This is due to increase in numbers of veterans and consequent increase in insurance contracts, claims, recoupment claims, etc. (World War I experience shows an increase in VA cases for 15 years after end of war. Decline begins after 15 years.)

EXHIBIT No. 1
LANDS DIVISION

Land acquisition by acquiring agencies during 1955 and 1956 fiscal years

Senator KILGORE. There is nothing there but cuts, is that right, with one $800 increase.

Mr. ANDRETTA. That is Office of Legal Counsel.
Senator KILGORE. Fine.

DISTRIBUTION OF RESTORATION REQUESTED

Mr. ANDRETTA. We would like the $600,000 dollars restored. Within that overall total, for the specific divisions, we are asking for $108,000 to be restored for the Tax Division, $69,400 for the Criminal Division, $80,400 for the Civil Division, $343,000 for the Internal Security Division. The Assistant Attorney General in charge of these Divisions will be over here, Senator, to testify as to their specific Divisions. We now have Mr. Brian Holland, Assistant Attorney General in charge of the Tax Dixision, who is here to testify on his amount, namely, the restoration of $108,000. Senator KILGORE. Please go ahead.

TAX DIVISION

STATEMENTS OF H. BRIAN HOLLAND, ASSISTANT ATTORNEY GENERAL; CHARLES K. RICE, FIRST ASSISTANT; C. GUY TADLOCK, ADMINISTRATIVE ASSISTANT, TAX DIVISION, DEPARTMENT OF

JUSTICE

REDUCTION UNDER HOUSE ALLOWANCE

Mr. HOLLAND. The Tax Division asked for an increase of $158,000 which was roughly 10 percent over this year. The House action gives us an increase of about $50,000 over this year, but that is actually about $30,000 less than we had available in 1954. The result of the House action is that we will get approximately $108,000 less than the amount we asked for. The House action gives us the $50,000 difference.

The full amount that we requested would have provided 15 additional attorneys on a net basis and 10 legal stenographers. The House bill, as we figure it, will just about take care of our present staff, and also enable us to live up to the commitments that have been made already under the Attorney Generals law school recruitment program to take on five law school graduates of this year's class. It will, however, after we have made allowance for those additional young men, leave us in pretty tight straits in regard to funds for the other expenses of litigation, which we have to take care of.

We requested the increase of approximately 10 percent over last year because we felt that without it we should not be in a position at best to do more than just about keep up with the new work that we will receive during the year, whereas with the 10 percent increase, the $158,000 increase that we asked for, we felt confident that we could begin to make substantial inroads into the backlog of work which has been accumulating over a period of about 8 years.

I think the committee is generally familiar with our problem, but I have had prepared, as a graphical illustration, a chart which shows the increase in the new work received beginning with the year 1947 up to date, and projected on an estimated basis for the current year and next year.

It also shows the number of cases closed over that period by years, and the final line on the chart shows the number of cases pending at the end of each year.

I think this sort of visual representation perhaps is a little easier to understand quickly than are figures, but the chart indicates that as compared with 1947, the amount of new work being received is more than double. The number of cases closed has also gone up, but not to the same degree, and the result has been that the number of cases pending at the end of each of the years has increased very, very substantially.

RESTORATION REQUEST

Senator KILGORE. What amount did you say would be restored? Mr. HOLLAND. $108,000.

I said the difference between what we asked for and what the House has allowed us is $108,000. That is what we are asking to have restored now.

I think the committee is probably familiar with the nature of the work that the Tax Division has to do but I might describe it very briefly.

FUNCTION OF TAX DIVISION

The Tax Division is responsible for handling all Federal tax cases in the Federal courts, that is, all the courts except the Tax Court. Cases in the Tax Court, which is not, I believe, strictly a court, are handled by the office of the Chief Counsel of the Internal Revenue Service. We handle everything else. The great bulk of our work is civil-tax work. About 85 percent is civil-tax work, and the other 15 percent, approximately, is criminal-tax work. Of the civil-tax work, from 80 to 85 percent involves the defense of suits brought by taxpayers for recovery of taxes which they have been required to pay by the Commissioner of Internal Revenue and which they think they should not have been required to pay.

Obviously, we have absolutely no control over the volume of that work.

INTEREST ON OVERPAYMENTS

Senator KILGORE. Based upon that, however, what interest do they charge from the time of payment?

Mr. HOLLAND. They are entitled to 6 percent interest per annum. The total amount of money that is involved in litigation pending in the Tax Division at the present time is something in excess of $400 million, and we figure that the potential interest liability of the Government runs somewhere in the neighborhood of $45,000 a day, so that there is an obvious advantage to the Government in our being in position to expedite.

Senator KILGORE. To close those cases out?

Mr. HOLLAND. Yes. However, it is not only in the interest of Government. I feel that it is also very much in the interest of the taxpayer, because I think that any taxpayer who gets into litigation with the Federal Government over his tax liability is entitled to have his claim disposed of as expeditiously as possible."

As I said, about 85 percent of our civil-tax work involves these suits for refund over which we have absolutely no control. That is, we cannot prevent their coming in to us. The other 15 percent of our