Extends from nine months to two years the period in which proceeds errantly acquired by the IRS may be returned.
Authorizes a taxpayer to deposit money in an IRA without regard to the normally applicable limits on IRA contributions and rollovers if the IRS has sent back the money being deposited due to a wrongful levy and it originally came from an IRA. Requires the contribution to be to the same type of IRA from which the amounts were withdrawn. Stipulates that in such a scenario any tax on the withdrawal from the IRA is abated. Considers interest paid by the IRS to the taxpayer part of the original payment and is not counted as gross income.
Modifies the suspension date of the statute of limitations for taxpayers suffering significant hardship by applying it only if the date of the decision by the National Taxpayer Advocate is at least seven days after the date of the taxpayer's application.
Directs the Secretary to study IRS practices concerning liens and levies.
Increases the allocations for low-income taxpayer clinics, from the current $6 million annually, to $15 million annually by 2003.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5548 Introduced in House (IH)]
107th CONGRESS
2d Session
H. R. 5548
To amend the Internal Revenue Code of 1986 to provide fairness in tax
collection procedures.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 3, 2002
Mr. Houghton introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide fairness in tax
collection procedures.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Fairness in Tax
Collections Act of 2002''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
Sec. 2. Partial payment of tax liability in installment agreements.
Sec. 3. Extension of time for return of property.
Sec. 4. Individuals held harmless on wrongful levy, etc. on individual
retirement plan.
Sec. 5. Seven-day threshold on tolling of statute of limitations during
tax review.
Sec. 6. Study of liens and levies.
Sec. 7. Low-income taxpayer clinics.
SEC. 2. PARTIAL PAYMENT OF TAX LIABILITY IN INSTALLMENT AGREEMENTS.
(a) In General.--
(1) Section 6159(a) (relating to authorization of
agreements) is amended--
(A) by striking ``satisfy liability for payment
of'' and inserting ``make payment on'', and
(B) by inserting ``full or partial'' after
``facilitate''.
(2) Section 6159(c) (relating to Secretary required to
enter into installment agreements in certain cases) is amended
in the matter preceding paragraph (1) by inserting ``full''
before ``payment''.
(b) Requirement To Review Partial Payment Agreements Every Two
Years.--Section 6159 is amended by redesignating subsections (d) and
(e) as subsections (e) and (f), respectively, and inserting after
subsection (c) the following new subsection:
``(d) Secretary Required To Review Installment Agreements for
Partial Collection Every Two Years.--In the case of an agreement
entered into by the Secretary under subsection (a) for partial
collection of a tax liability, the Secretary shall review the agreement
at least once every 2 years.''.
(c) Effective Date.--The amendments made by this section shall
apply to agreements entered into on or after the date of the enactment
of this Act.
SEC. 3. EXTENSION OF TIME FOR RETURN OF PROPERTY.
(a) Extension of Time for Return of Property Subject to Levy.--
Subsection (b) of section 6343 (relating to return of property) is
amended by striking ``9 months'' and inserting ``2 years''.
(b) Period of Limitation on Suits.--Subsection (c) of section 6532
(relating to suits by persons other than taxpayers) is amended--
(1) in paragraph (1) by striking ``9 months'' and inserting
``2 years'', and
(2) in paragraph (2) by striking ``9-month'' and inserting
``2-year''.
(c) Effective Date.--The amendments made by this section shall
apply to--
(1) levies made after the date of the enactment of this
Act, and
(2) 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.
SEC. 4. INDIVIDUALS HELD HARMLESS ON WRONGFUL LEVY, ETC., ON INDIVIDUAL
RETIREMENT PLAN.
(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:
``(f) Individuals Held Harmless on Wrongful Levy, etc., on
Individual Retirement Plan.--
``(1) In general.--If the Secretary determines that an
individual retirement plan has been levied upon in a case to
which subsection (b) or (d)(2)(A) applies, an amount equal to
the sum of--
``(A) the amount of money returned by the Secretary
on account of such levy, and
``(B) interest paid under subsection (c) on such
amount of money,
may be deposited into an individual retirement plan (other than
an endowment contract) to which a rollover from the plan levied
upon is permitted.
``(2) Treatment as rollover.--The distribution on account
of the levy and any deposit under paragraph (1) with respect to
such distribution shall be treated for purposes of this title
as if such distribution and deposit were part of a rollover
described in section 408(d)(3)(A)(i); except that--
``(A) interest paid under subsection (c) shall be
treated as part of such distribution and as not
includible in gross income,
``(B) the 60-day requirement in such section shall
be treated as met if the deposit is made not later than
the 60th day after the day on which the individual
receives an amount under paragraph (1) from the
Secretary, and
``(C) such deposit shall not be taken into account
under section 408(d)(3)(B).
``(3) Refund, etc., of income tax on levy.--If any amount
is includible in gross income for a taxable year by reason of a
levy referred to in paragraph (1) and any portion of such
amount is treated as a rollover under paragraph (2), any tax
imposed by chapter 1 on such portion shall not be assessed, and
if assessed shall be abated, and if collected shall be credited
or refunded as an overpayment made on the due date for filing
the return of tax for such taxable year.
``(4) Interest.--Notwithstanding subsection (d), interest
shall be allowed under subsection (c) in a case in which the
Secretary makes a determination described in subsection
(d)(2)(A) with respect to a levy upon an individual retirement
plan.''.
(b) Effective Date.--The amendment made by this section shall apply
to amounts paid under subsections (b), (c), and (d)(2)(A) of section
6343 of the Internal Revenue Code of 1986 after December 31, 2002.
SEC. 5. SEVEN-DAY THRESHOLD ON TOLLING OF STATUTE OF LIMITATIONS DURING
TAX REVIEW.
(a) In General.--Section 7811(d)(1) (relating to suspension of
running of period of limitation) is amended by inserting after
``application,'' the following: ``but only if the date of such decision
is at least 7 days after the date of the taxpayer's application''.
(b) Effective Date.--The amendment made by this section shall apply
to applications filed after the date of the enactment of this Act.
SEC. 6. STUDY OF LIENS AND LEVIES.
The Secretary of the Treasury, or the Secretary's delegate, shall
conduct a study of the practices of the Internal Revenue Service
concerning liens and levies. The study shall examine--
(1) the declining use of liens and levies by the Internal
Revenue Service, and
(2) the practicality of recording liens and levying against
property in cases in which the cost of such actions exceeds the
amount to be realized from such property.
Not later than 1 year after the date of the enactment of this Act, the
Secretary shall submit such study to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the
Senate.
SEC. 7. LOW-INCOME TAXPAYER CLINICS.
(a) Limitation on Amount of Grants.--Paragraph (1) of section
7526(c) (relating to special rules and limitations) is amended by
striking ``$6,000,000 per year'' and inserting ``$9,000,000 for 2002,
$12,000,000 for 2003, and $15,000,000 for each year thereafter''.
(b) Limitation on Use of Clinics for Tax Return Preparation.--
Subparagraph (A) of section 7526(b)(1) is amended by adding at the end
the following flush language:
``The term does not include a clinic that provides
routine tax return preparation. The preceding sentence
shall not apply to return preparation in connection
with a controversy with the Internal Revenue
Service.''.
(c) Promotion of Clinics.--Section 7526(c) is amended by adding at
the end the following new paragraph:
``(7) Promotion of clinics.--The Secretary is authorized to
promote the benefits of and encourage the use of low-income
taxpayer clinics through the use of mass communications,
referrals, and other means.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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