[Congressional Record Volume 142, Number 48 (Tuesday, April 16, 1996)]
[House]
[Pages H3399-H3412]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1215
TAXPAYER BILL OF RIGHTS 2
Mrs. JOHNSON of Connecticut. Mr. Speaker, I move to suspend the rules
and pass the bill (H.R. 2337) to amend the Internal Revenue Code of
1986 to provide for increased taxpayer protections, as amended.
The Clerk read as follows:
H.R. 2337
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Taxpayer
Bill of Rights 2''.
(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; amendment of 1986 Code; table of contents.
TITLE I--TAXPAYER ADVOCATE
Sec. 101. Establishment of position of Taxpayer Advocate within
Internal Revenue Service.
[[Page H3400]]
Sec. 102. Expansion of authority to issue Taxpayer Assistance Orders.
TITLE II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS
Sec. 201. Notification of reasons for termination of installment
agreements.
Sec. 202. Administrative review of termination of installment
agreement.
TITLE III--ABATEMENT OF INTEREST AND PENALTIES
Sec. 301. Expansion of authority to abate interest.
Sec. 302. Review of IRS failure to abate interest.
Sec. 303. Extension of interest-free period for payment of tax after
notice and demand.
Sec. 304. Abatement of penalty for failure to make required deposits of
payroll taxes in certain cases.
TITLE IV--JOINT RETURNS
Sec. 401. Studies of joint return-related issues.
Sec. 402. Joint return may be made after separate returns without full
payment of tax.
Sec. 403. Disclosure of collection activities.
TITLE V--COLLECTION ACTIVITIES
Sec. 501. Modifications to lien and levy provisions.
Sec. 502. Modifications to certain levy exemption amounts.
Sec. 503. Offers-in-compromise.
TITLE VI--INFORMATION RETURNS
Sec. 601. Civil damages for fraudulent filing of information returns.
Sec. 602. Requirement to conduct reasonable investigations of
information returns.
TITLE VII--AWARDING OF COSTS AND CERTAIN FEES
Sec. 701. United States must establish that its position in proceeding
was substantially justified.
Sec. 702. Increased limit on attorney fees.
Sec. 703. Failure to agree to extension not taken into account.
Sec. 704. Award of litigation costs permitted in declaratory judgment
proceedings.
TITLE VIII--MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR UNAUTHORIZED
COLLECTION ACTIONS
Sec. 801. Increase in limit on recovery of civil damages for
unauthorized collection actions.
Sec. 802. Court discretion to reduce award for litigation costs for
failure to exhaust administrative remedies.
TITLE IX--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX
Sec. 901. Preliminary notice requirement.
Sec. 902. Disclosure of certain information where more than 1 person
liable for penalty for failure to collect and pay over
tax.
Sec. 903. Right of contribution where more than 1 person liable for
penalty for failure to collect and pay over tax.
Sec. 904. Volunteer board members of tax-exempt organizations exempt
from penalty for failure to collect and pay over tax.
TITLE X--MODIFICATIONS OF RULES RELATING TO SUMMONSES
Sec. 1001. Enrolled agents included as third-party recordkeepers.
Sec. 1002. Safeguards relating to designated summonses.
Sec. 1003. Annual report to Congress concerning designated summonses.
TITLE XI--RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT
REGULATIONS
Sec. 1101. Relief from retroactive application of Treasury Department
regulations.
TITLE XII--MISCELLANEOUS PROVISIONS
Sec. 1201. Phone number of person providing payee statements required
to be shown on such statement.
Sec. 1202. Required notice of certain payments.
Sec. 1203. Unauthorized enticement of information disclosure.
Sec. 1204. Annual reminders to taxpayers with outstanding delinquent
accounts.
Sec. 1205. 5-year extension of authority for undercover operations.
Sec. 1206. Disclosure of Form 8300 information on cash transactions.
Sec. 1207. Disclosure of returns and return information to designee of
taxpayer.
Sec. 1208. Study of netting of interest on overpayments and
liabilities.
Sec. 1209. Expenses of detection of underpayments and fraud, etc.
Sec. 1210. Use of private delivery services for timely-mailing-as-
timely-filing rule.
Sec. 1211. Reports on misconduct of IRS employees.
TITLE XIII--REVENUE OFFSETS
Subtitle A--Application of Failure-to-Pay Penalty to Substitute Returns
Sec. 1301. Application of failure-to-pay penalty to substitute returns.
Subtitle B--Excise Taxes on Amounts of Private Excess Benefits
Sec. 1311. Excise taxes for failure by certain charitable organizations
to meet certain qualification requirements.
Sec. 1312. Reporting of certain excise taxes and other information.
Sec. 1313. Exempt organizations required to provide copy of return.
Sec. 1314. Increase in penalties on exempt organizations for failure to
file complete and timely annual returns.
TITLE I--TAXPAYER ADVOCATE
SEC. 101. ESTABLISHMENT OF POSITION OF TAXPAYER ADVOCATE
WITHIN INTERNAL REVENUE SERVICE.
(a) General Rule.--Section 7802 (relating to Commissioner
of Internal Revenue; Assistant Commissioner (Employee Plans
and Exempt Organizations)) is amended by adding at the end
the following new subsection:
``(d) Office of Taxpayer Advocate.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Office of the
Taxpayer Advocate'. Such office shall be under the
supervision and direction of an official to be known as the
`Taxpayer Advocate' who shall be appointed by and report
directly to the Commissioner of Internal Revenue. The
Taxpayer Advocate shall be entitled to compensation at the
same rate as the highest level official reporting directly to
the Deputy Commissioner of the Internal Revenue Service.
``(2) Functions of office.--
``(A) In general.--It shall be the function of the Office
of Taxpayer Advocate to--
``(i) assist taxpayers in resolving problems with the
Internal Revenue Service,
``(ii) identify areas in which taxpayers have problems in
dealings with the Internal Revenue Service,
``(iii) to the extent possible, propose changes in the
administrative practices of the Internal Revenue Service to
mitigate problems identified under clause (ii), and
``(iv) identify potential legislative changes which may be
appropriate to mitigate such problems.
``(B) Annual reports.--
``(i) Objectives.--Not later than June 30 of each calendar
year after 1995, the Taxpayer Advocate shall report to the
Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate on the objectives
of the Taxpayer Advocate for the fiscal year beginning in
such calendar year. Any such report shall contain full and
substantive analysis, in addition to statistical information.
``(ii) Activities.--Not later than December 31 of each
calendar year after 1995, the Taxpayer Advocate shall report
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate on
the activities of the Taxpayer Advocate during the fiscal
year ending during such calendar year. Any such report shall
contain full and substantive analysis, in addition to
statistical information, and shall--
``(I) identify the initiatives the Taxpayer Advocate has
taken on improving taxpayer services and Internal Revenue
Service responsiveness,
``(II) contain recommendations received from individuals
with the authority to issue Taxpayer Assistance Orders under
section 7811,
``(III) contain a summary of at least 20 of the most
serious problems encountered by taxpayers, including a
description of the nature of such problems,
``(IV) contain an inventory of the items described in
subclauses (I), (II), and (III) for which action has been
taken and the result of such action,
``(V) contain an inventory of the items described in
subclauses (I), (II), and (III) for which action remains to
be completed and the period during which each item has
remained on such inventory,
``(VI) contain an inventory of the items described in
subclauses (II) and (III) for which no action has been taken,
the period during which each item has remained on such
inventory, the reasons for the inaction, and identify any
Internal Revenue Service official who is responsible for such
inaction,
``(VII) identify any Taxpayer Assistance Order which was
not honored by the Internal Revenue Service in a timely
manner, as specified under section 7811(b),
``(VIII) contain recommendations for such administrative
and legislative action as may be appropriate to resolve
problems encountered by taxpayers,
``(IX) describe the extent to which regional problem
resolution officers participate in the selection and
evaluation of local problem resolution officers, and
``(X) include such other information as the Taxpayer
Advocate may deem advisable.
``(iii) Report to be submitted directly.--Each report
required under this subparagraph shall be provided directly
to the Committees referred to in clauses (i) and (ii) without
any prior review or comment from the Commissioner, the
Secretary of the Treasury, any other officer or employee of
the Department of the Treasury, or the Office of Management
and Budget.
``(3) Responsibilities of commissioner.--The Commissioner
of Internal Revenue shall establish procedures requiring a
formal response to all recommendations submitted to the
Commissioner by the Taxpayer Advocate within 3 months after
submission to the Commissioner.''
(b) Conforming Amendments.--
(1) Section 7811 (relating to Taxpayer Assistance Orders)
is amended--
(A) by striking ``the Office of Ombudsman'' in subsection
(a) and inserting ``the Office of the Taxpayer Advocate'',
and
(B) by striking ``Ombudsman'' each place it appears
(including in the headings of subsections (e) and (f)) and
inserting ``Taxpayer Advocate''.
(2) The heading for section 7802 is amended to read as
follows:
``SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT
COMMISSIONERS; TAXPAYER ADVOCATE.''
(3) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7802 and
inserting the following new item:
``Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioners;
Taxpayer Advocate.''
[[Page H3401]]
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 102. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER ASSISTANCE
ORDERS.
(a) Terms of Orders.--Subsection (b) of section 7811
(relating to terms of Taxpayer Assistance Orders) is
amended--
(1) by inserting ``within a specified time period'' after
``the Secretary'', and
(2) by inserting ``take any action as permitted by law,''
after ``cease any action,''.
(b) Limitation on Authority To Modify or Rescind.--Section
7811(c) (relating to authority to modify or rescind) is
amended to read as follows:
``(c) Authority To Modify or Rescind.--Any Taxpayer
Assistance Order issued by the Taxpayer Advocate under this
section may be modified or rescinded--
``(1) only by the Taxpayer Advocate, the Commissioner of
Internal Revenue, or the Deputy Commissioner of Internal
Revenue, and
``(2) only if a written explanation of the reasons for the
modification or rescission is provided to the Taxpayer
Advocate.''
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
TITLE II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS
SEC. 201. NOTIFICATION OF REASONS FOR TERMINATION OF
INSTALLMENT AGREEMENTS.
(a) Terminations.--Subsection (b) of section 6159 (relating
to extent to which agreements remain in effect) is amended by
adding at the end the following new paragraph:
``(5) Notice requirements.--The Secretary may not take any
action under paragraph (2), (3), or (4) unless--
``(A) a notice of such action is provided to the taxpayer
not later than the day 30 days before the date of such
action, and
``(B) such notice includes an explanation why the Secretary
intends to take such action.
The preceding sentence shall not apply in any case in which
the Secretary believes that collection of any tax to which an
agreement under this section relates is in jeopardy.''
(b) Conforming Amendment.--Paragraph (3) of section 6159(b)
is amended to read as follows:
``(3) Subsequent change in financial conditions.--If the
Secretary makes a determination that the financial condition
of a taxpayer with whom the Secretary has entered into an
agreement under subsection (a) has significantly changed, the
Secretary may alter, modify, or terminate such agreement.''
(c) Effective Date.--The amendments made by this section
shall take effect on the date 6 months after the date of the
enactment of this Act.
SEC. 202. ADMINISTRATIVE REVIEW OF TERMINATION OF INSTALLMENT
AGREEMENT.
(a) General Rule.--Section 6159 (relating to agreements for
payment of tax liability in installments) is amended by
adding at the end the following new subsection:
``(c) Administrative Review.--The Secretary shall establish
procedures for an independent administrative review of
terminations of installment agreements under this section for
taxpayers who request such a review.''
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 1997.
TITLE III--ABATEMENT OF INTEREST AND PENALTIES
SEC. 301. EXPANSION OF AUTHORITY TO ABATE INTEREST.
(a) General Rule.--Paragraph (1) of section 6404(e)
(relating to abatement of interest in certain cases) is
amended--
(1) by inserting ``unreasonable'' before ``error'' each
place it appears in subparagraphs (A) and (B), and
(2) by striking ``in performing a ministerial act'' each
place it appears and inserting ``in performing a ministerial
or managerial act''.
(b) Clerical Amendment.--The subsection heading for
subsection (e) of section 6404 is amended--
(1) by striking ``Assessments'' and inserting
``Abatement'', and
(2) by inserting ``Unreasonable'' before ``Errors''.
(c) Effective Date.--The amendments made by this section
shall apply to interest accruing with respect to deficiencies
or payments for taxable years beginning after the date of the
enactment of this Act.
SEC. 302. REVIEW OF IRS FAILURE TO ABATE INTEREST.
(a) In General.--Section 6404 is amended by adding at the
end the following new subsection:
``(g) Review of Denial of Request for Abatement of
Interest.--
``(1) In general.--The Tax Court shall have jurisdiction
over any action brought by a taxpayer who meets the
requirements referred to in section 7430(c)(4)(A)(iii) to
determine whether the Secretary's failure to abate interest
under this section was an abuse of discretion, and may order
an abatement, if such action is brought within 180 days after
the date of the mailing of the Secretary's final
determination not to abate such interest.
``(2) Special rules.--
``(A) Date of mailing.--Rules similar to the rules of
section 6213 shall apply for purposes of determining the date
of the mailing referred to in paragraph (1).
``(B) Relief.--Rules similar to the rules of section
6512(b) shall apply for purposes of this subsection.
``(C) Review.--An order of the Tax Court under this
subsection shall be reviewable in the same manner as a
decision of the Tax Court, but only with respect to the
matters determined in such order.''
(b) Effective Date.--The amendment made by this section
shall apply to requests for abatement after the date of the
enactment of this Act.
SEC. 303. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT OF
TAX AFTER NOTICE AND DEMAND.
(a) General Rule.--Paragraph (3) of section 6601(e)
(relating to payments made within 10 days after notice and
demand) is amended to read as follows:
``(3) Payments made within specified period after notice
and demand.--If notice and demand is made for payment of any
amount and if such amount is paid within 21 calendar days (10
business days if the amount for which such notice and demand
is made equals or exceeds $100,000) after the date of such
notice and demand, interest under this section on the amount
so paid shall not be imposed for the period after the date of
such notice and demand.''
(b) Conforming Amendments.--
(1) Subparagraph (A) of section 6601(e)(2) is amended by
striking ``10 days from the date of notice and demand
therefor'' and inserting ``21 calendar days from the date of
notice and demand therefor (10 business days if the amount
for which such notice and demand is made equals or exceeds
$100,000)''.
(2) Paragraph (3) of section 6651(a) is amended by striking
``10 days of the date of the notice and demand therefor'' and
inserting ``21 calendar days from the date of notice and
demand therefor (10 business days if the amount for which
such notice and demand is made equals or exceeds $100,000)''.
(c) Effective Date.--The amendments made by this section
shall apply in the case of any notice and demand given after
December 31, 1996.
SEC. 304. ABATEMENT OF PENALTY FOR FAILURE TO MAKE REQUIRED
DEPOSITS OF PAYROLL TAXES IN CERTAIN CASES.
(a) In General.--Section 6656 (relating to failure to make
deposit of taxes) is amended by adding at the end the
following new subsections:
``(c) Exception for First-Time Depositors of Employment
Taxes.--The Secretary may waive the penalty imposed by
subsection (a) on a person's inadvertent failure to deposit
any employment tax if--
``(1) such person meets the requirements referred to in
section 7430(c)(4)(A)(iii),
``(2) such failure occurs during the 1st quarter that such
person was required to deposit any employment tax, and
``(3) the return of such tax was filed on or before the due
date.
For purposes of this subsection, the term `employment taxes'
means the taxes imposed by subtitle C.
``(d) Authority To Abate Penalty Where Deposit Sent to
Secretary.--The Secretary may abate the penalty imposed by
subsection (a) with respect to the first time a depositor is
required to make a deposit if the amount required to be
deposited is inadvertently sent to the Secretary instead of
to the appropriate government depository.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to deposits required to be made after the date of
the enactment of this Act.
TITLE IV--JOINT RETURNS
SEC. 401. STUDIES OF JOINT RETURN-RELATED ISSUES.
The Secretary of the Treasury or his delegate and the
Comptroller General of the United States shall each conduct
separate studies of--
(1) the effects of changing the liability for tax on a
joint return from being joint and several to being
proportionate to the tax attributable to each spouse,
(2) the effects of providing that, if a divorce decree
allocates liability for tax on a joint return filed before
the divorce, the Secretary may collect such liability only in
accordance with the decree,
(3) whether those provisions of the Internal Revenue Code
of 1986 intended to provide relief to innocent spouses
provide meaningful relief in all cases where such relief is
appropriate, and
(4) the effect of providing that community income (as
defined in section 66(d) of such Code) which, in accordance
with the rules contained in section 879(a) of such Code,
would be treated as the income of one spouse is exempt from a
levy for failure to pay any tax imposed by subtitle A by the
other spouse for a taxable year ending before their marriage.
The reports of such studies shall be submitted to the
Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate within 6 months
after the date of the enactment of this Act.
SEC. 402. JOINT RETURN MAY BE MADE AFTER SEPARATE RETURNS
WITHOUT FULL PAYMENT OF TAX.
(a) General Rule.--Paragraph (2) of section 6013(b)
(relating to limitations on filing of joint return after
filing separate returns) is amended by striking subparagraph
(A) and redesignating the following subparagraphs
accordingly.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 403. DISCLOSURE OF COLLECTION ACTIVITIES.
(a) In General.--Subsection (e) of section 6103 (relating
to disclosure to persons having material interest) is amended
by adding at the end the following new paragraph:
``(8) Disclosure of collection activities with respect to
joint return.--If any deficiency of tax with respect to a
joint return is assessed and the individuals filing such
return are no longer married or no longer reside in the same
household, upon request in writing by either of such
individuals, the Secretary shall disclose in writing to the
individual making the request whether the Secretary has
attempted to collect such deficiency from such other
individual, the general nature of such collection activities,
and the amount collected. The preceding
[[Page H3402]]
sentence shall not apply to any deficiency which may not be
collected by reason of section 6502.''
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
TITLE V--COLLECTION ACTIVITIES
SEC. 501. MODIFICATIONS TO LIEN AND LEVY PROVISIONS.
(a) Withdrawal of Certain Notices.--Section 6323 (relating
to validity and priority against certain persons) is amended
by adding at the end the following new subsection:
``(j) Withdrawal of Notice in Certain Circumstances.--
``(1) In general.--The Secretary may withdraw a notice of a
lien filed under this section and this chapter shall be
applied as if the withdrawn notice had not been filed, if the
Secretary determines that--
``(A) the filing of such notice was premature or otherwise
not in accordance with administrative procedures of the
Secretary,
``(B) the taxpayer has entered into an agreement under
section 6159 to satisfy the tax liability for which the lien
was imposed by means of installment payments, unless such
agreement provides otherwise,
``(C) the withdrawal of such notice will facilitate the
collection of the tax liability, or
``(D) with the consent of the taxpayer or the Taxpayer
Advocate, the withdrawal of such notice would be in the best
interests of the taxpayer (as determined by the Taxpayer
Advocate) and the United States.
Any such withdrawal shall be made by filing notice at the
same office as the withdrawn notice. A copy of such notice of
withdrawal shall be provided to the taxpayer.
``(2) Notice to credit agencies, etc.--Upon written request
by the taxpayer with respect to whom a notice of a lien was
withdrawn under paragraph (1), the Secretary shall promptly
make reasonable efforts to notify credit reporting agencies,
and any financial institution or creditor whose name and
address is specified in such request, of the withdrawal of
such notice. Any such request shall be in such form as the
Secretary may prescribe.''
(b) Return of Levied Property in Certain Cases.--Section
6343 (relating to authority to release levy and return
property) is amended by adding at the end the following new
subsection:
``(d) Return of Property in Certain Cases.--If--
``(1) any property has been levied upon, and
``(2) the Secretary determines that--
``(A) the levy on such property was premature or otherwise
not in accordance with administrative procedures of the
Secretary,
``(B) the taxpayer has entered into an agreement under
section 6159 to satisfy the tax liability for which the levy
was imposed by means of installment payments, unless such
agreement provides otherwise,
``(C) the return of such property will facilitate the
collection of the tax liability, or
``(D) with the consent of the taxpayer or the Taxpayer
Advocate, the return of such property would be in the best
interests of the taxpayer (as determined by the Taxpayer
Advocate) and the United States,
the provisions of subsection (b) shall apply in the same
manner as if such property had been wrongly levied upon,
except that no interest shall be allowed under subsection
(c).''
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 502. MODIFICATIONS TO CERTAIN LEVY EXEMPTION AMOUNTS.
(a) Fuel, Etc.--Paragraph (2) of section 6334(a) (relating
to fuel, provisions, furniture, and personal effects exempt
from levy) is amended--
(1) by striking ``If the taxpayer is the head of a family,
so'' and inserting ``So'',
(2) by striking ``his household'' and inserting ``the
taxpayer's household'', and
(3) by striking ``$1,650 ($1,550 in the case of levies
issued during 1989)'' and inserting ``$2,500''.
(b) Books, Etc.--Paragraph (3) of section 6334(a) (relating
to books and tools of a trade, business, or profession) is
amended by striking ``$1,100 ($1,050 in the case of levies
issued during 1989)'' and inserting ``$1,250''.
(c) Inflation Adjustment.--Section 6334 (relating to
property exempt from levy) is amended by adding at the end
the following new subsection:
``(f) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year
beginning after 1997, each dollar amount referred to in
paragraphs (2) and (3) of subsection (a) shall be increased
by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, by substituting
`calendar year 1996' for `calendar year 1992' in subparagraph
(B) thereof.
``(2) Rounding.--If any dollar amount after being increased
under paragraph (1) is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of $10.''.
(d) Effective Date.--The amendments made by this section
shall take effect with respect to levies issued after
December 31, 1996.
SEC. 503. OFFERS-IN-COMPROMISE.
(a) Review Requirements.--Subsection (b) of section 7122
(relating to records) is amended by striking ``$500.'' and
inserting ``$50,000. However, such compromise shall be
subject to continuing quality review by the Secretary.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
TITLE VI--INFORMATION RETURNS
SEC. 601. CIVIL DAMAGES FOR FRAUDULENT FILING OF INFORMATION
RETURNS.
(a) General Rule.--Subchapter B of chapter 76 (relating to
proceedings by taxpayers and third parties) is amended by
redesignating section 7434 as section 7435 and by
inserting after section 7433 the following new section:
``SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF
INFORMATION RETURNS.
``(a) In General.--If any person willfully files a
fraudulent information return with respect to payments
purported to be made to any other person, such other person
may bring a civil action for damages against the person so
filing such return.
``(b) Damages.--In any action brought under subsection (a),
upon a finding of liability on the part of the defendant, the
defendant shall be liable to the plaintiff in an amount equal
to the greater of $5,000 or the sum of--
``(1) any actual damages sustained by the plaintiff as a
proximate result of the filing of the fraudulent information
return (including any costs attributable to resolving
deficiencies asserted as a result of such filing),
``(2) the costs of the action, and
``(3) in the court's discretion, reasonable attorneys fees.
``(c) Period for Bringing Action.--Notwithstanding any
other provision of law, an action to enforce the liability
created under this section may be brought without regard to
the amount in controversy and may be brought only within the
later of--
``(1) 6 years after the date of the filing of the
fraudulent information return, or
``(2) 1 year after the date such fraudulent information
return would have been discovered by exercise of reasonable
care.
``(d) Copy of Complaint Filed With IRS--Any person bringing
an action under subsection (a) shall provide a copy of the
complaint to the Internal Revenue Service upon the filing of
such complaint with the court.
``(e) Finding of Court To Include Correct Amount of
Payment.--The decision of the court awarding damages in an
action brought under subsection (a) shall include a finding
of the correct amount which should have been reported in the
information return.
``(f) Information Return.--For purposes of this section,
the term `information return' means any statement described
in section 6724(d)(1)(A).''
(b) Clerical Amendment.--The table of sections for
subchapter B of chapter 76 is amended by striking the item
relating to section 7434 and inserting the following:
``Sec. 7434. Civil damages for fraudulent filing of information
returns.
``Sec. 7435. Cross references.''
(c) Effective Date.--The amendments made by this section
shall apply to fraudulent information returns filed after the
date of the enactment of this Act.
SEC. 602. REQUIREMENT TO CONDUCT REASONABLE INVESTIGATIONS OF
INFORMATION RETURNS.
(a) General Rule.--Section 6201 (relating to assessment
authority) is amended by redesignating subsection (d) as
subsection (e) and by inserting after subsection (c) the
following new subsection:
``(d) Required Reasonable Verification of Information
Returns.--In any court proceeding, if a taxpayer asserts a
reasonable dispute with respect to any item of income
reported on an information return filed with the Secretary
under subpart B or C of part III of subchapter A of chapter
61 by a third party and the taxpayer has fully cooperated
with the Secretary (including providing, within a reasonable
period of time, access to and inspection of all witnesses,
information, and documents within the control of the taxpayer
as reasonably requested by the Secretary), the Secretary
shall have the burden of producing reasonable and probative
information concerning such deficiency in addition to such
information return.''
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
TITLE VII--AWARDING OF COSTS AND CERTAIN FEES
SEC. 701. UNITED STATES MUST ESTABLISH THAT ITS POSITION IN
PROCEEDING WAS SUBSTANTIALLY JUSTIFIED.
(a) General Rule.--Subparagraph (A) of section 7430(c)(4)
(defining prevailing party) is amended by striking clause (i)
and by redesignating clauses (ii) and (iii) as clauses (i)
and (ii), respectively.
(b) Burden of Proof on United States.--Paragraph (4) of
section 7430(c) is amended by redesignating subparagraph (B)
as subparagraph (C) and by inserting after subparagraph (A)
the following new subparagraph:
``(B) Exception if united states establishes that its
position was substantially justified.--
``(i) General rule.--A party shall not be treated as the
prevailing party in a proceeding to which subsection (a)
applies if the United States establishes that the position of
the United States in the proceeding was substantially
justified.
``(ii) Presumption of no justification if internal revenue
service did not follow certain published guidance.--For
purposes of clause (i), the position of the United States
shall be presumed not to be substantially justified if the
Internal Revenue Service did not follow its applicable
published guidance in the administrative proceeding. Such
presumption may be rebutted.
``(iii) Applicable published guidance.--For purposes of
clause (ii), the term `applicable published guidance' means--
``(I) regulations, revenue rulings, revenue procedures,
information releases, notices, and announcements, and
``(II) any of the following which are issued to the
taxpayer: private letter rulings, technical advice memoranda,
and determination letters.''
[[Page H3403]]
(c) Conforming Amendments.--
(1) Subparagraph (B) of section 7430(c)(2) is amended by
striking ``paragraph (4)(B)'' and inserting ``paragraph
(4)(C)''.
(2) Subparagraph (C) of section 7430(c)(4), as redesignated
by subsection (b), is amended by striking ``subparagraph
(A)'' and inserting ``this paragraph''.
(3) Sections 6404(g) and 6656(c)(1), as amended by this
Act, are each amended by striking ``section
7430(c)(4)(A)(iii)'' and inserting ``section
7430(c)(4)(A)(ii)''.
(d) Effective Date.--The amendments made by this section
shall apply in the case of proceedings commenced after the
date of the enactment of this Act.
SEC. 702. INCREASED LIMIT ON ATTORNEY FEES.
(a) In General.--Paragraph (1) of section 7430(c) (defining
reasonable litigation costs) is amended--
(1) by striking ``$75'' in clause (iii) of subparagraph (B)
and inserting ``$110'',
(2) by striking ``an increase in the cost of living or'' in
clause (iii) of subparagraph (B), and
(3) by adding after clause (iii) the following:
``In the case of any calendar year beginning after 1996, the
dollar amount referred to in clause (iii) shall be increased
by an amount equal to such dollar amount multiplied by the
cost-of-living adjustment determined under section 1(f)(3)
for such calendar year, by substituting `calendar year 1995'
for `calendar year 1992' in subparagraph (B) thereof. If any
dollar amount after being increased under the preceding
sentence is not a multiple of $10, such dollar amount shall
be rounded to the nearest multiple of $10.''
(b) Effective Date.--The amendment made by this section
shall apply in the case of proceedings commenced after the
date of the enactment of this Act.
SEC. 703. FAILURE TO AGREE TO EXTENSION NOT TAKEN INTO
ACCOUNT.
(a) In General.--Paragraph (1) of section 7430(b) (relating
to requirement that administrative remedies be exhausted) is
amended by adding at the end the following new sentence:
``Any failure to agree to an extension of the time for the
assessment of any tax shall not be taken into account for
purposes of determining whether the prevailing party meets
the requirements of the preceding sentence.''
(b) Effective Date.--The amendment made by this section
shall apply in the case of proceedings commenced after the
date of the enactment of this Act.
SEC. 704. AWARD OF LITIGATION COSTS PERMITTED IN DECLARATORY
JUDGMENT PROCEEDINGS.
(a) In General.--Subsection (b) of section 7430 is amended
by striking paragraph (3) and by redesignating paragraph (4)
as paragraph (3).
(b) Effective Date.--The amendment made by this section
shall apply in the case of proceedings commenced after the
date of the enactment of this Act.
TITLE VIII--MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR UNAUTHORIZED
COLLECTION ACTIONS
SEC. 801. INCREASE IN LIMIT ON RECOVERY OF CIVIL DAMAGES FOR
UNAUTHORIZED COLLECTION ACTIONS.
(a) General Rule.--Subsection (b) of section 7433 (relating
to damages) is amended by striking ``$100,000'' and inserting
``$1,000,000''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to actions by officers or employees of the
Internal Revenue Service after the date of the enactment of
this Act.
SEC. 802. COURT DISCRETION TO REDUCE AWARD FOR LITIGATION
COSTS FOR FAILURE TO EXHAUST ADMINISTRATIVE
REMEDIES.
(a) General Rule.--Paragraph (1) of section 7433(d)
(relating to civil damages for certain unauthorized
collection actions) is amended to read as follows:
``(1) Award for damages may be reduced if administrative
remedies not exhausted.--The amount of damages awarded under
subsection (b) may be reduced if the court determines that
the plaintiff has not exhausted the administrative remedies
available to such plaintiff within the Internal Revenue
Service.''
(b) Effective Date.--The amendment made by this section
shall apply in the case of proceedings commenced after the
date of the enactment of this Act.
TITLE IX--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX
SEC. 901. PRELIMINARY NOTICE REQUIREMENT.
(a) In General.--Section 6672 (relating to failure to
collect and pay over tax, or attempt to evade or defeat tax)
is amended by redesignating subsection (b) as subsection (c)
and by inserting after subsection (a) the following new
subsection:
``(b) Preliminary Notice Requirement.--
``(1) In general.--No penalty shall be imposed under
subsection (a) unless the Secretary notifies the taxpayer in
writing by mail to an address as determined under section
6212(b) that the taxpayer shall be subject to an assessment
of such penalty.
``(2) Timing of notice.--The mailing of the notice
described in paragraph (1) shall precede any notice and
demand of any penalty under subsection (a) by at least 60
days.
``(3) Statute of limitations.--If a notice described in
paragraph (1) with respect to any penalty is mailed before
the expiration of the period provided by section 6501 for the
assessment of such penalty (determined without regard to this
paragraph), the period provided by such section for the
assessment of such penalty shall not expire before the later
of--
``(A) the date 90 days after the date on which such notice
was mailed, or
``(B) if there is a timely protest of the proposed
assessment, the date 30 days after the Secretary makes a
final administrative determination with respect to such
protest.
``(4) Exception for jeopardy.--This subsection shall not
apply if the Secretary finds that the collection of the
penalty is in jeopardy.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to proposed assessments made after June 30, 1996.
SEC. 902. DISCLOSURE OF CERTAIN INFORMATION WHERE MORE THAN 1
PERSON LIABLE FOR PENALTY FOR FAILURE TO
COLLECT AND PAY OVER TAX.
(a) In General.--Subsection (e) of section 6103 (relating
to disclosure to persons having material interest), as
amended by section 403, is amended by adding at the end the
following new paragraph:
``(9) Disclosure of certain information where more than 1
person subject to penalty under section 6672.--If the
Secretary determines that a person is liable for a penalty
under section 6672(a) with respect to any failure, upon
request in writing of such person, the Secretary shall
disclose in writing to such person--
``(A) the name of any other person whom the Secretary has
determined to be liable for such penalty with respect to such
failure, and
``(B) whether the Secretary has attempted to collect such
penalty from such other person, the general nature of such
collection activities, and the amount collected.''
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 903. RIGHT OF CONTRIBUTION WHERE MORE THAN 1 PERSON
LIABLE FOR PENALTY FOR FAILURE TO COLLECT AND
PAY OVER TAX.
(a) In General.--Section 6672 (relating to failure to
collect and pay over tax, or attempt to evade or defeat tax)
is amended by adding at the end the following new subsection:
``(d) Right of Contribution Where More Than 1 Person Liable
for Penalty.--If more than 1 person is liable for the penalty
under subsection (a) with respect to any tax, each person who
paid such penalty shall be entitled to recover from other
persons who are liable for such penalty an amount equal to
the excess of the amount paid by such person over such
person's proportionate share of the penalty. Any claim for
such a recovery may be made only in a proceeding which is
separate from, and is not joined or consolidated with--
``(1) an action for collection of such penalty brought by
the United States, or
``(2) a proceeding in which the United States files a
counterclaim or third-party complaint for the collection of
such penalty.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply to penalties assessed after the date of the
enactment of this Act.
SEC. 904. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT ORGANIZATIONS
EXEMPT FROM PENALTY FOR FAILURE TO COLLECT AND
PAY OVER TAX.
(a) In General.--Section 6672 is amended by adding at the
end the following new subsection:
``(e) Exception for Voluntary Board Members of Tax-Exempt
Organizations.--No penalty shall be imposed by subsection (a)
on any unpaid, volunteer member of any board of trustees or
directors of an organization exempt from tax under subtitle A
if such member--
``(1) is solely serving in an honorary capacity,
``(2) does not participate in the day-to-day or financial
operations of the organization, and
``(3) does not have actual knowledge of the failure on
which such penalty is imposed.
The preceding sentence shall not apply if it results in no
person being liable for the penalty imposed by subsection
(a).''
(b) Public Information Requirements.--
(1) In general.--The Secretary of the Treasury or the
Secretary's delegate (hereafter in this subsection referred
to as the ``Secretary'') shall take such actions as may be
appropriate to ensure that employees are aware of their
responsibilities under the Federal tax depository system, the
circumstances under which employees may be liable for the
penalty imposed by section 6672 of the Internal Revenue Code
of 1986, and the responsibility to promptly report to the
Internal Revenue Service any failure referred to in
subsection (a) of such section 6672. Such actions shall
include--
(A) printing of a warning on deposit coupon booklets and
the appropriate tax returns that certain employees may be
liable for the penalty imposed by such section 6672, and
(B) the development of a special information packet.
(2) Development of explanatory materials.--The Secretary
shall develop materials explaining the circumstances under
which board members of tax-exempt organizations (including
voluntary and honorary members) may be subject to penalty
under section 6672 of such Code. Such materials shall be made
available to tax-exempt organizations.
(3) IRS instructions.--The Secretary shall clarify the
instructions to Internal Revenue Service employees on the
application of the penalty under section 6672 of such Code
with regard to voluntary members of boards of trustees or
directors of tax-exempt organizations.
TITLE X--MODIFICATIONS OF RULES RELATING TO SUMMONSES
SEC. 1001. ENROLLED AGENTS INCLUDED AS THIRD-PARTY
RECORDKEEPERS.
(a) In General.--Paragraph (3) of section 7609(a) (relating
to third-party recordkeeper defined) is amended by striking
``and'' at the end of subparagraph (G), by striking the
period at the end of subparagraph (H) and inserting ``;
and'', and by adding at the end the following the
subparagraph:
``(I) any enrolled agent.''
[[Page H3404]]
(b) Effective Date.--The amendment made by subsection (a)
shall apply to summonses issued after the date of the
enactment of this Act.
SEC. 1002. SAFEGUARDS RELATING TO DESIGNATED SUMMONSES.
(a) Standard of Review.--Subparagraph (A) of section
6503(k)(2) (defining designated summons) is amended by
redesignating clauses (i) and (ii) as clauses (ii) and (iii),
respectively, and by inserting before clause (ii) (as so
redesignated) the following new clause:
``(i) the issuance of such summons is preceded by a review
of such issuance by the regional counsel of the Office of
Chief Counsel for the region in which the examination of the
corporation is being conducted,''.
(b) Limitation on Persons to Whom Designated Summons May Be
Issued.--Paragraph (1) of section 6503(k) is amended by
striking ``with respect to any return of tax by a
corporation'' and inserting ``to a corporation (or to any
other person to whom the corporation has transferred records)
with respect to any return of tax by such corporation for a
taxable year (or other period) for which such corporation is
being examined under the coordinated examination program (or
any successor program) of the Internal Revenue Service''.
(c) Clerical Amendment.--Section 6503 is amended by
redesignating subsections (k) and (l) (as amended by this
section) as subsections (j) and (k), respectively.
(d) Effective Date.--The amendments made by this section
shall apply to summonses issued after the date of the
enactment of this Act.
SEC. 1003. ANNUAL REPORT TO CONGRESS CONCERNING DESIGNATED
SUMMONSES.
Not later than December 31 of each calendar year after
1995, the Secretary of the Treasury or his delegate shall
report to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate on
the number of designated summonses (as defined in section
6503(j) of the Internal Revenue Code of 1986) which were
issued during the preceding 12 months.
TITLE XI--RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT
REGULATIONS
SEC. 1101. RELIEF FROM RETROACTIVE APPLICATION OF TREASURY
DEPARTMENT REGULATIONS.
(a) In General.--Subsection (b) of section 7805 (relating
to rules and regulations) is amended to read as follows:
``(b) Retroactivity of Regulations.--
``(1) In general.--Except as otherwise provided in this
subsection, no temporary, proposed, or final regulation
relating to the internal revenue laws shall apply to any
taxable period ending before the earliest of the following
dates:
``(A) The date on which such regulation is filed with the
Federal Register.
``(B) In the case of any final regulation, the date on
which any proposed or temporary regulation to which such
final regulation relates was filed with the Federal Register.
``(C) The date on which any notice substantially describing
the expected contents of any temporary, proposed, or final
regulation is issued to the public.
``(2) Exception for promptly issued regulations.--Paragraph
(1) shall not apply to regulations filed or issued within 18
months of the date of the enactment of the statutory
provision to which the regulation relates.
``(3) Prevention of abuse.--The Secretary may provide that
any regulation may take effect or apply retroactively to
prevent abuse.
``(4) Correction of procedural defects.--The Secretary may
provide that any regulation may apply retroactively to
correct a procedural defect in the issuance of any prior
regulation.
``(5) Internal regulations.--The limitation of paragraph
(1) shall not apply to any regulation relating to internal
Treasury Department policies, practices, or procedures.
``(6) Congressional authorization.--The limitation of
paragraph (1) may be superseded by a legislative grant from
Congress authorizing the Secretary to prescribe the effective
date with respect to any regulation.
``(7) Election to apply retroactively.--The Secretary may
provide for any taxpayer to elect to apply any regulation
before the dates specified in paragraph (1).
``(8) Application to rulings.--The Secretary may prescribe
the extent, if any, to which any ruling (including any
judicial decision or any administrative determination other
than by regulation) relating to the internal revenue laws
shall be applied without retroactive effect.''
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to regulations which relate to
statutory provisions enacted on or after the date of the
enactment of this Act.
TITLE XII--MISCELLANEOUS PROVISIONS
SEC. 1201. PHONE NUMBER OF PERSON PROVIDING PAYEE STATEMENTS
REQUIRED TO BE SHOWN ON SUCH STATEMENT.
(a) General Rule.--The following provisions are each
amended by striking ``name and address'' and inserting
``name, address, and phone number of the information
contact'':
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) Effective Date.--The amendments made by subsection (a)
shall apply to statements required to be furnished after
December 31, 1996 (determined without regard to any
extension).
SEC. 1202. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the Treasury
or his delegate from any taxpayer and the Secretary cannot
associate such payment with such taxpayer, the Secretary
shall make reasonable efforts to notify the taxpayer of such
inability within 60 days after the receipt of such payment.
SEC. 1203. UNAUTHORIZED ENTICEMENT OF INFORMATION DISCLOSURE.
(a) In General.--Subchapter B of chapter 76 (relating to
proceedings by taxpayers and third parties), as amended by
section 601(a), is amended by redesignating section 7435 as
section 7436 and by inserting after section 7434 the
following new section:
``SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICEMENT OF
INFORMATION DISCLOSURE.
``(a) In General.--If any officer or employee of the United
States intentionally compromises the determination or
collection of any tax due from an attorney, certified public
accountant, or enrolled agent representing a taxpayer in
exchange for information conveyed by the taxpayer to the
attorney, certified public accountant, or enrolled agent for
purposes of obtaining advice concerning the taxpayer's tax
liability, such taxpayer may bring a civil action for damages
against the United States in a district court of the United
States. Such civil action shall be the exclusive remedy for
recovering damages resulting from such actions.
``(b) Damages.--In any action brought under subsection (a),
upon a finding of liability on the part of the defendant, the
defendant shall be liable to the plaintiff in an amount equal
to the lesser of $500,000 or the sum of--
``(1) actual, direct economic damages sustained by the
plaintiff as a proximate result of the information
disclosure, and
``(2) the costs of the action.
Damages shall not include the taxpayer's liability for any
civil or criminal penalties, or other losses attributable to
incarceration or the imposition of other criminal sanctions.
``(c) Payment Authority.--Claims pursuant to this section
shall be payable out of funds appropriated under section 1304
of title 31, United States Code.
``(d) Period for Bringing Action.--Notwithstanding any
other provision of law, an action to enforce liability
created under this section may be brought without regard to
the amount in controversy and may be brought only within 2
years after the date the actions creating such liability
would have been discovered by exercise of reasonable care.
``(e) Mandatory Stay.--Upon a certification by the
Commissioner or the Commissioner's delegate that there is an
ongoing investigation or prosecution of the taxpayer, the
district court before which an action under this section is
pending shall stay all proceedings with respect to such
action pending the conclusion of the investigation or
prosecution.
``(f) Crime-Fraud Exception.--Subsection (a) shall not
apply to information conveyed to an attorney, certified
public accountant, or enrolled agent for the purpose of
perpetrating a fraud or crime.''
(b) Clerical Amendment.--The table of sections for
subchapter B of chapter 76, as amended by section 601(b), is
amended by striking the item relating to section 7435 and by
adding at the end the following new items:
``Sec. 7435. Civil damages for unauthorized enticement of information
disclosure.
``Sec. 7436. Cross references.''
(c) Effective Date.--The amendments made by this section
shall apply to actions after the date of the enactment of
this Act.
SEC. 1204. ANNUAL REMINDERS TO TAXPAYERS WITH OUTSTANDING
DELINQUENT ACCOUNTS.
(a) In General.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end the following new
section:
``SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
``Not less often than annually, the Secretary shall send a
written notice to each taxpayer who has a tax delinquent
account of the amount of the tax delinquency as of the date
of the notice.''
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:
``Sec. 7524. Annual notice of tax delinquency.''
(c) Effective Date.--The amendments made by this section
shall apply to calendar years after 1996.
SEC. 1205. 5-YEAR EXTENSION OF AUTHORITY FOR UNDERCOVER
OPERATIONS.
(a) In General.--Paragraph (3) of section 7601(c) of the
Anti-Drug Abuse Act of 1988 is amended by striking all that
follows ``this Act'' and inserting a period.
(b) Restoration of Authority for 5 Years.--Subsection (c)
of section 7608 is amended by adding at the end the following
new paragraph:
``(6) Application of section.--The provisions of this
subsection--
``(A) shall apply after November 17, 1988, and before
January 1, 1990, and
``(B) shall apply after the date of the enactment of this
paragraph and before January 1, 2001.
All amounts expended pursuant to this subsection during the
period described in subparagraph (B) shall be recovered to
the extent possible, and deposited in the Treasury of the
United States as miscellaneous receipts, before January 1,
2001.''
(c) Enhanced Oversight.--
[[Page H3405]]
(1) Additional information required in reports to
congress.--Subparagraph (B) of section 7608(c)(4) is
amended--
(A) by striking ``preceding the period'' in clause (ii),
(B) by striking ``and'' at the end of clause (ii), and
(C) by striking clause (iii) and inserting the following:
``(iii) the number, by programs, of undercover
investigative operations closed in the 1-year period for
which such report is submitted, and
``(iv) the following information with respect to each
undercover investigative operation pending as of the end of
the 1-year period for which such report is submitted or
closed during such 1-year period--
``(I) the date the operation began and the date of the
certification referred to in the last sentence of paragraph
(1),
``(II) the total expenditures under the operation and the
amount and use of the proceeds from the operation,
``(III) a detailed description of the operation including
the potential violation being investigated and whether the
operation is being conducted under grand jury auspices, and
``(IV) the results of the operation including the results
of criminal proceedings.''
(2) Audits required without regard to amounts involved.--
Subparagraph (C) of section 7608(c)(5) is amended to read as
follows:
``(C) Undercover investigative operation.--The term
`undercover investigative operation' means any undercover
investigative operation of the Service; except that, for
purposes of subparagraphs (A) and (C) of paragraph (4), such
term only includes an operation which is exempt from section
3302 or 9102 of title 31, United States Code.''
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
SEC. 1206. DISCLOSURE OF FORM 8300 INFORMATION ON CASH
TRANSACTIONS.
(a) In General.--Subsection (l) of section 6103 (relating
to disclosure of returns and return information for purposes
other than tax administration) is amended by adding at the
end the following new paragraph:
``(15) Disclosure of returns filed under section 6050i.--
The Secretary may, upon written request, disclose to officers
and employees of--
``(A) any Federal agency,
``(B) any agency of a State or local government, or
``(C) any agency of the government of a foreign country,
information contained on returns filed under section 6050I.
Any such disclosure shall be made on the same basis, and
subject to the same conditions, as apply to disclosures of
information on reports filed under section 5313 of title 31,
United States Code; except that no disclosure under this
paragraph shall be made for purposes of the administration of
any tax law.''
(b) Conforming Amendments.--
(1) Subsection (i) of section 6103 is amended by striking
paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is amended--
(A) by striking ``(7)(A)(ii), or (8)'' and inserting ``or
(7)(A)(ii)'', and
(B) by striking ``or (14)'' and inserting ``(14), or
(15)''.
(3) The material preceding subparagraph (A) of section
6103(p)(4) is amended--
(A) by striking ``(5), or (8)'' and inserting ``or (5)'',
(B) by striking ``(i)(3)(B)(i), or (8)'' and inserting
``(i)(3)(B)(i),'', and
(C) by striking ``or (12)'' and inserting ``(12), or
(15)''.
(4) Clause (ii) of section 6103(p)(4)(F) is amended--
(A) by striking ``(5), or (8)'' and inserting ``or (5)'',
and
(B) by striking ``or (14)'' and inserting ``(14), or
(15)''.
(5) Paragraph (2) of section 7213(a) is amended by striking
``or (12)'' and inserting ``(12), or (15)''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 1207. DISCLOSURE OF RETURNS AND RETURN INFORMATION TO
DESIGNEE OF TAXPAYER.
Subsection (c) of section 6103 (relating to disclosure of
returns and return information to designee of taxpayer) is
amended by striking ``written request for or consent to such
disclosure'' and inserting ``request for or consent to such
disclosure''.
SEC. 1208. STUDY OF NETTING OF INTEREST ON OVERPAYMENTS AND
LIABILITIES.
(a) In General.--The Secretary of the Treasury or his
delegate shall--
(1) conduct a study of the manner in which the Internal
Revenue Service has implemented the netting of interest on
overpayments and underpayments and of the policy and
administrative implications of global netting, and
(2) before submitting the report of such study, hold a
public hearing to receive comments on the matters included in
such study.
(b) Report.--The report of such study shall be submitted
not later than 6 months after the date of the enactment of
this Act to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate.
SEC. 1209. EXPENSES OF DETECTION OF UNDERPAYMENTS AND FRAUD,
ETC.
(a) In General.--Section 7623 (relating to expenses of
deduction and punishment of frauds) is amended to read as
follows:
``SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS AND
FRAUD, ETC.
``The Secretary, under regulations prescribed by the
Secretary, is authorized to pay such sums as he deems
necessary for--
``(1) detecting underpayments of tax, and
``(2) detecting and bringing to trial and punishment
persons guilty of violating the internal revenue laws or
conniving at the same,
in cases where such expenses are not otherwise provided for
by law. Any amount payable under the preceding sentence shall
be paid from the proceeds of amounts (other than interest)
collected by reason of the information provided, and any
amount so collected shall be available for such payments.''.
(b) Clerical Amendment.--The table of sections for
subchapter B of chapter 78 is amended by striking the item
relating to section 7623 and inserting the following new
item:
``Sec. 7623. Expenses of detection of underpayments and fraud, etc.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date which is 6 months after the
date of the enactment of this Act.
(d) Report.--The Secretary of the Treasury or his delegate
shall submit an annual report to the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate on the payments under section 7623
of the Internal Revenue Code of 1986 during the year and
on the amounts collected for which such payments were
made.
SEC. 1210. USE OF PRIVATE DELIVERY SERVICES FOR TIMELY-
MAILING-AS-TIMELY-FILING RULE.
Section 7502 (relating to timely mailing treated as timely
filing and paying) is amended by adding at the end the
following new subsection:
``(f) Treatment of Private Delivery Services.--
``(1) In general.--Any reference in this section to the
United States mail shall be treated as including a reference
to any designated delivery service, and any reference in this
section to a postmark by the United States Postal Service
shall be treated as including a reference to any date
recorded or marked as described in paragraph (2)(C) by any
designated delivery service.
``(2) Designated delivery service.--For purposes of this
subsection, the term `designated delivery service' means any
delivery service provided by a trade or business if such
service is designated by the Secretary for purposes of this
section. The Secretary may designate a delivery service under
the preceding sentence only if the Secretary determines that
such service--
``(A) is available to the general public,
``(B) is at least as timely and reliable on a regular basis
as the United States mail,
``(C) records electronically to its data base, kept in the
regular course of its business, or marks on the cover in
which any item referred to in this section is to be
delivered, the date on which such item was given to such
trade or business for delivery, and
``(D) meets such other criteria as the Secretary may
prescribe.
``(3) Equivalents of registered and certified mail.--The
Secretary may provide a rule similar to the rule of paragraph
(1) with respect to any service provided by a designated
delivery service which is substantially equivalent to United
States registered or certified mail.''
SEC. 1211. REPORTS ON MISCONDUCT OF IRS EMPLOYEES.
On or before June 1 of each calendar year after 1996, the
Secretary of the Treasury shall submit to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate a report on--
(1) all categories of instances involving the misconduct of
employees of the Internal Revenue Service during the
preceding calendar year, and
(2) the disposition during the preceding calendar year of
any such instances (without regard to the year of the
misconduct).
TITLE XIII--REVENUE OFFSETS
Subtitle A--Application of Failure-to-Pay Penalty to Substitute Returns
SEC. 1301. APPLICATION OF FAILURE-TO-PAY PENALTY TO
SUBSTITUTE RETURNS.
(a) General Rule.--Section 6651 (relating to failure to
file tax return or to pay tax) is amended by adding at the
end the following new subsection:
``(g) Treatment of Returns Prepared by Secretary Under
Section 6020(b).--In the case of any return made by the
Secretary under section 6020(b)--
``(1) such return shall be disregarded for purposes of
determining the amount of the addition under paragraph (1) of
subsection (a), but
``(2) such return shall be treated as the return filed by
the taxpayer for purposes of determining the amount of the
addition under paragraphs (2) and (3) of subsection (a).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply in the case of any return the due date for which
(determined without regard to extensions) is after the date
of the enactment of this Act.
Subtitle B--Exicse Taxes on Amounts of Private Excess Benefits
SEC. 1311. EXCISE TAXES FOR FAILURE BY CERTAIN CHARITABLE
ORGANIZATIONS TO MEET CERTAIN QUALIFICATION
REQUIREMENTS.
(a) In General.--Chapter 42 (relating to private
foundations and certain other tax-exempt organizations) is
amended by redesignating subchapter D as subchapter E and by
inserting after subchapter C the following new subchapter:
``Subchapter D--Failure by Certain Charitable Organizations To Meet
Certain Qualification Requirements
``Sec. 4958. Taxes on excess benefit transactions.
``SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.
``(a) Initial Taxes.--
[[Page H3406]]
``(1) On the disqualified person.--There is hereby imposed
on each excess benefit transaction a tax equal to 25 percent
of the excess benefit. The tax imposed by this paragraph
shall be paid by any disqualified person referred to in
subsection (f)(1) with respect to such transaction.
``(2) On the management.--In any case in which a tax is
imposed by paragraph (1), there is hereby imposed on the
participation of any organization manager in the excess
benefit transaction, knowing that it is such a transaction, a
tax equal to 10 percent of the excess benefit, unless such
participation is not willful and is due to reasonable cause.
The tax imposed by this paragraph shall be paid by any
organization manager who participated in the excess benefit
transaction.
``(b) Additional Tax on the Disqualified Person.--In any
case in which an initial tax is imposed by subsection (a)(1)
on an excess benefit transaction and the excess benefit
involved in such transaction is not corrected within the
taxable period, there is hereby imposed a tax equal to 200
percent of the excess benefit involved. The tax imposed by
this subsection shall be paid by any disqualified person
referred to in subsection (f)(1) with respect to such
transaction.
``(c) Excess Benefit Transaction; Excess Benefit.--For
purposes of this section--
``(1) Excess benefit transaction.--
``(A) In general.--The term `excess benefit transaction'
means any transaction in which an economic benefit is
provided by an applicable tax-exempt organization directly or
indirectly to or for the use of any disqualified person if
the value of the economic benefit provided exceeds the value
of the consideration (including the performance of services)
received for providing such benefit. For purposes of the
preceding sentence, an economic benefit shall not be treated
as consideration for the performance of services unless such
organization clearly indicated its intent to so treat such
benefit.
``(B) Excess benefit.--The term `excess benefit' means the
excess referred to in subparagraph (A).
``(2) Authority to include certain other private
inurement.--To the extent provided in regulations prescribed
by the Secretary, the term `excess benefit transaction'
includes any transaction in which the amount of any economic
benefit provided to or for the use of a disqualified person
is determined in whole or in part by the revenues of 1 or
more activities of the organization but only if such
transaction results in inurement not permitted under
paragraph (3) or (4) of section 501(c), as the case may be.
In the case of any such transaction, the excess benefit shall
be the amount of the inurement not so permitted.
``(d) Special Rules.--For purposes of this section--
``(1) Joint and several liability.--If more than 1 person
is liable for any tax imposed by subsection (a) or subsection
(b), all such persons shall be jointly and severally liable
for such tax.
``(2) Limit for management.--With respect to any 1 excess
benefit transaction, the maximum amount of the tax imposed by
subsection (a)(2) shall not exceed $10,000.
``(e) Applicable Tax-Exempt Organization.--For purposes of
this subchapter, the term `applicable tax-exempt
organization' means--
``(1) any organization which (without regard to any excess
benefit) would be described in paragraph (3) or (4) of
section 501(c) and exempt from tax under section 501(a), and
``(2) any organization which was described in paragraph (1)
at any time during the 5-year period ending on the date of
the transaction.
Such term shall not include a private foundation (as defined
in section 509(a)).
``(f) Other Definitions.--For purposes of this section--
``(1) Disqualified person.--The term `disqualified person'
means, with respect to any transaction--
``(A) any person who was, at any time during the 5-year
period ending on the date of such transaction, in a position
to exercise substantial influence over the affairs of the
organization,
``(B) a member of the family of an individual described in
subparagraph (A), and
``(C) a 35-percent controlled entity.
``(2) Organization manager.--The term `organization
manager' means, with respect to any applicable tax-exempt
organization, any officer, director, or trustee of such
organization (or any individual having powers or
responsibilities similar to those of officers, directors, or
trustees of the organization).
``(3) 35-percent controlled entity.--
``(A) In general.--The term `35-percent controlled entity'
means--
``(i) a corporation in which persons described in
subparagraph (A) or (B) of paragraph (1) own more than 35
percent of the total combined voting power,
``(ii) a partnership in which such persons own more than 35
percent of the profits interest, and
``(iii) a trust or estate in which such persons own more
than 35 percent of the beneficial interest.
``(B) Constructive ownership rules.--Rules similar to the
rules of paragraphs (3) and (4) of section 4946(a) shall
apply for purposes of this paragraph.
``(4) Family members.--The members of an individual's
family shall be determined under section 4946(d); except that
such members also shall include the brothers and sisters
(whether by the whole or half blood) of the individual and
their spouses.
``(5) Taxable period.--The term `taxable period' means,
with respect to any excess benefit transaction, the period
beginning with the date on which the transaction occurs and
ending on the earliest of--
``(A) the date of mailing a notice of deficiency under
section 6212 with respect to the tax imposed by subsection
(a)(1), or
``(B) the date on which the tax imposed by subsection
(a)(1) is assessed.
``(6) Correction.--The terms `correction' and `correct'
mean, with respect to any excess benefit transaction, undoing
the excess benefit to the extent possible, and taking any
additional measures necessary to place the organization in a
financial position not worse than that in which it would be
if the disqualified person were dealing under the highest
fiduciary standards.''
(b) Application of Private Inurement Rule to Tax-Exempt
Organizations Described in Section 501(c)(4).--
(1) In general.--Paragraph (4) of section 501(c) is amended
by inserting ``(A)'' after ``(4)'' and by adding at the end
the following:
``(B) Subparagraph (A) shall not apply to an entity unless
no part of the net earnings of such entity inures to the
benefit of any private shareholder or individual.''
(2) Special rule for certain cooperatives.--In the case of
an organization operating on a cooperative basis which,
before the date of the enactment of this Act, was determined
by the Secretary of the Treasury or his delegate, to be
described in section 501(c)(4) of the Internal Revenue Code
of 1986 and exempt from tax under section 501(a) of such
Code, the allocation or return of net margins or capital to
the members of such organization in accordance with its
incorporating statute and bylaws shall not be treated for
purposes of such Code as the inurement of the net earnings
of such organization to the benefit of any private
shareholder or individual. The preceding sentence shall
apply only if such statute and bylaws are substantially as
such statute and bylaws were in existence on the date of
the enactment of this Act.
(c) Technical and Conforming Amendments.--
(1) Subsection (e) of section 4955 is amended--
(A) by striking ``Section 4945'' in the heading and
inserting ``Sections 4945 and 4958'', and
(B) by inserting before the period ``or an excess benefit
for purposes of section 4958''.
(2) Subsections (a), (b), and (c) of section 4963 are each
amended by inserting ``4958,'' after ``4955,''.
(3) Subsection (e) of section 6213 is amended by inserting
``4958 (relating to private excess benefit),'' before
``4971''.
(4) Paragraphs (2) and (3) of section 7422(g) are each
amended by inserting ``4958,'' after ``4955,''.
(5) Subsection (b) of section 7454 is amended by inserting
``or whether an organization manager (as defined in section
4958(f)(2)) has `knowingly' participated in an excess benefit
transaction (as defined in section 4958(c)),'' after
``section 4912(b),''.
(6) The table of subchapters for chapter 42 is amended by
striking the last item and inserting the following:
``Subchapter D. Failure by certain charitable organizations to meet
certain qualification requirements.
``Subchapter E. Abatement of first and second tier taxes in certain
cases.''
(d) Effective Dates.--
(1) In general.--The amendments made by this section (other
than subsection (b)) shall apply to excess benefit
transactions occurring on or after September 14, 1995.
(2) Binding contracts.--The amendments referred to in
paragraph (1) shall not apply to any benefit arising from a
transaction pursuant to any written contract which was
binding on September 13, 1995, and at all times thereafter
before such transaction occurred.
(3) Application of private inurement rule to tax-exempt
organizations described in section 501(c)(4).--
(A) In general.--The amendment made by subsection (b) shall
apply to inurement occurring on or after September 14, 1995.
(B) Binding contracts.--The amendment made by subsection
(b) shall not apply to any inurement occurring before January
1, 1997, pursuant to a written contract which was binding on
September 13, 1995, and at all times thereafter before such
inurement occurred.
SEC. 1312. REPORTING OF CERTAIN EXCISE TAXES AND OTHER
INFORMATION.
(a) Reporting by Organizations Described in Section
501(c)(3).--Subsection (b) of section 6033 (relating to
certain organizations described in section 501(c)(3)) is
amended by striking ``and'' at the end of paragraph (9), by
redesignating paragraph (10) as paragraph (14), and by
inserting after paragraph (9) the following new paragraphs:
``(10) the respective amounts (if any) of the taxes paid by
the organization during the taxable year under the following
provisions:
``(A) section 4911 (relating to tax on excess expenditures
to influence legislation),
``(B) section 4912 (relating to tax on disqualifying
lobbying expenditures of certain organizations), and
``(C) section 4955 (relating to taxes on political
expenditures of section 501(c)(3) organizations),
``(11) the respective amounts (if any) of the taxes paid by
the organization, or any disqualified person with respect to
such organization, during the taxable year under section 4958
(relating to taxes on private excess benefit from certain
charitable organizations),
``(12) such information as the Secretary may require with
respect to any excess benefit transaction (as defined in
section 4958),
``(13) such information with respect to disqualified
persons as the Secretary may prescribe, and''.
(b) Organizations Described in Section 501(c)(4).--Section
6033 is amended by redesignating subsection (f) as subsection
(g) and by inserting after subsection (e) the following new
subsection:
``(f) Certain Organizations Described in Section
501(c)(4).--Every organization described in section 501(c)(4)
which is subject to
[[Page H3407]]
the requirements of subsection (a) shall include on the
return required under subsection (a) the information referred
to in paragraphs (11), (12) and (13) of subsection (b) with
respect to such organization.''
(c) Effective Date.--The amendments made by this section
shall apply to returns for taxable years beginning after the
date of the enactment of this Act.
SEC. 1313. EXEMPT ORGANIZATIONS REQUIRED TO PROVIDE COPY OF
RETURN.
(a) Requirement To Provide Copy.--
(1) Subparagraph (A) of section 6104(e)(1) (relating to
public inspection of annual returns) is amended to read as
follows:
``(A) In general.--During the 3-year period beginning on
the filing date--
``(i) a copy of the annual return filed under section 6033
(relating to returns by exempt organizations) by any
organization to which this paragraph applies shall be made
available by such organization for inspection during regular
business hours by any individual at the principal office of
such organization and, if such organization regularly
maintains 1 or more regional or district offices having 3 or
more employees, at each such regional or district office, and
``(ii) upon request of an individual made at such principal
office or such a regional or district office, a copy of such
annual return shall be provided to such individual without
charge other than a reasonable fee for any reproduction and
mailing costs.
The request described in clause (ii) must be made in person
or in writing. If the request under clause (ii) is made in
person, such copy shall be provided immediately and, if made
in writing, shall be provided within 30 days.''
(2) Clause (ii) of section 6104(e)(2)(A) is amended by
inserting before the period at the end the following: ``(and,
upon request of an individual made at such principal office
or such a regional or district office, a copy of the material
requested to be available for inspection under this
subparagraph shall be provided (in accordance with the last
sentence of paragraph (1)(A)) to such individual without
charge other than reasonable fee for any reproduction and
mailing costs)''.
(3) Subsection (e) of section 6104 is amended by adding at
the end the following new paragraph:
``(3) Limitation.--Paragraph (1)(A)(ii) (and the
corresponding provision of paragraph (2)) shall not apply to
any request if, in accordance with regulations promulgated by
the Secretary, the organization has made the requested
documents widely available, or, the Secretary determines,
upon application by an organization, that such request is
part of a harassment campaign and that compliance with
such request is not in the public interest.''
(b) Increase in Penalty for Willful Failure To Allow Public
Inspection of Certain Returns, Etc.--Section 6685 is amended
by striking ``$1,000'' and inserting ``$5,000''.
(c) Effective Date.--The amendments made by this section
shall apply to requests made on or after the 60th day after
the Secretary of the Treasury first issues the regulations
referred to section 6104(e)(3) of the Internal Revenue Code
of 1986 (as added by subsection (a)(3)).
SEC. 1314. INCREASE IN PENALTIES ON EXEMPT ORGANIZATIONS FOR
FAILURE TO FILE COMPLETE AND TIMELY ANNUAL
RETURNS.
(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033) is amended by
striking ``$10'' and inserting ``$20'' and by striking
``$5,000'' and inserting ``$10,000''.
(b) Larger Penalty on Organizations Having Gross Receipts
in Excess of $1,000,000.--Subparagraph (A) of section
6652(c)(1) is amended by adding at the end the following new
sentence: ``In the case of an organization having gross
receipts exceeding $1,000,000 for any year, with respect to
the return required under section 6033 for such year, the
first sentence of this subparagraph shall be applied by
substituting `$100' for `$20' and, in lieu of applying the
second sentence of this subparagraph, the maximum penalty
under this subparagraph shall not exceed $50,000.''
(c) Effective Date.--The amendments made by this section
shall apply to returns for taxable years ending on or after
the date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Connecticut [Mrs. Johnson] and the gentleman from California [Mr.
Matsui] will each be recognized for 20 minutes.
The Chair recognizes the gentlewoman from Connecticut [Mrs. Johnson].
General Leave
Mrs. JOHNSON of Connecticut. Mr. Speaker, I ask unanimous consent
that all Members may have 5 legislative days within which to revise and
extend their remarks and include extraneous remarks on H.R. 2337.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Connecticut?
There was no objection.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself such time as
I may consume.
Mr. Speaker, the House already has acted favorably on the contents of
H.R. 2337 when it passed the 7-year Balanced Budget Act on October 26,
1995. The Taxpayer Bill of Rights II was part of the Committee on Ways
and Means title of H.R. 2491.
The freestanding bill which the Committee on Ways and Means approved
on March 21, 1996, is substantially the same as the provisions which
passed the House last October as part of the 7-year Balanced Budget
Act, with only minor technical changes and adjustments to some of the
bill's effective dates. Upon the President's veto of that bill, Mr.
Speaker, Commissioner Richardson implemented a number of our
recommendations by administrative action, and for that I thank her.
I commend her as well and appreciate her concern with our point of
view by enclosing my remarks in which I expressed great concern for the
IRS's use of economic reality audits with the distribution of her
guidance to her staff in the use of these extensive audits for the
purpose of assuring that people do pay their fair share.
I have enjoyed working with Commissioner Richardson and her staff,
and my colleague the gentleman from California [Mr. Matsui] and I
believe that the bill we bring before you today will move us forward in
assuring taxpayers' rights in dealing with the IRS, but also will do so
in a way that is harmonious with our underlying law and the
responsibilities of the IRS.
Yesterday was April 15, the deadline for American citizens to file
their income tax returns for 1995. Most citizens filed their tax
returns, will receive their refunds, and never hear from the IRS again.
They are the lucky ones.
The Taxpayer Bill of Rights aims to expand the protections for the
unlucky taxpayers who become involved in a tax dispute with the IRS.
These taxpayers often feel as if they are engaged in a David versus
Goliath contest.
H.R. 2337 gives taxpayers some important procedural tools in
defending themselves in controversies with the Goliath of the IRS.
While procedural tax rules may not seem glamorous, they can be
extremely important in deciding the outcome of a tax dispute.
For example, TV viewers who followed the O.J. Simpson trial last year
learned that procedural rules can have a major impact on the outcome of
a legal controversy. In a similar way, the procedural tax rule changes
and the Taxpayer Bill of Rights II will have a significant effect on
the outcome of tax disputes with the IRS.
For example, the committee learned of cases where the IRS began
auditing a taxpayer's return, and then the IRS employee conducting the
audit was transferred to a new division and the return sat for another
year or two before the audit was completed. Under current law, the IRS
has no authority to abate the interest which ran up during this period.
H.R. 2337 addresses this problem by giving the IRS expanded authority
to abate interest charges that occur as a result of unreasonable delays
caused by the IRS's own process.
The bill will also make it easier for taxpayers who win their cases
against the IRS in Tax Court to collect attorneys' fees. Under current
law, not only does a taxpayer have to prevail on the merits against the
IRS to collect attorneys fees, he must also prove that the IRS was not
justified in pressing the case against him. H.R. 2337 would switch the
burden to the IRS of proving that its position was substantially
justified. This is consistent with the judicial principle that the
party in control of the facts should bear the burden of proof.
Another provision would help taxpayers who enter into installment
payment agreements with the IRS. Under current law the IRS does not
have to give notice to the taxpayer before it revokes an installment
payment plan. This can result in a hardship when the IRS revokes an
installment agreement based on faulty information. H.R. 2337 would
require the IRS to give 30 days advance notice before it revokes an
installment agreement in order to give the affected taxpayer an
opportunity to challenge this action.
Further, in the extreme cases where the IRS damages the taxpayer
because its employees act recklessly in collecting taxes, the bill
would raise the ceiling for damage claims by taxpayers against the IRS
to $1 million. The current ceiling is $100,000.
Finally, for the first time, the experience of the IRS ombudsman as
to the most common problems experienced by taxpayers will be relayed
directly to the Committee on Ways and Means,
[[Page H3408]]
without passing through the many layers of administrative filters of
the IRS and then the Department of the Treasury.
This will enable us here in Congress to respond in a far more timely
fashion to the problems, indeed the snares, taxpayers get caught in as
they deal with the IRS. That will allow us to deal with the legitimate
problems, while assuring that the IRS can collect the legitimately owed
taxes.
Mr. Speaker, the Nation's taxpayers probably will never enjoy paying
taxes, but they should not feel powerless in their dealings with the
IRS. The Taxpayer Bill of Rights II will establish many new procedural
protections for taxpayers. Like the David in Biblical history, the
average taxpayer may be smaller than the rival IRS, but we are giving
him some significant weapons with which to defend himself.
I support the passage of H.R. 2337, urge my colleagues to do
likewise, and I thank the gentleman from California [Mr. Matsui], and
his able staff, for their work with us on this matter over the last
many months.
Mr. Speaker, I reserve the balance of my time.
Mr. MATSUI. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I also rise in strong support of H.R. 2337. This
legislation has been adopted numerous times by the Committee on Ways
and Means on a bipartisan basis, and certainly on the floor of the
House it has been adopted as well, and the enactment is certainly long
overdue. This legislation is supported by the administration and will
result in a much needed protection for taxpayers in their dealings with
the Internal Revenue Service.
Mr. Speaker, I would like to first of all take this opportunity to
commend the gentlewoman from Connecticut, Chairwoman Nancy Johnson, who
has done a tremendous job on making sure that we have a bipartisan
approach to this piece of legislation. All through the drafting and the
putting together of this legislation, we have worked very
cooperatively, and she and her staff have kept us informed, and I just
want to take this opportunity to personally thank her for her efforts.
Certainly it goes also to the majority's fine staff, Donna Steele,
and the members of our staff, Beth Vance, as well; all have played a
significant role in making sure this legislation is in the form that it
is today.
I want to also thank Secretary Rubin, and particularly Les Samuels,
the assistant to Mr. Rubin, who has been very helpful with his input in
the drafting of this legislation. Of course, the Internal Revenue
Commissioner, Margaret Richardson, who has made, as Chairwoman Johnson
stated in her opening statement, numerous reforms in this particular
area.
This legislation, Mr. Speaker, is the second comprehensive taxpayers'
bill of rights that have been adopted by the Congress and signed,
hopefully signed, by the President. this bill will establish, as the
gentlewoman from Connecticut [Mrs. Johnson] has said, a taxpayer
advocate which will replace the ombudsman.
The advocate will have four main responsibilities. One to assist the
taxpayer in resolving problems with the Internal Revenue Service; two,
to identify problem areas within the Internal Revenue Service; three, a
proposed change in the practice of the Internal Revenue Service to
solve these problems; and, four, identify legislative solutions to
these problems as well.
The second area in this bill in terms of making major changes, it
will switch the burden of proof in cases in which attorneys' fees will
be awarded. Currently taxpayers must show that the position of the IRS
was not substantially justified in order to recover his or her attorney
fees. Under the bill, a taxpayer who wins a suit can recover his or her
fees unless the Internal Revenue Service can show that it was
substantially justified in pursuing the action against the taxpayer in
the first instance.
Three, the bill includes a number of provisions in which the IRS has
greater flexibility in waiving certain penalties and will require that
the Internal Revenue Service notify taxpayers before taking actions
that would adversely affect them.
Fourth, the bill does address a problem that has been in the news
over the last few years, and this deals with divorced spouses. There
have been several cases where divorced spouses have signed returns not
knowing what is in these returns, and before collection will occur now
the Internal Revenue Service must give advance notice to the former
spouse before any collection efforts will be taken.
In addition, the Service will do a study that will be due back in 6
months on how to deal with the issue of joint and several liability,
undoubtedly which will affect many people in the middle of a divorce or
are divorced when the filing occurs.
Again, I would like to thank the gentlewoman from Connecticut [Mrs.
Johnson] and members of the majority staff for all their help in this
effort. I know that this is only the second step. We intend I believe
to have a taxpayers' bill of rights III during the next Congress, and I
look forward to working with the members of this committee and
certainly the Members of the House and the administration.
Mr. Speaker, I reserve the balance of my time.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from Texas [Mr. Archer], the chairman of the Committee on
Ways and Means, and I thank him for his participation.
Mr. ARCHER. Mr. Speaker, I thank the gentlewoman for yielding me
time, and also commend her on the outstanding work she has done on this
bill.
Mr. Speaker, I rise in strong support of the Taxpayer Bill of Rights
II, which will establish many new protections for the Nation's
taxpayers in their dealings with the IRS. The campaign to safeguard
taxpayer rights has a long history. The original Taxpayer Bill of
Rights was enacted in 1988. While this legislation was a good first
step, the continuing course of constituent complaints against the IRS
has convinced us of the need to enact additional taxpayer protections.
Under this bill, taxpayers who are involved in a dispute with the IRS
will be armed with additional rights and protections. In the David
against Goliath fight between the taxpayer and the IRS, this bill is
the slingshot the taxpayer can now use to win his or her fight.
I compliment the gentlewoman from Connecticut, [Mrs. Johnson],
chairwoman of the Subcommittee on Oversight, and the gentleman from
California [Mr. Matsui], the ranking Democrat, for their dedication to
championing the cause of the Nation's taxpayers.
Mr. Speaker, the IRS is the agency tasked with the responsibility of
enforcing our Nation's tax laws and collecting the taxes that are
legally due. It is an important job, because the functioning of the
Federal Government depends on the public's willingness to voluntarily
pay the taxes they owe. However, it is also a very difficult
responsibility because the complicated structure of our current income
tax system necessarily interjects the IRS into the private lives of the
American people.
There is no question the IRS has grown too powerful and too
intrusive. However, this has come in direct response to the growing
complexity of our current tax system. The ultimate solution to this
problem is to tear the income tax out by its roots and eliminate the
need for an agency which must delve into our private lives in order to
enforce the tax system. But until Congress fundamentally reforms the
tax laws, the next best approach is to make the current tax system
operate in a way which treats taxpayers more fairly.
{time} 1230
Mr. MATSUI. Mr. Speaker, I reserve the balance of my time.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 2 minutes to the
gentleman from California [Mr. Cox].
Mr. COX of California. Mr. Speaker, I thank the gentlewoman for
yielding me this time.
Mr. Speaker, too often the taxpayer is at the mercy of the IRS, and
the whole purpose of this bill is to try to set that right, at least a
little bit.
Included in this Taxpayer Bill of Rights II is the Fast and Efficient
Tax Filing Act, and I want to thank the Members that worked on Ways and
Means, in particular my colleague the gentlewoman from Connecticut,
Nancy Johnson, and my colleague from California for including this in
the legislation, so thank you, Mr. Matsui, as well.
[[Page H3409]]
The Fast and Efficient Tax Filing Act is going to make at least one
area of the Internal Revenue Code a little more user friendly. Many of
you may have at one time in your lives stood in line for an IRS Postal
Service postmark to mail your tax return on April 15.
Turns out that in order to use this rule, the Postal Service must be
the form of delivery. If on the morning of April 15 you send it Federal
Express, UPS, or some overnight delivery, and it gets there the next
day, that is not good enough. If you put it in the mailbox and it gets
postmarked, or if you stand in line and get that receipt from the
Postal Service, even though the IRS does not get it for a week, then
you can use the rule.
Both taxpayers and the IRS are being cheated under the current
system. As a result of the Fast and Efficient Tax Filing Act, no more
midnight waits at the post office; send it Fed Ex, call 1-800 pickup or
DHL, or any of the competitors that we have that operate in America to
deliver things efficiently throughout the rest of our economy. Next
year you will be able to do that as a result of the passage of this
bill.
So I want to congratulate once again my colleagues, the gentleman
from California [Mr. Matsui] and the gentlewoman from Connecticut [Mrs.
Johnson], for including this in a wonderful bill. The IRS is going to
get returns faster. Our constituents will not stand in line. At least
this one area of our onerous Tax Code will have a modicum of common
sense.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself such time as
I may consume to thank the gentleman from California for his good work.
He did contribute to this bill very substantially, and I thank him for
his comments today.
Mr. Speaker, I would now like to recognize the gentleman from Ohio
[Mr. Traficant], and in so doing I want to recognize his tireless
efforts to promote the rights of taxpayers in their dealings with the
IRS. He has long been one of this body's most steadfast champions for
the Nation's taxpayers, and he deserves much of the credit for
provision in this bill relating to burden-of-proof issues, including
the provision relating to the award of attorneys fees and costs, which
shifts the burden to the IRS to prove that it was justified in bringing
its case against the taxpayer.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Ohio [Mr. Traficant].
Mr. TRAFICANT. Mr. Speaker, I appreciate that from the distinguished
chairwoman, and I think the gentlewoman from Connecticut, Mrs. Johnson
was tired of having me run her down on the floor, and the gentleman
from Texas, Bill Archer. I want to thank Speaker Gingrich, the
gentleman from Texas, Dick Armey, the gentlewoman from Connecticut,
Nancy Johnson, the gentleman from Texas, Bill Archer, the gentleman
from Florida, Sam Gibbons, and the gentleman from California, Bob
Matsui.
Yes, I have been aggressive on some of these issues, and the
gentlewoman from Connecticut has accommodated me under a powerful
strain of opposition at times from the Internal Revenue Service.
Two provisions I worked hard for, as cited by the gentlewoman from
Connecticut [Mrs. Johnson]. No. 1, after a matter has been adjudicated,
a taxpayer can in fact go after those attorney fees and costs and, in
fact the burden of proof after adjudication is thus switched to the IRS
to justify and maintain their position for going after the taxpayer in
the first place.
That is a good first step, my colleagues. I have no complaints with
that, and I commend you and thank you for doing something I could not
get a Congress to do over the last four terms.
The second one says that right now there is a cap of $100,000 when an
IRS agent violates the rights of a taxpayer. In my provision in here it
increases that cap to $1 million, and I think $1 million will get their
attention.
This is a great first step, but I want to just make a few points
today, and I want to ask the Committee on Ways and Means to consider
what I say very seriously. More than 97 percent of the American people
support the change in the burden of proof in a civil tax case. No one
has helped me more than the gentlewoman from Connecticut [Mrs. Johnson]
and the gentleman from Texas [Mr. Archer]. As a Democrat, I want to
commend the Republican leadership for giving me an opportunity on this.
Right now, under current existing law, in a civil tax case a taxpayer
goes into court with the burden of proof. They have to prove they are
innocent. There is no other provision in law. I do not know how this
evolution has come about, where all of a sudden we have a law that
places an American guilty in the eyes of the court and under the
statutory law and they must prove themselves innocent.
Some of the arguments we are getting from the IRS are that deadbeats
might get over. I do not believe that. I think the IRS is now saying
that this would be a big revenue loser. I would say to all leaders, if
we scored the Bill of Rights and let the IRS score the Bill of Rights,
would we enjoy the freedoms of the Bill of Rights? Money is not an
argument here.
I think when the IRS says, ``Look, Mr. Traficant, don't confuse us
with the Constitution,'' I cannot buy the argument.
I am asking the Committee on Ways and Means to look at offsets. My
new bill, H.R. 2450, handles this matter differently. It breaks it down
to administrative and judicial.
When a taxpayer gets notice of an administrative audit, in that
administrative procedure they have the burden of proof. They must
substantiate those representations they make on their tax forms. But in
good faith, having made those representations and the IRS then choosing
to take the matter to court, the Traficant bill says at that point the
burden of proof shifts to the IRS and the IRS shall be able to justify
their case, prove evidence, submit evidence, and prove that matter.
Let me say this. That is something that we here in Congress should
do. I would even be willing to have a provision in that bill that says
that in the administrative procedure where the burden of proof is on
the taxpayer, they must comply, if they are not compliant and deemed to
have not complied in the eyes of the court, that the court can maintain
the burden of proof on the taxpayer.
It would force the administrative process to be up front. We could
expedite these cases. I do not think we would have as big a revenue
problem as we have, and I would urge the committee to look at the
scoring of it, but not only look at the scoring but to look at the
offsets for funds to right this wrong.
But for me to stand up here today and to say because this total
burden of proof is not enacted makes this bill weaker would not be
fair. The gentlewoman from Connecticut [Mrs. Johnson] has done a fine
job. I thank her for putting up with me.
The gentleman from California [Mr. Matsui] and the gentleman from
Texas [Mr. Archer] are going to have to put up more with me, and their
staff, because I will not be satisfied until we right the wrong. A
taxpayer in America pays the freight on this train coming down the
track and, by God, they should at least be considered like everyone
else in a court of law, innocent until proven guilty.
I am asking for their help, and I appreciate the time the gentlewoman
has given me.
Mr. MATSUI. Mr. Speaker, I yield myself such time as I may consume.
First, I want to commend the gentleman from Ohio [Mr. Traficant]. As
the gentlewoman from Connecticut [Mrs. Johnson] has said, he really has
been very helpful providing information to us, both in terms of the
burden of proof issue and, second, in terms of lifting the $100,000 cap
to $1 million in terms of the damage issue. We want to thank him very,
very much for that.
We both look forward to working with the gentleman in the future on
the third tax bill of rights legislation when we bring it before the
House. Again, we thank him.
Second, I would like to just thank the gentleman from California [Mr.
Cox] for his very helpful information and piece of legislation, as
well, in terms of the alternative uses besides the Postal Service in
terms of filing returns.
I might also add the name of this legislation is the Pickle-Johnson
legislation, and that is not two Texans, that
[[Page H3410]]
is not President Johnson, but that is the gentlewoman from Connecticut,
Nancy Johnson, and of course Jake Pickle, who was really one of the
leaders for the last 10 years working on the tax bill of rights. This
is the Pickle-Johnson legislation.
Mr. Speaker, I reserve the balance of my time.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield myself 30 seconds.
Mr. Speaker, I would like to comment that my colleague, the gentleman
from California [Mr. Matsui], and I and our staff have worked very
hard, not only together and with Members and with constituents who have
testified, but also with the IRS. These provisions are going to front-
load those defenses that taxpayers need so that we should not be
getting into the kinds of problems that the gentleman from Ohio [Mr.
Traficant] describes.
By assuring taxpayers better information, more open communication and
better procedures, we believe their rights will be defended long before
they get into the level of controversy that has concerned the
gentleman, and rightly so.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas, Mr. Sam
Johnson.
Mr. SAM JOHNSON of Texas. Mr. Speaker, I too would like to commend
the gentlewoman from Connecticut, Nancy Johnson, and the gentleman from
California, Mr. Matsui, for doing a good job and for getting this bill
back to the floor, this bill of rights back to the floor for a second
time.
As you know, the President vetoed it back in December, along with a
bunch of other stuff. But this bill is important because the powers of
the IRS to investigate and examine taxpayers are greater than any other
Government agency. They are intrusive. They are into our lives, and it
seems that the constitutional rights of taxpayers are always trampled
upon but nothing is ever done.
This bill makes important commonsense changes to current law that
will strengthen the rights of American taxpayers. It establishes a
taxpayer advocate to prevent the IRS from treating taxpayers like
second class citizens. It increases the amount people may sue the IRS
from $100,000 to $1 million. And for the first time, it allows the
Federal courts to determined IRS failure and abuse of discretion.
While this bill makes important progress to rein in the IRS and its
115,000 IRS agents, I believe America is demanding that the entire
system should be replaced, and I think we must insist that any new
system must empower individuals and not the Government; provide
opportunities, not dead ends, and, most importantly, it must offer the
hard-working people of this country the freedom to achieve the American
dream.
I commend the gentlewoman again for bringing this bill to the floor
again, and I hope we can get it through in good shape this time.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield 1\1/2\ minutes to
the gentleman from Florida [Mr. Shaw].
Mr. SHAW. Mr. Speaker, I thank the gentlewoman for yielding this time
to me, and I stand up in vigorous support of a commonsense change in
the law as it affects the taxpayers' rights in balancing it out with
the rights and duties of the Internal Revenue Service.
The Internal Revenue Service is a needed agency which looks over the
collection of taxes in this country. There is no question about it. But
there are some things that need to be balanced out which this
legislation does.
To give just a few examples of what is in this bill that needs to be
done: One of the provisions in here would allow the IRS to release
property on which there are liens when it is to the advantage of the
Government to do so. Right now they cannot do that.
You have situations where businesses are closed down, where if the
IRS would simply allow them to continue to exist for a short period of
time, the Federal Government could make up some of the dollars that it
is losing. And, of course, also, there is a question of jobs being
lost. This is just plain common sense.
When we have a situation where a spouse is charged with liability
because of signing a joint return and the secrecy law comes into play,
it is only common sense, if we are going to go after using the female
spouse, that we would be able to share certain information, which now
the IRS is prohibited from doing.
These are just a couple of examples of just pure common sense that we
are putting into the law.
I compliment my fellow Members of the Committee on Ways and Means. It
was a good meeting, and I think it shows that we have great bipartisan
support, and I am sure that each Member of the Congress, every Member
of the Congress is going to be proud to vote for and support this
legislation.
Mr. MATSUI. Mr. Speaker, I yield myself such time as I may consume to
say that I do not believe we have any further speakers.
I might just add, in closing on my side, that we hope that the
Members support this bill. I urge support of this legislation. The
President supports this legislation and will sign this bill and, again,
I look forward to continuing working with the gentlewoman from
Connecticut.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Camp). The gentlewoman from Connecticut
has three-fourth of a minute remaining.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I yield the balance of my
time to the gentleman from Colorado [Mr. Hefley].
Mr. HEFLEY. Mr. Speaker, I rise today in support of the Taxpayer Bill
of Rights. I think it is a step we need to take.
There are a couple of things I wish had been in it that are not
there. One of them, the item that the gentleman from Ohio [Mr.
Traficant] has worked so hard on, and some of the rest of us, and that
is to change the burden of proof. The other is that the IRS should pay
back at the same interest rate that we have to pay if they overcharge
us.
{time} 1245
But Congress, I think, has finally realized what taxpayers have known
for years, that the IRS has too much power over the lives of ordinary
citizens. This bill contains some much-needed reforms which make so
much sense. I have to shake my head and wonder that these protections
do not already exist.
This bill creates the position of taxpayer advocate. It expands the
authority of the IRS to abate interest and penalties, extend the length
of time which the taxpayer may fulfill his obligation to the IRS
without accrual of excessive penalties and interest. It allows the
taxpayer, when they are right, to collect the money in fees and costs
from the IRS. I hope we can pass this bill.
Mr. NEAL. Mr. Speaker, yesterday the House was involved in a
publicity stunt because of it being tax day. Today, we are debating tax
legislation that will truly help the American people. Before us today
is the Taxpayer Bill of Rights. The purpose of this legislation is to
help those taxpayers who find themselves in dispute with the Internal
Revenue Service [IRS].
This legislation will reduce the anxiety that surrounds April 15 each
year. Taxpayers will have some extra assistance when they are faced
with the IRS. This legislation is based on an extensive bipartisan
effort of the Ways and Means Committee to assist the taxpayer. Mr.
Pickle, the former chairman of the Subcommittee on Oversight, worked
long and hard on this issue. The legislation before us today is
substantially the same as legislation developed by Mr. Pickle. Also,
Senator Pryor has spent many years working on this legislation.
One of the key provisions of this legislation is the creation of an
independent taxpayer advocate. The taxpayer advocate will work to
improve taxpayer services and IRS responsiveness. The taxpayer advocate
will report to the tax writing committees of Congress on the progress
in this area. Another key provision requires the IRS to report to the
tax writing committees on the misconduct of IRS employees. This report
will give Congress the chance to study the misconduct of IRS employees
and the punishment for misconduct.
Taxpayers will receive assistance for taxpayers who experienced
difficulty with the IRS. This legislation would allow taxpayers who
have been the victim of reckless collection actions by the IRS to sue
the Government for $1 million up from the current cap of $100,000.
The bottom line is this legislation will make it easier for taxpayers
to work with the IRS. Currently, the United States has an 86-percent
rate of compliance for Federal taxes. Hopefully, this legislation will
help improve compliance which is already the envy of other countries.
This legislation will improve the working relationship between
taxpayers and the IRS.
[[Page H3411]]
I am pleased this legislation is before us today. This legislation is
a concrete way to help make April 15 a less stressful day for all
Americans.
Mr. PORTMAN. Mr. Speaker, first of all, I would like to thank
Chairman Johnson for her excellent leadership in crafting this bill.
She and her Oversight Subcommittee staff have worked tirelessly on
behalf of the American taxpayer.
Mr. Speaker, yesterday's deadline to file income tax returns reminds
us of how much power the Internal Revenue Service has over the honest
taxpayers of this country. We must ensure that the IRS isn't heavy-
handed in enforcing regulations and that the taxpayer has adequate
protections.
One of my constituents learned the hard way about how the IRS
sometimes does business. While she was married, she and her self-
employed husband filed a joint tax return. But after her divorce was
finalized, the IRS determined that she was responsible for paying off
almost all of the $30,000 in taxes her ex-husband owed the Federal
Government.
The IRS rejected her plea for relief under the innocent spouse
provision in the Tax Code because she had signed the joint tax returns.
Her ex-husband is now off the hook, having settled with the IRS for
about $5,000. Meanwhile, this divorcee currently owes the IRS $20,000,
a burden that could affect her for the rest of her life. She says she
feels like she's being punished for being a good citizen and for
working hard. It certainly looks that way to me, too.
We owe it to the hardworking citizens of our country to prevent the
IRS from unfairly pushing them around. Most people come away from a
confrontation with the IRS feeling bruised and battered. This
legislation at least will give them a fighting chance--it includes more
than 30 items that give the taxpayers rights and powers in dealing with
the IRS. Some of these provisions will help ensure that divorced filers
are not victimized.
I urge my colleagues in the House to vote in favor of passage of this
Taxpayer Bill of Rights--it will guard against unreasonable IRS
positions and protect the rights of taxpayers.
Mr. PACKARD. Mr. Speaker, few things are scarier than getting into a
dispute with the IRS. They truly believe that they are above the law
and all too often taxpayers have no recourse.
During April, working Americans struggle to fill out complicated U.S.
tax forms, enduring great anxiety and paying out large sums of money to
accountants, just to guarantee that they are giving Uncle Sam the
appropriate and expected amount. And when there is a dispute or audit,
taxpayers--right or wrong--always end up paying the price. Ironically
the IRS' own annual reports admit a high rate of errors and the IRS
telephone information service gives out wrong answers as much as one-
third of the time.
My Republican colleagues and I are committed to changing that. The
taxpayer bill of rights that we consider today makes it harder for the
IRS to demand America's hard-working families pay for the IRS' own
mistakes. The more than 30 protections in this bill will waive interest
charges when the IRS is at fault for tax underpayment. It extends time
for taxpayers to pay delinquent taxes without being subject to interest
and penalties. It allows taxpayers to sue the IRS for reckless
collection actions and there are dozens of other taxpayer protections
included in this measure.
Mr. Speaker, our tax system has veered out of control. My Republican
colleagues and I know America needs tax reform and the debate will
begin in earnest this week. Because, it will not happen overnight, we
must provide tax relief now to America's families. The taxpayer bill of
rights does that and more. It proves to our taxpayers that the
Republican-led Congress is committed to returning fiscal responsibility
to Washington.
Mrs. MINK of Hawaii. Mr. Speaker, I rise in support of H.R. 2337, the
Taxpayer Bill of Rights Act, which represents significant advancement
toward fair treatment of taxpayers under the Internal Revenue Code by
the Internal Revenue Service.
I am particularly in favor of a section that embodies the intent of a
bill that I introduced last year, H.R. 331, which would require the
Federal Government to consider as having arrived on time any sealed bid
for the procurement of goods or services, if the bid was sent by an
overnight message delivery service at least 2 business days before the
date specified for receipt of bids.
Current procurement law states that late bids cannot be considered
for awards unless they were one, sent by registered or certified mail
no later than 5 days before the bids receipt deadline, two, proven to
have been delivered late due to mishandling by the receiving Government
agency, or three, sent by U.S. Postal Service Express Mail Next Day
Service no later than 2 business days prior to bid receipt deadline.
This provision excludes from this portion of the procurement process
the use of private delivery services, such as United Postal Service and
Federal Express, despite the fact that these companies have proven
trustworthy and reliable in overnight package delivery, not only
meeting but in many cases exceeding the abilities of the U.S. Postal
Service.
Similarly, Internal Revenue Code Sec. 7502 was recently interpreted
by the Ninth Circuit U.S. Court of Appeals (V.L. Correia, 58 F.3d 468
(1995)) that only the date of actual delivery to the IRS or Tax Court
by private delivery service is applicable, rather than the date of
mailing as in cases of delivery by the U.S. Postal Service. Section
1210 of the bill before us would allow the Secretary of the Treasury to
expand this timely mailing as timely-filing section to the use of
private delivery companies that meet specified criteria. A significant
number of American taxpayers every year attempt to submit their income
tax returns to the IRS through a private delivery service, only to find
this inadequate to demonstrate timely filing of their returns.
I urge my colleagues full support of this provision, as well as my
bill, H.R. 331.
Mr. KLECZKA. Mr. Speaker, 8 years ago, the first ``Taxpayer Bill of
Rights'' passed which created a more level playing field between
citizens and the IRS with safeguards to protect taxpayers. The
legislation gave taxpayers the right to sue the IRS for actions taken
by its agents, provided financially troubled taxpayers the right to
seek an installment tax payment plan, and enabled taxpayers who prevail
over the IRS in court to seek reimbursement for part of their attorney
fees in some circumstances.
Although this 1988 legislation was a step in the right direction,
more can be done to help taxpayers. The ``Taxpayer Bill of Rights II,''
which I strongly supported in the Ways and Means Committee, contains
over two dozen provisions to give taxpayers further protection. This
bill will expand the power of the IRS Taxpayer Ombudsman to issue
protective orders to help taxpayers, mandate that the IRS take
reasonable steps to corroborate third-party information disputed by a
taxpayer, and give the IRS the authority to waive the interest on late
tax payments in cases where there is a valid reason for such payment.
Additionally, the bill would increase to $1 million the civil damages
for which a taxpayer could sue the IRS in cases of unauthorized
collections.
The vast majority of citizens are responsible taxpayers who deserve
the additional rights and safeguards that the Taxpayer Bill of Rights
II will provide. I hope that Congress will quickly pass, and the
President sign this meaningful bill. I urge a ``yea'' vote.
Ms. DUNN of Washington. Mr. Speaker, I rise in strong support of H.R.
2337, the Taxpayer Bill of Rights II and urge its adoption.
All too often ``tax fairness'' usually refers almost solely to
whether Government is seizing the right amount of money from different
economic classes--not how the tax collectors are treating the
individual citizen.
Under U.S. law, Americans are innocent until proven guilty. Yet, when
an individual taxpayer deals with the IRS, the taxpayer is guilty until
he or she proves their innocence.
Over the past few months, I have heard from literally hundreds of
constituents who have described to me numerous problems they see with
our system of taxation. A common theme has been the intrusive nature of
the Internal Revenue Service [IRS] and the enormous compliance burdens
imposed on individuals.
This measure gives taxpayers a helping hand if they find themselves
at odds with the IRS. The American taxpayer will be empowered with more
than 30 protections in dealing with the IRS.
In addition to these protections, I will continue to work for the
inclusion of an additional provision in the final version of this
legislation that I have been working on within the Ways and Means
Committee.
Specifically, the bipartisan provision, which I am sponsoring along
with my colleague, Mr. Matsui, would permit ``equitable tolling''
application in tax refund cases.
My interest in this area was precipitated by a highly publicized
court case in which a 93-year-old senile man, Stanley McGill, overpaid
his taxes in 1984. After Mr. McGill's death in 1988, Marian Brockamp
found her late father's canceled check to the IRS in a pile of
receipts. In fact, Mr. McGill owed the IRS $700--not $7,000. Mrs.
Brockamp asked the IRS for a refund.
Although the agency acknowledged the mistake, it refused to return
the money, claiming the 3-year statue of limitations on refund claims
had expired.
But Brockamp's attorney argued that the time set aside for suing the
Government should be extended under the legal doctrine known as
equitable tolling--which is invoked in cases where a taxpayer is
disabled.
A Federal judge in Los Angeles rejected that argument in 1993, but
the 9th U.S. Circuit Court of Appeals overruled the lower court in June
1995, calling the IRS refusal unconscionable.
[[Page H3412]]
The Justice Department has appealed the decision to the Supreme
Court.
This is just one example of an outrageous injustice that my
commonsense change of law is intended to end.
H.R. 2337, the Taxpayer Bill of Rights II, will help the average
American, who might have made an honest mistake in underestimating his
taxes due by providing him a little more time to prove it was an honest
mistake.
The new majority in this Congress is working on commonsense ways to
give taxpayers a break. In fact, the Taxpayers Bill of Rights II itself
is simply a long overdue exercise in common sense. Will Rogers once
said, ``Common sense ain't that common.'' Well, like everything else,
common sense is making a comeback.
The SPEAKER pro tempore (Mr. Camp). The question is on the motion
offered by the gentlewoman from Connecticut [Mrs. Johnson] that the
House suspend the rules and pass the bill, H.R. 2337, as amended.
The question was taken.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I object to the vote on the
ground that a quorum is not present and make the point of order that a
quorum is not present.
The SPEAKER pro tempore. Pursuant to clause 5 of rule I and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
The point of no quorum is considered withdrawn.
____________________