House Approves IRS Overhaul Bill
WASHINGTON (AllPolitics, June 25) -- The House gave final approval Thursday to a measure that would make sweeping changes in the way the Internal Revenue Service interacts with American taxpayers.
With broad bipartisan support in an election year, the IRS overhaul bill didn't face much opposition. Senate passage is expected after the July Fourth holiday recess, and President Bill Clinton has said he would sign the measure.
Among the provisions in the IRS overhaul bill:
- The burden of proof in civil court cases involving tax disputes would be shifted from the taxpayer to the IRS. The IRS would have to prove a taxpayer is wrong in cases in which taxpayers present "credible evidence" with regard to their tax liability. However, taxpayers only win the right if they maintain required tax records, cooperate with the IRS and don't have a net worth greater than $7 million.
- If the IRS waits more than 18 months to tell someone they owe additional taxes, the agency must suspend penalties and interest. After 2004, that period will be shortened to a year.
- So-called "innocent spouses" -- people who face collection actions due to tax problems caused without their knowledge by spouses -- would be protected from some IRS collection actions. Divorced or legally separated people would be able to separate their tax liability from their former spouse, with more limited protections extending to married taxpayers.
- The IRS will be required to respect taxpayers' due process rights in collections, including getting a judge's approval before seizing their houses.
- The IRS taxpayer advocate's office will have expanded powers to grant taxpayer assistance orders, which can halt tax collections in cases of hardship.
The IRS overhaul bill came after highly-publicized hearings in which taxpayers told horror stories of their treatment at the hands of the U.S. tax agency.
"Let this bill be a demonstration that you have been heard," said Senate Finance Committee Chairman William Roth (R-Del.) Wednesday. "Congress is responding. This bill is for you."
However, the House was expected to take up an amendment by House Minority Leader Dick Gephardt to strip out a provision in the bill that would reduce the waiting period before investors can qualify for a reduction in the capital gains tax to 20 percent. House Ways and Means Committee Chairman Bill Archer attached language to cut the waiting period from 18 months to 12 months.