II
113th CONGRESS
1st Session
S. 725
IN THE SENATE OF THE UNITED STATES
April 15, 2013
Mr. Cornyn introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To provide a taxpayer bill of rights for small businesses.
Short title; table of contents
Short title
This Act may be cited
as the
Small Business Taxpayer Bill of
Rights Act of 2013
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Modification of standards for awarding of costs and certain fees.
Sec. 3. Civil damages allowed for reckless or intentional disregard of internal revenue laws.
Sec. 4. Modifications relating to certain offenses by officers and employees in connection with revenue laws.
Sec. 5. Modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information.
Sec. 6. Interest abatement reviews.
Sec. 7. Ban on ex parte discussions.
Sec. 8. Alternative dispute resolution procedures.
Sec. 9. Extension of time for contesting IRS levy.
Sec. 10. Waiver of installment agreement fee.
Sec. 11. Suspension of running of period for filing petition of spousal relief and collection cases.
Sec. 12. Venue for appeal of spousal relief and collection cases.
Sec. 13. Increase in monetary penalties for certain unauthorized disclosures of information.
Sec. 14. De novo tax court review of claims for equitable innocent spouse relief.
Sec. 15. Ban on raising new issues on appeal.
Modification of standards for awarding of costs and certain fees
Small businesses eligible without regard to net worth
Subparagraph (D)
of section 7430(c)(4) of the Internal Revenue Code of 1986 is amended by
striking and
at the end of clause (i), by striking the period at
the end of clause (ii) and inserting and
, and by adding at the
end the following new clause:
in the case of an eligible small business, the net worth limitation in clause (ii) of such section shall not apply.
.
Eligible small business
Paragraph (4) of section 7430(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
Eligible small business
For purposes of subparagraph (D)(iii), the term eligible small business means, with respect to any proceeding commenced in a taxable year—
a corporation the stock of which is not publicly traded,
a partnership, or
a sole proprietorship,
.
Effective date
The amendments made by this section shall apply to proceedings commenced after the date of the enactment of this Act.
Civil damages allowed for reckless or intentional disregard of internal revenue laws
Increase in amount of damages
Section 7433(b) of the Internal Revenue Code of
1986 is amended by striking $1,000,000 ($100,000, in the case of
negligence)
and inserting $3,000,000 ($300,000, in the case of
negligence)
.
Extension of time To bring action
Section 7433(d)(3) of the Internal Revenue
Code of 1986 is amended by striking 2 years
and inserting
5 years
.
Effective date
The amendments made by this section shall apply to actions of employees of the Internal Revenue Service after the date of the enactment of this Act.
Modifications relating to certain offenses by officers and employees in connection with revenue laws
Increase in penalty
Section 7214 of the Internal Revenue Code of 1986 is amended—
by striking
$10,000
in subsection (a) and inserting $25,000
,
and
by striking
$5,000
in subsection (b) and inserting
$10,000
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.
Modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information
Increase in amount of damages
Subparagraph (A) of section 7431(c)(1) of the
Internal Revenue Code of 1986 is amended by striking $1,000
and
inserting $10,000
.
Effective date
The amendment made by this section shall apply to inspections and disclosure occurring on and after the date of the enactment of this Act.
Interest abatement reviews
Filing period for interest abatement cases
In general
Subsection (h) of section 6404 of the Internal Revenue Code of 1986 is amended—
by striking
Review of
denial
in the heading and inserting
Judicial
review
, and
by striking
‘if such action is brought’
and all that follows in paragraph
(1) and inserting
if such action is brought—
at any time after the earlier of—
the date of the mailing of the Secretary's final determination not to abate such interest, or
the date which is 180 days after the date of the filing with the Secretary (in such form as the Secretary may prescribe) of a claim for abatement under this section, and
not later than the date which is 180 days after the date described in subparagraph (A)(i).
.
Effective date
The amendments made by this subsection shall apply to claims for abatement of interest filed with the Secretary after the date of the enactment of this Act.
Small tax case election for interest abatement cases
In general
Subsection (f) of section 7463 of the Internal Revenue Code of 1986 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:
a petition to the Tax court under section 6404(h) in which the amount of interest abatement sought does not exceed $50,000.
.
Effective date
The amendments made by this subsection shall apply to—
cases pending as of the day after the date of the enactment of this Act, and
cases commenced after such date of enactment.
Ban on ex parte discussions
In general
Notwithstanding section 1001(a)(4) of the Internal Revenue Service Restructuring and Reform Act of 1998, the Internal Revenue Service shall prohibit any ex parte communications between officers in the Internal Revenue Service Office of Appeals and other Internal Revenue Service employees with respect to any matter pending before such officers.
Termination of employment for misconduct
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 prohibited under subsection (a) in the performance of the employee’s official duties. Such termination shall be a removal for cause on charges of misconduct.
Determination of commissioner
In general
The Commissioner of Internal Revenue may take a personnel action other than termination for an act prohibited under subsection (a).
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).
No appeal
Any determination of the Commissioner of Internal Revenue under this subsection may not be appealed in any administrative or judicial proceeding.
TIGTA reporting of termination or mitigation
Section 7803(d)(1)(E) of the
Internal Revenue Code of 1986 is amended by inserting or section 7 of
the Small Business Taxpayer Bill of Rights
Act of 2013
after 1998
.
Alternative dispute resolution procedures
In general
Section 7123 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Availability of dispute resolutions
In general
The procedures prescribed under subsection (b)(1) and the pilot program established under subsection (b)(2) shall provide that a taxpayer may request mediation or arbitration in any case unless the Secretary has specifically excluded the type of issue involved in such case or the class of cases to which such case belongs as not appropriate for resolution under such subsection. The Secretary shall make any determination that excludes a type of issue or a class of cases public within 5 working days and provide an explanation for each determination.
Independent mediators
In general
The procedures prescribed under subsection (b)(1) shall provide the taxpayer an opportunity to elect to have the mediation conducted by an independent, neutral individual not employed by the Office of Appeals.
Cost and selection
In general
Any taxpayer making an election under subparagraph (A) shall be required—
to share the costs of such independent mediator equally with the Office of Appeals, and
to limit the selection of the mediator to a roster of recognized national or local neutral mediators.
Exception
Clause (i)(I) shall not apply to any taxpayer who is an individual or who was a small business in the preceding calendar year if such taxpayer had an adjusted gross income that did 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, in the taxable year preceding the request.
Small business
For purposes of clause (ii), the term small business has the meaning given such term under section 41(b)(3)(D)(iii).
Availability of process
The procedures prescribed under subsection (b)(1) and the pilot program established under subsection (b)(2) shall provide the opportunity to elect mediation or arbitration at the time when the case is first filed with the Office of Appeals and at any time before deliberations in the appeal commence.
.
Effective date
The amendment made by this section shall take effect on the date of the enactment of this Act.
Extension of time for contesting IRS levy
Extension of time for return of property subject to levy
Subsection (b) of
section 6343 of the Internal Revenue Code of 1986 is amended by striking
9 months
and inserting 3 years
.
Period of limitation on suits
Subsection (c) of section 6532 of the Internal Revenue Code of 1986 is amended—
in paragraph (1)
by striking 9 months” and inserting ‘‘3 years
, and
in paragraph (2)
by striking 9-month
and inserting 3-year
.
Effective date
The amendments made by this section shall apply to—
levies made after the date of the enactment of this Act, and
levies made on or before such date if the 9-month period has not expired under section 6343(b) of the Internal Revenue Code of 1986 (without regard to this section) as of such date.
Waiver of installment agreement fee
In general
Section 6159 of the Internal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:
Waiver of installment agreement fee
The Secretary shall waive the fees imposed on installment agreements under this section for any taxpayer with an adjusted gross income that does 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 who has agreed to make payments under the installment agreement by electronic payment through a debit instrument.
.
Effective date
The amendment made by this section shall take effect on the date of the enactment of this Act.
Suspension of running of period for filing petition of spousal relief and collection cases
Petitions for spousal relief
In general
Subsection (e) of section 6015 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Suspension of running of period for filing petition in title 11 cases
In the case of a person who is prohibited by reason of a case under title 11, United States Code, from filing a petition under paragraph (1)(A) with respect to a final determination of relief under this section, the running of the period prescribed by such paragraph for filing such a petition with respect to such final determination shall be suspended for the period during which the person is so prohibited from filing such a petition, and for 60 days thereafter.
.
Effective date
The amendment made by this subsection shall apply to petitions filed under section 6015(e) of the Internal Revenue Code of 1986 after the date of the enactment of this Act.
Collection proceedings
In general
Subsection (d) of section 6330 of the Internal Revenue Code of 1986 is amended—
by striking
appeal such determination to the Tax Court
in paragraph (1) and
inserting petition the Tax Court for review of such
determination
,
by striking
Judicial review of
determination
in the heading of paragraph (1) and
inserting
Petition for
review by Tax Court
,
by redesignating paragraph (2) as paragraph (3), and
by inserting after paragraph (1) the following new paragraph:
Suspension of running of period for filing petition in title 11 cases
In the case of a person who is prohibited by reason of a case under title 11, United States Code, from filing a petition under paragraph (1) with respect to a determination under this section, the running of the period prescribed by such subsection for filing such a petition with respect to such determination shall be suspended for the period during which the person is so prohibited from filing such a petition, and for 30 days thereafter.
.
Conforming amendment
Subsection (c) of section 6320 of such Code is amended
by striking (2)(B)
and inserting (3)(B)
.
Effective date
The amendments made by this subsection shall apply to petitions filed under section 6330 of the Internal Revenue Code of 1986 after the date of the enactment of this Act.
Venue for appeal of spousal relief and collection cases
In general
Paragraph (1) of section 7482(b) of the Internal Revenue Code of 1986 is amended—
by striking
or
at the end of subparagraph (E),
by striking the period at the end of subparagraph (F) and inserting a comma, and
by inserting after subparagraph (F) the following new subparagraphs:
in the case of a petition under section 6015(e), the legal residence of the petitioner, or
in the case of a petition under section 6320 or 6330—
the legal residence of the petitioner if the petitioner is an individual, and
the principal place of business or principal office or agency if the petitioner is an entity other than an individual.
.
Effective date
The amendments made by this section shall apply to petitions filed after the date of enactment of this Act.
Increase in monetary penalties for certain unauthorized disclosures of information
In general
Paragraphs (1), (2), (3), and (4) of section 7213(a) of
the Internal Revenue Code of 1986 are each amended by striking
$5,000
and inserting $10,000
.
Effective date
The amendments made by this section shall apply to disclosures made after the date of the enactment of this Act.
De novo tax court review of claims for equitable innocent spouse relief
In general
Subparagraph (A) of section 6015(e)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new flush sentence:
Any review of a determination by the Secretary with respect to a claim for equitable relief under subsection (f) shall be reviewed de novo by the Tax Court.
.
Effective date
The amendment made by this section shall apply to petitions filed or pending before the Tax Court on and after the date of the enactment of this Act.
Ban on raising new issues on appeal
In general
Chapter 77 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
Prohibition on Internal Revenue Service raising new issues in an internal appeal
In general
In reviewing an appeal of any determination initially made by the Internal Revenue Service, the Internal Revenue Service Office of Appeals may not consider or decide any issue that is not within the scope of the initial determination.
Certain issues deemed outside of scope of determination
For purposes of subsection (a), the following matters shall be considered to be not within the scope of a determination:
Any issue that was not raised in a notice of deficiency or an examiner's report which is the subject of the appeal.
Any deficiency in tax which was not included in the initial determination.
Any theory or justification for a tax deficiency which was not considered in the initial determination.
No inference with respect to issues raised by taxpayers
Nothing in this section shall be construed to provide any limitation in addition to any limitations in effect on the date of the enactment of this section on the right of a taxpayer to raise an issue, theory, or justification on an appeal from a determination initially made by the Internal Revenue Service that was not within the scope of the initial determination.
.
Clerical amendment
The table of sections for chapter 77 of such Code is amended by adding at the end the following new item:
Sec. 7529. Prohibition on Internal Revenue Service raising new issues in an internal appeal.
.
Effective date
The amendments made by this section shall apply to matters filed or pending with the Internal Revenue Service Office of Appeals on or after the date of the enactment of this Act.
