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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 949 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                 S. 949

       To provide a taxpayer bill of rights for small businesses.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 15, 2015

 Mr. Cornyn (for himself, Mr. Heller, and Mr. Roberts) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL

 
       To provide a taxpayer bill of rights for small businesses.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Taxpayer Bill of Rights Act of 2015''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Modification of standards for awarding of costs and certain 
                            fees.
Sec. 3. Civil damages allowed for reckless or intentional disregard of 
                            internal revenue laws.
Sec. 4. Modifications relating to certain offenses by officers and 
                            employees in connection with revenue laws.
Sec. 5. Modifications relating to civil damages for unauthorized 
                            inspection or disclosure of returns and 
                            return information.
Sec. 6. Interest abatement reviews.
Sec. 7. Ban on ex parte discussions.
Sec. 8. Alternative dispute resolution procedures.
Sec. 9. Extension of time for contesting IRS levy.
Sec. 10. Waiver of installment agreement fee.
Sec. 11. Suspension of running of period for filing petition of spousal 
                            relief and collection cases.
Sec. 12. Venue for appeal of spousal relief and collection cases.
Sec. 13. Increase in monetary penalties for certain unauthorized 
                            disclosures of information.
Sec. 14. De novo tax court review of claims for equitable innocent 
                            spouse relief.
Sec. 15. Ban on raising new issues on appeal.
Sec. 16. Limitation on enforcement of liens against principal 
                            residences.
Sec. 17. Additional provisions relating to mandatory termination for 
                            misconduct.
Sec. 18. Extension of declaratory judgment procedures to social welfare 
                            organizations.
Sec. 19. Review by the Treasury Inspector General for Tax 
                            Administration.

SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF COSTS AND CERTAIN 
              FEES.

    (a) Small Businesses Eligible Without Regard to Net Worth.--
Subparagraph (D) of section 7430(c)(4) of the Internal Revenue Code of 
1986 is amended by striking ``and'' at the end of clause (i)(II), by 
striking the period at the end of clause (ii) and inserting ``, and'', 
and by adding at the end the following new clause:
                            ``(iii) in the case of an eligible small 
                        business, the net worth limitation in clause 
                        (ii) of such section shall not apply.''.
    (b) Eligible Small Business.--Paragraph (4) of section 7430(c) of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(F) Eligible small business.--For purposes of 
                subparagraph (D)(iii), the term `eligible small 
                business' means, with respect to any proceeding 
                commenced in a taxable year--
                            ``(i) a corporation the stock of which is 
                        not publicly traded,
                            ``(ii) a partnership, or
                            ``(iii) a sole proprietorship,
                if the average annual gross receipts of such 
                corporation, partnership, or sole proprietorship for 
                the 3-taxable-year period preceding such taxable year 
                does not exceed $50,000,000. For purposes of applying 
                the test under the preceding sentence, rules similar to 
                the rules of paragraphs (2) and (3) of section 448(c) 
                shall apply.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to proceedings commenced after the date of the enactment of this 
Act.

SEC. 3. CIVIL DAMAGES ALLOWED FOR RECKLESS OR INTENTIONAL DISREGARD OF 
              INTERNAL REVENUE LAWS.

    (a) Increase in Amount of Damages.--Section 7433(b) of the Internal 
Revenue Code of 1986 is amended by striking ``$1,000,000 ($100,000, in 
the case of negligence)'' and inserting ``$3,000,000 ($300,000, in the 
case of negligence)''.
    (b) Extension of Time To Bring Action.--Section 7433(d)(3) of the 
Internal Revenue Code of 1986 is amended by striking ``2 years'' and 
inserting ``5 years''.
    (c) Effective Date.--The amendments made by this section shall 
apply to actions of employees of the Internal Revenue Service after the 
date of the enactment of this Act.

SEC. 4. MODIFICATIONS RELATING TO CERTAIN OFFENSES BY OFFICERS AND 
              EMPLOYEES IN CONNECTION WITH REVENUE LAWS.

    (a) Increase in Penalty.--Section 7214 of the Internal Revenue Code 
of 1986 is amended--
            (1) by striking ``$10,000'' in subsection (a) and inserting 
        ``$25,000'', and
            (2) by striking ``$5,000'' in subsection (b) and inserting 
        ``$10,000''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 5. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR UNAUTHORIZED 
              INSPECTION OR DISCLOSURE OF RETURNS AND RETURN 
              INFORMATION.

    (a) Increase in Amount of Damages.--Subparagraph (A) of section 
7431(c)(1) of the Internal Revenue Code of 1986 is amended by striking 
``$1,000'' and inserting ``$10,000''.
    (b) Effective Date.--The amendment made by this section shall apply 
to inspections and disclosure occurring on and after the date of the 
enactment of this Act.

SEC. 6. INTEREST ABATEMENT REVIEWS.

    (a) Filing Period for Interest Abatement Cases.--
            (1) In general.--Subsection (h) of section 6404 of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``Review of Denial'' in the heading 
                and inserting ``Judicial Review'', and
                    (B) by striking ``if such action is brought'' and 
                all that follows in paragraph (1) and inserting ``if 
                such action is brought--
                    ``(A) at any time after the earlier of--
                            ``(i) the date of the mailing of the 
                        Secretary's final determination not to abate 
                        such interest, or
                            ``(ii) the date which is 180 days after the 
                        date of the filing with the Secretary (in such 
                        form as the Secretary may prescribe) of a claim 
                        for abatement under this section, and
                    ``(B) not later than the date which is 180 days 
                after the date described in subparagraph (A)(i).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to claims for abatement of interest filed with the 
        Secretary after the date of the enactment of this Act.
    (b) Small Tax Case Election for Interest Abatement Cases.--
            (1) In general.--Subsection (f) of section 7463 of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1),
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``, and'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(3) a petition to the Tax court under section 6404(h) in 
        which the amount of interest abatement sought does not exceed 
        $50,000.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to--
                    (A) cases pending as of the day after the date of 
                the enactment of this Act, and
                    (B) cases commenced after such date of enactment.

SEC. 7. BAN ON EX PARTE DISCUSSIONS.

    (a) In General.--Notwithstanding section 1001(a)(4) of the Internal 
Revenue Service Restructuring and Reform Act of 1998, the Internal 
Revenue Service shall prohibit any ex parte communications between 
officers in the Internal Revenue Service Office of Appeals and other 
Internal Revenue Service employees with respect to any matter pending 
before such officers.
    (b) Termination of Employment for Misconduct.--Subject to 
subsection (c), the Commissioner of Internal Revenue shall terminate 
the employment of any employee of the Internal Revenue Service if there 
is a final administrative or judicial determination that such employee 
committed any act or omission prohibited under subsection (a) in the 
performance of the employee's official duties. Such termination shall 
be a removal for cause on charges of misconduct.
    (c) Determination of Commissioner.--
            (1) In general.--The Commissioner of Internal Revenue may 
        take a personnel action other than termination for an act 
        prohibited under subsection (a).
            (2) Discretion.--The exercise of authority under paragraph 
        (1) shall be at the sole discretion of the Commissioner of 
        Internal Revenue and may not be delegated to any other officer. 
        At the sole discretion of the Commissioner of Internal Revenue, 
        such Commissioner may establish a procedure which will be used 
        to determine whether an individual should be referred to the 
        Commissioner of Internal Revenue for a determination by the 
        Commissioner under paragraph (1).
            (3) No appeal.--Any determination of the Commissioner of 
        Internal Revenue under this subsection may not be appealed in 
        any administrative or judicial proceeding.
    (d) TIGTA Reporting of Termination or Mitigation.--Section 
7803(d)(1)(E) of the Internal Revenue Code of 1986 is amended by 
inserting ``or section 7 of the Small Business Taxpayer Bill of Rights 
Act of 2015'' after ``1998''.

SEC. 8. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

    (a) In General.--Section 7123 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(c) Availability of Dispute Resolutions.--
            ``(1) In general.--The procedures prescribed under 
        subsection (b)(1) and the pilot program established under 
        subsection (b)(2) shall provide that a taxpayer may request 
        mediation or arbitration in any case unless the Secretary has 
        specifically excluded the type of issue involved in such case 
        or the class of cases to which such case belongs as not 
        appropriate for resolution under such subsection. The Secretary 
        shall make any determination that excludes a type of issue or a 
        class of cases public within 5 working days and provide an 
        explanation for each determination.
            ``(2) Independent mediators.--
                    ``(A) In general.--The procedures prescribed under 
                subsection (b)(1) shall provide the taxpayer an 
                opportunity to elect to have the mediation conducted by 
                an independent, neutral individual not employed by the 
                Internal Revenue Service Office of Appeals.
                    ``(B) Cost and selection.--
                            ``(i) In general.--Any taxpayer making an 
                        election under subparagraph (A) shall be 
                        required--
                                    ``(I) to share the costs of such 
                                independent mediator equally with the 
                                Internal Revenue Service Office of 
                                Appeals, and
                                    ``(II) to limit the selection of 
                                the mediator to a roster of recognized 
                                national or local neutral mediators.
                            ``(ii) Exception.--Clause (i)(I) shall not 
                        apply to any taxpayer who is an individual or 
                        who was a small business in the preceding 
                        calendar year if such taxpayer had an adjusted 
                        gross income that did 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, in the 
                        taxable year preceding the request.
                            ``(iii) Small business.--For purposes of 
                        clause (ii), the term `small business' has the 
                        meaning given such term under section 
                        41(b)(3)(D)(iii).
            ``(3) Availability of process.--The procedures prescribed 
        under subsection (b)(1) and the pilot program established under 
        subsection (b)(2) shall provide the opportunity to elect 
        mediation or arbitration at the time when the case is first 
        filed with the Office of Appeals and at any time before 
        deliberations in the appeal commence.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 9. EXTENSION OF TIME FOR CONTESTING IRS LEVY.

    (a) Extension of Time for Return of Property Subject to Levy.--
Subsection (b) of section 6343 of the Internal Revenue Code of 1986 is 
amended by striking ``9 months'' and inserting ``3 years''.
    (b) Period of Limitation on Suits.--Subsection (c) of section 6532 
of the Internal Revenue Code of 1986 is amended--
            (1) in paragraph (1) by striking ``9 months'' and inserting 
        ``3 years'', and
            (2) in paragraph (2) by striking ``9-month'' and inserting 
        ``3-year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to--
            (1) levies made after the date of the enactment of this 
        Act, and
            (2) levies made on or before such date if the 9-month 
        period under section 6343(b) of the Internal Revenue Code of 
        1986 (without regard to this section) has not expired as of 
        such date.

SEC. 10. WAIVER OF INSTALLMENT AGREEMENT FEE.

    (a) In General.--Section 6159 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (f) as subsection (g) and by 
inserting after subsection (e) the following new subsection:
    ``(f) Waiver of Installment Agreement Fee.--The Secretary shall 
waive the fees imposed on installment agreements under this section for 
any taxpayer with an adjusted gross income that 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 
who has agreed to make payments under the installment agreement by 
electronic payment through a debit instrument.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 11. SUSPENSION OF RUNNING OF PERIOD FOR FILING PETITION OF SPOUSAL 
              RELIEF AND COLLECTION CASES.

    (a) Petitions for Spousal Relief.--
            (1) In general.--Subsection (e) of section 6015 of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new paragraph:
            ``(6) Suspension of running of period for filing petition 
        in title 11 cases.--In the case of a person who is prohibited 
        by reason of a case under title 11, United States Code, from 
        filing a petition under paragraph (1)(A) with respect to a 
        final determination of relief under this section, the running 
        of the period prescribed by such paragraph for filing such a 
        petition with respect to such final determination shall be 
        suspended for the period during which the person is so 
        prohibited from filing such a petition, and for 60 days 
        thereafter.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to petitions filed under section 6015(e) of the 
        Internal Revenue Code of 1986 after the date of the enactment 
        of this Act.
    (b) Collection Proceedings.--
            (1) In general.--Subsection (d) of section 6330 of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``appeal such determination to the 
                Tax Court'' in paragraph (1) and inserting ``petition 
                the Tax Court for review of such determination'',
                    (B) by striking ``Judicial review of 
                determination'' in the heading of paragraph (1) and 
                inserting ``Petition for review by tax court'',
                    (C) by redesignating paragraph (2) as paragraph 
                (3), and
                    (D) by inserting after paragraph (1) the following 
                new paragraph:
            ``(2) Suspension of running of period for filing petition 
        in title 11 cases.--In the case of a person who is prohibited 
        by reason of a case under title 11, United States Code, from 
        filing a petition under paragraph (1) with respect to a 
        determination under this section, the running of the period 
        prescribed by such subsection for filing such a petition with 
        respect to such determination shall be suspended for the period 
        during which the person is so prohibited from filing such a 
        petition, and for 30 days thereafter.''.
            (2) Conforming amendment.--Subsection (c) of section 6320 
        of such Code is amended by striking ``(2)(B)'' and inserting 
        ``(3)(B)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to petitions filed under section 6330 of the 
        Internal Revenue Code of 1986 after the date of the enactment 
        of this Act.

SEC. 12. VENUE FOR APPEAL OF SPOUSAL RELIEF AND COLLECTION CASES.

    (a) In General.--Paragraph (1) of section 7482(b) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``or'' at the end of subparagraph (E),
            (2) by striking the period at the end of subparagraph 
        (F)(ii) and inserting a comma, and
            (3) by inserting after subparagraph (F) the following new 
        subparagraphs:
                    ``(G) in the case of a petition under section 
                6015(e), the legal residence of the petitioner, or
                    ``(H) in the case of a petition under section 6320 
                or 6330--
                            ``(i) the legal residence of the petitioner 
                        if the petitioner is an individual, and
                            ``(ii) the principal place of business or 
                        principal office or agency if the petitioner is 
                        an entity other than an individual.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to petitions filed after the date of enactment of this Act.

SEC. 13. INCREASE IN MONETARY PENALTIES FOR CERTAIN UNAUTHORIZED 
              DISCLOSURES OF INFORMATION.

    (a) In General.--Paragraphs (1), (2), (3), and (4) of section 
7213(a) of the Internal Revenue Code of 1986 are each amended by 
striking ``$5,000'' and inserting ``$10,000''.
    (b) Effective Date.--The amendments made by this section shall 
apply to disclosures made after the date of the enactment of this Act.

SEC. 14. DE NOVO TAX COURT REVIEW OF CLAIMS FOR EQUITABLE INNOCENT 
              SPOUSE RELIEF.

    (a) In General.--Subparagraph (A) of section 6015(e)(1) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new flush sentence:
                ``Any review of a determination by the Secretary with 
                respect to a claim for equitable relief under 
                subsection (f) shall be reviewed de novo by the Tax 
                Court.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to petitions filed or pending before the Tax Court on and after the 
date of the enactment of this Act.

SEC. 15. BAN ON RAISING NEW ISSUES ON APPEAL.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 7529. PROHIBITION ON INTERNAL REVENUE SERVICE RAISING NEW ISSUES 
              IN AN INTERNAL APPEAL.

    ``(a) In General.--In reviewing an appeal of any determination 
initially made by the Internal Revenue Service, the Internal Revenue 
Service Office of Appeals may not consider or decide any issue that is 
not within the scope of the initial determination.
    ``(b) Certain Issues Deemed Outside of Scope of Determination.--For 
purposes of subsection (a), the following matters shall be considered 
to be not within the scope of a determination:
            ``(1) Any issue that was not raised in a notice of 
        deficiency or an examiner's report which is the subject of the 
        appeal.
            ``(2) Any deficiency in tax which was not included in the 
        initial determination.
            ``(3) Any theory or justification for a tax deficiency 
        which was not considered in the initial determination.
    ``(c) No Inference With Respect to Issues Raised by Taxpayers.--
Nothing in this section shall be construed to provide any limitation in 
addition to any limitations in effect on the date of the enactment of 
this section on the right of a taxpayer to raise an issue, theory, or 
justification on an appeal from a determination initially made by the 
Internal Revenue Service that was not within the scope of the initial 
determination.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 of 
such Code is amended by adding at the end the following new item:

``Sec. 7529. Prohibition on Internal Revenue Service raising new issues 
                            in an internal appeal.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to matters filed or pending with the Internal Revenue Service 
Office of Appeals on or after the date of the enactment of this Act.

SEC. 16. LIMITATION ON ENFORCEMENT OF LIENS AGAINST PRINCIPAL 
              RESIDENCES.

    (a) In General.--Section 7403(a) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking ``In any case'' and inserting the 
        following:
            ``(1) In general.--In any case'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Limitation with respect to principal residence.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any property used as the principal residence of the 
                taxpayer (within the meaning of section 121) unless the 
                Secretary of the Treasury makes a written determination 
                that--
                            ``(i) all other property of the taxpayer, 
                        if sold, is insufficient to pay the tax or 
                        discharge the liability, and
                            ``(ii) such action will not create an 
                        economic hardship for the taxpayer.
                    ``(B) Delegation.--For purposes of this paragraph, 
                the Secretary of the Treasury may not delegate any 
                responsibilities under subparagraph (A) to any person 
                other than--
                            ``(i) the Commissioner of Internal Revenue, 
                        or
                            ``(ii) a district director or assistant 
                        district director of the Internal Revenue 
                        Service.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to actions filed after the date of the enactment of this Act.

SEC. 17. ADDITIONAL PROVISIONS RELATING TO MANDATORY TERMINATION FOR 
              MISCONDUCT.

    (a) Termination of Unemployment for Inappropriate Review of Tax-
Exempt Status.--Section 1203(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note) is amended 
by striking ``and'' at the end of paragraph (9), by striking the period 
at the end of paragraph (10) and inserting ``; and'', and by adding at 
the end the following new paragraph:
            ``(11) in the case of any review of an application for tax-
        exempt status by an organization described in section 501(c) of 
        the Internal Revenue Code of 1986, developing or using any 
        methodology that applies disproportionate scrutiny to any 
        applicant based on the ideology expressed in the name or 
        purpose of the organization.''.
    (b) Mandatory Unpaid Administrative Leave for Misconduct.--
Paragraph (1) of Section 1203(c) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note) is amended 
by adding at the end the following new sentence: ``Notwithstanding the 
preceding sentence, if the Commissioner of Internal Revenue takes a 
personnel action other than termination for an act or omission 
described in subsection (b), the Commissioner shall place the employee 
on unpaid administrative leave for a period of not less than 30 
days.''.
    (c) Limitation on Alternative Punishment.--Paragraph (1) of section 
1203(c) of the Internal Revenue Service Restructuring and Reform Act of 
1998 (26 U.S.C. 7804 note) is amended by striking ``The Commissioner'' 
and inserting ``Except in the case of an act or omission described in 
subsection (b)(3)(A), the Commissioner''.

SEC. 18. EXTENSION OF DECLARATORY JUDGMENT PROCEDURES TO SOCIAL WELFARE 
              ORGANIZATIONS.

    (a) In General.--Section 7428(a)(1) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of subparagraph (C) and 
by adding at the end the following new subparagraph:
                    ``(E) with respect to the initial classification or 
                continuing classification of an organization described 
                in section 501(c)(4) which is exempt from tax under 
                section 501(a), or''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to pleading filed after the date of the enactment of 
this Act.

SEC. 19. REVIEW BY THE TREASURY INSPECTOR GENERAL FOR TAX 
              ADMINISTRATION.

    (a) Review.--Subsection (k)(1) of section 8D of the Inspector 
General Act of 1978 (5 U.S.C. App.) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) by redesignating subparagraph (D) as subparagraph (E);
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) shall--
                            ``(i) review any criteria employed by the 
                        Internal Revenue Service to select tax returns 
                        (including applications for recognition of tax-
                        exempt status) for examination or audit, 
                        assessment or collection of deficiencies, 
                        criminal investigation or referral, refunds for 
                        amounts paid, or any heightened scrutiny or 
                        review in order to determine whether the 
                        criteria discriminates against taxpayers on the 
                        basis of race, religion, or political ideology; 
                        and
                            ``(ii) consult with the Internal Revenue 
                        Service on recommended amendments to such 
                        criteria in order to eliminate any 
                        discrimination identified pursuant to the 
                        review described in clause (i); and''; and
            (4) in subparagraph (E), as so redesignated, by striking 
        ``and (C)'' and inserting ``(C), and (D)''.
    (b) Semiannual Report.--Subsection (g) of such section is amended 
by adding at the end the following new paragraph:
            ``(3) Any semiannual report made by the Treasury Inspector 
        General for Tax Administration that is required pursuant to 
        section 5(a) shall include--
                    ``(A) a statement affirming that the Treasury 
                Inspector General for Tax Administration has reviewed 
                the criteria described in subsection (k)(1)(D) and 
                consulted with the Internal Revenue Service regarding 
                such criteria; and
                    ``(B) a description and explanation of any such 
                criteria that was identified as discriminatory by the 
                Treasury Inspector General for Tax Administration.''.
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