date of enactment.
12. Modifications to Lien and Levy Provisions
Present Law

IRS may withdraw a notice of a lien only if the notice
was erroneously filed or if the underlying lien has been
paid, bonded, or become unenforceable. IRS may return levied
property only when the taxpayer has overpaid its tax
liability.

Explanation of Provision

The provision permits the IRS to withdraw a notice of a
lien in specified situations. Upon the taxpayer's request,
the IRS shall notify credit agencies and financial
institutions of the withdrawal. Further, the IRS shall
return levied property in parallel specified situations.
Finally, the provision increases the dollar value of certain
items exempt from levy and indexes those amounts for
inflation.

13. Offers-in-Compromise
Present Law
The IRS can compromise any assessed tax. An opinion of
the Chief Counsel is necessary for any compromise of $500 or
more. Information relating to accepted compromises is
public.

Explanation of Provision

The provision clarifies that the IRS may make any
compromise that would be in the best interests of the United
States and raises the threshold above which an opinion of the
Chief Counsel of the IRS is necessary from $500 to $50,000.
The provision requires that opinions below the $50,000
threshold be subject to continuing quality review.

14. Notification of Examination
Present Law
IRS generally notifies a taxpayer in writing before
commencing an examination (sometimes it does so by
telephone). .

Explanation of Provision

IRS must both notify a taxpayer in writing that the
taxpayer is under examination and furnish a copy of
Publication 1, Your Rights as a Taxpayer, prior to commencing



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Explanation of Provision

The provision indexes the maximum rate for inflation,
effective from the date the $75 rate became effective.

25. Attorney's Fees: Failure .to Agree to Extension
Not Taken Into Account

Present Law

To be eligible to receive attorney's fees, a taxpayer
must have exhausted administrative remedies in the IRS.
Under Treasury regulations, failure to agree to extend the
statute of limitations is considered to be failure to exhaust
administrative remedies. The Tax Court has held this aspect
of the regulations to be invalid.

Explanation of Provision

Failure by the taxpayer to agree to an extension of the
statute of limitations for assessment is not to be taken into
-account for.purposes of determining whether the taxpayer is
entitled to receive attorney's fees.

IX. Other Provisions
26. Required Content of Certain Notices
Present Law

IRS tax deficiency notices must describe the basis for
and identify the amounts of tax, interest, and penalties.

Explanation of Provision

IRS notices must contain more detailed information.

27. Relief from Retroactive Application
of Treasury Department Regulations

Present Law

Treasury may prescribe the extent (if any) to which
regulations shall be applied without retroactive effect.

Explanation of Provision

Any proposed or temporary Treasury regulation shall
apply prospectively from the date of publication of the
regulation in the Federal Register (unless specifically
superseded by subsequent legislation authorizing a
retroactive effective date or unless Treasury permits
taxpayers to elect to apply the regulations retroactively and
the taxpayer so elects). Final regulations may take effect



summons is issued.

Under current internal procedures of the IRS, no
designated summons is issued unless first reviewed by the
Office of Chief Counsel to the IRS, including review by an
IRS Deputy Regional Counsel for the Region in which the audit
occurs.

Explanation of Provision

The provision requires that issuance of any designated
summons be preceded by review by the Regional Counsel, Office
of Chief Counsel to the IRS, for the Region in which the
audit occurs.

In addition, the provision requires that the corporation
whose return is in issue be promptly notified in writing in
any case where the Secretary issues a designated summons (or
another summons litigation over which tolls the running of
the assessment period under the designated summons procedure)
to a third party. The provision applies to summonses issued
after date of enactment.

VI. Information Returns

17. Phone Number of Person Providing Payee Statements
Required to be Shown on Such Statement

Present Law

Businesses are not required to put their telephone
numbers on information returns.

Explanation of Provision

The provision requires businesses to put their telephone
numbers and the name of a contact person on information
returns (1099 forms).

18. Civil Damages for Fraudulent Filing of Information
Returns

Present Law

Present law does not provide for civil damages for
fraudulent filing of information returns.

Explanation of Provision

If a person willfully files a false or fraudulent
information return with respect to payments purported to be
made to another person, the other person may bring a civil
action for damages.



any examination.

15. Recovery of Civil Damages for Unauthorized
Collection Action

Present Law
A taxpayer may sue the United States for up to $100,000
of damages caused by an IRS employee who recklessly or
intentionally disregards the provisions of the Code or
Treasury regulations.

Explanation of Provision

The provision increases the cap to $1 million with
respect to reckless or intentional acts. [In addition, it
permits a taxpayer to sue the United States for damages
caused by an IRS employee who negligently disregards the
provisions of the Code or regulations, subject to a cap of
$100,000 in damages.

16. Designated. Summons
Present Law

The period for assessment of additional tax with respect
to most tax returns, corporate or otherwise, is three years.
The IRS and the taxpayer can together agree to extend the
period, either for a specified period of time or
indefinitely. The taxpayer may terminate an indefinite
agreement to extend the period by providing notice to the IRS
on the appropriate form.

During an audit, the IRS may seek information by issuing
an administrative summons. Such a summons will not. be
enforced by judicial process unless the Government (as a
practical matter, the Department of Justice) seeks and
obtains an order for enforcement in Federal court.

In certain cases the running of the assessment period is
suspended during the period (if any) in which the parties are
in court for the purpose of obtaining or avoiding judicial
enforcement with respect to an administrative summons. Such
a suspension is provided with respect to a corporate tax
return if a summons is issued at least 60 days before the day
on which the limitation period (as extended, if extensions
have been made) is scheduled to expire. In this case,
suspension is only permitted if the summons clearly states
that it is a “designated summons" for this purpose. Only one
summons may be treated as a designated summons for purposes
of any one tax return. The limitations period is suspended
during the judicial enforcement period of the designated
summons and of any other summons relating to the same tax
return that is issued within 30 days after the designated



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collection activities, and the amount collected.
22. Penalties Under Section 6672
Present Law
A responsible officer is subject to a penalty equal to
100 percent of trust fund taxes that are not paid to the
Government on a timely basis.

Explanation of Provision

The IRS must print appropriate warnings and issue new
publications containing information regarding this penalty.
This penalty does not apply to volunteer officers of
tax-exempt organizations if they are unpaid and do not
participate in the day-to-day or financial activities of the
organization. The IRS must provide prompt notification of
failures to deposit trust fund taxes.

VIII. Awarding of Costs and Certain Fees

23. Attorney's Fees: .Recovery for Costs during IRS Appeals
Process

Present Law
Taxpayers may recover reasonable administrative costs
under the same conditions that attorney's fees are
recoverable, commencing with the earlier of the notice of
decision by IRS Appeals or the notice of deficiency.

Explanation of Provision

The provision expands the availability of administrative
costs by moving the commencement date to the earlier of the
notice of proposed deficiency or the notice of deficiency.
Once a taxpayer substantially prevails in litigation and
files a written request, the IRS is required to provide
within 30 days all information and relevant records of the
IRS concerning the history of the taxpayer's case and the
substantial justification for the position taken by the IRS.
The IRS shall develop a form for this purpose.

24. Increase Limit on Attorney Fees
Present Law
Allowable attorney's fees may not exceed $75 per hour,

unless the court determines that the cost of living or
another factor justifies a higher rate.



Joint Committee on Taxation
JCX-6-92
March 3, 1992

DESCRIPTION OF TAXPAYER BILL OF RIGHTS 2 PROVISIONS

{Scheduled for Markup by the. Senate Committee on Finance
on March 3, 1992)
I. Additional Safeguards to Protect Taxpayers’ Rights
1. Establishment of Taxpayers' Advocate
Present Law

The IRS Ombudsman assists taxpayers in resolving
administrative difficulties with the IRS.

Explanation of Provision

The provision statutorily establishes the position of
Taxpayers' Advocate in the IRS as a replacement for the
Ombudsman. The Advocate would ‘be appointed by the
Commissioner. The provision also requires detailed annual
reports to the tax-writing committees, provides that problems
resolution officers report to the Taxpayer Advocate, and
provides that the Taxpayer Advocate report directly to the
IRS Commissioner.

2. Expansion of Authority to Issue Taxpayer Assistance
Orders (TAOs)

Present Law
The Ombudsman may issue a Taxpayer Assistance Order,
which requires the IRS to cease taking an action (such as a
collection action).

Explanation of Provision

The provision permits the issuance of a TAO requiring
the IRS to take action (such as issue a refund faster),
deletes the requirement of present law that the hardship
experienced by the taxpayer be "significant" as a condition
for the issuance of a TAO, provides that only the Taxpayer
Advocate, the Commissioner of the IRS, or a superior of those
two positions, as well as a delegate of the Taxpayer
Advocate, may modify or rescind a TAO, and permits the TAO to
specify a time period within which the TAO must be followed.


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from the date the proposed or temporary regulations are
published. For the period from the effective date of the
statute until the publication of the proposed or temporary
regulations, taxpayers will be governed by the statute and
other authorities, as under present law.
28. Required Notice to Taxpayers of Certain Payments

Present Law

The IRS receives payments that it cannot associate with
any outstanding tax liability.

Explanation of Provision

The IRS must make reasonable efforts to notify taxpayers
who have made payments that IRS cannot associate with any
outstanding tax liability.

29. Prohibition of Exchanging Confidential Client
Information for Forgiveness of Taxes

Present Law
It is unlawful for any person who prepares a tax return
for compensation knowingly or recklessly to disclose tax
return information.

Explanation of Provision

It is unlawful for any Federal employee to forgive (or
offer to forgive) any taxes due from an attorney, certified
public accountant, or enrolled agent in exchange for
information about that person's clients.


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19. Requirement to Verify Accuracy of Information
Returns

Present Law

Deficiencies determined by the IRS are generally
afforded a presumption of correctness.

Explanation of Provision

If a taxpayer asserts a reasonable dispute with respect
to any income reported on an information return and has fully
cooperated, the IRS shall have the obligation in court to
introduce evidence of the deficiency (beyond the Form 1099
itself) in order to prevail.

VII. Modifications to Penalty for Failure to Collect
and Pay Over Taxes

20. Trust Fund Taxes
Present Law
A responsible officer is subject to a penalty equal to
100 percent of trust fund taxes (social security and withheld
income taxes) that are not paid to the Government on a timely
basis. IRS provides for administrative appeals as to whether
a person is in fact a responsible officer.

Explanation of Provision

The provision requires IRS to issue a notice to an
individual the IRS has determined to be a responsible officer
at least 60 days before issuing a notice and demand for the
penalty. After exhausting administrative remedies within the
IRS, the taxpayer may seek a declaratory judgment in the Tax
Court as to whether the taxpayer is in fact a responsible
officer.

21. Disclosure of Certain Information Where More Than
One Person Is Subject to Responsible Officer Penalty

Present Law
It is unclear whether IRS has authority to disclose toa
responsible officer whether the IRS has attempted to collect
from other responsible officers.

Explanation of Provision

The IRS shall, upon written request of the responsible
officer, disclose in writing to the responsible officer
whether the IRS has attempted to collect a deficiency from
any other responsible officers, the general nature of



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9. Joint Return May be Made After Separate Returns
Without Full Payment of Tax

Present Law
Married taxpayers who had-.previously filed separate
returns may not file a joint return without first fully
paying the tax.

Explanation of Provision

The provision permits married taxpayers who had
previously filed separate returns to file joint returns
without fully paying the tax.

10. Representation of Absent Divorced or Separated Spouse
by Other Spouse

Present Law

A taxpayer who has filed a joint return with a spouse
may represent the spouse with respect to a deficiency for any
year a joint return was filed. IRS administrative procedures
may allow each spouse to appeal separately from the statutory
notice of deficiency.

Explanation of Provision

The provision provides that an individual who had filed
a joint return with a spouse but who is no longer married to
that spouse (or no longer resides in the same household) may
not represent the absent spouse at an examination of that
return unless the absent spouse permits it in writing.

Vv. Collection Activities
11. Notice of Proposed Deficiency
Present Law

Although not statutorily required to do so, the IRS
often issues a notice of proposed deficiency prior to
issuance of a notice of deficiency. Failure to issue a
notice of proposed deficiency does not invalidate the notice
of deficiency.

Explanation of Provision

The provision requires IRS to issue a notice of proposed
deficiency in every instance (except jeopardy). The notice
of proposed deficiency must be mailed at least 60 days before
any notice of deficiency. Failure to issue a notice of
proposed deficiency would invalidate the notice of
deficiency. The provision is effective one year from the



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6. Extension of Interest-Free Period for Payment of Tax
After Notice and Demand

Present Law

The Code provides a 10-day interest-free period within
which taxpayers may pay after notice and demand is made.

Explanation of Provision

The provision extends from 10 to 21 days the
interest-free period within which taxpayers may pay after
notice and demand is made, applicable only to amounts of less
than $100,000 (amounts of $100,000 and above continue to be
subject to a 10 day period).

Iv. Joint Returns

7. Requirement of Separate Deficiency Notices in Certain
Cases

Present Law
IRS must send duplicate original deficiency notices to
both spouses when the IRS has been notified that ‘separate
residences have been established.

Explanation of Provision

This rule will apply to all instances in which the
spouses did not file a joint return for the most recent
taxable year.

8. Disclosure of Collection Activities With Respect to
a Joint Return

Present Law
It is unclear whether IRS has authority to disclose to
one spouse whether the IRS has attempted to collect a
deficiency arising from a joint return from the other spouse.

Explanation of Provision

The provision requires the IRS, upon written request of
the spouse, to disclose in writing to the spouse whether the
IRS has attempted to collect a deficiency from the other
spouse, the general nature of the collection activities, and
the amount collected.



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II. Modifications to Installment Agreement Provisions

3. Notification of Reasons for Termination of Installment
Agreement

Present Law
The IRS must give prior notice and an explanation
before it terminates an installment agreement because the
taxpayer's financial condition has changed.

Explanation of Provision

The provision requires that this notice be given before
any termination (except in cases of jeopardy).

4. Administrative Review of Denial of Request for
Installment Agreement

Present Law

The Code does not require that the IRS provide an
administrative review of denials of installment agreements.

Explanation of Provision

The provision requires the IRS to provide written notice
of the reasons for denial of an installment agreement. The
IRS also must establish procedures for independent
administrative review of denials and terminations of
installment agreements.

III. Interest
5. Expansion of Authority to Abate Interest
Present Law

IRS may in its discretion abate interest attributable to
IRS error or delay in performing a ministerial act.

Explanation of Provision

The provision requires the IRS to abate interest in any
case in which the taxpayer establishes that there was an
unreasonable and excessive IRS delay and the taxpayer has
fully cooperated in resolving outstanding issues. In order
to allow the taxpayer to develop the facts, the IRS shall be
required, upon written request, to provide the taxpayer
within 30 days with all information and relevant records that
the IRS has with respect to the history of the taxpayer's
case for the time period involved. The IRS shall develop a
form for the purpose of such requests.