Home > 106th Congressional Bills > H.R. 4163 (rh) To amend the Internal Revenue Code of 1986 to provide for increased fairness to taxpayers. [Reported in House] ...H.R. 4163 (rh) To amend the Internal Revenue Code of 1986 to provide for increased fairness to taxpayers. [Reported in House] ...
106th CONGRESS
2d Session
H. R. 4163
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 12, 2000
Received, read twice and referred to the Committee on Finance
_______________________________________________________________________
AN ACT
To amend the Internal Revenue Code of 1986 to provide for increased
fairness to taxpayers.
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 ``Taxpayer Bill of
Rights 2000''.
(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.--
Sec. 1. Short title; etc.
TITLE I--PENALTIES AND INTEREST
Sec. 101. Failure to pay estimated tax penalty converted to interest
charge on accumulated unpaid balance.
Sec. 102. Exclusion from gross income for interest on overpayments of
income tax by individuals.
Sec. 103. Reductions of penalty for failure to pay tax.
Sec. 104. Abatement of interest.
Sec. 105. Deposits made to stop the running of interest on potential
underpayments.
Sec. 106. Expansion of interest netting for individuals.
TITLE II--CONFIDENTIALITY AND DISCLOSURE
Sec. 201. Disclosure and privacy rules relating to returns and return
information.
Sec. 202. Expansion of type of advice available for public inspection.
Sec. 203. Collection activities with respect to joint return
disclosable to either spouse based on oral
request.
Sec. 204. Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers.
Sec. 205. Disclosure in judicial or administrative tax proceedings of
return and return information of persons
who are not party to such proceedings.
Sec. 206. Prohibition of disclosure of taxpayer identification
information with respect to disclosure of
accepted offers-in-compromise.
Sec. 207. Compliance by State contractors with confidentiality
safeguards.
Sec. 208. Higher standards for requests for and consents to disclosure.
Sec. 209. Notice to taxpayer concerning administrative determination of
browsing; annual report.
Sec. 210. Disclosure of taxpayer identity for tax refund purposes.
TITLE III--OTHER REQUIREMENTS
Sec. 301. Clarification of definition of church tax inquiry.
Sec. 302. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 303. Employee misconduct report to include summary of complaints
by category.
Sec. 304. Increase in threshold for Joint Committee reports on refunds
and credits.
Sec. 305. Annual report on awards of costs and certain fees in
administrative and court proceedings.
Sec. 306. Annual report on abatement of penalties.
Sec. 307. Better means of communicating with taxpayers.
Sec. 308. Explanation of statute of limitations and consequences of
failure to file.
TITLE I--PENALTIES AND INTEREST
SEC. 101. FAILURE TO PAY ESTIMATED TAX PENALTY CONVERTED TO INTEREST
CHARGE ON ACCUMULATED UNPAID BALANCE.
(a) Penalty Moved to Interest Chapter of Code.--The Internal
Revenue Code of 1986 is amended by redesignating section 6654 as
section 6641 and by moving section 6641 (as so redesignated) from part
I of subchapter A of chapter 68 to the end of subchapter E of chapter
67 (as added by subsection (e)(1) of this section).
(b) Penalty Converted to Interest Charge.--The heading and
subsections (a) and (b) of section 6641 (as so redesignated) are
amended to read as follows:
``SEC. 6641. INTEREST ON FAILURE BY INDIVIDUAL TO PAY ESTIMATED INCOME
TAX.
``(a) In General.--Interest shall be paid on any underpayment of
estimated tax by an individual for a taxable year for each day of such
underpayment. The amount of such interest for any day shall be the
product of the underpayment rate established under subsection (b)(2)
multiplied by the amount of the underpayment.
``(b) Amount of Underpayment; Interest Rate.--For purposes of
subsection (a)--
``(1) Amount.--The amount of the underpayment on any day
shall be the excess of--
``(A) the sum of the required installments for the
taxable year the due dates for which are on or before
such day, over
``(B) the sum of the amounts (if any) of estimated
tax payments made on or before such day on such
required installments.
``(2) Determination of interest rate.--
``(A) In general.--The underpayment rate with
respect to any day in an installment underpayment
period shall be the underpayment rate established under
section 6621 for the first day of the calendar quarter
in which such installment underpayment period begins.
``(B) Installment underpayment period.--For
purposes of subparagraph (A), the term `installment
underpayment period' means the period beginning on the
day after the due date for a required installment and
ending on the due date for the subsequent required
installment (or in the case of the 4th required
installment, the 15th day of the 4th month following
the close of a taxable year).
``(C) Daily rate.--The rate determined under
subparagraph (A) shall be applied on a daily basis and
shall be based on the assumption of 365 days in a
calendar year.
``(3) Termination of estimated tax interest.--No day after
the end of the installment underpayment period for the 4th
required installment specified in paragraph (2)(B) for a
taxable year shall be treated as a day of underpayment with
respect to such taxable year.''.
(c) Increase in Safe Harbor Where Tax is Small.--
(1) In general.--Clause (i) of section 6641(d)(1)(B) (as so
redesignated) is amended to read as follows:
``(i) the lesser of--
``(I) 90 percent of the tax shown
on the return for the taxable year (or,
if no return is filed, 90 percent of
the tax for such year), or
``(II) the tax shown on the return
for the taxable year (or, if no return
is filed, the tax for such year)
reduced (but not below zero) by $2,000,
or''.
(2) Conforming amendment.--Subsection (e) of section 6641
(as so redesignated) is amended by striking paragraph (1) and
redesignating paragraphs (2) and (3) as paragraphs (1) and (2),
respectively.
(d) Conforming Amendments.--
(1) Paragraphs (1) and (2) of subsection (e) (as
redesignated by subsection (c)(2)) and subsection (h) of
section 6641 (as so designated) are each amended by striking
``addition to tax'' each place it occurs and inserting
``interest''.
(2) Section 167(g)(5)(D) is amended by striking ``6654''
and inserting ``6641''.
(3) Section 460(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(4) Section 3510(b) is amended--
(A) by striking ``section 6654'' in paragraph (1)
and inserting ``section 6641'';
(B) by amending paragraph (2)(B) to read as
follows:
``(B) no interest would be required to be paid (but
for this section) under 6641 for such taxable year by
reason of the $2,000 amount specified in section
6641(d)(1)(B)(i)(II).'';
(C) by striking ``section 6654(d)(2)'' in paragraph
(3) and inserting ``section 6641(d)(2)''; and
(D) by striking paragraph (4).
(5) Section 6201(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(6) Section 6601(h) is amended by striking ``6654'' and
inserting ``6641''.
(7) Section 6621(b)(2)(B) is amended by striking ``addition
to tax under section 6654'' and inserting ``interest required
to be paid under section 6641''.
(8) Section 6622(b) is amended--
(A) by striking ``Penalty for'' in the heading; and
(B) by striking ``addition to tax under section
6654 or 6655'' and inserting ``interest required to be
paid under section 6641 or addition to tax under
section 6655''.
(9) Section 6658(a) is amended--
(A) by striking ``6654, or 6655'' and inserting
``or 6655, and no interest shall be required to be paid
under section 6641,''; and
(B) by inserting ``or paying interest'' after ``the
tax'' in paragraph (2)(B)(ii).
(10) Section 6665(b) is amended--
(A) in the matter preceding paragraph (1) by
striking ``, 6654,''; and
(B) in paragraph (2) by striking ``6654 or''.
(11) Section 7203 is amended by striking ``section 6654 or
6655'' and inserting ``section 6655 or interest required to be
paid under section 6641''.
(e) Clerical Amendments.--
(1) Chapter 67 is amended by inserting after subchapter D
the following:
``Subchapter E--Interest on Failure by Individual to Pay Estimated
Income Tax
``Sec. 6641. Interest on failure by
individual to pay estimated
income tax.''.
(2) The table of subchapters for chapter 67 is amended by
adding at the end the following new items:
``Subchapter D. Notice requirements.
``Subchapter E. Interest on failure by
individual to pay estimated
income tax.''.
(3) The table of sections for part I of subchapter A of
chapter 68 is amended by striking the item relating to section
6654.
(f) Effective Date.--The amendments made by this section shall
apply to installment payments for taxable years beginning after
December 31, 2000.
SEC. 102. EXCLUSION FROM GROSS INCOME FOR INTEREST ON OVERPAYMENTS OF
INCOME TAX BY INDIVIDUALS.
(a) In General.--Part III of subchapter B of chapter 1 (relating to
items specifically excluded from gross income) is amended by
redesignating section 139 as section 139A and by inserting after
section 138 the following new section:
``SEC. 139. EXCLUSION FROM GROSS INCOME FOR INTEREST ON OVERPAYMENTS OF
INCOME TAX BY INDIVIDUALS.
``(a) In General.--In the case of an individual, gross income shall
not include interest paid under section 6611 on any overpayment of tax
imposed by this subtitle.
``(b) Exception.--Subsection (a) shall not apply in the case of a
failure to claim items resulting in the overpayment on the original
return if the Secretary determines that the principal purpose of such
failure is to take advantage of subsection (a).
``(c) Special Rule for Determining Modified Adjusted Gross
Income.--For purposes of this title, interest not included in gross
income under subsection (a) shall not be treated as interest which is
exempt from tax for purposes of sections 32(i)(2)(B) and 6012(d) or any
computation in which interest exempt from tax under this title is added
to adjusted gross income.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 is amended by striking the item relating to
section 139 and inserting the following new items:
``Sec. 139. Exclusion from gross income
for interest on overpayments of
income tax by individuals.
``Sec. 139A. Cross references to other
Acts.''.
(c) Effective Date.--The amendments made by this section shall
apply to interest received in calendar years beginning after the date
of the enactment of this Act.
SEC. 103. REDUCTIONS OF PENALTY FOR FAILURE TO PAY TAX.
(a) Reductions of Penalty for Failure To Pay Tax.--
(1) Reduction of penalty by 50 percent.--
(A) In general.--Paragraphs (2) and (3) of section
6651(a) are each amended by striking ``0.5'' each place
it appears and inserting ``0.25''.
(B) Conforming amendment.--Paragraph (1) of section
6651(d) is amended by striking ``by substituting `1
percent' for `0.5 percent''' and inserting ``by
substituting `0.5 percent' for `0.25 percent'''.
(2) Reduction of penalty to zero during period of
installment agreement.--Subsection (h) of section 6651 is
amended by striking ``by substituting `0.25' for `0.5''' and
inserting ``by substituting `zero' for `0.25'''.
(3) Effective date.--The amendments made by this subsection
shall apply for purposes of determining additions to tax for
months beginning after December 31, 2000.
(b) Prohibition of Fee for Installment Agreements Using Automated
Withdrawals.--
(1) In general.--Section 6159 (relating to agreements for
payment of tax liability in installments) is amended by
redesignating subsection (e) as subsection (f) and by inserting
after subsection (d) the following new subsection:
``(e) Prohibition of Fee for Installment Agreements Using Automated
Withdrawals.--The Secretary may not charge a taxpayer a fee for
entering into an agreement with the Secretary under this section only
for so long as payments under such agreement are made by means of
electronic transfer or by similar automated means.''.
(2) Effective date.--The amendments made by this subsection
shall apply to installment agreements entered into more than 30
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