Putting the Taxpayer First Act of 1998

TABLE OF CONTENTS:

Title I: Taxpayer Rights

Title II: Penalty Reform

Title III: Internal Revenue Service Restructuring

Title IV: Electronic Filing

Title V: Regulatory Reform

Putting the Taxpayer First Actof 1998 - Title I: Taxpayer Rights - Amends the Internal Revenue Code to require court approval prior to the seizure of a taxpayer's property.

(Sec. 102) Requires the Secretary of the Treasury to accept an offer-in-compromise if it reasonably reflects the taxpayer's ability to pay.

(Sec. 103) Revises provisions concerning the awarding of administrative and litigation costs.

(Sec. 104) Applies the confidentiality privilege to communications between a taxpayer and a federally authorized tax practitioner.

(Sec. 105) Directs the Secretary, upon a taxpayer's reasonable request, to relocate an Internal Revenue Service (IRS) examination.

(Sec. 106) Requires the IRS to pre-notify a taxpayer engaged in a trade or business whenever it issues a summons to another person concerning the taxpayer's trade or business, unless such notification would jeopardize the investigation.

(Sec. 107) Requires the Secretary, at least 60 days prior to issuing a notice of deficiency, to notify the taxpayer of any proposed adjustments. Permits the taxpayer to appeal the Secretary's proposal.

Title II: Penalty Reform - Revises provisions concerning interest penalties for failure to pay taxes.

(Sec. 202) Repeals provisions concerning the penalty for the substantial understatement of income tax.

(Sec. 203) Repeals failure-to-pay penalties, while retaining the failure-to-file penalty.

Title III: Internal Revenue Service Restructuring - Establishes within the Department of the Treasury the Internal Revenue Service Board of Governors which shall review and approve: (1) strategic plans of the IRS; (2) operational functions of the IRS; (3) the IRS Commissioner's selection, evaluation, and compensation of senior managers; and (4) the IRS budget request. Requires the Board to report annually to the President and the Congress. Reestablishes the Commissioner's office and limits the Commissioner's term to five years.

(Sec. 302) Requires the IRS to be organized into divisions representing the following types of taxpayers: (1) individual taxpayers subject to wage withholding; (2) small businesses and the self-employed; (3) large businesses; (4) employee plans and exempt organizations; (5) trusts and estates; and (6) such other divisions as the Board deems necessary.

(Sec. 303) Reestablishes the Office of the Taxpayer Advocate as an office that is independent of all other IRS functions.

(Sec. 304) Repeals provisions providing for an Assistant Commissioner (Taxpayer Services) and replaces them with provisions establishing an Office of Appeals with functions that are to be independent of all other IRS functions. Mandates the Office to resolve tax controversies without litigation on a fair and impartial basis and in a manner that encourages voluntary compliance and public confidence.

(Sec. 305) Directs the Board to convene a taxpayer-communications advisory group which shall: (1) review all standard IRS written communications, forms and instructions; and (2) recommend such revisions to such documents as will render them more easily understood.

Title IV: Electronic Filing - Provides for the establishment and implementation of a plan to increase electronic filing gradually over the next ten years while maintaining processing times for paper returns at 40 days. Sets forth reporting requirements concerning such plan, including reporting on the plan's effect on small businesses.

Title V: Regulatory Reform - Amends Federal law concerning government organization to include in the definition of the term: (1) "major rule" any rule promulgated by the IRS, if such rule is likely to result in any net increase in Federal revenues; and (2) "covered agency" the IRS, for purposes of provisions concerning receiving comment from small entities on agency rulemaking.

(Sec. 503) Expands a taxpayer's options with respect to the recovery of certain costs and fees.