737
SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.
(a) IN GENERAL.—Section 6404 is amended by add-
ing at the end the following new subsection:
‘‘(g) REVIEW OF DENIAL OF REQUEST FOR ABATE-
MENT OF INTEREST.—The Tax Court shall have jurisdic-
tion over any action brought by a taxpayer who meets the
requirements referred to in section 7430(c)(4)(A)(iii) to
determine whether the Secretary’s failure to abate interest
under this section was an abuse of discretion if such action
is brought within 6 months after the date of the Sec-
retary’s final determination not to abate such interest.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to requests for abatement after the
date of the enactment of this Act.
SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR
PAYMENT OF TAX AFTER NOTICE AND DE-
MAND.
(a) GENERAL RULE.—Paragraph (3) of section
6601(e) (relating to payments made within 10 days after
notice and demand) is amended to read as follows:
‘‘(3) PAYMENTS MADE WITHIN SPECIFIED PE-
RIOD AFTER NOTICE AND DEMAND.—If notice and
demand is made for payment of any amount and if
such amount is paid within 21 calendar days (10
business days if the amount for which such notice
and demand is made equals or exceeds $100,000)
738
after the date of such notice and demand, interest
under this section on the amount so paid shall not
be imposed for the period after the date of such no-
tice and demand.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 6601(e)(2) is
amended by striking ‘‘10 days from the date of no-
tice and demand therefor’’ and inserting ‘‘21 cal-
endar days from the date of notice and demand
therefor (10 business days if the amount for which
such notice and demand is made equals or exceeds
$100,000)’’.
(2) Paragraph (3) of section 6651(a) is amend-
ed by striking ‘‘10 days of the date of the notice and
demand therefor’’ and inserting ‘‘21 calendar days
from the date of notice and demand therefor (10
business days if the amount for which such notice
and demand is made equals or exceeds $100,000)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of any notice and de-
mand given after June 30, 1996.
739
PART IV—JOINT RETURNS
SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.
The Secretary of the Treasury or his delegate and
the Comptroller General of the United States shall each
conduct separate studies of—
(1) the effects of changing the liability for tax
on a joint return from being joint and several to
being proportionate to the tax attributable to each
spouse,
(2) the effects of providing that, if a divorce de-
cree allocates liability for tax on a joint return filed
before the divorce, the Secretary may collect such li-
ability only in accordance with the decree,
(3) whether those provisions of the Internal
Revenue Code of 1986 intended to provide relief to
innocent spouses provide meaningful relief in all
cases where such relief is appropriate, and
(4) the effect of providing that community in-
come (as defined in section 66(d) of such Code)
which, in accordance with the rules contained in sec-
tion 879(a) of such Code, would be treated as the
income of one spouse is exempt from a levy for fail-
ure to pay any tax imposed by subtitle A by the
other spouse for a taxable year ending before their
marriage.
740
The reports of such studies shall be submitted to the Com-
mittee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate within
6 months after the date of the enactment of this Act.
SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPA-
RATE RETURNS WITHOUT FULL PAYMENT OF
TAX.
(a) GENERAL RULE.—Paragraph (2) of section
6013(b) (relating to limitations on filing of joint return
after filing separate returns) is amended by striking sub-
paragraph (A) and redesignating the following subpara-
graphs accordingly.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.
Subsection (e) of section 6103 (relating to disclosure
to persons having material interest) is amended by adding
at the end the following new paragraph:
‘‘(8) DISCLOSURE OF COLLECTION ACTIVITIES
WITH
RESPECT
TO
JOINT
RETURN.—If any defi-
ciency of tax with respect to a joint return is as-
sessed and the individuals filing such return are no
longer married or no longer reside in the same
household, upon request in writing by either of such
741
individuals, the Secretary shall disclose in writing to
the individual making the request whether the Sec-
retary has attempted to collect such deficiency from
such other individual, the general nature of such col-
lection activities, and the amount collected.’’
PART V—COLLECTION ACTIVITIES
SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVI-
SIONS.
(a) WITHDRAWAL OF CERTAIN NOTICES.—Section
6323 (relating to validity and priority against certain per-
sons) is amended by adding at the end the following new
subsection:
‘‘(j) WITHDRAWAL
OF NOTICE
IN CERTAIN CIR-
CUMSTANCES.—
‘‘(1) IN GENERAL.—The Secretary may with-
draw a notice of a lien filed under this section and
this chapter shall be applied as if the withdrawn no-
tice had not been filed, if the Secretary determines
that—
‘‘(A) the filing of such notice was pre-
mature or otherwise not in accordance with ad-
ministrative procedures of the Secretary,
‘‘(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the tax
liability for which the lien was imposed by
743
levy and return property) is amended by adding at the
end the following new subsection:
‘‘(d) RETURN OF PROPERTY IN CERTAIN CASES.—
If—
‘‘(1) any property has been levied upon, and
‘‘(2) the Secretary determines that—
‘‘(A) the levy on such property was pre-
mature or otherwise not in accordance with ad-
ministrative procedures of the Secretary,
‘‘(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the tax
liability for which the levy was imposed by
means of installment payments, unless such
agreement provides otherwise,
‘‘(C) the return of such property will facili-
tate the collection of the tax liability, or
‘‘(D) with the consent of the taxpayer or
the Taxpayer Advocate, the return of such
property would be in the best interests of the
taxpayer (as determined by the Taxpayer Advo-
cate) and the United States,
the provisions of subsection (b) shall apply in the same
manner as if such property had been wrongly levied upon,
except that no interest shall be allowed under subsection
(c).’’
744
(c) MODIFICATIONS IN CERTAIN LEVY EXEMPTION
AMOUNTS.—
(1) FUEL, ETC.—Paragraph (2) of section
6334(a) (relating to fuel, provisions, furniture, and
personal effects exempt from levy) is amended—
(A) by striking ‘‘If the taxpayer is the
head of a family, so’’ and inserting ‘‘So’’,
(B) by striking ‘‘his household’’ and insert-
ing ‘‘the taxpayer’s household’’, and
(C) by striking ‘‘$1,650 ($1,550 in the
case of levies issued during 1989)’’ and insert-
ing ‘‘$2,500’’.
(2) INFLATION
ADJUSTMENT.—Section 6334
(relating to property exempt from levy) is amended
by adding at the end the following new subsection:
‘‘(f) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any calendar
year beginning after 1996, each dollar amount re-
ferred to in paragraphs (2) and (3) of subsection (a)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year, by substituting ‘calendar year 1995’ for
745
‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) ROUNDING.—If any dollar amount after
being increased under paragraph (1) is not a mul-
tiple of $10, such dollar amount shall be rounded to
the nearest multiple of $10.’’
(3) TECHNICAL AMENDMENT.—Paragraph (3)
of section 6334(a) is amended by striking ‘‘($1,050
in the case of levies issued during 1989)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall take effect on the date of the enactment of this
Act.
(2) 
EXEMPT
AMOUNTS.—The 
amendments
made by subsection (c) shall take effect with respect
to levies issued after December 31, 1995.
SEC. 13322. OFFERS-IN-COMPROMISE.
(a) REVIEW REQUIREMENTS.—Subsection (b) of sec-
tion 7122 (relating to records) is amended by striking
‘‘$500.’’ and inserting ‘‘$100,000. However, such com-
promise shall be subject to continuing quality review by
the Secretary.’’
746
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
PART VI—INFORMATION RETURNS
SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF
INFORMATION RETURNS.
(a) GENERAL RULE.—Subchapter B of chapter 76
(relating to proceedings by taxpayers and third parties)
is amended by redesignating section 7434 as section 7435
and by inserting after section 7433 the following new
section:
‘‘SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF
INFORMATION RETURNS.
‘‘(a) IN GENERAL.—If any person willfully files a
fraudulent information return with respect to payments
purported to be made to any other person, such other per-
son may bring a civil action for damages against the per-
son so filing such return.
‘‘(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 greater of $5,000 or the sum of—
‘‘(1) any actual damages sustained by the plain-
tiff as a proximate result of the filing of the fraudu-
lent information return (including any costs attrib-
747
utable to resolving deficiencies asserted as a result
of such filing),
‘‘(2) the costs of the action, and
‘‘(3) in the court’s discretion, reasonable attor-
neys fees.
‘‘(c) PERIOD
FOR
BRINGING
ACTION.—Notwith-
standing any other provision of law, an action to enforce
the liability created under this section may be brought
without regard to the amount in controversy and may be
brought only within the later of—
‘‘(1) 6 years after the date of the filing of the
fraudulent information return, or
‘‘(2) 1 year after the date such fraudulent in-
formation return would have been discovered by ex-
ercise of reasonable care.
‘‘(d) COPY OF COMPLAINT FILED WITH IRS.—Any
person bringing an action under subsection (a) shall pro-
vide a copy of the complaint to the Internal Revenue Serv-
ice upon the filing of such complaint with the court.
‘‘(e) FINDING
OF COURT TO INCLUDE CORRECT
AMOUNT OF PAYMENT.—The decision of the court award-
ing damages in an action brought under subsection (a)
shall include a finding of the correct amount which should
have been reported in the information return.
748
‘‘(f) INFORMATION RETURN.—For purposes of this
section, the term ‘information return’ means any state-
ment described in section 6724(d)(1)(A).’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76 is amended by striking
the item relating to section 7434 and inserting the
following:
‘‘Sec. 7434. Civil damages for fraudulent filing of information re-
turns.
‘‘Sec. 7435. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to fraudulent information returns
filed after the date of the enactment of this Act.
SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE IN-
VESTIGATIONS OF INFORMATION RETURNS.
(a) GENERAL RULE.—Section 6201 (relating to as-
sessment authority) is amended by redesignating sub-
section (d) as subsection (e) and by inserting after sub-
section (c) the following new subsection:
‘‘(d) REQUIRED REASONABLE VERIFICATION OF IN-
FORMATION RETURNS.—In any court proceeding, if a tax-
payer asserts a reasonable dispute with respect to any
item of income reported on an information return filed
with the Secretary under subpart B or C of part III of
subchapter A of chapter 61 by a third party and the tax-
payer has fully cooperated with the Secretary (including
providing, within a reasonable period of time, access to
749
and inspection of all witnesses, information, and docu-
ments within the control of the taxpayer as reasonably re-
quested by the Secretary), the Secretary shall have the
burden of producing reasonable and probative information
concerning such deficiency in addition to such information
return.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
PART VII—AWARDING OF COSTS AND CERTAIN
FEES
SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS PO-
SITION IN PROCEEDING WAS SUBSTANTIALLY
JUSTIFIED.
(a) GENERAL RULE.—Subparagraph (A) of section
7430(c)(4) (defining prevailing party) is amended by
striking clause (i) and by redesignating clauses (ii) and
(iii) as clauses (i) and (ii), respectively.
(b) BURDEN OF PROOF ON UNITED STATES.—Para-
graph (4) of section 7430(c) is amended by redesignating
subparagraph (B) as subparagraph (C) and by inserting
after subparagraph (A) the following new subparagraph:
‘‘(B) EXCEPTION IF UNITED STATES ES-
TABLISHES THAT ITS POSITION WAS SUBSTAN-
TIALLY JUSTIFIED.—
751
‘‘(II) any of the following which
are issued to the taxpayer: private let-
ter rulings, technical advice memo-
randa, and determination letters.’’
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 7430(c)(2) is
amended by striking ‘‘paragraph (4)(B)’’ and insert-
ing ‘‘paragraph (4)(C)’’.
(2) Subparagraph (C) of section 7430(c)(4), as
redesignated by subsection (b), is amended by strik-
ing ‘‘subparagraph (A)’’ and inserting ‘‘this para-
graph’’.
(3) Sections 6404(g) and 6656(c)(1), as amend-
ed by this title, are each amended by striking ‘‘sec-
tion 7430(c)(4)(A)(iii)’’ and inserting ‘‘section
7430(c)(4)(A)(ii)’’.
SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.
Paragraph (1) of section 7430(c) (defining reason-
able litigation costs) is amended—
(1) by striking ‘‘$75’’ in clause (iii) of subpara-
graph (B) and inserting ‘‘$110’’,
(2) by striking ‘‘an increase in the cost of living
or’’ in clause (iii) of subparagraph (B), and
(3) by adding after clause (iii) the following:
752
‘‘In the case of any calendar year beginning after
1996, the dollar amount referred to in clause (iii)
shall be increased by an amount equal to such dollar
amount multiplied by the cost-of-living adjustment
determined under section 1(f)(3) for such calendar
year, by substituting ‘calendar year 1995’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof. If
any dollar amount after being increased under the
preceding sentence is not a multiple of $10, such
dollar amount shall be rounded to the nearest mul-
tiple of $10.’’
SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN
INTO ACCOUNT.
Paragraph (1) of section 7430(b) (relating to require-
ment that administrative remedies be exhausted) is
amended by adding at the end the following new sentence:
‘‘Any failure to agree to an extension of the time for the
assessment of any tax shall not be taken into account for
purposes of determining whether the prevailing party
meets the requirements of the preceding sentence.’’
SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN
DECLARATORY JUDGMENT PROCEEDINGS.
Subsection (b) of section 7430 is amended by striking
paragraph (3) and by redesignating paragraph (4) as
paragraph (3).
753
SEC. 13335. EFFECTIVE DATE.
The amendments made by this part shall apply in the
case of proceedings commenced after the date of the enact-
ment of this Act.
PART VIII—MODIFICATION TO RECOVERY OF
CIVIL DAMAGES FOR UNAUTHORIZED COL-
LECTION ACTIONS
SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL
DAMAGES FOR UNAUTHORIZED COLLECTION
ACTIONS.
(a) GENERAL RULE.—Subsection (b) of section 7433
(relating to damages) is amended by striking ‘‘$100,000’’
and inserting ‘‘$1,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to actions by officers or employ-
ees of the Internal Revenue Service after the date of the
enactment of this Act.
SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR
LITIGATION COSTS FOR FAILURE TO EX-
HAUST ADMINISTRATIVE REMEDIES.
(a) GENERAL RULE.—Paragraph (1) of section
7433(d) (relating to civil damages for certain unauthor-
ized collection actions) is amended to read as follows:
‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED
IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—
The amount of damages awarded under subsection
754
(b) may be reduced if the court determines that the
plaintiff has not exhausted the administrative rem-
edies available to such plaintiff within the Internal
Revenue Service.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply in the case of proceedings com-
menced after the date of the enactment of this Act.
PART IX—MODIFICATIONS TO PENALTY FOR
FAILURE TO COLLECT AND PAY OVER TAX
SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by redesignating subsection (b) as sub-
section (c) and by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
‘‘(1) IN
GENERAL.—No penalty shall be im-
posed under subsection (a) unless the Secretary noti-
fies the taxpayer in writing by mail to an address as
determined under section 6212(b) that the taxpayer
shall be subject to an assessment of such penalty.
‘‘(2) TIMING OF NOTICE.—The mailing of the
notice described in paragraph (1) shall precede any
notice and demand of any penalty under subsection
(a) by at least 60 days.
755
‘‘(3) STATUTE
OF
LIMITATIONS.—If a notice
described in paragraph (1) with respect to any pen-
alty is mailed before the expiration of the period
provided by section 6501 for the assessment of such
penalty (determined without regard to this para-
graph), the period provided by such section for the
assessment of such penalty shall not expire before
the later of—
‘‘(A) the date 90 days after the date on
which such notice was mailed, or
‘‘(B) if there is a timely protest of the pro-
posed assessment, the date 30 days after the
Secretary makes a final administrative deter-
mination with respect to such protest.
‘‘(4) EXCEPTION
FOR
JEOPARDY.—This sub-
section shall not apply if the Secretary finds that the
collection of the penalty is in jeopardy.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to proposed assessments made
after June 30, 1996.
756
SEC. 
13342. 
DISCLOSURE 
OF 
CERTAIN 
INFORMATION
WHERE MORE THAN 1 PERSON LIABLE FOR
PENALTY FOR FAILURE TO COLLECT AND
PAY OVER TAX.
(a) IN GENERAL.—Subsection (e) of section 6103
(relating to disclosure to persons having material interest),
as amended by section 13318, is amended by adding at
the end the following new paragraph:
‘‘(9) DISCLOSURE
OF
CERTAIN
INFORMATION
WHERE MORE THAN 1 PERSON SUBJECT TO PEN-
ALTY UNDER SECTION 6672.—If the Secretary deter-
mines that a person is liable for a penalty under sec-
tion 6672(a) with respect to any failure, upon re-
quest in writing of such person, the Secretary shall
disclose in writing to such person—
‘‘(A) the name of any other person whom
the Secretary has determined to be liable for
such penalty with respect to such failure, and
‘‘(B) whether the Secretary has attempted
to collect such penalty from such other person,
the general nature of such collection activities,
and the amount collected.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
757
SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY FOR FAIL-
URE TO COLLECT AND PAY OVER TAX.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by adding at the end the following new
subsection:
‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY.—If more than 1 person
is liable for the penalty under subsection (a) with respect
to any tax, each person who paid such penalty shall be
entitled to recover from other persons who are liable for
such penalty an amount equal to the excess of the amount
paid by such person over such person’s proportionate
share of the penalty. Any claim for such a recovery may
be made only in a proceeding which is separate from, and
is not joined with—
‘‘(1) an action for collection of such penalty
brought by the United States, or
‘‘(2) a proceeding in which the United States
files a counterclaim or third-party complaint for the
collection of such penalty.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to penalties assessed after the
date of the enactment of this Act.
758
SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT
ORGANIZATIONS EXEMPT FROM PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Section 6672 is amended by add-
ing at the end the following new subsection:
‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS
OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be
imposed by subsection (a) on any unpaid, volunteer mem-
ber of any board of trustees or directors of an organization
exempt from tax under subtitle A if such member—
‘‘(1) is solely serving in an honorary capacity,
‘‘(2) does not participate in the day-to-day or
financial operations of the organization, and
‘‘(3) does not have actual knowledge of the fail-
ure on which such penalty is imposed.
The preceding sentence shall not apply if it results in no
person being liable for the penalty imposed by subsection
(a).’’
(b) PUBLIC INFORMATION REQUIREMENTS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury or the Secretary’s delegate (hereafter in this
subsection referred to as the ‘‘Secretary’’) shall take
such actions as may be appropriate to ensure that
employees are aware of their responsibilities under
the Federal tax depository system, the circumstances
759
under which employees may be liable for the penalty
imposed by section 6672 of the Internal Revenue
Code of 1986, and the responsibility to promptly re-
port to the Internal Revenue Service any failure re-
ferred to in subsection (a) of such section 6672.
Such actions shall include—
(A) printing of a warning on deposit cou-
pon booklets and the appropriate tax returns
that certain employees may be liable for the
penalty imposed by such section 6672, and
(B) the development of a special informa-
tion packet.
(2) DEVELOPMENT
OF
EXPLANATORY
MATE-
RIALS.—The Secretary shall develop materials ex-
plaining the circumstances under which board mem-
bers of tax-exempt organizations (including vol-
untary and honorary members) may be subject to
penalty under section 6672 of such Code. Such ma-
terials shall be made available to tax-exempt organi-
zations.
(3) IRS INSTRUCTIONS.—The Secretary shall
clarify the instructions to Internal Revenue Service
employees on the application of the penalty under
section 6672 of such Code with regard to voluntary
760
members of boards of trustees or directors of tax-
exempt organizations.
PART X—MODIFICATIONS OF RULES RELATING
TO SUMMONSES
SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD-
PARTY RECORDKEEPERS.
(a) IN GENERAL.—Paragraph (3) of section 7609(a)
(relating to third-party recordkeeper defined) is amended
by striking ‘‘and’’ at the end of subparagraph (G), by
striking the period at the end of subparagraph (H) and
inserting ‘‘; and’’, and by adding at the end the following
the subparagraph:
‘‘(I) any enrolled agent.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to summonses issued after the
date of the enactment of this Act.
SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUM-
MONSES.
(a) STANDARD OF REVIEW.—Subparagraph (A) of
section 6503(j)(2) (defining designated summons) is
amended by redesignating clauses (i) and (ii) as clauses
(ii) and (iii), respectively, and by inserting before clause
(ii) (as so redesignated) the following new clause:
‘‘(i) the issuance of such summons is
preceded by a review of such issuance by
761
the regional counsel of the Office of Chief
Counsel for the region in which the exam-
ination of the corporation is being con-
ducted,’’.
(b) LIMITATION
ON
PERSONS
TO
WHOM
DES-
IGNATED SUMMONS MAY BE ISSUED.—Paragraph (1) of
section 6503(j) is amended by striking ‘‘with respect to
any return of tax by a corporation’’ and inserting ‘‘to a
corporation (or to any other person to whom the corpora-
tion has transferred records) with respect to any return
of tax by such corporation for a taxable year (or other
period) for which such corporation is being examined
under the coordinated examination program (or any suc-
cessor program) of the Internal Revenue Service’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to summonses issued after the date
of the enactment of this Act.
SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING
DESIGNATED SUMMONSES.
Not later than December 31 of each calendar year
after 1995, the Secretary of the Treasury or his delegate
shall report to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate on the number of designated summonses (as
defined in section 6503(j) of the Internal Revenue Code
762
of 1986) which were issued during the preceding 12
months.
PART XI—RELIEF FROM RETROACTIVE APPLICA-
TION OF TREASURY DEPARTMENT REGULA-
TIONS
SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF
TREASURY DEPARTMENT REGULATIONS.
(a) IN GENERAL.—Subsection (b) of section 7805
(relating to rules and regulations) is amended to read as
follows:
‘‘(b) RETROACTIVITY OF REGULATIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, no temporary, proposed, or
final regulation relating to the internal revenue laws
shall apply to any taxable period ending before the
earliest of the following dates:
‘‘(A) The date on which such regulation is
filed with the Federal Register.
‘‘(B) In the case of any final regulation,
the date on which any proposed or temporary
regulation to which such final regulation relates
was filed with the Federal Register.
‘‘(C) The date on which any notice sub-
stantially describing the expected contents of
763
any temporary, proposed, or final regulation is
issued to the public.
‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU-
LATIONS.—Paragraph (1) shall not apply to regula-
tions filed or issued within 12 months of the date of
the enactment of the statutory provision to which
the regulation relates.
‘‘(3) PREVENTION OF ABUSE.—The Secretary
may provide that any regulation may take effect or
apply retroactively to prevent abuse.
‘‘(4) 
CORRECTION
OF
PROCEDURAL
DE-
FECTS.—The Secretary may provide that any regu-
lation may apply retroactively to correct a proce-
dural defect in the issuance of any prior regulation.
‘‘(5) INTERNAL REGULATIONS.—The limitation
of paragraph (1) shall not apply to any regulation
relating to internal Treasury Department policies,
practices, or procedures.
‘‘(6) CONGRESSIONAL
AUTHORIZATION.—The
limitation of paragraph (1) may be superseded by a
legislative grant from Congress authorizing the Sec-
retary to prescribe the effective date with respect to
any regulation.
‘‘(7) ELECTION TO APPLY RETROACTIVELY.—
Paragraph (1) shall not apply to any regulation
764
which the taxpayer elects to apply before the dates
specified in paragraph (1) but only if such election
applies to all regulations which were issued with
such regulation under the statutory provision to
which such regulation relates.
‘‘(8) APPLICATION
TO
RULINGS.—The Sec-
retary may prescribe the extent, if any, to which any
ruling (including any judicial decision or any admin-
istrative determination other than by regulation) re-
lating to the internal revenue laws shall be applied
without retroactive effect.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to regulations
which relate to statutory provisions enacted on or after
the date of the enactment of this Act.
PART XII—MISCELLANEOUS PROVISIONS
SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF
ENFORCEMENT ACTIONS.
Not later than March 1, 1996, the Secretary of the
Treasury or his delegate shall submit to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate a report on the
pilot program for appeals of enforcement actions (includ-
ing lien, levy, and seizure actions) to the Appeals Division
765
of the Internal Revenue Service, together with such rec-
ommendations as he may deem advisable.
SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE
STATEMENTS REQUIRED TO BE SHOWN ON
SUCH STATEMENT.
(a) GENERAL RULE.—The following provisions are
each amended by striking ‘‘name and address’’ and insert-
ing ‘‘name, address, and phone number of the information
contact’’:
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to statements required to be fur-
nished after December 31, 1996 (determined without
regard to any extension).
766
SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the
Treasury or his delegate from any taxpayer and the Sec-
retary cannot associate such payment with such taxpayer,
the Secretary shall make reasonable efforts to notify the
taxpayer of such inability within 60 days after the re-
ceipt of such payment.
SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMA-
TION DISCLOSURE.
(a) IN GENERAL.—Subchapter B of chapter 76 (re-
lating to proceedings by taxpayers and third parties), as
amended by section 13316(a), is amended by redesignat-
ing section 7435 as section 7436 and by inserting after
section 7434 the following new section:
‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE-
MENT OF INFORMATION DISCLOSURE.
‘‘(a) IN GENERAL.—If any officer or employee of the
United States intentionally compromises the determina-
tion or collection of any tax due from an attorney, certified
public accountant, or enrolled agent representing a tax-
payer in exchange for information conveyed by the tax-
payer to the attorney, certified public accountant, or en-
rolled agent for purposes of obtaining advice concerning
the taxpayer’s tax liability, such taxpayer may bring a civil
action for damages against the United States in a district
court of the United States. Such civil action shall be the
767
exclusive remedy for recovering damages resulting from
such actions.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the plaintiff in
an amount equal to the lesser of $500,000 or the sum
of—
‘‘(1) actual, direct economic damages sustained
by the plaintiff as a proximate result of the informa-
tion disclosure, and
‘‘(2) the costs of the action.
Damages shall not include the taxpayer’s liability for any
civil or criminal penalties, or other losses attributable to
incarceration or the imposition of other criminal sanctions.
‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to
this section shall be payable out of funds appropriated
under section 1304 of title 31, United States Code.
‘‘(d) PERIOD
FOR BRINGING ACTION.—Notwith-
standing any other provision of law, an action to enforce
liability created under this section may be brought without
regard to the amount in controversy and may be brought
only within 2 years after the date the actions creating such
liability would have been discovered by exercise of reason-
able care.
768
‘‘(e) MANDATORY STAY.—Upon a certification by the
Commissioner or the Commissioner’s delegate that there
is an ongoing investigation or prosecution of the taxpayer,
the district court before which an action under this section
is pending, shall stay all proceedings with respect to such
action pending the conclusion of the investigation or
prosecution.
‘‘(f) CRIME-FRAUD
EXCEPTION.—Subsection (a)
shall not apply to information conveyed to an attorney,
certified public accountant, or enrolled agent for the pur-
pose of perpetrating a fraud or crime.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76, as amended by section
13316(b), is amended by striking the item relating to sec-
tion 7435 and by adding at the end the following new
items:
‘‘Sec. 7435. Civil damages for unauthorized enticement of infor-
mation disclosure.
‘‘Sec. 7436. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions after the date of the
enactment of this Act.
SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUT-
STANDING DELINQUENT ACCOUNTS.
(a) IN GENERAL.—Chapter 77 (relating to mis-
cellaneous provisions) is amended by adding at the end
the following new section:
769
‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
‘‘Not less often than annually, the Secretary shall
send a written notice to each taxpayer who has a tax delin-
quent account of the amount of the tax delinquency as
of the date of the notice.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end the follow-
ing new item:
‘‘Sec. 7524. Annual notice of tax delinquency.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 1995.
SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER-
COVER OPERATIONS.
(a) IN GENERAL.—Paragraph (3) of section 7601(c)
of the Anti-Drug Abuse Act of 1988 is amended by strik-
ing all that follows ‘‘this Act’’ and inserting a period.
(b) RESTORATION OF AUTHORITY FOR 5 YEARS.—
Subsection (c) of section 7608 is amended by adding at
the end the following new paragraph:
‘‘(6) APPLICATION
OF
SECTION.—The provi-
sions of this subsection—
‘‘(A) shall apply after November 17, 1988,
and before January 1, 1990, and
‘‘(B) shall apply after the date of the en-
actment of this paragraph and before January
1, 2001.
770
All amounts expended pursuant to this subsection
during the period described in subparagraph (B)
shall be recovered to the extent possible, and depos-
ited in the Treasury of the United States as mis-
cellaneous receipts, before January 1, 2001.’’
(c) ENHANCED OVERSIGHT.—
(1) ADDITIONAL
INFORMATION
REQUIRED
IN
REPORTS TO CONGRESS.—Subparagraph (B) of sec-
tion 7608(c)(4) is amended—
(A) by striking ‘‘preceding the period’’ in
clause (ii),
(B) by striking ‘‘and’’ at the end of clause
(ii), and
(C) by striking clause (iii) and inserting
the following:
‘‘(iii) the number, by programs, of un-
dercover investigative operations closed in
the 1-year period for which such report is
submitted, and
‘‘(iv) the following information with
respect to each undercover investigative op-
eration pending as of the end of the 1-year
period for which such report is submitted
or closed during such 1-year period—
771
‘‘(I) the date the operation began
and the date of the certification re-
ferred to in the last sentence of para-
graph (1),
‘‘(II) 
the 
total 
expenditures
under the operation and the amount
and use of the proceeds from the op-
eration,
‘‘(III) a detailed description of
the operation including the potential
violation 
being 
investigated 
and
whether the operation is being con-
ducted under grand jury auspices, and
‘‘(IV) the results of the operation
including the results of criminal pro-
ceedings.’’
(2) AUDITS REQUIRED WITHOUT REGARD TO
AMOUNTS INVOLVED.—Subparagraph (C) of section
7608(c)(5) is amended to read as follows:
‘‘(C) UNDERCOVER INVESTIGATIVE OPER-
ATION.—The term ‘undercover investigative op-
eration’ means any undercover investigative op-
eration of the Service; except that, for purposes
of subparagraphs (A) and (C) of paragraph (4),
such term only includes an operation which is
772
exempt from section 3302 or 9102 of title 31,
United States Code.’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON
CASH TRANSACTIONS.
(a) IN GENERAL.—Subsection (l) of section 6103 (re-
lating to disclosure of returns and return information for
purposes other than tax administration) is amended by
adding at the end the following new paragraph:
‘‘(15) DISCLOSURE OF RETURNS FILED UNDER
SECTION 6050I.—The Secretary may, upon written
request, disclose to officers and employees of—
‘‘(A) any Federal agency,
‘‘(B) any agency of a State or local govern-
ment, or
‘‘(C) any agency of the government of a
foreign country,
information contained on returns filed under section
6050I. Any such disclosure shall be made on the
same basis, and subject to the same conditions, as
apply to disclosures of information on reports filed
under section 5313 of title 31, United States Code;
except that no disclosure under this paragraph shall
773
be made for purposes of the administration of any
tax law.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (i) of section 6103 is amended
by striking paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is
amended—
(A) by striking ‘‘(7)(A)(ii), or (8)’’ and in-
serting ‘‘or (7)(A)(ii)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(3) The material preceding subparagraph (A) of
section 6103(p)(4) is amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’,
(B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and
inserting ‘‘(i)(3)(B)(i),’’, and
(C) by striking ‘‘or (12)’’ and inserting
‘‘(12), or (15)’’.
(4) Clause (ii) of section 6103(p)(4)(F) is
amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
836
‘‘(A) ceases to be a lawful permanent resi-
dent of the United States (within the meaning
of section 7701(b)(6)), or
‘‘(B) commences to be treated as a resi-
dent of a foreign country under the provisions
of a tax treaty between the United States and
the foreign country and who does not waive the
benefits of such treaty applicable to residents of
the foreign country,
shall be treated for purposes of this section and sec-
tions 2107, 2501, and 6039F in the same manner
as if such resident were a citizen of the United
States who lost United States citizenship on the date
of such cessation or commencement.
‘‘(2) LONG-TERM RESIDENT.—For purposes of
this subsection, the term ‘long-term resident’ means
any individual (other than a citizen of the United
States) who is a lawful permanent resident of the
United States in at least 8 taxable years during the
period of 15 taxable years ending with the taxable
year during which the event described in subpara-
graph (A) or (B) of paragraph (1) occurs. For pur-
poses of the preceding sentence, an individual shall
not be treated as a lawful permanent resident for
any taxable year if such individual is treated as a