[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1793 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1793

   To amend the Internal Revenue Code of 1986 to reform the Internal 
                Revenue Service, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 18, 1998

  Mr. Graham 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 reform the Internal 
                Revenue Service, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Taxpayer Fairness 
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.--

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Reduction of statute of limitations for collections after 
                            assessments to 6 years.
Sec. 3. Extension of statute of limitations for claims of credits or 
                            refunds to 6 years.
Sec. 4. Listing of local IRS telephone numbers and addresses.
Sec. 5. No failure-to-pay penalty during installment agreement.
Sec. 6. Elimination of interest rate differential on overlapping 
                            periods of interest on tax overpayments and 
                            underpayments.
Sec. 7. Increase in overpayment rate payable to taxpayers other than 
                            corporations.
Sec. 8. Review of rejections of offers-in-compromise.
Sec. 9. Tenure and evaluation of agents.
Sec. 10. Expansion of pilot programs allowing alternative dispute 
                            resolution.
Sec. 11. Safe harbor for qualification for installment agreements.
Sec. 12. Acceptance of offers-in-compromise in cases where IRS can not 
                            locate taxpayer records.

SEC. 2. REDUCTION OF STATUTE OF LIMITATIONS FOR COLLECTIONS AFTER 
              ASSESSMENTS TO 6 YEARS.

    (a) In General.--Section 6502(a) (relating to length of period) is 
amended--
            (1) by striking ``10 years'' in paragraph (1) and inserting 
        ``6 years'', and
            (2) by striking ``10-year period'' each place it appears in 
        paragraph (2) and inserting ``6-year period''.
    (b) Conforming Amendment.--Section 6323(g)(3) is amended by 
striking ``10 years'' each place it appears and inserting ``6 years''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxes assessed after the date of the enactment of this Act.

SEC. 3. EXTENSION OF STATUTE OF LIMITATIONS FOR CLAIMS OF CREDITS OR 
              REFUNDS TO 6 YEARS.

    (a) In General.--Section 6511(a) (relating to period of limitation 
on filing claim) is amended--
            (1) by striking ``3 years'' each place it appears and 
        inserting ``6 years'', and
            (2) by striking ``2 years'' and inserting ``5 years''.
    (b) Limit on Amount of Credit or Refund.--Section 6511(b)(2) 
(relating to limit on amount of credit or refund) is amended--
            (1) by striking ``3-year period'' each place it appears in 
        subparagraphs (A) and (B) and inserting ``6-year period'',
            (2) by striking ``3 years'' each place it appears in 
        subparagraph (A) and inserting ``6 years'',
            (3) by striking ``2 years'' in subparagraph (B) and 
        inserting ``5 years'', and
            (4) by striking ``3-year period'' in the headings of 
        subparagraphs (A) and (B) and inserting ``6-year period''.
    (c) Conforming Amendments.--
            (1) Paragraphs (1), (2)(A), (3)(A), (4)(A), and (6) of 
        section 6511(d) are amended by striking ``3-year period'' each 
        place it appears and inserting ``6-year period''.
            (2) Sections 6511(d)(2), 6511(d)(4)(A), and 6512(b)(3) are 
        amended by striking ``3 years'' each place it appears and 
        inserting ``6 years''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 4. LISTING OF LOCAL IRS TELEPHONE NUMBERS AND ADDRESSES.

    The Secretary of the Treasury or the Secretary's delegate shall, as 
soon as practicable, but not later than 180 days after the date of the 
enactment of this Act, provide that the local telephone numbers and 
addresses of all Internal Revenue Service offices located in any 
particular area be listed in the telephone book for that area.

SEC. 5. NO FAILURE-TO-PAY PENALTY DURING INSTALLMENT AGREEMENT.

    (a) In General.--Section 6651 (relating to failure to file tax 
return or to pay tax) is amended by adding at the end the following new 
subsection:
    ``(h) Exception From Penalty on Individual's Failure To Pay During 
Period of Installment Agreement.--
            ``(1) In general.--No addition to the tax shall be imposed 
        under paragraph (2) or (3) of subsection (a) with respect to 
        the tax liability of an individual for any month during which 
        an installment agreement under section 6159 is in effect for 
        the payment of such tax.
            ``(2) Termination of installment agreement.--If the 
        Secretary terminates any installment agreement under section 
        6159(b), the determination of the rate of the penalty under 
        paragraph (2) or (3) of subsection (a) for months ending after 
        such termination shall be made by treating months during such 
        agreement as months for which there was a failure to pay.''.
    (b) Effective Date.--The amendment made by this section shall apply 
for purposes of determining additions to tax for months beginning after 
the date of the enactment of this Act.

SEC. 6. ELIMINATION OF INTEREST RATE DIFFERENTIAL ON OVERLAPPING 
              PERIODS OF INTEREST ON TAX OVERPAYMENTS AND 
              UNDERPAYMENTS.

    (a) In General.--Section 6621 of the Internal Revenue Code of 1986 
(relating to determination of rate of interest) is amended by adding at 
the end the following new subsection:
    ``(d) Elimination of Interest on Overlapping Periods of Income Tax 
Overpayments and Underpayments.--To the extent that, for any period, 
interest is payable under subchapter A and allowable under subchapter B 
on equivalent underpayments and overpayments by the same taxpayer of 
tax imposed by this title, the net rate of interest under this section 
on such amounts shall be zero for such period.''.
    (b) Conforming Amendment.--Subsection (f) of section 6601 (relating 
to satisfaction by credits) is amended by adding at the end the 
following new sentence: ``The preceding sentence shall not apply to the 
extent that section 6621(d) applies.''.
    (c) Effective Date.--
            (1) In general.--Except as provided under paragraph (2), 
        the amendments made by this section shall apply to interest for 
        periods beginning after the date of the enactment of this Act.
            (2) Special rule.--Subject to any applicable statute of 
        limitation, the amendments made by this section shall apply to 
        interest for periods beginning before the date of the enactment 
        of this Act if the taxpayer--
                    (A) reasonably identifies and establishes periods 
                of tax overpayments and underpayments for which the 
                zero rate applies, and
                    (B) not later than December 31, 1999, requests the 
                Secretary of the Treasury to apply section 6621(d) of 
                the Internal Revenue Code of 1986, as added by 
                subsection (a), to such periods.

SEC. 7. INCREASE IN OVERPAYMENT RATE PAYABLE TO TAXPAYERS OTHER THAN 
              CORPORATIONS.

    (a) In General.--Subparagraph (B) of section 6621(a)(1) of the 
Internal Revenue Code of 1986 (defining overpayment rate) is amended to 
read as follows:
                    ``(B) 3 percentage points (2 percentage points in 
                the case of a corporation).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to interest for calendar quarters beginning after the date of the 
enactment of this Act.

SEC. 8. REVIEW OF REJECTIONS OF OFFERS-IN-COMPROMISE.

    (a) In General.--Section 7122 (relating to compromises) is amended 
by adding at the end the following:
    ``(c) Administrative Review.--The Secretary shall establish 
procedures for an independent administrative review of rejections by 
the Secretary of offers-in-compromise made by taxpayers under this 
section for taxpayers who request such a review.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to offers-in-compromise made after the date of the 
enactment of this Act.

SEC. 9. TENURE AND EVALUATION OF AGENTS.

    The Secretary of the Treasury shall establish procedures for--
            (1) the periodic rotation of Internal Revenue Service 
        employees among the various divisions of the Internal Revenue 
        Service, and
            (2) the inclusion of criteria regarding cooperation with 
        other divisions and customer service in Internal Revenue 
        Service employee evaluations.

SEC. 10. EXPANSION OF PILOT PROGRAMS ALLOWING ALTERNATIVE DISPUTE 
              RESOLUTION.

    The Secretary of the Treasury, through the National Office Appeals, 
Internal Revenue Service, and pursuant to the Administrative Dispute 
Resolution Act of 1996, shall expand the elective mediation pilot 
program to include taxpayers with less than $10,000,000 tax liability 
in dispute, and shall implement an arbitration pilot program for 
individual taxpayers.

SEC. 11. SAFE HARBOR FOR QUALIFICATION FOR INSTALLMENT AGREEMENTS.

    (a) In General.--Subsection (a) of section 6159 (relating to 
agreements for payment of tax liability in installments) is amended--
            (1) by striking ``The Secretary is'' and inserting the 
        following:
            ``(1) In general.--The Secretary is'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Safe harbor.--The Secretary shall enter into an 
        agreement to accept the payment of a tax liability in 
        installments if--
                    ``(A) the amount of such liability does not exceed 
                $10,000,
                    ``(B) the taxpayer has not failed to file any tax 
                return or pay any tax required to be shown thereon 
                during the immediately preceding 5 years, and
                    ``(C) the taxpayer has not entered into any prior 
                installment agreement under this paragraph.''
    (b) Effective Date.--The amendments made by this section shall 
apply to agreements entered into after the date of the enactment of 
this Act.

SEC. 12. ACCEPTANCE OF OFFERS-IN-COMPROMISE IN CASES WHERE IRS CAN NOT 
              LOCATE TAXPAYER RECORDS.

    (a) In General.--Section 7122 (relating to compromises), as amended 
by section 8, is amended by adding at the end the following:
    ``(d) Acceptance of Offers-In-Compromise.--The Secretary shall 
accept an offer-in-compromise if--
            ``(1) such offer by the taxpayer proposes to settle all 
        issues of liability, and
            ``(2) the Secretary is unable to locate the taxpayer's 
        return or return information for verification of such liability 
        within 90 days of the date of such offer.''
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to offers-in-compromise made after the date of the 
enactment of this Act.
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