‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an individual is financially disabled
if such individual is unable to manage his finan-
cial 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 continuous
period of not less than 12 months. An individual
shall not be considered to have such an impair-
ment unless proof of the existence thereof is fur-
nished in such form and manner as the Sec-
retary 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 sub-
section (a) shall apply to periods of disability before, on,
or after the date of the enactment of this Act but shall not
apply to any claim for credit or refund which (without re-
gard to such amendment) is barred by the operation of any
law or rule of law (including res judicata) as of January
1, 1998.
Subtitle D—Provisions Relating to
Interest
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 PE-
RIODS OF INCOME TAX OVERPAYMENTS AND UNDERPAY-
MENTS.—To the extent that, for any period, interest is pay-
able under subchapter A and allowable under subchapter
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 sec-
tion 6601 (relating to satisfaction by credits) is amended
by adding at the end the following new sentence: ‘‘The pre-
ceding sentence 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 begin-
ning after the date of the enactment of this Act.
SEC. 332. INCREASE IN OVERPAYMENT RATE PAYABLE TO
TAXPAYERS OTHER THAN CORPORATIONS.
(a) IN
GENERAL.—Subparagraph (B) of section
6621(a)(1) (defining overpayment rate) is amended to read
as follows:
‘‘(B) 3 percentage points (2 percentage
points in the case of a corporation).’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to interest for calendar quarters begin-
ning 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 AUTHOR-
IZED TO PRACTICE BEFORE INTERNAL REVENUE SERV-
ICE.—
‘‘(1) IN GENERAL.—In any noncriminal proceed-
ing before the Internal Revenue Service, the taxpayer
shall be entitled to the same common law protections
of confidentiality with respect to tax advice furnished
by any qualified individual (in a manner consistent
with State law for such individual’s profession) as the
taxpayer would have if such individual were an at-
torney.
‘‘(2) QUALIFIED INDIVIDUAL.—For purposes of
paragraph (1), the term ‘qualified individual’ means
any individual (other than an attorney) who is au-
thorized to practice before the Internal Revenue Serv-
ice.’’
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 para-
graphs:
‘‘(2) ISSUANCE OF TAXPAYER ASSISTANCE OR-
DERS.—For purposes of determining whether to issue
a taxpayer assistance order, the Taxpayer Advocate
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 irrep-
arable 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 determining
whether to issue a taxpayer assistance order in the
manner most favorable to the taxpayer.’’
SEC. 343. LIMITATION ON FINANCIAL STATUS AUDIT TECH-
NIQUES.
Section 7602 is amended by adding at the end the fol-
lowing 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 adding
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 issued
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 OTH-
ERWISE 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 re-
turn for the period involved, and
‘‘(B) the Secretary identifies with reason-
able specificity such portion as to be used to ver-
ify the correctness of such item.
The Secretary shall be treated as meeting the require-
ments 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 described in sub-
paragraph (A)(ii) if such material is not provided be-
fore the close of such 90th day.
‘‘(3) OTHER EXCEPTIONS.—Paragraph (1) shall
not apply to—
‘‘(A) any inquiry into any offense connected
with the administration or enforcement of the in-
ternal 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 mean-
ing of section 267 or 707(b)) for internal use by
the taxpayer or such person and not for commer-
cial 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 com-
puter software program for accounting, tax re-
turn preparation or compliance, or tax plan-
ning, or
‘‘(B) design and development materials re-
lated to such a software program (including pro-
gram notes and memoranda).
‘‘(5) RIGHT TO CONTEST SUMMONS.—The deter-
mination 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 striking
a period at the end of subparagraph (I) and inserting ‘‘,
and’’, and by adding at the end the following:
‘‘(J) any owner or developer of a tax-related
computer source code (as defined in section
7602(f)(4)).
Subparagraph (J) shall apply only with respect to a
summons requiring the production of the source code
referred to in subparagraph (J) or the program and
data described in section 7602(f)(2)(A)(ii) to which
such source code relates.’’
(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 follow-
ing:
‘‘(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 limita-
tions 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 amended
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 obligations
of the Internal Revenue Service relating to offers-in-com-
promise. Such statement shall—
(1) advise taxpayers who have entered into a
compromise agreement of the advantages of promptly
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 ac-
tions of 1 spouse or former spouse, the Internal Reve-
nue Service will, upon application, reinstate such
agreement with the spouse or former spouse who re-
mains 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 defi-
ciency under section 6212 of the Internal Revenue Code of
1986 the date determined by such Secretary (or delegate)
as the last day on which the taxpayer may file a petition
with the Tax Court.
(b) LATER FILING DEADLINES SPECIFIED ON NOTICE
OF DEFICIENCY TO BE BINDING.—Subsection (a) of section
6213 (relating to restrictions applicable to deficiencies; peti-
tion 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 peti-
tion by the Secretary in the notice of deficiency shall be
treated as timely filed.’’
(c) EFFECTIVE DATE.—Subsection (a) and the amend-
ment 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 sec-
tion 6213 is amended—
(1) by striking ‘‘, including the Tax Court.’’ and
inserting ‘‘, including the Tax Court, and a refund
may be ordered by such court of any amount collected
within the period during which the Secretary is pro-
hibited from collecting by levy or through a proceed-
ing in court under the provisions of this subsection.’’,
and
(2) by striking ‘‘to enjoin any action or proceed-
ing’’ and inserting ‘‘to enjoin any action or proceed-
ing 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 author-
ized to refund or credit pending appeal as provided
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 section
7483, the Secretary is authorized to refund or credit the
overpayment determined by the Tax Court to the extent 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 dele-
gate shall instruct employees of the Internal Revenue Serv-
ice 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 LIABILITY.
The Secretary of the Treasury or the Secretary’s dele-
gate 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 dele-
gate 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 Tax-
payer Bill of Rights (Internal Revenue Service Publication
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 section
6227 of the Omnibus Taxpayer Bill of Rights (Internal
Revenue Service Publication No. 1) a statement which sets
forth in simple and nontechnical terms the criteria and pro-
cedures for selecting taxpayers for examination. Such state-
ment shall not include any information the disclosure of
which would be detrimental to law enforcement, but shall
specify the general procedures used by the Internal Revenue
Service, including whether taxpayers are selected for exam-
ination on the basis of information available in the media
or on the basis of information provided to the Internal Rev-
enue Service by informants.
(b) TRANSMISSION TO COMMITTEES OF CONGRESS.—
The Secretary shall transmit drafts of the statement re-
quired 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 Taxation on the
same day.
SEC. 354. EXPLANATIONS OF APPEALS AND COLLECTION
PROCESS.
The Secretary of the Treasury or the Secretary’s dele-
gate 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 respect
to such proposed deficiency.
Subtitle G—Low Income Taxpayer
Clinics
SEC. 361. LOW INCOME TAXPAYER CLINICS.
(a) IN GENERAL.—Chapter 77 (relating to miscellane-
ous provisions) is amended by adding at the end the follow-
ing 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 nomi-
nal fee for its services (except for reimburse-
ment 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 lan-
guage about their rights and responsibilities
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 Budg-
et, 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 paragraph (1)
through representation of taxpayers or referral of
taxpayers to qualified representatives.
‘‘(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 otherwise
provided by specific appropriation, the Secretary
shall not allocate more than $3,000,000 per year (ex-
clusive of costs of administering the program) to
grants under this section.
‘‘(2) LIMITATION ON ANNUAL GRANTS TO A CLIN-
IC.—The aggregate amount of grants which may be
made under this section to a clinic for a year shall
not exceed $100,000.
‘‘(3) MULTI-YEAR GRANTS.—Upon application of
a qualified low income taxpayer clinic, the Secretary
is authorized to award a multi-year grant not to ex-
ceed 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 tax-
payers in the geographical area for whom Eng-
lish 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 record, if any, in provid-
ing 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 sponsoring
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 clin-
ic.
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 following
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 IN-
STALLMENT METHOD OF PAYMENT.
(a) IN GENERAL.—Section 7422 is amended by redes-
ignating subsection (j) as subsection (k) and by inserting
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 Federal
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 ef-
fect 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 estate, no
part of such liability which is disallowed by a deci-
sion of such court which has become final may be col-
lected by the Secretary, and amounts paid in excess
of the installments determined by the court as cur-
rently 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 dur-
ing 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 decision 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 section
1211 of Taxpayer Bill of Rights 2 (Public Law 104–168),
the Secretary of the Treasury or the Secretary’s delegate
shall maintain records of taxpayer complaints of mis-
conduct by Internal Revenue Service employees on an indi-
vidual 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 fol-
lowing 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 employees of
the National Archives and Records Administration
for purposes of, and only to the extent necessary in,
the appraisal of records for destruction 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 information disclosed under the
preceding sentence to any person other than to the
Secretary, or to another officer or employee of the Na-
tional Archives and Records Administration whose of-
ficial duties require such disclosure for purposes of
such appraisal.’’
(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
(15)’’ and inserting ‘‘, (15), 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 dele-
gate shall establish such rules, regulations, and procedures
as are necessary to allow payment of taxes by check or
money order made payable to the United States Treasury.
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’’.
SEC. 376. LIMITATION ON PENALTY ON INDIVIDUAL’S FAIL-
URE TO PAY FOR MONTHS DURING PERIOD
OF INSTALLMENT AGREEMENT.
(a) IN GENERAL.—Section 6651 (relating to failure to
file tax return or to pay tax) is amended by adding at the
end the following new subsection:
‘‘(h) LIMITATION ON PENALTY ON INDIVIDUAL’S FAIL-
URE TO PAY FOR MONTHS DURING PERIOD OF INSTALL-
MENT AGREEMENT.—No addition to the tax shall be im-
posed under paragraph (2) or (3) of subsection (a) with
respect to the tax liability of an individual for any month
during which an installment agreement under section 6159
is in effect for the payment of such tax to the extent that
imposing an addition to the tax under such paragraph for
such month would result in the aggregate number of per-
centage points of such addition to the tax exceeding 9.5.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply for purposes of determining additions
to the tax for months beginning after the date of the enact-
ment of this Act.
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 penalty
reform provisions of the Omnibus Budget Reconcili-
ation 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 Commit-
tee 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 taxpayer
confidentiality, and shall report the findings of such study,
together with such recommendations as it deems appro-
priate, 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 compliance by allow-
ing 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 re-
view all requests (other than requests by the chairman or
ranking member of a Committee or Subcommittee) for in-
vestigations of the Internal Revenue Service by the General
Accounting Office, and approve such requests when appro-
priate, with a view towards eliminating overlapping inves-
tigations, ensuring that the General Accounting Office has
the capacity to handle the investigation, and ensuring that
investigations focus on areas of primary importance 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 Committees
on Finance, Appropriations, and Government Affairs
of the Senate, and the Committees on Ways and
Means, Appropriations, and Government Reform and
Oversight of the House of Representatives, to review
the strategic plans and budget for the Internal Reve-
nue Service. After the conclusion of the annual filing
season, there shall be a second annual joint hearing
to review the other matters outlined in section
8022(3)(C).’’
(b) EFFECTIVE DATES.—
(1) Subsection (e) of section 8021 of the Internal
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 Internal
Revenue Code of 1986, as added by subsection (a) of
this section, shall take effect on the date of the enact-
ment of this Act.
SEC. 402. COORDINATED OVERSIGHT REPORTS.
(a) IN GENERAL.—Paragraph (3) of section 8022 (re-
lating to the duties of the Joint Committee on Taxation)
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 advisable.
‘‘(B) To report, annually, to the Committee
on Finance and the Committee on Ways and
Means on the overall state of the Federal tax sys-
tem, together with recommendations with respect
to possible simplification proposals and other
matters relating to the administration of the
Federal tax system as it may deem advisable.
‘‘(C) To report, annually, to the Committees
on Finance, Appropriations, and Government
Affairs of the Senate, and to the Committees on
Ways and Means, Appropriations, and Govern-
ment Reform and Oversight of the House of Rep-
resentatives, with respect to—
‘‘(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 Reve-
nue Service and whether it supports its ob-
jectives;
‘‘(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 computing
problems should be funded fully to provide for certain reso-
lution of such problems.
SEC. 412. FINANCIAL MANAGEMENT ADVISORY GROUP.
The Commissioner shall convene a financial manage-
ment advisory group consisting of individuals with exper-
tise in governmental accounting and auditing from both the
private sector and the Government to advise the Commis-
sioner on financial management issues, including—
(1) the continued partnership between the Inter-
nal Revenue Service and the General Accounting Of-
fice;
(2) the financial accounting aspects of the Inter-
nal Revenue Service’s system modernization;
(3) the necessity and utility of year-round audit-
ing; 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 Reve-
nue Service with respect to the administrability of pending
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 amended by
adding at the end the following new section:
‘‘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 sim-
plification, as determined by the staff of the Joint Commit-
tee on Taxation, and shall include the basis for such deter-
mination.
‘‘(c) LEGISLATION SUBJECT TO POINT OF ORDER.—
It shall not be in order in the Senate or the House of Rep-
resentatives to consider any legislation described in sub-
section (a) required to be accompanied by a Tax Complexity
Analysis that does not contain a Tax Complexity Analysis.
‘‘(d) RESPONSIBILITIES OF THE COMMISSIONER.—The
Commissioner shall provide the Joint Committee on Tax-
ation 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 following
new item:
‘‘Sec. 8024. Tax complexity analysis.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to legislation considered on or after Jan-
uary 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 paragraph:
‘‘(11) DETERMINATIONS RELATING TO DEFERRED
COMPENSATION.—
‘‘(A) IN GENERAL.—For purposes of deter-
mining under this section—
‘‘(i) whether compensation of an em-
ployee is deferred compensation, and
‘‘(ii) when deferred compensation is
paid,
no amount shall be treated as received by the em-
ployee, or paid, until it is actually received by
the employee.
100
‘‘(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 inserting
‘‘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 initiated
by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treasury,
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
of 1986 shall be taken into account in such first
taxable year.