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The Senate Finance Committee has been investigating the IRS which has sparked public interest, and some members of Congress are proposing solutions.

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JIM LEHRER: Changing the IRS. Today, the House Ways & Means Committee approved an overhaul of the tax agency. Committee Chairman Bill Archer, Republican of Texas, is the chief proponent and architect of the new approach. And he's with us now. Congressman Archer, welcome.

REP. BILL ARCHER, Chairman, Ways & Means Committee: Jim, good to talk you again.

JIM LEHRER: I guess you must be pleased with the response your proposal has gotten the last 24 hours.

REP. BILL ARCHER: Well, I am, Jim, but the most pleasing thing is that taxpayers in the future, once this is implemented, are going to have a much better shake out of the IRS. And taxpayers are the winners. It's been almost like Goliath against the David in previous battles between the IRS and taxpayers, and we're giving David a bigger slingshot.

JIM LEHRER: And that slingshot involves changing the burden of proof from the taxpayer to the--through the IRS in tax court, correct, is the--

REP. BILL ARCHER: That is true, and that is a significant part of it, but it also establishes for the first time a criminal penalty in the event that a cabinet official or people in the White House contact the IRS, relative to any audit, either to make an audit against a particular taxpayer, or to suspend an audit perhaps on a friend. And so we're trying to get politics out of the IRS.

JIM LEHRER: Now, explain why the burden of proof change is so important?

REP. BILL ARCHER: Well, it's important because all the IRS today has to do is make an allegation and then the taxpayer has to provide all of the evidence to overcome that and prove that they are, in effect, are innocent or not liable. Taxpayers under current law have less rights in criminals and our court system. We're going to change that.

JIM LEHRER: Now, does that apply only when the matter goes to court, or does that apply from the very beginning contact that a taxpayer has with IRS?

REP. BILL ARCHER: Well, there's no burden of proof in the administrative functions that lead up to any court action. The burden of proof applies when it does go to court. But that's the important thing because the IRS will know in the future that they can't make a claim on people and expect to get it unless they can truly prove it because the taxpayer will then be able to go to court and put that burden on the IRS.

JIM LEHRER: Are you concerned at all, Congressman, that this could help tax cheaters have a little easier go with the IRS?

REP. BILL ARCHER: Absolutely not. This has nothing to do with tax cheaters. This has to do with innocent people, people who have done the right thing, who end up having to establish a burden of proof to prove their innocence. And we've got to change that. And we've got a burden of proof to prove their innocence. And we've got to change that.

JIM LEHRER: Now, another key part of it is your 11-member oversight board for the IRS. Why is that important? How would it be set up?

REP. BILL ARCHER: Well, it's important because eight of those members will be from the private sector. They'll all be appointed by the President but eight will be from the private sector, and the chairman of the board will be a private citizen, not a government person. The secretary of the Treasury would be on that board, so the Treasury will have an input into it, but the Treasury for the first time will not have complete control over the IRS. It has been a stepchild in the Treasury, and that's one of the reasons that we got to the point where we are today. It is going to put that new board in charge of the strategy plan for the IRS and any reorganization and with the input from the private sector, we're going to have an opportunity to see a better managed and a more considerate IRS. It's interesting, Jim, and you probably remember that the IRS spent $4 billion of taxpayers' money to upgrade their computers, and in the end the computer didn't work.

JIM LEHRER: Didn't work. I remember that.

REP. BILL ARCHER: And so this expertise coming in from the private sector is going to be very, very helpful in that type of thing.

JIM LEHRER: Well, what authority will it have to actually run the IRS?

REP. BILL ARCHER: Well, the commissioner will be appointed by the President but out of a list recommended by the board and the commissioner will be in a sense more powerful than he is today to do the right thing subject to overview by the board, rather than having a separate IRS under the egis of the Treasury.

JIM LEHRER: And you believe that one of the reasons the IRS has had its problems is it did not have oversight from the private sector?

REP. BILL ARCHER: Well, clearly, it needs this oversight, and I think, it, yes, has been part of the problem. In the end, though, Jim, we've got such a complex tax code. This is only the first step. We can have a better IRS, but until we totally structurally replace the income tax we're still going to find complexities that are going to be difficult for any IRS to manage, and as you probably know, I'm committed to tearing the income tax out by its roots and getting the IRS completely and totally out of the lives of every individual in this country. But in the interim time, while we still have this code, I also have the responsibility to see that the IRS does not abuse taxpayers.

JIM LEHRER: Do you agree that those hearings that the Senate had recently--I think it was four weeks ago now--on abuses of the taxpayers by the IRS is what got this ball really rolling here?

REP. BILL ARCHER: No, Jim. They certainly brought to the attention of the American public a lot of things that maybe the public didn't know or didn't realize to the full extent. But we had planned this all along before the Senate hearings. The commission, the bipartisan commission on restructuring the IRS, had been meeting for a year and a half, had come out with their recommendation earlier this year, and we have planned all along to take that recommendation and modify it, which we have done, and put it in place. The Senate hearings did not precipitate this.

JIM LEHRER: I meant the sudden ball that everybody's jumped on, or the band wagon everybody's jumped on in the last few days as a result of your plan. That's what I meant. In other words--

REP. BILL ARCHER: Well, I can't say whether it helped to motivate the President to change his mind because he has taken a 180 degree turn from where he was two or three days ago and endorse my bill that came out of the committee today. Perhaps some of what was presented in the Senate hearings influenced that but it certainly did not influence me, and in any way change our plans.

JIM LEHRER: All right. Now, what happens next? Your committee voted this out today. When is it going to go to the floor? When will there be a vote in the full House?

REP. BILL ARCHER: We'll have a vote in the full House before we adjourn this year. I'm not sure whether that will be a week or two weeks from now, perhaps three weeks from now. But it will be put on the floor, and it will pass with a big, big bipartisan vote. And that should send a signal to the Senate that they need to really get behind it and get it passed so we can put it on the President's desk.

JIM LEHRER: Now, the word from the Senate is that they will not do it before adjournment. They won't take it up until next spring.

REP. BILL ARCHER: Well, that's the word that has been conveyed to us as recently as today. I wish they would do it earlier but of course the Senate has to move at its own pace.

JIM LEHRER: Is the Internal Revenue Service fixable?

REP. BILL ARCHER: In the full sense of having a system that all Americans will believe is no longer intrusive in their lives the answer is no but certainly many of the abuses can be corrected, and that's what we're about. Certainly it can operate more efficiently. Certainly it can have a computer system that functions. Certainly it can answer telephone calls and give more accurate answers, be more considerate and more taxpayer friendly, as it were, and this proposal will do that. In addition, certainly it can have less abusive power, less ability to collect taxes that really weren't owed because of the intimidation factor. And changing the burden of proof is going to have a big impact on this.

JIM LEHRER: All right. Well, Congressman Archer, thank you for being with us.

REP. BILL ARCHER: You bet, Jim.

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