Internal Revenue Service Restructuring and Reform Act of 1998
Encyclopedia
The Internal Revenue Service Restructuring and Reform Act of 1998, also known as Taxpayer Bill of Rights III, , resulted from hearings held by the United States Congress in 1996 and 1997. The Act included numerous amendments to the Internal Revenue Code
of 1986.
Individuals are allowed to deduct interest expense paid on certain student loans.
The exclusion, from income, of gain on the sale of a principal residence (up to $250,000 for individuals or $500,000 on a joint return) is pro-rated for certain taxpayers.
The use of a continuous levy -- a levy attaching to both property held on the date of levy and to property acquired after that date -- must be specifically approved by the Internal Revenue Service
(IRS) before the levy is effective.
The Act also provided a five-year term of office for the Commissioner of Internal Revenue
. The Act also provided that the National Taxpayer Advocate will be appointed by the Secretary of the Treasury, and will report directly to the Commissioner of Internal Revenue.
The Act created an IRS oversight board to ensure, among other things, that taxpayers are properly treated by IRS employees.
The IRS was barred from using the term "illegal tax protester
".
The Act allows for civil damages of up to $100,000 where an IRS office or employee negligently disregards the tax statutes or regulations.
The Act limits the use of certain financial status audit techniques by IRS employees.
The Act also provided that the IRS cannot seize a personal residence to satisfy a liability of $5,000 or less.
The Act provides for changes in the due process rights afforded to taxpayers after the filing of a notice of Federal tax lien.
The IRS was also required by the Act to follow certain guidelines in the Fair Debt Collection Practices Act.
The Act also changes certain procedures relating to taxpayers' offers in compromise of tax liabilities and installment agreement between taxpayers and the IRS with respect to payment of taxes.
.
The Act also changed certain rules regarding the burden of proof in court proceedings in connection with Federal taxes.
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...
of 1986.
Examples of provisions related to individuals
The Act provides that individuals who fail to provide their taxpayer identification numbers are not allowed to take the earned income credit for the year in which the failure occurs.Individuals are allowed to deduct interest expense paid on certain student loans.
The exclusion, from income, of gain on the sale of a principal residence (up to $250,000 for individuals or $500,000 on a joint return) is pro-rated for certain taxpayers.
The use of a continuous levy -- a levy attaching to both property held on the date of levy and to property acquired after that date -- must be specifically approved by the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
(IRS) before the levy is effective.
Examples of provisions related to business and investment
The Act changed the holding period for long-term capital gain treatment from eighteen months to twelve months, effective for tax years that begin after December 31, 1997.Examples of provisions related to structure and function of the IRS
The Act mandated the replacement of geographic regional divisions of the IRS with units designed to serve particular categories of taxpayers.The Act also provided a five-year term of office for the Commissioner of Internal Revenue
Commissioner of Internal Revenue
The Commissioner of Internal Revenue is the head of the Internal Revenue Service , a bureau within the United States Department of the Treasury.The office of Commissioner was created by Congress by the Revenue Act of 1862...
. The Act also provided that the National Taxpayer Advocate will be appointed by the Secretary of the Treasury, and will report directly to the Commissioner of Internal Revenue.
The Act created an IRS oversight board to ensure, among other things, that taxpayers are properly treated by IRS employees.
The IRS was barred from using the term "illegal tax protester
Tax protester (United States)
A tax protester is someone who refuses to pay a tax on constitutional or legal grounds, typically because he or she believes that the tax laws are unconstitutional or otherwise invalid...
".
Examples of provisions related to taxpayer rights
The Act created a limited privilege for taxpayers with respect to certain communications made between a taxpayer and a "federally authorized tax practitioner" in non-criminal proceedings.The Act allows for civil damages of up to $100,000 where an IRS office or employee negligently disregards the tax statutes or regulations.
The Act limits the use of certain financial status audit techniques by IRS employees.
Tax collection activities
The Act also provided that certain assessments and levies must have the approval of IRS legal counsel.The Act also provided that the IRS cannot seize a personal residence to satisfy a liability of $5,000 or less.
The Act provides for changes in the due process rights afforded to taxpayers after the filing of a notice of Federal tax lien.
The IRS was also required by the Act to follow certain guidelines in the Fair Debt Collection Practices Act.
The Act also changes certain procedures relating to taxpayers' offers in compromise of tax liabilities and installment agreement between taxpayers and the IRS with respect to payment of taxes.
Judicial proceedings
The Act increased, from $10,000 to $50,000, the designated maximum amount that may be at issue in simplified "small tax case" actions filed in the United States Tax CourtUnited States Tax Court
The United States Tax Court is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides that the Congress has the power to "constitute Tribunals inferior to the supreme Court"...
.
The Act also changed certain rules regarding the burden of proof in court proceedings in connection with Federal taxes.