68242 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules

independent administrative review.

Absent jeopardy, collection action is

stayed until the appeals officer has

informed the taxpayer of a decision.

The proposed regulations provide

that, if a taxpayer disagrees with a

determination to alter, modify, or

terminate an installment agreement, the

taxpayer may initiate an independent

administrative review of the

determination by calling the telephone

number listed on the notice within 30

days of the date of the notice. This will

set the review process in motion.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It also has

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) does not apply to these

regulations, and because the regulation

does not impose a collection of

information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments that are submitted

timely (a signed original and eight (8)

copies) to the IRS. All comments will be

available for public inspection and

copying. A public hearing may be

scheduled if requested in writing by a

person that timely submits written

comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal author of these

regulations is Kevin B. Connelly, Office

of Assistant Chief Counsel (General

Litigation) CC:EL:GL, IRS. However,

other personnel from the IRS and

Treasury Department participated in

their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes,

Excise taxes, Gift taxes, Income taxes,

Penalties, Reporting and recordkeeping

requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 301 is

proposed to be amended as follows:

PART 301—PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority citation

for part 301 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.6159–1 is amended by

revising paragraphs (c)(4) and (g) to read as

follows:

§ 301.6159–1 Agreements for payment of

tax liability in installments.

* * * * *

(c) * * *

(4) Notice. Unless the director

determines that collection of the tax is

in jeopardy, the director will notify the

taxpayer in writing at least 30 days

before altering, modifying, or

terminating an installment agreement

pursuant to paragraph (c)(1) or (2) of

this section. A notice provided pursuant

to this paragraph must briefly describe

the reason for the intended alteration,

modification, or termination. If the

taxpayer disagrees with the director’s

decision to terminate, alter, or modify

the installment agreement, the taxpayer

has the right to an independent

administrative review. The taxpayer

may initiate an independent

administrative review by calling the

telephone number listed on the notice

within 30 days of the date of the notice.

If, upon calling the telephone number

listed on the notice, the dispute is not

resolved to the taxpayer’s satisfaction,

the taxpayer must speak with a

manager. If, after speaking with a

manager, the dispute still is not resolved

to the taxpayer’s satisfaction, the

taxpayer may request the Office of

Appeals to independently review the

decision. The Office of Appeals shall

conduct a review to determine whether

the facts and circumstances warrant the

alteration, modification, or termination

of the taxpayer’s installment agreement.

* * * * *

(g) Effective date. This section is

applicable December 23, 1994, except

that paragraph (c)(4) of this section is

applicable on the date final regulations

are published in the Federal Register.

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

[FR Doc. 97–33790 Filed 12–30–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[Reg–251502–96]

RIN 1545–AU68

Civil Cause of Action for Certain

Unauthorized Collection Actions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations relating to civil

causes of action for damages caused by

unlawful collection actions of officers

and employees of the Internal Revenue

Service (IRS). The proposed regulations

reflect amendments made by the

Taxpayer Bill of Rights 2. The proposed

regulations affect all taxpayers who file

civil actions for damages caused by

unlawful collection actions of officers or

employees of the IRS.

DATES: Written comments and requests

for a public hearing must be received by

March 2, 1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (Reg–251502–96),

Room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions

may be hand delivered between the

hours of 8 a.m. and 5 p.m. to:

CC:DOM:CORP:R (Reg–251502–96),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington DC. Alternatively,

taxpayers may submit comments

electronically via the Internet by

selecting the ‘‘Tax Regs’’ option on the

IRS Home Page, or by submitting

comments directly to the IRS Internet

site at http://www.irs.ustreas.gov/prod/

taxllregs/comments.html.

FOR FURTHER INFORMATION CONTACT:

Kevin B. Connelly, (202) 622-3640 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Procedure and

Administration Regulations (26 CFR

part 301) relating to civil actions for

damages caused by unlawful collection

actions of officers or employees of the

IRS. The Taxpayer Bill of Rights 2

(TBOR2), Public Law 104–168, 110 Stat.

1465 (1996), amended section 7433 of

the Internal Revenue Code of 1986

(Code) by raising the cap on the amount

a taxpayer may be awarded for damages

caused by unlawful collection actions

from $100,000 to $1,000,000. Under
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68243

prior law, a suit for damages could not

be brought unless the taxpayer first

exhausted administrative remedies

available within the IRS. TBOR2

eliminated this jurisdictional

prerequisite but authorized federal

district courts to reduce damage awards

if the taxpayer fails to exhaust

administrative remedies. The proposed

regulations reflect these changes.

Explanation of Provision

Section 801 of TBOR2 amended

section 7433(a) of the Code by

increasing from $100,000 to $1,000,000

the cap on the amount of damages that

a taxpayer may recover in Federal

district court from the United States for

damages caused by any unauthorized

collection actions of an officer or

employee of the IRS occurring after July

30, 1996. Section 802 of TBOR2

amended section 7433(d)(1) of the Code

by providing that a taxpayer’s failure to

exhaust administrative remedies

available within the IRS shall only be a

factor that the court may consider in

determining whether to reduce the

amount of an award. In actions filed

prior to the enactment of TBOR2, the

failure to exhaust administrative

remedies was a jurisdictional bar to an

action. The proposed regulations reflect

the changes made by TBOR 2.

The regulations that are being

amended by these proposed regulations

currently provide that administrative

remedies shall be considered exhausted

on the earlier of: (1) the date the

decision is rendered by the IRS on an

administrative claim for damages filed

in accordance with the manner and

form set forth in the regulations; or (2)

the date six months after the date an

administrative claim is filed in

accordance with the manner and form

set forth in the regulations. 26 CFR

§ 301.7433–1(d). An exception to this

rule is provided with respect to civil

actions filed in federal district court

prior to July 31, 1996. Under this

exception, if an administrative claim is

filed during the last six months of the

period of limitations for filing a civil

action for damages under section 7433

of the Code, administrative remedies

shall be considered exhausted on the

date the administrative claim is filed.

The exception was included in the

current regulations because, prior to the

enactment of TBOR2, the failure to

exhaust administrative remedies was a

jurisdictional bar to an action. Without

the exception, if a taxpayer filed an

administrative claim during the last six

months of the period of limitations and

the IRS did not consider the claim

before the limitations period expired,

the taxpayer automatically would have

been barred from filing suit. These

provisions still apply to actions that

were filed on or before July 30, 1996, the

enactment date of TBOR2.

With respect to actions filed after July

30, 1996, the proposed regulations do

not contain the exception for

administrative claims filed during the

last six months of the period of

limitation because the failure to exhaust

administrative remedies is no longer a

bar to an action. Since the enactment of

TBOR2, the failure to exhaust

administrative remedies is just one

factor the court may consider in

determining whether to reduce an

award of damages. Pursuant to the

notice of proposed rulemaking, if a

taxpayer waits until the last six months

of the period of limitations to file an

administrative claim, the IRS does not

reach a determination before the

limitations period expires, and the

taxpayer files a timely action under

section 7433, the court may consider the

facts and circumstances of the case and

decide what effect the late filing of the

claim should have on the amount of

damages awarded.

The proposed manner and form for

filing an administrative claim for

damages remain the same as those set

forth in the current regulations at 26

CFR 301.7433–1(e)(1) and (2). The claim

must be sent in writing to the district

director (marked for the attention of the

Chief, Special Procedures Function) of

the district in which the taxpayer

resides. The claim must include: (1) The

name, current address, current home

and work telephone numbers and any

convenient times to be contacted, and

taxpayer identification number of the

taxpayer making the claim; (2) the

grounds, in reasonable detail, for the

claim (include copies of any available

substantiating documentation or

correspondence with the Internal

Revenue Service); (3) a description of

the injuries incurred by the taxpayer

filing the claim (include copies of any

available substantiating documentation

or evidence); (4) the dollar amount of

the claim, including any damages that

have not yet been incurred but which

are reasonably foreseeable (include

copies of any available substantiating

documentation or evidence); and (5) the

signature of the taxpayer or duly

authorized representative.

The notice of proposed rulemaking

does not have a new effective date

paragraph because amended paragraphs

(a), (d), and (e) set forth the effective

dates of the new statutory provisions as

well as the statutory provisions they are

replacing.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It also has

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) does not apply to these

regulations, and because the regulation

does not impose a collection of

information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments that are submitted

timely (a signed original and eight (8)

copies) to the IRS. All comments will be

available for public inspection and

copying. A public hearing may be

scheduled if requested in writing by a

person that timely submits written

comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal author of these

regulations is Kevin B. Connelly, Office

of Assistant Chief Counsel (General

Litigation) CC:EL:GL, IRS. However,

other personnel from the IRS and

Treasury Department participated in

their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes,

Excise taxes, Gift taxes, Income taxes,

Penalties, Reporting and

recordingkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 301 is

proposed to be amended as follows:

PART 301—PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority citation

for part 301 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. In § 301.7433–1, paragraphs (a), (d),

(e), and (f) are revised to read as follows:
68244 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules

§ 301.7433 Civil cause of action for certain

unauthorized collection actions.

(a) In general. If, in connection with

the collection of a federal tax with

respect to a taxpayer, an officer or an

employee of the Internal Revenue

Service recklessly or intentionally

disregards any provision of the Internal

Revenue Code or any regulation

promulgated under the Internal Revenue

Code, such taxpayer may bring a civil

action for damages against the United

States in federal district court. The

taxpayer has a duty to mitigate damages.

The total amount of damages

recoverable is the lesser of $1,000,000

($100,000 if the act giving rise to

damages occurred before July 31, 1996)

or the sum of—

(1) The actual, direct economic

damages sustained as a proximate result

of the reckless or intentional actions of

the officer or employee; and

(2) Costs of the action.

* * * * *

(d) Exhaustion of administrative

remedies in suits brought prior to July

31, 1996—(1) General. With respect to

civil actions filed in federal district

court prior to July 31, 1996, no action

may be maintained before the

exhaustion of administrative remedies.

Administrative remedies are exhausted

on the earlier of the following dates—

(i) The date the decision is rendered

on an administrative claim filed in

accordance with paragraph (f) of this

section; or

(ii) The date six months after the date

an administrative claim is filed in

accordance with paragraph (f) of this

section.

(2) Exception. If an administrative

claim is filed in accordance with

paragraph (f) of this section during the

last six months of the period of

limitations described in paragraph (g) of

this section, the taxpayer may file an

action in federal district court any time

after the administrative claim is filed

and before the expiration of the period

of limitations.

(3) No action in federal district court

for any sum in excess of the dollar

amount sought in the administrative

claim. With respect to civil actions filed

in federal district court prior to July 31,

1996, no action may be instituted for

any sum in excess of the amount

(already incurred and estimated) of the

administrative claim filed under

paragraph (f) of this section, except

where the increased amount is based

upon newly discovered evidence not

reasonably discoverable at the time the

administrative claim was filed, or upon

allegation and proof of intervening facts

relating to the amount of the claim.

(e) Exhaustion of administrative

remedies in suits brought after July 30,

1996—(1) General. With respect to civil

actions filed in federal district court

after July 30, 1996, the amount of

damages awarded under paragraph (a) of

this section may be reduced if the court

determines that the taxpayer has not

exhausted the administrative remedies

available within the Internal Revenue

Service.

(2) Administrative remedies

exhausted. Administrative remedies

shall be considered exhausted on the

earlier of—

(i) The date the decision is rendered

on a claim filed in accordance with

paragraph (f) of this section; or

(ii) The date six months after the date

an administrative claim is filed in

accordance with paragraph (f) of this

section.

(f) Procedures for an administrative

claim—(1) Manner. An administrative

claim for damages shall be sent in

writing to the district director (marked

for the attention of the Chief, Special

Procedures Function) of the district in

which the taxpayer resides.

(2) Form. The administrative claim

shall include—

(i) The name, current address, current

home and work telephone numbers and

any convenient times to be contacted,

and taxpayer identification number of

the taxpayer making the claim;

(ii) The grounds, in reasonable detail,

for the claim (include copies of any

available substantiating documentation

or correspondence with the Internal

Revenue Service);

(iii) A description of the injuries

incurred by the taxpayer filing the claim

(include copies of any available

substantiating documentation or

evidence);

(iv) The dollar amount of the claim,

including any damages that have not yet

been incurred but which are reasonably

foreseeable (include copies of any

available substantiating documentation

or evidence); and

(v) The signature of the taxpayer or

the taxpayer’s duly authorized

representative as defined in paragraph

(f)(3) of this section.

(3) Duly authorized representative.

For purposes of paragraph (f)(2)(v) of

this section, a duly authorized

representative is any attorney, certified

public accountant, enrolled actuary, or

any other person permitted to represent

the taxpayer before the Internal Revenue

Service who is not disbarred or

suspended from practice before the

Internal Revenue Service and who has

a written power of attorney executed by

the taxpayer.

* * * * *

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

[FR Doc. 97–33791 Filed 12–30–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 250, 243 and 290, and 43

CFR Part 4

RIN 1010–AC21 and AC08

Administrative Appeals Process and

Policy for Release of Third-Party

Proprietary Information

AGENCY: Minerals Management Service,

Interior.

ACTION: Notice of a public workshop,

withdrawal of a proposed rule.

SUMMARY: The Minerals Management

Service (MMS) has withdrawn the

proposed rule published in the Federal

Register on April 4, 1997 (62 FR 16116),

which would have authorized release of

third-party proprietary information in

certain circumstances to parties

involved in appeals and alternative

dispute resolution efforts. In addition,

MMS plans to revise the notice of

proposed rule published in the Federal

Register on October 28, 1996 (61 FR

55607), which would have amended

regulations governing the administrative

appeals process. Based in large part on

a report from the Royalty Policy

Committee, which provides advice to

the Secretary of the Interior under the

authority of the Federal Advisory

Committee Act, MMS plans to revise its

regulations governing its administrative

appeals and alternative dispute

resolution processes, including

authority for disclosure of third-party

proprietary information. The MMS will

hold a public workshop to discuss these

matters before issuing the revised notice

of proposed rule. Interested parties are

invited to attend and participate in the

workshop and are requested to register

in advance.

DATES: The public workshop will be

held on Tuesday, January 27, 1998, 8:30

a.m.—3:00 p.m., Mountain Standard

Time.

ADDRESSES: The workshop will be held

at the Embassy Suites, Denver

Southeast, 7525 East Hampden Avenue,

Denver, Colorado 80231, telephone

number (303) 696–6644.

FOR FURTHER INFORMATION CONTACT: Mr.

Hugh Hilliard, Chief, Appeals Division