Omnibus Taxpayers’ Bill of Rights Act: Taxpayers’ Remedy or Political Placebo?
This Note examines whether the bill, as drafted, addresses the problems which spawned it. It anticipates the bill’s effects on existing law and identifies areas where the bill would likely create new problems in the administration of the federal tax laws. It further identifies areas where the bill would solve problems. This Note concludes that (1) the bill’s audit provisions will not significantly expand taxpayer rights, and may in fact disrupt the audit process; (2) except for safeguards for installment agreements, the bill’s attempts to reform IRS collections procedures will not achieve its intended objectives; and (3) the bill’s damages provision, if properly construed by the courts, will serve to reform IRS abuses.
This Note has five parts. Part I, “Legislative Background,” describes the bill’s origins and provides reasons for its introduction. Part II, “IRS Audits and Investigations,” analyzes the audit process from the viewpoint of both taxpayer rights and IRS administration. Specifically, Part II discusses four aspects of the audit and taxpayer investigations process: (1) audit time and place; (2) the statutory right to record interviews; (3) the power of attorney and (4) taxpayer surveillance. Part II also discusses the legal effect of the Internal Revenue Manual in light of the Administrative Procedure Act. Part III, “IRS Collections Procedures,” critiques three aspects of the bill, including (1) the mechanics of the lien and levy proposals, (2) installment payment provisions, and (3) uneconomical levy provisions. Part IV, “Damages Provision,” examines the relative merits of the bill’s provision that permits taxpayers to obtain damages against the IRS for certain Code violations. This Part first identifies defects in the existing Code by examining Code safeguards against IRS overreaching in the lien and levy area. In addition, Part IV discusses whether the bill adequately addresses those defects. Finally, Part V summarizes the benefits and drawbacks of the bill and suggests amendments or deletions which would expand taxpayer rights while simultaneously improving IRS administration.