PRINTER'S NO. 432
No. 412 Session of 1999
INTRODUCED BY GODSHALL, BENNINGHOFF, CIVERA, CLARK, FICHTER,
GEORGE, HASAY, KENNEY, LAUGHLIN, McCALL, MICOZZIE, ORIE,
PESCI, RAMOS, ROBERTS, SEMMEL, SEYFERT, TULLI AND YOUNGBLOOD,
FEBRUARY 9, 1999
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 9, 1999
AN ACT
1 Amending the act of December 20, 1996 (P.L.1504, No.195),
2 entitled "An act providing for the rights and privileges of
3 taxpayers," creating the Independent Taxpayer Appeals Board;
4 adding definitions; further providing for rights of
5 taxpayers, for installment agreements, for employee
6 evaluations, for taxpayer assistance orders, for board
7 decisions and for the Board of Finance and Revenue; providing
8 for enforcement procedures, for a code of ethical conduct,
9 for audits and for performance review and training of
10 auditors; and making a repeal.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 103 of the act of December 20, 1996
14 (P.L.1504, No.195), known as the Taxpayers' Bill of Rights, is
15 amended by adding definitions to read:
16 Section 103. Definitions.
17 The following words and phrases when used in this act shall
18 have the meanings given to them in this section unless the
19 context clearly indicates otherwise:
20 * * *
21 "Board." The Independent Taxpayer Appeals Board, created
1 under this act.
2 * * *
3 "Member." A person who serves as an appointed member of the
4 Independent Taxpayer Appeals Board.
5 * * *
6 Section 2. Section 202(a) of the act is amended to read:
7 Section 202. Disclosure statement of rights of taxpayers.
8 (a) Contents.--The secretary shall[, not later than 180 days
9 after the effective date of this act,] prepare a statement which
10 sets forth the following in simple and nontechnical terms:
11 (1) The rights of a taxpayer and the obligation of the
12 department during an audit. The taxpayer shall be informed
13 about the extent of and the limits to the department's
14 obligation in an audit and an appeal. The Code of Ethics
15 established under section 213 shall be made available to
16 taxpayers upon request.
17 (2) The procedures by which a taxpayer may appeal or
18 seek review of any adverse decision of the department,
19 including administrative and judicial appeals.
20 (3) The procedure for filing and processing refund
21 claims and taxpayer complaints and the time frames for
22 departmental action.
23 (4) The taxpayer's right to counsel and advice and to be
24 represented by a person of the taxpayer's choosing.
25 [(4)] (5) The procedures which the department may use
26 and the remedies it may seek in enforcing taxes.
27 * * *
28 Section 3. Sections 205 and 206 of the act are amended by
29 adding subsections to read:
30 Section 205. Installment agreements.
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1 * * *
2 (d) Abatement of interest charges.--Additional interest will
3 not accrue on the outstanding tax liability of a taxpayer who
4 has entered into and who is abiding by a written agreement to
5 make installment payments to the department to satisfy a tax
6 claim.
7 Section 206. Basis for evaluating department employees.
8 * * *
9 (c) Code of Ethics violations.--An employee of the
10 department who violates the principles of the Code of Ethics,
11 established under section 213, shall be subject to appropriate
12 disciplinary action, suspension, removal to another position,
13 demotion or termination of employment. An employee of the
14 department who releases confidential information, uses
15 confidential information for personal or private purposes, or in
16 any other way violates the privacy rights of any taxpayer shall
17 be subject to immediate dismissal.
18 Section 4. Sections 208 and 210 of the act are amended to
19 read:
20 Section 208. Taxpayer assistance orders.
21 (a) Authority to issue.--On application filed by a taxpayer
22 with the department Taxpayers' Rights Advocate in the form,
23 manner and time prescribed by the secretary and after thorough
24 investigation, the Taxpayers' Rights Advocate may issue a
25 taxpayer assistance order if, in the determination of the
26 Taxpayers' Rights Advocate, the manner in which the State tax
27 laws are being administered is creating or will create an unjust
28 and inequitable result for the taxpayer. A determination by the
29 Taxpayers' Rights Advocate under this section to issue or to not
30 issue a taxpayer assistance order is final and cannot be
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1 appealed to any court or administrative panel.
2 (b) Terms of a taxpayer assistance order.--A taxpayer
3 assistance order may require the department to release property
4 of the taxpayer levied on, cease any action or refrain from
5 taking any action to enforce the State tax laws against the
6 taxpayer until the issue or issues giving rise to the order have
7 been resolved. The running of the period of limitation for such
8 department action shall be suspended from the date of the
9 taxpayer assistance order until one of the following:
10 (1) The expiration date of the order.
11 (2) If an order is modified, the expiration date of the
12 modification order.
13 (3) If an order is rescinded, the date of the rescission
14 order.
15 (c) Authority to modify or rescind.--A taxpayer assistance
16 order may be modified or rescinded by the [secretary] board.
17 (d) Independent action of Taxpayers' Rights Advocate.--This
18 section shall not prevent the Taxpayers' Rights Advocate from
19 taking action in the absence of an application being filed under
20 subsection (a).
21 Section 210. Decisions of Independent Taxpayer Appeals Board
22 [of Finance and Revenue] and Department of
23 Revenue.
24 (a) Precedent.--Where the [Board of Finance and Revenue]
25 board has issued a decision or an order in favor of a taxpayer
26 and the Commonwealth has not appealed the decision or order, the
27 department may not make an assessment against the taxpayer that
28 raises an identical or substantially identical issue.
29 (b) Application.--Precedent shall apply to tax periods
30 following the period to which the decision or order of the
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1 [Board of Finance and Revenue] board applies. It shall not apply
2 where there has been a change in statute, regulation or material
3 fact applicable to periods following the period to which the
4 decision or order of the [Board of Finance and Revenue] board
5 applies.
6 (c) Decisions of department.--In the case of a tax imposed
7 under Article III of the act of March 4, 1971 (P.L.6, No.2),
8 known as the Tax Reform Code of 1971, the department may not
9 assess a taxpayer with respect to an issue for which the
10 department assessed the same taxpayer in a previous year and the
11 taxpayer prevailed in removing such assessment based upon
12 identical or substantially identical facts.
13 (d) Exception.--Subsections (a) and (c) shall not apply if
14 the department, upon publication of notice, changes its [policy]
15 regulations with respect to a discretionary issue, provided that
16 any such change in [policy] regulation shall be effective
17 prospectively only.
18 Section 5. The act is amended by adding sections to read:
19 Section 212. Enforcement procedures.
20 (a) Limitations.--In taking enforcement actions, the
21 department shall not:
22 (1) Force an innocent spouse who is either divorced from
23 a taxpayer who is subject to an enforcement action by the
24 department or is the widow or widower of a taxpayer subject
25 to such an action to make payment for back taxes if it can be
26 shown that the innocent spouse had no prior knowledge of the
27 acts which resulted in the department's enforcement action.
28 (2) Unless pursuing a criminal investigation, take
29 action against a taxpayer for the failure to file or the
30 erroneous or fraudulent filing of a tax return for a tax
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1 liability under Article III of the act of March 4, 1971
2 (P.L.6, No.2), known as the Tax Reform Code of 1971, more
3 than 36 months after the filing or payment was due. The
4 department must complete its audit and investigation within
5 15 months of providing such notice to the taxpayer.
6 (b) Burden of proof.--The department shall bear the burden
7 of proof in any tax claim enforcement action.
8 Section 213. Code of Ethics.
9 (a) Duty of department.--The department shall establish a
10 code of ethical conduct governing all department employees
11 involved in taxpayer audits, investigations, tax collections and
12 settlements and license or registration. The Code of Ethics
13 shall clearly delineate the authority and responsibility
14 department staff and its agents shall have in investigating a
15 taxpayer, in interviewing a taxpayer, in handling confidential
16 taxpayer information and in informing the taxpayer of his or her
17 rights.
18 (b) Distribution.--The Code of Ethics shall be distributed
19 to all department employees and made available to taxpayers
20 under investigation or undergoing a department audit.
21 (c) Applicability to contractors.--The department shall
22 require all entities with which it contracts for the collection
23 of delinquent taxes and other claims to adhere to a similar code
24 of ethical conduct.
25 Section 214. Taxpayer customer satisfaction survey.
26 (a) General rule.--The department shall periodically survey
27 taxpayers to determine their satisfaction with how they were
28 treated. This survey shall be provided to every taxpayer
29 selected for an audit and may be provided to a random sample of
30 other taxpayers. The survey, at a minimum, shall seek
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1 information about the ease of filing and the behavior of
2 department representatives.
3 (b) Confidentiality.--Personal identifying information from
4 the survey shall be confidential.
5 (c) Internet.--The department may make the survey available
6 in electronic format.
7 (d) Report of survey results.--The department shall
8 annually, as part of its budget submission, provide the General
9 Assembly with a report on the results of the most recent
10 customer satisfaction survey.
11 Section 215. Audits.
12 (a) Duty to inform taxpayer of anticipated time required.--
13 At the time it initiates an audit of a taxpayer, the department
14 shall provide the taxpayer with a reasonable estimate of the
15 length of time the audit will take, including the time required
16 to review the taxpayer's records, the time required to
17 physically be present in the taxpayer's offices and the
18 completion date for the audit.
19 (b) Closing the audit.--If an audit of a taxpayer has been
20 completed and the taxpayer has complied with the results of the
21 audit, either voluntarily, through mediation or through
22 adjudication, the taxpayer's records shall be deemed to be
23 closed and not subject to further audit, unless the department
24 has clear and convincing evidence of criminal behavior by the
25 taxpayer.
26 Section 216. Performance review and training of auditors.
27 (a) Annual review of auditors.--The department shall
28 annually review the performance of each auditor to ensure
29 consistent interpretation of State tax laws, regulations,
30 policies and procedures.
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1 (b) Information and training to be provided.--The department
2 shall maintain a digest of policy decisions, interpretations and
3 decisions of the department, the advocate and the board, which
4 shall be periodically distributed to all tax examiners and
5 auditors. The department shall provide an annual training
6 program for all auditors and examiners.
7 Section 6. The act is amended by adding a chapter to read:
8 CHAPTER 2-A
9 INDEPENDENT TAXPAYER APPEALS BOARD
10 Section 201-A. The Independent Taxpayer Appeals Board.
11 (a) Board established.--The Independent Taxpayer Appeals
12 Board is hereby established.
13 (b) Members.--The board shall be composed of three members
14 who are appointed by the Governor and confirmed by a two-thirds
15 vote in the Senate.
16 (c) Terms.--Among the initial appointments to the board one
17 shall be for a term of two years, one for a term of four years
18 and one for a term of six years. Thereafter members shall be
19 appointed to serve for six-year terms.
20 (d) Required qualification.--All members of the board shall
21 be attorneys admitted to practice in Pennsylvania and shall have
22 a familiarity with the tax laws of Pennsylvania.
23 (e) Compensation.--Members shall receive the same
24 compensation set for members of the Environmental Hearing Board.
25 (f) Powers and duties of the board.--The board shall be the
26 first level of appeal of any decision by an employee of the
27 department relative to a decision affecting a taxpayer. The
28 board shall have the following powers:
29 (1) To adjudicate tax disputes between taxpayers and the
30 department, including hearing appeals of decisions of the
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1 department, remanding a dispute to mediation and issuing
2 enforceable orders.
3 (2) To hire such staff, enter into such contracts,
4 implement such rules and procedures and adopt such forms as
5 the board shall deem necessary and appropriate to carry out
6 its responsibilities.
7 (3) To elect a chairman for the board annually from
8 among the members.
9 (g) Transfer of authority.--The powers and duties of any
10 internal review program within the department, the department
11 Board of Appeals and the Board of Finance and Revenue relative
12 to adjudicating disputes between the department and taxpayers
13 are hereby transferred to the Independent Taxpayer Appeals Board
14 created under this act.
15 (h) Removal from office and filling an unexpired term.--A
16 board member may only be removed for gross negligence or
17 malfeasance. Three-quarters of the Senate must ratify the
18 Governor's decision for removal of a board member or the
19 advocate. Any vacancy on the board shall be filled in the same
20 manner as the original appointment. Any appointment to fill a
21 vacancy before the expiration of the term for which the
22 predecessor was appointed shall be appointed for the remainder
23 of that term.
24 Section 202-A. Personal liability.
25 (a) General rule.--Members of the board and the advocate
26 shall have no personal liability under State law with respect to
27 any claim arising out of or resulting from an act or omission by
28 the member or the advocate within the scope of service of their
29 respective positions.
30 (b) Exception.--This shall not be construed to limit
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1 personal liability for criminal acts or omissions, willful or
2 malicious conduct, acts or omissions for private gain, or any
3 other act or omission outside the scope of the service of the
4 member or the advocate.
5 Section 203-A. Exceptions.
6 The advocate and board shall have no responsibilities or
7 authority with respect to the criminal law enforcement
8 activities of the department, including compliance activities
9 such as criminal investigations, examinations and collection
10 activities, or specific procurement activities of the
11 department.
12 Section 204-A. Confidentiality.
13 All members of the board and the advocate are bound to
14 confidentiality of all information pertaining to individual tax
15 information. Any member or advocate who does not adhere to this
16 policy shall be removed from office.
17 Section 7. Repeals.
18 All acts and parts of acts are repealed insofar as they are
19 inconsistent with this act.
20 Section 8. Effective date.
21 This act shall take effect in 90 days.
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