II

105TH CONGRESS

1ST SESSION S. 1308

To amend the Internal Revenue Code of 1986 to ensure taxpayer confidence

in the fairness and independence of the taxpayer problem resolution

process by providing a more independently operated Office of the Taxpayer Advocate, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 22, 1997

Mr. BREAUX (for himself 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 ensure

taxpayer confidence in the fairness and independence

of the taxpayer problem resolution process by providing

a more independently operated Office of the Taxpayer

Advocate, 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.

4 This Act may be cited as the ‘‘Taxpayer Protection

5 Act of 1997’’.
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1 SEC. 2. ESTABLISHMENT OF MORE INDEPENDENT OFFICE

2 OF THE TAXPAYER ADVOCATE.

3 (a) IN GENERAL.—Paragraph (1) of section 7802(d)

4 of the Internal Revenue Code of 1986 (relating to Office

5 of Taxpayer Advocate) is amended to read as follows:

6 ‘‘(1) ESTABLISHMENT.—

7 ‘‘(A) IN GENERAL.—There is established in

8 the Internal Revenue Service an office to be

9 known as the ‘Office of the Taxpayer Advocate’.

10 ‘‘(B) NATIONAL TAXPAYER ADVOCATE.—

11 ‘‘(i) IN GENERAL.—The Office of the

12 Taxpayer Advocate shall be under the su13 pervision and direction of an official to be

14 known as the ‘National Taxpayer Advo15 cate’. The National Taxpayer Advocate

16 shall report directly to the Commissioner

17 of Internal Revenue and shall be entitled

18 to compensation at the same rate as the

19 highest level official reporting directly to

20 the Commissioner of the Internal Revenue

21 Service.

22 ‘‘(ii) APPOINTMENT.—The National

23 Taxpayer Advocate shall be appointed by

24 the President, by and with the advice and

25 consent of the Senate, from among individ26 uals with a background in customer serv-
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1 ice, as well as tax law. No officer or em2 ployee of the Internal Revenue Service may

3 be appointed to such position in order to

4 ensure an independent position to rep5 resent taxpayers’ interests.’’.

6 (b) ANNUAL REPORTS AND ADDITIONAL RESPON7 SIBILITIES.—Section 7802(d)(2) of the Internal Revenue

8 Code of 1986 (relating to functions of office) is amended

9 by striking subparagraph (B) and inserting the following:

10 ‘‘(B) ANNUAL REPORTS.—

11 ‘‘(i) OBJECTIVES.—Not later than

12 June 30 of each calendar year, the Na13 tional Taxpayer Advocate shall report to

14 the Committee on Ways and Means of the

15 House of Representatives and the Commit16 tee on Finance of the Senate on the objec17 tives of the Office of the Taxpayer Advo18 cate for the fiscal year beginning in such

19 calendar year. Any such report shall con20 tain full and substantive analysis, in addi21 tion to statistical information.

22 ‘‘(ii) ACTIVITIES.—Not later than De23 cember 31 of each calendar year, the Na24 tional Taxpayer Advocate shall report to

25 the Committee on Ways and Means of the
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1 House of Representatives and the Commit2 tee on Finance of the Senate on the activi3 ties of the Office of the Taxpayer Advocate

4 during the fiscal year ending during such

5 calendar year. Any such report shall con6 tain full and substantive analysis, in addi7 tion to statistical information, and shall—

8 ‘‘(I) identify the initiatives the

9 Office of the Taxpayer Advocate has

10 taken on improving taxpayer services

11 and Internal Revenue Service respon12 siveness,

13 ‘‘(II) contain recommendations

14 received from individuals with the au15 thority to issue Taxpayer Assistance

16 Orders under section 7811,

17 ‘‘(III) contain a summary of at

18 least 20 of the most serious problems

19 encountered by taxpayers, including a

20 description of the nature of such prob21 lems,

22 ‘‘(IV) contain an inventory of the

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

24 and (III) for which action has been

25 taken and the result of such action,
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1 ‘‘(V) contain an inventory of the

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

3 and (III) for which action remains to

4 be completed and the period during

5 which each item has remained on such

6 inventory,

7 ‘‘(VI) contain an inventory of the

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

9 and (III) for which no action has been

10 taken, the period during which each

11 item has remained on such inventory,

12 the reasons for the inaction, and iden13 tify any Internal Revenue Service offi14 cial who is responsible for such inac15 tion,

16 ‘‘(VII) identify any Taxpayer As17 sistance Order which was not honored

18 by the Internal Revenue Service in a

19 timely manner, as specified under sec20 tion 7811(b),

21 ‘‘(VIII) contain recommendations

22 for such administrative and legislative

23 action as may be appropriate to re24 solve problems encountered by tax25 payers,
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1 ‘‘(IX) identify areas of the tax

2 law that impose significant compliance

3 burdens on taxpayers or the Internal

4 Revenue Service, including specific

5 recommendations for remedying these

6 problems,

7 ‘‘(X) identify the 10 most liti8 gated issues for each category of tax9 payers, including recommendations for

10 mitigating such disputes, and

11 ‘‘(XI) include such other infor12 mation as the National Taxpayer Ad13 vocate may deem advisable.

14 ‘‘(iii) REPORT TO BE SUBMITTED DI15 RECTLY.—Each report required under this

16 subparagraph shall be provided directly to

17 the Committees described in clauses (i)

18 and (ii) without any prior review or com19 ment from the Commissioner, the Sec20 retary of the Treasury, any other officer or

21 employee of the Department of the Treas22 ury, or the Office of Management and

23 Budget.

24 ‘‘(C) OTHER RESPONSIBILITIES.—The Na25 tional Taxpayer Advocate shall—
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1 ‘‘(i) monitor the coverage and geo2 graphic allocation of local taxpayer advo3 cates,

4 ‘‘(ii) develop guidance to be distrib5 uted to all Internal Revenue Service offi6 cers and employees outlining the criteria

7 for referral of taxpayer inquiries to local

8 taxpayer advocates,

9 ‘‘(iii) ensure that the local telephone

10 number for the local taxpayer advocate in

11 each Internal Revenue Service district is

12 published and available to taxpayers, and

13 ‘‘(iv) in conjunction with the Commis14 sioner, develop career paths for local tax15 payer advocates choosing to make a career

16 in the Office of the Taxpayer Advocate.’’.

17 (c) NATIONAL OVERSIGHT OF LOCAL OFFICES.—

18 Section 7802(d)(2) of the Internal Revenue Code of 1986

19 (relating to functions of office), as amended by subsection

20 (b), is amended by adding at the end the following:

21 ‘‘(D) PERSONNEL ACTIONS.—

22 ‘‘(i) HEADS OF LOCAL OFFICES.—The

23 National Taxpayer Advocate shall have the

24 responsibility to—
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1 ‘‘(I) appoint and dismiss the local

2 taxpayer advocate heading the office

3 of the taxpayer advocate at each In4 ternal Revenue Service district office

5 and service center, and

6 ‘‘(II) evaluate and take personnel

7 actions with respect to any employee

8 of an office of the taxpayer advocate

9 described in subclause (I).

10 ‘‘(ii) CONSULTATION.—The National

11 Taxpayer Advocate may consult with the

12 head of any Internal Revenue Service dis13 trict office or service center in carrying out

14 the National Taxpayer Advocate’s respon15 sibilities under this subparagraph.’’.

16 (d) OPERATION OF LOCAL OFFICES.—Section

17 7802(d) of the Internal Revenue Code of 1986 is amended

18 by adding at the end the following:

19 ‘‘(4) OPERATION OF LOCAL OFFICES.—

20 ‘‘(A) IN GENERAL.—Each local taxpayer

21 advocate—

22 ‘‘(i) shall report directly to the Na23 tional Taxpayer Advocate,

24 ‘‘(ii) may consult with the head of the

25 Internal Revenue Service district office or
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1 service center which the local taxpayer ad2 vocate serves regarding the daily operation

3 of the office of the taxpayer advocate,

4 ‘‘(iii) shall, at the initial meeting with

5 any taxpayer seeking the assistance of the

6 office of the taxpayer advocate, notify such

7 taxpayer that the office operates independ8 ently of any Internal Revenue Service dis9 trict office or service center and reports di10 rectly to Congress through the National

11 Taxpayer Advocate, and

12 ‘‘(iv) shall, at the taxpayer advocate’s

13 discretion, not disclose to the Internal Rev14 enue Service contact with, or information

15 provided by, such taxpayer.

16 ‘‘(B) MAINTENANCE OF INDEPENDENT

17 COMMUNICATIONS.—Each local office of the

18 taxpayer advocate shall maintain separate

19 phone, facsimile, and other electronic commu20 nication access, and a separate post office ad21 dress from the Internal Revenue Service district

22 office or service center which it serves.’’.

23 (e) NOTICE OF RIGHT TO CONTACT OFFICE IN24 CLUDED IN NOTICE OF DEFICIENCY.—Section 6212(a) of

25 the Internal Revenue Code of 1986 (relating to notice of
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1 deficiency) is amended by adding at the end the following:

2 ‘‘Such notice shall include a notice to the taxpayer of the

3 taxpayer’s right to contact a local office of the taxpayer

4 advocate and the location and phone number of the near5 est office.’’.

6 (f) EXPANSION OF AUTHORITY TO ISSUE TAXPAYER

7 ASSISTANCE ORDERS.—Section 7811(a) of the Internal

8 Revenue Code of 1986 (relating to taxpayer assistance or9 ders) is amended—

10 (1) by striking ‘‘Upon application’’ and insert11 ing the following:

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

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

14 (3) by adding at the end the following new

15 paragraph:

16 ‘‘(2) DETERMINATION OF HARDSHIP.—For pur17 poses of determining whether a taxpayer is suffering

18 or about to suffer a significant hardship, the Na19 tional Taxpayer Advocate should consider—

20 ‘‘(A) whether the Internal Revenue Service

21 employee to which such order would issue is fol22 lowing applicable published administrative guid23 ance, including the Internal Revenue Manual,

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

25 of adverse action,
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1 ‘‘(C) whether there has been a delay of

2 more than 30 days in resolving taxpayer ac3 count problems, and

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

5 have to pay significant professional fees for rep6 resentation.’’.

7 (g) CONFORMING AMENDMENTS.—

8 (1) The following provisions of the Internal

9 Revenue Code of 1986 are each amended by striking

10 ‘‘Taxpayer Advocate’’ each place it appears and in11 serting ‘‘National Taxpayer Advocate’’:

12 (A) Section 6323(j)(1)(D) (relating to

13 withdrawal of notice in certain circumstances).

14 (B) Section 6343(d)(2)(D) (relating to re15 turn of property in certain cases).

16 (C) Section 7802(d)(3) (relating to respon17 sibilities of Commissioner).

18 (D) Section 7811(a)(1) (relating to author19 ity to issue), as amended by subsection (f).

20 (E) Section 7811(b)(2)(D) (relating to

21 terms of a Taxpayer Assistance Order).

22 (F) Section 7811(c) (relating to authority

23 to modify or rescind).

24 (G) Section 7811(d)(2) (relating to sus25 pension of running of period of limitation).
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1 (H) Section 7811(e) (relating to independ2 ent action of Taxpayer Advocate).

3 (I) Section 7811(f) (relating to Taxpayer

4 Advocate).

5 (2) Section 7811(d)(1) of such Code (relating

6 to suspension of running of period of limitation) is

7 amended by striking ‘‘Taxpayer Advocate’s’’ and in8 serting ‘‘National Taxpayer Advocate’s’’.

9 (3) The headings of subsections (e) and (f) of

10 section 7802 of such Code are each amended by

11 striking ‘‘TAXPAYER ADVOCATE’’ and inserting ‘‘NA12 TIONAL TAXPAYER ADVOCATE’’.

13 (4) The heading of section 7802 of such Code

14 is amended by striking ‘‘TAXPAYER ADVOCATE’’

15 and inserting ‘‘NATIONAL TAXPAYER ADVO16 CATE’’.

17 (h) TRANSITION RULES RELATING TO APPOINTMENT

18 OF NATIONAL TAXPAYER ADVOCATE.—

19 (1) INITIAL APPOINTMENT.—The President

20 shall nominate for appointment the initial National

21 Taxpayer Advocate to serve as head of the Office of

22 the Taxpayer Advocate established under section

23 7208(a) of the Internal Revenue Code of 1986 (as

24 amended by this section) not later than 120 days

25 after the date of the enactment of this Act.
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1 (2) INTERIM ROLE OF CURRENT TAXPAYER AD2 VOCATE.—Until an individual has taken office under

3 section 7208(a) of such Code (as so amended), the

4 Taxpayer Advocate shall assume the additional pow5 ers and duties of the National Taxpayer Advocate

6 under the amendments made by this section.

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

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

9 of this Act.

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