[Congressional Record Volume 141, Number 13 (Monday, January 23, 1995)]
[Senate]
[Pages S1369-S1373]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. PRYOR (for himself, Mr. Grassley, Mr. Reid, Mr. Bryan, Mr. 
        Hatch, Mr. Baucus, Mr. Murkowski, Mr. Breaux, Mr. Nickles, Mr. 
        Exon, Mr. Cochran, Mr. Glenn, Mr. Cohen, Mr. Johnston, Mr. 
        Lott, Mr. Kerry, Mr. Smith, Ms. Mikulski, Mr. Sarbanes, Mr. 
        Simon, Mr. Kyl, and Mr. Daschle):
  S. 258. A bill to amend the Internal Revenue Code of 1986 to provide 
additional safeguards to protect taxpayer rights; to the Committee on 
Finance.


                     the taxpayer bill of rights ii

  Mr. PRYOR. Mr. President, I am very sorry my colleagues and chief 
cosponsor of the Taxpayer Bill of Rights II, Senator Grassley of Iowa, 
has been detained. He is at the White House. I think later in the day 
he will speak on this subject matter.
  Mr. President, over the past several years, there has been extensive 
debate over ways to achieve tax fairness for middle-income Americans. 
Proposals are most often costly, and very, very partisan. But there is 
one legislative package helping taxpayers, Mr. President, that 
transcends political boundaries and costs very little--we call it the 
Taxpayer Bill of Rights II.
  So, as the debate once again heats up on ways to achieve tax fairness 
for middle-income Americans, I want to draw attention to this 
legislation which will help bolster taxpayer confidence in dealing with 
the Government by ensuring taxpayers are treated fairly by the tax 
collector--the Internal Revenue Service.
  Mr. President, many of my colleagues in the Senate today were not 
here in 1988 when Congress passed, and President Reagan signed into 
law, the first Taxpayer Bill of Rights. That bill was the first ever 
comprehensive piece of legislation enumerating the rights of taxpayers. 
For example:
  The right of the taxpayer to be informed of their rights;
  The right of the taxpayer to rely on written advice of the IRS;
  The right of the taxpayer to representation; and
  The right of the taxpayer to recover civil damages and attorneys fees 
from the IRS.
  I might note that this particular legislation, the Taxpayer Bill of 
Rights, which was signed into law in 1988, was the very first piece of 
legislation throughout recorded American history that gave the 
taxpayers of America their due rights.
  Mr. President, these basic, commonsense provisions were codified by 
the first Taxpayer Bill of Rights. The battle waged by a strongly 
bipartisan coalition for their codification was hard fought and their 
ultimate enactment was a giant first step for the American taxpayer. 
But the time is overdue to more fully develop and expand these rights.
  Mr. President, the Taxpayer Bill of Rights II is the next natural 
step which builds on the first effort in 1988.
  In 1992, I first introduced the Taxpayer Bill of Rights II with a 
considerable bipartisan backing of 52 of my colleagues. The bill passed 
Congress twice that year but was ultimately vetoed because it was 
included as part of two large tax bills with which President Bush did 
not agree.
  Since these two bills were vetoed, the Senate has not had the 
opportunity to consider the Taxpayer Bill of Rights II. However, Mr. 
President, I believe the time is now to enact this legislation, and I 
am committed to work along side my friend and colleague Senator 
Grassley to push taxpayer rights forward and in the coming months to 
look for additional ways to ensure the IRS treats taxpayers with 
respect.
  Today, Senator Grassley and I come to the floor, once again, with a 
strong bipartisan contingent in support of this bill--20 cosponsors--12 
Democrats and 8 Republicans--a bill which builds on the foundation laid 
by the original Taxpayer Bill of Rights and is the next natural step in 
requiring the IRS to achieve higher standards of accuracy, timeliness, 
and fair play in providing taxpayer service.
  The Taxpayer Bill of Rights II achieves these new standards through 
27 provisions, including:
  First, expanding the authority of the taxpayer advocate to prevent 
hardships on taxpayers.
  Second, create the right in small taxpayers to an installment 
agreement, and further, rights when installment agreements are denied 
or terminated.
  Third, require the IRS to abate interest when it has made an 
unreasonable error or delay, and enable the courts the power to review 
the interest abatement determination.
  Fourth, increase the rights of taxpayers to recover civil damages 
against the IRS when it has acted negligently or recklessly.
  Fifth, strengthen the code so a taxpayer may recover out-of-pocket 
costs incurred in a case in which the IRS position was not 
substantially justified.
  Sixth, and, prohibit the IRS from issuing retroactive proposed 
regulations unless the Congress provides otherwise.
  These are some of the examples of the 27 provisions that Senator 
Grassley and our 20 cosponsors in the Senate in a bipartisan effort 
will bring to this body for action later in this session.
  Mr. President, the Taxpayer Bill of Rights II contains many more 
commonsense provisions designed to safeguard the rights of taxpayers, 
and I believe, will work to instill some confidence into our system of 
taxation.
  Mr. President, joining me later in the day, as I have mentioned, is 
my friend and colleague, Senator Grassley. We worked very hard on these 
provisions in the past, and we look forward to our work in the future.
  Let me name one other individual who has worked very, very hard in 
this field and that, of course, is Senator Harry Reid of Nevada.
  Senator Reid came from the House of Representatives to the Senate. 
Mr. President, one day I was presiding in the chair when the Democrats 
had control of the Senate. I noticed over to my far extreme right that 
Senator Reid of Nevada was making his very first maiden speech in the 
Senate. And it was about taxpayers' rights. I, too, had been interested 
in this issue. I called for a page to come up, and I handed the page a 
note. I said, ``Harry Reid, I want to work with you on this provision 
that you are so concerned about.'' Ultimately, Senator Reid, Senator 
Grassley, Senator Levin, and many of us worked through the course of 
that year in developing the Taxpayer Bill of Rights I, which was in 
fact signed into law.
  So it has been a great pleasure and honor to have worked with these 
fine Members of the Senate, I must say in a very bipartisan way. As the 
Finance Committee continues its march of progress, let us say during 
the next several months, I look forward to the development now of 
Taxpayer Bill of Rights II and working with my colleagues on both sides 
of the aisle.
  Mr. President, I think there are other Senators who seek recognition.

[[Page S1370]]

 Mr. BRYAN. Mr. President, I am pleased to once again sing on 
as a cosponsor to the bill introduced by Senator Pryor, the taxpayer 
bill of rights II. I was a cosponsor of this important legislation in 
both the 102d and 103d Congress.
  Over the years, many have cited abused by the IRS during tax audits 
and collection. Aware of these types of problems, Congress passed the 
taxpayer bill of rights in 1988. While the original bill was in many 
ways successful, it is clear that further action is necessary.
  The taxpayer bill of rights II builds on the success of the original 
bill, and provides taxpayers with expanded protections against improper 
collection techniques. This legislation expands protection for 
taxpayers by requiring the IRS to pay legal fees when it loses in 
court, increases from $100,000 to $1 million the cap on damages a 
taxpayer can collect from the IRS, and revokes the agencies authority 
to issue retroactive regulations.
  The bill also establishes a better taxpayer advocate within the IRS 
who will have the authority to intervene and help taxpayers cases, and 
increases taxpayers' ability to get a fair hearing in disputes with the 
IRS.
  It is unfortunate that this bill is necessary; however, in such a 
monumental task as collecting taxes it is inevitable that there will be 
mistakes made. This bill will help to ensure that taxpayers are not 
forced to pay for the mistakes for which they had no control over.
  I have heard too many times from anguished constituents in Nevada 
regarding their dealings with the IRS. While dealing with discrepancies 
with the IRS is never an enjoyable experience, once this bill becomes 
law taxpayers will finally have their rights protected.
  In past sessions of Congress, this bill has received overwhelming 
bipartisan support. I am hopeful that we can again join together, pass 
this bill and give taxpayers the rights that they deserve.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
                    Taxpayer Bill of Rights II (T2)


                         A.--TAXPAYER ADVOCATE

       Section 101. Establishment of Position of Taxpayer Advocate 
     within Internal Revenue Service. The Office of the Taxpayer 
     Ombudsman was statutorily created in 1987 in the Omnibus 
     Taxpayer Bill of Rights. The Ombudsman is presently hired by 
     and reports directly to the IRS Commissioner.
       T2 will replace the Ombudsman with the new Office of 
     Taxpayer Advocate which will have expanded authority as 
     provided in A.2 below. The Taxpayer Advocate will continue to 
     be hired by and report to the IRS Commissioner.
       Presently, the Office of the Taxpayer Ombudsman carries out 
     its duties and responsibilities in the local field offices 
     through the Problem Resolution Office (PRO). However, PROs 
     are hired, supervised, reviewed, and promoted by the local 
     IRS District Director, not the Ombudsman. T2 will provide 
     that the PRO will report directly to the Office of Taxpayer 
     Advocate.
       T2 will require the Taxpayer Advocate to provide the 
     Committee on Ways and Means of the U.S. House of 
     Representatives and the Committee on Finance of the U.S. 
     Senate two annual reports. The first report is on the 
     activities of the Taxpayer Advocate during the previous 
     fiscal year. The report must identify the initiatives the 
     Taxpayer Advocate has taken to improve taxpayer services and 
     IRS responsiveness, contain recommendations received from 
     individuals who have the authority to issue a TAO, contain a 
     summary of at least 20 of the most serious problems which 
     taxpayers have in dealing with the IRS, describe in detail 
     the progress made in implementing these recommendations, 
     include recommendations for such administrative and 
     legislative action as may be appropriate to resolve such 
     problems, and to include other such information as the 
     Taxpayer Advocate may deem advisable. The Commissioner is 
     required to establish procedures that will ensure a formal 
     IRS response to all recommendations submitted by the Taxpayer 
     Advocate. The first report is due not later than December 31 
     for each fiscal year after September 30, 1995.
       In the second report, the Taxpayer Advocate must furnish to 
     the tax writing committees its annual objectives, not later 
     than December 31 of each calendar year after 1994.
       All reports should contain full and substantive analysis, 
     in addition to statistical information.
       Effective Date.--The provision is effective on the date of 
     enactment except for the specified due dates of the above 
     reports.
       Section 102. Expansion of Authority of the Taxpayer to 
     Issue Taxpayer Assistance Orders. Under current law, section 
     7811(a) authorizes the Taxpayer Ombudsman to issue a Taxpayer 
     Assistance Order (TAO) if, in the determination of the 
     Ombudsman, the taxpayer is suffering or about to suffer a 
     ``significant hardship'' as a result of the manner in which 
     the tax laws are being administered by the Secretary.
       T2 eliminates the qualifier of ``significant'' hardship 
     from section 7811 to allow PROs to assist taxpayers in 
     avoiding hardship before it occurs since the standard of 
     ``significant'' hardship presupposes that a taxpayer must be 
     some degree of hardship before any relief can be afforded.
       Currently under section 7811(b), a TAO allows a PRO to 
     ``cease any [IRS] action'' with respect to a taxpayer. 
     However, section 7811(b) does not allow the terms of a TAO to 
     authorize affirmative steps to help a taxpayer.
       T2 will authorize the terms of a TAO to ``cease any action, 
     take any action'' with respect to a taxpayer, and therefore, 
     allow a TAO to both stop IRS action and to take affirmative 
     steps with respect to a taxpayer. For example, the Taxpayer 
     Advocate's new scope of power will specifically include, but 
     not be limited to, the authority to (1) abate assessments, 
     (2) grant refund requests, and (3) stay collection activity. 
     Further, a TAO may specify a period of time within which the 
     TAO must be followed. The Taxpayer Advocate will have the 
     power to grant authority to his or her designees (i.e., the 
     Problems Resolution Officers).
       Current law provides that a TAO may be modified or 
     rescinded by the Ombudsman, a district director, a service 
     center director, a compliance center director, a regional 
     director of appeals, or any superior of such person.
       T2 provides that a TAO may be modified or rescinded only by 
     the Taxpayer Advocate and/or the IRS Commissioner.
       Effective date.--The provision is effective on the date of 
     enactment.
         b.--modifications to installment agreement provisions

       Section 201. Taxpayer's Right to Installment Agreement. T2 
     amends section 6159 to provide that, upon request, an 
     individual taxpayer has an automatic right to an installment 
     agreement if the taxpayer has not been delinquent in the 
     previous 3 years and the liability is under $10,000.
       Effective date.--The provision is effective for installment 
     agreements entered after the date of enactment.
       Section 202. Running of Failure to Pay Penalty Suspended 
     During Period Section 111 Installment Agreement in Effect. 
     Under present law, a taxpayer is subject to ``failure to 
     pay'' penalties even though he of she has agreed to pay his 
     or her tax liability with interest by entering into an 
     installment agreement.
       T2 will amend current law to prevent the IRS from imposing 
     the ``failure to pay'' on installment agreements, under 
     section 111 above, where the taxpayer requests an agreement 
     on or before the due date of the tax return.
       Effective date.--The provision is effective for installment 
     agreements entered after the date of enactment.
       Section 203. Notification of Reasons for Termination of 
     Installment Agreements. Section 6159(b)(3) presently requires 
     the IRS to give the taxpayer a 30-day notice before 
     terminating an installment agreement, if it is determined 
     that the financial condition of the taxpayer has 
     significantly changed. However, no notice is required if the 
     taxpayer defaults for any other reason. In these cases, the 
     IRS may unilaterally terminate the installment agreement with 
     no notice to the taxpayer.
       T2 will require the IRS to provide a taxpayer with a 30-day 
     notice before terminating an installment agreement for any 
     reason except when the collection of the tax is determined to 
     be in jeopardy. In addition, T2 will require the notice to 
     include the reason(s) why the IRS considers the installment 
     agreement to be in default.
       Effective date.--The provision is effective six months 
     after the date of enactment.
       Section 204. Administrative Review of Termination or Denial 
     of Request for Installment Agreement. Under present law, a 
     taxpayer has no right to an independent review of a 
     termination or denial of his request for an installment 
     agreement.
       T2 will require the IRS to establish procedures for an 
     independent administrative review of a termination of or 
     denial of a request, for an installment agreement. T2 will 
     also require the IRS to provide a written response to a 
     taxpayer who requested an installment agreement. The written 
     response must state the decision of the IRS and the basis for 
     such decision. Finally, T2 will require the IRS to include in 
     the instructions for filing Federal income tax returns the 
     rules and procedures for requesting installment agreements.
       Effective date.--The provision is effective January 1, 
     1996.


                              c.--interest

       Section 301. Expansion of Authority to Abate Interest. 
     Section 6404(e)(1) (Assessment of interest attributable to 
     errors and delays by the IRS) provides ``the Secretary may 
     abate'' interest on ``any deficiency in whole or in part to 
     [due to] any error or delay by an officer or employee of the 
     IRS (acting in his official capacity) in performing a 
     ministerial act''.
       The ministerial act requirement too narrowly limits the 
     possibility of relief to the taxpayer with the result that 
     the IRS does not abate interest even if it is the IRS' fault. 
     Further, IRS rejection of a taxpayer request 
     [[Page S1371]] to abate interest cannot be reviewed because 
     section 6404(e)(1) provides no authorization for courts to 
     review an IRS rejection and no appropriate standard of 
     review. The resulting interest assessment may be especially 
     onerous on small taxpayers who do not have cash on hand to 
     invest in anticipation of paying future tax assessments.
       T2 will provide that for qualified small taxpayers, as 
     defined in section 7430(c)(4)(A)(iii), the Secretary must 
     abate or refund interest when the IRS has made an 
     unreasonable error or delay. This will allow courts to review 
     the IRS determination on the abatement of interest issue for 
     small taxpayers. For nonqualified ``larger'' taxpayers, 
     courts will still not be allowed to review the IRS 
     determination on the interest abatement issue, however, the 
     new standard of review will allow the IRS more flexibility in 
     providing relief.
       Section 302. Extension of Interest-Free Period for Payment 
     of Tax After Notice and Demand. When the IRS sends a first 
     notice requesting payment to a taxpayer, section 6601(e) 
     provides a 10-day interest-free period from the date of the 
     notice. The 10-day requirement is virtually impossible to 
     meet given delivery time to and from the taxpayer attempting 
     to timely remit payment.
       T2 will extend taxpayers' interest-free period for payment 
     of the tax liability reflected in the first notice from 10 
     days to 21 days, when the total tax liability on the notice 
     of deficiency is less than $100,000.
       Effective date.--The provision applies in the case of any 
     notice and demand given six months after the date of 
     enactment.


                           D.--Joint Returns

       Section 401. Disclosure of Collection Activities. Present 
     law does not allow the IRS to inform either spouse as to the 
     efforts of the IRS to collect the tax liability from the 
     other spouse.
       T2 will permit that, if either spouse or former spouse 
     makes a written request, the IRS is required to disclose in 
     writing whether the IRS has attempted to collect the 
     deficiency from his or her spouse or former spouse, the 
     general nature of such collection activities, and the amount 
     collected. The IRS may refuse such request in cases where 
     disclosure of such information may result in the threat of 
     physical danger or harassment to a taxpayer.
       Effective date.--The provision is effective on the date of 
     enactment.
       Section 402. Joint Return May Be Made After Separate 
     Returns Without Full Payment of Tax. Under section 
     6013(b)(2), taxpayers, who file separate returns and 
     subsequently determine that their tax liability would have 
     been less if they had filed a joint return, may not reduce 
     their tax liability by filing jointly unless they are able to 
     pay the entire amount of the joint return liability before 
     the expiration of the 3-year period for making the election.
       T2 will repeal the provision requiring full payment of the 
     tax liability as a precondition to taxpayers switching from 
     married filing separately to married filing jointly status.
       Effective date.--The provision applies to taxable years 
     beginning after the date of the enactment.


                       e.--collection activities

       Section 501. Modifications to Lien and Levy Provisions. A 
     Notice of tax lien provides public notice that a taxpayer 
     owes the government money. Section 6326(b) requires the IRS 
     to issue a Certificate of Release for such notices for 
     erroneous liens only. This extremely narrow language prevents 
     the IRS from issuing the Release on premature or incorrectly 
     filed liens.
       T2 will give discretion to the IRS to remove such liens 
     without prejudice when (1) the filing of the notice was 
     premature or not in accordance with administration procedures 
     of the IRS; (2) the taxpayer has entered into an installment 
     agreement for the payment of the tax liability with respect 
     to the tax on which the lien is imposed; (3) the withdrawal 
     of the lien will facilitate the collection of the tax 
     liability; or (4) the withdrawal of the lien would be in the 
     best interest of the taxpayer and the United States (with the 
     best interests of the taxpayer to be determined by the 
     Taxpayer Advocate).
       T2 will require that, upon written request by the taxpayer 
     in the 4 cases cited above, the IRS shall make prompt efforts 
     to notify the credit reporting agencies specified that the 
     notice has been withdrawn. T2 will also require the IRS to 
     return levied-upon-property to the taxpayer in the 4 above 
     cited cases.
       T2 will raise the levy exemption amounts of $1500 for 
     personal property and of $1100 for equipment and property for 
     a trade, business, or profession, which were set in 1990, to 
     the present indexed amounts of $1750 and $1250, respectively.
       Effective date.--The provisions are effective on the date 
     of enactment.
       Section 502. Offers-in-Compromise. Section 7122 provides 
     that the IRS may settle a tax debt pursuant to an offer-in-
     compromise. Amounts over $500 can be accepted only if the 
     reasons for the acceptance are documented in detail and 
     supported by an opinion of the IRS Chief Counsel. Further, 
     section 6103(k) requires public disclosure of the names of 
     taxpayers whose tax debts are compromised, as well as the 
     amount owed and the amount accepted by the Government. These 
     burdensome requirements result in the IRS not pursuing the 
     offer-in-compromise route in settling even small tax 
     disputes.
       T2 will provide that, in cases where the unpaid tax 
     assessment is less than $50,000, the opinion of the IRS Chief 
     Counsel is not required. However, the IRS shall subject these 
     offers-in-compromise to an IRS quality review. Further, T2 
     will amend 6103(k) to provide that in cases where the unpaid 
     tax assessment is less than $50,000, the offer-in-compromise 
     will not be subject to public disclosure.
       Effective date.--The provision is effective on the date of 
     enactment.
       Section 503. Notification of Examination. Presently, in 
     many cases, the IRS is approaching taxpayers, requesting 
     books and records, but not notifying taxpayers of 
     examination. If the taxpayer is contacted and the agent 
     requests to review the taxpayer's books and records, a 
     written notice, followed by an examination report, should be 
     required.
       T2 will amend section 7605 to require that the IRS give the 
     taxpayer written notice that the taxpayer is under 
     examination. The notice will be required for examinations 
     under all sub-titles of the Code. Such notice will include an 
     explanation of the process as described in section 7521 
     (explanation of examination process, right to be represented 
     by an attorney, etc.).
       Effective date.--The provision is effective on the date of 
     enactment.
       Section 504. Increase in Limit on Recovery of Civil Damage. 
     Section 7433 caps civil damage awards for unauthorized 
     collections actions against the IRS at $100,000. Section 7433 
     also limits recovery to reckless and intentional'' actions of 
     the IRS.
       T2 will increase the $100,000 cap for ``reckless and 
     intentional actions'' to $1 million, and in addition, T2 will 
     include recovery for ``negligent'' actions of the IRS capped 
     at $100,000.
       Effective date.--The provision applies to actions by IRS 
     employees that occur after the date of enactment.
       Section 505. Designated Summons. T2 requires that issuance 
     of any designated summons with respect to a corporation's tax 
     return be preceded by review of such issuance by the Regional 
     Counsel, Office of Chief Counsel to the IRS, for the Region 
     in which the examination of the corporation's return is being 
     conducted.
       In addition, T2 requires that the corporation whose return 
     is in issue be promptly notified in writing in any case where 
     the Secretary issues a designated summons (or another 
     summons, the litigation over which suspends the running of 
     the assessment period under the designated summons procedure) 
     to a third party. It is expected that the IRS generally will 
     meet this requirement by issuing such notice on the same day 
     that it issues such summons, and by transmitting such notice 
     to the corporation in a manner reasonably designed to bring 
     it to the prompt attention of an agent of the corporation 
     responsible for communicating with the IRS in connection with 
     the examination.
       Effective date.--This provision applies to summonses issued 
     after date of enactment.


                        f.--information returns

       Section 601. Phone Number of Person Providing Payee 
     Statements Required to be Shown on Such Statement. Taxpayers 
     frequently need to contact payors issuing information returns 
     in order to resolve disputes. Presently, information returns 
     (e.g. W-2s, 1099s, etc.) require only the name and address of 
     the payor.
       T2 will require the payor to also provide the phone number 
     of the payor's information contact. Payors may have the 
     option of providing the name of its customer service 
     department, if appropriate, an Form 1099.
       Effective date.--The provision applies to statements 
     required to be furnished after December 31, 1993 (determined 
     without regard to any extension).
       Section 602. Civil Damages for Fraudulent Filing of 
     Information Returns. Some taxpayers have suffered significant 
     personal loss and inconvenience as the result of the IRS 
     receiving fraudulent information returns. These false returns 
     have been filed by payors whose intent is to defraud the IRS 
     or to harass taxpayers.
       T2 will provide that, if any person files a false or 
     fraudulent information return with respect to payments made 
     to another person, with the intent of either defrauding the 
     IRS or harassing another person, the other person may bring a 
     civil action for damages against the person filing such 
     return. Further, T2 will provide that damage awards in such 
     cases be at least $5000, and that the plaintiff must bring 
     action within 6 years from the time the fraudulent return was 
     filed with the IRS.
       Effective date.-- The provision applies to false or 
     fraudulent information returns filed after the date of 
     enactment.
       Section 603. Requirement to Conduct a Reasonable 
     Investigation of Information Returns. Section 6212(a) 
     authorizes the IRS to determine tax deficiencies. The term 
     ``determine'' is not defined in the Code, and until recently, 
     courts have declined to inquire whether or not, and how, the 
     IRS made its determination. Further, courts have begun to 
     chip away at the long-standing presumption of correctness 
     afforded deficiency notices.
       T2 will amend section 6212(a) to provide that a 
     ``determination'' must be ``a thoughtful and considered 
     determination that the United States is entitled to an amount 
     not yet paid.'' Portillo v. Commissioner, 832 F. 2d 1128 (5th 
     Circuit 1991). If the IRS fails to 
     [[Page S1372]] make a thoughtful and considered 
     determination, then the notice of deficiency will be invalid.
       T2 will provide that where the taxpayer asserts a 
     reasonable dispute with respect to any item of income 
     reported to the IRS on an information return, the IRS, not 
     the taxpayer, will bear the burden of proof in any deficiency 
     or refund proceeding absent a showing that the IRS conducted 
     a reasonable investigation of the facts surrounding the 
     taxpayer's return.
       Effective date.--The provision is effective on the date of 
     enactment.


  g.--modifications to penalty for failure to collect and pay over tax

       Section 701. Preliminary Notice Requirement. Section 6672 
     imposes personal liability on those persons who are required 
     to collect employment taxes (``responsible officers'') and 
     who willfully fail to pay over these taxes to the IRS. The 
     Code additionally provides for a 100% penalty on responsible 
     officers failing to pay over such taxes. Taxpayers who may be 
     responsible persons are assessed the taxes owed and the 
     penalty without the right to an administrative review.
       T2 will require the IRS to issue a preliminary notice which 
     will give the taxpayer the right to an administrative appeals 
     hearing.
       Effective date.--The provisions applies to failures 
     occurring after the date of enactment.
       Section 702. Disclosure of Certain Information Where More 
     Than One Person Subject to Penalty. The IRS may recover more 
     than the amount owed under section 6672 (since each 
     responsible person is jointly and severally liable). There is 
     no procedure to ensure that the IRS does not collect more 
     than 100% of what is owed.
       T2 will require that a person liable for a section 6672 
     penalty may request, in writing, that the IRS disclose any 
     other person who is liable for such penalty along with 
     general nature of the IRS' collection activities.
       Effective date.--The provision is effective on the date of 
     enactment.
       Section 703. Penalties Under Section 6672. Under current 
     law, unpaid, volunteers, who serve on boards of tax-exempt 
     organizations, may be held liable for the 100% penalty 
     depending on the duties and roles of the individual involved.
       T2 provides that the 100% penalty will not be imposed on 
     unpaid, volunteer members of any board of trustees or 
     directors of a tax exempt organization.
       T2 will also require the IRS to develop materials to better 
     inform employees and volunteers of their responsibilities 
     under the law.
                 h.--awarding of costs and certain fees

       Section 801. Motion for Disclosure of Information. Once a 
     taxpayer has substantially prevailed in his case with the 
     IRS, he may file a petition for an order requiring the 
     disclosure of all information and copies of relevant records 
     in the possession of the IRS with respect to the taxpayer's 
     case and the substantial justification for the position taken 
     by the IRS.
       Effective date.--The provision is effective for notices 
     made and proceedings commenced after the date of enactment.
       Section 802. Increased Limit on Attorney Fees. T2 will 
     amend section 7430 to provide that reasonable fees incurred 
     for the services of qualified taxpayer representatives shall 
     not be indexed for inflation occurring since 1981, currently 
     $110 per hour, and this amount shall be indexed to inflation 
     in the future.
       Effective date.--The provision applies to notices made and 
     proceedings commenced after the date of enactment.
       Section 803. Failure to Agree to Extension not taken into 
     Account. Section 7430 requires the taxpayer to exhaust all 
     administrative remedies before costs may be awarded. T2 
     provides that a taxpayer's failure to agree to an extension 
     of time shall not be taken into account in determining 
     whether a taxpayer has exhausted his or her administrative 
     remedies.
       Section 804. Authority for Court to Award Reasonable 
     Administrative Costs. Section 7430 provides for the recovery 
     of administrative costs incurred on or after the earlier of 
     the receipt of the final decision of IRS Appeals or the 
     statutory notice of deficiency. Because, generally, no 
     administrative costs are incurred after this period, the 
     provision is ineffective.
       T2 remedies the statute by deleting the time limitations on 
     the recovery of costs and by providing that the court may in 
     its discretion determine the commencement date of the running 
     of administrative costs on a case by case basis.


                          i.--other provisions

       Section 901. Required Content of Notices. Section 7522 
     (Content of tax due, deficiency, and other notices.) requires 
     the IRS to clarify certain notices by identifying and 
     describing the basis for any tax due, as well as any interest 
     and penalties assessed. However, the IRS is not required to 
     separately set forth, in the notice, the components and 
     explanation for each adjustment.
       T2 will amend section 7522 to require that the IRS set 
     forth the components and explanation for each specific 
     adjustment which is the basis for the total tax deficiency.
       Section 902. Relief from Retroactive Application of 
     Treasury Department Regulations. T2 will generally require 
     that temporary and proposed regulations issued by the 
     Treasury Department are to effective prospectively from the 
     date of filing with the Federal Register except: (1) 
     temporary or proposed regulations may take effect from the 
     date any notice which substantially describes the regulation 
     is issued to the public, (2) Congress may explicitly 
     authorize Treasury to prescribe the effective date, (3) 
     Treasury may issue retroactive temporary or proposed 
     regulations to prevent abuse of the statute, (4) Treasury may 
     issue retroactive temporary, proposed, or final regulations 
     to correct a procedural defect in the issuance of a 
     regulation, (5) Treasury may provide that taxpayers may elect 
     to apply a temporary or proposed regulation retroactively.
       Effective date.--The provision applies with respect to any 
     temporary or proposed regulation published on or after 
     January 5, 1993, and any temporary or proposed regulation 
     published before January 5, 1993, and published as a final 
     regulation after that date.
       Section 903. Required Notice of Certain Payments. T2 will 
     provide that, if the IRS receives a payment from a taxpayer 
     and cannot associate that payment with any outstanding tax 
     liability, then the IRS must make reasonable efforts to 
     notify the taxpayer of such inability within 60 days after 
     receipt of such payment.

  Mr. GRASSLEY. Mr. President, as many taxpayers are struggling in the 
midst of the current tax filing season, the issue of taxpayer's rights 
takes on a special importance. Although most IRS employees provide 
valuable and responsible service, taxpayer abuse by the Government is 
an ongoing problem. With this in mind, I am very happy to be joining 
Senator Pryor and others in reintroducing the taxpayer bill of rights 
II. This is very necessary legislation that builds upon the original 
taxpayer bill of rights that we passed into law in 1988.
  I was unable to be here earlier today when the bill was introduced 
because I was taking part in the President's signing ceremony of the 
Congressional Accountability Act, of which I am the lead Senate 
sponsor. But, I'm glad to be here now to offer my strong support to 
this ongoing effort.
  Mr. President, for me, the long process of trying to ensure taxpayer 
protections began in the early 1980's, when I was a member and then 
chairman of the Finance Subcommittee on IRS Oversight. We made 
progress, but it was only the beginning.
  Senator Pryor continued the cause when he succeeded me as chairman in 
1987. At that time, he took the initiative and asked me to work with 
him in pushing for a taxpayer bill of rights by expanding legislation I 
and others had introduced. It took nearly 2 years, but we ultimately 
succeeded in achieving this goal.
  We now have a 6-year record of implementation regarding the taxpayer 
bill of rights. Great strides toward taxpayer protection were achieved 
through this legislation. However, the taxpayer bill of rights of 1988 
was never expected to be the final chapter of the book on taxpayer 
protection. It was a major step in the continuing process of stamping 
out taxpayer abuse. And that process continues today, as we look into 
ways to improve the current law.
  In reviewing the record, it's clear that much more needs to be done. 
There's no question that breakdowns in implementing the law have 
occurred, and there are gaps in the law that need to be filled. For 
instance, we believe the current ombudsman position is too limited and 
too beholden to IRS insiders. Our legislation will turn the ombudsman 
into a more independent office of taxpayer advocate that will have 
expanded powers to help taxpayers.
  We were successful in passing a very similar proposal through the 
Congress in 1992. However, the underlying legislation that the proposal 
was attached to was vetoed by President Bush. So, we're back again in 
this new Congress.
  Since 1987, Senator Pryor and I have worked in a cooperative, 
bipartisan effort to further taxpayer rights. As our roles change 
somewhat in this new Republican-controlled Congress, I hope to continue 
our successful teamwork.
  Beyond the introduction of this bill today, Senator Pryor and I will 
be working on further improvements and even more protaxpayer provisions 
that will be offered at a later date.
  I urge my colleagues to join us in this effort to help make the IRS 
more responsible and more accountable to the taxpayers of this country.
                                 ______

      By Mr. McCAIN:
  S. 260. A bill to provide for the protection of books and materials 
from the Library of Congress, and for other 
[[Page S1373]] purposes; to the Committee on Rules and Administration.


              the library of congress book protection act

 Mr. McCAIN. Mr. President, I introduce legislation to help 
protect the valuable resources of the Library of Congress. The Library 
of Congress Protection Act will help the Library of Congress stop 
abuses of its free book loan program by authorizing the Library to 
impose fines for books that are long overdue.
  I am reintroducing this legislation to empower Library of Congress 
officials to crack down on individuals who seriously abuse their 
Library privileges, by keeping books too long or failing to return 
them. Library of Congress officials should not have to tolerate the 
fact that many individuals are apparently unconcerned about returning 
the books that taxpayers provide for them. Congress should not prevent 
the Library from instituting strengthened policies to hold severely 
delinquent borrowers responsible for their tardiness.
  This legislation will enable the Library of Congress to implement a 
reasonable overdue book charge policy similar to those of most public 
libraries across America. By doing so, the many Members of Congress, 
congressional staffers, and executive branch employees who benefit from 
this magnificent institution will have an added incentive to comply 
with the generous loan policies of the Library of Congress.
  This proposal is very basic, but it will afford Library officials the 
leverage and flexibility they need to address this problem. This bill 
will help Library of Congress officials keep better track of their 
resources, and will spur many delinquent borrowers to return the books 
that taxpayers provide for them completely free of charge.
  The Library of Congress Book Protection Act would direct the Library 
to implement an overdue book charge policy for books improperly held 
over 70 days. These individuals or offices will have their privileges 
suspended until their fines are paid in full. Library of Congress 
officials will, however, be able to waive such penalties when 
appropriate. The Library would also be authorized to retain the funds 
received from late book fines, as well. Finally, the offices of 
severely delinquent borrowers and the fines they owe will be published 
in the annual report submitted by the Library to its oversight 
committees.
  Figures published by the Library during the 103d Congress showed that 
out of the 20,000 books that were out on loan, over one-third were 
listed as overdue. One half of the 4,200 books on loan to congressional 
staff and the media were listed as overdue, and one in five books out 
on loan to Members, committees, and congressional support agencies had 
been overdue for more than 2 months. Library of Congress officials 
state that over 300,000 books are missing from their collections dating 
back to 1978, and the estimated cost of these thefts is $12 million.
  I am concerned about the fact that it is all too easy for individuals 
to disregard their responsibility to return books to the Library of 
Congress in a timely manner. This negligence is not only unfair to the 
other users of the Library, but it also drains the Library's resources 
in chasing down overdue or missing books.
  In addition to Members of Congress and congressional staff, the 
Library of Congress also makes loans to executive branch departments 
and agencies, the judiciary and diplomatic corps, the press, and other 
institutions. As I have mentioned, Mr. President, the Library of 
Congress is barred from charging late fees for overdue books in 
contrast to virtually every other publicly funded Library in America. 
Furthermore, the Library cannot retain any funds that might be 
collected due to the loss or damage of loaned books. It's clearly time 
to change these unwise restrictions and strengthen the Library's 
ability to protect its resources, and I hope Members of the Senate will 
support this legislation to do so.
  Surely it's not asking too much of the individuals and offices 
fortunate enough to the use the Library of Congress to do so in a 
responsible manner. Even under the new borrowing guidelines that would 
be instituted by this legislation, there really is no reason for any 
well-intentioned borrower ever to have to pay late fines or have their 
privileges suspended. I'm optimistic that the mere specter of having to 
pay overdue book fines will coax delinquent borrowers into 
responsibility renewing their book loans or returning the books.
  I hope that the Senate will adopt this legislation to implement 
prudent new guidelines in the book loan policies of the Library of 
Congress.


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