Miscellaneous Provisions
TAXPAYER BILL OF RIGHTS II
13. TITLE XII--MISCELLANEOUS PROVISIONS
13.1. Phone Number Of Person Providing Payee Statements Required To Be Shown On Such Statement. The new law requires that information returns contain the name, address, and phone number of the information contact of the person required to make the
information return. A payor may for example, provide the phone number of the department with the relevant information. It is intended that the telephone number provide direct access to individuals with immediate resources to resolve a taxpayer's
questions in an expeditious manner. The provision applies to statements required to be furnished after December 31, 1996 (determined without regard to any extension).TPBR2 §1201. IRC §6041A(e)(1); §6042(c)(1); §6044(e)(1); §6045(b)(1); §6049(c)(1)(A);
§6050B(b)(1); §6050H(d)(1); §6050I(e)(1); §6050J(e); §6050K(b)(1); §6050N(b)(1). SEC. 1201 OF THE BILL
13.2. Required Notice Of Certain Payments. If the IRS receives a payment without sufficient information to properly credit it to a taxpayer's account, the IRS may attempt to contact the taxpayer. If contact cannot be made, the IRS places
the payment in an unidentified remittance file. If the IRS cannot associate a taxpayer's payment with a balance due, the IRS generally deposits the money and may not inform the taxpayer of the overpayment. For example, a check that is separated from a
balance-due income tax return, which is subsequently lost, may not get credited to that taxpayer's account. The new law requires the IRS to make reasonable efforts to notify, within 60 days, those taxpayers who have made payments which the IRS cannot
associate with the taxpayer. The provision is effective on the date of enactment. TPBR2 §1202. SEC. 1202 OF THE BILL
13.3. Unauthorized Enticement Of Information Disclosure. Under prior law, no statutory disincentive applies to IRS employees who entice a tax professional to disclose information about clients in exchange for the favorable treatment of
the taxes of the professional. The new law provides that if any officer or employee of the United States intentionally compromises the determination or collection of any tax due from an attorney, certified public accountant, or enrolled agent
representing a taxpayer in exchange for information conveyed by the taxpayer to the attorney, certified public accountant, or enrolled agent for purposes of obtaining advice concerning the taxpayer's tax liability, the taxpayer may bring a civil action
for damages against the United States in a district court of the United States. Upon a finding of liability, damages shall equal the lesser of $500,000 or the sum of (1) actual economic damages sustained by the taxpayer as a proximate result of the
information disclosure and (2) the costs of the action. These remedies shall not apply to information conveyed to an attorney, certified public accountant, or enrolled agent for the purpose of perpetrating a fraud or crime. The provision applies to
actions taken after the date of enactment. TPBR2 §1203. IRC §7435. SEC. 1203 OF THE BILL
13.4. Annual Reminders To Taxpayers With Outstanding Delinquent Accounts. The new law requires the IRS to send taxpayers an annual reminder of their outstanding tax liabilities. The fact that a taxpayer did not receive a timely, annual
reminder notice does not affect the tax liability. The provision requires the IRS to send annual reminder notices beginning in 1997. TPBR2 §1204. IRC §7524. SEC. 1204 OF THE BILL
13.5. 5-Year Extension Of Authority For Undercover Operations. The Anti-Drug Abuse Act of 1988 exempted IRS undercover operations from the otherwise applicable statutory restrictions controlling the use of Government ends (which generally
provide that all receipts be deposited in the general fund of the Treasury and all expenses be paid out of appropriated funds). In general, the exemption permits the IRS to "churn" the income earned by an undercover operation to pay additional expenses
incurred in the undercover operation. The IRS is required to conduct a detailed financial audit of large undercover operations in which the IRS is churning funds and to provide an annual audit report to the Congress on all such large undercover
operations. The exemption originally expired on December 31, 1989, and was extended by the Comprehensive Crime Control Act of 1990 to December 31, 1991. The IRS has not had the authority to churn funds from its undercover operations since 1991.
The new law reinstates the IRS's offset authority under section 7608(c) from the date of enactment until January 1, 2001. The new law amends the IRS annual reporting requirement under section 7608(c)(4)(B) to require the provision of the
following data: (1) the date the operation was initiated; (2) the date offsetting was approved; (3) the total current expenditures and the amount and use of proceeds of the operation; (4) a detailed description of the undercover operation projected to
generate proceeds, including the potential violation being investigated, and whether the operation is being conducted under grand jury auspices; and (5) the results of the operation to date, including the results of criminal proceedings. The provision is
effective on the date of enactment. TPBR2 §1205. Anti-Drug Abuse Act of 1988 §7601(c) and §7608(c)(4) and (5). SEC. 1205 OF THE BILL
13.6. Disclosure Of Form 8300 Information On Cash Transactions. The Internal Revenue Code prohibits disclosure of tax returns and return information, except to the extent specifically authorized by the Internal Revenue Code (sec. 6103).
Unauthorized disclosure is a felony punishable by a fine not exceeding $5,000 or imprisonment of not more than five years, or both (sec. 7213). An action for civil damages also may be brought for unauthorized disclosure (sec. 7431). No tax information
may be furnished by the IRS to another agency unless the other agency establishes procedures satisfactory to the IRS for safeguarding the tax information it receives (sec. 6103(p)). Under section 6050I, any person who receives more than $10,000 in cash
in one transaction (or two or more related transactions) in the course of a trade or business generally must file an information return (Form 8300) with the IRS specifying the name, address, and taxpayer identification number of the person from whom the
cash was received and the amount of cash received. The Anti-Drug Abuse Act of 1988 provided a special rule permitting the IRS to disclose these information returns to other Federal agencies for the purpose of administering Federal criminal statutes. The
special rule originally was to expire after November 18, 1990, and was extended by the Comprehensive Crime Control Act of 1990 to November 18, 1992. Information filed on Form 8300 is very similar to information filed on Currency Transaction Reports
(CTRs) under the Bank Secrecy Act. Both types of information reports should be subject to the same disclosure rules.
The new law permanently extends the special rule for disclosing Form 8300 information. Moreover, the new law permits disclosures not only to Federal agencies but also to State, local and foreign agencies and for civil, criminal and regulatory
purposes (i.e., generally in the same manner as Currency Transaction Reports filed by financial institutions under the Bank Secrecy Act). Disclosure, however, is not permitted to any such agency for purposes of tax administration. The new law also (1)
extends the dissemination policies and guidelines under section 6103 to people having access to Form 8300 information, and (2) applies section 6103 sanctions to persons having access to Form 8300 information that disclose this information without proper
authorization. The provision is effective on the date of enactment. TPBR2 §1206. IRC §6103(l). SEC. 1206 OF THE BILL
13.7. Disclosure Of Returns And Return Information To Designee Of Taxpayer. Under prior law, the IRS is authorized to disclose the return of any taxpayer, or return information pertaining to a taxpayer, to such person(s) as the taxpayer
has designated in a written request. The IRS's move to a paperless system depends on the ease and functionality of electronic communication systems, e.g., telephones, facsimile machines, computers, communications networks, etc. The new law deletes the
word "written" from the requirement that "written consent" from the taxpayer is necessary for the disclosure of taxpayer information to a designated third party. Allowing the IRS to adopt alternatives to the written request requirement will expedite such
changes and facilitate the development and implementation of Tax System Modernization projects. It is anticipated that the IRS will continue to utilize its regulatory authority to impose reasonable restrictions on the form in which a request is made, and
that the IRS will in no event accept an unconfirmed verbal request. The provision is effective on the date of enactment. TPBR2 §1207. IRC §6103(c). SEC. 1207 OF THE BILL
13.8. Study Of Netting Of Interest On Overpayments And Liabilities. If any portion of a tax is satisfied through the crediting of an overpayment of tax, no interest is imposed on that portion of the tax for any period during which, if the
credit had not been made, interest would have been allowable. The Tax Reform Act of 1986 first implemented an interest rate differential. The underpayment rate was set 1 percent higher than the overpayment rate. The Omnibus Budget Reconciliation Act of
1990 increased the underpayment rate on certain large corporate underpayments to 3 percent higher than the overpayment rate. The General Agreement on Tariffs and Trade (GATT) reduced the overpayment rate on certain corporate tax refunds.
The new law requires the Secretary of the Treasury to conduct a study of the manner in which IRS has implemented the netting of interest on overpayments and underpayments and the policy and administrative implications of global netting. The
Treasury is required to hold a public hearing to receive comments from any interested party prior to submitting the report of its study to the tax writing committees. The report is due six months after the date of enactment. TPBR2 §1208. SEC. 1208 OF THE BILL
13.9. Expenses Of Detection Of Underpayments And Fraud, Etc. The Secretary may, pursuant to regulations, pay rewards for information leading to the detection and punishment of violations of the Internal Revenue laws. The new law clarifies
that rewards may be paid for information relating to civil violations, as well as criminal violations. The new law also provides that the rewards are to be paid out of the proceeds of amounts (other than interest) collected by reason of the information
provided. The new law also requires an annual report on the rewards program. The provision is effective six months after the date of enactment. TPBR2 §1209. IRC §7623. SEC. 1209 OF THE BILL
13.10. Use Of Private Delivery Services For Timely-Mailing-AsTimely-Filing Rule. The Code sets forth the rules for determining when a return, payment of tax, or other document required to be filed with the IRS is deemed to be filed or
delivered on a timely basis (sec. 7502). In a recent case interpreting this section (V.L. Correia, 58 F.3d 468 (1995)), the U.S. Court of Appeals for the 9th Circuit upheld the Tax Court's ruling that the section's so-called "timely-mailing as
timely-filing" rule does not apply to private delivery companies. Although the Appeals Court agreed that there is a legitimate policy rationale for extending the rule to private delivery companies, it concluded that only Congress, and not the courts, had
the power to make such a change. Under the new law, the Secretary of the Treasury is given authority to expand the "timely-mailing as timely-filing" rule to include a designated delivery service. A designated delivery service must be designated as such
by the Secretary. The Secretary may designate a delivery service only if it meets the following criteria: (1) it is available to the general public; (2) it is at least as timely and reliable on a regular basis as the United States mail; (3) it satisfies
recordkeeping criteria; and (4) it meets any additional criteria as the Secretary may prescribe. The provision also gives the Secretary similar authority with respect to equivalents for United States certified or registered mail. The provision is
effective on the date of enactment. TPBR2 §1210. IRC §7502(f). SEC. 1210 OF THE BILL
13.11. Reports On Misconduct Of IRS Employees. The IRS Inspection Division investigates allegations of criminal misconduct or serious violations of the "Standards of Ethical Conduct for Employees of the Executive Branch" (5 CFR 2635) by
IRS employees. In addition, IRS management addresses other types of taxpayer complaints relating to inappropriate behavior by IRS employees. The new law requires the IRS to make an annual report to the tax-writing committees, beginning June 1, 1997, on
all categories of instances involving allegations of misconduct by IRS employees, arising either from internally identified cases or from taxpayer or third-party initiated complaints. The report must identify by IRS Region and primary activity involved
(e.g., examination, collection, etc.), the nature of the misconduct or complaint, the number of instances received by category, and the disposition of these instances. This would include, but not be limited to, the following categories: number of
employees reprimanded, terminated, or prosecuted; instances dismissed because of a finding that proper procedures were followed; and those initiated but not yet resolved. Instances covered by this process must include both written complaints of
misconduct and those received by telephone through management channels. Each annual report will cover instances of misconduct that occurred during the preceding calendar year. Disposition of complaints not resolved by the time the report is prepared must
be included in the report for the year in which resolution occurs. The first report is due by June 1, 1997. TPBR2 §1211. SEC. 1211 OF THE BILL
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