[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 89 Introduced in House (IH)]

112th CONGRESS
  1st Session
H. RES. 89

Expressing the sense of the House of Representatives that the Internal 
 Revenue Service should immediately update its collection policies and 
  procedures in order to more adequately protect and assist taxpayers 
                    suffering an economic hardship.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 11, 2011

    Ms. Waters (for herself and Ms. Fudge) submitted the following 
   resolution; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                               RESOLUTION


 
Expressing the sense of the House of Representatives that the Internal 
 Revenue Service should immediately update its collection policies and 
  procedures in order to more adequately protect and assist taxpayers 
                    suffering an economic hardship.

Whereas in Vinatieri v. Commissioner, the tax court held that the Internal 
        Revenue Service (IRS) abused its discretion by proposing to levy on a 
        taxpayer who had shown that she was in economic hardship;
Whereas the Vinatieri error arose because the IRS interpreted the Internal 
        Revenue Manual as preventing it from placing the taxpayer's account into 
        currently not collectible status due to the unfiled returns;
Whereas, since Vinatieri v. Commissioner, the IRS has failed to adequately 
        explain procedures for placing an account with unfiled returns into 
        currently-not-collectible status rather than proceeding with levy;
Whereas errors in the Vinatieri case also occurred because: (1) The Internal 
        Revenue Manual did not simply state that the IRS cannot levy or propose 
        to levy on a taxpayer known to be in economic hardship; and (2) the 
        Internal Revenue Manual that permits currently-not-collectible status 
        for taxpayers in economic hardship was contradictory and incomplete in 
        explaining the availability of currently-not-collectible status where 
        there were unfiled returns;
Whereas as long as the IRS does not levy or propose to levy on a taxpayer it 
        knows is in economic hardship, it operates consistently with the holding 
        of Vinatieri;
Whereas as IRS employees would benefit from additional training on the 
        principles outlined in the Vinatieri decision, independently of any 
        other circumstance, the IRS should not levy or propose to levy if the 
        levy will create economic hardship;
Whereas, according to the National Taxpayer Advocate, the IRS's collection 
        policies inflict unnecessary harm on taxpayers who are struggling 
        financially;
Whereas, according to the National Taxpayer Advocate, in fiscal year 2010, the 
        IRS filed liens against 1,100,000 taxpayers;
Whereas, according to the National Taxpayer Advocate, between fiscal year 1999 
        to fiscal year 2010, the IRS increased its lien filings by 553 percent;
Whereas when the IRS files a notice of Federal tax lien, the taxpayer's credit 
        rating can be damaged for the long term;
Whereas tax liens are recorded by consumer reporting agencies and remain on a 
        taxpayer's credit report for 7 years from the date a tax liability is 
        resolved;
Whereas employers, mortgage lenders, landlords, car dealerships, auto insurance 
        companies, and credit card companies utilize credit reports, and a tax 
        lien has the potential to render an individual unemployable, unable to 
        obtain housing (owned or rented), and unable to obtain car insurance or 
        a credit card, at least at reasonable rates, for many years into the 
        future;
Whereas a tax lien can be particularly devastating to small businesses, as it 
        often cuts off their access to credit;
Whereas section 6343(a)(1)(D) of the Internal Revenue Code of 1986 states that a 
        levy shall be released if the Secretary has determined that such levy is 
        creating an economic hardship due to the financial condition of the 
        taxpayer;
Whereas Treasury Regulation section 301.6343-1(b)(4) provides that economic 
        hardship is present ``if satisfaction of the levy in whole or in part 
        will cause an individual taxpayer to be unable to pay his or her 
        reasonable basic living expenses'';
Whereas, to determine hardship, the IRS considers general earning potential, 
        basic living expenses, and the cost of living in the taxpayer's 
        geographic location;
Whereas a levy on the taxpayer's wages or property would cause the taxpayer to 
        be unable to pay reasonable basic living expenses, creating an economic 
        hardship that would require release of the levy pursuant to Treasury 
        Regulation section 301.6343-1(b)(4) and other regulations;
Whereas the IRS has not revised Internal Revenue Manual sections that lead it to 
        propose to levy on a taxpayer in economic hardship;
Whereas the IRS lacks sufficient procedures to monitor economic hardship among 
        taxpayers;
Whereas the IRS should work with the Taxpayer Advocate Service to revise its 
        Internal Revenue Manual and other procedural guidance to clarify that 
        all collection employees have authority to put a taxpayer account into 
        currently-not-collectible status based on economic hardship even when 
        the taxpayer has unfiled returns, independently of any other criteria;
Whereas the IRS should work with Taxpayer Advocate Service to train collection 
        employees how to manage taxpayer accounts when the taxpayer is facing 
        economic hardship;
Whereas the IRS should establish quality review procedures that measure whether 
        employees considered the possibility that a taxpayer was in economic 
        hardship and managed accounts appropriately;
Whereas taxpayers and small businesses continue to be harmed as a result of the 
        IRS's failure to correct its instructions to its employees;
Whereas the IRS has not corrected either of these conditions;
Whereas currently-not-collectible status is the mechanism for preventing 
        issuance of levies;
Whereas it is the IRS's mission to provide America's taxpayers with quality 
        service by helping them understand and meet their tax responsibilities; 
        and
Whereas it is the IRS's obligation to apply tax law with integrity and fairness 
        to all: Now, therefore, be it
    Resolved, That it is the sense of the House of Representatives that 
the Internal Revenue Service should immediately update its collection 
policies and procedures in order to more adequately protect and assist 
taxpayers suffering an economic hardship.
                                 <all>