Taxpayer Bill of Rights 2

TABLE OF CONTENTS:

Title I: Taxpayer Advocate

Title II: Modifications to Installment Agreement Provisions

Title III: Interest

Title IV: Joint Returns

Title V: Collection Activities

Title VI: Information Returns

Title VII: Modifications to Penalty for Failure to Collect

and Pay Over Tax

Title VIII: Awarding of Costs and Certain Fees

Title IX: Other Provisions

Title X: Form Modifications; Studies

Subtitle A: Form Modifications

Subtitle B: Studies

Taxpayer Bill of Rights 2 - Title I: Taxpayer Advocate - Amends the Internal Revenue Code to establish in the Internal Revenue Service (IRS) the Office of Taxpayer Advocate, headed by the Taxpayer Advocate, to: (1) assist taxpayers in resolving problems with the IRS; (2) identify areas in which taxpayers have problems in dealings with the IRS; (3) propose changes in the administrative practices of the IRS to mitigate such problems; and (4) identify potential legislative changes which may be appropriate to mitigate such problems.

Requires the Commissioner of Internal Revenue to establish procedures requiring a formal response to all recommendations submitted to the Commissioner by the Taxpayer Advocate.

Replaces the Office of the Ombudsman with the Office of the Taxpayer Advocate.

Revises the terms of a Taxpayer Assistance Order to: (1) allow the Order to require the Secretary of the Treasury to act within a specified time period; and (2) require the Secretary to take certain actions (currently, only to cease or refrain from taking certain actions).

Title II: Modifications to Installment Agreement Provisions - Grants certain taxpayers the right to an installment agreement for the payment of tax liability less than $10,000.

Requires prior notification to taxpayers under an installment agreement to pay tax liability before altering, modifying, or terminating such an agreement. Provides for administrative review of denials of requests for, or termination of, installment agreements.

Title III: Interest - Authorizes the abatement of interest in the case of an assessment due to the unreasonable error or delay of an IRS act.

Extends from ten to 21 days the period for which interest will not be imposed after notice and demand for payment, if such payment is less than $100,000.

Title IV: Joint Returns - Allows the disclosure of collection activities to an individual requesting such information in the case of a joint return where such individual is no longer married to or resides in the same household as the other joint filer.

Removes limitations on filing a joint return after filing separate returns.

Title V: Collection Activities - Authorizes the Secretary, in certain cases, to: (1) withdraw a notice of a lien; (2) return property that has been levied upon; and (3) offer compromises in civil or criminal cases. Requires the Secretary to provide a copy of such notice of withdrawal to the taxpayer and, at the request of the taxpayer, to make reasonable efforts to notify credit reporting agencies and financial institutions of such withdrawal notice.

Requires prior notification to the taxpayer that the taxpayer is under examination and an explanation of the process, with exceptions.

Increases the dollar limit on the recovery of civil damages for unauthorized collection actions.

Revises provisions with respect to a designated summons concerning the standard of review and notice requirements for issuance.

Title VI: Information Returns - Requires payee statements to provide the phone number of the person providing payment.

Establishes civil damages for the fraudulent filing of information returns.

Requires the Secretary, in any court proceeding where a taxpayer asserts a reasonable dispute with respect to income reported on an information return filed by a third party and the taxpayer has fully cooperated with the Secretary, to present reasonable and probative information concerning such deficiency in addition to such return.

Title VII: Modifications to Penalty for Failure to Collect and Pay Over Tax - Establishes preliminary notice requirements for failure to pay tax.

Declares that a person shall not be liable for any penalty for failure to collect and pay over tax if such person: (1) is not a significant owner or highly compensated employee of the trade or business; (2) notifies the Secretary within ten days after such failure; (3) such notification was before any notice by the Secretary with respect to such failure; and (4) such failure is not a part of a plan to defraud the Government.

Directs the Secretary to: (1) disclose certain information where more than one person is liable for a penalty; and (2) ensure that IRS employees are aware of their responsibilities under the tax depository system, the circumstances under which they may be liable for penalties, and reporting responsibilities.

Exempts unpaid, volunteer board members of tax-exempt organizations who do not have actual knowledge of the failure on which such penalties are imposed from collection penalties.

Title VIII: Awarding of Costs and Certain Fees - Authorizes a taxpayer who substantially prevails on a claim to file a motion for an order requiring the disclosure of all information and copies of relevant records in the possession of the IRS regarding such taxpayer's case and the substantial justification for the position taken by the IRS.

Increases the limit on attorney fees.

Provides that any failure to agree to an extension of time for the assessment of any tax shall not be taken into account in determining whether a prevailing party has exhausted all administrative remedies.

Title IX: Other Provisions - Revises provisions on the required content of tax due, deficiency, and other notices.

Sets forth provisions regarding: (1) treatment of substitute returns under section 6651 (relating to failure to file a tax return or to pay tax); (2) prospective application of Treasury Department regulations; and (3) required notice to the taxpayer of payments that the Secretary cannot associate with any outstanding tax liability of such taxpayer.

Authorizes a taxpayer to bring a civil damage suit against the United States if any U.S. officer or employee intentionally compromises the determination or collection of any tax due from an attorney, certified public accountant (CPA), or enrolled agent representing a taxpayer in exchange for information conveyed by the taxpayer for purposes of obtaining advice concerning tax liability, except where conveyed for the purpose of perpetrating a fraud or crime.

Title X: Form Modifications; Studies - Subtitle A: Form Modifications - Directs the Secretary to: (1) take steps to ensure that taxpayers are aware of provisions of the Internal Revenue Code permitting payment of tax in installments, extensions, and compromises of tax liability; (2) provide improved procedures for taxpayers to notify the Secretary of changes in names and addresses; and (3) include in the IRS publication entitled "Your Rights As a Taxpayer" a section on the rights and responsibilities of divorced individuals.

Subtitle B: Studies - Directs the Secretary to: (1) establish a one-year pilot program for appeals of enforcement actions to the Appeals Division of the IRS; (2) study ways to assist the elderly, physically impaired, foreign-language speaking, and other taxpayers with special needs to comply with the internal revenue laws; and (3) report to the tax-writing committees on the IRS's taxpayer-rights education program and on all cases involving complaints about misconduct of IRS employees.

Requires the Comptroller General to conduct: (1) a study on IRS efforts to notify taxpayers of tax deficiencies; and (2) annual studies of the accuracy of 25 of the most commonly used IRS forms, notices, and publications.