Mr. President, as the debate heats-up on how to achieve tax fairness for middle-income Americans, I believe the debate must also focus on whether middle-income Americans are treated fairly by the Internal Revenue Service.

The IRS is composed of over 120,000 employees, who process over a hundred million tax returns and collect over a trillion dollars every year.

Let's face it -- The IRS is going to make some mistakes, and a few IRS employees are going to overstep their bounds. Even if the IRS makes honest mistakes on only 1% of the returns it processes, this would mean that the IRS makes over a million mistakes every year.

The IRS is faced with a truly awesome task which it cannot fulfill without error. Our tax laws should reflect this.

The American taxpayer should not be required to pay the price for IRS mistakes and improper actions. Safeguards must be built into the law to protect the taxpayer against the potentially devastating effect of such mistakes and acts.

My colleagues in the Senate led the way in recognizing taxpayer rights. Almost 5 years ago, in early 1987, I introduced the Taxpayer Bill of Rights, S. 604. After hearings held by the Finance Subcommittee on Private Retirement Plans and Oversight of the IRS, I introduced a modified proposal, S. 1774, which reflected many concerns identified in those hearings.

Ultimately, S. 1774 was used as the basis for the Omnibus Taxpayer Bill of Rights enacted in 1988.

Many times throughout the almost two-year process of enacting the Taxpayer Bill of Rights I referred to the legislation as a "good first step." Upon its passage, I promised I'd be back. Well, now I'm back.

Mr. President, in the coming month, I plan to introduce the Taxpayer Bill of Rights 2 which will reflect our growing understanding of taxpayer needs and use as its foundation, the Taxpayer Bill of Rights enacted in 1988.

Today, I offer for consideration a list of proposals that will form the backbone of the Taxpayer Bill of Rights 2. These proposals will help the IRS achieve higher standards of accuracy, timeliness, and fairplay in providing taxpayer service. At the same time, these proposals do not diminish or increase the power of the IRS -- It simply makes the IRS accountable for its actions.

The Taxpayer Bill of Rights 2 will, among others, include:

• the creation of an independent administrative appeal outside the IRS for taxpayer disputes related solely to taxpayer rights;

• increased authority vested in the Ombudsman an to act to prevent hardships to taxpayers;

• a requirement that the Ombudsman provide Congress with quarterly reports related to its activities;

• the elimination of the differential between interest the taxpayer pays the IRS and interest the IRS pays the taxpayer;

• the strengthening of section 7430 of the Code 80 a taxpayer may recover out of pocket costs incurred in a case in which he/she substantially prevailed and the IRS' position was not substantially justified;

• a requirement that the IRS must abate interest for unreasonable IRS delays;

• procedural safeguards in cases where the IRS determines a tax deficiency based on a computer crosscheck; and

• a requirement that all regulations issued by the Treasury Department be prospective unless expressly provided otherwise by Congress.

In addition, there are a number of other proposals designed to safeguard taxpayer rights which are explained in the summary description that I will provide for the record.

It is my hope that this list of proposals will be studied and discussed by the many interested in the administration of our tax laws. I look forward to meeting with these individuals and groups, and I plan to hold hearings in the IRS Oversight subcommittee to debate the merits of these proposals and any others that come to my attention.

Mr. President, I ask unanimous consent that my written statement and a summary description of the proposals for the Taxpayer Bill of Rights 2 be included in the record.