Date: 1981-12-15
Speaker: VANDER JAGT (republican)
Chamber: H

Mr. Speaker. I rise In support of H.R. 4961 which makes a number of changes in tax law. I am pleased to join as a cosponsor of this bill. and wish to commend my colleagues on the Committee on Ways and Means for the bipartisan spirit of cooperation that led to favorable action In the committee. The most Important provision of H.R. 4961. In my estimation. Is the section that authorizes the award of attorney foes who prev9ail In tax cases when the position of the Government Is unreasonable. This has been a longstanding legislative goal of mine. and I anti pleased to have participated In shaping the particular language Included In H.R. 4961. Early In my congressional career. I Introduced a bill that I called the "David and Goliath" legislationsocalled because It permitted Individuals to take on the full weight of the Federal Government and be reimbursed for their legal expenses If they won. I am sure that most of my colleagues understand the frustration of many of their constituents who feel very Intimidated by the Government. knowIng that even if they are proved right the cost and aggravation of their legal defense will severely penalize them. For this reason. my early legislation to reimburse Individuals who prevail against the Government was very popular. Enactment of the Equal Access to Justice Act in 1980 was a great step toward this legislative goal. However. that act couldnot address the situation In Tax Court cases. so further legislation Is necessary to fill this gap. Admittedly. the situation In tax cases is somewhat different from other Issues Inasmuch as tens of thousands of tax disputes are resolved each year between taxpayers and the Government. The vast majority are resolved at the administrative level. but several thousand are decided In the U.S. Tax Court. Under current law. no taxpayers are entitled to recover their legal fees If they prevail against the Government in Tax Court. In some situations this may encourage a taxpayer to pursue the case in the U.S. District Court where attorney fees can be awarded. rather than in the Tax Court which is better equipped to handle tax cases. The standard the Ways and Means Committee developed to determine when It would be appropriate for attorney fees to be awarded Is a classic compromise. Under the language of H.R. 4961. taxpayers who prevail may be entitled to reimbursement of attorney fees when the position of the Government Is determined by the Court to have been unreasonable. Frankly. I am sympathetic to the arguments of many that taxpayers should automatically be entitled to attorney fees if they win in tax cases. just as they would In other legal disputes. The Treasury Department points out. however. that thousands of cases are itigated to clarify Interpretations of the Tax Code and the application of the Code to the facts and circumstances of the particular taxpayers Involved. with many cases resulting In a give and take on both sides. The Treasury Department sought a standard that would limit reimbursement to cases where the Government acted In bad faith. The final standard of unreasonableness on the part of the Government appears to be both workable and equitable. The language and accompanying report of H.R. 4961 make it clear that this determination will be made by the Tax Court based primarily on the record of the case. so the taxpayer will not have to be subject to another lengthy legal ordeal after he prevails In his original case. Tax Court judges with extensive experience In tax litigation will in most cases be able to determine with relative ease the situations where the Governments case was unreasonable. The committee accepted my amendment to limit attorney fee awards to no more than $50.000 to satisfy the concern that very large corporations and very wealthy Individuals would potentially be able to recover multimilliondollar awards for their attorney fees In complex cases litigated over a number of years. I feel most of us would agree that the objective of this legislation Is to encourage the little guyindividuals and small businessesto pursue their case If they feel the Government Is being unreasonable and the $50.000 amount should satisfy all but the most complex cases. The dollar limitation was viewed as a more workable soiution than the approach taken In the Equal Access to Justice Act which limits the class of person and business entitled to recover attorney fees to spare a taxpayer who prevails against an unreasonable Government position the ordeal of proving yet a third condition. that he Is In fact. of a net worth enditled to the award. Mr. Speaker. I also want to voice mny support for a minor provision of H.R. 4961 concerning refunds of the manufacturers excise tax nn buses. Thec Windfall Profit Tax Act of 1978 repealed the excise tax on buses and cxtablished the criteria for certain refunds of taxes already paid. Unfortunately. some purchasers of buses were denied the refund because the act required dealers to make the refund before receiving the funds from the Treasury. Some dealers were financially unable to make those refund payments due to the economic conditions. and the purchasers were denied the payments the Congress intended In the 1978 act. This change takes care of this situation with little loss to the Treasury. about $300.000 in excise taxes that actually should have been refunded earlier. Mr. Speaker. I urge my colleagues to support H.R. 4961 as reported from the Committee on Ways and Mcans.e