the Secretary shall convene an electronic commerce
advisory group to include representatives from the
tax practitioner, preparer, and computerized tax
processor communities and other representatives
from the electronic filing industry.
(c) PROMOTION OF ELECTRONIC FILING AND INCEN-
TIVES.—Section 6011 is amended by redesignating sub-
section (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection:
‘‘(f) PROMOTION OF ELECTRONIC FILING.—
(1) IN GENERAL.—The Secretary is authorized
to promote the benefits of and encourage the use of
electronic tax administration programs, as they be-
come available, through the use of mass communica-
tions and other means.
‘‘(2) INCENTIVES.—The Secretary may imple-
ment procedures to provide for the payment of ap-
propriate incentives for electronically filed returns.’’
(d) ANNUAL REPORTS.—Not later than June 30 of
each calendar year after 1997, the Chairperson of the In-
ternal Revenue Service Oversight Board, the Secretary,
and the Chairperson of the electronic commerce advisory
group established under subsection (b)(2) shall report to
the Committees on Ways and Means, Appropriations, and
Government Reform and Oversight of the House of Rep-
resentatives, the Committees on Finance, Appropriations,
and Government Affairs of the Senate, and the Joint Com-
mittee on Taxation, on—
(1) the progress of the Internal Revenue Serv-
ice in meeting the goal of receiving electronically 80
percent of tax and information returns by 2007;
(2) the status of the plan required by sub-
section (b); and
(3) the legislative changes necessary to assist
the Internal Revenue Service in meeting such goal.
SEC. 202. DUE DATE FOR CERTAIN INFORMATION RETURNS
FILED ELECTRONICALLY.
(a) IN GENERAL.—Section 6071 (relating to time for
filing returns and other documents) is amended by redes-
ignating subsection (b) as subsection (c) and by inserting
after subsection (a) the following new subsection:
‘‘(b) ELECTRONICALLY FILED INFORMATION RE-
TURNS.—Returns made under subparts B and C of part
III of this subchapter which are filed electronically shall
be filed on or before March 31 of the year following the
calendar year to which such returns relate.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to returns required to be filed after
December 31, 1999.
SEC. 203. PAPERLESS ELECTRONIC FILING.
(a) IN GENERAL.—Section 6061 (relating to signing
of returns and other documents) is amended—
(1) by striking ‘‘Except as otherwise provided
by’’ and inserting the following:
‘‘(a) GENERAL RULE.—Except as otherwise provided
by subsection (b) and’’, and
(2) by adding at the end the following new sub-
section:
‘‘(b) ELECTRONIC SIGNATURES.—
‘‘(1) IN GENERAL.—The Secretary shall develop
procedures for the acceptance of signatures in digital
or other electronic form. Until such time as such
procedures are in place, the Secretary may waive the
requirement of a signature for all returns or classes
of returns, or may provide for alternative methods of
subscribing all returns, declarations, statements, or
other documents required or permitted to be made
or written under internal revenue laws and regula-
tions.
‘‘(2) TREATMENT
OF
ALTERNATIVE
METH-
ODS.—Notwithstanding any other provision of law,
any return, declaration, statement or other docu-
ment filed without signature under the authority of
this subsection or verified, signed or subscribed
under any method adopted under paragraph (1)
shall be treated for all purposes (both civil and
criminal, including penalties for perjury) in the same
manner as though signed and subscribed. Any such
return, declaration, statement or other document
shall be presumed to have been actually submitted
and subscribed by the person on whose behalf it was
submitted.
‘‘(3) PUBLISHED
GUIDANCE.—The Secretary
shall publish guidance as appropriate to define and
implement any waiver of the signature require-
ments.’’
(b) ACKNOWLEDGMENT OF ELECTRONIC FILING.—
Section 7502(c) is amended to read as follows:
‘‘(c) REGISTERED AND CERTIFIED MAILING; ELEC-
TRONIC FILING.—
‘‘(1) REGISTERED MAIL.—For purposes of this
section, if any return, claim, statement, or other
document, or payment, is sent by United States reg-
istered mail—
‘‘(A) such registration shall be prima facie
evidence that the return, claim, statement, or
other document was delivered to the agency, of-
ficer, or office to which addressed, and
‘‘(B) the date of registration shall be
deemed the postmark date.
‘‘(2) CERTIFIED MAIL; ELECTRONIC FILING.—
The Secretary is authorized to provide by regula-
tions the extent to which the provisions of paragraph
(1) with respect to prima facie evidence of delivery
and the postmark date shall apply to certified mail
and electronic filing.’’.
(c) ESTABLISHMENT OF PROCEDURES FOR OTHER
INFORMATION.—In the case of taxable periods beginning
after December 31, 1998, the Secretary of the Treasury
or the Secretary’s delegate shall, to the extent practicable,
establish procedures to accept, in electronic form, any
other information, statements, elections, or schedules,
from taxpayers filing returns electronically, so that such
taxpayers will not be required to file any paper.
(d) PROCEDURES FOR COMMUNICATIONS BETWEEN
IRS AND PREPARER
OF ELECTRONICALLY-FILED RE-
TURNS.—The Secretary shall establish procedures for tax-
payers to authorize, on electronically filed returns, the pre-
parer of such returns to communicate with the Internal
Revenue Service on matters included on such returns.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 204. RETURN-FREE TAX SYSTEM.
(a) IN GENERAL.—The Secretary of the Treasury or
the Secretary’s delegate shall develop procedures for the
implementation of a return-free tax system under which
appropriate individuals would be permitted to comply with
the Internal Revenue Code of 1986 without making the
return required under section 6012 of such Code for tax-
able years beginning after 2007.
(b) REPORT.—Not later than June 30 of each cal-
endar year after 1999, such Secretary shall report to the
Committee on Ways and Means of the House of Rep-
resentatives, the Committee on Finance of the Senate, and
the Joint Committee on Taxation on—
(1) what additional resources the Internal Reve-
nue Service would need to implement such a system,
(2) the changes to the Internal Revenue Code
of 1986 that could enhance the use of such a sys-
tem,
(3) the procedures developed pursuant to sub-
section (a), and
(4) the number and classes of taxpayers that
would be permitted to use the procedures developed
pursuant to subsection (a).
SEC. 205. ACCESS TO ACCOUNT INFORMATION.
Not later than December 31, 2006, the Secretary of
the Treasury or the Secretary’s delegate shall develop pro-
cedures under which a taxpayer filing returns electroni-
cally would be able to review the taxpayer’s account elec-
tronically, but only if all necessary safeguards to ensure
the privacy of such account information are in place.
TITLE III—TAXPAYER
PROTECTION AND RIGHTS
SEC. 300. SHORT TITLE.
This title may be cited as the ‘‘Taxpayer Bill of
Rights 3’’.
Subtitle A—Burden of Proof
SEC. 301. BURDEN OF PROOF.
(a) IN GENERAL.—Chapter 76 (relating to judicial
proceedings) is amended by adding at the end the follow-
ing new subchapter:
‘‘Subchapter E—Burden of Proof
‘‘Sec. 7491. Burden of proof.
‘‘SEC. 7491. BURDEN OF PROOF.
‘‘(a) GENERAL RULE.—The Secretary shall have the
burden of proof in any court proceeding with respect to
any factual issue relevant to ascertaining the income tax
liability of a taxpayer.
‘‘(b) LIMITATIONS.—Subsection (a) shall only apply
with respect to an issue if—
‘‘(1) the taxpayer asserts a reasonable dispute
with respect to such issue,
‘‘(2) the taxpayer has fully cooperated with the
Secretary with respect to such issue, including pro-
viding, within a reasonable period of time, access to
and inspection of all witnesses, information, and
documents within the control of the taxpayer, as rea-
sonably requested by the Secretary, and
‘‘(3) in the case of a partnership, corporation,
or trust, the taxpayer is described in section
7430(c)(4)(A)(ii).
‘‘(c) SUBSTANTIATION.—Nothing in this section shall
be construed to override any requirement of this title to
substantiate any item.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 6201 is amended by striking sub-
section (d) and redesignating subsection (e) as sub-
section (d).
(2) The table of subchapters for chapter 76 is
amended by adding at the end the following new
item:
‘‘Subchapter E. Burden of proof.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to court proceedings arising in con-
nection with examinations commencing after the date of
the enactment of this Act.
Subtitle B—Proceedings by
Taxpayers
SEC. 311. EXPANSION OF AUTHORITY TO AWARD COSTS
AND CERTAIN FEES.
(a) AWARD OF HIGHER ATTORNEY’S FEES BASED
ON COMPLEXITY
OF ISSUES.—Clause (iii) of section
7430(c)(1)(B) (relating to the award of costs and certain
fees) is amended by inserting ‘‘, the difficulty of the issues
presented in the case, or the local availability of tax exper-
tise,’’ before ‘‘justifies a higher rate’’.
(b) AWARD OF ADMINISTRATIVE COSTS INCURRED
AFTER
30-DAY
LETTER.—Paragraph (2) of section
7430(c) is amended by striking the last sentence and in-
serting the following:
‘‘Such term shall only include costs incurred on or
after whichever of the following is the earliest: (i)
the date of the receipt by the taxpayer of the notice
of the decision of the Internal Revenue Service Of-
fice of Appeals, (ii) the date of the notice of defi-
ciency, or (iii) the date on which the 1st letter of
proposed deficiency which allows the taxpayer an op-
portunity for administrative review in the Internal
Revenue Service Office of Appeals is sent. Clause
(iii) of the preceding sentence shall apply only if, on
the basis of information in the possession of the
United States as of the date referred to in such
clause, there is no reasonable basis for the position
of the United States.’’
(c) AWARD
OF FEES
FOR CERTAIN ADDITIONAL
SERVICES.—Paragraph (3) of section 7430(c) is amended
to read as follows:
‘‘(3) ATTORNEY’S FEES.—
‘‘(A) IN GENERAL.—For purposes of para-
graphs (1) and (2), fees for the services of an
individual (whether or not an attorney) who is
authorized to practice before the Tax Court or
before the Internal Revenue Service shall be
treated as fees for the services of an attorney.
‘‘(B) PRO BONO SERVICES.—In any case in
which the court could have awarded attorney’s
fees under subsection (a) but for the fact that
an individual is representing the prevailing
party for a fee which (taking into account all
the facts and circumstances) is no more than a
nominal fee, the court may also award a judg-
ment or settlement for such amounts as the
court determines to be appropriate (based on
hours worked and costs expended) for services
of such individual but only if such award is paid
to such individual or such individual’s em-
ployer.’’
(d) DETERMINATION
OF WHETHER POSITION
OF
UNITED STATES IS SUBSTANTIALLY JUSTIFIED.—Sub-
paragraph (B) of section 7430(c)(4) is amended by redes-
ignating clause (iii) as clause (iv) and by inserting after
clause (ii) the following new clause:
‘‘(iii) EFFECT
OF
LOSING
ON
SUB-
STANTIALLY
SIMILAR
ISSUES.—In deter-
mining for purposes of clause (i) whether
the position of the United States was sub-
stantially justified, the court shall take
into account whether the United States
has lost in courts of appeal for other cir-
cuits on substantially similar issues.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to costs incurred (and, in the case
of the amendment made by subsection (c), services per-
formed) more than 180 days after the date of the enact-
ment of this Act.
SEC. 312. CIVIL DAMAGES FOR NEGLIGENCE IN COLLEC-
TION ACTIONS.
(a) IN GENERAL.—Section 7433 (relating to civil
damages for certain unauthorized collection actions) is
amended—
(1) in subsection (a), by inserting ‘‘, or by rea-
son of negligence,’’ after ‘‘recklessly or inten-
tionally’’, and
(2) in subsection (b)—
(A) in the matter preceding paragraph (1),
by inserting ‘‘($100,000, in the case of neg-
ligence)’’ after ‘‘$1,000,000’’, and
(B) in paragraph (1), by inserting ‘‘or neg-
ligent’’ after ‘‘reckless or intentional’’.
(b) REQUIREMENT THAT ADMINISTRATIVE REM-
EDIES
BE
EXHAUSTED.—Paragraph (1) of section
7433(d) is amended to read as follows:
‘‘(1) REQUIREMENT
THAT
ADMINISTRATIVE
REMEDIES BE EXHAUSTED.—A judgment for dam-
ages shall not be awarded under subsection (b) un-
less the court determines that the plaintiff has ex-
hausted the administrative remedies available to
such plaintiff within the Internal Revenue Service.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions of officers or employees
of the Internal Revenue Service after the date of the en-
actment of this Act.
SEC. 313. INCREASE IN SIZE OF CASES PERMITTED ON
SMALL CASE CALENDAR.
(a) IN GENERAL.—Subsection (a) of section 7463
(relating to disputes involving $10,000 or less) is amended
by striking ‘‘$10,000’’ each place it appears and inserting
‘‘$25,000’’.
(b) CONFORMING AMENDMENTS.—
(1) The section heading for section 7463 is
amended by striking ‘‘$10,000’’ and inserting
‘‘$25,000’’.
(2) The item relating to section 7463 in the
table of sections for part II of subchapter C of chap-
ter 76 is amended by striking ‘‘$10,000’’ and insert-
ing ‘‘$25,000’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to proceedings commencing after
the date of the enactment of this Act.
Subtitle 
C—Relief 
for 
Innocent
Spouses and for Taxpayers Un-
able To Manage Their Financial
Affairs Due to Disabilities
SEC. 321. SPOUSE RELIEVED IN WHOLE OR IN PART OF LI-
ABILITY IN CERTAIN CASES.
(a) IN GENERAL.—Subpart B of part II of sub-
chapter A of chapter 61 is amended by inserting after sec-
tion 6014 the following new section:
‘‘SEC. 6015. INNOCENT SPOUSE RELIEF; PETITION TO TAX
COURT.
‘‘(a) SPOUSE RELIEVED OF LIABILITY IN CERTAIN
CASES.—
‘‘(1) IN
GENERAL.—Under procedures pre-
scribed by the Secretary, if—
‘‘(A) a joint return has been made under
section 6013 for a taxable year,
‘‘(B) on such return there is an under-
statement of tax attributable to erroneous items
of 1 spouse,
‘‘(C) the other spouse establishes that in
signing the return he or she did not know, and
had no reason to know, that there was such un-
derstatement,
‘‘(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
spouse liable for the deficiency in tax for such
taxable year attributable to such understate-
ment, and
‘‘(E) the other spouse claims (in such form
as the Secretary may prescribe) the benefits of
this subsection not later than the date which is
2 years after the date of the assessment of such
deficiency,
then the other spouse shall be relieved of liability for
tax 
(including 
interest, 
penalties, 
and 
other
amounts) for such taxable year to the extent such li-
ability is attributable to such understatement.
‘‘(2) APPORTIONMENT OF RELIEF.—If a spouse
who, but for paragraph (1)(C), would be relieved of
liability under paragraph (1), establishes that in
signing the return such spouse did not know, and
had no reason to know, the extent of such under-
statement, then such spouse shall be relieved of li-
ability for tax (including interest, penalties, and
other amounts) for such taxable year to the extent
that such liability is attributable to the portion of
such understatement of which such spouse did not
know and had no reason to know.
‘‘(3) UNDERSTATEMENT.—For purposes of this
subsection, the term ‘understatement’ has the mean-
ing given to such term by section 6662(d)(2)(A).
‘‘(4) SPECIAL
RULE
FOR
COMMUNITY
PROP-
ERTY INCOME.—For purposes of this subsection, the
determination of the spouse to whom items of gross
income (other than gross income from property) are
attributable shall be made without regard to commu-
nity property laws.
‘‘(b) PETITION FOR REVIEW BY TAX COURT.—In the
case of an individual who has filed a claim under sub-
section (a) within the period specified in subsection
(a)(1)(E)—
‘‘(1) IN GENERAL.—Such individual may peti-
tion the Tax Court (and the Tax Court shall have
jurisdiction) to determine such claim if such petition
is filed during the 90-day period beginning on the
earlier of—
‘‘(A) the date which is 6 months after the
date such claim is filed with the Secretary, or
‘‘(B) the date on which the Secretary mails
by certified or registered mail a notice to such
individual denying such claim.
Such 90-day period shall be determined by not
counting Saturday, Sunday, or a legal holiday in the
District of Columbia as the last day of such period.
‘‘(2) RESTRICTIONS
APPLICABLE
TO
COLLEC-
TION OF ASSESSMENT.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in section 6851, 6852, or 6861, no
levy or proceeding in court for collection of any
assessment to which such claim relates shall be
made, begun, or prosecuted, until the expiration
of the 90-day period described in paragraph
(1), nor, if a petition has been filed with the
Tax Court, until the decision of the Tax Court
has become final. Rules similar to the rules of
section 7485 shall apply with respect to the col-
lection of such assessment.
‘‘(B) AUTHORITY TO ENJOIN COLLECTION
ACTIONS.—Notwithstanding the provisions of
section 7421(a), the beginning of such proceed-
ing or levy during the time the prohibition
under subparagraph (A) is in force may be en-
joined by a proceeding in the proper court, in-
cluding the Tax Court.
‘‘(C) JEOPARDY COLLECTION.—If the Sec-
retary makes a finding that the collection of the
tax is in jeopardy, nothing in this subsection
shall prevent the immediate collection of such
tax.
‘‘(c) SUSPENSION OF RUNNING OF PERIOD OF LIMI-
TATIONS.—The running of the period of limitations in sec-
tion 6502 on the collection of the assessment to which the
petition under subsection (b) relates shall be suspended
for the period during which the Secretary is prohibited by
subsection (b) from collecting by levy or a proceeding in
court and for 60 days thereafter.
‘‘(d) APPLICABLE RULES.—
‘‘(1) ALLOWANCE OF APPLICATION.—Except as
provided in paragraph (2), notwithstanding any
other law or rule of law (other than section 6512(b),
7121, or 7122), credit or refund shall be allowed or
made to the extent attributable to the application of
this section.
‘‘(2) RES JUDICATA.—In the case of any claim
under subsection (a), the determination of the Tax
Court in any prior proceeding for the same taxable
periods in which the decision has become final, shall
be conclusive except with respect to the qualification
of the spouse for relief which was not an issue in
such proceeding. The preceding sentence shall not
apply if the Tax Court determines that the spouse
participated meaningfully in such prior proceeding.
‘‘(3) LIMITATION
ON
TAX
COURT
JURISDIC-
TION.—If a suit for refund is begun by either spouse
pursuant to section 6532, the Tax Court shall lose
jurisdiction of the spouse’s action under this section
to whatever extent jurisdiction is acquired by the
district court or the United States Court of Federal
Claims over the taxable years that are the subject of
the suit for refund.’’
(b) SEPARATE FORM FOR APPLYING FOR SPOUSAL
RELIEF.—Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury shall
develop a separate form with instructions for use by tax-
payers in applying for relief under section 6015(a) of the
Internal Revenue Code of 1986, as added by this section.
(c) CONFORMING AMENDMENT.—Section 6013 is
amended by striking subsection (e).
(d) CLERICAL AMENDMENT.—The table of sections
for subpart B of part II of subchapter A of chapter 61
is amended by inserting after the item relating to section
6014 the following new item:
‘‘Sec. 6015. Innocent spouse relief; petition to Tax Court.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to understatements for taxable
years beginning after the date of the enactment of this
Act.
SEC. 322. SUSPENSION OF STATUTE OF LIMITATIONS ON
FILING REFUND CLAIMS DURING PERIODS
OF DISABILITY.
(a) IN GENERAL.—Section 6511 (relating to limita-
tions on credit or refund) is amended by redesignating
subsection (h) as subsection (i) and by inserting after sub-
section (g) the following new subsection:
‘‘(h) RUNNING OF PERIODS OF LIMITATION SUS-
PENDED WHILE TAXPAYER IS UNABLE TO MANAGE FI-
NANCIAL AFFAIRS DUE TO DISABILITY.—
‘‘(1) IN GENERAL.—In the case of an individ-
ual, the running of the periods specified in sub-
sections (a), (b), and (c) shall be suspended during
any period of such individual’s life that such individ-
ual is financially disabled.
‘‘(2) FINANCIALLY DISABLED.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an individual is financially disabled
if such individual is unable to manage his fi-
nancial affairs by reason of his medically deter-
minable physical or mental impairment which
can be expected to result in death or which has
lasted or can be expected to last for a continu-
ous period of not less than 12 months. An indi-
vidual shall not be considered to have such an
impairment unless proof of the existence thereof
is furnished in such form and manner as the
Secretary may require.
‘‘(B) EXCEPTION WHERE INDIVIDUAL HAS
GUARDIAN, ETC.—An individual shall not be
treated as financially disabled during any pe-
riod that such individual’s spouse or any other
person is authorized to act on behalf of such in-
dividual in financial matters.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to claims for credit or refund
for periods ending after the date of the enactment of this
Act.
Subtitle D—Elimination of Interest
Rate Differential on Overlap-
ping Periods of Interest on In-
come Tax Overpayments and
Underpayments
SEC. 331. ELIMINATION OF INTEREST RATE DIFFERENTIAL
ON OVERLAPPING PERIODS OF INTEREST ON
INCOME TAX OVERPAYMENTS AND UNDER-
PAYMENTS.
(a) IN GENERAL.—Section 6621 (relating to deter-
mination of rate of interest) is amended by adding at the
end the following new subsection:
‘‘(d) ELIMINATION OF INTEREST ON OVERLAPPING
PERIODS OF INCOME TAX OVERPAYMENTS AND UNDER-
PAYMENTS.—To the extent that, for any period, interest
is payable under subchapter A and allowable under sub-
chapter B on equivalent underpayments and overpayments
by the same taxpayer of tax imposed by chapters 1 and
2, the net rate of interest under this section on such
amounts shall be zero for such period.’’
(b) CONFORMING AMENDMENT.—Subsection (f) of
section 6601 (relating to satisfaction by credits) is amend-
ed by adding at the end the following ‘‘The preceding sen-
tence shall not apply to the extent that section 6621(d)
applies.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to interest for calendar quarters
beginning after the date of the enactment of this Act.
Subtitle E—Protections for Tax-
payers Subject to Audit or Col-
lection Activities
SEC. 341. PRIVILEGE OF CONFIDENTIALITY EXTENDED TO
TAXPAYER’S DEALINGS WITH NON-ATTOR-
NEYS AUTHORIZED TO PRACTICE BEFORE IN-
TERNAL REVENUE SERVICE.
Section 7602 (relating to examination of books and
witnesses) is amended by adding at the end the following
new subsection:
‘‘(d) PRIVILEGE OF CONFIDENTIALITY EXTENDED
TO TAXPAYER’S DEALINGS WITH NON-ATTORNEYS AU-
THORIZED TO PRACTICE BEFORE INTERNAL REVENUE
SERVICE.—
‘‘(1) IN
GENERAL.—In any noncriminal pro-
ceeding before the Internal Revenue Service, the tax-
payer shall be entitled to the same common law pro-
tections of confidentiality with respect to tax advice
furnished by any qualified individual as the taxpayer
would have if such individual were an attorney.
‘‘(2) QUALIFIED INDIVIDUAL.—For purposes of
paragraph (1), the term ‘qualified individual’ means
any individual (other than an attorney)—
‘‘(A) who is authorized to practice before
the Internal Revenue Service, and
‘‘(B) who is providing the tax advice within
the scope permitted under State law for such
individual’s profession.’’
SEC. 342. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER
ASSISTANCE ORDERS.
Section 7811(a) (relating to taxpayer assistance or-
ders) is amended—
(1) by striking ‘‘Upon application’’ and insert-
ing the following:
‘‘(1) IN GENERAL.—Upon application’’,
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new
paragraphs:
‘‘(2) ISSUANCE OF TAXPAYER ASSISTANCE OR-
DERS.—For purposes of determining whether to
issue a taxpayer assistance order, the Taxpayer Ad-
vocate shall consider the following factors, among
others:
‘‘(A) Whether there is an immediate threat
of adverse action.
‘‘(B) Whether there has been an unreason-
able delay in resolving taxpayer account prob-
lems.
‘‘(C) Whether the taxpayer will have to pay
significant costs (including fees for professional
representation) if relief is not granted.
‘‘(D) Whether the taxpayer will suffer ir-
reparable injury, or a long-term adverse impact,
if relief is not granted.
‘‘(3) STANDARD WHERE ADMINISTRATIVE GUID-
ANCE NOT FOLLOWED.—In cases where any Internal
Revenue Service employee is not following applicable
published administrative guidance (including the In-
ternal Revenue Manual), the Taxpayer Advocate
shall construe the factors taken into account in de-
termining whether to issue a taxpayer assistance
order in the manner most favorable to the tax-
payer.’’
SEC. 343. LIMITATION ON FINANCIAL STATUS AUDIT TECH-
NIQUES.
Section 7602 is amended by adding at the end the
following new subsection:
‘‘(e) LIMITATION ON EXAMINATION ON UNREPORTED
INCOME.—The Secretary shall not use financial status or
economic reality examination techniques to determine the
existence of unreported income of any taxpayer unless the
Secretary has a reasonable indication that there is a likeli-
hood of such unreported income.’’
SEC. 344. LIMITATION ON AUTHORITY TO REQUIRE PRO-
DUCTION OF COMPUTER SOURCE CODE.
(a) IN GENERAL.—Section 7602 is amended by add-
ing at the end the following new subsection:
‘‘(f) LIMITATION ON AUTHORITY TO REQUIRE PRO-
DUCTION OF COMPUTER SOURCE CODE.—
‘‘(1) IN GENERAL.—No summons may be is-
sued under this title, and the Secretary may not
begin any action under section 7604 to enforce any
summons, to produce or examine any tax-related
computer source code.
‘‘(2) EXCEPTION
WHERE
INFORMATION
NOT
OTHERWISE
AVAILABLE
TO
VERIFY
CORRECTNESS
OF
ITEM
ON
RETURN.—Paragraph (1) shall not
apply to any portion of a tax-related computer
source code if—
‘‘(A) the Secretary is unable to otherwise
reasonably ascertain the correctness of any item
on a return from—
‘‘(i) the taxpayer’s books, papers,
records, or other data, or
‘‘(ii) the computer software program
and the associated data which, when exe-
cuted, produces the output to prepare the
return for the period involved, and
‘‘(B) the Secretary identifies with reason-
able specificity such portion as to be used to
verify the correctness of such item.
The Secretary shall be treated as meeting the re-
quirements of subparagraphs (A) and (B) after the
90th day after the Secretary makes a formal request
to the taxpayer and the owner or developer of the
computer software program for the material de-
scribed in subparagraph (A)(ii) if such material is
not provided before the close of such 90th day.
‘‘(3) OTHER EXCEPTIONS.—Paragraph (1) shall
not apply to—
‘‘(A) any inquiry into any offense con-
nected with the administration or enforcement
of the internal revenue laws, and
‘‘(B) any tax-related computer source code
developed by (or primarily for the benefit of)
the taxpayer or a related person (within the
meaning of section 267 or 707(b)) for internal
use by the taxpayer or such person and not for
commercial distribution.
‘‘(4) 
TAX-RELATED
COMPUTER
SOURCE
CODE.—For purposes of this subsection, the term
‘tax-related computer source code’ means—
‘‘(A) the computer source code for any
computer software program for accounting, tax
return preparation or compliance, or tax plan-
ning, or
‘‘(B) design and development materials re-
lated to such a software program (including
program notes and memoranda).
‘‘(5) RIGHT TO CONTEST SUMMONS.—The de-
termination of whether the requirements of subpara-
graphs (A) and (B) of paragraph (2) are met or
whether any exception under paragraph (3) applies
may be contested in any proceeding under section
7604.
‘‘(6) PROTECTION
OF
TRADE
SECRETS
AND
OTHER CONFIDENTIAL INFORMATION.—In any court
proceeding to enforce a summons for any portion of
a tax-related computer source code, the court may
issue any order necessary to prevent the disclosure
of trade secrets or other confidential information
with respect to such source code, including providing
that any information be placed under seal to be
opened only as directed by the court.’’
(b) APPLICATION
OF SPECIAL PROCEDURES
FOR
THIRD-PARTY SUMMONSES.—Paragraph (3) of section
7609(a) (defining third-party recordkeeper) is amended by
striking ‘‘and’’ at the end of subparagraph (H), by strik-
ing a period at the end of subparagraph (I) and inserting
‘‘; and’’, and by adding at the end the following new sub-
paragraph:
‘‘(J) any owner or developer of a tax-relat-
ed computer source code (as defined in section
7602(f)(4)).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to summonses issued more than
90 days after the date of the enactment of this Act.
SEC. 345. PROCEDURES RELATING TO EXTENSIONS OF
STATUTE OF LIMITATIONS BY AGREEMENT.
(a) IN GENERAL.—Paragraph (4) of section 6501(c)
(relating to the period for limitations on assessment and
collection) is amended—
(1) by striking ‘‘Where’’ and inserting the fol-
lowing:
‘‘(A) IN GENERAL.—Where’’,
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) NOTICE TO TAXPAYER OF RIGHT TO
REFUSE OR LIMIT EXTENSION.—The Secretary
shall notify the taxpayer of the taxpayer’s right
to refuse to extend the period of limitations, or
to limit such extension to particular issues, on
each occasion when the taxpayer is requested to
provide such consent.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to requests to extend the period
of limitations made after the date of the enactment of this
Act.
SEC. 346. OFFERS-IN-COMPROMISE.
(a) ALLOWANCES FOR BASIC LIVING EXPENSES.—
Section 7122 (relating to offers-in-compromise) is amend-
ed by adding at the end the following new subsection:
‘‘(c) ALLOWANCES FOR BASIC LIVING EXPENSES.—
The Secretary shall develop and publish schedules of na-
tional and local allowances designed to provide that tax-
payers entering into a compromise have an adequate
means to provide for basic living expenses.’’
(b) PREPARATION OF STATEMENT RELATING TO OF-
FERS-IN-COMPROMISE.—The Secretary of the Treasury
shall prepare a statement which sets forth in simple, non-
technical terms the rights of a taxpayer and the obliga-
tions of the Internal Revenue Service relating to offers-
in-compromise. Such statement shall—
(1) advise taxpayers who have entered into a
compromise agreement of the advantages of prompt-
ly notifying the Internal Revenue Service of any
change of address or marital status, and
(2) provide notice to taxpayers that in the case
of a compromise agreement terminated due to the
actions of 1 spouse or former spouse, the Internal
Revenue Service will, upon application, reinstate
such agreement with the spouse or former spouse
who remains in compliance with such agreement.
SEC. 347. NOTICE OF DEFICIENCY TO SPECIFY DEADLINES
FOR FILING TAX COURT PETITION.
(a) IN GENERAL.—The Secretary of the Treasury or
the Secretary’s delegate shall include on each notice of de-
ficiency under section 6212 of the Internal Revenue Code
of 1986 the date determined by such Secretary (or dele-
gate) as the last day on which the taxpayer may file a
petition with the Tax Court.
(b) LATER FILING DEADLINES SPECIFIED ON NO-
TICE OF DEFICIENCY TO BE BINDING.—Subsection (a)
of section 6213 (relating to restrictions applicable to defi-
ciencies; petition to Tax Court) is amended by adding at
the end the following new sentence: ‘‘Any petition filed
with the Tax Court on or before the last date specified
for filing such petition by the Secretary in the notice of
deficiency shall be treated as timely filed.’’
(c) EFFECTIVE
DATE.—Subsection (a) and the
amendment made by subsection (b) shall apply to notices
mailed after December 31, 1998.
SEC. 348. REFUND OR CREDIT OF OVERPAYMENTS BEFORE
FINAL DETERMINATION.
(a) TAX COURT PROCEEDINGS.—Subsection (a) of
section 6213 is amended—
(1) by striking ‘‘, including the Tax Court.’’
and inserting ‘‘, including the Tax Court, and a re-
fund may be ordered by such court of any amount
collected within the period during which the Sec-
retary is prohibited from collecting by levy or
through a proceeding in court under the provisions
of this subsection.’’, and
(2) by striking ‘‘to enjoin any action or pro-
ceeding’’ and inserting ‘‘to enjoin any action or pro-
ceeding or order any refund’’.
(b) OTHER PROCEEDINGS.—Subsection (a) of section
6512 is amended by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’, and by inserting after
paragraph (4) the following new paragraphs:
‘‘(5) As to any amount collected within the pe-
riod during which the Secretary is prohibited from
making the assessment or from collecting by levy or
through a proceeding in court under the provisions
of section 6213(a), and
‘‘(6) As to overpayments the Secretary is au-
thorized to refund or credit pending appeal as pro-
vided in subsection (b).’’
(c) REFUND OR CREDIT PENDING APPEAL.—Para-
graph (1) of section 6512(b) is amended by adding at the
end the following new sentence: ‘‘If a notice of appeal in
respect of the decision of the Tax Court is filed under sec-
tion 7483, the Secretary is authorized to refund or credit
the overpayment determined by the Tax Court to the ex-
tent the overpayment is not contested on appeal.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 349. THREAT OF AUDIT PROHIBITED TO COERCE TIP
REPORTING 
ALTERNATIVE 
COMMITMENT
AGREEMENTS.
The Secretary of the Treasury or the Secretary’s del-
egate shall instruct employees of the Internal Revenue
Service that they may not threaten to audit any taxpayer
in an attempt to coerce the taxpayer into entering into
a Tip Reporting Alternative Commitment Agreement.
Subtitle F—Disclosures to
Taxpayers
SEC. 351. EXPLANATION OF JOINT AND SEVERAL LIABIL-
ITY.
The Secretary of the Treasury or the Secretary’s del-
egate shall, as soon as practicable, but not later than 180
days after the date of the enactment of this Act, establish
procedures to clearly alert married taxpayers of their joint
and several liabilities on all appropriate publications and
instructions.
SEC. 352. EXPLANATION OF TAXPAYERS’ RIGHTS IN INTER-
VIEWS WITH THE INTERNAL REVENUE SERV-
ICE.
The Secretary of the Treasury or the Secretary’s del-
egate shall, as soon as practicable, but not later than 180
days after the date of the enactment of this Act, revise
the statement required by section 6227 of the Omnibus
Taxpayer Bill of Rights (Internal Revenue Service Publi-
cation No. 1) to more clearly inform taxpayers of their
rights—
(1) to be represented at interviews with the In-
ternal Revenue Service by any person authorized to
practice before the Internal Revenue Service, and
(2) to suspend an interview pursuant to section
7521(b)(2) of the Internal Revenue Code of 1986.
SEC. 353. DISCLOSURE OF CRITERIA FOR EXAMINATION SE-
LECTION.
(a) IN GENERAL.—The Secretary of the Treasury or
the Secretary’s delegate shall, as soon as practicable, but
not later than 180 days after the date of the enactment
of this Act, incorporate into the statement required by sec-
tion 6227 of the Omnibus Taxpayer Bill of Rights (Inter-
nal Revenue Service Publication No. 1) a statement which
sets forth in simple and nontechnical terms the criteria
and procedures for selecting taxpayers for examination.
Such statement shall not include any information the dis-
closure of which would be detrimental to law enforcement,
but shall specify the general procedures used by the Inter-
nal Revenue Service, including the extent to which tax-
payers are selected for examination on the basis of infor-
mation available in the media or on the basis of informa-
tion provided to the Internal Revenue Service by inform-
ants.
(b) TRANSMISSION
TO
COMMITTEES
OF
CON-
GRESS.—The Secretary shall transmit drafts of the state-
ment required under subsection (a) (or proposed revisions
to any such statement) to the Committee on Ways and
Means of the House of Representatives, the Committee on
Finance of the Senate, and the Joint Committee on Tax-
ation on the same day.
SEC. 354. DISCLOSURE OF FIELD SERVICE ADVICE MEMO-
RANDA.
(a) IN GENERAL.—Section 6110 (relating to public
inspection of written determinations) is amended by redes-
ignating subsections (i), (j), (k), and (l) as subsections (j),
(k), (l), and (m), respectively, and by inserting after sub-
section (h) the following new subsection:
‘‘(i) DISCLOSURE OF FIELD SERVICE ADVICE MEMO-
RANDA.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, and except as otherwise provided in this sub-
section, a field service advice memorandum shall be
treated as a written determination.
‘‘(2) EXEMPTIONS FROM DISCLOSURE.—Before
making a field service advice memorandum open to
public inspection pursuant to paragraph (1), the
Secretary, in addition to matters deleted under sub-
section (c), shall also delete—
‘‘(A) information regarding the scope, di-
rection, or emphasis of audit or collection activ-
ity, including case tactics, strategies, alternative
theories, and assessments of litigating hazards,
‘‘(B) information the disclosure of which
could reasonably be expected to risk circumven-
tion of law, and
‘‘(C) information the disclosure of which
could reasonably be expected to reveal the iden-
tity of a confidential source.
‘‘(3) NOTICE OF INTENTION TO DISCLOSE.—
For purposes of this subsection, the notice required
by subsection (f)(1) shall be mailed within 180 days
after the date of the issuance of a field service ad-
vice memorandum, together with a copy of such
memorandum in which the Secretary has deleted the
information described in subsection (c), paragraph
(2) of this subsection, and the names, addresses, and
other identifying details of taxpayers other than the
person to whom the memorandum pertains. The pre-
ceding sentence shall not apply to the extent that
such information was provided by such person.
‘‘(4) SPECIAL
RULES
FOR
CERTAIN
FIELD
SERVICE
ADVICE
MEMORANDA.—Notwithstanding
subsection (g)(5), in addition to matters not re-
quired to be made available to the public under such
subsection, the Secretary shall not be required to
make available to the public any field service advice
memorandum issued in connection with—
‘‘(A) cases docketed in any Federal or
State court, or
‘‘(B) any criminal investigation.
‘‘(5) NO EVIDENTIARY VALUE.—A field service
advice memorandum shall not be considered by any
court as evidence of an Internal Revenue Service po-
sition or as an admission against interest.
‘‘(6) CERTAIN
RULES
INAPPLICABLE.—Sub-
sections (d) and (e) shall not apply to any field serv-
ice advice memorandum.
‘‘(7) FIELD SERVICE ADVICE MEMORANDUM DE-
FINED.—The term ‘field service advice memoran-
dum’ means case-specific written advice issued by
the National Office of Chief Counsel to field person-
nel of either the Internal Revenue Service or the Of-
fice of Chief Counsel with respect to the determina-
tion of the existence, or possible existence, of liability
(or the amount thereof) of any person under this
title for any tax, penalty, interest, fine, forfeiture, or
other imposition, or offense.’’
(b) 
LEGAL
OR
FACTUAL
ANALYSES
ONLY
DISCLOSABLE UNDER SECTION 6110.—Paragraph (2) of
section 6103(b) is amended—
(1) in subparagraph (A), by inserting ‘‘or anal-
yses of law or fact’’ after ‘‘data’’, and
(2) in subparagraph (B), by striking ‘‘section
6110(b)’’ and inserting ‘‘subsections (b) and (i) of
section 6110’’.
(c) EFFECTIVE DATES.—
(1) DISCLOSURE
OF
FIELD
SERVICE
MEMO-
RANDA.—
(A) IN GENERAL.—The amendments made
by subsection (a) shall apply to any field service
advice memorandum issued more than 90 days
after the date of the enactment of this Act.
(B) PRIOR FIELD SERVICE ADVICE MEMO-
RANDA.—The amendments made by subsection
(a) also shall apply to any field service advice
memorandum issued after 1991 and before the
91st day after the date of the enactment of this
Act by the offices of the associate chief counsels
for domestic, employee benefits and exempt or-
ganizations, and international, as follows:
(i) Such amendments shall take effect
on January 1, 1999 (or, if later, the date
which is 1 year after the date of the enact-
ment of this Act) in the case of memo-
randa issued during 1992 or 1993.
(ii) Such amendments shall take effect
on January 1, 2000 (or, if later, the date
which is 2 years after the date of the en-
actment of this Act) in the case of memo-
randa issued during 1994 or 1995.
(iii) Such amendments shall take ef-
fect on January 1, 2001 (or, if later, the
date which is 3 years after the date of the
enactment of this Act) in the case of
memoranda issued after 1995 and before
such 91st day.
The Secretary of the Treasury or the Sec-
retary’s delegate may provide that clauses (i),
(ii), and (iii) shall be applied by substituting ef-
fective dates which are earlier than the effective
dates specified in such clauses.
(2) DISCLOSURE OF LEGAL OR FACTUAL ANAL-
YSES.—The amendments made by subsection (b)
shall take effect on the date of the enactment of this
Act.
SEC. 355. EXPLANATIONS OF APPEALS AND COLLECTION
PROCESS.
The Secretary of the Treasury or the Secretary’s del-
egate shall, as soon as practicable but not later than 180
days after the date of the enactment of this Act, include
with any 1st letter of proposed deficiency which allows the
taxpayer an opportunity for administrative review in the
Internal Revenue Service Office of Appeals an explanation
of the appeals process and the collection process with re-
spect to such proposed deficiency.
Subtitle G—Low Income Taxpayer
Clinics
SEC. 361. LOW INCOME TAXPAYER CLINICS.
(a) IN GENERAL.—Chapter 77 (relating to mis-
cellaneous provisions) is amended by adding at the end
the following new section:
‘‘SEC. 7525. LOW INCOME TAXPAYER CLINICS.
‘‘(a) IN GENERAL.—The Secretary shall make grants
to provide matching funds for the development, expansion,
or continuation of qualified low income taxpayer clinics.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED LOW INCOME TAXPAYER CLIN-
IC.—
‘‘(A) IN
GENERAL.—The term ‘qualified
low income taxpayer clinic’ means a clinic
that—
‘‘(i) does not charge more than a
nominal fee for its services (except for re-
imbursement of actual costs incurred), and
‘‘(ii)(I) represents low income tax-
payers in controversies with the Internal
Revenue Service, or
‘‘(II) operates programs to inform in-
dividuals for whom English is a second
language about their rights and respon-
sibilities under this title.
‘‘(B) REPRESENTATION OF LOW INCOME
TAXPAYERS.—A clinic meets the requirements
of subparagraph (A)(ii)(I) if—
‘‘(i) at least 90 percent of the tax-
payers represented by the clinic have in-
comes which do not exceed 250 percent of
the poverty level, as determined in accord-
ance with criteria established by the Direc-
tor of the Office of Management and
Budget, and
‘‘(ii) the amount in controversy for
any taxable year generally does not exceed
the amount specified in section 7463.
‘‘(2) CLINIC.—The term ‘clinic’ includes—
‘‘(A) a clinical program at an accredited
law school in which students represent low in-
come taxpayers in controversies arising under
this title, and
‘‘(B) an organization described in section
501(c) and exempt from tax under section
501(a) which satisfies the requirements of para-
graph (1) through representation of taxpayers
or referral of taxpayers to qualified representa-
tives.
‘‘(3) QUALIFIED REPRESENTATIVE.—The term
‘qualified representative’ means any individual
(whether or not an attorney) who is authorized to
practice before the Internal Revenue Service or the
applicable court.
‘‘(c) SPECIAL RULES AND LIMITATIONS.—
‘‘(1) AGGREGATE
LIMITATION.—Unless other-
wise provided by specific appropriation, the Sec-
retary shall not allocate more than $3,000,000 per
year (exclusive of costs of administering the pro-
gram) to grants under this section.
‘‘(2) LIMITATION ON INDIVIDUAL GRANTS.—A
grant under this section shall not exceed $100,000
per year.
‘‘(3) MULTI-YEAR GRANTS.—Upon application
of a qualified low income taxpayer clinic, the Sec-
retary is authorized to award a multi-year grant not
to exceed 3 years.
‘‘(4) CRITERIA FOR AWARDS.—In determining
whether to make a grant under this section, the Sec-
retary shall consider—
‘‘(A) the numbers of taxpayers who will be
served by the clinic, including the number of
taxpayers in the geographical area for whom
English is a second language,
‘‘(B) the existence of other low income tax-
payer clinics serving the same population,
‘‘(C) the quality of the program offered by
the low income taxpayer clinic, including the
qualifications of its administrators and qualified
representatives, and its track record, if any, in
providing service to low income taxpayers, and
‘‘(D) alternative funding sources available
to the clinic, including amounts received from
other grants and contributions, and the endow-
ment and resources of the institution sponsor-
ing the clinic.
‘‘(5) REQUIREMENT OF MATCHING FUNDS.—A
low income taxpayer clinic must provide matching
funds on a dollar for dollar basis for all grants pro-
vided under this section. Matching funds may in-
clude—
‘‘(A) the salary (including fringe benefits)
of individuals performing services for the clinic,
and
‘‘(B) the cost of equipment used in the
clinic.
Indirect expenses, including general overhead of the
institution sponsoring the clinic, shall not be counted
as matching funds.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end the follow-
ing new section:
‘‘Sec. 7525. Low income taxpayer clinics.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
Subtitle H—Other Matters
SEC. 371. ACTIONS FOR REFUND WITH RESPECT TO CER-
TAIN ESTATES WHICH HAVE ELECTED THE
INSTALLMENT METHOD OF PAYMENT.
(a) IN GENERAL.—Section 7422 is amended by re-
designating subsection (j) as subsection (k) and by insert-
ing after subsection (i) the following new subsection:
‘‘(j) SPECIAL RULE FOR ACTIONS WITH RESPECT TO
ESTATES FOR WHICH AN ELECTION UNDER SECTION
6166 IS MADE.—
‘‘(1) IN GENERAL.—The district courts of the
United States and the United States Court of Fed-
eral Claims shall have jurisdiction over any action
brought by the representative of an estate to which
this subsection applies to determine the correct
amount of the estate tax liability of such estate (or
for any refund with respect thereto) even if the full
amount of such liability has not been paid.
‘‘(2) ESTATES
TO
WHICH
SUBSECTION
AP-
PLIES.—This subsection shall apply to any estate if,
as of the date the action is filed—
‘‘(A) an election under section 6166 is in
effect with respect to such estate,
‘‘(B) no portion of the installments payable
under such section have been accelerated, and
‘‘(C) all installments the due date for
which is on or before the date the action is filed
have been paid.
‘‘(3) PROHIBITION
ON
COLLECTION
OF
DIS-
ALLOWED
LIABILITY.—If the court redetermines
under paragraph (1) the estate tax liability of an es-
tate, no part of such liability which is disallowed by
a decision of such court which has become final may
be collected by the Secretary, and amounts paid in
excess of the installments determined by the court as
currently due and payable shall be refunded.’’
(b) EXTENSION OF TIME TO FILE REFUND SUIT.—
Section 7479 (relating to declaratory judgments relating
to eligibility of estate with respect to installment payments
under section 6166) is amended by adding at the end the
following new subsection:
‘‘(c) EXTENSION OF TIME TO FILE REFUND SUIT.—
The 2-year period in section 6532(a)(1) for filing suit for
refund after disallowance of a claim shall be suspended
during the 90-day period after the mailing of the notice
referred to in subsection (b)(3) and, if a pleading has been
filed with the Tax Court under this section, until the deci-
sion of the Tax Court has become final.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to any claim for refund filed after
the date of the enactment of this Act.
SEC. 372. CATALOGING COMPLAINTS.
In collecting data for the report required under sec-
tion 1211 of Taxpayer Bill of Rights 2 (Public Law 104–
168), the Secretary of the Treasury or the Secretary’s del-
egate shall maintain records of taxpayer complaints of
misconduct by Internal Revenue Service employees on an
individual employee basis.
SEC. 373. ARCHIVE OF RECORDS OF INTERNAL REVENUE
SERVICE.
(a) IN GENERAL.—Subsection (l) of section 6103 (re-
lating to confidentiality and disclosure of returns and re-
turn information) is amended by adding at the end the
following new paragraph:
‘‘(17) DISCLOSURE
TO
NATIONAL
ARCHIVES
AND
RECORDS
ADMINISTRATION.—The Secretary
shall, upon written request from the Archivist of the
United States, disclose or authorize the disclosure of
returns and return information to officers and em-
ployees of the National Archives and Records Ad-
ministration for purposes of, and only to the extent
necessary in, the scheduling of records for destruc-
tion or retention. No such officer or employee shall,
except to the extent authorized by subsections (f),
(i)(7), or (p), disclose any return or return informa-
tion disclosed under the preceding sentence to any
person other than to the Secretary, or to another of-
ficer of employee or the National Archives and
Records Administration whose official duties require
such disclosure for purposes of such scheduling.’’
(b) CONFORMING AMENDMENTS.—Section 6103(p) is
amended—
(1) in paragraph (3)(A), by striking ‘‘or (16)’’
and inserting ‘‘(16), or (17)’’,
(2) in paragraph (4), by striking ‘‘or (14)’’ and
inserting ‘‘, (14), or (17)’’ in the matter preceding
subparagraph (A), and
(3) in paragraph (4)(F)(ii), by striking ‘‘‘‘or
(14)’’ and inserting ‘‘, (14), or (17)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to requests made by the Archivist
of the United States after the date of the enactment of
this Act.
SEC. 374. PAYMENT OF TAXES.
The Secretary of the Treasury or the Secretary’s del-
egate shall establish such rules, regulations, and proce-
dures as are necessary to allow payment of taxes by check
or money order made payable to the United States Treas-
ury.
SEC. 375. CLARIFICATION OF AUTHORITY OF SECRETARY
RELATING TO THE MAKING OF ELECTIONS.
Subsection (d) of section 7805 is amended by striking
‘‘by regulations or forms’’.
Subtitle I—Studies
SEC. 381. PENALTY ADMINISTRATION.
The Joint Committee on Taxation shall conduct a
study—
(1) reviewing the administration and implemen-
tation by the Internal Revenue Service of the pen-
alty reform provisions of the Omnibus Budget Rec-
onciliation Act of 1989, and
(2) making any legislative and administrative
recommendations it deems appropriate to simplify
penalty administration and reduce taxpayer burden.
Such study shall be submitted to the Committee on Ways
and Means of the House of Representatives and the Com-
mittee on Finance of the Senate not later than 9 months
after the date of enactment of this Act.
SEC. 382. CONFIDENTIALITY OF TAX RETURN INFORMA-
TION.
The Joint Committee on Taxation shall conduct a
study of the scope and use of provisions regarding tax-
payer confidentiality, and shall report the findings of such
study, together with such recommendations as it deems
appropriate, to the Congress not later than one year after
the date of the enactment of this Act. Such study shall
examine the present protections for taxpayer privacy, the
need for third parties to use tax return information, and
the ability to achieve greater levels of voluntary compli-
ance by allowing the public to know who is legally required
to file tax returns, but does not file tax returns.
TITLE IV—CONGRESSIONAL AC-
COUNTABILITY FOR THE IN-
TERNAL REVENUE SERVICE
Subtitle A—Oversight
SEC. 401. EXPANSION OF DUTIES OF THE JOINT COMMIT-
TEE ON TAXATION.
(a) IN GENERAL.—Section 8021 (relating to the pow-
ers of the Joint Committee on Taxation) is amended by
adding at the end the following new subsections:
‘‘(e) INVESTIGATIONS.—The Joint Committee shall
review all requests (other than requests by the chairman
or ranking member of a Committee or Subcommittee) for
investigations of the Internal Revenue Service by the Gen-
eral Accounting Office, and approve such requests when
appropriate, with a view towards eliminating overlapping
investigations, ensuring that the General Accounting Of-
fice has the capacity to handle the investigation, and en-
suring that investigations focus on areas of primary im-
portance to tax administration.
‘‘(f) RELATING TO JOINT HEARINGS.—
‘‘(1) IN
GENERAL.—The Chief of Staff, and
such other staff as are appointed pursuant to section
8004, shall provide such assistance as is required for
joint hearings described in paragraph (2).
‘‘(2) JOINT HEARINGS.—On or before April 1
of each calendar year after 1997, there shall be a
joint hearing of two members of the majority and
one member of the minority from each of the Com-
mittees on Finance, Appropriations, and Govern-
ment Affairs of the Senate, and the Committees on
Ways and Means, Appropriations, and Government
Reform and Oversight of the House of Representa-
tives, to review the strategic plans and budget for
the Internal Revenue Service. After the conclusion of
the annual filing season, there shall be a second an-
nual joint hearing to review the other matters out-
lined in section 8022(3)(C).’’
(b) EFFECTIVE DATES.—
(1) Subsection (e) of section 8021 of the Inter-
nal Revenue Code of 1986, as added by subsection
(a) of this section, shall apply to requests made after
the date of enactment of this Act.
(2) Subsection (f) of section 8021 of the Inter-
nal Revenue Code of 1986, as added by subsection
(a) of this section, shall take effect on the date of
the enactment of this Act.
SEC. 402. COORDINATED OVERSIGHT REPORTS.
(a) IN GENERAL.—Paragraph (3) of section 8022
(relating to the duties of the Joint Committee on Tax-
ation) is amended to read as follows:
‘‘(3) REPORTS.—
‘‘(A) To report, from time to time, to the
Committee on Finance and the Committee on
Ways and Means, and, in its discretion, to the
Senate or House of Representatives, or both,
the results of its investigations, together with
such recommendations as it may deem advis-
able.
‘‘(B) To report, annually, to the Commit-
tee on Finance and the Committee on Ways
and Means on the overall state of the Federal
tax system, together with recommendations
with respect to possible simplification proposals
and other matters relating to the administra-
tion of the Federal tax system as it may deem
advisable.
‘‘(C) To report, annually, to the Commit-
tees on Finance, Appropriations, and Govern-
ment Affairs of the Senate, and to the Commit-
tees on Ways and Means, Appropriations, and
Government Reform and Oversight of the
House of Representatives, with respect to—
100
‘‘(i) strategic and business plans for
the Internal Revenue Service;
‘‘(ii) progress of the Internal Revenue
Service in meeting its objectives;
‘‘(iii) the budget for the Internal Rev-
enue Service and whether it supports its
objectives;
‘‘(iv) progress of the Internal Revenue
Service in improving taxpayer service and
compliance;
‘‘(v) progress of the Internal Revenue
Service on technology modernization; and
‘‘(vi) the annual filing season.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
Subtitle B—Budget
SEC. 411. FUNDING FOR CENTURY DATE CHANGE.
It is the sense of Congress that the Internal Revenue
Service efforts to resolve the century date change comput-
ing problems should be funded fully to provide for certain
resolution of such problems.
SEC. 412. FINANCIAL MANAGEMENT ADVISORY GROUP.
The Commissioner shall convene a financial manage-
ment advisory group consisting of individuals with exper-
101
tise in governmental accounting and auditing from both
the private sector and the Government to advise the Com-
missioner on financial management issues, including—
(1) the continued partnership between the In-
ternal Revenue Service and the General Accounting
Office;
(2) the financial accounting aspects of the In-
ternal Revenue Service’s system modernization;
(3) the necessity and utility of year-round au-
diting; and
(4) the Commissioner’s plans for improving its
financial management system.
Subtitle C—Tax Law Complexity
SEC. 421. ROLE OF THE INTERNAL REVENUE SERVICE.
It is the sense of Congress that the Internal Revenue
Service should provide the Congress with an independent
view of tax administration, and that during the legislative
process, the tax writing committees of the Congress should
hear from front-line technical experts at the Internal Rev-
enue Service with respect to the administrability of pend-
ing amendments to the Internal Revenue Code of 1986.
SEC. 422. TAX COMPLEXITY ANALYSIS.
(a) IN GENERAL.—Chapter 92 (relating to powers
and duties of the Joint Committee on Taxation) is amend-
ed by adding at the end the following new section:
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‘‘SEC. 8024. TAX COMPLEXITY ANALYSIS.
‘‘(a) IN GENERAL.—If—
‘‘(1) legislation is reported by the Committee on
Finance of the Senate, the Committee on Ways and
Means of the House of Representatives, or any com-
mittee of conference, and
‘‘(2) such legislation includes any provision
amending the Internal Revenue Code of 1986,
the report or statement accompanying such legislation
shall contain a Tax Complexity Analysis prepared by the
staff of the Joint Committee on Taxation.
‘‘(b) CONTENT OF COMPLEXITY ANALYSIS.—Each
Tax Complexity Analysis shall identify the provisions, if
any, adding significant complexity or providing significant
simplification, as determined by the staff of the Joint
Committee on Taxation, and shall include the basis for
such determination.
‘‘(c) LEGISLATION SUBJECT TO POINT OF ORDER.—
It shall not be in order in the Senate or the House of
Representatives to consider any legislation described in
subsection (a) required to be accompanied by a Tax Com-
plexity Analysis that does not contain a Tax Complexity
Analysis.
‘‘(d) RESPONSIBILITIES OF THE COMMISSIONER.—
The Commissioner shall provide the Joint Committee on
103
Taxation with such information as is necessary to prepare
Tax Complexity Analyses.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 92 is amended by adding at the end the follow-
ing new item:
‘‘Sec. 8024. Tax complexity analysis.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to legislation considered on or after
January 1, 1998.
TITLE V—CLARIFICATION OF DE-
DUCTION 
FOR 
DEFERRED
COMPENSATION
SEC. 501. CLARIFICATION OF DEDUCTION FOR DEFERRED
COMPENSATION.
(a) IN GENERAL.—Subsection (a) of section 404 is
amended by adding at the end the following new para-
graph:
‘‘(11) DETERMINATIONS
RELATING
TO
DE-
FERRED COMPENSATION.—
‘‘(A) IN GENERAL.—For purposes of deter-
mining—
‘‘(i) whether compensation of an indi-
vidual is deferred compensation, and
‘‘(ii) when deferred compensation is
paid,
104
no amount shall be treated as received by the
individual, or paid, until it is actually received
by the individual.
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to severance pay.’’
(b) SICK LEAVE PAY TREATED LIKE VACATION
PAY.—Paragraph (5) of section 404(a) is amended by in-
serting ‘‘or sick leave pay’’ after ‘‘vacation pay’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years ending after
October 8, 1997.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by this section to
change its method of accounting for its first taxable
year ending after October 8, 1997—
(A) such change shall be treated as initi-
ated by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treas-
ury, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
105
of 1986 shall be taken into account in such first
taxable year.
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