II

105TH CONGRESS

2D SESSION S. 1747

To amend the Internal Revenue Code of 1986 to provide for additional

taxpayer rights and taxpayer education, notice, and resources, and for

other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 11, 1998

Mr. GRASSLEY (for himself, Mr. REID, and Mr. KERREY) 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 provide

for additional taxpayer rights and taxpayer education,

notice, and resources, 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 ‘‘Taxpayer Bill of Rights 3’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 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. Findings.

TITLE I—TAXPAYER RIGHTS

Sec. 101. Disclosure of criteria for examination selection.

Sec. 102. Civil damages for negligence in collection actions.

Sec. 103. Freedom of information.

Sec. 104. Elimination of application of failure to pay penalty during period of

installment agreement.

Sec. 105. Safe harbor for qualification for installment agreements.

Sec. 106. Cataloging complaints.

Sec. 107. Suspension of statute of limitations on filing refund claims during periods of disability.

Sec. 108. Limitation on financial status audit techniques.

Sec. 109. Notice of deficiency to specify deadlines for filing tax court petition.

Sec. 110. Refund or credit of overpayments before final determination.

Sec. 111. Threat of audit prohibited to coerce tip reporting alternative commitment agreements.

Sec. 112. Court approval for seizure of taxpayer’s property.

Sec. 113. Expansion of authority to issue taxpayer assistance orders.

Sec. 114. Modifications to certain levy exemption amounts.

Sec. 115. Offers-in-compromise.

Sec. 116. Increase in overpayment rate payable to taxpayers other than corporations.

Sec. 117. Levy prohibited during certain negotiations.

Sec. 118. Application of certain fair debt collection procedures.

Sec. 119. Allowance of civil damage suits by persons other than taxpayers for

IRS unauthorized collection actions.

Sec. 120. Cooperative agreements with State tax authorities.

TITLE II—TAXPAYER EDUCATION, NOTICE, AND RESOURCES

Sec. 201. Explanation of taxpayers’ rights.

Sec. 202. Toll-free customer help line.

Sec. 203. Notice of various telephone numbers.

Sec. 204. Procedures involving taxpayer interviews.

Sec. 205. Explanation of joint and several liability.

Sec. 206. Procedures relating to extensions of statute of limitations by agreement.

Sec. 207. Explanations of appeals and collection process.

Sec. 208. Independent operation of local taxpayer advocates.

5 SEC. 2. FINDINGS.

6 The Senate finds that—
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1 (1) the National Commission on Restructuring

2 the Internal Revenue Service has found the urgent

3 need for significant Internal Revenue Service reform;

4 (2) the ongoing hearings of the Committee on

5 Finance of the Senate have uncovered consistent

6 abuse of taxpayers by the Internal Revenue Service;

7 (3) the Internal Revenue Service should be re8 sponsible and held accountable for its treatment of

9 taxpayers;

10 (4) the American public expects and deserves

11 timely and accurate service from the Internal Reve12 nue Service; and

13 (5) additional taxpayer protections are nec14 essary to ensure that taxpayers receive fair, impar15 tial, and courteous assistance from the Internal Rev16 enue Service.

17 TITLE I—TAXPAYER RIGHTS

18 SEC. 101. DISCLOSURE OF CRITERIA FOR EXAMINATION SE19 LECTION.

20 (a) IN GENERAL.—The Secretary of the Treasury or

21 the Secretary’s delegate shall, as soon as practicable, but

22 not later than 180 days after the date of the enactment

23 of this Act, incorporate into the statement required by sec24 tion 6227 of the Omnibus Taxpayer Bill of Rights (Inter25 nal Revenue Service Publication No. 1) a statement which
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1 sets forth in simple and nontechnical terms the criteria

2 and procedures for selecting taxpayers for examination.

3 Such statement shall not include any information the dis4 closure of which would be detrimental to law enforcement,

5 but shall specify the general procedures used by the Inter6 nal Revenue Service, including the extent to which tax7 payers are selected for examination on the basis of infor8 mation available in the media or on the basis of informa9 tion provided to the Internal Revenue Service by inform10 ants.

11 (b) TRANSMISSION TO COMMITTEES OF CON12 GRESS.—Such Secretary shall transmit drafts of the state13 ment required under subsection (a) (or proposed revisions

14 to any such statement) to the Committee on Ways and

15 Means of the House of Representatives, the Committee on

16 Finance of the Senate, and the Joint Committee on Tax17 ation on the same day.

18 SEC. 102. CIVIL DAMAGES FOR NEGLIGENCE IN COLLEC19 TION ACTIONS.

20 (a) IN GENERAL.—Section 7433 (relating to civil

21 damages for certain unauthorized collection actions) is

22 amended—

23 (1) in subsection (a), by inserting ‘‘, or by rea24 son of negligence,’’ after ‘‘recklessly or inten25 tionally’’, and
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1 (2) in subsection (b)—

2 (A) in the matter preceding paragraph (1),

3 by inserting ‘‘($100,000, in the case of neg4 ligence)’’ after ‘‘$1,000,000’’, and

5 (B) in paragraph (1), by inserting ‘‘or neg6 ligent’’ after ‘‘reckless or intentional’’.

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

8 this section shall apply to actions of officers or employees

9 of the Internal Revenue Service after the date of the en10 actment of this Act.

11 SEC. 103. FREEDOM OF INFORMATION.

12 (a) IN GENERAL.—The Secretary of the Treasury or

13 the Secretary’s delegate shall, as soon as practicable, but

14 not later than 180 days after the date of the enactment

15 of this Act, develop procedures under which expedited ac16 cess will be granted to requests under section 551 of title

17 5, United States Code, when—

18 (1) there exists widespread and exceptional

19 media interest in the requested information, and

20 (2) expedited processing is warranted because

21 the information sought involves possible questions

22 about the government’s integrity which affect public

23 confidence.

24 In addition, such procedures shall require the Internal

25 Revenue Service to provide an explanation to the person
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1 making the request if the request is not satisfied within

2 30 days, including a summary of actions taken to date

3 and the expected completion date. Finally, to the extent

4 that any such request is not satisfied in full within 60

5 days, such person may seek a determination of whether

6 such request should be granted by the appropriate Federal

7 district court.

8 (b) TRANSMISSION TO COMMITTEES OF CON9 GRESS.—Such Secretary shall transmit drafts of the pro10 cedures required under subsection (a) (or proposed revi11 sions to any such procedures) to the Committee on Ways

12 and Means of the House of Representatives, the Commit13 tee on Finance of the Senate, and the Joint Committee

14 on Taxation on the same day.

15 SEC. 104. ELIMINATION OF APPLICATION OF FAILURE TO

16 PAY PENALTY DURING PERIOD OF INSTALL17 MENT AGREEMENT.

18 (a) IN GENERAL.—Subsection (c) of section 6651

19 (relating to the penalty for failure to file tax return or

20 to pay tax) is amended by adding at the end the following:

21 ‘‘(3) TOLLING DURING PERIOD OF INSTALL22 MENT AGREEMENT.—If the amount required to be

23 paid is the subject of an agreement for payment of

24 tax liability in installments made pursuant to section

25 6159, the additions imposed under subsection (a)
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1 shall not apply so long as such agreement remains

2 in effect.’’

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

4 this section shall apply to agreements entered into after

5 the date of the enactment of this Act.

6 SEC. 105. SAFE HARBOR FOR QUALIFICATION FOR IN7 STALLMENT AGREEMENTS.

8 (a) IN GENERAL.—Subsection (a) of section 6159

9 (relating to agreements for payment of tax liability in in10 stallments) is amended—

11 (1) by striking ‘‘The Secretary is’’ and inserting

12 the following:

13 ‘‘(1) IN GENERAL.—The Secretary is’’,

14 (2) by moving the text 2 ems to the right, and

15 (3) by adding at the end the following:

16 ‘‘(2) SAFE HARBOR.—The Secretary shall enter

17 into an agreement to accept the payment of a tax li18 ability in installments if—

19 ‘‘(A) the amount of such liability does not

20 exceed $10,000,

21 ‘‘(B) the taxpayer has not failed to file any

22 tax return or pay any tax required to be shown

23 thereon during the immediately preceding 5

24 years, and
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1 ‘‘(C) the taxpayer has not entered into any

2 prior installment agreement under this para3 graph.’’

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

5 this section shall apply to agreements entered into after

6 the date of the enactment of this Act.

7 SEC. 106. CATALOGING COMPLAINTS.

8 (a) IN GENERAL.—The Commissioner of Internal

9 Revenue shall, as soon as practicable, but not later than

10 180 days after the date of the enactment of this Act, de11 velop procedures to catalog and review taxpayer com12 plaints of misconduct by Internal Revenue Service employ13 ees. Such procedures should include guidelines for internal

14 review and discipline of employees, as warranted by the

15 scope of such complaints.

16 (b) HOTLINE.— The Commissioner of Internal Reve17 nue shall, as soon as practicable, but not later than 180

18 days after the date of the enactment of this Act, establish

19 a toll-free telephone number for taxpayers to register com20 plaints of misconduct by Internal Revenue Service employ21 ees, and shall publish such number in Publication 1.
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1 SEC. 107. SUSPENSION OF STATUTE OF LIMITATIONS ON

2 FILING REFUND CLAIMS DURING PERIODS

3 OF DISABILITY.

4 (a) IN GENERAL.—Section 6511 (relating to limita5 tions on credit or refund) is amended by redesignating

6 subsection (h) as subsection (i) and by inserting after sub7 section (g) the following:

8 ‘‘(h) RUNNING OF PERIODS OF LIMITATION SUS9 PENDED WHILE TAXPAYER IS UNABLE TO MANAGE FI10 NANCIAL AFFAIRS DUE TO DISABILITY.—

11 ‘‘(1) IN GENERAL.—In the case of an individ12 ual, the running of the periods specified in sub13 sections (a), (b), and (c) shall be suspended during

14 any period of such individual’s life that such individ15 ual is financially disabled.

16 ‘‘(2) FINANCIALLY DISABLED.—

17 ‘‘(A) IN GENERAL.—For purposes of para18 graph (1), an individual is financially disabled

19 if such individual is unable to manage his fi20 nancial affairs by reason of his medically deter21 minable physical or mental impairment which

22 can be expected to result in death or which has

23 lasted or can be expected to last for a continu24 ous period of not less than 12 months. An indi25 vidual shall not be considered to have such an

26 impairment unless proof of the existence thereof
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1 is furnished in such form and manner as the

2 Secretary may require.

3 ‘‘(B) EXCEPTION WHERE INDIVIDUAL HAS

4 GUARDIAN, ETC.—An individual shall not be

5 treated as financially disabled during any pe6 riod that such individual’s spouse or any other

7 person is authorized to act on behalf of such in8 dividual in financial matters.’’

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

10 subsection (a) shall apply to periods of disability before,

11 on, or after the date of the enactment of this Act but shall

12 not apply to any claim for credit or refund which (without

13 regard to such amendment) is barred by the operation of

14 any law or rule of law (including res judicata) as of Janu15 ary 1, 1998.

16 SEC. 108. LIMITATION ON FINANCIAL STATUS AUDIT TECH17 NIQUES.

18 Section 7602 is amended by adding at the end the

19 following:

20 ‘‘(e) LIMITATION ON EXAMINATION ON UNREPORTED

21 INCOME.—The Secretary shall not use financial status or

22 economic reality examination techniques to determine the

23 existence of unreported income of any taxpayer unless the

24 Secretary has a reasonable indication that there is a likeli25 hood of such unreported income.’’
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1 SEC. 109. NOTICE OF DEFICIENCY TO SPECIFY DEADLINES

2 FOR FILING TAX COURT PETITION.

3 (a) IN GENERAL.—The Secretary of the Treasury or

4 the Secretary’s delegate shall include on each notice of de5 ficiency under section 6212 of the Internal Revenue Code

6 of 1986 the date determined by such Secretary (or dele7 gate) as the last day on which the taxpayer may file a

8 petition with the Tax Court.

9 (b) LATER FILING DEADLINES SPECIFIED ON NO10 TICE OF DEFICIENCY TO BE BINDING.—Subsection (a)

11 of section 6213 (relating to restrictions applicable to defi12 ciencies; petition to Tax Court) is amended by adding at

13 the end the following: ‘‘Any petition filed with the Tax

14 Court on or before the last date specified for filing such

15 petition by the Secretary in the notice of deficiency shall

16 be treated as timely filed.’’

17 (c) EFFECTIVE DATE.—Subsection (a) and the

18 amendment made by subsection (b) shall apply to notices

19 mailed after December 31, 1998.

20 SEC. 110. REFUND OR CREDIT OF OVERPAYMENTS BEFORE

21 FINAL DETERMINATION.

22 (a) TAX COURT PROCEEDINGS.—Subsection (a) of

23 section 6213 is amended—

24 (1) by striking ‘‘, including the Tax Court.’’

25 and inserting ‘‘, including the Tax Court, and a re26 fund may be ordered by such court of any amount
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1 collected within the period during which the Sec2 retary is prohibited from collecting by levy or

3 through a proceeding in court under the provisions

4 of this subsection.’’, and

5 (2) by striking ‘‘to enjoin any action or pro6 ceeding’’ and inserting ‘‘to enjoin any action or pro7 ceeding or order any refund’’.

8 (b) OTHER PROCEEDINGS.—Subsection (a) of section

9 6512 is amended by striking the period at the end of para10 graph (4) and inserting ‘‘, and’’, and by inserting after

11 paragraph (4) the following:

12 ‘‘(5) As to any amount collected within the pe13 riod during which the Secretary is prohibited from

14 making the assessment or from collecting by levy or

15 through a proceeding in court under the provisions

16 of section 6213(a), and

17 ‘‘(6) As to overpayments the Secretary is au18 thorized to refund or credit pending appeal as pro19 vided in subsection (b).’’

20 (c) REFUND OR CREDIT PENDING APPEAL.—Para21 graph (1) of section 6512(b) is amended by adding at the

22 end the following: ‘‘If a notice of appeal in respect of the

23 decision of the Tax Court is filed under section 7483, the

24 Secretary is authorized to refund or credit the overpay-
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1 ment determined by the Tax Court to the extent the over2 payment is not contested on appeal.’’

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

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

5 of this Act.

6 SEC. 111. THREAT OF AUDIT PROHIBITED TO COERCE TIP

7 REPORTING ALTERNATIVE COMMITMENT

8 AGREEMENTS.

9 The Secretary of the Treasury or the Secretary’s del10 egate shall instruct employees of the Internal Revenue

11 Service that they may not threaten to audit any taxpayer

12 in an attempt to coerce the taxpayer into entering into

13 a Tip Reporting Alternative Commitment Agreement.

14 SEC. 112. COURT APPROVAL FOR SEIZURE OF TAXPAYER’S

15 PROPERTY.

16 (a) IN GENERAL.—Section 6331(a) (relating to levy

17 and distraint) is amended by adding at the end the follow18 ing:

19 ‘‘(2) LIMITATION ON AUTHORITY OF SEC20 RETARY.—Notwithstanding paragraph (1), the Sec21 retary shall not levy upon any property or rights to

22 property until a court of competent jurisdiction—

23 ‘‘(A) has determined that—

24 ‘‘(i) such levy is reasonable under the

25 circumstances, and
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1 ‘‘(ii) in the case of a levy upon the

2 principal residence or business establish3 ment of the taxpayer, the Secretary has ex4 hausted all other payment options, and

5 ‘‘(B) issues a writ of execution.’’

6 (b) CONFORMING AMENDMENT.—Section 6331(a) is

7 amended by striking ‘‘If any person’’ and inserting:

8 ‘‘(1) IN GENERAL.—If any person’’.

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

10 this section shall be effective for seizures occurring on or

11 after the date of the enactment of this Act.

12 SEC. 113. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER

13 ASSISTANCE ORDERS.

14 (a) IN GENERAL.—Section 7811(a) (relating to tax15 payer assistance orders) is amended—

16 (1) by striking ‘‘Upon application’’ and insert17 ing the following:

18 ‘‘(1) IN GENERAL.—Upon application’’,

19 (2) by moving the text 2 ems to the right, and

20 (3) by adding at the end the following:

21 ‘‘(2) DETERMINATION OF HARDSHIP.—For pur22 poses of determining whether a taxpayer is suffering

23 or about to suffer a significant hardship, the Tax24 payer Advocate should consider—
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1 ‘‘(A) whether the Internal Revenue Service

2 employee to which such order would issue is fol3 lowing applicable published administrative guid4 ance, including the Internal Revenue Manual,

5 ‘‘(B) whether there is an immediate threat

6 of adverse action,

7 ‘‘(C) whether there has been a delay of

8 more than 30 days in resolving taxpayer ac9 count problems,

10 ‘‘(D) the prospect that the taxpayer will

11 have to pay significant professional fees for rep12 resentation,

13 ‘‘(E) whether the taxpayer will suffer ir14 reparable injury, or a long-term adverse impact,

15 if relief is not granted, and

16 ‘‘(F) any other factor the Taxpayer Advo17 cate deems appropriate.’’

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

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

20 of this Act.

21 SEC. 114. MODIFICATIONS TO CERTAIN LEVY EXEMPTION

22 AMOUNTS.

23 (a) FUEL, ETC.—Section 6334(a)(2) (relating to

24 fuel, provisions, furniture, and personal effects) is amend25 ed by striking ‘‘$2,500’’ and inserting ‘‘$5,000’’.
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1 (b) BOOKS, ETC.—Section 6334(a)(3) (relating to

2 books and tools of a trade, business, or profession) is

3 amended by striking ‘‘$1,250’’ and inserting ‘‘$10,000’’.

4 (c) CONFORMING AMENDMENT.—Section 6334(f)(1)

5 (relating to inflation adjustment) is amended—

6 (1) by striking ‘‘1997’’ and inserting ‘‘1999’’,

7 and

8 (2) by striking ‘‘1996’’ in subparagraph (B)

9 and inserting ‘‘1998’’.

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

11 this section shall take effect with respect to levies issued

12 after December 31, 1998.

13 SEC. 115. OFFERS-IN-COMPROMISE.

14 (a) IN GENERAL.—Section 7122 (relating to offers15 in-compromise) is amended by adding at the end the fol16 lowing:

17 ‘‘(c) ALLOWANCES.—The Secretary shall develop and

18 publish guidelines for national and local allowances to en19 sure that taxpayers entering into a compromise have an

20 adequate means to provide for basic living expenses.’’

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

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

23 of this Act.
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1 SEC. 116. INCREASE IN OVERPAYMENT RATE PAYABLE TO

2 TAXPAYERS OTHER THAN CORPORATIONS.

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

4 6621(a)(1) (defining overpayment rate) is amended to

5 read as follows:

6 ‘‘(B) 3 percentage points (2 percentage

7 points in the case of a corporation).’’

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

9 this section shall apply to interest for calendar quarters

10 beginning after the date of the enactment of this Act.

11 SEC. 117. LEVY PROHIBITED DURING CERTAIN NEGOTIA12 TIONS.

13 (a) IN GENERAL.—Section 6331 (relating to levy and

14 distraint) is amended by redesignating subsection (i) as

15 subsection (j) and by inserting after subsection (h) the fol16 lowing:

17 ‘‘(j) NO LEVY DURING CERTAIN NEGOTIATIONS.—

18 ‘‘(1) IN GENERAL.—No levy may be made

19 under subsection (a) on the salary or wages or other

20 property of any person with respect to any unpaid

21 tax in a case, and during the period, to which para22 graph (2) or (3) applies.

23 ‘‘(2) OFFERS IN COMPROMISE; INSTALLMENT

24 AGREEMENTS.—This paragraph applies to any un25 paid tax of such person—
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1 ‘‘(A) during the period that an offer by

2 such person in compromise under section 7122,

3 or for an installment agreement under section

4 6159, of such unpaid tax is pending with the

5 Secretary, and

6 ‘‘(B) if such offer is rejected by the Sec7 retary, during the 30 days thereafter (and, if

8 an appeal of such rejection is filed within such

9 30 days, during the period that such appeal is

10 pending).

11 ‘‘(3) CERTAIN ASSESSMENTS OF INDIVIDUAL

12 INCOME TAX.—This paragraph applies to any un13 paid tax of an individual which is imposed by sub14 title A during the 60-day period beginning on the

15 date such individual requests that this paragraph

16 apply to such tax if—

17 ‘‘(A) such tax was included in a notice of

18 deficiency under section 6212 mailed to the last

19 known address of such individual, and

20 ‘‘(B) the assessment of such tax was not

21 prevented at any prior time by reason of any

22 action taken by such individual.

23 ‘‘(4) EXCEPTION.—Paragraph (1) shall not

24 apply if the Secretary finds that—
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1 ‘‘(A) the collection of the tax is in jeop2 ardy, or

3 ‘‘(B) the offer or request is made solely to

4 delay collection.

5 ‘‘(5) SUSPENSION OF STATUTE OF LIMITATIONS

6 ON COLLECTION.—Subsection (i)(4) shall apply for

7 purposes of this subsection.’’

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

9 this section shall apply to taxes assessed on or after the

10 60th day after the date of the enactment of this Act.

11 SEC. 118. APPLICATION OF CERTAIN FAIR DEBT COLLEC12 TION PROCEDURES.

13 (a) IN GENERAL.—Subchapter A of chapter 64 (re14 lating to collection) is amended by inserting after section

15 6303 the following:

16 ‘‘SEC. 6304. FAIR TAX COLLECTION PRACTICES.

17 ‘‘(a) COMMUNICATION WITH THE TAXPAYER.—With18 out the prior consent of the taxpayer given directly to the

19 Secretary or the express permission of a court of com20 petent jurisdiction, the Secretary may not communicate

21 with a taxpayer in connection with the collection of any

22 unpaid tax—

23 ‘‘(1) at any unusual time or place or a time or

24 place known or which should be known to be incon25 venient to the taxpayer;
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1 ‘‘(2) if the Secretary knows the taxpayer is rep2 resented by an attorney with respect to such unpaid

3 tax and has knowledge of, or can readily ascertain,

4 such attorney’s name and address, unless the attor5 ney fails to respond within a reasonable period of

6 time to a communication from the Secretary or un7 less the attorney consents to direct communication

8 with the taxpayer; or

9 ‘‘(3) at the taxpayer’s place of employment if

10 the Secretary knows or has reason to know that the

11 taxpayer’s employer prohibits the taxpayer from re12 ceiving such communication.

13 In the absence of knowledge of circumstances to the con14 trary, the Secretary shall assume that the convenient time

15 for communicating with a taxpayer is after 8 a.m. and

16 before 9 p.m., local time at the taxpayer’s location.

17 ‘‘(b) PROHIBITION OF HARASSMENT AND ABUSE.—

18 The Secretary may not engage in any conduct the natural

19 consequence of which is to harass, oppress, or abuse any

20 person in connection with any unpaid tax. Without limit21 ing the general application of the foregoing, the following

22 conduct is a violation of this subsection:

23 ‘‘(1) The use or threat of use of violence or

24 other criminal means to harm the physical person,

25 reputation, or property of any person.
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1 ‘‘(2) The use of obscene or profane language or

2 language the natural consequence of which is to

3 abuse the hearer or reader.

4 ‘‘(3) The publication of a list of taxpayers who

5 allegedly refuse to pay taxes, except to a consumer

6 reporting agency or to persons meeting the require7 ments of section 603(f) or 604(a)(3) of the Fair

8 Credit Reporting Act.

9 ‘‘(4) Causing a telephone to ring or engaging

10 any person in telephone conversation repeatedly or

11 continuously with intent to annoy, abuse, or harass

12 any person at the called number.

13 ‘‘(5) Except as provided under rules similar to

14 the rules in section 804 of the Fair Debt Collection

15 Practices Act (15 U.S.C. 1692b), the placement of

16 telephone calls without meaningful disclosure of the

17 caller’s identity.

18 ‘‘(c) CIVIL ACTION FOR VIOLATIONS OF SECTION.—

‘‘For civil action for violations of this section, see

section 7433.’’

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

20 for subchapter A of chapter 64 is amended by inserting

21 after the item relating to section 6303 the following:

‘‘Sec. 6304. Fair tax collection practices.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

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

3 of this Act.

4 SEC. 119. ALLOWANCE OF CIVIL DAMAGE SUITS BY PER5 SONS OTHER THAN TAXPAYERS FOR IRS UN6 AUTHORIZED COLLECTION ACTIONS.

7 (a) IN GENERAL.—Section 7433(a) (relating to civil

8 damages for certain unauthorized collection damages) is

9 amended—

10 (1) by striking ‘‘a taxpayer’’ and inserting ‘‘any

11 person’’, and

12 (2) by striking ‘‘such taxpayer’’ and inserting

13 ‘‘such person’’.

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

15 this section shall apply to actions by officers or employees

16 of the Internal Revenue Service after the date of the en17 actment of this Act.

18 SEC. 120. COOPERATIVE AGREEMENTS WITH STATE TAX

19 AUTHORITIES.

20 (A) IN GENERAL.—Chapter 77 (relating to mis21 cellaneous provisions) is amended by adding after section

22 7524 the following:

23 ‘‘SEC. 7525. TAX ADMINISTRATION AGREEMENTS.

24 ‘‘(a) IN GENERAL.—To the extent provided in regula25 tions, the Secretary is authorized to enter into tax admin-
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1 istration agreements with any State agency, body, or com2 mission described in section 6103(d)(1). Under such

3 agreements, the Secretary may delegate powers relating

4 to the administration of this title to officers and employees

5 of such State agency, body, or commission, only if such

6 officers and employees in exercising such powers are under

7 the supervision of the Secretary.

8 ‘‘(b) TAX ADMINISTRATION AGREEMENT DE9 FINED.—A tax administration agreement is a written

10 agreement entered into by the Secretary and a State agen11 cy, body, or commission described in section 6103(d)(1)

12 that provides for a delegation of tax administration powers

13 or a payment of reasonable compensation for activities

14 conducted by either party to the agreement. Each Federal

15 or State tax administration power to be exercised pursuant

16 to a tax administration agreement shall be performed in

17 accordance with the terms of the agreement to the extent

18 such terms do not conflict with the Federal or State laws

19 that otherwise authorize the respective tax administration

20 function.

21 ‘‘(c) JUDICIAL PROCEEDINGS.—

22 ‘‘(1) REVIEW BY THE UNITED STATES

23 COURTS.—Nothing in this subchapter shall give any

24 court of the United States any additional jurisdic25 tion nor diminish its jurisdiction.
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1 ‘‘(2) PROHIBITION OF REVIEW BY THE STATE

2 COURTS.—No court or other tribunal of any State

3 shall have jurisdiction to adjudicate in any action,

4 legal or equitable, the validity or scope of an assess5 ment of an internal revenue tax that is the subject

6 of a tax administration agreement.

7 ‘‘(3) LIMITATION ON PERSONAL JURISDIC8 TION.—No court or other tribunal of any State shall

9 have jurisdiction over an individual who exercises

10 Federal tax administration powers pursuant to a tax

11 administration agreement for actions relating to the

12 exercise of those powers.

13 ‘‘(d) PAYMENT FOR SERVICES.—The Secretary is au14 thorized to pay reasonable compensation for activities con15 ducted by a State pursuant to a tax administration agree16 ment. The Secretary is authorized to collect reasonable

17 compensation for activities conducted by the United States

18 pursuant to a tax administration agreement.

19 ‘‘(e) AVAILABILITY OF FUNDS.—Any funds appro20 priated for purposes of the administration of this title

21 shall be available for purposes of carrying out the Sec22 retary’s responsibilities under a tax administration agree23 ment. Any reasonable compensation received pursuant to

24 a tax administration agreement shall be credited to the

25 amounts so appropriated and shall remain available to the
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1 Internal Revenue Service until expended to supplement

2 appropriations made available to the appropriations ac3 counts in the fiscal year during which this provision is en4 acted and all fiscal years thereafter.

5 ‘‘(f) TAX TREATIES AND OTHER INTERNATIONAL

6 AGREEMENTS.—To the extent the provisions of this sub7 chapter or a tax administration agreement may conflict

8 with the terms of any tax treaty, or other international

9 agreement of the United States containing provisions re10 lating to taxation or the administration of tax laws, the

11 terms of the treaty or international agreement shall con12 trol.

13 ‘‘(g) EMPLOYEE STATUS.—Any officer or employee

14 of the United States acting pursuant to a tax administra15 tion agreement shall be deemed to remain a Federal em16 ployee. Except as otherwise expressly provided by the laws

17 of the United States, any officer or employee of a State

18 acting pursuant to a tax administration agreement shall

19 be deemed to remain a State employee.’’

20 (b) CONFORMING AMENDMENTS.—

21 (1) Section 6103(d) is amended—

22 (A) by amending paragraph (1) to read as

23 follows:

24 ‘‘(1)(A) IN GENERAL.—Returns and return in25 formation with respect to taxes imposed by chapters
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1 1, 2, 6, 11, 12, 21, 23, 24, 31, 32, 44, 51, and 52

2 and subchapter D of chapter 36 shall be open to in3 spection by, or disclosure to, any State agency, body,

4 or commission, or its legal representative, which is

5 charged under the laws of such State with the re6 sponsibility for the administration of State tax laws

7 for the purpose of, and only to the extent necessary

8 in—

9 ‘‘(i) the administration of such laws, in10 cluding any procedures with respect to locating,

11 any person who may be entitled to a refund; or

12 ‘‘(ii) the administration of Federal tax

13 laws pursuant to a tax administration agree14 ment entered into between such agency, body or

15 commission and the Secretary under section

16 7525.

17 ‘‘(B) WRITTEN REQUEST BY AGENCY HEAD RE18 QUIRED FOR DISCLOSURE.—The inspection of re19 turns and return information under this paragraph

20 shall be permitted, or disclosure of such returns and

21 return information made, only upon written request

22 by the head of such agency, body, or commission,

23 and only to the representatives of such agency, body,

24 or commission designated in such written request as

25 the individuals who are to inspect or receive the re-
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1 turns or return information on behalf of such agen2 cy, body, or commission.

3 ‘‘(C) PERMISSIBLE RECIPIENTS.—The rep4 resentatives of such agency, body, or commission to

5 whom disclosure is permitted under this paragraph

6 shall include only employees or legal representatives

7 of such agency, body, or commission, or a person de8 scribed in subsection (n) of this section. However,

9 notwithstanding the foregoing, disclosure shall not

10 be permitted to any individual who is the chief exec11 utive officer of such State.

12 ‘‘(D) CONFIDENTIAL INFORMANTS; IMPAIR13 MENT OF INVESTIGATIONS.—Return information

14 shall not be disclosed under this paragraph to the

15 extent that the Secretary determines that such dis16 closure would identify a confidential informant or se17 riously impair any civil or criminal tax investiga18 tion.’’; and

19 (B) by adding at the end the following:

20 ‘‘(5) JOINT RETURN FILING PROGRAMS.—

21 ‘‘(A) IN GENERAL.—Upon written request

22 by the head of any agency, body, or commission

23 described in paragraph (1), the Secretary may

24 disclose common data to such agency, body or

25 commission for the purpose of carrying out a
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1 joint return filing program entered into under

2 section 7525.

3 ‘‘(B) COMMON DATA DEFINED.—For pur4 poses of this paragraph, ‘common data’ means

5 any item of information that is required by both

6 Federal and State law to be attached to or in7 cluded on the respective Federal and State re8 turns.

9 ‘‘(C) PROCEDURES FOR STATE AGEN10 CIES.—Subsections (a)(2) and (p)(4) of this

11 section shall not apply with respect to any dis12 closures made pursuant to this paragraph.

13 However, common data disclosed pursuant to

14 this paragraph is subject to subsection (p)(8) of

15 this section.’’

16 (2) Section 6103(p)(3) is amended—

17 (A) in subparagraph (A) by inserting

18 ‘‘(d),’’ after ‘‘subsections (c),’’; and

19 (B) in subparagraph (C)(i) by striking

20 ‘‘(d),’’.

21 (3) Section 7212(a) is amended by inserting

22 ‘‘or any State officer or employee who is authorized

23 to administer Federal tax laws pursuant to an

24 agreement authorized by section 7525’’ after ‘‘any
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1 officer or employee of the United States’’ in both

2 places it appears.

3 (4) Section 7213(a)(2) is amended by deleting

4 ‘‘(d),’’ and inserting instead ‘‘(d)(1), (2), (3), or

5 (4),’’.

6 (5) Section 7214 is amended—

7 (A) in subsection (a), by inserting ‘‘or any

8 State officer or employee who is authorized to

9 administer Federal tax laws pursuant to an

10 agreement authorized by section 7525’’ after

11 ‘‘Any officer or employee of the United States’’;

12 and

13 (B) in subsection (b), by inserting ‘‘or any

14 State employee who is authorized to administer

15 Federal tax laws pursuant to an agreement au16 thorized by section 7525’’ after ‘‘Any internal

17 revenue officer or employee’’.

18 (6) Section 7431(a)(1) is amended by inserting

19 ‘‘or any State employee who is authorized to admin20 ister Federal tax laws pursuant to an agreement au21 thorized by section 7525’’ after ‘‘If any officer or

22 employee of the United States’’.

23 (7) Section 7432(a) is amended by inserting

24 ‘‘or any State employee who is authorized to release

25 liens under section 6325 pursuant to an agreement
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1 authorized by section 7525’’ after ‘‘If any officer or

2 employee of the Internal Revenue Service’’.

3 (8) Section 7433(a), as amended by this Act, is

4 amended by inserting ‘‘or any State employee who is

5 authorized to collect Federal taxes pursuant to an

6 agreement authorized by section 7525’’ after ‘‘If, in

7 connection with any collection of Federal tax with

8 respect to any person, any officer or employee of the

9 Internal Revenue Service’’.

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

11 for chapter 77 is amended by adding at the end the follow12 ing:

‘‘Sec. 7525. Tax administration agreements.’’

13 TITLE II—TAXPAYER EDU14 CATION, NOTICE, AND RE15 SOURCES

16 SEC. 201. EXPLANATION OF TAXPAYERS’ RIGHTS.

17 The Secretary of the Treasury or the Secretary’s del18 egate shall, as soon as practicable, but not later than 180

19 days after the date of the enactment of this Act, revise

20 the statement required by section 6227 of the Omnibus

21 Taxpayer Bill of Rights (Internal Revenue Service Publi22 cation No. 1) to more clearly inform taxpayers of their

23 rights.
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1 SEC. 202. TOLL-FREE CUSTOMER HELP LINE.

2 The Secretary of the Treasury or the Secretary’s del3 egate shall, as soon as practicable, but not later than 180

4 days after the date of the enactment of this Act, establish

5 a 24-hour-a-day toll-free telephone customer help line,

6 staffed at all times by a person trained in helping individ7 ual taxpayers and staffed during regular business hours

8 (for all time zones in the United States) by a person

9 trained in helping small business taxpayers.

10 SEC. 203. NOTICE OF VARIOUS TELEPHONE NUMBERS.

11 The Secretary of the Treasury or the Secretary’s del12 egate shall, as soon as practicable, but not later than 180

13 days after the date of the enactment of this Act, provide

14 that all paper communications received by a taxpayer from

15 the Internal Revenue Service shall include in a prominent

16 manner the telephone number and purpose of the nearest

17 local office of the taxpayer advocate and the low income

18 taxpayer clinic and the toll-free telephone number for tax19 payers to register complaints of misconduct by Internal

20 Revenue Service employees established under section

21 107(b).

22 SEC. 204. PROCEDURES INVOLVING TAXPAYER INTER23 VIEWS.

24 (a) IN GENERAL.—Paragraph (1) of section 7521(b)

25 (relating to procedures involving taxpayer interviews) is

26 amended to read as follows:
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1 ‘‘(1) EXPLANATIONS OF PROCESSES.—An offi2 cer or employee of the Internal Revenue Service

3 shall—

4 ‘‘(A) before or at an initial interview, pro5 vide to the taxpayer—

6 ‘‘(i) in the case of an in-person inter7 view with the taxpayer relating to the de8 termination of any tax, an explanation of

9 the audit process and the taxpayer’s rights

10 under such process, or

11 ‘‘(ii) in the case of an in-person inter12 view with the taxpayer relating to the col13 lection of any tax, an explanation of the

14 collection process and the taxpayer’s rights

15 under such process, and

16 ‘‘(B) before an in-person initial interview

17 with the taxpayer relating to the determination

18 of any tax—

19 ‘‘(i) inquire whether the taxpayer is

20 represented by an individual described in

21 subsection (c),

22 ‘‘(ii) explain that the taxpayer has the

23 right to have the interview take place in a

24 reasonable place and that such place does

25 not have to be the taxpayer’s home,
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1 ‘‘(iii) explain the reasons for the selec2 tion of the taxpayer’s return for examina3 tion, and

4 ‘‘(iv) provide the taxpayer with a writ5 ten explanation of the applicable burdens

6 of proof on taxpayers and the Internal

7 Revenue Service.

8 If the taxpayer is represented by an individual de9 scribed in subsection (c), the interview may not pro10 ceed without the presence of such individual unless

11 the taxpayer consents.’’

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

13 this section shall apply to interviews and examinations

14 taking place after the date of the enactment of this Act.

15 SEC. 205. EXPLANATION OF JOINT AND SEVERAL LIABIL16 ITY.

17 (a) IN GENERAL.—The Secretary of the Treasury or

18 the Secretary’s delegate shall, as soon as practicable, but

19 not later than 180 days after the date of the enactment

20 of this Act, establish procedures to clearly alert taxpayers

21 of their joint and several liabilities on all tax forms, publi22 cations, and instructions issued during the period joint

23 and several liability remains a standard of liability. Such

24 procedures shall include explanations of the possible con25 sequences of joint and several liability.
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1 (b) TRANSMISSION TO COMMITTEES OF CON2 GRESS.—Such Secretary shall transmit drafts of the pro3 cedures required under subsection (a) (or proposed revi4 sions to any such procedures) to the Committee on Ways

5 and Means of the House of Representatives, the Commit6 tee on Finance of the Senate, and the Joint Committee

7 on Taxation on the same day.

8 SEC. 206. PROCEDURES RELATING TO EXTENSIONS OF

9 STATUTE OF LIMITATIONS BY AGREEMENT.

10 (a) IN GENERAL.—Paragraph (4) of section 6501(c)

11 (relating to the period for limitations on assessment and

12 collection) is amended—

13 (1) by striking ‘‘Where’’ and inserting the fol14 lowing:

15 ‘‘(A) IN GENERAL.—Where’’,

16 (2) by moving the text 2 ems to the right, and

17 (3) by adding at the end the following:

18 ‘‘(B) NOTICE TO TAXPAYER OF RIGHT TO

19 REFUSE OR LIMIT EXTENSION.—The Secretary

20 shall notify the taxpayer of the taxpayer’s right

21 to refuse to extend the period of limitations, or

22 to limit such extension to particular issues, on

23 each occasion when the taxpayer is requested to

24 provide such consent.’’
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to requests to extend the period

3 of limitations made after the date of the enactment of this

4 Act.

5 SEC. 207. EXPLANATIONS OF APPEALS AND COLLECTION

6 PROCESS.

7 (a) TAXPAYER SPECIFIC EXPLANATION.—The Sec8 retary of the Treasury or the Secretary’s delegate shall,

9 as soon as practicable but not later than 180 days after

10 the date of the enactment of this Act, include with any

11 1st letter of proposed deficiency which allows the taxpayer

12 an opportunity for administrative review in the Internal

13 Revenue Service Office of Appeals an explanation of the

14 appeals process and the collection process with respect to

15 such proposed deficiency.

16 (b) GENERAL EXPLANATION.—The Secretary of the

17 Treasury or the Secretary’s delegate shall, as soon as

18 practicable but not later than 180 days after the date of

19 the enactment of this Act, make available to the general

20 public, a booklet which in simple language provides an ex21 planation of the appeals process and the collection process

22 and the rights of taxpayers at each step of such process.
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1 SEC. 208. INDEPENDENT OPERATION OF LOCAL TAXPAYER

2 ADVOCATES.

3 (a) INDEPENDENT OPERATION OF LOCAL OF4 FICES.—Section 7802(d) (relating to Office of Taxpayer

5 Advocate) is amended by adding at the end the following:

6 ‘‘(4) OPERATION OF LOCAL OFFICES.—

7 ‘‘(A) INDEPENDENT OPERATION.—Each

8 local taxpayer advocate shall, at the taxpayer

9 advocate’s discretion, not disclose to the Inter10 nal Revenue Service contact with, or informa11 tion provided by, a taxpayer.

12 ‘‘(B) MAINTENANCE OF INDEPENDENT

13 COMMUNICATIONS.—Each local office of the

14 taxpayer advocate shall maintain separate

15 phone, facsimile, and other electronic commu16 nication access, and a separate post office ad17 dress from the Internal Revenue Service district

18 office or service center which it serves.’’

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

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

21 of this Act.

Æ