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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1096 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1096

  To restructure the Internal Revenue Service, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 31, 1997

  Mr. Kerrey (for himself and Mr. Grassley) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To restructure the Internal Revenue Service, and for other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Internal Revenue 
Service Restructuring and Reform Act of 1997''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code.
Sec. 2. Congressional findings and declaration of purposes.
   TITLE I--EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE 
                        INTERNAL REVENUE SERVICE

     Subtitle A--Executive Branch Governance and Senior Management

Sec. 101. Internal Revenue Service Oversight Board.
Sec. 102. Commissioner of Internal Revenue; Chief Counsel; other 
                            officials.
Sec. 103. Other personnel.
                  Subtitle B--Personnel Flexibilities

Sec. 111. Personnel flexibilities.
                      TITLE II--ELECTRONIC FILING

Sec. 201. Electronic filing of tax and information returns.
Sec. 202. Extension of time to file for electronic filers.
Sec. 203. Paperless electronic filing.
Sec. 204. Regulation of preparers.
Sec. 205. Paperless payment.
Sec. 206. Return-free tax system.
Sec. 207. Access to account information.
               TITLE III--TAXPAYER PROTECTION AND RIGHTS

Sec. 301. Expansion of authority to issue taxpayer assistance orders.
Sec. 302. Expansion of authority to award costs and certain fees.
Sec. 303. Civil damages for negligence in collection actions.
Sec. 304. Disclosure of criteria for examination selection.
Sec. 305. Archival of records of Internal Revenue Service.
Sec. 306. Tax return information.
Sec. 307. Freedom of information.
Sec. 308. Offers-in-compromise.
Sec. 309. Elimination of interest differential on overpayments and 
                            underpayments.
Sec. 310. Elimination of application of failure to pay penalty during 
                            period of installment agreement.
Sec. 311. Safe harbor for qualification for installment agreements.
Sec. 312. Payment of taxes.
Sec. 313. Low income taxpayer clinics.
Sec. 314. Jurisdiction of the Tax Court.
Sec. 315. Cataloging complaints.
Sec. 316. Procedures involving taxpayer interviews.
Sec. 317. Explanation of joint and several liability.
Sec. 318. Procedures relating to extensions of statute of limitations 
                            by agreement.
Sec. 319. Review of penalty administration.
Sec. 320. Study of treatment of all taxpayers as separate filing units.
Sec. 321. Study of burden of proof.
TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

                         Subtitle A--Oversight

Sec. 401. Expansion of powers of the Joint Committee on Taxation.
Sec. 402. Coordinated oversight reports.
                           Subtitle B--Budget

Sec. 411. Budget discretion.
Sec. 412. Funding for century date change.
Sec. 413. Financial management advisory group.
                     Subtitle C--Tax Law Complexity

Sec. 421. Role of Internal Revenue Service.
Sec. 422. Tax complexity analysis.
Sec. 423. Simplified tax and wage reporting system.
Sec. 424. Compliance burden estimates.

SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.

    (a) The Congress finds the following:
            (1) The structure of the Internal Revenue Service should be 
        strengthened to ensure focus and better target its budgeting, 
        staffing, and technology to serve the American taxpayer and 
        collect the Federal revenue.
            (2) The American public expects timely, accurate, and 
        respectful service from the Internal Revenue Service.
            (3) The job of the Internal Revenue Service is to operate 
        as an efficient financial management organization.
            (4) The bulk of the Federal revenue is generated through 
        voluntary compliance. Taxpayer service and education, as well 
        as targeted compliance and enforcement initiatives, increase 
        voluntary compliance.
            (5) While the Internal Revenue Service must maintain a 
        strong enforcement presence, its core and the core of the 
        Federal revenue stream lie in a revamped, modern, 
        technologically advanced organization that can track finances, 
        send out clear notices, and assist taxpayers promptly and 
        efficiently.
            (6) The Internal Revenue Service governance, management, 
        and oversight structures must: develop and maintain a shared 
        vision with continuity; set and maintain priorities and 
        strategic direction; impose accountability on senior 
        management; provide oversight through a credible board, 
        including members who bring private sector expertise to the 
        Internal Revenue Service; develop appropriate measures of 
        success; align budget and technology with priorities and 
        strategic direction; and coordinate oversight and identify 
        problems at an early stage.
            (7) The Internal Revenue Service must use information 
        technology as an enabler of its strategic objectives.
            (8) Electronic filing can increase cost savings and 
        compliance.
            (9) In order to ensure that fewer taxpayers are subject to 
        improper treatment by the Internal Revenue Service, Congress 
        and the agency need to focus on preventing problems before they 
        occur.
            (10) There currently is no mechanism in place to ensure 
        that Members of Congress have a complete understanding of how 
        tax legislation will affect taxpayers and the Internal Revenue 
        Service and to create incentives to simplify the tax law, and 
        to ensure that Congress hears directly from the Internal 
        Revenue Service during the legislative process.
    (b) The purposes of this Act are as follows:
            (1) To restructure the Internal Revenue Service, 
        transforming it into a world class service organization.
            (2) To establish taxpayer satisfaction as the goal of the 
        Internal Revenue Service, such that the Internal Revenue 
        Service should only initiate contact with a taxpayer if the 
        agency is prepared to devote the resources necessary for a 
        proper and timely resolution of the matter.
            (3) To provide for direct accountability to the President 
        for tax administration, an Internal Revenue Service Oversight 
        Board, a strengthened Commissioner of Internal Revenue, and 
        coordinated congressional oversight to ensure that there are 
        clear lines of accountability and that the leadership of the 
        Internal Revenue Service has the continuity and expertise to 
        guide the agency.
            (4) To enable the Internal Revenue Service to recruit and 
        train a first-class workforce that will be rewarded for 
        performance and held accountable for working with taxpayers to 
        solve problems.
            (5) To establish paperless filing as the preferred and most 
        convenient means of filing tax returns for the vast majority of 
        taxpayers within 10 years of enactment of this Act.
            (6) To provide additional taxpayer protections and rights 
        and to ensure that taxpayers receive fair, impartial, timely, 
        and courteous treatment from the Internal Revenue Service.
            (7) To establish the resolution of the century date change 
        problem as the highest technology priority of the Internal 
        Revenue Service.
            (8) To establish procedures to minimize complexity in the 
        tax law and simplify tax administration, and provide Congress 
        with an independent view of tax administration from the 
        Internal Revenue Service.

   TITLE I--EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE 
                        INTERNAL REVENUE SERVICE

     Subtitle A--Executive Branch Governance and Senior Management

SEC. 101. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

    (a) In General.--Section 7802 (relating to the Commissioner of 
Internal Revenue) is amended to read as follows:

``SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

    ``(a) Establishment.--There is established within the Department of 
the Treasury the Internal Revenue Service Oversight Board (in this 
subchapter referred to as the `Board').
    ``(b) Membership.--
            ``(1) Composition.--The Board shall be composed of 9 
        members, of whom--
                    ``(A) 7 shall be individuals who are not full-time 
                Federal officers or employees, who are appointed by the 
                President, by and with the advice and consent of the 
                Senate, and who shall be considered special government 
                employees pursuant to paragraph (2),
                    ``(B) 1 shall be the Secretary of the Treasury or, 
                if the Secretary so designates, the Deputy Secretary of 
                the Treasury, and
                    ``(C) 1 shall be a representative of an 
                organization that represents a substantial number of 
                Internal Revenue Service employees who is appointed by 
                the President, by and with the advice and consent of 
                the Senate.
            ``(2) Special government employees.--
                    ``(A) Qualifications.--Members of the Board 
                described in paragraph (1)(A) shall be appointed solely 
                on the basis of their professional experience and 
                expertise in the following areas:
                            ``(i) Management of large service 
                        organizations.
                            ``(ii) Customer service.
                            ``(iii) Compliance.
                            ``(iv) Information technology.
                            ``(v) Organization development.
                            ``(vi) The needs and concerns of taxpayers.
                In the aggregate, the members of the Board described in 
                paragraph (1)(A) should collectively bring to bear 
                expertise in these enumerated areas.
                    ``(B) Terms.--Each member who is described in 
                paragraph (1)(A) shall be appointed for a term of 5 
                years, except that of the members first appointed--
                            ``(i) 1 member shall be appointed for a 
                        term of 1 year,
                            ``(ii) 1 member shall be appointed for a 
                        term of 2 years,
                            ``(iii) 2 members shall be appointed for a 
                        term of 3 years, and
                            ``(iv) 1 member shall be appointed for a 
                        term of 4 years.
                    ``(C) Reappointment.--An individual who is 
                described in paragraph (1)(A) may be appointed to no 
                more than two 5-year terms on the Board.
                    ``(D) Special government employees.--During such 
                periods as they are performing services for the Board, 
                members who are not Federal officers or employees shall 
                be treated as special government employees (as defined 
                in section 202 of title 18, United States Code).
                    ``(E) Claims.--
                            ``(i) In general.--Members of the Board who 
                        are described in paragraph (1)(A) shall have no 
                        personal liability under Federal law with 
                        respect to any claim arising out of or 
                        resulting from an act or omission by such 
                        member within the scope of service as a member. 
                        The preceding sentence shall not be construed 
                        to limit personal liability for criminal acts 
                        or omissions, willful or malicious conduct, 
                        acts or omissions for private gain, or any 
                        other act or omission outside the scope of the 
                        service of such member on the Board.
                            ``(ii) Effect on other law.--This 
                        subparagraph shall not be construed--
                                    ``(I) to affect any other 
                                immunities and protections that may be 
                                available to such member under 
                                applicable law with respect to such 
                                transactions,
                                    ``(II) to affect any other right or 
                                remedy against the United States under 
                                applicable law, or
                                    ``(III) to limit or alter in any 
                                way the immunities that are available 
                                under applicable law for Federal 
                                officers and employees not described in 
                                this subparagraph.
            ``(3) Vacancy.--Any vacancy on the Board--
                    ``(A) shall not affect the powers of the Board, and
                    ``(B) shall be filled in the same manner as the 
                original appointment.
            ``(4) Removal.--
                    ``(A) In general.--A member of the Board may be 
                removed at the will of the President.
                    ``(B) Secretary or delegate.--An individual 
                described in subsection (b)(1)(B) shall be removed upon 
                termination of employment.
                    ``(C) Representative of internal revenue service 
                employees.--A member who is from an organization that 
                represents a substantial number of Internal Revenue 
                Service employees shall be removed upon termination of 
                employment, membership, or other affiliation with such 
                organization.
    ``(c) General Responsibilities.--
            ``(1) In general.--The Board shall oversee the Internal 
        Revenue Service in the administration, management, conduct, 
        direction, and supervision of the execution and application of 
        the internal revenue laws or related statutes and tax 
        conventions to which the United States is a party.
            ``(2) Exceptions.--The Board shall have no responsibilities 
        or authority with respect to--
                    ``(A) the development and formulation of Federal 
                tax policy relating to existing or proposed internal 
                revenue laws, related statutes, and tax conventions,
                    ``(B) specific law enforcement activities of the 
                Internal Revenue Service, including compliance 
                activities such as criminal investigations, 
                examinations, and collection activities, or
                    ``(C) specific activities of the Internal Revenue 
                Service delegated to employees of the Internal Revenue 
                Service pursuant to delegation orders in effect as of 
                the date of the enactment of this subsection, including 
                delegation order 106 relating to procurement authority, 
                except to the extent that such delegation orders are 
                modified subsequently by the Secretary.
            ``(3) Restriction on disclosure of return information to 
        board members.--No return, return information, or taxpayer 
        return information (as defined in section 6103(b)) may be 
        disclosed to any member of the Board described in subsection 
        (b)(1)(A) or (C). Any request for information not permitted to 
        be disclosed under the preceding sentence, and any contact 
        relating to a specific taxpayer, made by a member of the Board 
        to an officer or employee of the Internal Revenue Service shall 
        be reported by such officer or employee to the Secretary and 
        the Joint Committee on Taxation.
    ``(d) Specific Responsibilities.--The Board shall have the 
following specific responsibilities:
            ``(1) Strategic plans.--To review and approve strategic 
        plans of the Internal Revenue Service, including the 
        establishment of--
                    ``(A) mission and objectives, and standards of 
                performance relative to either, and
                    ``(B) annual and long-range strategic plans.
            ``(2) Operational plans.--To review the operational 
        functions of the Internal Revenue Service, including--
                    ``(A) plans for modernization of the tax system,
                    ``(B) plans for outsourcing or managed competition, 
                and
                    ``(C) plans for training and education.
            ``(3) Management.--To provide for--
                    ``(A) the selection and appointment, evaluation, 
                and removal of the Commissioner of Internal Revenue,
                    ``(B) the review of the Commissioner's selection, 
                evaluation, and compensation of senior managers, and
                    ``(C) the review of the Commissioner's plans for 
                reorganization of the Internal Revenue Service.
            ``(4) Budget.--To--
                    ``(A) review and approve the budget request of the 
                Internal Revenue Service prepared by the Commissioner,
                    ``(B) submit such budget request to the Secretary 
                of the Treasury,
                    ``(C) ensure that the budget request supports the 
                annual and long-range strategic plans, and
                    ``(D) ensure appropriate financial audits of the 
                Internal Revenue Service.
The Secretary shall submit the budget request referred to in 
subparagraph (B) for any fiscal year to the President who shall submit 
such request, without revision, to Congress together with the 
President's annual budget request for the Internal Revenue Service for 
such fiscal year.
    ``(e) Board Personnel Matters.--
            ``(1) Compensation of members.--
                    ``(A) In general.--Each member of the Board who is 
                described in subsection (b)(1)(A) shall be compensated 
                at a rate of $30,000 per year. All other members of the 
                Board shall serve without compensation for such 
                service.
                    ``(B) Chairperson.--In lieu of the amount specified 
                in subparagraph (A), the Chairperson of the Board shall 
                be compensated at a rate of $50,000 per year if such 
                Chairperson is described in subsection (b)(1)(A).
            ``(2) Travel expenses.--The members of the Board shall be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of services for the Board.
            ``(3) Staff.--On the request of the Chairperson of the 
        Board, the Commissioner shall detail to the Board such 
        personnel as may be necessary to enable the Board to perform 
        its duties. Such detail shall be without interruption or loss 
        of civil service status or privilege.
            ``(4) Procurement of temporary and intermittent services.--
        The Chairperson of the Board may procure temporary and 
        intermittent services under section 3109(b) of title 5, United 
        States Code.
    ``(f) Administrative Matters.--
            ``(1) Chair.--The members of the Board shall elect a 
        chairperson for a 2-year term.
            ``(2) Committees.--The Board may establish such committees 
        as the Board determines appropriate.
            ``(3) Meetings.--The Board shall meet at least once each 
        month and at such other times as the Board determines 
        appropriate.
            ``(4) Reports.--The Board shall each year report to the 
        President and the Congress with respect to the conduct of its 
responsibilities under this title.''.
    (b) Conforming Amendments.--
            (1) Section 4946(c) (relating to definitions and special 
        rules for chapter 42) is amended--
                    (A) by striking ``or'' at the end of paragraph (5),
                    (B) by striking the period at the end of paragraph 
                (6) and inserting ``, or'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(7) a member of the Internal Revenue Service Oversight 
        Board.''.
            (2) The table of sections for subchapter A of chapter 80 is 
        amended by striking the item relating to section 7802 and 
        inserting the following new item:

                              ``Sec. 7802. Internal Revenue Service 
                                        Oversight Board.''
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. COMMISSIONER OF INTERNAL REVENUE; CHIEF COUNSEL; OTHER 
              OFFICIALS.

    (a) In General.--Section 7803 (relating to other personnel) is 
amended to read as follows:

``SEC. 7803. COMMISSIONER OF INTERNAL REVENUE; CHIEF COUNSEL; OTHER 
              OFFICIALS.

    ``(a) Commissioner of Internal Revenue.--
            ``(1) Appointment.--There shall be in the Department of the 
        Treasury a Commissioner of Internal Revenue who shall be 
        appointed by the Internal Revenue Service Oversight Board to a 
        5-year term and compensated without regard to chapters 33, 51, 
        and 53 of title 5, United States Code. The appointment shall be 
        made on the basis of demonstrated ability in management and 
        without regard to political affiliation or activity. The Board 
        may reappoint the Commissioner to subsequent terms so long as 
        performance is satisfactory or better.
            ``(2) Duties.--The Commissioner shall--
                    ``(A) administer, manage, conduct, direct, and 
                supervise the execution and application of the internal 
                revenue laws or related statutes and tax conventions to 
                which the United States is a party; and
                    ``(B) when a vacancy occurs, recommend a candidate 
                for appointment as Chief Counsel for the Internal 
                Revenue Service to the President, and may recommend the 
                removal of such Chief Counsel to the President.
            ``(3) Consultation with board.--The Commissioner shall 
        consult with the Board on all matters set forth in paragraphs 
        (2) and (3) (other than subparagraph (A)) of section 
        7802(d)(2).
            ``(4) Pay.--The Commissioner is authorized to be paid at an 
        annual rate of basic pay not to exceed the maximum rate of 
        basic pay of level II of the Executive Schedule under section 
        5311 of title 5, United States Code, including any applicable 
        locality-based comparability payment that may be authorized 
        under section 5304 of such title 5.
    ``(b) Chief Counsel for the Internal Revenue Service.--
            ``(1) Appointment.--There shall be in the Department of the 
        Treasury a Chief Counsel for the Internal Revenue Service who 
        shall be appointed by the President, by and with the advice and 
        consent of the Senate.
            ``(2) Duties.--The Chief Counsel shall be the chief law 
        officer for the Internal Revenue Service and shall perform such 
        duties as may be prescribed by the Secretary of the Treasury. 
        To the extent that the Chief Counsel performs duties relating 
        to the development of rules and regulations promulgated under 
        this title, final decision making authority shall remain with 
        the Secretary.
            ``(3) Pay.--The Chief Counsel is authorized to be paid at 
        an annual rate of basic pay not to exceed the maximum rate of 
        basic pay of level III of the Executive Schedule under section 
        5311 of title 5, United States Code, including any applicable 
        locality-based comparability payment that may be authorized 
        under section 5304 of such title 5.
    ``(c) Assistant Commissioner for Employee Plans and Exempt 
Organizations.--
            ``(1) Establishment of office.--There is established within 
        the Internal Revenue Service an office to be known as the 
        `Office of Employee Plans and Exempt Organizations' to be under 
        the supervision and direction of an Assistant Commissioner of 
        Internal Revenue. As head of the Office, the Assistant 
        Commissioner shall be responsible for carrying out such 
        functions as the Secretary may prescribe with respect to 
        organizations exempt from tax under section 501(a) and with 
        respect to plans to which part I of subchapter D of chapter 1 
        applies (and with respect to organizations designed to be 
        exempt under such section and plans designed to be plans to 
        which such part applies) and other nonqualified deferred 
compensation arrangements. The Assistant Commissioner shall report 
annually to the Commissioner with respect to the Assistant 
Commissioner's responsibilities under this section.
            ``(2) Authorization of appropriations.--There is authorized 
        to be appropriated to the Internal Revenue Service solely to 
        carry out the functions of the Office an amount equal to the 
        sum of--
                    ``(A) so much of the collection from taxes under 
                section 4940 (relating to excise tax based on 
                investment income) as would have been collected if the 
                rate of tax under such section was 2 percent during the 
                second preceding fiscal year, and
                    ``(B) the greater of--
                            ``(i) an amount equal to the amount 
                        described in subparagraph (A), or
                            ``(ii) $30,000,000.
            ``(3) User fees.--All user fees collected by the Office 
        shall be dedicated to carry out the functions of the Office.
    ``(d) Office of Taxpayer Advocate.--
            ``(1) In general.--
                    ``(A) There is established in the Internal Revenue 
                Service an office to be known as the `Office of the 
                Taxpayer Advocate'. Such office shall be under the 
                supervision and direction of an official to be known as 
                the `Taxpayer Advocate' who shall be appointed by and 
                report directly to the Commissioner of Internal 
                Revenue, with the approval of the Internal Revenue 
                Service Oversight Board. The Taxpayer Advocate shall be 
                entitled to compensation at the same rate as the 
                highest level official reporting directly to the 
                Commissioner of Internal Revenue.
                    ``(B) As a qualification for appointment as the 
                Taxpayer Advocate, an individual must have substantial 
                experience representing taxpayers before the Internal 
                Revenue Service or with taxpayer rights issues.
                    ``(C) An individual who, before being appointed as 
                the Taxpayer Advocate, was an officer or employee of 
                the Internal Revenue Service may be so appointed only 
                if such individual agrees not to accept any employment 
                with the Internal Revenue Service for at least 5 years 
                after ceasing to be the Taxpayer Advocate.
            ``(2) Functions of office.--
                    ``(A) In general.--It shall be the function of the 
                Office of Taxpayer Advocate to--
                            ``(i) assist taxpayers in resolving 
                        problems with the Internal Revenue Service,
                            ``(ii) identify areas in which taxpayers 
                        have problems in dealings with the Internal 
                        Revenue Service,
                            ``(iii) to the extent possible, propose 
                        changes in the administrative practices of the 
                        Internal Revenue Service to mitigate problems 
                        identified under clause (ii), and
                            ``(iv) identify potential legislative 
                        changes which may be appropriate to mitigate 
                        such problems.
                    ``(B) Annual reports.--
                            ``(i) Objectives.--Not later than June 30 
                        of each calendar year after 1995, the Taxpayer 
                        Advocate shall report to the Committee on Ways 
                        and Means of the House of Representatives and 
                        the Committee on Finance of the Senate on the 
                        objectives of the Taxpayer Advocate for the 
                        fiscal year beginning in such calendar year. 
                        Any such report shall contain full and 
                        substantive analysis, in addition to 
                        statistical information.
                            ``(ii) Activities.--Not later than December 
                        31 of each calendar year after 1995, the 
                        Taxpayer Advocate shall report to the Committee 
                        on Ways and Means of the House of 
                        Representatives and the Committee on Finance of 
                        the Senate on the activities of the Taxpayer 
                        Advocate during the fiscal year ending during 
                        such calendar year. Any such report shall 
                        contain full and substantive analysis, in 
                        addition to statistical information, and 
                        shall--
                                    ``(I) identify the initiatives the 
                                Taxpayer Advocate has taken on 
                                improving taxpayer services and 
                                Internal Revenue Service 
                                responsiveness,
                                    ``(II) contain recommendations 
                                received from individuals with the 
                                authority to issue Taxpayer Assistance 
                                Orders under section 7811,
                                    ``(III) contain a summary of at 
                                least 20 of the most serious problems 
                                encountered by taxpayers, including a 
                                description of the nature of such 
                                problems,
                                    ``(IV) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which action has 
                                been taken and the result of such 
                                action,
                                    ``(V) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which action 
                                remains to be completed and the period 
                                during which each item has remained on 
                                such inventory,
                                    ``(VI) contain an inventory of the 
                                items described in subclauses (I), 
                                (II), and (III) for which no action has 
                                been taken, the period during which 
                                each item has remained on such 
                                inventory, the reasons for the 
                                inaction, and identify any Internal 
                                Revenue Service official who is 
                                responsible for such inaction,
                                    ``(VII) identify any Taxpayer 
                                Assistance Order which was not honored 
                                by the Internal Revenue Service in a 
                                timely manner, as specified under 
                                section 7811(b),
                                    ``(VIII) contain recommendations 
                                for such administrative and legislative 
                                action as may be appropriate to resolve 
                                problems encountered by taxpayers,
                                    ``(IX) describe the extent to which 
                                regional problem resolution officers 
                                participate in the selection and 
                                evaluation of local problem resolution 
                                officers,
                                    ``(X) identify areas of the tax law 
                                that impose significant compliance 
                                burdens on taxpayers or the Internal 
                                Revenue Service, including specific 
                                recommendations for remedying these 
                                problems,
                                    ``(XI) in conjunction with the 
                                National Director of Appeals, identify 
                                the 10 most litigated issues for each 
                                category of taxpayers (e.g., 
                                individuals, self-employed individuals, 
                                and small businesses), including 
                                recommendations for mitigating such 
                                disputes, and
                                    ``(XII) include such other 
                                information as the Taxpayer Advocate 
                                may deem advisable.
                            ``(iii) Report to be submitted directly.--
                        Each report required under this subparagraph 
                        shall be provided directly to the Committees 
                        described in clauses (i) and (ii) without any 
                        prior review or comment from the Commissioner, 
                        the Internal Revenue Service Oversight Board, 
                        the Secretary of the Treasury, any other 
                        officer or employee of the Department of the 
                        Treasury, or the Office of Management and 
                        Budget.
                    ``(C) Other responsibilities.--The Taxpayer 
                Advocate shall--
                            ``(i) monitor the coverage and geographic 
                        allocation of problem resolution officers,
                            ``(ii) develop guidance to be distributed 
                        to all Internal Revenue Service officers and 
                        employees outlining the criteria for referral 
                        of taxpayer inquiries to problem resolution 
                        officers,
                            ``(iii) ensure that the local telephone 
                        numbers for the problem resolution officer in 
                        each internal revenue district is published and 
                        available to taxpayers, and
                            ``(iv) in conjunction with the 
                        Commissioner, develop career paths for problem 
                        resolution officers choosing to make a career 
                        in the Office of the Taxpayer Advocate.
            ``(3) Responsibilities of commissioner.--The Commissioner 
        shall establish procedures requiring a formal response to all 
        recommendations submitted to the Commissioner by the Taxpayer 
        Advocate within 3 months after submission to the 
        Commissioner.''.
    (b) Amendment of President's Authority To Appoint Chief Counsel for 
Internal Revenue Service.--
            (1) Paragraph (2) of section 7801(b) (relating to the 
        office of General Counsel for the Department) is amended to 
        read as follows:
            ``(2) Assistant general counsels.--The Secretary of the 
        Treasury may appoint, without regard to the provisions of the 
        civil service laws, and fix the duties of not to exceed five 
assistant General Counsels.''.
            (2)(A) Subsection (f)(2) of section 301 of title 31, United 
        States Code, is amended by striking ``an Assistant General 
        Counsel who shall be the'' and inserting ``a''.
            (B) Section 301 of such title 31 is amended by adding at 
        the end the following new subsection:
    ``(h) Cross Reference.--For provisions relating to the appointment 
of officers and employees of the Internal Revenue Service, see 
subchapter A of chapter 80 of the Internal Revenue Code of 1986.''.
    (c) Conforming Amendments.--
            (1) The table of sections for subchapter A of chapter 80 is 
        amended by striking the item relating to section 7803 and 
        inserting the following new item:

                              ``Sec. 7803. Commissioner of Internal 
                                        Revenue; Chief Counsel; other 
                                        officials.''
            (2) Subsection (b) of section 5109 of title 5, United 
        States Code, is amended by striking ``7802(b)'' and inserting 
        ``7803(c)''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 103. OTHER PERSONNEL.

    (a) In General.--Section 7804 (relating to the effect of 
reorganization plans) is amended to read as follows:

``SEC. 7804. OTHER PERSONNEL.

    ``(a) Appointment and Supervision.--The Commissioner of Internal 
Revenue is authorized to employ such number of persons as the 
Commissioner deems proper for the administration and enforcement of the 
internal revenue laws, and the Commissioner shall issue all necessary 
directions, instructions, orders, and rules applicable to such persons.
    ``(b) Posts of Duty of Employees in Field Service or Traveling.--
            ``(1) Designation of post of duty.--The Commissioner shall 
        determine and designate the posts of duty of all such persons 
        engaged in field work or traveling on official business outside 
        of the District of Columbia.
            ``(2) Detail of personnel from field service.--The 
        Commissioner may order any such person engaged in field work to 
        duty in the District of Columbia, for such periods as the 
        Commissioner may prescribe, and to any designated post of duty 
        outside the District of Columbia upon the completion of such 
        duty.
    ``(c) Delinquent Internal Revenue Officers and Employees.--If any 
officer or employee of the Treasury Department acting in connection 
with the internal revenue laws fails to account for and pay over any 
amount of money or property collected or received by him in connection 
with the internal revenue laws, the Secretary shall issue notice and 
demand to such officer or employee for payment of the amount which he 
failed to account for and pay over, and, upon failure to pay the amount 
demanded within the time specified in such notice, the amount so 
demanded shall be deemed imposed upon such officer or employee and 
assessed upon the date of such notice and demand, and the provisions of 
chapter 64 and all other provisions of law relating to the collection 
of assessed taxes shall be applicable in respect of such amount.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 6344 is amended by striking 
        ``section 7803(d)'' and inserting ``section 7804(c)''.
            (2) The table of sections for subchapter A of chapter 80 is 
        amended by striking the item relating to section 7804 and 
        inserting the following new item:

                              ``Sec. 7804. Other personnel.''
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

                  Subtitle B--Personnel Flexibilities

SEC. 111. PERSONNEL FLEXIBILITIES.

    (a) In General.--Part III of title 5, United States Code, is 
amended by adding at the end the following new subpart:

                       ``Subpart I--Miscellaneous

``CHAPTER 93--PERSONNEL FLEXIBILITIES RELATING TO THE INTERNAL REVENUE 
                                SERVICE

``Sec.
``9301. General requirements.
``9302. Flexibilities relating to performance management.
``9303. Classification and pay flexibilities.
``9304. Staffing flexibilities.
``9305. Flexibilities relating to demonstration projects.
``Sec. 9301. General requirements
    ``(a) Conformance With Merit System Principles, Etc.--Any 
flexibilities under this chapter shall be exercised in a manner 
consistent with--
            ``(1) chapter 23, relating to merit system principles and 
        prohibited personnel practices; and
            ``(2) provisions of this title (outside of this subpart) 
        relating to preference eligibles.
    ``(b) Requirement Relating to Units Represented by Labor 
Organizations.--
            ``(1) Written agreement required.--Employees within a unit 
        with respect to which a labor organization is accorded 
        exclusive recognition under chapter 71 shall not be subject to 
        the exercise of any flexibility under section 9302, 9303, 9304, 
        or 9305, unless there is a written agreement between the 
        Internal Revenue Service and the organization permitting such 
        exercise.
            ``(2) Definition of a written agreement.--In order to 
        satisfy paragraph (1), a written agreement--
                    ``(A) need not be a collective bargaining agreement 
                within the meaning of section 7103(8); and
                    ``(B) may not be an agreement imposed by the 
                Federal Service Impasses Panel under section 7119.
    ``(c) Flexibilities for Which OPM Approval Is Required.--
            ``(1) In general.--Except as provided in paragraph (2), 
        flexibilities under this chapter may be exercised by the 
        Internal Revenue Service without prior approval of the Office 
        of Personnel Management.
            ``(2) Exceptions.--The flexibilities under subsections (c) 
        through (e) of section 9303 may be exercised by the Internal 
        Revenue Service only after a specific plan describing how those 
        flexibilities are to be exercised has been submitted to and 
        approved, in writing, by the Director of the Office of 
        Personnel Management.
``Sec. 9302. Flexibilities relating to performance management
    ``(a) In General.--The Commissioner of Internal Revenue shall, 
within 180 days after the date of the enactment of this chapter, 
establish a performance management system which--
            ``(1) subject to section 9301(b), shall cover all employees 
        of the Internal Revenue Service other than--
                    ``(A) the members of the Internal Revenue Service 
                Oversight Board;
                    ``(B) the Commissioner of Internal Revenue; and
                    ``(C) the Chief Counsel for the Internal Revenue 
                Service;
            ``(2) shall maintain individual accountability by--
                    ``(A) establishing retention standards which--
                            ``(i) shall permit the accurate evaluation 
                        of each employee's performance on the basis of 
                        criteria relating to the duties and 
                        responsibilities of the position held by such 
                        employee; and
                            ``(ii) shall be communicated to an employee 
                        before the start of any period with respect to 
                        which the performance of such employee is to be 
                        evaluated using such standards;
                    ``(B) providing for periodic performance 
                evaluations to determine whether retention standards 
                are being met; and
                    ``(C) with respect to any employee whose 
                performance does not meet retention standards, using 
                the results of such employee's performance evaluation 
                as a basis for--
                            ``(i) denying increases in basic pay, 
                        promotions, and credit for performance under 
                        section 3502; and
                            ``(ii) the taking of other appropriate 
                        action, such as a reassignment or an action 
                        under chapter 43; and
            ``(3) shall provide for--
                    ``(A) establishing goals or objectives for 
                individual, group, or organizational performance (or 
                any combination thereof), consistent with Internal 
                Revenue Service performance planning procedures, 
                including those established under the Government 
                Performance and Results Act of 1993, the Information 
                Technology Management Reform Act of 1996, Revenue 
                Procedure 64-22 (as in effect on July 30, 1997), and 
                taxpayer service surveys, and communicating such goals 
                or objectives to employees;
                    ``(B) using such goals and objectives to make 
                performance distinctions among employees or groups of 
                employees; and
                    ``(C) using assessments under this paragraph, in 
                combination with performance evaluations under 
                paragraph (2), as a basis for granting employee awards, 
                adjusting an employee's rate of basic pay, and taking 
                such other personnel action as may be appropriate.
For purposes of this title, performance of an employee during any 
period in which such employee is subject to retention standards under 
paragraph (2) shall be considered to be `unacceptable' if the 
performance of such employee during such period fails to meet any of 
those standards.
    ``(b) Awards.--
            ``(1) For superior accomplishments.--In the case of an 
        employee of the Internal Revenue Service, section 4502(b) shall 
        be applied by substituting `with the approval of the 
        Commissioner of Internal Revenue' for `with the approval of the 
        Office'.
            ``(2) For employees who report directly to the 
        commissioner.--
                    ``(A) In general.--In the case of an employee of 
                the Internal Revenue Service who reports directly to 
                the Commissioner of Internal Revenue, a cash award in 
                an amount up to 50 percent of such employee's annual 
                rate of basic pay may be made if the Commissioner finds 
                such an award to be warranted based on such employee's 
                performance.
                    ``(B) Nature of an award.--A cash award under this 
                paragraph shall not be considered to be part of basic 
                pay.
                    ``(C) Tax enforcement results.--A cash award under 
                this paragraph may not be based solely on tax 
                enforcement results.
                    ``(D) Eligible employees.--Whether or not an 
                employee is an employee who reports directly to the 
                Commissioner of Internal Revenue shall, for purposes of 
                this paragraph, be determined under regulations which 
                the Commissioner shall prescribe.
                    ``(E) Limitation on compensation.--For purposes of 
                applying section 5307 to an employee in connection with 
                any calendar year to which an award made under this 
                paragraph to such employee is attributable, subsection 
                (a)(1) of such section shall be applied by substituting 
                `to equal or exceed the annual rate of compensation for 
                the President for such calendar year' for `to exceed 
                the annual rate of basic pay payable for level I of the 
                Executive Schedule, as of the end of such calendar 
                year'.
            ``(3) Based on savings.--
                    ``(A) In general.--The Commissioner of Internal 
                Revenue may authorize the payment of cash awards to 
                employees based on documented financial savings 
                achieved by a group or organization which such 
                employees comprise, if such payments are made pursuant 
                to a plan which--
                            ``(i) specifies minimum levels of service 
                        and quality to be maintained while achieving 
                        such financial savings; and
                            ``(ii) is in conformance with criteria 
                        prescribed by the Office of Personnel 
                        Management.
                    ``(B) Funding.--A cash award under this paragraph 
                may be paid from the fund or appropriation available to 
                the activity primarily benefiting or the various 
                activities benefiting.
                    ``(C) Tax enforcement results.--A cash award under 
                this paragraph may not be based solely on tax 
                enforcement results.
    ``(c) Other Provisions.--
            ``(1) Notice provisions.--In applying sections 
        4303(b)(1)(A) and 7513(b)(1) to employees of the Internal 
        Revenue Service, `15 days' shall be substituted for `30 days'.
            ``(2) Appeals.--Notwithstanding the second sentence of 
        section 5335(c), an employee of the Internal Revenue Service 
        shall not have a right to appeal the denial of a periodic step 
        increase under section 5335 to the Merit Systems Protection 
        Board.
``Sec. 9303. Classification and pay flexibilities
    ``(a) Broad-Banded Systems.--
            ``(1) Definitions.--For purposes of this subsection--
                    ``(A) the term `broad-banded system' means a system 
                under which positions are classified and pay for 
                service in any such position is fixed through the use 
                of pay bands, rather than under--
                            ``(i) chapter 51 and subchapter III of 
                        chapter 53; or
                            ``(ii) subchapter IV of chapter 53; and
                    ``(B) the term `pay band' means, with respect to 
                positions in 1 or more occupational series, a pay 
                range--
                            ``(i) consisting of--
                                    ``(I) 2 or more consecutive grades 
                                of the General Schedule; or
                                    ``(II) 2 or more consecutive pay 
                                ranges of such other pay or wage 
                                schedule as would otherwise apply (but 
                                for this section); and
                            ``(ii) the minimum rate for which is the 
                        minimum rate for the lower (or lowest) grade or 
                        range in the pay band and the maximum rate for 
                        which is the maximum rate for the higher (or 
                        highest) grade or range in the pay band, 
including any locality-based and other similar comparability payments.
            ``(2) Authority.--The Commissioner of Internal Revenue may, 
        subject to criteria to be prescribed by the Office of Personnel 
        Management, establish one or more broad-banded systems covering 
        all or any portion of its workforce which would otherwise be 
        subject to the provisions of law cited in clause (i) or (ii) of 
        subsection (a)(1)(A), except for any position classified by 
        statute.
            ``(3) Criteria.--The criteria to be prescribed by the 
        Office shall, at a minimum--
                    ``(A) ensure that the structure of any broad-banded 
                system maintains the principle of equal pay for 
                substantially equal work;
                    ``(B) establish the minimum (but not less than 2) 
                and maximum number of grades or pay ranges that may be 
                combined into pay bands;
                    ``(C) establish requirements for adjusting the pay 
                of an employee within a pay band;
                    ``(D) establish requirements for setting the pay of 
                a supervisory employee whose position is in a pay band 
                or who supervises employees whose positions are in pay 
                bands; and
                    ``(E) establish requirements and methodologies for 
                setting the pay of an employee upon conversion to a 
                broad-banded system, initial appointment, change of 
                position or type of appointment (including promotion, 
                demotion, transfer, reassignment, reinstatement, 
                placement in another pay band, or movement to a 
                different geographic location), and movement between a 
                broad-banded system and another pay system.
            ``(4) Information.--The Commissioner of Internal Revenue 
        shall submit to the Office such information relating to its 
        broad-banded systems as the Office may require.
            ``(5) Review and revocation authority.--The Office may, 
        with respect to any broad-banded system under this subsection, 
        and in accordance with regulations which it shall prescribe, 
        exercise with respect to any broad-banded system under this 
        subsection authorities similar to those available to it under 
        sections 5110 and 5111 with respect to classifications under 
        chapter 51.
    ``(b) Single Pay-Band System.--
            ``(1) In general.--The Commissioner of Internal Revenue 
        may, with respect to employees who remain subject to chapter 51 
        and subchapter III of chapter 53 (or subchapter IV of chapter 
        53), fix rates of pay under a single pay-band system.
            ``(2) Definition.--For purposes of this subsection, the 
        term `single pay-band system' means, for pay-setting purposes, 
        a system similar to the pay-setting aspects of a broad-banded 
        system under subsection (a), but consisting of only a single 
        grade or pay range, under which pay may be fixed at any rate 
        not less than the minimum and not more than the maximum rate 
        which (but for this section) would otherwise apply with respect 
        to the grade or pay range involved, including any locality-
        based and other similar comparability payments.
            ``(3) Special rules.--
                    ``(A) Promotion or transfer.--An employee under 
                this subsection who is promoted or transferred to a 
                position in a higher grade shall be entitled to basic 
                pay at a rate determined under criteria prescribed by 
                the Office of Personnel Management based on section 
                5334(b).
                    ``(B) Performance increases.--In lieu of periodic 
                step-increases under section 5335, an employees under 
                this subsection who meets retention standards under 
                section 9302(a)(2)(A) shall be entitled to performance 
                increases under criteria prescribed by the Office. An 
                increase under this subparagraph shall be equal to one-
                ninth of the difference between the minimum and maximum 
                rates of pay for the applicable grade or pay range
                    ``(C) Increases for exceptional performance.--In 
                lieu of additional step-increases under section 5336, 
                an employee under this subsection who has demonstrated 
                exceptional performance shall be eligible for a pay 
                increase under this subparagraph under criteria 
                prescribed by the Office. An increase under this 
                subparagraph may not exceed the amount of an increase 
                under subparagraph (B).
    ``(c) Alternative Classification Systems.--
            ``(1) In general.--Subject to section 9301(c), the 
        Commissioner of Internal Revenue may establish 1 or more 
        alternative classification systems that include any positions 
        or groups of positions that the Commissioner determines, for 
        reasons of effective administration--
                    ``(A) should not be classified under chapter 51 or 
                paid under the General Schedule;
                    ``(B) should not be classified or paid under 
                subchapter IV of chapter 53; or
                    ``(C) should not be paid under section 5376.
            ``(2) Limitations.--An alternative classification system 
        under this subsection may not--
                    ``(A) with respect to any position that (but for 
                this section) would otherwise be subject to the 
                provisions of law cited in subparagraph (A) or (B) of 
                paragraph (1), establish a rate of basic pay in excess 
                of the maximum rate for grade GS-15 of the General 
                Schedule, including any locality-based and other 
                similar comparability payments; and
                    ``(B) with respect to any position that (but for 
                this section) would otherwise be subject to the 
                provision of law cited in paragraph (1)(C), establish a 
                rate of basic pay in excess of the annual rate of basic 
                pay of the Commissioner of Internal Revenue.
    ``(d) Grade and Pay Retention.--Subject to section 9301(c), the 
Commissioner of Internal Revenue may, with respect to employees who are 
covered by a broad-banded system under subsection (a) or an alternative 
classification system under subsection (c), provide for variations from 
the provisions of subchapter VI of chapter 53.
    ``(e) Recruitment and Retention Bonuses; Retention Allowances.--
Subject to section 9301(c), the Commissioner of Internal Revenue may, 
with respect to its employees, provide for variations from the 
provisions of sections 5753 and 5754.
``Sec. 9304. Staffing flexibilities
    ``(a) In General.--
            ``(1) Permanent appointment in the competitive service.--
        Except as otherwise provided by this subsection, an employee of 
        the Internal Revenue Service may be selected for a permanent 
        appointment in the competitive service in the Internal Revenue 
        Service through internal competitive promotion procedures when 
        the following conditions are met:
                    ``(A) The employee has completed 2 years of current 
                continuous service in the competitive service under a 
                term appointment or any combination of term 
                appointments.
                    ``(B) Such term appointment or appointments were 
                made under competitive procedures prescribed for 
                permanent appointments.
                    ``(C) The employee's performance under such term 
                appointment or appointments met established retention 
                standards.
                    ``(D) The vacancy announcement for the term 
                appointment from which the conversion is made stated 
                that there was a potential for subsequent conversion to 
                a permanent appointment.
            ``(2) Condition.--An appointment under this subsection may 
        be made only to a position the duties and responsibilities of 
        which are similar to those of the position held by the employee 
        at the time of conversion (referred to in paragraph (1)(D)).
    ``(b) Rating Systems.--
            ``(1) In general.--Notwithstanding subchapter I of chapter 
        33, the Commissioner of Internal Revenue may establish category 
        rating systems for evaluating job applicants for positions in 
        the competitive service, under which qualified candidates are 
        divided into 2 or more quality categories on the basis of 
        relative degrees of merit, rather than assigned individual 
        numerical ratings. Each applicant who meets the minimum 
        qualification requirements for the position to be filled shall 
        be assigned to an appropriate category based on an evaluation 
        of the applicant's knowledge, skills, and abilities relative to 
        those needed for successful performance in the job to be 
        filled.
            ``(2) Treatment of preference eligibles.--Within each 
        quality category established under paragraph (1), preference 
        eligibles shall be listed ahead of individuals who are not 
        preference eligibles. For other than scientific and 
        professional positions at or higher than GS-9 (or equivalent), 
        preference eligibles who have a compensable service-connected 
        disability of 10 percent or more, and who meet the minimum 
        qualification standards, shall be listed in the highest quality 
        category.
            ``(3) Selection process.--An appointing authority may 
        select any applicant from the highest quality category or, if 
        fewer than 3 candidates have been assigned to the highest 
        quality category, from a merged category consisting of the 
        highest and second highest quality categories. Notwithstanding 
        the preceding sentence, the appointing authority may not pass 
        over a preference eligible in the same or a higher category 
        from which selection is made, unless the requirements of 
        section 3317(b) or 3318(b), as applicable, are satisfied, 
        except that in no event may certification of a preference 
        eligible under this subsection be discontinued by the Internal 
Revenue Service under section 3317(b) before the end of the 6-month 
period beginning on the date of such employee's first certification.
    ``(c) Maximum Period for Which Employee May Be Detailed.--The 120-
day limitation under section 3341(b)(1) for details and renewals of 
details shall not apply with respect to the Internal Revenue Service.
    ``(d) Involuntary Reassignments and Removals of Career Appointees 
in the Senior Executive Service.--Neither section 3395(e)(1) nor 
section 3592(b)(1) shall apply with respect to the Internal Revenue 
Service.
    ``(e) Probationary Periods.--Notwithstanding any other provision of 
law or regulation, the Commissioner of Internal Revenue may establish a 
period of probation under section 3321 of up to 3 years for any 
position if, as determined by the Commissioner, a shorter period would 
be insufficient for the incumbent to demonstrate complete proficiency 
in such position.
    ``(f) Provisions That Remain Applicable.--No provision of this 
section exempts the Internal Revenue Service from--
            ``(1) any employment priorities established under direction 
        of the President for the placement of surplus or displaced 
        employees; or
            ``(2) its obligations under any court order or decree 
        relating to the employment practices of the Internal Revenue 
        Service.
``Sec. 9305. Flexibilities relating to demonstration projects
    ``(a) In General.--For purposes of applying section 4703 with 
respect to the Internal Revenue Service--
            ``(1) paragraph (1) of subsection (b) of such section shall 
        be deemed to read as follows:
            `` `(1) develop a plan for such project which describes its 
        purpose, the employees to be covered, the project itself, its 
        anticipated outcomes, and the method of evaluating the 
        project;';
            ``(2) paragraph (3) of subsection (b) of such section shall 
        be disregarded;
            ``(3) paragraph (4) of subsection (b) of such section shall 
        be applied by substituting `30 days' for `180 days';
            ``(4) paragraph (6) of subsection (b) of such section shall 
        be deemed to read as follows:
            `` `(6) provide each House of the Congress with the final 
        version of the plan.';
            ``(5) paragraph (1) of subsection (c) of such section shall 
        be deemed to read as follows:
            `` `(1) subchapter V of chapter 63 or subpart G of part 
        III;'; and
            ``(6) subsection (d)(1) of such section shall be 
        disregarded.
    ``(b) Numerical Limitation.--For purposes of applying the numerical 
limitation under subsection (d)(2) of section 4703, a demonstration 
project shall not be counted if or to the extent that it involves the 
Internal Revenue Service.''
    (b) Clerical Amendment.--The analysis for part III of title 5, 
United States Code, is amended by adding at the end the following:

                       ``Subpart I--Miscellaneous

``93. Personnel Flexibilities Relating to the Internal          9301''.
Revenue Service.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.

                      TITLE II--ELECTRONIC FILING

SEC. 201. ELECTRONIC FILING OF TAX AND INFORMATION RETURNS.

    (a) In General.--It is the policy of the Congress that paperless 
filing should be the preferred and most convenient means of filing tax 
and information returns, and that by the year 2007, no more than 20 
percent of all tax returns should be filed on paper.
    (b) Strategic Plan.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary of the Treasury or the 
        Secretary's delegate (hereafter in this section referred to as 
        the ``Secretary'') shall implement a plan to eliminate 
        barriers, provide incentives, and use competitive market forces 
        to increase electronic filing gradually over the next 10 years 
        while maintaining processing times for paper returns at 40 
        days.
            (2) Electronic commerce advisory group.--To ensure that the 
        Secretary receives input from the private sector in the 
        development and implementation of the plan required by 
        paragraph (1), the Secretary shall convene an electronic 
        commerce advisory group to include representatives from the tax 
        practitioner, preparer, and computerized tax processor 
        communities and other representatives from the electronic 
        filing industry.
    (c) Incentives.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary shall implement 
        procedures to provide for the payment of incentives to 
transmitters of qualified electronically filed returns, based on the 
fair market value of costs to transmit returns electronically.
            (2) Qualified electronically filed returns.--For purposes 
        of this section, the term ``qualified electronically filed 
        return'' means a return that--
                    (A) is transmitted electronically to the Internal 
                Revenue Service,
                    (B) for which the taxpayer was not charged for the 
                cost of such transmission, and
                    (C) in the case of returns transmitted after 
                December 31, 2004, was prepared by a paid preparer who 
                does not submit any return after such date to the 
                Internal Revenue Service on paper.
    (d) Annual Reports.--Not later than June 30 of each calendar year 
after 1997, the Chairperson of the Internal Revenue Service Oversight 
Board, the Secretary, and the Chairperson of the electronic commerce 
advisory group established under subsection (b)(2) shall report to the 
Committees on Ways and Means, Appropriations, and Government Reform and 
Oversight of the House of Representatives, the Committees on Finance, 
Appropriations, and Government Affairs of the Senate, and the Joint 
Committee on Taxation, on--
            (1) the progress of the Internal Revenue Service in meeting 
        the policy set forth in subsection (a);
            (2) the status of the plan required by subsection (b); and
            (3) the necessity of action by the Congress to assist the 
        Internal Revenue Service to satisfy the policy set forth in 
        subsection (a).

SEC. 202. EXTENSION OF TIME TO FILE FOR ELECTRONIC FILERS.

    (a) In General.--Subsection (a) of section 6072 (relating to the 
time for filing income tax returns) is amended--
            (1) by striking ``(a) General Rule.--In the case of'' and 
        inserting the following:
    ``(a) General Rules.--
            ``(1) Paper returns.--Except as provided in paragraph (2), 
        in the case of'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Electronically filed returns.--In the case of returns 
        filed electronically, returns made on the basis of the calendar 
        year shall be filed on or before the 15th day of May following 
        the close of the calendar year and returns made on the basis of 
        a fiscal year shall be filed on or before the 15th day of the 
        fifth month following the close of the fiscal year.''
    (b) Returns of Corporations.--Subsection (b) of section 6072 
(relating to the time for filing income tax returns) is amended--
            (1) by moving the text 2 ems to the right, and
            (2) by adding at the end the following new paragraph:
            ``(2) Electronically filed returns.--In the case of returns 
        filed electronically, returns made on the basis of the calendar 
        year shall be filed on or before the 15th day of April 
        following the close of the calendar year and returns made on 
        the basis of a fiscal year shall be filed on or before the 15th 
        day of the 4th month following the close of the fiscal year.''
    (c) Information Returns.--Part V of chapter 61 (relating to 
information and returns) is amended by adding the following new 
section:

``SEC. 6073. TIME FOR FILING CERTAIN INFORMATION RETURNS.

    ``(a) Electronically Filed Returns.--In the case of returns made 
under subparts B and C of part III of this chapter that are filed 
electronically, such returns shall be filed on or before March 31 of 
the year following the calendar year to which such returns relate.
    ``(b) Notice to Recipients.--Notwithstanding subsection (a), 
receipts for employees required under section 6051 and any statements 
otherwise required to be furnished to persons with respect to whom 
information is required, shall be furnished to such persons on or 
before January 31 of the calendar year in which the return under 
subsection (a) is required to be filed.
    ``(c) Effective Date.--The amendments made by this section shall 
apply to returns required to be filed after December 31, 1999.''
    (d) Returns of Partnerships.--Part V of chapter 61 (relating to 
information and returns) is amended by adding the following new 
section:

``SEC. 6074. TIME FOR FILING PARTNERSHIP RETURNS.

    ``(a) In General.--Except as provided in subsection (b), returns 
made under section 6031 shall be filed on or before the 15th day of the 
3d month following the close of the taxable year of the partnership, 
except that the return of a partnership consisting entirely of 
nonresident aliens shall be filed on or before the 15th day of the 6th 
month following the close of the taxable year of the partnership.
    ``(b) Electronically Filed Returns.--In the case of returns filed 
electronically, returns shall be filed on or before the 15th day of the 
4th month following the close of the taxable year of the partnership.''
    (e) Effective Date.--The amendments made by this section shall 
apply to returns for taxable years beginning after December 31, 1998.

SEC. 203. PAPERLESS ELECTRONIC FILING.

    (a) In General.--Section 6061 (relating to signing of returns and 
other documents) is amended--
            (1) by striking ``Except as otherwise provided by'' and 
        inserting the following:
    ``(a) General Rule.--Except as otherwise provided by subsection (b) 
and'', and
            (2) by adding at the end the following new subsection:
    ``(b) Electronic Signatures.--The Secretary shall develop 
procedures for the acceptance of signatures in digital or other 
electronic form. Until such time as such procedures are in place, the 
Secretary shall accept electronically filed returns and other documents 
on which the required signature(s) appears in typewritten form, but 
filers of such documents shall be required to retain a signed paper 
original of all such filings, to be made available to the Secretary for 
inspection, until the expiration of the applicable period of 
limitations set forth in chapter 66.''.
    (b) Deadline for Establishing Procedures.--Not later than December 
31, 1998, the Secretary of the Treasury or the Secretary's delegate 
shall establish procedures to accept, in electronic form, any other 
information, statements, elections, or schedules, from taxpayers filing 
returns electronically, so that such taxpayers will not be required to 
file any paper.
    (c) Procedures for Communications Between IRS and Preparer of 
Electronically-Filed Returns.--Such Secretary shall establish 
procedures for taxpayers to authorize, on electronically filed returns, 
the preparer of such returns to communicate with the Internal Revenue 
Service on matters included on such returns.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 204. REGULATION OF PREPARERS.

    (a) In General.--Subsection (a) of section 330 of title 31, United 
States Code, is amended--
            (1) by striking ``Treasury; and'' in paragraph (1) and 
        inserting ``Treasury and all other persons engaged in the 
        business of preparing returns or otherwise accepting 
        compensation for advising in the preparation of returns,'',
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``, and'', and
            (3) by adding at the end the following:
            ``(3) establish uniform procedures for regulating preparers 
        of paper and electronic tax and information returns.
No demonstration shall be required under paragraph (2) for persons 
solely engaged in the business of preparing returns or otherwise 
accepting compensation for advising in the preparation of returns.''
    (b) Director of Practice.--Such section 330 is amended by adding at 
the end the following new subsection:
    ``(d) Director of Practice.--There is established within the 
Department of the Treasury an office to be known as the `Office of the 
Director of Practice' to be under the supervision and direction of an 
official to be known as the `Director of Practice'. The Director of 
Practice shall be responsible for regulation of all practice before the 
Department of the Treasury.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 205. PAPERLESS PAYMENT.

    (a) In General.--Section 6311 (relating to payment by check or 
money order) is amended to read as follows:

``SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

    ``(a) Authority To Receive.--It shall be lawful for the Secretary 
to receive for internal revenue taxes (or in payment of internal 
revenue stamps) any commercially acceptable means that the Secretary 
deems appropriate to the extent and under the conditions provided in 
regulations prescribed by the Secretary.
    ``(b) Ultimate Liability.--If a check, money order, or other method 
of payment, including payment by credit card, debit card, charge card, 
or electronic funds transfer so received is not duly paid, or is paid 
and subsequently charged back to the Secretary, the person by whom such 
check, money order, or other method of payment has been tendered shall 
remain liable for the payment of the tax or for the stamps, and for all 
legal penalties and additions, to the same extent as if such check, 
money order, or other method of payment had not been tendered.
    ``(c) Liability of Banks and Others.--If any certified, 
treasurer's, or cashier's check (or other guaranteed draft), or any 
money order, or any means of payment that has been guaranteed by a 
financial institution (such as a credit card, debit card, charge card, 
or electronic funds transfer transaction which has been guaranteed 
expressly by a financial institution) so received is not duly paid, the 
United States shall, in addition to its right to exact payment from the 
party originally indebted therefor, have a lien for--
            ``(1) the amount of such check (or draft) upon all assets 
        of the financial institution on which drawn,
            ``(2) the amount of such money order upon all the assets of 
        the issuer therefor,
            ``(3) the guaranteed amount of any other transaction upon 
        all the assets of the institution making such guarantee,
and such amount shall be paid out of such assets in preference to any 
other claims whatsoever against such financial institution, issuer, or 
guaranteeing institution, except the necessary costs and expenses of 
administration and the reimbursement of the United States for the 
amount expended in the redemption of the circulating notes of such 
financial institution.
    ``(d) Payment by Other Means.--
            ``(1) Authority to prescribe regulations.--The Secretary 
        shall prescribe such regulations as the Secretary deems 
        necessary to receive payment by commercially acceptable means, 
        including regulations that--
                    ``(A) specify which methods of payment by 
                commercially acceptable means will be acceptable;
                    ``(B) specify when payment by such means will be 
                considered received;
                    ``(C) identify types of nontax matters related to 
                payment by such means that are to be resolved by 
                persons ultimately liable for payment and financial 
                intermediaries, without the involvement of the 
                Secretary; and
                    ``(D) ensure that tax matters will be resolved by 
                the Secretary, without the involvement of financial 
                intermediaries.
            ``(2) Authority to enter into contracts.--Notwithstanding 
        section 3718(f) of title 31, United States Code, the Secretary 
        is authorized to enter into contracts to obtain services 
        relating to receiving payment by other means when cost 
        beneficial to the Government.
            ``(3) Special provisions for use of credit cards.--If use 
        of credit cards is accepted as a method of payment of taxes 
        pursuant to subsection (a)--
                    ``(A) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) by a person by use 
                of a credit card shall not be subject to section 161 of 
                the Truth-in-Lending Act (15 U.S.C. 1666), or to any 
                similar provisions of State law, if the error alleged 
                by the person is an error relating to the underlying 
                tax liability, rather than an error relating to the 
                credit card account such as a computational error or 
                numerical transposition in the credit card transaction 
                or an issue as to whether the person authorized payment 
                by use of the credit card;
                    ``(B) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) shall not be 
                subject to section 170 of the Truth in Lending Act (15 
                U.S.C. 1666i), or to any similar provisions of State 
                law;
                    ``(C) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) by a person by use 
                of a debit card shall not be subject to section 908 of 
                the Electronic Fund Transfer Act (15 U.S.C. 1693f), or 
                to any similar provisions of State law, if the error 
                alleged by the person is an error relating to the 
                underlying tax liability, rather than an error relating 
                to the debit card account such as a computational error 
                or numerical transposition in the debit card 
                transaction or an issue as to whether the person 
                authorized payment by use of the debit card;
                    ``(D) the term `creditor' under section 103(f) of 
                the Truth in Lending Act (15 U.S.C. 1602(f)) shall not 
                include the Secretary with respect to credit card 
                transactions in payment of internal revenue taxes (or 
                payment for internal revenue stamps); and
                    ``(E) notwithstanding any other provision of law to 
                the contrary, in the case of payment made by credit 
                card or debit card transaction in an amount owed to a 
                person as a result of the correction of an error under 
                section 161 of the Truth in Lending Act (15 U.S.C. 
                1666) or section 908 of the Electronic Fund Transfer 
                Act (15 U.S.C 1693(f)), the Secretary is authorized to 
                provide such amount to such person as a credit to that 
person's credit card or debit card account through the applicable 
credit card or debit card system.
    ``(e) Confidentiality of Information.--
            ``(1) In general.--Except as otherwise authorized by this 
        subsection, no person may use or disclose any information 
        relating to credit or debit card transactions obtained pursuant 
        to section 6103(k)(8) other than for purposes directly related 
        to the processing of such transactions, or the billing or 
        collection of amounts charged or debited pursuant thereto.
            ``(2) Exceptions.--
                    ``(A) Debit or credit card issuers or others acting 
                on behalf of such issuers may also use and disclose 
                such information for purposes directly related to 
                servicing an issuer's accounts.
                    ``(B) Debit or credit card issuers or others 
                directly involved in the processing of credit or debit 
                card transactions or the billing or collection of 
                amounts charged or debited thereto may also use and 
                disclose such information for purposes directly related 
                to--
                            ``(i) statistical risk and profitability 
                        assessment,
                            ``(ii) transferring receivables, accounts, 
                        or interest therein,
                            ``(iii) auditing the account information,
                            ``(iv) complying with Federal, State, or 
                        local law, and
                            ``(v) properly authorized civil, criminal, 
                        or regulatory investigation by Federal, State, 
                        or local authorities.
            ``(3) Procedures.--Use and disclosure of information under 
        this paragraph shall be made only to the extent authorized by 
        written procedures promulgated by the Secretary.
            ``(4) Cross reference.--

                                ``For provision providing for civil 
damages for violation of paragraph (1), see section 7431.''
    (b) Separate Appropriation Required for Payment of Credit Card 
Fees.--No amount may be paid by the United States to a credit card 
issuer for the right to receive payments of internal revenue taxes by 
credit card without a separate appropriation therefor.
    (c) Clerical Amendment.--The table of sections for subchapter B of 
chapter 64 is amended by striking the item relating to section 6311 and 
inserting the following:

                              ``Sec. 6311. Payment of tax by 
                                        commercially acceptable 
                                        means.''
    (d) Amendments to Section 6103 and 7431 With Respect to Disclosure 
Authorization.--
            (1) Subsection (k) of section 6103 (relating to 
        confidentiality and disclosure of returns and return 
        information) is amended by adding at the end the following new 
        paragraph--
            ``(8) Disclosure of information to administer section 
        6311.--The Secretary may disclose returns or return information 
        to financial institutions and others to the extent the 
        Secretary deems necessary for the administration of section 
        6311. Disclosures of information for purposes other than to 
        accept payments by check or money orders shall be made only to 
        the extent authorized by written procedures promulgated by the 
        Secretary.''.
            (2) Section 7431 (relating to civil damages for 
        unauthorized disclosure of returns and return information) is 
        amended by adding at the end the following new subsection:
    ``(g) Special Rule for Information Obtained Under Section 
6103(k)(8).--For purposes of this section, any reference to section 
6103 shall be treated as including a reference to section 6311(e).''.
            (3) Section 6103(p)(3)(A) is amended by striking ``or (6)'' 
        and inserting ``(6), or (8)''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the day which is 9 months after the date of the enactment of 
this Act.

SEC. 206. RETURN-FREE TAX SYSTEM.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall develop procedures for the implementation of a return-
free tax system under which individuals would be permitted to comply 
with the Internal Revenue Code of 1986 without making the return 
required under section 6012 of such Code for taxable years beginning 
after 2007.
    (b) Report.--Not later than June 30 of each calendar year after 
1999, such Secretary shall report to the Committee on Ways and Means of 
the House of Representatives, the Committee on Finance of the Senate, 
and the Joint Committee on Taxation on--
            (1) the procedures developed pursuant to subsection (a),
            (2) the number and classes of taxpayers that would be 
        permitted to use the procedures developed pursuant to 
        subsection (a),
            (3) the changes to the Internal Revenue Code of 1986 that 
        could enhance the use of such a system, and
            (4) what additional resources the Internal Revenue Service 
        would need to implement such a system.

SEC. 207. ACCESS TO ACCOUNT INFORMATION.

    Not later than December 31, 2006, the Secretary of the Treasury or 
the Secretary's delegate shall develop procedures under which a 
taxpayer filing returns electronically would be able to review the 
taxpayer's account electronically, including all necessary safeguards 
to ensure the privacy of such account information.

               TITLE III--TAXPAYER PROTECTION AND RIGHTS

SEC. 301. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER ASSISTANCE ORDERS.

    (a) In General.--Section 7811(a) (relating to taxpayer assistance 
orders) is amended--
            (1) by striking ``Upon application'' and inserting the 
        following:
            ``(1) In general.--Upon application'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Determination of hardship.--For purposes of 
        determining whether a taxpayer is suffering or about to suffer 
        a significant hardship, the Taxpayer Advocate should consider--
                    ``(A) whether the Internal Revenue Service employee 
                to which such order would issue is following applicable 
                published administrative guidance, including the 
                Internal Revenue Manual,
                    ``(B) whether there is an immediate threat of 
                adverse action,
                    ``(C) whether there has been a delay of more than 
                30 days in resolving taxpayer account problems, and
                    ``(D) the prospect that the taxpayer will have to 
                pay significant professional fees for 
                representation.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 302. EXPANSION OF AUTHORITY TO AWARD COSTS AND CERTAIN FEES.

    (a) Authority to Award Higher Attorney's Fees Based on Complexity 
of Issues.--Clause (iii) of section 7430(c)(1)(B) (relating to the 
award of costs and certain fees) is amended by inserting ``, or the 
difficulty of the issues presented in the case or the local 
availability of tax expertise,'' before ``justifies a higher rate''.
    (b) Award of Administrative Costs Incurred After 30-Day Letter.--
            (1) Paragraph (2) of section 7430(c) is amended by striking 
        the last sentence and insert the following:
        ``Such term shall only include costs incurred on or after 
        whichever of the following is the earliest: (i) the date of the 
        receipt by the taxpayer of the notice of the decision of the 
        Internal Revenue Service Office of Appeals, (ii) the date of 
        the notice of deficiency, or (iii) the date on which the 1st 
        letter of proposed deficiency which allows the taxpayer an 
        opportunity for administrative review in the Internal Revenue 
        Service Office of Appeals is sent.''
            (2) Subparagraph (B) of section 7430(c)(7) is amended by 
        striking ``or'' and the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding at the end the following new clause:
                            ``(iii) the date on which the 1st letter of 
                        proposed deficiency which allows the taxpayer 
                        an opportunity for administrative review in the 
                        Internal Revenue Service Office of Appeals is 
                        sent.''
    (c) Award of Fees for Certain Additional Services.--Paragraph (3) 
of section 7430(c) is amended by adding at the end the following new 
sentence: ``Such term also includes such amounts as the court 
calculates, based on hours worked and costs expended, for services of 
an individual (whether or not an attorney) who is authorized to 
practice before the Tax Court or before the Internal Revenue Service 
and who represents the taxpayer for no more than a nominal fee.''
    (d) Determination of Prevailing Party.--Paragraph (4) of section 
7430(c) is amended--
                    (A) by inserting at the end of subparagraph (A) the 
                following new flush sentence:
                ``For purposes of this section, such section 
                2412(d)(2)(B) shall be applied by substituting 
                `$5,000,000' for the amount otherwise applicable to 
                individuals, and `$35,000,000' for the amount otherwise 
                applicable to businesses.'', and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Safe Harbor.--The position of the United 
                States was not substantially justified if the United 
                States has not prevailed on the same issue in at least 
                3 United States Courts of Appeal.''
    (e) Effective Date.--The amendments made by this section shall 
apply to proceedings beginning after the date of the enactment of this 
Act.

SEC. 303. CIVIL DAMAGES FOR NEGLIGENCE IN COLLECTION ACTIONS.

    (a) In General.--Section 7433 (relating to civil damages for 
certain unauthorized collection actions) is amended--
            (1) in subsection (a), by inserting ``, or by reason of 
        negligence,'' after ``recklessly or intentionally'', and
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (1), by 
                inserting ``($100,000, in the case of negligence)'' 
                after ``$1,000,000'', and
                    (B) in paragraph (1), by inserting ``or negligent'' 
                after ``reckless or intentional''.
    (b) Effective Date.--The amendments made by this section shall 
apply to actions of officers or employees of the Internal Revenue 
Service after the date of the enactment of this Act.

SEC. 304. DISCLOSURE OF CRITERIA FOR EXAMINATION SELECTION.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall, as soon as practicable, but not later than 180 days 
after the date of the enactment of this Act, incorporate into the 
statement required by section 6227 of the Omnibus Taxpayer Bill of 
Rights (Internal Revenue Service Publication No. 1) a statement which 
sets forth in simple and nontechnical terms the criteria and procedures 
for selecting taxpayers for examination. Such statement shall not 
include any information the disclosure of which would be detrimental to 
law enforcement, but shall specify the general procedures used by the 
Internal Revenue Service, including the extent to which taxpayers are 
selected for examination on the basis of information available in the 
media or on the basis of information provided to the Internal Revenue 
Service by informants.
    (b) Transmission to Committees of Congress.--Such Secretary shall 
transmit drafts of the statement required under subsection (a) (or 
proposed revisions to any such statement) to the Committee on Ways and 
Means of the House of Representatives, the Committee on Finance of the 
Senate, and the Joint Committee on Taxation on the same day.

SEC. 305. ARCHIVAL OF RECORDS OF INTERNAL REVENUE SERVICE.

    (a) In General.--Subsection (l) of section 6103 (relating to 
confidentiality and disclosure of returns and return information) is 
amended by adding at the end the following new paragraph:
            ``(16) Disclosure to national archives and records 
        administration.--The Secretary shall, upon written request from 
        the Archivist of the United States, disclose to the Archivist 
        all records of the Internal Revenue Service for purposes of 
        scheduling such records for destruction or for retention in the 
        National Archives. Any such information that is retained in the 
        National Archives shall not be disclosed without the express 
        written approval of the Secretary.''
    (b) Effective Date.--The amendment made by this section shall apply 
to requests made by the Archivist after the date of the enactment of 
this Act.

SEC. 306. TAX RETURN INFORMATION.

    The Joint Committee on Taxation shall convene a study of the scope 
and use of provisions regarding taxpayer confidentiality, and shall 
report the findings of such study, together with such recommendations 
as it deems appropriate, to the Congress no later than one year after 
the date of the enactment of this Act. Such study shall be led by a 
panel of experts, to be appointed by the Joint Committee on Taxation, 
which shall examine the present protections for taxpayer privacy, the 
need for third parties to use tax return information, and the ability 
to achieve greater levels of voluntary compliance by allowing the 
public to know who is legally required to do so, but does not file tax 
returns.

SEC. 307. FREEDOM OF INFORMATION.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall, as soon as practicable, but not later than 180 days 
after the date of the enactment of this Act, develop procedures under 
which expedited access will be granted to requests under section 551 of 
title 5, United States Code, when--
            (1) there exists widespread and exceptional media interest 
        in the requested information, and
            (2) expedited processing is warranted because the 
        information sought involves possible questions about the 
        government's integrity which affect public confidence.
In addition, such procedures shall require the Internal Revenue Service 
to provide an explanation to the person making the request if the 
request is not satisfied within 30 days, including a summary of actions 
taken to date and the expected completion date. Finally, to the extent 
that any such request is not satisfied in full within 60 days, such 
person may seek a determination of whether such request should be 
granted by the appropriate Federal district court.
    (b) Transmission to Committees of Congress.--Such Secretary shall 
transmit drafts of the procedures required under subsection (a) (or 
proposed revisions to any such procedures) to the Committee on Ways and 
Means of the House of Representatives, the Committee on Finance of the 
Senate, and the Joint Committee on Taxation on the same day.

SEC. 308. OFFERS-IN-COMPROMISE.

    (a) In General.--Section 7122 (relating to offers-in-compromise) is 
amended by adding at the end the following new subsection:
    ``(c) Allowances.--The Secretary shall develop and publish 
schedules of national and local allowances to ensure that taxpayers 
entering into a compromise have an adequate means to provide for basic 
living expenses.''
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 309. ELIMINATION OF INTEREST DIFFERENTIAL ON OVERPAYMENTS AND 
              UNDERPAYMENTS.

    (a) In General.--Subsection (a) of section 6621 (relating to the 
determination of rate of interest) is amended to read as follows:
    ``(a) General Rule.--
            ``(1) Rate.--The rate established under this section shall 
        be the sum of--
                    ``(A) the Federal short-term rate determined under 
                subsection (b), plus
                    ``(B) the number of percentage points specified by 
                the Secretary.
            ``(2) Determination of percentage points.--The number of 
        percentage points specified by the Secretary for purposes of 
        paragraph (1)(B) shall be the number which the Secretary 
        estimates will result in the same net revenue to the Treasury 
        as would have resulted without regard to the amendments made by 
        section 309 of the Internal Revenue Service Restructuring and 
        Reform Act of 1997.''
    (b) Conforming Amendments.--
            (1) Section 6621 is amended by striking subsection (c).
            (2) The following provisions are each amended by striking 
        ``overpayment rate'' and inserting ``rate'': Sections 
        42(j)(2)(B), 167(g)(2)(C), 460(b)(2)(C), 6343(c), 
        6427(i)(3)(B), 6611(a), and 7426(g).
            (3) The following provisions are each amended by striking 
        ``underpayment rate'' and inserting ``rate'': Sections 
        42(k)(4)(A)(ii), 148(f)(4)(C)(x)(II), 148(f)(7)(C)(ii), 
        453A(c)(2)(B), 644(a)(2)(B), 852(e)(3)(A), 4497(c)(2), 
        6332(d)(1), 6601(a), 6602, 6654(a)(1), 6655(a)(1), and 
        6655(h)(1).
    (c) Effective Date.--The amendments made by this section shall 
apply for purposes of determining interests for periods after the date 
of the enactment of this Act.

SEC. 310. ELIMINATION OF APPLICATION OF FAILURE TO PAY PENALTY DURING 
              PERIOD OF INSTALLMENT AGREEMENT.

    (a) In General.--Subsection (c) of section 6651 (relating to the 
penalty for failure to file tax return or to pay tax) is amended by 
adding at the end the following new paragraph:
            ``(3) Tolling during period of installment agreement.--If 
        the amount required to be paid is the subject of an agreement 
        for payment of tax liability in installments made pursuant to 
        section 6159, the additions imposed under subsection (a) shall 
        not apply so long as such agreement remains in effect.''
    (b) Effective Date.--The amendment made by this section shall apply 
to agreements entered into after the date of the enactment of this Act.

SEC. 311. SAFE HARBOR FOR QUALIFICATION FOR INSTALLMENT AGREEMENTS.

    (a) In General.--Subsection (a) of section 6159 (relating to 
agreements for payment of tax liability in installments) is amended--
            (1) by striking ``The Secretary is'' and inserting the 
        following:
            ``(1) In general.--The Secretary is'',
            (2) by moving the test 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Safe harbor.--The Secretary shall enter into an 
        agreement to accept the payment of a tax liability in 
        installments if--
                    ``(A) the amount of such liability does not exceed 
                $10,000,
                    ``(B) the taxpayer has not failed to file any tax 
                return or pay any tax required to be shown thereon 
                during the immediately preceding 5 years, and
                    ``(C) the taxpayer has not entered into any prior 
                installment agreement under this paragraph.''
    (b) Effective Date.--The amendments made by this section shall 
apply to agreements entered into after the date of the enactment of 
this Act.

SEC. 312. PAYMENT OF TAXES.

    (a) In General.--The Secretary of the Treasury or his delegate 
shall establish such rules, regulations, and procedures as are 
necessary to require payment of taxes by check or money order to be 
made payable to the Treasurer, United States of America.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 313. LOW INCOME TAXPAYER CLINICS.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions) 
is amended by adding at the end thereof the following new section:

``SEC. 7525. LOW INCOME TAXPAYER CLINICS.

    ``(a) In General.--The Secretary shall make grants to provide 
matching funds for the development, expansion, or continuation of 
qualified low income taxpayer clinics.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified low income taxpayer clinic.--
                    ``(A) In general.--The term `qualified low income 
                taxpayer clinic' means a clinic that--
                            ``(i) represents low income taxpayers in 
                        controversies with the Internal Revenue 
                        Service,
                            ``(ii) operates programs to inform 
                        individuals for whom English is a second 
                        language about their rights and 
                        responsibilities under this title, and
                            ``(iii) does not charge more than a nominal 
                        fee for its services, except for reimbursement 
                        of actual costs incurred.
                    ``(B) Representation of low income taxpayers.--A 
                clinic meets the requirements of subparagraph (A)(i) 
                if--
                            ``(i) at least 90 percent of the taxpayers 
                        represented by the clinic have income which 
                        does not exceed 250 percent of the poverty 
                        level, as determined in accordance with 
                        criteria established by the Director of the 
                        Office of Management and Budget, and
                            ``(ii) the amount in controversy for any 
                        taxable year generally does not exceed the 
                        amount specified in section 7463.
            ``(2) Clinic.--The term `clinic' includes--
                    ``(A) a clinical program at an accredited law 
                school in which students represent low income taxpayers 
                in controversies arising under this title, and
                    ``(B) an organization exempt from tax under section 
                501(c) which satisfies the requirements of paragraph 
                (1) through representation of taxpayers or referral of 
                taxpayers to qualified representatives.
            ``(3) Qualified representative.--The term `qualified 
        representative' means any individual (whether or not an 
        attorney) who is authorized to practice before the Internal 
        Revenue Service or the applicable court.
    ``(c) Special Rules and Limitations.--
            ``(1) Aggregate limitation.--Unless otherwise provided by 
        specific appropriation, the Secretary shall not allocate more 
        than $3,000,000 per year (exclusive of costs of administering 
        the program) to grants under this section.
            ``(2) Limitation on individual grants.--A grant under this 
        section shall not exceed $100,000 per year.
            ``(3) Multi-year grants.--Upon application of a qualified 
        low income taxpayer clinic, the Secretary is authorized to 
        award a multi-year grant not to exceed 3 years.
            ``(4) Criteria for awards.--In determining whether to make 
        a grant under this section, the Secretary shall consider--
                    ``(A) the numbers of taxpayers who will be served 
                by the clinic, including the number of taxpayers in the 
                geographical area for whom English is a second 
                language,
                    ``(B) the existence of other low income taxpayer 
                clinics serving the same population,
                    ``(C) the quality of the program offered by the low 
                income taxpayer clinic, including the qualifications of 
                its administrators and qualified representatives, and 
                its track record, if any, in providing service to low 
                income taxpayers, and
                    ``(D) alternative funding sources available to the 
                clinic, including amounts received from other grants 
                and contributions, and the endowment and resources of 
                the educational institution sponsoring the clinic.
            ``(5) Requirement of matching funds.--A low income taxpayer 
        clinic must provide matching funds on a dollar for dollar basis 
        for all grants provided under this section. Matching funds may 
        include--
                    ``(A) the salary (including fringe benefits) of a 
                faculty member at an educational institution who is 
                teaching in the clinic;
                    ``(B) the salaries of administrative personnel 
                employed in the clinic; and
                    ``(C) the cost of equipment used in the clinic.
        Indirect expenses, including general overhead of the 
        educational institution sponsoring the clinic, shall not be 
        counted as matching funds.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new section:

                              ``Sec. 7525. Low income taxpayer 
                                        clinics.''
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 314. JURISDICTION OF THE TAX COURT.

    (a) Interest Determinations.--Subsection (c) of section 7481 
(relating to the date when Tax Court decisions become final) is 
amended--
            (1) by inserting ``or underpayment'' after ``overpayment'' 
        each place it appears, and
            (2) by striking ``petition'' in paragraph (3) and inserting 
        ``motion''.
    (b) Extension of Time for Payment of Estate Tax.--Section 6166 
(relating to the extension of time for payment of estate tax) is 
amended--
            (1) by redesignating subsection (k) as subsection (l), and
            (2) by inserting after subsection (j) the following new 
        subsection:
    ``(k) Judicial Review.--The Tax Court shall have jurisdiction to 
review disputes regarding initial or continuing eligibility for 
extensions of time for payment under this section, including disputes 
regarding the proper amount of installment payments required herein.''
    (c) Small Case Calendar.--
            (1) Subsection (a) of section 7463 (relating to disputes 
        involving $10,000 or less) is amended by striking ``$10,000'' 
        each place it appears and inserting ``$25,000''.
            (2) The section heading for section 7463 is amended by 
        striking ``$10,000'' and inserting ``$25,000''.
            (3) The item relating to section 7463 in the table of 
        sections for part II of subchapter C of chapter 76 is amended 
        by striking ``$10,000'' and inserting ``$25,000''.
    (d) Effective Date.--The amendments made by this section shall 
apply to proceedings commencing after the date of the enactment of this 
Act.

SEC. 315. CATALOGING COMPLAINTS.

    (a) In General.--The Commissioner of Internal Revenue shall, as 
soon as practicable, but not later than 180 days after the date of the 
enactment of this Act, develop procedures to catalog and review 
taxpayer complaints of misconduct by Internal Revenue Service 
employees. Such procedures should include guidelines for internal 
review and discipline of employees, as warranted by the scope of such 
complaints.
    (b) Hotline.-- The Commissioner of Internal Revenue shall, as soon 
as practicable, but not later than 180 days after the date of the 
enactment of this Act, establish a toll-free telephone number for 
taxpayers to register complaints of misconduct by Internal Revenue 
Service employees, and shall publish such number in Publication 1.

SEC. 316. PROCEDURES INVOLVING TAXPAYER INTERVIEWS.

    (a) In General.--Paragraph (1) of section 7521(b) (relating to 
procedures involving taxpayer interviews) is amended to read as 
follows:
            ``(1) Explanations of processes.--An officer or employee of 
        the Internal Revenue Service shall--
                    ``(A) before or at an initial interview, provide to 
                the taxpayer--
                            ``(i) in the case of an in-person interview 
                        with the taxpayer relating to the determination 
                        of any tax, an explanation of the audit process 
                        and the taxpayer's rights under such process, 
                        or
                            ``(ii) in the case of an in-person 
                        interview with the taxpayer relating to the 
                        collection of any tax, an explanation of the 
                        collection process and the taxpayer's rights 
                        under such process, and
                    ``(B) before an in-person initial interview with 
                the taxpayer relating to the determination of any tax--
                            ``(i) inquire whether the taxpayer is 
                        represented by an individual described in 
                        subsection (c),
                            ``(ii) explain that the taxpayer has the 
                        right to have the interview take place in a 
                        reasonable place and that such place does not 
                        have to be the taxpayer's home,
                            ``(iii) explain the reasons for the 
                        selection of the taxpayer's return for 
                        examination, and
                            ``(iv) provide the taxpayer with a written 
                        explanation of the applicable burdens of proof 
                        on taxpayers and the Internal Revenue Service.
        If the taxpayer is represented by an individual described in 
        subsection (c), the interview may not proceed without the 
        presence of such individual unless the taxpayer consents.''
    (b) Effective Date.--The amendments made by this section shall 
apply to interviews and examinations taking place after the date of the 
enactment of this Act.

SEC. 317. EXPLANATION OF JOINT AND SEVERAL LIABILITY.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall, as soon as practicable, but not later than 180 days 
after the date of the enactment of this Act, establish procedures to 
clearly alert taxpayers of their joint and several liabilities on all 
tax forms, publications, and instructions. Such procedures shall 
include explanations of the possible consequences of joint and several 
liability.
    (b) Transmission to Committees of Congress.--Such Secretary shall 
transmit drafts of the procedures required under subsection (a) (or 
proposed revisions to any such procedures) to the Committee on Ways and 
Means of the House of Representatives, the Committee on Finance of the 
Senate, and the Joint Committee on Taxation on the same day.

SEC. 318. PROCEDURES RELATING TO EXTENSIONS OF STATUTE OF LIMITATIONS 
              BY AGREEMENT.

    (a) In General.--Paragraph (4) of section 6501(c) (relating to the 
period for limitations on assessment and collection) is amended--
            (1) by striking ``Where'' and inserting the following:
                    ``(A) In general.--Where'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Notice to taxpayer of right to refuse or 
                limit extension.--The Secretary shall notify the 
                taxpayer of the taxpayer's right to refuse to extend 
                the period of limitations, or to limit such extension 
                to particular issues, on each occasion when the 
                taxpayer is requested to provide such consent.''
    (b) Effective Date.--The amendments made by this section shall 
apply to requests to extend the period of limitations made after the 
date of the enactment of this Act.

SEC. 319. REVIEW OF PENALTY ADMINISTRATION.

    The Taxpayer Advocate shall prepare a study and provide an 
independent report to the Committee on Ways and Means of the House of 
Representatives, the Committee on Finance of the Senate, and the Joint 
Committee on Taxation, no later than July 30, 1998, reviewing the 
administration and implementation by the Internal Revenue Service of 
the penalty reform recommendations made in the Omnibus Budget 
Reconciliation Act of 1989, including legislative and administrative 
recommendations to simplify penalty administration and reduce taxpayer 
burden.

SEC. 320. STUDY OF TREATMENT OF ALL TAXPAYERS AS SEPARATE FILING UNITS.

    The Secretary of the Treasury or his delegate and the Comptroller 
General of the United States shall each conduct separate studies on the 
feasibility of treating each individual separately for purposes of the 
Internal Revenue Code of 1986, including recommendations for 
eliminating the marriage penalty, addressing community property issues, 
and reducing burden for divorced and separated taxpayers. The reports 
of each study shall be delivered to the Committee on Ways and Means of 
the House of Representatives, the Committee on Finance of the Senate, 
and the Joint Committee on Taxation no later than 180 days after the 
date of the enactment of this Act.

SEC. 321. STUDY OF BURDEN OF PROOF.

    The Comptroller General of the United States shall prepare a report 
on the burdens of proof for taxpayers and the Internal Revenue Service 
for controversies arising under the Internal Revenue Code of 1986, 
which shall be delivered to the Committee on Ways and Means of the 
House of Representatives, the Committee on Finance of the Senate, and 
the Joint Committee on Taxation no later than 180 days after the date 
of the enactment of this Act. Such report shall highlight the 
differences between these burdens and the burdens imposed in other 
disputes with the Federal Government, and should comment on the impact 
of changing these burdens on tax administration and taxpayer rights.

TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

                         Subtitle A--Oversight

SEC. 401. EXPANSION OF POWERS OF THE JOINT COMMITTEE ON TAXATION.

    (a) In General.--Section 8021 (relating to the powers of the Joint 
Committee on Taxation) is amended by adding at the end the following 
new subsections:
    ``(e) Consultant Services.--The Joint Committee is authorized to 
procure the services of experts and consultants in accordance with 
section 3109(b) of title 5, United States Code.
    ``(f) Investigations.--The Joint Committee shall review all 
requests (other than requests by a Committee or Subcommittee) for 
investigations of the Internal Revenue Service by the General 
Accounting Office, and approve such requests when appropriate, with a 
view towards eliminating overlapping investigations, ensuring that the 
General Accounting Office has the capacity to handle the investigation, 
and ensuring that investigations focus on areas of primary importance 
to tax administration.
    ``(g) Relating to Joint Hearings.--
            ``(1) In general.--The Chief of Staff, and such other staff 
        as are appointed pursuant to section 8004, shall provide such 
        assistance as is required for joint hearings described in 
        paragraph (2).
            ``(2) Joint hearings.--On or before April 1 of each 
        calendar year after 1997, there shall be a joint hearing of two 
        members of the majority and one member of the minority from 
        each of the Committees on Finance, Appropriations, and 
        Government Affairs of the Senate, and the Committees on Ways 
        and Means, Appropriations, and Government Reform and Oversight 
        of the House of Representatives, to review the strategic plans 
        and budget for the Internal Revenue Service. After the 
        conclusion of the annual filing season, there shall be a second 
        annual joint hearing to review other matters outlined in 
        section 8022(3)(C).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 402. COORDINATED OVERSIGHT REPORTS.

    (a) In General.--Paragraph (3) of section 8022 (relating to the 
duties of the Joint Committee on Taxation) is amended to read as 
follows:
            ``(3) Reports.--
                    ``(A) To report, from time to time, to the 
                Committee on Finance and the Committee on Ways and 
                Means, and, in its discretion, to the Senate or House 
                of Representatives, or both, the results of its 
                investigations, together with such recommendations as 
                it may deem advisable.
                    ``(B) To report, annually, to the Committee on 
                Finance and the Committee on Ways and Means on the 
                overall state of the Federal tax system, together with 
                recommendations with respect to possible simplification 
                proposals and other matters relating to the 
                administration of the Federal tax system as it may deem 
                advisable.
                    ``(C) To report, annually, to the Committees on 
                Finance, Appropriations, and Government Affairs of the 
                Senate, and to the Committees on Ways and Means, 
                Appropriations, and Government Reform and Oversight of 
                the House of Representatives, with respect to--
                            ``(i) strategic and business plans for the 
                        Internal Revenue Service;
                            ``(ii) progress of the Internal Revenue 
                        Service in meeting its objectives;
                            ``(iii) the budget for the Internal Revenue 
                        Service and whether it supports its objectives;
                            ``(iv) progress of the Internal Revenue 
                        Service in improving taxpayer service and 
                        compliance;
                            ``(v) progress of the Internal Revenue 
                        Service on technology modernization; and
                            ``(vi) the annual filing season.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

                           Subtitle B--Budget

SEC. 411. BUDGET DISCRETION.

    (a) In General.--
            (1) Adjustments.--For purposes of the Congressional Budget 
        Act of 1974 and the Balanced Budget and Emergency Deficit 
        Control Act of 1985--
                    (A) the discretionary spending limits under section 
                601(a)(2) of the Congressional Budget Act of 1974 (and 
                those limits as cumulatively adjusted) for the current 
                fiscal year and each outyear;
                    (B) the allocations to the Committees on 
                Appropriations under sections 302(a) and 602(a) of the 
                Congressional Budget Act of 1974; and
                    (C) the levels for major functional category 800 
                (General Government) and the appropriate budgetary 
                aggregates in the most recently agreed to concurrent 
                resolution on the budget,
        shall be adjusted to reflect the amounts of additional new 
        budget authority or additional outlays reported by the 
        Committee on Appropriations in appropriations legislation (or 
        by the committee of conference on such legislation) for the 
        Internal Revenue Service.
            (2) Limitation.--Any adjustments made pursuant to paragraph 
        (1) may be made for new initiatives on an annual basis only 
        for--
                    (A) improvements in taxpayer services, including 
                building an integrated database of taxpayer information 
                accessible to front-line Internal Revenue Service 
                personnel; or
                    (B) other improvements that the Director of the 
                Congressional Budget Office certifies to the 
                Chairpersons of the Committees on Budget of the Senate 
                and the House of Representatives that such budget 
                authority will not increase the Federal budget deficit,
        except that funding for ongoing programs shall be provided 
        through the normal appropriations process.
    (b) Revised Limits, Allocations, Levels, and Aggregates.--Upon the 
reporting of legislation pursuant to subsection (a), and again upon the 
submission of a conference report on such legislation in either House 
(if a conference report is submitted), the Chairpersons of the 
Committees on the Budget of the Senate and the House of Representatives 
shall file with their respective Houses appropriately revised--
            (1) discretionary spending limits under section 601(a)(2) 
        of the Congressional Budget Act of 1974 (and those limits as 
        cumulatively adjusted) for the current fiscal year and each 
        outyear;
            (2) allocations to the Committee on Appropriations under 
        sections 302(a) and 602(a) of that Act; and
            (3) levels for major functional category 800 (General 
        Government) and the appropriate budgetary aggregates in the 
        most recently agreed to concurrent resolution on the budget, to 
        carry out this subsection.
These revised discretionary spending limits, allocations, functional 
levels, and aggregates shall be considered for purposes of 
congressional enforcement of that Act as the discretionary spending 
limits, allocations, functional levels, and aggregates.
    (c) Reporting Revised Allocations.--The Committees on 
Appropriations of the Senate and the House of Representatives may 
report appropriately revised allocations pursuant to sections 302(b) 
and 602(b) of the Congressional Budget Act of 1974 to carry out this 
section.
    (d) Contingencies.--This section shall not apply to any additional 
new budget authority or additional outlays unless the Director of the 
Congressional Budget Office certifies to the Chairpersons of the 
Committees on Appropriation of the Senate and the House of 
Representatives that the Director or any other outside authority has 
verified that--
            (1) the Internal Revenue Service has provided them with 
        reasonably accurate cost and revenue information;
            (2) the Internal Revenue Service has implemented adequate 
        quality service measures consistent with taxpayer rights;
            (3) the Internal Revenue Service has obtained a clean 
        opinion on its financial audit of appropriated accounts; and
            (4) the Internal Revenue Service has made significant 
        progress towards receiving a clean opinion on its financial 
        audit of custodial accounts.

SEC. 412. FUNDING FOR CENTURY DATE CHANGE.

    It is the sense of Congress that funding for the Internal Revenue 
Service efforts to resolve the century date change computing problems 
should be funded fully to provide for certain resolution of such 
problems.

SEC. 413. FINANCIAL MANAGEMENT ADVISORY GROUP.

    The Commissioner shall convene a financial management advisory 
group consisting of individuals with expertise in governmental 
accounting and auditing from both the private sector and the Government 
to advise the Commissioner on financial management issues, including--
            (1) the continued partnership between the Internal Revenue 
        Service and the General Accounting Office;
            (2) the financial accounting aspects of the Internal 
        Revenue Service's system modernization;
            (3) the necessity and utility of year-round auditing; and
            (4) the Commissioner's plans for improving its financial 
        management system.

                     Subtitle C--Tax Law Complexity

SEC. 421. ROLE OF THE INTERNAL REVENUE SERVICE.

    It is the sense of Congress that the Internal Revenue Service 
should provide the Congress with an independent view of tax 
administration, and that during the legislative process, the tax 
writing committees of the Congress should hear from front-line 
technical experts at the Internal Revenue Service with respect to the 
administrability of pending amendments to the Internal Revenue Code of 
1986.

SEC. 422. TAX COMPLEXITY ANALYSIS.

    (a) In General.--Chapter 92 (relating to powers and duties of the 
Joint Committee on Taxation) is amended by adding at the end the 
following new section:

``SEC. 8024. TAX COMPLEXITY ANALYSIS.

    ``(a) In General.--
            ``(1) Reported bills and resolutions.--When a committee of 
        the Senate or House of Representatives reports a bill or joint 
        resolution that includes any provision amending the Internal 
        Revenue Code of 1986, the report for such bill or joint 
        resolution shall contain a Tax Complexity Analysis prepared by 
        the Joint Committee on Taxation for each provision therein.
            ``(2) Amended bills and joint resolutions; conference 
        reports.--If a bill or joint resolution is passed in an amended 
        form (including if passed by one House as an amendment in the 
        nature of a substitute for the text of a bill or joint 
        resolution from the other House) or is reported by a committee 
        of conference in amended form, and the amended form contains an 
        amendment to the Internal Revenue Code of 1986 not previously 
        considered by either House, then the committee of conference 
        shall ensure that the Joint Committee on Taxation prepares a 
        Tax Complexity Analysis for each provision therein.
    ``(b) Content of Complexity Analysis.--Each Tax Complexity Analysis 
must address--
            ``(1) whether the provision is new, modifies or replaces 
        existing law, and whether hearings were held to discuss the 
        proposal and whether the Internal Revenue Service provided 
        input as to its administrability;
            ``(2) when the provision becomes effective, and 
        corresponding compliance requirements on taxpayers (e.g., 
        effective on date of enactment, phased in, or retroactive);
            ``(3) whether new Internal Revenue Service forms or 
        worksheets are needed, whether existing forms or worksheets 
        must be modified, and whether the effective date allows 
        sufficient time for the Internal Revenue Service to prepare 
        such forms and educate taxpayers;
            ``(4) necessity of additional interpretive guidance (e.g., 
        regulations, rulings, and notices);
            ``(5) the extent to which the proposal relies on concepts 
        contained in existing law, including definitions;
            ``(6) effect on existing record keeping requirements and 
        the activities of taxpayers, complexity of calculations and 
        likely behavioral responses, and standard business practices 
        and resource requirements;
            ``(7) number, type, and sophistication of affected 
        taxpayers; and
            ``(8) whether the proposal requires the Internal Revenue 
        Service to assume responsibilities not directly related to 
        raising revenue which could be handled through another Federal 
        agency.
    ``(c) Legislation Subject to Point of Order.--
            ``(1) In general.--It shall not be in order in the Senate 
        or the House of Representatives to consider any bill, joint 
        resolution, amendment, motion, or conference report that is not 
        accompanied by a Tax Complexity Analysis for each provision 
        therein.
            ``(2) In the senate.--Upon a point of order being made by 
        any Senator against any provision under this section, and the 
        point of order being sustained by the Chair, such specific 
        provision shall be deemed stricken from the bill, resolution, 
        amendment, amendment in disagreement, or conference report, and 
        may not be offered as an amendment from the floor.
            ``(3) In the house of representatives.--
                    ``(A) It shall not be in order in the House of 
                Representatives to consider a rule or order that waives 
                the application of paragraph (1).
                    ``(B) In order to be cognizable by the Chair, a 
                point of order under this section must specify the 
                precise language on which it is premised.
                    ``(C) As disposition of points of order under this 
                section, the Chair shall put the question of 
                consideration with respect to the proposition that is 
                the subject of the points of order.
                    ``(D) A question of consideration under this 
                section shall be debatable for 10 minutes by each 
Member initiating a point of order and for 10 minutes by an opponent on 
each point of order, but shall otherwise by decided without intervening 
motion except one that the House adjourn or that the Committee of the 
Whole rise, as the case may be.
                    ``(E) The disposition of the question of 
                consideration under this subsection with respect to a 
                bill or joint resolution shall be considered also to 
                determine the question of consideration under this 
                subsection with respect to an amendment made in order 
                as original text.
    ``(d) Responsibilities of the Commissioner.--The Commissioner shall 
provide the Joint Committee on Taxation with such information as is 
necessary to prepare a Tax Complexity Analysis on each instance in 
which such an analysis is required.''
    (b) Clerical Amendment.--The table of sections for chapter 92 is 
amended by adding at the end the following new item:

                              ``Sec. 8024. Tax complexity analysis.''
    (c) Effective Date.--The amendments made by this section shall 
apply to legislation considered on or after the earlier of January 1, 
1998, or the 90th day after the date of the enactment of an additional 
appropriation to carry out section 8024 of the Internal Revenue Code of 
1986, as added by this section.

SEC. 423. SIMPLIFIED TAX AND WAGE REPORTING SYSTEM.

    (a) Policy.--It is the policy of the Congress that employers should 
have a single point of filing tax and wage reporting information.
    (b) Electronic Filing of Information Returns.--The Social Security 
Administration shall establish procedures no later than December 31, 
1998, to accept electronic submissions of tax and wage reporting 
information from employers, and to forward such information to the 
Internal Revenue Service, and to the tax administrators of the States, 
upon request and reimbursement of expenses. For purposes of this 
paragraph, recipients of tax and wage reporting information from the 
Social Security Administration shall reimburse the Social Security 
Administration for its incremental expenses associated with accepting 
and furnishing such information.

SEC. 424. COMPLIANCE BURDEN ESTIMATES.

    The Joint Committee on Taxation shall prepare a study of the 
feasibility of developing a baseline estimate of taxpayers' compliance 
burdens against which future legislative proposals could be measured.
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