I
105TH CONGRESS
1ST SESSION
H. R. 2838
To amend the Internal Revenue Code of 1986 to provide additional protections
for taxpayers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 6, 1997
Mr. FOX of Pennsylvania introduced the following bill; which was referred to
the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
additional protections for taxpayers, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Taxpayer Bill of
Rights III’’.
SEC. 2. BURDEN OF PROOF.
(a) IN GENERAL.—Chapter 76 of the Internal Reve-
nue Code of 1986 (relating to judicial proceedings) is
amended by adding at the end the following new sub-
chapter:
‘‘Subchapter E—Burden of Proof
‘‘Sec. 7491. Burden of proof.
‘‘SEC. 7491. BURDEN OF PROOF.
‘‘The Secretary shall have the burden of proof in any
court proceeding with respect to any factual issue relevant
to ascertaining the tax liability of a taxpayer and the as-
sessment and collection of any such tax.’’
(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.
SEC. 3. TAXPAYER RELIANCE ON ORAL ADVICE PROVIDED
BY THE INTERNAL REVENUE SERVICE.
(a) IN GENERAL.—Subsection (f) of section 6404 of
the Internal Revenue Code of 1986 is amended—
(1) in the heading, by striking ‘‘WRITTEN’’,
(2) in paragraph (2)(A), by striking ‘‘specific
written request’’ and inserting ‘‘specific request’’,
(3) by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the
following new paragraph:
‘‘(3) ORAL REQUESTS FOR ADVICE.—Upon re-
quest by a taxpayer, any officer or employee of the
Internal Revenue Service who provides advice orally
in response to a specific request of the taxpayer
shall provide such taxpayer with a transcript or
other written evidence of such advice.’’
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to advice provided after 180
days after the date of the enactment of this Act.
SEC. 4. JEOPARDY.
(a) IN GENERAL.—Section 6861 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g)
the following new subsection:
‘‘(h) AFFIDAVIT
REQUIREMENT.—No assessment
may be made under this section unless such assessment
is based on affidavits of not less than 2 officers or employ-
ees of the Internal Revenue Service. Each such officer or
employee shall make an independent evaluation of the sit-
uation giving rise to assessment under this section.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to assessments made after the
date of the enactment of this Act.
SEC. 5. TAXPAYER SUGGESTIONS AND COMPLAINTS WITH-
OUT RETRIBUTION.
(a) ESTABLISHMENT OF OFFICE.—Not later than
180 days after the date of the enactment of this Act, the
Secretary of the Treasury or the Secretary’s delegate shall
establish an office within the Internal Revenue Service to
receive taxpayer suggestions and complaints.
(b) CONFIDENTIALITY OF INFORMATION.—No infor-
mation identifying a problem within the Internal Revenue
Service provided by a taxpayer to the office established
under subsection (a) may be used by the Internal Revenue
Service, including selecting such taxpayer for audit.
SEC. 6. MEDIATION OF TAX DISPUTES.
Not later than 180 days after the date of the enact-
ment of this Act, the Secretary of the Treasury or the
Secretary’s delegate shall establish a mediation service
within the Internal Revenue Service. Such service shall,
upon request of a taxpayer, provide an individual to medi-
ate disputes between the taxpayer and the Internal Reve-
nue Service regarding tax liability of the taxpayer and the
assessment and collection of such tax.
SEC. 7. STRICT LIABILITY FOR ERRORS BY THE INTERNAL
REVENUE SERVICE.
(a) FAILURE TO RELEASE LIEN.—Section 7432(a)
of the Internal Revenue Code of 1986 (relating to civil
damages for failure to release lien) is amended by striking
‘‘knowingly, or by reason of negligence,’’.
(b) UNAUTHORIZED COLLECTION ACTIONS.—
(1) IN GENERAL.—Section 7433 of such Code
(relating to civil damages for certain unauthorized
collection actions) is amended to read as follows:
‘‘SEC. 7433. CIVIL DAMAGES FOR UNAUTHORIZED ACTIONS.
‘‘(a) IN GENERAL.—If, in connection with any collec-
tion of Federal tax with respect to a taxpayer, any officer
or employee of the Internal Revenue Service disregards
any provision of this title, or any regulation promulgated
under this title, such taxpayer may bring a civil action
for damages against the United States in a district court
of the United States. Except as provided in section 7432,
such civil action shall be the exclusive remedy for recover-
ing damages resulting from such actions.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the plaintiff in
an amount equal to the lesser of $1,000,000 or the sum
of—
‘‘(1) actual, direct economic damages sustained
by the plaintiff as a proximate result of the reckless
or intentional actions of the officer or employee, and
‘‘(2) the costs of the action.
‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to
this section shall be payable out of funds appropriated
under section 1304 of title 31, United States Code.
‘‘(d) LIMITATIONS.—
‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED
IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—
The amount of damages awarded under subsection
(b) may be reduced if the court determines that the
plaintiff has not exhausted the administrative rem-
edies available to such plaintiff within the Internal
Revenue Service.
‘‘(2) MITIGATION OF DAMAGES.—The amount
of damages awarded under subsection (b)(1) shall be
reduced by the amount of such damages which could
have reasonably been mitigated by the plaintiff.
‘‘(3) PERIOD FOR BRINGING ACTION.—Notwith-
standing any other provision of law, an action to en-
force liability created under this section may be
brought without regard to the amount in controversy
and may be brought only within 2 years after the
date the right of action accrues.’’
(2) CLERICAL AMENDMENT.—The item in the
table of sections for subchapter B of chapter 76 of
such Code relating to section 7433 is amended to
read as follows:
‘‘Sec. 7433. Civil damages for unauthorized actions.’’
(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. 8. PROHIBITION ON USE OF RANDOM AUDITS.
Section 7602 of the Internal Revenue Code of 1986
is amended by adding at the end the following new sub-
section:
‘‘(e) PROHIBITION ON USE OF RANDOM AUDITS.—
The Secretary shall not use random examination tech-
niques to determine the existence of unreported income of
any taxpayer.’’
SEC. 9. PERSONAL LIABILITY OF INTERNAL REVENUE
SERVICE EMPLOYEES.
(a) IN GENERAL.—Subchapter B of chapter 76 of the
Internal Revenue Code of 1986 (relating to proceedings
by taxpayers and third parties) is amended by redesignat-
ing section 7437 as section 7438 and inserting after sec-
tion 7436 the following new section:
‘‘SEC. 7437. PERSONAL LIABILITY OF INTERNAL REVENUE
SERVICE EMPLOYEES.
‘‘In any proceeding under this title in which the pre-
vailing party (as defined in section 7430) is awarded a
judgment for reasonable litigation costs under such sec-
tion, the court may assess a portion of such costs against
any Internal Revenue Service officer or employee, who
shall not be reimbursed by the United States for the costs
so assessed, if the court determines that such proceeding
resulted from actions of such officer or employee outside
established Internal Revenue Service protocol.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76 of such Code is amended
by striking the item relating to section 7437 and inserting
the following:
‘‘Sec. 7437. Personal liability of Internal Revenue Service em-
ployees.
‘‘Sec. 7438. Cross References.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions of officers and employees
of the Internal Revenue Service after the date of the en-
actment of this Act.
SEC. 10. PROHIBITION ON USE OF QUOTAS.
Officers and employees of the Internal Revenue Serv-
ice may not establish, and shall not be subject to, any
quota regarding the initiation of investigations or other-
wise determining the taxpayers found to be delinquent in
filing their returns of tax or in remitting their taxes.
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