Summary of Principal Issues

The bill presents several issues for consideration. The principal issues include the following:

(1) Whether there should be an independent Ombudsman within IRS or the Treasury Department to act as an advocate of taxpayers' right and, if so, the proper scope of powers that could be exercised by an Ombudsman;

(2) Whether there should be a procedure for administratively appealing the imposition of Federal tax liens;

(3) Whether a court order should be required before the IRS can levy upon a taxpayer's property;

(4) Whether statutory time requirements should be imposed with respect to the issuance of Treasury Regulations and, if so, what those requirements should be;

(5) Whether the declaration requirements with respect to the rules relating to the payment of estimated taxes by individuals should be repealed and whether the tax liability threshold for the payment of estimated taxes should be increased; and

(6) Whether employees who terminate employment during the year should be provided with Forms W-2 at the same time as all other employees (rather than with the last salary payment).

Discussion of Certain Issues

The primary issues raised by the bill involve the proper level of IRS taxpayer services and scope of an ombudsman, the level of protection which should be afforded to taxpayers in regard to IRS collection procedures, and the tax regulations process.

Taxpayer Services and Ombudsman

Taxpayer services

Many individuals believe that increasingly complex tax laws mandate that the IRS provide continually increasing levels of taxpayer services. These people especially are concerned that, in times of budget cuts, taxpayer services are an easy target, and believe that the Congress should send a signal to the IRS that it does not want taxpayer services to be cut. Other people feel that the primary function of the IRS should be to collect taxes and that taxpayer services should be provided only to the extent that they do not detract from that function. In general, the problem is one of how existing IRS resources should properly be allocated.

Ombudsman

Many people believe that there is no need for the law to provide for an Ombudsman in the IRS since the IRS already has established, internally, an Office of Ombudsman. Others, however, would point out that taxpayers might perceive that an Ombudsman could not operate as a truly independent spokesman for taxpayer rights unless legally independent of the IRS.

Tax Collection Procedures

The present law tax collection procedures provide important tools (including liens and levies) necessary for the IRS to collect taxes which have been assessed but not paid. While collection procedures may be necessary to assure the Federal Government a means for collecting taxes and to preserve the integrity of the tax system, many people have expressed a concern that certain tax collection devices have been administered in a heavy-handed manner and have the potential of depriving innocent taxpayers of their property. These people feel that there should be some sort of appeals process prior to collection and that the IRS generally should be required to get a court order before levying against or seizing a taxpayer's property. Others argue that taxpayers are currently afforded adequate protection prior to the time an issue reaches the collection stage and that to provide for appeals or to require a court order for levy would enable taxpayers to further delay the collection of taxes properly due.

Regulations Process

With respect to Treasury Regulations, many have voiced concern that the time involved in issuing regulations contributes to ambiguity in the tax law. Some people believe that time limits should be placed on the issuance of regulations. Others would argue, however, that because of resource limitations, complexity of issues, the need to provide proper guidance, and input that must be considered both from sources inside and outside the IRS, time limitations would be unrealistic.