II 

109TH CONGRESS 

1ST SESSION S. 1591 

To amend the Internal Revenue Code of 1986 to modify the rules relating 

to the suspension of interest and certain penalties where the taxpayer 

is not contacted by the Internal Revenue Service within 18 months. 

IN THE SENATE OF THE UNITED STATES 

JULY 29, 2005 

Mr. BAUCUS (for himself and Mr. GRASSLEY) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the rules relating to the suspension of interest and certain penalties where the taxpayer is not contacted by 

the Internal Revenue Service within 18 months. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. MODIFICATIONS OF SUSPENSION OF INTEREST 

4 AND PENALTIES WHERE INTERNAL REVENUE 

5 SERVICE FAILS TO CONTACT TAXPAYER. 

6 (a) EFFECTIVE DATE OF EXCEPTION FROM SUSPEN7 SION RULES FOR CERTAIN LISTED AND REPORTABLE

8 TRANSACTIONS.— 
2 

•S 1591 IS

1 (1) IN GENERAL.—Paragraph (2) of section 

2 903(d) of the American Jobs Creation Act of 2004 

3 is amended to read as follows: 

4 ‘‘(2) EXCEPTION FOR REPORTABLE OR LISTED

5 TRANSACTIONS.— 

6 ‘‘(A) IN GENERAL.—The amendments 

7 made by subsection (c) shall apply with respect 

8 to interest accruing after October 3, 2004. 

9 ‘‘(B) SPECIAL RULE FOR CERTAIN LISTED

10 AND REPORTABLE TRANSACTIONS.— 

11 ‘‘(i) IN GENERAL.—Except as pro12 vided in clause (ii) or (iii), the amendments 

13 made by subsection (c) shall also apply 

14 with respect to interest accruing on or be15 fore October 3, 2004. 

16 ‘‘(ii) PARTICIPANTS IN SETTLEMENT

17 INITIATIVES.—Clause (i) shall not apply to 

18 any transaction if, pursuant to a published 

19 settlement initiative which is offered by the 

20 Secretary of the Treasury to a group of 

21 similarly situated taxpayers claiming bene22 fits from the transaction, the taxpayer has 

23 entered into a settlement agreement with 

24 respect to the tax liability arising in con25 nection with the transaction. 
3 

•S 1591 IS

1 ‘‘(iii) CLOSED TRANSACTIONS.— 

2 Clause (i) shall not apply to a transaction 

3 if, as of July 29, 2005 (May 9, 2005 in 

4 the case of a listed transaction)— 

5 ‘‘(I) the assessment of all Fed6 eral income taxes for the taxable year 

7 in which the tax liability to which the 

8 interest relates arose is prevented by 

9 the operation of any law or rule of 

10 law, or 

11 ‘‘(II) a closing agreement under 

12 section 7121 has been entered into 

13 with respect to the tax liability arising 

14 in connection with the transaction.’’. 

15 (2) EFFECTIVE DATE.—The amendment made 

16 by this subsection shall take effect as if included in 

17 the provisions of the American Jobs Creation Act of 

18 2004 to which it relates. 

19 (b) TREATMENT OF AMENDED RETURNS AND

20 OTHER SIMILAR NOTICES OF ADDITIONAL TAX OWED.— 

21 (1) IN GENERAL.—Section 6404(g)(1) of the 

22 Internal Revenue Code of 1986 (relating to suspen23 sion) is amended by adding at the end the following 

24 new sentence: ‘‘If, after the return for a taxable year 

25 is filed, the taxpayer provides to the Secretary 1 or 
4 

•S 1591 IS

1 more signed written documents showing that the 

2 taxpayer owes an additional amount of tax for the 

3 taxable year, clause (i) shall be applied by sub4 stituting the date the last of the documents was pro5 vided for the date on which the return is filed.’’ 

6 (2) EFFECTIVE DATE.—The amendment made 

7 by this subsection shall apply to documents provided 

8 on or after July 29, 2005. 

Æ