,,ii #aaeth ,,congress #ast ,session ,s4 #agic ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #ab1 #bjag,mr4 ,grassley 7for himself and ,mr4 ,thune7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to enhance taxpayer rights1 and for other purposes4 #a4 ,short title1 etc 7a7 ,short title ,this ,act may be cited as the ,taxpayer ,bill of ,rights ,enhancement ,act of #bjag4 7b7 ,amendment of #aihf ,code ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 7c7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title1 etc4 ,,title ,i--,the right to privacy ,sec4 #aja4 ,civil damages for unauthorized disclosure or inspection4 ,sec4 #ajb4 ,compliance by contractors with confidentiality safeguards4 ,,title ,,ii--,the right to appeal in an independent forum and to challenge the ,internal ,revenue ,service position and be heard ,sec4 #bja4 ,increase in limitations on civil damages for certain unauthorized collection actions4 ,sec4 #bjb4 ,extension of time limit for contesting ,,irs levy4 ,,title ,,iii--,the right to a fair and just tax system ,sec4 #cja4 ,waiver of user fee for installment agreements using automated withdrawals4 ,sec4 #cjb4 ,individuals held harmless on improper levy on retirement plans4 ,sec4 #cjc4 ,office of ,chief ,counsel review of offers-in-compromise4 ,sec4 #cjd4 ,increase in and expansion of individual estimated tax exception4 ,sec4 #cje4 ,modifications to computation of individual estimated tax4 ,sec4 #cjf4 ,corporate estimated tax4 ,sec4 #cjg4 ,increase in large corporation threshold for estimated tax payments4 ,sec4 #cjh4 ,expansion of interest netting4 ,sec4 #cji4 ,clarification of application of ,federal tax deposit penalty4 ,,title ,,iv--,the right to be informed ,sec4 #dja4 ,collection activities with respect to joint return disclosable to either spouse based on oral request4 ,sec4 #djb4 ,mandatory electronic filing for annual returns of exempt organizations4 ,,title ,v--,the right to quality service ,sec4 #eja4 ,free electronic filing4 ,sec4 #ejb4 ,access to appeals4 ,i ,the right to privacy #aja4 ,civil damages for unauthorized disclosure or inspection 7a7 ,notice to ,taxpayer ,subsection 7e7 of section #gdca is amended by adding at the end the following new sentences3 ,the ,secretary shall also notify such taxpayer if the ,internal ,revenue ,service or1 upon notice to the ,secretary by a ,federal or ,state agency1 if such ,federal or ,state agency1 proposes an administrative determination as to disciplinary or adverse action against an employee arising from the employee's unauthorized inspection or disclosure of the taxpayer's return or return information4 ,the notice described in this subsection shall include the date of the inspection or disclosure and the rights of the taxpayer under such administrative determination44 7b7 ,payment ,authority ,clarified 7#a7 ,in general ,section #gdca is amended by adding at the end the following new subsection3 7i7 ,payment ,authority ,claims pursuant to subsection 7a77#a7 shall be payable out of funds appropriated under section #acjd of title #ca1 ,united ,states ,code4 4 7#b7 ,annual reports of payments ,the ,secretary of the ,treasury shall annually report to the ,committee on ,finance of the ,senate and the ,committee on ,ways and ,means of the ,house of ,representatives regarding payments made from the ,united ,states ,judgment ,fund under section #gdca7;i7 of the ,internal ,revenue ,code of #aihf4 7c7 ,burden of ,proof for ,good ,faith ,exception ,rests ,with ,person ,making ,inspection or ,disclosure ,section #gdca7;b7 is amended by adding at the end the following new flush sentence3 ,in any proceeding involving the existence of a good faith but erroneous interpretation of section #fajc1 the burden of proof with respect to such issue shall be on the person who made the inspection or disclosure1 or in the case of a suit pursuant to paragraph 7a77#a71 the ,united ,states4 4 7d7 ,reports ,subsection 7p7 of section #fajc is amended by adding at the end the following new paragraph3 7#i7 ,report on willful unauthorized disclosure and inspection ,as part of the report required by paragraph 7#c77;,c7 for each calendar year1 the ,secretary shall furnish information regarding the willful unauthorized disclosure and inspection of returns and return information1 including the number1 status1 and results of-- 7,a7 administrative investigations1 7,b7 civil lawsuits brought under section #gdca 7including the amounts for which such lawsuits were settled and the amounts of damages awarded71 and 7,c7 criminal prosecutions4 4 7e7 ,increase in amount of damages per violation 7#a7 ,in general ,subparagraph 7,a7 of section #gdca7;c77#a7 is amended to read as follows3 7,a7 the sum of-- 7i7 #e1jjj for each act of unauthorized inspection of a return or return information with respect to which such defendant is found liable1 and 7ii7 #aj1jjj for each act of unauthorized disclosure of a return or return information with respect to which such defendant is found liable1 or 4 7#b7 ,punitive damages 7,a7 ,in general ,section #gdca7;c7 is amended by redesignating paragraphs 7#b7 and 7#c7 as paragraphs 7#c7 and 7#d71 respectively1 and by inserting after paragraph 7#a7 the following new paragraph3 7#b7 in the case of willful inspection or disclosure or an inspection or disclosure which is the result of gross negligence1 punitive damages1 plus 4 7,b7 ,conforming amendment ,subparagraph 7,b7 of section #gdca7;c77#a7 is amended to read as follows3 7,b7 the actual damages sustained by the plaintiff as a result of such unauthorized inspection or disclosure1 plus 4 7f7 ,effective ,dates 7#a7 ,notice ,the amendment made by subsection 7a7 shall apply to determinations made after the date which is #ahj days after the date of the enactment of this ,act4 7#b7 ,payment authority ,the amendment made by subsection 7b77#a7 shall take effect on the date which is #ahj days after the date of the enactment of this ,act4 7#c7 ,burden of proof ,the amendments made by subsection 7c7 shall apply to inspections and disclosures occurring on and after the date which is #ahj days after the date of the enactment of this ,act4 7#d7 ,reports ,subsection 7b77#b7 and the amendment made by subsection 7d7 shall apply to calendar years ending after the date which is #ahj days after the date of the enactment of this ,act4 7#e7 ,increase in damages ,the amendment made by subsection 7e7 shall apply to proceedings commenced after the date of the enactment of this ,act4 #ajb4 ,compliance by contractors with confidentiality safeguards 7a7 ,in ,general ,section #fajc7p71 as amended by this ,act1 is amended by adding at the end the following new paragraph3 7#aj7 ,disclosure to contractors and other agents ,notwithstanding any other provision of this section1 no return or return information shall be disclosed to any contractor or other agent of a ,federal1 ,state1 or local agency unless such agency1 to the satisfaction of the ,secretary-- 7,a7 has requirements in effect which require each such contractor or other agent which would have access to returns or return information to provide safeguards 7within the meaning of paragraph 7#d77 to protect the confidentiality of such returns or return information1 7,b7 agrees to conduct an on-site review every #c years 7or a mid-point review in the case of contracts or agreements of less than #c years in duration7 of each contractor or other agent to determine compliance with such requirements1 7,c7 submits the findings of the most recent review conducted under subparagraph 7,b7 to the ,secretary as part of the report required by paragraph 7#d77;,e71 and 7,d7 certifies to the ,secretary for the most recent annual period that such contractor or other agent is in compliance with all such requirements4 ,the certification required by subparagraph 7,d7 shall include the name and address of each contractor and other agent1 a description of the contract or agreement with such contractor or other agent1 and the duration of such contract or agreement4 ,the requirements of this paragraph shall not apply to disclosures pursuant to subsection 7n7 for purposes of ,federal tax administration4 4 7b7 ,conforming ,amendment ,subparagraph 7,b7 of section #fajc7p77#h7 is amended by inserting or paragraph 7#aj7 after subparagraph 7,a74 7c7 ,effective ,date 7#a7 ,in general ,the amendments made by this section shall apply to disclosures made after the date of the enactment of this ,act4 7#b7 ,certifications ,the first certification under section #fajc7p77#aj77;,d7 of the ,internal ,revenue ,code of #aihf1 as added by subsection 7a71 shall be made with respect to the portion of calendar year #bjag following the date of the enactment of this ,act4 ,,ii ,the right to appeal in an independent forum and to challenge the ,internal ,revenue ,service position and be heard #bja4 ,increase in limitations on civil damages for certain unauthorized collection actions 7a7 ,in general ,section #gdcc7;b7 is amended by striking #a1jjj1jjj 7#ajj1jjj and inserting #a1ejj1jjj 7#aej1jjj4 7b7 ,punitive damages in the case of reckless or intentional action ,subsection 7b7 of section #gdcc is amended-- 7#a7 by redesignating paragraphs 7#a7 and 7#b7 as subparagraphs 7,a7 and 7,b71 respectively1 and by moving such subparagraphs #b ems to the right1 7#b7 by striking ,in any action and inserting the following3 7#a7 ,in general ,in any action 1 and 7#c7 by adding at the end the following new paragraph3 7#b7 ,punitive damages for willful and reckless actions ,in any action brought under subsection 7a7 or petition filed under subsection 7e7 in which the defendant is found to be liable and to have acted recklessly or intentionally1 the court may award the plaintiff punitive damages4 4 7c7 ,period for bringing action ,paragraph 7#c7 of section #gdcc7;d7 is amended by striking the date the right of action accrues and inserting the later of the date of on which administrative remedies available within the ,internal ,revenue ,service have been exhausted or the date on which the taxpayer reasonably could have discovered that the actions of the officer or employee were done in disregard of a provision of this title or any regulation promulgated under this title4 7d7 ,effective date ,the amendments made by this section shall apply in the case of proceedings commenced after the date of the enactment of this ,act4 #bjb4 ,extension of time limit for contesting ,,irs levy 7a7 ,extension of ,time for ,return of ,property ,subject to ,levy ,subsection 7b7 of section #fcdc is amended by striking #i months and inserting #b years4 7b7 ,period of ,limitation on ,suits ,subsection 7c7 of section #fecb is amended-- 7#a7 by striking #i months in paragraph 7#a7 and inserting #b years1 and 7#b7 by striking #i-month in paragraph 7#b7 and inserting #b-year4 7c7 ,effective ,date ,the amendments made by this section shall apply to-- 7#a7 levies made after the date of the enactment of this ,act1 and 7#b7 levies made on or before such date if the #i-month period has not expired under section #fcdc7;b7 of the ,internal ,revenue ,code of #aihf 7without regard to this section7 as of such date4 ,,iii ,the right to a fair and just tax system #cja4 ,waiver of user fee for installment agreements using automated withdrawals 7a7 ,in ,general ,section #faei is amended by redesignating subsections 7e7 and 7f7 as subsections 7f7 and 7g71 respectively1 and by inserting after subsection 7d7 the following new subsection3 7e7 ,waiver of user fees for installment agreements using automated withdrawals ,in the case of a taxpayer who enters into an installment agreement in which automated installment payments are agreed to1 the ,secretary shall waive the fee 7if any7 for entering into the installment agreement4 4 7b7 ,effective ,date ,the amendments made by this section shall apply to agreements entered into on or after the date which is #ahj days after the date of the enactment of this ,act4 #cjb4 ,individuals held harmless on improper levy on retirement plans 7a7 ,in ,general ,section #fcdc is amended by adding at the end the following new subsection3 7f7 ,individuals ,held ,harmless on ,wrongful ,levy1 etc4 on ,retirement ,plan 7#a7 ,in general ,if the ,secretary determines that an individual's account or benefit under an eligible retirement plan 7as defined in section #djb7;c77#h77;,b77 has been levied upon in a case to which subsection 7b7 or 7d77#b77;,a7 applies and property or an amount of money is returned to the individual-- 7,a7 the individual may contribute such property or an amount equal to the sum of-- 7i7 the amount of money so returned by the ,secretary1 and 7ii7 interest paid under subsection 7c7 on such amount of money1 into such eligible retirement plan if such contribution is permitted by the plan1 or into an individual retirement plan 7other than an endowment contract7 to which a rollover contribution of a distribution from such eligible retirement plan is permitted1 but only if such contribution is made not later than the due date 7not including extensions7 for filing the return of tax for the taxable year in which such property or amount of money is returned1 and 7,b7 the ,secretary shall1 at the time such property or amount of money is returned1 notify such individual that a contribution described in subparagraph 7,a7 may be made4 7#b7 ,treatment as rollover ,the distribution on account of the levy and any contribution under paragraph 7#a7 with respect to the return of such distribution shall be treated for purposes of this title as if such distribution and contribution were described in section #djb7;c71 #djb;,a7c77#c71 #djc7;a77#d71 #djc7;b77#h71 #djh7;d77#c71 #djh;,a7d77#c71 or #deg7;e77#af71 whichever is applicable2 except that-- 7,a7 the contribution shall be treated as having been made for the taxable year in which the distribution on account of the levy occurred1 and the interest paid under subsection 7c7 shall be treated as earnings within the plan after the contribution and shall not be included in gross income1 and 7,b7 such contribution shall not be taken into account under section #djh7;d77#c77;,b74 7#c7 ,refund1 etc41 of income tax on levy 7,a7 ,in general ,if any amount is includible in gross income for a taxable year by reason of a distribution on account of a levy referred to in paragraph 7#a7 and any portion of such amount is treated as a rollover contribution under paragraph 7#b71 any tax imposed by chapter #a on such portion shall not be assessed1 and if assessed shall be abated1 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 year4 7,b7 ,exception ,subparagraph 7,a7 shall not apply to a rollover contribution under this subsection which is made from an eligible retirement plan which is not a ,roth ,,ira or a designated ,roth account 7within the meaning of section #djb;,a7 to a ,roth ,,ira or a designated ,roth account under an eligible retirement plan4 7#d7 ,interest ,notwithstanding subsection 7d71 interest shall be allowed under subsection 7c7 in a case in which the ,secretary makes a determination described in subsection 7d77#b77;,a7 with respect to a levy upon an individual retirement plan4 7#e7 ,treatment of inherited accounts ,for purposes of paragraph 7#a77;,a71 section #djh7;d77#c77;,c7 shall be disregarded in determining whether an individual retirement plan is a plan to which a rollover contribution of a distribution from the plan levied upon is permitted4 4 7b7 ,effective ,date ,the amendment made by this section shall apply to amounts paid under subsections 7b71 7c71 and 7d77#b77;,a7 of section #fcdc of the ,internal ,revenue ,code of #aihf after ,december #ca1 #bjag4 #cjc4 ,office of ,chief ,counsel review of offers-in-compromise 7a7 ,in ,general ,section #gabb7;b7 is amended by striking ,whenever a compromise and all that follows through his delegate and inserting ,if the ,secretary determines that an opinion of the ,general ,counsel for the ,department of the ,treasury1 or the ,counsel's delegate1 is required with respect to a compromise1 there shall be placed on file in the office of the ,secretary such opinion4 7b7 ,conforming ,amendments ,section #gabb7;b7 is amended by striking the second and third sentences4 7c7 ,effective ,date ,the amendments made by this section shall apply to offers-in-compromise submitted or pending on or after the date of the enactment of this ,act4 #cjd4 ,increase in and expansion of individual estimated tax exception 7a7 ,in general ,paragraph 7#a7 of section #ffed7;e7 is amended to read as follows3 7#a7 ,where tax is small amount 7,a7 ,in general ,no addition to tax shall be imposed under subsection 7a7 for any taxable year if-- 7i7 the excess 7if any7 of the tax shown on the return for such taxable year 7or1 if no return is filed1 the tax7 over the sum of-- 7,i7 the estimated tax paid for such taxable year1 plus 7,,ii7 credit allowable under section #ca1 is less than 7ii7 #b1jjj4 7,b7 ,exception 7i7 ,in general ,no amount of estimated tax paid for a taxable year shall be taken into account under subparagraph 7,a77i77,i7 after the first due date 7as determined under subsection 7c77#b77 for which the individual's required installment was greater than zero and more than #aj percent of the required installment was not paid by such date4 7ii7 ,order of crediting payments ,in determining whether a payment was made for purposes of clause 7i71 a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid4 4 7b7 ,effective ,date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #cje4 ,modifications to computation of individual estimated tax 7a7 ,in general ,section #ffed is amended by striking subsections 7a7 and 7b7 and inserting the following3 7a7 ,addition to the ,tax 7#a7 ,in general ,except as otherwise provided in this section1 in the case of any underpayment of estimated tax by an individual for a taxable year1 there shall be added to the tax under chapter #a1 the tax under chapter #b1 and the tax under chapter #b;,a for such taxable year the sum of the amounts determined under paragraph 7#b7 for each day for which there is an underpayment4 7#b7 ,amount of addition to tax ,the amount determined under this paragraph for any day shall be the product of-- 7,a7 the underpayment rate established under subsection 7b77#b7 for such day1 multiplied by 7,b7 the amount of the underpayment for such day4 7b7 ,amount of underpayment2 underpayment rate ,for purposes of subsection 7a7-- 7#a7 ,amount ,the amount of underpayment on any day shall be the excess 7if any7 of-- 7,a7 the sum of the required installments for the taxable year the due dates for which are on or before such day1 over 7,b7 the sum of the amounts of estimated tax payments made for such taxable year on or before such day4 7#b7 ,determination of underpayment rate 7,a7 ,in general ,the underpayment rate with respect to any day in an installment underpayment period shall be the underpayment rate established under section #ffba for the first day of the calendar quarter in which such installment underpayment period begins4 7,b7 ,installment underpayment period ,for purposes of subparagraph 7,a71 the term installment underpayment period means the period beginning on the day after the due date for a required installment and ending on the due date for the subsequent required installment 7or in the case of the #dth required installment1 the #aeth day of the #dth month following the close of a taxable year74 7,c7 ,daily rate ,the rate determined under subparagraph 7,a7 shall be applied on a daily basis and shall be based on the assumption of #cfe days in a calendar year4 7#c7 ,termination of estimated tax underpayment ,no day after the end of the installment underpayment period for the #dth required installment specified in paragraph 7#b77;,b7 for a taxable year shall be treated as a day of underpayment with respect to such taxable year4 4 7b7 ,effective ,date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #cjf4 ,corporate estimated tax 7a7 ,increase in ,small ,tax ,amount ,exception ,section #ffee7;f7 is amended by striking #ejj and inserting #b1jjj4 7b7 ,effective ,date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #cjg4 ,increase in large corporation threshold for estimated tax payments 7a7 ,in ,general ,section #ffee7;g77#b7 is amended-- 7#a7 by striking #a1jjj1jjj in subparagraph 7,a7 and inserting #a1ejj1jjj1 7#b7 by striking the #a1jjj1jjj amount specified in subparagraph 7,a7 in subparagraph 7,b77ii7 and inserting the amount in effect for the taxable year under subparagraph 7,a71 and 7#c7 by inserting after subparagraph 7,b7 the following new subparagraph3 7,c7 ,inflation adjustment 7i7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjah1 the #a1ejj1jjj amount in subparagraph 7,a7 shall be increased by an amount equal to-- 7,i7 such dollar amount1 multiplied by 7,,ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjag for calendar year #aiib in subparagraph 7,b7 thereof4 7ii7 ,rounding ,if any dollar amount1 after being increased under paragraph 7#a71 is not a multiple of #a1jjj1 such dollar amount shall be rounded to the next lowest multiple of #a1jjj4 4 7b7 ,effective ,date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjag4 #cjh4 ,expansion of interest netting 7a7 ,in ,general ,subsection 7d7 of section #ffba is amended by adding at the end the following new sentence3 ,solely for purposes of the preceding sentence1 section #ffaa7;e7 shall not apply44 7b7 ,effective ,date ,the amendment made by this section shall apply to interest accrued after ,december #ca1 #bjag4 #cji4 ,clarification of application of ,federal tax deposit penalty ,nothing in section #ffef of the ,internal ,revenue ,code of #aihf shall be construed to permit the percentage specified in subsection 7b77#a77;,a77iii7 thereof to apply other than in a case where the failure is for more than #ae days4 ,,iv ,the right to be informed #dja4 ,collection activities with respect to joint return disclosable to either spouse based on oral request 7a7 ,in ,general ,paragraph 7#h7 of section #fajc7;e7 is amended by striking in writing the first place it appears4 7b7 ,effective ,date ,the amendment made by this section shall apply to requests made after the date of the enactment of this ,act4 #djb4 ,mandatory electronic filing for annual returns of exempt organizations 7a7 ,in general ,section #fjcc is amended by redesignating subsection 7n7 as subsection 7o7 and by inserting after subsection 7m7 the following new subsection3 7n7 ,mandatory electronic filing ,any organization required to file a return under this section shall file such return in electronic form4 4 7b7 ,inspection of electronically filed annual returns ,subsection 7b7 of section #fajd is amended by adding at the end the following3 ,any annual return required to be filed electronically under section #fjcc7n7 shall be made available by the ,secretary to the public in machine readable format44 7c7 ,effective date 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 7#b7 ,transitional relief 7,a7 ,small organizations 7i7 ,in general ,in the case of any small organizations1 or any other organizations for which the ,secretary determines the application of the amendments made by subsection 7a7 would cause undue burden without a delay1 the ,secretary may delay the application of such amendments1 but not later than taxable years beginning #b years after the date of the enactment of this ,act4 7ii7 ,small organization ,for purposes of clause 7i71 the term small organization means any organization-- 7,i7 the gross receipts of which for the taxable year are less than #bjj1jjj1 and 7,,ii7 the aggregate gross assets of which at the end of the taxable year are less than #ejj1jjj4 7,b7 ,organizations filing form #iij-,t ,in the case of any organization described in section #eaa7;a77#b7 of the ,internal ,revenue ,code of #aihf which is subject to the tax imposed by section #eaa7;a77#a7 of such ,code on its unrelated business taxable income1 or any organization required to file a return under section #fjcc of such ,code and include information under subsection 7e7 thereof1 the ,secretary may delay the application of the amendments made by this section1 but not later than taxable years beginning #b years after the date of the enactment of this ,act4 ,v ,the right to quality service #eja4 ,free electronic filing 7a7 ,in general ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall1 in cooperation with the private sector technology industry1 maintain a program that provides free individual income tax preparation and electronic filing services to low-income taxpayers and elderly taxpayers4 7b7 ,requirements of program ,the ,secretary shall by regulation or other guidance prescribe with respect to the program-- 7#a7 the qualifications1 selection process1 and contract term for businesses participating in the program1 7#b7 a process for periodic review of businesses participating in the program1 7#c7 procedures for terminating business participation in the program for failure to comply with any program requirements1 and 7#d7 such other procedures as the ,secretary determines are necessary or appropriate to carry out the purposes of the program4 7c7 ,free ,file program ,the ,internal ,revenue ,service ,free ,file program1 as set forth in the notice published in the ,federal ,register on ,november #d1 #bjjb 7#fg ,fed4 ,reg4 #fgbdg71 shall be treated as meeting the requirements of subsection 7a74 #ejb4 ,access to appeals ,subsection 7b7 of section #cdfe of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih is amended by striking an appeals officer is regularly available within each ,state and inserting there is at least one appeals officer and one settlement officer located and permanently available in each ,state1 the ,district of ,columbia1 and ,puerto ,rico4