article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Taxpayer Protection Act of 1997''. SEC. 2. ESTABLISHMENT OF MORE INDEPENDENT OFFICE OF THE TAXPAYER ADVOCATE. (a) In General.--Paragraph (1) of section 7802(d) of the Internal Revenue Code of 1986 (relating to Office of Taxpayer Advocate) is amended to read as follows: ``(1) Establishment.-- ``(A) In general.--There is established in the Internal Revenue Service an office to be known as the `Office of the Taxpayer Advocate'. ``(B) National taxpayer advocate.-- ``(i) In general.--The Office of the Taxpayer Advocate shall be under the supervision and direction of an official to be known as the `National Taxpayer Advocate'. The National Taxpayer Advocate shall report directly to the Commissioner of Internal Revenue and shall be entitled to compensation at the same rate as the highest level official reporting directly to the Commissioner of the Internal Revenue Service. ``(ii) Appointment.--The National Taxpayer Advocate shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals with a background in customer service, as well as tax law. No officer or employee of the Internal Revenue Service may be appointed to such position in order to ensure an independent position to represent taxpayers' interests.''. (b) Annual Reports and Additional Responsibilities.--Section 7802(d)(2) of the Internal Revenue Code of 1986 (relating to functions of office) is amended by striking subparagraph (B) and inserting the following: ``(B) Annual reports.-- ``(i) Objectives.--Not later than June 30 of each calendar year, the National Taxpayer Advocate shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in such calendar year. Any such report shall contain full and substantive analysis, in addition to statistical information. ``(ii) Activities.--Not later than December 31 of each calendar year, the National Taxpayer Advocate shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the activities of the Office of the Taxpayer Advocate during the fiscal year ending during such calendar year. Any such report shall contain full and substantive analysis, in addition to statistical information, and shall-- ``(I) identify the initiatives the Office of the Taxpayer Advocate has taken on improving taxpayer services and Internal Revenue Service responsiveness, ``(II) contain recommendations received from individuals with the authority to issue Taxpayer Assistance Orders under section 7811, ``(III) contain a summary of at least 20 of the most serious problems encountered by taxpayers, including a description of the nature of such problems, ``(IV) contain an inventory of the items described in subclauses (I), (II), and (III) for which action has been taken and the result of such action, ``(V) contain an inventory of the items described in subclauses (I), (II), and (III) for which action remains to be completed and the period during which each item has remained on such inventory, ``(VI) contain an inventory of the items described in subclauses (I), (II), and (III) for which no action has been taken, the period during which each item has remained on such inventory, the reasons for the inaction, and identify any Internal Revenue Service official who is responsible for such inaction, ``(VII) identify any Taxpayer Assistance Order which was not honored by the Internal Revenue Service in a timely manner, as specified under section 7811(b), ``(VIII) contain recommendations for such administrative and legislative action as may be appropriate to resolve problems encountered by taxpayers, ``(IX) identify areas of the tax law that impose significant compliance burdens on taxpayers or the Internal Revenue Service, including specific recommendations for remedying these problems, ``(X) identify the 10 most litigated issues for each category of taxpayers, including recommendations for mitigating such disputes, and ``(XI) include such other information as the National Taxpayer Advocate may deem advisable. ``(iii) Report to be submitted directly.-- Each report required under this subparagraph shall be provided directly to the Committees described in clauses (i) and (ii) without any prior review or comment from the Commissioner, the Secretary of the Treasury, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. ``(C) Other responsibilities.--The National Taxpayer Advocate shall-- ``(i) monitor the coverage and geographic allocation of local taxpayer advocates, ``(ii) develop guidance to be distributed to all Internal Revenue Service officers and employees outlining the criteria for referral of taxpayer inquiries to local taxpayer advocates, ``(iii) ensure that the local telephone number for the local taxpayer advocate in each Internal Revenue Service district is published and available to taxpayers, and ``(iv) in conjunction with the Commissioner, develop career paths for local taxpayer advocates choosing to make a career in the Office of the Taxpayer Advocate.''. (c) National Oversight of Local Offices.--Section 7802(d)(2) of the Internal Revenue Code of 1986 (relating to functions of office), as amended by subsection (b), is amended by adding at the end the following: ``(D) Personnel actions.-- ``(i) Heads of local offices.--The National Taxpayer Advocate shall have the responsibility to-- ``(I) appoint and dismiss the local taxpayer advocate heading the office of the taxpayer advocate at each Internal Revenue Service district office and service center, and ``(II) evaluate and take personnel actions with respect to any employee of an office of the taxpayer advocate described in subclause (I). ``(ii) Consultation.--The National Taxpayer Advocate may consult with the head of any Internal Revenue Service district office or service center in carrying out the National Taxpayer Advocate's responsibilities under this subparagraph.''. (d) Operation of Local Offices.--Section 7802(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following: ``(4) Operation of local offices.-- ``(A) In general.--Each local taxpayer advocate-- ``(i) shall report directly to the National Taxpayer Advocate, ``(ii) may consult with the head of the Internal Revenue Service district office or service center which the local taxpayer advocate serves regarding the daily operation of the office of the taxpayer advocate, ``(iii) shall, at the initial meeting with any taxpayer seeking the assistance of the office of the taxpayer advocate, notify such taxpayer that the office operates independently of any Internal Revenue Service district office or service center and reports directly to Congress through the National Taxpayer Advocate, and ``(iv) shall, at the taxpayer advocate's discretion, not disclose to the Internal Revenue Service contact with, or information provided by, such taxpayer. ``(B) Maintenance of independent communications.-- Each local office of the taxpayer advocate shall maintain separate phone, facsimile, and other electronic communication access, and a separate post office address from the Internal Revenue Service district office or service center which it serves.''. (e) Notice of Right To Contact Office Included in Notice of Deficiency.--Section 6212(a) of the Internal Revenue Code of 1986 (relating to notice of deficiency) is amended by adding at the end the following: ``Such notice shall include a notice to the taxpayer of the taxpayer's right to contact a local office of the taxpayer advocate and the location and phone number of the nearest office.''. (f) Expansion of Authority To Issue Taxpayer Assistance Orders.-- Section 7811(a) of the Internal Revenue Code of 1986 (relating to taxpayer assistance orders) is amended-- (1) by striking ``Upon application'' and inserting the following: ``(1) In general.--Upon application'', (2) by moving the text 2 ems to the right, and (3) by adding at the end the following new paragraph: ``(2) Determination of hardship.--For purposes of determining whether a taxpayer is suffering or about to suffer a significant hardship, the National Taxpayer Advocate should consider-- ``(A) whether the Internal Revenue Service employee to which such order would issue is following applicable published administrative guidance, including the Internal Revenue Manual, ``(B) whether there is an immediate threat of adverse action, ``(C) whether there has been a delay of more than 30 days in resolving taxpayer account problems, and ``(D) the prospect that the taxpayer will have to pay significant professional fees for representation.''. (g) Conforming Amendments.-- (1) The following provisions of the Internal Revenue Code of 1986 are each amended by striking ``Taxpayer Advocate'' each place it appears and inserting ``National Taxpayer Advocate'': (A) Section 6323(j)(1)(D) (relating to withdrawal of notice in certain circumstances). (B) Section 6343(d)(2)(D) (relating to return of property in certain cases). (C) Section 7802(d)(3) (relating to responsibilities of Commissioner). (D) Section 7811(a)(1) (relating to authority to issue), as amended by subsection (f). (E) Section 7811(b)(2)(D) (relating to terms of a Taxpayer Assistance Order). (F) Section 7811(c) (relating to authority to modify or rescind). (G) Section 7811(d)(2) (relating to suspension of running of period of limitation). (H) Section 7811(e) (relating to independent action of Taxpayer Advocate). (I) Section 7811(f) (relating to Taxpayer Advocate). (2) Section 7811(d)(1) of such Code (relating to suspension of running of period of limitation) is amended by striking ``Taxpayer Advocate's'' and inserting ``National Taxpayer Advocate's''. (3) The headings of subsections (e) and (f) of section 7802 of such Code are each amended by striking ``Taxpayer Advocate'' and inserting ``National Taxpayer Advocate''. (4) The heading of section 7802 of such Code is amended by striking ``taxpayer advocate'' and inserting ``national taxpayer advocate''. (h) Transition Rules Relating to Appointment of National Taxpayer Advocate.-- (1) Initial appointment.--The President shall nominate for appointment the initial National Taxpayer Advocate to serve as head of the Office of the Taxpayer Advocate established under section 7208(a) of the Internal Revenue Code of 1986 (as amended by this section) not later than 120 days after the date of the enactment of this Act. (2) Interim role of current taxpayer advocate.--Until an individual has taken office under section 7208(a) of such Code (as so amended), the Taxpayer Advocate shall assume the additional powers and duties of the National Taxpayer Advocate under the amendments made by this section. (i) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act.
summary: Taxpayer Protection Act of 1997 - Amends the Internal Revenue Code to revise provisions concerning of the Office of the Taxpayer Advocate. Places such office under the direction of the National Taxpayer Advocate, who shall be appointed by the President. (Currently, the Office is under the direction of the Taxpayer Advocate, who is appointed by the Commissioner of Internal Revenue.) Revises provisions concerning reporting and responsibilities of the Office, including directing the National Taxpayer Advocate to appoint local taxpayer advocates who shall report directly to the National Taxpayer Advocate. Requires each local taxpayer advocate office to maintain separate phone, facsimile, and other communication access, and a separate post office address from its IRS district office or service center. Revises provisions concerning the authority to issue taxpayer assistance orders.