1.Short
title; table of contents
(a)This Act may be cited
as the Small Business Taxpayer Bill of
Rights Act of 2012
.
(b)The table of contents of this Act is as follows:
Sec. 1. Short title; table of
contents.
Sec. 2. Modification of standards for awarding of costs and
certain fees.
Sec. 3. Civil damages allowed for reckless or intentional
disregard of internal revenue laws.
Sec. 4. Modifications relating to certain offenses by officers
and employees in connection with revenue laws.
Sec. 5. Modifications relating to civil damages for
unauthorized inspection or disclosure of returns and return
information.
Sec. 6. Interest abatement reviews.
Sec. 7. Ban on ex parte discussions.
Sec. 8. Alternative dispute resolution procedures.
Sec. 9. Extension of time for contesting IRS levy.
Sec. 10. Waiver of installment agreement fee.
Sec. 11. Suspension of running of period for filing petition of
spousal relief and collection cases.
Sec. 12. Venue for appeal of spousal relief and collection
cases.
Sec. 13. Increase in monetary penalties for certain
unauthorized disclosures of information.
Sec. 14. De novo tax court review of claims for equitable
innocent spouse relief.
Sec. 15. Ban on raising new issues on appeal.
2.Modification of
standards for awarding of costs and certain fees
(a)Small
businesses eligible without regard to net worthSubparagraph (D)
of section 7430(c)(4) of the Internal Revenue Code of 1986 is amended by
striking and
at the end of clause (i), by striking the period at
the end of clause (ii) and inserting and
, and by adding at the
end the following new clause:
(iii)in the case of
an eligible small business, the net worth limitation in clause (ii) of such
section shall not
apply.
.
(b)Paragraph (4) of section 7430(c) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
(F)For purposes of subparagraph (D)(iii), the term
eligible small business means, with respect to any proceeding
commenced in a taxable year—
(i)a
corporation the stock of which is not publicly traded,
(ii)a partnership,
or
(iii)a sole
proprietorship,
if the
average annual gross receipts of such corporation, partnership, or sole
proprietorship for the 3-taxable-year period preceding such taxable year does
not exceed $50,000,000. For purposes of applying the test under the preceding
sentence, rules similar to the rules of paragraphs (2) and (3) of section
448(c) shall
apply..
(c)The amendments made by this section shall apply to
proceedings commenced after the date of the enactment of this Act.
3.Civil damages
allowed for reckless or intentional disregard of internal revenue laws
(a)Increase in
amount of damagesSection 7433(b) of the Internal Revenue Code of
1986 is amended by striking $1,000,000 ($100,000, in the case of
negligence)
and inserting $3,000,000 ($300,000, in the case of
negligence)
.
(b)Extension of
time To bring actionSection 7433(d)(3) of the Internal Revenue
Code of 1986 is amended by striking 2 years
and inserting
5 years
.
(c)The amendments made by this section shall apply to actions
of employees of the Internal Revenue Service after the date of the enactment of
this Act.
4.Modifications
relating to certain offenses by officers and employees in connection with
revenue laws
(a)Section 7214 of the Internal Revenue Code of 1986 is
amended—
(1)by striking
$10,000
in subsection (a) and inserting $25,000
,
and
(2)by striking
$5,000
in subsection (b) and inserting
$10,000
.
(b)The amendments made by this section shall take effect on the
date of the enactment of this Act.
5.Modifications
relating to civil damages for unauthorized inspection or disclosure of returns
and return information
(a)Increase in
amount of damagesSubparagraph (A) of section 7431(c)(1) of the
Internal Revenue Code of 1986 is amended by striking $1,000
and
inserting $10,000
.
(b)The amendment made by this section shall apply to
inspections and disclosure occurring on and after the date of the enactment of
this Act.
6.Interest
abatement reviews
(a)Filing period
for interest abatement cases
(1)Subsection (h) of section 6404 of the Internal Revenue
Code of 1986 is amended—
(A)by striking
Review of
denial
in the heading and inserting
Judicial
review
, and
(B)by striking
‘if such action is brought’
and all that follows in paragraph
(1) and inserting
if such action is
brought—(A)at any time after
the earlier of—
(i)the date of the
mailing of the Secretary's final determination not to abate such interest,
or
(ii)the date which
is 180 days after the date of the filing with the Secretary (in such form as
the Secretary may prescribe) of a claim for abatement under this section,
and
(B)not later than
the date which is 180 days after the date described in subparagraph
(A)(i).
.
(2)The amendments made by this subsection shall apply to claims
for abatement of interest filed with the Secretary after the date of the
enactment of this Act.
(b)Small tax case
election for interest abatement cases
(1)Subsection (f) of section 7463 of the Internal Revenue
Code of 1986 is amended—
(A)by striking
and
at the end of paragraph (1),
(B)by striking the
period at the end of paragraph (2) and inserting , and
,
and
(C)by adding at the
end the following new paragraph:
(3)a petition to the
Tax court under section 6404(h) in which the amount of interest abatement
sought does not exceed
$50,000.
.
(2)The amendments made by this subsection shall apply
to—
(A)cases pending as
of the day after the date of the enactment of this Act, and
(B)cases commenced
after such date of enactment.
7.Ban on ex parte
discussions
(a)Notwithstanding
section 1001(a)(4) of the Internal Revenue Service Restructuring and Reform Act
of 1998, the Internal Revenue Service shall prohibit any ex parte
communications between officers in the Internal Revenue Service Office of
Appeals and other Internal Revenue Service employees with respect to any matter
pending before such officers.
(b)Termination of
employment for misconductSubject to subsection (c), the
Commissioner of Internal Revenue shall terminate the employment of any employee
of the Internal Revenue Service if there is a final administrative or judicial
determination that such employee committed any act or omission prohibited under
subsection (a) in the performance of the employee’s official duties. Such
termination shall be a removal for cause on charges of misconduct.
(c)Determination
of commissioner
(1)The Commissioner of Internal Revenue may take a personnel
action other than termination for an act prohibited under subsection
(a).
(2)The
exercise of authority under paragraph (1) shall be at the sole discretion of
the Commissioner of Internal Revenue and may not be delegated to any other
officer. The Commissioner of Internal Revenue, in his sole discretion, may
establish a procedure which will be used to determine whether an individual
should be referred to the Commissioner of Internal Revenue for a determination
by the Commissioner under paragraph (1).
(3)Any determination of the Commissioner of Internal Revenue
under this subsection may not be appealed in any administrative or judicial
proceeding.
(d)TIGTA reporting
of termination or mitigationSection 7803(d)(1)(E) of the
Internal Revenue Code of 1986 is amended by inserting or section 7 of
the Small Business Taxpayer Bill of Rights
Act of 2012
after 1998
.
8.Alternative
dispute resolution procedures
(a)Section 7123 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
(c)Availability of
dispute resolutions
(1)The procedures prescribed under subsection (b)(1) and the
pilot program established under subsection (b)(2) shall provide that a taxpayer
may request mediation or arbitration in any case unless the Secretary has
specifically excluded the type of issue involved in such case or the class of
cases to which such case belongs as not appropriate for resolution under such
subsection. The Secretary shall make any determination that excludes a type of
issue or a class of cases public within 5 working days and provide an
explanation for each determination.
(2)
(A)The procedures prescribed under subsection (b)(1) shall
provide the taxpayer an opportunity to elect to have the mediation conducted by
an independent, neutral individual not employed by the Office of
Appeals.
(B)
(i)Any taxpayer making an election under subparagraph (A)
shall be required—
(I)to share the
costs of such independent mediator equally with the Office of Appeals,
and
(II)to limit the
selection of the mediator to a roster of recognized national or local neutral
mediators.
(ii)Clause
(i)(I) shall not apply to any taxpayer who is an individual or who was a small
business in the preceding calendar year if such taxpayer had an adjusted gross
income that did not exceed 250 percent of the poverty level, as determined in
accordance with criteria established by the Director of the Office of
Management and Budget, in the taxable year preceding the request.
(iii)For purposes of clause (ii), the term small
business has the meaning given such term under section
41(b)(3)(D)(iii).
(3)The procedures prescribed under subsection (b)(1) and the
pilot program established under subsection (b)(2) shall provide the opportunity
to elect mediation or arbitration at the time when the case is first filed with
the Office of Appeals and at any time before deliberations in the appeal
commence.
.
(b)The amendment made by this section shall take effect on the
date of the enactment of this Act.
9.Extension of
time for contesting IRS levy
(a)Extension of
time for return of property subject to levySubsection (b) of
section 6343 of the Internal Revenue Code of 1986 is amended by striking
9 months
and inserting 3 years
.
(b)Period of
limitation on suitsSubsection (c) of section 6532 of the
Internal Revenue Code of 1986 is amended—
(1)in paragraph (1)
by striking 9 months” and inserting ‘‘3 years
, and
(2)in paragraph (2)
by striking 9-month
and inserting 3-year
.
(c)The amendments made by this section shall apply to—
(1)levies made after
the date of the enactment of this Act, and
(2)levies made on or
before such date if the 9-month period has not expired under section 6343(b) of
the Internal Revenue Code of 1986 (without regard to this section) as of such
date.
10.Waiver of
installment agreement fee
(a)Section 6159 of the Internal Revenue Code of 1986 is
amended by redesignating subsection (f) as subsection (g) and by inserting
after subsection (e) the following new subsection:
(f)Waiver of
installment agreement feeThe Secretary shall waive the fees
imposed on installment agreements under this section for any taxpayer with an
adjusted gross income that does not exceed 250 percent of the poverty level, as
determined in accordance with criteria established by the Director of the
Office of Management and Budget, and who has agreed to make payments under the
installment agreement by electronic payment through a debit
instrument.
.
(b)The amendment made by this section shall take effect on the
date of the enactment of this Act.
11.Suspension of
running of period for filing petition of spousal relief and collection
cases
(a)Petitions for
spousal relief
(1)Subsection (e) of section 6015 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
paragraph:
(6)Suspension of
running of period for filing petition in title 11 casesIn the
case of an individual who is prohibited by reason of a case under title 11,
United States Code, from filing a petition under paragraph (1)(A) with respect
to a final determination of relief under this section, the running of the
period prescribed by such paragraph for filing such a petition with respect to
such final determination shall be suspended for the period during which the
individual is so prohibited from filing such a petition, and for 60 days
thereafter.
.
(2)The amendment made by this subsection shall apply to
petitions filed under section 6015(e) of the Internal Revenue Code of 1986
after the date of the enactment of this Act.
(b)
(1)Subsection (d) of section 6330 of the Internal Revenue
Code of 1986 is amended—
(A)by striking
appeal such determination to the Tax Court
in paragraph (1) and
inserting petition the Tax Court for review of such
determination
,
(B)by striking
Judicial review of
determination
in the heading of paragraph (1) and
inserting Petition for
review by Tax Court
,
(C)by redesignating
paragraph (2) as paragraph (3), and
(D)by inserting
after paragraph (1) the following new paragraph:
(2)Suspension of
running of period for filing petition in title 11 casesIn the
case of an individual who is prohibited by reason of a case under title 11,
United States Code, from filing a petition under paragraph (1) with respect to
a determination under this section, the running of the period prescribed by
such subsection for filing such a petition with respect to such determination
shall be suspended for the period during which the individual is so prohibited
from filing such a petition, and for 30 days
thereafter.
.
(2)Subsection (c) of section 6320 of such Code is amended
by striking (2)(B)
and inserting (3)(B)
.
(3)The amendments made by this subsection shall apply to
petitions filed under section 6330 of the Internal Revenue Code of 1986 after
the date of the enactment of this Act.
12.Venue for
appeal of spousal relief and collection cases
(a)Paragraph (1) of section 7482(b) of the Internal Revenue
Code of 1986 is amended—
(1)by striking
or
at the end of subparagraph (E),
(2)by striking the
period at the end of subparagraph (F) and inserting a comma, and
(3)by inserting
after subparagraph (F) the following new subparagraphs:
(G)in the case of a
petition under section 6015(e), the legal residence of the petitioner,
or
(H)in the case of a
petition under section 6320 or 6330—
(i)the legal
residence of the petitioner if the petitioner is an individual, and
(ii)the principal
place of business or principal office or agency if the petitioner is an entity
other than an
individual.
.
(b)The amendments made by this section shall apply to petitions
filed after the date of enactment of this Act.
13.Increase in
monetary penalties for certain unauthorized disclosures of information
(a)Paragraphs (1), (2), (3), and (4) of section 7213(a) of
the Internal Revenue Code of 1986 are each amended by striking
$5,000
and inserting $10,000
.
(b)The amendments made by this section shall apply to
disclosures made after the date of the enactment of this Act.
14.De novo tax
court review of claims for equitable innocent spouse relief
(a)Subparagraph (A) of section 6015(e)(1) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new flush
sentence:
Any
review of a determination by the Secretary with respect to a claim for
equitable relief under subsection (f) shall be reviewed de novo by the Tax
Court..
(b)The amendment made by this section shall apply to petitions
filed or pending before the Tax Court on and after the date of the enactment of
this Act.
15.Ban on raising
new issues on appeal
(a)Chapter 77 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new section:
7529.Prohibition
on Internal Revenue Service raising new issues in an internal appeal
(a)In reviewing an appeal of any determination initially
made by the Internal Revenue Service, the Internal Revenue Service Office of
Appeals may not consider or decide any issue that is not within the scope of
the initial determination.
(b)Certain issues
deemed outside of scope of determinationFor purposes of
subsection (a), the following matters shall be considered to be not within the
scope of a determination:
(1)Any issue that
was not raised in a notice of deficiency or an examiner's report which is the
subject of the appeal.
(2)Any deficiency in
tax which was not included in the initial determination.
(3)Any theory or
justification for a tax deficiency which was not considered in the initial
determination.
(c)No inference
with respect to issues raised by taxpayersNothing in this
section shall be construed to provide any limitation in addition to any
limitations in effect on the date of the enactment of this section on the right
of a taxpayer to raise an issue, theory, or justification on an appeal from a
determination initially made by the Internal Revenue Service that was not
within the scope of the initial
determination.
.
(b)The table of sections for chapter 77 of such Code is
amended by adding at the end the following new item:
Sec. 7529. Prohibition on Internal Revenue Service raising new
issues in an internal
appeal.
.
(c)The amendments made by this section shall apply to matters
filed or pending with the Internal Revenue Service Office of Appeals on or
after the date of the enactment of this Act.