,,ii #aaeth ,,congress #b;d ,session ,s4 #bfhi ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,april #ag1 #bjah,mr4 ,cornyn 7for himself1 ,mr4 ,heller1 and ,mr4 ,roberts7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to provide a taxpayer bill of rights for small businesses4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,small ,business ,taxpayer ,bill of ,rights ,act of #bjah4 7b7 ,table of contents ,the table of contents of this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,sec4 #b4 ,modification of standards for awarding of costs and certain fees4 ,sec4 #c4 ,civil damages allowed for reckless or intentional disregard of internal revenue laws4 ,sec4 #d4 ,modifications relating to certain offenses by officers and employees in connection with revenue laws4 ,sec4 #e4 ,modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information4 ,sec4 #f4 ,ban on ex parte discussions4 ,sec4 #g4 ,right to independent conference4 ,sec4 #h4 ,alternative dispute resolution procedures4 ,sec4 #i4 ,increase in monetary penalties for certain unauthorized disclosures of information4 ,sec4 #aj4 ,ban on raising new issues on appeal4 ,sec4 #aa4 ,limitation on enforcement of liens against principal residences4 ,sec4 #ab4 ,additional provisions relating to mandatory termination for misconduct4 ,sec4 #ac4 ,review by the ,treasury ,inspector ,general for ,tax ,administration4 ,sec4 #ad4 ,deduction for expenses relating to certain audits4 ,sec4 #ae4 ,term limit for ,national ,taxpayer ,advocate4 ,sec4 #af4 ,release of ,,irs levy due to economic hardship for business taxpayers4 ,sec4 #ag4 ,repeal of partial payment requirement on submissions of offers-in-compromise4 #b4 ,modification of standards for awarding of costs and certain fees 7a7 ,small businesses eligible without regard to net worth ,subparagraph 7,d7 of section #gdcj7;c77#d7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of clause 7i77,,ii71 by striking the period at the end of clause 7ii7 and inserting 1 and1 and by adding at the end the following new clause3 7iii7 in the case of an eligible small business1 the net worth limitation in clause 7ii7 of such section shall not apply4 4 7b7 ,eligible small business ,paragraph 7#d7 of section #gdcj7;c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,f7 ,eligible small business 7i7 ,in general ,for purposes of subparagraph 7,d77iii71 the term eligible small business means1 with respect to any proceeding commenced in a taxable year-- 7,i7 a corporation the stock of which is not publicly traded1 7,,ii7 a partnership1 or 7,,iii7 a sole proprietorship1 if the average annual gross receipts of such corporation1 partnership1 or sole proprietorship for the #c-taxable-year period preceding such taxable year does not exceed #ej1jjj1jjj4 ,for purposes of applying the test under the preceding sentence1 rules similar to the rules of paragraphs 7#b7 and 7#c7 of section #ddh7;c7 shall apply4 7ii7 ,adjustment for inflation ,in the case of any calendar year after #bjah1 the #ej1jjj1jjj amount in clause 7i7 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 such calendar year1 determined by substituting calendar year #bjag for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #ejj1 such amount shall be rounded to the next lowest multiple of #ejj4 4 7c7 ,effective date ,the amendments made by this section shall apply to proceedings commenced after the date of the enactment of this ,act4 #c4 ,civil damages allowed for reckless or intentional disregard of internal revenue laws 7a7 ,increase in amount of damages 7#a7 ,in general ,section #gdcc7;b7 of the ,internal ,revenue ,code of #aihf is amended by striking #a1jjj1jjj 7#ajj1jjj1 in the case of negligence7 and inserting #e1jjj1jjj 7#ejj1jjj1 in the case of negligence74 7#b7 ,adjustment for inflation ,section #gdcc of such ,code is amended by adding at the end the following new subsection3 7f7 ,adjustment for inflation ,in the case of any calendar year after #bjah1 the #e1jjj1jjj and #ejj1jjj amounts in subsection 7b7 shall each be increased by an amount equal to-- 7#a7 such dollar amount1 multiplied by 7#b7 the cost-of-living adjustment determined under section #a7;f77#c7 for such calendar year1 determined by substituting calendar year #bjag for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #ejj1 such amount shall be rounded to the next lowest multiple of #ejj4 4 7b7 ,extension of time ,to bring action ,section #gdcc7;d77#c7 of the ,internal ,revenue ,code of #aihf is amended by striking #b years and inserting #e years4 7c7 ,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 ,act4 #d4 ,modifications relating to certain offenses by officers and employees in connection with revenue laws 7a7 ,increase in penalty ,section #gbad of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking #aj1jjj in subsection 7a7 and inserting #be1jjj1 and 7#b7 by striking #e1jjj in subsection 7b7 and inserting #aj1jjj4 7b7 ,adjustment for inflation ,section #gbad of the ,internal ,revenue ,code of #aihf1 as amended by subsection 7a71 is amended by redesignating subsection 7c7 as subsection 7d7 and by inserting after subsection 7b7 the following new subsection3 7c7 ,adjustment for inflation ,in the case of any calendar year after #bjah1 the #be1jjj amount in subsection 7a7 and the #aj1jjj amount in subsection 7b7 shall each be increased by an amount equal to-- 7#a7 such dollar amount1 multiplied by 7#b7 the cost-of-living adjustment determined under section #a7;f77#c7 for such calendar year1 determined by substituting calendar year #bjag for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #ajj1 such amount shall be rounded to the next lowest multiple of #ajj4 4 7c7 ,effective date ,the amendments made by this section shall take effect on the date of the enactment of this ,act4 #e4 ,modifications relating to civil damages for unauthorized inspection or disclosure of returns and return information 7a7 ,increase in amount of damages ,subparagraph 7,a7 of section #gdca7;c77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking #a1jjj and inserting #aj1jjj4 7b7 ,adjustment for inflation ,section #gdca of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7i7 ,adjustment for inflation ,in the case of any calendar year after #bjah1 the #aj1jjj amount in subsection 7c77#a77;,a7 shall be increased by an amount equal to-- 7#a7 such dollar amount1 multiplied by 7#b7 the cost-of-living adjustment determined under section #a7;f77#c7 for such calendar year1 determined by substituting calendar year #bjag for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #ajj1 such amount shall be rounded to the next lowest multiple of #ajj4 4 7c7 ,period for bringing action ,subsection 7d7 of section #gdca of the ,internal ,revenue ,code of #aihf is amended by striking #b years and inserting #e years4 7d7 ,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 ,act4 #f4 ,ban on ex parte discussions 7a7 ,in general ,notwithstanding section #ajja7;a77#d7 of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih1 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 officers4 7b7 ,termination of employment for misconduct ,subject to subsection 7c71 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 7a7 in the performance of the employee's official duties4 ,such termination shall be a removal for cause on charges of misconduct4 7c7 ,determination of commissioner 7#a7 ,in general ,the ,commissioner of ,internal ,revenue may take a personnel action other than termination for an act prohibited under subsection 7a74 7#b7 ,discretion ,the exercise of authority under paragraph 7#a7 shall be at the sole discretion of the ,commissioner of ,internal ,revenue and may not be delegated to any other officer4 ,at the sole discretion of the ,commissioner of ,internal ,revenue1 such ,commissioner 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 7#a74 7#c7 ,no appeal ,any determination of the ,commissioner of ,internal ,revenue under this subsection may not be appealed in any administrative or judicial proceeding4 7d7 ,,tigta reporting of termination or mitigation ,section #ghjc7;d77#a77;,e7 of the ,internal ,revenue ,code of #aihf is amended by inserting or section #f of the ,small ,business ,taxpayer ,bill of ,rights ,act of #bjah after #aiih4 #g4 ,right to independent conference ,section #ajja of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih is amended by redesignating subsection 7c7 as subsection 7d7 and by inserting after subsection 7b7 the following new subsection3 7c7 ,right to independent conference ,under the organization plan of the ,internal ,revenue ,service1 a taxpayer shall have the right to a conference with the ,internal ,revenue ,service ,office of ,appeals which does not include personnel from the ,office of ,chief ,counsel for the ,internal ,revenue ,service or the compliance functions of the ,internal ,revenue ,service unless the taxpayer specifically consents to the participation of such personnel4 4 #h4 ,alternative dispute resolution procedures 7a7 ,in general ,section #gabc of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7d7 ,availability of dispute resolutions 7#a7 ,in general ,the procedures prescribed under subsection 7b77#a7 and the pilot program established under subsection 7b77#b7 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 subsection4 ,the ,secretary shall make any determination that excludes a type of issue or a class of cases public within #e working days and provide an explanation for each determination4 7#b7 ,independent mediators 7,a7 ,in general ,the procedures prescribed under subsection 7b77#a7 shall provide the taxpayer an opportunity to elect to have the mediation conducted by an independent1 neutral individual not employed by the ,internal ,revenue ,service ,office of ,appeals4 7,b7 ,cost and selection 7i7 ,in general ,any taxpayer making an election under subparagraph 7,a7 shall be required-- 7,i7 to share the costs of such independent mediator equally with the ,internal ,revenue ,service ,office of ,appeals1 and 7,,ii7 to limit the selection of the mediator to a roster of recognized national or local neutral mediators4 7ii7 ,exception ,clause 7i77,i7 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 #bej percent of the poverty level1 as determined in accordance with criteria established by the ,director of the ,office of ,management and ,budget1 in the taxable year preceding the request4 7iii7 ,small business ,for purposes of clause 7ii71 the term small business has the meaning given such term under section #da7;b77#c77;,d77iii74 7#c7 ,availability of process ,the procedures prescribed under subsection 7b77#a7 and the pilot program established under subsection 7b77#b7 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 commence4 4 7b7 ,effective date ,the amendment made by this section shall take effect on the date of the enactment of this ,act4 #i4 ,increase in monetary penalties for certain unauthorized disclosures of information 7a7 ,in general ,paragraphs 7#a71 7#b71 7#c71 and 7#d7 of section #gbac7;a7 of the ,internal ,revenue ,code of #aihf are each amended by striking #e1jjj and inserting #aj1jjj4 7b7 ,adjustment for inflation ,subsection 7a7 of section #gbac of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#f7 ,adjustment for inflation ,in the case of any calendar year after #bjah1 the #aj1jjj amounts in paragraphs 7#a71 7#b71 7#c71 and 7#d7 shall each be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for such calendar year1 determined by substituting calendar year #bjag for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,if any amount as increased under the preceding sentence is not a multiple of #ajj1 such amount shall be rounded to the next lowest multiple of #ajj4 4 7c7 ,effective date ,the amendments made by this section shall apply to disclosures made after the date of the enactment of this ,act4 #aj4 ,ban on raising new issues on appeal 7a7 ,in general ,chapter #gg of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #gebi4 ,prohibition on ,internal ,revenue ,service raising new issues in an internal appeal 7a7 ,in general ,in reviewing an appeal of any determination initially made by the ,internal ,revenue ,service1 the ,internal ,revenue ,service ,office of ,appeals may not consider or decide any issue that is not within the scope of the initial determination4 7b7 ,certain issues deemed outside of scope of determination ,for purposes of subsection 7a71 the following matters shall be considered to be not within the scope of a determination3 7#a7 ,any issue that was not raised in a notice of deficiency or an examiner's report which is the subject of the appeal4 7#b7 ,any deficiency in tax which was not included in the initial determination4 7#c7 ,any theory or justification for a tax deficiency which was not considered in the initial determination4 7c7 ,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 issue1 theory1 or justification on an appeal from a determination initially made by the ,internal ,revenue ,service that was not within the scope of the initial determination4 4 7b7 ,clerical amendment ,the table of sections for chapter #gg of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new item3 ,sec4 #gebi4 ,prohibition on ,internal ,revenue ,service raising new issues in an internal appeal4 4 7c7 ,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 ,act4 #aa4 ,limitation on enforcement of liens against principal residences 7a7 ,in general ,section #gdjc7;a7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking ,in any case and inserting the following3 7#a7 ,in general ,in any case 2 and 7#b7 by adding at the end the following new paragraph3 7#b7 ,limitation with respect to principal residence 7,a7 ,in general ,paragraph 7#a7 shall not apply to any property used as the principal residence of the taxpayer 7within the meaning of section #aba7 unless the ,secretary of the ,treasury makes a written determination that-- 7i7 all other property of the taxpayer1 if sold1 is insufficient to pay the tax or discharge the liability1 and 7ii7 such action will not create an economic hardship for the taxpayer4 7,b7 ,delegation ,for purposes of this paragraph1 the ,secretary of the ,treasury may not delegate any responsibilities under subparagraph 7,a7 to any person other than-- 7i7 the ,commissioner of ,internal ,revenue1 or 7ii7 a district director or assistant district director of the ,internal ,revenue ,service4 4 7b7 ,effective date ,the amendments made by this section shall apply to actions filed after the date of the enactment of this ,act4 #ab4 ,additional provisions relating to mandatory termination for misconduct 7a7 ,termination of unemployment for inappropriate review of tax-,exempt status ,section #abjc7;b7 of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih 7#bf ,u4,s4,c4 #ghjd note7 is amended by striking and at the end of paragraph 7#i71 by striking the period at the end of paragraph 7#aj7 and inserting 2 and1 and by adding at the end the following new paragraph3 7#aa7 in the case of any review of an application for tax-exempt status by an organization described in section #eja7;c7 of the ,internal ,revenue ,code of #aihf1 developing or using any methodology that applies disproportionate scrutiny to any applicant based on the ideology expressed in the name or purpose of the organization4 4 7b7 ,mandatory unpaid administrative leave for misconduct ,paragraph 7#a7 of section #abjc7;c7 of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih 7#bf ,u4,s4,c4 #ghjd note7 is amended by adding at the end the following new sentence3 ,notwithstanding the preceding sentence1 if the ,commissioner of ,internal ,revenue takes a personnel action other than termination for an act or omission described in subsection 7b71 the ,commissioner shall place the employee on unpaid administrative leave for a period of not less than #ij days44 7c7 ,limitation on alternative punishment ,paragraph 7#a7 of section #abjc7;c7 of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih 7#bf ,u4,s4,c4 #ghjd note7 is amended by striking ,the ,commissioner and inserting ,except in the case of an act or omission described in subsection 7b77#c77;,a71 the ,commissioner4 #ac4 ,review by the ,treasury ,inspector ,general for ,tax ,administration 7a7 ,review ,subsection 7k77#a7 of section #h;,d of the ,inspector ,general ,act of #aigh 7#e ,u4,s4,c4 ,app47 is amended-- 7#a7 in subparagraph 7,c71 by striking and at the end2 7#b7 by redesignating subparagraph 7,d7 as subparagraph 7,e72 7#c7 by inserting after subparagraph 7,c7 the following new subparagraph3 7,d7 shall-- 7i7 review any criteria employed by the ,internal ,revenue ,service to select tax returns 7including applications for recognition of tax-exempt status7 for examination or audit1 assessment or collection of deficiencies1 criminal investigation or referral1 refunds for amounts paid1 or any heightened scrutiny or review in order to determine whether the criteria discriminates against taxpayers on the basis of race1 religion1 or political ideology2 and 7ii7 consult with the ,internal ,revenue ,service on recommended amendments to such criteria in order to eliminate any discrimination identified pursuant to the review described in clause 7i72 and 2 and 7#d7 in subparagraph 7,e71 as so redesignated1 by striking and 7,c7 and inserting 7,c71 and 7,d74 7b7 ,semiannual ,report ,subsection 7g7 of section #h;,d of the ,inspector ,general ,act of #aigh 7#e ,u4,s4,c4 ,app47 is amended by adding at the end the following new paragraph3 7#c7 ,any semiannual report made by the ,treasury ,inspector ,general for ,tax ,administration that is required pursuant to section #e7;a7 shall include-- 7,a7 a statement affirming that the ,treasury ,inspector ,general for ,tax ,administration has reviewed the criteria described in subsection 7k77#a77;,d7 and consulted with the ,internal ,revenue ,service regarding such criteria2 and 7,b7 a description and explanation of any such criteria that was identified as discriminatory by the ,treasury ,inspector ,general for ,tax ,administration4 4 #ad4 ,deduction for expenses relating to certain audits 7a7 ,in general ,subsection 7a7 of section #fb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#bb7 ,expenses relating to certain audits ,the deduction allowed by section #bbd4 4 7b7 ,deduction for expenses relating to certain audits ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by redesignating section #bbd as section #bbe and by inserting after section #bbc the following new section3 #bbd4 ,expenses relating to certain audits 7a7 ,allowance of deduction ,in the case of an individual1 there shall be allowed as a deduction for the taxable year an amount equal to so much of the qualified ,,nrp expenses paid or incurred during the taxable year as does not exceed #e1jjj4 7b7 ,qualified ,,nrp expenses ,for purposes of this section1 the term qualified ,,nrp expenses means amounts which but for subsection 7d7 would be allowed as a deduction under section #afb or #bab7c7 in connection with an audit of the taxpayer's return of the tax imposed by this chapter for any taxable year under the ,national ,research ,program1 but only if such audit results in no increase in the tax liability of the taxpayer for such taxable year4 7c7 ,denial of double benefit ,no deduction shall be allowed under any other provision of this chapter for any amount for which a deduction is allowed under this section4 4 7c7 ,clerical amendment ,the table of sections for part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by striking the item relating to section #bbd and by inserting after the item relating to section #bbc the following new items3 ,sec4 #bbd4 ,expenses relating to certain audits4,sec4 #bbe4 ,cross reference4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #ae4 ,term limit for ,national ,taxpayer ,advocate 7a7 ,in general ,subparagraph 7,b7 of section #ghjc7;c77#a7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new clause3 7v7 ,term ,the term of the ,national ,taxpayer ,advocate shall be a #aj-year term1 beginning with a term to commence on the date which is #ah months after the date of the enactment of the ,small ,business ,taxpayer ,bill of ,rights ,act of #bjah4 ,each subsequent term shall begin on the day after the date on which the previous term expires4 ,the ,national ,taxpayer ,advocate may be appointed to serve more than #a term4 4 7b7 ,effective date ,the term of any individual serving as the ,national ,taxpayer ,advocate under section #ghjc7;c7 of the ,internal ,revenue ,code of #aihf as of the date of the enactment of this ,act shall end as of the day before the date which is #ah months after such date of enactment1 unless such individual is reappointed as the ,national ,taxpayer ,advocate for a subsequent term pursuant to section #ghjc7;c77#a77;,b77v7 of such ,code4 #af4 ,release of ,,irs levy due to economic hardship for business taxpayers 7a7 ,in general ,subparagraph 7,d7 of section #fcdc7;a77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking or and inserting including the financial condition of the taxpayer's viable trade or business1 or4 7b7 ,determination of economic hardship ,subsection 7a7 of section #fcdc of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#d7 ,determination of economic hardship to business taxpayer ,in determining whether to release any levy under paragraph 7#a77;,d71 the ,secretary shall consider-- 7,a7 the economic viability of the business1 7,b7 the nature and extent of the hardship created by the levy 7including whether the taxpayer has exercised ordinary business care and prudence71 and 7,c7 the potential harm to individuals if the business is liquidated4 4 7c7 ,effective date ,the amendments made by this section shall apply to levies made after the date of the enactment of this ,act4 #ag4 ,repeal of partial payment requirement on submissions of offers-in-compromise 7a7 ,in general ,section #gabb of the ,internal ,revenue ,code of #aihf is amended by striking subsection 7c7 and by redesignating subsections 7d71 7e71 7f71 and 7g7 as subsections 7c71 7d71 7e71 and 7f71 respectively4 7b7 ,conforming amendments 7#a7 ,paragraph 7#c7 of section #gabb7;c7 of the ,internal ,revenue ,code of #aihf1 as redesignated by subsection 7a71 is amended by inserting and at the end of subparagraph 7,a71 by striking 1 and at the end of subparagraph 7,b7 and inserting a period1 and by striking subparagraph 7,c74 7#b7 ,section #gabb of such ,code1 as amended by this section1 is amended by adding at the end the following new subsection3 7g7 ,application of user fee ,in the case of any assessed tax or other amounts imposed under this title with respect to such tax which is the subject of an offer-in-compromise1 such tax or other amounts shall be reduced by any user fee imposed under this title with respect to such offer-in-compromise4 4 7#c7 ,section #faei7;g7 of such ,code is amended by striking section #gabb7;e7 and inserting section #gabb7;d74 7c7 ,effective date ,the amendments made by this section shall apply to offers-in-compromise submitted after the date of the enactment of this ,act4