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House Ways and Means Committee Report on the IRS Restructuring and Reform Act of 1998, HR 2676

October 31, 1997

105TH CONGRESS

1st Session

HOUSE OF REPRESENTATIVES

REPT . 105-364

Part 1

INTERNAL REVENUE SERVICE RESTRUCTURING AND REFORM ACT OF 1997

OCTOBER 31, 1997. --Committed to the Committee of the

Whole House on the State of the Union and ordered to be printed

Mr. ARCHER, from the Committee on Ways and Means, submitted the following

R E P O R T

[To accompany H.R. 2676]

[Including cost estimate of the Congressional Budget Office]

together with

ADDITIONAL AND DISSENTING VIEWS

The Committee on Ways and Means, to whom was referred the bill (H.R. 2676) to amend the Internal Revenue Code of 1986 to restructure and reform the Internal Revenue Service, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass.

CONTENTS

I. Summary and Background

A. Purpose and Summary

B. Background and Need for Legislation

C. Legislative History

II. Explanation of the Bill

Title I. Executive Branch Government

A. Creation of IRS Oversight Board (sec. 101)

B. Appointment and Duties of IRS Commissioner (secs. 102 and 103)

C. Structure and Funding of the Employee Plans and Exempt Organizations Division (sec. 102)

D. Taxpayer Advocate (sec. 102)

E. Prohibition on Executive Branch Influence Over Taxpayer Audits (sec. 104)

F. IRS Personnel Flexibilities (sec. 111)

Title II. Electronic Filing

A. Electronic Filing of Tax and Information Returns (sec. 201)

B. Time for Filing Certain Information Returns With the IRS (sec. 202)

C. Paperless Electronic Filing (sec. 203)

D. Return-Free Tax System (sec. 204)

E. Access to Account Information (sec. 205)

Title III . Taxpayer Bill of Rights 3

A. Burden of Proof (sec. 301)

B. Proceedings by Taxpayers

1. Expansion of authority to award costs and certain fees (sec. 311)

2. Civil damages for negligence in collection actions (sec. 312)

3. Increase in size of cases permitted on small case calendar (sec. 313)

C. Relief for Innocent Spouses and Persons With Disabilities

1. Innocent spouse relief (sec. 321)

2. Suspension of statute of limitations on filing claims during periods of disability (sec. 322)

D. Provisions Relating to Interest

1. Elimination of interest differential on overlapping periods of interest on income tax overpayments and underpayments (sec. 331)

2. Increase in overpayment rate payable to taxpayers other than corporations (sec. 332)

E. Protections for Taxpayers Subject to Audit or Collection

1. Privilege of confidentiality extended to taxpayer's dealings with non-attorneys authorized to practice before the IRS (sec. 341)

2. Expansion of authority to issue taxpayer assistance orders (sec. 342)

3. Limitation on financial status audits (sec. 343)

4. Limitation on authority to require production of computer source code (sec. 344)

5. Procedures relating to extensions of statute of limitations by agreement (sec. 345)

6. Offers-in-compromise (sec. 346)

7. Notice of deficiency to specify deadlines for filing Tax Court petition (sec. 347)

8. Refund or credit of overpayments before final determination (sec. 348)

9. Threat of audit prohibited to coerce tip report alternative commitment agreements (sec. 349)

F. Disclosures to Taxpayers

1. Explanation of joint and several liability (sec. 351)

2. Explanation of taxpayers' rights in interviews with the IRS (sec. 352)

3. Disclosure of criteria for examination selection (sec. 353)

4. Explanation of appeals and collection process (sec. 354)

G. Low-Income Taxpayer Clinics (sec. 361)

H. Other Taxpayer Rights Provisions

1. Actions for refund with respect to certain estates which have elected the installment method of payment (sec. 371)

2. Cataloging complaints (sec. 372)

3. Archive of records of the IRS (sec. 373)

4. Payment of taxes (sec. 374)

5. Clarification of authority of Secretary relating to the making of elections (sec. 375)

6. Limitation on penalty on individual's failure to pay for months during period of installment agreement (sec. 376)

I. Studies

1. Study of penalty administration (sec. 381)

2. Study of confidentiality of tax return information (sec. 382)

Title IV. Congressional Accountability for the IRS

A. Review of Requests for GAO Investigations of the IRS (sec. 401)

B. Joint Congressional Hearings and Coordinated Oversight Reports (sees. 401 and 402)

C. Budget Matters

1. Funding for century date change (sec. 411)

2. Financial management advisory group (sec. 412)

D. Tax Law Complexity Analysis (sec. 422)

Title V. Revenue Offset: Employer Deduction for Vacation Pay (sec. 501)

III . Votes of the Committee

IV. Budget Effects of the Bill

A. Committee Estimates of Budgetary Effects

B. Budget Authority and Tax Expenditures

C. Cost Estimate Prepared by the Congressional Budget Office

V. Other Matters to Be Discussed Under the Rules of the House

A. Committee Oversight Findings and Recommendations

B. Summary of Findings and Recommendations of the Committee on Government Reform and Oversight

C. Constitutional Authority Statement

D. Information Relating to Unfunded Mandates

E. Applicability of House Rule XXI5(c)

VI. Changes in Existing Law Made by the Bill, as Reported

VII . Correspondence From Other Committees

A. Correspondence from Committee on Government Reform and Oversight

B. Correspondence from Committee on Rules

VIII. Additional Views

IX. Dissenting Views

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof the following:

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) SHORT TITLE. --This Act may be cited as the "Internal Revenue Service Restructuring and Reform Act of 1997".

(b) AMENDMENT OF 1986 CODE. --Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c) TABLE OF CONTENTS. --Sec. 1. Short title; amendment of 1986 Code; table of contents.

TITLE I --EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE INTERNAL REVENUE SERVICE

Subtitle A --Executive Branch Governance and Senior Management

Sec. 101. Internal Revenue Service Oversight Board.

Sec. 102. Commissioner of Internal Revenue; other officials.

Sec. 103. Other personnel.

Sec. 104. Prohibition on executive branch influence over taxpayer audits and other investigations.

Subtitle B --Personnel Flexibilities

Sec. 111. Personnel flexibilities.

TITLE II-ELECTRONIC FILING

Sec. 201. Electronic filing of tax and information returns.

Sec. 202. Due date for certain information returns filed electronically.

Sec. 203. Paperless electronic filing.

Sec. 204. Return-free tax system.

Sec. 205. Access to account information.

TITLE III --TAXPAYER PROTECTION AND RIGHTS

Sec. 300. Short title.

Subtitle A --Burden of Proof

Sec. 301. Burden of proof.

Subtitle B --Proceedings by Taxpayers

Sec. 311. Expansion of authority to award coats and certain fees.

Sec. 312. Civil damages for negligence in collection actions.

Sec. 313. Increase in size of cases permitted on small case calendar.

Subtitle C --Relief for Innocent Spouses and for Taxpayers Unable To Manage Their Financial Affairs Due to Disabilities

Sec. 321. Spouse relieved in whole or in part of liability in certain cases.

Sec. 322. Suspension of statute of limitations on filing refund claims during periods of disability.

Subtitle D --Provisions Relating to Interest

Sec. 331. Elimination of interest rate differential on overlapping periods of interest on income tax overpayments and underpayments.

Sec. 332. increase in overpayment rate payable to taxpayers other than corporations.

Subtitle E --Protections for Taxpayers Subject to Audit or Collection Activities

Sec. 341. Privilege of confidentiality extended to taxpayer's dealings with non-attorneys authorized to practice before Internal Revenue Service.

Sec. 342. Expansion of authority to issue taxpayer assistance orders.

Sec. 343. Limitation on financial status audit techniques.

Sec. 344. Limitation on authority to require production of computer source code.

Sec. 345. Procedures relating to extensions of statute of limitations by agreement.

Sec. 346. Offers-in-compromise.

Sec. 347. Notice of deficiency to specify deadlines for filing Tax Court petition.

Sec. 348. Refund or credit of overpayments before final determination.

Sec. 349. Threat of audit prohibited to coerce Tip Reporting Alternative Commitment Agreements.

Subtitle F --Disclosures to Taxpayers

Sec. 351. Explanation of joint and several liability.

Sec. 352. Explanation of taxpayers' rights in interviews with the Internal Revenue Service.

Sec. 353. Disclosure of criteria for examination selection.

Sec. 354. Explanations of appeals and collection process.

Subtitle G --Low Income Taxpayer Clinics

Sec. 361. Low income taxpayer clinics.

Subtitle H --Other Matters

Sec. 371. Actions for refund with respect to certain estates which have elected the installment method of payment.

Sec. 372. Cataloging complaints.

Sec. 373. Archive of records of Internal Revenue Service.

Sec. 374. Payment of taxes.

Sec. 375. Clarification of authority of Secretary relating to the making of elections.

Sec. 376. Limitation on penalty on individual's failure to pay for months during period of installment agreement.

Subtitle I --Studies

Sec. 381. Penalty administration.

Sec. 382. Confidentiality of tax return information.

TITLE IV --CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

Subtitle A --Oversight

Sec. 401. Expansion of duties of the Joint Committee on Taxation.

Sec. 402. Coordinated oversight reports.

Subtitle B --Budget

Sec. 411. Funding for century date change.

Sec. 412. Financial Management Advisory Group.

Subtitle C --Tax Law Complexity

Sec. 421. Role of the Internal Revenue Service.

Sec. 422. Tax complexity analysis.

TITLE V --CLARIFICATION OF DEDUCTION FOR DEFERRED COMPENSATION

Sec. 501. Clarification of deduction for deferred compensation.

TITLE I --EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE INTERNAL REVENUE SERVICE

Subtitle A --Executive Branch Governance and Senior Management

SEC . 101. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

(a) IN GENERAL. --Section 7802 (relating to the Commissioner of Internal Revenue) is amended to read as follows:

" SEC . 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

"(a) ESTABLISHMENT. --There is established within the Department of the Treasury the Internal Revenue Service Oversight Board (hereafter in this subchapter referred to as the `Oversight Board').

"(b) MEMBERSHIP. --

"(1) COMPOSITION. --The Oversight Board shall be composed of 11 members, as follows:

"(A) 8 members shall be individuals who are not Federal officers or employees and who are appointed by the President, by and with the advice and consent of the Senate.

"(B) 1 member shall be the Secretary of the Treasury or, if the Secretary so designates, the Deputy Secretary of the Treasury.

"(C) 1 member shall be the Commissioner of Internal Revenue.

"(D) 1 member shall be an individual who is a representative of an organization that represents a substantial number of Internal Revenue Service employees and who is appointed by the President, by and with the advice and consent of the Senate.

"(2) QUALIFICATIONS AND TERMS. --

"(A) QUALIFICATIONS --Members of the Oversight Board described in paragraph (1)(A) shall be appointed solely on the basis of their professional experience and expertise in 1 or more of the following areas:

"(i) Management of large service organizations.

"(ii) Customer service.

"(iii) Federal tax laws, including tax administration and compliance.

"(iv) Information technology.

"(v) Organization development.

"(vi) The needs and concerns of taxpayers. In the aggregate, the members of the Oversight Board described in paragraph (1)(A) should collectively bring to bear expertise in all of the areas described in the preceding sentence.

"(B) TERMS. --Each member who is described in paragraph (1)(A) or (D) shall be appointed for a term of 5 years, except that of the members first appointed under paragraph (1)(A) --

"(i) 1 member shall be appointed for a term of 1 year,

"(ii) 1 member shall be appointed for a term of 2 years,

"(iii) 2 members shall be appointed for a term of 3 years, and

"(iv) 2 members shall be appointed for a term of 4 years.

Such terms shall begin on the date of appointment.

"(C) REAPPOINTMENT. --An individual who is described in paragraph (1) (A) may be appointed to no more than two 5-year terms on the Oversight Board.

"(D) VACANCY. --Any vacancy on the Oversight Board shall be filled in the same manner as the original appointment. Any member appointed to fill a vacancy occurring before the expiration of the term for which the member's predecessor was appointed shall be appointed for the remainder of that term.

"(E) SPECIAL GOVERNMENT EMPLOYEES. --During the entire period that an individual appointed under paragraph (1)(A) is a member of the Oversight Board, such individual shall be treated as --

"(i) serving as a special government employee (as defined in section 202 of title 18, United States Code) and as described in section 207(c)(2) of such title 18, and

"(ii) serving as an officer or employee referred to in section 101(f) of the Ethics in Government Act of 1978 for purposes of title I of such Act.

"(3) QUORUM. --6 members of the Oversight Board shall constitute a quorum.

A majority of members present and voting shall be required for the Oversight Board to take action.

"(4) REMOVAL. --

"(A) IN GENERAL. --Any member of the Oversight Board may be removed at the will of the President.

"(B) SECRETARY AND COMMISSIONER. --An individual described in subparagraph (B) or (C) of paragraph (1) shall be removed upon termination of employment.

"(C) REPRESENTATIVE OF INTERNAL REVENUE SERVICE EMPLOYEES. --The member described in paragraph (1)(D) shall be removed upon termination of employment, membership, or other affiliation with the organization described in such paragraph.

"(5) CLAIMS. --

"(A) IN GENERAL. --Members of the Oversight Board who are described in paragraph (1)(A) or (D) shall have no personal liability under Federal law with respect to any claim arising out of or resulting from an act or omission by such member within the scope of service as a member. The preceding sentence shall not be construed to limit personal liability for criminal acts or omissions, willful or malicious conduct, acts or omissions for private gain, or any other act or omission outside the scope of the service of such member on the Oversight Board.

"(B) EFFECT ON OTHER LAW. --This paragraph shall not be construed --

"(i) to affect any other immunities and protections that may be available to such member under applicable law with respect to such transactions,

"(ii) to affect any other right or remedy against the United States under applicable law, or

"(iii) to limit or alter in any way the immunities that are available under applicable law for Federal officers and employees.

"(c) GENERAL RESPONSIBILITIES. --

"(1) IN GENERAL. --The Oversight Board shall oversee the Internal Revenue Service in its administration, management, conduct, direction, and supervision of the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party.

"(2) EXCEPTIONS. --The Oversight Board shall have no responsibilities or authority with respect to --

"(A) the development and formulation of Federal tax policy relating to existing or proposed internal revenue laws, related statutes, and tax conventions,

"(B) law enforcement activities of the Internal Revenue Service, including compliance activities such as criminal investigations, examinations, and collection activities, or

"(C) specific procurement activities of the Internal Revenue Service.

"(3) RESTRICTION ON DISCLOSURE OF RETURN INFORMATION TO OVERSIGHT BOARD MEMBERS. --No return, return information, or taxpayer return information (as defined in section 6103(b)) may be disclosed to any member of the Oversight Board described in subsection (b)(1)(A) or (D). Any request for information not permitted to be disclosed under the preceding sentence, and any contact relating to a specific taxpayer, made by a member of the Oversight Board so described to an officer or employee of the Internal Revenue Service shall be reported by such officer or employee to the Secretary and the Joint Committee on Taxation.

"(d) SPECIFIC RESPONSIBILITIES. --The Oversight Board shall have the following specific responsibilities:

"(1) STRATEGIC PLANS. --To review and approve strategic plans of the Internal Revenue Service, including the establishment of --

"(A) mission and objectives, and standards of performance relative to either, and

"(B) annual and long-range strategic plans.

"(2) OPERATIONAL PLANS. --To review the operational functions of the Internal Revenue Service, including --

"(A) plans for modernization of the tax system,

"(B) plans for outsourcing or managed competition, and

"(C) plans for training and education.

"(3) MANAGEMENT. --To --

"(A) recommend to the President candidates for appointment as the Commissioner of Internal Revenue and recommend to the President the removal of the Commissioner,

"(B) review the Commissioner's selection, evaluation, and compensation of senior managers, and

"(C) review and approve the Commissioner's plans for any major reorganization of the Internal Revenue Service.

"(4) BUDGET. --To --

"(A) review and approve the budget request of the Internal Revenue Service prepared by the Commissioner,

"(B) submit such budget request to the Secretary of the Treasury, and

"(C) ensure that the budget request supports the annual and long-range strategic plans.

The Secretary shall submit the budget request referred to in paragraph (4)(B) for any fiscal year to the President who shall submit such request, without revision, to Congress together with the President's annual budget request for the Internal Revenue Service for such fiscal year.

"(e) BOARD PERSONNEL MATTERS. --

"(1) COMPENSATION OF MEMBERS. --

"(A) IN GENERAL. --Each member of the Oversight Board who is described in subsection (b)(1)(A) shall be compensated at a rate of $30,000 per year. All other members of the Oversight Board shall serve without compensation for such service.

"(B) CHAIRPERSON. --In lieu of the amount specified in subparagraph (A), the Chairperson of the Oversight Board shall be compensated at a rate of $50,000.

"(2) TRAVEL EXPENSES. --The members of the Oversight Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business for purposes of attending meetings of the Oversight Board.

"(3) STAFF. --At the request of the Chairperson of the Oversight Board, the Commissioner shall detail to the Oversight Board such personnel as may be necessary to enable the Oversight Board to perform its duties. Such detail shall be without interruption or loss of civil service status or privilege.

"(4) PROCUREMENT OF TEMPORARY AND INTERMITTENT SERVICES. --The Chairperson of the Oversight Board may procure temporary and intermittent services under section 3109(b) of title 5, United States Code.

"(f) ADMINISTRATIVE MATTERS. --

"(1) CHAIR. --The members of the Oversight Board shall elect for a 2-year term a chairperson from among the members appointed under subsection (b)(1)(A).

"(2) COMMITTEES. --The Oversight Board may establish such committees as the Oversight Board determines appropriate.

"(3) MEETINGS. --The Oversight Board shall meet at least once each month and at such other times as the Oversight Board determines appropriate.

"(4) REPORTS. --The Oversight Board shall each year report to the President and the Congress with respect to the conduct of its responsibilities under this title.".

(b) CONFORMING AMENDMENTS. --

(1) Section 4946(c) (relating to definitions and special rules for chapter 42) is amended --

(A) by striking "or" at the end of paragraph (5),

(B) by striking the period at the end of paragraph (6) and inserting ", or", and

(C) by adding at the end the following new paragraph:

"(7) a member of the Internal Revenue Service Oversight Board.".

(2) The table of sections for subchapter A of chapter 80 is amended by striking the item relating to section 7802 and inserting the following new item:

"Sec. 7802. Internal Revenue Service Oversight Board."

(c) EFFECTIVE DATE. --

(1) IN GENERAL. --The amendments made by this section shall take effect on the date of the enactment of this Act.

(2) NOMINATIONS TO INTERNAL REVENUE SERVICE OVERSIGHT BOARD. --The President shall submit nominations under section 7802 of the Internal Revenue Code of 1986, as added by this section, to the Senate not later than 6 months after the date of the enactment of this Act.

SEC . 102. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.

(a) IN GENERAL. --Section 7803 (relating to other personnel) is amended to read as follows:

" SEC . 7803. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.

"(a) COMMISSIONER OF INTERNAL REVENUE. --

"(1) APPOINTMENT.

"(A) IN GENERAL. --There shall be in the Department of the Treasury a Commissioner of Internal Revenue who shall be appointed by the President, by and with the advice and consent of the Senate, to a 5-year term. The appointment shall be made without regard to political affiliation or activity.

"(B) VACANCY. --Any individual appointed to fill a vacancy in the position of Commissioner occurring before the expiration of the term for which such individual's predecessor was appointed shall be appointed only for the remainder of that term

"(C) REMOVAL. --The Commissioner may be removed at the will of the President.

"(2) DUTIES. --The Commissioner shall have such duties and powers as the Secretary may prescribe, including the power to --

"(A) administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party; and

"(B) recommend to the President a candidate for appointment as Chief Counsel for the Internal Revenue Service when a vacancy occurs, and recommend to the President the removal of such Chief Counsel. If the Secretary determines not to delegate a power specified in subparagraph (A) or (B), such determination may not take effect until 30 days after the Secretary notifies the Committees on Ways and Means, Government Reform and Oversight, and Appropriations of the House of Representatives, the Committees on Finance, Government Operations, and Appropriations of the Senate, and the Joint Committee on Taxation.

"(3) CONSULTATION WITH BOARD. --The Commissioner shall consult with the Oversight Board on all matters set forth in paragraphs (2) and (3) (other than paragraph (3)(A)) of section 7802(d).

"(b) ASSISTANT COMMISSIONER FOR EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS. --There is established within the Internal Revenue Service an office to be known as the `Office of Employee Plans and Exempt Organizations' to be under the supervision and direction of an Assistant Commissioner of Internal Revenue. As head of the Office, the Assistant Commissioner shall be responsible for carrying out such functions as the Secretary may prescribe with respect to organizations exempt from tax under section 501(a) and with respect to plans to which part I of subchapter D of chapter 1 applies (and with respect to organizations designed to be exempt under such section and plans designed to be plans to which such part applies) an other nonqualified deferred compensation arrangements. The Assistant Commissioner shall report annually to the Commissioner with respect to the Assistant Commissioner's responsibilities under this section.

"(c) OFFICE OF TAXPAYER ADVOCATE. --

"(1) IN GENERAL. --

"(A) ESTABLISHMENT. --There is established in the Internal Revenue Service an office to be known as the `Office of the Taxpayer Advocate'. Such office shall be under the supervision and direction of an official to be known as the `Taxpayer Advocate who shall be appointed with the approval of the Oversight Board by the Commissioner of Internal Revenue and shall report directly to the Commissioner. The Taxpayer Advocate shall be entitled to compensation at the same rate as the highest level official reporting directly to the Commissioner of Internal Revenue.

"(B) RESTRICTION ON SUBSEQUENT EMPLOYMENT. --An individual who is an officer or employee of the Internal Revenue Service may be appointed as Taxpayer Advocate only if such individual agrees not to accept any employment with the Internal Revenue Service for at least 5 years after ceasing to be the Taxpayer Advocate.

"(2) FUNCTIONS OF OFFICE. --

"(A) IN GENERAL. --It shall be the function of the Office of Taxpayer Advocate to --

"(i) assist taxpayers in resolving problems with the Internal Revenue Service,

"(ii) identify areas in which taxpayers have problems in dealings with the Internal Revenue Service,

"(iii) to the extent possible, propose changes in the administrative practices of the Internal Revenue Service to mitigate problems identified under clause (ii), and

"(iv) identify potential legislative changes which may be appropriate to mitigate such problems.

"(B) ANNUAL REPORTS. --

"(i) OBJECTIVES. --Not later than June 30 of each calendar year, the 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 Taxpayer Advocate for the fiscal year beginning in such calendar year. Any such report shall contain fall and substantive analysis, in addition to statistical information. "(ii) ACTIVITIES. --Not later than December 31 of each calendar year, the 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 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 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) in conjunction with the National Director of Appeals, 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 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 Oversight Board, 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 Taxpayer Advocate shall --

"(i) monitor the coverage and geographic allocation of problem resolution officers, and

"(ii) develop guidance to be distributed to all Internal Revenue Service officers and employees outlining the criteria for referral of taxpayer inquiries to problem resolution officers.

"(3) RESPONSIBILITIES OF COMMISSIONER. --The Commissioner shall establish procedures requiring a formal response to all recommendations submitted to the Commissioner by the Taxpayer Advocate within 3 months after submission to the Commissioner.".

(b) CONFORMING AMENDMENTS. --

(1) The table of sections for subchapter A of chapter 80 is amended by striking the item relating to section 7803 and inserting the following new item:

"Sec. 7803. Commissioner of Internal Revenue; other officials."

(2) Subsection (b) of section 5109 of title 5, United States Code, is amended by striking "7802(b)" and inserting "7803(b)".

(c) EFFECTIVE DATE. --

(1) IN GENERAL. --The amendments made by this section shall take effect on the date of the enactment of this Act.

(2) CURRENT OFFICERS --

(A) In the case of an individual serving as Commissioner of Internal Revenue on the date of the enactment of this Act who was appointed to such position before such date, the 5-year term required by section 7803(a)(1) of the Internal Revenue Code of 1986, as added by this section, shall begin as of the date of such appointment.

(B) Section 7803(c)(1)(B) of such Code, as added by this section, shall not apply to the individual serving as Taxpayer Advocate on the date of the enactment of this Act.

SEC . 103. OTHER PERSONNEL.