[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3493 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3493

   To amend the Internal Revenue Code of 1986 to provide additional 
                            taxpayer rights.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 18, 1998

 Mr. Coyne (for himself, Mrs. Johnson of Connecticut, Mr. Rangel, Mr. 
Herger, Mr. Stark, Mr. Camp, Mr. Matsui, Mr. Ramstad, Mrs. Kennelly of 
Connecticut, Ms. Dunn, Mr. Levin, Mr. Portman, Mr. Cardin, Mr. English 
   of Pennsylvania, Mr. McDermott, Mr. Christensen, Mr. Kleczka, Mr. 
Watkins, Mr. Lewis of Georgia, Mr. Hayworth, Mr. Neal of Massachusetts, 
 Mr. Weller, Mr. McNulty, Mr. Jefferson, Mr. Tanner, Mr. Becerra, and 
Mrs. Thurman) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide additional 
                            taxpayer rights.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Taxpayer 
Protection Act of 1998''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; reference; table of contents.
     TITLE I--RESTRICTIONS ON LEVY AND OTHER COLLECTION ACTIVITIES

Sec. 101. Levy prohibited during pendency of certain proceedings.
Sec. 102. Levy prohibited while offer in compromise pending, while 
                            offer for installment agreement pending, 
                            and during period installment agreement in 
                            effect.
Sec. 103. Levy prohibited while determining validity of assessment.
Sec. 104. IRS counsel approval required for certain third-party 
                            collection activities.
Sec. 105. Approval required for levy on certain assets.
Sec. 106. Approval required for jeopardy and termination assessments 
                            and jeopardy levies.
Sec. 107. Approval required before sale of perishable goods.
Sec. 108. Increase in amount of certain property on which lien not 
                            valid.
    TITLE II--APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCEDURES

Sec. 201. Application of certain fair debt collection procedures.
        TITLE III--PROVISIONS RELATING TO INSTALLMENT AGREEMENTS

Sec. 301. Guaranteed availability of installment agreements.
                TITLE IV--EXPANSION OF JUDICIAL REMEDIES

Sec. 401. Taxpayers allowed motion to quash all third-party summonses.
Sec. 402. Civil action for release of erroneous lien.
Sec. 403. Civil damages for IRS violations of bankruptcy procedures.
                     TITLE V--MISCELLANEOUS CHANGES

Sec. 501. Personal delivery of notice of penalty under section 6672.
Sec. 502. Service of summonses to third-party recordkeepers permitted 
                            by mail.
Sec. 503. Increase of size of cases permitted to use Tax Court small 
                            case procedures.

     TITLE I--RESTRICTIONS ON LEVY AND OTHER COLLECTION ACTIVITIES

SEC. 101. LEVY PROHIBITED DURING PENDENCY OF CERTAIN PROCEEDINGS.

    (a) In General.--Section 6331 (relating to levy and distraint) is 
amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) No Levy During Pendency of Certain Proceedings.--
            ``(1) Proceedings in tax court by one spouse involving 
        liability on joint return.--No levy may be made under 
        subsection (a) on the property or rights to property of any 
        individual with respect to any unpaid tax relating to a joint 
        return filed by such individual and any other individual during 
        the pendency of a proceeding brought in the Tax Court by such 
        other individual with respect to such unpaid tax.
            ``(2) Proceedings for refund of divisible tax.--
                    ``(A) In general.--No levy may be made under 
                subsection (a) on the property or rights to property of 
                any person with respect to any unpaid divisible tax 
                during the pendency of any proceeding brought by such 
                person in a proper court for the recovery of any 
                portion of such divisible tax which was paid by such 
                person if--
                            ``(i) the decision in such proceeding would 
                        be res judicata with respect to such unpaid 
                        tax, or
                            ``(ii) such person would be collaterally 
                        estopped from contesting such unpaid tax by 
                        reason of such proceeding.
                    ``(B) Divisible tax.--For purposes of subparagraph 
                (A), the term `divisible tax' means--
                            ``(i) any tax imposed by subtitle C, and
                            ``(ii) the penalty imposed by section 6672 
                        with respect to any such tax.
            ``(3) Exceptions.--
                    ``(A) Certain unpaid taxes.--This subsection shall 
                not apply with respect to any unpaid tax if--
                            ``(i) the taxpayer files a written notice 
                        with the Secretary which waives the restriction 
                        imposed by this subsection on levy with respect 
                        to such tax, or
                            ``(ii) the Secretary finds that the 
                        collection of such tax is in jeopardy.
                    ``(B) Certain levies.--This subsection shall not 
                apply to--
                            ``(i) any levy to carry out an offset under 
                        section 6402, and
                            ``(ii) any levy which was first made before 
                        the date that the applicable proceeding under 
                        this subsection commenced.
            ``(4) Authority to enjoin levy.--No proceeding in court for 
        the collection of any unpaid tax to which paragraph (1) or (2) 
        applies shall be begun by the Secretary during the pendency of 
        a proceeding under such paragraph. Notwithstanding section 
        7421(a), such a levy or collection proceeding may be enjoined 
        (during the period such prohibition is in force) by the court 
        in which the proceeding under paragraph (1) or (2) is brought.
            ``(5) Suspension of statute of limitations on collection.--
        The period of limitations under section 6502 shall be suspended 
        for the period during which the Secretary is prohibited under 
        this subsection from making a levy.
            ``(6) Pendency of proceeding.--For purposes of this 
        subsection, a proceeding is pending beginning on the date such 
        proceeding commences and ending on the date the decision in 
        such proceeding becomes final.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to unpaid tax attributable to taxable periods beginning after December 
31, 1998.

SEC. 102. LEVY PROHIBITED WHILE OFFER IN COMPROMISE PENDING, WHILE 
              OFFER FOR INSTALLMENT AGREEMENT PENDING, AND DURING 
              PERIOD INSTALLMENT AGREEMENT IN EFFECT.

    (a) In General.--Section 6331 (relating to levy and distraint) is 
amended by redesignating subsection (j) as subsection (k) and by 
inserting after subsection (i) the following new subsection:
    ``(j) No Levy While Certain Offers Pending and While Installment 
Agreement in Effect.--
            ``(1) Offer in compromise pending.--No levy may be made 
        under subsection (a) on the property or rights to property of 
        any person with respect to any unpaid tax--
                    ``(A) during the period that an offer by such 
                person in compromise under section 7122 of such unpaid 
                tax is pending with the Secretary, and
                    ``(B) if such offer is rejected by the Secretary, 
                during the 30 days thereafter (and, if an appeal of 
                such rejection is filed within such 30 days, during the 
                period that such appeal is pending).
        For purposes of subparagraph (A), an offer is pending beginning 
        on the date the Secretary accepts the waiver in such offer of 
        the period of limitations for collecting such tax.
            ``(2) Installment agreements.--No levy may be made under 
        subsection (a) on the property or rights to property of any 
        person with respect to any unpaid tax--
                    ``(A) during the period that an offer by such 
                person for an installment agreement under section 6159 
                for payment of such unpaid tax is pending with the 
                Secretary,
                    ``(B) if such offer is rejected by the Secretary, 
                during the 30 days thereafter (and, if an appeal of 
                such rejection is filed within such 30 days, during the 
                period that such appeal is pending),
                    ``(C) during the period that such an installment 
                agreement for payment of such unpaid tax is in effect, 
                and
                    ``(D) if such agreement is terminated by the 
                Secretary, during the 30 days thereafter (and, if an 
                appeal of such termination is filed within such 30 
                days, during the period that such appeal is pending).
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of subsection (i) shall apply 
        for purposes of this subsection.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to--
            (1) offers in compromise or for installment agreements 
        pending on or made after the 60th day after the date of the 
        enactment of this Act, and
            (2) installment agreements entered into on or after such 
        60th day.

SEC. 103. LEVY PROHIBITED WHILE DETERMINING VALIDITY OF ASSESSMENT.

    (a) In General.--Section 6331 (relating to levy and distraint) is 
amended by redesignating subsection (k) as subsection (l) and by 
inserting after subsection (j) the following new subsection:
    ``(k) No Levy While Secretary Determines Validity of Assessment.--
            ``(1) In general.--In the case of any unpaid tax under 
        subtitle A--
                    ``(A) which has been assessed against an 
                individual, and
                    ``(B) which was included in a notice of deficiency 
                under section 6212 mailed to the last known address of 
                such individual,
        no levy may be made under subsection (a) on the property or 
        rights to property of any person with respect to such tax 
        during the 60-day period (or such longer period as the 
        Secretary may specify) beginning on the date such individual 
        requests that this paragraph apply.
            ``(2) Exception.--Paragraph (1) shall not apply to any 
        unpaid tax if the assessment of such tax was previously 
        prevented under section 6213 by such individual.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of subsection (i) shall apply 
        for purposes of this subsection.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxes assessed on or after the 60th day after the date of the 
enactment of this Act.

SEC. 104. IRS COUNSEL APPROVAL REQUIRED FOR CERTAIN THIRD-PARTY 
              COLLECTION ACTIVITIES.

    (a) Restriction on Filing Notice of Lien.--Section 6323 is amended 
by adding at the end the following new subsection:
    ``(k) IRS Counsel Approval Required for Filing Notice on Property 
Held by Certain Third Parties.--
            ``(1) In general.--The Secretary may file a notice of a 
        lien imposed by section 6321 against the property or rights to 
        property of any person who the Secretary believes is holding 
        such property or rights as a nominee, transferee, or alter ego 
        of the person with respect to whose liability the lien arose 
        only if the filing of such notice is approved by the Chief 
        Counsel for the Internal Revenue Service (or such Counsel's 
        delegate).
            ``(2) Exception.--Paragraph (1) shall not apply to any lien 
        if the Secretary finds that the collection of the tax is in 
        jeopardy.''.
    (b) Restriction on Levy.--Section 6331 (relating to levy and 
distraint) is amended by redesignating subsection (l) as subsection (m) 
and by inserting after subsection (k) the following new subsection:
    ``(l) IRS Counsel Approval Required for Levy on Property Held by 
Certain Third Parties.--
            ``(1) In general.--The Secretary may levy on the property 
        or rights to property of any person who the Secretary believes 
        is holding such property or rights as a nominee, transferee, or 
        alter ego of the person whose liability the Secretary is 
        seeking to collect only if the levy is approved by the Chief 
        Counsel for the Internal Revenue Service (or such Counsel's 
        delegate).
            ``(2) Exception.--Paragraph (1) shall not apply to any levy 
        if the Secretary finds that the collection of the tax is in 
        jeopardy.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxes assessed after the date of the enactment of this Act.

SEC. 105. APPROVAL REQUIRED FOR LEVY ON CERTAIN ASSETS.

    (a) In General.--Subsection (e) of section 6334 is amended to read 
as follows:
    ``(e) Levy Allowed on Certain Assets Only in Case of Jeopardy or 
Certain Approval.--
            ``(1) Principal residences.--Property described in 
        subsection (a)(13) shall not be exempt from levy if the 
        requirements of subparagraph (A) or (B) of paragraph (3) are 
        met.
            ``(2) Other property.--Levy may be made on the following 
        property only if the requirements of subparagraph (A) or (B) of 
        paragraph (3) are met:
                    ``(A) Any pension or annuity provided under a 
                qualified employer plan (as defined in section 
                4972(d)(1), determined without regard to subparagraph 
                (B) thereof).
                    ``(B) Any life insurance, endowment, or annuity 
                contract.
        This paragraph shall not apply to a levy to which section 
        6331(h) applies.
            ``(3) Requirements.--
                    ``(A) Approval.--The requirement of this 
                subparagraph is met if a district director or assistant 
                district director of the Internal Revenue Service 
                personally approves (in writing) the levy.
                    ``(B) Jeopardy.--The requirement of this 
                subparagraph is met if the Secretary finds that the 
                collection of tax is in jeopardy.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxes assessed after the date of the enactment of this Act.

SEC. 106. APPROVAL REQUIRED FOR JEOPARDY AND TERMINATION ASSESSMENTS 
              AND JEOPARDY LEVIES.

    (a) In General.--Paragraph (1) of section 7429(a) (relating to 
review of jeopardy levy or assessment procedures) is amended to read as 
follows:
            ``(1) Administrative review.--
                    ``(A) Prior approval required.--No assessment may 
                be made under section 6851(a), 6852(a), 6861(a), or 
                6862, and no levy may be made under section 6331(a) 
                less than 30 days after notice and demand for payment 
                is made under section 6331(d), unless the Chief Counsel 
                for the Internal Revenue Service (or such Counsel's 
                delegate) personally approves (in writing) such 
                assessment or levy.
                    ``(B) Information to taxpayer.--Within 5 days after 
                the day on which such an assessment or levy is made, 
                the Secretary shall provide the taxpayer with a written 
                statement of the information upon which the Secretary 
                relies in making such assessment or levy.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxes assessed after the date of the enactment of this Act.

SEC. 107. APPROVAL REQUIRED BEFORE SALE OF PERISHABLE GOODS.

    (a) In General.--Paragraph (2) of section 6336 (relating to sale of 
perishable goods) is amended to read as follows:
            ``(2) Immediate sale.--If--
                    ``(A) the owner does not pay such amount or furnish 
                such bond in accordance with this section, and
                    ``(B) a district director or assistant district 
                director of the Internal Revenue Service personally 
                approves (in writing) the sale of the property (or the 
                owner waives such approval in writing),
        the Secretary shall as soon as practicable make public sale of 
        the property in accordance with such regulations as may be 
        prescribed by the Secretary.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxes assessed after the date of the enactment of this Act.

SEC. 108. INCREASE IN AMOUNT OF CERTAIN PROPERTY ON WHICH LIEN NOT 
              VALID.

    (a) Certain Property.--
            (1) In general.--Subsection (b) of section 6323 (relating 
        to validity and priority against certain persons) is amended--
                    (A) by striking ``$250'' in paragraph (4) (relating 
                to personal property purchased in casual sale) and 
                inserting ``$1,000'', and
                    (B) by striking ``$1,000'' in paragraph (7) 
                (relating to residential property subject to a 
                mechanic's lien for certain repairs and improvements) 
                and inserting ``$5,000''.
            (2) Inflation adjustment.--Subsection (i) of section 6323 
        (relating to special rules) is amended by adding at the end the 
        following new paragraph:
            ``(4) Cost-of-living adjustment.--In the case of notices of 
        liens imposed by section 6321 which are filed in any calendar 
        year after 1998, each of the dollar amounts under paragraph (4) 
        or (7) of subsection (b) shall be increased by an amount equal 
        to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 1996' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10, such amount shall be rounded to the nearest 
        multiple of $10.''.
    (b) Expansion of Treatment of Passbook Loans.--Paragraph (10) of 
section 6323(b) is amended--
            (1) by striking ``Passbook loans'' in the heading and 
        inserting ``Deposit-secured loans'',
            (2) by striking ``, evidenced by a passbook,'', and
            (3) by striking all that follows ``secured by such 
        account'' and inserting a period.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

    TITLE II--APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCEDURES

SEC. 201. APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCEDURES.

    (a) In General.--Subchapter A of chapter 64 (relating to 
collection) is amended by inserting after section 6303 the following 
new section:

``SEC. 6304. FAIR TAX COLLECTION PRACTICES.

    ``(a) Communication With the Taxpayer.--Without the prior consent 
of the taxpayer given directly to the Secretary or the express 
permission of a court of competent jurisdiction, the Secretary may not 
communicate with a taxpayer in connection with the collection of any 
unpaid tax--
            ``(1) at any unusual time or place or a time or place known 
        or which should be known to be inconvenient to the taxpayer;
            ``(2) if the Secretary knows the taxpayer is represented by 
        any person authorized to practice before the Internal Revenue 
        Service with respect to such unpaid tax and has knowledge of, 
        or can readily ascertain, such person's name and address, 
        unless such person fails to respond within a reasonable period 
        of time to a communication from the Secretary or unless such 
        person consents to direct communication with the taxpayer; or
            ``(3) at the taxpayer's place of employment if the 
        Secretary knows or has reason to know that the taxpayer's 
        employer prohibits the taxpayer from receiving such 
        communication.
In the absence of knowledge of circumstances to the contrary, the 
Secretary shall assume that the convenient time for communicating with 
a taxpayer is after 8 a.m. and before 9 p.m., local time at the 
taxpayer's location.
    ``(b) Prohibition of Harassment and Abuse.--The Secretary may not 
engage in any conduct the natural consequence of which is to harass, 
oppress, or abuse any person in connection with the collection of any 
unpaid tax. Without limiting the general application of the foregoing, 
the following conduct is a violation of this subsection:
            ``(1) The use or threat of use of violence or other 
        criminal means to harm the physical person, reputation, or 
        property of any person.
            ``(2) The use of obscene or profane language or language 
        the natural consequence of which is to abuse the hearer or 
        reader.
            ``(3) Causing a telephone to ring or engaging any person in 
        telephone conversation repeatedly or continuously with intent 
        to annoy, abuse, or harass any person at the called number.
            ``(4) Except as provided under rules similar to the rules 
        in section 804 of the Fair Debt Collection Practices Act (15 
        U.S.C. 1692b), the placement of telephone calls without 
        meaningful disclosure of the caller's identity.
    ``(c) Civil Action for Violations of Section.--

                                ``For civil action for violations of 
this section, see section 7433.''.
    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 64 is amended by inserting after the item relating to section 
6303 the following new item:

                              ``Sec. 6304. Fair tax collection 
                                        practices.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

        TITLE III--PROVISIONS RELATING TO INSTALLMENT AGREEMENTS

SEC. 301. GUARANTEED AVAILABILITY OF INSTALLMENT AGREEMENTS.

    (a) In General.--Section 6159 (relating to agreements for payment 
of tax liability in installments) is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Secretary Required To Enter Into Installment Agreements in 
Certain Cases.--In the case of a liability for tax under subtitle A of 
an individual, the Secretary shall enter into an agreement to accept 
the payment of such tax in installments if, as of the date the 
individual offers to enter into the agreement--
            ``(1) the aggregate amount of such liability (determined 
        without regard to interest, penalties, additions to the tax, 
        and additional amounts) does not exceed $10,000,
            ``(2) the taxpayer (and, if such liability relates to a 
        joint return, the taxpayer's spouse) has not, during any of the 
        preceding 5 taxable years--
                    ``(A) failed to file any return of tax imposed by 
                subtitle A,
                    ``(B) failed to pay any tax required to be shown on 
                any such return, or
                    ``(C) entered into an installment agreement under 
                this section for payment of any tax imposed by subtitle 
                A,
            ``(3) the Secretary determines that the taxpayer is 
        financially unable to pay such liability in full when due (and 
        the taxpayer submits such information as the Secretary may 
        require to make such determination),
            ``(4) the agreement requires full payment of such liability 
        within 3 years, and
            ``(5) the taxpayer agrees--
                    ``(A) to extend the period under section 6502 for 
                collecting such liability (including interest, 
                penalties, additions to the tax, and additional 
                amounts) by the term of such agreement, and
                    ``(B) to comply with the provisions of this title 
                for the period such agreement is in effect.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

                TITLE IV--EXPANSION OF JUDICIAL REMEDIES

SEC. 401. TAXPAYERS ALLOWED MOTION TO QUASH ALL THIRD-PARTY SUMMONSES.

    (a) In General.--Paragraph (1) of section 7609(a) (relating to 
summonses to which section applies) is amended by striking so much of 
such paragraph as precedes ``notice of the summons'' and inserting the 
following:
            ``(1) In general.--If any summons to which this section 
        applies requires the giving of testimony on, or the production 
        of any portion of records made or kept of, the business 
        transactions or affairs of any person (other than the person 
        summoned) who is identified in the summons, then''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 7609 is amended by striking 
        paragraphs (3) and (4), by redesignating paragraph (5) as 
        paragraph (3), and by striking in paragraph (3) (as so 
        redesignated) ``subsection (c)(2)(B)'' and inserting 
        ``subsection (c)(2)(D)''.
            (2) Subsection (c) of section 7609 is amended to read as 
        follows:
    ``(c) Summons to Which Section Applies.--
            ``(1) In general.--Except as provided in paragraph (2), 
        this section shall apply to any summons issued under paragraph 
        (2) of section 7602(a) or under section 6420(e)(2), 6421(g)(2), 
        or 6427(j)(2).
            ``(2) Exceptions.--This section shall not apply to any 
        summons--
                    ``(A) served on the person with respect to whose 
                liability the summons is issued, or any officer or 
                employee of such person,
                    ``(B) issued to determine whether or not records of 
                the business transactions or affairs of an identified 
                person have been made or kept,
                    ``(C) issued solely to determine the identity of 
                any person having a numbered account (or similar 
                arrangement) with a bank or other institution described 
                in section 7603(b)(2)(A),
                    ``(D) issued in aid of the collection of--
                            ``(i) an assessment made or judgment 
                        rendered against the person with respect to 
                        whose liability the summons is issued, or
                            ``(ii) the liability at law or in equity of 
                        any transferee or fiduciary of any person 
                        referred to in clause (i),
                    ``(E)(i) issued by a criminal investigator of the 
                Internal Revenue Service in connection with the 
                investigation of an offense connected with the 
                administration or enforcement of the internal revenue 
                laws, and
                    ``(ii) served on any person who is not a third-
                party recordkeeper (as defined in section 7603(b)), or
                    ``(F) described in subsection (f) or (g).
            ``(3) Records.--For purposes of this section, the term 
        `records' includes books, papers, and other data.''
            (3) Paragraph (2) of section 7609(e) is amended by striking 
        ``third-party recordkeeper's'' and all that follows through 
        ``subsection (f)'' and inserting ``summoned party's response to 
        the summons''.
            (4) Subsection (f) of section 7609 is amended--
                    (A) by striking ``described in subsection (c)'' and 
                inserting ``described in subsection (c)(1)'', and
                    (B) by inserting ``or testimony'' after ``records'' 
                in paragraph (3).
            (5) Subsection (g) of section 7609 is amended by striking 
        ``In the case of any summons described in subsection (c), the 
        provisions of subsections (a)(1) and (b) shall not apply if'' 
        and inserting ``A summons is described in this subsection if''.
            (6)(A) Subsection (i) of section 7609 is amended by 
        striking ``Third-Party Recordkeeper and'' in the subsection 
        heading.
            (B) Paragraph (1) of section 7609(i) is amended by striking 
        ``described in subsection (c), the third-party recordkeeper'' 
        and inserting ``to which this section applies for the 
        production of records, the summoned party''.
            (C) Paragraph (2) of such section is amended--
                    (i) by striking ``recordkeeper'' in the heading and 
                inserting ``summoned party'', and
                    (ii) by striking ``the third-party recordkeeper'' 
                and inserting ``the summoned party''.
            (D) Paragraph (3) of such section is amended to read as 
        follows:
            ``(3) Protection for summoned party who discloses.--Any 
        summoned party, or agent or employee thereof, making a 
        disclosure of records or testimony pursuant to this section in 
        good faith reliance on the certificate of the Secretary or an 
        order of a court requiring production of records or the giving 
        of such testimony shall not be liable to any customer or other 
        person for such disclosure.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to summonses served after the date of the enactment of this Act.

SEC. 402. CIVIL ACTION FOR RELEASE OF ERRONEOUS LIEN.

    (a) Right of Substitution of Value.--Subsection (b) of section 6325 
(relating to release of lien or discharge of property) is amended by 
adding at the end the following new paragraph:
            ``(4) Right of substitution of value.--
                    ``(A) In general.--At the request of the owner of 
                any property subject to any lien imposed by this 
                chapter, the Secretary shall issue a certificate of 
                discharge of such property if such owner--
                            ``(i) deposits with the Secretary an amount 
                        of money equal to the value of the interest of 
                        the United States (as determined by the 
                        Secretary) in the property, or
                            ``(ii) furnishes a bond acceptable to the 
                        Secretary in a like amount.
                    ``(B) Refund of deposit with interest and release 
                of bond.--The Secretary shall refund the amount so 
                deposited (and shall pay interest at the overpayment 
                rate under section 6621), and shall release such bond, 
                to the extent that the Secretary determines that--
                            ``(i) the unsatisfied liability giving rise 
                        to the lien can be satisfied from a source 
                        other than such property, or
                            ``(ii) the value of the interest of the 
                        United States in the property is less than the 
                        Secretary's prior determination of such value.
                    ``(C) Use of deposit, etc., if action to contest 
                lien not filed.--If no action is filed under section 
                7426(a)(4) within the period prescribed therefor, the 
                Secretary shall, within 60 days after the expiration of 
                such period--
                            ``(i) apply the amount deposited, or 
                        collect on such bond, to the extent necessary 
                        to satisfy the unsatisfied liability secured by 
                        the lien, and
                            ``(ii) refund (with interest as described 
                        in subparagraph (B)) any portion of the amount 
                        deposited which is not used to satisfy such 
                        liability.
                    ``(D) Exception.--Subparagraph (A) shall not apply 
                if the owner of the property is the person whose 
                unsatisfied liability gave rise to the lien.''.
    (b) Civil Action To Release Erroneous Lien.--
            (1) In general.--Subsection (a) of section 7426 (relating 
        to civil actions by persons other than taxpayers) is amended by 
        adding at the end the following new paragraph:
            ``(4) Substitution of value.--If a certificate of discharge 
        is issued to any person under section 6325(b)(4) with respect 
        to any property, such person may, within 120 days after the day 
        on which such certificate is issued, bring a civil action 
        against the United States in a district court of the United 
        States for a determination of whether the value of the interest 
        of the United States (if any) in such property is less than the 
        value determined by the Secretary. No other action may be 
        brought by such person for such a determination.''.
            (2) Form of relief.--
                    (A) In general.--Subsection (b) of section 7426 is 
                amended by adding at the end the following new 
                paragraph:
            ``(5) Substitution of value.--If the court determines that 
        the Secretary's determination of the value of the interest of 
        the United States in the property for purposes of section 
        6325(b)(4) exceeds the actual value of such interest, the court 
        shall grant a judgment ordering a refund of the amount 
        deposited, and a release of the bond, to the extent that the 
        aggregate of the amounts thereof exceeds such value determined 
        by the court.''.
                    (B) Interest allowed on refund of deposit.--
                Subsection (g) of section 7426 is amended by striking 
                ``and'' at the end of paragraph (1), by striking the 
                period at the end of paragraph (2) and inserting ``; 
                and'', and by adding at the end the following new 
                paragraph:
            ``(3) in the case of a judgment pursuant to subsection 
        (b)(5) which orders a refund of any amount, from the date the 
        Secretary received such amount to the date of payment of such 
        judgment.''.
            (3) Suspension of running of statute of limitation.--
        Subsection (f) of section 6503 is amended to read as follows:
    ``(f) Wrongful Seizure of or Levy on Property of Third Party.--
            ``(1) Wrongful seizure.--The running of the period under 
        section 6502 shall be suspended for a period equal to the 
        period from the date property (including money) of a third 
        party is wrongfully seized or received by the Secretary to the 
        date the Secretary returns property pursuant to section 6343(b) 
        or the date on which a judgment secured pursuant to section 
        7426 with respect to such property becomes final, and for 30 
        days thereafter. The running of such period shall be suspended 
        under this paragraph only with respect to the amount of such 
        assessment equal to the amount of money or the value of 
        specific property returned.
            ``(2) Wrongful levy.--In the case of any assessment for 
        which a lien was made on any property, the running of the 
        period under section 6502 shall be suspended for a period equal 
        to the period beginning on the date any person becomes entitled 
        to a certificate under section 6325(b)(4) with respect to such 
        property and ending on the date which is 30 days after the 
        earlier of--
                    ``(A) the earliest date on which the Secretary no 
                longer holds any amount as a deposit or bond provided 
under section 6325(b)(4) by reason of such deposit or bond being used 
to satisfy the unpaid tax or being refunded or released, or
                    ``(B) the date that the judgment secured under 
                section 7426(a)(4) becomes final.
        The running of such period shall be suspended under this 
        paragraph only with respect to the amount of such assessment 
        equal to the value of the interest of the United States in the 
        property plus interest, penalties, additions to the tax, and 
        additional amounts attributable thereto.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 403. CIVIL DAMAGES FOR IRS VIOLATIONS OF BANKRUPTCY PROCEDURES.

    (a) In General.--Section 7433 (relating to civil damages for 
certain unauthorized collection actions) is amended by adding at the 
end the following new subsection:
    ``(e) Actions for Violations of Certain Bankruptcy Procedures.--
            ``(1) In general.--If, in connection with any collection of 
        Federal tax with respect to a taxpayer, any officer or employee 
        of the Internal Revenue Service willfully disregards any 
        provision of section 362 (relating to automatic stay) or 524 
        (relating to effect of discharge) of title 11, United States 
        Code, or any regulation promulgated under such section, such 
        taxpayer may petition the bankruptcy court to recover damages 
        against the United States.
            ``(2) Remedy to be exclusive.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), notwithstanding section 105 of such 
                title 11, such petition shall be the exclusive remedy 
                for recovering damages resulting from such actions.
                    ``(B) Certain other actions permitted.--
                Subparagraph (A) shall not apply to an action under 
                section 362(h) of such title 11 for a violation of a 
                stay provided by section 362 of such title; except 
                that--
                            ``(i) administrative and litigation costs 
                        in connection with such an action may only be 
                        awarded only under section 7430, and
                            ``(ii) administrative costs may be awarded 
                        only if incurred on or after the date that the 
                        bankruptcy petition is filed.''
    (b) Conforming Amendment.--Subsection (b) of section 7433 is 
amended by inserting ``or petition filed under subsection (e)'' after 
``subsection (a)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to actions by officers or employees of the Internal Revenue 
Service after the date of the enactment of this Act.

                     TITLE V--MISCELLANEOUS CHANGES

SEC. 501. PERSONAL DELIVERY OF NOTICE OF PENALTY UNDER SECTION 6672.

    (a) In General.--Paragraph (1) of section 6672(b) (relating to 
failure to collect and pay over tax, or attempt to evade or defeat tax) 
is amended by inserting ``or in person'' after ``section 6212(b)''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 6672(b) is amended by 
        inserting ``(or, in the case of such a notice delivered in 
        person, such delivery)'' after ``paragraph (1)''.
            (2) Paragraph (3) of section 6672(b) is amended by 
        inserting ``or delivered in person'' after ``mailed'' each 
        place it appears.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 502. SERVICE OF SUMMONSES TO THIRD-PARTY RECORDKEEPERS PERMITTED 
              BY MAIL.

    (a) In General.--Section 7603 (relating to service of summons) is 
amended by striking ``A summons issued'' and inserting ``(a) In 
General.--A summons issued'' and by adding at the end the following new 
subsection:
    ``(b) Service by Mail to Third-Party Recordkeepers.--
            ``(1) In general.--A summons referred to in subsection (a) 
        for the production of books, papers, records, or other data by 
        a third-party recordkeeper may also be served by certified or 
        registered mail to the last known address of such recordkeeper.
            ``(2) Third-party recordkeeper.--For purposes of paragraph 
        (1), the term `third-party recordkeeper' means--
                    ``(A) any mutual savings bank, cooperative bank, 
                domestic building and loan association, or other 
                savings institution chartered and supervised as a 
                savings and loan or similar association under Federal 
                or State law, any bank (as defined in section 581), or 
                any credit union (within the meaning of section 
                501(c)(14)(A));
                    ``(B) any consumer reporting agency (as defined 
                under section 603(f) of the Fair Credit Reporting Act 
                (15 U.S.C. 1681a(f)));
                    ``(C) any person extending credit through the use 
                of credit cards or similar devices;
                    ``(D) any broker (as defined in section 3(a)(4) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)(4)));
                    ``(E) any attorney;
                    ``(F) any accountant;
                    ``(G) any barter exchange (as defined in section 
                6045(c)(3));
                    ``(H) any regulated investment company (as defined 
                in section 851) and any agent of such regulated 
                investment company when acting as an agent thereof, and
                    ``(I) any enrolled agent.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to summonses served after the date of the enactment of this Act.

SEC. 503. INCREASE OF SIZE OF CASES PERMITTED TO USE TAX COURT SMALL 
              CASE PROCEDURES.

    (a) In General.--Section 7463 (relating to disputes involving 
$10,000 or less) is amended by striking ``$10,000'' each place it 
appears (including the section heading) and inserting ``$25,000''.
    (b) Conforming Amendments.--
            (1) Sections 7436(c)(1) and 7443A(b)(3) are each amended by 
        striking ``$10,000'' and inserting ``$25,000''.
            (2) The table of sections for part II of subchapter C of 
        chapter 76 is amended by striking ``$10,000'' in the item 
        relating to section 7463 and inserting ``$25,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to proceedings commenced after the date of the enactment of this 
Act.
                                 <all>