[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1308 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1308

     To amend the Internal Revenue Code of 1986 to ensure taxpayer 
  confidence in the fairness and independence of the taxpayer problem 
resolution process by providing a more independently operated Office of 
             the Taxpayer Advocate, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 22, 1997

Mr. Breaux (for himself and Mr. Kerrey) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to ensure taxpayer 
  confidence in the fairness and independence of the taxpayer problem 
resolution process by providing a more independently operated Office of 
             the Taxpayer Advocate, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxpayer Protection Act of 1997''.

SEC. 2. ESTABLISHMENT OF MORE INDEPENDENT OFFICE OF THE TAXPAYER 
              ADVOCATE.

    (a) In General.--Paragraph (1) of section 7802(d) of the Internal 
Revenue Code of 1986 (relating to Office of Taxpayer Advocate) is 
amended to read as follows:
            ``(1) Establishment.--
                    ``(A) In general.--There is established in the 
                Internal Revenue Service an office to be known as the 
                `Office of the Taxpayer Advocate'.
                    ``(B) National taxpayer advocate.--
                            ``(i) In general.--The Office of the 
                        Taxpayer Advocate shall be under the 
                        supervision and direction of an official to be 
                        known as the `National Taxpayer Advocate'. The 
                        National Taxpayer Advocate shall report 
                        directly to the Commissioner of Internal 
                        Revenue and shall be entitled to compensation 
                        at the same rate as the highest level official 
                        reporting directly to the Commissioner of the 
                        Internal Revenue Service.
                            ``(ii) Appointment.--The National Taxpayer 
                        Advocate shall be appointed by the President, 
                        by and with the advice and consent of the 
                        Senate, from among individuals with a 
                        background in customer service, as well as tax 
                        law. No officer or employee of the Internal 
                        Revenue Service may be appointed to such 
                        position in order to ensure an independent 
                        position to represent taxpayers' interests.''.
    (b) Annual Reports and Additional Responsibilities.--Section 
7802(d)(2) of the Internal Revenue Code of 1986 (relating to functions 
of office) is amended by striking subparagraph (B) and inserting the 
following:
                    ``(B) Annual reports.--
                            ``(i) Objectives.--Not later than June 30 
                        of each calendar year, the National Taxpayer 
                        Advocate shall report to the Committee on Ways 
                        and Means of the House of Representatives and 
                        the Committee on Finance of the Senate on the 
                        objectives of the Office of the Taxpayer 
                        Advocate for the fiscal year beginning in such 
                        calendar year. Any such report shall contain 
                        full and substantive analysis, in addition to 
                        statistical information.
                            ``(ii) Activities.--Not later than December 
                        31 of each calendar year, the National Taxpayer 
                        Advocate shall report to the Committee on Ways 
                        and Means of the House of Representatives and 
                        the Committee on Finance of the Senate on the 
                        activities of the Office of the Taxpayer 
                        Advocate during the fiscal year ending during 
                        such calendar year. Any such report shall 
                        contain full and substantive analysis, in 
                        addition to statistical information, and 
                        shall--
                                    ``(I) identify the initiatives the 
                                Office of the Taxpayer Advocate has 
                                taken on improving taxpayer services 
                                and Internal Revenue Service 
                                responsiveness,
                                    ``(II) contain recommendations 
                                received from individuals with the 
                                authority to issue Taxpayer Assistance 
                                Orders under section 7811,
                                    ``(III) contain a summary of at 
                                least 20 of the most serious problems 
                                encountered by taxpayers, including a 
                                description of the nature of such 
                                problems,
                                    ``(IV) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which action has 
                                been taken and the result of such 
                                action,
                                    ``(V) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which action 
                                remains to be completed and the period 
                                during which each item has remained on 
                                such inventory,
                                    ``(VI) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which no action has 
                                been taken, the period during which 
                                each item has remained on such 
                                inventory, the reasons for the 
                                inaction, and identify any Internal 
                                Revenue Service official who is 
                                responsible for such inaction,
                                    ``(VII) identify any Taxpayer 
                                Assistance Order which was not honored 
                                by the Internal Revenue Service in a 
                                timely manner, as specified under 
                                section 7811(b),
                                    ``(VIII) contain recommendations 
                                for such administrative and legislative 
                                action as may be appropriate to resolve 
                                problems encountered by taxpayers,
                                    ``(IX) identify areas of the tax 
                                law that impose significant compliance 
                                burdens on taxpayers or the Internal 
                                Revenue Service, including specific 
                                recommendations for remedying these 
                                problems,
                                    ``(X) identify the 10 most 
                                litigated issues for each category of 
                                taxpayers, including recommendations 
                                for mitigating such disputes, and
                                    ``(XI) include such other 
                                information as the National Taxpayer 
                                Advocate may deem advisable.
                            ``(iii) Report to be submitted directly.--
                        Each report required under this subparagraph 
                        shall be provided directly to the Committees 
                        described in clauses (i) and (ii) without any 
                        prior review or comment from the Commissioner, 
                        the Secretary of the Treasury, any other 
                        officer or employee of the Department of the 
                        Treasury, or the Office of Management and 
                        Budget.
                    ``(C) Other responsibilities.--The National 
                Taxpayer Advocate shall--
                            ``(i) monitor the coverage and geographic 
                        allocation of local taxpayer advocates,
                            ``(ii) develop guidance to be distributed 
                        to all Internal Revenue Service officers and 
                        employees outlining the criteria for referral 
                        of taxpayer inquiries to local taxpayer 
                        advocates,
                            ``(iii) ensure that the local telephone 
                        number for the local taxpayer advocate in each 
                        Internal Revenue Service district is published 
                        and available to taxpayers, and
                            ``(iv) in conjunction with the 
                        Commissioner, develop career paths for local 
                        taxpayer advocates choosing to make a career in 
                        the Office of the Taxpayer Advocate.''.
    (c) National Oversight of Local Offices.--Section 7802(d)(2) of the 
Internal Revenue Code of 1986 (relating to functions of office), as 
amended by subsection (b), is amended by adding at the end the 
following:
                    ``(D) Personnel actions.--
                            ``(i) Heads of local offices.--The National 
                        Taxpayer Advocate shall have the responsibility 
                        to--
                                    ``(I) appoint and dismiss the local 
                                taxpayer advocate heading the office of 
                                the taxpayer advocate at each Internal 
                                Revenue Service district office and 
                                service center, and
                                    ``(II) evaluate and take personnel 
                                actions with respect to any employee of 
                                an office of the taxpayer advocate 
                                described in subclause (I).
                            ``(ii) Consultation.--The National Taxpayer 
                        Advocate may consult with the head of any 
                        Internal Revenue Service district office or 
                        service center in carrying out the National 
                        Taxpayer Advocate's responsibilities under this 
                        subparagraph.''.
    (d) Operation of Local Offices.--Section 7802(d) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following:
            ``(4) Operation of local offices.--
                    ``(A) In general.--Each local taxpayer advocate--
                            ``(i) shall report directly to the National 
                        Taxpayer Advocate,
                            ``(ii) may consult with the head of the 
                        Internal Revenue Service district office 
or service center which the local taxpayer advocate serves regarding 
the daily operation of the office of the taxpayer advocate,
                            ``(iii) shall, at the initial meeting with 
                        any taxpayer seeking the assistance of the 
                        office of the taxpayer advocate, notify such 
                        taxpayer that the office operates independently 
                        of any Internal Revenue Service district office 
                        or service center and reports directly to 
                        Congress through the National Taxpayer 
                        Advocate, and
                            ``(iv) shall, at the taxpayer advocate's 
                        discretion, not disclose to the Internal 
                        Revenue Service contact with, or information 
                        provided by, such taxpayer.
                    ``(B) Maintenance of independent communications.--
                Each local office of the taxpayer advocate shall 
                maintain separate phone, facsimile, and other 
                electronic communication access, and a separate post 
                office address from the Internal Revenue Service 
                district office or service center which it serves.''.
    (e) Notice of Right To Contact Office Included in Notice of 
Deficiency.--Section 6212(a) of the Internal Revenue Code of 1986 
(relating to notice of deficiency) is amended by adding at the end the 
following: ``Such notice shall include a notice to the taxpayer of the 
taxpayer's right to contact a local office of the taxpayer advocate and 
the location and phone number of the nearest office.''.
    (f) Expansion of Authority To Issue Taxpayer Assistance Orders.--
Section 7811(a) of the Internal Revenue Code of 1986 (relating to 
taxpayer assistance orders) is amended--
            (1) by striking ``Upon application'' and inserting the 
        following:
            ``(1) In general.--Upon application'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Determination of hardship.--For purposes of 
        determining whether a taxpayer is suffering or about to suffer 
        a significant hardship, the National Taxpayer Advocate should 
        consider--
                    ``(A) whether the Internal Revenue Service employee 
                to which such order would issue is following applicable 
                published administrative guidance, including the 
                Internal Revenue Manual,
                    ``(B) whether there is an immediate threat of 
                adverse action,
                    ``(C) whether there has been a delay of more than 
                30 days in resolving taxpayer account problems, and
                    ``(D) the prospect that the taxpayer will have to 
                pay significant professional fees for 
                representation.''.
    (g) Conforming Amendments.--
            (1) The following provisions of the Internal Revenue Code 
        of 1986 are each amended by striking ``Taxpayer Advocate'' each 
        place it appears and inserting ``National Taxpayer Advocate'':
                    (A) Section 6323(j)(1)(D) (relating to withdrawal 
                of notice in certain circumstances).
                    (B) Section 6343(d)(2)(D) (relating to return of 
                property in certain cases).
                    (C) Section 7802(d)(3) (relating to 
                responsibilities of Commissioner).
                    (D) Section 7811(a)(1) (relating to authority to 
                issue), as amended by subsection (f).
                    (E) Section 7811(b)(2)(D) (relating to terms of a 
                Taxpayer Assistance Order).
                    (F) Section 7811(c) (relating to authority to 
                modify or rescind).
                    (G) Section 7811(d)(2) (relating to suspension of 
                running of period of limitation).
                    (H) Section 7811(e) (relating to independent action 
                of Taxpayer Advocate).
                    (I) Section 7811(f) (relating to Taxpayer 
                Advocate).
            (2) Section 7811(d)(1) of such Code (relating to suspension 
        of running of period of limitation) is amended by striking 
        ``Taxpayer Advocate's'' and inserting ``National Taxpayer 
        Advocate's''.
            (3) The headings of subsections (e) and (f) of section 7802 
        of such Code are each amended by striking ``Taxpayer Advocate'' 
        and inserting ``National Taxpayer Advocate''.
            (4) The heading of section 7802 of such Code is amended by 
        striking ``taxpayer advocate'' and inserting ``national 
        taxpayer advocate''.
    (h) Transition Rules Relating to Appointment of National Taxpayer 
Advocate.--
            (1) Initial appointment.--The President shall nominate for 
        appointment the initial National Taxpayer Advocate to serve as 
        head of the Office of the Taxpayer Advocate established under 
        section 7208(a) of the Internal Revenue Code of 1986 (as 
        amended by this section) not later than 120 days after the date 
        of the enactment of this Act.
            (2) Interim role of current taxpayer advocate.--Until an 
        individual has taken office under section 7208(a) of such Code 
        (as so amended), the Taxpayer Advocate shall assume the 
        additional powers and duties of the National Taxpayer Advocate 
        under the amendments made by this section.
    (i) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
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