PRINTER'S NO. 4161
No. 2967 Session of 1998
INTRODUCED BY STURLA, STETLER, ORIE, BELARDI, HANNA,
CAPPABIANCA, STABACK, SANTONI, SHANER, DeLUCA, BOSCOLA,
COLAFELLA, HARHAI, MELIO, JOSEPHS, THOMAS AND RAMOS,
NOVEMBER 18, 1998
REFERRED TO COMMITTEE ON RULES, NOVEMBER 18, 1998
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 Office of Independent Taxpayer
4 Advocate; 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 "Advocate." The Office of Independent Taxpayer Advocate,
21 created under this act.
1 * * *
2 "Board." The Independent Taxpayer Appeals Board, created
3 under this act.
4 * * *
5 "Member." A person who serves as an appointed member of the
6 Independent Taxpayer Appeals Board.
7 * * *
8 Section 2. Section 202(a) of the act is amended to read:
9 Section 202. Disclosure statement of rights of taxpayers.
10 (a) Contents.--The secretary shall[, not later than 180 days
11 after the effective date of this act,] prepare a statement which
12 sets forth the following in simple and nontechnical terms:
13 (1) The rights of a taxpayer and the [obligation]
14 authority of the department during an audit. The taxpayer
15 shall be informed about the extent of and the limits to the
16 department's authority in an audit and an appeal. The Code of
17 Ethics established under section 213 shall be made available
18 to taxpayers upon request.
19 (2) The procedures by which a taxpayer may appeal or
20 seek review of any adverse decision of the department,
21 including administrative and judicial appeals.
22 (3) The procedure for filing and processing refund
23 claims and taxpayer complaints and the time frames for
24 departmental action.
25 (4) The taxpayer's right to counsel and advice and to be
26 represented by a person of the taxpayer's choosing.
27 [(4)] (5) The procedures which the department may use
28 and the remedies it may seek in enforcing [taxes] a tax
29 claim.
30 * * *
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1 Section 3. Sections 205 and 206 of the act are amended by
2 adding subsections to read:
3 Section 205. Installment agreements.
4 * * *
5 (d) Abatement of interest charges.--Additional interest will
6 not accrue on the outstanding tax liability of a taxpayer who
7 has entered into a written agreement to make installment
8 payments to the department to satisfy a tax claim.
9 Section 206. Basis for evaluating department employees.
10 * * *
11 (c) Code of Ethics violations.--An employee of the
12 department who violates the principles of the Code of Ethics,
13 established under section 213, shall be subject to appropriate
14 disciplinary action, suspension, removal to another position,
15 demotion or termination of employment. An employee of the
16 department who releases confidential information, uses
17 confidential information for personal or private purposes, or in
18 any other way violates the privacy rights of any taxpayer shall
19 be subject to immediate dismissal.
20 Section 4. Section 207 of the act is repealed.
21 Section 5. Sections 208 and 210 of the act are amended to
22 read:
23 Section 208. Taxpayer assistance orders.
24 (a) Authority to issue.--On application [filed] by a
25 taxpayer [with] to the [department Taxpayers' Rights]
26 Independent Taxpayer Advocate in the form, manner and time
27 prescribed by the [secretary] advocate and after thorough
28 investigation, the [Taxpayers' Rights Advocate] advocate may
29 issue a taxpayer assistance order if, in the determination of
30 the [Taxpayers' Rights Advocate] advocate, the manner in which
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1 the State tax laws are being administered is creating or will
2 create an unjust and inequitable result for the taxpayer. A
3 determination by the [Taxpayers' Rights Advocate] advocate under
4 this section to issue or to not issue a taxpayer assistance
5 order is final and cannot be appealed to any court or
6 administrative panel.
7 (b) Terms of a taxpayer assistance order.--A taxpayer
8 assistance order may require the department to release property
9 of the taxpayer levied on, cease any action or refrain from
10 taking any action to enforce the State tax laws against the
11 taxpayer until the issue or issues giving rise to the order have
12 been resolved. The running of the period of limitation for such
13 department action shall be suspended from the date of the
14 taxpayer assistance order until one of the following:
15 (1) The expiration date of the order.
16 (2) If an order is modified, the expiration date of the
17 modification order.
18 (3) If an order is rescinded, the date of the rescission
19 order.
20 (c) Authority to modify or rescind.--A taxpayer assistance
21 order may be modified or rescinded by the [secretary] board.
22 (d) Independent action of [Taxpayers' Rights] Independent
23 Taxpayer Advocate.--This section shall not prevent the
24 [Taxpayers' Rights Advocate] advocate from taking action in the
25 absence of an application being filed under subsection (a).
26 Section 210. Decisions of Independent Taxpayer Appeals Board
27 [of Finance and Revenue] and Department of
28 Revenue.
29 (a) Precedent.--Where the [Board of Finance and Revenue]
30 board has issued a decision or an order in favor of a taxpayer
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1 and the Commonwealth has not appealed the decision or order, the
2 department may not make an assessment against the taxpayer that
3 raises an identical or substantially identical issue.
4 (b) Application.--Precedent shall apply to tax periods
5 following the period to which the decision or order of the
6 [Board of Finance and Revenue] board applies. It shall not apply
7 where there has been a change in statute, regulation or material
8 fact applicable to periods following the period to which the
9 decision or order of the [Board of Finance and Revenue] board
10 applies.
11 (c) Decisions of department.--In the case of a tax imposed
12 under Article III of the act of March 4, 1971 (P.L.6, No.2),
13 known as the Tax Reform Code of 1971, the department may not
14 assess a taxpayer with respect to an issue for which the
15 department assessed the same taxpayer in a previous year and the
16 taxpayer prevailed in removing such assessment based upon
17 identical or substantially identical facts.
18 (d) Exception.--Subsections (a) and (c) shall not apply if
19 the department, upon publication of notice, changes its policy
20 with respect to a discretionary issue, provided that any such
21 change in policy shall be effective prospectively only.
22 Section 6. The act is amended by adding sections to read:
23 Section 212. Enforcement procedures.
24 (a) Limitations.--In taking enforcement actions, the
25 department shall not:
26 (1) Force an innocent spouse who is either divorced from
27 a taxpayer who is subject to an enforcement action by the
28 department or is the widow or widower of a taxpayer subject
29 to such an action to make payment for back taxes if it can be
30 shown that the innocent spouse had no prior knowledge of the
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1 acts which resulted in the department's enforcement action.
2 (2) Unless pursuing a criminal investigation, take
3 action against a taxpayer for the failure to file or the
4 erroneous or fraudulent filing of a tax return for a tax
5 liability under Article III of the act of March 4, 1971
6 (P.L.6, No.2), known as the Tax Reform Code of 1971, more
7 than 36 months after the filing or payment was due. The
8 department must complete its audit and investigation within
9 15 months of providing such notice to the taxpayer.
10 (b) Burden of proof.--The department shall bear the burden
11 of proof in any tax claim enforcement action.
12 Section 213. Code of Ethics.
13 (a) Duty of department.--The department shall establish a
14 code of ethical conduct governing all department employees
15 involved in taxpayer audits, investigations, tax collections and
16 settlements and license or registration. The Code of Ethics
17 shall clearly delineate the authority and responsibility
18 department staff and its agents shall have in investigating a
19 taxpayer, in interviewing a taxpayer, in handling confidential
20 taxpayer information and in informing the taxpayer of his or her
21 rights.
22 (b) Distribution.--The Code of Ethics shall be distributed
23 to all department employees and made available to taxpayers
24 under investigation or undergoing a department audit.
25 (c) Applicability to contractors.--The department shall
26 require all entities with which it contracts for the collection
27 of delinquent taxes and other claims to adhere to a similar code
28 of ethical conduct.
29 Section 214. Taxpayer customer satisfaction survey.
30 (a) General rule.--The department shall periodically survey
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1 taxpayers to determine their satisfaction with how they were
2 treated. This survey shall be provided to every taxpayer
3 selected for an audit and may be provided to a random sample of
4 other taxpayers. The survey, at a minimum, shall seek
5 information about the ease of filing and the behavior of
6 department representatives.
7 (b) Confidentiality.--Personal identifying information from
8 the survey shall be confidential.
9 (c) Internet.--The department may make the survey available
10 in electronic format.
11 (d) Report of survey results.--The department shall
12 annually, as part of its budget submission, provide the General
13 Assembly with a report on the results of the most recent
14 customer satisfaction survey.
15 Section 215. Audits.
16 (a) Duty to inform taxpayer of anticipated time required.--
17 At the time it initiates an audit of a taxpayer, the department
18 shall provide the taxpayer with a reasonable estimate of the
19 length of time the audit will take, including the time required
20 to review the taxpayer's records, the time required to
21 physically be present in the taxpayer's offices and the
22 completion date for the audit.
23 (b) Closing the audit.--If an audit of a taxpayer has been
24 completed and the taxpayer has complied with the results of the
25 audit, either voluntarily, through mediation or through
26 adjudication, the taxpayer's records shall be deemed to be
27 closed and not subject to further audit, unless the department
28 has clear and convincing evidence of criminal behavior by the
29 taxpayer.
30 Section 216. Performance review and training of auditors.
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1 (a) Annual review of auditors.--The department shall
2 annually review the performance of each auditor to ensure
3 consistent interpretation of State tax laws, regulations,
4 policies and procedures.
5 (b) Information and training to be provided.--The department
6 shall maintain a digest of policy decisions, interpretations and
7 decisions of the department, the advocate and the board, which
8 shall be periodically distributed to all tax examiners and
9 auditors. The department shall provide an annual training
10 program for all auditors and examiners.
11 Section 7. The act is amended by adding a chapter to read:
12 CHAPTER 2-A
13 INDEPENDENT TAXPAYER ADVOCATE
14 Section 201-A. Office of Independent Taxpayer Advocate.
15 (a) Office established.--The Office of Independent Taxpayer
16 Advocate is hereby established as an independent agency of State
17 government.
18 (b) Appointment of advocate.--The Governor shall appoint an
19 individual to the advocate position from the private sector who
20 is a resident of Pennsylvania, subject to confirmation by the
21 Senate by a two-thirds vote. The term of office shall be five
22 years. The Governor shall submit nominations to the Senate not
23 later than 90 days after the date of the enactment of this act.
24 (c) Qualifications.--The advocate shall be appointed on the
25 basis of his professional experience and expertise in the
26 following areas:
27 (1) State tax laws, including tax administration and
28 compliance.
29 (2) Standard auditing and accounting procedures.
30 (3) Understanding of customer service and information
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1 technology.
2 (4) Understanding of the needs and concerns of
3 taxpayers.
4 Section 202-A. Powers and duties of advocate.
5 The advocate shall have the following powers and duties:
6 (1) The authority to offer mediation services to settle
7 disputes between taxpayers and the department.
8 (2) The right to review and comment on policy decisions,
9 including the development of rules, regulations, forms and
10 procedures by the department.
11 (3) The right to review all judgments pertaining to
12 individual taxpayers by the department.
13 (4) To advise taxpayers of their rights and
14 responsibilities according to Pennsylvania tax law.
15 (5) To represent taxpayers in hearings before the board.
16 (6) To operate a taxpayer hotline.
17 (7) To hire and fire such staff as may be necessary.
18 (8) To enter into such contracts, to purchase such
19 supplies and materials as may be necessary to permit the
20 successful operation of the office.
21 (9) To prepare and present an annual budget.
22 (10) To report the decisions of the advocate to
23 taxpayers in such form as the advocate deems appropriate.
24 Section 203-A. Transfer of authority and resources.
25 The powers and duties of the Taxpayers' Rights Advocate set
26 forth in section 207 and all of the resources now dedicated to
27 that office are hereby transferred to the advocate.
28 Section 204-A. The Independent Taxpayer Appeals Board.
29 (a) Board established.--The Independent Taxpayer Appeals
30 Board is hereby established.
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1 (b) Members.--The board shall be composed of three members
2 who are appointed by the Governor and confirmed by a two-thirds
3 vote in the Senate.
4 (c) Terms.--Among the initial appointments to the board one
5 shall be for a term of two years, one for a term of four years
6 and one for a term of six years. Thereafter members shall be
7 appointed to serve for six-year terms.
8 (d) Required qualification.--All members of the board shall
9 be attorneys admitted to practice in Pennsylvania and shall have
10 a familiarity with the tax laws of Pennsylvania.
11 (e) Compensation--Members shall receive the same
12 compensation set for members of the Environmental Hearing Board.
13 (f) Powers and duties of the board.--The board shall be the
14 first level of appeal of any decision by an employee of the
15 department relative to a decision affecting a taxpayer. The
16 board shall have the following powers:
17 (1) To adjudicate tax disputes between taxpayers and the
18 department, including hearing appeals of decisions of the
19 department, remanding a dispute to mediation and issuing
20 enforceable orders.
21 (2) To hire such staff, enter into such contracts,
22 implement such rules and procedures and adopt such forms as
23 the board shall deem necessary and appropriate to carry out
24 its responsibilities.
25 (3) To elect a chairman for the board annually from
26 among the members.
27 (g) Transfer of authority.--The powers and duties of the
28 internal review program within the department, the department
29 Board of Appeals and the Board of Finance and Revenue relative
30 to adjudicating disputes between the department and taxpayers
19980H2967B4161 - 10 -
1 are hereby transferred to the Independent Taxpayer Appeals Board
2 created under this act.
3 (h) Removal from office and filling an unexpired term.--A
4 board member may only be removed for gross negligence or
5 malfeasance. Three-quarters of the Senate must ratify the
6 Governor's decision for removal of a board member or the
7 advocate. Any vacancy on the board shall be filled in the same
8 manner as the original appointment. Any appointment to fill a
9 vacancy before the expiration of the term for which the
10 predecessor was appointed shall be appointed for the remainder
11 of that term.
12 Section 205-A. Personal liability.
13 (a) General rule.--Members of the board and the advocate
14 shall have no personal liability under State law with respect to
15 any claim arising out of or resulting from an act or omission by
16 the member or the advocate within the scope of service of their
17 respective positions.
18 (b) Exception.--This shall not be construed to limit
19 personal liability for criminal acts or omissions, willful or
20 malicious conduct, acts or omissions for private gain, or any
21 other act or omission outside the scope of the service of the
22 member or the advocate.
23 Section 206-A. Exceptions.
24 The advocate and board shall have no responsibilities or
25 authority with respect to the criminal law enforcement
26 activities of the department, including compliance activities
27 such as criminal investigations, examinations and collection
28 activities, or specific procurement activities of the
29 department.
30 Section 207-A. Confidentiality.
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1 All members of the board and the advocate are bound to
2 confidentiality of all information pertaining to individual tax
3 information. Any member or advocate who does not adhere to this
4 policy shall be removed from office.
5 Section 8. Effective date.
6 This act shall take effect in 90 days.
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