Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. CORNYN. Mr. President, I rise to introduce the Small Business Taxpayer Bill of Rights Act of 2012, SBTBOR. I am very pleased that Senators SNOWE, HUTCHISON, and HELLER are cosponsors of this taxpayer-friendly legislation.

As Americans across the country race to meet today's deadline to complete their federal tax return, it is important to note that their tax burden is more than just the amount of tax paid to the federal government. Taxpayers also bear the burden of the cost of complying with the tax code. Analysts predict that taxpayers will spend over $350 billion this year alone to comply with the tax code. In addition, according to a survey by the National Small Business Association, over half of the respondents reported that they spend more than 40 hours a year dealing with federal taxes and spend more than $5,000 each year just on the administration of federal taxes. In addition, a dispute over a complex tax code with the IRS can become an expensive endeavor for small businesses, who have limited resources to fight off frivolous IRS claims. With the passage of the 2010 health care act, this burden is expected to increase in the future. At a time when job creation remains weak, small businesses should be spending their time and resources creating jobs, not cutting through miles of burdensome IRS red tape. The Small Business Taxpayer Bill of Rights seeks to mitigate this problem. It would ensure that small businesses spend less time dealing with the IRS and more time creating jobs.

The Small Business Taxpayer Bill of Rights, among other things, provides more protections and safeguards for small businesses during administrative procedures with the IRS. It would: lower the compliance burden on small business taxpayers; strengthen safeguards against IRS overreach; increase taxpayer compensation for IRS abuses and; improve taxpayer access to the court system. Amid the weakest economic recovery since World War II, American job creators urgently need such relief.

The Small Business Taxpayer Bill of Rights Act will reduce the compliance and administrative burdens faced by small business taxpayers when it comes to dealing with the IRS. The bill provides an alternative dispute resolution procedure through which a small business taxpayer may be able to request arbitration with an independent, neutral third party not employed by the IRS. In addition, the bill will make more small businesses eligible to recoup attorney's fees when a court finds that the IRS's action taken against a taxpayer is not substantially justified.

The legislation also reinforces the independent nature of the IRS Appeals Office by prohibiting it from discussing the merits of a taxpayer's case with any other department at the IRS, unless the taxpayer is afforded an opportunity to participate. Second, the bill will prevent an Appeals Officer from raising a new issue that was not initially raised by the IRS in the examination process. The SBTBOR would help to ensure the Appeals Office remains a neutral entity that effectively facilitates the taxpayer's appeals process.

The Small Business Taxpayer Bill of Rights Act will make the IRS more accountable to taxpayers by increasing the amount of damages taxpayers may receive for any collection action the IRS takes against them that is reckless, or by reason of negligence disregards the law or its regulations. Second, it increases the amount of damages taxpayers may be awarded when the IRS improperly discloses their tax returns and tax information. Third, the bill raises the monetary penalty on IRS employees who commit certain unlawful acts or disclose taxpayer information.

Finally, the legislation will improve taxpayer access to the Tax Court by expanding the role of the current ``small tax case'' procedure--an informal and efficient method for resolving disputes before the Tax Court--to include a wider variety of cases. The bill will permit taxpayers to obtain judicial review from the Tax Court when the IRS fails to act on their claim for interest abatement due to an error or delay by the IRS. Taxpayers whose property has been wrongly seized to satisfy a tax debt will have more time to claim relief and bring a civil suit against the IRS. It also makes procedural improvements for taxpayers who request innocent spouse relief. By requesting innocent spouse relief, taxpayers can be relieved of the responsibility for paying tax, interest, and penalties if their spouse improperly reported items or omitted items on their tax return.

Last week, I held an event in Houston, Texas, where I announced my intention to introduce the Small Business Taxpayer Bill of Rights Act. The event was held at the headquarters of Forge USA, which is a family-owned, medium-sized open-die forging business. Forging is a process involving the shaping of heated metal parts in which the metal is never completely confined or restrained in the dies. Forge USA has 215 employees and provides high-quality custom forged products for a variety of industries, with about 70 percent of its product going to the oil and gas industry. This is what the owners of Forge USA said about the legislation: ``Senator Cornyn's efforts to improve the rights of small businesses will mean that business owners will be able to spend more time growing their businesses and hiring more workers and hopefully less time talking to the tax man.'' I am grateful for the support of a small business like Forge USA. This legislation is also supported by the Texas Association of Business, U.S. Hispanic Chamber of Commerce, and the National Taxpayers Union, among others.

Small business owners face an especially crushing burden of paperwork, but they lack the key financial and legal resources that multinational corporations do when dealing with the tax code and the IRS. This legislation will provide relief for small businesses and will allow small businesses to spend more time expanding their business and creating jobs and less time dealing with the IRS.

Mr. President, I ask unanimous consent that the text of the bill and a letter of support be printed in the Record.

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