[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4163 Reported in House (RH)]
Union Calendar No. 311
106th CONGRESS
2d Session
H. R. 4163
[Report No. 106-566]
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for increased
fairness to taxpayers.
_______________________________________________________________________
April 10, 2000
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
Union Calendar No. 311
106th CONGRESS
2d Session
H. R. 4163
[Report No. 106-566]
To amend the Internal Revenue Code of 1986 to provide for increased
fairness to taxpayers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 4, 2000
Mr. Houghton (for himself, Mr. Portman, Mr. Hayworth, Mr. Coyne, Mr.
Rangel, Mr. Crane, Mr. Thomas, Mr. Shaw, Mrs. Johnson of Connecticut,
Mr. Herger, Mr. McCrery, Mr. Camp, Mr. Ramstad, Mr. Nussle, Mr. Sam
Johnson of Texas, Ms. Dunn, Mr. Collins, Mr. English, Mr. Watkins, Mr.
Weller, Mr. Hulshof, Mr. McInnis, Mr. Lewis of Kentucky, Mr. Foley, Mr.
Matsui, and Mr. Becerra) introduced the following bill; which was
referred to the Committee on Ways and Means
April 10, 2000
Additional sponsors: Mr. Tanner, Mr. McNulty, Mr. Doggett, Mr. Terry,
and Mrs. Biggert
April 10, 2000
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on April
4, 2000]
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for increased
fairness to taxpayers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Taxpayer Bill of
Rights 2000''.
(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; etc.
TITLE I--PENALTIES AND INTEREST
Sec. 101. Failure to pay estimated tax penalty converted to interest
charge on accumulated unpaid balance.
Sec. 102. Exclusion from gross income for interest on overpayments of
income tax by individuals.
Sec. 103. Reductions of penalty for failure to pay tax.
Sec. 104. Abatement of interest.
Sec. 105. Deposits made to stop the running of interest on potential
underpayments.
Sec. 106. Expansion of interest netting for individuals.
TITLE II--CONFIDENTIALITY AND DISCLOSURE
Sec. 201. Disclosure and privacy rules relating to returns and return
information.
Sec. 202. Expansion of type of advice available for public inspection.
Sec. 203. Collection activities with respect to joint return
disclosable to either spouse based on oral
request.
Sec. 204. Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers.
Sec. 205. Disclosure in judicial or administrative tax proceedings of
return and return information of persons
who are not party to such proceedings.
Sec. 206. Prohibition of disclosure of taxpayer identification
information with respect to disclosure of
accepted offers-in-compromise.
Sec. 207. Compliance by State contractors with confidentiality
safeguards.
Sec. 208. Higher standards for requests for and consents to disclosure.
Sec. 209. Notice to taxpayer concerning administrative determination of
browsing; annual report.
Sec. 210. Disclosure of taxpayer identity for tax refund purposes.
TITLE III--OTHER REQUIREMENTS
Sec. 301. Clarification of definition of church tax inquiry.
Sec. 302. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 303. Employee misconduct report to include summary of complaints
by category.
Sec. 304. Increase in threshold for Joint Committee reports on refunds
and credits.
Sec. 305. Annual report on awards of costs and certain fees in
administrative and court proceedings.
Sec. 306. Annual report on abatement of penalties.
Sec. 307. Better means of communicating with taxpayers.
Sec. 308. Explanation of statute of limitations and consequences of
failure to file.
TITLE I--PENALTIES AND INTEREST
SEC. 101. FAILURE TO PAY ESTIMATED TAX PENALTY CONVERTED TO INTEREST
CHARGE ON ACCUMULATED UNPAID BALANCE.
(a) Penalty Moved to Interest Chapter of Code.--The Internal
Revenue Code of 1986 is amended by redesignating section 6654 as
section 6641 and by moving section 6641 (as so redesignated) from part
I of subchapter A of chapter 68 to the end of subchapter E of chapter
67 (as added by subsection (e)(1) of this section).
(b) Penalty Converted to Interest Charge.--The heading and
subsections (a) and (b) of section 6641 (as so redesignated) are
amended to read as follows:
``SEC. 6641. INTEREST ON FAILURE BY INDIVIDUAL TO PAY ESTIMATED INCOME
TAX.
``(a) In General.--Interest shall be paid on any underpayment of
estimated tax by an individual for a taxable year for each day of such
underpayment. The amount of such interest for any day shall be the
product of the underpayment rate established under subsection (b)(2)
multiplied by the amount of the underpayment.
``(b) Amount of Underpayment; Interest Rate.--For purposes of
subsection (a)--
``(1) Amount.--The amount of the underpayment on any day
shall be the excess of--
``(A) the sum of the required installments for the
taxable year the due dates for which are on or before
such day, over
``(B) the sum of the amounts (if any) of estimated
tax payments made on or before such day on such
required installments.
``(2) Determination of interest rate.--
``(A) In general.--The underpayment rate with
respect to any day in an installment underpayment
period shall be the underpayment rate established under
section 6621 for the first day of the calendar quarter
in which such installment underpayment period begins.
``(B) Installment underpayment period.--For
purposes of subparagraph (A), the term `installment
underpayment period' means the period beginning on the
day after the due date for a required installment and
ending on the due date for the subsequent required
installment (or in the case of the 4th required installment, the 15th
day of the 4th month following the close of a taxable year).
``(C) Daily rate.--The rate determined under
subparagraph (A) shall be applied on a daily basis and
shall be based on the assumption of 365 days in a
calendar year.
``(3) Termination of estimated tax interest.--No day after
the end of the installment underpayment period for the 4th
required installment specified in paragraph (2)(B) for a
taxable year shall be treated as a day of underpayment with
respect to such taxable year.''.
(c) Increase in Safe Harbor Where Tax is Small.--
(1) In general.--Clause (i) of section 6641(d)(1)(B) (as so
redesignated) is amended to read as follows:
``(i) the lesser of--
``(I) 90 percent of the tax shown
on the return for the taxable year (or,
if no return is filed, 90 percent of
the tax for such year), or
``(II) the tax shown on the return
for the taxable year (or, if no return
is filed, the tax for such year)
reduced (but not below zero) by $2,000,
or''.
(2) Conforming amendment.--Subsection (e) of section 6641
(as so redesignated) is amended by striking paragraph (1) and
redesignating paragraphs (2) and (3) as paragraphs (1) and (2),
respectively.
(d) Conforming Amendments.--
(1) Paragraphs (1) and (2) of subsection (e) (as
redesignated by subsection (c)(2)) and subsection (h) of
section 6641 (as so designated) are each amended by striking
``addition to tax'' each place it occurs and inserting
``interest''.
(2) Section 167(g)(5)(D) is amended by striking ``6654''
and inserting ``6641''.
(3) Section 460(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(4) Section 3510(b) is amended--
(A) by striking ``section 6654'' in paragraph (1)
and inserting ``section 6641'',
(B) by amending paragraph (2)(B) to read as
follows:
``(B) no interest would be required to be paid (but
for this section) under 6641 for such taxable year by
reason of the $2,000 amount specified in section
6641(d)(1)(B)(i)(II).'',
(C) by striking ``section 6654(d)(2)'' in paragraph
(3) and inserting ``section 6641(d)(2)'', and
(D) by striking paragraph (4).
(5) Section 6201(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(6) Section 6601(h) is amended by striking ``6654'' and
inserting ``6641''.
(7) Section 6621(b)(2)(B) is amended by striking ``addition
to tax under section 6654'' and inserting ``interest required
to be paid under section 6641''.
(8) Section 6622(b) is amended--
(A) by striking ``Penalty for'' in the heading, and
(B) by striking ``addition to tax under section
6654 or 6655'' and inserting ``interest required to be
paid under section 6641 or addition to tax under
section 6655''.
(9) Section 6658(a) is amended--
(A) by striking ``6654, or 6655'' and inserting
``or 6655, and no interest shall be required to be paid
under section 6641,'', and
(B) by inserting ``or paying interest'' after ``the
tax'' in paragraph (2)(B)(ii).
(10) Section 6665(b) is amended--
(A) in the matter preceding paragraph (1) by
striking ``, 6654,'', and
(B) in paragraph (2) by striking ``6654 or''.
(11) Section 7203 is amended by striking ``section 6654 or
6655'' and inserting ``section 6655 or interest required to be
paid under section 6641''.
(e) Clerical Amendments.--
(1) Chapter 67 is amended by inserting after subchapter D
the following:
``Subchapter E--Interest on Failure by Individual to Pay Estimated
Income Tax
``Sec. 6641. Interest on failure by
individual to pay estimated
income tax.''.
(2) The table of subchapters for chapter 67 is amended by
adding at the end the following new items:
``Subchapter D. Notice requirements.
``Subchapter E. Interest on failure by
individual to pay estimated
income tax.''.
(3) The table of sections for part I of subchapter A of
chapter 68 is amended by striking the item relating to section
6654.
(f) Effective Date.--The amendments made by this section shall
apply to installment payments for taxable years beginning after
December 31, 2000.
SEC. 102. EXCLUSION FROM GROSS INCOME FOR INTEREST ON OVERPAYMENTS OF
INCOME TAX BY INDIVIDUALS.
(a) In General.--Part III of subchapter B of chapter 1 (relating to
items specifically excluded from gross income) is amended by
redesignating section 139 as section 139A and by inserting after
section 138 the following new section:
``SEC. 139. EXCLUSION FROM GROSS INCOME FOR INTEREST ON OVERPAYMENTS OF
INCOME TAX BY INDIVIDUALS.
``(a) In General.--In the case of an individual, gross income shall
not include interest paid under section 6611 on any overpayment of tax
imposed by this subtitle.
``(b) Exception.--Subsection (a) shall not apply in the case of a
failure to claim items resulting in the overpayment on the original
return if the Secretary determines that the principal purpose of such
failure is to take advantage of subsection (a).
``(c) Special Rule for Determining Modified Adjusted Gross
Income.--For purposes of this title, interest not included in gross
income under subsection (a) shall not be treated as interest which is
exempt from tax for purposes of sections 32(i)(2)(B) and 6012(d) or any
computation in which interest exempt from tax under this title is added
to adjusted gross income.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 is amended by striking the item relating to
section 139 and inserting the following new items:
``Sec. 139. Exclusion from gross income
for interest on overpayments of
income tax by individuals.
``Sec. 139A. Cross references to other
Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply to interest received in calendar years beginning after the date
of the enactment of this Act.
SEC. 103. REDUCTIONS OF PENALTY FOR FAILURE TO PAY TAX.
(a) Reductions of Penalty for Failure To Pay Tax.--
(1) Reduction of penalty by 50 percent.--
(A) In general.--Paragraphs (2) and (3) of section
6651(a) are each amended by striking ``0.5'' each place
it appears and inserting ``0.25''.
(B) Conforming amendment.--Paragraph (1) of section
6651(d) is amended by striking ``by substituting `1
percent' for `0.5 percent''' and inserting ``by
substituting `0.5 percent' for `0.25 percent'''.
(2) Reduction of penalty to zero during period of
installment agreement.--Subsection (h) of section 6651 is
amended by striking ``by substituting `0.25' for `0.5''' and
inserting ``by substituting `zero' for `0.25'''.
(3) Effective date.--The amendments made by this subsection
shall apply for purposes of determining additions to tax for
months beginning after December 31, 2000.
(b) Prohibition of Fee for Installment Agreements Using Automated
Withdrawals.--
(1) In general.--Section 6159 (relating to agreements for
payment of tax liability in installments) is amended by
redesignating subsection (e) as subsection (f) and by inserting
after subsection (d) the following new subsection:
``(e) Prohibition of Fee for Installment Agreements Using Automated
Withdrawals.--The Secretary may not charge a taxpayer a fee for
entering into an agreement with the Secretary under this section only
for so long as payments under such agreement are made by means of
electronic transfer or by similar automated means.''.
(2) Effective date.--The amendments made by this subsection
shall apply to installment agreements entered into more than 30
days after the date of the enactment of this Act.
SEC. 104. ABATEMENT OF INTEREST.
(a) Abatement of Interest if Gross Injustice Would Otherwise
Result.--Section 6404 is amended by redesignating subsection (i) as
subsection (j) and by inserting after subsection (h) the following new
subsection:
``(i) Abatement of Interest if Gross Injustice Would Otherwise
Result.--The Secretary may abate the assessment of all or any part of
interest on any amount of tax imposed by this title for any period if
the Secretary determines that--
``(1) a gross injustice would otherwise result if interest
were to be charged, and
``(2) no significant aspect of the events giving rise to
the accrual of the interest can be attributed to the taxpayer
involved.''.
(b) Abatement of Interest for Periods Attributable to Any
Unreasonable IRS Error or Delay.--Subparagraphs (A) and (B) of section
6404(e)(1) are each amended by striking ``in performing a ministerial
or managerial act''.
(c) Abatement of Interest With Respect to Erroneous Refund Check
Without Regard to Size of Refund.--Paragraph (2) of section 6404(e) is
amended by striking ``unless--'' and all that follows and inserting
``unless the taxpayer (or a related party) has in any way caused such
erroneous refund.''
(d) Abatement of Interest to Extent Interest is Attributable to
Taxpayer Reliance on Written Statements of the IRS.--Subsection (f) of
section 6404 is amended--
(1) in the subsection heading, by striking ``Penalty or
Addition'' and inserting ``Interest, Penalty, or Addition'',
and
(2) in paragraph (1) and in subparagraph (B) of paragraph
(2), by striking ``penalty or addition'' and inserting
``interest, penalty, or addition''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to interest accruing on or after the date of the
enactment of this Act.
SEC. 105. DEPOSITS MADE TO STOP THE RUNNING OF INTEREST ON POTENTIAL
UNDERPAYMENTS.
(a) In General.--Subchapter B of chapter 67 (relating to interest
on overpayments) is amended by redesignating section 6612 as section
6613 and by inserting after section 6611 the following new section:
``SEC. 6612. DEPOSITS MADE TO STOP THE RUNNING OF INTEREST ON POTENTIAL
UNDERPAYMENTS, ETC.
``(a) Authority To Make Deposits Other Than As Payment of Tax.--Any
taxpayer may make a cash bond deposit with the Secretary to offset any
potential underpayment of tax imposed by this title for any taxable
period. Such a deposit shall be made in such manner as the Secretary
shall prescribe.
``(b) Deposits Used To Pay Underpayment Also Offset Running of
Interest on Underpayment.--Any cash bond deposit used to pay tax under
this title shall offset interest under subchapter A during the period
of such deposit on such tax under such procedures as the Secretary
shall prescribe.
``(c) Taxpayer May Request Return of Cash Bond Deposit.--
``(1) In general.--On written request of a taxpayer who
made a cash bond deposit, the Secretary shall return to the
taxpayer any amount of such deposit specified by the taxpayer.
``(2) No interest.--In the case of a deposit which is so
returned--
``(A) the amount returned shall not offset interest
under subchapter A for any period, and
``(B) except as provided in subsection (d), no
interest shall be allowed on such amount.
``(3) Exceptions.--Paragraph (1) shall not apply to any
amount if--
``(A) such amount has been treated by the Secretary
as a payment of tax after a final determination of the
disputed items to which such amount relates,
``(B) such amount has been designated by the
taxpayer as being a payment of tax,
``(C) the Secretary determines that assessment or
collection of tax is in jeopardy, or
``(D) the amount is applied in accordance with
section 6402.
Subparagraph (D) shall not apply to a payment to a taxpayer if
the taxpayer is entitled to be paid interest under subsection
(d) on such payment.
``(d) Interest on Amounts Returned in Certain Circumstances.--
``(1) In general.--Interest shall be allowed and paid on
the amount of any cash bond deposit for a taxable period which
is returned to the taxpayer only if the deposit is attributable
to a dispute reserve account for such period.
``(2) Attribution to dispute reserve account.--For purposes
of paragraph (1), an amount is attributable to a dispute
reserve account for any taxable period only to the extent that
the aggregate of the cash bond deposits for such period
(reduced by the amount of such deposits which has been
previously returned to the taxpayer or treated as a payment of
tax) does not exceed the deposit limit for such period.
``(3) Deposit limit.--For purposes of paragraph (2)--
``(A) In general.--The deposit limit for any
taxable period is the amount specified by the taxpayer
at the time of the deposit as the taxpayer's reasonable
estimate of the potential underpayment for such period
with respect to disputable items identified (at such
time) by the taxpayer with respect to such deposit.
``(B) Safe harbor based on 30-day letter.--In the
case of a taxpayer who is issued a 30-day letter for
any taxable period, the deposit limit for such period
shall not be less than the amount of the proposed
deficiency specified in such letter.
``(4) Definitions.--For purposes of paragraph (3)--
``(A) Disputable item.--The term `disputable item'
means any item if the taxpayer--
``(i) has a reasonable basis for its
treatment of such item, and
``(ii) reasonably believes that the
Secretary also has a reasonable basis for
disallowing the taxpayer's treatment of such
item.
``(B) 30-day letter.--The term `30-day letter'
means the first letter of proposed deficiency which
allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of
Appeals.
``(5) Rate and period of interest.--
``(A) Rate.--The rate of interest allowable under
this subsection shall be the Federal short-term rate
determined under section 6621(b), compounded daily.
``(B) Period.--Interest under this subsection on
any payment to a taxpayer shall be payable from the
date of the deposit to which such payment is
attributable to a date (to be determined by the
Secretary) preceding the date of the check making such
payment by not more than 30 days. For purposes of the
preceding sentence, cash bond deposits for any taxable
period shall be treated as used and returned on a last-
in first-out basis.
``(e) Cash Bond Deposit.--For purposes of this section--
``(1) In general.--The term `cash bond deposit' means any
payment which is designated by the taxpayer as being a cash
bond deposit for a specified taxable period.
``(2) Amounts designated or used as payment of tax.--A cash
bond deposit shall cease to be treated as such for purposes of
this section beginning on the date that the taxpayer designates
such deposit as a payment of tax for purposes of this title,
or, if earlier, on the date such deposit is so used.
``(f) Change in Period for Which Deposit Made.--Subject to the
requirements of subsection (d), a taxpayer may change the taxable
period to which a cash bond deposit relates.''
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 67 is amended by striking the last item and inserting the
following new items:
``Sec. 6612. Deposits made to stop the
running of interest on
potential underpayments, etc.
``Sec. 6613. Cross references.''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to interest for periods after the date of the enactment
of this Act.
(2) Specification of disputed items.--In the case of
amounts held by the Secretary of the Treasury on the date of
the enactment of this Act as a deposit in the nature of a cash
bond pursuant to Revenue Procedure 84-58, the date that the
taxpayer makes the identification under subsection (d)(3)(A) of
section 6612 of the Internal Revenue Code of 1986, as added by
this section, shall be treated as the date such amounts were
deposited for purposes of such section 6612.
SEC. 106. EXPANSION OF INTEREST NETTING FOR INDIVIDUALS.
(a) In General.--Subsection (d) of section 6621 (relating to
elimination of interest on overlapping periods of tax overpayments and
underpayments) is amended by adding at the end the following: ``Solely
for purposes of the preceding sentence, section 6611(e) shall not apply
in the case of an individual.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to interest accrued after December 31, 2000.
TITLE II--CONFIDENTIALITY AND DISCLOSURE
SEC. 201. DISCLOSURE AND PRIVACY RULES RELATING TO RETURNS AND RETURN
INFORMATION.
(a) In General.--Subsection (a) of section 6103 (relating to
general rule for confidentiality and disclosure of returns and return
information) is amended by striking ``title--'' and inserting ``title
and notwithstanding any other provision of law--''.
(b) Procedural and Jurisdictional Rules.--Subsection (p) of section
6103 (relating to procedure and recordkeeping) is amended by adding at
the end the following new paragraph:
``(9) Procedural rules applicable to certain disclosures.--
``(A) In general.--The Secretary shall prescribe
regulations for purposes of providing for disclosures
of return and return information under subsections (c),
(e), and (k) (1) and (2). Such regulations shall
include a schedule of fees, and waivers and reductions
of such fees, applicable to the processing of requests
for such disclosures.
``(B) Determinations of whether to comply with
disclosure requests.--
``(i) Initial requests.--In response to a
request that reasonably describes the return or
return information sought and is made in
accordance with the published rules, the
Secretary shall--
``(I) determine within 20 days
after the receipt of any request for
disclosure of return or return
information under subsections (c), (e),
and (k) (1) and (2) whether to comply
with such request, and
``(II) immediately notify the
person making such request of such
determination and the reasons therefor,
and of the right of such person to
appeal to the Commissioner any adverse
determination.
``(ii) Appeal.--The Commissioner shall--
``(I) make a determination with
respect to any appeal of any adverse
determination under clause (i)(I)
within 20 days after the receipt of
such appeal, and
``(II) if on appeal the denial of
the request for disclosure of such
return or return information is in
whole or in part upheld, the
Commissioner shall notify the person
making such request of the provisions
for judicial review of that
determination under subparagraph (D).
``(iii) Extension of periods for unusual
circumstances.--
``(I) In general.--The time limits
prescribed in clause (i) and clause
(ii) (as the case may be) may be
extended for not more than 10 days in
unusual circumstances by providing to
the person making such request for
disclosure written notice which sets
forth the unusual circumstances for
such extension and the date on which a
determination is expected to be
dispatched. No such notice shall
specify a date that would result in an
extension for more than 10 working
days, except as provided in subclause
(II).
``(II) Modification of request or
time period.--If, with respect to a
request for which the time limits are
extended under subclause (I), the
Secretary determines that the request
cannot be processed within the time
limit so specified, the Secretary shall
notify the person making the request
and shall provide the person an
opportunity to limit the scope of the
request so that it may be processed
within that time limit or an
opportunity to arrange with the agency
an alternative time frame for
processing the request or a modified
request. Refusal by the person to
reasonably modify the request or
arrange such an alternative time frame
shall be considered as a factor in
determining whether exceptional
circumstances exist for purposes of
subparagraph (C).
``(iv) Unusual circumstances defined.--For
purposes of clause (iii), the term `unusual
circumstances' means, but only to the extent
reasonably necessary to the proper processing
of the particular requests--
``(I) the need to search for and
collect the requested records from
field facilities or other
establishments that are separate from
the office processing the request,
``(II) the need to search for,
collect, and appropriately examine a
voluminous amount of separate and
distinct records which are demanded in
a single request, or
``(III) the need for consultation,
which shall be conducted with all
practicable speed, with another agency
having a substantial interest in the
determination of the request or among
two or more components of the agency
having substantial subject-matter
interest therein.
``(v) 20-day period excludes certain
days.--The 20-day periods referred to in
clauses (i) and (ii) shall not include
Saturdays, Sundays, and legal public holidays.
``(C) Failure to meet time limits.--
``(i) In general.--Any person making a
request for the disclosure of return or return
information which is subject to this paragraph
shall be deemed to have exhausted his
administrative remedies with respect to such
request if the Secretary fails to comply with
the applicable time limit provisions of this
paragraph. If the Secretary can show
exceptional circumstances exist and that the
agency is exercising due diligence in
responding to the request, the court may retain
jurisdiction and allow the agency additional
time to complete its review of the records.
Upon any determination by the Secretary to
comply with a request for records, the records
shall be made promptly available to such person
making such request. Any notification of denial
of any request for records under this
subsection shall set forth the names and titles
or positions of each person responsible for the
denial of such request.
``(ii) Exceptional circumstances defined.--
For purposes of clause (i), the term
`exceptional circumstances' does not include a
delay that results from a predictable workload
of the Secretary relating to requests subject
to this paragraph, unless the Secretary
demonstrates reasonable progress in reducing
its backlog of pending requests.
``(iii) Refusal to modify request or time
frame.--Refusal by a person to reasonably
modify the scope of a request or arrange an
alternative time frame for processing a request
(or a modified request) under subparagraph
(B)(ii) after being given an opportunity to do
so by the agency to whom the person made the
request shall be considered as a factor in
determining whether exceptional circumstances
exist for purposes of this subparagraph.
``(D) Judicial proceedings.--
``(i) Jurisdiction of the district
courts.--
``(I) In general.--On complaint,
the district courts of the United
States in the district in which the
complainant resides, or has his
principal place of business, or in
which his return or return information
is situated, or in the District of
Columbia, shall have jurisdiction to
enjoin the Secretary from withholding
return or return information which is
subject to disclosure under subsection
(c), (e), or (k) (1) or (2), and to
order the production of any return or
return information improperly withheld
from the complainant.
``(II) Expedited processing.--No
district court of the United States
shall have jurisdiction to review a
denial by the Secretary of expedited
processing of a request for return or
return information after the Secretary
has provided a complete response to the
request.
``(ii) Procedural matters.--In a case
arising under clause (i), the court shall
determine the matter de novo (on the record
before the Secretary at the time of the
determination in the case of a request for
expedited processing), and may examine the
contents of such return or return information
in camera to determine whether such return or
return information or any part thereof shall be
withheld under any of the provisions of this
title, and the burden shall be on the Secretary
to sustain its action. In addition to any other
matters to which a court accords substantial
weight, a court shall accord substantial weight
to an affidavit of the Secretary concerning the
Secretary's determination as to technical
feasibility relating to, and reproducibility
of, such return and return information.
``(E) Deadline for Secretary to answer complaint.--
Notwithstanding any other provision of law, the
Secretary shall serve an answer or otherwise plead to
any complaint made under this paragraph within 30 days
after service upon the Secretary of the pleading in
which such complaint is made, unless the court
otherwise directs for good cause shown.''.
(c) Attorney Fees.--Subsection (a) of section 7430 (relating to
general rule for awarding of costs and certain fees) is amended by
inserting after ``title,'' the following: ``and in any court proceeding
in connection with the disclosure of return and return information
under section 6103(p)(9),''.
(d) Effective Date.--The amendments made by this section shall
apply to requests made after the date of the enactment of this Act.
SEC. 202. EXPANSION OF TYPE OF ADVICE AVAILABLE FOR PUBLIC INSPECTION.
(a) In General.--Subparagraph (A) of section 6110(i)(1) is
amended--
(1) by striking ``national office component of the Office
of Chief Counsel'' and inserting ``component of the Office of
Chief Counsel or of the Service'', and
(2) in clause (i) by striking ``field or service center
employees of the Service or regional or district'' and
inserting ``employees of the Service or''.
(b) Conforming Amendments.--
(1) Section 6110(i)(2) is amended by inserting ``or the
Service'' after ``Office of Chief Counsel''.
(2) The following provisions of section 6110 are amended by
striking ``Chief Counsel advice'' each place it appears and
inserting ``official advice'':
(A) Paragraph (1) of subsection (b).
(B) Subparagraph (A) of subsection (i)(1).
(C) Paragraphs (3) and (4) of subsection (i).
(3) Subparagraph (A) of section 6110(g)(5) is amended by
inserting ``official advice and'' before ``technical advice''.
(4) The heading for subsection (i) of section 6110 is
amended by striking ``Chief Counsel'' and inserting
``Official''.
(5) The heading for paragraph (1) of section 6110(i) is
amended by striking ``Chief counsel'' and inserting
``Official''.
(6) The headings for paragraphs (2) and (3) of section
6110(i), and for subparagraphs (A) and (B) of paragraph (4) of
such section, are each amended by striking ``chief counsel''
and inserting ``official''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to any official advice issued more than 90 days after the
date of the enactment of this Act.
(2) Documents treated as official advice.--If the Secretary
of the Treasury by regulation provides pursuant to section
6110(i)(2) of the Internal Revenue Code of 1986, that any
additional advice or instruction issued by the Office of Chief
Counsel shall be treated as official advice, such additional
advice or instruction shall be made available for public
inspection pursuant to section 6110 of such Code, as amended by
this section, only in accordance with the effective date set
forth in such regulation.
(3) Official advice to be available electronically.--The
Internal Revenue Service shall make any official advice issued
more than 90 days after the date of the enactment of this Act
and made available for public inspection pursuant to section
6110 of the Internal Revenue Code of 1986, as amended by this
section, also available by computer telecommunications within 1
year after issuance.
SEC. 203. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN
DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL REQUEST.
(a) In General.--Paragraph (8) of section 6103(e) (relating to
disclosure of collection activities with respect to joint return) is
amended by striking ``in writing'' the first place it appears.
(b) Effective Date.--The amendment made by this section shall apply
to requests made after the date of the enactment of this Act.
SEC. 204. TAXPAYER REPRESENTATIVES NOT SUBJECT TO EXAMINATION ON SOLE
BASIS OF REPRESENTATION OF TAXPAYERS.
(a) In General.--Subsection (h) of section 6103 (relating to
disclosure to certain Federal officers and employees for purposes of
tax administration, etc.) is amended by adding at the end the following
new paragraph:
``(7) Taxpayer representatives.--Notwithstanding paragraph
(1), the return of the representative of a taxpayer whose
return is being examined by an officer or employee of the
Department of the Treasury shall not be open to inspection by
such officer or employee on the sole basis of the
representative's relationship to the taxpayer unless a
supervisor of such officer or employee has approved the
inspection of the return of such representative on a basis
other than by reason of such relationship.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 205. DISCLOSURE IN JUDICIAL OR ADMINISTRATIVE TAX PROCEEDINGS OF
RETURN AND RETURN INFORMATION OF PERSONS WHO ARE NOT
PARTY TO SUCH PROCEEDINGS.
(a) In General.--Paragraph (4) of section 6103(h) (relating to
disclosure to certain Federal officers and employees for purposes of
tax administration, etc.) is amended by adding at the end the following
new subparagraph:
``(B) Disclosure in judicial or administrative tax
proceedings of return and return information of persons
not party to such proceedings.--
``(i) Notice.--Return or return information
of any person who is not a party to a judicial
or administrative proceeding described in
paragraph (4) shall not be disclosed under
clause (ii) or (iii) of subparagraph (A) until
after the Secretary makes a reasonable effort
to give notice to such person and an
opportunity for such person to request the
deletion of matter from such return or return
information, including any of the items
referred to in paragraphs (1) through (7) of
section 6110(c). Such notice shall include a
statement of the issue or issues the resolution
of which is the reason such return or return
information is sought. In the case of S
corporations, partnerships, estates, and
trusts, such notice shall be made at the entity
level.
``(ii) Disclosure limited to pertinent
portion.--The only portion of a return or
return information described in clause (i)
which may be disclosed under subparagraph (A)
is that portion of such return or return
information that directly relates to the
resolution of an issue in such proceeding.
``(iii) Exceptions.--Clause (i) shall not
apply to--
``(I) any ex parte proceeding for
obtaining a search warrant, order for
entry on premises or safe deposit
boxes, or similar ex parte proceeding,
``(II) disclosure of third party
return information by indictment or
criminal information, or
``(III) if the Secretary determines
that the application of such clause
would seriously impair a criminal tax
investigation.''.
(b) Conforming Amendments.--Paragraph (4) of section 6103(h) is
amended by--
(1) by striking ``proceedings.--A return'' and inserting
``proceedings.--
``(A) In general.--Except as provided in
subparagraph (B), a return'',
(2) by redesignating subparagraphs (A), (B), (C), and (D)
clauses (i), (ii), (iii), and (iv), respectively, and
(3) in the matter following clause (iv) (as so
redesignated), by striking ``subparagraph (A), (B), or (C)''
and inserting ``clause (i), (ii) or (iii)'' and by moving such
matter two ems to the right.
(c) Effective Date.--The amendments made by this section shall
apply to proceedings commenced after the date of the enactment of this
Act.
SEC. 206. PROHIBITION OF DISCLOSURE OF TAXPAYER IDENTIFICATION
INFORMATION
WITH RESPECT TO DISCLOSURE OF ACCEPTED
OFFERS-IN-COMPROMISE.
(a) In General.--Paragraph (1) of section 6103(k) (relating to
disclosure of certain returns and return information for tax
administrative purposes) is amended by inserting ``(other than address
and TIN)'' after ``Return information''.
(b) Effective Date.--The amendment made by this section shall apply
to disclosures made after the date of the enactment of this Act.
SEC. 207. COMPLIANCE BY STATE CONTRACTORS WITH CONFIDENTIALITY
SAFEGUARDS.
(a) In General.--Paragraph (8) of section 6103(p) (relating to
State law requirements) is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A) the following
new subparagraph:
``(B) Disclosure to contractors.--Notwithstanding
any other provision of this section, no return or
return information shall be disclosed by any officer or
employee of any State to any contractor of the State
unless such State--
``(i) has requirements in effect which
require each contractor of the State which
would have access to returns or return
information to provide safeguards (within the
meaning of paragraph (4)) to protect the
confidentiality of such returns or return
information,
``(ii) agrees to conduct an annual, on-site
review (mid-point review in the case of
contracts of less than 1 year in duration) of
each contractor to determine compliance with
such requirements,
``(iii) submits the findings of the most
recent review conducted under clause (ii)
to the Secretary as part of the report required by paragraph (4)(E),
and
``(iv) certifies to the Secretary for the
most recent annual period that all contractors
are in compliance with all such requirements.
The certification required by clause (iv) shall include
the name and address of each contractor, a description
of the contract of the contractor with the State, and
the duration of such contract.''.
(b) Conforming Amendment.--Subparagraph (C) of section 6103(p)(8),
as amended by subsection (a), is amended by striking ``subparagraph
(A)'' and inserting ``subparagraphs (A) and (B)''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to disclosures made after December 31, 2001.
(2) The first certification under section 6103(p)(8)(B)(iv)
of the Internal Revenue Code of 1986, as added by subsection
(a), shall be made with respect to calendar year 2002.
SEC. 208. HIGHER STANDARDS FOR REQUESTS FOR AND CONSENTS TO DISCLOSURE.
(a) In General.--Subsection (c) of section 6103 (relating to
disclosure of returns and return information to designee of taxpayer)
is amended by adding at the end the following new paragraphs:
``(2) Requirements for valid requests and consents.--A
request for or consent to disclosure under paragraph (1) shall
only be valid for purposes of this section or sections 7213,
7213A, or 7431 if--
``(A) at the time of execution, such request or
consent designates a recipient of such disclosure and
is dated, and
``(B) at the time such request or consent is
submitted to the Secretary, the submitter of such
request or consent certifies, under penalty of perjury,
that such request or consent complied with subparagraph
(A).
``(3) Restrictions on persons obtaining information.--Any
person shall, as a condition for receiving return or return
information under paragraph (1)--
``(A) ensure that such return and return
information is kept confidential,
``(B) use such return and return information only
for the purpose for which it was requested, and
``(C) not disclose such return and return
information except to accomplish the purpose for which
it was requested, unless a separate consent from the
taxpayer is obtained.
``(4) Requirements for form prescribed by secretary.--For
purposes of this subsection, the Secretary shall prescribe a
form for requests and consents which shall--
``(A) contain a warning, prominently displayed,
informing the taxpayer that the form should not be
signed unless it is completed,
``(B) state that if the taxpayer believes there is
an attempt to coerce him to sign an incomplete or blank
form, the taxpayer should report the matter to the
Treasury Inspector General for Tax Administration, and
``(C) contain the address and telephone number of
the Treasury Inspector General for Tax
Administration.''.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Treasury Inspector General for Tax
Administration shall submit a report to the Congress on compliance with
the designation and certification requirements applicable to requests
for or consent to disclosure of returns and return information under
section 6103(c) of the Internal Revenue Code of 1986, as amended by
subsection (a). Such report shall--
(1) evaluate (on the basis of random sampling) whether--
(A) the amendments made by subsection (a) are
achieving the purposes of this section,
(B) requesters and submitters for such disclosure
are continuing to evade the purposes of this section
and, if so, how, and
(C) the sanctions for violations of such
requirements are adequate, and
(2) include such recommendations that the Treasury
Inspector General for Tax Administration considers necessary or
appropriate to better achieve the purposes of this section.
(c) Conforming Amendment.--Section 6103(c) is amended by striking
``Taxpayer.--The Secretary'' and inserting ``Taxpayer.--
``(1) In General.--The Secretary''.
(d) Effective Date.--The amendments made by this section shall
apply to requests and consents made after 3 months after the date of
the enactment of this Act.
SEC. 209. NOTICE TO TAXPAYER CONCERNING ADMINISTRATIVE DETERMINATION OF
BROWSING;
ANNUAL REPORT.
(a) Notice to Taxpayer.--Subsection (e) of section 7431 (relating
to notification of unlawful inspection and disclosure) is amended by
adding at the end the following: ``The Secretary shall also notify such
taxpayer if the Treasury Inspector General for Tax Administration
determines that such taxpayer's return or return information was
inspected or disclosed in violation of any of the provisions specified
in paragraph (1), (2), or (3).''.
(b) Reports.--Subsection (p) of section 6103 (relating to procedure
and recordkeeping), as amended by section 201(b), is further amended by
adding at the end the following new paragraph:
``(10) Report on unauthorized disclosure and inspection.--
As part of the report required by paragraph (3)(C) for each
calendar year, the Secretary shall furnish information
regarding the unauthorized disclosure and inspection of returns
and return information, including the number, status, and
results of--
``(A) administrative investigations,
``(B) civil lawsuits brought under section 7431
(including the amounts for which such lawsuits were
settled and the amounts of damages awarded), and
``(C) criminal prosecutions.''.
(c) Effective Date.--
(1) Notice.--The amendment made by subsection (a) shall
apply to determinations made after the date of the enactment of
this Act.
(2) Reports.--The amendment made by subsection (b) shall
apply to calendar years ending after the date of the enactment
of this Act.
SEC. 210. DISCLOSURE OF TAXPAYER IDENTITY FOR TAX REFUND PURPOSES.
Paragraph (1) of section 6103(m) (relating to disclosure of
taxpayer identity information for tax refunds) is amended by inserting
``, and through any other means of mass communication,'' after
``media''.
TITLE III--OTHER REQUIREMENTS
SEC. 301. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.
Subsection (i) of section 7611 (relating to section not to apply to
criminal investigations, etc.) is amended by striking ``or'' at the end
of paragraph (4), by striking the period at the end of paragraph (5)
and inserting ``, or'', and by inserting after paragraph (5) the
following:
``(6) information provided by the Secretary related to the
standards for exemption from tax under this title and the
requirements under this title relating to unrelated business
taxable income.''.
SEC. 302. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT
ORGANIZATIONS.
(a) In General.--Paragraph (1) of section 7428(a) (relating to
creation of remedy) is amended--
(1) in subparagraph (B) by inserting after ``509(a))'' the
following: ``or as a private operating foundation (as defined
in section 4942(j)(3))'', and
(2) by amending subparagraph (C) to read as follows:
``(C) with respect to the initial qualification or
continuing qualification of an organization as an
organization described in section 501(c) (other than
paragraph (3)) which is exempt from tax under section
501(a), or''.
(b) Court Jurisdiction.--Subsection (a) of section 7428 is amended
in the material following paragraph (2) by striking ``United States Tax
Court, the United States Claims Court, or the district court of the
United States for the District of Columbia'' and inserting the
following: ``United States Tax Court (in the case of any such
determination or failure) or the United States Claims Court or the
district court of the United States for the District of Columbia (in
the case of a determination or failure with respect to an issue
referred to in subparagraph (A) or (B) of paragraph (1)),''.
(c) Failure of Service To Act on Determinations Treated as
Exhaustion of Remedies.--The second sentence of paragraph (2) of
section 7428(b) (relating to exhaustion of administrative remedies) is
amended to read as follows: ``An organization requesting the
determination of an issue referred to in subsection (a)(1) shall be
deemed to have exhausted its administrative remedies with respect to--
``(A) a failure by the Secretary to make a
determination with respect to such issue at the
expiration of 270 days after the date on which the
request for such determination was made if the
organization has taken, in a timely manner, all
reasonable steps to secure such determination, and
``(B) a failure by any office of the Service (other
than the office which is responsible for initial
determinations with respect to such issue (hereinafter
in this subparagraph referred to as the `initial
office'), to make a determination with respect to such
issue at the expiration of 180 days after the date on
which any request for such determination was made by the initial office
if the organization has taken, in a timely manner, all reasonable steps
to secure such determination.''.
(d) Effective Dates.--
(1) Declaratory judgment.--The amendments made by
subsections (a) and (b) shall apply to pleadings filed with
respect to determinations (or requests for determinations) made
after the date of the enactment of this Act.
(2) Failure of service to act.--The amendments made by
subsection (c) shall apply to applications received in the
national office of the Internal Revenue Service after the date
of the enactment of this Act.
SEC. 303. EMPLOYEE MISCONDUCT REPORT TO INCLUDE SUMMARY OF COMPLAINTS
BY CATEGORY.
(a) In General.--Clause (ii) of section 7803(d)(2)(A) is amended by
inserting before the semicolon at the end the following: ``, including
a summary (by category) of the 10 most common complaints made and the
number of such common complaints''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to reporting periods ending after the date of the
enactment of this Act.
SEC. 304. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS ON REFUNDS
AND CREDITS.
(a) General Rule.--Subsections (a) and (b) of section 6405 are each
amended by striking ``$1,000,000'' and inserting ``$2,000,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act, except that such
amendment shall not apply with respect to any refund or credit with
respect to a report that has been made before such date of the
enactment under section 6405 of the Internal Revenue Code of 1986.
SEC. 305. ANNUAL REPORT ON AWARDS OF COSTS AND CERTAIN FEES IN
ADMINISTRATIVE AND COURT PROCEEDINGS.
Not later than 3 months after the close of each Federal fiscal year
after fiscal year 1999, the Treasury Inspector General for Tax
Administration shall submit a report to Congress which specifies for
such year--
(1) the number of payments made by the United States
pursuant to section 7430 of the Internal Revenue Code of 1986
(relating to awarding of costs and certain fees),
(2) the amount of each such payment,
(3) an analysis of any administrative issue giving rise to
such payments, and
(4) changes (if any) which will be implemented as a result
of such analysis and other changes (if any) recommended by the
Treasury Inspector General for Tax Administration as a result
of such analysis.
SEC. 306. ANNUAL REPORT ON ABATEMENT OF PENALTIES.
Not later than 6 months after the close of each Federal fiscal year
after fiscal year 1999, the Treasury Inspector General for Tax
Administration shall submit a report to Congress on abatements of
penalties under the Internal Revenue Code of 1986 during such year,
including information on the reasons and criteria for such abatements.
SEC. 307. BETTER MEANS OF COMMUNICATING WITH TAXPAYERS.
Not later than 18 months after the date of the enactment of this
Act, the Treasury Inspector General for Tax Administration shall submit
a report to Congress evaluating whether technological advances, such as
e-mail and facsimile transmission, permit the use of alternative means
for the Internal Revenue Service to communicate with taxpayers.
SEC. 308. EXPLANATION OF STATUTE OF LIMITATIONS AND CONSEQUENCES OF
FAILURE TO FILE.
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, revise the statement required by section 6227 of
the Omnibus Taxpayer Bill of Rights (Internal Revenue Service
Publication No. 1), and any instructions booklet accompanying a general
income tax return form for taxable years beginning in 2000 and later
(including forms 1040, 1040A, 1040EZ, and any similar or successor
forms relating thereto), to provide for an explanation of--
(1) the limitations imposed by section 6511 of the Internal
Revenue Code of 1986 on credits and refunds, and
(2) the consequences under such section 6511 of the failure
to file a return of tax.