[Congressional Record Volume 141, Number 143 (Thursday, September 14, 1995)]
[Extensions of Remarks]
[Page E1792]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


             INTRODUCTION OF THE TAXPAYER BILL OF RIGHTS 2

                                 ______


                         HON. NANCY L. JOHNSON

                             of connecticut

                    in the house of representatives

                      Thursday, September 14, 1995
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I am pleased to introduce 
the Taxpayer Bill of Rights 2. This legislation will help safeguard the 
rights of taxpayers in dealing with the Internal Revenue Service [IRS].
  The Taxpayer Bill of Rights does not involve the substantive 
provisions in the Internal Revenue Code which determine a person's tax 
liability. The subject matter does not involve capital gains or 
depreciation rules. The nature of the subject matter involves the 
procedural rules and IRS operational practices which apply during the 
examination of tax returns and the collection process. Many times these 
rules and practices can have as much importance to the taxpayers as the 
substantive provision in the tax law from which their liability arises.
  The original Taxpayer Bill of Rights was enacted as part of the 
Technical and Miscellaneous Revenue Act of 1988. While this action was 
helpful, there was a general consensus that more could be done to 
protect the rights of taxpayers.
  The Subcommittee on Oversight sought to develop a Taxpayer Bill of 
Rights 2 during the 102d Congress. It developed a package of 
recommendations for taxpayer safeguards which eventually was introduced 
as H.R. 3838 in November 1991. A Taxpayer Bill of Rights section, based 
on H.R. 3838, was included in H.R. 11 the Revenue Act of 1992, which 
was vetoed by former President Bush.
  The Subcommittee on Oversight held a hearing on March 24, 1995, to 
investigate what additional taxpayer safeguards were appropriate in 
order to provide citizens more evenhanded treatment in their dealings 
with the IRS. In addition, the subcommittee staff reviewed numerous 
communications from taxpayers which described their experiences with 
the IRS and reinforced the position that a Taxpayer Bill of Rights 2 
was needed. The subcommittee's recommendations are a combination of 
many of the provisions which were developed in the 102d Congress, as 
well as a number of new initiatives.
  The bill that Representative Matsui and I are introducing today 
reflects the narrative recommendations which the Subcommittee on 
Oversight unanimously approved on September 12, 1995. For example, the 
bill would make it easier for taxpayers who win their cases against the 
IRS in Tax Court to collect attorney's fees. Under current law, not 
only does a taxpayer have to prevail against the IRS to collect 
attorney fees, but she must also prove that the IRS was not 
substantially justified in pressing its case against her. The bill 
shifts the burden to the IRS of proving that its position was 
justified. This is consistent with the judicial principal that the 
party in control of the facts should bear the burden of proof. Who 
knows better than the IRS why it pressed its case against the taxpayer?
  Another major area is the treatment of separated or divorced 
taxpayers. Under current law, married couples who file a joint return 
are each fully responsible for the accuracy of the return and for the 
full tax liability, even though one spouse may have earned the income 
which is shown on the tax return. This is known as joint and several 
liability. Spouses who wish to avoid this joint and several liability 
feature may file as a married person filing separately.
  The subcommittee learned of many instances where divorced taxpayers 
who had previously signed a joint tax return during their marriage were 
treated harshly when the IRS later disputed the accuracy of their joint 
tax return. In many cases the IRS tried to collect the entire amount of 
taxes from the wife, even though the omitted income or erroneous 
deductions which caused the deficiency were attributable solely to her 
former husband. All too often, the woman, being pursued for payment of 
taxes due, was not aware that a tax return filed during the marriage 
had been audited or that a deficiency had been imposed on the return.
  In an era where almost 50 percent of marriages end in divorce, this 
problem is contributing to the growing perception that the tax system 
is unfair. The time has come to reexamine the joint and several 
standard of liability and consider replacing it with a proportionate 
liability standard, where each spouse would be responsible for the 
taxes on that portion of the income which he or she earned.
  However, replacing the current standard would be changing over 60 
years of established practice and so the subcommittee concluded that it 
did not have information about all the ramifications of such a change 
to include it in the bill. What the bill does do is direct the 
Department of the Treasury and the General Accounting Office to conduct 
detailed studies examining possible changes to the joint and several 
liability standard in order to better protect the rights of separated 
or divorced couples. These studies are due within 6 months and I 
believe they could be a prelude to further legislative action in the 
104th Congress.
  A brief sample of the bill's other features includes: First, allowing 
taxpayers who have been the victim of reckless collection actions by 
the IRS, to sue the IRS for up to $1 million in damages, up from the 
current ceiling of $100,000; second, giving the IRS the authority to 
withdraw tax liens and return seized property when it would be in the 
best interest of the taxpayer and the Government; third, creating a 
civil cause of action for damages for taxpayers who have been harmed by 
fraudulent information returns; and fourth, requiring the IRS to send 
out annual reminders to taxpayers with outstanding tax obligations. 
This will alert taxpayers that the IRS has not forgotten an old tax 
liability.
  Mr. Speaker, the public may never be thrilled about the fact that 
they must pay taxes to the Government. But the Taxpayer Bill of Rights 
2 should at least give them more leverage and ammunition in dealing 
with the IRS.