By Barr, Dorothea
The National Public Accountant , Vol. 35, No. 7
Leveling the Playing Field
Just after announcing that he would not seek re-election, Senator William Armstrong (R-CO) introduced a series of bills aimed at "leveling the playing field" between taxpayers and the Internal Revenue Service. Acknowledging his retirement, the introduction of this bill series has caught many national leaders by surprise. A strong proponent of Senator Pryor's Taxpayer's Bill of Rights, passed in 1988, Senator Armstrong believes that more work must be done to prevent agency abuses. The Senator publicly introduced five bills as part of his taxpayer's "fair play" package; his staff indicates that more are coming.
The proposals attempt to remedy certain oversights currently contained within Internal Revenue Code Sections 7430, 6621 and 7433, as well as Rule 501 of the Federal Rules of Evidence. Several of these proposals are of particular importance to public accountants and tax practitioners.
Senate Bill 2400, referred to the Senate Finance Committee, would effectively amend Section 7430 of the Internal Revenue Code of 1986. Upon passage, this proposal would alter the definition of prevailing parties for awarding of attorneys' fees in tax cases by striking clauses 7430(c)(4)(a) and 7430(c)(7). The elimination of these provisions would change the standard for awarding attorney's fees against the IRS, so that merely winning in court is de facto evidence of an entitlement to fees. Senate Bill 2400 would ultimately require federal officials to address the implications of unjustifiably aggressive efforts, actions or procedures. NSPA supports the proposal and the fairer structure which it would ultimately encourage.
Senate Bill S. 2433, entitled "Determination of Rate of Interest" and referred to the Senate Banking Committee, would effectively amend Section 6621 of the Internal Revenue Code of 1986. Upon passage, this proposal would amend clause 6621(a)(1)(B) adjusting the overpayment rate to match the current underpayment rate. Therefore, the proposal would establish that the overpayment rate shall be the sum of the federal short-term rate plus three percentage points instead of the current allowance of two percentage points. Section 2433 would undoubtedly remedy IRCS. 6621's existent tax inequities and unfairness by equalizing the interest rates between amounts owed to the IRS and amounts the agency refunds. NSPA views passage of this provision as a great step forward for taxpayers in the tax equity struggle.
Senate Bills S. 2467 and S. 2486, referred to the Senate Finance Committee, would effectively amend Section 7433 of the Internal Revenue Code of 1986 to provide civil damages for certain careless collection actions, and civil damages for certain unauthorized determination of income tax, respectively. Simply put, these proposals broaden the scope of this Code provision by adding the terms "carelessly" and "determination or" to 7433(a) in an effort to adequately recognize all dispute aspects. …