II 

118TH CONGRESS 

1ST SESSION S. 1177 

To provide a taxpayer bill of rights for small businesses. 

IN THE SENATE OF THE UNITED STATES 

APRIL 18, 2023 

Mr. CORNYN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To provide a taxpayer bill of rights for small businesses. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Business Taxpayer Bill of Rights Act of 2023’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 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. 


pbinns on DSKJLVW7X2PROD with $$_JOB
2 

•S 1177 IS

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. 

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-incompromise. 

1 SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF 

2 COSTS AND CERTAIN FEES. 

3 (a) SMALL BUSINESSES ELIGIBLE WITHOUT RE4 GARD TO NET WORTH.—Subparagraph (D) of section 

5 7430(c)(4) of the Internal Revenue Code of 1986 is 

6 amended by striking ‘‘and’’ at the end of clause (i)(II), 

7 by striking the period at the end of clause (ii) and insert8 ing ‘‘, and’’, and by adding at the end the following new 

9 clause: 

10 ‘‘(iii) in the case of an eligible small 

11 business, the net worth limitation in clause 

12 (ii) of such section shall not apply.’’. 

13 (b) ELIGIBLE SMALL BUSINESS.—Paragraph (4) of 

14 section 7430(c) of the Internal Revenue Code of 1986 is 

15 amended by adding at the end the following new subpara16 graph: 

17 ‘‘(F) ELIGIBLE SMALL BUSINESS.— 

18 ‘‘(i) IN GENERAL.—For purposes of 

19 subparagraph (D)(iii), the term ‘eligible 


pbinns on DSKJLVW7X2PROD with $$_JOB
3 

•S 1177 IS

1 small business’ means, with respect to any 

2 proceeding commenced in a taxable year— 

3 ‘‘(I) a corporation the stock of 

4 which is not publicly traded, 

5 ‘‘(II) a partnership, or 

6 ‘‘(III) a sole proprietorship, 

7 if the average annual gross receipts of such 

8 corporation, partnership, or sole propri9 etorship for the 3-taxable-year period pre10 ceding such taxable year does not exceed 

11 $50,000,000. For purposes of applying the 

12 test under the preceding sentence, rules 

13 similar to the rules of paragraphs (2) and 

14 (3) of section 448(c) shall apply. 

15 ‘‘(ii) ADJUSTMENT FOR INFLATION.— 

16 In the case of any calendar year after 

17 2023, the $50,000,000 amount in clause 

18 (i) shall be increased by an amount equal 

19 to— 

20 ‘‘(I) such dollar amount, multi21 plied by 

22 ‘‘(II) the cost-of-living adjust23 ment determined under section 1(f)(3) 

24 for such calendar year, determined by 

25 substituting ‘calendar year 2022’ for 


pbinns on DSKJLVW7X2PROD with $$_JOB
4 

•S 1177 IS

1 ‘calendar year 2016’ in subparagraph 

2 (A)(ii) thereof. 

3 If any amount as increased under the pre4 ceding sentence is not a multiple of $500, 

5 such amount shall be rounded to the next 

6 lowest multiple of $500.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to proceedings commenced after 

9 the date of the enactment of this Act. 

10 SEC. 3. CIVIL DAMAGES ALLOWED FOR RECKLESS OR IN11 TENTIONAL DISREGARD OF INTERNAL REV12 ENUE LAWS. 

13 (a) INCREASE IN AMOUNT OF DAMAGES.— 

14 (1) IN GENERAL.—Section 7433(b) of the In15 ternal Revenue Code of 1986 is amended by striking 

16 ‘‘$1,000,000 ($100,000, in the case of negligence)’’ 

17 and inserting ‘‘$5,000,000 ($500,000, in the case of 

18 negligence)’’. 

19 (2) ADJUSTMENT FOR INFLATION.—Section 

20 7433 of such Code is amended by adding at the end 

21 the following new subsection: 

22 ‘‘(f) ADJUSTMENT FOR INFLATION.—In the case of 

23 any calendar year after 2023, the $5,000,000 and 

24 $500,000 amounts in subsection (b) shall each be in25 creased by an amount equal to— 


pbinns on DSKJLVW7X2PROD with $$_JOB
5 

•S 1177 IS

1 ‘‘(1) such dollar amount, multiplied by 

2 ‘‘(2) the cost-of-living adjustment determined 

3 under section 1(f)(3) for such calendar year, deter4 mined by substituting ‘calendar year 2022’ for ‘cal5 endar year 2016’ in subparagraph (A)(ii) thereof. 

6 If any amount as increased under the preceding sentence 

7 is not a multiple of $500, such amount shall be rounded 

8 to the next lowest multiple of $500.’’. 

9 (b) EXTENSION OF TIME TO BRING ACTION.—Sec10 tion 7433(d)(3) of the Internal Revenue Code of 1986 is 

11 amended by striking ‘‘2 years’’ and inserting ‘‘5 years’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to actions of employees of the In14 ternal Revenue Service after the date of the enactment 

15 of this Act. 

16 SEC. 4. MODIFICATIONS RELATING TO CERTAIN OFFENSES 

17 BY OFFICERS AND EMPLOYEES IN CONNEC18 TION WITH REVENUE LAWS. 

19 (a) INCREASE IN PENALTY.—Section 7214 of the In20 ternal Revenue Code of 1986 is amended— 

21 (1) by striking ‘‘$10,000’’ in subsection (a) and 

22 inserting ‘‘$25,000’’, and 

23 (2) by striking ‘‘$5,000’’ in subsection (b) and 

24 inserting ‘‘$10,000’’. 


pbinns on DSKJLVW7X2PROD with $$_JOB
6 

•S 1177 IS

1 (b) ADJUSTMENT FOR INFLATION.—Section 7214 of 

2 the Internal Revenue Code of 1986, as amended by sub3 section (a), is amended by redesignating subsection (c) as 

4 subsection (d) and by inserting after subsection (b) the 

5 following new subsection: 

6 ‘‘(c) ADJUSTMENT FOR INFLATION.—In the case of 

7 any calendar year after 2023, the $25,000 amount in sub8 section (a) and the $10,000 amount in subsection (b) shall 

9 each be increased by an amount equal to— 

10 ‘‘(1) such dollar amount, multiplied by 

11 ‘‘(2) the cost-of-living adjustment determined 

12 under section 1(f)(3) for such calendar year, deter13 mined by substituting ‘calendar year 2022’ for ‘cal14 endar year 2016’ in subparagraph (A)(ii) thereof. 

15 If any amount as increased under the preceding sentence 

16 is not a multiple of $100, such amount shall be rounded 

17 to the next lowest multiple of $100.’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall take effect on the date of the enactment 

20 of this Act. 


pbinns on DSKJLVW7X2PROD with $$_JOB
7 

•S 1177 IS

1 SEC. 5. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR 

2 UNAUTHORIZED INSPECTION OR DISCLO3 SURE OF RETURNS AND RETURN INFORMA4 TION. 

5 (a) INCREASE IN AMOUNT OF DAMAGES.—Subpara6 graph (A) of section 7431(c)(1) of the Internal Revenue 

7 Code of 1986 is amended by striking ‘‘$1,000’’ and insert8 ing ‘‘$10,000’’. 

9 (b) ADJUSTMENT FOR INFLATION.—Section 7431 of 

10 the Internal Revenue Code of 1986 is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(i) ADJUSTMENT FOR INFLATION.—In the case of 

13 any calendar year after 2023, the $10,000 amount in sub14 section (c)(1)(A) shall be increased by an amount equal 

15 to— 

16 ‘‘(1) such dollar amount, multiplied by 

17 ‘‘(2) the cost-of-living adjustment determined 

18 under section 1(f)(3) for such calendar year, deter19 mined by substituting ‘calendar year 2022’ for ‘cal20 endar year 2016’ in subparagraph (A)(ii) thereof. 

21 If any amount as increased under the preceding sentence 

22 is not a multiple of $100, such amount shall be rounded 

23 to the next lowest multiple of $100.’’. 

24 (c) PERIOD FOR BRINGING ACTION.—Subsection (d) 

25 of section 7431 of the Internal Revenue Code of 1986 is 

26 amended by striking ‘‘2 years’’ and inserting ‘‘5 years’’. 


pbinns on DSKJLVW7X2PROD with $$_JOB
8 

•S 1177 IS

1 (d) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to inspections and disclosure occur3 ring on and after the date of the enactment of this Act. 

4 SEC. 6. BAN ON EX PARTE DISCUSSIONS. 

5 (a) IN GENERAL.—Notwithstanding section 

6 1001(a)(4) of the Internal Revenue Service Restructuring 

7 and Reform Act of 1998, the Internal Revenue Service 

8 shall prohibit any ex parte communications between offi9 cers in the Internal Revenue Service Independent Office 

10 of Appeals and other Internal Revenue Service employees 

11 with respect to any matter pending before such officers. 

12 (b) TERMINATION OF EMPLOYMENT FOR MIS13 CONDUCT.—Subject to subsection (c), the Commissioner 

14 of Internal Revenue shall terminate the employment of 

15 any employee of the Internal Revenue Service if there is 

16 a final administrative or judicial determination that such 

17 employee committed any act or omission prohibited under 

18 subsection (a) in the performance of the employee’s official 

19 duties. Such termination shall be a removal for cause on 

20 charges of misconduct. 

21 (c) DETERMINATION OF COMMISSIONER.— 

22 (1) IN GENERAL.—The Commissioner of Inter23 nal Revenue may take a personnel action other than 

24 termination for an act prohibited under subsection 

25 (a). 


pbinns on DSKJLVW7X2PROD with $$_JOB
9 

•S 1177 IS

1 (2) DISCRETION.—The exercise of authority 

2 under paragraph (1) shall be at the sole discretion 

3 of the Commissioner of Internal Revenue and may 

4 not be delegated to any other officer. At the sole dis5 cretion of the Commissioner of Internal Revenue, 

6 such Commissioner may establish a procedure which 

7 will be used to determine whether an individual 

8 should be referred to the Commissioner of Internal 

9 Revenue for a determination by the Commissioner 

10 under paragraph (1). 

11 (3) NO APPEAL.—Any determination of the 

12 Commissioner of Internal Revenue under this sub13 section may not be appealed in any administrative or 

14 judicial proceeding. 

15 (d) TIGTA REPORTING OF TERMINATION OR MITI16 GATION.—Section 7803(d)(1)(E) of the Internal Revenue 

17 Code of 1986 is amended by inserting ‘‘or section 6 of 

18 the Small Business Taxpayer Bill of Rights Act of 2023’’ 

19 after ‘‘1998’’. 

20 SEC. 7. RIGHT TO INDEPENDENT CONFERENCE. 

21 Section 1001 of the Internal Revenue Service Re22 structuring and Reform Act of 1998 is amended by redes23 ignating subsection (c) as subsection (d) and by inserting 

24 after subsection (b) the following new subsection: 


pbinns on DSKJLVW7X2PROD with $$_JOB
10 

•S 1177 IS

1 ‘‘(c) RIGHT TO INDEPENDENT CONFERENCE.— 

2 Under the organization plan of the Internal Revenue Serv3 ice, a taxpayer shall have the right to a conference with 

4 the Internal Revenue Service Independent Office of Ap5 peals which does not include personnel from the Office of 

6 Chief Counsel for the Internal Revenue Service or the 

7 compliance functions of the Internal Revenue Service un8 less the taxpayer specifically consents to the participation 

9 of such personnel.’’. 

10 SEC. 8. ALTERNATIVE DISPUTE RESOLUTION PROCE11 DURES. 

12 (a) IN GENERAL.—Section 7123 of the Internal Rev13 enue Code of 1986 is amended by adding at the end the 

14 following new subsection: 

15 ‘‘(d) AVAILABILITY OF DISPUTE RESOLUTIONS.— 

16 ‘‘(1) IN GENERAL.—The procedures prescribed 

17 under subsection (b)(1) and the pilot program estab18 lished under subsection (b)(2) shall provide that a 

19 taxpayer may request mediation or arbitration in 

20 any case unless the Secretary has specifically ex21 cluded the type of issue involved in such case or the 

22 class of cases to which such case belongs as not ap23 propriate for resolution under such subsection. The 

24 Secretary shall make any determination that ex25 cludes a type of issue or a class of cases public withVerDate Sep 11 2014 05:48 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1177.IS S1177

pbinns on DSKJLVW7X2PROD with $$_JOB
11 

•S 1177 IS

1 in 5 working days and provide an explanation for 

2 each determination. 

3 ‘‘(2) INDEPENDENT MEDIATORS.— 

4 ‘‘(A) IN GENERAL.—The procedures pre5 scribed under subsection (b)(1) shall provide 

6 the taxpayer an opportunity to elect to have the 

7 mediation conducted by an independent, neutral 

8 individual not employed by the Internal Rev9 enue Service Independent Office of Appeals. 

10 ‘‘(B) COST AND SELECTION.— 

11 ‘‘(i) IN GENERAL.—Any taxpayer 

12 making an election under subparagraph 

13 (A) shall be required— 

14 ‘‘(I) to share the costs of such 

15 independent mediator equally with the 

16 Internal Revenue Service Independent 

17 Office of Appeals, and 

18 ‘‘(II) to limit the selection of the 

19 mediator to a roster of recognized na20 tional or local neutral mediators. 

21 ‘‘(ii) EXCEPTION.—Clause (i)(I) shall 

22 not apply to any taxpayer who is an indi23 vidual or who was a small business in the 

24 preceding calendar year if such taxpayer 

25 had an adjusted gross income that did not 


pbinns on DSKJLVW7X2PROD with $$_JOB
12 

•S 1177 IS

1 exceed 250 percent of the poverty level, as 

2 determined in accordance with criteria es3 tablished by the Director of the Office of 

4 Management and Budget, in the taxable 

5 year preceding the request. 

6 ‘‘(iii) SMALL BUSINESS.—For pur7 poses of clause (ii), the term ‘small busi8 ness’ has the meaning given such term 

9 under section 41(b)(3)(D)(iii). 

10 ‘‘(3) AVAILABILITY OF PROCESS.—The proce11 dures prescribed under subsection (b)(1) and the 

12 pilot program established under subsection (b)(2) 

13 shall provide the opportunity to elect mediation or 

14 arbitration at the time when the case is first filed 

15 with the Internal Revenue Service Independent Of16 fice of Appeals and at any time before deliberations 

17 in the appeal commence.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall take effect on the date of the enactment 

20 of this Act. 

21 SEC. 9. INCREASE IN MONETARY PENALTIES FOR CERTAIN 

22 UNAUTHORIZED DISCLOSURES OF INFORMA23 TION. 

24 (a) IN GENERAL.—Paragraphs (1), (2), (3), and (4) 

25 of section 7213(a) of the Internal Revenue Code of 1986 


pbinns on DSKJLVW7X2PROD with $$_JOB
13 

•S 1177 IS

1 are each amended by striking ‘‘$5,000’’ and inserting 

2 ‘‘$10,000’’. 

3 (b) ADJUSTMENT FOR INFLATION.—Subsection (a) 

4 of section 7213 of the Internal Revenue Code of 1986 is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(6) ADJUSTMENT FOR INFLATION.—In the 

8 case of any calendar year after 2023, the $10,000 

9 amounts in paragraphs (1), (2), (3), and (4) shall 

10 each be increased by an amount equal to— 

11 ‘‘(A) such dollar amount, multiplied by 

12 ‘‘(B) the cost-of-living adjustment deter13 mined under section 1(f)(3) for such calendar 

14 year, determined by substituting ‘calendar year 

15 2022’ for ‘calendar year 2016’ in subparagraph 

16 (A)(ii) thereof. 

17 If any amount as increased under the preceding sen18 tence is not a multiple of $100, such amount shall 

19 be rounded to the next lowest multiple of $100.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to disclosures made after the date 

22 of the enactment of this Act. 


pbinns on DSKJLVW7X2PROD with $$_JOB
14 

•S 1177 IS

1 SEC. 10. BAN ON RAISING NEW ISSUES ON APPEAL. 

2 (a) IN GENERAL.—Chapter 77 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following new section: 

5 ‘‘SEC. 7531. PROHIBITION ON INTERNAL REVENUE SERVICE 

6 RAISING NEW ISSUES IN AN INTERNAL AP7 PEAL. 

8 ‘‘(a) IN GENERAL.—In reviewing an appeal of any 

9 determination initially made by the Internal Revenue 

10 Service, the Internal Revenue Service Independent Office 

11 of Appeals may not consider or decide any issue that is 

12 not within the scope of the initial determination. 

13 ‘‘(b) CERTAIN ISSUES DEEMED OUTSIDE OF SCOPE

14 OF DETERMINATION.—For purposes of subsection (a), the 

15 following matters shall be considered to be not within the 

16 scope of a determination: 

17 ‘‘(1) Any issue that was not raised in a notice 

18 of deficiency or an examiner’s report which is the 

19 subject of the appeal. 

20 ‘‘(2) Any deficiency in tax which was not in21 cluded in the initial determination. 

22 ‘‘(3) Any theory or justification for a tax defi23 ciency which was not considered in the initial deter24 mination. 

25 ‘‘(c) NO INFERENCE WITH RESPECT TO ISSUES

26 RAISED BY TAXPAYERS.—Nothing in this section shall be 


pbinns on DSKJLVW7X2PROD with $$_JOB
15 

•S 1177 IS

1 construed to provide any limitation in addition to any limi2 tations in effect on the date of the enactment of this sec3 tion on the right of a taxpayer to raise an issue, theory, 

4 or justification on an appeal from a determination initially 

5 made by the Internal Revenue Service that was not within 

6 the scope of the initial determination.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for chapter 77 of the Internal Revenue Code of 1986 is 

9 amended by adding at the end the following new item: 

‘‘Sec. 7531. Prohibition on Internal Revenue Service raising new issues in an 

internal appeal.’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to matters filed or pending with 

12 the Internal Revenue Service Independent Office of Ap13 peals on or after the date of the enactment of this Act. 

14 SEC. 11. LIMITATION ON ENFORCEMENT OF LIENS AGAINST 

15 PRINCIPAL RESIDENCES. 

16 (a) IN GENERAL.—Section 7403(a) of the Internal 

17 Revenue Code of 1986 is amended— 

18 (1) by striking ‘‘In any case’’ and inserting the 

19 following: 

20 ‘‘(1) IN GENERAL.—In any case’’; and 

21 (2) by adding at the end the following new 

22 paragraph: 

23 ‘‘(2) LIMITATION WITH RESPECT TO PRINCIPAL

24 RESIDENCE.— 


pbinns on DSKJLVW7X2PROD with $$_JOB
16 

•S 1177 IS

1 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

2 not apply to any property used as the principal 

3 residence of the taxpayer (within the meaning 

4 of section 121) unless the Secretary of the 

5 Treasury makes a written determination that— 

6 ‘‘(i) all other property of the taxpayer, 

7 if sold, is insufficient to pay the tax or dis8 charge the liability, and 

9 ‘‘(ii) such action will not create an 

10 economic hardship for the taxpayer. 

11 ‘‘(B) DELEGATION.—For purposes of this 

12 paragraph, the Secretary of the Treasury may 

13 not delegate any responsibilities under subpara14 graph (A) to any person other than— 

15 ‘‘(i) the Commissioner of Internal 

16 Revenue, or 

17 ‘‘(ii) a district director or assistant 

18 district director of the Internal Revenue 

19 Service.’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to actions filed after the date of 

22 the enactment of this Act. 


pbinns on DSKJLVW7X2PROD with $$_JOB
17 

•S 1177 IS

1 SEC. 12. ADDITIONAL PROVISIONS RELATING TO MANDA2 TORY TERMINATION FOR MISCONDUCT. 

3 (a) TERMINATION OF UNEMPLOYMENT FOR INAP4 PROPRIATE REVIEW OF TAX-EXEMPT STATUS.—Section 

5 1203(b) of the Internal Revenue Service Restructuring 

6 and Reform Act of 1998 (26 U.S.C. 7804 note) is amend7 ed by striking ‘‘and’’ at the end of paragraph (9), by strik8 ing the period at the end of paragraph (10) and inserting 

9 ‘‘; and’’, and by adding at the end the following new para10 graph: 

11 ‘‘(11) in the case of any review of an applica12 tion for tax-exempt status by an organization de13 scribed in section 501(c) of the Internal Revenue 

14 Code of 1986, developing or using any methodology 

15 that applies disproportionate scrutiny to any appli16 cant based on the ideology expressed in the name or 

17 purpose of the organization.’’. 

18 (b) MANDATORY UNPAID ADMINISTRATIVE LEAVE

19 FOR MISCONDUCT.—Paragraph (1) of section 1203(c) of 

20 the Internal Revenue Service Restructuring and Reform 

21 Act of 1998 (26 U.S.C. 7804 note) is amended by adding 

22 at the end the following new sentence: ‘‘Notwithstanding 

23 the preceding sentence, if the Commissioner of Internal 

24 Revenue takes a personnel action other than termination 

25 for an act or omission described in subsection (b), the 


pbinns on DSKJLVW7X2PROD with $$_JOB
18 

•S 1177 IS

1 Commissioner shall place the employee on unpaid adminis2 trative leave for a period of not less than 90 days.’’. 

3 (c) LIMITATION ON ALTERNATIVE PUNISHMENT.— 

4 Paragraph (1) of section 1203(c) of the Internal Revenue 

5 Service Restructuring and Reform Act of 1998 (26 U.S.C. 

6 7804 note) is amended by striking ‘‘The Commissioner’’ 

7 and inserting ‘‘Except in the case of an act or omission 

8 described in subsection (b)(3)(A), the Commissioner’’. 

9 SEC. 13. REVIEW BY THE TREASURY INSPECTOR GENERAL 

10 FOR TAX ADMINISTRATION. 

11 (a) REVIEW.—Subsection (k)(1) of section 412 of 

12 title 5, United States Code, is amended— 

13 (1) in subparagraph (C), by striking ‘‘and’’ at 

14 the end; 

15 (2) by redesignating subparagraph (D) as sub16 paragraph (E); 

17 (3) by inserting after subparagraph (C) the fol18 lowing new subparagraph: 

19 ‘‘(D) shall— 

20 ‘‘(i) review any criteria employed by 

21 the Internal Revenue Service to select tax 

22 returns (including applications for recogni23 tion of tax-exempt status) for examination 

24 or audit, assessment or collection of defi25 ciencies, criminal investigation or referral, 


pbinns on DSKJLVW7X2PROD with $$_JOB
19 

•S 1177 IS

1 refunds for amounts paid, or any height2 ened scrutiny or review in order to deter3 mine whether the criteria discriminates 

4 against taxpayers on the basis of race, reli5 gion, or political ideology; and 

6 ‘‘(ii) consult with the Internal Rev7 enue Service on recommended amendments 

8 to such criteria in order to eliminate any 

9 discrimination identified pursuant to the 

10 review described in clause (i); and’’; and 

11 (4) in subparagraph (E), as so redesignated, by 

12 striking ‘‘and (C)’’ and inserting ‘‘(C), and (D)’’. 

13 (b) SEMIANNUAL REPORT.—Subsection (g) of section 

14 412 of title 5, United States Code, is amended by adding 

15 at the end the following new paragraph: 

16 ‘‘(3) SEMIANNUAL REPORTS.—Any semiannual 

17 report made by the Treasury Inspector General for 

18 Tax Administration that is required pursuant to sec19 tion 405(b) shall include— 

20 ‘‘(A) a statement affirming that the Treas21 ury Inspector General for Tax Administration 

22 has reviewed the criteria described in subsection 

23 (k)(1)(D) and consulted with the Internal Rev24 enue Service regarding such criteria; and 


pbinns on DSKJLVW7X2PROD with $$_JOB
20 

•S 1177 IS

1 ‘‘(B) a description and explanation of any 

2 such criteria that was identified as discrimina3 tory by the Treasury Inspector General for Tax 

4 Administration.’’. 

5 SEC. 14. DEDUCTION FOR EXPENSES RELATING TO CER6 TAIN AUDITS. 

7 (a) IN GENERAL.—Subsection (a) of section 62 of the 

8 Internal Revenue Code of 1986 is amended by inserting 

9 after paragraph (21) the following new paragraph: 

10 ‘‘(22) EXPENSES RELATING TO CERTAIN AU11 DITS.—The deduction allowed by section 224.’’. 

12 (b) DEDUCTION FOR EXPENSES RELATING TO CER13 TAIN AUDITS.—Part VII of subchapter B of chapter 1 of 

14 the Internal Revenue Code of 1986 is amended by redesig15 nating section 224 as section 225 and by inserting after 

16 section 223 the following new section: 

17 ‘‘SEC. 224. EXPENSES RELATING TO CERTAIN AUDITS. 

18 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

19 individual, there shall be allowed as a deduction for the 

20 taxable year an amount equal to so much of the qualified 

21 NRP expenses paid or incurred during the taxable year 

22 as does not exceed $5,000. 

23 ‘‘(b) QUALIFIED NRP EXPENSES.—For purposes of 

24 this section, the term ‘qualified NRP expenses’ means 

25 amounts which but for subsection (c) would be allowed as 


pbinns on DSKJLVW7X2PROD with $$_JOB
21 

•S 1177 IS

1 a deduction under section 162 or 212(3) in connection 

2 with an audit of the taxpayer’s return of the tax imposed 

3 by this chapter for any taxable year under the National 

4 Research Program, but only if such audit results in no 

5 increase in the tax liability of the taxpayer for such taxable 

6 year. 

7 ‘‘(c) DENIAL OF DOUBLE BENEFIT.—No deduction 

8 shall be allowed under any other provision of this chapter 

9 for any amount for which a deduction is allowed under 

10 this section.’’. 

11 (c) CLERICAL AMENDMENT.—The table of sections 

12 for part VII of subchapter B of chapter 1 of the Internal 

13 Revenue Code of 1986 is amended by striking the item 

14 relating to section 224 and by inserting after the item re15 lating to section 223 the following new items: 

‘‘Sec. 224. Expenses relating to certain audits. 

‘‘Sec. 225. Cross reference.’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 SEC. 15. TERM LIMIT FOR NATIONAL TAXPAYER ADVOCATE. 

20 (a) IN GENERAL.—Subparagraph (B) of section 

21 7803(c)(1) of the Internal Revenue Code of 1986 is 

22 amended by adding at the end the following new clause: 

23 ‘‘(v) TERM.—The term of the Na24 tional Taxpayer Advocate shall be a 10- 


pbinns on DSKJLVW7X2PROD with $$_JOB
22 

•S 1177 IS

1 year term, beginning with a term to com2 mence on the date which is 18 months 

3 after the date of the enactment of the 

4 Small Business Taxpayer Bill of Rights 

5 Act of 2023. Each subsequent term shall 

6 begin on the day after the date on which 

7 the previous term expires. The National 

8 Taxpayer Advocate may be appointed to 

9 serve more than 1 term.’’. 

10 (b) EFFECTIVE DATE.—The term of any individual 

11 serving as the National Taxpayer Advocate under section 

12 7803(c) of the Internal Revenue Code of 1986 as of the 

13 date of the enactment of this Act shall end as of the day 

14 before the date which is 18 months after such date of en15 actment, unless such individual is reappointed as the Na16 tional Taxpayer Advocate for a subsequent term pursuant 

17 to section 7803(c)(1)(B)(v) of such Code. 

18 SEC. 16. RELEASE OF IRS LEVY DUE TO ECONOMIC HARD19 SHIP FOR BUSINESS TAXPAYERS. 

20 (a) IN GENERAL.—Subparagraph (D) of section 

21 6343(a)(1) of the Internal Revenue Code of 1986 is 

22 amended by striking ‘‘or’’ and inserting ‘‘including the fi23 nancial condition of the taxpayer’s viable trade or busi24 ness, or’’. 


pbinns on DSKJLVW7X2PROD with $$_JOB
23 

•S 1177 IS

1 (b) DETERMINATION OF ECONOMIC HARDSHIP.— 

2 Subsection (a) of section 6343 of the Internal Revenue 

3 Code of 1986 is amended by adding at the end the fol4 lowing new paragraph: 

5 ‘‘(4) DETERMINATION OF ECONOMIC HARDSHIP

6 TO BUSINESS TAXPAYER.—In determining whether 

7 to release any levy under paragraph (1)(D), the Sec8 retary shall consider— 

9 ‘‘(A) the economic viability of the business, 

10 ‘‘(B) the nature and extent of the hardship 

11 created by the levy (including whether the tax12 payer has exercised ordinary business care and 

13 prudence), and 

14 ‘‘(C) the potential harm to individuals if 

15 the business is liquidated.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to levies made after the date of 

18 the enactment of this Act. 

19 SEC. 17. REPEAL OF PARTIAL PAYMENT REQUIREMENT ON 

20 SUBMISSIONS OF OFFERS-IN-COMPROMISE. 

21 (a) IN GENERAL.—Section 7122 of the Internal Rev22 enue Code of 1986 is amended by striking subsection (c) 

23 and by redesignating subsections (d), (e), (f), and (g) as 

24 subsections (c), (d), (e), and (f), respectively. 

25 (b) CONFORMING AMENDMENTS.— 


pbinns on DSKJLVW7X2PROD with $$_JOB
24 

•S 1177 IS

1 (1) Paragraph (3) of section 7122(c) of the In2 ternal Revenue Code of 1986, as redesignated by 

3 subsection (a), is amended by inserting ‘‘and’’ at the 

4 end of subparagraph (A), by striking ‘‘, and’’ at the 

5 end of subparagraph (B) and inserting a period, and 

6 by striking subparagraph (C). 

7 (2) Section 7122 of such Code, as amended by 

8 this section, is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(g) APPLICATION OF USER FEE.—In the case of 

11 any assessed tax or other amounts imposed under this title 

12 with respect to such tax which is the subject of an offer13 in-compromise, such tax or other amounts shall be reduced 

14 by any user fee imposed under this title with respect to 

15 such offer-in-compromise.’’. 

16 (3) Section 6159(g) of such Code is amended 

17 by striking ‘‘section 7122(e)’’ and inserting ‘‘section 

18 7122(d)’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to offers-in-compromise submitted 

21 after the date of the enactment of this Act. 

Æ 


pbinns on DSKJLVW7X2PROD with $$_JOB