Tax Lien Simplification Act

Mr. President, today, on behalf of the Senate Republican leadership, I am introducing the Invest in America Act, a comprehensive set of legislative proposals that are designed keep American families and the American economy on the path of continued prosperity by preventing--the largest tax increase in our Nation's history--a tax increase that is scheduled to happen in 2011 if Congress fails to extend current tax policies.

The American economy is the envy of the developed world. Our unemployment rate is just 4.4 percent, and 7.8 million new jobs have been created since mid-2003. Not only are more Americans working than ever before, but the benefits of our growing economy are broadly shared by all Americans. Real, inflation-adjusted wages rose 2.2 percent in the last 12 months--faster than the average rate of the late 1990s. This meant an extra $1,279 in the past year for the typical family with two wage earners. To keep our economy growing on this strong and sustainable path, we must avoid tax increases that could damage our economy.

America's economy has been growing at a strong and sustainable pace due in large measure to the fact that Americans are willing to work harder and be more productive in their labor, thus creating more new goods and services at lower costs. Americans will continue to be productive and contribute to our strong economy if we reject marginal tax rate increases on the income they earn. Studies have shown that people really do work more if the tax imposed on their extra labor is relatively low. Arizona State University's distinguished economics professor, Dr. Edward Prescott, won a Nobel Prize in economics for research that proved this theory.

It's interesting that the big investment bank, Goldman Sachs, studied what would happen if taxes increase across-the-board, as is scheduled to happen in 2011 when the various tax rates and other provisions enacted since 2001 expire. The short answer is an immediate recession-- a recession that would not be avoided even if the Federal Reserve acted to cut interest rates. This study demonstrates very clearly why Congress cannot allow this tax hike to happen.

The President proposed in his fiscal year 2008 budget to make the tax rates and many other tax incentives enacted since 2001 permanent. In marked contrast, Democrats have produced budget resolutions in both the House and the Senate that assume all of these tax policies will expire and taxes will increase dramatically for virtually every American. In fact, the average family will see its taxes increase by about $3,675 if the Democrats are successful in canceling the tax relief. Today, Senate Republicans are going on the record in support of making these important tax policies permanent and in opposition to plans by Democrats to allow these tax increases to occur.

Our legislation underscores our commitment to American families and to a strong American economy by preventing the largest tax increase in American history. We believe that American families pay enough in taxes--indeed, revenues are running above historical levels. The Invest in America Act makes all of the current-law tax rates permanent so that no American family faces an automatic tax hike in 2011. I want to underscore that Republicans believe that no American family should face a tax increase--not young people just entering the job market and other lower-income Americans who are benefiting so substantially from the 10 percent bracket; not middle-income families; and not more successful Americans, including the almost 80 percent of taxpayers in the top bracket who report small business income.

Our legislation also invests in American families by making the $1,OOO-per-child tax credit, the marriage penalty relief, and the other components of the Economic Growth and Tax Relief Reconciliation Act-- EGTRRA--of 2001 permanent. American moms and dads face an enormous and unexpected reduction in the child tax credit in 2011,

when the child tax credit is scheduled to be cut in half. Republicans know that the child tax credit helps countless parents offset some of the costs associated with raising their children, and we know that reducing the credit by 50 percent will be a terrible blow to many families. That's why Republicans support making the current $1,000 per- child tax credit permanent.

Married couples will face an unwelcome surprise when the marriage penalty relief expires. The marriage penalty relief the Republicans enacted is aimed squarely at middle-income families because the relief is only provided for the standard deduction and the 15-percent bracket. Republicans believe there is no reason a married couple should face a higher tax burden than they would as two single taxpayers, and so we propose to invest in American families by making the marriage penalty relief permanent.

The Invest in America Act underscores our commitment to investing in America's future by making the important education-related tax benefits enacted in recent years permanent. This will help countless middle- income Americans afford higher education costs. Our legislation invests in America's future by extending the tuition deduction, extending the modifications to Coverdell education savings accounts, extending certain provisions for the student loan interest deduction, and extending the exclusion for employer-provided educational assistance. We also propose to permanently extend the $250 deduction for expenses of elementary and secondary school teachers.

Republicans also believe that parents ought to be able to pass on the fruits of their labor to their children without the Federal death tax confiscating half of their estate, above a small exemption amount. The death tax hits family businesses and family farms and ranches the hardest because the owners are often not wealthy families, but rather have most of their assets tied up in the value of the business or the value of the land. And while the death tax hurts families, it also hurts our economy if it forces family businesses to close down, eliminating good-paying jobs in the process. Under current law, the death tax is repealed in 2010, but springs back to life in 2011, when more than 131,000 families will have to file estate tax returns in that year alone. Americans pay taxes throughout their lives, and Republicans believe they should not have more than half of their assets taken in taxes at death too, so the Invest in America Act makes repeal of the death tax permanent.

The Invest in America Act goes beyond the 2001 and 2003 tax relief laws and also repeals--once and for all--the individual Alternative Minimum Tax (AMT). If you go by rhetoric alone, there is overwhelming bipartisan support in Congress for repealing the AMT. But, American taxpayers want action. The problems we have encountered from the AMT demonstrate what happens when Congress tries to target a tax specifically at the ``wealthy''--we almost always end up hitting the broad swath of middle-income families. The AMT was never intended to hit middle-income taxpayers, and Congress ought to repeal it before it imposes unnecessary and unexpected taxes on more and more families.

Republicans understand that, in addition to not raising taxes on families, we cannot take our strong and dynamic economy for granted; we believe we must invest in American competitiveness. While our legislation should not be viewed as a comprehensive approach to improving American competitiveness, we believe a necessary first step is to prevent tax increases that will surely hurt America's competitive position in the world economy. Specifically, the Invest in America Act makes permanent the current tax rates for capital gains and dividends; it makes the increased expensing amounts available for small businesses permanent; and it makes permanent the newly-enhanced research and development tax credit.

America cannot expect to be the home for worldwide capital markets if it is hostile to American investors, so the Invest in America Act makes the existing tax rates for long-term capital gains and for qualified dividends permanent. These lower tax rates implemented in 2003 and extended in 2006 have encouraged investors of all income categories to put their money to work in the markets, generating solid returns for American investors and providing much needed capital for American businesses to grow and create new jobs. It has been 4 years since these lower rates were enacted-long enough for us to determine once and for all that lower rates really do encourage increased economic activity.

Growth since the 2003 tax relief has averaged more than 3.5 percent, while it averaged just 1.3 percent from the first quarter of 2001 through the second quarter of 2003. The Dow Jones Industrial Average has risen by 40 percent since the lower investment tax rates were enacted. The average 401(k) balance has risen by about 65 percent since 2003. All of this investment activity makes it easier for entrepreneurs and businesses to raise funds to expand and grow their businesses, create more jobs, and improve standards of living around the country.

It's interesting to note that, while the conventional wisdom is that these lower investment tax rates only benefit ``the rich,'' half of all Americans own shares of stock, either on their own or in their retirement savings. In fact, most of the Americans who are benefiting from these lower rates are middle-income taxpayers. Moreover, the current 5 percent rate, which is available for the lower-income investors and drops to zero in 2008, is a sometimes-forgotten benefit, but it is especially important to our senior citizens who rely on their investment income. According to statistics calculated by the Joint Committee on Taxation, the vast majority of elderly taxpayers who report capital gains and dividends income have incomes under $100,000.

In addition to reducing tax rates to encourage more business investment, Congress also significantly increased the amount of investment that small businesses may expense in a given year. This has helped countless small businesses expand their operations by making the purchase of new equipment more cost-effective. Unfortunately, these increased levels are only in effect through 2009. Small businesses create most new jobs in the U.S. and comprise half of our private gross domestic product, so the Invest in America Act proposes to make the enhanced small business expensing levels permanent.

While low tax rates on income and investments are essential to keeping America competitive, Republicans know that many countries around the world are specifically and aggressively working to attract some of the most high-quality jobs and economic activities available: research and development. America hinders its ability to attract and retain R&D here because the tax incentives we give to encourage R&D are not permanent law, but must be extended every year or so. This makes it very difficult for companies to commit to large-scale R&D investments in the U.S., when other countries are offering permanent or longer-term tax incentives. To ensure that America remains the most attractive place for R&D, the Invest in America Act makes the R&D tax credit permanent.

The Invest in America Act also acknowledges that the U.S. tax system imposes a costly and frustrating burden on taxpayers, with filers spending an average 30 hours to complete the typical Form 1040. Six in ten Americans opt instead to hire a professional. The billions of dollars spent each year simply complying with the tax system could be put to a much better, and more economically beneficial, use. The Invest in America Act expresses the Sense of the Senate that the Finance Committee should report tax simplification legislation by the end of the year to make the tax system fair, transparent, and efficient, without raising tax rates.

Finally, I want to address the effect all of the tax changes have had on our budget deficit and to dispute the notion that Congress must raise taxes elsewhere if we are going to make existing tax rates and incentives permanent and repeal the AMT. It is important for all Americans to know that all of the additional tax revenue flowing into the Treasury from our growing economy, hardworking Americans, and from profitable investments has caused our budget deficit to shrink below 2 percent of GDP--well below its historical average. If we stay on our current progrowth path, reject tax increases,

and impose reasonable restraints on spending growth, we will balance the budget by 2012, if not sooner.

As for the notion that Congress must ``pay for'' tax relief with tax increases, I would note that the official estimates about how much certain tax provisions will ``cost'' the Treasury are just that, estimates. And they often prove to be wrong. For example, since 2003, the Treasury has collected $133 billion more in capital gains revenue than was originally projected by the Congressional Budget Office; revenues have exceeded official CBO projections by 68 percent. Second, the concept of requiring corresponding tax increases falsely assumes that the Government is entitled to the revenue, when it really belongs to the American people. Third, revenues are running above their historical average of about 18.2 percent and are projected to continue increasing even if we make the current tax structure permanent, as we propose in the Invest in America Act. If we raise taxes in order to extend the tax policies, we will be taking even more resources out of the private sector and spending them on government programs, which will certainly damage our economy. To protect our growing economy, I believe we must ensure that revenues, as a percentage of our economy, do not rise much above their current level.

I am pleased to be the lead sponsor of this important legislation that underscores the commitment of the Senate Republican leadership to investing in American families, America's future, and American competitiveness. America's economy is growing at a strong and sustainable level, to the benefit of all American families, but this growth will not continue if we unwisely allow taxes to be increased on work, savings, and investment--the very engines of economic growth.

Mr. President, I rise and send to the desk a bill entitled the ``Fair Arbitration Act of 2007.'' This bill continues the legislative process that I started several years ago with the introduction of the ``Consumer and Employee Arbitration Bill of Rights'' and the ``Arbitration Fairness Act of 2002.'' The purpose of the Fair Arbitration Act of 2007, like my earlier proposals, is to improve the Federal Arbitration Act so that it will remain a cost- effective means of resolving disputes, but will do so in a fair way. The Fair Arbitration Act will provide procedural protections to everyone who enters into a contract with an arbitration clause. This bill ensures that consumers, employees, and small businesses that enter into contracts covered by the Federal Arbitration Act will have their disputes resolved in accordance with fundamental principles of due process, and in a speedy and cost-effective manner.

Congress originally enacted the Federal Arbitration Act in 1925. It has served us well for over three-quarters of a century. Under the Act, if the parties agree to a contract affecting interstate commerce that contains a clause requiring arbitration, the clause will be enforceable in court. In short, the Federal Arbitration Act allows parties to a contract to agree not to take their disputes to court, but to resolve any dispute arising from that contract before a neutral decision-maker, generally selected by a nonprofit arbitration organization, such as the American Arbitration Association or the National Arbitration Forum. The parties can generally present evidence and be represented by counsel. And the decision-makers will apply the relevant State law in resolving the dispute. Arbitration is generally quicker and less expensive than going to court.

In recent years, there have been some cases where the arbitration process has not worked well, but thousands of disputes have been fairly and effectively settled by arbitrators. Such a system is even more important because of skyrocketing legal costs where attorneys require large contingency fees. Accordingly, I have opposed piecemeal legislative changes to the act. Instead, I believe that the Senate should approach the Federal Arbitration Act in a comprehensive manner.

The approach of reforming arbitration rather than abandoning the arbitration process provides a better solution in several respects. Arbitration is one of the most cost-effective means of resolving disputes. Unlike businesses, consumers and employees generally cannot afford a team of lawyers to represent them. And their claims are often not big enough so that a lawyer would take the case on a 25 percent or even a 50 percent contingent fee. In a 1998 article in the Columbia Human Rights Law Review, Lewis Maltby, then the Director of the National Task Force on Civil Liberties in the Workplace of the American Civil Liberties Union and a Director of the American Arbitration Association, explained how court litigation is often just too expensive for most employees:

Even if the client has clearly been wronged and is

virtually certain to prevail in court, the attorney will be

forced to turn down the case unless there are substantial

damages. A survey of plaintiff employment lawyers found that

a prospective plaintiff needed to have a minimum of $60,000

in provable damages not including pain and suffering or other

intangible damages before an attorney would take the case.

Even this, however, does not exhaust the financial

obstacles an employee must overcome to secure representation.

In light of their risk of losing such cases, many plaintiffs'

attorneys require a prospective client to pay a retainer,

typically about $3,000. Others require clients to pay out-of-

pocket expenses of the case as they are incurred. Expenses in

employment discrimination cases can be substantial. Donohue

and Siegelman found that expenses in Title VII cases are at

least $10,000 and can reach as high as $25,000. Finally, some

plaintiffs' attorneys now require a consultation fee,

generally $200-$300, just to discuss their situation with a

potential client.

The result of these formidable hurdles is that most people

with claims against their employer are unable to obtain

counsel, and thus never receive justice. Paul Tobias, founder

of the National Employment Lawyers' Association, has

testified that ninety-five percent of those who seek help

from the private bar with an employment matter do not obtain

counsel. Howard's survey of plaintiffs' lawyers produced the

same result. A Detroit firm reported that only one of eighty-

seven employees who came to them seeking representation was

accepted as a client.

Without arbitration, consumers and employees are faced with having to pay a lawyer's hourly rate, which may amount to several thousand dollars to litigate a claim in court. If that is what consumers and employees are left with, many will have no choice but to drop their claim. That is not right. It is not fair. Thus, Professor Stephen Ware of the Cumberland Law School stated in a paper published by the CATO Institute that ``current [arbitration] law is better for all consumers [than an exemption from the Federal Arbitration Act] except those few who are especially likely to have large liability claims. . . .''

Thus, while some have argued that the Congress should enact exemptions from the Federal Arbitration Act for different classes of contracts from automobile franchise contracts to employment contracts to chicken farmers, such exemptions would not help the overwhelming majority of the people who could not afford a lawyer to litigate in court. This is where arbitration can give consumers and employees a cost-effective forum to assert their claims. Thus, before we make exceptions to the Federal Arbitration Act for special interests with friends in Washington, I think it is our duty to consider how we can improve the system for everyone.

We can improve the arbitration system, but we must take a balanced approach. In such an approach, we must protect the sanctity of legal contracts explicitly protected under Article I, Section 10 of the U.S. Constitution. In any contract, the parties must agree to all the terms and clauses included in the contract document. This includes the arbitration clause. This is basic contract law, and the basic premise of the Federal Arbitration Act for over 75 years.

Unfortunately, however, in certain situations consumers, employees, and small businesses have not been treated fairly. That is what the Fair Arbitration Act is designed to correct.

The bill will maintain the cost savings of binding arbitration, but will grant several specific ``due process'' rights to all parties to an arbitration proceeding. The bill is modeled after consumer and employee due process protocols of the American Arbitration Association, which have broad support. The bill provides the following rights:

1. Notice. Under the bill, to be enforceable, an arbitration clause would have to have a heading in large, bold print, would have to state whether arbitration is binding or optional, identify a source that the parties may contact for more information, and state that a consumer could opt out to small claims court.

This will ensure, for example, that consumers who receive credit card notices in the mail will not miss an arbitration clause because it is lost in the ``fine print.'' Further, it would give all parties a means to obtain more information on how to resolve any disputes. Finally, the clause would explain that if a party's claims could otherwise be brought in small claims court, the party would be free to do so. Small claims court, unlike regular trial court, provides another inexpensive and quick means of dispute resolution.

2. Independent selection of arbitrators. The bill grants all parties the right to have potential arbitrators disclose relevant information concerning their business ties and employment. All parties to the arbitration will have an equal voice in selecting a neutral arbitrator. This ensures that the large company who sold a consumer a product will not select the arbitrator itself, because the consumer with a grievance will have the right to nominate potential arbitrators, too. As a result, the

final arbitrator selected will have to have the explicit approval of both parties to the dispute. This helps ensure that the arbitrator will be a neutral party with no allegiance to either party.

3. Choice of law. The bill grants the non-drafting party, usually the consumer or the employee, the right to have the arbitrator governed by the substantive law that would apply under conflicts of laws principles applicable in the forum in which the non-drafting party resided at the time the contract was entered into. This means that the substantive contract law that would apply in a court where the consumer, employee, or business resides at the time of making the contract will apply in the arbitration. Thus, in a dispute arising from the purchase of a product by an Alabama consumer from an Illinois company, a court would have to determine whether Alabama or Illinois law applied by looking to the language of the contract and to the place where the contract was entered into. The bill ensures that an arbitrator would use the same conflict of laws principles that a court would in determining whether Alabama or Illinois law would govern the arbitration proceedings.

4. Representation. The bill grants all parties the right to be represented by counsel at their own expense. Thus, if the claim involves complicated legal issues, consumers, employees, or small businesses would be free to have their lawyer represent him in the arbitration. Such representation should be substantially less expensive than a trial in court because of the more abbreviated and expedited process of arbitration.

5. Hearing. The bill grants all parties the right to a fair hearing in a forum that is reasonably convenient to the consumer or employee. This would prevent a large company from requiring consumers, employees, or small business owners to travel across the country to arbitrate their claim and to expend more in travel costs than their claim is potentially worth.

6. Evidence. The bill grants all parties the right to conduct discovery and to present evidence. This ensures that the arbitrator can have all the facts before making a decision.

7. Cross examination. The bill grants all parties the right to cross examine witnesses presented by the other party at the hearing. This allows a party to test the statements of the other party's witnesses and be sure that the evidence before the arbitrator is correct.

8. Record. The bill grants all parties the right to hire a stenographer or tape record the hearing to produce a record. This right is key to proving later whether the arbitration proceeding was fair.

9. Timely resolution. The bill grants all parties the right to have an arbitration proceeding completed promptly so that they do not have to wait for a year or more to have their claim resolved. Under the bill, a defendant must file an answer not more than 30 days of the filing of the complaint. The arbitrator has 90 days after the answer to hold a hearing. The arbitrator must render a final decision within 30 days after the hearing. Extensions are available in extraordinary circumstances.

10. Written decision. The bill grants all parties the right to a written decision by the arbitrator explaining the resolution of the case and his reasons therefor. If the consumer or employee takes a claim to arbitration, he deserves to have an explanation of why he won or lost.

11. Expenses. The bill grants all parties the right to have an arbitrator provide for reimbursement of arbitration fees in the interests of justice and the reduction, deferral, or waiver of arbitration fees in cases of extreme hardship. It does little good to take a claim to arbitration if the consumer or employee cannot even afford the arbitration fee. This provision ensures that the arbitrator can waive or reduce the fee or make the company reimburse the consumer or employee for a fee if the interests of justice so require.

12. Small claims opt-out. The bill grants all parties the right to opt out of arbitration into small claims court if that court has jurisdiction over the claim and the claim does not exceed $50,000.

The bill also provides an effective mechanism for parties to enforce these rights. At any time, if a consumer or employee believes that another party violated his or her rights, the consumer or employee can request and the arbitrator may award a penalty up to the amount of the claim plus attorneys fees. For example, if a defendant party failed to provide discovery to a plaintiff party, the plaintiff could move for an award of fees. The amount of the fee award is limited, as it is in court, to the amount of cost incurred by the employee in trying to obtain the information from the company. This principle is taken from Rule 37 of the Federal Rules of Civil Procedure. After the decision, if the losing party believes that the rights granted to him by the Act have been violated, it may file a petition with the Federal district court. If the court finds by clear and convincing evidence that the losing party's rights were violated, it may order a new arbitrator appointed. Thus, if a consumer, employee, or small business has an arbitrator that is unfair and this causes him to lose the case, the plaintiff can obtain another arbitrator.

This bill is an important step to continuing a constructive dialog on arbitration. This bill will ensure that those who can least afford to go to court can go to a less expensive arbitrator and be treated fairly. It will ensure that every arbitration carried out under the Federal Arbitration Act is completed fairly, promptly, and economically. I look forward to working with my colleagues in the Senate to ensure that consumers, employees, and small businesses who agree in a contract to arbitrate their claims will be treated fairly under the Federal Arbitration Act.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today is the day that millions of Americans across this country perform an important civic duty by paying their taxes. It is also a day when many Members of Congress take the time to reflect on the state of the Federal tax system and consider how we can strengthen it, simplify it, make it more fair, and, in a responsible way, ease the tax burden on our citizens.

Earlier this year, I introduced the Stop Tax Haven Abuse Act, S. 681, to strengthen our tax system. That bipartisan bill, which I introduced with my colleagues, Senators Norm Coleman and Barack Obama, targets outrageous, offshore tax abuses that drain $100 billion each year from the U.S. Treasury at the expense of honest, hardworking American families who pay their fair share. Offshore tax abuses eat away at the foundations of our tax system, draining billions in tax revenue, diverting substantial IRS enforcement resources, and demoralizing honest taxpayers who play by the rules. S. 681 offers a host of provisions to stop offshore abuses, and I urge my colleagues to take a serious look at that legislation on this tax day. If enacted, it would make our tax system more effective, more fair, and more productive. It deserves to be enacted into law this year.

Stopping offshore tax abuse, however, is far from the only tax problem that needs to be addressed if we are to achieve a fair and cost effective tax system. So today, I am introducing with Senator Coleman legislation offering a cure to a completely different tax problem. The target of this legislation is better administration of Federal tax liens.

It has been 40 years since Congress made any significant changes to the laws regulating how the Internal Revenue Service (IRS) files Federal tax liens and makes them public. Right now, outdated laws are forcing the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that should be replaced by a modernized electronic filing system capable of operating at a fraction of the cost. It is time to bring the Federal tax lien system into the 21st century. That's why I am introducing today, along with Senator Coleman, the Tax Lien Simplification

Act, which will simplify the process of recording tax liens at an estimated ten-year cost savings of over half a billion dollars, while at the same time improving taxpayer service by speeding up the release of liens after taxes are paid.

Tax liens are a principal way to collect payment from persons who are delinquent in paying their taxes. By law, Federal tax liens arise automatically ten days after a taxpayer's failure to pay an assessed tax. The lien automatically attaches to the taxpayer's real and personal property and remains in effect until the tax is paid. However, the tax lien is not effective against other creditors owed money by the same taxpayer, until a notice of the Federal tax lien is publicly recorded. Generally, between competing creditors, the first to file notice has priority, so the filing of tax lien notices is very important to the government and to the taxpaying public if taxes are to be collected from persons who don't pay them.

Current law requires the IRS to file public notices of Federal tax liens in State, county, or city recording offices around the country. There are currently more than 4,100 of these local recording offices, many of which have developed specific rules regulating how such liens must be formatted and filed in their jurisdictions. This patchwork system developed more by default than by plan, because those local offices were where documents affecting title to real property, judgments, and other lien and security interest documents had always been filed.

In 1966, to help the IRS comply with a proliferating set of local filing rules for Federal tax liens, Congress passed the Tax Lien Act to standardize certain practices. This act provided, for example, that liens against real estate had to be filed where the property was located, and required each State to designate a single place to file Federal tax liens applicable to personal property. Most States subsequently adopted a version of the Uniform Tax Lien Filing Act, enabling the IRS to file a notice of tax lien in each locality where the taxpayer's real estate is located, and a single notice where the taxpayer resides to reach any personal property. For corporations, States typically require the IRS to file a notice to attach real estate in each locality where the real estate is located, and a separate notice, usually at the State level, to attach other types of property. There are often additional rules for trusts and partnerships. The end result of the law was to reduce some but not all of the multiple sets of rules regulating the local filing of Federal tax liens.

In addition, in most cases, the IRS continued to have to physically file the tax lien in the appropriate local recording office. In most cases, that filing is accomplished by mail. Some jurisdictions also allow electronic filings, but those jurisdictions are few and far between. The same is true if a lien has to be corrected, or a related certificate of discharge, subordination, or nonattachment needs to be filed, or when a tax liability has been resolved and the IRS wants to release a lien. Each usually requires a paper filing in one or more local recording offices. If a paper filing is lost or misplaced, the IRS often has to send an employee in person to deal with the problem, adding travel costs to other administrative expenses.

The paper filing system imposes similar burdens on other persons dealing with the tax lien system. Any person who is the subject of a tax lien, for example, or who is a creditor trying to locate a tax lien, is required to make a physical trip to one or more local recording offices to search the documents and see if a lien has been filed. Currently, there is no central database of locally filed tax liens that can be accessed by any member of the public or by any taxpayer that is the subject of a federal tax lien. Not even IRS personnel have access to such a tax lien database. It does not exist.

The result is an inefficient, costly, and burdensome paper filing system that can and should be completely revamped. Businesses across the country learned long ago that electronic filing systems outperform paper; they save personnel costs, material costs, time, and client frustration. Government agencies have learned the same thing as they have moved to electronic databases and recordkeeping, including systems made available to the public on the Internet. Among the many examples of government-sponsored, Internet-based systems currently in operation are the contractor registry operated by the General Services Administration to allow persons to register to bid on federal contracts, the license registry operated by the Federal Communications Commission to allow the public to search radio licenses, and the registry operated by the U.S. Patent and Trademark Office to allow the public to search currently registered patents and trademarks. Each of these systems has saved taxpayer money, while improving service to the public.

Just as government agencies gave up the horse and buggy for the automobile, it is time for the IRS to move from a decentralized, paper- based tax lien filing system to an electronic national tax lien registry. But the IRS' hands are tied, until the Congress changes the laws holding back modernization of the federal tax lien filing system.

The bill we are introducing today would make the changes necessary to enable the IRS to take immediate steps to simplify and modernize the Federal tax lien filing system. The operative provisions would require the IRS to create a national registry for the filing of tax lien notices as an electronic database that is Internet accessible and searchable by the public at no cost. It would mandate the use of this system in place of the existing system of local filings. It would establish the priority of Federal tax liens according to the date and time that the relevant notice was filed in the national registry, in the same way that priorities are currently established from the date and time of filing in local recording offices. The bill would also shorten the time allowed to release a tax lien, after the related tax liability has been resolved, from 30 days to 10 days.

To establish this new electronic filing system, the bill would give the Treasury Secretary express authority to issue regulations or other guidance governing the establishment and maintenance of the registry. Among other obligations, Treasury would be required to ensure that the registry was secure and prevent data tampering. In addition, prior to the implementation of the national registry, the Treasury Secretary would be required to review the information currently included in public tax lien filings to determine whether any of that information should be excluded or protected from disclosure on the Internet. For example, the Treasury Secretary would be expected to prevent the disclosure of social security numbers that are currently included in many public tax lien filings, but if disclosed on the Internet, could facilitate identity theft. While such identifying information could continue to be included in a tax lien filing to ensure that the filing is directed toward the correct person, the registry could be constructed to prevent such information from being disclosed publicly and to instead provide such information only upon request from appropriate persons involved in the enforcement of the tax lien or collection of the tax debt. By requiring this information review prior to implementing the national tax lien registry, the bill is expected to provide greater protection of some taxpayer information than occurs in current tax lien filings.

The bill would require the Treasury Secretary to establish a functioning tax lien registry by January 1, 2009, but would also allow the IRS to continue to use the existing paper-based tax lien filing system, in parallel with the new system, for an appropriate period to ensure a smooth transition. The IRS has indicated that it would be able to establish an electronic tax lien filing system within the specified time period.

Moving to a centralized, electronic tax lien filing system, an Internet-based National Registry of tax liens, would accomplish at least three objectives. It would save taxpayer dollars, speed the process for filing and releasing tax liens, and simplify the process for researching Federal tax liens for taxpayers and creditors.

The IRS estimates that moving from a paper-based, locally filed tax lien system to an Internet-based, Federal tax lien filing system would save about $570 million over 10 years. That's half a billion dollars in cost savings. These

savings would come from the elimination of State filing fees, IRS personnel costs, travel costs related to local filing problems, and the cost of lost taxes whenever the IRS makes an error or a tax lien filing is misplaced or delayed. Filing fees, for example, vary widely from state to state, but typically cost at least $10 per filing, and in some States cost as much as $150. If a taxpayer has real estate in multiple jurisdictions, those costs multiply. Personnel costs include the IRS service center staff that is currently charged with filing tax liens nationwide and complying with the myriad filing rules in effect in the 4,100 recording offices across the country. Additional anticipated savings would come from reduced mailing and travel costs.

Electronic filing would not only save money, it would improve taxpayer service. Taxpayers who are the subject of a tax lien filing, for example, would benefit from a centralized registry in several ways. First, taxpayers would be able to review their liens as soon as they are filed online, without having to make a physical trip to one or more local recording offices. Second, taxpayers would have an easy way to look up their liens on multiple occasions, identify any problems, and correct any errors. Third, once the underlying tax liability was resolved, the IRS would be required to release the tax lien in 10 days, instead of the 30 days allowed under current law. The longer 30-day period is necessitated by the current complexities associated with filing a paper lien in one or more local offices, complexities that would be eliminated by the establishment of a centralized, electronic registry.

Creditors who need to research Federal tax liens would also benefit from a centralized, electronic registry. Lenders, security holders and others, for example, would be able to use a simplified search process that could take place online and would not require physical trips to multiple locations. Simplifying the search process would also provide greater certainty that all tax liens were found. The ability to research Federal tax liens remotely and instantaneously should be of particular benefit to larger lenders and to creditors of taxpayers with widely distributed assets.

Federal tax liens are not a topic that normally excites the public's interest. Sound tax administration, however, requires attention to administrative as well as enforcement concerns. Federal law is currently impeding development of a more efficient, cost effective tax lien filing system. Amending the law as indicated in the Tax Lien Simplification Act to streamline the tax lien filing system, moving it from a paper-based to an electronic-based system, would not only advance the more efficient, cost-effective tax system we all want, it would also save half a billion dollars in taxpayer money. At the same time, it would make the system work better for individual taxpayers by reducing the possibility for mistakes and speeding up the release of liens for taxpayers who have paid. Modernizing our tax lien filing system makes sense in every way. I urge my colleagues to join Senator Coleman and myself in enacting this bill into law this year.

I ask unanimous consent to print in the Record following these remarks a section-by-section analysis of the bill.

Mr. President, today is the day that millions of Americans across this country perform an important civic duty by paying their taxes. It is also a day when many Members of Congress take the time to reflect on the state of the Federal tax system and consider how we can strengthen it, simplify it, make it more fair, and, in a responsible way, ease the tax burden on our citizens.

Earlier this year, I introduced the Stop Tax Haven Abuse Act, S. 681, to strengthen our tax system. That bipartisan bill, which I introduced with my colleagues, Senators Norm Coleman and Barack Obama, targets outrageous, offshore tax abuses that drain $100 billion each year from the U.S. Treasury at the expense of honest, hardworking American families who pay their fair share. Offshore tax abuses eat away at the foundations of our tax system, draining billions in tax revenue, diverting substantial IRS enforcement resources, and demoralizing honest taxpayers who play by the rules. S. 681 offers a host of provisions to stop offshore abuses, and I urge my colleagues to take a serious look at that legislation on this tax day. If enacted, it would make our tax system more effective, more fair, and more productive. It deserves to be enacted into law this year.

Stopping offshore tax abuse, however, is far from the only tax problem that needs to be addressed if we are to achieve a fair and cost effective tax system. So today, I am introducing with Senator Coleman legislation offering a cure to a completely different tax problem. The target of this legislation is better administration of Federal tax liens.

It has been 40 years since Congress made any significant changes to the laws regulating how the Internal Revenue Service (IRS) files Federal tax liens and makes them public. Right now, outdated laws are forcing the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that should be replaced by a modernized electronic filing system capable of operating at a fraction of the cost. It is time to bring the Federal tax lien system into the 21st century. That's why I am introducing today, along with Senator Coleman, the Tax Lien Simplification

Act, which will simplify the process of recording tax liens at an estimated ten-year cost savings of over half a billion dollars, while at the same time improving taxpayer service by speeding up the release of liens after taxes are paid.

Tax liens are a principal way to collect payment from persons who are delinquent in paying their taxes. By law, Federal tax liens arise automatically ten days after a taxpayer's failure to pay an assessed tax. The lien automatically attaches to the taxpayer's real and personal property and remains in effect until the tax is paid. However, the tax lien is not effective against other creditors owed money by the same taxpayer, until a notice of the Federal tax lien is publicly recorded. Generally, between competing creditors, the first to file notice has priority, so the filing of tax lien notices is very important to the government and to the taxpaying public if taxes are to be collected from persons who don't pay them.

Current law requires the IRS to file public notices of Federal tax liens in State, county, or city recording offices around the country. There are currently more than 4,100 of these local recording offices, many of which have developed specific rules regulating how such liens must be formatted and filed in their jurisdictions. This patchwork system developed more by default than by plan, because those local offices were where documents affecting title to real property, judgments, and other lien and security interest documents had always been filed.

In 1966, to help the IRS comply with a proliferating set of local filing rules for Federal tax liens, Congress passed the Tax Lien Act to standardize certain practices. This act provided, for example, that liens against real estate had to be filed where the property was located, and required each State to designate a single place to file Federal tax liens applicable to personal property. Most States subsequently adopted a version of the Uniform Tax Lien Filing Act, enabling the IRS to file a notice of tax lien in each locality where the taxpayer's real estate is located, and a single notice where the taxpayer resides to reach any personal property. For corporations, States typically require the IRS to file a notice to attach real estate in each locality where the real estate is located, and a separate notice, usually at the State level, to attach other types of property. There are often additional rules for trusts and partnerships. The end result of the law was to reduce some but not all of the multiple sets of rules regulating the local filing of Federal tax liens.

In addition, in most cases, the IRS continued to have to physically file the tax lien in the appropriate local recording office. In most cases, that filing is accomplished by mail. Some jurisdictions also allow electronic filings, but those jurisdictions are few and far between. The same is true if a lien has to be corrected, or a related certificate of discharge, subordination, or nonattachment needs to be filed, or when a tax liability has been resolved and the IRS wants to release a lien. Each usually requires a paper filing in one or more local recording offices. If a paper filing is lost or misplaced, the IRS often has to send an employee in person to deal with the problem, adding travel costs to other administrative expenses.

The paper filing system imposes similar burdens on other persons dealing with the tax lien system. Any person who is the subject of a tax lien, for example, or who is a creditor trying to locate a tax lien, is required to make a physical trip to one or more local recording offices to search the documents and see if a lien has been filed. Currently, there is no central database of locally filed tax liens that can be accessed by any member of the public or by any taxpayer that is the subject of a federal tax lien. Not even IRS personnel have access to such a tax lien database. It does not exist.

The result is an inefficient, costly, and burdensome paper filing system that can and should be completely revamped. Businesses across the country learned long ago that electronic filing systems outperform paper; they save personnel costs, material costs, time, and client frustration. Government agencies have learned the same thing as they have moved to electronic databases and recordkeeping, including systems made available to the public on the Internet. Among the many examples of government-sponsored, Internet-based systems currently in operation are the contractor registry operated by the General Services Administration to allow persons to register to bid on federal contracts, the license registry operated by the Federal Communications Commission to allow the public to search radio licenses, and the registry operated by the U.S. Patent and Trademark Office to allow the public to search currently registered patents and trademarks. Each of these systems has saved taxpayer money, while improving service to the public.

Just as government agencies gave up the horse and buggy for the automobile, it is time for the IRS to move from a decentralized, paper- based tax lien filing system to an electronic national tax lien registry. But the IRS' hands are tied, until the Congress changes the laws holding back modernization of the federal tax lien filing system.

The bill we are introducing today would make the changes necessary to enable the IRS to take immediate steps to simplify and modernize the Federal tax lien filing system. The operative provisions would require the IRS to create a national registry for the filing of tax lien notices as an electronic database that is Internet accessible and searchable by the public at no cost. It would mandate the use of this system in place of the existing system of local filings. It would establish the priority of Federal tax liens according to the date and time that the relevant notice was filed in the national registry, in the same way that priorities are currently established from the date and time of filing in local recording offices. The bill would also shorten the time allowed to release a tax lien, after the related tax liability has been resolved, from 30 days to 10 days.

To establish this new electronic filing system, the bill would give the Treasury Secretary express authority to issue regulations or other guidance governing the establishment and maintenance of the registry. Among other obligations, Treasury would be required to ensure that the registry was secure and prevent data tampering. In addition, prior to the implementation of the national registry, the Treasury Secretary would be required to review the information currently included in public tax lien filings to determine whether any of that information should be excluded or protected from disclosure on the Internet. For example, the Treasury Secretary would be expected to prevent the disclosure of social security numbers that are currently included in many public tax lien filings, but if disclosed on the Internet, could facilitate identity theft. While such identifying information could continue to be included in a tax lien filing to ensure that the filing is directed toward the correct person, the registry could be constructed to prevent such information from being disclosed publicly and to instead provide such information only upon request from appropriate persons involved in the enforcement of the tax lien or collection of the tax debt. By requiring this information review prior to implementing the national tax lien registry, the bill is expected to provide greater protection of some taxpayer information than occurs in current tax lien filings.

The bill would require the Treasury Secretary to establish a functioning tax lien registry by January 1, 2009, but would also allow the IRS to continue to use the existing paper-based tax lien filing system, in parallel with the new system, for an appropriate period to ensure a smooth transition. The IRS has indicated that it would be able to establish an electronic tax lien filing system within the specified time period.

Moving to a centralized, electronic tax lien filing system, an Internet-based National Registry of tax liens, would accomplish at least three objectives. It would save taxpayer dollars, speed the process for filing and releasing tax liens, and simplify the process for researching Federal tax liens for taxpayers and creditors.

The IRS estimates that moving from a paper-based, locally filed tax lien system to an Internet-based, Federal tax lien filing system would save about $570 million over 10 years. That's half a billion dollars in cost savings. These

savings would come from the elimination of State filing fees, IRS personnel costs, travel costs related to local filing problems, and the cost of lost taxes whenever the IRS makes an error or a tax lien filing is misplaced or delayed. Filing fees, for example, vary widely from state to state, but typically cost at least $10 per filing, and in some States cost as much as $150. If a taxpayer has real estate in multiple jurisdictions, those costs multiply. Personnel costs include the IRS service center staff that is currently charged with filing tax liens nationwide and complying with the myriad filing rules in effect in the 4,100 recording offices across the country. Additional anticipated savings would come from reduced mailing and travel costs.

Electronic filing would not only save money, it would improve taxpayer service. Taxpayers who are the subject of a tax lien filing, for example, would benefit from a centralized registry in several ways. First, taxpayers would be able to review their liens as soon as they are filed online, without having to make a physical trip to one or more local recording offices. Second, taxpayers would have an easy way to look up their liens on multiple occasions, identify any problems, and correct any errors. Third, once the underlying tax liability was resolved, the IRS would be required to release the tax lien in 10 days, instead of the 30 days allowed under current law. The longer 30-day period is necessitated by the current complexities associated with filing a paper lien in one or more local offices, complexities that would be eliminated by the establishment of a centralized, electronic registry.

Creditors who need to research Federal tax liens would also benefit from a centralized, electronic registry. Lenders, security holders and others, for example, would be able to use a simplified search process that could take place online and would not require physical trips to multiple locations. Simplifying the search process would also provide greater certainty that all tax liens were found. The ability to research Federal tax liens remotely and instantaneously should be of particular benefit to larger lenders and to creditors of taxpayers with widely distributed assets.

Federal tax liens are not a topic that normally excites the public's interest. Sound tax administration, however, requires attention to administrative as well as enforcement concerns. Federal law is currently impeding development of a more efficient, cost effective tax lien filing system. Amending the law as indicated in the Tax Lien Simplification Act to streamline the tax lien filing system, moving it from a paper-based to an electronic-based system, would not only advance the more efficient, cost-effective tax system we all want, it would also save half a billion dollars in taxpayer money. At the same time, it would make the system work better for individual taxpayers by reducing the possibility for mistakes and speeding up the release of liens for taxpayers who have paid. Modernizing our tax lien filing system makes sense in every way. I urge my colleagues to join Senator Coleman and myself in enacting this bill into law this year.

I ask unanimous consent to print in the Record following these remarks a section-by-section analysis of the bill.

Mr. President, the people of Maine have always been faithful stewards of the forest because we understand its tremendous value to our economy and to our way of life. From the vast tracts of undeveloped land in the north to the small woodlots in the south, forest land has helped to shape the character of our entire State.

While our commitment to stewardship has preserved the forest for generations, there is a threat to Maine's working landscape that requires a fresh approach. This threat is suburban sprawl, which has already consumed tens of thousands of acres of forest land in southern Maine. Sprawl occurs because the economic value of forest or farm land cannot compete with the value of developed land.

Sprawl threatens our environment and our quality of life. It destroys eco-systems, increasing the risk of flooding and other environmental hazards. It burdens the infrastructure of the affected communities, increases traffic on neighborhood streets, and wastes taxpayer money. Sprawl causes the unnecessary fragmentation of open space that reduces the economic viability of the remaining working forests.

In the State of Maine, suburban sprawl has already consumed tens of thousands of acres of forest and farm land. The problem is particularly acute in southern Maine where an 108 percent increase in urbanized land over the past two decades has resulted in the labeling of greater Portland as the ``sprawl capital of the Northeast.''

I am particularly alarmed by the amount of working forest and farm land and open space in southern and coastal Maine that has given way to strip malls and cul-de-sacs. Once these forests, farms, and meadows are lost to development, they are lost forever.

Maine is trying to respond to this challenge. The people of Maine continue to contribute their time and money to preserve important lands and to support our State's 88 land trusts. It is time for the Federal Government to help support these State and community-based efforts.

For these reasons, I have introduced the Suburban and Community Forestry and Open Space Program Act. This legislation, which was drafted with the advice of land owners and conservation groups, establishes a $50 million grant program within the U.S. Forest Service to support locally driven land conservation projects that preserve working forests. Local government and nonprofit organizations would compete for funds to purchase land or access to land to protect working landscapes threatened by development.

Projects funded under this initiative must be targeted at lands located in parts of the country that are threatened by sprawl. In addition, this legislation requires that Federal grant funds be matched dollar-for-dollar by State, local, or private resources.

This is a market-driven program that relies upon market forces rather than government regulations to achieve its objectives. Rather than preserving our working forests, farmland and open spaces by zoning or other government regulation, with this program we will provide the resources to allow a landowner who wishes to keep his or her land as a working woodlot to do so.

My legislation also protects the rights of property owners with the inclusion of a ``willing-seller'' provision, which requires the consent of a landowner if a parcel of land is to participate in the program.

The $50 million that would be authorized by my bill would help achieve stewardship objectives: First, this bill would help prevent forest fragmentation and preserve working forests, helping to maintain the supply of timber that fuels Maine's most significant industry. Second, these resources would be a valuable tool for communities that are struggling to manage growth and prevent sprawl.

Understanding that land ownership issues differ in other parts of the Nation, I have included a geographic limitation in this bill. This limitation would exempt any State where the Federal Government owns 25 percent or more of that State's land from the Suburban and Community Forestry and Open Space Program. With the 25 percent limitation, a figure used in previous bills, the twelve States with the highest percentage of federally owned land would not be eligible to participate in this new program. Those

States, however, who are struggling most with the loss of working landscapes would be authorized to receive Federal assistance in their efforts to combat sprawl.

Third, the bill would help to preserve open space and family farms. Currently, if the town of Gorham, ME, or another community trying to cope with the effects of sprawl turned to the Federal Government for assistance, none would be found. My bill will change that by making the Federal Government an active partner in preserving forest and farm land and managing sprawl, while leaving decision-making at the State and local level where it belongs.

The Suburban and Community Forestry and Open Space Program Act has had a successful history in the Senate. In 2002, this legislation was included in the forestry title of the Senate approved version of the Farm Bill. Unfortunately, the forestry title was stripped out of the Farm Bill conference report. And again, in 2003, this legislation passed the Senate. This time, during consideration of the Healthy Forests Restoration Act. Unfortunately, this provision was removed from the Healthy Forests Restoration Act conference report. This new Congress and the reauthorization of the Farm Bill provide an excellent opportunity to enact this important legislation.

There is great work being done on the local level to protect working landscapes for the next generation. By enacting the Suburban and Community Forestry and Open Space Act, Congress can provide an additional avenue of support for these conservation initiatives, help prevent sprawl, and help sustain the vitality of natural resource-based industries.