text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Taxpayer Protection Act of 1997''.
  
  SEC. 2. ESTABLISHMENT OF MORE INDEPENDENT OFFICE OF THE TAXPAYER 
                ADVOCATE.
  
      (a) In General.--Paragraph (1) of section 7802(d) of the Internal 
  Revenue Code of 1986 (relating to Office of Taxpayer Advocate) is 
  amended to read as follows:
              ``(1) Establishment.--
                      ``(A) In general.--There is established in the 
                  Internal Revenue Service an office to be known as the 
                  `Office of the Taxpayer Advocate'.
                      ``(B) National taxpayer advocate.--
                              ``(i) In general.--The Office of the 
                          Taxpayer Advocate shall be under the 
                          supervision and direction of an official to be 
                          known as the `National Taxpayer Advocate'. The 
                          National Taxpayer Advocate shall report 
                          directly to the Commissioner of Internal 
                          Revenue and shall be entitled to compensation 
                          at the same rate as the highest level official 
                          reporting directly to the Commissioner of the 
                          Internal Revenue Service.
                              ``(ii) Appointment.--The National Taxpayer 
                          Advocate shall be appointed by the President, 
                          by and with the advice and consent of the 
                          Senate, from among individuals with a 
                          background in customer service, as well as tax 
                          law. No officer or employee of the Internal 
                          Revenue Service may be appointed to such 
                          position in order to ensure an independent 
                          position to represent taxpayers' interests.''.
      (b) Annual Reports and Additional Responsibilities.--Section 
  7802(d)(2) of the Internal Revenue Code of 1986 (relating to functions 
  of office) is amended by striking subparagraph (B) and inserting the 
  following:
                      ``(B) Annual reports.--
                              ``(i) Objectives.--Not later than June 30 
                          of each calendar year, the National 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 Office of the Taxpayer 
                          Advocate for the fiscal year beginning in such 
                          calendar year. Any such report shall contain 
                          full and substantive analysis, in addition to 
                          statistical information.
                              ``(ii) Activities.--Not later than December 
                          31 of each calendar year, the National 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 Office 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 
                                  Office of 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) 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 National 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 Commissioner, 
                          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 National 
                  Taxpayer Advocate shall--
                              ``(i) monitor the coverage and geographic 
                          allocation of local taxpayer advocates,
                              ``(ii) develop guidance to be distributed 
                          to all Internal Revenue Service officers and 
                          employees outlining the criteria for referral 
                          of taxpayer inquiries to local taxpayer 
                          advocates,
                              ``(iii) ensure that the local telephone 
                          number for the local taxpayer advocate in each 
                          Internal Revenue Service district is published 
                          and available to taxpayers, and
                              ``(iv) in conjunction with the 
                          Commissioner, develop career paths for local 
                          taxpayer advocates choosing to make a career in 
                          the Office of the Taxpayer Advocate.''.
      (c) National Oversight of Local Offices.--Section 7802(d)(2) of the 
  Internal Revenue Code of 1986 (relating to functions of office), as 
  amended by subsection (b), is amended by adding at the end the 
  following:
                      ``(D) Personnel actions.--
                              ``(i) Heads of local offices.--The National 
                          Taxpayer Advocate shall have the responsibility 
                          to--
                                      ``(I) appoint and dismiss the local 
                                  taxpayer advocate heading the office of 
                                  the taxpayer advocate at each Internal 
                                  Revenue Service district office and 
                                  service center, and
                                      ``(II) evaluate and take personnel 
                                  actions with respect to any employee of 
                                  an office of the taxpayer advocate 
                                  described in subclause (I).
                              ``(ii) Consultation.--The National Taxpayer 
                          Advocate may consult with the head of any 
                          Internal Revenue Service district office or 
                          service center in carrying out the National 
                          Taxpayer Advocate's responsibilities under this 
                          subparagraph.''.
      (d) Operation of Local Offices.--Section 7802(d) of the Internal 
  Revenue Code of 1986 is amended by adding at the end the following:
              ``(4) Operation of local offices.--
                      ``(A) In general.--Each local taxpayer advocate--
                              ``(i) shall report directly to the National 
                          Taxpayer Advocate,
                              ``(ii) may consult with the head of the 
                          Internal Revenue Service district office 
  or service center which the local taxpayer advocate serves regarding 
  the daily operation of the office of the taxpayer advocate,
                              ``(iii) shall, at the initial meeting with 
                          any taxpayer seeking the assistance of the 
                          office of the taxpayer advocate, notify such 
                          taxpayer that the office operates independently 
                          of any Internal Revenue Service district office 
                          or service center and reports directly to 
                          Congress through the National Taxpayer 
                          Advocate, and
                              ``(iv) shall, at the taxpayer advocate's 
                          discretion, not disclose to the Internal 
                          Revenue Service contact with, or information 
                          provided by, such taxpayer.
                      ``(B) Maintenance of independent communications.--
                  Each local office of the taxpayer advocate shall 
                  maintain separate phone, facsimile, and other 
                  electronic communication access, and a separate post 
                  office address from the Internal Revenue Service 
                  district office or service center which it serves.''.
      (e) Notice of Right To Contact Office Included in Notice of 
  Deficiency.--Section 6212(a) of the Internal Revenue Code of 1986 
  (relating to notice of deficiency) is amended by adding at the end the 
  following: ``Such notice shall include a notice to the taxpayer of the 
  taxpayer's right to contact a local office of the taxpayer advocate and 
  the location and phone number of the nearest office.''.
      (f) Expansion of Authority To Issue Taxpayer Assistance Orders.--
  Section 7811(a) of the Internal Revenue Code of 1986 (relating to 
  taxpayer assistance orders) is amended--
              (1) by striking ``Upon application'' and inserting the 
          following:
              ``(1) In general.--Upon application'',
              (2) by moving the text 2 ems to the right, and
              (3) by adding at the end the following new paragraph:
              ``(2) Determination of hardship.--For purposes of 
          determining whether a taxpayer is suffering or about to suffer 
          a significant hardship, the National Taxpayer Advocate should 
          consider--
                      ``(A) whether the Internal Revenue Service employee 
                  to which such order would issue is following applicable 
                  published administrative guidance, including the 
                  Internal Revenue Manual,
                      ``(B) whether there is an immediate threat of 
                  adverse action,
                      ``(C) whether there has been a delay of more than 
                  30 days in resolving taxpayer account problems, and
                      ``(D) the prospect that the taxpayer will have to 
                  pay significant professional fees for 
                  representation.''.
      (g) Conforming Amendments.--
              (1) The following provisions of the Internal Revenue Code 
          of 1986 are each amended by striking ``Taxpayer Advocate'' each 
          place it appears and inserting ``National Taxpayer Advocate'':
                      (A) Section 6323(j)(1)(D) (relating to withdrawal 
                  of notice in certain circumstances).
                      (B) Section 6343(d)(2)(D) (relating to return of 
                  property in certain cases).
                      (C) Section 7802(d)(3) (relating to 
                  responsibilities of Commissioner).
                      (D) Section 7811(a)(1) (relating to authority to 
                  issue), as amended by subsection (f).
                      (E) Section 7811(b)(2)(D) (relating to terms of a 
                  Taxpayer Assistance Order).
                      (F) Section 7811(c) (relating to authority to 
                  modify or rescind).
                      (G) Section 7811(d)(2) (relating to suspension of 
                  running of period of limitation).
                      (H) Section 7811(e) (relating to independent action 
                  of Taxpayer Advocate).
                      (I) Section 7811(f) (relating to Taxpayer 
                  Advocate).
              (2) Section 7811(d)(1) of such Code (relating to suspension 
          of running of period of limitation) is amended by striking 
          ``Taxpayer Advocate's'' and inserting ``National Taxpayer 
          Advocate's''.
              (3) The headings of subsections (e) and (f) of section 7802 
          of such Code are each amended by striking ``Taxpayer Advocate'' 
          and inserting ``National Taxpayer Advocate''.
              (4) The heading of section 7802 of such Code is amended by 
          striking ``taxpayer advocate'' and inserting ``national 
          taxpayer advocate''.
      (h) Transition Rules Relating to Appointment of National Taxpayer 
  Advocate.--
              (1) Initial appointment.--The President shall nominate for 
          appointment the initial National Taxpayer Advocate to serve as 
          head of the Office of the Taxpayer Advocate established under 
          section 7208(a) of the Internal Revenue Code of 1986 (as 
          amended by this section) not later than 120 days after the date 
          of the enactment of this Act.
              (2) Interim role of current taxpayer advocate.--Until an 
          individual has taken office under section 7208(a) of such Code 
          (as so amended), the Taxpayer Advocate shall assume the 
          additional powers and duties of the National Taxpayer Advocate 
          under the amendments made by this section.
      (i) Effective Date.--The amendments made by this section shall take 
  effect on the date of the enactment of this Act.
target: Taxpayer Protection Act of 1997 - Amends the Internal Revenue Code to revise provisions concerning of the Office of the Taxpayer Advocate. Places such office under the direction of the National Taxpayer Advocate, who shall be appointed by the President. (Currently, the Office is under the direction of the Taxpayer Advocate, who is appointed by the Commissioner of Internal Revenue.) 
  Revises provisions concerning reporting and responsibilities of the Office, including directing the National Taxpayer Advocate to appoint local taxpayer advocates who shall report directly to the National Taxpayer Advocate. 
  Requires each local taxpayer advocate office to maintain separate phone, facsimile, and other communication access, and a separate post office address from its IRS district office or service center. 
  Revises provisions concerning the authority to issue taxpayer assistance orders.
feat_title: Taxpayer Protection Act of 1997