HR6506-119

1. Short title This Act may be cited as the Taxpayer Due Process Enhancement Act.

2. Suspension of period of limitations on filing a claim for credit or refund during collection action proceedings Section 6330(e)(1) of the Internal Revenue Code of 1986 is amended by inserting subsection (a), (b), or (c) of section 6511 (relating to limitations on credit or refund), after section 6502 (relating to collection after assessment),. Section 6330(e) of such Code is amended by adding at the end the following new paragraph: In the case of the running of any period of limitations under subsection (a), (b), or (c) of section 6511 with respect to the filing of any claim for credit or refund, paragraph (1)— shall apply only to the extent that such credit or refund relates to an underlying tax liability properly disputed at the hearing requested under this section, and shall not result in a suspension of the running of such period of limitations after any date on which a lapse of a deadline, a court filing, or a court order establishes that the taxpayer has forfeited or otherwise lost the right to pursue such dispute. Section 6511(i) of such Code is amended by adding at the end the following new paragraph: For limitations in case of collection action proceedings, see section 6330(e). The amendments made by this section shall apply to the running of any period of limitations if such period (determined without regard to the amendments made by this section) ends on or after the date of the enactment of this Act. (3)Period of limitations on filing a claim for credit or refundIn the case of the running of any period of limitations under subsection (a), (b), or (c) of section 6511 with respect to the filing of any claim for credit or refund, paragraph (1)— (A)shall apply only to the extent that such credit or refund relates to an underlying tax liability properly disputed at the hearing requested under this section, and (B)shall not result in a suspension of the running of such period of limitations after any date on which a lapse of a deadline, a court filing, or a court order establishes that the taxpayer has forfeited or otherwise lost the right to pursue such dispute.. (8)For limitations in case of collection action proceedings, see section 6330(e)..

3. Prohibition on crediting of overpayments against disputed tax liability during collection action proceedings Section 6402 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: If a hearing is properly requested under section 6320(a)(3)(B) or 6330(a)(3)(B), and an underlying tax liability referred to in section 6330(c)(2)(B) is properly disputed at such hearing, such tax liability shall not, except with the consent of the taxpayer, be taken into account under subsection (a) for the period during which the period of limitations for filing a claim for credit or refund relating to such tax liability is suspended by reason of section 6330(e). Section 6330(c)(2)(A) of such Code is amended by striking unpaid tax or the proposed levy and inserting unpaid tax, collection action, or proposed collection action. The amendment made by subsection (a) shall apply with respect to any period described in section 6402(o) of the Internal Revenue Code of 1986 (as added by this section) if any portion of such period is after the date of the enactment of this Act. The amendment made by subsection (b) shall take effect on the date of the enactment of this Act. (o)Prohibition on crediting of overpayments against disputed tax liability during collection action proceedingsIf a hearing is properly requested under section 6320(a)(3)(B) or 6330(a)(3)(B), and an underlying tax liability referred to in section 6330(c)(2)(B) is properly disputed at such hearing, such tax liability shall not, except with the consent of the taxpayer, be taken into account under subsection (a) for the period during which the period of limitations for filing a claim for credit or refund relating to such tax liability is suspended by reason of section 6330(e)..

4. Expansion of jurisdiction of Tax Court Section 6330(d)(1) of the Internal Revenue Code of 1986 is amended to read as follows: In the case of a determination under this section, the person may, within 30 days of such determination, petition the Tax Court for review of— such determination, and any underlying tax liability referred to in subsection (c)(2)(B) which is properly disputed at the hearing in which such determination is made. Upon the filing of a petition, the Tax Court shall have jurisdiction with respect to— the determination referred to in subparagraph (A)(i), any underlying tax liability referred to in subparagraph (A)(ii), and any equitable tolling of the 30-day deadline referred to in subparagraph (A). Upon a determination being made under this section, subparagraphs (A) and (B) shall apply whether or not the Secretary abandons the collection action or proposed collection action at issue in such determination. The amendment made by this subsection shall apply with respect to petitions filed after the date of the enactment of this Act. (1)Petition for review by Tax Court (A)In generalIn the case of a determination under this section, the person may, within 30 days of such determination, petition the Tax Court for review of— (i)such determination, and (ii)any underlying tax liability referred to in subsection (c)(2)(B) which is properly disputed at the hearing in which such determination is made. (B)Jurisdiction of Tax CourtUpon the filing of a petition, the Tax Court shall have jurisdiction with respect to— (i)the determination referred to in subparagraph (A)(i), (ii)any underlying tax liability referred to in subparagraph (A)(ii), and (iii)any equitable tolling of the 30-day deadline referred to in subparagraph (A). (C)Retention of jurisdictionUpon a determination being made under this section, subparagraphs (A) and (B) shall apply whether or not the Secretary abandons the collection action or proposed collection action at issue in such determination..