highlights one of the great problems for payers of dividends and interest. This will be the failure or refusal of payees to furnish their account numbers to payers. Because such a situation will exist in many cases for a long period of time, it appears to us most unfair to impose a $5 penalty or indeed any other penalty on interest and dividend payers or to require them to establish reasonable cause to justify each failure to use an account number. I am confident that banks and other payers of interest and dividends will cooperate fully with any reasonable program of this kind and there will be no need for any penalty to be applicable to them. To summarize, we believe that the Treasury account numbering program should be approached with great care and put into effect only after careful study of the many problems involved. We would hope that the Treasury program would be one which could be best geared to the overall use of automatic equipment. Any program adopted without such careful study might well be so burdensome, costly, and unrealistic that it would defeat its own purposes. Moreover, a gradual adoption of a numbering program would minimize the costs which otherwise might be so substantial as to require Government reimbursement for additional equipment and other expenses. Sincerely yours, CARL A. BIMSON, President. THE FIRST NATIONAL BANK OF BOSTON, Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, DEAR CONGRESSMAN MILLS: We are an American commercial bank serving customers in this country and abroad. We have studied with great interest the President's recommendations contained in his message on taxation on May 3, 1961, and are submitting below our views concerning certain of these recommendations. TAXPAYER ACCOUNT NUMBERING SYSTEM On this subject, we endorse the comments and recommendations submitted to the committee by Carl A. Bimson, president of the American Bankers Associa tion in a letter dated May 19, 1961. Very truly yours, ROGER C. DAMON. AMERICAN FEDERATION OF LABOR Hon. WILBUR MILLS, Chairman, House Ways and Means Committee, DEAR CONGRESSMAN MILLS: The AFL-CIO has asked to testify before your committee on the issue of tax administration and the proposal for taxpayer account numbers, but instead of appearing in person we would like to express briefly the views of the AFL-CIO on this important matter, and ask that you incorporate this letter in the hearings of your committee. Any discussion of the Nation's tax system obviously must involve not only the written law, but also its enforcement. While we feel the Treasury Department and the Internal Revenue Service have been performing a creditable job with the resources they have currently available, we think it is important to develop more effective enforcement procedures. We welcome the President's message and Secretary Dillon's statement emphasizing the importance of this question. We specifically approve the request for authority to assign taxpayer account numbers to each taxpayer. The Treasury cannot move to a system of automatic data processing until account numbers are assigned to taxpayers. The adoption of such a system will simplify the operations of the Internal Revenue Service. With the automatic equipment the Treasury will be able to bring together all the tax information pertaining to one particular taxpayer, and thus make possible more effective enforcement of the tax laws. Since practically all taxpayers already have social security numbers and since these social security numbers will become their tax account numbers, the Treasury is not imposing an additional burden on its taxpayers. In fact, the Treasury reports that between 85 and 90 percent of all individual income tax returns already indicate the taxpayer's social security account number. We therefore urge your committee to provide the Treasury Department with this additional authority. Sincerely, ANDREW J. BIEMILLER, Director, Legislative Department. STATEMENT OF L. C. MAY, TREASURER, AMERICAN TELEPHONE & TELEGRAPH Co. TAXPAYER ACCOUNT NUMBERS It is being proposed that the Congress enact legislation requiring every taxpayer (or other recipient of income) to have an identifying number to be used in connection with tax collection and enforcement. It is also being recommended that penalties be imposed upon (1) taxpayers failing to include their identifying numbers on any tax documents required to be filed by them, (2) recipients of income failing to furnish such number to payers of income, and (3) payers of income failing to provide payee's number on information return. Penalty would not be imposed if the failure is due to reasonable cause. The proposals in connection with the numbering plan pose questions and problems not adequately covered at present by official statements on the subject. Certain of these questions follow: 1. The task of obtaining tax account numbers from all individuals to whom dividends and interest are paid and entering such numbers in the payer's reeords would be a burdensome and costly process. The income payer would have no way to force income recipients to provide their identifying numbers. It cannot hold back dividends or interest in the event of failure to obtain the number. Therefore, it is neither practicable nor fair to place the burden of obtaining these numbers on the income payer. It should be a complete discharge of the payer's duty if it (1) notifies all known recipients of income of the requirement to supply account numbers and (2) includes all numbers furnished to it in information returns. Furthermore, it should be made clear that the payer may rely, without penalty, upon the number supplied by the payee. 2. One of the reasons cited for adopting taxpayer account numbers is that name and address information is "subject to an almost endless variety of errors and mutations." This is just as true of shareowner accounts of corporations as it is of taxpayer accounts. Differences in names and addresses supplied with securities submitted for transfer makes it difficult or impossible to match these transfers with existing accounts. It is therefore recommended that any legislation on this subject provide that all securities submitted to income payers for transfer after the enactment of the law must be accompanied by the account number of the purchaser of the securities. This would provide protection to the transfer agent in case of delay and would also facilitate reporting numbers for new payee accounts. 3. The proposals are silent regarding requirements for fiduciary and joint accounts. These types of accounts present a great variety of situations which will require further study on the part of government and business. In the case of joint accounts, for example, the account may include the names of several individuals. We strongly recommend that only one account number be required for purposes of reporting the information return. There are many practical problems in connection with the institution of a numbering plan. We earnestly hope that these problems will be approached on a basis that will be efficient and workable for government and industry. STATEMENT OF COMMITTEE ON TAXATION, NEW YORK CHAMBER OF COMMERCE, ON THE PRESIDENT'S PROPOSALS RELATING TO TAX ADMINISTRATION The President further proposes the use of taxpayer account numbers, increased audit coverage, and stepped-up emphasis on the verification of inventories and their valuation. We are in agreement with these proposals. (Whereupon, at 1:40 p.m., the committee recessed, to reconvene at 10 a.m., Thursday, June 1, 1961.) |