The Treasury Department supports the National Park Service and the work it is doing to protect and preserve an important public resource -- our National Parks. At the same time, we recognize the importance of developing appropriate financing methods that meet the needs of the Park Service and avoid negative and fiscal implications for taxpayers. As you are aware, the Treasury Department is committed to working with the Interior Department, the Office of Management and Budget, and the Subcommittee on the financing needs of the Park Service.

Treasury's comments are confined to Section 701 of the bill, which is the only section dealing with a tax matter. Section 701 of the bill would permit an individual income tax filer to designate that a portion of his or her tax refund (or of an additional amount included with his or her tax return) be paid to the National Parks Trust Fund. The designation would be made on the individual income tax return, on either the first page or the page with space for the taxpayer's signature.

Despite the worthy goal to be served by allowing the funds to be designated, the Treasury Department opposes Section 701 of the bill. There are many federally supported functions that may be interested in soliciting additional voluntary contributions from taxpayers. It is Treasury's view that the tax collection system should not be used to give preferential treatment to certain functions over others.

In addition, we have concerns about how this proposal would be administered and what its impact would be on the efficiency and effectiveness of the tax system. By requiring information that does not directly relate to the determination of an individual's tax liability or overpayment, tax check-off and designation provisions complicate tax returns and instructions for all taxpayers and frustrate the objective of reducing the paperwork burden from, and the complexity of, tax forms.

Such provisions can have a particularly adverse impact on certain types of very efficient electronic filing methods, such as the TeleFile program under which simpler tax returns can be filed interactively over the telephone. More importantly, the available space on individual income tax forms is very limited and is already allocated so as to maximize compliance. Mandating additional items could displace items crucial to the proper reporting and collection of tax. That could limit the ability of the Internal Revenue Service to properly enforce the tax laws, and thus reduce tax receipts.

Including designations would increase complexity more than it may at first appear, and such complexities would have to be addressed in any enabling legislation. For example, a taxpayer's refund may be less than the taxpayer expects if the refund is offset to pay another liability such as an unpaid student loan or child support amount. In other circumstances, a taxpayer may initially receive a refund but subsequently be found to owe additional tax. Such possibilities would complicate the IRS' handling of designated amounts, and would add to the burdens and costs of developing and maintaining the necessary returns processing systems.

The additional burdens from implementing a refund designation program would be particularly troublesome for IRS over the next several years. IRS must solve the year 2000 computer issue. Many systems must be revised and in place before the beginning of the year 2000, but work may continue on other, somewhat less crucial systems for several additional years. Major, long overdue modernization of IRS' systems will also require large amounts of resources. For both of these reasons, IRS would be unlikely to be able to implement a new refund designation system in the time frame specified by S.1693.

Finally, the Committee should be aware that taxpayer utilization of any refund designation option is likely to be quite low. Many states have included check-off and designation programs on their income tax forms. While utilization varies among programs and states and over time, it is our understanding that typically only a small percentage of taxpayers make use of the options.

I hope these comments are useful to the Committee in its consideration of S.1693. Again, thank you for the opportunity to express our views on this legislation.