[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1200 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 1200
To provide appropriations for the Internal Revenue Service to overhaul
technology and strengthen enforcement, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 22, 2021
Mr. Khanna introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To provide appropriations for the Internal Revenue Service to overhaul
technology and strengthen enforcement, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Corporations and High Earners
from Avoiding Taxes and Enforce the Rules Strictly Act'' or the ``Stop
CHEATERS Act''.
SEC. 2. POLICY OF CONGRESS.
It is the policy of Congress that--
(1) tax compliance, to raise revenue for national needs,
restore fairness, and protect the integrity of the tax system,
high-income United States citizens and corporations should pay
all of the taxes they owe,
(2) tax compliance, as indicated by the fraction of taxes
due that are reported and paid, should be comparable among
groups of taxpayers regardless of the legal entity,
(3) the Internal Revenue Service should be given resources
to increase audits and enforcement of tax compliance of high-
income individuals to reduce the tax gap, with an emphasis on
the auditing and enforcement of tax compliance by individuals
with gross income of not less than $1,000,000 and of large
corporations, and to modernize its technology in order to
better serve taxpayers and enforce the tax laws,
(4) pursuing non-filers is one of the most efficient
enforcement strategies of the Internal Revenue Service because
issuing non-filer notices can be a cost-effective tool that
requires little more than automated notices,
(5) priorities for actions and resources to improve
compliance should be guided by the relative revenue loss from
non-compliance,
(6) it should be the goal of the Internal Revenue Service
that, by the tenth tax year after the effective date of this
statute, the net tax gap, as measured by the fraction of taxes
that are due that are not reported and paid, should be reduced
by at least one-third, as compared with the fraction estimated
in the most recent Internal Revenue Service study prior to
enactment of this statute, and
(7) it should be the goal of the Internal Revenue Service
to provide quality, timely, and accurate assistance to all
taxpayers interacting with the Internal Revenue Service.
SEC. 3. ADDITIONAL APPROPRIATIONS FOR THE INTERNAL REVENUE SERVICE.
(a) Enforcement.--
(1) There is appropriated each amount listed in paragraph
(2) for additional amounts for the ``Department of the
Treasury--Internal Revenue Service--Enforcement'' account for
the salaries and expenses of additional staff to strengthen the
enforcement capacity of the IRS and increase audits yearly
until 2025 so that the following minimum targets are reached:
(A) 50 percent of individual tax returns with a
disclosed total income of not less than $10,000,000.
(B) 33 percent of individual tax returns with a
disclosed total income of not less than $5,000,000 and
less than $10,000,000.
(C) 20 percent of individual tax returns with a
disclosed total income of not less than $1,000,000 and
less than $5,000,000.
(D) 95 percent of corporations with more than
$20,000,000,000 in assets reported on Schedule L.
(E) 40 percent of returns reflecting taxes related
to estates larger than $10,000,000.
(F) 1.2 percent of returns reflecting taxes related
to gifts.
(G) 0.22 percent of tax returns filed by an
employer with respect to employee compensation.
(2) The amounts listed in this paragraph are the following:
(A) For fiscal year 2022, $2,000,000,000.
(B) For fiscal year 2023, $4,000,000,000.
(C) For fiscal year 2024, $5,000,000,000.
(D) For fiscal year 2025, $8,000,000,000.
(E) For fiscal year 2026, $8,500,000,000.
(F) For fiscal year 2027, $8,500,000,000.
(G) For fiscal year 2028, $8,500,000,000.
(H) For fiscal year 2029, $8,500,000,000.
(I) For fiscal year 2030, $8,500,000,000.
(J) For fiscal year 2031, $8,500,000,000.
(b) Taxpayer Services.--There are appropriated the following
additional amounts for the ``Department of the Treasury--Internal
Revenue Service--Taxpayer Services'' account to carry out this Act:
(1) For fiscal year 2022, $1,000,000,000.
(2) For fiscal year 2023, $1,000,000,000.
(3) For fiscal year 2024, $1,000,000,000.
(4) For fiscal year 2025, $2,500,000,000.
(5) For fiscal year 2026, $2,500,000,000.
(6) For fiscal year 2027, $2,500,000,000.
(7) For fiscal year 2028, $2,500,000,000.
(8) For fiscal year 2029, $2,500,000,000.
(9) For fiscal year 2030, $2,500,000,000.
(10) For fiscal year 2031, $2,500,000,000.
(c) Operations Support.--There are appropriated the following
additional amounts for the ``Department of the Treasury--Internal
Revenue Service--Operations Support'' account to overhaul outdated
technology of the IRS and improve the capacity of the IRS to detect
fraud related to income from a trade or business:
(1) For fiscal year 2022, $1,000,000,000.
(2) For fiscal year 2023, $1,000,000,000.
(3) For fiscal year 2024, $1,000,000,000.
(4) For fiscal year 2025, $1,000,000,000.
(5) For fiscal year 2026, $1,000,000,000.
(6) For fiscal year 2027, $1,000,000,000.
(7) For fiscal year 2028, $1,000,000,000.
(8) For fiscal year 2029, $1,000,000,000.
(9) For fiscal year 2030, $1,000,000,000.
(10) For fiscal year 2031, $1,000,000,000.
(d) Availability.--Each additional amount appropriated by this
section shall remain available until expended.
SEC. 4. RETURNS RELATING TO CERTAIN BUSINESS TRANSACTIONS.
(a) In General.--Subpart B of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 6050Z. RETURNS RELATING TO CERTAIN TRANSACTIONS.
``(a) Requirement of Reporting.--Any bank or other financial
institution prescribed by the Secretary by regulation which, in the
course of any calendar year, maintains an account for a covered
taxpayer shall make the information return described in subsection (b)
with respect to each such taxpayer at such time as the Secretary may by
regulations prescribe.
``(b) Return.--A return is described in this subsection if such
return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name, address, and TIN of the covered
taxpayer on behalf of whom such bank or financial
institution managed an account,
``(B) a summary report of total deposits received
and total withdrawals made in each such account of such
covered taxpayer, and
``(C) such other information as the Secretary may
require.
``(c) Covered Account.--
``(1) In general.--For purposes of this section, the term
`covered account' means any account belonging to a covered
taxpayer the Internal Revenue Service identifies to a bank or
financial institution via electronic communication with such
bank or financial institution.
``(2) Regulations and guidance.--The Secretary may
prescribe such regulations and other guidance as may be
appropriate or necessary to facilitate--
``(A) the identification of a covered account by
the Internal Revenue Service,
``(B) the exchange of electronic information
between the Internal Revenue Service and a bank or
financial institution, and
``(C) the reconciliation of covered accounts with
the tax return of a covered taxpayer.
``(d) Covered Taxpayer.--For purposes of this section, the term
`covered taxpayer' means--
``(1) an individual who, with respect to the applicable
taxable year--
``(A) has an adjusted gross income of $400,000 or
more, and
``(B) has any income that is not otherwise reported
on any other return or statement submitted to the
Internal Revenue Service by a third party, or
``(2) a pass-thru business entity, including a partnership
or S corporation, in which an individual described in paragraph
(1) has an ownership interest.
``(e) Statement To Be Furnished to Taxpayers With Respect to Whom
Information Is Required.--
``(1) In general.--Every bank or other financial
institution prescribed by the Secretary by regulation that is
required to make a return under subsection (a) shall furnish to
a covered taxpayer whose identity is required to be set forth
in such return a written statement showing the name, address,
and phone number of the information contact of the qualified
entity required to make such a return.
``(2) Furnishing of information.--The written statement
required under paragraph (1) shall be furnished to the taxpayer
on or before January 31 of the year following the calendar year
for which the return under subsection (a) is required to be
made.
``(f) Applicable Taxable Year.--For purposes of this section, the
term `applicable taxable year' means the taxable year ending in the
calendar year with respect to which a report is made under subsection
(a).
``(g) Regulations and Guidance.--The Secretary may prescribe such
regulations and other guidance as may be appropriate or necessary to
carry out the purposes of this section, including guidance that
facilitates the following objectives:
``(1) Annually on a date to be determined by the Secretary,
banks and financial institutions will provide to the Internal
Revenue Service an electronic file containing a complete list
of the accounts of covered taxpayers and their corresponding
taxpayer ID numbers.
``(2) The Secretary shall compare the files described in
paragraph (1) with the tax returns of taxpayers and use such
comparison to determine if a taxpayer is a covered taxpayer,
and inform the proper bank or financial institution if such
taxpayer is a covered taxpayer.
``(3) Banks and financial institutions shall issue a 1099
or other Form, as designated by the Secretary, to accounts
identified under paragraph (2).''.
(b) Clerical Amendment.--The table of sections for subchapter A of
chapter 61 of such Code is amended by adding at the end the following
new item:
``Sec. 6050Z. Returns relating to certain transactions.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 5. REPORTS TO CONGRESS.
Not later than 1 year after the date of the enactment of this Act
and every 2 years thereafter, the Commissioner of the Internal Revenue
Service, after consultation with the Comptroller General, shall submit
to Congress a report containing--
(1) a comprehensive description of--
(A) a plan to--
(i) shift more of the auditing and
enforcement assets of the Internal Revenue
Service toward high-income tax filers, and
(ii) recruit and retain auditors with the
skills essential to audit high-income
individuals, and
(B) the progress made in implementing such plan,
(2) an estimate of revenue loss from offshore tax evasion,
and
(3) information with respect to revenue loss due to such
tax evasion, organized by groups of taxpayers arranged by the
true income level of such taxpayers, as determined by the
Secretary.
SEC. 6. IRS ENFORCEMENT PENALTIES INCREASED FOR CERTAIN TAXPAYERS.
(a) In General.--Subsection (a) of section 6662 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If this section applies to any portion
of an underpayment of tax required to be shown on a return,
there shall be added to the tax an amount equal to the
applicable percentage of the portion of the underpayment to
which this section applies.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) in the case of a taxpayer with a taxable
income of less than $2 million, 20 percent,
``(B) in the case of a taxpayer with a taxable
income greater than $2 million but less than $5
million, 30 percent, and
``(C) in the case of a taxpayer with a taxable
income greater than $5 million, 40 percent.''.
(b) Effective Date.--The amendment made by this section shall apply
to returns on the due date which (determined without regard to
extensions) is after December 31, 2022.
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