II

★(Star Print)

105TH CONGRESS

1ST SESSION S. 1555

To amend the Internal Revenue Code of 1986 to restructure and reform

the Internal Revenue Service, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 13, 1997

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

referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to restructure

and reform the Internal Revenue Service, and for other

purposes.

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

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE;

4 TABLE OF CONTENTS.

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

6 ‘‘Internal Revenue Service Oversight, Restructuring and

7 Tax Code Elimination Act of 1997’’.

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amend10 ment or repeal is expressed in terms of an amendment
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1 to, or repeal of, a section or other provision, the reference

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986.

4 (c) TABLE OF CONTENTS.—

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Sec. 2. Internal Revenue Service Oversight Board.

Sec. 3. Commissioner of Internal Revenue; other officials.

Sec. 4. Other personnel.

Sec. 5. Prohibition on executive branch influence over taxpayer audits and

other investigations.

Sec. 6. Termination of Internal Revenue Code of 1986 and Internal Revenue

Service.

Sec. 7. Structure of new Federal tax system.

5 SEC. 2. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

6 (a) IN GENERAL.—Section 7802 (relating to the

7 Commissioner of Internal Revenue) is amended to read as

8 follows:

9 ‘‘SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT

10 BOARD.

11 ‘‘(a) ESTABLISHMENT.—There is established within

12 the Department of the Treasury the Internal Revenue

13 Service Oversight Board (hereafter in this subchapter re14 ferred to as the ‘Oversight Board’).

15 ‘‘(b) MEMBERSHIP.—

16 ‘‘(1) COMPOSITION.—The Oversight Board

17 shall be composed of 9 members who are not Fed18 eral officers or employees and who are appointed by

19 the President, by and with the advice and consent

20 of the Senate.

21 ‘‘(2) QUALIFICATIONS AND TERMS.—
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1 ‘‘(A) QUALIFICATIONS.—Members of the

2 Oversight Board shall be appointed solely on

3 the basis of their professional experience and

4 expertise in 1 or more of the following areas:

5 ‘‘(i) Management of large service or6 ganizations.

7 ‘‘(ii) Customer service.

8 ‘‘(iii) Federal tax laws, including tax

9 administration and compliance.

10 ‘‘(iv) Information technology.

11 ‘‘(v) Organization development.

12 ‘‘(vi) The needs and concerns of tax13 payers.

14 ‘‘(vii) Management or ownership of a

15 small business.

16 In the aggregate, the members of the Oversight

17 Board should collectively bring to bear expertise

18 in all of the areas described in the preceding

19 sentence.

20 ‘‘(B) TERMS.—Each member shall be ap21 pointed for a term of 5 years, except that of the

22 members first appointed under paragraph (1)—

23 ‘‘(i) 1 member shall be appointed for

24 a term of 1 year,
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1 ‘‘(ii) 1 member shall be appointed for

2 a term of 2 years,

3 ‘‘(iii) 2 members shall be appointed

4 for a term of 3 years, and

5 ‘‘(iv) 2 members shall be appointed

6 for a term of 4 years.

7 Such terms shall begin on the date of appoint8 ment.

9 ‘‘(C) REAPPOINTMENT.—An individual

10 may be appointed to no more than two 5-year

11 terms on the Oversight Board.

12 ‘‘(D) VACANCY.—Any vacancy on the

13 Oversight Board shall be filled in the same

14 manner as the original appointment. Any mem15 ber appointed to fill a vacancy occurring before

16 the expiration of the term for which the mem17 ber’s predecessor was appointed shall be ap18 pointed for the remainder of that term.

19 ‘‘(E) SPECIAL GOVERNMENT EMPLOY20 EES.—During the entire period that an individ21 ual is a member of the Oversight Board, such

22 individual shall be treated as—

23 ‘‘(i) serving as a special government

24 employee (as defined in section 202 of title
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1 18, United States Code) and as described

2 in section 207(c)(2) of such title 18, and

3 ‘‘(ii) serving as an officer or employee

4 referred to in section 101(f) of the Ethics

5 in Government Act of 1978 for purposes of

6 title I of such Act.

7 ‘‘(3) QUORUM.—6 members of the Oversight

8 Board shall constitute a quorum. A majority of

9 members present and voting shall be required for the

10 Oversight Board to take action.

11 ‘‘(4) REMOVAL.—Any member of the Oversight

12 Board may be removed at the will of the President.

13 ‘‘(5) CLAIMS.—

14 ‘‘(A) IN GENERAL.—Members of the Over15 sight Board shall have no personal liability

16 under Federal law with respect to any claim

17 arising out of or resulting from an act or omis18 sion by such member within the scope of service

19 as a member. The preceding sentence shall not

20 be construed to limit personal liability for crimi21 nal acts or omissions, willful or malicious con22 duct, acts or omissions for private gain, or any

23 other act or omission outside the scope of the

24 service of such member on the Oversight Board.
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1 ‘‘(B) EFFECT ON OTHER LAW.—This para2 graph shall not be construed—

3 ‘‘(i) to affect any other immunities

4 and protections that may be available to

5 such member under applicable law with re6 spect to such transactions,

7 ‘‘(ii) to affect any other right or rem8 edy against the United States under appli9 cable law, or

10 ‘‘(iii) to limit or alter in any way the

11 immunities that are available under appli12 cable law for Federal officers and employ13 ees.

14 ‘‘(c) GENERAL RESPONSIBILITIES.—

15 ‘‘(1) IN GENERAL.—The Oversight Board shall

16 oversee the Internal Revenue Service in its adminis17 tration, management, conduct, direction, and super18 vision of the execution and application of the inter19 nal revenue laws or related statutes and tax conven20 tions to which the United States is a party.

21 ‘‘(2) RESTRICTION ON DISCLOSURE OF RETURN

22 INFORMATION TO OVERSIGHT BOARD MEMBERS.—

23 No return, return information, or taxpayer return

24 information (as defined in section 6103(b)) may be

25 disclosed to any member of the Oversight Board.
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1 Any request for information not permitted to be dis2 closed under the preceding sentence, and any contact

3 relating to a specific taxpayer, made by a member

4 of the Oversight Board so described to an officer or

5 employee of the Internal Revenue Service shall be

6 reported by such officer or employee to the Secretary

7 and the Joint Committee on Taxation.

8 ‘‘(d) SPECIFIC RESPONSIBILITIES.—The Oversight

9 Board shall have the following specific responsibilities:

10 ‘‘(1) STRATEGIC PLANS.—To review and ap11 prove strategic plans of the Internal Revenue Serv12 ice, including the establishment of—

13 ‘‘(A) mission and objectives, and standards

14 of performance relative to either, and

15 ‘‘(B) annual and long-range strategic

16 plans.

17 ‘‘(2) OPERATIONAL PLANS.—To review the

18 operational functions of the Internal Revenue Serv19 ice, including—

20 ‘‘(A) plans for modernization of the tax

21 system, including the procurement of informa22 tion technology intended to process tax returns,

23 ‘‘(B) plans for outsourcing or managed

24 competition, and

25 ‘‘(C) plans for training and education.
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1 ‘‘(3) MANAGEMENT.—To—

2 ‘‘(A) recommend to the President can3 didates for appointment as the Commissioner of

4 Internal Revenue and recommend to the Presi5 dent the removal of the Commissioner,

6 ‘‘(B) review the Commissioner’s selection,

7 evaluation, and compensation of senior man8 agers,

9 ‘‘(C) review and approve the Commis10 sioner’s plans for any major reorganization of

11 the Internal Revenue Service, and

12 ‘‘(D) review, and make recommendations

13 to the Commissioner concerning, the auditing

14 procedures and collection activities of the Inter15 nal Revenue Service.

16 ‘‘(4) BUDGET.—To—

17 ‘‘(A) review and approve the budget re18 quest of the Internal Revenue Service prepared

19 by the Commissioner,

20 ‘‘(B) submit such budget request to the

21 Secretary of the Treasury, and

22 ‘‘(C) ensure that the budget request sup23 ports the annual and long-range strategic plans.

24 The Secretary shall submit the budget request referred to

25 in paragraph (4)(B) for any fiscal year to the President
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1 who shall submit such request, without revision, to Con2 gress together with the President’s annual budget request

3 for the Internal Revenue Service for such fiscal year.

4 ‘‘(e) OVERSIGHT BOARD PERSONNEL MATTERS.—

5 ‘‘(1) COMPENSATION OF MEMBERS.—

6 ‘‘(A) IN GENERAL.—Each member of the

7 Oversight Board shall be compensated at a rate

8 not to exceed $30,000 per year.

9 ‘‘(B) CHAIRPERSON.—In lieu of the

10 amount specified in subparagraph (A), the

11 Chairperson of the Oversight Board shall be

12 compensated at a rate not to exceed $50,000.

13 ‘‘(2) TRAVEL EXPENSES.—The members of the

14 Oversight Board shall be allowed travel expenses, in15 cluding per diem in lieu of subsistence, at rates au16 thorized for employees of agencies under subchapter

17 I of chapter 57 of title 5, United States Code, while

18 away from their homes or regular places of business

19 for purposes of attending meetings of the Oversight

20 Board.

21 ‘‘(3) STAFF.—At the request of the Chair22 person of the Oversight Board, the Commissioner

23 shall detail to the Oversight Board such personnel as

24 may be necessary to enable the Oversight Board to

25 perform its duties. Such detail shall be without
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1 interruption or loss of civil service status or privi2 lege. The Chairperson of the Oversight Board may

3 recommend to the Commissioner specific staff of the

4 Internal Revenue Service for detail to the Oversight

5 Board, and may recommend to the Commissioner

6 specific individuals not employed by the Internal

7 Revenue Service to be hired by the Internal Revenue

8 Service for the purpose of being detailed to the

9 Oversight Board.

10 ‘‘(4) PROCUREMENT OF TEMPORARY AND

11 INTERMITTENT SERVICES.—The Chairperson of the

12 Oversight Board may procure temporary and inter13 mittent services under section 3109(b) of title 5,

14 United States Code.

15 ‘‘(f) ADMINISTRATIVE MATTERS.—

16 ‘‘(1) CHAIR.—The members of the Oversight

17 Board shall elect for a 2-year term a chairperson

18 from among the members.

19 ‘‘(2) COMMITTEES.—The Oversight Board may

20 establish such committees as the Oversight Board

21 determines appropriate.

22 ‘‘(3) MEETINGS.—The Oversight Board shall

23 meet at least once each month and at such other

24 times as the Oversight Board determines appro25 priate.
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1 ‘‘(4) REPORTS.—The Oversight Board shall

2 each year report to the President and the Congress

3 with respect to the conduct of its responsibilities

4 under this title.’’.

5 (b) CONFORMING AMENDMENTS.—

6 (1) Section 4946(c) (relating to definitions and

7 special rules for chapter 42) is amended—

8 (A) by striking ‘‘or’’ at the end of para9 graph (5),

10 (B) by striking the period at the end of

11 paragraph (6) and inserting ‘‘, or’’, and

12 (C) by adding at the end the following new

13 paragraph:

14 ‘‘(7) a member of the Internal Revenue Service

15 Oversight Board.’’.

16 (2) The table of sections for subchapter A of

17 chapter 80 is amended by striking the item relating

18 to section 7802 and inserting the following new

19 item:

‘‘Sec. 7802. Internal Revenue Service Oversight Board.’’.

20 (c) EFFECTIVE DATE.—

21 (1) IN GENERAL.—The amendments made by

22 this section shall take effect on the date of the en23 actment of this Act.

24 (2) NOMINATIONS TO INTERNAL REVENUE

25 SERVICE OVERSIGHT BOARD.—The President shall
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1 submit nominations under section 7802 of the Inter2 nal Revenue Code of 1986, as added by this section,

3 to the Senate not later than 6 months after the date

4 of the enactment of this Act.

5 SEC. 3. COMMISSIONER OF INTERNAL REVENUE; OTHER

6 OFFICIALS.

7 (a) IN GENERAL.—Section 7803 (relating to other

8 personnel) is amended to read as follows:

9 ‘‘SEC. 7803. COMMISSIONER OF INTERNAL REVENUE;

10 OTHER OFFICIALS.

11 ‘‘(a) COMMISSIONER OF INTERNAL REVENUE.—

12 ‘‘(1) APPOINTMENT.—

13 ‘‘(A) IN GENERAL.—There shall be in the

14 Department of the Treasury a Commissioner of

15 Internal Revenue who shall be appointed by the

16 President, by and with the advice and consent

17 of the Senate, to a 5-year term. The appoint18 ment shall be made without regard to political

19 affiliation or activity.

20 ‘‘(B) VACANCY.—Any individual appointed

21 to fill a vacancy in the position of Commis22 sioner occurring before the expiration of the

23 term for which such individual’s predecessor

24 was appointed shall be appointed only for the

25 remainder of that term.
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1 ‘‘(C) REMOVAL.—The Commissioner may

2 be removed at the will of the President.

3 ‘‘(2) DUTIES.—The Commissioner shall have

4 such duties and powers as the Secretary may pre5 scribe, including the power to—

6 ‘‘(A) administer, manage, conduct, direct,

7 and supervise the execution and application of

8 the internal revenue laws or related statutes

9 and ax conventions to which the United States

10 is a party; and

11 ‘‘(B) recommend to the President a can12 didate for appointment as Chief Counsel for the

13 Internal Revenue Service when a vacancy oc14 curs, and recommend to the President the re15 moval of such Chief Counsel.

16 If the Secretary determines not to delegate a power

17 specified in subparagraph (A) or (B), such deter18 mination may not take effect until 30 days after the

19 Secretary notifies the Committees on Ways and

20 Means, Government Reform and Oversight, and Ap21 propriations of the House of Representatives, the

22 Committees on Finance, Government Operations,

23 and Appropriations of the Senate, and the Joint

24 Committee on Taxation.
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1 ‘‘(3) CONSULTATION WITH OVERSIGHT

2 BOARD.—The Commissioner shall consult with the

3 Oversight Board on all matters set forth in para4 graphs (2) and (3) (other than paragraph (3)(A)) of

5 section 7802(d).

6 ‘‘(b) ASSISTANT COMMISSIONER FOR EMPLOYEE

7 PLANS AND EXEMPT ORGANIZATIONS.—There is estab8 lished within the Internal Revenue Service an office to be

9 known as the ‘Office of Employee Plans and Exempt Or10 ganizations’ to be under the supervision and direction of

11 an Assistant Commissioner of Internal Revenue. As head

12 of the Office, the Assistant Commissioner shall be respon13 sible for carrying out such functions as the Secretary may

14 prescribe with respect to organizations exempt from tax

15 under section 501(a) and with respect to plans to which

16 part I of subchapter D of chapter 1 applies (and with re17 spect to organizations designed to be exempt under such

18 section and plans designed to be plans to which such part

19 applies) and other nonqualified deferred compensation ar20 rangements. The Assistant Commissioner shall report an21 nually to the Commissioner with respect to the Assistant

22 Commissioner’s responsibilities under this section.

23 ‘‘(c) OFFICE OF TAXPAYER ADVOCATE.—

24 ‘‘(1) IN GENERAL.—
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1 ‘‘(A) ESTABLISHMENT.—There is estab2 lished in the Internal Revenue Service an office

3 to be known as the ‘Office of the Taxpayer Ad4 vocate’. Such office shall be under the super5 vision and direction of an official to be known

6 as the ‘Taxpayer Advocate’ who shall be ap7 pointed with the approval of the Oversight

8 Board by the Commissioner of Internal Reve9 nue and shall report directly to the Commis10 sioner. The Taxpayer Advocate shall be entitled

11 to compensation at the same rate as the highest

12 level official reporting directly to the Commis13 sioner of Internal Revenue.

14 ‘‘(B) RESTRICTION ON SUBSEQUENT EM15 PLOYMENT.—An individual who is an officer or

16 employee of the Internal Revenue Service may

17 be appointed as Taxpayer Advocate only if such

18 individual agrees not to accept any employment

19 with the Internal Revenue Service for at least

20 5 years after ceasing to be the Taxpayer Advo21 cate.

22 ‘‘(2) FUNCTIONS OF OFFICE.—

23 ‘‘(A) IN GENERAL.—It shall be the func24 tion of the Office of Taxpayer Advocate to—
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1 ‘‘(i) assist taxpayers in resolving prob2 lems with the Internal Revenue Service,

3 ‘‘(ii) identify areas in which taxpayers

4 have problems in dealings with the Internal

5 Revenue Service,

6 ‘‘(iii) to the extent possible, propose

7 changes in the administrative practices of

8 the Internal Revenue Service to mitigate

9 problems identified under clause (ii), and

10 ‘‘(iv) identify potential legislative

11 changes which may be appropriate to miti12 gate such problems.

13 ‘‘(B) ANNUAL REPORTS.—

14 ‘‘(i) OBJECTIVES.—Not later than

15 June 30 of each calendar year, the Tax16 payer Advocate shall report to the Commit17 tee on Ways and Means of the House of

18 Representatives, the Committee on Fi19 nance of the Senate, and the Subcommit20 tees on Treasury, Postal Service, and Gen21 eral Government of the Committees on Ap22 propriation of the House of Representa23 tives and the Senate on the objectives of

24 the Taxpayer Advocate for the fiscal year

25 beginning in such calendar year. Any such
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1 report shall contain full and substantive

2 analysis, in addition to statistical informa3 tion.

4 ‘‘(ii) ACTIVITIES.—Not later than De5 cember 31 of each calendar year, the Tax6 payer Advocate shall report to the Commit7 tee on Ways and Means of the House of

8 Representatives, the Committee on Fi9 nance of the Senate, and the Subcommit10 tees on Treasury, Postal Service, and Gen11 eral Government of the Committees on Ap12 propriation of the House of Representa13 tives and the Senate on the activities of the

14 Taxpayer Advocate during the fiscal year

15 ending during such calendar year. Any

16 such report shall contain full and sub17 stantive analysis, in addition to statistical

18 information, and shall—

19 ‘‘(I) identify the initiatives the

20 Taxpayer Advocate has taken on im21 proving taxpayer services and Internal

22 Revenue Service responsiveness,

23 ‘‘(II) contain recommendations

24 received from individuals with the au-
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1 thority to issue Taxpayer Assistance

2 Orders under section 7811,

3 ‘‘(III) contain a summary of at

4 least 20 of the most serious problems

5 encountered by taxpayers, including a

6 description of the nature of such prob7 lems,

8 ‘‘(IV) contain an inventory of the

9 items described in subclauses (I), (II),

10 and (III) for which action has been

11 taken and the result of such action,

12 ‘‘(V) contain an inventory of the

13 items described in subclauses (I), (II),

14 and (III) for which action remains to

15 be completed and the period during

16 which each item has remained on such

17 inventory,

18 ‘‘(VI) contain an inventory of the

19 items described in subclauses (I), (II),

20 and (III) for which no action has been

21 taken, the period during which each

22 item has remained on such inventory,

23 the reasons for the inaction, and iden24 tify any Internal Revenue Service offi-
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1 cial who is responsible for such inac2 tion,

3 ‘‘(VII) identify any Taxpayer As4 sistance Order which was not honored

5 by the Internal Revenue Service in a

6 timely manner, as specified under sec7 tion 7811(b),

8 ‘‘(VIII) contain recommendations

9 for such administrative and legislative

10 action as may be appropriate to re11 solve problems encountered by tax12 payers,

13 ‘‘(IX) identify areas of the tax

14 law that impose significant compliance

15 burdens on taxpayers or the Internal

16 Revenue Service, including specific

17 recommendations for remedying these

18 problems,

19 ‘‘(X) in conjunction with the Na20 tional Director of Appeals, identify

21 the 10 most litigated issues for each

22 category of taxpayers, including rec23 ommendations for mitigating such dis24 putes, and
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1 ‘‘(XI) include such other infor2 mation as the Taxpayer Advocate may

3 deem advisable.

4 ‘‘(iii) SUBMISSION OF REPORT.—Each

5 report required under this subparagraph

6 shall be provided to the committees de7 scribed in clauses (i) and (ii) with prior re8 view and comment from the Oversight

9 Board, but without any prior review or

10 comment from the Secretary of the Treas11 ury, any other officer or employee of the

12 Department of the Treasury, or the Office

13 of Management and Budget.

14 ‘‘(C) OTHER RESPONSIBILITIES.—The

15 Taxpayer Advocate shall—

16 ‘‘(i) monitor the coverage and geo17 graphic allocation of problem resolution of18 ficers, and

19 ‘‘(ii) develop guidance to be distrib20 uted to all Internal Revenue Service offi21 cers and employees outlining the criteria

22 for referral of taxpayer inquiries to prob23 lem resolution officers.

24 ‘‘(3) RESPONSIBILITIES OF COMMISSIONER.—

25 The Commissioner shall establish procedures requir-
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1 ing a formal response to all recommendations sub2 mitted to the Commissioner by the Taxpayer Advo3 cate within 3 months after submission to the Com4 missioner.’’.

5 (b) CONFORMING AMENDMENTS.—

6 (1) The table of sections for subchapter A of

7 chapter 80 is amended by striking the item relating

8 to section 7803 and inserting the following new

9 item:

‘‘Sec. 7803. Commissioner of Internal Revenue; other officials.’’.

10 (2) Subsection (b) of section 5109 of title 5,

11 United States Code, is amended by striking

12 ‘‘7802(b)’’ and inserting ‘‘7803(b)’’.

13 (c) EFFECTIVE DATE.—

14 (1) IN GENERAL.—The amendments made by

15 this section shall take effect on the date of the en16 actment of this Act.

17 (2) CURRENT OFFICERS.—

18 (A) In the case of an individual serving as

19 Commissioner of Internal Revenue on the date

20 of the enactment of this Act who was appointed

21 to such position before such date, the 5-year

22 term required by section 7803(a)(1) of the In23 ternal Revenue Code of 1986, as added by this

24 section, shall begin as of the date of such ap25 pointment.
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1 (B) Section 7803(c)(1)(B) of such Code,

2 as added by this section, shall not apply to the

3 individual serving as Taxpayer Advocate on the

4 date of the enactment of this Act.

5 SEC. 4. OTHER PERSONNEL.

6 (a) IN GENERAL.—Section 7804 (relating to the ef7 fect of reorganization plans) is amended to read as follows:

8 ‘‘SEC. 7804. OTHER PERSONNEL.

9 ‘‘(a) APPOINTMENT AND SUPERVISION.—Unless oth10 erwise prescribed by the Secretary, the Commissioner of

11 Internal Revenue is authorized to employ such number of

12 persons as the Commissioner deems proper for the admin13 istration and enforcement of the internal revenue laws,

14 and the Commissioner shall issue all necessary directions,

15 instructions, orders, and rules applicable to such persons.

16 ‘‘(b) POSTS OF DUTY OF EMPLOYEES IN FIELD

17 SERVICE OR TRAVELING.—Unless otherwise prescribed by

18 the Secretary—

19 ‘‘(1) DESIGNATION OF POST OF DUTY.—The

20 Commissioner shall determine and designate the

21 posts of duty of all such persons engaged in field

22 work or traveling on official business outside of the

23 District of Columbia.

24 ‘‘(2) DETAIL OF PERSONNEL FROM FIELD

25 SERVICE.—The Commissioner may order any such
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1 person engaged in field work to duty in the District

2 of Columbia, for such periods as the Commissioner

3 may prescribe, and to any designated post of duty

4 outside the District of Columbia upon the comple5 tion of such duty.

6 ‘‘(c) DELINQUENT INTERNAL REVENUE OFFICERS

7 AND EMPLOYEES.—If any officer or employee of the

8 Treasury Department acting in connection with the inter9 nal revenue laws fails to account for and pay over any

10 amount of money or property collected or received by him

11 in connection with the internal revenue laws, the Secretary

12 shall issue notice and demand to such officer or employee

13 for payment of the amount which he failed to account for

14 and pay over, and, upon failure to pay the amount de15 manded within the time specified in such notice, the

16 amount so demanded shall be deemed imposed upon such

17 officer or employee and assessed upon the date of such

18 notice and demand, and the provisions of chapter 64 and

19 all other provisions of law relating to the collection of as20 sessed taxes shall be applicable in respect of such

21 amount.’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Subsection (b) of section 6344 is amended

24 by striking ‘‘section 7803(d)’’ and inserting ‘‘section

25 7804(c)’’.
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1 (2) The table of sections for subchapter A of

2 chapter 80 is amended by striking the item relating

3 to section 7804 and inserting the following new

4 item:

‘‘Sec. 7804. Other personnel.’’.

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

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

7 of this Act.

8 SEC. 5. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE

9 OVER TAXPAYER AUDITS AND OTHER INVES10 TIGATIONS.

11 (a) IN GENERAL.—Part I of subchapter A of chapter

12 75 (relating to crimes, other offenses, and forfeitures) is

13 amended by adding after section 7216 the following new

14 section:

15 ‘‘SEC. 7217. PROHIBITION ON EXECUTIVE BRANCH INFLU16 ENCE OVER TAXPAYER AUDITS AND OTHER

17 INVESTIGATIONS.

18 ‘‘(a) PROHIBITION.—It shall be unlawful for any ap19 plicable person to request any officer or employee of the

20 Internal Revenue Service to conduct or terminate an audit

21 or other investigation of any particular taxpayer with re22 spect to the tax liability of such taxpayer.

23 ‘‘(b) REPORTING REQUIREMENT.—Any officer or em24 ployee of the Internal Revenue Service receiving any re25 quest prohibited by subsection (a) shall report the receipt
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1 of such request to the Chief Inspector of the Internal Rev2 enue Service.

3 ‘‘(c) EXCEPTIONS.—Subsection (a) shall not apply

4 to—

5 ‘‘(1) any request made to an applicable person

6 by the taxpayer or a representative of the taxpayer

7 and forwarded by such applicable person to the In8 ternal Revenue Service,

9 ‘‘(2) any request by an applicable person for

10 disclosure of return or return information under sec11 tion 6103 if such request is made in accordance with

12 the requirements of such section, or

13 ‘‘(3) any request by the Secretary of the Treas14 ury as a consequence of the implementation of a

15 change in tax policy.

16 ‘‘(d) PENALTY.—Any person who willfully violates

17 subsection (a) or fails to report under subsection (b) shall

18 be punished upon conviction by a fine in any amount not

19 exceeding $5,000, or imprisonment of not more than 5

20 years, or both, together with the costs of prosecution.

21 ‘‘(e) APPLICABLE PERSON.—For purposes of this

22 section, the term ‘applicable person’ means—

23 ‘‘(1) the President, the Vice President, any em24 ployee of the executive office of the President, and
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1 any employee of the executive office of the Vice

2 President, and

3 ‘‘(2) any individual (other than the Attorney

4 General of the United States) serving in a position

5 specified in section 5312 of title 5, United States

6 Code.’’.

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

8 for part I of subchapter A of chapter 75 is amended by

9 adding after the item relating to section 7216 the follow10 ing new item:

‘‘Sec. 7217. Prohibition on executive branch influence over taxpayer audits and other investigations.’’.

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

12 this section shall apply to requests made after the date

13 of the enactment of this Act.

14 SEC. 6. TERMINATION OF INTERNAL REVENUE CODE OF

15 1986 AND INTERNAL REVENUE SERVICE.

16 (a) TAX CODE.—No tax shall be imposed under the

17 Internal Revenue Code of 1986—

18 (1) for any taxable year beginning after Decem19 ber 31, 2000, and

20 (2) in the case of any tax not imposed on the

21 basis of a taxable year, on any taxable event or for

22 any period after December 31, 2000.

23 (b) INTERNAL REVENUE SERVICE.—The operations

24 of the Internal Revenue Service are terminated and no ap-
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1 propriations are authorized for such operations in fiscal

2 years beginning after September 30, 2001. The Secretary

3 of the Treasury shall provide for the orderly termination

4 of such operations.

5 (c) EXCEPTIONS.—Subsection (a) shall not apply to

6 taxes imposed by—

7 (1) chapter 2 (relating to tax on self-employ8 ment income),

9 (2) chapter 21 (relating to Federal Insurance

10 Contributions Act), and

11 (3) chapter 22 (relating to Railroad Retirement

12 Tax Act).

13 SEC. 7. STRUCTURE OF NEW FEDERAL TAX SYSTEM.

14 The Congress hereby declares that any new Federal

15 tax system should be a simple and fair system that—

16 (1) applies a low rate to all Americans,

17 (2) requires a supermajority of both Houses of

18 Congress to raise taxes,

19 (3) provides tax relief for working Americans,

20 (4) protects the rights of taxpayers and reduces

21 tax collection abuses,

22 (5) eliminates the bias against savings and in23 vestment,

24 (6) promotes economic growth and job creation,

25 (7) does not penalize marriage or families, and
28

S 1555 IS1S

1 (8) protects the integrity of Social Security and

2 Medicare.

3 (9) provides for a taxpayer-friendly collections

4 process to replace the Internal Revenue Service.

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