Senate Panel Approves ‘Bill of Rights’ for Taxpayers

The Senate Finance Committee approved a package of tax changes Thursday, including a first-time “bill of rights” to protect taxpayers involved in disputes with the Internal Revenue Service.

The IRS would be required to give a written explanation of rights to any taxpayer being audited or subjected to collections actions and would be prohibited from promoting employees on the basis of how much money they collect.

The committee also voted to extend several expiring tax credits for brief periods and agreed to grant targeted tax relief to a variety of special interests including free-lance writers and drought-stricken livestock farmers.

Added to Previous Bill

All of those provisions and numerous others would be added to a bill, previously approved by the committee, that is aimed chiefly at correcting mainly technical errors that have been found in the tax overhaul enacted in 1986.

The “taxpayer bill of rights” would assure a taxpayer the right to tape-record meetings with the IRS, require the IRS to forgive any penalty that was imposed because of erroneous advice furnished by the agency, permit the IRS ombudsman to halt any agency action that would impose a significant hardship on a taxpayer and require that any tax-due notice include a full explanation.

Seizure of Property

The measure also would require the IRS to give 30-day notice, up from the current 10 days, before attempting to collect taxes by seizing a taxpayer’s property. It would exempt from levy more of a person’s wages and property.

Other parts of the Senate package approved Thursday would:

--Repeal retroactively a 1986 provision that prohibited free-lance writers, photographers and artists from deducting expenses of a project until it produced income. The same relief would be granted some livestock producers who otherwise would have to pay what has come to be known as a “heifer tax.”

--Allow farmers who are forced by drought to sell draft, sporting, dairy or breeding livestock to delay tax on such income for a year.

--Disallow any business deduction for the basic monthly charge for a home telephone.