CPAs Laud New Taxpayer Protection Law; 'Taxpayer Bill of Rights' Discourages Abuse by the IRS.

SAN FRANCISCO--(BUSINESS WIRE)--July 30, 1996--A "Taxpayers Bill of Rights" law signed today by President Clinton will give Americans more leverage in disputes with the Internal Revenue Service, according to members of the California Society of Certified Public Accountants.

CPAs who specialize in business and individual taxation agree the new law will bolster taxpayer rights, provide greater checks against the IRS and discourage abuse of taxpayers by IRS agents in disputes about tax liability.

The new law is a "step in the right direction," according to Noelle Allen, a Cupertino, Calif. CPA and a former IRS employee. "As public advocates for tax and finance matters, we're always pleased when the small business or the individual taxpayer is given more clout in their dealings with the government," Allen said. "It's a matter of fairness and we think this law will help make things a little more fair."

For the average taxpayer, the most beneficial change may be a provision that allows individuals to use receipts from a qualified private delivery service as proof that a tax return or other time-sensitive document was filed on time. Previously the government recognized only a U.S. Postal Service post mark as proof.

"It's amazing how many people made the mistake of sending their tax documents via Federal Express or Airborne Express or some other major delivery service only to find out that the government disallowed the proof because it didn't recognize their documentation as valid," said Allen, a member of the California Society of CPAs state tax committee. "This provision, while apparently small, will probably have the most beneficial impact on the greatest number of people."

Other provisions of the new taxpayer protection legislation include:

-- Shifting the burden of proof to the IRS in the recovery of attorney's fees. Previously, taxpayers who won disputes with the IRS in court couldn't recover attorney's fees unless they also proved the government was not substantially justified in bringing the case. Now, the IRS, to avoid paying taxpayer's attorney fees in cases it loses, will have to prove it was justified in bringing suit.

-- Increasing the amount of damages you can collect (up to $1 million) from the IRS if you prove you have been the victim of a "reckless" IRS collection action.

-- Restructuring and strengthening the IRS office of taxpayer ombudsman with the establishment of a more independent taxpayer advocate position.

-- Reducing exposure to tax liability for persons who are volunteer members of unpaid boards of directors for tax-exempt organizations. Under current law, directors of these groups are potentially liable for the failure to collect and pay over payroll taxes. The new laws exempt board members of tax-exempt organizations from this responsibility, if they are not involved in the day-to-day financial operations of the organization.

-- Quicker settlement of offers in compromise on tax debts. The new law raises the threshold under which an IRS agent can routinely settle an offer in compromise on a tax debt from $500 to $50,000. Previously, if a debt in dispute was over $500, it had to be referred to the agency's chief counsel for a formal opinion, a process that is very time consuming. Now, many more cases involving offers in compromise on tax debts will be settled more quickly.

-- Extending the interest-free period for a delinquent tax payment of less than $100,000 from 10 to 21 calendar days.

The California Society of CPAs is the state's largest nonprofit accounting organization, representing nearly 30,000 certified public accountants in public practice, business, education and government.

CONTACTS: California Society Certified Public Accountants

Jane Herzog, 415/802-2496

or

Healy Partners & Co.

Jim Zelinski, 415/546-6166