the new member's position, the union representative was exempted from four essential ethics laws in the criminal code. The ethics experts in the Office of Government Ethics say that these provisions are "unprecedented" and "inadvisable" and "antithetical to sound Government ethics policy and thus to sound Government."
The IRS reform bill, H.R. 2676, establishes an Internal Revenue Service Oversight Board to oversee the strategic plans, operational plans, management, and budget of the IRS and to "ensure the proper treatment of taxpayers by the employees of the Internal Revenue Service." The Board is composed of nine members:
- The Secretary of the Treasury (or the Deputy Secretary)
- The Commissioner of Internal Revenue
- Six members from the private sector who will be appointed by the President with the advice and consent of the Senate. (These "private-life members" are to have experience and expertise in management, customer service, tax laws, informative technology, organizational development, and "the needs and concerns of taxpayers," and they may serve for no more than two five-year terms.)
- One member "who is a representative of an organization that represents a substantial number of Internal Revenue Service employees" who will be appointed by the President with the advice and consent of the Senate. (This provision was added during markup on a vote of 12-to-8, with three Republicans and nine Democrats voting "aye" and eight Republicans (including the Chairman) voting "no" [S. Rept. 105-174 at 207].)
However, the union representative is not subject to the same ethics rules as other members of the Board and is not subject to the same ethics rules that apply to other public employees. The bill-as-reported exempts the union representative from four key ethics laws when the representative is acting on behalf of her union. Those four laws are a part of chapter 11 of Title 18, United States Code, which is titled, "Bribery, Graft, and Conflicts of Interest," and they are 18 U.S.C. §§203, 205, 207, & 208:
- 18 U.S.C. §203 makes it a crime to "demand, seek, receive, accept, or agree to receive or accept" any compensation as an agent or attorney for a third party when a person is working as an officer or employee of the Federal Government. The bill exempts the union representative on the Board from liability under §203 for acting as an agent or attorney for her union, "§7802(b)(3)(D)(i)(I)", and, unlike all other members of the Board who will be paid out of the Treasury, "§7802(e)(1)", the union representative will be paid by her union, see "§7802(b)(3)(D)(ii)".
- 18 U.S.C. §205 makes it a crime for any Federal employee to appear as an agent or attorney on behalf of anyone in a proceeding to which the United States is a party. As above, the bill exempts the union representative from liability under §205 for acting as an agent or attorney for her union, "§7802(b)(3)(D)(i)(I)", even while she is on the union's payroll, "§7802(b)(3)(D)(ii)".
- 18 U.S.C. §207 makes it a crime to make certain communications to an official of the Federal Government on behalf of any other person if the communications are made "with the intent to influence." (This is the section that restricts the post-employment activities of Federal officers and employees.) The bill exempts the union representative on the Board from coverage under §207 for post-employment appearances and communi-cations on behalf of the union, "§7802(b)(3)(D)(i)(II)". See also, "§7802(b)(3)(B)".
- 18 U.S.C. §208 is a general conflict-of-interest provision which makes it a crime for a Federal employee to participate "personally and substantially" in any way in a matter where he, himself, his family, a partner, or certain others have "a financial interest." The bill exempts the union representative from coverage under §208 for even "personal and substantial participation in a particular matter" so long as all financial interests which would otherwise apply under §208 are interests of her union, "§7802(b)(3)(D)(i)(III)".
(Under the generally applicable law as it now stands, a person convicted of one of the above four offenses may be fined and imprisoned for up to one year. If the offense is willful, imprisonment can be for up to five years. 18 U.S.C. §216.)
The Office of Government Ethics (OGE) says that the waivers in H.R. 2676 are "unprecedented," "inadvisable," and "antithetical to sound Government ethics policy and thus to sound Government." OGE's letter of May 1 is attached: It should be read for a more comprehensive assessment of the bill's extraordinary waivers. Additionally, the OGE letter explains that removing the waivers but keeping the union representative would "leave this individual extremely vulnerable to charges of criminal conduct."
RPC's Legislative Notice says that Senator Faircloth will offer an amendment to remove the union representative from the Board. Of course, there may be other, related amendments.
[All references are to H.R. 2676 as reported from the Senate Finance Committee on April 22, 1998. Citations are to Subsection 1101(a) of the bill which proposes to enact a new Section 7802 of the Internal Revenue Code of 1986.]
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