By Mr. CORNYN:
S. 725. A bill to provide a taxpayer bill of rights for small businesses; to the Committee on Finance.
Mr. CORNYN. Mr. President, I rise to reintroduce the Small Business Taxpayer Bill of Rights Act of 2013, SBTBOR.
As millions of taxpayers across the country race to meet today's deadline to file their Federal tax return, it is important to note that their tax burden is more than just the amount of tax paid to the Federal Government. Taxpayers also bear the compliance cost of complying with a byzantine tax code. Analysts predict that taxpayers will spend over $350 billion this year alone to comply with the tax code. An analysis of IRS data by the Office of the Taxpayer Advocate shows it takes taxpayers more than 6.1 billion hours to compete filings required by a tax code that contains almost four million words and that, on average, has more than one new provision added to it daily.
A dispute over a complex tax code with the IRS can become an expensive endeavor for small businesses, who have limited resources to fight off frivolous IRS claims. With the passage of the 2010 health care act, this burden is expected to increase in the future. At a time when job creation remains weak, small businesses should be spending their time and resources creating jobs, not cutting through miles of burdensome IRS red tape. The Small Business Taxpayer Bill of Rights seeks to mitigate this problem. It would ensure that small businesses spend less time dealing with the IRS and more time creating jobs.
The Small Business Taxpayer Bill of Rights, among other things, provides more protections and safeguards for small businesses during administrative procedures with the IRS. It would lower the compliance burden on small business taxpayers; strengthen safeguards against IRS overreach; increase taxpayer compensation for IRS abuses and; improve taxpayer access to the court system. Amid the weakest economic recovery since World War II, American job creators urgently need such relief.
The Small Business Taxpayer Bill of Rights Act will reduce the compliance and administrative burdens faced by small business taxpayers when it comes to dealing with the IRS. The bill provides an alternative dispute resolution procedure through which a small business taxpayer may be able to request arbitration with an independent, neutral third party not employed by the IRS. In addition, the bill will make more small businesses eligible to recoup attorney's fees when a court finds that the IRS's action taken against a taxpayer is not substantially justified.
The legislation also reinforces the independent nature of the IRS Appeals Office by prohibiting it from discussing the merits of a taxpayer's case with any other department at the IRS, unless the taxpayer is afforded an opportunity to
participate. Second, the bill will prevent an Appeals Officer from raising a new issue that was not initially raised by the IRS in the examination process. The SBTBOR would help to ensure the Appeals Office remains a neutral entity that effectively facilitates the taxpayer's appeals process.
The Small Business Taxpayer Bill of Rights Act will make the IRS more accountable to taxpayers by increasing the amount of damages taxpayers may receive for any collection action the IRS takes against them that is reckless, or by reason of negligence disregards the law or its regulations. Second, it increases the amount of damages taxpayers may be awarded when the IRS improperly discloses their tax returns and tax information. Third, the bill raises the monetary penalty on IRS employees who commit certain unlawful acts or disclose taxpayer information.
Finally, the legislation will improve taxpayer access to the Tax Court by expanding the role of the current ``small tax case'' procedure--an informal and efficient method for resolving disputes before the Tax Court--to include a wider variety of cases. The bill will permit taxpayers to obtain judicial review from the Tax Court when the IRS fails to act on their claim for interest abatement due to an error or delay by the IRS. And taxpayers whose property has been wrongly seized to satisfy a tax debt will have more time to claim relief and bring a civil suit against the IRS. It also makes procedural improvements for taxpayers who request innocent spouse relief. By requesting innocent spouse relief, taxpayers can be relieved of the responsibility for paying tax, interest, and penalties if their spouse improperly reported items or omitted items on their tax return.
This legislation is also supported by the Texas Association of Business, National Federation of Independent Business, U.S. Hispanic Chamber of Commerce, Americans for Tax Reform, and the National Taxpayers Union, among others.
Small business owners face an especially crushing burden of paperwork, but they lack the key financial and legal resources that multinational corporations do when dealing with the tax code and the IRS. This legislation will provide relief for small businesses and will allow small businesses to spend more time expanding their business and creating jobs and less time dealing with the IRS.
Mr. President, I ask unanimous consent that the text of the bill and a letter of support be printed in the Record.
BREAK IN TRANSCRIPT