[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 542 Introduced in Senate (IS)]
103d CONGRESS
1st Session
S. 542
To amend the Internal Revenue Code of 1986 to provide additional
safeguards to protect taxpayer rights.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 10 (legislative day, March 3), 1993
Mr. Pryor (for himself, Mr. Grassley, Mr. Reid, Mr. Baucus, Mr.
Packwood, Mr. Boren, Mr. Danforth, Mr. Riegle, Mr. Hatch, Mr.
Rockefeller, Mr. Wallop, Mr. Daschle, Mr. Breaux, Mr. Conrad, Mr.
Bryan, Mr. Bumpers, Mr. Campbell, Mr. Cochran, Mr. D'Amato, Mr.
DeConcini, Mr. Domenici, Mr. Exon, Mr. Glenn, Mr. Helms, Mr. Hollings,
Mr. Johnston, Mr. Lott, Ms. Mikulski, Mr. Murkowski, Mr. Nickles, Mr.
Pressler, Mr. Sarbanes, Mr. Sasser, Mr. Shelby, Mr. Simon, Mr. Wofford,
and Mr. Cohen) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide additional
safeguards to protect taxpayer rights.
Be it enacted by the Senate and House of Representatives 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 otherwise expressly
provided, whenever in this Act an amendment 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
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:
TITLE I--TAXPAYER ADVOCATE
Sec. 101. Establishment of position of Taxpayer Advocate within
Internal Revenue Service.
Sec. 102. Expansion of authority to issue taxpayer assistance orders.
TITLE II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS
Sec. 201. Taxpayer's right to installment agreement.
Sec. 202. Notification of reasons for termination or denial of
installment agreements.
Sec. 203. Administrative review of denial of request for, or
termination of, installment agreement.
TITLE III--INTEREST
Sec. 301. Expansion of authority to abate interest.
Sec. 302. Extension of interest-free period for payment of tax after
notice and demand.
TITLE IV--JOINT RETURNS
Sec. 401. Disclosure of collection activities.
Sec. 402. Joint return may be made after separate returns without full
payment of tax.
TITLE V--COLLECTION ACTIVITIES
Sec. 501. Modifications to lien and levy provisions.
Sec. 502. Offers-in-compromise.
Sec. 503. Notification of examination.
Sec. 504. Increase in limit on recovery of civil damages for
unauthorized collection actions.
Sec. 505. Safeguards relating to designated summons.
TITLE VI--INFORMATION RETURNS
Sec. 601. Phone number of person providing payee statements required to
be shown on such statement.
Sec. 602. Civil damages for fraudulent filing of information returns.
Sec. 603. Requirement to verify accuracy of information returns.
TITLE VII--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX
Sec. 701. Preliminary notice requirement.
Sec. 702. No penalty if prompt notification of the Secretary.
Sec. 703. Disclosure of certain information where more than 1 person
subject to penalty.
Sec. 704. Penalties under section 6672.
TITLE VIII--AWARDING OF COSTS AND CERTAIN FEES
Sec. 801. Motion for disclosure of information.
Sec. 802. Increased limit on attorney fees.
Sec. 803. Failure to agree to extension not taken into account.
Sec. 804. Effective date.
TITLE IX--OTHER PROVISIONS
Sec. 901. Required content of certain notices.
Sec. 902. Treatment of substitute returns under section 6651.
Sec. 903. Relief from retroactive application of Treasury Department
regulations.
Sec. 904. Required notice of certain payments.
Sec. 905. Unauthorized enticement of information disclosure.
TITLE X--FORM MODIFICATIONS; STUDIES
Sec. 1000. Definitions.
Subtitle A--Form Modifications
Sec. 1001. Explanation of certain provisions.
Sec. 1002. Improved procedures for notifying service of change of
address or name.
Sec. 1003. Rights and responsibilities of divorced individuals.
Subtitle B--Studies
Sec. 1011. Pilot program for appeal of enforcement actions.
Sec. 1012. Study on taxpayers with special needs.
Sec. 1013. Reports on taxpayer-rights education program.
Sec. 1014. Biennial reports on misconduct by Internal Revenue Service
employees.
Sec. 1015. Study of notices of deficiency.
Sec. 1016. Notice and form accuracy study.
Sec. 1017. Internal Revenue Service employees' suggestions study.
TITLE I--TAXPAYER ADVOCATE
SEC. 101. ESTABLISHMENT OF POSITION OF TAXPAYER ADVOCATE WITHIN
INTERNAL REVENUE SERVICE.
(a) General Rule.--Section 7802 (relating to Commissioner of
Internal Revenue; Assistant Commissioner (Employee Plans and Exempt
Organizations)) is amended by adding at the end thereof the following
new subsection:
``(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, including all problem
resolution officers, shall be under the supervision and
direction of an official to be known as the `Taxpayer Advocate'
who shall report directly to the Commissioner of Internal
Revenue. The Taxpayer Advocate shall be entitled to
compensation at the same rate as the Chief Counsel for the
Internal Revenue Service.
``(2) Functions of office.--
``(A) In general.--It shall be the function of the
Office of Taxpayer Advocate to--
``(i) assist taxpayers in resolving
problems 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 mitigate
such problems.
``(B) Annual reports.--
``(i) Objectives.--Not later than October
31 of each calendar year after 1993, the
Taxpayer Advocate shall report to the Committee
on Ways and Means of the House of
Representatives and the Committee on Finance of
the Senate on the objectives of the Taxpayer
Advocate for the following calendar year. Any
such report shall contain full and substantive
analysis, in addition to statistical
information.
``(ii) Activities.--Not later than June 30
of each calendar year after 1993, the Taxpayer
Advocate shall report to the Committee on Ways
and Means of the House of Representatives and
the Committee on Finance of the Senate on the
activities of the Taxpayer Advocate during the
fiscal year ending during such calendar year.
Any such report shall contain full and
substantive analysis, in addition to
statistical information, and shall--
``(I) identify the initiatives the
Taxpayer Advocate has taken on
improving taxpayer services and
Internal Revenue Service
responsiveness,
``(II) contain recommendations
received from individuals with the
authority to issue taxpayer assistance
orders under section 7811,
``(III) contain a summary of at
least 20 of the most serious problems
encountered by taxpayers, including a
description of the nature of such
problems,
``(IV) contain an inventory of the
items described in subclauses (I),
(II), and (III) for which action has
been taken and the result of such
action,
``(V) contain an inventory of the
items described in subclauses (I),
(II), and (III) for which action
remains to be completed and the period
during which each item has remained on
such inventory,
``(VI) contain an inventory of the
items described in subclauses (II) and
(III) for which no action has been
taken, the period during which each
item has remained on such inventory,
the reasons for the inaction, and
identify any Internal Revenue Service
official who is responsible for such
inaction,
``(VII) identify any Taxpayer
Assistance Order which was not honored
by the Internal Revenue Service in a
timely manner, as specified under
section 7811(b),
``(VIII) contain recommendations
for such administrative and legislative
action as may be appropriate to resolve
problems encountered by taxpayers, and
``(IX) include such other
information as the Taxpayer Advocate
may deem advisable.
``(iii) Report to be submitted directly.--
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 comment from the Commissioner
of the Internal Revenue Service, the Secretary
of the Treasury, any other officer or employee
of the Department of the Treasury, or the
Office of Management and Budget.
``(3) Responsibilities of commissioner of internal revenue
service.--The Commissioner of Internal Revenue shall establish
procedures requiring a formal response to all recommendations
submitted to the Commissioner by the Taxpayer Advocate.''.
(b) Conforming Amendments.--
(1) Section 7811 (relating to taxpayer assistance orders)
is amended--
(A) by striking ``the Office of Ombudsman'' in
subsection (a) and inserting ``the Office of the
Taxpayer Advocate'', and
(B) by striking ``Ombudsman'' each place it appears
(including in the headings of subsections (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; ASSISTANT COMMISSIONERS;
TAXPAYER ADVOCATE.''
(3) The table of sections for subchapter A of chapter 80 of
subtitle F is amended by striking the item relating to section
7802 and inserting the following new item:
``Sec. 7802. Commissioner of Internal
Revenue; Assistant
Commissioners; 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 period'' 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 Rescind.--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 Advocate under this section may be
modified or rescinded only by the Taxpayer Advocate, the Commissioner,
or any superior of either.''.
(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. TAXPAYER'S RIGHT TO INSTALLMENT AGREEMENT.
(a) In General.--Subsection (a) of section 6159 (relating to
agreements for payment of tax liability in installments) is amended to
read as follows:
``(a) In General.--
``(1) Authorization of agreements.--The Secretary is
authorized to enter into written agreements with any taxpayer
under which such taxpayer is allowed to satisfy liability for
payment of any tax in installment payments if the Secretary
determines that such agreement will facilitate collection of
such liability.
``(2) Agreement as a matter of right.--In the case of any
taxpayer other than a corporation, the Secretary shall enter
into such an agreement if--
``(A) the taxpayer requests such an agreement,
``(B) the tax liability is attributable to the tax
imposed under chapter 1 and is less than $10,000, and
``(C) the taxpayer has paid any tax liability for
the 3 preceding taxable years at the time such
liability was due.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 202. NOTIFICATION OF REASONS FOR TERMINATION OR DENIAL 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 thereof the following new paragraph:
``(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 before 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) Denials.--Section 6159 (relating to agreements for payment of
tax liability in installments) is amended by adding at the end thereof
the following new subsection:
``(c) Notice Requirements for Denials.--The Secretary may not deny
any request for an installment agreement under this section unless--
``(1) a notice of the proposed denial is provided to the
taxpayer not later than the day 30 days before the date of such
denial, and
``(2) such notice includes an explanation why the Secretary
intends to deny such request.
The preceding sentence shall not apply in any case in which the
Secretary believes that collection of any tax to which a request for an
agreement under this section relates is in jeopardy.''.
(c) Conforming Amendment.--Paragraph (3) of section 6159(b) is
amended to read as follows:
``(3) Subsequent change in financial conditions.--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
Secretary may alter, modify, or terminate such agreement.''.
(d) 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. 203. ADMINISTRATIVE REVIEW OF DENIAL OF REQUEST FOR, OR
TERMINATION OF, INSTALLMENT AGREEMENT.
(a) General Rule.--Section 6159 (relating to agreements for payment
of tax liability in installments), as amended by section 202(b), is
amended by adding at the end thereof the following new subsection:
``(d) Administrative Review.--The Secretary shall establish
procedures for an independent administrative review of denials of
requests for, or terminations of, installment agreements under this
section.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 1994.
TITLE III--INTEREST
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.
(b) Clerical Amendment.--The subsection heading for subsection (e)
of section 6404 is amended by striking ``Assessments'' and inserting
``Abatement''.
(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. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT 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 period after notice
and demand.--If notice and demand is made for payment of any
amount and if such amount is paid within 21 days (10 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 notice and
demand.''.
(b) Conforming Amendment.--Paragraph (3) of section 6651(a)
(relating to addition to tax for failure to file tax return or pay tax)
is amended by striking ``10 days'' and inserting ``21 days (10 days if
the amount for which such notice and demand is made equals or exceed
$100,000)''.
(c) Effective Date.--The amendments made by this section shall
apply in the case of any notice and demand given after December 31,
1993.
TITLE IV--JOINT RETURNS
SEC. 401. DISCLOSURE OF COLLECTION ACTIVITIES.
(a) General Rule.--Subsection (e) of section 6103 (relating to
disclosure to persons having material interest) is amended by adding at
the end thereof the following new paragraph:
``(8) Disclosure of collection activities with respect to
joint return.--If any deficiency of tax with respect to a joint
return is assessed and the individuals filing such return are
no longer married or no longer reside in the same household,
upon request in writing of either of such individuals, the
Secretary may disclose in writing to the individual making the
request whether the Secretary has attempted to collect such
deficiency from such other individual, 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 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 subparagraph (A) and redesignating the following
subparagraphs 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.
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 persons) is amended by adding at
the end thereof the following new subsection:
``(j) Withdrawal of Notice in Certain Circumstances.--
``(1) In general.--The Secretary may withdraw a notice of a
lien filed under this section and this chapter shall be applied
as if the withdrawn notice had not been filed, if the Secretary
determines that--
``(A) the filing of such notice was premature or
otherwise not in accordance with administrative
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 facilitate
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 taxpayer (as determined
by the Taxpayer Advocate) and the United States.
Any such withdrawal shall be made by filing notice thereof 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 withdrawal 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 thereof 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 premature or
otherwise not in accordance with administrative
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 facilitate
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 Advocate) 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'', and
(B) by striking ``$1,650 ($1,550 in the case of
levies issued during 1989)'' and inserting ``$1,700''.
(2) Books, etc.--Paragraph (3) of section 6334(a) (relating
to books and tools of a trade, business, or profession exempt
from levy) is amended by striking ``$1,100 ($1,050 in the case
of levies issued during 1989)'' and inserting ``$1,200''.
(3) Health care premiums.--TO BE DISCUSSED.
(4) Indexed for inflation.--Section 6334 (relating to
property exempt from levy) is amended by adding at the end
thereof the following new subsection:
``(f) Inflation Adjustments.--
``(1) In general.--In the case of any calendar year
beginning after 1993, each dollar amount referred 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 determined
under section 1(f)(3) for such calendar year, by
substituting `calendar year 1992' for `calendar year
1989' in subparagraph (B) thereof.
``(2) Rounding.--If any dollar amount after being increased
under paragraph (1) is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of $10 (or, if
such dollar amount is a multiple of $5, such dollar amount
shall be increased to the next higher multiple of $10).''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (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, 1993.
SEC. 502. OFFERS-IN-COMPROMISE.
(a) General Rule.--Subsection (a) of section 7122 (relating to
compromises) is amended by adding at the end thereof the following new
sentence: ``The Secretary may make such a compromise in any case where
the Secretary determines that such compromise would be in the best
interests of the United States.''.
(b) Review Requirements.--Subsection (b) of section 7122 (relating
to records) is amended by striking ``$500.'' and inserting ``$50,000.
However, such compromise shall be subject to continuing quality review
by the Secretary.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 503. NOTIFICATION OF EXAMINATION.
(a) In General.--Section 7605 (relating to restrictions on
examination of taxpayer) is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the following new
subsection:
``(c) Notification Requirement.--No examination described in
subsection (a) shall be made unless the Secretary notifies the taxpayer
in writing by mail to an address determined under section 6212(b) that
the taxpayer is under examination and provides the taxpayer with an
explanation of the process as described in section 7521(b)(1). The
preceding sentence shall not apply in the case of any examination if
the Secretary determines that--
``(1) such examination is in connection with a criminal
investigation or is with respect to a tax the collection of
which is in jeopardy, or
``(2) the application of the preceding sentence would be
inconsistent with national security needs or would interfere
with the effective conduct of a confidential law enforcement or
foreign counterintelligence activity.''.
(b) Conforming Amendment.--Paragraph (1) of section 7521(b)
(relating to safeguards) is amended by striking ``or at''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 504. 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 employees of the Internal Revenue
Service after the date of the enactment of this Act.
SEC. 505. SAFEGUARDS RELATING TO DESIGNATED SUMMONS.
(a) Standard of Review.--Subparagraph (A) of section 6503(k)(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 the
regional counsel of the Office of Chief Counsel
for the region in which the examination of the
corporation is being conducted,''.
(b) Notice Requirements for Issuance.--Section 6503(k) is amended
by adding at the end thereof the following new paragraph:
``(4) Notice requirements.--With respect to any summons
referred to in paragraph (1)(A) issued to any person other than
the corporation, the Secretary shall promptly notify the
corporation, in writing, that such summons has been issued with
respect to such corporation's return of tax.''.
(c) Effective Date.--The amendments made by this section shall
apply to summons issued after the date of the enactment of this Act.
TITLE VI--INFORMATION RETURNS
SEC. 601. 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 inserting ``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 furnished after December 31, 1993
(determined without regard to any extension).
SEC. 602. 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 false or
fraudulent information return with respect to payments purported to be
made to any other person, such other person may bring a civil action
for damages against the person so filing such return.
``(b) Damages.--In any action brought under subsection (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 plaintiff as a
proximate result of the filing of the false or fraudulent
information return (including any costs attributable to
resolving deficiencies asserted as a result of such filing),
and
``(2) the costs of the action.
``(c) Period for Bringing Action.--Notwithstanding 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) 4 years after the date of the filing of the false or
fraudulent information return, or
``(2) 1 year after the date such false or fraudulent
information return would have been discovered by exercise of
reasonable care.
``(d) Copy of Complaint Filed With IRS.--Any person bringing an
action under subsection (a) shall provide a copy of the complaint to
the Internal Revenue Service 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.
``(f) Information Return.--For purposes of this section, the term
`information return' means any statement 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 returns.
``Sec. 7435. Cross references.''.
(c) Effective Date.--The amendments made by this section shall
apply to false or fraudulent information returns filed after the date
of the enactment of this Act.
SEC. 603. REQUIREMENT TO VERIFY ACCURACY OF INFORMATION RETURNS.
(a) General Rule.--Section 6201 (relating to assessment authority)
is amended by redesignating subsection (d) as subsection (e) and by
inserting after subsection (c) the following new subsection:
``(d) Required Reasonable Verification of Information Returns.--In
any court proceeding, if a taxpayer asserts a reasonable dispute with
respect to any item of income reported on an information return filed
with the Secretary under subpart B of part III of subchapter A of
chapter 61 by a third party and the taxpayer has fully cooperated with
the Secretary (including providing, within a reasonable period of time,
access to and inspection of all witnesses, information, and documents
within the control of the taxpayer as reasonably requested by the
Secretary), the Secretary shall present 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 enactment of this Act.
TITLE VII--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX
SEC. 701. 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 subsection (c) and by inserting after
subsection (a) the following new subsection:
``(b) Preliminary Notice Requirement.--
``(1) In general.--No penalty shall be imposed under
subsection (a) unless the Secretary notifies 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.
``(3) Statute of limitations.--If a notice described in
paragraph (1) with respect to any penalty is mailed before the
expiration of the period provided by section 6501 for the
assessment of such penalty (determined without regard to this
paragraph), the period provided by such section for the
assessment of such penalty shall not expire before the date 90
days after the date on which such notice was mailed.
``(4) Exception for jeopardy.--This subsection 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 assessments made after June 30, 1994.
SEC. 702. NO PENALTY IF PROMPT NOTIFICATION OF THE SECRETARY.
(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 thereof the following new subsection:
``(d) Penalty Not Applicable Where Prompt Notification of
Failure.--
``(1) In general.--A person shall not be liable for any
penalty under subsection (a) by reason of any failure referred
to in subsection (a) if--
``(A) such person is not a significant owner, or
highly compensated employee, of the trade or business
with respect to which such failure occurred,
``(B) such person notifies the Secretary (in such
manner as he may prescribe) that such failure has
occurred within 10 days after the date of such failure,
``(C) such notification was before any notice by
the Secretary to any person with respect to such
failure, and
``(D) such failure is not a part of a plan to
defraud the Federal Government.
``(2) Definitions.--For purposes of paragraph (1)--
``(A) Significant owner.--The term `significant
owner' means--
``(i) any person holding an interest as a
proprietor in a trade or business carried on as
a proprietorship, and
``(ii) in the case of a trade or business
conducted by a corporation or partnership, any
person who is a 5-percent owner (as defined in
section 416(i)(1)) in such corporation or
partnership, as the case may be.
``(B) Highly compensated employee.--The term
`highly compensated employee' means any employee who
receives compensation from the employer at an annual
rate in excess of $75,000.
``(3) Special rules.--
``(A) One-time relief.--This subsection shall apply
only once with respect to--
``(i) any person, and
``(ii) any trade or business with respect
to which the failure described in subsection
(a) occurred.
``(B) Application of subsection.--This subsection
shall not apply if it results in no person being held
liable for the penalty described in subsection (a).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply in the case of failures after the date of the enactment of this
Act.
SEC. 703. DISCLOSURE OF CERTAIN INFORMATION WHERE MORE THAN 1 PERSON
SUBJECT TO PENALTY.
(a) In General.--Subsection (e) of section 6103 (relating to
disclosure to persons having material interest), as amended by section
401(a), is amended by adding at the end thereof the following new
paragraph:
``(9) Disclosure of certain information where more than 1
person subject to penalty under section 6672.--If the Secretary
determines that a person is liable for a penalty under section
6672(a) with respect to any failure, upon request 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 enactment of this Act.
SEC. 704. PENALTIES UNDER SECTION 6672.
(a) Public Information Requirements.--The Secretary of the Treasury
or the Secretary's delegate (hereafter in this section 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 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 report to the
Internal Revenue Service any failure referred to in subsection (a) of
such section 6672. Such actions shall include--
(1) printing of a warning on deposit coupon booklets and
the appropriate tax returns that certain employees may be
liable for the penalty imposed by such section 6672, and
(2) the development of a special information packet.
(b) Board Members of Tax-Exempt Organizations.--
(1) Voluntary board members.--
(A) In general.--The penalty under section 6672 of
the Internal Revenue Code of 1986 shall not be imposed
on unpaid, volunteer members of any board of trustees
or directors of an organization referred to in section
501 of such Code to the extent such members are solely
serving in an honorary capacity, do not participate in
the day-to-day or financial operations of the
organization, and do not have actual knowledge of the
failure on which such penalty is imposed.
(B) Application of paragraph.--This paragraph shall
not apply if it results in no person being held liable
for the penalty described in section 6672(a) of the
Internal Revenue Code of 1986.
(2) Development of explanatory materials.--The Secretary
shall develop materials explaining the circumstances under
which board members of tax-exempt organizations (including
voluntary and honorary members) may be subject to penalty under
section 6672 of such Code. Such materials shall be made
available to tax-exempt organizations.
(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 members of boards of trustees or directors
of tax- exempt organizations.
(c) Prompt Notification.--To the maximum extent practicable, the
Secretary shall notify all persons who have failed to make timely and
complete deposit of any taxes described in section 6672 of the Internal
Revenue Code of 1986 of such failure within 30 days after the return
was filed reflecting such failure or after the date on which the
Secretary is first aware of such failure. If the person failing to make
the deposit is not an individual, the Secretary shall notify the entity
subject to such deposit requirement and that entity shall notify,
within 15 days of the notification by the Secretary, all officers,
general partners, trustees, or other managers of the failure.
TITLE VIII--AWARDING OF COSTS AND CERTAIN FEES
SEC. 801. MOTION FOR DISCLOSURE OF INFORMATION.
Paragraph (4) of section 7430(c) (defining prevailing party) is
amended by adding at the end thereof the following new subparagraph:
``(C) Motion for disclosure of information.--Once a
taxpayer substantially prevails as described in
subparagraph (A)(ii), the taxpayer may file a motion
for an order requiring the disclosure (within a
reasonable period of time specified by the court) of
all information and copies of relevant records in the
possession of the Internal Revenue Service with respect
to such taxpayer's case and the substantial
justification for the position taken by the Internal
Revenue Service.''.
SEC. 802. INCREASED LIMIT ON ATTORNEY FEES.
Paragraph (1) of section 7430(c) (defining reasonable litigation
costs) is amended--
(1) by striking ``$75'' in clause (iii) of subparagraph (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:
``In the case of any calendar year beginning after 1992, 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 1991' for
`calendar year 1989' 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 multiple of $10 (or, if such dollar amount is a
multiple of $5, such dollar amount shall be increased to the
next higher multiple of $10).''.
SEC. 803. FAILURE TO AGREE TO EXTENSION NOT TAKEN INTO ACCOUNT.
Paragraph (1) of section 7430(b) (relating to requirement that
administrative remedies be exhausted) is amended by adding at the end
thereof 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. 804. EFFECTIVE DATE.
The amendments made by this title shall apply in the case of
proceedings commenced after the date of the enactment of this Act.
TITLE IX--OTHER PROVISIONS
SEC. 901. REQUIRED CONTENT OF CERTAIN NOTICES.
(a) General Rule.--Subsection (a) of section 7522 (relating to
content of tax due, deficiency, and other notices) is amended by
striking ``shall describe the basis for, and identify'' and inserting
``shall set forth the adjustments which are the basis for, and shall
identify''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to notices sent after the date 6 months after the date of the
enactment of this Act.
SEC. 902. TREATMENT OF SUBSTITUTE RETURNS UNDER SECTION 6651.
(a) General Rule.--Section 6651 (relating to failure to file tax
return or to pay tax) is amended by adding at the end thereof the
following new subsection:
``(h) Treatment of Returns Prepared by Secretary Under Section
6020(b).--In the case of any return made by the Secretary under section
6020(b)--
``(1) such return shall be disregarded for purposes of
determining the amount of the addition under paragraph (1) of
subsection (a), but
``(2) such return shall be treated as the return filed by
the taxpayer for purposes of determining the amount of the
addition under paragraphs (2) and (3) of subsection (a).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply in the case of any return the due date for which (determined
without regard to extensions) is after the date of the enactment of
this Act.
SEC. 903. 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 provided 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 substantially
describing the expected contents of any temporary,
proposed, or final regulation is issued to the public.
``(2) Prevention of abuse.--The Secretary may provide that
any regulation may take effect or apply retroactively to
prevent abuse of a statute to which the regulation relates.
``(3) Correction of procedural defects.--The Secretary may
provide that any regulation may apply retroactively to correct
a procedural defect in the issuance of any prior regulation.
``(4) Internal regulations.--The limitations of paragraph
(1) shall not apply to any regulation relating to internal
Treasury Department policies, practices or procedures.
``(5) Congressional authorization.--The limitation of
paragraph (1) may be superseded by a legislative grant from
Congress authorizing the Secretary to prescribe the effective
date with respect to any regulation.
``(6) Election to apply retroactively.--The Secretary may
provide for any taxpayer to elect to apply any regulation
before the dates specified in paragraph (1).
``(7) Application to rulings.--The Secretary may prescribe
the extent, if any, to which any ruling (including any judicial
decision or any administrative determination other than by
regulation) relating to the internal revenue laws shall be
applied without retroactive effect.''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by subsection (a) shall apply with respect to--
(A) any temporary or proposed regulation filed on
or after January 5, 1993, and
(B) any temporary or proposed regulation filed
before January 5, 1993, and filed as a final regulation
after such date.
(2) Special rule.--Section 7805(b)(2) of the Internal
Revenue Code of 1986 (as added by subsection (a)) shall apply
only to statutes enacted on or after the date of the enactment
of this Act.
SEC. 904. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the Treasury or the
Secretary's delegate (hereafter in the section referred to as the
``Secretary'') from any taxpayer and the Secretary cannot associate
such payment with any outstanding tax liability of such taxpayer, the
Secretary shall make reasonable efforts to notify the taxpayer of such
inability within 60 days after the receipt of such payment.
SEC. 905. UNAUTHORIZED ENTICEMENT OF INFORMATION DISCLOSURE.
(a) In General.--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 UNAUTHORIZED ENTICEMENT OF INFORMATION
DISCLOSURE.
``(a) In General.--If any officer or employee of the United States
intentionally compromises the determination or collection of any tax
due from an attorney, certified public accountant, or enrolled agent
representing a taxpayer in exchange for information conveyed by the
taxpayer to the attorney, certified public accountant, or enrolled
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 exclusive remedy for recovering damages resulting
from such actions.
``(b) Damages.--In any action brought under subsection (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 information 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.--Notwithstanding 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 reasonable
care.
``(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 purpose of perpetrating a fraud or crime.''.
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 76 is amended by striking the item relating to section 7434 and
by adding at the end thereof the following new items:
``Sec. 7434. Civil damages for
unauthorized enticement of
information disclosure.
``Sec. 7435. Cross references.''.
(c) Effective Date.--The amendments made by this section shall
apply to actions after the date of the enactment of this Act.
TITLE X--FORM MODIFICATIONS; STUDIES
SEC. 1000. DEFINITIONS.
For purposes of this title:
(1) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or his delegate.
(2) 1986 code.--The term ``1986 Code'' means the Internal
Revenue Code of 1986.
(3) Tax-writing committees.--The term ``tax-writing
Committees'' means the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the Senate.
Subtitle A--Form Modifications
SEC. 1001. EXPLANATION OF CERTAIN PROVISIONS.
(a) General Rule.--The Secretary shall take such actions as may be
appropriate to ensure that taxpayers are aware of the provisions of the
1986 Code permitting payment of tax in installments, extensions of time
for payment of tax, and compromises of tax liability. Such actions
shall include revising the instructions for filing income tax returns
so that such instructions include an explanation of--
(1) the procedures for requesting the benefits of such
provisions, and
(2) the terms and conditions under which the benefits of
such provisions are available.
(b) Collection Notices.--In any notice of an underpayment of tax or
proposed underpayment of tax sent by the Secretary to any taxpayer, the
Secretary shall include a notification of the availability of the
provisions of sections 6159, 6161, and 7122 of the 1986 Code.
SEC. 1002. IMPROVED PROCEDURES FOR NOTIFYING SERVICE OF CHANGE OF
ADDRESS OR NAME.
The Secretary shall provide improved procedures for taxpayers to
notify the Secretary of changes in names and addresses. Not later than
June 30, 1994, the Secretary shall institute procedures for timely
updating all Internal Revenue Service records with change-of-address
information provided to the Secretary by taxpayers.
SEC. 1003. RIGHTS AND RESPONSIBILITIES OF DIVORCED INDIVIDUALS.
The Secretary shall include in the Internal Revenue Service
publication entitled ``Your Rights As A Taxpayer'' a section on the
rights and responsibilities of divorced individuals.
Subtitle B--Studies
SEC. 1011. PILOT PROGRAM FOR APPEAL OF ENFORCEMENT ACTIONS.
(a) General Rule.--The Secretary shall establish a 1-year pilot
program for appeals of enforcement actions (including lien, levy, and
seizure actions) to the Appeals Division of the Internal Revenue
Service--
(1) where the deficiency was assessed without actual
knowledge of the taxpayer,
(2) where the deficiency was assessed without an
opportunity for administrative appeal, and
(3) in other appropriate circumstances.
(b) Report.--Not later than June 30, 1994, the Secretary shall
submit to the tax-writing Committees a report on the pilot program
established under subsection (a), together with such recommendations as
he may deem advisable.
SEC. 1012. STUDY ON TAXPAYERS WITH SPECIAL NEEDS.
(a) General Rule.--The Secretary shall conduct a study on ways to
assist the elderly, physically impaired, foreign-language speaking, and
other taxpayers with special needs to comply with the internal revenue
laws.
(b) Report.--Not later than June 30, 1994, the Secretary shall
submit to the tax-writing Committees a report on the study conducted
under subsection (a), together with such recommendations as he may deem
advisable.
SEC. 1013. REPORTS ON TAXPAYER-RIGHTS EDUCATION PROGRAM.
Not later than April 1, 1994, the Secretary shall submit a report
to the tax-writing Committees on the scope and content of the Internal
Revenue Service's taxpayer-rights education program for its officers
and employees. Not later than June 30, 1994, the Secretary shall submit
a report to the tax-writing Committees on the effectiveness of the
program referred to in the preceding sentence.
SEC. 1014. BIENNIAL REPORTS ON MISCONDUCT BY INTERNAL REVENUE SERVICE
EMPLOYEES.
Not later than June 30, 1994 and during June of each second
calendar year thereafter, the Secretary shall report to the tax-writing
Committees on all cases involving complaints about misconduct of
Internal Revenue Service employees and the disposition of such
complaints.
SEC. 1015. STUDY OF NOTICES OF DEFICIENCY.
(a) General Rule.--The Comptroller General shall conduct a study
on--
(1) the effectiveness of current Internal Revenue Service
efforts to notify taxpayers with regard to tax deficiencies
under section 6212 of the 1986 Code,
(2) the number of registered or certified letters and other
notices returned to the Internal Revenue Service as
undeliverable,
(3) any follow-up action taken by the Internal Revenue
Service to locate taxpayers who did not receive actual notice,
(4) the effect that failures to receive notice of such
deficiencies have on taxpayers, and
(5) recommendations to improve Internal Revenue Service
notification of taxpayers.
(b) Report.--Not later than June 30, 1994, the Comptroller General
shall submit to the tax-writing Committees a report on the study
conducted under subsection (a), together with such recommendations as
he may deem advisable.
SEC. 1016. NOTICE AND FORM ACCURACY STUDY.
(a) General Rule.--The Comptroller General shall conduct annual
studies of the accuracy of 25 of the most commonly used Internal
Revenue Service forms, notices, and publications. In conducting any
such study, the Comptroller General shall examine the suitability and
usefulness of Internal Revenue Service telephone numbers on Internal
Revenue Service notices and shall solicit and consider the comments of
organizations representing taxpayers, employers, and tax professionals.
(b) Reports.--The Comptroller General shall submit to the tax-
writing Committees a report on each study conducted under subsection
(a), together with such recommendations as he may deem advisable. The
first such report shall be submitted not later than June 30, 1994.
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