COMMITTEE ON THE JUDICIARY JAMES O. EASTLAND, Mississippi, Chairman JOHN L. MCCLELLAN, Arkansas SAM J. ERVIN, JR., North Carolina EDWARD M. KENNEDY, Massachusetts QUENTIN N. BURDICK, North Dakota ROMAN L. HRUSKA, Nebraska STROM THURMOND, South Carolina CHARLES MCC. MATHIAS, JR., Maryland EDWARD J. GURNEY, Florida SUBCOMMITTEE ADMINISTRATIVE PRACTICE AND PROCEDURE PHILIP A. HART, Michigan STROM THURMOND, South Carolina THOMAS M. SUSMAN, Chief Counsel CONTENTS Alexander, Donald L., Commissioner, Internal Revenue Service. Ac- companied by: Meade Whitaker, Chief Counsel; Lawrence B. Gibbs, Assistant Commissioner (Technical); Anita F. Alpern, Deputy As- sistant Commissioner (Planning and Research); Charles A. Gibb, Chief, Disclosure Staff, Office of Assistant Commissioner (Compli- ance); Harold T. Flanagan, Director, Disclosure Division Office of Chief Counsel; and Burke W. Willsey, Assistant to the Commis- Caplin, Mortimer, former Commissioner of Internal Revenue Service, Field, Thomas, executive director, Tax Analysts and Advocates, Wash- Special Service staff activities, IRS Manual supplement_. Letter from Arthur J. Maren, publisher of Freedom to Senator Edward M. Kennedy, March 25, 1974 (Enclosure: Release of IRS and other telephone directories to the public, IRS Manual supple- Letter from Lawrence E. Wilber, contributing editor of Freedom to IRS breakdown of White House tax check requests-- IRS Manual announcing suspension of the sensitive case program__ Correspondence relating to IRS suspension of previous sensitive case reporting from Donald C. Alexander to Senator Edward M. Ken- Correspondence relating to use of "Official Use Only" classification from Donald C. Alexander to Senator Edward M. Kennedy, October IRS supplementary information on Irish and Brandon cases_. Correspondence relating to reduction in charges for copies of docu- ments from Donald C. Alexander to Senator Edward M. Kennedy, October 23, 1974 (Enclosure: News release, October 15, 1974) – Correspondence relating to freedom of information requests from Donald C. Alexander to Senator Edward M. Kennedy, July 29, 174-- APPENDIXES 1. Internal Revenue Service regulations. guidelines, manual, and policy statements concerning freedom of information____ II. Internal Revenue Service instructions and guidelines relating to freedow of information reading room. Page 181 224 231 III. Internal Revenue Service Chief Counsel's classification of records 265 SUBCOMMITTEE ON ADMINISTRATIVE PRACTICE AND Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 2228, Dirksen Office Building, Senator Edward M. Kennedy, chairman of the subcommittee, presiding, Present: Senators Kennedy (presiding) and Thurmond. Also present: Thomas M. Šusman, counsel and Ann Phillippi, staff assistant. Senator KENNEDY. The committee will come to order. Every American used to believe in the old adage that no matter who you were or who you knew, only two things in life were inevitabledeath and taxes. Many are no longer so sure about taxes. They are now convinced that a few-individuals with rich and powerful friends and corporations who buy political clout with campaign contributionshave found a way to escape the April 15 reaper. Certainly it is true that the compliance of Americans with their tax laws has always been the envy of the free world. It is equally true that the reason they comply is because they believe that our system of taxation is founded upon fair, uniform and even-handed enforcement of the law. Yet when we fill out our form 1040 this year, it is hard not to think of individuals earning hundreds of thousands of dollars who escape Federal tax liability completely; of oil companies with soaring profits who pay only 6 percent of their income in taxes, while workers pay more than triple that amount; and of a vast number of corporations who obtain special treatment under the tax laws. We also think about White House plans to use tax audits to harass political enemies; of White House plans to obtain embarrassing personal information from tax files; of White House plans to revoke tax exemptions for public interest organizations; and of White House plans to secure special treatment for friends. And we think about the allegations that the President himself may have avoided paying his lawful share of his own tax bill. Our system of self-assessment, backed by the full weight of the law whenever necessary, has produced a greater degree of voluntary compliance than the tax system of any other free people. But it is little wonder these days that, when Archie Bunker's daughter catches him cheating on his tax return, he replies, "I'm just, what do you call it, exercising my loopholes, that's all. Like the big guys." Last year a Harris poll found 60 percent of those surveyed in sympathy with |