Preserving Taxpayers' Rights Act

To amend the Internal Revenue Code of 1986 to preserve taxpayers’ rights to administrative appeal of deficiency determinations, and for other purposes. 1. Short title, etc (a) Short title This Act may be cited as the Preserving Taxpayers’ Rights Act (b) Table of contents The table of contents of this bill is as follows: Sec. 1. Short title, etc. Sec. 2. Ensuring taxpayer right to appeal. Sec. 3. Appeals dispute resolution procedures. Sec. 4. Restriction on Secretarial authority to designate cases for litigation. Sec. 5. Modification of authority to issue designated summons. Sec. 6. Limitation on access of non-Internal Revenue Service employees to returns and return information. 2. Ensuring taxpayer right to appeal (a) In general Subsection (a) of section 6212 (1) by striking In general In general (1) Authorization If— (A) the Secretary ; (2) by striking 44, he is authorized 44, and (B) the requirements of paragraph (2) have been met with respect to such deficiency, the Secretary is authorized ; and (3) by adding at the end the following new paragraph: (2) Opportunity for administrative review in the Office of Appeals (A) In general The requirements of this paragraph are met with respect to a deficiency if, prior to the issuance of the notice of deficiency under paragraph (1)— (i) the taxpayer has been issued a letter of proposed deficiency that explains the basis for the determination of deficiency and allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals, and (ii) either— (I) the time provided in such letter for requesting administrative review in the Internal Revenue Service Office of Appeals has expired and the taxpayer has not made such request, or (II) such Office of Appeals officially concluded the administrative review process with respect to such deficiency. (B) Frivolous tax positions The Secretary is authorized to issue regulations limiting the application of subparagraph (A) in cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds, or for other positions listed as frivolous under section 6702(c). (C) Cases designated for litigation Subparagraph (A) shall not apply in the case of issues designated for litigation in accordance with section 7124, and the taxpayer’s right to administrative review in the Internal Revenue Service Office of Appeals as provided in this paragraph shall not otherwise be denied. . (b) Opportunity for appeal if fewer than 60 days remain on statute of limitations Section 6212 (e) Opportunity for appeal if fewer than 60 days remain on statute of limitations In the case of any issues relating to a potential deficiency with respect to which 60 days or fewer remain in the period applicable under section 6501, if the taxpayer agrees to the extension of such period by 12 months, the Secretary shall issue a letter of proposed deficiency described in subsection (a)(2)(A)(i) allowing the taxpayer an opportunity for administrative review of such issues in the Internal Revenue Service Office of Appeals before a notice of deficiency is issued under this section. Rules similar to the rules of subsection (a)(2)(B) shall apply for purposes of this subsection. . (c) Effective date The amendments made by this section shall apply to notices of deficiency issued after the date of the introduction of this Act. 3. Appeals dispute resolution procedures Subsection (a) of section 7123 (a) Referral to appeals procedures The Secretary shall prescribe procedures by which any taxpayer may request— (1) early referral of one or more unresolved issues from the examination or collection division to the Internal Revenue Service Office of Appeals, or (2) consideration by such Office of Appeals of issues included in— (A) a letter of proposed deficiency described in section 6212(a)(2)(A), (B) a notice of deficiency pursuant to section 6212, whether or not the taxpayer has filed a petition with the Tax Court pursuant to section 6213(a), or (C) a claim for refund, whether or not the taxpayer has filed suit in a district court or the United States Court of Federal Claims with respect to the issues included in such claim or refund. Such regulations may limit such procedures in cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds, or for other positions listed as frivolous under section 6702(c). Such procedures shall not be available in the case of issues designated for litigation in accordance with section 7124, and the taxpayer’s right to administrative review in the Internal Revenue Service Office of Appeals as provided in section 6212(a)(2) shall not otherwise be denied. . 4. Restriction on Secretarial authority to designate cases for litigation (a) In general Chapter 74 7124. Restriction on Secretarial authority to designate cases for litigation (a) In general The Secretary may designate issues arising from the examination or collection division for litigation, and not permit the taxpayer to request consideration of such issues by the Internal Revenue Service Office of Appeals under section 7123(a), only to the extent such issues relate to listed transactions (as defined in section 6707A(c)(2)). (b) Settlement In offering terms under a settlement agreement for purposes of the resolution of any issues arising from the examination or collection division, the Secretary may offer terms that preclude the taxpayer from requesting consideration of such issues by the Office of Appeals under section 7123(a) only to the extent such issues relate to listed transactions (as defined in section 6707A(c)(2)). . (b) Clerical amendment The table of sections for chapter 74 section 7124 Sec. 7124. Restriction on Secretarial authority to designate cases for litigation. Sec. 7125. Cross references. . (c) Effective date The amendments made by this section shall apply to the designation of issues for litigation, and offers of settlement terms, after the date of the introduction of this Act. 5. Modification of authority to issue designated summons (a) In general Paragraph (1) of section 6503(j) coordinated examination program coordinated industry case program (b) Designated summons Clause (i) of section 6503(j)(2)(A) (i) the issuance of such summons is preceded by a review and written approval of such issuance by the Large Business and International Division Commissioner and the Division Counsel of the Office of Chief Counsel (or their successors)— (I) which clearly establishes that the taxpayer did not reasonably cooperate with reasonable requests by the Secretary for witnesses, documents, meetings, and interviews, and (II) which is attached to such summons, . (c) Burden of proof Subsection (j) of section 6503 (4) Burden of proof In any court proceeding described in paragraph (3), the Secretary shall bear the burden of proving that the corporation described in paragraph (1) did not reasonably cooperate with reasonable requests by the Secretary for witnesses, documents, meetings, and interviews. . (d) Effective date The amendments made by this section shall apply to summonses issued after the date of the introduction of this Act. 6. Limitation on access of non-Internal Revenue Service employees to returns and return information (a) In general Section 7602 (f) Limitation on access of persons other than Internal Revenue Service officers and employees No person other than an officer or employee of the Internal Revenue Service shall be designated under section 6103(n) to receive any books, papers, records, or other data obtained pursuant to this section, other than for the sole purpose of serving as an expert, and no person other than an officer or employee of the Internal Revenue Service or the Office of Chief Counsel may question a witness under oath whose testimony was obtained pursuant to this section. . (b) Effective date (1) In general Except as provided in paragraph (2), the amendment made by this section shall take effect on the date of the enactment of this Act. (2) Application to contracts in effect The amendment made by this section shall apply to any contract in effect under section 6103(n)

Summary: Preserving Taxpayers' Rights Act This bill amends the Internal Revenue Code to establish new procedures and requirements for administrative appeals of Internal Revenue Service (IRS) deficiency determinations. If the IRS determines that there is a deficiency with respect to a tax imposed, it may send a notice of deficiency to a taxpayer after: the taxpayer has been issued a letter of proposed deficiency that explains the basis for the determination of deficiency and provides an opportunity for administrative review in the IRS Office of Appeals; and either: (1) the time provided in the letter for requesting administrative review in the office has expired and the taxpayer has not made such a request, or (2) the office has officially concluded the administrative review process with respect to the deficiency. The bill includes exceptions to these requirements for frivolous tax positions and issues in cases designated for litigation. The IRS must permit a taxpayer to appeal a deficiency prior to issuing a deficiency notice if 60 or fewer days remain on the statute of limitations and the taxpayer agrees to extend the period for 12 months. The bill modifies appeals dispute resolution procedures. It also restricts the authority of the IRS to: (1) designate cases for litigation without permitting an appeal, or (2) offer settlement agreements that preclude an appeal. The bill modifies the authority of the IRS to issue a summons and limits the access that people outside of the IRS have to returns and return information acquired by a summons.