I
105TH CONGRESS
1ST SESSION
H. R. 1227
To amend the Internal Revenue Code of 1986 to provide for increased
accountability by Internal Revenue Service agents and other Federal
Government officials in tax collection practices and procedures, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 8, 1997
Ms. DUNN (for herself, Mr. GINGRICH, Mr. WATTS of Oklahoma, Ms. GRANG-
ER, Mr. CHRISTENSEN, Mr. SAM JOHNSON of Texas, Mr. SNOWBARGER,
Mr. METCALF, Mr. GIBBONS, Mr. ENGLISH of Pennsylvania, Mr.
SHIMKUS, Mrs. EMERSON, Mr. FRANKS of New Jersey, Mr. GUTKNECHT,
Mr. HAYWORTH, Mr. HERGER, Mr. HASTINGS of Washington, Mr. BARR
of Georgia, Mr. PAUL, Mr. DEAL of Georgia, Mr. CAMP, Mr. COOK, and
Mr. WELLER) introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
for increased accountability by Internal Revenue Service
agents and other Federal Government officials in tax
collection practices and procedures, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
ceeding with respect to the issue of whether there is
to be an assessment against such officer or employee
under paragraph (1). If, in any case in which such
an officer or employee is so represented by the Unit-
ed States, it is finally determined that such officer
or employee is liable for an assessment under para-
graph (1), such officer or employee shall also be lia-
ble to repay the United States for the costs of its
representation under this paragraph.’’.
(b) CIVIL DAMAGES AND COURT COSTS FOR FAIL-
URE TO RELEASE LIEN.—Section 7432 of the Internal
Revenue Code of 1986 (relating to civil damages for fail-
ure to release lien) is amended by adding at the end the
following new subsection:
‘‘(f) PERSONAL LIABILITY OF INTERNAL REVENUE
SERVICE
OFFICERS
AND
EMPLOYEES
IN
CERTAIN
CASES.—
‘‘(1) IN GENERAL.—In any proceeding in which
the prevailing plaintiff is awarded a judgment under
this section for damages described in subsection (b),
the court may assess a portion of such damages
against any Internal Revenue Service officer or em-
ployee (and such officer or employee shall not be re-
imbursed by the United States for the damages so
assessed) if the court determines that such proceed-
ing resulted from any arbitrary, capricious, or mali-
cious act of such officer or employee. For purposes
of this section, the term ‘officer or employee’ in-
cludes a former officer or employee.
‘‘(2) REPRESENTATION
OF
OFFICER
OR
EM-
PLOYEE.—Upon the request of any Internal Revenue
Service officer or employee, such officer or employee
may be represented by the United States in any pro-
ceeding with respect to the issue of whether there is
to be an assessment against such officer or employee
under paragraph (1). If, in any case in which such
an officer or employee is so represented by the Unit-
ed States, it is finally determined that such officer
or employee is liable for an assessment under para-
graph (1), such officer or employee shall also be lia-
ble to repay the United States for the costs of its
representation under this paragraph.’’.
(c) CIVIL DAMAGES AND COURT COSTS FOR CERTAIN
UNAUTHORIZED COLLECTION ACTIONS.—Section 7433 of
the Internal Revenue Code of 1986 (relating to civil dam-
ages for certain unauthorized collection actions) is amend-
ed by adding at the end the following new subsection:
‘‘(e) PERSONAL LIABILITY OF INTERNAL REVENUE
SERVICE
OFFICERS
AND
EMPLOYEES
IN
CERTAIN
CASES.—
‘‘(1) IN GENERAL.—In any proceeding in which
the prevailing plaintiff is awarded a judgment for
damages described in subsection (b), the court may
assess a portion of such damages against any Inter-
nal Revenue Service officer or employee (and such
officer or employee shall not be reimbursed by the
United States for the damages so assessed) if the
court determines that such proceeding resulted from
any arbitrary, capricious, or malicious act of such
officer or employee. For purposes of this section, the
term ‘officer or employee’ includes a former officer
or employee.
‘‘(2) REPRESENTATION
OF
OFFICER
OR
EM-
PLOYEE.—Upon the request of any Internal Revenue
Service officer or employee, such officer or employee
may be represented by the United States in any pro-
ceeding with respect to the issue of whether there is
to be an assessment against such officer or employee
under paragraph (1). If, in any case in which such
an officer or employee is so represented by the Unit-
ed States, it is finally determined that such officer
or employee is liable for an assessment under para-
graph (1), such officer or employee shall also be lia-
ble to repay the United States for the costs of its
representation under this paragraph.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of proceedings com-
menced after the date of the enactment of this Act.
SEC. 4. PROTECTING THE PRIVACY OF TAXPAYERS.
(a) CIVIL PENALTY FOR UNAUTHORIZED ACCESS OF
RETURNS AND RETURN INFORMATION.—Section 7431 of
the Internal Revenue Code of 1986 (relating to civil dam-
ages for unauthorized disclosure of returns and return in-
formation) is amended—
(1) by inserting ‘‘or accesses’’ after ‘‘discloses’’
in subsection (a)(1),
(2) by inserting ‘‘OR ACCESS’’ after ‘‘DISCLO-
SURE’’ in the heading for subsection (a)(1),
(3) by inserting ‘‘(or former officer or em-
ployee)’’ after ‘‘officer or employee’’ both places it
appears in subsection (a),
(4) by inserting ‘‘or access’’ after ‘‘disclosure’’
each place it appears in subsections (b), (c)(1), and
(d),
(5) by inserting ‘‘the earlier of notification to
or’’ after ‘‘after the date of’’ in subsection (d), and
(6) by inserting ‘‘OR ACCESS’’ after ‘‘DISCLO-
SURE’’ in the heading.
(b) CRIMINAL PENALTY FOR UNAUTHORIZED AC-
CESS OF RETURNS AND RETURN INFORMATION.—Section
7213(a)(1) of the Internal Revenue Code of 1986 (relating
to Federal employees and other persons) is amended—
(1) by striking ‘‘this paragraph’’ and inserting
‘‘this subparagraph’’,
(2) by striking ‘‘It shall be unlawful’’ and in-
serting the following:
‘‘(A) DISCLOSURE.—It shall be unlawful’’,
and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) ACCESS.—It shall be unlawful for
any officer, employee, or other person described
in subparagraph (A) willfully to access without
authorization any return or return information
(as defined in section 6103(b)). Any violation of
this subparagraph shall be punishable by dis-
missal from office or discharge from employ-
ment and, further, shall be a misdemeanor pun-
ishable upon conviction by a fine in any amount
not exceeding $1,000, or imprisonment of not
more than 1 year, or both, together with costs
of prosecution, and, if necessary, by dismissal
from office or discharge from employment.’’.
(c) NOTIFICATION
OF UNAUTHORIZED ACCESS.—
Section 6103 of the Internal Revenue Code of 1986 (relat-
ing to confidentiality and disclosure of returns and return
information) is amended by redesignating subsection (q)
as subsection (r) and by inserting after subsection (p) the
following new subsection:
‘‘(q) UNAUTHORIZED ACCESS PROHIBITED.—
‘‘(1) IN
GENERAL.—Except as authorized by
this title, no officer or employee (or former officer
or employee) of the United States shall access any
return or return information.
‘‘(2) NOTIFICATION.—Upon discovery that a
taxpayer’s return or return information has been
accessed in violation of paragraph (1), the taxpayer
shall be notified immediately.’’.
(d) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter B of chapter 76 of the Internal Reve-
nue Code of 1986 is amended by inserting ‘‘or access’’
after ‘‘disclosure’’ in the item relating to section 7431.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions by officers or employees
after the date of the enactment of this Act.
SEC. 5. LIMITATIONS ON EXAMINATIONS.
(a) IN GENERAL.—Section 7602 of the Internal Rev-
enue Code of 1986 (relating to examination of books and
witnesses) is amended by adding at the end the following
new subsection:
‘‘(d) LIMITATIONS ON AUTHORITY TO EXAMINE.—
In taking any action under subsection (a), the Secretary—
‘‘(1) shall demonstrate, upon demand of any
person described in subsection (a), reasonable jus-
tification (and not random selection) for initiating
an examination of a return, and
‘‘(2) shall not—
‘‘(A) initiate an examination of a return or
issue of a return if such return or issue of a re-
turn has previously been examined, or
‘‘(B) extend back an examination under
subsection (a), once initiated, beyond a 3-tax-
able-year period ending on the day before the
beginning of the taxable year which includes the
date of initiation,
except upon court approval if in the course of an in-
vestigation into possible criminal activity.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to examinations initiated after the
date of the enactment of this Act.
SEC. 6. EXTENSION OF TIME TO PAY TAX AFTER NOTICE
AND DEMAND.
(a) IN GENERAL.—Section 6651(a)(3) of the Internal
Revenue Code of 1986 (relating to addition to the tax)
is amended by striking ‘‘21 calendar days’’ and inserting
‘‘90 calendar days’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to notices and demands given after
the date of the enactment of this Act.
SEC. 7. ENSURING THE INTEGRITY OF JUDICIAL PROCEED-
INGS.
(a) IN GENERAL.—Subchapter B of chapter 76 of the
Internal Revenue Code of 1986 (relating to proceedings
by taxpayers and third parties) is amended by redesignat-
ing section 7436 as section 7437 and by inserting after
section 7435 the following new section:
‘‘SEC. 7436. DECLARATORY JUDGMENTS RELATING TO SEC-
RETARIAL NONACQUIESCENCE.
‘‘In a case of actual controversy involving the Sec-
retary’s decision to not acquiesce with respect to conclu-
sions of law in identical or similar cases to a case or cases
previously decided within the same court jurisdiction or
appellate circuit, upon the filing of an appropriate plead-
ing and the exhaustion of administrative remedies avail-
able to the petitioner within the Internal Revenue Service,
the district court for such jurisdiction may make a dec-
laration with respect to the Secretary’s decision. Any such
declaration shall have the force and effect of a final judg-
ment or decree of the district court and shall be reviewable
as such.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for such subchapter B is amended by striking the
item relating to section 7436 and inserting the following
new items:
‘‘Sec. 7436. Declaratory judgments relating to secretarial non-
acquiescence.
‘‘Sec. 7437. Cross references.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to court proceedings initiated after
the date of the enactment of this Act.
SEC. 8. LIMITATIONS ON ASSET SEIZURES AND LEVIES.
(a) IN GENERAL.—Section 6331(a) of the Internal
Revenue Code of 1986 (relating to levy and distraint) is
amended by inserting ‘‘, upon the consent of an appro-
priate court,’’ after ‘‘it shall be lawful for the Secretary’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to levies initiated after the date
of the enactment of this Act.
SEC. 
9. 
NO 
INTEREST 
ON 
PENALTIES, 
ADDITIONAL
AMOUNTS, AND ADDITIONS TO TAX.
(a) IN GENERAL.—Section 6601(e)(2) of the Internal
Revenue Code of 1986 (relating to applicable rules) is
amended to read as follows:
‘‘(2) NO INTEREST ON PENALTIES, ADDITIONAL
AMOUNTS, AND ADDITIONS TO TAX.—Interest shall
not be imposed under subsection (a) in respect of
any assessable penalty, additional amount, or addi-
tion to tax.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to notices and demands given after
the date of the enactment of this Act.
SEC. 10. INTEREST RATE FOR OVERPAYMENTS TO EQUAL
RATE FOR UNDERPAYMENTS.
(a) IN GENERAL.—Section 6621(a) of the Internal
Revenue Code of 1986 (relating to determination of rate
of interest) is amended to read as follows:
‘‘(a) GENERAL RULE.—The overpayment rate and
the underpayment rate established under this section shall
be the Federal short-term rate determined under sub-
section (b).’’.
(b) CONFORMING AMENDMENT.—Section 6621 of the
Internal Revenue Code of 1986 (relating to determination
of rate of interest) is amended by striking subsection (c).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply for purposes of determining inter-
est to periods after the date of the enactment of this Act.
SEC. 11. FAIRNESS WHEN COLLECTING A TAX DUE TO
MATHEMATICAL AND CLERICAL ERRORS.
(a) IN GENERAL.—Section 6404(d) of the Internal
Revenue Code of 1986 (relating to abatements) is amend-
ed to read as follows:
‘‘(d) ABATEMENT OF INTEREST, PENALTY, ADDI-
TIONAL AMOUNT, AND ADDITION TO TAX ATTRIBUTABLE
TO CERTAIN MATHEMATICAL OR CLERICAL ERRORS.—In
the case of an assessment of additional tax attributable
to a mathematical or clerical error (as defined in section
6213(g)(2)), the Secretary shall abate any interest, pen-
alty, additional amount, and addition to tax with respect
to such assessment if, within 60 days after notice of such
assessment is sent under section 6213(b)(1) by certified
mail or registered mail, the taxpayer pays, or files a re-
quest for an abatement of, such assessment.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to notices filed after the date of
the enactment of this Act.
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