[Congressional Record Volume 164, Number 62 (Tuesday, April 17, 2018)]
[Senate]
[Pages S2219-S2222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. CORNYN (for himself, Mr. Heller, and Mr. Roberts):
S. 2689. A bill to provide a taxpayer bill of rights for small
businesses; to the Committee on Finance.
Mr. CORNYN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 2689
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 2018''.
(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. Ban on ex parte discussions.
Sec. 7. Right to independent conference.
Sec. 8. Alternative dispute resolution procedures.
Sec. 9. Increase in monetary penalties for certain unauthorized
disclosures of information.
Sec. 10. Ban on raising new issues on appeal.
Sec. 11. Limitation on enforcement of liens against principal
residences.
[[Page S2220]]
Sec. 12. Additional provisions relating to mandatory termination for
misconduct.
Sec. 13. Review by the Treasury Inspector General for Tax
Administration.
Sec. 14. Deduction for expenses relating to certain audits.
Sec. 15. Term limit for National Taxpayer Advocate.
Sec. 16. Release of IRS levy due to economic hardship for business
taxpayers.
Sec. 17. Repeal of partial payment requirement on submissions of
offers-in-compromise.
SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF COSTS AND
CERTAIN FEES.
(a) Small Businesses Eligible Without Regard to Net
Worth.--Subparagraph (D) of section 7430(c)(4) of the
Internal Revenue Code of 1986 is amended by striking ``and''
at the end of clause (i)(II), 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.--
``(i) In general.--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.
``(ii) Adjustment for inflation.--In the case of any
calendar year after 2018, the $50,000,000 amount in clause
(i) shall be increased by an amount equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2017' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $500, such amount shall be rounded to the
next lowest multiple of $500..''.
(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.--
(1) In general.--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 ``$5,000,000
($500,000, in the case of negligence)''.
(2) Adjustment for inflation.--Section 7433 of such Code is
amended by adding at the end the following new subsection:
``(f) Adjustment for Inflation.--In the case of any
calendar year after 2018, the $5,000,000 and $500,000 amounts
in subsection (b) shall each be increased by an amount equal
to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2017' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $500, such amount shall be rounded to the
next lowest multiple of $500.''.
(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) Adjustment for Inflation.--Section 7214 of the Internal
Revenue Code of 1986, as amended by subsection (a), is
amended by redesignating subsection (c) as subsection (d) and
by inserting after subsection (b) the following new
subsection:
``(c) Adjustment for Inflation.--In the case of any
calendar year after 2018, the $25,000 amount in subsection
(a) and the $10,000 amount in subsection (b) shall each be
increased by an amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2017' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $100, such amount shall be rounded to the
next lowest multiple of $100.''.
(c) 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) Adjustment for Inflation.--Section 7431 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(i) Adjustment for Inflation.--In the case of any
calendar year after 2018, the $10,000 amount in subsection
(c)(1)(A) shall be increased by an amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2017' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $100, such amount shall be rounded to the
next lowest multiple of $100.''.
(c) Period for Bringing Action.--Subsection (d) of section
7431 of the Internal Revenue Code of 1986 is amended by
striking ``2 years'' and inserting ``5 years''.
(d) 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. 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. At the sole discretion of the Commissioner of
Internal Revenue, such Commissioner 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 6 of the Small Business Taxpayer
Bill of Rights Act of 2018'' after ``1998''.
SEC. 7. RIGHT TO INDEPENDENT CONFERENCE.
Section 1001 of the Internal Revenue Service Restructuring
and Reform Act of 1998 is amended by redesignating subsection
(c) as subsection (d) and by inserting after subsection (b)
the following new subsection:
``(c) Right to Independent Conference.--Under the
organization plan of the Internal Revenue Service, a taxpayer
shall have the right to a conference with the Internal
Revenue Service Office of Appeals which does not include
personnel from the Office of Chief Counsel for the Internal
Revenue Service or the compliance functions of the Internal
Revenue Service unless the taxpayer specifically consents to
the participation of such personnel.''.
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:
``(d) 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,
[[Page S2221]]
neutral individual not employed by the Internal Revenue
Service 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 Internal Revenue Service 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. 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) Adjustment for Inflation.--Subsection (a) of section
7213 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new paragraph:
``(6) Adjustment for inflation.--In the case of any
calendar year after 2018, the $10,000 amounts in paragraphs
(1), (2), (3), and (4) shall each 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, determined by
substituting `calendar year 2017' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is
not a multiple of $100, such amount shall be rounded to the
next lowest multiple of $100.''.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures made after the date of the
enactment of this Act.
SEC. 10. 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 the Internal Revenue Code of 1986 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.
SEC. 11. LIMITATION ON ENFORCEMENT OF LIENS AGAINST PRINCIPAL
RESIDENCES.
(a) In General.--Section 7403(a) of the Internal Revenue
Code of 1986 is amended--
(1) by striking ``In any case'' and inserting the
following:
``(1) In general.--In any case'', and
(2) by adding at the end the following new paragraph:
``(2) Limitation with respect to principal residence.--
``(A) In general.--Paragraph (1) shall not apply to any
property used as the principal residence of the taxpayer
(within the meaning of section 121) unless the Secretary of
the Treasury makes a written determination that--
``(i) all other property of the taxpayer, if sold, is
insufficient to pay the tax or discharge the liability, and
``(ii) such action will not create an economic hardship for
the taxpayer.
``(B) Delegation.--For purposes of this paragraph, the
Secretary of the Treasury may not delegate any
responsibilities under subparagraph (A) to any person other
than--
``(i) the Commissioner of Internal Revenue, or
``(ii) a district director or assistant district director
of the Internal Revenue Service.''.
(b) Effective Date.--The amendments made by this section
shall apply to actions filed after the date of the enactment
of this Act.
SEC. 12. ADDITIONAL PROVISIONS RELATING TO MANDATORY
TERMINATION FOR MISCONDUCT.
(a) Termination of Unemployment for Inappropriate Review of
Tax-Exempt Status.--Section 1203(b) of the Internal Revenue
Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804
note) is amended by striking ``and'' at the end of paragraph
(9), by striking the period at the end of paragraph (10) and
inserting ``; and'', and by adding at the end the following
new paragraph:
``(11) in the case of any review of an application for tax-
exempt status by an organization described in section 501(c)
of the Internal Revenue Code of 1986, developing or using any
methodology that applies disproportionate scrutiny to any
applicant based on the ideology expressed in the name or
purpose of the organization.''.
(b) Mandatory Unpaid Administrative Leave for Misconduct.--
Paragraph (1) of section 1203(c) of the Internal Revenue
Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804
note) is amended by adding at the end the following new
sentence: ``Notwithstanding the preceding sentence, if the
Commissioner of Internal Revenue takes a personnel action
other than termination for an act or omission described in
subsection (b), the Commissioner shall place the employee on
unpaid administrative leave for a period of not less than 90
days.''.
(c) Limitation on Alternative Punishment.--Paragraph (1) of
section 1203(c) of the Internal Revenue Service Restructuring
and Reform Act of 1998 (26 U.S.C. 7804 note) is amended by
striking ``The Commissioner'' and inserting ``Except in the
case of an act or omission described in subsection (b)(3)(A),
the Commissioner''.
SEC. 13. REVIEW BY THE TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION.
(a) Review.--Subsection (k)(1) of section 8D of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
(1) in subparagraph (C), by striking ``and'' at the end,
(2) by redesignating subparagraph (D) as subparagraph (E),
(3) by inserting after subparagraph (C) the following new
subparagraph:
``(D) shall--
``(i) review any criteria employed by the Internal Revenue
Service to select tax returns (including applications for
recognition of tax-exempt status) for examination or audit,
assessment or collection of deficiencies, criminal
investigation or referral, refunds for amounts paid, or any
heightened scrutiny or review in order to determine whether
the criteria discriminates against taxpayers on the basis of
race, religion, or political ideology; and
``(ii) consult with the Internal Revenue Service on
recommended amendments to such criteria in order to eliminate
any discrimination identified pursuant to the review
described in clause (i); and'', and
(4) in subparagraph (E), as so redesignated, by striking
``and (C)'' and inserting ``(C), and (D)''.
(b) Semiannual Report.--Subsection (g) of section 8D of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended by
adding at the end the following new paragraph:
``(3) Any semiannual report made by the Treasury Inspector
General for Tax Administration that is required pursuant to
section 5(a) shall include--
``(A) a statement affirming that the Treasury Inspector
General for Tax Administration has reviewed the criteria
described in subsection (k)(1)(D) and consulted with the
Internal Revenue Service regarding such criteria; and
``(B) a description and explanation of any such criteria
that was identified as discriminatory by the Treasury
Inspector General for Tax Administration.''.
SEC. 14. DEDUCTION FOR EXPENSES RELATING TO CERTAIN AUDITS.
(a) In General.--Subsection (a) of section 62 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(22) Expenses relating to certain audits.--The deduction
allowed by section 224.''.
(b) Deduction for Expenses Relating to Certain Audits.--
Part VII of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 is amended by redesignating section 224 as
section 225 and by inserting after section 223 the following
new section:
``SEC. 224. EXPENSES RELATING TO CERTAIN AUDITS.
``(a) Allowance of Deduction.--In the case of an
individual, there shall be allowed as a deduction for the
taxable year an amount equal to so much of the qualified
[[Page S2222]]
NRP expenses paid or incurred during the taxable year as does
not exceed $5,000.
``(b) Qualified NRP Expenses.--For purposes of this
section, the term `qualified NRP expenses' means amounts
which but for subsection (d) would be allowed as a deduction
under section 162 or 212(3) in connection with an audit of
the taxpayer's return of the tax imposed by this chapter for
any taxable year under the National Research Program, but
only if such audit results in no increase in the tax
liability of the taxpayer for such taxable year.
``(c) Denial of Double Benefit.--No deduction shall be
allowed under any other provision of this chapter for any
amount for which a deduction is allowed under this
section.''.
(c) Clerical Amendment.--The table of sections for part VII
of subchapter B of chapter 1 of the Internal Revenue Code of
1986 is amended by striking the item relating to section 224
and by inserting after the item relating to section 223 the
following new items:
``Sec. 224. Expenses relating to certain audits.
``Sec. 225. Cross reference.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 15. TERM LIMIT FOR NATIONAL TAXPAYER ADVOCATE.
(a) In General.--Subparagraph (B) of section 7803(c)(1) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new clause:
``(v) Term.--The term of the National Taxpayer Advocate
shall be a 10-year term, beginning with a term to commence on
the date which is 18 months after the date of the enactment
of the Small Business Taxpayer Bill of Rights Act of 2018.
Each subsequent term shall begin on the day after the date on
which the previous term expires. The National Taxpayer
Advocate may be appointed to serve more than 1 term.''.
(b) Effective Date.--The term of any individual serving as
the National Taxpayer Advocate under section 7803(c) of the
Internal Revenue Code of 1986 as of the date of the enactment
of this Act shall end as of the day before the date which is
18 months after such date of enactment, unless such
individual is reappointed as the National Taxpayer Advocate
for a subsequent term pursuant to section 7803(c)(1)(B)(v) of
such Code.
SEC. 16. RELEASE OF IRS LEVY DUE TO ECONOMIC HARDSHIP FOR
BUSINESS TAXPAYERS.
(a) In General.--Subparagraph (D) of section 6343(a)(1) of
the Internal Revenue Code of 1986 is amended by striking
``or'' and inserting ``including the financial condition of
the taxpayer's viable trade or business, or''.
(b) Determination of Economic Hardship.--Subsection (a) of
section 6343 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new paragraph:
``(4) Determination of economic hardship to business
taxpayer.--In determining whether to release any levy under
paragraph (1)(D), the Secretary shall consider--
``(A) the economic viability of the business,
``(B) the nature and extent of the hardship created by the
levy (including whether the taxpayer has exercised ordinary
business care and prudence), and
``(C) the potential harm to individuals if the business is
liquidated.''.
(c) Effective Date.--The amendments made by this section
shall apply to levies made after the date of the enactment of
this Act.
SEC. 17. REPEAL OF PARTIAL PAYMENT REQUIREMENT ON SUBMISSIONS
OF OFFERS-IN-COMPROMISE.
(a) In General.--Section 7122 of the Internal Revenue Code
of 1986 is amended by striking subsection (c) and by
redesignating subsections (d), (e), (f), and (g) as
subsections (c), (d), (e), and (f), respectively.
(b) Conforming Amendments.--
(1) Paragraph (3) of section 7122(c) of the Internal
Revenue Code of 1986, as redesignated by subsection (a), is
amended by inserting ``and'' at the end of subparagraph (A),
by striking ``, and'' at the end of subparagraph (B) and
inserting a period, and by striking subparagraph (C).
(2) Section 7122 of such Code, as amended by this section,
is amended by adding at the end the following new subsection:
``(g) Application of User Fee.--In the case of any assessed
tax or other amounts imposed under this title with respect to
such tax which is the subject of an offer-in-compromise, such
tax or other amounts shall be reduced by any user fee imposed
under this title with respect to such offer-in-compromise.''.
(3) Section 6159(g) of such Code is amended by striking
``section 7122(e)'' and inserting ``section 7122(d)''.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted after the date
of the enactment of this Act.
____________________