Title: Preserving Taxpayers' Rights Act
Policy area: Taxation

Summary:
Preserving Taxpayers' Rights Act
This bill amends the Internal Revenue Code to establish new procedures and requirements for administrative appeals of Internal Revenue Service (IRS) deficiency determinations.
If the IRS determines that there is a deficiency with respect to a tax imposed, it may send a notice of deficiency to a taxpayer after:
The bill includes exceptions to these requirements for frivolous tax positions and issues in cases designated for litigation.
The IRS must permit a taxpayer to appeal a deficiency prior to issuing a deficiency notice if 60 or fewer days remain on the statute of limitations and the taxpayer agrees to extend the period for 12 months.
The bill modifies appeals dispute resolution procedures. It also restricts the authority of the IRS to: (1) designate cases for litigation without permitting an appeal, or (2) offer settlement agreements that preclude an appeal.
The bill modifies the authority of the IRS to issue a summons and limits the access that people outside of the IRS have to returns and return information acquired by a summons.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3220 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 3220

   To amend the Internal Revenue Code of 1986 to preserve taxpayers' 
 rights to administrative appeal of deficiency determinations, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 13, 2017

Mr. Smith of Missouri (for himself, Ms. Sewell of Alabama, Ms. Judy Chu 
of California, Mr. Thompson of California, Mr. Curbelo of Florida, and 
 Mr. Holding) 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 preserve taxpayers' 
 rights to administrative appeal of deficiency determinations, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Preserving 
Taxpayers' Rights Act''.
    (b) Table of Contents.--The table of contents of this bill is as 
follows:

Sec. 1. Short title, etc.
Sec. 2. Ensuring taxpayer right to appeal.
Sec. 3. Appeals dispute resolution procedures.
Sec. 4. Restriction on Secretarial authority to designate cases for 
                            litigation.
Sec. 5. Modification of authority to issue designated summons.
Sec. 6. Limitation on access of non-Internal Revenue Service employees 
                            to returns and return information.

SEC. 2. ENSURING TAXPAYER RIGHT TO APPEAL.

    (a) In General.--Subsection (a) of section 6212 of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``In General.--If the Secretary'' and 
        inserting ``In General.--
            ``(1) Authorization.--If--
                    ``(A) the Secretary'';
            (2) by striking ``44, he is authorized'' and inserting 
        ``44, and
                    ``(B) the requirements of paragraph (2) have been 
                met with respect to such deficiency,
        the Secretary is authorized''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Opportunity for administrative review in the office 
        of appeals.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to a deficiency if, 
                prior to the issuance of the notice of deficiency under 
                paragraph (1)--
                            ``(i) the taxpayer has been issued a letter 
                        of proposed deficiency that explains the basis 
                        for the determination of deficiency and allows 
                        the taxpayer an opportunity for administrative 
                        review in the Internal Revenue Service Office 
                        of Appeals, and
                            ``(ii) either--
                                    ``(I) the time provided in such 
                                letter for requesting administrative 
                                review in the Internal Revenue Service 
                                Office of Appeals has expired and the 
                                taxpayer has not made such request, or
                                    ``(II) such Office of Appeals 
                                officially concluded the administrative 
                                review process with respect to such 
                                deficiency.
                    ``(B) Frivolous tax positions.--The Secretary is 
                authorized to issue regulations limiting the 
                application of subparagraph (A) in cases involving 
                solely the failure or refusal to comply with the tax 
                laws because of moral, religious, political, 
                constitutional, conscientious, or similar grounds, or 
                for other positions listed as frivolous under section 
                6702(c).
                    ``(C) Cases designated for litigation.--
                Subparagraph (A) shall not apply in the case of issues 
                designated for litigation in accordance with section 
                7124, and the taxpayer's right to administrative review 
                in the Internal Revenue Service Office of Appeals as 
                provided in this paragraph shall not otherwise be 
                denied.''.
    (b) Opportunity for Appeal if Fewer Than 60 Days Remain on Statute 
of Limitations.--Section 6212 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(e) Opportunity for Appeal if Fewer Than 60 Days Remain on 
Statute of Limitations.--In the case of any issues relating to a 
potential deficiency with respect to which 60 days or fewer remain in 
the period applicable under section 6501, if the taxpayer agrees to the 
extension of such period by 12 months, the Secretary shall issue a 
letter of proposed deficiency described in subsection (a)(2)(A)(i) 
allowing the taxpayer an opportunity for administrative review of such 
issues in the Internal Revenue Service Office of Appeals before a 
notice of deficiency is issued under this section. Rules similar to the 
rules of subsection (a)(2)(B) shall apply for purposes of this 
subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to notices of deficiency issued after the date of the 
introduction of this Act.

SEC. 3. APPEALS DISPUTE RESOLUTION PROCEDURES.

    Subsection (a) of section 7123 of the Internal Revenue Code of 1986 
is amended to read as follows:
    ``(a) Referral to Appeals Procedures.--The Secretary shall 
prescribe procedures by which any taxpayer may request--
            ``(1) early referral of one or more unresolved issues from 
        the examination or collection division to the Internal Revenue 
        Service Office of Appeals, or
            ``(2) consideration by such Office of Appeals of issues 
        included in--
                    ``(A) a letter of proposed deficiency described in 
                section 6212(a)(2)(A),
                    ``(B) a notice of deficiency pursuant to section 
                6212, whether or not the taxpayer has filed a petition 
                with the Tax Court pursuant to section 6213(a), or
                    ``(C) a claim for refund, whether or not the 
                taxpayer has filed suit in a district court or the 
                United States Court of Federal Claims with respect to 
                the issues included in such claim or refund.
        Such regulations may limit such procedures in cases involving 
        solely the failure or refusal to comply with the tax laws 
        because of moral, religious, political, constitutional, 
        conscientious, or similar grounds, or for other positions 
        listed as frivolous under section 6702(c). Such procedures 
        shall not be available in the case of issues designated for 
        litigation in accordance with section 7124, and the taxpayer's 
        right to administrative review in the Internal Revenue Service 
        Office of Appeals as provided in section 6212(a)(2) shall not 
        otherwise be denied.''.

SEC. 4. RESTRICTION ON SECRETARIAL AUTHORITY TO DESIGNATE CASES FOR 
              LITIGATION.

    (a) In General.--Chapter 74 of the Internal Revenue Code of 1986 is 
amended by redesignating section 7124 as section 7125 and by inserting 
after section 7123 the following new section:

``SEC. 7124. RESTRICTION ON SECRETARIAL AUTHORITY TO DESIGNATE CASES 
              FOR LITIGATION.

    ``(a) In General.--The Secretary may designate issues arising from 
the examination or collection division for litigation, and not permit 
the taxpayer to request consideration of such issues by the Internal 
Revenue Service Office of Appeals under section 7123(a), only to the 
extent such issues relate to listed transactions (as defined in section 
6707A(c)(2)).
    ``(b) Settlement.--In offering terms under a settlement agreement 
for purposes of the resolution of any issues arising from the 
examination or collection division, the Secretary may offer terms that 
preclude the taxpayer from requesting consideration of such issues by 
the Office of Appeals under section 7123(a) only to the extent such 
issues relate to listed transactions (as defined in section 
6707A(c)(2)).''.
    (b) Clerical Amendment.--The table of sections for chapter 74 of 
the Internal Revenue Code of 1986 is amended by striking the item 
relating to section 7124 and inserting the following new items:

``Sec. 7124. Restriction on Secretarial authority to designate cases 
                            for litigation.
``Sec. 7125. Cross references.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to the designation of issues for litigation, and offers of 
settlement terms, after the date of the introduction of this Act.

SEC. 5. MODIFICATION OF AUTHORITY TO ISSUE DESIGNATED SUMMONS.

    (a) In General.--Paragraph (1) of section 6503(j) of the Internal 
Revenue Code of 1986 is amended by striking ``coordinated examination 
program'' and inserting ``coordinated industry case program''.
    (b) Designated Summons.--Clause (i) of section 6503(j)(2)(A) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                            ``(i) the issuance of such summons is 
                        preceded by a review and written approval of 
                        such issuance by the Large Business and 
                        International Division Commissioner and the 
                        Division Counsel of the Office of Chief Counsel 
                        (or their successors)--
                                    ``(I) which clearly establishes 
                                that the taxpayer did not reasonably 
                                cooperate with reasonable requests by 
                                the Secretary for witnesses, documents, 
                                meetings, and interviews, and
                                    ``(II) which is attached to such 
                                summons,''.
    (c) Burden of Proof.--Subsection (j) of section 6503 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(4) Burden of proof.--In any court proceeding described 
        in paragraph (3), the Secretary shall bear the burden of 
        proving that the corporation described in paragraph (1) did not 
        reasonably cooperate with reasonable requests by the Secretary 
        for witnesses, documents, meetings, and interviews.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to summonses issued after the date of the introduction of this 
Act.

SEC. 6. LIMITATION ON ACCESS OF NON-INTERNAL REVENUE SERVICE EMPLOYEES 
              TO RETURNS AND RETURN INFORMATION.

    (a) In General.--Section 7602 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(f) Limitation on Access of Persons Other Than Internal Revenue 
Service Officers and Employees.--No person other than an officer or 
employee of the Internal Revenue Service shall be designated under 
section 6103(n) to receive any books, papers, records, or other data 
obtained pursuant to this section, other than for the sole purpose of 
serving as an expert, and no person other than an officer or employee 
of the Internal Revenue Service or the Office of Chief Counsel may 
question a witness under oath whose testimony was obtained pursuant to 
this section.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall take effect on the date of 
        the enactment of this Act.
            (2) Application to contracts in effect.--The amendment made 
        by this section shall apply to any contract in effect under 
        section 6103(n) of the Internal Revenue Code of 1986, pursuant 
        to temporary Treasury Regulation section 301.7602-1T proposed 
        in Internal Revenue Bulletin 2014-28, Treasury Regulation 
        section 301.7602-1(b)(3), or any similar or successor 
        regulation, that is in effect on the date of the enactment of 
        this Act.
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