INTRODUCTION

In 1924, Senator James Couzens (Michigan) introduced a resolution in the Senate for the creation of

a Select Committee to investigate the Bureau of Internal Revenue. At the time, there were reports of

inefficiency and waste in the Bureau and allegations that the method of making refunds created the

opportunity for fraud. One of the issues investigated by the Select Committee was the valuation of

oil properties. The Committee found that there appeared to be no system, no adherence to principle,

and a total absence of competent supervision in the determination of oil property values.

In 1925, after making public charges that millions of tax dollars were being lost through the

favorable treatment of large corporations by the Bureau, Senator Couzens was notified by the Bureau

that he owed more than $10 million in back taxes. Then Treasury Secretary Andrew Mellon was

believed to be personally responsible for the retaliation against Senator Couzens. At the time,

Treasury Secretary Mellon was the principal owner of Gulf Oil, which had benefited from rulings

specifically criticized by Senator Couzens.

The investigations by the Senate Select Committee led, in the Revenue Act of 1926, to the creation

of the Joint Committee on Internal Revenue Taxation. The select committee emphasized

the need for the institution of a procedure by which the Congress could be better advised

as to the systems and methods employed in the administration of the internal revenue

laws with a view to the needs for legislation in the future, simplification and

clarification of administration, and generally a closer understanding of the detailed

problems with which both the taxpayer and the Bureau of Internal Revenue are

confronted. It is more properly the function of the Senate Finance Committee and the

House Ways and Means Committee, jointly, to engage in such an activity.(2)

As originally conceived by the House, a temporary "Joint Commission on Taxation" was to be

created to "investigate and report upon the operation, effects, and administration of the Federal

system of income and other internal revenue taxes and upon any proposals or measures which in the

judgment of the Commission may be employed to simplify or improve the operation or

administration of such systems of taxes.....".(1)

The Senate expanded significantly the functions contemplated by the House and transformed the

proposed Joint Commission to a Joint Committee with a permanent staff. The Senate version was

incorporated into the Revenue Act of 1926 and the Joint Committee was created.(3)

The first Chief of Staff of the Joint Committee on Internal Revenue Taxation was L.H. Parker, who

had been the chief investigator on Senator Couzens' Select Senate Committee. The Revenue Act of

1926 required the Joint Committee on Internal Revenue Taxation to publish from time to time for

public examination and analysis proposed measures and methods for the simplification of internal

revenue taxes and required the Joint Committee to provide a written report to the House and Senate

by December 31, 1927, with such recommendations as it deemed advisable. The Joint Committee

published its initial report on November 15, 1927, and made various recommendations to simplify

the Federal tax system, including a recommendation for the restructuring of the Federal income tax

title.

In the Revenue Act of 1928, the Joint Committee's authority was extended to the review of all

refunds or credits of any income, war-profits, excess-profits, or estate or gift tax in excess of

$75,000. In addition, the Act required the Joint Committee to make an annual report to the Congress

with respect to such refunds and credits, including the names of all persons and corporations to

whom amounts are credited or payments are made, together with the amounts credit or paid to each.

Since 1928, the threshold for review of large tax refunds has been increased from $75,000 to $2

Introduction - Joint Commmittee History & Background Page 1 of 2

http://permanent.access.gpo.gov/lps78154/intrhist.htm 07/22/11
million in various steps and the taxes to which such review applies has been expanded. Other than

that, the Joint Committee's responsibilities under the Internal Revenue Code have remained

essentially unchanged since 1928.

While the statutory mandate of the Joint Committee has not changed significantly, however, the tax

legislative process has. Consequently, the responsibilities of the Joint Committee staff have

expanded considerably. Today, the Joint Committee staff play an integral role in every stage of the

tax legislative process. The following material contains a detailed description of that role and the

staff that performs it.

Specifically, Part I sets out the Joint Committee's statutory mandate. Part II describes the unique

features of the Joint Committee and its staff that enable it to carry out that statutory mandate. Part III

reviews the role of the Joint Committee in the tax legislative process. Part IV recounts the revenue

estimating functions of the Joint Committee. The statutory refund review responsibilities of the Joint

Committee are explained in Part V. Other important functions performed by the Joint Committee are

mentioned in Part VI. Part VII contains a summary of the educational and career backgrounds of the

Joint Committee professional staff and lists the chiefs of staff of the Joint Committee. In addition, a

selected bibliography on the tax legislative process is included.

1. Revenue Act of 1926, House Report 1, 69th Cong., 1st Sess. (1925).

2. Revenue Act of 1926, Senate Report 52, 69th Cong., 1st Sess. (1926) (emphasis added).

3. Revenue Act of 1926, House Report 356 (Conference Report), 69th Cong., 1st Sess.(1926);

Revenue Act of 1926, Public--No. 20--69th Congress (44 Stat. 127).

Return to Home Page

Return to Main Table of Contents

Return to History Table of Contents

Introduction - Joint Commmittee History & Background Page 2 of 2

http://permanent.access.gpo.gov/lps78154/intrhist.htm 07/22/11