[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2676 Enrolled Bill (ENR)]
H.R.2676
One Hundred Fifth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
eight
An Act
To amend the Internal Revenue Code of 1986 to restructure and reform the
Internal Revenue Service, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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PENALTIES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Internal Revenue
Service Restructuring and Reform Act of 1998''.
(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) Waiver of Estimated Tax Penalties.--No addition to tax shall be
made under section 6654 or 6655 of the Internal Revenue Code of 1986
with respect to any underpayment of an installment required to be paid
on or before the 30th day after the date of the enactment of this Act
to the extent such underpayment was created or increased by any
provision of this Act.
(d) Table of Contents.--The table of contents for this Act is as
follows:

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penalties; table of contents.
REVENUE SERVICE
Subtitle A--Reorganization of the Internal Revenue Service
Sec.1001.Reorganization of the Internal Revenue Service.
Sec.1002.Internal Revenue Service mission to focus on taxpayers' needs.
Subtitle B--Executive Branch Governance and Senior Management
Sec.1101.Internal Revenue Service Oversight Board.
Sec.1102.Commissioner of Internal Revenue; other officials.
Sec.1103.Treasury Inspector General for Tax Administration.
Sec.1104.Other personnel.
Sec.1105.Prohibition on executive branch influence over taxpayer audits
and other investigations.
Subtitle C--Personnel Flexibilities
Sec.1201.Improvements in personnel flexibilities.
Sec.1202.Voluntary separation incentive payments.
Sec.1203.Termination of employment for misconduct.
Sec.1204.Basis for evaluation of Internal Revenue Service employees.
Sec.1205.Employee training program.
Sec.2001.Electronic filing of tax and information returns.
Sec.2002.Due date for certain information returns.
Sec.2003.Paperless electronic filing.
Sec.2004.Return-free tax system.
Sec.2005.Access to account information.
Sec.3000.Short title.
Subtitle A--Burden of Proof
Sec.3001.Burden of proof.
Subtitle B--Proceedings by Taxpayers
Sec.3101.Expansion of authority to award costs and certain fees.
Sec.3102.Civil damages for collection actions.
Sec.3103.Increase in size of cases permitted on small case calendar.
Sec.3104.Actions for refund with respect to certain estates which have
elected the installment method of payment.
Sec.3105.Administrative appeal of adverse Internal Revenue Service
determination of tax-exempt status of bond issue.
Sec.3106.Civil action for release of erroneous lien.
Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To
Manage Their Financial Affairs Due to Disabilities
Sec.3201.Relief from joint and several liability on joint return.
Sec.3202.Suspension of statute of limitations on filing refund claims
during periods of disability.
Subtitle D--Provisions Relating to Interest and Penalties
Sec.3301.Elimination of interest rate differential on overlapping
periods of interest on tax overpayments and underpayments.
Sec.3302.Increase in overpayment rate payable to taxpayers other than
corporations.
Sec.3303.Mitigation of penalty on individual's failure to pay for months
during period of installment agreement.
Sec.3304.Mitigation of failure to deposit penalty.
Sec.3305.Suspension of interest and certain penalties where Secretary
fails to contact individual taxpayer.
Sec.3306.Procedural requirements for imposition of penalties and
additions to tax.
Sec.3307.Personal delivery of notice of penalty under section 6672.
Sec.3308.Notice of interest charges.
Sec.3309.Abatement of interest on underpayments by taxpayers in
Presidentially declared disaster areas.
Subtitle E--Protections for Taxpayers Subject to Audit or Collection
Activities
Part I--Due Process
Sec.3401.Due process in Internal Revenue Service collection actions.
Part II--Examination Activities
Sec.3411.Confidentiality privileges relating to taxpayer communications.
Sec.3412.Limitation on financial status audit techniques.
Sec.3413.Software trade secrets protection.
Sec.3414.Threat of audit prohibited to coerce tip reporting alternative
commitment agreements.
Sec.3415.Taxpayers allowed motion to quash all third-party summonses.
Sec.3416.Service of summonses to third-party recordkeepers permitted by
mail.
Sec.3417.Notice of Internal Revenue Service contact of third parties.
Part III--Collection Activities
SUBPART A--APPROVAL PROCESS
Sec.3421.Approval process for liens, levies, and seizures.
SUBPART B--LIENS AND LEVIES
Sec.3431.Modifications to certain levy exemption amounts.
Sec.3432.Release of levy upon agreement that amount is uncollectible.
Sec.3433.Levy prohibited during pendency of refund proceedings.
Sec.3434.Approval required for jeopardy and termination assessments and
jeopardy levies.
Sec.3435.Increase in amount of certain property on which lien not valid.
Sec.3436.Waiver of early withdrawal tax for Internal Revenue Service
levies on employer-sponsored retirement plans or IRAs.
SUBPART C--SEIZURES
Sec.3441.Prohibition of sales of seized property at less than minimum
bid.
Sec.3442.Accounting of sales of seized property.
Sec.3443.Uniform asset disposal mechanism.
Sec.3444.Codification of Internal Revenue Service administrative
procedures for seizure of taxpayer's property.
Sec.3445.Procedures for seizure of residences and businesses.
Part IV--Provisions Relating to Examination and Collection Activities
Sec.3461.Procedures relating to extensions of statute of limitations by
agreement.
Sec.3462.Offers-in-compromise.
Sec.3463.Notice of deficiency to specify deadlines for filing Tax Court
petition.
Sec.3464.Refund or credit of overpayments before final determination.
Sec.3465.Internal Revenue Service procedures relating to appeals of
examinations and collections.
Sec.3466.Application of certain fair debt collection procedures.
Sec.3467.Guaranteed availability of installment agreements.
Sec.3468.Prohibition on requests to taxpayers to give up rights to bring
actions.
Subtitle F--Disclosures to Taxpayers
Sec.3501.Explanation of joint and several liability.
Sec.3502.Explanation of taxpayers' rights in interviews with the
Internal Revenue Service.
Sec.3503.Disclosure of criteria for examination selection.
Sec.3504.Explanations of appeals and collection process.
Sec.3505.Explanation of reason for refund disallowance.
Sec.3506.Statements regarding installment agreements.
Sec.3507.Notification of change in tax matters partner.
Sec.3508.Disclosure to taxpayers.
Sec.3509.Disclosure of Chief Counsel advice.
Subtitle G--Low-Income Taxpayer Clinics
Sec.3601.Low-income taxpayer clinics.
Subtitle H--Other Matters
Sec.3701.Cataloging complaints.
Sec.3702.Archive of records of Internal Revenue Service.
Sec.3703.Payment of taxes.
Sec.3704.Clarification of authority of Secretary relating to the making
of elections.
Sec.3705.Internal Revenue Service employee contacts.
Sec.3706.Use of pseudonyms by Internal Revenue Service employees.
Sec.3707.Illegal tax protester designation.
Sec.3708.Provision of confidential information to Congress by
whistleblowers.
Sec.3709.Listing of local Internal Revenue Service telephone numbers and
addresses.
Sec.3710.Identification of return preparers.
Sec.3711.Offset of past-due, legally enforceable State income tax
obligations against overpayments.
Sec.3712.Reporting requirements in connection with education tax credit.
Subtitle I--Studies
Sec.3801.Administration of penalties and interest.
Sec.3802.Confidentiality of tax return information.
Sec.3803.Study of noncompliance with internal revenue laws by taxpayers.
Sec.3804.Study of payments made for detection of underpayments and
fraud.
Subtitle A--Oversight
Sec.4001.Expansion of duties of the Joint Committee on Taxation.
Sec.4002.Coordinated oversight reports.
Subtitle B--Century Date Change
Sec.4011.Century date change.
Subtitle C--Tax Law Complexity
Sec.4021.Role of the Internal Revenue Service.
Sec.4022.Tax law complexity analysis.
Sec.5001.Lower capital gains rates to apply to property held more than 1
year.
Sec.5002.Clarification of exclusion of meals for certain employees.
Sec.5003.Clarification of designation of normal trade relations.
Sec.6001.Short title; coordination with other titles.
Sec.6002.Definitions.
Sec.6003.Amendments related to title I of 1997 Act.
Sec.6004.Amendments related to title II of 1997 Act.
Sec.6005.Amendments related to title III of 1997 Act.
Sec.6006.Amendment related to title IV of 1997 Act.
Sec.6007.Amendments related to title V of 1997 Act.
Sec.6008.Amendments related to title VII of 1997 Act.
Sec.6009.Amendments related to title IX of 1997 Act.
Sec.6010.Amendments related to title X of 1997 Act.
Sec.6011.Amendments related to title XI of 1997 Act.
Sec.6012.Amendments related to title XII of 1997 Act.
Sec.6013.Amendments related to title XIII of 1997 Act.
Sec.6014.Amendments related to title XIV of 1997 Act.
Sec.6015.Amendments related to title XV of 1997 Act.
Sec.6016.Amendments related to title XVI of 1997 Act.
Sec.6017.Amendment related to Transportation Equity Act for the 21st
Century.
Sec.6018.Amendments related to Small Business Job Protection Act of
1996.
Sec.6019.Amendments related to Taxpayer Bill of Rights 2.
Sec.6020.Amendment related to Omnibus Budget Reconciliation Act of 1993.
Sec.6021.Amendment related to Revenue Reconciliation Act of 1990.
Sec.6022.Amendment related to Tax Reform Act of 1986.
Sec.6023.Miscellaneous clerical and deadwood changes.
Sec.6024.Effective date.
Sec.7001.Clarification of deduction for deferred compensation.
Sec.7002.Termination of exception for certain real estate investment
trusts from the treatment of stapled entities.
Sec.7003.Certain customer receivables ineligible for mark to market
treatment.
Sec.7004.Modification of AGI limit for conversions to Roth IRAs.
VETO
Sec.8001.Identification of limited tax benefits subject to line item
veto.
21ST CENTURY
Sec.9001.Short title.
Sec.9002.Authorization and program subtitle.
Sec.9003.Restorations to general provisions subtitle.
Sec.9004.Restorations to program streamlining and flexibility subtitle.
Sec.9005.Restorations to safety subtitle.
Sec.9006.Elimination of duplicate provisions.
Sec.9007.Highway finance.
Sec.9008.High priority projects technical corrections.
Sec.9009.Federal Transit Administration programs.
Sec.9010.Motor carrier safety technical correction.
Sec.9011.Restorations to research title.
Sec.9012.Automobile safety and information.
Sec.9013.Technical corrections regarding subtitle A of title VIII.
Sec.9014.Corrections to veterans subtitle.
Sec.9015.Technical corrections regarding title IX.
Sec.9016.Effective date.
REVENUE SERVICE
Subtitle A--Reorganization of the Internal Revenue Service

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(a) In General.--The Commissioner of Internal Revenue shall develop
and implement a plan to reorganize the Internal Revenue Service. The
plan shall--
(1) supersede any organization or reorganization of the
Internal Revenue Service based on any statute or reorganization
plan applicable on the effective date of this section;
(2) eliminate or substantially modify the existing organization
of the Internal Revenue Service which is based on a national,
regional, and district structure;
(3) establish organizational units serving particular groups of
taxpayers with similar needs; and
(4) ensure an independent appeals function within the Internal
Revenue Service, including the prohibition in the plan of ex parte
communications between appeals officers and other Internal Revenue
Service employees to the extent that such communications appear to
compromise the independence of the appeals officers.
(b) Savings Provisions.--
(1) Preservation of specific tax rights and remedies.--Nothing
in the plan developed and implemented under subsection (a) shall be
considered to impair any right or remedy, including trial by jury,
to recover any internal revenue tax alleged to have been
erroneously or illegally assessed or collected, or any penalty
claimed to have been collected without authority, or any sum
alleged to have been excessive or in any manner wrongfully
collected under the internal revenue laws. For the purpose of any
action to recover any such tax, penalty, or sum, all statutes,
rules, and regulations referring to the collector of internal
revenue, the principal officer for the internal revenue district,
or the Secretary, shall be deemed to refer to the officer whose act
or acts referred to in the preceding sentence gave rise to such
action. The venue of any such action shall be the same as under
existing law.
(2) Continuing effect of legal documents.--All orders,
determinations, rules, regulations, permits, agreements, grants,
contracts, certificates, licenses, registrations, privileges, and
other administrative actions--
(A) which have been issued, made, granted, or allowed to
become effective by the President, any Federal agency or
official thereof, or by a court of competent jurisdiction, in
the performance of any function transferred or affected by the
reorganization of the Internal Revenue Service or any other
administrative unit of the Department of the Treasury under
this section; and
(B) which are in effect at the time this section takes
effect, or were final before the effective date of this section
and are to become effective on or after the effective date of
this section,
shall continue in effect according to their terms until modified,
terminated, superseded, set aside, or revoked in accordance with
law by the President, the Secretary of the Treasury, the
Commissioner of Internal Revenue, or other authorized official, a
court of competent jurisdiction, or by operation of law.
(3) Proceedings not affected.--The provisions of this section
shall not affect any proceedings, including notices of proposed
rulemaking, or any application for any license, permit,
certificate, or financial assistance pending before the Department
of the Treasury (or any administrative unit of the Department,
including the Internal Revenue Service) at the time this section
takes effect, with respect to functions transferred or affected by
the reorganization under this section but such proceedings and
applications shall continue. Orders shall be issued in such
proceedings, appeals shall be taken therefrom, and payments shall
be made pursuant to such orders, as if this section had not been
enacted, and orders issued in any such proceedings shall continue
in effect until modified, terminated, superseded, or revoked by a
duly authorized official, by a court of competent jurisdiction, or
by operation of law. Nothing in this paragraph shall be deemed to
prohibit the discontinuance or modification of any such proceeding
under the same terms and conditions and to the same extent that
such proceeding could have been discontinued or modified if this
section had not been enacted.
(4) Suits not affected.--The provisions of this section shall
not affect suits commenced before the effective date of this
section, and in all such suits, proceedings shall be had, appeals
taken, and judgments rendered in the same manner and with the same
effect as if this section had not been enacted.
(5) Nonabatement of actions.--No suit, action, or other
proceeding commenced by or against the Department of the Treasury
(or any administrative unit of the Department, including the
Internal Revenue Service), or by or against any individual in the
official capacity of such individual as an officer of the
Department of the Treasury, shall abate by reason of the enactment
of this section.
(6) Administrative actions relating to promulgation of
regulations.--Any administrative action relating to the preparation
or promulgation of a regulation by the Department of the Treasury
(or any administrative unit of the Department, including the
Internal Revenue Service) relating to a function transferred or
affected by the reorganization under this section may be continued
by the Department of the Treasury through any appropriate
administrative unit of the Department, including the Internal
Revenue Service with the same effect as if this section had not
been enacted.
(c) Effective Date.--This section shall take effect on the date of
the enactment of this Act.

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TITLE I

-REORGANIZATION OF STRUCTURE AND MANAGEMENT OF THE INTERNAL

NEEDS.
The Internal Revenue Service shall review and restate its mission
to place a greater emphasis on serving the public and meeting
taxpayers' needs.
Subtitle B--Executive Branch Governance and Senior Management

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(a) In General.--Section 7802 (relating to the Commissioner of
Internal Revenue) is amended to read as follows:
``SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.
``(a) Establishment.--There is established within the Department of
the Treasury the Internal Revenue Service Oversight Board (hereafter in
this subchapter referred to as the `Oversight Board').
``(b) Membership.--
``(1) Composition.--The Oversight Board shall be composed of
nine members, as follows:
``(A) six members shall be individuals who are not
otherwise Federal officers or employees and who are appointed
by the President, by and with the advice and consent of the
Senate.
``(B) one member shall be the Secretary of the Treasury or,
if the Secretary so designates, the Deputy Secretary of the
Treasury.
``(C) one member shall be the Commissioner of Internal
Revenue.
``(D) one member shall be an individual who is a full-time
Federal employee or a representative of employees and who is
appointed by the President, by and with the advice and consent
of the Senate.
``(2) Qualifications and terms.--
``(A) Qualifications.--Members of the Oversight Board
described in paragraph (1)(A) shall be appointed without regard
to political affiliation and solely on the basis of their
professional experience and expertise in one or more of the
following areas:
``(i) Management of large service organizations.
``(ii) Customer service.
``(iii) Federal tax laws, including tax administration
and compliance.
``(iv) Information technology.
``(v) Organization development.
``(vi) The needs and concerns of taxpayers.
``(vii) The needs and concerns of small businesses.
In the aggregate, the members of the Oversight Board described
in paragraph (1)(A) should collectively bring to bear expertise
in all of the areas described in the preceding sentence.
``(B) Terms.--Each member who is described in subparagraph
(A) or (D) of paragraph (1) shall be appointed for a term of 5
years, except that of the members first appointed under
paragraph (1)(A)--
``(i) two members shall be appointed for a term of 3
years,
``(ii) two members shall be appointed for a term of 4
years; and
``(iii) two members shall be appointed for a term of 5
years.
``(C) Reappointment.--An individual who is described in
subparagraph (A) or (D) of paragraph (1) may be appointed to no
more than two 5-year terms on the Oversight Board.
``(D) Vacancy.--Any vacancy on the Oversight Board shall be
filled in the same manner as the original appointment. Any
member appointed to fill a vacancy occurring before the
expiration of the term for which the member's predecessor was
appointed shall be appointed for the remainder of that term.
``(3) Ethical considerations.--
``(A) Financial disclosure.--During the entire period that
an individual appointed under subparagraph (A) or (D) of
paragraph (1) is a member of the Oversight Board, such
individual shall be treated as serving as an officer or
employee referred to in section 101(f) of the Ethics in
Government Act of 1978 for purposes of title I of such Act,
except that section 101(d) of such Act shall apply without
regard to the number of days of service in the position.
``(B) Restrictions on post-employment.--For purposes of
section 207(c) of title 18, United States Code, an individual
appointed under subparagraph (A) or (D) of paragraph (1) shall
be treated as an employee referred to in section
207(c)(2)(A)(i) of such title during the entire period the
individual is a member of the Board, except that subsections
(c)(2)(B) and (f) of section 207 of such title shall not apply.
``(C) Members who are special government employees.--If an
individual appointed under subparagraph (A) or (D) of paragraph
(1) is a special Government employee, the following additional
rules apply for purposes of chapter 11 of title 18, United
States Code:
``(i) Restriction on representation.--In addition to
any restriction under section 205(c) of title 18, United
States Code, except as provided in subsections (d) through
(i) of section 205 of such title, such individual (except
in the proper discharge of official duties) shall not, with
or without compensation, represent anyone to or before any
officer or employee of--
``(I) the Oversight Board or the Internal Revenue
Service on any matter;
``(II) the Department of the Treasury on any matter
involving the internal revenue laws or involving the
management or operations of the Internal Revenue
Service; or
``(III) the Department of Justice with respect to
litigation involving a matter described in subclause
(I) or (II).
``(ii) Compensation for services provided by another.--
For purposes of section 203 of such title--
``(I) such individual shall not be subject to the
restrictions of subsection (a)(1) thereof for sharing
in compensation earned by another for representations
on matters covered by such section, and
``(II) a person shall not be subject to the
restrictions of subsection (a)(2) thereof for sharing
such compensation with such individual.
``(D) Waiver.--The President may, only at the time the
President nominates the member of the Oversight Board described
in paragraph (1)(D), waive for the term of the member any
appropriate provision of chapter 11 of title 18, United States
Code, to the extent such waiver is necessary to allow such
member to participate in the decisions of the Board while
continuing to serve as a full-time Federal employee or a
representative of employees. Any such waiver shall not be
effective unless a written intent of waiver to exempt such
member (and actual waiver language) is submitted to the Senate
with the nomination of such member.
``(4) Quorum.--Five members of the Oversight Board shall
constitute a quorum. A majority of members present and voting shall
be required for the Oversight Board to take action.
``(5) Removal.--
``(A) In general.--Any member of the Oversight Board
appointed under subparagraph (A) or (D) of paragraph (1) may be
removed at the will of the President.
``(B) Secretary and commissioner.--An individual described
in subparagraph (B) or (C) of paragraph (1) shall be removed
upon termination of service in the office described in such
subparagraph.
``(6) Claims.--
``(A) In general.--Members of the Oversight Board who are
described in subparagraph (A) or (D) of paragraph (1) shall
have no personal liability under Federal law with respect to
any claim arising out of or resulting from an act or omission
by such member within the scope of service as a member.
``(B) Effect on other law.--This paragraph shall not be
construed--
``(i) to affect any other immunities and protections
that may be available to such member under applicable law
with respect to such transactions;
``(ii) to affect any other right or remedy against the
United States under applicable law; or
``(iii) to limit or alter in any way the immunities
that are available under applicable law for Federal
officers and employees.
``(c) General Responsibilities.--
``(1) Oversight.--
``(A) In general.--The Oversight Board shall oversee the
Internal Revenue Service in its administration, management,
conduct, direction, and supervision of the execution and
application of the internal revenue laws or related statutes
and tax conventions to which the United States is a party.
``(B) Mission of irs.--As part of its oversight functions
described in subparagraph (A), the Oversight Board shall ensure
that the organization and operation of the Internal Revenue
Service allows it to carry out its mission.
``(C) Confidentiality.--The Oversight Board shall ensure
that appropriate confidentiality is maintained in the exercise
of its duties.
``(2) Exceptions.--The Oversight Board shall have no
responsibilities or authority with respect to--
``(A) the development and formulation of Federal tax policy
relating to existing or proposed internal revenue laws, related
statutes, and tax conventions,
``(B) specific law enforcement activities of the Internal
Revenue Service, including specific compliance activities such
as examinations, collection activities, and criminal
investigations,
``(C) specific procurement activities of the Internal
Revenue Service, or
``(D) except as provided in subsection (d)(3), specific
personnel actions.
``(d) Specific Responsibilities.--The Oversight Board shall have
the following specific responsibilities:
``(1) Strategic plans.--To review and approve strategic plans
of the Internal Revenue Service, including the establishment of--
``(A) mission and objectives, and standards of performance
relative to either, and
``(B) annual and long-range strategic plans.
``(2) Operational plans.--To review the operational functions
of the Internal Revenue Service, including--
``(A) plans for modernization of the tax system,
``(B) plans for outsourcing or managed competition, and
``(C) plans for training and education.
``(3) Management.--To--
``(A) recommend to the President candidates for appointment
as the Commissioner of Internal Revenue and recommend to the
President the removal of the Commissioner;
``(B) review the Commissioner's selection, evaluation, and
compensation of Internal Revenue Service senior executives who
have program management responsibility over significant
functions of the Internal Revenue Service; and
``(C) review and approve the Commissioner's plans for any
major reorganization of the Internal Revenue Service.
``(4) Budget.--To--
``(A) review and approve the budget request of the Internal
Revenue Service prepared by the Commissioner;
``(B) submit such budget request to the Secretary of the
Treasury; and
``(C) ensure that the budget request supports the annual
and long-range strategic plans.
``(5) Taxpayer protection.--To ensure the proper treatment of
taxpayers by the employees of the Internal Revenue Service.
The Secretary shall submit the budget request referred to in paragraph
(4)(B) for any fiscal year to the President who shall submit such
request, without revision, to Congress together with the President's
annual budget request for the Internal Revenue Service for such fiscal
year.
``(e) Board Personnel Matters.--
``(1) Compensation of members.--
``(A) In general.--Each member of the Oversight Board who--
``(i) is described in subsection (b)(1)(A); or
``(ii) is described in subsection (b)(1)(D) and is not
otherwise a Federal officer or employee,
shall be compensated at a rate of $30,000 per year. All other
members shall serve without compensation for such service.
``(B) Chairperson.--In lieu of the amount specified in
subparagraph (A), the Chairperson of the Oversight Board shall
be compensated at a rate of $50,000 per year.
``(2) Travel expenses.--
``(A) In general.--The members of the Oversight Board shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, to attend meetings of the Oversight Board and, with the
advance approval of the Chairperson of the Oversight Board,
while otherwise away from their homes or regular places of
business for purposes of duties as a member of the Oversight
Board.
``(B) Report.--The Oversight Board shall include in its
annual report under subsection (f)(3)(A) information with
respect to the travel expenses allowed for members of the
Oversight Board under this paragraph.
``(3) Staff.--
``(A) In general.--The Chairperson of the Oversight Board
may appoint and terminate any personnel that may be necessary
to enable the Board to perform its duties.
``(B) Detail of government employees.--Upon request of the
Chairperson of the Oversight Board, a Federal agency shall
detail a Federal Government employee to the Oversight Board
without reimbursement. Such detail shall be without
interruption or loss of civil service status or privilege.
``(4) Procurement of temporary and intermittent services.--The
Chairperson of the Oversight Board may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code.
``(f) Administrative Matters.--
``(1) Chair.--
``(A) Term.--The members of the Oversight Board shall elect
for a 2-year term a chairperson from among the members
appointed under subsection (b)(1)(A).
``(B) Powers.--Except as otherwise provided by a majority
vote of the Oversight Board, the powers of the Chairperson
shall include--
``(i) establishing committees;
``(ii) setting meeting places and times;
``(iii) establishing meeting agendas; and
``(iv) developing rules for the conduct of business.
``(2) Meetings.--The Oversight Board shall meet at least
quarterly and at such other times as the Chairperson determines
appropriate.
``(3) Reports.--
``(A) Annual.--The Oversight Board shall each year report
with respect to the conduct of its responsibilities under this
title to the President, the Committees on Ways and Means,
Government Reform and Oversight, and Appropriations of the
House of Representatives and the Committees on Finance,
Governmental Affairs, and Appropriations of the Senate.
``(B) Additional report.--Upon a determination by the
Oversight Board under subsection (c)(1)(B) that the
organization and operation of the Internal Revenue Service are
not allowing it to carry out its mission, the Oversight Board
shall report such determination to the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate.''.
(b) Restriction on Disclosure of Return Information to Oversight
Board Members.--Section 6103(h) (relating to disclosure to certain
Federal officers and employees for purposes of tax administration,
etc.) is amended by adding at the end the following new paragraph:
``(5) Internal revenue service oversight board.--
``(A) In general.--Notwithstanding paragraph (1), and
except as provided in subparagraph (B), no return or return
information may be disclosed to any member of the Oversight
Board described in subparagraph (A) or (D) of section
7802(b)(1) or to any employee or detailee of such Board by
reason of their service with the Board. Any request for
information not permitted to be disclosed under the preceding
sentence, and any contact relating to a specific taxpayer, made
by any such individual to an officer or employee of the
Internal Revenue Service shall be reported by such officer or
employee to the Secretary, the Treasury Inspector General for
Tax Administration, and the Joint Committee on Taxation.
``(B) Exception for reports to the board.--If--
``(i) the Commissioner or the Treasury Inspector
General for Tax Administration prepares any report or other
matter for the Oversight Board in order to assist the Board
in carrying out its duties; and
``(ii) the Commissioner or such Inspector General
determines it is necessary to include any return or return
information in such report or other matter to enable the
Board to carry out such duties,
such return or return information (other than information
regarding taxpayer identity) may be disclosed to members,
employees, or detailees of the Board solely for the purpose of
carrying out such duties.''.
(c) Conforming Amendments.--
(1) Section 4946(c) (relating to definitions and special rules
for chapter 42) is amended by striking ``or'' at the end of
paragraph (5), by striking the period at the end of paragraph (6)
and inserting ``, or'', and by adding at the end the following new
paragraph:
``(7) a member of the Internal Revenue Service Oversight
Board.''.
(2) 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. Internal Revenue Service Oversight Board.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Initial nominations to internal revenue service oversight
board.--The President shall submit the initial nominations under
section 7802 of the Internal Revenue Code of 1986, as added by this
section, to the Senate not later than 6 months after the date of
the enactment of this Act.
(3) Effect on actions prior to appointment of oversight
board.--Nothing in this section shall be construed to invalidate
the actions and authority of the Internal Revenue Service prior to
the appointment of the members of the Internal Revenue Service
Oversight Board.

6a611f3e702531544d882ddc40fca98e6116f7ca6318b74c74c5ad067f5ef2e4

192cbf5db7be20ed09280c0e0119f648895e980340fea551a0174b2992a48890

(a) Establishment of Two Inspectors General in the Department of
the Treasury.--Section 2 of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended by striking the matter following paragraph (3) and
inserting the following:
``there is established--
``(A) in each of such establishments an office of Inspector
General, subject to subparagraph (B); and
``(B) in the establishment of the Department of the
Treasury--
``(i) an Office of Inspector General of the Department
of the Treasury; and
``(ii) an Office of Treasury Inspector General for Tax
Administration.''.
(b) Amendments to Section 8D of the Inspector General Act of
1978.--
(1) Limitation on authority of inspector general.--Section
8D(a) of the Inspector General Act of 1978 (5 U.S.C. App.) is
amended by adding at the end the following new paragraph:
``(4) The Secretary of the Treasury may not exercise any power
under paragraph (1) or (2) with respect to the Treasury Inspector
General for Tax Administration.''.
(2) Duties of inspector general of the department of the
treasury; relationship to the treasury inspector general for tax
administration.--Section 8D(b) of such Act is amended--
(A) by inserting ``(1)'' after ``(b)''; and
(B) by adding at the end the following new paragraphs:
``(2) The Inspector General of the Department of the Treasury
shall exercise all duties and responsibilities of an Inspector
General for the Department of the Treasury other than the duties
and responsibilities exercised by the Treasury Inspector General
for Tax Administration.
``(3) The Secretary of the Treasury shall establish procedures
under which the Inspector General of the Department of the Treasury
and the Treasury Inspector General for Tax Administration will--
``(A) determine how audits and investigations are allocated
in cases of overlapping jurisdiction; and
``(B) provide for coordination, cooperation, and efficiency
in the conduct of such audits and investigations.''.
(3) Access to returns and return information.-- Section 8D(e)
of such Act is amended--
(A) in paragraph (1), by striking ``Inspector General'' and
inserting ``Treasury Inspector General for Tax
Administration'';
(B) in paragraph (2), by striking all beginning with
``(2)'' through subparagraph (B);
(C)(i) by redesignating subparagraph (C) of paragraph (2)
as paragraph (2) of such subsection; and
(ii) in such redesignated paragraph (2), by striking
``Inspector General'' and inserting ``Treasury Inspector
General for Tax Administration''; and
(D)(i) by redesignating subparagraph (D) of such paragraph
as paragraph (3) of such subsection; and
(ii) in such redesignated paragraph (3), by striking
``Inspector General'' and inserting ``Treasury Inspector
General for Tax Administration''.
(4) Effect on certain final decisions of the secretary.--
Section 8D(f) of such Act is amended by striking ``Inspector
General'' and inserting ``Inspector General of the Department of
the Treasury or the Treasury Inspector General for Tax
Administration''.
(5) Repeal of limitation on reports to the attorney general.--
Section 8D of such Act is amended by striking subsection (g).
(6) Transmission of reports.--Section 8D(h) of such Act is
amended--
(A) by striking ``(h)'' and inserting ``(g)(1)'';
(B) by striking ``and the Committees on Government
Operations and Ways and Means of the House of Representatives''
and inserting ``and the Committees on Government Reform and
Oversight and Ways and Means of the House of Representatives'';
and
(C) by adding at the end the following new paragraph:
``(2) Any report made by the Treasury Inspector General for Tax
Administration that is required to be transmitted by the Secretary of
the Treasury to the appropriate committees or subcommittees of Congress
under section 5(d) shall also be transmitted, within the 7-day period
specified under such subsection, to the Internal Revenue Service
Oversight Board and the Commissioner of Internal Revenue.''.
(7) Treasury inspector general for tax administration.--Section
8D of the Act is amended by adding at the end the following new
subsections:
``(h) The Treasury Inspector General for Tax Administration shall
exercise all duties and responsibilities of an Inspector General of an
establishment with respect to the Department of the Treasury and the
Secretary of the Treasury on all matters relating to the Internal
Revenue Service. The Treasury Inspector General for Tax Administration
shall have sole authority under this Act to conduct an audit or
investigation of the Internal Revenue Service Oversight Board and the
Chief Counsel for the Internal Revenue Service.
``(i) In addition to the requirements of the first sentence of
section 3(a), the Treasury Inspector General for Tax Administration
should have demonstrated ability to lead a large and complex
organization.
``(j) An individual appointed to the position of Treasury Inspector
General for Tax Administration, the Assistant Inspector General for
Auditing of the Office of the Treasury Inspector General for Tax
Administration under section 3(d)(1), the Assistant Inspector General
for Investigations of the Office of the Treasury Inspector General for
Tax Administration under section 3(d)(2), or any position of Deputy
Inspector General of the Office of the Treasury Inspector General for
Tax Administration may not be an employee of the Internal Revenue
Service--
``(1) during the 2-year period preceding the date of
appointment to such position; or
``(2) during the 5-year period following the date such
individual ends service in such position.
``(k)(1) In addition to the duties and responsibilities exercised
by an inspector general of an establishment, the Treasury Inspector
General for Tax Administration--
``(A) shall have the duty to enforce criminal provisions under
section 7608(b) of the Internal Revenue Code of 1986;
``(B) in addition to the functions authorized under section
7608(b)(2) of such Code, may carry firearms;
``(C) shall be responsible for protecting the Internal Revenue
Service against external attempts to corrupt or threaten employees
of the Internal Revenue Service, but shall not be responsible for
the conducting of background checks and the providing of physical
security; and
``(D) may designate any employee in the Office of the Treasury
Inspector General for Tax Administration to enforce such laws and
perform such functions referred to under subparagraphs (A), (B),
and (C).
``(2)(A) In performing a law enforcement function under paragraph
(1), the Treasury Inspector General for Tax Administration shall report
any reasonable grounds to believe there has been a violation of Federal
criminal law to the Attorney General at an appropriate time as
determined by the Treasury Inspector General for Tax Administration,
notwithstanding section 4(d).
``(B) In the administration of section 5(d) and subsection (g)(2)
of this section, the Secretary of the Treasury may transmit the
required report with respect to the Treasury Inspector General for Tax
Administration at an appropriate time as determined by the Secretary,
if the problem, abuse, or deficiency relates to--
``(i) the performance of a law enforcement function under
paragraph (1); and
``(ii) sensitive information concerning matters under
subsection (a)(1)(A) through (F).
``(3) Nothing in this subsection shall be construed to affect the
authority of any other person to carry out or enforce any provision
specified in paragraph (1).
``(l)(1) The Commissioner of Internal Revenue or the Internal
Revenue Service Oversight Board may request, in writing, the Treasury
Inspector General for Tax Administration to conduct an audit or
investigation relating to the Internal Revenue Service. If the Treasury
Inspector General for Tax Administration determines not to conduct such
audit or investigation, the Inspector General shall timely provide a
written explanation for such determination to the person making the
request.
``(2)(A) Any final report of an audit conducted by the Treasury
Inspector General for Tax Administration shall be timely submitted by
the Inspector General to the Commissioner of Internal Revenue and the
Internal Revenue Service Oversight Board.
``(B) The Treasury Inspector General for Tax Administration shall
periodically submit to the Commissioner and Board a list of
investigations for which a final report has been completed by the
Inspector General and shall provide a copy of any such report upon
request of the Commissioner or Board.
``(C) This paragraph applies regardless of whether the applicable
audit or investigation is requested under paragraph (1).''.
(c) Transfer of Functions.--
(1) In general.--Section 9(a)(1) of the Inspector General Act
of 1978 (5 U.S.C. App.) is amended in subparagraph (L)--
(A) by inserting ``(i)'' after ``(L)'';
(B) by inserting ``and'' after the semicolon; and
(C) by adding at the end the following new clause:
``(ii) of the Treasury Inspector General for Tax
Administration, effective 180 days after the date of the
enactment of the Internal Revenue Service Restructuring and
Reform Act of 1998, the Office of Chief Inspector of the
Internal Revenue Service;''.
(2) Termination of office of chief inspector.--Effective upon
the transfer of functions under the amendment made by paragraph
(1), the Office of Chief Inspector of the Internal Revenue Service
is terminated.
(3) Retention of certain internal audit personnel.--In making
the transfer under the amendment made by paragraph (1), the
Commissioner of Internal Revenue shall designate and retain an
appropriate number (not in excess of 300) of internal audit full-
time equivalent employee positions necessary for management
relating to the Internal Revenue Service.
(4) Additional personnel transfers.--Effective 180 days after
the date of the enactment of this Act, the Secretary of the
Treasury shall transfer 21 full-time equivalent positions from the
Office of the Inspector General of the Department of the Treasury
to the Office of the Treasury Inspector General for Tax
Administration.
(d) Audits and Reports of Agency Financial Statements.--Subject to
section 3521(g) of title 31, United States Code--
(1) the Inspector General of the Department of the Treasury
shall, subject to paragraph (2)--
(A) audit each financial statement in accordance with
section 3521(e) of such title; and
(B) prepare and submit each report required under section
3521(f) of such title; and
(2) the Treasury Inspector General for Tax Administration
shall--
(A) audit that portion of each financial statement referred
to under paragraph (1)(A) that relates to custodial and
administrative accounts of the Internal Revenue Service; and
(B) prepare that portion of each report referred to under
paragraph (1)(B) that relates to custodial and administrative
accounts of the Internal Revenue Service.
(e) Technical and Conforming Amendments.--
(1) Transfer of functions.--Section 8D(b) of the Inspector
General Act of 1978 (5 U.S.C. App.) is amended by striking ``and
the internal audits and internal investigations performed by the
Office of Assistant Commissioner (Inspection) of the Internal
Revenue Service''.
(2) Amendments relating to references to the inspector general
of the department of the treasury.--
(A) Limitation on authority.--Section 8D(a) of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
(i) in the first sentence of paragraph (1), by
inserting ``of the Department of the Treasury'' after
``Inspector General'';
(ii) in paragraph (2), by inserting ``of the Department
of the Treasury'' after ``prohibit the Inspector General'';
and
(iii) in paragraph (3)--
(I) in the first sentence, by inserting ``of the
Department of the Treasury'' after ``notify the
Inspector General''; and
(II) in the second sentence, by inserting ``of the
Department of the Treasury'' after ``notice, the
Inspector General''.
(B) Duties.--Section 8D(b) of such Act is amended in the
second sentence by inserting ``of the Department of the
Treasury'' after ``Inspector General''.
(C) Audits and investigations.--Section 8D (c) and (d) of
such Act are amended by inserting ``of the Department of the
Treasury'' after ``Inspector General'' each place it appears.
(3) References.--The second section 8G of the Inspector General
Act of 1978 (relating to rule of construction of special
provisions) is amended--
(A) by striking ``Sec. 8G'' and inserting ``Sec. 8H'';
(B) by striking ``or 8E'' and inserting ``8E or 8F''; and
(C) by striking ``section 8F(a)'' and inserting ``section
8G(a)''.
(4) Amendment to internal revenue code of 1986.--Section
7608(b)(1) is amended by striking ``or of the Internal Security
Division''.

662b6889adebac904855521b08a4e297fcbfaf18de475f74429734837e92690a

(a) In General.--Section 7804 (relating to the effect of
reorganization plans) is amended to read as follows:
``SEC. 7804. OTHER PERSONNEL.
``(a) Appointment and Supervision.--Unless otherwise prescribed by
the Secretary, the Commissioner of Internal Revenue is authorized to
employ such number of persons as the Commissioner deems proper for the
administration and enforcement of the internal revenue laws, and the
Commissioner shall issue all necessary directions, instructions,
orders, and rules applicable to such persons.
``(b) Posts of Duty of Employees in Field Service or Traveling.--
Unless otherwise prescribed by the Secretary--
``(1) Designation of post of duty.--The Commissioner shall
determine and designate the posts of duty of all such persons
engaged in field work or traveling on official business outside of
the District of Columbia.
``(2) Detail of personnel from field service.--The Commissioner
may order any such person engaged in field work to duty in the
District of Columbia, for such periods as the Commissioner may
prescribe, and to any designated post of duty outside the District
of Columbia upon the completion of such duty.
``(c) Delinquent Internal Revenue Officers and Employees.--If any
officer or employee of the Treasury Department acting in connection
with the internal revenue laws fails to account for and pay over any
amount of money or property collected or received by him in connection
with the internal revenue laws, the Secretary shall issue notice and
demand to such officer or employee for payment of the amount which he
failed to account for and pay over, and, upon failure to pay the amount
demanded within the time specified in such notice, the amount so
demanded shall be deemed imposed upon such officer or employee and
assessed upon the date of such notice and demand, and the provisions of
chapter 64 and all other provisions of law relating to the collection
of assessed taxes shall be applicable in respect of such amount.''.
(b) Conforming Amendments.--
(1) Subsection (b) of section 6344 is amended by striking
``section 7803(d)'' and inserting ``section 7804(c)''.
(2) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7804 and inserting
the following new item:
``Sec. 7804. Other personnel.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

b84a5083cd934d252fb51ab4435d9261aec3f4a63752dbcaa0d8c3fc06454588

AUDITS AND OTHER INVESTIGATIONS.
(a) In General.--Part I of subchapter A of chapter 75 (relating to
crimes, other offenses, and forfeitures) is amended by adding after
section 7216 the following new section:
``SEC. 7217. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE OVER TAXPAYER
AUDITS AND OTHER INVESTIGATIONS.
``(a) Prohibition.--It shall be unlawful for any applicable person
to request, directly or indirectly, any officer or employee of the
Internal Revenue Service to conduct or terminate an audit or other
investigation of any particular taxpayer with respect to the tax
liability of such taxpayer.
``(b) Reporting Requirement.--Any officer or employee of the
Internal Revenue Service receiving any request prohibited by subsection
(a) shall report the receipt of such request to the Treasury Inspector
General for Tax Administration.
``(c) Exceptions.--Subsection (a) shall not apply to any written
request made--
``(1) to an applicable person by or on behalf of the taxpayer
and forwarded by such applicable person to the Internal Revenue
Service;
``(2) by an applicable person for disclosure of return or
return information under section 6103 if such request is made in
accordance with the requirements of such section; or
``(3) by the Secretary of the Treasury as a consequence of the
implementation of a change in tax policy.
``(d) Penalty.--Any person who willfully violates subsection (a) or
fails to report under subsection (b) shall be punished upon conviction
by a fine in any amount not exceeding $5,000, or imprisonment of not
more than 5 years, or both, together with the costs of prosecution.
``(e) Applicable Person.--For purposes of this section, the term
`applicable person' means--
``(1) the President, the Vice President, any employee of the
executive office of the President, and any employee of the
executive office of the Vice President; and
``(2) any individual (other than the Attorney General of the
United States) serving in a position specified in section 5312 of
title 5, United States Code.''.
(b) Clerical Amendment.--The table of sections for part I of
subchapter A of chapter 75 is amended by adding after the item relating
to section 7216 the following new item:
``Sec. 7217. Prohibition on executive branch influence over
taxpayer audits and other investigations.''.
(c) Effective Date.--The amendments made by this section shall
apply to requests made after the date of the enactment of this Act.
Subtitle C--Personnel Flexibilities

568b5da0dfbd278ede5b17ca79cdf60451622a145a5efe36e1d8e8f4d515c403

0547d8e3f12fb2998d2e5b26b523c9bf9efcac94e3169999621558bab2aaffe7

(a) Definition.--In this section, the term ``employee'' means an
employee (as defined by section 2105 of title 5, United States Code)
who is employed by the Internal Revenue Service serving under an
appointment without time limitation, and has been currently employed
for a continuous period of at least 3 years, but does not include--
(1) a reemployed annuitant under subchapter III of chapter 83
or chapter 84 of title 5, United States Code, or another retirement
system;
(2) an employee having a disability on the basis of which such
employee is or would be eligible for disability retirement under
the applicable retirement system referred to in paragraph (1);
(3) an employee who is in receipt of a specific notice of
involuntary separation for misconduct or unacceptable performance;
(4) an employee who, upon completing an additional period of
service as referred to in section 3(b)(2)(B)(ii) of the Federal
Workforce Restructuring Act of 1994 (5 U.S.C. 5597 note), would
qualify for a voluntary separation incentive payment under section
3 of such Act;
(5) an employee who has previously received any voluntary
separation incentive payment by the Federal Government under this
section or any other authority and has not repaid such payment;
(6) an employee covered by statutory reemployment rights who is
on transfer to another organization; or
(7) any employee who, during the 24-month period preceding the
date of separation, has received a recruitment or relocation bonus
under section 5753 of title 5, United States Code, or who, within
the 12-month period preceding the date of separation, received a
retention allowance under section 5754 of title 5, United States
Code.
(b) Authority To Provide Voluntary Separation Incentive Payments.--
(1) In general.--The Commissioner of Internal Revenue may pay
voluntary separation incentive payments under this section to any
employee to the extent necessary to carry out the plan to
reorganize the Internal Revenue Service under section 1001.
(2) Amount and treatment of payments.--A voluntary separation
incentive payment--
(A) shall be paid in a lump sum after the employee's
separation;
(B) shall be paid from appropriations or funds available
for the payment of the basic pay of the employees;
(C) shall be equal to the lesser of--
(i) an amount equal to the amount the employee would be
entitled to receive under section 5595(c) of title 5,
United States Code; or
(ii) an amount determined by an agency head not to
exceed $25,000;
(D) may not be made except in the case of any qualifying
employee who voluntarily separates (whether by retirement or
resignation) before January 1, 2003;
(E) shall not be a basis for payment, and shall not be
included in the computation, of any other type of Government
benefit; and
(F) shall not be taken into account in determining the
amount of any severance pay to which the employee may be
entitled under section 5595 of title 5, United States Code,
based on any other separation.
(c) Additional Internal Revenue Service Contributions to the
Retirement Fund.--
(1) In general.--In addition to any other payments which it is
required to make under subchapter III of chapter 83 of title 5,
United States Code, the Internal Revenue Service shall remit to the
Office of Personnel Management for deposit in the Treasury of the
United States to the credit of the Civil Service Retirement and
Disability Fund an amount equal to 15 percent of the final basic
pay of each employee who is covered under subchapter III of chapter
83 or chapter 84 of title 5, United States Code, to whom a
voluntary separation incentive has been paid under this section.
(2) Definition.--In paragraph (1), the term ``final basic
pay'', with respect to an employee, means the total amount of basic
pay which would be payable for a year of service by such employee,
computed using the employee's final rate of basic pay, and, if last
serving on other than a full-time basis, with appropriate
adjustment therefor.
(d) Effect of Subsequent Employment With the Government.--An
individual who has received a voluntary separation incentive payment
under this section and accepts any employment for compensation with the
Government of the United States, or who works for any agency of the
United States Government through a personal services contract, within 5
years after the date of the separation on which the payment is based
shall be required to pay, prior to the individual's first day of
employment, the entire amount of the incentive payment to the Internal
Revenue Service.
(e) Effect on Internal Revenue Service Employment Levels.--
(1) Intended effect.--Voluntary separations under this section
are not intended to necessarily reduce the total number of full-
time equivalent positions in the Internal Revenue Service.
(2) Use of voluntary separations.--The Internal Revenue Service
may redeploy or use the full-time equivalent positions vacated by
voluntary separations under this section to make other positions
available to more critical locations or more critical occupations.

fbbbead42428fef22bc0d92d6929d344306dae1ad7e7ea0bf4b0d0fea18f665e

(a) In General.--Subject to subsection (c), the Commissioner of
Internal Revenue shall terminate the employment of any employee of the
Internal Revenue Service if there is a final administrative or judicial
determination that such employee committed any act or omission
described under subsection (b) in the performance of the employee's
official duties. Such termination shall be a removal for cause on
charges of misconduct.
(b) Acts or Omissions.--The acts or omissions referred to under
subsection (a) are--
(1) willful failure to obtain the required approval signatures
on documents authorizing the seizure of a taxpayer's home, personal
belongings, or business assets;
(2) providing a false statement under oath with respect to a
material matter involving a taxpayer or taxpayer representative;
(3) with respect to a taxpayer, taxpayer representative, or
other employee of the Internal Revenue Service, the violation of--
(A) any right under the Constitution of the United States;
or
(B) any civil right established under--
(i) title VI or VII of the Civil Rights Act of 1964;
(ii) title IX of the Education Amendments of 1972;
(iii) the Age Discrimination in Employment Act of 1967;
(iv) the Age Discrimination Act of 1975;
(v) section 501 or 504 of the Rehabilitation Act of
1973; or
(vi) title I of the Americans with Disabilities Act of
1990;
(4) falsifying or destroying documents to conceal mistakes made
by any employee with respect to a matter involving a taxpayer or
taxpayer representative;
(5) assault or battery on a taxpayer, taxpayer representative,
or other employee of the Internal Revenue Service, but only if
there is a criminal conviction, or a final judgment by a court in a
civil case, with respect to the assault or battery;
(6) violations of the Internal Revenue Code of 1986, Department
of Treasury regulations, or policies of the Internal Revenue
Service (including the Internal Revenue Manual) for the purpose of
retaliating against, or harassing, a taxpayer, taxpayer
representative, or other employee of the Internal Revenue Service;
(7) willful misuse of the provisions of section 6103 of the
Internal Revenue Code of 1986 for the purpose of concealing
information from a congressional inquiry;
(8) willful failure to file any return of tax required under
the Internal Revenue Code of 1986 on or before the date prescribed
therefor (including any extensions), unless such failure is due to
reasonable cause and not to willful neglect;
(9) willful understatement of Federal tax liability, unless
such understatement is due to reasonable cause and not to willful
neglect; and
(10) threatening to audit a taxpayer for the purpose of
extracting personal gain or benefit.
(c) Determination of Commissioner.--
(1) In general.--The Commissioner of Internal Revenue may take
a personnel action other than termination for an act or omission
under subsection (a).
(2) Discretion.--The exercise of authority under paragraph (1)
shall be at the sole discretion of the Commissioner of Internal
Revenue and may not be delegated to any other officer. The
Commissioner of Internal Revenue, in his sole discretion, may
establish a procedure which will be used to determine whether an
individual should be referred to the Commissioner of Internal
Revenue for a determination by the Commissioner under paragraph
(1).
(3) No appeal.--Any determination of the Commissioner of
Internal Revenue under this subsection may not be appealed in any
administrative or judicial proceeding.
(d) Definition.--For purposes of the provisions described in
clauses (i), (ii), and (iv) of subsection (b)(3)(B), references to a
program or activity receiving Federal financial assistance or an
education program or activity receiving Federal financial assistance
shall include any program or activity conducted by the Internal Revenue
Service for a taxpayer.

c8230bec4c8438c71c55e749641d408af1ea38c56f59fe3256869b67006d7f89

(a) In General.--The Internal Revenue Service shall not use records
of tax enforcement results--
(1) to evaluate employees; or
(2) to impose or suggest production quotas or goals with
respect to such employees.
(b) Taxpayer Service.--The Internal Revenue Service shall use the
fair and equitable treatment of taxpayers by employees as one of the
standards for evaluating employee performance.
(c) Certification.--Each appropriate supervisor shall certify
quarterly by letter to the Commissioner of Internal Revenue whether or
not tax enforcement results are being used in a manner prohibited by
subsection (a).
(d) Technical and Conforming Amendment.--Section 6231 of the
Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647;
102 Stat. 3734) is repealed.
(e) Effective Date.--This section shall apply to evaluations
conducted on or after the date of the enactment of this Act.

896c041e5b55a8abd66d640eb2e43105d71bf69c276f5fd164ce3bc13e3d1701

(a) In General.--Not later than 180 days after the date of the
enactment of this Act, the Commissioner of Internal Revenue shall
implement an employee training program and shall submit an employee
training plan to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives.
(b) Contents.--The plan submitted under subsection (a) shall--
(1) detail a comprehensive employee training program to ensure
adequate customer service training;
(2) detail a schedule for training and the fiscal years during
which the training will occur;
(3) detail the funding of the program and relevant information
to demonstrate the priority and commitment of resources to the
plan;
(4) review the organizational design of customer service;
(5) provide for the implementation of a performance development
system; and
(6) provide for at least 16 hours of conflict management
training during fiscal year 1999 for employees conducting
collection activities.

b7d23e0967f47437223f55488f5b8ef609bf934864c68960fb10dca7af9ae225

(a) In General.--It is the policy of Congress that--
(1) paperless filing should be the preferred and most
convenient means of filing Federal tax and information returns;
(2) it should be the goal of the Internal Revenue Service to
have at least 80 percent of all such returns filed electronically
by the year 2007; and
(3) the Internal Revenue Service should cooperate with and
encourage the private sector by encouraging competition to increase
electronic filing of such returns.
(b) Strategic Plan.--
(1) In general.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury or the
Secretary's delegate (hereafter in this section referred to as the
``Secretary'') shall establish a plan to eliminate barriers,
provide incentives, and use competitive market forces to increase
electronic filing gradually over the next 10 years while
maintaining processing times for paper returns at 40 days. To the
extent practicable, such plan shall provide that all returns
prepared electronically for taxable years beginning after 2001
shall be filed electronically.
(2) Electronic commerce advisory group.--To ensure that the
Secretary receives input from the private sector in the development
and implementation of the plan required by paragraph (1), the
Secretary shall convene an electronic commerce advisory group to
include representatives from the small business community and from
the tax practitioner, preparer, and computerized tax processor
communities and other representatives from the electronic filing
industry.
(c) Promotion of Electronic Filing and Incentives.-- Section 6011
is amended by redesignating subsection (f) as subsection (g) and by
inserting after subsection (e) the following new subsection:
``(f) Promotion of Electronic Filing.--
``(1) In general.--The Secretary is authorized to promote the
benefits of and encourage the use of electronic tax administration
programs, as they become available, through the use of mass
communications and other means.
``(2) Incentives.--The Secretary may implement procedures to
provide for the payment of appropriate incentives for
electronically filed returns.''.
(d) Annual Reports.--Not later than June 30 of each calendar year
after 1998, the Chairperson of the Internal Revenue Service Oversight
Board, the Secretary of the Treasury, and the Chairperson of the
electronic commerce advisory group established under subsection (b)(2)
shall report to the Committees on Ways and Means, Appropriations,
Government Reform and Oversight, and Small Business of the House of
Representatives and the Committees on Finance, Appropriations,
Governmental Affairs, and Small Business of the Senate on--
(1) the progress of the Internal Revenue Service in meeting the
goal of receiving electronically 80 percent of tax and information
returns by 2007;
(2) the status of the plan required by subsection (b);
(3) the legislative changes necessary to assist the Internal
Revenue Service in meeting such goal; and
(4) the effects on small businesses and the self-employed of
electronically filing tax and information returns.

43ddde14df52c7e3d2c7885e60084a93ecb8b7fcf74e37e469761758d1bc0a14

TITLE II

-ELECTRONIC FILING

(a) Information Returns Filed Electronically.--Section 6071
(relating to time for filing returns and other documents) is amended by
redesignating subsection (b) as subsection (c) and by inserting after
subsection (a) the following new subsection:
``(b) Electronically Filed Information Returns.--Returns made under
subparts B and C of part III of this subchapter which are filed
electronically shall be filed on or before March 31 of the year
following the calendar year to which such returns relate.''.
(b) Study Relating to Time For Providing Notice to Recipients.--
(1) In general.--The Secretary of the Treasury shall conduct a
study evaluating the effect of extending the deadline for providing
statements to persons with respect to whom information is required
to be furnished under subparts B and C of part III of subchapter A
of chapter 61 of the Internal Revenue Code of 1986 (other than
section 6051 of such Code) from January 31 to February 15 of the
year in which the return to which the statement relates is required
to be filed.
(2) Report.--Not later than June 30, 1999, the Secretary of the
Treasury shall submit a report on the study under paragraph (1) to
the Committee on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to returns required to be filed after December 31, 1999.

47eb355c3d45d88dd76ecb26ff52ed4fe9ca48027e3ed6c281d0e3af8b702eea

(a) In General.--Section 6061 (relating to signing of returns and
other documents) is amended--
(1) by striking ``Except as otherwise provided by'' and
inserting the following:
``(a) General Rule.--Except as otherwise provided by subsection (b)
and''; and
(2) by adding at the end the following new subsection:
``(b) Electronic Signatures.--
``(1) In general.--The Secretary shall develop procedures for
the acceptance of signatures in digital or other electronic form.
Until such time as such procedures are in place, the Secretary
may--
``(A) waive the requirement of a signature for; or
``(B) provide for alternative methods of signing or
subscribing,
a particular type or class of return, declaration, statement, or
other document required or permitted to be made or written under
internal revenue laws and regulations.
``(2) Treatment of alternative methods.--Notwithstanding any
other provision of law, any return, declaration, statement, or
other document filed and verified, signed, or subscribed under any
method adopted under paragraph (1)(B) shall be treated for all
purposes (both civil and criminal, including penalties for perjury)
in the same manner as though signed or subscribed.
``(3) Published guidance.--The Secretary shall publish guidance
as appropriate to define and implement any waiver of the signature
requirements or any method adopted under paragraph (1).''.
(b) Acknowledgment of Electronic Filing.--Section 7502(c) is
amended to read as follows:
``(c) Registered and Certified Mailing; Electronic Filing.--
``(1) Registered mail.--For purposes of this section, if any
return, claim, statement, or other document, or payment, is sent by
United States registered mail--
``(A) such registration shall be prima facie evidence that
the return, claim, statement, or other document was delivered
to the agency, officer, or office to which addressed; and
``(B) the date of registration shall be deemed the postmark
date.
``(2) Certified mail; electronic filing.--The Secretary is
authorized to provide by regulations the extent to which the
provisions of paragraph (1) with respect to prima facie evidence of
delivery and the postmark date shall apply to certified mail and
electronic filing.''.
(c) Establishment of Procedures for Other Information.--In the case
of taxable periods beginning after December 31, 1999, the Secretary of
the Treasury or the Secretary's delegate shall, to the extent
practicable, establish procedures to accept, in electronic form, any
other information, statements, elections, or schedules, from taxpayers
filing returns electronically, so that such taxpayers will not be
required to file any paper.
(d) Internet Availability.--In the case of taxable periods
beginning after December 31, 1998, the Secretary of the Treasury or the
Secretary's delegate shall establish procedures for all tax forms,
instructions, and publications created in the most recent 5-year period
to be made available electronically on the Internet in a searchable
database at approximately the same time such records are available to
the public in paper form. In addition, in the case of taxable periods
beginning after December 31, 1998, the Secretary of the Treasury or the
Secretary's delegate shall, to the extent practicable, establish
procedures for other taxpayer guidance to be made available
electronically on the Internet in a searchable database at
approximately the same time such guidance is available to the public in
paper form.
(e) Procedures for Authorizing Disclosure Electronically.--The
Secretary shall establish procedures for any taxpayer to authorize, on
an electronically filed return, the Secretary to disclose information
under section 6103(c) of the Internal Revenue Code of 1986 to the
preparer of the return.
(f) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

fe21c712d2a0572a2d239681a1403d3cd6a1e82d2511d06e0a06e5b6fd833ae6

(a) In General.--The Secretary of the Treasury or the Secretary's
delegate shall develop procedures for the implementation of a return-
free tax system under which appropriate individuals would be permitted
to comply with the Internal Revenue Code of 1986 without making the
return required under section 6012 of such Code for taxable years
beginning after 2007.
(b) Report.--Not later than June 30 of each calendar year after
1999, the Secretary shall report to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the Senate
on--
(1) what additional resources the Internal Revenue Service
would need to implement such a system;
(2) the changes to the Internal Revenue Code of 1986 that could
enhance the use of such a system;
(3) the procedures developed pursuant to subsection (a); and
(4) the number and classes of taxpayers that would be permitted
to use the procedures developed pursuant to subsection (a).

0d7481c9ede606ba279dcb9d62cb736463c135e7f563e703811237865adf249e

(a) In General.--Not later than December 31, 2006, the Secretary of
the Treasury or the Secretary's delegate shall develop procedures under
which a taxpayer filing returns electronically (and their designees
under section 6103(c) of the Internal Revenue Code of 1986) would be
able to review the taxpayer's account electronically, but only if all
necessary safeguards to ensure the privacy of such account information
are in place.
(b) Report.--Not later than December 31, 2003, the Secretary of the
Treasury shall report on the progress the Secretary is making on the
development of procedures under subsection (a) to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate.

420ab4a2647a0728f24fbacddffce6526f7473e458b05ba84d4e14924d46def4

This title may be cited as the ``Taxpayer Bill of Rights 3''.
Subtitle A--Burden of Proof

05b22749459a4ae1a58aba5fb49aee97fbf9ccd6c867f53b7d6b475722743efb

TITLE III

-TAXPAYER PROTECTION AND RIGHTS

(a) In General.--Chapter 76 (relating to judicial proceedings) is
amended by adding at the end the following new subchapter:
``Subchapter E--Burden of Proof
``Sec. 7491. Burden of proof.
``SEC. 7491. BURDEN OF PROOF.
``(a) Burden Shifts Where Taxpayer Produces Credible Evidence.--
``(1) General rule.--If, in any court proceeding, a taxpayer
introduces credible evidence with respect to any factual issue
relevant to ascertaining the liability of the taxpayer for any tax
imposed by subtitle A or B, the Secretary shall have the burden of
proof with respect to such issue.
``(2) Limitations.--Paragraph (1) shall apply with respect to
an issue only if--
``(A) the taxpayer has complied with the requirements under
this title to substantiate any item;
``(B) the taxpayer has maintained all records required
under this title and has cooperated with reasonable requests by
the Secretary for witnesses, information, documents, meetings,
and interviews; and
``(C) in the case of a partnership, corporation, or trust,
the taxpayer is described in section 7430(c)(4)(A)(ii).
``(3) Coordination.--Paragraph (1) shall not apply to any issue
if any other provision of this title provides for a specific burden
of proof with respect to such issue.
``(b) Use of Statistical Information on Unrelated Taxpayers.--In
the case of an individual taxpayer, the Secretary shall have the burden
of proof in any court proceeding with respect to any item of income
which was reconstructed by the Secretary solely through the use of
statistical information on unrelated taxpayers.
``(c) Penalties.--Notwithstanding any other provision of this
title, the Secretary shall have the burden of production in any court
proceeding with respect to the liability of any individual for any
penalty, addition to tax, or additional amount imposed by this
title.''.
(b) Conforming Amendment.--The table of subchapters for chapter 76
is amended by adding at the end the following new item:
``Subchapter E. Burden of proof.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to court proceedings arising in connection with examinations
commencing after the date of the enactment of this Act.
(2) Taxable periods or events after date of enactment.--In any
case in which there is no examination, such amendments shall apply
to court proceedings arising in connection with taxable periods or
events beginning or occurring after such date of enactment.
Subtitle B--Proceedings by Taxpayers

0785ac01359f8b1dbbbde86f0b3653166bc51fe14c825c14bbadd1b2e65b4be7

(a) Increase in Attorney's Fees.--
(1) Increase in hourly amount.--Clause (iii) of section
7430(c)(1)(B) (relating to reasonable litigation costs) is amended
by striking ``$110'' and inserting ``$125''.
(2) Award of higher attorney's fees based on complexity of
issues.--Clause (iii) of section 7430(c)(1)(B) (relating to the
award of costs and certain fees) is amended by inserting ``the
difficulty of the issues presented in the case, or the local
availability of tax expertise,'' before ``justifies a higher
rate''.
(b) Award of Administrative Costs Incurred After 30-Day Letter.--
Paragraph (2) of section 7430(c) is amended by striking the last
sentence and inserting the following new flush sentence:
``Such term shall only include costs incurred on or after whichever
of the following is the earliest: (i) the date of the receipt by
the taxpayer of the notice of the decision of the Internal Revenue
Service Office of Appeals; (ii) the date of the notice of
deficiency; or (iii) the date on which the first letter of proposed
deficiency which allows the taxpayer an opportunity for
administrative review in the Internal Revenue Service Office of
Appeals is sent.''.
(c) Award of Fees for Certain Additional Services.-- Paragraph (3)
of section 7430(c) is amended to read as follows:
``(3) Attorneys fees.--
``(A) In general.--For purposes of paragraphs (1) and (2),
fees for the services of an individual (whether or not an
attorney) who is authorized to practice before the Tax Court or
before the Internal Revenue Service shall be treated as fees
for the services of an attorney.
``(B) Pro bono services.--The court may award reasonable
attorneys fees under subsection (a) in excess of the attorneys
fees paid or incurred if such fees are less than the reasonable
attorneys fees because an individual is representing the
prevailing party for no fee or for a fee which (taking into
account all the facts and circumstances) is no more than a
nominal fee. This subparagraph shall apply only if such award
is paid to such individual or such individual's employer.''.
(d) Determination of Whether Position of United States Is
Substantially Justified.--Subparagraph (B) of section 7430(c)(4) is
amended by redesignating clause (iii) as clause (iv) and by inserting
after clause (ii) the following new clause:
``(iii) Effect of losing on substantially similar
issues.--In determining for purposes of clause (i) whether
the position of the United States was substantially
justified, the court shall take into account whether the
United States has lost in courts of appeal for other
circuits on substantially similar issues.''.
(e) Taxpayer Treated as Prevailing if Judgment Is Less Than
Taxpayer's Offer.--
(1) In general.--Section 7430(c)(4) (defining prevailing party)
is amended by adding at the end the following new subparagraph:
``(E) Special rules where judgment less than taxpayer's
offer.--
``(i) In general.--A party to a court proceeding
meeting the requirements of subparagraph (A)(ii) shall be
treated as the prevailing party if the liability of the
taxpayer pursuant to the judgment in the proceeding
(determined without regard to interest) is equal to or less
than the liability of the taxpayer which would have been so
determined if the United States had accepted a qualified
offer of the party under subsection (g).
``(ii) Exceptions.--This subparagraph shall not apply
to--
``(I) any judgment issued pursuant to a settlement;
or
``(II) any proceeding in which the amount of tax
liability is not in issue, including any declaratory
judgment proceeding, any proceeding to enforce or quash
any summons issued pursuant to this title, and any
action to restrain disclosure under section 6110(f).
``(iii) Special rules.--If this subparagraph applies to
any court proceeding--
``(I) the determination under clause (i) shall be
made by reference to the last qualified offer made with
respect to the tax liability at issue in the
proceeding; and
``(II) reasonable administrative and litigation
costs shall only include costs incurred on and after
the date of such offer.
``(iv) Coordination.--This subparagraph shall not apply
to a party which is a prevailing party under any other
provision of this paragraph.''.
(2) Qualified offer.--Section 7430 is amended by adding at the
end the following new subsection:
``(g) Qualified Offer.--For purposes of subsection (c)(4)--
``(1) In general.--The term `qualified offer' means a written
offer which--
``(A) is made by the taxpayer to the United States during
the qualified offer period;
``(B) specifies the offered amount of the taxpayer's
liability (determined without regard to interest);
``(C) is designated at the time it is made as a qualified
offer for purposes of this section; and
``(D) remains open during the period beginning on the date
it is made and ending on the earliest of the date the offer is
rejected, the date the trial begins, or the 90th day after the
date the offer is made.
``(2) Qualified offer period.--For purposes of this subsection,
the term `qualified offer period' means the period--
``(A) beginning on the date on which the first letter of
proposed deficiency which allows the taxpayer an opportunity
for administrative review in the Internal Revenue Service
Office of Appeals is sent, and
``(B) ending on the date which is 30 days before the date
the case is first set for trial.''.
(f) Award of Attorneys Fees in Unauthorized Inspection and
Disclosure Cases.--Section 7431(c) (relating to damages) is amended by
striking the period at the end of paragraph (2) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(3) in the case of a plaintiff which is described in section
7430(c)(4)(A)(ii), reasonable attorneys fees, except that if the
defendant is the United States, reasonable attorneys fees may be
awarded only if the plaintiff is the prevailing party (as
determined under section 7430(c)(4)).''.
(g) Effective Date.--The amendments made by this section shall
apply to costs incurred (and, in the case of the amendment made by
subsection (c), services performed) more than 180 days after the date
of the enactment of this Act.

9c744b575cdca977b144d350e5a38dc20c51680fd352c02cf5658876f50575d8

(a) Extension to Negligence Actions.--
(1) In general.--Section 7433 (relating to civil damages for
certain unauthorized collection actions) is amended--
(A) in subsection (a), by inserting ``, or by reason of
negligence,'' after ``recklessly or intentionally''; and
(B) in subsection (b)--
(i) in the matter preceding paragraph (1), by inserting
``($100,000, in the case of negligence)'' after
``$1,000,000''; and
(ii) in paragraph (1), by inserting ``or negligent''
after ``reckless or intentional''.
(2) Requirement that administrative remedies be exhausted.--
Paragraph (1) of section 7433(d) is amended to read as follows:
``(1) Requirement that administrative remedies be exhausted.--A
judgment for damages shall not be awarded under subsection (b)
unless the court determines that the plaintiff has exhausted the
administrative remedies available to such plaintiff within the
Internal Revenue Service.''.
(b) Damages Allowed in Civil Actions by Persons Other Than
Taxpayers.--Section 7426 is amended by redesignating subsection (h) as
subsection (i) and by adding after subsection (g) the following new
subsection:
``(h) Recovery of Damages Permitted in Certain Cases.--
``(1) In general.--Notwithstanding subsection (b), if, in any
action brought under this section, there is a finding that any
officer or employee of the Internal Revenue Service recklessly or
intentionally, or by reason of negligence, disregarded any
provision of this title the defendant shall be liable to the
plaintiff in an amount equal to the lesser of $1,000,000 ($100,000
in the case of negligence) or the sum of--
``(A) actual, direct economic damages sustained by the
plaintiff as a proximate result of the reckless or intentional
or negligent disregard of any provision of this title by the
officer or employee (reduced by any amount of such damages
awarded under subsection (b)); and
``(B) the costs of the action.
``(2) Requirement that administrative remedies be exhausted;
mitigation; period.--The rules of section 7433(d) shall apply for
purposes of this subsection.
``(3) Payment authority.--Claims pursuant to this section shall
be payable out of funds appropriated under section 1304 of title
31, United States Code.''.
(c) Civil Damages for IRS Violations of Bankruptcy Procedures.--
(1) In general.--Section 7433 (relating to civil damages for
certain unauthorized collection actions) is amended by adding at
the end the following new subsection:
``(e) Actions for Violations of Certain Bankruptcy Procedures.--
``(1) In general.--If, in connection with any collection of
Federal tax with respect to a taxpayer, any officer or employee of
the Internal Revenue Service willfully violates any provision of
section 362 (relating to automatic stay) or 524 (relating to effect
of discharge) of title 11, United States Code (or any successor
provision), or any regulation promulgated under such provision,
such taxpayer may petition the bankruptcy court to recover damages
against the United States.
``(2) Remedy to be exclusive.--
``(A) In general.--Except as provided in subparagraph (B),
notwithstanding section 105 of such title 11, such petition
shall be the exclusive remedy for recovering damages resulting
from such actions.
``(B) Certain other actions permitted.--Subparagraph (A)
shall not apply to an action under section 362(h) of such title
11 for a violation of a stay provided by section 362 of such
title; except that--
``(i) administrative and litigation costs in connection
with such an action may only be awarded under section 7430;
and
``(ii) administrative costs may be awarded only if
incurred on or after the date that the bankruptcy petition
is filed.''.
(2) Conforming amendment.--Subsection (b) of section 7433 is
amended by inserting ``or petition filed under subsection (e)''
after ``subsection (a)''.
(d) Effective Date.--The amendments made by this section shall
apply to actions of officers or employees of the Internal Revenue
Service after the date of the enactment of this Act.

7db6d9bd1c56676b67fff8d0d3c86736e1b23f610bed423478efc51675b0ecf8

(a) In General.--Section 7463 (relating to disputes involving
$10,000 or less) is amended by striking ``$10,000'' each place it
appears (including the section heading) and inserting ``$50,000''.
(b) Conforming Amendments.--
(1) Sections 7436(c)(1) and 7443A(b)(3) are each amended by
striking ``$10,000'' and inserting ``$50,000''.
(2) The table of sections for part II of subchapter C of
chapter 76 is amended by striking ``$10,000'' in the item relating
to section 7463 and inserting ``$50,000''.
(c) Effective Date.--The amendments made by this section shall
apply to proceedings commenced after the date of the enactment of this
Act.

2592eee6239503f81243f50adcc48cea49f3ffcde825ebb846896d443faf7eda

HAVE ELECTED THE INSTALLMENT METHOD OF PAYMENT.
(a) In General.--Section 7422 is amended by redesignating
subsection (j) as subsection (k) and by inserting after subsection (i)
the following new subsection:
``(j) Special Rule for Actions With Respect to Estates for Which an
Election Under Section 6166 Is Made.--
``(1) In general.--The district courts of the United States and
the United States Court of Federal Claims shall not fail to have
jurisdiction over any action brought by the representative of an
estate to which this subsection applies to determine the correct
amount of the estate tax liability of such estate (or for any
refund with respect thereto) solely because the full amount of such
liability has not been paid by reason of an election under section
6166 with respect to such estate.
``(2) Estates to which subsection applies.--This subsection
shall apply to any estate if, as of the date the action is filed--
``(A) no portion of the installments payable under section
6166 have been accelerated;
``(B) all such installments the due date for which is on or
before the date the action is filed have been paid;
``(C) there is no case pending in the Tax Court with
respect to the tax imposed by section 2001 on the estate and,
if a notice of deficiency under section 6212 with respect to
such tax has been issued, the time for filing a petition with
the Tax Court with respect to such notice has expired; and
``(D) no proceeding for declaratory judgment under section
7479 is pending.
``(3) Prohibition on collection of disallowed liability.--If
the court redetermines under paragraph (1) the estate tax liability
of an estate, no part of such liability which is disallowed by a
decision of such court which has become final may be collected by
the Secretary, and amounts paid in excess of the installments
determined by the court as currently due and payable shall be
refunded.''.
(b) Extension of Time To File Refund Suit.--Section 7479 (relating
to declaratory judgments relating to eligibility of estate with respect
to installment payments under section 6166) is amended by adding at the
end the following new subsection:
``(c) Extension of Time To File Refund Suit.--The 2-year period in
section 6532(a)(1) for filing suit for refund after disallowance of a
claim shall be suspended during the 90-day period after the mailing of
the notice referred to in subsection (b)(3) and, if a pleading has been
filed with the Tax Court under this section, until the decision of the
Tax Court has become final.''.
(c) Effective Date.--The amendments made by this section shall
apply to any claim for refund filed after the date of the enactment of
this Act.

72cc2dd72bea7d0f629d2cfcc24d675d9ef056785ccd4091cb7a2dea6b323e6a

DETERMINATION OF TAX-EXEMPT STATUS OF BOND ISSUE.
The Internal Revenue Service shall amend its administrative
procedures to provide that if, upon examination, the Internal Revenue
Service proposes to an issuer that interest on previously issued
obligations of such issuer is not excludable from gross income under
section 103(a) of the Internal Revenue Code of 1986, the issuer of such
obligations shall have an administrative appeal of right to a senior
officer of the Internal Revenue Service Office of Appeals.

0b1bca2dc3bc5f9a7bd8e705818cb7fdd2998d424216e48af3725f7eb8156f7b

(a) Right of Substitution of Value.--Subsection (b) of section 6325
(relating to release of lien or discharge of property) is amended by
adding at the end the following new paragraph:
``(4) Right of substitution of value.--
``(A) In general.--At the request of the owner of any
property subject to any lien imposed by this chapter, the
Secretary shall issue a certificate of discharge of such
property if such owner--
``(i) deposits with the Secretary an amount of money
equal to the value of the interest of the United States (as
determined by the Secretary) in the property; or
``(ii) furnishes a bond acceptable to the Secretary in
a like amount.
``(B) Refund of deposit with interest and release of
bond.--The Secretary shall refund the amount so deposited (and
shall pay interest at the overpayment rate under section 6621),
and shall release such bond, to the extent that the Secretary
determines that--
``(i) the unsatisfied liability giving rise to the lien
can be satisfied from a source other than such property; or
``(ii) the value of the interest of the United States
in the property is less than the Secretary's prior
determination of such value.
``(C) Use of deposit, etc., if action to contest lien not
filed.--If no action is filed under section 7426(a)(4) within
the period prescribed therefor, the Secretary shall, within 60
days after the expiration of such period--
``(i) apply the amount deposited, or collect on such
bond, to the extent necessary to satisfy the unsatisfied
liability secured by the lien; and
``(ii) refund (with interest as described in
subparagraph (B)) any portion of the amount deposited which
is not used to satisfy such liability.
``(D) Exception.--Subparagraph (A) shall not apply if the
owner of the property is the person whose unsatisfied liability
gave rise to the lien.''.
(b) Civil Action To Release Erroneous Lien.--
(1) In general.--Subsection (a) of section 7426 (relating to
civil actions by persons other than taxpayers) is amended by adding
at the end the following new paragraph:
``(4) Substitution of value.--If a certificate of discharge is
issued to any person under section 6325(b)(4) with respect to any
property, such person may, within 120 days after the day on which
such certificate is issued, bring a civil action against the United
States in a district court of the United States for a determination
of whether the value of the interest of the United States (if any)
in such property is less than the value determined by the
Secretary. No other action may be brought by such person for such a
determination.''.
(2) Form of relief.--
(A) In general.--Subsection (b) of section 7426 is amended
by adding at the end the following new paragraph:
``(5) Substitution of value.--If the court determines that the
Secretary's determination of the value of the interest of the
United States in the property for purposes of section 6325(b)(4)
exceeds the actual value of such interest, the court shall grant a
judgment ordering a refund of the amount deposited, and a release
of the bond, to the extent that the aggregate of the amounts
thereof exceeds such value determined by the court.''.
(B) Interest allowed on refund of deposit.-- Subsection (g)
of section 7426 is amended by striking ``and'' at the end of
paragraph (1), by striking the period at the end of paragraph
(2) and inserting ``; and'', and by adding at the end the
following new paragraph:
``(3) in the case of a judgment pursuant to subsection (b)(5)
which orders a refund of any amount, from the date the Secretary
received such amount to the date of payment of such judgment.''.
(3) Suspension of running of statute of limitation.--Subsection
(f) of section 6503 is amended to read as follows:
``(f) Wrongful Seizure of or Lien on Property of Third Party.--
``(1) Wrongful seizure.--The running of the period under
section 6502 shall be suspended for a period equal to the period
from the date property (including money) of a third party is
wrongfully seized or received by the Secretary to the date the
Secretary returns property pursuant to section 6343(b) or the date
on which a judgment secured pursuant to section 7426 with respect
to such property becomes final, and for 30 days thereafter. The
running of such period shall be suspended under this paragraph only
with respect to the amount of such assessment equal to the amount
of money or the value of specific property returned.
``(2) Wrongful lien.--In the case of any assessment for which a
lien was made on any property, the running of the period under
section 6502 shall be suspended for a period equal to the period
beginning on the date any person becomes entitled to a certificate
under section 6325(b)(4) with respect to such property and ending
on the date which is 30 days after the earlier of--
``(A) the earliest date on which the Secretary no longer
holds any amount as a deposit or bond provided under section
6325(b)(4) by reason of such deposit or bond being used to
satisfy the unpaid tax or being refunded or released; or
``(B) the date that the judgment secured under section
7426(b)(5) becomes final.
The running of such period shall be suspended under this paragraph
only with respect to the amount of such assessment equal to the
value of the interest of the United States in the property plus
interest, penalties, additions to the tax, and additional amounts
attributable thereto.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To
Manage Their Financial Affairs Due to Disabilities

2e69f2a4b8c1376137d3e9dd583e24058e346b2bda8671dd365640413c09f092

(a) In General.--Subpart B of part II of subchapter A of chapter 61
is amended by inserting after section 6014 the following new section:
``SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.
``(a) In General.--Notwithstanding section 6013(d)(3)--
``(1) an individual who has made a joint return may elect to
seek relief under the procedures prescribed under subsection (b);
and
``(2) if such individual is eligible to elect the application
of subsection (c), such individual may, in addition to any election
under paragraph (1), elect to limit such individual's liability for
any deficiency with respect to such joint return in the manner
prescribed under subsection (c).
Any determination under this section shall be made without regard to
community property laws.
``(b) Procedures For Relief From Liability Applicable to All Joint
Filers.--
``(1) In general.--Under procedures prescribed by the
Secretary, if--
``(A) a joint return has been made for a taxable year;
``(B) on such return there is an understatement of tax
attributable to erroneous items of one individual filing the
joint return;
``(C) the other individual filing the joint return
establishes that in signing the return he or she did not know,
and had no reason to know, that there was such understatement;
``(D) taking into account all the facts and circumstances,
it is inequitable to hold the other individual liable for the
deficiency in tax for such taxable year attributable to such
understatement; and
``(E) the other individual elects (in such form as the
Secretary may prescribe) the benefits of this subsection not
later than the date which is 2 years after the date the
Secretary has begun collection activities with respect to the
individual making the election,
then the other individual shall be relieved of liability for tax
(including interest, penalties, and other amounts) for such taxable
year to the extent such liability is attributable to such
understatement.
``(2) Apportionment of relief.--If an individual who, but for
paragraph (1)(C), would be relieved of liability under paragraph
(1), establishes that in signing the return such individual did not
know, and had no reason to know, the extent of such understatement,
then such individual shall be relieved of liability for tax
(including interest, penalties, and other amounts) for such taxable
year to the extent that such liability is attributable to the
portion of such understatement of which such individual did not
know and had no reason to know.
``(3) Understatement.--For purposes of this subsection, the
term `understatement' has the meaning given to such term by section
6662(d)(2)(A).
``(c) Procedures To Limit Liability for Taxpayers No Longer Married
or Taxpayers Legally Separated or Not Living Together.--
``(1) In general.--Except as provided in this subsection, if an
individual who has made a joint return for any taxable year elects
the application of this subsection, the individual's liability for
any deficiency which is assessed with respect to the return shall
not exceed the portion of such deficiency properly allocable to the
individual under subsection (d).
``(2) Burden of proof.--Except as provided in subparagraph
(A)(ii) or (C) of paragraph (3), each individual who elects the
application of this subsection shall have the burden of proof with
respect to establishing the portion of any deficiency allocable to
such individual.
``(3) Election.--
``(A) Individuals eligible to make election.--
``(i) In general.--An individual shall only be eligible
to elect the application of this subsection if--
``(I) at the time such election is filed, such
individual is no longer married to, or is legally
separated from, the individual with whom such
individual filed the joint return to which the election
relates; or
``(II) such individual was not a member of the same
household as the individual with whom such joint return
was filed at any time during the 12-month period ending
on the date such election is filed.
``(ii) Certain taxpayers ineligible to elect.--If the
Secretary demonstrates that assets were transferred between
individuals filing a joint return as part of a fraudulent
scheme by such individuals, an election under this
subsection by either individual shall be invalid (and
section 6013(d)(3) shall apply to the joint return).
``(B) Time for election.--An election under this subsection
for any taxable year shall be made not later than 2 years after
the date on which the Secretary has begun collection activities
with respect to the individual making the election.
``(C) Election not valid with respect to certain
deficiencies.--If the Secretary demonstrates that an individual
making an election under this subsection had actual knowledge,
at the time such individual signed the return, of any item
giving rise to a deficiency (or portion thereof) which is not
allocable to such individual under subsection (d), such
election shall not apply to such deficiency (or portion). This
subparagraph shall not apply where the individual with actual
knowledge establishes that such individual signed the return
under duress.
``(4) Liability increased by reason of transfers of property to
avoid tax.--
``(A) In general.--Notwithstanding any other provision of
this subsection, the portion of the deficiency for which the
individual electing the application of this subsection is
liable (without regard to this paragraph) shall be increased by
the value of any disqualified asset transferred to the
individual.
``(B) Disqualified asset.--For purposes of this paragraph--
``(i) In general.--The term `disqualified asset' means
any property or right to property transferred to an
individual making the election under this subsection with
respect to a joint return by the other individual filing
such joint return if the principal purpose of the transfer
was the avoidance of tax or payment of tax.
``(ii) Presumption.--
``(I) In general.--For purposes of clause (i),
except as provided in subclause (II), any transfer
which is made after the date which is 1 year before the
date on which the first letter of proposed deficiency
which allows the taxpayer an opportunity for
administrative review in the Internal Revenue Service
Office of Appeals is sent shall be presumed to have as
its principal purpose the avoidance of tax or payment
of tax.
``(II) Exceptions.--Subclause (I) shall not apply
to any transfer pursuant to a decree of divorce or
separate maintenance or a written instrument incident
to such a decree or to any transfer which an individual
establishes did not have as its principal purpose the
avoidance of tax or payment of tax.
``(d) Allocation of Deficiency.--For purposes of sub- section (c)--
``(1) In general.--The portion of any deficiency on a joint
return allocated to an individual shall be the amount which bears
the same ratio to such deficiency as the net amount of items taken
into account in computing the deficiency and allocable to the
individual under paragraph (3) bears to the net amount of all items
taken into account in computing the deficiency.
``(2) Separate treatment of certain items.--If a deficiency (or
portion thereof) is attributable to--
``(A) the disallowance of a credit; or
``(B) any tax (other than tax imposed by section 1 or 55)
required to be included with the joint return;
and such item is allocated to one individual under paragraph (3),
such deficiency (or portion) shall be allocated to such individual.
Any such item shall not be taken into account under paragraph (1).
``(3) Allocation of items giving rise to the deficiency.--For
purposes of this subsection--
``(A) In general.--Except as provided in paragraphs (4) and
(5), any item giving rise to a deficiency on a joint return
shall be allocated to individuals filing the return in the same
manner as it would have been allocated if the individuals had
filed separate returns for the taxable year.
``(B) Exception where other spouse benefits.--Under rules
prescribed by the Secretary, an item otherwise allocable to an
individual under subparagraph (A) shall be allocated to the
other individual filing the joint return to the extent the item
gave rise to a tax benefit on the joint return to the other
individual.
``(C) Exception for fraud.--The Secretary may provide for
an allocation of any item in a manner not prescribed by
subparagraph (A) if the Secretary establishes that such
allocation is appropriate due to fraud of one or both
individuals.
``(4) Limitations on separate returns disregarded.--If an item
of deduction or credit is disallowed in its entirety solely because
a separate return is filed, such disallowance shall be disregarded
and the item shall be computed as if a joint return had been filed
and then allocated between the spouses appropriately. A similar
rule shall apply for purposes of section 86.
``(5) Child's liability.--If the liability of a child of a
taxpayer is included on a joint return, such liability shall be
disregarded in computing the separate liability of either spouse
and such liability shall be allocated appropriately between the
spouses.
``(e) Petition for Review by Tax Court.--
``(1) In general.--In the case of an individual who elects to
have subsection (b) or (c) apply--
``(A) In general.--The individual may petition the Tax
Court (and the Tax Court shall have jurisdiction) to determine
the appropriate relief available to the individual under this
section if such petition is filed during the 90-day period
beginning on the date on which the Secretary mails by certified
or registered mail a notice to such individual of the
Secretary's determination of relief available to the
individual. Notwithstanding the preceding sentence, an
individual may file such petition at any time after the date
which is 6 months after the date such election is filed with
the Secretary and before the close of such 90-day period.
``(B) Restrictions applicable to collection of
assessment.--
``(i) In general.--Except as otherwise provided in
section 6851 or 6861, no levy or proceeding in court shall
be made, begun, or prosecuted against the individual making
an election under subsection (b) or (c) for collection of
any assessment to which such election relates until the
expiration of the 90-day period described in subparagraph
(A), or, if a petition has been filed with the Tax Court,
until the decision of the Tax Court has become final. Rules
similar to the rules of section 7485 shall apply with
respect to the collection of such assessment.
``(ii) Authority to enjoin collection actions.--
Notwithstanding the provisions of section 7421(a), the
beginning of such levy or proceeding during the time the
prohibition under clause (i) is in force may be enjoined by
a proceeding in the proper court, including the Tax Court.
The Tax Court shall have no jurisdiction under this
subparagraph to enjoin any action or proceeding unless a
timely petition has been filed under subparagraph (A) and
then only in respect of the amount of the assessment to
which the election under subsection (b) or (c) relates.
``(2) Suspension of running of period of limitations.--The
running of the period of limitations in section 6502 on the
collection of the assessment to which the petition under paragraph
(1)(A) relates shall be suspended for the period during which the
Secretary is prohibited by paragraph (1)(B) from collecting by levy
or a proceeding in court and for 60 days thereafter.
``(3) Applicable rules.--
``(A) Allowance of credit or refund.--Except as provided in
subparagraph (B), notwithstanding any other law or rule of law
(other than section 6512(b), 7121, or 7122), credit or refund
shall be allowed or made to the extent attributable to the
application of this section.
``(B) Res judicata.--In the case of any election under
subsection (b) or (c), if a decision of the Tax Court in any
prior proceeding for the same taxable year has become final,
such decision shall be conclusive except with respect to the
qualification of the individual for relief which was not an
issue in such proceeding. The exception contained in the
preceding sentence shall not apply if the Tax Court determines
that the individual participated meaningfully in such prior
proceeding.
``(C) Limitation on tax court jurisdiction.--If a suit for
refund is begun by either individual filing the joint return
pursuant to section 6532--
``(i) the Tax Court shall lose jurisdiction of the
individual's action under this section to whatever extent
jurisdiction is acquired by the district court or the
United States Court of Federal Claims over the taxable
years that are the subject of the suit for refund; and
``(ii) the court acquiring jurisdiction shall have
jurisdiction over the petition filed under this subsection.
``(4) Notice to other spouse.--The Tax Court shall establish
rules which provide the individual filing a joint return but not
making the election under subsection (b) or (c) with adequate
notice and an opportunity to become a party to a proceeding under
either such subsection.
``(f) Equitable Relief.--Under procedures prescribed by the
Secretary, if--
``(1) taking into account all the facts and circumstances, it
is inequitable to hold the individual liable for any unpaid tax or
any deficiency (or any portion of either); and
``(2) relief is not available to such individual under
subsection (b) or (c),
the Secretary may relieve such individual of such liability.
``(g) Regulations.--The Secretary shall prescribe such regulations
as are necessary to carry out the provisions of this section,
including--
``(1) regulations providing methods for allocation of items
other than the methods under subsection (d)(3); and
``(2) regulations providing the opportunity for an individual
to have notice of, and an opportunity to participate in, any
administrative proceeding with respect to an election made under
subsection (b) or (c) by the other individual filing the joint
return.''.
(b) Equitable Relief for Individuals Not Filing Joint Return.--
Section 66(c) (relating to spouse relieved of liability in certain
other cases) is amended by adding at the end the following new
sentence: ``Under procedures prescribed by the Secretary, if, taking
into account all the facts and circumstances, it is inequitable to hold
the individual liable for any unpaid tax or any deficiency (or any
portion of either) attributable to any item for which relief is not
available under the preceding sentence, the Secretary may relieve such
individual of such liability.''.
(c) Separate Form for Applying for Spousal Relief.--Not later than
180 days after the date of the enactment of this Act, the Secretary of
the Treasury shall develop a separate form with instructions for use by
taxpayers in applying for relief under section 6015(a) of the Internal
Revenue Code of 1986, as added by this section.
(d) Separate Notice to Each Filer.--The Secretary of the Treasury
shall, wherever practicable, send any notice relating to a joint return
under section 6013 of the Internal Revenue Code of 1986 separately to
each individual filing the joint return.
(e) Conforming Amendments.--
(1) Section 6013 is amended by striking subsection (e).
(2) Subparagraph (A) of section 6230(c)(5) is amended by
striking ``section 6013(e)'' and inserting ``section 6015''.
(3) Section 7421(a) is amended by inserting ``6015(d),'' after
``sections''.
(f) Clerical Amendment.--The table of sections for subpart B of
part II of subchapter A of chapter 61 is amended by inserting after the
item relating to section 6014 the following new item:
``Sec. 6015. Relief from joint and several liability on joint
return.''.
(g) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to any liability for
tax arising after the date of the enactment of this Act and any
liability for tax arising on or before such date but remaining
unpaid as of such date.
(2) 2-year period.--The 2-year period under subsection
(b)(1)(E) or (c)(3)(B) of section 6015 of the Internal Revenue Code
of 1986 shall not expire before the date which is 2 years after the
date of the first collection activity after the date of the
enactment of this Act.

6199542b0d21af9126f4a4f1de18f6195026e6fca87dd49e820cd91a58e7f3d5

DURING PERIODS OF DISABILITY.
(a) In General.--Section 6511 (relating to limitations on credit or
refund) is amended by redesignating subsection (h) as subsection (i)
and by inserting after subsection (g) the following new subsection:
``(h) Running of Periods of Limitation Suspended While Taxpayer Is
Unable To Manage Financial Affairs Due to Disability.--
``(1) In general.--In the case of an individual, the running of
the periods specified in subsections (a), (b), and (c) shall be
suspended during any period of such individual's life that such
individual is financially disabled.
``(2) Financially disabled.--
``(A) In general.--For purposes of paragraph (1), an
individual is financially disabled if such individual is unable
to manage his financial affairs by reason of a medically
determinable physical or mental impairment of the individual
which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less
than 12 months. An individual shall not be considered to have
such an impairment unless proof of the existence thereof is
furnished in such form and manner as the Secretary may require.
``(B) Exception where individual has guardian, etc.--An
individual shall not be treated as financially disabled during
any period that such individual's spouse or any other person is
authorized to act on behalf of such individual in financial
matters.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to periods of disability before, on, or after the date of the
enactment of this Act but shall not apply to any claim for credit or
refund which (without regard to such amendment) is barred by the
operation of any law or rule of law (including res judicata) as of the
date of the enactment of this Act.
Subtitle D--Provisions Relating to Interest and Penalties

510a55f3901ef8ac56b35f94d3ee320d4594515f91e8a72ee3b941c085789c6d

PERIODS OF INTEREST ON TAX OVERPAYMENTS AND
UNDERPAYMENTS.
(a) In General.--Section 6621 (relating to determination of rate of
interest) is amended by adding at the end the following new subsection:
``(d) Elimination of Interest on Overlapping Periods of Tax
Overpayments and Underpayments.--To the extent that, for any period,
interest is payable under subchapter A and allowable under subchapter B
on equivalent underpayments and overpayments by the same taxpayer of
tax imposed by this title, the net rate of interest under this section
on such amounts shall be zero for such period.''.
(b) Conforming Amendment.--Subsection (f) of section 6601 (relating
to satisfaction by credits) is amended by adding at the end the
following new sentence: ``The preceding sentence shall not apply to the
extent that section 6621(d) applies.''.
(c) Effective Dates.--
(1) In general.--Except as provided under paragraph (2), the
amendments made by this section shall apply to interest for periods
beginning after the date of the enactment of this Act.
(2) Special rule.--The amendments made by this section shall
apply to interest for periods beginning before the date of the
enactment of this Act if the taxpayer--
(A) reasonably identifies and establishes periods of such
tax overpayments and underpayments for which the zero rate
applies; and
(B) not later than December 31, 1999, requests the
Secretary of the Treasury to apply section 6621(d) of the
Internal Revenue Code of 1986, as added by subsection (a), to
such periods.

4226d1dd79a40bf56cfe7613e0df8f2216b637b583933e55f6bcfcfe89afa6ce

CORPORATIONS.
(a) In General.--Subparagraph (B) of section 6621(a)(1) (defining
overpayment rate) is amended to read as follows:
``(B) 3 percentage points (2 percentage points in the case
of a corporation).''.
(b) Effective Date.--The amendment made by this section shall apply
to interest for the second and succeeding calendar quarters beginning
after the date of the enactment of this Act.

7a5dfd37d5c63f257ed99cee1143f5371b610e119cd572c37b596491e5720cbb

MONTHS DURING PERIOD OF INSTALLMENT AGREEMENT.
(a) In General.--Section 6651 (relating to failure to file tax
return or to pay tax) is amended by adding at the end the following new
subsection:
``(h) Limitation on Penalty on Individual's Failure To Pay for
Months During Period of Installment Agreement.--In the case of an
individual who files a return of tax on or before the due date for the
return (including extensions), paragraphs (2) and (3) of subsection (a)
shall each be applied by substituting `0.25' for `0.5' each place it
appears for purposes of determining the addition to tax for any month
during which an installment agreement under section 6159 is in effect
for the payment of such tax.''.
(b) Effective Date.--The amendment made by this section shall apply
for purposes of determining additions to the tax for months beginning
after December 31, 1999.

63885a7fe7475a863d7395ae6f4ac1948fa3f1a82907266ad5496a3b6f131586

(a) Taxpayer May Designate Periods to Which Deposits Apply.--
Section 6656 (relating to underpayment of deposits) is amended by
adding at the end the following new subsection:
``(e) Designation of Periods to Which Deposits Apply.--
``(1) In general.--A person may, with respect to any deposit of
tax to be reported on such person's return for a specified tax
period, designate the period or periods within such specified tax
period to which the deposit is to be applied for purposes of this
section.
``(2) Time for making designation.--A person may make a
designation under paragraph (1) only during the 90-day period
beginning on the date of a notice that a penalty under subsection
(a) has been imposed for the specified tax period to which the
deposit relates.''.
(b) Expansion of Exemption for First-Time Deposits.--
(1) In general.--Paragraph (2) of section 6656(c) (relating to
exemption for first-time depositors of employment taxes) is amended
to read as follows:
``(2) such failure--
``(A) occurs during the first quarter that such person was
required to deposit any employment tax; or
``(B) if such person is required to change the frequency of
deposits of any employment tax, relates to the first deposit to
which such change applies, and''.
(c) Periods Apply to Current Liabilities Unless Designated
Otherwise.--Paragraph (1) of section 6656(e) (as added by subsection
(a) of this section) is amended to read as follows:
``(e) Designation of Periods to Which Deposits Apply.--
``(1) In general.--A deposit made under this section shall be
applied to the most recent period or periods within the specified
tax period to which the deposit relates, unless the person making
such deposit designates a different period or periods to which such
deposit is to be applied.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to deposits required to be made after the 180th day after the
date of the enactment of this Act.
(2) Application to current liabilities.--The amendment made by
subsection (c) shall apply to deposits required to be made after
December 31, 2001.

ed55f911e75c39e660555283ca7963834ad2cd066df30fb1032603d92d0b5bf0

FAILS TO CONTACT INDIVIDUAL TAXPAYER.
(a) In General.--Section 6404 (relating to abatements) is amended
by redesignating subsection (g) as subsection (h) and by inserting
after subsection (f) the following new subsection:
``(g) Suspension of Interest and Certain Penalties Where Secretary
Fails To Contact Taxpayer.--
``(1) Suspension.--
``(A) In general.--In the case of an individual who files a
return of tax imposed by subtitle A for a taxable year on or
before the due date for the return (including extensions), if
the Secretary does not provide a notice to the taxpayer
specifically stating the taxpayer's liability and the basis for
the liability before the close of the 1-year period (18-month
period in the case of taxable years beginning before January 1,
2004) beginning on the later of--
``(i) the date on which the return is filed; or
``(ii) the due date of the return without regard to
extensions,
the Secretary shall suspend the imposition of any interest,
penalty, addition to tax, or additional amount with respect to
any failure relating to the return which is computed by
reference to the period of time the failure continues to exist
and which is properly allocable to the suspension period.
``(B) Separate application.--This paragraph shall be
applied separately with respect to each item or adjustment.
``(2) Exceptions.--Paragraph (1) shall not apply to--
``(A) any penalty imposed by section 6651;
``(B) any interest, penalty, addition to tax, or additional
amount in a case involving fraud;
``(C) any interest, penalty, addition to tax, or additional
amount with respect to any tax liability shown on the return;
or
``(D) any criminal penalty.
``(3) Suspension period.--For purposes of this subsection, the
term `suspension period' means the period--
``(A) beginning on the day after the close of the 1-year
period (18-month period in the case of taxable years beginning
before January 1, 2004) under paragraph (1); and
``(B) ending on the date which is 21 days after the date on
which notice described in paragraph (1)(A) is provided by the
Secretary.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.

b23c9bedf549d2f9a4b85dcace118db9d395668f0ecaf471cb85ea84e079edfd

ADDITIONS TO TAX.
(a) In General.--Chapter 68 (relating to additions to the tax,
additional amounts, and assessable penalties) is amended by adding at
the end the following new subchapter:
``Subchapter C--Procedural Requirements
``Sec. 6751. Procedural requirements.
``SEC. 6751. PROCEDURAL REQUIREMENTS.
``(a) Computation of Penalty Included in Notice.--The Secretary
shall include with each notice of penalty under this title information
with respect to the name of the penalty, the section of this title
under which the penalty is imposed, and a computation of the penalty.
``(b) Approval of Assessment.--
``(1) In general.--No penalty under this title shall be
assessed unless the initial determination of such assessment is
personally approved (in writing) by the immediate supervisor of the
individual making such determination or such higher level official
as the Secretary may designate.
``(2) Exceptions.--Paragraph (1) shall not apply to--
``(A) any addition to tax under section 6651, 6654, or
6655; or
``(B) any other penalty automatically calculated through
electronic means.
``(c) Penalties.--For purposes of this section, the term `penalty'
includes any addition to tax or any additional amount.''.
(b) Conforming Amendment.--The table of subchapters for chapter 68
is amended by adding at the end the following new item:
``Subchapter C. Procedural requirements.''.
(c) Effective Date.--The amendments made by this section shall
apply to notices issued, and penalties assessed, after December 31,
2000.

34a94c2ce7c867fcb2899e41874e3cf3b7fedc14f17dba56f291dbc140cacfef

(a) In General.--Paragraph (1) of section 6672(b) (relating to
failure to collect and pay over tax, or attempt to evade or defeat tax)
is amended by inserting ``or in person'' after ``section 6212(b)''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 6672(b) is amended by inserting
``(or, in the case of such a notice delivered in person, such
delivery)'' after ``paragraph (1)''.
(2) Paragraph (3) of section 6672(b) is amended by inserting
``or delivered in person'' after ``mailed'' each place it appears.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

f8af804d4eb825026ca2820f5565472e0f895e8af4186264dbfab68e7f965a29

(a) In General.--Chapter 67 (relating to interest) is amended by
adding at the end the following new subchapter:
``Subchapter D--Notice requirements
``Sec. 6631. Notice requirements.
``SEC. 6631. NOTICE REQUIREMENTS.
``The Secretary shall include with each notice to an individual
taxpayer which includes an amount of interest required to be paid by
such taxpayer under this title information with respect to the section
of this title under which the interest is imposed and a computation of
the interest.''.
(b) Conforming Amendment.--The table of subchapters for chapter 67
is amended by adding at the end the following new item:
``Subchapter D. Notice requirements.''.
(c) Effective Date.--The amendments made by this section shall
apply to notices issued after December 31, 2000.

db75ea7bf0e2f3ceecd739e48f66d24f6be0d96d2fc94198a4e8a1a7619aec95

PRESIDENTIALLY DECLARED DISASTER AREAS.
(a) In General.--Section 6404 (relating to abatements), as amended
by section 3305, is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the following new
subsection:
``(h) Abatement of Interest on Underpayments by Taxpayers in
Presidentially Declared Disaster Areas.--
``(1) In general.--If the Secretary extends for any period the
time for filing income tax returns under section 6081 and the time
for paying income tax with respect to such returns under section
6161 for any taxpayer located in a Presidentially declared disaster
area, the Secretary shall abate for such period the assessment of
any interest prescribed under section 6601 on such income tax.
``(2) Presidentially declared disaster area.--For purposes of
paragraph (1), the term `Presidentially declared disaster area'
means, with respect to any taxpayer, any area which the President
has determined warrants assistance by the Federal Government under
the Disaster Relief and Emergency Assistance Act.''.
(b) Effective Date.--The amendment made by this section shall apply
to disasters declared after December 31, 1997, with respect to taxable
years beginning after December 31, 1997.
(c) Emergency Designation.--
(1) For the purposes of section 252(e) of the Balanced Budget
and Emergency Deficit Control Act, Congress designates the
provisions of this section as an emergency requirement.
(2) The amendments made by subsections (a) and (b) of this
section shall only take effect upon the transmittal by the
President to the Congress of a message designating the provisions
of subsections (a) and (b) as an emergency requirement pursuant to
section 252(e) of the Balanced Budget and Emergency Deficit Control
Act.
Subtitle E--Protections for Taxpayers Subject to Audit or Collection
Activities
PART I--DUE PROCESS

6d3f6a87c7d968d830930c6927cae7f8935e1f7a59db447b371bd0f758054e69

(a) Notice and Opportunity for Hearing Upon Filing of Notice of
Lien.--Subchapter C of chapter 64 (relating to lien for taxes) is
amended by inserting before the table of sections the following:
``Part I.  Due process for liens.
``Part II.  Liens.
``PART I--DUE PROCESS FOR LIENS
``Sec. 6320. Notice and opportunity for hearing upon filing of
notice of lien.
``SEC. 6320. NOTICE AND OPPORTUNITY FOR HEARING UPON FILING OF NOTICE
OF LIEN.
``(a) Requirement of Notice.--
``(1) In general.--The Secretary shall notify in writing the
person described in section 6321 of the filing of a notice of lien
under section 6323.
``(2) Time and method for notice.--The notice required under
paragraph (1) shall be--
``(A) given in person;
``(B) left at the dwelling or usual place of business of
such person; or
``(C) sent by certified or registered mail to such person's
last known address,
not more than 5 business days after the day of the filing of the
notice of lien.
``(3) Information included with notice.--The notice required
under paragraph (1) shall include in simple and nontechnical
terms--
``(A) the amount of unpaid tax;
``(B) the right of the person to request a hearing during
the 30-day period beginning on the day after the 5-day period
described in paragraph (2);
``(C) the administrative appeals available to the taxpayer
with respect to such lien and the procedures relating to such
appeals; and
``(D) the provisions of this title and procedures relating
to the release of liens on property.
``(b) Right to Fair Hearing.--
``(1) In general.--If the person requests a hearing under
subsection (a)(3)(B), such hearing shall be held by the Internal
Revenue Service Office of Appeals.
``(2) One hearing per period.--A person shall be entitled to
only one hearing under this section with respect to the taxable
period to which the unpaid tax specified in subsection (a)(3)(A)
relates.
``(3) Impartial officer.--The hearing under this subsection
shall be conducted by an officer or employee who has had no prior
involvement with respect to the unpaid tax specified in subsection
(a)(3)(A) before the first hearing under this section or section
6330. A taxpayer may waive the requirement of this paragraph.
``(4) Coordination with section 6330.--To the extent
practicable, a hearing under this section shall be held in
conjunction with a hearing under section 6330.
``(c) Conduct of Hearing; Review; Suspensions.--For purposes of
this section, subsections (c), (d) (other than paragraph (2)(B)
thereof), and (e) of section 6330 shall apply.
``PART II--LIENS''.
(b) Notice and Opportunity for Hearing Before Levy.--Subchapter D
of chapter 64 (relating to seizure of property for collection of taxes)
is amended by inserting before the table of sections the following:
``Part I.  Due process for collections.
``Part II.  Levy.
``PART I--DUE PROCESS FOR COLLECTIONS
``Sec. 6330. Notice and opportunity for hearing before levy.
``SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.
``(a) Requirement of Notice Before Levy.--
``(1) In general.--No levy may be made on any property or right
to property of any person unless the Secretary has notified such
person in writing of their right to a hearing under this section
before such levy is made. Such notice shall be required only once
for the taxable period to which the unpaid tax specified in
paragraph (3)(A) relates.
``(2) Time and method for notice.--The notice required under
paragraph (1) shall be--
``(A) given in person;
``(B) left at the dwelling or usual place of business of
such person; or
``(C) sent by certified or registered mail, return receipt
requested, to such person's last known address;
not less than 30 days before the day of the first levy with respect
to the amount of the unpaid tax for the taxable period.
``(3) Information included with notice.--The notice required
under paragraph (1) shall include in simple and nontechnical
terms--
``(A) the amount of unpaid tax;
``(B) the right of the person to request a hearing during
the 30-day period under paragraph (2); and
``(C) the proposed action by the Secretary and the rights
of the person with respect to such action, including a brief
statement which sets forth--
``(i) the provisions of this title relating to levy and
sale of property;
``(ii) the procedures applicable to the levy and sale
of property under this title;
``(iii) the administrative appeals available to the
taxpayer with respect to such levy and sale and the
procedures relating to such appeals;
``(iv) the alternatives available to taxpayers which
could prevent levy on property (including installment
agreements under section 6159); and
``(v) the provisions of this title and procedures
relating to redemption of property and release of liens on
property.
``(b) Right to Fair Hearing.--
``(1) In general.--If the person requests a hearing under
subsection (a)(3)(B), such hearing shall be held by the Internal
Revenue Service Office of Appeals.
``(2) One hearing per period.--A person shall be entitled to
only one hearing under this section with respect to the taxable
period to which the unpaid tax specified in subsection (a)(3)(A)
relates.
``(3) Impartial officer.--The hearing under this subsection
shall be conducted by an officer or employee who has had no prior
involvement with respect to the unpaid tax specified in subsection
(a)(3)(A) before the first hearing under this section or section
6320. A taxpayer may waive the requirement of this paragraph.
``(c) Matters Considered at Hearing.--In the case of any hearing
conducted under this section--
``(1) Requirement of investigation.--The appeals officer shall
at the hearing obtain verification from the Secretary that the
requirements of any applicable law or administrative procedure have
been met.
``(2) Issues at hearing.--
``(A) In general.--The person may raise at the hearing any
relevant issue relating to the unpaid tax or the proposed levy,
including--
``(i) appropriate spousal defenses;
``(ii) challenges to the appropriateness of collection
actions; and
``(iii) offers of collection alternatives, which may
include the posting of a bond, the substitution of other
assets, an installment agreement, or an offer-in-
compromise.
``(B) Underlying liability.--The person may also raise at
the hearing challenges to the existence or amount of the
underlying tax liability for any tax period if the person did
not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability.
``(3) Basis for the determination.--The determination by an
appeals officer under this subsection shall take into
consideration--
``(A) the verification presented under paragraph (1);
``(B) the issues raised under paragraph (2); and
``(C) whether any proposed collection action balances the
need for the efficient collection of taxes with the legitimate
concern of the person that any collection action be no more
intrusive than necessary.
``(4) Certain issues precluded.--An issue may not be raised at
the hearing if--
``(A) the issue was raised and considered at a previous
hearing under section 6320 or in any other previous
administrative or judicial proceeding; and
``(B) the person seeking to raise the issue participated
meaningfully in such hearing or proceeding.
This paragraph shall not apply to any issue with respect to which
subsection (d)(2)(B) applies.
``(d) Proceeding After Hearing.--
``(1) Judicial review of determination.--The person may, within
30 days of a determination under this section, appeal such
determination--
``(A) to the Tax Court (and the Tax Court shall have
jurisdiction to hear such matter); or
``(B) if the Tax Court does not have jurisdiction of the
underlying tax liability, to a district court of the United
States.
If a court determines that the appeal was to an incorrect court, a
person shall have 30 days after the court determination to file
such appeal with the correct court.
``(2) Jurisdiction retained at irs office of appeals.--The
Internal Revenue Service Office of Appeals shall retain
jurisdiction with respect to any determination made under this
section, including subsequent hearings requested by the person who
requested the original hearing on issues regarding--
``(A) collection actions taken or proposed with respect to
such determination; and
``(B) after the person has exhausted all administrative
remedies, a change in circumstances with respect to such person
which affects such determination.
``(e) Suspension of Collections and Statute of Limitations.--
``(1) In general.--Except as provided in paragraph (2), if a
hearing is requested under subsection (a)(3)(B), the levy actions
which are the subject of the requested hearing and the running of
any period of limitations under section 6502 (relating to
collection after assessment), section 6531 (relating to criminal
prosecutions), or section 6532 (relating to other suits) shall be
suspended for the period during which such hearing, and appeals
therein, are pending. In no event shall any such period expire
before the 90th day after the day on which there is a final
determination in such hearing.
``(2) Levy upon appeal.--Paragraph (1) shall not apply to a
levy action while an appeal is pending if the underlying tax
liability is not at issue in the appeal and the court determines
that the Secretary has shown good cause not to suspend the levy.
``(f) Jeopardy and State Refund Collection.--If--
``(1) the Secretary has made a finding under the last sentence
of section 6331(a) that the collection of tax is in jeopardy; or
``(2) the Secretary has served a levy on a State to collect a
Federal tax liability from a State tax refund,
this section shall not apply, except that the taxpayer shall be given
the opportunity for the hearing described in this section within a
reasonable period of time after the levy.
``PART II--LEVY''.
(c) Review by Special Trial Judges Allowed.--
(1) In general.--Section 7443(b) (relating to proceedings which
may be assigned to special trial judges) is amended by striking
``and'' at the end of paragraph (3), by redesignating paragraph (4)
as paragraph (5), and by inserting after paragraph (3) the
following new paragraph:
``(4) any proceeding under section 6320 or 6330, and''.
(2) Authority to make decisions.--Section 7443(c) (relating to
authority to make court decisions) is amended by striking ``or
(3)'' and inserting ``(3), or (4)''.
(d) Effective Date.--The amendments made by this section shall
apply to collection actions initiated after the date which is 180 days
after the date of the enactment of this Act.
PART II--EXAMINATION ACTIVITIES

c439f6221081d53b5411fef772bfd1bb6d5a77f2d1b6462c46551f77c5cab423

COMMUNICATIONS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions)
is amended by adding at the end the following new section:
``SEC. 7525. CONFIDENTIALITY PRIVILEGES RELATING TO TAXPAYER
COMMUNICATIONS.
``(a) Uniform Application to Taxpayer Communications With Federally
Authorized Practitioners.--
``(1) General rule.--With respect to tax advice, the same
common law protections of confidentiality which apply to a
communication between a taxpayer and an attorney shall also apply
to a communication between a taxpayer and any federally authorized
tax practitioner to the extent the communication would be
considered a privileged communication if it were between a taxpayer
and an attorney.
``(2) Limitations.--Paragraph (1) may only be asserted in--
``(A) any noncriminal tax matter before the Internal
Revenue Service; and
``(B) any noncriminal tax proceeding in Federal court
brought by or against the United States.
``(3) Definitions.--For purposes of this subsection--
``(A) Federally authorized tax practitioner.--The term
`federally authorized tax practitioner' means any individual
who is authorized under Federal law to practice before the
Internal Revenue Service if such practice is subject to Federal
regulation under section 330 of title 31, United States Code.
``(B) Tax advice.--The term `tax advice' means advice given
by an individual with respect to a matter which is within the
scope of the individual's authority to practice described in
subparagraph (A).
``(b) Section Not To Apply to Communications Regarding Corporate
Tax Shelters.--The privilege under subsection (a) shall not apply to
any written communication between a federally authorized tax
practitioner and a director, shareholder, officer, or employee, agent,
or representative of a corporation in connection with the promotion of
the direct or indirect participation of such corporation in any tax
shelter (as defined in section 6662(d)(2)(C)(iii)).''.
(b) Conforming Amendment.--The table of sections for such chapter
77 is amended by adding at the end the following new item:
``Sec. 7525. Confidentiality privileges relating to taxpayer
communications.''.
(c) Effective Date.--The amendments made by this section shall
apply to communications made on or after the date of the enactment of
this Act.

d03dd1c1a40bdb36220daa9bcacb28b5c2d63cccfa7b5bec4576e8cee38ecb95

Section 7602 (relating to examination of books and witnesses) is
amended by adding at the end the following new subsection:
``(d) Limitation on Examination on Unreported Income.--The
Secretary shall not use financial status or economic reality
examination techniques to determine the existence of unreported income
of any taxpayer unless the Secretary has a reasonable indication that
there is a likelihood of such unreported income.''.

e202b58429a2546d460a839e3874f5f9cfad07554da18231786cf389c1b7c19c

(a) In General.--Subchapter A of chapter 78 (relating to
examination and inspection) is amended by redesignating section 7612 as
section 7613 and by inserting after 7611 the following new section:
``SEC. 7612. SPECIAL PROCEDURES FOR SUMMONSES FOR COMPUTER SOFTWARE.
``(a) General Rule.--For purposes of this title--
``(1) except as provided in subsection (b), no summons may be
issued under this title, and the Secretary may not begin any action
under section 7604 to enforce any summons to produce or analyze any
tax-related computer software source code; and
``(2) any software and related materials which are provided to
the Secretary under this title shall be subject to the safeguards
under subsection (c).
``(b) Circumstances Under Which Computer Software Source Code May
Be Provided.--
``(1) In general.--Subsection (a)(1) shall not apply to any
portion, item, or component of tax-related computer software source
code if--
``(A) the Secretary is unable to otherwise reasonably
ascertain the correctness of any item on a return from--
``(i) the taxpayer's books, papers, records, or other
data; or
``(ii) the computer software executable code (and any
modifications thereof) to which such source code relates
and any associated data which, when executed, produces the
output to ascertain the correctness of the item;
``(B) the Secretary identifies with reasonable specificity
the portion, item, or component of such source code needed to
verify the correctness of such item on the return; and
``(C) the Secretary determines that the need for the
portion, item, or component of such source code with respect to
such item outweighs the risks of unauthorized disclosure of
trade secrets.
``(2) Exceptions.--Subsection (a)(1) shall not apply to--
``(A) any inquiry into any offense connected with the
administration or enforcement of the internal revenue laws;
``(B) any tax-related computer software source code
acquired or developed by the taxpayer or a related person
primarily for internal use by the taxpayer or such person
rather than for commercial distribution;
``(C) any communications between the owner of the tax-
related computer software source code and the taxpayer or
related persons; or
``(D) any tax-related computer software source code which
is required to be provided or made available pursuant to any
other provision of this title.
``(3) Cooperation required.--For purposes of paragraph (1), the
Secretary shall be treated as meeting the requirements of
subparagraphs (A) and (B) of such paragraph if--
``(A) the Secretary determines that it is not feasible to
determine the correctness of an item without access to the
computer software executable code and associated data described
in paragraph (1)(A)(ii);
``(B) the Secretary makes a formal request to the taxpayer
for such code and data and to the owner of the computer
software source code for such executable code; and
``(C) such code and data is not provided within 180 days of
such request.
``(4) Right to contest summons.--In any proceeding brought
under section 7604 to enforce a summons issued under the authority
of this subsection, the court shall, at the request of any party,
hold a hearing to determine whether the applicable requirements of
this subsection have been met.
``(c) Safeguards To Ensure Protection of Trade Secrets and Other
Confidential Information.--
``(1) Entry of protective order.--In any court proceeding to
enforce a summons for any portion of software, the court may
receive evidence and issue any order necessary to prevent the
disclosure of trade secrets or other confidential information with
respect to such software, including requiring that any information
be placed under seal to be opened only as directed by the court.
``(2) Protection of software.--Notwithstanding any other
provision of this section, and in addition to any protections
ordered pursuant to paragraph (1), in the case of software that
comes into the possession or control of the Secretary in the course
of any examination with respect to any taxpayer--
``(A) the software may be used only in connection with the
examination of such taxpayer's return, any appeal by the
taxpayer to the Internal Revenue Service Office of Appeals, any
judicial proceeding (and any appeals therefrom), and any
inquiry into any offense connected with the administration or
enforcement of the internal revenue laws;
``(B) the Secretary shall provide, in advance, to the
taxpayer and the owner of the software a written list of the
names of all individuals who will analyze or otherwise have
access to the software;
``(C) the software shall be maintained in a secure area or
place, and, in the case of computer software source code, shall
not be removed from the owner's place of business unless the
owner permits, or a court orders, such removal;
``(D) the software may not be copied except as necessary to
perform such analysis, and the Secretary shall number all
copies made and certify in writing that no other copies have
been (or will be) made;
``(E) at the end of the period during which the software
may be used under subparagraph (A)--
``(i) the software and all copies thereof shall be
returned to the person from whom they were obtained and any
copies thereof made under subparagraph (D) on the hard
drive of a machine or other mass storage device shall be
permanently deleted; and
``(ii) the Secretary shall obtain from any person who
analyzes or otherwise had access to such software a written
certification under penalty of perjury that all copies and
related materials have been returned and that no copies
were made of them;
``(F) the software may not be decompiled or disassembled;
``(G) the Secretary shall provide to the taxpayer and the
owner of any interest in such software, as the case may be, a
written agreement, between the Secretary and any person who is
not an officer or employee of the United States and who will
analyze or otherwise have access to such software, which
provides that such person agrees not to--
``(i) disclose such software to any person other than
persons to whom such information could be disclosed for tax
administration purposes under section 6103; or
``(ii) participate for 2 years in the development of
software which is intended for a similar purpose as the
software examined; and
``(H) the software shall be treated as return information
for purposes of section 6103.
For purposes of subparagraph (C), the owner shall make available
any necessary equipment or materials for analysis of computer
software source code required to be conducted on the owner's
premises. The owner of any interest in the software shall be
considered a party to any agreement described in subparagraph (G).
``(d) Definitions.--For purposes of this section--
``(1) Software.--The term `software' includes computer software
source code and computer software executable code.
``(2) Computer software source code.--The term `computer
software source code' means--
``(A) the code written by a programmer using a programming
language which is comprehensible to appropriately trained
persons and is not capable of directly being used to give
instructions to a computer;
``(B) related programmers' notes, design documents,
memoranda, and similar documentation; and
``(C) related customer communications.
``(3) Computer software executable code.--The term `computer
software executable code' means--
``(A) any object code, machine code, or other code readable
by a computer when loaded into its memory and used directly by
such computer to execute instructions; and
``(B) any related user manuals.
``(4) Owner.--The term `owner' shall, with respect to any
software, include the developer of the software.
``(5) Related person.--A person shall be treated as related to
another person if such persons are related persons under section
267 or 707(b).
``(6) Tax-related computer software source code.--The term
`tax-related computer software source code' means the computer
source code for any computer software program intended for
accounting, tax return preparation or compliance, or tax
planning.''.
(b) Unauthorized Disclosure of Software.--Section 7213 (relating to
unauthorized disclosure of information) is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection:
``(d) Disclosure of Software.--Any person who willfully divulges or
makes known software (as defined in section 7612(d)(1)) to any person
in violation of section 7612 shall be guilty of a felony and, upon
conviction thereof, shall be fined not more than $5,000, or imprisoned
not more than 5 years, or both, together with the costs of
prosecution.''.
(c) Application of Special Procedures for Third-Party Summonses.--
Paragraph (2) of section 7603(b), as amended by section 3416(a), is
amended by striking ``and'' at the end of subparagraph (H), by striking
a period at the end of subparagraph (I) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(J) any owner or developer of a computer software source
code (as defined in section 7612(d)(2)).
Subparagraph (J) shall apply only with respect to a summons
requiring the production of the source code referred to in
subparagraph (J) or the program and data described in section
7612(b)(1)(A)(ii) to which such source code relates.''.
(d) Conforming Amendment.--The table of sections for subchapter A
of chapter 78 is amended by striking the item relating to section 7612
and by inserting the following new item:
``Sec. 7612. Special procedures for summonses for computer
software.
``Sec. 7613. Cross references.''.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to summonses issued, and software acquired, after the date of
the enactment of this Act.
(2) Software protection.--In the case of any software acquired
on or before such date of enactment, the requirements of section
7612(a)(2) of the Internal Revenue Code of 1986 (as added by such
amendments) shall apply after the 90th day after such date. The
preceding sentence shall not apply to the requirement under section
7612(c)(2)(G)(ii) of such Code (as so added).

95b89793b398d3464e1132cd64d221dabb4ff6633a2127a68415705df4d9e84b

ALTERNATIVE COMMITMENT AGREEMENTS.
The Secretary of the Treasury or the Secretary's delegate shall
instruct employees of the Internal Revenue Service that they may not
threaten to audit any taxpayer in an attempt to coerce the taxpayer
into entering into a Tip Reporting Alternative Commitment Agreement.

bb3916800cae2aed8ee2d18de08de11a5c1782e62c2c794efb6a81ff1d579baa

(a) In General.--Paragraph (1) of section 7609(a) (relating to
summonses to which section applies) is amended by striking so much of
such paragraph as precedes ``notice of the summons'' and inserting the
following:
``(1) In general.--If any summons to which this section applies
requires the giving of testimony on or relating to, the production
of any portion of records made or kept on or relating to, or the
production of any computer software source code (as defined in
7612(d)(2)) with respect to, any person (other than the person
summoned) who is identified in the summons, then''.
(b) Coordination With Other Authority.--Section 7609 (relating to
special procedures for third-party summonses) is amended by adding at
the end the following new subsection:
``(j) Use of Summons Not Required.--Nothing in this section shall
be construed to limit the Secretary's ability to obtain information,
other than by summons, through formal or informal procedures authorized
by sections 7601 and 7602.''.
(c) Conforming Amendments.--
(1) Subsection (a) of section 7609 is amended by striking
paragraphs (3) and (4), by redesignating paragraph (5) as paragraph
(3), and by striking in paragraph (3) (as so redesignated)
``subsection (c)(2)(B)'' and inserting ``subsection (c)(2)(D)''.
(2) Subsection (c) of section 7609 is amended to read as
follows:
``(c) Summons to Which Section Applies.--
``(1) In general.--Except as provided in paragraph (2), this
section shall apply to any summons issued under paragraph (2) of
section 7602(a) or under section 6420(e)(2), 6421(g)(2),
6427(j)(2), or 7612.
``(2) Exceptions.--This section shall not apply to any
summons--
``(A) served on the person with respect to whose liability
the summons is issued, or any officer or employee of such
person;
``(B) issued to determine whether or not records of the
business transactions or affairs of an identified person have
been made or kept;
``(C) issued solely to determine the identity of any person
having a numbered account (or similar arrangement) with a bank
or other institution described in section 7603(b)(2)(A);
``(D) issued in aid of the collection of--
``(i) an assessment made or judgment rendered against
the person with respect to whose liability the summons is
issued; or
``(ii) the liability at law or in equity of any
transferee or fiduciary of any person referred to in clause
(i);
``(E)(i) issued by a criminal investigator of the Internal
Revenue Service in connection with the investigation of an
offense connected with the administration or enforcement of the
internal revenue laws; and
``(ii) served on any person who is not a third-party
recordkeeper (as defined in section 7603(b)); or
``(F) described in subsection (f) or (g).
``(3) Records.--For purposes of this section, the term
`records' includes books, papers, and other data.''.
(3) Paragraph (2) of section 7609(e) is amended by striking
``third-party recordkeeper's'' and all that follows through
``subsection (f)'' and inserting ``summoned party's response to the
summons''.
(4) Subsection (f) of section 7609 is amended--
(A) by striking ``described in subsection (c)'' and
inserting ``described in subsection (c)(1)''; and
(B) by inserting ``or testimony'' after ``records'' in
paragraph (3).
(5) Subsection (g) of section 7609 is amended by striking ``In
the case of any summons described in subsection (c), the provisions
of subsections (a)(1) and (b) shall not apply if'' and inserting
``A summons is described in this subsection if''.
(6)(A) Subsection (i) of section 7609 is amended by striking
``Third-Party Recordkeeper and'' in the subsection heading.
(B) Paragraph (1) of section 7609(i) is amended by striking
``described in subsection (c), the third-party recordkeeper'' and
inserting ``to which this section applies for the production of
records, the summoned party''.
(C) Paragraph (2) of section 7609(i) is amended--
(i) by striking ``recordkeeper'' in the heading and
inserting ``summoned party''; and
(ii) by striking ``the third-party recordkeeper'' and
inserting ``the summoned party''.
(D) Paragraph (3) of section 7609(i) is amended to read as
follows:
``(3) Protection for summoned party who discloses.--Any
summoned party, or agent or employee thereof, making a disclosure
of records or testimony pursuant to this section in good faith
reliance on the certificate of the Secretary or an order of a court
requiring production of records or the giving of such testimony
shall not be liable to any customer or other person for such
disclosure.''.
(d) Effective Date.--The amendments made by this section shall
apply to summonses served after the date of the enactment of this Act.

f0cb83837087e58ed92e059c341995adb742ac94c93774d3ea8812b2d05158d2

BY MAIL.
(a) In General.--Section 7603 (relating to service of summons) is
amended by striking ``A summons issued'' and inserting ``(a) In
General.--A summons issued'' and by adding at the end the following new
subsection:
``(b) Service by Mail to Third-Party Recordkeepers.--
``(1) In general.--A summons referred to in subsection (a) for
the production of books, papers, records, or other data by a third-
party recordkeeper may also be served by certified or registered
mail to the last known address of such recordkeeper.
``(2) Third-party recordkeeper.--For purposes of paragraph (1),
the term `third-party recordkeeper' means--
``(A) any mutual savings bank, cooperative bank, domestic
building and loan association, or other savings institution
chartered and supervised as a savings and loan or similar
association under Federal or State law, any bank (as defined in
section 581), or any credit union (within the meaning of
section 501(c)(14)(A));
``(B) any consumer reporting agency (as defined under
section 603(f) of the Fair Credit Reporting Act (15 U.S.C.
1681a(f)));
``(C) any person extending credit through the use of credit
cards or similar devices;
``(D) any broker (as defined in section 3(a)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)));
``(E) any attorney;
``(F) any accountant;
``(G) any barter exchange (as defined in section
6045(c)(3));
``(H) any regulated investment company (as defined in
section 851) and any agent of such regulated investment company
when acting as an agent thereof, and
``(I) any enrolled agent.''.
(b) Effective Date.--The amendment made by this section shall apply
to summonses served after the date of the enactment of this Act.

3a11ae632388f77a2cfa186ef3ef11644b9e8425869324f52e3de50c5f2a8491

(a) In General.--Section 7602 (relating to examination of books and
witnesses), as amended by section 3412, is amended by redesignating
subsections (c) and (d) as subsections (d) and (e), respectively, and
by inserting after subsection (b) the following new subsection:
``(c) Notice of Contact of Third Parties.--
``(1) General notice.--An officer or employee of the Internal
Revenue Service may not contact any person other than the taxpayer
with respect to the determination or collection of the tax
liability of such taxpayer without providing reasonable notice in
advance to the taxpayer that contacts with persons other than the
taxpayer may be made.
``(2) Notice of specific contacts.--The Secretary shall
periodically provide to a taxpayer a record of persons contacted
during such period by the Secretary with respect to the
determination or collection of the tax liability of such taxpayer.
Such record shall also be provided upon request of the taxpayer.
``(3) Exceptions.--This subsection shall not apply--
``(A) to any contact which the taxpayer has authorized;
``(B) if the Secretary determines for good cause shown that
such notice would jeopardize collection of any tax or such
notice may involve reprisal against any person; or
``(C) with respect to any pending criminal
investigation.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to contacts made after the 180th day after the date of the
enactment of this Act.
PART III--COLLECTION ACTIVITIES
Subpart A--Approval Process

0eb7ea36adfe38085037a8532baf6ca6170acc7859dd63acb4e56e768a6ea177

(a) In General.--The Commissioner of Internal Revenue shall develop
and implement procedures under which--
(1) a determination by an employee to file a notice of lien or
levy with respect to, or to levy or seize, any property or right to
property would, where appropriate, be required to be reviewed by a
supervisor of the employee before the action was taken; and
(2) appropriate disciplinary action would be taken against the
employee or supervisor where the procedures under paragraph (1)
were not followed.
(b) Review Process.--The review process under subsection (a)(1) may
include a certification that the employee has--
(1) reviewed the taxpayer's information;
(2) verified that a balance is due; and
(3) affirmed that the action proposed to be taken is
appropriate given the taxpayer's circumstances, considering the
amount due and the value of the property or right to property.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), this
section shall take effect on the date of the enactment of this Act.
(2) Automated collection system actions.--In the case of any
action under an automated collection system, this section shall
apply to actions initiated after December 31, 2000.
Subpart B--Liens and Levies

7464db08dcb1a094c20bbc0540bae4174c2ad0c892b0fbf9a31a0b3fd327bc31

(a) Fuel, Etc.--Section 6334(a)(2) (relating to fuel, provisions,
furniture, and personal effects) is amended by striking ``$2,500'' and
inserting ``$6,250''.
(b) Books, Etc.--Section 6334(a)(3) (relating to books and tools of
a trade, business, or profession) is amended by striking ``$1,250'' and
inserting ``$3,125''.
(c) Conforming Amendment.--Section 6334(g)(1) (relating to
inflation adjustment) is amended--
(1) by striking ``1997'' and inserting ``1999''; and
(2) by striking ``1996'' in subparagraph (B) and inserting
``1998''.
(d) Effective Date.--The amendments made by this section shall take
effect with respect to levies issued after the date of the enactment of
this Act.

3d33a638c152a3532d70082050c90e018969b1ef0317997b6a4cda0bc400c573

(a) In General.--Section 6343 (relating to authority to release
levy and return property) is amended by adding at the end the following
new subsection:
``(e) Release of Levy Upon Agreement That Amount is not
Collectible.--In the case of a levy on the salary or wages payable to
or received by the taxpayer, upon agreement with the taxpayer that the
tax is not collectible, the Secretary shall release such levy as soon
as practicable.''.
(b) Effective Date.--The amendment made by this section shall apply
to levies imposed after December 31, 1999.

129236f1f3fd9cd73172cee9b456bc38a137a57966b3ead333344e3c40bfcbc1

(a) In General.--Section 6331 (relating to levy and distraint) is
amended by redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) No Levy During Pendency of Proceedings for Refund of
Divisible Tax.--
``(1) In general.--No levy may be made under subsection (a) on
the property or rights to property of any person with respect to
any unpaid divisible tax during the pendency of any proceeding
brought by such person in a proper Federal trial court for the
recovery of any portion of such divisible tax which was paid by
such person if--
``(A) the decision in such proceeding would be res judicata
with respect to such unpaid tax; or
``(B) such person would be collaterally estopped from
contesting such unpaid tax by reason of such proceeding.
``(2) Divisible tax.--For purposes of paragraph (1), the term
`divisible tax' means--
``(A) any tax imposed by subtitle C; and
``(B) the penalty imposed by section 6672 with respect to
any such tax.
``(3) Exceptions.--
``(A) Certain unpaid taxes.--This subsection shall not
apply with respect to any unpaid tax if--
``(i) the taxpayer files a written notice with the
Secretary which waives the restriction imposed by this
subsection on levy with respect to such tax; or
``(ii) the Secretary finds that the collection of such
tax is in jeopardy.
``(B) Certain levies.--This subsection shall not apply to--
``(i) any levy to carry out an offset under section
6402; and
``(ii) any levy which was first made before the date
that the applicable proceeding under this subsection
commenced.
``(4) Limitation on collection activity; authority to enjoin
collection.--
``(A) Limitation on collection.--No proceeding in court for
the collection of any unpaid tax to which paragraph (1) applies
shall be begun by the Secretary during the pendency of a
proceeding under such paragraph. This subparagraph shall not
apply to--
``(i) any counterclaim in a proceeding under such
paragraph; or
``(ii) any proceeding relating to a proceeding under
such paragraph.
``(B) Authority to enjoin.--Notwithstanding section
7421(a), a levy or collection proceeding prohibited by this
subsection may be enjoined (during the period such prohibition
is in force) by the court in which the proceeding under
paragraph (1) is brought.
``(5) Suspension of statute of limitations on collection.--The
period of limitations under section 6502 shall be suspended for the
period during which the Secretary is prohibited under this
subsection from making a levy.
``(6) Pendency of proceeding.--For purposes of this subsection,
a proceeding is pending beginning on the date such proceeding
commences and ending on the date that a final order or judgment
from which an appeal may be taken is entered in such proceeding.''.
(b) Effective Date.--The amendment made by this section shall apply
to unpaid tax attributable to taxable periods beginning after December
31, 1998.

37137de5fda5f93c5fe1f8965b03f97c2e639159d45073b4be6754ed01ee4be9

AND JEOPARDY LEVIES.
(a) In General.--Paragraph (1) of section 7429(a) (relating to
review of jeopardy levy or assessment procedures) is amended to read as
follows:
``(1) Administrative review.--
``(A) Prior approval required.--No assessment may be made
under section 6851(a), 6852(a), 6861(a), or 6862, and no levy
may be made under section 6331(a) less than 30 days after
notice and demand for payment is made, unless the Chief Counsel
for the Internal Revenue Service (or such Counsel's delegate)
personally approves (in writing) such assessment or levy.
``(B) Information to taxpayer.--Within 5 days after the day
on which such an assessment or levy is made, the Secretary
shall provide the taxpayer with a written statement of the
information upon which the Secretary relied in making such
assessment or levy.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxes assessed and levies made after the date of the enactment of
this Act.

54ed8de9f99c0d52a1330f1b5c47689b3a985602bbef91d9c6306c79b3bfcbb5

VALID.
(a) Certain Property.--
(1) In general.--Subsection (b) of section 6323 (relating to
validity and priority against certain persons) is amended--
(A) by striking ``$250'' in paragraph (4) (relating to
personal property purchased in casual sale) and inserting
``$1,000''; and
(B) by striking ``$1,000'' in paragraph (7) (relating to
residential property subject to a mechanic's lien for certain
repairs and improvements) and inserting ``$5,000''.
(2) Inflation adjustment.--Subsection (i) of section 6323
(relating to special rules) is amended by adding at the end the
following new paragraph:
``(4) Cost-of-living adjustment.--In the case of notices of
liens imposed by section 6321 which are filed in any calendar year
after 1998, each of the dollar amounts under paragraph (4) or (7)
of subsection (b) 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 the calendar year, determined by
substituting `calendar year 1996' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest
multiple of $10.''.
(b) Expansion of Treatment of Passbook Loans.--Paragraph (10) of
section 6323(b) is amended--
(1) by striking ``Passbook loans'' in the heading and inserting
``Deposit-secured loans'';
(2) by striking ``, evidenced by a passbook,''; and
(3) by striking all that follows ``secured by such account''
and inserting a period.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

7b4172e717f836a98c3e27b97bbeeaea92c468f0fe1bd7e078776cbe52b608fe

LEVIES ON EMPLOYER-SPONSORED RETIREMENT PLANS OR IRAS.
(a) In General.--Section 72(t)(2)(A) (relating to subsection not to
apply to certain distributions) is amended by striking ``or'' at the
end of clauses (iv) and (v), by striking the period at the end of
clause (vi) and inserting ``, or'', and by adding at the end the
following new clause:
``(vii) made on account of a levy under section 6331 on
the qualified retirement plan.''.
(b) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 1999.
Subpart C--Seizures

7879cfd51553fc88284e42a96b277cf53df01f46f6738f2468618bdb4c9ba154

BID.
(a) In General.--Section 6335(e)(1)(A)(i) (relating to
determinations relating to minimum price) is amended by striking ``a
minimum price for which such property shall be sold'' and inserting ``a
minimum price below which such property shall not be sold''.
(b) Reference to Penalty for Violation.--Section 6335(e) is amended
by adding at the end the following new paragraph:
``(4) Cross reference.--
``For provision providing for civil damages for violation of
paragraph (1)(A)(i), see section 7433.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales made after the date of the enactment of this Act.

c13f479b1b50a87eda05032bf03191159953f5c23592068e20d834e7d8aef7d0

(a) In General.--Section 6340 (relating to records of sale) is
amended--
(1) in subsection (a)--
(A) by striking ``real''; and
(B) by inserting ``or certificate of sale of personal
property'' after ``deed''; and
(2) by adding at the end the following new subsection:
``(c) Accounting to Taxpayer.--The taxpayer with respect to whose
liability the sale was conducted or who redeemed the property shall be
furnished--
``(1) the record under subsection (a) (other than the names of
the purchasers);
``(2) the amount from such sale applied to the taxpayer's
liability; and
``(3) the remaining balance of such liability.''.
(b) Effective Date.--The amendments made by this section shall
apply to seizures occurring after the date of the enactment of this
Act.

62902418b5132b6459fd1d02a6deb2a0dca3d9100796cb5ca470dde517a5e752

Not later than the date which is 2 years after the date of the
enactment of this Act, the Secretary of the Treasury or the Secretary's
delegate shall implement a uniform asset disposal mechanism for sales
under section 6335 of the Internal Revenue Code of 1986. The mechanism
should be designed to remove any participation in such sales by revenue
officers of the Internal Revenue Service and should consider the use of
outsourcing.

d678399717cba0cf3c957e6c7ceedee8155c13209d9eee891f2facc8ffb66708

PROCEDURES FOR SEIZURE OF TAXPAYER'S PROPERTY.
(a) In General.--Section 6331 (relating to levy and distraint), as
amended by section 3433, is amended by redesignating subsection (j) as
subsection (k) and by inserting after subsection (i) the following new
subsection:
``(j) No Levy Before Investigation of Status of Property.--
``(1) In general.--For purposes of applying the provisions of
this subchapter, no levy may be made on any property or right to
property which is to be sold under section 6335 until a thorough
investigation of the status of such property has been completed.
``(2) Elements in investigation.--For purposes of paragraph
(1), an investigation of the status of any property shall include--
``(A) a verification of the taxpayer's liability;
``(B) the completion of an analysis under sub- section (f);
``(C) the determination that the equity in such property is
sufficient to yield net proceeds from the sale of such property
to apply to such liability; and
``(D) a thorough consideration of alternative collection
methods.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

276c08c2e35451a8abb8a2a4046686c0b55010856e50edad777cc5d0e4f62966

(a) In General.--Section 6334(a)(13) (relating to property exempt
from levy) is amended to read as follows:
``(13) Residences exempt in small deficiency cases and
principal residences and certain business assets exempt in absence
of certain approval or jeopardy.--
``(A) Residences in small deficiency cases.--If the amount
of the levy does not exceed $5,000--
``(i) any real property used as a residence by the
taxpayer; or
``(ii) any real property of the taxpayer (other than
real property which is rented) used by any other individual
as a residence.
``(B) Principal residences and certain business assets.--
Except to the extent provided in subsection (e)--
``(i) the principal residence of the taxpayer (within
the meaning of section 121); and
``(ii) tangible personal property or real property
(other than real property which is rented) used in the
trade or business of an individual taxpayer.''.
(b) Levy Allowed in Certain Circumstances.--Section 6334(e) is
amended to read as follows:
``(e) Levy Allowed on Principal Residences and Certain Business
Assets in Certain Circumstances.--
``(1) Principal residences.--
``(A) Approval required.--A principal residence shall not
be exempt from levy if a judge or magistrate of a district
court of the United States approves (in writing) the levy of
such residence.
``(B) Jurisdiction.--The district courts of the United
States shall have exclusive jurisdiction to approve a levy
under subparagraph (A).
``(2) Certain business assets.--Property (other than a
principal residence) described in subsection (a)(13)(B) shall not
be exempt from levy if--
``(A) a district director or assistant district director of
the Internal Revenue Service personally approves (in writing)
the levy of such property; or
``(B) the Secretary finds that the collection of tax is in
jeopardy.
An official may not approve a levy under subparagraph (A) unless
the official determines that the taxpayer's other assets subject to
collection are insufficient to pay the amount due, together with
expenses of the proceedings.''.
(c) State Fish and Wildlife Permits.--
(1) In general.--With respect to permits issued by a State and
required under State law for the harvest of fish or wildlife in the
trade or business of an individual taxpayer, the term ``other
assets'' as used in section 6334(e)(2) of the Internal Revenue Code
of 1986 shall include future income which may be derived by such
taxpayer from the commercial sale of fish or wildlife under such
permit.
(2) Construction.--Paragraph (1) shall not be construed to
invalidate or in any way prejudice any assertion that the privilege
embodied in permits described in paragraph (1) is not property or a
right to property under the Internal Revenue Code of 1986.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
PART IV--PROVISIONS RELATING TO EXAMINATION AND COLLECTION ACTIVITIES

818b728de526f824dec794069a9574a3d29959e302e36dd0d629265b4ce2f2ac

BY AGREEMENT.
(a) Authority To Extend 10-Year Collection Period After
Assessment.--Section 6502(a) (relating to length of period after
collection) is amended--
(1) by striking paragraph (2) and inserting:
``(2) if--
``(A) there is an installment agreement between the
taxpayer and the Secretary, prior to the date which is 90 days
after the expiration of any period for collection agreed upon
in writing by the Secretary and the taxpayer at the time the
installment agreement was entered into; or
``(B) there is a release of levy under section 6343 after
such 10-year period, prior to the expiration of any period for
collection agreed upon in writing by the Secretary and the
taxpayer before such release.''; and
(2) by striking the first sentence in the matter following
paragraph (2).
(b) Notice to Taxpayer of Right To Refuse or Limit Extension.--
Paragraph (4) of section 6501(c) (relating to the period for
limitations on assessment and collection) is amended--
(1) by striking ``Where'' and inserting the following:
``(A) In general.--Where''; and
(2) by adding at the end the following new subparagraph:
``(B) Notice to taxpayer of right to refuse or limit
extension.--The Secretary shall notify the taxpayer of the
taxpayer's right to refuse to extend the period of limitations,
or to limit such extension to particular issues or to a
particular period of time, on each occasion when the taxpayer
is requested to provide such consent.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to requests to extend the period of limitations made after
December 31, 1999.
(2) Prior request.--If, in any request to extend the period of
limitations made on or before December 31, 1999, a taxpayer agreed
to extend such period beyond the 10-year period referred to in
section 6502(a) of the Internal Revenue Code of 1986, such
extension shall expire on the latest of--
(A) the last day of such 10-year period;
(B) December 31, 2002; or
(C) in the case of an extension in connection with an
installment agreement, the 90th day after the end of the period
of such extension.

315916194d4e5b0d58be888c72abab8e3b6cbabcabe7b56e931be07358b57125

(a) Standards for Evaluation of Offers-in-Compromise.--Section 7122
(relating to offers-in-compromise) is amended by adding at the end the
following new subsection:
``(c) Standards for Evaluation of Offers.--
``(1) In general.--The Secretary shall prescribe guidelines for
officers and employees of the Internal Revenue Service to determine
whether an offer-in-compromise is adequate and should be accepted
to resolve a dispute.
``(2) Allowances for basic living expenses.--
``(A) In general.--In prescribing guidelines under
paragraph (1), the Secretary shall develop and publish
schedules of national and local allowances designed to provide
that taxpayers entering into a compromise have an adequate
means to provide for basic living expenses.
``(B) Use of schedules.--The guidelines shall provide that
officers and employees of the Internal Revenue Service shall
determine, on the basis of the facts and circumstances of each
taxpayer, whether the use of the schedules published under
subparagraph (A) is appropriate and shall not use the schedules
to the extent such use would result in the taxpayer not having
adequate means to provide for basic living expenses.
``(3) Special rules relating to treatment of offers.--The
guidelines under paragraph (1) shall provide that--
``(A) an officer or employee of the Internal Revenue
Service shall not reject an offer-in-compromise from a low-
income taxpayer solely on the basis of the amount of the offer;
and
``(B) in the case of an offer-in-compromise which relates
only to issues of liability of the taxpayer--
``(i) such offer shall not be rejected solely because
the Secretary is unable to locate the taxpayer's return or
return information for verification of such liability; and
``(ii) the taxpayer shall not be required to provide a
financial statement.''.
(b) Levy Prohibited While Offer-in-Compromise Pending or
Installment Agreement Pending or in Effect.--Section 6331 (relating to
levy and distraint), as amended by sections 3433 and 3444, is amended
by redesignating subsection (k) as subsection (l) and by inserting
after subsection (j) the following new subsection:
``(k) No Levy While Certain Offers Pending or Installment Agreement
Pending or in Effect.--
``(1) Offer-in-compromise pending.--No levy may be made under
subsection (a) on the property or rights to property of any person
with respect to any unpaid tax--
``(A) during the period that an offer-in-compromise by such
person under section 7122 of such unpaid tax is pending with
the Secretary; and
``(B) if such offer is rejected by the Secretary, during
the 30 days thereafter (and, if an appeal of such rejection is
filed within such 30 days, during the period that such appeal
is pending).
For purposes of subparagraph (A), an offer is pending beginning on
the date the Secretary accepts such offer for processing.
``(2) Installment agreements.--No levy may be made under
subsection (a) on the property or rights to property of any person
with respect to any unpaid tax--
``(A) during the period that an offer by such person for an
installment agreement under section 6159 for payment of such
unpaid tax is pending with the Secretary;
``(B) if such offer is rejected by the Secretary, during
the 30 days thereafter (and, if an appeal of such rejection is
filed within such 30 days, during the period that such appeal
is pending);
``(C) during the period that such an installment agreement
for payment of such unpaid tax is in effect; and
``(D) if such agreement is terminated by the Secretary,
during the 30 days thereafter (and, if an appeal of such
termination is filed within such 30 days, during the period
that such appeal is pending).
``(3) Certain rules to apply.--Rules similar to the rules of
paragraphs (3), (4), and (5) of subsection (i) shall apply for
purposes of this subsection.''.
(c) Review of Rejections of Offers-in-Compromise and Installment
Agreements.--
(1) In general.--Section 7122 (relating to compromises), as
amended by subsection (a), is amended by adding at the end the
following new subsection:
``(d) Administrative Review.--The Secretary shall establish
procedures--
``(1) for an independent administrative review of any rejection
of a proposed offer-in-compromise or installment agreement made by
a taxpayer under this section or section 6159 before such rejection
is communicated to the taxpayer; and
``(2) which allow a taxpayer to appeal any rejection of such
offer or agreement to the Internal Revenue Service Office of
Appeals.''.
(2) Conforming amendment.--Section 6159 (relating to
installment agreements) is amended by adding at the end the
following new subsection:
``(d) Cross Reference.--
``For rights to administrative review and appeal, see section
7122(d).''.
(d) Preparation of Statement Relating to Offers-in- Compromise.--
The Secretary of the Treasury shall prepare a statement which sets
forth in simple, nontechnical terms the rights of a taxpayer and the
obligations of the Internal Revenue Service relating to offers-in-
compromise. Such statement shall--
(1) advise taxpayers who have entered into a compromise of the
advantages of promptly notifying the Internal Revenue Service of
any change of address or marital status;
(2) provide notice to taxpayers that in the case of a
compromise terminated due to the actions of one spouse or former
spouse, the Internal Revenue Service will, upon application,
reinstate such compromise with the spouse or former spouse who
remains in compliance with such compromise; and
(3) provide notice to the taxpayer that the taxpayer may appeal
the rejection of an offer-in-compromise to the Internal Revenue
Service Office of Appeals.
(e) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to proposed offers-in-compromise and installment agreements
submitted after the date of the enactment of this Act.
(2) Suspension of collection by levy.--The amendment made by
subsection (b) shall apply to offers-in-compromise pending on or
made after December 31, 1999.

73e60a479bcdd280793d3dbe1d7403f7bb3590bef7c515af7c378f9634886987

COURT PETITION.
(a) In General.--The Secretary of the Treasury or the Secretary's
delegate shall include on each notice of deficiency under section 6212
of the Internal Revenue Code of 1986 the date determined by such
Secretary (or delegate) as the last day on which the taxpayer may file
a petition with the Tax Court.
(b) Later Filing Deadlines Specified on Notice of Deficiency To Be
Binding.--Subsection (a) of section 6213 (relating to restrictions
applicable to deficiencies; petition to Tax Court) is amended by adding
at the end the following new sentence: ``Any petition filed with the
Tax Court on or before the last date specified for filing such petition
by the Secretary in the notice of deficiency shall be treated as timely
filed.''.
(c) Effective Date.--Subsection (a) and the amendment made by
subsection (b) shall apply to notices mailed after December 31, 1998.

d434a775d0fc556d7ed726231be6bc30882bac92404ed2bc120f8100aa99dde7

(a) Tax Court Proceedings.--Subsection (a) of section 6213 is
amended--
(1) by striking ``, including the Tax Court.'' and inserting
``, including the Tax Court, and a refund may be ordered by such
court of any amount collected within the period during which the
Secretary is prohibited from collecting by levy or through a
proceeding in court under the provisions of this subsection.''; and
(2) by striking ``to enjoin any action or proceeding'' and
inserting ``to enjoin any action or proceeding or order any
refund''.
(b) Other Proceedings.--Subsection (a) of section 6512 is amended
by striking the period at the end of paragraph (4) and inserting ``,
and'', and by inserting after paragraph (4) the following new
paragraphs:
``(5) As to any amount collected within the period during which
the Secretary is prohibited from making the assessment or from
collecting by levy or through a proceeding in court under the
provisions of section 6213(a); and
``(6) As to overpayments the Secretary is authorized to refund
or credit pending appeal as provided in subsection (b).''.
(c) Refund or Credit Pending Appeal.--Paragraph (1) of section
6512(b) is amended by adding at the end the following new sentence:
``If a notice of appeal in respect of the decision of the Tax Court is
filed under section 7483, the Secretary is authorized to refund or
credit the overpayment determined by the Tax Court to the extent the
overpayment is not contested on appeal.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

b65f2e6df0a2f0d04a03d8fa7152b17f18dbd7a5c5502b28abd37d8e22d34f16

EXAMINATIONS AND COLLECTIONS.
(a) Dispute Resolution Procedures.--
(1) In general.--Chapter 74 (relating to closing agreements and
compromises) is amended by redesignating section 7123 as section
7124 and by inserting after section 7122 the following new section:
``SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.
``(a) Early Referral to Appeals Procedures.--The Secretary shall
prescribe procedures by which any taxpayer may request early referral
of 1 or more unresolved issues from the examination or collection
division to the Internal Revenue Service Office of Appeals.
``(b) Alternative Dispute Resolution Procedures.--
``(1) Mediation.--The Secretary shall prescribe procedures
under which a taxpayer or the Internal Revenue Service Office of
Appeals may request non-binding mediation on any issue unresolved
at the conclusion of--
``(A) appeals procedures; or
``(B) unsuccessful attempts to enter into a closing
agreement under section 7121 or a compromise under section
7122.
``(2) Arbitration.--The Secretary shall establish a pilot
program under which a taxpayer and the Internal Revenue Service
Office of Appeals may jointly request binding arbitration on any
issue unresolved at the conclusion of--
``(A) appeals procedures; or
``(B) unsuccessful attempts to enter into a closing
agreement under section 7121 or a compromise under section
7122.''.
(2) Conforming amendment.--The table of sections for chapter 74
is amended by striking the item relating to section 7123 and
inserting the following new items:
``Sec. 7123. Appeals dispute resolution procedures.
``Sec. 7124. Cross references.''.
(b) Appeals Officers in Each State.--The Commissioner of Internal
Revenue shall ensure that an appeals officer is regularly available
within each State.
(c) Appeals Videoconferencing Alternative for Rural Areas.--The
Commissioner of Internal Revenue shall consider the use of the
videoconferencing of appeals conferences between appeals officers and
taxpayers seeking appeals in rural or remote areas.

5bf542e4334f3f76056f87b5b4fe0d300a939aa5e7c08098a60cfa91558e659f

(a) In General.--Subchapter A of chapter 64 (relating to
collection) is amended by inserting after section 6303 the following
new section:
``SEC. 6304. FAIR TAX COLLECTION PRACTICES.
``(a) Communication With the Taxpayer.--Without the prior consent
of the taxpayer given directly to the Secretary or the express
permission of a court of competent jurisdiction, the Secretary may not
communicate with a taxpayer in connection with the collection of any
unpaid tax--
``(1) at any unusual time or place or a time or place known or
which should be known to be inconvenient to the taxpayer;
``(2) if the Secretary knows the taxpayer is represented by any
person authorized to practice before the Internal Revenue Service
with respect to such unpaid tax and has knowledge of, or can
readily ascertain, such person's name and address, unless such
person fails to respond within a reasonable period of time to a
communication from the Secretary or unless such person consents to
direct communication with the taxpayer; or
``(3) at the taxpayer's place of employment if the Secretary
knows or has reason to know that the taxpayer's employer prohibits
the taxpayer from receiving such communication.
In the absence of knowledge of circumstances to the contrary, the
Secretary shall assume that the convenient time for communicating with
a taxpayer is after 8 a.m. and before 9 p.m., local time at the
taxpayer's location.
``(b) Prohibition of Harassment and Abuse.--The Secretary may not
engage in any conduct the natural consequence of which is to harass,
oppress, or abuse any person in connection with the collection of any
unpaid tax. Without limiting the general application of the foregoing,
the following conduct is a violation of this subsection:
``(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or property of any
person.
``(2) The use of obscene or profane language or language the
natural consequence of which is to abuse the hearer or reader.
``(3) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously with intent to
annoy, abuse, or harass any person at the called number.
``(4) Except as provided under rules similar to the rules in
section 804 of the Fair Debt Collection Practices Act (15 U.S.C.
1692b), the placement of telephone calls without meaningful
disclosure of the caller's identity.
``(c) Civil Action for Violations of Section.--
``For civil action for violations of this section, see section
7433.''.
(b) Clerical Amendment.--The table of sections for subchapter A of
chapter 64 is amended by inserting after the item relating to section
6303 the following new item:
``Sec. 6304. Fair tax collection practices.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

8a3b6950553176361f8c0356270eb247b42bd8831c9b785b83735064a57704f6

(a) In General.--Section 6159 (relating to agreements for payment
of tax liability in installments) is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection (b)
the following new subsection:
``(c) Secretary Required To Enter Into Installment Agreements in
Certain Cases.--In the case of a liability for tax of an individual
under subtitle A, the Secretary shall enter into an agreement to accept
the payment of such tax in installments if, as of the date the
individual offers to enter into the agreement--
``(1) the aggregate amount of such liability (determined
without regard to interest, penalties, additions to the tax, and
additional amounts) does not exceed $10,000;
``(2) the taxpayer (and, if such liability relates to a joint
return, the taxpayer's spouse) has not, during any of the preceding
5 taxable years--
``(A) failed to file any return of tax imposed by sub-
title A;
``(B) failed to pay any tax required to be shown on any
such return; or
``(C) entered into an installment agreement under this
section for payment of any tax imposed by subtitle A,
``(3) the Secretary determines that the taxpayer is financially
unable to pay such liability in full when due (and the taxpayer
submits such information as the Secretary may require to make such
determination);
``(4) the agreement requires full payment of such liability
within 3 years; and
``(5) the taxpayer agrees to comply with the provisions of this
title for the period such agreement is in effect.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.

e899b28fb39df489ec0d5ea79a02ead1baa049dab825837d8c8bb77a7be24afc

BRING ACTIONS.
(a) Prohibition.--No officer or employee of the United States may
request a taxpayer to waive the taxpayer's right to bring a civil
action against the United States or any officer or employee of the
United States for any action taken in connection with the internal
revenue laws.
(b) Exceptions.--Subsection (a) shall not apply in any case where--
(1) a taxpayer waives the right described in subsection (a)
knowingly and voluntarily; or
(2) the request by the officer or employee is made in person
and the taxpayer's attorney or other federally authorized tax
practitioner (within the meaning of section 7525(a)(3)(A) of the
Internal Revenue Code of 1986) is present, or the request is made
in writing to the taxpayer's attorney or other representative.
Subtitle F--Disclosures to Taxpayers

61b452e2392dbe5773299d8c908ffa0f4a726e990df03e12c92ccd2e45c3185b

(a) In General.--The Secretary of the Treasury or the Secretary's
delegate shall, as soon as practicable, but not later than 180 days
after the date of the enactment of this Act, establish procedures to
clearly alert married taxpayers of their joint and several liabilities
on all appropriate publications and instructions.
(b) Right To Limit Liability.--The procedures under subsection (a)
shall include requirements that notice of an individual's right to
relief under section 6015 of the Internal Revenue Code of 1986 shall be
included in the statement required by section 6227 of the Omnibus
Taxpayer Bill of Rights (Internal Revenue Service Publication No. 1)
and in any collection-related notices.

7c447fa8d764c7342c6833e4d699544a05be1a043fd4c7a20f7613feec50cf73

INTERNAL REVENUE SERVICE.
The Secretary of the Treasury or the Secretary's delegate shall, as
soon as practicable, but not later than 180 days after the date of the
enactment of this Act, revise the statement required by section 6227 of
the Omnibus Taxpayer Bill of Rights (Internal Revenue Service
Publication No. 1) to more clearly inform taxpayers of their rights--
(1) to be represented at interviews with the Internal Revenue
Service by any person authorized to practice before the Internal
Revenue Service; and
(2) to suspend an interview pursuant to section 7521(b)(2) of
the Internal Revenue Code of 1986.

abc1ec344be9a65416f02e1cce3280aa1a843b29b107c83979c43d648da04fba

(a) In General.--The Secretary of the Treasury or the Secretary's
delegate shall, as soon as practicable, but not later than 180 days
after the date of the enactment of this Act, incorporate into the
statement required by section 6227 of the Omnibus Taxpayer Bill of
Rights (Internal Revenue Service Publication No. 1) a statement which
sets forth in simple and nontechnical terms the criteria and procedures
for selecting taxpayers for examination. Such statement shall not
include any information the disclosure of which would be detrimental to
law enforcement, but shall specify the general procedures used by the
Internal Revenue Service, including whether taxpayers are selected for
examination on the basis of information available in the media or on
the basis of information provided to the Internal Revenue Service by
informants.
(b) Transmission to Committees of Congress.--The Secretary shall
transmit drafts of the statement required under subsection (a) (or
proposed revisions to any such statement) to the Committee on Ways and
Means of the House of Representatives and the Committee on Finance of
the Senate on the same day.

aace9650c7813109a1d8ef1e38f96662b635caa05bcb04db8df9c27f654ec8fc

The Secretary of the Treasury or the Secretary's delegate shall, as
soon as practicable, but not later than 180 days after the date of the
enactment of this Act, include with any first letter of proposed
deficiency which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals an explanation
of the entire process from examination through collection with respect
to such proposed deficiency, including the assistance available to the
taxpayer from the National Taxpayer Advocate at various points in the
process.

718e71af73418a800dc8446a85e449e45f6148c5c0b622841588c65667d89dd3

(a) In General.--Section 6402 (relating to authority to make
credits or refunds) is amended by adding at the end the following new
subsection:
``(j) Explanation of Reason for Refund Disallowance.--In the case
of a disallowance of a claim for refund, the Secretary shall provide
the taxpayer with an explanation for such disallowance.''.
(b) Effective Date.--The amendment made by this section shall apply
to disallowances after the 180th day after the date of the enactment of
this Act.

7295fbc9ca771c60b2ad9489f7c8e9c78ce4ed401e9304ba8c69d1ecdd31fd38

The Secretary of the Treasury or the Secretary's delegate shall,
beginning not later than July 1, 2000, provide each taxpayer who has an
installment agreement in effect under section 6159 of the Internal
Revenue Code of 1986 an annual statement setting forth the initial
balance at the beginning of the year, the payments made during the
year, and the remaining balance as of the end of the year.

94c93e2a35fc17586a56064b1de724967014ee4320c09ba6cb69158fd777698a

(a) In General.--Section 6231(a)(7) (defining tax matters partner)
is amended by adding at the end the following new sentence: ``The
Secretary shall, within 30 days of selecting a tax matters partner
under the preceding sentence, notify all partners required to receive
notice under section 6223(a) of the name and address of the person
selected.''.
(b) Effective Date.--The amendment made by this section shall apply
to selections of tax matters partners made by the Secretary of the
Treasury after the date of the enactment of this Act.

bd728535e544a01181470ca173821f50e9d2befcb3e82f677317b6262ce29cf3

The Secretary of the Treasury or the Secretary's delegate shall
ensure that any instructions booklet accompanying an individual Federal
income tax return form (including forms 1040, 1040A, 1040EZ, and any
similar or successor forms) shall include, in clear language, in
conspicuous print, and in a conspicuous place, a concise description of
the conditions under which return information may be disclosed to any
party outside the Internal Revenue Service, including disclosure to any
State or agency, body, or commission (or legal representative) thereof.

73da23d45a68b18733092d7e26189fc4969e1675b24b5d55e8877911bdba7b3d

(a) In General.--Section 6110(b)(1) (defining written
determination) is amended by striking ``or technical advice
memorandum'' and inserting ``technical advice memorandum, or Chief
Counsel advice''.
(b) Chief Counsel Advice.--Section 6110 (relating to public
inspection of written determinations) is amended by redesignating
subsections (i), (j), (k), and (l) as subsections (j), (k), (l), and
(m), respectively, and by inserting after subsection (h) the following
new subsection:
``(i) Special Rules for Disclosure of Chief Counsel Advice.--
``(1) Chief counsel advice defined.--
``(A) In general.--For purposes of this section, the term
`Chief Counsel advice' means written advice or instruction,
under whatever name or designation, prepared by any national
office component of the Office of Chief Counsel which--
``(i) is issued to field or service center employees of
the Service or regional or district employees of the Office
of Chief Counsel; and
``(ii) conveys--
``(I) any legal interpretation of a revenue
provision;
``(II) any Internal Revenue Service or Office of
Chief Counsel position or policy concerning a revenue
provision; or
``(III) any legal interpretation of State law,
foreign law, or other Federal law relating to the
assessment or collection of any liability under a
revenue provision.
``(B) Revenue provision defined.--For purposes of
subparagraph (A), the term `revenue provision' means any
existing or former internal revenue law, regulation, revenue
ruling, revenue procedure, other published or unpublished
guidance, or tax treaty, either in general or as applied to
specific taxpayers or groups of specific taxpayers.
``(2) Additional documents treated as chief counsel advice.--
The Secretary may by regulation provide that this section shall
apply to any advice or instruction prepared and issued by the
Office of Chief Counsel which is not described in paragraph (1).
``(3) Deletions for chief counsel advice.--In the case of Chief
Counsel advice open to public inspection pursuant to this section--
``(A) paragraphs (2) through (7) of subsection (c) shall
not apply, but
``(B) the Secretary may make deletions of material in
accordance with subsections (b) and (c) of section 552 of title
5, United States Code, except that in applying subsection
(b)(3) of such section, no statutory provision of this title
shall be taken into account.
``(4) Notice of intention to disclose.--
``(A) Nontaxpayer-specific chief counsel advice.--In the
case of Chief Counsel advice which is written without reference
to a specific taxpayer or group of specific taxpayers--
``(i) subsection (f)(1) shall not apply; and
``(ii) the Secretary shall, within 60 days after the
issuance of the Chief Counsel advice, complete any
deletions described in subsection (c)(1) or paragraph (3)
and make the Chief Counsel advice, as so edited, open for
public inspection.
``(B) Taxpayer-specific chief counsel advice.--In the case
of Chief Counsel advice which is written with respect to a
specific taxpayer or group of specific taxpayers, the Secretary
shall, within 60 days after the issuance of the Chief Counsel
advice, mail the notice required by subsection (f)(1) to each
such taxpayer. The notice shall include a copy of the Chief
Counsel advice on which is indicated the information that the
Secretary proposes to delete pursuant to subsection (c)(1). The
Secretary may also delete from the copy of the text of the
Chief Counsel advice any of the information described in
paragraph (3), and shall delete the names, addresses, and other
identifying details of taxpayers other than the person to whom
the advice pertains, except that the Secretary shall not delete
from the copy of the Chief Counsel advice that is furnished to
the taxpayer any information of which that taxpayer was the
source.''.
(c) Conforming Amendments.--
(1) Section 6110(f)(1) is amended by striking ``The Secretary''
and inserting ``Except as otherwise provided by subsection (i), the
Secretary''.
(2) Paragraphs (1)(B) and (2) of section 6110(j)(1), as
redesignated by this section, are amended by striking ``subsection
(g)'' each place it appears and inserting ``subsection (g) or
(i)(4)(B)''.
(3) Section 6110(k)(1)(B), as so redesignated, is amended by
striking ``subsection (c)'' and inserting ``subsection (c)(1) or
(i)(3)''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to any
Chief Counsel advice issued more than 90 days after the date of the
enactment of this Act.
(2) Transition rules.--The amendments made by this section
shall apply to any Chief Counsel advice issued after December 31,
1985, and before the 91st day after the date of the enactment of
this Act by the offices of the associate chief counsel for
domestic, employee benefits and exempt organizations, and
international, except that any such Chief Counsel advice shall be
treated as made available on a timely basis if such advice is made
available for public inspection not later than the following dates:
(A) One year after the date of the enactment of this Act,
in the case of all litigation guideline memoranda, service
center advice, tax litigation bulletins, criminal tax
bulletins, and general litigation bulletins.
(B) Eighteen months after such date of enactment, in the
case of field service advice and technical assistance to the
field issued on or after January 1, 1994.
(C) Three years after such date of enactment, in the case
of field service advice and technical assistance to the field
issued on or after January 1, 1992, and before January 1, 1994.
(D) Six years after such date of enactment, in the case of
any other Chief Counsel advice issued after December 31, 1985.
(3) Documents treated as chief counsel advice.--If the
Secretary of the Treasury by regulation provides pursuant to
section 6110(i)(2) of the Internal Revenue Code of 1986, as added
by this section, that any additional advice or instruction issued
by the Office of Chief Counsel shall be treated as Chief Counsel
advice, such additional advice or instruction shall be made
available for public inspection pursuant to section 6110 of such
Code, as amended by this section, only in accordance with the
effective date set forth in such regulation.
(4) Chief counsel advice to be available electronically.--The
Internal Revenue Service shall make any Chief Counsel advice issued
more than 90 days after the date of the enactment of this Act and
made available for public inspection pursuant to section 6110 of
such Code, as amended by this section, also available by computer
telecommunications within 1 year after issuance.
Subtitle G--Low-Income Taxpayer Clinics

3b6d8d2b8269acceaba659ce6d8fa698615ae96e54453d2c961bc1bd4f678e16

(a) In General.--Chapter 77 (relating to miscellaneous provisions),
as amended by section 3411, is amended by adding at the end the
following new section:
``SEC. 7526. LOW-INCOME TAXPAYER CLINICS.
``(a) In General.--The Secretary may, subject to the availability
of appropriated funds, make grants to provide matching funds for the
development, expansion, or continuation of qualified low-income
taxpayer clinics.
``(b) Definitions.--For purposes of this section--
``(1) Qualified low-income taxpayer clinic.--
``(A) In general.--The term `qualified low-income taxpayer
clinic' means a clinic that--
``(i) does not charge more than a nominal fee for its
services (except for reimbursement of actual costs
incurred); and
``(ii)(I) represents low-income taxpayers in
controversies with the Internal Revenue Service; or
``(II) operates programs to inform individuals for whom
English is a second language about their rights and
responsibilities under this title.
``(B) Representation of low-income taxpayers.--A clinic
meets the requirements of subparagraph (A)(ii)(I) if--
``(i) at least 90 percent of the taxpayers represented
by the clinic have incomes which do not exceed 250 percent
of the poverty level, as determined in accordance with
criteria established by the Director of the Office of
Management and Budget; and
``(ii) the amount in controversy for any taxable year
generally does not exceed the amount specified in section
7463.
``(2) Clinic.--The term `clinic' includes--
``(A) a clinical program at an accredited law, business, or
accounting school in which students represent low-income
taxpayers in controversies arising under this title; and
``(B) an organization described in section 501(c) and
exempt from tax under section 501(a) which satisfies the
requirements of paragraph (1) through representation of
taxpayers or referral of taxpayers to qualified
representatives.
``(3) Qualified representative.--The term `qualified
representative' means any individual (whether or not an attorney)
who is authorized to practice before the Internal Revenue Service
or the applicable court.
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more than
$6,000,000 per year (exclusive of costs of administering the
program) to grants under this section.
``(2) Limitation on annual grants to a clinic.--The aggregate
amount of grants which may be made under this section to a clinic
for a year shall not exceed $100,000.
``(3) Multi-year grants.--Upon application of a qualified low-
income taxpayer clinic, the Secretary is authorized to award a
multi-year grant not to exceed 3 years.
``(4) Criteria for awards.--In determining whether to make a
grant under this section, the Secretary shall consider--
``(A) the numbers of taxpayers who will be served by the
clinic, including the number of taxpayers in the geographical
area for whom English is a second language;
``(B) the existence of other low-income taxpayer clinics
serving the same population;
``(C) the quality of the program offered by the low-income
taxpayer clinic, including the qualifications of its
administrators and qualified representatives, and its record,
if any, in providing service to low-income taxpayers; and
``(D) alternative funding sources available to the clinic,
including amounts received from other grants and contributions,
and the endowment and resources of the institution sponsoring
the clinic.
``(5) Requirement of matching funds.--A low-income taxpayer
clinic must provide matching funds on a dollar-for-dollar basis for
all grants provided under this section. Matching funds may
include--
``(A) the salary (including fringe benefits) of individuals
performing services for the clinic; and
``(B) the cost of equipment used in the clinic.
Indirect expenses, including general overhead of the institution
sponsoring the clinic, shall not be counted as matching funds.''.
(b) Clerical Amendment.--The table of sections for chapter 77, as
amended by section 3411, is amended by adding at the end the following
new item:
``Sec. 7526. Low-income taxpayer clinics.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
Subtitle H--Other Matters

6487c0546716f6dbbed5cd51779b37060813cbb76d3e33f2673c4c4d2e3b45aa

In collecting data for the report required under section 1211 of
the Taxpayer Bill of Rights 2 (Public Law 104-168), the Secretary of
the Treasury or the Secretary's delegate shall, not later than January
1, 2000, maintain records of taxpayer complaints of misconduct by
Internal Revenue Service employees on an individual employee basis.

82e0045ee480d21b8efddbaa8f1730c542034ec7d58fac7688be5355aa4e53ad

(a) In General.--Subsection (l) of section 6103 (relating to
confidentiality and disclosure of returns and return information) is
amended by adding at the end the following new paragraph:
``(17) Disclosure to national archives and records
administration.--The Secretary shall, upon written request from the
Archivist of the United States, disclose or authorize the
disclosure of returns and return information to officers and
employees of the National Archives and Records Administration for
purposes of, and only to the extent necessary in, the appraisal of
records for destruction or retention. No such officer or employee
shall, except to the extent authorized by subsection (f), (i)(7),
or (p), disclose any return or return information disclosed under
the preceding sentence to any person other than to the Secretary,
or to another officer or employee of the National Archives and
Records Administration whose official duties require such
disclosure for purposes of such appraisal.''.
(b) Conforming Amendments.--Section 6103(p) is amended--
(1) in paragraph (3)(A), by striking ``or (16)'' and inserting
``(16), or (17)'';
(2) in paragraph (4), by striking ``or (14)'' and inserting ``,
(14), or (17)'' in the matter preceding subparagraph (A); and
(3) in paragraph (4)(F)(ii), by striking ``or (15)'' and
inserting ``, (15), or (17)''.
(c) Effective Date.--The amendments made by this section shall
apply to requests made by the Archivist of the United States after the
date of the enactment of this Act.

cfe32c8e82a0de60ac787dcdfe7762db52be8450473ac073d534efeb0ed46c5d

The Secretary of the Treasury or the Secretary's delegate shall
establish such rules, regulations, and procedures as are necessary to
allow payment of taxes by check or money order made payable to the
United States Treasury.

9d05066ae5809fe9239a55baa1844dff0e702a2de484cecbeb4c32efa8afe9a2

MAKING OF ELECTIONS.
Subsection (d) of section 7805 is amended by striking ``by
regulations or forms''.

251bb4678befb7dc6047bcbc03259ba37a59cec9658bcc1e39999dee8e30097e

(a) Notice.--The Secretary of the Treasury or the Secretary's
delegate shall provide that--
(1) any manually generated correspondence received by a
taxpayer from the Internal Revenue Service shall include in a
prominent manner the name, telephone number, and unique identifying
number of an Internal Revenue Service employee the taxpayer may
contact with respect to the correspondence;
(2) any other correspondence or notice received by a taxpayer
from the Internal Revenue Service shall include in a prominent
manner a telephone number that the taxpayer may contact; and
(3) an Internal Revenue Service employee shall give a taxpayer
during a telephone or personal contact the employee's name and
unique identifying number.
(b) Single Contact.--The Secretary of the Treasury or the
Secretary's delegate shall develop a procedure under which, to the
extent practicable and if advantageous to the taxpayer, one Internal
Revenue Service employee shall be assigned to handle a taxpayer's
matter until it is resolved.
(c) Telephone Helpline in Spanish.--The Secretary of the Treasury
or the Secretary's delegate shall provide, in appropriate
circumstances, that taxpayer questions on telephone helplines of the
Internal Revenue Service are answered in Spanish.
(d) Other Telephone Helpline Options.--The Secretary of the
Treasury or the Secretary's delegate shall provide, in appropriate
circumstances, on telephone helplines of the Internal Revenue Service
an option for any taxpayer to talk to an Internal Revenue Service
employee during normal business hours. The person shall direct phone
questions of the taxpayer to other Internal Revenue Service personnel
who can provide assistance to the taxpayer.
(e) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, this section shall take effect 60 days after the date
of the enactment of this Act.
(2) Subsection (c).--Subsection (c) shall take effect on
January 1, 2000.
(3) Subsection (d).--Subsection (d) shall take effect on
January 1, 2000.
(4) Unique identifying number.--Any requirement under this
section to provide a unique identifying number shall take effect 6
months after the date of the enactment of this Act.

417ce113e1b56a087d6364c53e97af36a73cea2b06f1dcc943b1dd927e56cf35

(a) In General.--Any employee of the Internal Revenue Service may
use a pseudonym only if--
(1) adequate justification for the use of a pseudonym is
provided by the employee, including protection of personal safety;
and
(2) such use is approved by the employee's supervisor before
the pseudonym is used.
(b) Effective Date.--Subsection (a) shall apply to requests made
after the date of the enactment of this Act.

7c7be3419dda8e41ab3fc429e766b6f6df54921eb44f80e0fae88bbd301b9dac

(a) Prohibition.--The officers and employees of the Internal
Revenue Service--
(1) shall not designate taxpayers as illegal tax protesters (or
any similar designation); and
(2) in the case of any such designation made on or before the
date of the enactment of this Act--
(A) shall remove such designation from the individual
master file; and
(B) shall disregard any such designation not located in the
individual master file.
(b) Designation of Nonfilers Allowed.--An officer or employee of
the Internal Revenue Service may designate any appropriate taxpayer as
a nonfiler, but shall remove such designation once the taxpayer has
filed income tax returns for 2 consecutive taxable years and paid all
taxes shown on such returns.
(c) Effective Date.--The provisions of this section shall take
effect on the date of the enactment of this Act, except that the
removal of any designation under subsection (a)(2)(A) shall not be
required to begin before January 1, 1999.

adcca0f7920d029b583b51481d0c04d235a6f54670cdeee23c41aa382d28989b

WHISTLEBLOWERS.
(a) In General.--Section 6103(f) (relating to disclosure to
committees of Congress) is amended by adding at the end the following
new paragraph:
``(5) Disclosure by whistleblower.--Any person who otherwise
has or had access to any return or return information under this
section may disclose such return or return information to a
committee referred to in paragraph (1) or any individual authorized
to receive or inspect information under paragraph (4)(A) if such
person believes such return or return information may relate to
possible misconduct, maladministration, or taxpayer abuse.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.

70870c4fbcbde9a6e1cc261206f8a16ffec72e1ded2564624f776d5f21f1d568

AND ADDRESSES.
The Secretary of the Treasury or the Secretary's delegate shall, as
soon as practicable, provide that the local telephone numbers and
addresses of Internal Revenue Service offices located in any particular
area be listed in a telephone book for that area.

6b4362ec6448dda429c6d3f8f771e63f5c56b9d716f05ece852ccff4b9e61a43

(a) In General.--The last sentence of section 6109(a) (relating to
identifying numbers) is amended by striking ``For purposes of this
subsection'' and inserting ``For purposes of paragraphs (1), (2), and
(3)''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.

a47c564655af34d1617039cd079c807414bb0fffcfe782c9e00ff8868880c3f1

OBLIGATIONS AGAINST OVERPAYMENTS.
(a) In General.--Section 6402 (relating to authority to make
credits or refunds), as amended by section 3505, is amended by
redesignating subsections (e) through (j) as subsections (f) through
(k), respectively, and by inserting after subsection (d) the following
new subsection:
``(e) Collection of Past-Due, Legally Enforceable State Income Tax
Obligations.--
``(1) In general.--Upon receiving notice from any State that a
named person owes a past-due, legally enforceable State income tax
obligation to such State, the Secretary shall, under such
conditions as may be prescribed by the Secretary--
``(A) reduce the amount of any overpayment payable to such
person by the amount of such State income tax obligation;
``(B) pay the amount by which such overpayment is reduced
under subparagraph (A) to such State and notify such State of
such person's name, taxpayer identification number, address,
and the amount collected; and
``(C) notify the person making such overpayment that the
overpayment has been reduced by an amount necessary to satisfy
a past-due, legally enforceable State income tax obligation.
If an offset is made pursuant to a joint return, the notice under
subparagraph (B) shall include the names, taxpayer identification
numbers, and addresses of each person filing such return.
``(2) Offset permitted only against residents of state seeking
offset.--Paragraph (1) shall apply to an overpayment by any person
for a taxable year only if the address shown on the Federal return
for such taxable year of the overpayment is an address within the
State seeking the offset.
``(3) Priorities for offset.--Any overpayment by a person shall
be reduced pursuant to this subsection--
``(A) after such overpayment is reduced pursuant to--
``(i) subsection (a) with respect to any liability for
any internal revenue tax on the part of the person who made
the overpayment;
``(ii) subsection (c) with respect to past-due support;
and
``(iii) subsection (d) with respect to any past-due,
legally enforceable debt owed to a Federal agency; and
``(B) before such overpayment is credited to the future
liability for any Federal internal revenue tax of such person
pursuant to subsection (b).
If the Secretary receives notice from one or more agencies of the
State of more than one debt subject to paragraph (1) that is owed
by such person to such an agency, any overpayment by such person
shall be applied against such debts in the order in which such
debts accrued.
``(4) Notice; consideration of evidence.--No State may take
action under this subsection until such State--
``(A) notifies by certified mail with return receipt the
person owing the past-due State income tax liability that the
State proposes to take action pursuant to this section;
``(B) gives such person at least 60 days to present
evidence that all or part of such liability is not past-due or
not legally enforceable;
``(C) considers any evidence presented by such person and
determines that an amount of such debt is past-due and legally
enforceable; and
``(D) satisfies such other conditions as the Secretary may
prescribe to ensure that the determination made under
subparagraph (C) is valid and that the State has made
reasonable efforts to obtain payment of such State income tax
obligation.
``(5) Past-due, legally enforceable state income tax
obligation.--For purposes of this subsection, the term `past-due,
legally enforceable State income tax obligation' means a debt--
``(A)(i) which resulted from--
``(I) a judgment rendered by a court of competent
jurisdiction which has determined an amount of State income
tax to be due; or
``(II) a determination after an administrative hearing
which has determined an amount of State income tax to be
due; and
``(ii) which is no longer subject to judicial review; or
``(B) which resulted from a State income tax which has been
assessed but not collected, the time for redetermination of
which has expired, and which has not been delinquent for more
than 10 years.
For purposes of this paragraph, the term `State income tax'
includes any local income tax administered by the chief tax
administration agency of the State.
``(6) Regulations.--The Secretary shall issue regulations
prescribing the time and manner in which States must submit notices
of past-due, legally enforceable State income tax obligations and
the necessary information that must be contained in or accompany
such notices. The regulations shall specify the types of State
income taxes and the minimum amount of debt to which the reduction
procedure established by paragraph (1) may be applied. The
regulations may require States to pay a fee to reimburse the
Secretary for the cost of applying such procedure. Any fee paid to
the Secretary pursuant to the preceding sentence shall be used to
reimburse appropriations which bore all or part of the cost of
applying such procedure.
``(7) Erroneous payment to state.--Any State receiving notice
from the Secretary that an erroneous payment has been made to such
State under paragraph (1) shall pay promptly to the Secretary, in
accordance with such regulations as the Secretary may prescribe, an
amount equal to the amount of such erroneous payment (without
regard to whether any other amounts payable to such State under
such paragraph have been paid to such State).''.
(b) Disclosure of Certain Information to States Requesting Refund
Offsets for Past-Due, Legally Enforceable State Income Tax
Obligations.--
(1) Paragraph (10) of section 6103(l) is amended by striking
``(c) or (d)'' each place it appears and inserting ``(c), (d), or
(e)''.
(2) The heading for paragraph (10) is amended by striking
``section 6402 (c) or 6402 (d)'' and inserting ``subsection (c),
(d), or (e) of section 6402''.
(c) Conforming Amendments.--
(1) Subsection (a) of section 6402 is amended by striking ``(c)
and (d)'' and inserting ``(c), (d), and (e)''.
(2) Paragraph (2) of section 6402(d) is amended by striking
``and before such overpayment'' and inserting ``and before such
overpayment is reduced pursuant to subsection (e) and before such
overpayment''.
(3) Subsection (f) of section 6402, as redesignated by
subsection (a), is amended--
(A) by striking ``(c) or (d)'' and inserting ``(c), (d), or
(e)''; and
(B) by striking ``Federal agency'' and inserting ``Federal
agency or State''.
(4) Subsection (h) of section 6402, as redesignated by
subsection (a), is amended by striking ``subsection (c)'' and
inserting ``subsection (c) or (e)''.
(d) Effective Date.--The amendments made by this section (other
than subsection (d)) shall apply to refunds payable under section 6402
of the Internal Revenue Code of 1986 after December 31, 1999.

9f9166180e4e62dac3ae834529877c221d1cb6bb7c496e2fcb828183fe1d9b76

CREDIT.
(a) Amounts to be Reported.--Subparagraph (C) of section
6050S(b)(2) is amended--
(1) by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively, and by inserting after clause (i) the
following new clause:
``(ii) the amount of any grant received by such
individual for payment of costs of attendance and processed
by the person making such return during such calendar
year,'';
(2) in clause (iii) (as so redesignated), by inserting ``by the
person making such return'' after ``year''; and
(3) in clause (iv) (as so redesignated), by inserting ``and''
at the end.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 6050S(d) is amended by striking
``aggregate''.
(2) Subsection (e) of section 6050S is amended by inserting
``(without regard to subsection (g)(2) thereof)'' after ``section
25A''.
(c) Effective Date.--The amendments made by this section shall
apply to returns required to be filed with respect to taxable years
beginning after December 31, 1998.
Subtitle I--Studies

ca02663eb1721e1263767bdd0147e781908e004f45c25ca102232207ea513b0e

The Joint Committee on Taxation and the Secretary of the Treasury
shall each conduct a separate study--
(1) reviewing the administration and implementation by the
Internal Revenue Service of the interest and penalty provisions of
the Internal Revenue Code of 1986 (including the penalty reform
provisions of the Omnibus Budget Reconciliation Act of 1989); and
(2) making any legislative and administrative recommendations
the Committee or the Secretary deems appropriate to simplify
penalty or interest administration and reduce taxpayer burden.
Such studies shall be submitted to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the Senate
not later than 1 year after the date of the enactment of this Act.

f6e664758c622581d2fd91c5d387fa9aaa952faec60a68eb2fb867151d859ee5

The Joint Committee on Taxation and the Secretary of the Treasury
shall each conduct a separate study of the scope and use of provisions
regarding taxpayer confidentiality, and shall report the findings of
such study, together with such recommendations as the Committee or the
Secretary deems appropriate, to the Congress not later than 18 months
after the date of the enactment of this Act. Such study shall examine--
(1) the present protections for taxpayer privacy;
(2) any need for third parties to use tax return information;
(3) whether greater levels of voluntary compliance may be
achieved by allowing the public to know who is legally required to
file tax returns, but does not file tax returns;
(4) the interrelationship of the taxpayer confidentiality
provisions in the Internal Revenue Code of 1986 with such
provisions in other Federal law, including section 552a of title 5,
United States Code (commonly known as the ``Freedom of Information
Act'');
(5) the impact on taxpayer privacy of the sharing of income tax
return information for purposes of enforcement of State and local
tax laws other than income tax laws, and including the impact on
the taxpayer privacy intended to be protected at the Federal,
State, and local levels under Public Law 105-35, the Taxpayer
Browsing Protection Act of 1997; and
(6) whether the public interest would be served by greater
disclosure of information relating to tax exempt organizations
described in section 501 of the Internal Revenue Code of 1986.

920a68c336f3e5025c3221ca8d77271abbe0dcd2777e3bd9702f32360a4885a4

TAXPAYERS.
Not later than 1 year after the date of the enactment of this Act,
the Secretary of the Treasury and the Commissioner of Internal Revenue
shall jointly conduct a study, in consultation with the Joint Committee
on Taxation, of the noncompliance with internal revenue laws by
taxpayers (including willful noncompliance and noncompliance due to tax
law complexity or other factors) and report the findings of such study
to Congress.

375e18399afd7202462a67d0fd0744169dd9292d2afb8f182793c336638d65c3

FRAUD.
Not later than 1 year after the date of the enactment of this Act,
the Secretary of the Treasury shall conduct a study and report to
Congress on the use of section 7623 of the Internal Revenue Code of
1986 including--
(1) an analysis of the present use of such section and the
results of such use; and
(2) any legislative or administrative recommendations regarding
the provisions of such section and its application.
Subtitle A--Oversight

928677b0b336ba929ddbf07264faf5422f85cecb79b7151deae1552e4b33ce17

(a) In General.--Section 8021 (relating to the powers of the Joint
Committee on Taxation) is amended by adding at the end the following
new subsections:
``(e) Investigations.--The Joint Committee shall review all
requests (other than requests by the chairman or ranking member of a
committee or subcommittee) for investigations of the Internal Revenue
Service by the General Accounting Office, and approve such requests
when appropriate, with a view towards eliminating overlapping
investigations, ensuring that the General Accounting Office has the
capacity to handle the investigation, and ensuring that investigations
focus on areas of primary importance to tax administration.
``(f) Relating to Joint Reviews.--
``(1) In general.--The Chief of Staff, and the staff of the
Joint Committee, shall provide such assistance as is required for
joint reviews described in paragraph (2).
``(2) Joint reviews.--Before June 1 of each calendar year after
1998 and before 2004, there shall be a joint review of the
strategic plans and budget for the Internal Revenue Service and
such other matters as the Chairman of the Joint Committee deems
appropriate. Such joint review shall be held at the call of the
Chairman of the Joint Committee and shall include two members of
the majority and one member of the minority from each of the
Committees on Finance, Appropriations, and Governmental Affairs of
the Senate, and the Committees on Ways and Means, Appropriations,
and Government Reform and Oversight of the House of
Representatives.''.
(b) Effective Dates.--
(1) Subsection (e) of section 8021 of the Internal Revenue Code
of 1986, as added by subsection (a) of this section, shall apply to
requests made after the date of the enactment of this Act.
(2) Subsection (f) of such section shall take effect on the
date of the enactment of this Act.

873ce2ba96d1a48e1cf90a461dda4d32328bb6fd4dd9429a3b3cede200e9ac13

TITLE IV

-CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

(a) In General.--Paragraph (3) of section 8022 (relating to the
duties of the Joint Committee on Taxation) is amended to read as
follows:
``(3) Reports.--
``(A) To report, from time to time, to the Committee on
Finance and the Committee on Ways and Means, and, in its
discretion, to the Senate or House of Representatives, or both,
the results of its investigations, together with such
recommendations as it may deem advisable.
``(B) Subject to amounts specifically appropriated to carry
out this subparagraph, to report, at least once each Congress,
to the Committee on Finance and the Committee on Ways and Means
on the overall state of the Federal tax system, together with
recommendations with respect to possible simplification
proposals and other matters relating to the administration of
the Federal tax system as it may deem advisable.
``(C) To report, for each calendar year after 1998 and
before 2004, to the Committees on Finance, Appropriations, and
Governmental Affairs of the Senate, and to the Committees on
Ways and Means, Appropriations, and Government Reform and
Oversight of the House of Representatives, with respect to--
``(i) strategic and business plans for the Internal
Revenue Service;
``(ii) progress of the Internal Revenue Service in
meeting its objectives;
``(iii) the budget for the Internal Revenue Service and
whether it supports its objectives;
``(iv) progress of the Internal Revenue Service in
improving taxpayer service and compliance;
``(v) progress of the Internal Revenue Service on
technology modernization; and
``(vi) the annual filing season.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
Subtitle B--Century Date Change

620e66ba4018ad0f5e4b5485a22edb78094d3dafa95621c6fff382e3c5cab0e9

It is the sense of the Congress that--
(1) the Internal Revenue Service should place a high priority
on resolving the century date change computing problems; and
(2) the Internal Revenue Service efforts to resolve the century
date change computing problems should be funded fully to provide
for certain resolution of such problems.
Subtitle C--Tax Law Complexity

b9a25915744e3b5d1c8329b50bc8998fe219c625ee737ac21d0c531b9b8dcab6

It is the sense of the Congress that the Internal Revenue Service
should provide Congress with an independent view of tax administration,
and that during the legislative process, the tax writing committees of
Congress should hear from front-line technical experts at the Internal
Revenue Service with respect to the administrability of pending
amendments to the Internal Revenue Code of 1986.

fcd86cdc23ab4fbb5730890442f7c338b327d4b4614209a39af168e61893d9f1

(a) Commissioner Study.--
(1) In general.--The Commissioner of Internal Revenue shall
conduct each year after 1998 an analysis of the sources of
complexity in administration of the Federal tax laws. Such analysis
may include an analysis of--
(A) questions frequently asked by taxpayers with respect to
return filing;
(B) common errors made by taxpayers in filling out their
returns;
(C) areas of law which frequently result in disagreements
between taxpayers and the Internal Revenue Service;
(D) major areas of law in which there is no (or incomplete)
published guidance or in which the law is uncertain;
(E) areas in which revenue officers make frequent errors
interpreting or applying the law;
(F) the impact of recent legislation on complexity; and
(G) forms supplied by the Internal Revenue Service,
including the time it takes for taxpayers to complete and
review forms, the number of taxpayers who use each form, and
how recent legislation has affected the time it takes to
complete and review forms.
(2) Report.--The Commissioner shall not later than March 1 of
each year report the results of the analysis conducted under
paragraph (1) for the preceding year to the Committee on Ways and
Means of the House of Representatives and the Committee on Finance
of the Senate. The report shall include any recommendations--
(A) for reducing the complexity of the administration of
Federal tax laws; and
(B) for repeal or modification of any provision the
Commissioner believes adds undue and unnecessary complexity to
the administration of the Federal tax laws.
(b) Analysis to Accompany Certain Legislation.--
(1) In general.--The Joint Committee on Taxation, in
consultation with the Internal Revenue Service and the Department
of the Treasury, shall include a tax complexity analysis in each
report for legislation, or provide such analysis to members of the
committee reporting the legislation as soon as practicable after
the report is filed, if--
(A) such legislation is reported by the Committee on
Finance in the Senate, the Committee on Ways and Means of the
House of Representatives, or any committee of conference; and
(B) such legislation includes a provision which would
directly or indirectly amend the Internal Revenue Code of 1986
and which has widespread applicability to individuals or small
businesses.
(2) Tax complexity analysis.--For purposes of this subsection,
the term ``tax complexity analysis'' means, with respect to any
legislation, a report on the complexity and administrative
difficulties of each provision described in paragraph (1)(B)
which--
(A) includes--
(i) an estimate of the number of taxpayers affected by
the provision; and
(ii) if applicable, the income level of taxpayers
affected by the provision; and
(B) should include (if determinable)--
(i) the extent to which tax forms supplied by the
Internal Revenue Service would require revision and whether
any new forms would be required;
(ii) the extent to which taxpayers would be required to
keep additional records;
(iii) the estimated cost to taxpayers to comply with
the provision;
(iv) the extent to which enactment of the provision
would require the Internal Revenue Service to develop or
modify regulatory guidance;
(v) the extent to which the provision may result in
disagreements between taxpayers and the Internal Revenue
Service; and
(vi) any expected impact on the Internal Revenue
Service from the provision (including the impact on
internal training, revision of the Internal Revenue Manual,
reprogramming of computers, and the extent to which the
Internal Revenue Service would be required to divert or
redirect resources in response to the provision).
(3) Legislation subject to point of order in house of
representatives.--
(A) Legislation reported by committee on ways and means.--
Clause 2(l) of rule XI of the Rules of the House of
Representatives is amended by adding at the end the following
new subparagraph:
``(8) The report of the Committee on Ways and Means on any bill or
joint resolution containing any provision amending the Internal Revenue
Code of 1986 shall include a Tax Complexity Analysis prepared by the
Joint Committee on Taxation in accordance with section 4022(b) of the
Internal Revenue Service Restructuring and Reform Act of 1998 unless
the Committee on Ways and Means causes to have such Analysis printed in
the Congressional Record prior to the consideration of the bill or
joint resolution.''.
(B) Conference reports.--Rule XXVIII of the Rules of the
House of Representatives is amended by adding at the end the
following new clause:
``7. It shall not be in order to consider the report of a committee
of conference which contains any provision amending the Internal
Revenue Code of 1986 unless--
``(a) the accompanying joint explanatory statement contains a
Tax Complexity Analysis prepared by the Joint Committee on Taxation
in accordance with section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998; or
``(b) such Analysis is printed in the Congressional Record
prior to the consideration of the report.''.
(C) Rules of house of representatives.--This paragraph is
enacted by the House of Representatives--
(i) as an exercise of the rulemaking power of the House
of Representatives, and as such it is deemed a part of the
Rules of the House, and it supersedes other rules only to
the extent that it is inconsistent therewith; and
(ii) with full recognition of the constitutional right
of the House to change its rules at any time, in the same
manner and to the same extent as in the case of any other
rule of the House.
(4) Effective date.--This subsection shall apply to legislation
considered on and after January 1, 1999.

e124404d622a9c678febfae41b176893a977f1dc4b01c9ce7c876373b60295e3

TEA 21 bill — HR. 2676

Other Sections

TITLE I

TITLE II

TITLE III

TITLE IV

TITLE V

TITLE VI

TITLE VII

TITLE VIII

TITLE IX

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