SEC. 705. EFFECTIVE DATE.
The amendments made by this title shall apply in the
case of proceedings commenced after the date of the enact-
ment of this Act.
TITLE VIII—MODIFICATION TO
RECOVERY 
OF 
CIVIL 
DAM-
AGES 
FOR 
UNAUTHORIZED
COLLECTION ACTIONS
SEC. 801. INCREASE IN LIMIT ON RECOVERY OF CIVIL DAM-
AGES FOR UNAUTHORIZED COLLECTION AC-
TIONS.
(a) GENERAL RULE.—Subsection (b) of section 7433
(relating to damages) is amended by striking ‘‘$100,000’’
and inserting ‘‘$1,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to actions by officers or employ-
ees of the Internal Revenue Service after the date of the
enactment of this Act.
SEC. 802. COURT DISCRETION TO REDUCE AWARD FOR
LITIGATION COSTS FOR FAILURE TO EX-
HAUST ADMINISTRATIVE REMEDIES.
(a) GENERAL RULE.—Paragraph (1) of section
7433(d) (relating to civil damages for certain unauthor-
ized collection actions) is amended to read as follows:
‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED
IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—
The amount of damages awarded under subsection
(b) may be reduced if the court determines that the
plaintiff has not exhausted the administrative rem-
edies available to such plaintiff within the Internal
Revenue Service.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply in the case of proceedings com-
menced after the date of the enactment of this Act.
TITLE 
IX—MODIFICATIONS 
TO
PENALTY FOR FAILURE TO
COLLECT AND PAY OVER TAX
SEC. 901. PRELIMINARY NOTICE REQUIREMENT.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by redesignating subsection (b) as sub-
section (c) and by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
‘‘(1) IN
GENERAL.—No penalty shall be im-
posed under subsection (a) unless the Secretary noti-
fies the taxpayer in writing by mail to an address as
determined under section 6212(b) that the taxpayer
shall be subject to an assessment of such penalty.
‘‘(2) TIMING OF NOTICE.—The mailing of the
notice described in paragraph (1) shall precede any
notice and demand of any penalty under subsection
(a) by at least 60 days.
‘‘(3) STATUTE
OF
LIMITATIONS.—If a notice
described in paragraph (1) with respect to any pen-
alty is mailed before the expiration of the period
provided by section 6501 for the assessment of such
penalty (determined without regard to this para-
graph), the period provided by such section for the
assessment of such penalty shall not expire before
the later of—
‘‘(A) the date 90 days after the date on
which such notice was mailed, or
‘‘(B) if there is a timely protest of the pro-
posed assessment, the date 30 days after the
Secretary makes a final administrative deter-
mination with respect to such protest.
‘‘(4) EXCEPTION
FOR
JEOPARDY.—This sub-
section shall not apply if the Secretary finds that the
collection of the penalty is in jeopardy.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to proposed assessments made
after June 30, 1996.
SEC. 902. DISCLOSURE OF CERTAIN INFORMATION WHERE
MORE THAN 1 PERSON LIABLE FOR PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Subsection (e) of section 6103
(relating to disclosure to persons having material interest),
as amended by section 403, is amended by adding at the
end the following new paragraph:
‘‘(9) DISCLOSURE
OF
CERTAIN
INFORMATION
WHERE MORE THAN 1 PERSON SUBJECT TO PEN-
ALTY UNDER SECTION 6672.—If the Secretary deter-
mines that a person is liable for a penalty under sec-
tion 6672(a) with respect to any failure, upon re-
quest in writing of such person, the Secretary shall
disclose in writing to such person—
‘‘(A) the name of any other person whom
the Secretary has determined to be liable for
such penalty with respect to such failure, and
‘‘(B) whether the Secretary has attempted
to collect such penalty from such other person,
the general nature of such collection activities,
and the amount collected.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 903. RIGHT OF CONTRIBUTION WHERE MORE THAN 1
PERSON LIABLE FOR PENALTY FOR FAILURE
TO COLLECT AND PAY OVER TAX.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by adding at the end the following new
subsection:
‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY.—If more than 1 person
is liable for the penalty under subsection (a) with respect
to any tax, each person who paid such penalty shall be
entitled to recover from other persons who are liable for
such penalty an amount equal to the excess of the amount
paid by such person over such person’s proportionate
share of the penalty. Any claim for such a recovery may
be made only in a separate action involving such persons.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to penalties assessed after the
date of the enactment of this Act.
SEC. 904. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT
ORGANIZATIONS EXEMPT FROM PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Section 6672 is amended by add-
ing at the end the following new subsection:
‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS
OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be
imposed by subsection (a) on any unpaid, volunteer mem-
ber of any board of trustees or directors of an organization
exempt from tax under subtitle A if such member—
‘‘(1) is solely serving in an honorary capacity,
‘‘(2) does not participate in the day-to-day or
financial operations of the organization, and
‘‘(3) does not have actual knowledge of the fail-
ure on which such penalty is imposed.
The preceding sentence shall not apply if it results in no
person being liable for the penalty imposed by subsection
(a).’’
(b) PUBLIC INFORMATION REQUIREMENTS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury or the Secretary’s delegate (hereafter in this
subsection referred to as the ‘‘Secretary’’) shall take
such actions as may be appropriate to ensure that
employees are aware of their responsibilities under
the Federal tax depository system, the circumstances
under which employees may be liable for the penalty
imposed by section 6672 of the Internal Revenue
Code of 1986, and the responsibility to promptly re-
port to the Internal Revenue Service any failure re-
ferred to in subsection (a) of such section 6672.
Such actions shall include—
(A) printing of a warning on deposit cou-
pon booklets and the appropriate tax returns
that certain employees may be liable for the
penalty imposed by such section 6672, and
(B) the development of a special informa-
tion packet.
(2) DEVELOPMENT
OF
EXPLANATORY
MATE-
RIALS.—The Secretary shall develop materials ex-
plaining the circumstances under which board mem-
bers of tax-exempt organizations (including vol-
untary and honorary members) may be subject to
penalty under section 6672 of such Code. Such ma-
terials shall be made available to tax-exempt organi-
zations.
(3) IRS INSTRUCTIONS.—The Secretary shall
clarify the instructions to Internal Revenue Service
employees on the application of the penalty under
section 6672 of such Code with regard to voluntary
members of boards of trustees or directors of tax-
exempt organizations.
TITLE 
X—MODIFICATIONS 
OF
RULES RELATING TO SUM-
MONSES
SEC. 1001. ENROLLED AGENTS INCLUDED AS THIRD-PARTY
RECORDKEEPERS.
(a) IN GENERAL.—Paragraph (3) of section 7609(a)
(relating to third-party recordkeeper defined) is amended
by striking ‘‘and’’ at the end of subparagraph (G), by
striking the period at the end of subparagraph (H) and
inserting ‘‘; and’’, and by adding at the end the following
the subparagraph:
‘‘(I) any enrolled agent.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to summonses issued after the
date of the enactment of this Act.
SEC. 1002. SAFEGUARDS RELATING TO DESIGNATED SUM-
MONSES.
(a) STANDARD OF REVIEW.—Subparagraph (A) of
section 6503(j)(2) (defining designated summons) is
amended by redesignating clauses (i) and (ii) as clauses
(ii) and (iii), respectively, and by inserting before clause
(ii) (as so redesignated) the following new clause:
‘‘(i) the issuance of such summons is
preceded by a review of such issuance by
the regional counsel of the Office of Chief
Counsel for the region in which the exam-
ination of the corporation is being con-
ducted,’’.
(b) LIMITATION
ON PERSONS TO WHOM DES-
IGNATED SUMMONS MAY BE ISSUED.—Paragraph (1) of
section 6503(j) is amended by striking ‘‘with respect to
any return of tax by a corporation’’ and inserting ‘‘to a
corporation (or to any other person to whom the corpora-
tion has transferred records) with respect to any return
of tax by such corporation for a taxable year (or other
period) for which such corporation is being examined
under the coordinated examination program (or any suc-
cessor program) of the Internal Revenue Service’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to summonses issued after the date
of the enactment of this Act.
SEC. 1003. ANNUAL REPORT TO CONGRESS CONCERNING
DESIGNATED SUMMONSES.
Not later than December 31 of each calendar year
after 1995, the Secretary of the Treasury or his delegate
shall report to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate on the number of designated summonses (as
defined in section 6503(j) of the Internal Revenue Code
of 1986) which were issued during the preceding 12
months.
TITLE XI—RELIEF FROM RETRO-
ACTIVE 
APPLICATION 
OF
TREASURY 
DEPARTMENT
REGULATIONS
SEC. 1101. RELIEF FROM RETROACTIVE APPLICATION OF
TREASURY DEPARTMENT REGULATIONS.
(a) IN GENERAL.—Subsection (b) of section 7805
(relating to rules and regulations) is amended to read as
follows:
‘‘(b) RETROACTIVITY OF REGULATIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, no temporary, proposed, or
final regulation relating to the internal revenue laws
shall apply to any taxable period ending before the
earliest of the following dates:
‘‘(A) The date on which such regulation is
filed with the Federal Register.
‘‘(B) In the case of any final regulation,
the date on which any proposed or temporary
regulation to which such final regulation relates
was filed with the Federal Register.
‘‘(C) The date on which any notice sub-
stantially describing the expected contents of
any temporary, proposed, or final regulation is
issued to the public.
‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU-
LATIONS.—Paragraph (1) shall not apply to regula-
tions issued within 12 months of the date of the en-
actment of the statutory provision to which the regu-
lation relates.
‘‘(3) PREVENTION OF ABUSE.—The Secretary
may provide that any regulation may take effect or
apply retroactively to prevent abuse.
‘‘(4) 
CORRECTION
OF
PROCEDURAL
DE-
FECTS.—The Secretary may provide that any regu-
lation may apply retroactively to correct a proce-
dural defect in the issuance of any prior regulation.
‘‘(5) INTERNAL REGULATIONS.—The limitation
of paragraph (1) shall not apply to any regulation
relating to internal Treasury Department policies,
practices, or procedures.
‘‘(6) CONGRESSIONAL
AUTHORIZATION.—The
limitation of paragraph (1) may be superseded by a
legislative grant from Congress authorizing the Sec-
retary to prescribe the effective date with respect to
any regulation.
‘‘(7) ELECTION TO APPLY RETROACTIVELY.—
Paragraph (1) shall not apply to any regulation
which the taxpayer elects to apply before the dates
specified in paragraph (1) but only if such election
applies to all regulations which were issued with
such regulation under the statutory provision to
which such regulation relates.
‘‘(8) APPLICATION
TO
RULINGS.—The Sec-
retary may prescribe the extent, if any, to which any
ruling (including any judicial decision or any admin-
istrative determination other than by regulation) re-
lating to the internal revenue laws shall be applied
without retroactive effect.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to regulations
which relate to statutory provisions enacted on or after
the date of the enactment of this Act.
TITLE XII—MISCELLANEOUS
PROVISIONS
SEC. 1201. REPORT ON PILOT PROGRAM FOR APPEAL OF
ENFORCEMENT ACTIONS.
Not later than March 1, 1996, the Secretary of the
Treasury or his delegate shall submit to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate a report on the
pilot program for appeals of enforcement actions (includ-
ing lien, levy, and seizure actions) to the Appeals Division
of the Internal Revenue Service, together with such rec-
ommendations as he may deem advisable.
SEC. 1202. PHONE NUMBER OF PERSON PROVIDING PAYEE
STATEMENTS REQUIRED TO BE SHOWN ON
SUCH STATEMENT.
(a) GENERAL RULE.—The following provisions are
each amended by striking ‘‘name and address’’ and insert-
ing ‘‘name, address, and phone number of the information
contact’’:
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to statements required to be fur-
nished after December 31, 1996 (determined without
regard to any extension).
SEC. 1203. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the
Treasury or his delegate from any taxpayer and the Sec-
retary cannot associate such payment with such taxpayer,
the Secretary shall make reasonable efforts to notify the
taxpayer of such inability within 60 days after the re-
ceipt of such payment.
SEC. 1204. UNAUTHORIZED ENTICEMENT OF INFORMATION
DISCLOSURE.
(a) IN GENERAL.—Subchapter B of chapter 76 (re-
lating to proceedings by taxpayers and third parties), as
amended by section 601(a), is amended by redesignating
section 7435 as section 7436 and by inserting after sec-
tion 7434 the following new section:
‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE-
MENT OF INFORMATION DISCLOSURE.
‘‘(a) IN GENERAL.—If any officer or employee of the
United States intentionally compromises the determina-
tion or collection of any tax due from an attorney, certified
public accountant, or enrolled agent representing a tax-
payer in exchange for information conveyed by the tax-
payer to the attorney, certified public accountant, or en-
rolled agent for purposes of obtaining advice concerning
the taxpayer’s tax liability, such taxpayer may bring a civil
action for damages against the United States in a district
court of the United States. Such civil action shall be the
exclusive remedy for recovering damages resulting from
such actions.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the plaintiff in
an amount equal to the lesser of $500,000 or the sum
of—
‘‘(1) actual, direct economic damages sustained
by the plaintiff as a proximate result of the informa-
tion disclosure, and
‘‘(2) the costs of the action.
Damages shall not include the taxpayer’s liability for any
civil or criminal penalties, or other losses attributable to
incarceration or the imposition of other criminal sanctions.
‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to
this section shall be payable out of funds appropriated
under section 1304 of title 31, United States Code.
‘‘(d) PERIOD
FOR BRINGING ACTION.—Notwith-
standing any other provision of law, an action to enforce
liability created under this section may be brought without
regard to the amount in controversy and may be brought
only within 2 years after the date the actions creating such
liability would have been discovered by exercise of reason-
able care.
‘‘(e) MANDATORY STAY.—Upon a certification by the
Commissioner or the Commissioner’s delegate that there
is an ongoing investigation or prosecution of the taxpayer,
the district court before which an action under this section
is pending, shall stay all proceedings with respect to such
action pending the conclusion of the investigation or
prosecution.
‘‘(f) CRIME-FRAUD
EXCEPTION.—Subsection (a)
shall not apply to information conveyed to an attorney,
certified public accountant, or enrolled agent for the pur-
pose of perpetrating a fraud or crime.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76, as amended by section
601(b), is amended by striking the item relating to section
7435 and by adding at the end the following new items:
‘‘Sec. 7435. Civil damages for unauthorized enticement of infor-
mation disclosure.
‘‘Sec. 7436. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions after the date of the
enactment of this Act.
SEC. 1205. ANNUAL REMINDERS TO TAXPAYERS WITH OUT-
STANDING DELINQUENT ACCOUNTS.
(a) IN GENERAL.—Chapter 77 (relating to mis-
cellaneous provisions) is amended by adding at the end
the following new section:
‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
‘‘Not less often than annually, the Secretary shall
send a written notice to each taxpayer who has a tax delin-
quent account of the amount of the tax delinquency as
of the date of the notice.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end the follow-
ing new item:
‘‘Sec. 7524. Annual notice of tax delinquency.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 1995.
SEC. 1206. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER-
COVER OPERATIONS.
(a) IN GENERAL.—Paragraph (3) of section 7601(c)
of the Anti-Drug Abuse Act of 1988 is amended by strik-
ing all that follows ‘‘this Act’’ and inserting a period.
(b) RESTORATION OF AUTHORITY FOR 5 YEARS.—
Subsection (c) of section 7608 is amended by adding at
the end the following new paragraph:
‘‘(6) APPLICATION
OF
SECTION.—The provi-
sions of this subsection—
‘‘(A) shall apply after November 17, 1988,
and before January 1, 1990, and
‘‘(B) shall apply after the date of the en-
actment of this paragraph and before January
1, 2001.
All amounts expended pursuant to this subsection
during the period described in subparagraph (B)
shall be recovered to the extent possible, and depos-
ited in the Treasury of the United States as mis-
cellaneous receipts, before January 1, 2001.’’
(c) ENHANCED OVERSIGHT.—
(1) ADDITIONAL
INFORMATION
REQUIRED
IN
REPORTS TO CONGRESS.—Subparagraph (B) of sec-
tion 7608(c)(4) is amended—
(A) by striking ‘‘preceding the period’’ in
clause (ii),
(B) by striking ‘‘and’’ at the end of clause
(ii), and
(C) by striking clause (iii) and inserting
the following:
‘‘(iii) the number, by programs, of un-
dercover investigative operations closed in
the 1-year period for which such report is
submitted, and
‘‘(iv) the following information with
respect to each undercover investigative op-
eration pending as of the end of the 1-year
period for which such report is submitted
or closed during such 1-year period—
‘‘(I) the date the operation began
and the date of the certification re-
ferred to in the last sentence of para-
graph (1),
‘‘(II) 
the 
total 
expenditures
under the operation and the amount
and use of the proceeds from the op-
eration,
‘‘(III) a detailed description of
the operation including the potential
violation 
being 
investigated 
and
whether the operation is being con-
ducted under grand jury auspices, and
‘‘(IV) the results of the operation
including the results of criminal pro-
ceedings.’’
(2) AUDITS REQUIRED WITHOUT REGARD TO
AMOUNTS INVOLVED.—Subparagraph (C) of section
7608(c)(5) is amended to read as follows:
‘‘(C) UNDERCOVER INVESTIGATIVE OPER-
ATION.—The term ‘undercover investigative op-
eration’ means any undercover investigative op-
eration of the Service; except that, for purposes
of subparagraphs (A) and (C) of paragraph (4),
such term only includes an operation which is
exempt from section 3302 or 9102 of title 31,
United States Code.’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
SEC. 1207. DISCLOSURE OF FORM 8300 INFORMATION ON
CASH TRANSACTIONS.
(a) IN GENERAL.—Subsection (l) of section 6103 (re-
lating to disclosure of returns and return information for
purposes other than tax administration) is amended by
adding at the end the following new paragraph:
‘‘(15) DISCLOSURE OF RETURNS FILED UNDER
SECTION 6050I.—The Secretary may, upon written
request, disclose to officers and employees of—
‘‘(A) any Federal agency,
‘‘(B) any agency of a State or local govern-
ment, or
‘‘(C) any agency of the government of a
foreign country,
information contained on returns filed under section
6050I. Any such disclosure shall be made on the
same basis, and subject to the same conditions, as
apply to disclosures of information on reports filed
under section 5313 of title 31, United States Code;
except that no disclosure under this paragraph shall
be made for purposes of the administration of any
tax law.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (i) of section 6103 is amended
by striking paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is
amended—
(A) by striking ‘‘(7)(A)(ii), or (8)’’ and in-
serting ‘‘or (7)(A)(ii)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(3) The material preceding subparagraph (A) of
section 6103(p)(4) is amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’,
(B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and
inserting ‘‘(i)(3)(B)(i),’’, and
(C) by striking ‘‘or (12)’’ and inserting
‘‘(12), or (15)’’.
(4) Clause (ii) of section 6103(p)(4)(F) is
amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(5) Paragraph (2) of section 7213(a) is amend-
ed by striking ‘‘or (12)’’ and inserting ‘‘(12), or
(15)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 1208. DISCLOSURE OF RETURNS AND RETURN INFOR-
MATION TO DESIGNEE OF TAXPAYER.
Subsection (c) of section 6103 (relating to disclosure
of returns and return information to designee of taxpayer)
is amended by striking ‘‘written request for or consent to
such disclosure’’ and inserting ‘‘request for or consent to
such disclosure’’.
SEC. 1209. STUDY OF NETTING OF INTEREST ON OVERPAY-
MENTS AND LIABILITIES.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate shall—
(1) conduct a study of the manner in which the
Internal Revenue Service has implemented the net-
ting of interest on overpayments and underpayments
and of the policy and administrative implications of
global netting, and
(2) before submitting the report of such study,
hold a public hearing to receive comments on the
matters included in such study.
(b) REPORT.—The report of such study shall be sub-
mitted not later than 6 months after the date of the enact-
ment of this Act to the Committee on Ways and Means
of the House of Representatives and the Committee on
Finance of the Senate.
Æ
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