Senate OKs Taxpayer's Bill of Rights

WASHINGTON--The Senate passed a package of tax provisions Tuesday night, including a first-ever "bill of rights" to strengthen the hand of taxpayers involved in disputes with the Internal Revenue Service.

The measure was approved on an 87-1 vote. Negotiators will begin work Wednesday trying to compromise the bill with a similar, but larger, version that has passed the House. The Reagan administration prefers the Senate bill.

The bill would clear up errors and ambiguities in the 1986 tax overhaul; relieve farms and some other businesses from paying the federal tax on diesel fuel used for off-road purposes and extend several expiring provisions.

Altogether, the revenue-neutral bill reduces taxes by a total of $2.7 billion for some but raises them by an equal amount for others.

The "bill of rights" provision is designed to tip the scales slightly toward taxpayers who are the subject of collections or other enforcement actions by the IRS. It would require the IRS to fully inform of taxpayers of their rights and triple the 30 days notice required before property is seized.

On an 82-5 vote, senators killed an amendment by Sen. Bill Bradley, D-N.J., to jettison most of the money-losing parts of the bill, saving $1.8 billion over three years, and earmark' the money to help pay for a sweeping drug bill that is still being written.

"It is a question of priorities," Bradley argued. But Sen. Max Baucus, D-Mont., manager of the tax bill, said it makes no sense to "spend money on a bill that this body has not yet seen."

Bradley also lost, 85-2, in an effort to delete some of the benefits from the bill and use the money to boost the maximum earned-income credit, which benefits low-income working families with children, from $875 to $978. Only Sen. Christopher Dodd, D-Conn., sided with him.

Bradley cast the only vote against the bill.

In comparison with the $2.7 billion, three-year pricetag on the Senate bill, the House package would cost about $7.5 billion. Congressional leaders hope negotiators can hammer out a compromise before the House and Senate adjourn for the year at week's end.

Congress began writing a "technical corrections" bill immediately after passing the landmark 1986 tax overhaul.

The original purpose of the bill was to remedy mistakes--such as to fix typographical errors that resulted in the wrong section of the tax code being cited in some cases--and to make sure the law came out as Congress intended.

But as the bill made its way through the congressional taxwriting committees, it picked up dozens of amendments that had nothing to do with correcting errors. The Senate bill would, among other things:

.Allow families to avoid tax on interest earned on U.S. savings bonds redeemed to pay for college or vocational education.

.Exempt farmers, loggers and other business people from paying the diesel tax on fuel used for off-road purposes. They now must pay and later file for a refund.

.Permit free-lance writers, photographers and artists to deduct expenses of a project even before it begins producing income.

Allow livestock farmers to deduct expenses of producing an animal even before it became productive; this would wipe out what has become known as the "heifer tax."

.Prohibit a business deduction for the basic monthly charge for a home telephone.

.Extend authority to issue tax-exempt bonds to benefit lower-income first-time homebuyers through June 1989.