IRS Customer Service Improvement Act

Summary: IRS Customer Service Improvement Act - Requires the Internal Revenue Service (IRS) to develop and implement a plan to ensure that: (1) each phone call to the IRS is answered personally and in a timely manner by an IRS employee; and (2) every written IRS communication sent to a taxpayer is signed by an IRS employee who can be contacted for additional information. 
Requires the overpayment and the underpayment rate to be the Federal short-term rate. 
Revises provisions concerning mathematical or clerical errors. 
Provides for a one-year period of limitation (under the general rule, a three-year period) on certain additional assessments relating to certain returns. 
Provides an exception from the electronic fund transfer system when the amount of employment taxes attributable to annual payments made is $50,000 or less.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``IRS Customer Service Improvement 
Act''.

SEC. 2. DEVELOPMENT AND IMPLEMENTATION OF PERSONAL SERVICE PLAN.

    Not later than 1 year after the date of the enactment of this Act, 
the Director of the Internal Revenue Service shall develop and 
implement a plan to ensure that--
            (1) each voice call to service telephone numbers of the 
        Internal Revenue Service is answered personally and in a timely 
        manner by an employee of the Internal Revenue Service; and
            (2) each letter and notification sent to a taxpayer by the 
        Internal Revenue Service is signed by the Internal Revenue 
        Service employee who can be contacted for additional 
        information regarding such letter or notification.

SEC. 3. INTEREST RATE FOR OVERPAYMENTS TO EQUAL RATE FOR UNDERPAYMENTS.

    (a) In General.--Section 6621(a) of the Internal Revenue Code of 
1986 (relating to determination of rate of interest) is amended to read 
as follows:
    ``(a) General Rule.--The overpayment rate and the underpayment rate 
established under this section shall be the Federal short-term rate 
determined under subsection (b).''
    (b) Conforming Amendment.--Section 6621 of such Code (relating to 
determination of rate of interest) is amended by striking subsection 
(c).
    (c) Effective Date.--The amendments made by this section shall 
apply for purposes of determining interest to periods after the date of 
the enactment of this Act.

SEC. 4. NOTICE OF ASSESSMENT ARISING OUT OF MATHEMATICAL OR CLERICAL 
              ERRORS.

    (a) In General.--Paragraph (1) of section 6213(b) of the Internal 
Revenue Code of 1986 (relating to assessments arising out of 
mathematical or clerical errors) is amended to read as follows:
            ``(1) Assessments arising out of mathematical or clerical 
        errors.--
                    ``(A) Notice to taxpayer.--Not later than 6 months 
                after the due date of a return (or, if applicable, the 
                last day of any extension relating thereto), the 
                Secretary shall notify the taxpayer by certified mail 
                or registered mail if, on account of a mathematical or 
                clerical error appearing on the return, an amount of 
                tax in excess of that shown on the return is due, and 
                an assessment of the tax has been or will be made on 
                the basis of what would have been the correct amount of 
                tax but for the mathematical or clerical error.
                    ``(B) Required contents.--Each notice under this 
                paragraph shall set forth the error alleged and an 
                explanation thereof.
                    ``(C) Not treated as notice of deficiency.--A 
                notice under this paragraph shall not be considered as 
                a notice of deficiency for the purposes of subsection 
                (a) (prohibiting assessment and collection until notice 
                of the deficiency has been mailed), or of section 
                6212(c)(1) (restricting further deficiency letters), or 
                of section 6512(a) (prohibiting credits or refunds 
                after petition to the Tax Court), and the taxpayer 
                shall have no right to file a petition with the Tax 
                Court based on such notice, nor shall such assessment 
                or collection be prohibited by the provisions of 
                subsection (a) of this section.
                    ``(D) Failure to provide timely notice.--In the 
                case of a failure by the Secretary to provide timely 
                notice under this paragraph, see section 6404(d)(2) for 
                waiver of certain interest amounts and penalties.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to returns filed after the date of the enactment of this Act.

SEC. 5. FAIRNESS WHEN COLLECTING A TAX DUE TO MATHEMATICAL AND CLERICAL 
              ERRORS.

    (a) In General.--Section 6404(d) of the Internal Revenue Code of 
1986 (relating to abatements) is amended to read as follows:
    ``(d) Abatement of Interest, Penalty, Additional Amount, and 
Addition to Tax Attributable to Certain Mathematical or Clerical 
Errors.--
            ``(1) Prompt payment.--In the case of an assessment of 
        additional tax attributable to a mathematical or clerical error 
        (as defined in section 6213(g)(2)), the Secretary shall abate 
        any interest, penalty, additional amount, and addition to tax 
        with respect to such assessment if, within 60 days after notice 
        of such assessment is sent under section 6213(b)(1), the 
        taxpayer pays, or files a request for an abatement of, such 
        assessment.
            ``(2) Failure of secretary to notify within 6 months.--In 
        the case of an assessment of additional tax attributable to a 
        mathematical or clerical error (as defined in section 
        6213(g)(2)) with respect to which the Secretary failed to 
        notify the taxpayer within the 6-month period specified in 
        section 6213(b)(1), the Secretary shall abate any interest, 
        penalty, and additional amount with respect to such 
        assessment.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to notices filed after the date of the enactment of this Act.

SEC. 6. 1-YEAR PERIOD OF LIMITATION ON CERTAIN ADDITIONAL ASSESSMENTS 
              RELATING TO CERTAIN RETURNS.

    (a) In General.--Subsection (c) of section 6501 of the Internal 
Revenue Code of 1986 (relating to exceptions to limitations on 
assessment and collection) is amended by adding at the end the 
following new paragraph:
            ``(10) 1-year period for certain individual income tax 
        taxpayers.--
                    ``(A) In general.--Except as otherwise provided by 
                this subsection, in the case of a return described in 
                subparagraph (B), subsection (a) shall be applied by 
                substituting `1 year' for `3 years' both places it 
                appears.
                    ``(B) Return described.--A return is described in 
                this subparagraph if the return is a return of tax 
                imposed under section 1 for a taxable year of a 
                taxpayer and if--
                            ``(i) the amount of taxable income shown on 
                        such return is equal to or exceeds the lowest 
                        amount of taxable income to which the 39.6 
                        percent rate of tax applies, and
                            ``(ii) the understatement of tax (if any) 
                        on such return is 25 percent or less of the tax 
                        required to be shown on the return for such 
                        taxable year.
                For purposes of clause (ii), the term `understatement' 
                has the meaning given such term by section 
                6662(d)(2)(A).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1997.

SEC. 7. EXCEPTION FOR SMALL BUSINESSES FROM REQUIRED USE OF ELECTRONIC 
              FUND TRANSFER SYSTEM.

    (a) In General.--Subsection (h) of section 6302 of the Internal 
Revenue Code of 1986 (relating to use of electronic fund transfer 
system for collection of certain taxes) is amended by redesignating 
paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and by 
inserting after paragraph (2) the following new paragraph:
            ``(3) Exception for small depositors.--
                    ``(A) In general.--A taxpayer who is a small 
                depositor for any calendar year shall not be required 
                to make deposits by electronic fund transfer for taxes 
                attributable to payments made during the following 
                calendar year.
                    ``(B) Small depositor.--A taxpayer is a small 
                depositor for any calendar year if the amount of 
                employment taxes attributable to payments made by such 
                taxpayer during such year is $50,000 or less.''
    (b) Required Percentages of Deposits Frozen at 1996 Level.--
            (1) Subparagraph (B) of section 6302(h)(2) of such Code is 
        amended--
                    (A) by striking ``the applicable required 
                percentage'' in clause (i) and inserting ``20.1 
                percent'', and
                    (B) by striking ``the applicable required 
                percentage'' in clause (ii) and inserting ``30 
                percent''.
            (2) Paragraph (2) of section 6302(h) of such Code is 
        amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts otherwise required to be deposited after June 30, 
1998.