Small Business Taxpayer Bill of Rights Act of 2012 - Amends the Internal Revenue Code to: (1) allow businesses with average annual gross receipts of not more than $50,000 that prevail in an administrative or court proceeding involving the determination, collection, or refund of tax, interest, or penalty to recover their costs incurred in such proceedings; (2) increase the amount of civil damages against Internal Revenue Service (IRS) officers or employees for reckless, intentional, or negligent disregard of internal revenue laws and extend from two to five years the period for bringing a claim for damages; (3) increase the penalties against federal officers or employees for unlawful acts in connection with internal revenue laws and for unauthorized disclosures or inspections of tax returns; and (4) allow a taxpayer whose interest abatement claim does not exceed $50,000 to elect to bring a small tax case petition in U.S. Tax Court.
Prohibits ex parte communications between officers in the IRS Office of Appeals and other IRS employees with respect to matters pending before such officers and employees.
Authorizes new alternative dispute resolution procedures for taxpayer disputes with the IRS.
Extends to three years: (1) the period in which taxpayer property that has been wrongfully levied upon may be returned, and (2) the period for bringing suit against the United States for a wrongful tax levy.
Authorizes the waiver of the fee for establishing an installment agreement for payment of tax for certain low-income taxpayers who agree to make electronic debit payments.
Allows a taxpayer seeking review of a claim for innocent spouse relief or of a collection case in U.S. Tax Court a 60-day suspension of the period for filing a petition for such review when the U.S. Bankruptcy Court has issued an automatic stay in a bankruptcy case involving the taxpayer's claim.
Allows de novo review in U.S. Tax Court of any determination by the IRS with respect to a claim for equitable innocent spouse relief.
Prohibits the IRS Office of Appeals from considering or deciding any new issue in an internal appeal that is not within the scope of the initial determination made in a taxpayer's case.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2291 Introduced in Senate (IS)]
112th CONGRESS
2d Session
S. 2291
To provide a taxpayer bill of rights for small businesses.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 17, 2012
Mr. Cornyn (for himself, Ms. Snowe, Mrs. Hutchison, and Mr. Heller)
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Small Business
Taxpayer Bill of Rights Act of 2012''.
(b) 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.
SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF COSTS AND CERTAIN
FEES.
(a) 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:
``(iii) in the case of an eligible small
business, the net worth limitation in clause
(ii) of such section shall not apply.''.
(b) 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:
``(F) 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--
``(i) a corporation the stock of which is
not publicly traded,
``(ii) a partnership, or
``(iii) a sole proprietorship,
if the average annual gross receipts of such
corporation, partnership, or sole proprietorship for
the 3-taxable-year period preceding such taxable year
does not exceed $50,000,000. For purposes of applying
the test under the preceding sentence, rules similar to
the rules of paragraphs (2) and (3) of section 448(c)
shall apply.''.
(c) Effective Date.--The amendments made by this section shall
apply to proceedings commenced after the date of the enactment of this
Act.
SEC. 3. CIVIL DAMAGES ALLOWED FOR RECKLESS OR INTENTIONAL DISREGARD OF
INTERNAL REVENUE LAWS.
(a) 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)''.
(b) 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''.
(c) 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.
SEC. 4. MODIFICATIONS RELATING TO CERTAIN OFFENSES BY OFFICERS AND
EMPLOYEES IN CONNECTION WITH REVENUE LAWS.
(a) Increase in Penalty.--Section 7214 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``$10,000'' in subsection (a) and inserting
``$25,000'', and
(2) by striking ``$5,000'' in subsection (b) and inserting
``$10,000''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 5. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR UNAUTHORIZED
INSPECTION OR DISCLOSURE OF RETURNS AND RETURN
INFORMATION.
(a) 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''.
(b) 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.
SEC. 6. INTEREST ABATEMENT REVIEWS.
(a) Filing Period for Interest Abatement Cases.--
(1) In general.--Subsection (h) of section 6404 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``Review of Denial'' in the heading
and inserting ``Judicial Review'', and
(B) by striking ```if such action is brought''' and
all that follows in paragraph (1) and inserting ``if
such action is brought--
``(A) at any time after the earlier of--
``(i) the date of the mailing of the
Secretary's final determination not to abate
such interest, or
``(ii) 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
``(B) not later than the date which is 180 days
after the date described in subparagraph (A)(i).''.
(2) 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.
(b) Small Tax Case Election for Interest Abatement Cases.--
(1) In general.--Subsection (f) of section 7463 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``and'' at the end of paragraph
(1),
(B) by striking the period at the end of paragraph
(2) and inserting ``, and'', and
(C) by adding at the end the following new
paragraph:
``(3) a petition to the Tax court under section 6404(h) in
which the amount of interest abatement sought does not exceed
$50,000.''.
(2) Effective date.--The amendments made by this subsection
shall apply to--
(A) cases pending as of the day after the date of
the enactment of this Act, and
(B) cases commenced after such date of enactment.
SEC. 7. BAN ON EX PARTE DISCUSSIONS.
(a) 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.
(b) 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.
(c) Determination of Commissioner.--
(1) In general.--The Commissioner of Internal Revenue may
take a personnel action other than termination for an act
prohibited 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) 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 2012'' after ``1998''.
SEC. 8. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.
(a) In General.--Section 7123 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(c) Availability of Dispute Resolutions.--
``(1) 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.
``(2) Independent mediators.--
``(A) 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.
``(B) Cost and selection.--
``(i) In general.--Any taxpayer making an
election under subparagraph (A) shall be
required--
``(I) to share the costs of such
independent mediator equally with the
Office of Appeals, and
``(II) to limit the selection of
the mediator to a roster of recognized
national or local neutral mediators.
``(ii) 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.
``(iii) Small business.--For purposes of
clause (ii), the term `small business' has the
meaning given such term under section
41(b)(3)(D)(iii).
``(3) 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.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 9. EXTENSION OF TIME FOR CONTESTING IRS LEVY.
(a) 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''.
(b) Period of Limitation on Suits.--Subsection (c) of section 6532
of the Internal Revenue Code of 1986 is amended--
(1) in paragraph (1) by striking ``9 months'' and inserting
``3 years'', and
(2) in paragraph (2) by striking ``9-month'' and inserting
``3-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. 10. WAIVER OF INSTALLMENT AGREEMENT FEE.
(a) 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:
``(f) 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.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 11. SUSPENSION OF RUNNING OF PERIOD FOR FILING PETITION OF SPOUSAL
RELIEF AND COLLECTION CASES.
(a) Petitions for Spousal Relief.--
(1) 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:
``(6) Suspension of running of period for filing petition
in title 11 cases.--In the case of an individual 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 individual
is so prohibited from filing such a petition, and for 60 days
thereafter.''.
(2) 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.
(b) Collection Proceedings.--
(1) In general.--Subsection (d) of section 6330 of the
Internal Revenue Code of 1986 is amended--
(A) by striking ``appeal such determination to the
Tax Court'' in paragraph (1) and inserting ``petition
the Tax Court for review of such determination'',
(B) by striking ``Judicial review of
determination'' in the heading of paragraph (1) and
inserting ``Petition for review by tax court'',
(C) by redesignating paragraph (2) as paragraph
(3), and
(D) by inserting after paragraph (1) the following
new paragraph:
``(2) Suspension of running of period for filing petition
in title 11 cases.--In the case of an individual 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 individual is so prohibited from filing
such a petition, and for 30 days thereafter.''.
(2) Conforming amendment.--Subsection (c) of section 6320
of such Code is amended by striking ``(2)(B)'' and inserting
``(3)(B)''.
(3) 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.
SEC. 12. VENUE FOR APPEAL OF SPOUSAL RELIEF AND COLLECTION CASES.
(a) In General.--Paragraph (1) of section 7482(b) of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``or'' at the end of subparagraph (E),
(2) by striking the period at the end of subparagraph (F)
and inserting a comma, and
(3) by inserting after subparagraph (F) the following new
subparagraphs:
``(G) in the case of a petition under section
6015(e), the legal residence of the petitioner, or
``(H) in the case of a petition under section 6320
or 6330--
``(i) the legal residence of the petitioner
if the petitioner is an individual, and
``(ii) the principal place of business or
principal office or agency if the petitioner is
an entity other than an individual.''.
(b) Effective Date.--The amendments made by this section shall
apply to petitions filed after the date of enactment of this Act.
SEC. 13. INCREASE IN MONETARY PENALTIES FOR CERTAIN UNAUTHORIZED
DISCLOSURES OF INFORMATION.
(a) 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''.
(b) Effective Date.--The amendments made by this section shall
apply to disclosures made after the date of the enactment of this Act.
SEC. 14. DE NOVO TAX COURT REVIEW OF CLAIMS FOR EQUITABLE INNOCENT
SPOUSE RELIEF.
(a) 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.''.
(b) 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.
SEC. 15. BAN ON RAISING NEW ISSUES ON APPEAL.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new section:
``SEC. 7529. PROHIBITION ON INTERNAL REVENUE SERVICE RAISING NEW ISSUES
IN AN INTERNAL APPEAL.
``(a) 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.
``(b) 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:
``(1) Any issue that was not raised in a notice of
deficiency or an examiner's report which is the subject of the
appeal.
``(2) Any deficiency in tax which was not included in the
initial determination.
``(3) Any theory or justification for a tax deficiency
which was not considered in the initial determination.
``(c) 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.''.
(b) 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.''.
(c) 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.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S2395-2396)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S2396-2398)
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