[Los Angeles Times - July 25, 1996]
Taxpayers are abut to get an array of new weapons for dealing
with the Internal Revenue Service, thanks to a measure recently
approved by Congress and headed for President Clinton’s
expected signature.
The "Taxpayer Bill of
Rights," which cleared both houses
without a dissenting vote, makes it easier for taxpayers to sue
the IRS if the agency undertakes unwarranted collection action
against them, boosts to $1 million the maximum damage that can be
awarded in such suits and improves the chances that a taxpayer
who wins a case against the agency will be able to recover
attorneys’ fees and other out-of-pocket expenses.
It also expands the authority of the IRS’ internal ombudsman
to assist taxpayers in resolving problems. In the past, the
ombudsman’s powers have been restricted to halting agency
actions against a taxpayer; under the bill, the office would have
the authority to make the agency do things for the taxpayer as
well.
"I think the bill is a good bill," said former IRS
Commissioner Donald Alexander, now a lawyer in private practice
in Washington. He said provisions will encourage the IRS to speed
up issuance of regulations and "to be more selective in the
quality of their cases" that they bring against taxpayers.
The IRS has supported the bill generally, and some of its
requirements have already been instituted.
Sen. David Pryor (D-Ark.), who along with Sen. Charles E.
Grassley (R-Iowa), was a principal backer of the measure, said he
believes the measure, said he believes the measure will help rein
I overzealous agents and make others make doubly certain they are
right before proceeding against a taxpayer.
"I would say it’s going to be an attitude thing as much
as anything," he said of the legislation’s overall
impact.
Key provisions in the bill would:
•
Make it easier to recover costs:
Current law allows the taxpayer to recover attorney’s fees
and the like, but requires the taxpayer to prove that the
IRS’ position in the case was not substantially justified.
In practice, that has turned out be extremely difficult. Under
the new law, the taxpayer’s victory creates a presumption
that the government’s position was not substantially
justified and leaves it up to the IRS to show otherwise.
It also boosts the allowable rate for attorney’s hourly fees
to $110 from $75.
•
Improve taxpayer protections under Installment Agreements:
Taxpayers who can’t pay what they owe right away but could
over time can often work out a time payment plan. However, the
agency can suddenly terminate such a plan if the taxpayer falls
behind on payments or the agency thinks the taxpayer’s
circumstances have improved and he or she could pay all at once.
The measure would require the agency to notify a taxpayer if it
plans to terminate an installment plan, explain why and give him
or her time to respond. "They can’t just hit you out of
the blue," said a Pryor aide.
•
Require the IRS to notify former or separated spouses when it
begins action to collect jointly owed back taxes from the other
spouse:
There have been many cases where the agency has sometimes
proceeded against one spouse and obtained a judgment that applies
to both--all unknown to the other spouse.
•
Provide protection for volunteer board members:
If you are and unpaid, volunteer board member of a museum, or
other tax-exempt association not involved in the financial
details of the group, the new law limits your responsibility for
errors in tax payments or reports. Some board members have
worried abut having to pay penalties in such situations.
Also in the bill are provisions to make it easier for the IRS to
remove liens from taxpayers’ property, require the IRS to
notify taxpayers annually of overdue taxes and give taxpayers the
right to sue someone who files false tax information on them,
such as a phony W-2 or 1099.
Some minor provisions clean up areas that were not serious
problems but could trap someone—for example, taxpayers will
be able to use a receipt from any qualified private delivery
service to prove a tax return was filed on time, instead of
having to the U.S. Postal Service.
Despite the large number of issues addressed in the legislation,
most taxpayers will probably not notice the new law, IRS
Commissioner Margaret Milner Richardson said.
