I
104TH CONGRESS
1ST SESSION
H. R. 2337
To amend the Internal Revenue Code of 1986 to provide for increased
taxpayer protections.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 14, 1995
Mrs. JOHNSON of Connecticut (for herself and Mr. MATSUI) 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
for increased taxpayer protections.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE;
TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Taxpayer Bill of Rights 2’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I—TAXPAYER ADVOCATE
Sec. 101. Establishment of position of Taxpayer Advocate within Internal Reve-
nue Service.
Sec. 102. Expansion of authority to issue Taxpayer Assistance Orders.
TITLE II—MODIFICATIONS TO INSTALLMENT AGREEMENT
PROVISIONS
Sec. 201. Notification of reasons for termination of installment agreements.
Sec. 202. Administrative review of termination of installment agreement.
TITLE III—ABATEMENT OF INTEREST AND PENALTIES
Sec. 301. Expansion of authority to abate interest.
Sec. 302. Review of IRS failure to abate interest.
Sec. 303. Extension of interest-free period for payment of tax after notice and
demand.
Sec. 304. Abatement of penalty for failure to make required deposits of payroll
taxes in certain cases.
TITLE IV—JOINT RETURNS
Sec. 401. Studies of joint return-related issues.
Sec. 402. Joint return may be made after separate returns without full pay-
ment of tax.
Sec. 403. Disclosure of collection activities.
TITLE V—COLLECTION ACTIVITIES
Sec. 501. Modifications to lien and levy provisions.
Sec. 502. Offers-in-compromise.
TITLE VI—INFORMATION RETURNS
Sec. 601. Civil damages for fraudulent filing of information returns.
Sec. 602. Requirement to conduct reasonable investigations of information re-
turns.
TITLE VII—AWARDING OF COSTS AND CERTAIN FEES
Sec. 701. United States must establish that position in proceeding was substan-
tially justified.
Sec. 702. Increased limit on attorney fees.
Sec. 703. Failure to agree to extension not taken into account.
Sec. 704. Award of litigation costs permitted in declaratory judgment proceed-
ings.
Sec. 705. Effective date.
TITLE VIII—MODIFICATION TO RECOVERY OF CIVIL DAMAGES
FOR UNAUTHORIZED COLLECTION ACTIONS
Sec. 801. Increase in limit on recovery of civil damages for unauthorized collec-
tion actions.
Sec. 802. Court discretion to reduce award for litigation costs for failure to ex-
haust administrative remedies.
TITLE IX—MODIFICATIONS TO PENALTY FOR FAILURE TO
COLLECT AND PAY OVER TAX
Sec. 901. Preliminary notice requirement.
Sec. 902. Disclosure of certain information where more than 1 person liable for
penalty for failure to collect and pay over tax.
Sec. 903. Right of contribution where more than 1 person liable for penalty for
failure to collect and pay over tax.
Sec. 904. Volunteer board members of tax-exempt organizations exempt from
penalty for failure to collect and pay over tax.
TITLE X—MODIFICATIONS OF RULES RELATING TO SUMMONSES
Sec. 1001. Enrolled agents included as third-party recordkeepers.
Sec. 1002. Safeguards relating to designated summonses.
Sec. 1003. Annual report to Congress concerning designated summonses.
TITLE XI—RELIEF FROM RETROACTIVE APPLICATION OF
TREASURY DEPARTMENT REGULATIONS
Sec. 1101. Relief from retroactive application of Treasury Department regula-
tions.
TITLE XII—MISCELLANEOUS PROVISIONS
Sec. 1201. Report on pilot program for appeal of enforcement actions.
Sec. 1202. Phone number of person providing payee statements required to be
shown on such statement.
Sec. 1203. Required notice of certain payments.
Sec. 1204. Unauthorized enticement of information disclosure.
Sec. 1205. Annual reminders to taxpayers with outstanding delinquent ac-
counts.
Sec. 1206. 5-year extension of authority for undercover operations.
Sec. 1207. Disclosure of Form 8300 information on cash transactions.
Sec. 1208. Disclosure of returns and return information to designee of tax-
payer.
Sec. 1209. Study of netting of interest on overpayments and liabilities.
TITLE I—TAXPAYER ADVOCATE
SEC. 101. ESTABLISHMENT OF POSITION OF TAXPAYER AD-
VOCATE WITHIN INTERNAL REVENUE SERV-
ICE.
(a) GENERAL RULE.—Section 7802 (relating to
Commissioner of Internal Revenue; Assistant Commis-
sioner (Employee Plans and Exempt Organizations)) is
amended by adding at the end the following new sub-
section:
‘‘(d) OFFICE OF TAXPAYER ADVOCATE.—
‘‘(1) IN GENERAL.—There is established in the
Internal Revenue Service an office to be known as
the ‘Office of the Taxpayer Advocate’. Such office
shall be under the supervision and direction of an of-
ficial to be known as the ‘Taxpayer Advocate’ who
shall be appointed by and report directly to the
Commissioner of Internal Revenue. The Taxpayer
Advocate shall be entitled to compensation at the
same rate as the highest level official reporting di-
rectly to the Deputy Commissioner of the Internal
Revenue Service.
‘‘(2) FUNCTIONS OF OFFICE.—
‘‘(A) IN GENERAL.—It shall be the func-
tion of the Office of Taxpayer Advocate to—
‘‘(i) assist taxpayers in resolving prob-
lems with the Internal Revenue Service,
‘‘(ii) identify areas in which taxpayers
have problems in dealings with the Internal
Revenue Service,
‘‘(iii) to the extent possible, propose
changes in the administrative practices of
the Internal Revenue Service to mitigate
problems identified under clause (ii), and
‘‘(iv) 
identify 
potential 
legislative
changes which may be appropriate to miti-
gate such problems.
‘‘(B) ANNUAL REPORTS.—
‘‘(i) OBJECTIVES.—Not later than
June 30 of each calendar year after 1995,
the Taxpayer Advocate shall report to the
Committee on Ways and Means of the
House of Representatives and the Commit-
tee on Finance of the Senate on the objec-
tives of the Taxpayer Advocate for the fis-
cal year beginning in such calendar year.
Any such report shall contain full and sub-
stantive analysis, in addition to statistical
information.
‘‘(VIII) contain recommendations
for such administrative and legislative
action as may be appropriate to re-
solve problems encountered by tax-
payers,
‘‘(IX) describe the extent to
which regional problem resolution offi-
cers participate in the selection and
evaluation of local problem resolution
officers, and
‘‘(X) include such other informa-
tion as the Taxpayer Advocate may
deem advisable.
‘‘(iii) REPORT TO BE SUBMITTED DI-
RECTLY.—Each report required under this
subparagraph shall be provided directly to
the Committees referred to in clauses (i)
and (ii) without any prior review or com-
ment from the Commissioner, the Sec-
retary of the Treasury, any other officer or
employee of the Department of the Treas-
ury, or the Office of Management and
Budget.
‘‘(3) RESPONSIBILITIES
OF
COMMISSIONER.—
The Commissioner of Internal Revenue shall estab-
lish procedures requiring a formal response to all
recommendations submitted to the Commissioner
by the Taxpayer Advocate within 3 months after
submission to the Commissioner.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 7811 (relating to Taxpayer Assist-
ance Orders) is amended—
(A) by striking ‘‘the Office of Ombuds-
man’’ in subsection (a) and inserting ‘‘the Of-
fice of the Taxpayer Advocate’’, and
(B) by striking ‘‘Ombudsman’’ each place
it appears (including in the headings of sub-
sections (e) and (f)) and inserting ‘‘Taxpayer
Advocate’’.
(2) The heading for section 7802 is amended to
read as follows:
‘‘SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; AS-
SISTANT COMMISSIONERS; TAXPAYER ADVO-
CATE.’’
(3) The table of sections for subchapter A of
chapter 80 is amended by striking the item relating
to section 7802 and inserting the following new
item:
‘‘Sec. 7802. Commissioner of Internal Revenue; Assistant Com-
missioners; Taxpayer Advocate.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 102. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER
ASSISTANCE ORDERS.
(a) TERMS OF ORDERS.—Subsection (b) of section
7811 (relating to terms of Taxpayer Assistance Orders)
is amended—
(1) by inserting ‘‘within a specified time pe-
riod’’ after ‘‘the Secretary’’, and
(2) by inserting ‘‘take any action as permitted
by law,’’ after ‘‘cease any action,’’.
(b) LIMITATION ON AUTHORITY TO MODIFY OR RE-
SCIND.—Section 7811(c) (relating to authority to modify
or rescind) is amended to read as follows:
‘‘(c) AUTHORITY TO MODIFY
OR RESCIND.—Any
Taxpayer Assistance Order issued by the Taxpayer Advo-
cate under this section may be modified or rescinded—
‘‘(1) only by the Taxpayer Advocate, the Com-
missioner of Internal Revenue, the Deputy Commis-
sioner of Internal Revenue, or a regional problem
resolution officer, and
‘‘(2) only if a written explanation of the reasons
for the modification or rescission is provided to the
Taxpayer Advocate.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
TITLE 
II—MODIFICATIONS 
TO
INSTALLMENT 
AGREEMENT
PROVISIONS
SEC. 201. NOTIFICATION OF REASONS FOR TERMINATION
OF INSTALLMENT AGREEMENTS.
(a) TERMINATIONS.—Subsection (b) of section 6159
(relating to extent to which agreements remain in effect)
is amended by adding at the end the following new para-
graph:
‘‘(5) NOTICE REQUIREMENTS.—The Secretary
may not take any action under paragraph (2), (3),
or (4) unless—
‘‘(A) a notice of such action is provided to
the taxpayer not later than the day 30 days be-
fore the date of such action, and
‘‘(B) such notice includes an explanation
why the Secretary intends to take such action.
The preceding sentence shall not apply in any case
in which the Secretary believes that collection of any
tax to which an agreement under this section relates
is in jeopardy.’’
(b) CONFORMING AMENDMENT.—Paragraph (3) of
section 6159(b) is amended to read as follows:
‘‘(3) SUBSEQUENT CHANGE IN FINANCIAL CON-
DITIONS.—If the Secretary makes a determination
that the financial condition of a taxpayer with whom
the Secretary has entered into an agreement under
subsection (a) has significantly changed, the Sec-
retary may alter, modify, or terminate such agree-
ment.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date 6 months after
the date of the enactment of this Act.
SEC. 202. ADMINISTRATIVE REVIEW OF TERMINATION OF
INSTALLMENT AGREEMENT.
(a) GENERAL RULE.—Section 6159 (relating to
agreements for payment of tax liability in installments)
is amended by adding at the end the following new sub-
section:
‘‘(c) ADMINISTRATIVE REVIEW.—The Secretary shall
establish procedures for an independent administrative re-
view of terminations of installment agreements under this
section for taxpayers who request such a review.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on January 1, 1996.
TITLE III—ABATEMENT OF
INTEREST AND PENALTIES
SEC. 301. EXPANSION OF AUTHORITY TO ABATE INTEREST.
(a) GENERAL RULE.—Paragraph (1) of section
6404(e) (relating to abatement of interest in certain cases)
is amended—
(1) by inserting ‘‘unreasonable’’ before ‘‘error’’
each place it appears in subparagraphs (A) and (B),
and
(2) by striking ‘‘in performing a ministerial
act’’ each place it appears and inserting ‘‘in per-
forming a ministerial or managerial act’’.
(b) CLERICAL AMENDMENT.—The subsection head-
ing for subsection (e) of section 6404 is amended—
(1) by striking ‘‘ASSESSMENTS’’ and inserting
‘‘ABATEMENT’’, and
(2) by inserting ‘‘UNREASONABLE’’ before ‘‘ER-
RORS’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to interest accruing with respect
to deficiencies or payments for taxable years beginning
after the date of the enactment of this Act.
SEC. 302. 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. 303. EXTENSION OF INTEREST-FREE PERIOD FOR PAY-
MENT OF TAX AFTER NOTICE AND DEMAND.
(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)
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.
SEC. 304. ABATEMENT OF PENALTY FOR FAILURE TO MAKE
REQUIRED DEPOSITS OF PAYROLL TAXES IN
CERTAIN CASES.
(a) IN GENERAL.—Section 6656 (relating to failure
to make deposit of taxes) is amended by adding at the
end the following new subsections:
‘‘(c) EXCEPTION FOR FIRST-TIME DEPOSITORS OF
EMPLOYMENT TAXES.—The Secretary may waive the pen-
alty imposed by subsection (a) on a person’s inadvertent
failure to deposit any employment tax if—
‘‘(1) such person meets the requirements re-
ferred to in section 7430(c)(4)(A)(iii),
‘‘(2) such failure occurs during the 1st quarter
that such person was required to deposit any em-
ployment tax, and
‘‘(3) the return of such tax was filed on or be-
fore the due date.
For purposes of this subsection, the term ‘employment
taxes’ means the taxes imposed by subtitle C.
‘‘(d) AUTHORITY TO ABATE PENALTY WHERE DE-
POSIT SENT TO SECRETARY.—The Secretary may abate
the penalty imposed by subsection (a) the first time a de-
positor inadvertently sends the amount required to be de-
posited to the Secretary instead of to the appropriate gov-
ernment depository.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to deposits required to be made
after the date of the enactment of this Act.
TITLE IV—JOINT RETURNS
SEC. 401. 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.
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. 402. JOINT RETURN MAY BE MADE AFTER SEPARATE
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. 403. 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
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.’’
TITLE V—COLLECTION
ACTIVITIES
SEC. 501. MODIFICATIONS TO LIEN AND LEVY PROVISIONS.
(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
means of installment payments, unless such
agreement provides otherwise,
‘‘(C) the withdrawal of such notice will fa-
cilitate the collection of the tax liability, or
‘‘(D) with the consent of the taxpayer or
the Taxpayer Advocate, the withdrawal of such
notice would be in the best interests of the tax-
payer (as determined by the Taxpayer Advo-
cate) and the United States.
Any such withdrawal shall be made by filing notice
at the same office as the withdrawn notice. A copy
of such notice of withdrawal shall be provided to the
taxpayer.
‘‘(2) NOTICE
TO
CREDIT
AGENCIES, ETC.—
Upon written request by the taxpayer with respect
to whom a notice of a lien was withdrawn under
paragraph (1), the Secretary shall promptly make
reasonable efforts to notify credit reporting agencies,
and any financial institution or creditor whose name
and address is specified in such request, of the with-
drawal of such notice. Any such request shall be in
such form as the Secretary may prescribe.’’
(b) RETURN
OF LEVIED PROPERTY
IN CERTAIN
CASES.—Section 6343 (relating to authority to release
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).’’
(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
‘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. 502. 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.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
TITLE VI—INFORMATION
RETURNS
SEC. 601. CIVIL DAMAGES FOR FRAUDULENT FILING OF IN-
FORMATION 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-
utable to resolving deficiencies asserted as a result
of such filing), and
‘‘(2) the costs of the action.
‘‘(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 judgment of the court in an
action brought under subsection (a) shall include a finding
of the correct amount which should have been reported
in the information return.