[Congressional Record Volume 159, Number 50 (Monday, April 15, 2013)]
[Senate]
[Pages S2651-S2653]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. CORNYN:
S. 725. A bill to provide a taxpayer bill of rights for small
businesses; to the Committee on Finance.
Mr. CORNYN. Mr. President, I rise to reintroduce the Small Business
Taxpayer Bill of Rights Act of 2013, SBTBOR.
As millions of taxpayers across the country race to meet today's
deadline to file their Federal tax return, it is important to note that
their tax burden is more than just the amount of tax paid to the
Federal Government. Taxpayers also bear the compliance cost of
complying with a byzantine tax code. Analysts predict that taxpayers
will spend over $350 billion this year alone to comply with the tax
code. An analysis of IRS data by the Office of the Taxpayer Advocate
shows it takes taxpayers more than 6.1 billion hours to compete filings
required by a tax code that contains almost four million words and
that, on average, has more than one new provision added to it daily.
A dispute over a complex tax code with the IRS can become an
expensive endeavor for small businesses, who have limited resources to
fight off frivolous IRS claims. With the passage of the 2010 health
care act, this burden is expected to increase in the future. At a time
when job creation remains weak, small businesses should be spending
their time and resources creating jobs, not cutting through miles of
burdensome IRS red tape. The Small Business Taxpayer Bill of Rights
seeks to mitigate this problem. It would ensure that small businesses
spend less time dealing with the IRS and more time creating jobs.
The Small Business Taxpayer Bill of Rights, among other things,
provides more protections and safeguards for small businesses during
administrative procedures with the IRS. It would lower the compliance
burden on small business taxpayers; strengthen safeguards against IRS
overreach; increase taxpayer compensation for IRS abuses and; improve
taxpayer access to the court system. Amid the weakest economic recovery
since World War II, American job creators urgently need such relief.
The Small Business Taxpayer Bill of Rights Act will reduce the
compliance and administrative burdens faced by small business taxpayers
when it comes to dealing with the IRS. The bill provides an alternative
dispute resolution procedure through which a small business taxpayer
may be able to request arbitration with an independent, neutral third
party not employed by the IRS. In addition, the bill will make more
small businesses eligible to recoup attorney's fees when a court finds
that the IRS's action taken against a taxpayer is not substantially
justified.
The legislation also reinforces the independent nature of the IRS
Appeals Office by prohibiting it from discussing the merits of a
taxpayer's case with any other department at the IRS, unless the
taxpayer is afforded an opportunity to participate. Second, the bill
will prevent an Appeals Officer from raising a new issue that was not
initially raised by the IRS in the examination process. The SBTBOR
would help to ensure the Appeals Office remains a neutral entity that
effectively facilitates the taxpayer's appeals process.
The Small Business Taxpayer Bill of Rights Act will make the IRS more
accountable to taxpayers by increasing the amount of damages taxpayers
may receive for any collection action the IRS takes against them that
is reckless, or by reason of negligence disregards the law or its
regulations. Second, it increases the amount of damages taxpayers may
be awarded when the IRS improperly discloses their tax returns and tax
information. Third, the bill raises the monetary penalty on IRS
employees who commit certain unlawful acts or disclose taxpayer
information.
Finally, the legislation will improve taxpayer access to the Tax
Court by expanding the role of the current ``small tax case''
procedure--an informal and efficient method for resolving disputes
before the Tax Court--to include a wider variety of cases. The bill
will permit taxpayers to obtain judicial review from the Tax Court when
the IRS fails to act on their claim for interest abatement due to an
error or delay by the IRS. And taxpayers whose property has been
wrongly seized to satisfy a tax debt will have more time to claim
relief and bring a civil suit against the IRS. It also makes procedural
improvements for taxpayers who request innocent spouse relief. By
requesting innocent spouse relief, taxpayers can be relieved of the
responsibility for paying tax, interest, and penalties if their spouse
improperly reported items or omitted items on their tax return.
This legislation is also supported by the Texas Association of
Business, National Federation of Independent Business, U.S. Hispanic
Chamber of Commerce, Americans for Tax Reform, and the National
Taxpayers Union, among others.
Small business owners face an especially crushing burden of
paperwork, but they lack the key financial and legal resources that
multinational corporations do when dealing with the tax code and the
IRS. This legislation will provide relief for small businesses and will
allow small businesses to spend more time expanding their business and
creating jobs and less time dealing with the IRS.
Mr. President, I ask unanimous consent that the text of the bill and
a letter of support be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 725
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Small
Business Taxpayer Bill of Rights Act of 2013''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Modification of standards for awarding of costs and certain
fees.
Sec. 3. Civil damages allowed for reckless or intentional disregard of
internal revenue laws.
Sec. 4. Modifications relating to certain offenses by officers and
employees in connection with revenue laws.
Sec. 5. Modifications relating to civil damages for unauthorized
inspection or disclosure of returns and return
information.
Sec. 6. Interest abatement reviews.
Sec. 7. Ban on ex parte discussions.
Sec. 8. Alternative dispute resolution procedures.
Sec. 9. Extension of time for contesting IRS levy.
Sec. 10. Waiver of installment agreement fee.
Sec. 11. Suspension of running of period for filing petition of spousal
relief and collection cases.
Sec. 12. Venue for appeal of spousal relief and collection cases.
Sec. 13. Increase in monetary penalties for certain unauthorized
disclosures of information.
Sec. 14. De novo tax court review of claims for equitable innocent
spouse relief.
Sec. 15. Ban on raising new issues on appeal.
SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF COSTS AND
CERTAIN FEES.
(a) Small Businesses Eligible Without Regard to Net
Worth.--Subparagraph (D)
[[Page S2652]]
of section 7430(c)(4) of the Internal Revenue Code of 1986 is
amended by striking ``and'' at the end of clause (i), by
striking the period at the end of clause (ii) and inserting
``and'', and by adding at the end the following new clause:
``(iii) in the case of an eligible small business, the net
worth limitation in clause (ii) of such section shall not
apply.''.
(b) Eligible Small Business.--Paragraph (4) of section
7430(c) of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subparagraph:
``(F) Eligible small business.--For purposes of
subparagraph (D)(iii), the term `eligible small business'
means, with respect to any proceeding commenced in a taxable
year--
``(i) a corporation the stock of which is not publicly
traded,
``(ii) a partnership, or
``(iii) a sole proprietorship,
if the average annual gross receipts of such corporation,
partnership, or sole proprietorship for the 3-taxable-year
period preceding such taxable year does not exceed
$50,000,000. For purposes of applying the test under the
preceding sentence, rules similar to the rules of paragraphs
(2) and (3) of section 448(c) shall apply.''.
(c) Effective Date.--The amendments made by this section
shall apply to proceedings commenced after the date of the
enactment of this Act.
SEC. 3. CIVIL DAMAGES ALLOWED FOR RECKLESS OR INTENTIONAL
DISREGARD OF INTERNAL REVENUE LAWS.
(a) Increase in Amount of Damages.--Section 7433(b) of the
Internal Revenue Code of 1986 is amended by striking
``$1,000,000 ($100,000, in the case of negligence)'' and
inserting ``$3,000,000 ($300,000, in the case of
negligence)''.
(b) Extension of Time To Bring Action.--Section 7433(d)(3)
of the Internal Revenue Code of 1986 is amended by striking
``2 years'' and inserting ``5 years''.
(c) Effective Date.--The amendments made by this section
shall apply to actions of employees of the Internal Revenue
Service after the date of the enactment of this Act.
SEC. 4. MODIFICATIONS RELATING TO CERTAIN OFFENSES BY
OFFICERS AND EMPLOYEES IN CONNECTION WITH
REVENUE LAWS.
(a) Increase in Penalty.--Section 7214 of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``$10,000'' in subsection (a) and inserting
``$25,000'', and
(2) by striking ``$5,000'' in subsection (b) and inserting
``$10,000''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 5. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR
UNAUTHORIZED INSPECTION OR DISCLOSURE OF
RETURNS AND RETURN INFORMATION.
(a) Increase in Amount of Damages.--Subparagraph (A) of
section 7431(c)(1) of the Internal Revenue Code of 1986 is
amended by striking ``$1,000'' and inserting ``$10,000''.
(b) Effective Date.--The amendment made by this section
shall apply to inspections and disclosure occurring on and
after the date of the enactment of this Act.
SEC. 6. INTEREST ABATEMENT REVIEWS.
(a) Filing Period for Interest Abatement Cases.--
(1) In general.--Subsection (h) of section 6404 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``Review of Denial'' in the heading and
inserting ``Judicial Review'', and
(B) by striking `` `if such action is brought' '' and all
that follows in paragraph (1) and inserting ``if such action
is brought--
``(A) at any time after the earlier of--
``(i) the date of the mailing of the Secretary's final
determination not to abate such interest, or
``(ii) the date which is 180 days after the date of the
filing with the Secretary (in such form as the Secretary may
prescribe) of a claim for abatement under this section, and
``(B) not later than the date which is 180 days after the
date described in subparagraph (A)(i).''.
(2) Effective date.--The amendments made by this subsection
shall apply to claims for abatement of interest filed with
the Secretary after the date of the enactment of this Act.
(b) Small Tax Case Election for Interest Abatement Cases.--
(1) In general.--Subsection (f) of section 7463 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``and'' at the end of paragraph (1),
(B) by striking the period at the end of paragraph (2) and
inserting ``, and'', and
(C) by adding at the end the following new paragraph:
``(3) a petition to the Tax court under section 6404(h) in
which the amount of interest abatement sought does not exceed
$50,000.''.
(2) Effective date.--The amendments made by this subsection
shall apply to--
(A) cases pending as of the day after the date of the
enactment of this Act, and
(B) cases commenced after such date of enactment.
SEC. 7. BAN ON EX PARTE DISCUSSIONS.
(a) In General.--Notwithstanding section 1001(a)(4) of the
Internal Revenue Service Restructuring and Reform Act of
1998, the Internal Revenue Service shall prohibit any ex
parte communications between officers in the Internal Revenue
Service Office of Appeals and other Internal Revenue Service
employees with respect to any matter pending before such
officers.
(b) Termination of Employment for Misconduct.--Subject to
subsection (c), the Commissioner of Internal Revenue shall
terminate the employment of any employee of the Internal
Revenue Service if there is a final administrative or
judicial determination that such employee committed any act
or omission prohibited under subsection (a) in the
performance of the employee's official duties. Such
termination shall be a removal for cause on charges of
misconduct.
(c) Determination of Commissioner.--
(1) In general.--The Commissioner of Internal Revenue may
take a personnel action other than termination for an act
prohibited under subsection (a).
(2) Discretion.--The exercise of authority under paragraph
(1) shall be at the sole discretion of the Commissioner of
Internal Revenue and may not be delegated to any other
officer. The Commissioner of Internal Revenue, in his sole
discretion, may establish a procedure which will be used to
determine whether an individual should be referred to the
Commissioner of Internal Revenue for a determination by the
Commissioner under paragraph (1).
(3) No appeal.--Any determination of the Commissioner of
Internal Revenue under this subsection may not be appealed in
any administrative or judicial proceeding.
(d) TIGTA Reporting of Termination or Mitigation.--Section
7803(d)(1)(E) of the Internal Revenue Code of 1986 is amended
by inserting ``or section 7 of the Small Business Taxpayer
Bill of Rights Act of 2013'' after ``1998''.
SEC. 8. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.
(a) In General.--Section 7123 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(c) Availability of Dispute Resolutions.--
``(1) In general.--The procedures prescribed under
subsection (b)(1) and the pilot program established under
subsection (b)(2) shall provide that a taxpayer may request
mediation or arbitration in any case unless the Secretary has
specifically excluded the type of issue involved in such case
or the class of cases to which such case belongs as not
appropriate for resolution under such subsection. The
Secretary shall make any determination that excludes a type
of issue or a class of cases public within 5 working days and
provide an explanation for each determination.
``(2) Independent mediators.--
``(A) In general.--The procedures prescribed under
subsection (b)(1) shall provide the taxpayer an opportunity
to elect to have the mediation conducted by an independent,
neutral individual not employed by the Office of Appeals.
``(B) Cost and selection.--
``(i) In general.--Any taxpayer making an election under
subparagraph (A) shall be required--
``(I) to share the costs of such independent mediator
equally with the Office of Appeals, and
``(II) to limit the selection of the mediator to a roster
of recognized national or local neutral mediators.
``(ii) Exception.--Clause (i)(I) shall not apply to any
taxpayer who is an individual or who was a small business in
the preceding calendar year if such taxpayer had an adjusted
gross income that did not exceed 250 percent of the poverty
level, as determined in accordance with criteria established
by the Director of the Office of Management and Budget, in
the taxable year preceding the request.
``(iii) Small business.--For purposes of clause (ii), the
term `small business' has the meaning given such term under
section 41(b)(3)(D)(iii).
``(3) Availability of process.--The procedures prescribed
under subsection (b)(1) and the pilot program established
under subsection (b)(2) shall provide the opportunity to
elect mediation or arbitration at the time when the case is
first filed with the Office of Appeals and at any time before
deliberations in the appeal commence.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9. EXTENSION OF TIME FOR CONTESTING IRS LEVY.
(a) Extension of Time for Return of Property Subject to
Levy.--Subsection (b) of section 6343 of the Internal Revenue
Code of 1986 is amended by striking ``9 months'' and
inserting ``3 years''.
(b) Period of Limitation on Suits.--Subsection (c) of
section 6532 of the Internal Revenue Code of 1986 is
amended--
(1) in paragraph (1) by striking ``9 months'' and inserting
``3 years'', and
(2) in paragraph (2) by striking ``9-month'' and inserting
``3-year''.
(c) Effective Date.--The amendments made by this section
shall apply to--
(1) levies made after the date of the enactment of this
Act, and
(2) levies made on or before such date if the 9-month
period has not expired under section 6343(b) of the Internal
Revenue Code of 1986 (without regard to this section) as of
such date.
SEC. 10. WAIVER OF INSTALLMENT AGREEMENT FEE.
(a) In General.--Section 6159 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the
following new subsection:
[[Page S2653]]
``(f) Waiver of Installment Agreement Fee.--The Secretary
shall waive the fees imposed on installment agreements under
this section for any taxpayer with an adjusted gross income
that does not exceed 250 percent of the poverty level, as
determined in accordance with criteria established by the
Director of the Office of Management and Budget, and who has
agreed to make payments under the installment agreement by
electronic payment through a debit instrument.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 11. SUSPENSION OF RUNNING OF PERIOD FOR FILING PETITION
OF SPOUSAL RELIEF AND COLLECTION CASES.
(a) Petitions for Spousal Relief.--
(1) In general.--Subsection (e) of section 6015 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(6) Suspension of running of period for filing petition
in title 11 cases.--In the case of a person who is prohibited
by reason of a case under title 11, United States Code, from
filing a petition under paragraph (1)(A) with respect to a
final determination of relief under this section, the running
of the period prescribed by such paragraph for filing such a
petition with respect to such final determination shall be
suspended for the period during which the person is so
prohibited from filing such a petition, and for 60 days
thereafter.''.
(2) Effective date.--The amendment made by this subsection
shall apply to petitions filed under section 6015(e) of the
Internal Revenue Code of 1986 after the date of the enactment
of this Act.
(b) Collection Proceedings.--
(1) In general.--Subsection (d) of section 6330 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``appeal such determination to the Tax
Court'' in paragraph (1) and inserting ``petition the Tax
Court for review of such determination'',
(B) by striking ``Judicial review of determination'' in the
heading of paragraph (1) and inserting ``Petition for review
by tax court'',
(C) by redesignating paragraph (2) as paragraph (3), and
(D) by inserting after paragraph (1) the following new
paragraph:
``(2) Suspension of running of period for filing petition
in title 11 cases.--In the case of a person who is prohibited
by reason of a case under title 11, United States Code, from
filing a petition under paragraph (1) with respect to a
determination under this section, the running of the period
prescribed by such subsection for filing such a petition with
respect to such determination shall be suspended for the
period during which the person is so prohibited from filing
such a petition, and for 30 days thereafter.''.
(2) Conforming amendment.--Subsection (c) of section 6320
of such Code is amended by striking ``(2)(B)'' and inserting
``(3)(B)''.
(3) Effective date.--The amendments made by this subsection
shall apply to petitions filed under section 6330 of the
Internal Revenue Code of 1986 after the date of the enactment
of this Act.
SEC. 12. VENUE FOR APPEAL OF SPOUSAL RELIEF AND COLLECTION
CASES.
(a) In General.--Paragraph (1) of section 7482(b) of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``or'' at the end of subparagraph (E),
(2) by striking the period at the end of subparagraph (F)
and inserting a comma, and
(3) by inserting after subparagraph (F) the following new
subparagraphs:
``(G) in the case of a petition under section 6015(e), the
legal residence of the petitioner, or
``(H) in the case of a petition under section 6320 or
6330--
``(i) the legal residence of the petitioner if the
petitioner is an individual, and
``(ii) the principal place of business or principal office
or agency if the petitioner is an entity other than an
individual.''.
(b) Effective Date.--The amendments made by this section
shall apply to petitions filed after the date of enactment of
this Act.
SEC. 13. INCREASE IN MONETARY PENALTIES FOR CERTAIN
UNAUTHORIZED DISCLOSURES OF INFORMATION.
(a) In General.--Paragraphs (1), (2), (3), and (4) of
section 7213(a) of the Internal Revenue Code of 1986 are each
amended by striking ``$5,000'' and inserting ``$10,000''.
(b) Effective Date.--The amendments made by this section
shall apply to disclosures made after the date of the
enactment of this Act.
SEC. 14. DE NOVO TAX COURT REVIEW OF CLAIMS FOR EQUITABLE
INNOCENT SPOUSE RELIEF.
(a) In General.--Subparagraph (A) of section 6015(e)(1) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new flush sentence:
``Any review of a determination by the Secretary with respect
to a claim for equitable relief under subsection (f) shall be
reviewed de novo by the Tax Court.''.
(b) Effective Date.--The amendment made by this section
shall apply to petitions filed or pending before the Tax
Court on and after the date of the enactment of this Act.
SEC. 15. BAN ON RAISING NEW ISSUES ON APPEAL.
(a) In General.--Chapter 77 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
section:
``SEC. 7529. PROHIBITION ON INTERNAL REVENUE SERVICE RAISING
NEW ISSUES IN AN INTERNAL APPEAL.
``(a) In General.--In reviewing an appeal of any
determination initially made by the Internal Revenue Service,
the Internal Revenue Service Office of Appeals may not
consider or decide any issue that is not within the scope of
the initial determination.
``(b) Certain Issues Deemed Outside of Scope of
Determination.--For purposes of subsection (a), the following
matters shall be considered to be not within the scope of a
determination:
``(1) Any issue that was not raised in a notice of
deficiency or an examiner's report which is the subject of
the appeal.
``(2) Any deficiency in tax which was not included in the
initial determination.
``(3) Any theory or justification for a tax deficiency
which was not considered in the initial determination.
``(c) No Inference With Respect to Issues Raised by
Taxpayers.--Nothing in this section shall be construed to
provide any limitation in addition to any limitations in
effect on the date of the enactment of this section on the
right of a taxpayer to raise an issue, theory, or
justification on an appeal from a determination initially
made by the Internal Revenue Service that was not within the
scope of the initial determination.''.
(b) Clerical Amendment.--The table of sections for chapter
77 of such Code is amended by adding at the end the following
new item:
``Sec. 7529. Prohibition on Internal Revenue Service raising new issues
in an internal appeal.''.
(c) Effective Date.--The amendments made by this section
shall apply to matters filed or pending with the Internal
Revenue Service Office of Appeals on or after the date of the
enactment of this Act.
____
United States Hispanic
Chamber of Commerce,
Washington, DC, April 11, 2013.
Hon. John Cornyn,
Senate Minority Whip, U.S. Senate,
Washington, DC.
Dear Senator Cornyn: The United States Hispanic Chamber of
Commerce (USHCC) would like to express its support and thank
you for introducing the Small Business Taxpayer Bill of
Rights Act of 2013 (SBTBOR). As our organization advocates
for legislation that helps Hispanic owned businesses grow the
economy and create jobs, it is encouraging to see the SBTBOR
introduced on the Senate floor during the 113th Congress.
As you are aware, Hispanic-owned firms are the fastest
growing segment of American enterprise. We applaud you for
recognizing this fact and, as a result, taking the initiative
to provide sensible solutions for the USHCC constituency of
Hispanic entrepreneurs. The four pillars of the SBTBOR--
lowering compliance burden for taxpayers, strengthening
taxpayer protections, compensating taxpayers for IRS abuses,
and improving taxpayer access to the judicial system--are
crucial for the financial health of small businesses across
the country, and we hope that your Senate colleagues join in
your efforts to pass common sense, pro-growth legislation.
In the USHCC's 2012-2014 Legislative Agenda, regulatory
reform is noted as a critical part of the Hispanic small
business community's potential for job creation and economic
development. The SBTBOR, by addressing problematic regulation
and interaction with the IRS, is in line with the USHCC's
view for a full economic recovery. In order for the Hispanic
community to continue leveraging its entrepreneurial spirit,
we cannot allow for these job creators to be subject to slow
and costly resolution of audits, low civil damages when the
IRS disregards the law, fees on installment agreements for
low-income taxpayers, and many other harsh burdens that exist
for small businesses.
The SBTBOR could have an immediate, positive impact on the
Hispanic business community and American economy as a whole.
Please let us know how we may assist in your effort to
promote an environment where entrepreneurs focus more on
growing their businesses rather than dealing with
unreasonable regulations. We are here to help.
Respectfully Submitted,
Marc Rodriguez,
Chairman of the Board, USHCC.
Javier Palomarez,
President & CEO, USHCC.
______