Pub.L. 104-169 To create the National Gambling Impact and Policy Commission. <> ...

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                        TAXPAYER BILL OF RIGHTS 2

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Public Law 104-168
104th Congress

                                 An Act


 
  To amend the Internal Revenue Code of 1986 to provide for increased 
     taxpayer protections. <<NOTE:  July 30, 1996 -  [H.R. 2337]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Taxpayer Bill of 
Rights 2.>> 

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) <<NOTE: 26 USC 1 note.>>  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.--

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 
           Revenue 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 
           payment of tax.
Sec. 403. Disclosure of collection activities.

                     TITLE V--COLLECTION ACTIVITIES

Sec. 501. Modifications to lien and levy provisions.
Sec. 502. Modifications to certain levy exemption amounts.
Sec. 503. 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 returns.

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              TITLE VII--AWARDING OF COSTS AND CERTAIN FEES

Sec. 701. United States must establish that its position in proceeding 
           was substantially 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 
           proceedings.

 TITLE VIII--MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR UNAUTHORIZED 
                           COLLECTION ACTIONS

Sec. 801. Increase in limit on recovery of civil damages for 
           unauthorized collection actions.
Sec. 802. Court discretion to reduce award for litigation costs for 
           failure to exhaust 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 
           regulations.

                   TITLE XII--MISCELLANEOUS PROVISIONS

Sec. 1201. Phone number of person providing payee statements required to 
           be shown on such statement.
Sec. 1202. Required notice of certain payments.
Sec. 1203. Unauthorized enticement of information disclosure.
Sec. 1204. Annual reminders to taxpayers with outstanding delinquent 
           accounts.
Sec. 1205. 5-year extension of authority for undercover operations.
Sec. 1206. Disclosure of Form 8300 information on cash transactions.
Sec. 1207. Disclosure of returns and return information to designee of 
           taxpayer.
Sec. 1208. Study of netting of interest on overpayments and liabilities.
Sec. 1209. Expenses of detection of underpayments and fraud, etc.
Sec. 1210. Use of private delivery services for timely-mailing-as-
           timely-filing rule.
Sec. 1211. Reports on misconduct of IRS employees.

                       TITLE XIII--REVENUE OFFSETS

 Subtitle A--Application of Failure-to-Pay Penalty to Substitute Returns

Sec. 1301. Application of failure-to-pay penalty to substitute returns.

     Subtitle B--Excise Taxes on Amounts of Private Excess Benefits

Sec. 1311. Excise taxes for failure by certain charitable organizations 
           to meet certain qualification requirements.
Sec. 1312. Reporting of certain excise taxes and other information.
Sec. 1313. Exempt organizations required to provide copy of return.
Sec. 1314. Increase in penalties on exempt organizations for failure to 
           file complete and timely annual returns.

                       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

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Exempt Organizations)) is amended by adding at the end the following new 
subsection:
    ``(d) <<NOTE: Establishment. Government organization.>>  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 official 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 directly to the Deputy Commissioner of 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 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 
                      Committee on Finance of the Senate on the 
                      objectives of the Taxpayer Advocate for the fiscal 
                      year beginning in such calendar year. Any such 
                      report shall contain full and substantive 
                      analysis, in addition to statistical information.
                          ``(ii) Activities.--Not later than December 31 
                      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 
                      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,

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                                    ``(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,
                                    ``(IX) describe the extent to which 
                                regional problem resolution officers 
                                participate in the selection and 
                                evaluation of local problem resolution 
                                officers, and
                                    ``(X) 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, 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.--The Commissioner of 
        Internal Revenue shall establish 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 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:

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``SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT COMMISSIONERS; 
            TAXPAYER ADVOCATE.''.

            (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 Commissioners; 
           Taxpayer Advocate.''.

    (c) <<NOTE: 26 USC 7802 note.>>  Effective Date.--The amendments 

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