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116th Congress   }                                   {    Rept. 116-39
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1
_______________________________________________________________________

                                     

 
                        TAXPAYER FIRST ACT OF 2019

                               ----------                              

                              R E P O R T

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS 
                      
                        HOUSE OF REPRESENTATIVES

                                   on

                               H.R. 1957

      [Including cost estimate of the Congressional Budget Office]









[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]










                 April 9, 2019.--Ordered to be printed




















116th Congress   }                                   {    Rept. 116-39
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1
_______________________________________________________________________

                                     


                       TAXPAYER FIRST ACT OF 2019

                               __________

                              R E P O R T

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS

                        HOUSE OF REPRESENTATIVES

                                   on

                               H.R. 1957

      [Including cost estimate of the Congressional Budget Office]


















[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


















                 April 9, 2019.--Ordered to be printed


                                   ______

		 
                     U.S. GOVERNMENT PUBLISHING OFFICE 
		 
89-006                    WASHINGTON : 2019                 






















                            C O N T E N T S

                              ----------                              
                                                                   Page
 I. SUMMARY AND BACKGROUND...........................................26
        A. Purpose and Summary...................................    26
        B. Background and Need for Legislation...................    26
        C. Legislative History...................................    27
II. EXPLANATION OF THE BILL..........................................28
TITLE I--PUTTING TAXPAYERS FIRST.................................    28
        A. Independent Appeals Process...........................    28
            1. Establishment of Internal Revenue Service 
              Independent Office of Appeals (sec. 1001 of the 
              bill and sec. 7803 of the Code)....................    28
        B. Improved Service......................................    32
            1. Comprehensive customer service strategy (sec. 1101 
              of the bill).......................................    32
            2. IRS Free File Program (sec. 1102 of the bill).....    33
            3. Low-income exception for payments otherwise 
              required in connection with a submission of an 
              offer-in-compromise (sec. 1103 of the bill and sec. 
              7122 of the Code)..................................    34
        C. Sensible Enforcement..................................    35
            1. Internal Revenue Service seizure requirements with 
              respect to structuring transactions (sec. 1201 of 
              the bill)..........................................    35
            2. Exclusion of interest received in action to 
              recover property seized by the Internal Revenue 
              Service based on structuring transaction (sec. 1202 
              of the bill and new sec. 139H of the Code).........    38
            3. Clarification of equitable relief from joint 
              liability (sec. 1203 of the bill and sec. 6015 of 
              the Code)..........................................    38
            4. Modification of procedures for issuance of third-
              party summons (sec. 1204 of the bill and sec. 7609 
              of the Code).......................................    40
            5. Private debt collection and special compliance 
              personnel program (sec. 1205 of the bill and sec. 
              6306 of the Code)..................................    42
            6. Reform of notice of contact of third parties (sec. 
              1206 of the bill and sec. 7602 of the Code)........    44
            7. Modification of authority to issue designated 
              summons (sec. 1207 of the bill and sec. 6503(j) of 
              the Code)..........................................    45
            8. Limitation on access of non-Internal Revenue 
              Service employees to returns and return information 
              (sec. 1208 of the bill and sec. 7602 of the Code)..    48
        D. Organizational Modernization..........................    50
            1. Office of the National Taxpayer Advocate (sec. 
              1301 of the bill and sec. 7803(c) of the Code).....    50
            2. Modernization of Internal Revenue Service 
              organizational structure (sec. 1302 of the bill)...    53
        E. Other Provisions......................................    54
            1. Return preparation programs for applicable 
              taxpayers (sec. 1401 of the bill and new sec. 7526A 
              of the Code).......................................    54
            2. Provision of information regarding low-income 
              taxpayer clinics (sec. 1402 of the bill and sec. 
              7526 of the Code)..................................    57
            3. Notice from IRS regarding closure of Taxpayer 
              Assistance Centers (sec. 1403 of the bill).........    58
            4. Rules for seizure and sale of perishable goods 
              restricted to only perishable goods (sec. 1404 of 
              the bill and sec. 6336 of the Code)................    58
            5. Whistleblower reforms (sec. 1405 of the bill and 
              sec. 6103 of the Code).............................    59
            6. Customer service information (sec. 1406 of the 
              bill)..............................................    61
            7. Misdirected tax refund deposits (sec. 1407 of the 
              bill and sec. 6402 of the Code)....................    62
TITLE II--21ST CENTURY IRS.......................................    63
        A. Cybersecurity and Identity Protection.................    63
            1. Public-private partnership to address identity 
              theft tax refund fraud (sec. 2001 of the bill).....    63
            2. Recommendations of Electronic Tax Administration 
              Advisory Committee regarding identity theft refund 
              fraud (sec. 2002 of the bill)......................    64
            3. Information sharing and analysis center (sec. 2003 
              of the bill and sec. 6103 of the Code).............    65
            4. Compliance by contractors with confidentiality 
              safeguards (sec. 2004 of the bill and sec. 6103 of 
              the Code)..........................................    69
            5. Report on electronic payments (sec. 2005 of the 
              bill)..............................................    71
            6. Identity protection personal identification 
              numbers (sec. 2006 of the bill)....................    71
            7. Single point of contact for tax-related identity 
              theft victims (sec. 2007 of the bill)..............    73
            8. Notification of suspected identity theft (sec. 
              2008 of the bill and new sec. 7529 of the Code)....    74
            9. Guidelines for stolen identity theft refund fraud 
              cases (sec. 2009 of the bill)......................    76
            10. Increased penalty for improper disclosure or use 
              of information by preparers of returns (sec. 2010 
              of the bill and sec. 6713 of the Code).............    77
        B. Development of Information Technology.................    78
            1. Management of IRS information technology (sec. 
              2101 of the bill and sec. 7803 of the Code)........    78
            2. Internet platform for Form 1099 filings (sec. 2102 
              of the bill).......................................    80
            3. Streamlined critical pay authority for information 
              technology positions (sec. 2103 of the bill and new 
              sec. 7812 of the Code).............................    81
        C. Modernization of Consent-Based Income Verification 
          System.................................................    83
            1. Disclosure of taxpayer information for third-party 
              income verification (sec. 2201 of the bill and sec. 
              6103 of the Code)..................................    83
            2. Limit redisclosures and uses of consent-based 
              disclosures of tax return information (sec. 2202 of 
              the bill and sec. 6103 of the Code)................    85
        D. Expanded Use of Electronic Systems....................    86
            1. Electronic filing of returns (sec. 2301 of the 
              bill and sec. 6011 of the Code)....................    86
            2. Uniform standards for the use of electronic 
              signatures for disclosure authorizations to, and 
              other authorizations of, practitioners (sec. 2302 
              of the bill and sec. 6061 of the Code).............    88
            3. Payment of taxes by debit and credit cards (sec. 
              2303 of the bill and sec. 6311 of the Code)........    90
            4. Authentication of users of electronic services 
              accounts (sec. 2304 of the bill)...................    91
        F. Other Provisions......................................    91
            1. Repeal of provision regarding certain tax 
              compliance procedures and reports (sec. 2401 of the 
              bill)..............................................    91
            2. Comprehensive training strategy (sec. 2402 of the 
              bill)..............................................    92
TITLE III--MISCELLANEOUS PROVISIONS..............................    93
        A. Reform of Laws Governing Internal Revenue Service 
          Employees..............................................    93
            1. Prohibition on rehiring any employee of the 
              Internal Revenue Service who was involuntarily 
              separated from service for misconduct (sec. 3001 of 
              the bill and sec. 7804 of the Code)................    93
            2. Notification of unauthorized inspection or 
              disclosure of returns and return information (sec. 
              3002 of the bill and sec. 7431 of the Code)........    95
        B. Provisions Relating to Exempt Organizations...........    96
            1. Mandatory e-filing by exempt organizations (sec. 
              3101 of the bill and secs. 6033 and 6104 of the 
              Code)..............................................    96
            2. Notice required before revocation of tax-exempt 
              status for failure to file return (sec. 3102 of the 
              bill and sec. 6033(j) of the Code).................    98
        C. Revenue Provision.....................................   101
            1. Increase in penalty for failure to file (sec. 3201 
              of the bill and sec. 6651(a) of the Code)..........   101
III.VOTES OF THE COMMITTEE..........................................103

IV. BUDGET EFFECTS OF THE BILL......................................103
        A. Committee Estimate of Budgetary Effects...............   103
        B. Statement Regarding New Budget Authority and Tax 
          Expenditures Budget Authority..........................   108
        C. Cost Estimate Prepared by the Congressional Budget 
          Office.................................................   108
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......113
        A. Committee Oversight Findings and Recommendations......   113
        B. Statement of General Performance Goals and Objectives.   113
        C. Information Relating to Unfunded Mandates.............   113
        D. Applicability of House Rule XXI 5(b)..................   113
        E. Tax Complexity Analysis...............................   114
        F. Congressional Earmarks, Limited Tax Benefits, and 
          Limited Tariff Benefits................................   114
        G. Duplication of Federal Programs.......................   114
        H. Hearings..............................................   114
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........115
        A. Text of Existing Law Amended or Repealed by the Bill, 
          as Reported............................................   115
        B. Changes in Existing Law Proposed by the Bill, as 
          Reported...............................................   115


















116th Congress   }                                   {    Rept. 116-39
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1

====================================================================== 





                       TAXPAYER FIRST ACT OF 2019

                                _______
                                

 April 9, 2019.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Neal, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                        [To accompany H.R. 1957]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1957) to amend the Internal Revenue Code of 1986 to 
modernize and improve the Internal Revenue Service, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; ETC.

  (a) Short Title.--This Act may be cited as the ``Taxpayer First Act 
of 2019''.
  (b) Amendment of 1986 Code.--Except as otherwise expressly provided, 
whenever in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
  (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.

                    TITLE I--PUTTING TAXPAYERS FIRST

                Subtitle A--Independent Appeals Process

Sec. 1001. Establishment of Internal Revenue Service Independent Office 
of Appeals.

                      Subtitle B--Improved Service

Sec. 1101. Comprehensive customer service strategy.
Sec. 1102. IRS Free File Program.
Sec. 1103. Low-income exception for payments otherwise required in 
connection with a submission of an offer-in-compromise.

                    Subtitle C--Sensible Enforcement

Sec. 1201. Internal Revenue Service seizure requirements with respect 
to structuring transactions.
Sec. 1202. Exclusion of interest received in action to recover property 
seized by the Internal Revenue Service based on structuring 
transaction.
Sec. 1203. Clarification of equitable relief from joint liability.
Sec. 1204. Modification of procedures for issuance of third-party 
summons.
Sec. 1205. Private debt collection and special compliance personnel 
program.
Sec. 1206. Reform of notice of contact of third parties.
Sec. 1207. Modification of authority to issue designated summons.
Sec. 1208. Limitation on access of non-Internal Revenue Service 
employees to returns and return information.

                Subtitle D--Organizational Modernization

Sec. 1301. Office of the National Taxpayer Advocate.
Sec. 1302. Modernization of Internal Revenue Service organizational 
structure.

                      Subtitle E--Other Provisions

Sec. 1401. Return preparation programs for applicable taxpayers.
Sec. 1402. Provision of information regarding low-income taxpayer 
clinics.
Sec. 1403. Notice from IRS regarding closure of taxpayer assistance 
centers.
Sec. 1404. Rules for seizure and sale of perishable goods restricted to 
only perishable goods.
Sec. 1405. Whistleblower reforms.
Sec. 1406. Customer service information.
Sec. 1407. Misdirected tax refund deposits.

                       TITLE II--21ST CENTURY IRS

           Subtitle A--Cybersecurity and Identity Protection

Sec. 2001. Public-private partnership to address identity theft refund 
fraud.
Sec. 2002. Recommendations of Electronic Tax Administration Advisory 
Committee regarding identity theft refund fraud.
Sec. 2003. Information sharing and analysis center.
Sec. 2004. Compliance by contractors with confidentiality safeguards.
Sec. 2005. Report on electronic payments.
Sec. 2006. Identity protection personal identification numbers.
Sec. 2007. Single point of contact for tax-related identity theft 
victims.
Sec. 2008. Notification of suspected identity theft.
Sec. 2009. Guidelines for stolen identity refund fraud cases.
Sec. 2010. Increased penalty for improper disclosure or use of 
information by preparers of returns.

           Subtitle B--Development of Information Technology

Sec. 2101. Management of Internal Revenue Service information 
technology.
Sec. 2102. Internet platform for Form 1099 filings.
Sec. 2103. Streamlined critical pay authority for information 
technology positions.

 Subtitle C--Modernization of Consent-Based Income Verification System

Sec. 2201. Disclosure of taxpayer information for third-party income 
verification.
Sec. 2202. Limit redisclosures and uses of consent-based disclosures of 
tax return information.

             Subtitle D--Expanded Use of Electronic Systems

Sec. 2301. Electronic filing of returns.
Sec. 2302. Uniform standards for the use of electronic signatures for 
disclosure authorizations to, and other authorizations of, 
practitioners.
Sec. 2303. Payment of taxes by debit and credit cards.
Sec. 2304. Authentication of users of electronic services accounts.

                      Subtitle E--Other Provisions

Sec. 2401. Repeal of provision regarding certain tax compliance 
procedures and reports.
Sec. 2402. Comprehensive training strategy.

                  TITLE III--MISCELLANEOUS PROVISIONS

Subtitle A--Reform of Laws Governing Internal Revenue Service Employees

Sec. 3001. Prohibition on rehiring any employee of the Internal Revenue 
Service who was involuntarily separated from service for misconduct.
Sec. 3002. Notification of unauthorized inspection or disclosure of 
returns and return information.

        Subtitle B--Provisions Relating to Exempt Organizations

Sec. 3101. Mandatory e-filing by exempt organizations.
Sec. 3102. Notice required before revocation of tax-exempt status for 
failure to file return.

                     Subtitle C--Revenue Provision

Sec. 3201. Increase in penalty for failure to file.

                    TITLE I--PUTTING TAXPAYERS FIRST

                Subtitle A--Independent Appeals Process

SEC. 1001. ESTABLISHMENT OF INTERNAL REVENUE SERVICE INDEPENDENT OFFICE 
                    OF APPEALS.

  (a) In General.--Section 7803 is amended by adding at the end the 
following new subsection:
  ``(e) Independent Office of Appeals.--
          ``(1) Establishment.--There is established in the Internal 
        Revenue Service an office to be known as the `Internal Revenue 
        Service Independent Office of Appeals'.
          ``(2) Chief of appeals.--
                  ``(A) In general.--The Internal Revenue Service 
                Independent Office of Appeals shall be under the 
                supervision and direction of an official to be known as 
                the `Chief of Appeals'. The Chief of Appeals shall 
                report directly to the Commissioner of Internal Revenue 
                and shall be entitled to compensation at the same rate 
                as the highest rate of basic pay established for the 
                Senior Executive Service under section 5382 of title 5, 
                United States Code.
                  ``(B) Appointment.--The Chief of Appeals shall be 
                appointed by the Commissioner of Internal Revenue 
                without regard to the provisions of title 5, United 
                States Code, relating to appointments in the 
                competitive service or the Senior Executive Service.
                  ``(C) Qualifications.--An individual appointed under 
                subparagraph (B) shall have experience and expertise 
                in--
                          ``(i) administration of, and compliance with, 
                        Federal tax laws,
                          ``(ii) a broad range of compliance cases, and
                          ``(iii) management of large service 
                        organizations.
          ``(3) Purposes and duties of office.--It shall be the 
        function of the Internal Revenue Service Independent Office of 
        Appeals to resolve Federal tax controversies without litigation 
        on a basis which--
                  ``(A) is fair and impartial to both the Government 
                and the taxpayer,
                  ``(B) promotes a consistent application and 
                interpretation of, and voluntary compliance with, the 
                Federal tax laws, and
                  ``(C) enhances public confidence in the integrity and 
                efficiency of the Internal Revenue Service.
          ``(4) Right of appeal.--The resolution process described in 
        paragraph (3) shall be generally available to all taxpayers.
          ``(5) Limitation on designation of cases as not eligible for 
        referral to independent office of appeals.--
                  ``(A) In general.--If any taxpayer which is in 
                receipt of a notice of deficiency authorized under 
                section 6212 requests referral to the Internal Revenue 
                Service Independent Office of Appeals and such request 
                is denied, the Commissioner of Internal Revenue shall 
                provide such taxpayer a written notice which--
                          ``(i) provides a detailed description of the 
                        facts involved, the basis for the decision to 
                        deny the request, and a detailed explanation of 
                        how the basis of such decision applies to such 
                        facts, and
                          ``(ii) describes the procedures prescribed 
                        under subparagraph (C) for protesting the 
                        decision to deny the request.
                  ``(B) Report to congress.--The Commissioner of 
                Internal Revenue shall submit a written report to 
                Congress on an annual basis which includes the number 
                of requests described in subparagraph (A) which were 
                denied and the reasons (described by category) that 
                such requests were denied.
                  ``(C) Procedures for protesting denial of request.--
                The Commissioner of Internal Revenue shall prescribe 
                procedures for protesting to the Commissioner of 
                Internal Revenue a denial of a request described in 
                subparagraph (A).
                  ``(D) Not applicable to frivolous positions.--This 
                paragraph shall not apply to a request for referral to 
                the Internal Revenue Service Independent Office of 
                Appeals which is denied on the basis that the issue 
                involved is a frivolous position (within the meaning of 
                section 6702(c)).
          ``(6) Staff.--
                  ``(A) In general.--All personnel in the Internal 
                Revenue Service Independent Office of Appeals shall 
                report to the Chief of Appeals.
                  ``(B) Access to staff of office of the chief 
                counsel.--The Chief of Appeals shall have authority to 
                obtain legal assistance and advice from the staff of 
                the Office of the Chief Counsel. The Chief Counsel 
                shall ensure, to the extent practicable, that such 
                assistance and advice is provided by staff of the 
                Office of the Chief Counsel who were not involved in 
                the case with respect to which such assistance and 
                advice is sought and who are not involved in preparing 
                such case for litigation.
          ``(7) Access to case files.--
                  ``(A) In general.--In any case in which a conference 
                with the Internal Revenue Service Independent Office of 
                Appeals has been scheduled upon request of a specified 
                taxpayer, the Chief of Appeals shall ensure that such 
                taxpayer is provided access to the nonprivileged 
                portions of the case file on record regarding the 
                disputed issues (other than documents provided by the 
                taxpayer to the Internal Revenue Service) not later 
                than 10 days before the date of such conference.
                  ``(B) Taxpayer election to expedite conference.--If 
                the taxpayer so elects, subparagraph (A) shall be 
                applied by substituting `the date of such conference' 
                for `10 days before the date of such conference'.
                  ``(C) Specified taxpayer.--For purposes of this 
                paragraph--
                          ``(i) In general.--The term `specified 
                        taxpayer' means--
                                  ``(I) in the case of any taxpayer who 
                                is a natural person, a taxpayer whose 
                                adjusted gross income does not exceed 
                                $400,000 for the taxable year to which 
                                the dispute relates, and
                                  ``(II) in the case of any other 
                                taxpayer, a taxpayer whose gross 
                                receipts do not exceed $5,000,000 for 
                                the taxable year to which the dispute 
                                relates.
                          ``(ii) Aggregation rule.--Rules similar to 
                        the rules of section 448(c)(2) shall apply for 
                        purposes of clause (i)(II).''.
  (b) Conforming Amendments.--
          (1) The following provisions are each amended by striking 
        ``Internal Revenue Service Office of Appeals'' and inserting 
        ``Internal Revenue Service Independent Office of Appeals'':
                  (A) Section 6015(c)(4)(B)(ii)(I).
                  (B) Section 6320(b)(1).
                  (C) Subsections (b)(1) and (d)(3) of section 6330.
                  (D) Section 6603(d)(3)(B).
                  (E) Section 6621(c)(2)(A)(i).
                  (F) Section 7122(e)(2).
                  (G) Subsections (a), (b)(1), (b)(2), and (c)(1) of 
                section 7123.
                  (H) Subsections (c)(7)(B)(i) and (g)(2)(A) of section 
                7430.
                  (I) Section 7522(b)(3).
                  (J) Section 7612(c)(2)(A).
          (2) Section 7430(c)(2) is amended by striking ``Internal 
        Revenue Service Office of Appeals'' each place it appears and 
        inserting ``Internal Revenue Service Independent Office of 
        Appeals''.
          (3) The heading of section 6330(d)(3) is amended by inserting 
        ``independent'' after ``irs''.
  (c) Other References.--Any reference in any provision of law, or 
regulation or other guidance, to the Internal Revenue Service Office of 
Appeals shall be treated as a reference to the Internal Revenue Service 
Independent Office of Appeals.
  (d) Savings Provisions.--Rules similar to the rules of paragraphs (2) 
through (6) of section 1001(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 shall apply for purposes of this 
section (and the amendments made by this section).
  (e) Effective Date.--
          (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall take 
        effect on the date of the enactment of this Act.
          (2) Access to case files.--Section 7803(e)(7) of the Internal 
        Revenue Code of 1986, as added by subsection (a), shall apply 
        to conferences occurring after the date which is 1 year after 
        the date of the enactment of this Act.

                      Subtitle B--Improved Service

SEC. 1101. COMPREHENSIVE CUSTOMER SERVICE STRATEGY.

  (a) In General.--Not later than the date which is 1 year after the 
date of the enactment of this Act, the Secretary of the Treasury (or 
the Secretary's delegate) shall submit to Congress a written 
comprehensive customer service strategy for the Internal Revenue 
Service. Such strategy shall include--
          (1) a plan to provide assistance to taxpayers that is secure, 
        designed to meet reasonable taxpayer expectations, and adopts 
        appropriate best practices of customer service provided in the 
        private sector, including online services, telephone call back 
        services, and training of employees providing customer 
        services;
          (2) a thorough assessment of the services that the Internal 
        Revenue Service can co-locate with other Federal services or 
        offer as self-service options;
          (3) proposals to improve Internal Revenue Service customer 
        service in the short term (the current and following fiscal 
        year), medium term (approximately 3 to 5 fiscal years), and 
        long term (approximately 10 fiscal years);
          (4) a plan to update guidance and training materials for 
        customer service employees of the Internal Revenue Service, 
        including the Internal Revenue Manual, to reflect such 
        strategy; and
          (5) identified metrics and benchmarks for quantitatively 
        measuring the progress of the Internal Revenue Service in 
        implementing such strategy.
  (b) Updated Guidance and Training Materials.--Not later than 2 years 
after the date of the enactment of this Act, the Secretary of the 
Treasury (or the Secretary's delegate) shall make available the updated 
guidance and training materials described in subsection (a)(4) 
(including the Internal Revenue Manual). Such updated guidance and 
training materials (including the Internal Revenue Manual) shall be 
written in a manner so as to be easily understood by customer service 
employees of the Internal Revenue Service and shall provide clear 
instructions.

SEC. 1102. IRS FREE FILE PROGRAM.

  (a) In General.--
          (1) The Secretary of the Treasury, or the Secretary's 
        delegate, shall continue to operate the IRS Free File Program 
        as established by the Internal Revenue Service and published in 
        the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), 
        including any subsequent agreements and governing rules 
        established pursuant thereto.
          (2) The IRS Free File Program shall continue to provide free 
        commercial-type online individual income tax preparation and 
        electronic filing services to the lowest 70 percent of 
        taxpayers by adjusted gross income. The number of taxpayers 
        eligible to receive such services each year shall be calculated 
        by the Internal Revenue Service annually based on prior year 
        aggregate taxpayer adjusted gross income data.
          (3) In addition to the services described in paragraph (2), 
        and in the same manner, the IRS Free File Program shall 
        continue to make available to all taxpayers (without regard to 
        income) a basic, online electronic fillable forms utility.
          (4) The IRS Free File Program shall continue to work 
        cooperatively with the private sector to provide the free 
        individual income tax preparation and the electronic filing 
        services described in paragraphs (2) and (3).
          (5) The IRS Free File Program shall work cooperatively with 
        State government agencies to enhance and expand the use of the 
        program to provide needed benefits to the taxpayer while 
        reducing the cost of processing returns.
  (b) Innovations.--The Secretary of the Treasury, or the Secretary's 
delegate, shall work with the private sector through the IRS Free File 
Program to identify and implement, consistent with applicable law, 
innovative new program features to improve and simplify the taxpayer's 
experience with completing and filing individual income tax returns 
through voluntary compliance.

SEC. 1103. LOW-INCOME EXCEPTION FOR PAYMENTS OTHERWISE REQUIRED IN 
                    CONNECTION WITH A SUBMISSION OF AN OFFER-IN-
                    COMPROMISE.

  (a) In General.--Section 7122(c) is amended by adding at the end the 
following new paragraph:
          ``(3) Exception for low-income taxpayers.--Paragraph (1), and 
        any user fee otherwise required in connection with the 
        submission of an offer-in-compromise, shall not apply to any 
        offer-in-compromise with respect to a taxpayer who is an 
        individual with adjusted gross income, as determined for the 
        most recent taxable year for which such information is 
        available, which does not exceed 250 percent of the applicable 
        poverty level (as determined by the Secretary).''.
  (b) Effective Date.--The amendment made by this section shall apply 
to offers-in-compromise submitted after the date of the enactment of 
this Act.

                    Subtitle C--Sensible Enforcement

SEC. 1201. INTERNAL REVENUE SERVICE SEIZURE REQUIREMENTS WITH RESPECT 
                    TO STRUCTURING TRANSACTIONS.

  Section 5317(c)(2) of title 31, United States Code, is amended--
          (1) by striking ``Any property'' and inserting the following:
                  ``(A) In general.--Any property''; and
          (2) by adding at the end the following:
                  ``(B) Internal revenue service seizure requirements 
                with respect to structuring transactions.--
                          ``(i) Property derived from an illegal 
                        source.--Property may only be seized by the 
                        Internal Revenue Service pursuant to 
                        subparagraph (A) by reason of a claimed 
                        violation of section 5324 if the property to be 
                        seized was derived from an illegal source or 
                        the funds were structured for the purpose of 
                        concealing the violation of a criminal law or 
                        regulation other than section 5324.
                          ``(ii) Notice.--Not later than 30 days after 
                        property is seized by the Internal Revenue 
                        Service pursuant to subparagraph (A), the 
                        Internal Revenue Service shall--
                                  ``(I) make a good faith effort to 
                                find all persons with an ownership 
                                interest in such property; and
                                  ``(II) provide each such person so 
                                found with a notice of the seizure and 
                                of the person's rights under clause 
                                (iv).
                          ``(iii) Extension of notice under certain 
                        circumstances.--The Internal Revenue Service 
                        may apply to a court of competent jurisdiction 
                        for one 30-day extension of the notice 
                        requirement under clause (ii) if the Internal 
                        Revenue Service can establish probable cause of 
                        an imminent threat to national security or 
                        personal safety necessitating such extension.
                          ``(iv) Post-seizure hearing.--If a person 
                        with an ownership interest in property seized 
                        pursuant to subparagraph (A) by the Internal 
                        Revenue Service requests a hearing by a court 
                        of competent jurisdiction within 30 days after 
                        the date on which notice is provided under 
                        subclause (ii), such property shall be returned 
                        unless the court holds an adversarial hearing 
                        and finds within 30 days of such request (or 
                        such longer period as the court may provide, 
                        but only on request of an interested party) 
                        that there is probable cause to believe that 
                        there is a violation of section 5324 involving 
                        such property and probable cause to believe 
                        that the property to be seized was derived from 
                        an illegal source or the funds were structured 
                        for the purpose of concealing the violation of 
                        a criminal law or regulation other than section 
                        5324.''.

SEC. 1202. EXCLUSION OF INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY 
                    SEIZED BY THE INTERNAL REVENUE SERVICE BASED ON 
                    STRUCTURING TRANSACTION.

  (a) In General.--Part III of subchapter B of chapter 1 is amended by 
inserting before section 140 the following new section:

``SEC. 139H. INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY SEIZED BY 
                    THE INTERNAL REVENUE SERVICE BASED ON STRUCTURING 
                    TRANSACTION.

  ``Gross income shall not include any interest received from the 
Federal Government in connection with an action to recover property 
seized by the Internal Revenue Service pursuant to section 5317(c)(2) 
of title 31, United States Code, by reason of a claimed violation of 
section 5324 of such title.''.
  (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting before the item 
relating to section 140 the following new item:

``Sec. 139H. Interest received in action to recover property seized by 
the Internal Revenue Service based on structuring transaction.''.

  (c) Effective Date.--The amendments made by this section shall apply 
to interest received on or after the date of the enactment of this Act.

SEC. 1203. CLARIFICATION OF EQUITABLE RELIEF FROM JOINT LIABILITY.

  (a) In General.--Section 6015 is amended--
          (1) in subsection (e), by adding at the end the following new 
        paragraph:
          ``(7) Standard and scope of review.--Any review of a 
        determination made under this section shall be reviewed de novo 
        by the Tax Court and shall be based upon--
                  ``(A) the administrative record established at the 
                time of the determination, and
                  ``(B) any additional newly discovered or previously 
                unavailable evidence.''; and
          (2) by amending subsection (f) to read as follows:
  ``(f) Equitable Relief.--
          ``(1) In general.--Under procedures prescribed by the 
        Secretary, if--
                  ``(A) taking into account all the facts and 
                circumstances, it is inequitable to hold the individual 
                liable for any unpaid tax or any deficiency (or any 
                portion of either), and
                  ``(B) relief is not available to such individual 
                under subsection (b) or (c),
        the Secretary may relieve such individual of such liability.
          ``(2) Limitation.--A request for equitable relief under this 
        subsection may be made with respect to any portion of any 
        liability that--
                  ``(A) has not been paid, provided that such request 
                is made before the expiration of the applicable period 
                of limitation under section 6502, or
                  ``(B) has been paid, provided that such request is 
                made during the period in which the individual could 
                submit a timely claim for refund or credit of such 
                payment.''.
  (b) Effective Date.--The amendments made by this section shall apply 
to petitions or requests filed or pending on or after the date of the 
enactment of this Act.

SEC. 1204. MODIFICATION OF PROCEDURES FOR ISSUANCE OF THIRD-PARTY 
                    SUMMONS.

  (a) In General.--Section 7609(f) is amended by adding at the end the 
following flush sentence:
``The Secretary shall not issue any summons described in the preceding 
sentence unless the information sought to be obtained is narrowly 
tailored to information that pertains to the failure (or potential 
failure) of the person or group or class of persons referred to in 
paragraph (2) to comply with one or more provisions of the internal 
revenue law which have been identified for purposes of such 
paragraph.''.
  (b) Effective Date.--The amendments made by this section shall apply 
to summonses served after the date that is 45 days after the date of 
the enactment of this Act.

SEC. 1205. PRIVATE DEBT COLLECTION AND SPECIAL COMPLIANCE PERSONNEL 
                    PROGRAM.

  (a) Certain Tax Receivables Not Eligible for Collection Under Tax 
Collection Contracts.--Section 6306(d)(3) is amended by striking ``or'' 
at the end of subparagraph (C) and by inserting after subparagraph (D) 
the following new subparagraphs:
                  ``(E) a taxpayer substantially all of whose income 
                consists of disability insurance benefits under section 
                223 of the Social Security Act or supplemental security 
                income benefits under title XVI of the Social Security 
                Act (including supplemental security income benefits of 
                the type described in section 1616 of such Act or 
                section 212 of Public Law 93-66), or
                  ``(F) a taxpayer who is an individual with adjusted 
                gross income, as determined for the most recent taxable 
                year for which such information is available, which 
                does not exceed 200 percent of the applicable poverty 
                level (as determined by the Secretary),''.
  (b) Determination of Inactive Tax Receivables Eligible for Collection 
Under Tax Collection Contracts.--Section 6306(c)(2)(A)(ii) is amended 
by striking ``more than \1/3\ of the period of the applicable statute 
of limitation has lapsed'' and inserting ``more than 2 years has passed 
since assessment''.
  (c) Maximum Length of Installment Agreements Offered Under Tax 
Collection Contracts.--Section 6306(b)(1)(B) is amended by striking ``5 
years'' and inserting ``7 years''.
  (d) Clarification That Special Compliance Personnel Program Account 
May Be Used for Program Costs.--
          (1) In general.--Section 6307(b) is amended--
                  (A) in paragraph (2), by striking all that follows 
                ``under such program'' and inserting a period, and
                  (B) in paragraph (3), by striking all that follows 
                ``out of such account'' and inserting ``for other than 
                program costs.''.
          (2) Communications, software, and technology costs treated as 
        program costs.--Section 6307(d)(2)(B) is amended by striking 
        ``telecommunications'' and inserting ``communications, 
        software, technology''.
          (3) Conforming amendment.--Section 6307(d)(2) is amended by 
        striking ``and'' at the end of subparagraph (A), by striking 
        the period at the end of subparagraph (B) and inserting ``, 
        and'', and by inserting after subparagraph (B) the following 
        new subparagraph:
                  ``(C) reimbursement of the Internal Revenue Service 
                or other government agencies for the cost of 
                administering the qualified tax collection program 
                under section 6306.''.
  (e) Effective Dates.--
          (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        tax receivables identified by the Secretary (or the Secretary's 
        delegate) after December 31, 2020.
          (2) Maximum length of installment agreements.--The amendment 
        made by subsection (c) shall apply to contracts entered into 
        after the date of the enactment of this Act.
          (3) Use of special compliance personnel program account.--The 
        amendment made by subsection (d) shall apply to amounts 
        expended from the special compliance personnel program account 
        after the date of the enactment of this Act.

SEC. 1206. REFORM OF NOTICE OF CONTACT OF THIRD PARTIES.

  (a) In General.--Section 7602(c)(1) is amended to read as follows:
          ``(1) General notice.--An officer or employee of the Internal 
        Revenue Service may not contact any person other than the 
        taxpayer with respect to the determination or collection of the 
        tax liability of such taxpayer unless such contact occurs 
        during a period (not greater than 1 year) which is specified in 
        a notice which--
                  ``(A) informs the taxpayer that contacts with persons 
                other than the taxpayer are intended to be made during 
                such period, and
                  ``(B) except as otherwise provided by the Secretary, 
                is provided to the taxpayer not later than 45 days 
                before the beginning of such period.
        Nothing in the preceding sentence shall prevent the issuance of 
        notices to the same taxpayer with respect to the same tax 
        liability with periods specified therein that, in the 
        aggregate, exceed 1 year. A notice shall not be issued under 
        this paragraph unless there is an intent at the time such 
        notice is issued to contact persons other than the taxpayer 
        during the period specified in such notice. The preceding 
        sentence shall not prevent the issuance of a notice if the 
        requirement of such sentence is met on the basis of the 
        assumption that the information sought to be obtained by such 
        contact will not be obtained by other means before such 
        contact.''.
  (b) Effective Date.--The amendment made by this section shall apply 
to notices provided, and contacts of persons made, after the date which 
is 45 days after the date of the enactment of this Act.

SEC. 1207. MODIFICATION OF AUTHORITY TO ISSUE DESIGNATED SUMMONS.

  (a) In General.--Paragraph (1) of section 6503(j) is amended by 
striking ``coordinated examination program'' and inserting 
``coordinated industry case program''.
  (b) Requirements for Summons.--Clause (i) of section 6503(j)(2)(A) is 
amended to read as follows:
                          ``(i) the issuance of such summons is 
                        preceded by a review and written approval of 
                        such issuance by the Commissioner of the 
                        relevant operating division of the Internal 
                        Revenue Service and the Chief Counsel which--
                                  ``(I) states facts clearly 
                                establishing that the Secretary has 
                                made reasonable requests for the 
                                information that is the subject of the 
                                summons, and
                                  ``(II) is attached to such 
                                summons,''.
  (c) Establishment That Reasonable Requests for Information Were 
Made.--Subsection (j) of section 6503 is amended by adding at the end 
the following new paragraph:
          ``(4) Establishment that reasonable requests for information 
        were made.--In any court proceeding described in paragraph (3), 
        the Secretary shall establish that reasonable requests were 
        made for the information that is the subject of the summons.''.
  (d) Effective Date.--The amendments made by this section shall apply 
to summonses issued after the date which is 45 days after the date of 
the enactment of this Act.

SEC. 1208. LIMITATION ON ACCESS OF NON-INTERNAL REVENUE SERVICE 
                    EMPLOYEES TO RETURNS AND RETURN INFORMATION.

  (a) In General.--Section 7602 is amended by adding at the end the 
following new subsection:
  ``(f) Limitation on Access of Persons Other Than Internal Revenue 
Service Officers and Employees.--The Secretary shall not, under the 
authority of section 6103(n), provide any books, papers, records, or 
other data obtained pursuant to this section to any person authorized 
under section 6103(n), except when such person requires such 
information for the sole purpose of providing expert evaluation and 
assistance to the Internal Revenue Service. No person other than an 
officer or employee of the Internal Revenue Service or the Office of 
Chief Counsel may, on behalf of the Secretary, question a witness under 
oath whose testimony was obtained pursuant to this section.''.
  (b) Effective Date.--The amendment made by this section--
          (1) shall take effect on the date of the enactment of this 
        Act; and
          (2) shall not fail to apply to a contract in effect under 
        section 6103(n) of the Internal Revenue Code of 1986 merely 
        because such contract was in effect before the date of the 
        enactment of this Act.

                Subtitle D--Organizational Modernization

SEC. 1301. OFFICE OF THE NATIONAL TAXPAYER ADVOCATE.

  (a) Taxpayer Advocate Directives.--
          (1) In general.--Section 7803(c) is amended by adding at the 
        end the following new paragraph:
          ``(5) Taxpayer advocate directives.--In the case of any 
        Taxpayer Advocate Directive issued by the National Taxpayer 
        Advocate pursuant to a delegation of authority from the 
        Commissioner of Internal Revenue--
                  ``(A) the Commissioner or a Deputy Commissioner shall 
                modify, rescind, or ensure compliance with such 
                directive not later than 90 days after the issuance of 
                such directive, and
                  ``(B) in the case of any directive which is modified 
                or rescinded by a Deputy Commissioner, the National 
                Taxpayer Advocate may (not later than 90 days after 
                such modification or rescission) appeal to the 
                Commissioner, and the Commissioner shall (not later 
                than 90 days after such appeal is made) ensure 
                compliance with such directive as issued by the 
                National Taxpayer Advocate or provide the National 
                Taxpayer Advocate with the reasons for any modification 
                or rescission made or upheld by the Commissioner 
                pursuant to such appeal.''.
          (2) Report to certain committees of congress regarding 
        directives.--Section 7803(c)(2)(B)(ii) is amended by 
        redesignating subclauses (VIII) through (XI) as subclauses (IX) 
        through (XII), respectively, and by inserting after subclause 
        (VII) the following new subclause:
                                  ``(VIII) identify any Taxpayer 
                                Advocate Directive which was not 
                                honored by the Internal Revenue Service 
                                in a timely manner, as specified under 
                                paragraph (5);''.
  (b) National Taxpayer Advocate Annual Reports to Congress.--
          (1) Inclusion of most serious taxpayer problems.--Section 
        7803(c)(2)(B)(ii)(III) is amended by striking ``at least 20 of 
        the'' and inserting ``the 10''.
          (2) Coordination with treasury inspector general for tax 
        administration.--Section 7803(c)(2) is amended by adding at the 
        end the following new subparagraph:
                  ``(E) Coordination with treasury inspector general 
                for tax administration.--Before beginning any research 
                or study, the National Taxpayer Advocate shall 
                coordinate with the Treasury Inspector General for Tax 
                Administration to ensure that the National Taxpayer 
                Advocate does not duplicate any action that the 
                Treasury Inspector General for Tax Administration has 
                already undertaken or has a plan to undertake.''.
          (3) Statistical support.--
                  (A) In general.--Section 6108 is amended by adding at 
                the end the following new subsection:
  ``(d) Statistical Support for National Taxpayer Advocate.--Upon 
request of the National Taxpayer Advocate, the Secretary shall, to the 
extent practicable, provide the National Taxpayer Advocate with 
statistical support in connection with the preparation by the National 
Taxpayer Advocate of the annual report described in section 
7803(c)(2)(B)(ii). Such statistical support shall include statistical 
studies, compilations, and the review of information provided by the 
National Taxpayer Advocate for statistical validity and sound 
statistical methodology.''.
                  (B) Disclosure of review.--Section 7803(c)(2)(B)(ii), 
                as amended by subsection (a), is amended by striking 
                ``and'' at the end of subclause (XI), by redesignating 
                subclause (XII) as subclause (XIII), and by inserting 
                after subclause (XI) the following new subclause:
                                  ``(XII) with respect to any 
                                statistical information included in 
                                such report, include a statement of 
                                whether such statistical information 
                                was reviewed or provided by the 
                                Secretary under section 6108(d) and, if 
                                so, whether the Secretary determined 
                                such information to be statistically 
                                valid and based on sound statistical 
                                methodology; and''.
                  (C) Conforming amendment.--Section 7803(c)(2)(B)(iii) 
                is amended by adding at the end the following: ``The 
                preceding sentence shall not apply with respect to 
                statistical information provided to the Secretary for 
                review, or received from the Secretary, under section 
                6108(d).''.
  (c) Salary of National Taxpayer Advocate.--Section 7803(c)(1)(B)(i) 
is amended by striking ``, or, if the Secretary of the Treasury so 
determines, at a rate fixed under section 9503 of such title''.
  (d) Effective Date.--
          (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall take 
        effect on the date of the enactment of this Act.
          (2) Salary of national taxpayer advocate.--The amendment made 
        by subsection (c) shall apply to compensation paid to 
        individuals appointed as the National Taxpayer Advocate after 
        March 31, 2019.

SEC. 1302. MODERNIZATION OF INTERNAL REVENUE SERVICE ORGANIZATIONAL 
                    STRUCTURE.

  (a) In General.--Not later than September 30, 2020, the Secretary of 
the Treasury (or the Secretary's delegate) shall submit to Congress a 
comprehensive written plan to redesign the organization of the Internal 
Revenue Service. Such plan shall--
          (1) ensure the successful implementation of the priorities 
        specified by Congress in this Act;
          (2) prioritize taxpayer services to ensure that all taxpayers 
        easily and readily receive the assistance that they need;
          (3) streamline the structure of the agency including 
        minimizing the duplication of services and responsibilities 
        within the agency;
          (4) best position the Internal Revenue Service to combat 
        cybersecurity and other threats to the Internal Revenue 
        Service; and
          (5) address whether the Criminal Investigation Division of 
        the Internal Revenue Service should report directly to the 
        Commissioner of Internal Revenue.
  (b) Repeal of Restriction on Organizational Structure of Internal 
Revenue Service.--Paragraph (3) of section 1001(a) of the Internal 
Revenue Service Restructuring and Reform Act of 1998 shall cease to 
apply beginning 1 year after the date on which the plan described in 
subsection (a) is submitted to Congress.

                      Subtitle E--Other Provisions

SEC. 1401. RETURN PREPARATION PROGRAMS FOR APPLICABLE TAXPAYERS.

  (a) In General.--Chapter 77 is amended by inserting after section 
7526 the following new section:

``SEC. 7526A. RETURN PREPARATION PROGRAMS FOR APPLICABLE TAXPAYERS.

  ``(a) Establishment of Volunteer Income Tax Assistance Matching Grant 
Program.--The Secretary shall establish a Community Volunteer Income 
Tax Assistance Matching Grant Program under which the Secretary may, 
subject to the availability of appropriated funds, make grants to 
provide matching funds for the development, expansion, or continuation 
of qualified return preparation programs assisting applicable taxpayers 
and members of underserved populations.
  ``(b) Use of Funds.--
          ``(1) In general.--Qualified return preparation programs may 
        use grants received under this section for--
                  ``(A) ordinary and necessary costs associated with 
                program operation in accordance with cost principles 
                under the applicable Office of Management and Budget 
                circular, including--
                          ``(i) wages or salaries of persons 
                        coordinating the activities of the program,
                          ``(ii) developing training materials, 
                        conducting training, and performing quality 
                        reviews of the returns prepared under the 
                        program,
                          ``(iii) equipment purchases, and
                          ``(iv) vehicle-related expenses associated 
                        with remote or rural tax preparation services,
                  ``(B) outreach and educational activities described 
                in subsection (c)(2)(B), and
                  ``(C) services related to financial education and 
                capability, asset development, and the establishment of 
                savings accounts in connection with tax return 
                preparation.
          ``(2) Requirement of matching funds.--A qualified return 
        preparation program must provide matching funds on a dollar-
        for-dollar basis for all grants provided under this section. 
        Matching funds may include--
                  ``(A) the salary (including fringe benefits) of 
                individuals performing services for the program,
                  ``(B) the cost of equipment used in the program, and
                  ``(C) other ordinary and necessary costs associated 
                with the program.
        Indirect expenses, including general overhead of any entity 
        administering the program, shall not be counted as matching 
        funds.
  ``(c) Application.--
          ``(1) In general.--Each applicant for a grant under this 
        section shall submit an application to the Secretary at such 
        time, in such manner, and containing such information as the 
        Secretary may reasonably require.
          ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to applications which 
        demonstrate--
                  ``(A) assistance to applicable taxpayers, with 
                emphasis on outreach to, and services for, such 
                taxpayers,
                  ``(B) taxpayer outreach and educational activities 
                relating to eligibility and availability of income 
                supports available through this title, including the 
                earned income tax credit, and
                  ``(C) specific outreach and focus on one or more 
                underserved populations.
          ``(3) Amounts taken into account.--In determining matching 
        grants under this section, the Secretary shall only take into 
        account amounts provided by the qualified return preparation 
        program for expenses described in subsection (b).
  ``(d) Program Adherence.--
          ``(1) In general.--The Secretary shall establish procedures 
        for, and shall conduct not less frequently than once every 5 
        calendar years during which a qualified return preparation 
        program is operating under a grant under this section, periodic 
        site visits--
                  ``(A) to ensure the program is carrying out the 
                purposes of this section, and
                  ``(B) to determine whether the program meets such 
                program adherence standards as the Secretary shall by 
                regulation or other guidance prescribe.
          ``(2) Additional requirements for grant recipients not 
        meeting program adherence standards.--In the case of any 
        qualified return preparation program which--
                  ``(A) is awarded a grant under this section, and
                  ``(B) is subsequently determined--
                          ``(i) not to meet the program adherence 
                        standards described in paragraph (1)(B), or
                          ``(ii) not to be otherwise carrying out the 
                        purposes of this section,
        such program shall not be eligible for any additional grants 
        under this section unless such program provides sufficient 
        documentation of corrective measures established to address any 
        such deficiencies determined.
  ``(e) Definitions.--For purposes of this section--
          ``(1) Qualified return preparation program.--The term 
        `qualified return preparation program' means any program--
                  ``(A) which provides assistance to individuals, not 
                less than 90 percent of whom are applicable taxpayers, 
                in preparing and filing Federal income tax returns,
                  ``(B) which is administered by a qualified entity,
                  ``(C) in which all volunteers who assist in the 
                preparation of Federal income tax returns meet the 
                training requirements prescribed by the Secretary, and
                  ``(D) which uses a quality review process which 
                reviews 100 percent of all returns.
          ``(2) Qualified entity.--
                  ``(A) In general.--The term `qualified entity' means 
                any entity which--
                          ``(i) is an eligible organization,
                          ``(ii) is in compliance with Federal tax 
                        filing and payment requirements,
                          ``(iii) is not debarred or suspended from 
                        Federal contracts, grants, or cooperative 
                        agreements, and
                          ``(iv) agrees to provide documentation to 
                        substantiate any matching funds provided 
                        pursuant to the grant program under this 
                        section.
                  ``(B) Eligible organization.--The term `eligible 
                organization' means--
                          ``(i) an institution of higher education 
                        which is described in section 102 (other than 
                        subsection (a)(1)(C) thereof) of the Higher 
                        Education Act of 1965 (20 U.S.C. 1002), as in 
                        effect on the date of the enactment of this 
                        section, and which has not been disqualified 
                        from participating in a program under title IV 
                        of such Act,
                          ``(ii) an organization described in section 
                        501(c) and exempt from tax under section 
                        501(a),
                          ``(iii) a local government agency, 
                        including--
                                  ``(I) a county or municipal 
                                government agency, and
                                  ``(II) an Indian tribe, as defined in 
                                section 4(13) of the Native American 
                                Housing Assistance and Self-
                                Determination Act of 1996 (25 U.S.C. 
                                4103(13)), including any tribally 
                                designated housing entity (as defined 
                                in section 4(22) of such Act (25 U.S.C. 
                                4103(22))), tribal subsidiary, 
                                subdivision, or other wholly owned 
                                tribal entity,
                          ``(iv) a local, State, regional, or national 
                        coalition (with one lead organization which 
                        meets the eligibility requirements of clause 
                        (i), (ii), or (iii) acting as the applicant 
                        organization), or
                          ``(v) in the case of applicable taxpayers and 
                        members of underserved populations with respect 
                        to which no organizations described in the 
                        preceding clauses are available--
                                  ``(I) a State government agency, or
                                  ``(II) an office providing 
                                Cooperative Extension services (as 
                                established at the land-grant colleges 
                                and universities under the Smith-Lever 
                                Act of May 8, 1914).
          ``(3) Applicable taxpayers.--The term `applicable taxpayer' 
        means a taxpayer whose income for the taxable year does not 
        exceed an amount equal to the completed phaseout amount under 
        section 32(b) for a married couple filing a joint return with 
        three or more qualifying children, as determined in a revenue 
        procedure or other published guidance.
          ``(4) Underserved population.--The term `underserved 
        population' includes populations of persons with disabilities, 
        persons with limited English proficiency, Native Americans, 
        individuals living in rural areas, members of the Armed Forces 
        and their spouses, and the elderly.
  ``(f) Special Rules and Limitations.--
          ``(1) Duration of grants.--Upon application of a qualified 
        return preparation program, the Secretary is authorized to 
        award a multi-year grant not to exceed 3 years.
          ``(2) Aggregate limitation.--Unless otherwise provided by 
        specific appropriation, the Secretary shall not allocate more 
        than $30,000,000 per fiscal year (exclusive of costs of 
        administering the program) to grants under this section.
  ``(g) Promotion of Programs.--
          ``(1) In general.--The Secretary shall promote tax 
        preparation through qualified return preparation programs 
        through the use of mass communications and other means.
          ``(2) Provision of information regarding qualified return 
        preparation programs.--The Secretary may provide taxpayers 
        information regarding qualified return preparation programs 
        receiving grants under this section.
          ``(3) Referrals to low-income taxpayer clinics.--Qualified 
        return preparation programs receiving a grant under this 
        section are encouraged, in appropriate cases, to--
                  ``(A) advise taxpayers of the availability of, and 
                eligibility requirements for receiving, advice and 
                assistance from qualified low-income taxpayer clinics 
                receiving funding under section 7526, and
                  ``(B) provide information regarding the location of, 
                and contact information for, such clinics.''.
  (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by inserting after the item relating to section 7526 the 
following new item:

``Sec. 7526A. Return preparation programs for applicable taxpayers.''.

SEC. 1402. PROVISION OF INFORMATION REGARDING LOW-INCOME TAXPAYER 
                    CLINICS.

  (a) In General.--Section 7526(c) is amended by adding at the end the 
following new paragraph:
          ``(6) Provision of information regarding qualified low-income 
        taxpayer clinics.--Notwithstanding any other provision of law, 
        officers and employees of the Department of the Treasury may--
                  ``(A) advise taxpayers of the availability of, and 
                eligibility requirements for receiving, advice and 
                assistance from one or more specific qualified low-
                income taxpayer clinics receiving funding under this 
                section, and
                  ``(B) provide information regarding the location of, 
                and contact information for, such clinics.''.
  (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 1403. NOTICE FROM IRS REGARDING CLOSURE OF TAXPAYER ASSISTANCE 
                    CENTERS.

  Not later than 90 days before the date that a proposed closure of a 
Taxpayer Assistance Center would take effect, the Secretary of the 
Treasury (or the Secretary's delegate) shall--
          (1) make publicly available (including by non-electronic 
        means) a notice which--
                  (A) identifies the Taxpayer Assistance Center 
                proposed for closure and the date of such proposed 
                closure; and
                  (B) identifies the relevant alternative sources of 
                taxpayer assistance which may be utilized by taxpayers 
                affected by such proposed closure; and
          (2) submit to Congress a written report that includes--
                  (A) the information included in the notice described 
                in paragraph (1);
                  (B) the reasons for such proposed closure; and
                  (C) such other information as the Secretary may 
                determine appropriate.

SEC. 1404. RULES FOR SEIZURE AND SALE OF PERISHABLE GOODS RESTRICTED TO 
                    ONLY PERISHABLE GOODS.

  (a) In General.--Section 6336 is amended by striking ``or become 
greatly reduced in price or value by keeping, or that such property 
cannot be kept without great expense''.
  (b) Effective Date.--The amendment made by this section shall apply 
to property seized after the date of the enactment of this Act.

SEC. 1405. WHISTLEBLOWER REFORMS.

  (a) Modifications to Disclosure Rules for Whistleblowers.--
          (1) In general.--Section 6103(k) is amended by adding at the 
        end the following new paragraph:
          ``(13) Disclosure to whistleblowers.--
                  ``(A) In general.--The Secretary may disclose, to any 
                individual providing information relating to any 
                purpose described in paragraph (1) or (2) of section 
                7623(a), return information related to the 
                investigation of any taxpayer with respect to whom the 
                individual has provided such information, but only to 
                the extent that such disclosure is necessary in 
                obtaining information, which is not otherwise 
                reasonably available, with respect to the correct 
                determination of tax liability for tax, or the amount 
                to be collected with respect to the enforcement of any 
                other provision of this title.
                  ``(B) Updates on whistleblower investigations.--The 
                Secretary shall disclose to an individual providing 
                information relating to any purpose described in 
                paragraph (1) or (2) of section 7623(a) the following:
                          ``(i) Not later than 60 days after a case for 
                        which the individual has provided information 
                        has been referred for an audit or examination, 
                        a notice with respect to such referral.
                          ``(ii) Not later than 60 days after a 
                        taxpayer with respect to whom the individual 
                        has provided information has made a payment of 
                        tax with respect to tax liability to which such 
                        information relates, a notice with respect to 
                        such payment.
                          ``(iii) Subject to such requirements and 
                        conditions as are prescribed by the Secretary, 
                        upon a written request by such individual--
                                  ``(I) information on the status and 
                                stage of any investigation or action 
                                related to such information, and
                                  ``(II) in the case of a determination 
                                of the amount of any award under 
                                section 7623(b), the reasons for such 
                                determination.
                Clause (iii) shall not apply to any information if the 
                Secretary determines that disclosure of such 
                information would seriously impair Federal tax 
                administration. Information described in clauses (i), 
                (ii), and (iii) may be disclosed to a designee of the 
                individual providing such information in accordance 
                with guidance provided by the Secretary.''.
          (2) Conforming amendments.--
                  (A) Confidentiality of information.--Section 
                6103(a)(3) is amended by striking ``subsection 
                (k)(10)'' and inserting ``paragraph (10) or (13) of 
                subsection (k)''.
                  (B) Penalty for unauthorized disclosure.--Section 
                7213(a)(2) is amended by striking ``(k)(10)'' and 
                inserting ``(k)(10) or (13)''.
                  (C) Coordination with authority to disclose for 
                investigative purposes.--Section 6103(k)(6) is amended 
                by adding at the end the following new sentence: ``This 
                paragraph shall not apply to any disclosure to an 
                individual providing information relating to any 
                purpose described in paragraph (1) or (2) of section 
                7623(a) which is made under paragraph (13)(A).''.
  (b) Protection Against Retaliation.--Section 7623 is amended by 
adding at the end the following new subsection:
  ``(d) Civil Action To Protect Against Retaliation Cases.--
          ``(1) Anti-retaliation whistleblower protection for 
        employees.--No employer, or any officer, employee, contractor, 
        subcontractor, or agent of such employer, may discharge, 
        demote, suspend, threaten, harass, or in any other manner 
        discriminate against an employee in the terms and conditions of 
        employment (including through an act in the ordinary course of 
        such employee's duties) in reprisal for any lawful act done by 
        the employee--
                  ``(A) to provide information, cause information to be 
                provided, or otherwise assist in an investigation 
                regarding underpayment of tax or any conduct which the 
                employee reasonably believes constitutes a violation of 
                the internal revenue laws or any provision of Federal 
                law relating to tax fraud, when the information or 
                assistance is provided to the Internal Revenue Service, 
                the Secretary of Treasury, the Treasury Inspector 
                General for Tax Administration, the Comptroller General 
                of the United States, the Department of Justice, the 
                United States Congress, a person with supervisory 
                authority over the employee, or any other person 
                working for the employer who has the authority to 
                investigate, discover, or terminate misconduct, or
                  ``(B) to testify, participate in, or otherwise assist 
                in any administrative or judicial action taken by the 
                Internal Revenue Service relating to an alleged 
                underpayment of tax or any violation of the internal 
                revenue laws or any provision of Federal law relating 
                to tax fraud.
          ``(2) Enforcement action.--
                  ``(A) In general.--A person who alleges discharge or 
                other reprisal by any person in violation of paragraph 
                (1) may seek relief under paragraph (3) by--
                          ``(i) filing a complaint with the Secretary 
                        of Labor, or
                          ``(ii) if the Secretary of Labor has not 
                        issued a final decision within 180 days of the 
                        filing of the complaint and there is no showing 
                        that such delay is due to the bad faith of the 
                        claimant, bringing an action at law or equity 
                        for de novo review in the appropriate district 
                        court of the United States, which shall have 
                        jurisdiction over such an action without regard 
                        to the amount in controversy.
                  ``(B) Procedure.--
                          ``(i) In general.--An action under 
                        subparagraph (A)(i) shall be governed under the 
                        rules and procedures set forth in section 
                        42121(b) of title 49, United States Code.
                          ``(ii) Exception.--Notification made under 
                        section 42121(b)(1) of title 49, United States 
                        Code, shall be made to the person named in the 
                        complaint and to the employer.
                          ``(iii) Burdens of proof.--An action brought 
                        under subparagraph (A)(ii) shall be governed by 
                        the legal burdens of proof set forth in section 
                        42121(b) of title 49, United States Code, 
                        except that in applying such section--
                                  ``(I) `behavior described in 
                                paragraph (1)' shall be substituted for 
                                `behavior described in paragraphs (1) 
                                through (4) of subsection (a)' each 
                                place it appears in paragraph (2)(B) 
                                thereof, and
                                  ``(II) `a violation of paragraph (1)' 
                                shall be substituted for `a violation 
                                of subsection (a)' each place it 
                                appears.
                          ``(iv) Statute of limitations.--A complaint 
                        under subparagraph (A)(i) shall be filed not 
                        later than 180 days after the date on which the 
                        violation occurs.
                          ``(v) Jury trial.--A party to an action 
                        brought under subparagraph (A)(ii) shall be 
                        entitled to trial by jury.
          ``(3) Remedies.--
                  ``(A) In general.--An employee prevailing in any 
                action under paragraph (2)(A) shall be entitled to all 
                relief necessary to make the employee whole.
                  ``(B) Compensatory damages.--Relief for any action 
                under subparagraph (A) shall include--
                          ``(i) reinstatement with the same seniority 
                        status that the employee would have had, but 
                        for the reprisal,
                          ``(ii) the sum of 200 percent of the amount 
                        of back pay and 100 percent of all lost 
                        benefits, with interest, and
                          ``(iii) compensation for any special damages 
                        sustained as a result of the reprisal, 
                        including litigation costs, expert witness 
                        fees, and reasonable attorney fees.
          ``(4) Rights retained by employee.--Nothing in this section 
        shall be deemed to diminish the rights, privileges, or remedies 
        of any employee under any Federal or State law, or under any 
        collective bargaining agreement.
          ``(5) Nonenforceability of certain provisions waiving rights 
        and remedies or requiring arbitration of disputes.--
                  ``(A) Waiver of rights and remedies.--The rights and 
                remedies provided for in this subsection may not be 
                waived by any agreement, policy form, or condition of 
                employment, including by a predispute arbitration 
                agreement.
                  ``(B) Predispute arbitration agreements.--No 
                predispute arbitration agreement shall be valid or 
                enforceable, if the agreement requires arbitration of a 
                dispute arising under this subsection.''.
  (c) Effective Date.--
          (1) In general.--The amendments made by subsection (a) shall 
        apply to disclosures made after the date of the enactment of 
        this Act.
          (2) Civil protection.--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

SEC. 1406. CUSTOMER SERVICE INFORMATION.

  The Secretary of the Treasury (or the Secretary's delegate) shall 
provide helpful information to taxpayers placed on hold during a 
telephone call to any Internal Revenue Service help line, including the 
following:
          (1) Information about common tax scams.
          (2) Information on where and how to report tax scams.
          (3) Additional advice on how taxpayers can protect themselves 
        from identity theft and tax scams.

SEC. 1407. MISDIRECTED TAX REFUND DEPOSITS.

  Section 6402 is amended by adding at the end the following new 
subsection:
  ``(n) Misdirected Direct Deposit Refund.--Not later than the date 
which is 6 months after the date of the enactment of the Taxpayer First 
Act of 2019, the Secretary shall prescribe regulations to establish 
procedures to allow for--
          ``(1) taxpayers to report instances in which a refund made by 
        the Secretary by electronic funds transfer was not transferred 
        to the account of the taxpayer;
          ``(2) coordination with financial institutions for the 
        purpose of--
                  ``(A) identifying the accounts to which transfers 
                described in paragraph (1) were made; and
                  ``(B) recovery of the amounts so transferred; and
          ``(3) the refund to be delivered to the correct account of 
        the taxpayer.''.

                       TITLE II--21ST CENTURY IRS

           Subtitle A--Cybersecurity and Identity Protection

SEC. 2001. PUBLIC-PRIVATE PARTNERSHIP TO ADDRESS IDENTITY THEFT REFUND 
                    FRAUD.

  The Secretary of the Treasury (or the Secretary's delegate) shall 
work collaboratively with the public and private sectors to protect 
taxpayers from identity theft refund fraud.

SEC. 2002. RECOMMENDATIONS OF ELECTRONIC TAX ADMINISTRATION ADVISORY 
                    COMMITTEE REGARDING IDENTITY THEFT REFUND FRAUD.

  The Secretary of the Treasury shall ensure that the advisory group 
convened by the Secretary pursuant to section 2001(b)(2) of the 
Internal Revenue Service Restructuring and Reform Act of 1998 (commonly 
known as the Electronic Tax Administration Advisory Committee) studies 
(including by providing organized public forums) and makes 
recommendations to the Secretary regarding methods to prevent identity 
theft and refund fraud.

SEC. 2003. INFORMATION SHARING AND ANALYSIS CENTER.

  (a) In General.--The Secretary of the Treasury (or the Secretary's 
delegate) may participate in an information sharing and analysis center 
to centralize, standardize, and enhance data compilation and analysis 
to facilitate sharing actionable data and information with respect to 
identity theft tax refund fraud.
  (b) Development of Performance Metrics.--The Secretary of the 
Treasury (or the Secretary's delegate) shall develop metrics for 
measuring the success of such center in detecting and preventing 
identity theft tax refund fraud.
  (c) Disclosure.--
          (1) In general.--Section 6103(k), as amended by this Act, is 
        amended by adding at the end the following new paragraph:
          ``(14) Disclosure of return information for purposes of 
        cybersecurity and the prevention of identity theft tax refund 
        fraud.--
                  ``(A) In general.--Under such procedures and subject 
                to such conditions as the Secretary may prescribe, the 
                Secretary may disclose specified return information to 
                specified ISAC participants to the extent that the 
                Secretary determines such disclosure is in furtherance 
                of effective Federal tax administration relating to the 
                detection or prevention of identity theft tax refund 
                fraud, validation of taxpayer identity, authentication 
                of taxpayer returns, or detection or prevention of 
                cybersecurity threats.
                  ``(B) Specified isac participants.--For purposes of 
                this paragraph--
                          ``(i) In general.--The term `specified ISAC 
                        participant' means--
                                  ``(I) any person designated by the 
                                Secretary as having primary 
                                responsibility for a function performed 
                                with respect to the information sharing 
                                and analysis center described in 
                                section 2003(a) of the Taxpayer First 
                                Act of 2019, and
                                  ``(II) any person subject to the 
                                requirements of section 7216 and which 
                                is a participant in such information 
                                sharing and analysis center.
                          ``(ii) Information sharing agreement.--Such 
                        term shall not include any person unless such 
                        person has entered into a written agreement 
                        with the Secretary setting forth the terms and 
                        conditions for the disclosure of information to 
                        such person under this paragraph, including 
                        requirements regarding the protection and 
                        safeguarding of such information by such 
                        person.
                  ``(C) Specified return information.--For purposes of 
                this paragraph, the term `specified return information' 
                means--
                          ``(i) in the case of a return which is in 
                        connection with a case of potential identity 
                        theft refund fraud--
                                  ``(I) in the case of such return 
                                filed electronically, the internet 
                                protocol address, device 
                                identification, email domain name, 
                                speed of completion, method of 
                                authentication, refund method, and such 
                                other return information related to the 
                                electronic filing characteristics of 
                                such return as the Secretary may 
                                identify for purposes of this 
                                subclause, and
                                  ``(II) in the case of such return 
                                prepared by a tax return preparer, 
                                identifying information with respect to 
                                such tax return preparer, including the 
                                preparer taxpayer identification number 
                                and electronic filer identification 
                                number of such preparer,
                          ``(ii) in the case of a return which is in 
                        connection with a case of a identity theft 
                        refund fraud which has been confirmed by the 
                        Secretary (pursuant to such procedures as the 
                        Secretary may provide), the information 
                        referred to in subclauses (I) and (II) of 
                        clause (i), the name and taxpayer 
                        identification number of the taxpayer as it 
                        appears on the return, and any bank account and 
                        routing information provided for making a 
                        refund in connection with such return, and
                          ``(iii) in the case of any cybersecurity 
                        threat to the Internal Revenue Service, 
                        information similar to the information 
                        described in subclauses (I) and (II) of clause 
                        (i) with respect to such threat.
                  ``(D) Restriction on use of disclosed information.--
                          ``(i) Designated third parties.--Any return 
                        information received by a person described in 
                        subparagraph (B)(i)(I) shall be used only for 
                        the purposes of and to the extent necessary 
                        in--
                                  ``(I) performing the function such 
                                person is designated to perform under 
                                such subparagraph,
                                  ``(II) facilitating disclosures 
                                authorized under subparagraph (A) to 
                                persons described in subparagraph 
                                (B)(i)(II), and
                                  ``(III) facilitating disclosures 
                                authorized under subsection (d) to 
                                participants in such information 
                                sharing and analysis center.
                          ``(ii) Return preparers.--Any return 
                        information received by a person described in 
                        subparagraph (B)(i)(II) shall be treated for 
                        purposes of section 7216 as information 
                        furnished to such person for, or in connection 
                        with, the preparation of a return of the tax 
                        imposed under chapter 1.
                  ``(E) Data protection and safeguards.--Return 
                information disclosed under this paragraph shall be 
                subject to such protections and safeguards as the 
                Secretary may require in regulations or other guidance 
                or in the written agreement referred to in subparagraph 
                (B)(ii). Such written agreement shall include a 
                requirement that any unauthorized access to information 
                disclosed under this paragraph, and any breach of any 
                system in which such information is held, be reported 
                to the Treasury Inspector General for Tax 
                Administration.''.
          (2) Application of civil and criminal penalties.--
                  (A) Section 6103(a)(3), as amended by this Act, is 
                amended by striking ``or (13)'' and inserting ``, (13), 
                or (14)''.
                  (B) Section 7213(a)(2), as amended by this Act, is 
                amended by striking ``or (13)'' and inserting ``, (13), 
                or (14)''.

SEC. 2004. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY SAFEGUARDS.

  (a) In General.--Section 6103(p) is amended by adding at the end the 
following new paragraph:
          ``(9) Disclosure to contractors and other agents.--
        Notwithstanding any other provision of this section, no return 
        or return information shall be disclosed to any contractor or 
        other agent of a Federal, State, or local agency unless such 
        agency, to the satisfaction of the Secretary--
                  ``(A) has requirements in effect which require each 
                such contractor or other agent which would have access 
                to returns or return information to provide safeguards 
                (within the meaning of paragraph (4)) to protect the 
                confidentiality of such returns or return information,
                  ``(B) agrees to conduct an on-site review every 3 
                years (or a mid-point review in the case of contracts 
                or agreements of less than 3 years in duration) of each 
                contractor or other agent to determine compliance with 
                such requirements,
                  ``(C) submits the findings of the most recent review 
                conducted under subparagraph (B) to the Secretary as 
                part of the report required by paragraph (4)(E), and
                  ``(D) certifies to the Secretary for the most recent 
                annual period that such contractor or other agent is in 
                compliance with all such requirements.
        The certification required by subparagraph (D) shall include 
        the name and address of each contractor or other agent, a 
        description of the contract or agreement with such contractor 
        or other agent, and the duration of such contract or agreement. 
        The requirements of this paragraph shall not apply to 
        disclosures pursuant to subsection (n) for purposes of Federal 
        tax administration.''.
  (b) Conforming Amendment.--Section 6103(p)(8)(B) is amended by 
inserting ``or paragraph (9)'' after ``subparagraph (A)''.
  (c) Effective Date.--The amendments made by this section shall apply 
to disclosures made after December 31, 2022.

SEC. 2005. REPORT ON ELECTRONIC PAYMENTS.

  Not later than 2 years after the date of the enactment of this Act, 
the Secretary of the Treasury (or the Secretary's delegate), in 
coordination with the Bureau of Fiscal Service and the Internal Revenue 
Service, and in consultation with private sector financial 
institutions, shall submit a written report to Congress describing how 
the government can utilize new payment platforms to increase the number 
of tax refunds paid by electronic funds transfer. Such report shall 
weigh the interests of reducing identity theft tax refund fraud, 
reducing the Federal Government's costs in delivering tax refunds, the 
costs and any associated fees charged to taxpayers (including monthly 
and point-of-service fees) to access their tax refunds, the impact on 
individuals who do not have access to financial accounts or 
institutions, and ensuring payments are made to accounts at a financial 
institution that complies with section 21 of the Federal Deposit 
Insurance Act, chapter 2 of title I of Public Law 91-508, and 
subchapter II of chapter 53 of title 31, United States Code (commonly 
referred to collectively as the ``Bank Secrecy Act'') and the USA 
PATRIOT Act. Such report shall include any legislative recommendations 
necessary to accomplish these goals.

SEC. 2006. IDENTITY PROTECTION PERSONAL IDENTIFICATION NUMBERS.

  (a) In General.--Subject to subsection (b), the Secretary of the 
Treasury or the Secretary's delegate (hereafter referred to in this 
section as the ``Secretary'') shall establish a program to issue, upon 
the request of any individual, a number which may be used in connection 
with such individual's social security number (or other identifying 
information with respect to such individual as determined by the 
Secretary) to assist the Secretary in verifying such individual's 
identity.
  (b) Requirements.--
          (1) Annual expansion.--For each calendar year beginning after 
        the date of the enactment of this Act, the Secretary shall 
        provide numbers through the program described in subsection (a) 
        to individuals residing in such States as the Secretary deems 
        appropriate, provided that the total number of States served by 
        such program during such year is greater than the total number 
        of States served by such program during the preceding year.
          (2) Nationwide availability.--Not later than 5 years after 
        the date of the enactment of this Act, the Secretary shall 
        ensure that the program described in subsection (a) is made 
        available to any individual residing in the United States.

SEC. 2007. SINGLE POINT OF CONTACT FOR TAX-RELATED IDENTITY THEFT 
                    VICTIMS.

  (a) In General.--The Secretary of the Treasury (or the Secretary's 
delegate) shall establish and implement procedures to ensure that any 
taxpayer whose return has been delayed or otherwise adversely affected 
due to tax-related identity theft has a single point of contact at the 
Internal Revenue Service throughout the processing of the taxpayer's 
case. The single point of contact shall track the taxpayer's case to 
completion and coordinate with other Internal Revenue Service employees 
to resolve case issues as quickly as possible.
  (b) Single Point of Contact.--
          (1) In general.--For purposes of subsection (a), the single 
        point of contact shall consist of a team or subset of specially 
        trained employees who--
                  (A) have the ability to work across functions to 
                resolve the issues involved in the taxpayer's case; and
                  (B) shall be accountable for handling the case until 
                its resolution.
          (2) Team or subset.--The employees included within the team 
        or subset described in paragraph (1) may change as required to 
        meet the needs of the Internal Revenue Service, provided that 
        procedures have been established to--
                  (A) ensure continuity of records and case history; 
                and
                  (B) notify the taxpayer when appropriate.

SEC. 2008. NOTIFICATION OF SUSPECTED IDENTITY THEFT.

  (a) In General.--Chapter 77 is amended by adding at the end the 
following new section:

``SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY THEFT.

  ``(a) In General.--If the Secretary determines that there has been or 
may have been an unauthorized use of the identity of any individual, 
the Secretary shall, without jeopardizing an investigation relating to 
tax administration--
          ``(1) as soon as practicable--
                  ``(A) notify the individual of such determination,
                  ``(B) provide instructions on how to file a report 
                with law enforcement regarding the unauthorized use,
                  ``(C) identify any steps to be taken by the 
                individual to permit law enforcement to access personal 
                information of the individual during the investigation,
                  ``(D) provide information regarding actions the 
                individual may take in order to protect the individual 
                from harm relating to the unauthorized use, and
                  ``(E) offer identity protection measures to the 
                individual, such as the use of an identity protection 
                personal identification number, and
          ``(2) at the time the information described in paragraph (1) 
        is provided (or, if not available at such time, as soon as 
        practicable thereafter), issue additional notifications to such 
        individual (or such individual's designee) regarding--
                  ``(A) whether an investigation has been initiated in 
                regards to such unauthorized use,
                  ``(B) whether the investigation substantiated an 
                unauthorized use of the identity of the individual, and
                  ``(C) whether--
                          ``(i) any action has been taken against a 
                        person relating to such unauthorized use, or
                          ``(ii) any referral has been made for 
                        criminal prosecution of such person and, to the 
                        extent such information is available, whether 
                        such person has been criminally charged by 
                        indictment or information.
  ``(b) Employment-Related Identity Theft.--
          ``(1) In general.--For purposes of this section, the 
        unauthorized use of the identity of an individual includes the 
        unauthorized use of the identity of the individual to obtain 
        employment.
          ``(2) Determination of employment-related identity theft.--
        For purposes of this section, in making a determination as to 
        whether there has been or may have been an unauthorized use of 
        the identity of an individual to obtain employment, the 
        Secretary shall review any information--
                  ``(A) obtained from a statement described in section 
                6051 or an information return relating to compensation 
                for services rendered other than as an employee, or
                  ``(B) provided to the Internal Revenue Service by the 
                Social Security Administration regarding any statement 
                described in section 6051,
        which indicates that the social security account number 
        provided on such statement or information return does not 
        correspond with the name provided on such statement or 
        information return or the name on the tax return reporting the 
        income which is included on such statement or information 
        return.''.
  (b) Additional Measures.--
          (1) Examination of both paper and electronic statements and 
        returns.--The Secretary of the Treasury (or the Secretary's 
        delegate) shall examine the statements, information returns, 
        and tax returns described in section 7529(b)(2) of the Internal 
        Revenue Code of 1986 (as added by subsection (a)) for any 
        evidence of employment-related identity theft, regardless of 
        whether such statements or returns are submitted electronically 
        or on paper.
          (2) Improvement of effective return processing program with 
        social security administration.--Section 232 of the Social 
        Security Act (42 U.S.C. 432) is amended by inserting after the 
        third sentence the following: ``For purposes of carrying out 
        the return processing program described in the preceding 
        sentence, the Commissioner of Social Security shall request, 
        not less than annually, such information described in section 
        7529(b)(2) of the Internal Revenue Code of 1986 as may be 
        necessary to ensure the accuracy of the records maintained by 
        the Commissioner of Social Security related to the amounts of 
        wages paid to, and the amounts of self-employment income 
        derived by, individuals.''.
          (3) Underreporting of income.--The Secretary of the Treasury 
        (or the Secretary's delegate) shall establish procedures to 
        ensure that income reported in connection with the unauthorized 
        use of a taxpayer's identity is not taken into account in 
        determining any penalty for underreporting of income by the 
        victim of identity theft.
  (c) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new item:

``Sec. 7529. Notification of suspected identity theft.''.

  (d) Effective Date.--The amendments made by this section shall apply 
to determinations made after the date that is 6 months after the date 
of the enactment of this Act.

SEC. 2009. GUIDELINES FOR STOLEN IDENTITY REFUND FRAUD CASES.

  (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of the Treasury (or the 
Secretary's delegate), in consultation with the National Taxpayer 
Advocate, shall develop and implement publicly available guidelines for 
management of cases involving stolen identity refund fraud in a manner 
that reduces the administrative burden on taxpayers who are victims of 
such fraud.
  (b) Standards and Procedures To Be Considered.--The guidelines 
described in subsection (a) may include--
          (1) standards for--
                  (A) the average length of time in which a case 
                involving stolen identity refund fraud should be 
                resolved;
                  (B) the maximum length of time, on average, a 
                taxpayer who is a victim of stolen identity refund 
                fraud and is entitled to a tax refund which has been 
                stolen should have to wait to receive such refund; and
                  (C) the maximum number of offices and employees 
                within the Internal Revenue Service with whom a 
                taxpayer who is a victim of stolen identity refund 
                fraud should be required to interact in order to 
                resolve a case;
          (2) standards for opening, assigning, reassigning, or closing 
        a case involving stolen identity refund fraud; and
          (3) procedures for implementing and accomplishing the 
        standards described in paragraphs (1) and (2), and measures for 
        evaluating such procedures and determining whether such 
        standards have been successfully implemented.

SEC. 2010. INCREASED PENALTY FOR IMPROPER DISCLOSURE OR USE OF 
                    INFORMATION BY PREPARERS OF RETURNS.

  (a) In General.--Section 6713 is amended--
          (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
          (2) by inserting after subsection (a) the following new 
        subsection:
  ``(b) Enhanced Penalty for Improper Use or Disclosure Relating to 
Identity Theft.--
          ``(1) In general.--In the case of a disclosure or use 
        described in subsection (a) that is made in connection with a 
        crime relating to the misappropriation of another person's 
        taxpayer identity (as defined in section 6103(b)(6)), whether 
        or not such crime involves any tax filing, subsection (a) shall 
        be applied--
                  ``(A) by substituting `$1,000' for `$250', and
                  ``(B) by substituting `$50,000' for `$10,000'.
          ``(2) Separate application of total penalty limitation.--The 
        limitation on the total amount of the penalty under subsection 
        (a) shall be applied separately with respect to disclosures or 
        uses to which this subsection applies and to which it does not 
        apply.''.
  (b) Criminal Penalty.--Section 7216(a) is amended by striking 
``$1,000'' and inserting ``$1,000 ($100,000 in the case of a disclosure 
or use to which section 6713(b) applies)''.
  (c) Effective Date.--The amendments made by this section shall apply 
to disclosures or uses on or after the date of the enactment of this 
Act.

           Subtitle B--Development of Information Technology

SEC. 2101. MANAGEMENT OF INTERNAL REVENUE SERVICE INFORMATION 
                    TECHNOLOGY.

  (a) Duties and Responsibilities of Internal Revenue Service Chief 
Information Officer.--Section 7803, as amended by section 1001, is 
amended by adding at the end the following new subsection:
  ``(f) Internal Revenue Service Chief Information Officer.--
          ``(1) In general.--There shall be in the Internal Revenue 
        Service an Internal Revenue Service Chief Information Officer 
        (hereafter referred to in this subsection as the `IRS CIO') who 
        shall be appointed by the Commissioner of Internal Revenue.
          ``(2) Centralized responsibility for internal revenue service 
        information technology.--The Commissioner of Internal Revenue 
        (and the Secretary) shall act through the IRS CIO with respect 
        to all development, implementation, and maintenance of 
        information technology for the Internal Revenue Service. Any 
        reference in this subsection to the IRS CIO which directs the 
        IRS CIO to take any action, or to assume any responsibility, 
        shall be treated as a reference to the Commissioner of Internal 
        Revenue acting through the IRS CIO.
          ``(3) General duties and responsibilities.--The IRS CIO 
        shall--
                  ``(A) be responsible for the development, 
                implementation, and maintenance of information 
                technology for the Internal Revenue Service,
                  ``(B) ensure that the information technology of the 
                Internal Revenue Service is secure and integrated,
                  ``(C) maintain operational control of all information 
                technology for the Internal Revenue Service,
                  ``(D) be the principal advocate for the information 
                technology needs of the Internal Revenue Service, and
                  ``(E) consult with the Chief Procurement Officer of 
                the Internal Revenue Service to ensure that the 
                information technology acquired for the Internal 
                Revenue Service is consistent with--
                          ``(i) the goals and requirements specified in 
                        subparagraphs (A) through (D), and
                          ``(ii) the strategic plan developed under 
                        paragraph (4).
          ``(4) Strategic plan.--
                  ``(A) In general.--The IRS CIO shall develop and 
                implement a multiyear strategic plan for the 
                information technology needs of the Internal Revenue 
                Service. Such plan shall--
                          ``(i) include performance measurements of 
                        such technology and of the implementation of 
                        such plan,
                          ``(ii) include a plan for an integrated 
                        enterprise architecture of the information 
                        technology of the Internal Revenue Service,
                          ``(iii) include and take into account the 
                        resources needed to accomplish such plan,
                          ``(iv) take into account planned major 
                        acquisitions of information technology by the 
                        Internal Revenue Service, and
                          ``(v) align with the needs and strategic plan 
                        of the Internal Revenue Service.
                  ``(B) Plan updates.--The IRS CIO shall, not less 
                frequently than annually, review and update the 
                strategic plan under subparagraph (A) (including the 
                plan for an integrated enterprise architecture 
                described in subparagraph (A)(ii)) to take into account 
                the development of new information technology and the 
                needs of the Internal Revenue Service.
          ``(5) Scope of authority.--
                  ``(A) Information technology.--For purposes of this 
                subsection, the term `information technology' has the 
                meaning given such term by section 11101 of title 40, 
                United States Code.
                  ``(B) Internal revenue service.--Any reference in 
                this subsection to the Internal Revenue Service 
                includes a reference to all components of the Internal 
                Revenue Service, including--
                          ``(i) the Office of the Taxpayer Advocate,
                          ``(ii) the Criminal Investigation Division of 
                        the Internal Revenue Service, and
                          ``(iii) except as otherwise provided by the 
                        Secretary with respect to information 
                        technology related to matters described in 
                        subsection (b)(3)(B), the Office of the Chief 
                        Counsel.''.
  (b) Independent Verification and Validation of the Customer Account 
Data Engine 2 and Enterprise Case Management System.--
          (1) In general.--The Commissioner of Internal Revenue shall 
        enter into a contract with an independent reviewer to verify 
        and validate the implementation plans (including the 
        performance milestones and cost estimates included in such 
        plans) developed for the Customer Account Data Engine 2 and the 
        Enterprise Case Management System.
          (2) Deadline for completion.--Such contract shall require 
        that such verification and validation be completed not later 
        than the date which is 1 year after the date of the enactment 
        of this Act.
          (3) Application to phases of cade 2.--
                  (A) In general.--Paragraphs (1) and (2) shall not 
                apply to phase 1 of the Customer Account Data Engine 2 
                and shall apply separately to each other phase.
                  (B) Deadline for completing plans.--Not later than 1 
                year after the date of the enactment of this Act, the 
                Commissioner of Internal Revenue shall complete the 
                development of plans for all phases of the Customer 
                Account Data Engine 2.
                  (C) Deadline for completion of verification and 
                validation of plans.--In the case of any phase after 
                phase 2 of the Customer Account Data Engine 2, 
                paragraph (2) shall be applied by substituting ``the 
                date on which the plan for such phase was completed'' 
                for ``the date of the enactment of this Act''.
  (c) Coordination of IRS CIO and Chief Procurement Officer of the 
Internal Revenue Service.--
          (1) In general.--The Chief Procurement Officer of the 
        Internal Revenue Service shall--
                  (A) identify all significant IRS information 
                technology acquisitions and provide written 
                notification to the Internal Revenue Service Chief 
                Information Officer (hereafter referred to in this 
                subsection as the ``IRS CIO'') of each such acquisition 
                in advance of such acquisition, and
                  (B) regularly consult with the IRS CIO regarding 
                acquisitions of information technology for the Internal 
                Revenue Service, including meeting with the IRS CIO 
                regarding such acquisitions upon request.
          (2) Significant irs information technology acquisitions.--For 
        purposes of this subsection, the term ``significant IRS 
        information technology acquisitions'' means--
                  (A) any acquisition of information technology for the 
                Internal Revenue Service in excess of $1,000,000; and
                  (B) such other acquisitions of information technology 
                for the Internal Revenue Service (or categories of such 
                acquisitions) as the IRS CIO, in consultation with the 
                Chief Procurement Officer of the Internal Revenue 
                Service, may identify.
          (3) Scope.--Terms used in this subsection which are also used 
        in section 7803(f) of the Internal Revenue Code of 1986 (as 
        added by subsection (a)) shall have the same meaning as when 
        used in such section.

SEC. 2102. INTERNET PLATFORM FOR FORM 1099 FILINGS.

  (a) In General.--Not later than January 1, 2023, the Secretary of the 
Treasury or the Secretary's delegate (hereafter referred to in this 
section as the ``Secretary'') shall make available an Internet website 
or other electronic media, with a user interface and functionality 
similar to the Business Services Online Suite of Services provided by 
the Social Security Administration, that provides access to resources 
and guidance provided by the Internal Revenue Service and allows 
persons to--
          (1) prepare and file Forms 1099;
          (2) prepare Forms 1099 for distribution to recipients other 
        than the Internal Revenue Service; and
          (3) maintain a record of completed, filed, and distributed 
        Forms 1099.
  (b) Electronic Services Treated as Supplemental; Application of 
Security Standards.--The Secretary shall ensure that the services 
described in subsection (a)--
          (1) are a supplement to, and not a replacement for, other 
        services provided by the Internal Revenue Service to taxpayers; 
        and
          (2) comply with applicable security standards and guidelines.

SEC. 2103. STREAMLINED CRITICAL PAY AUTHORITY FOR INFORMATION 
                    TECHNOLOGY POSITIONS.

  (a) In General.--Subchapter A of chapter 80 is amended by adding at 
the end the following new section:

``SEC. 7812. STREAMLINED CRITICAL PAY AUTHORITY FOR INFORMATION 
                    TECHNOLOGY POSITIONS.

  ``In the case of any position which is critical to the functionality 
of the information technology operations of the Internal Revenue 
Service--
          ``(1) section 9503 of title 5, United States Code, shall be 
        applied--
                  ``(A) by substituting `during the period beginning on 
                the date of the enactment of section 7812 of the 
                Internal Revenue Code of 1986, and ending on September 
                30, 2025' for `Before September 30, 2013 in subsection 
                (a)',
                  ``(B) without regard to subparagraph (B) of 
                subsection (a)(1), and
                  ``(C) by substituting `the date of the enactment of 
                the Taxpayer First Act of 2019' for `June 1, 1998' in 
                subsection (a)(6),
          ``(2) section 9504 of such title 5 shall be applied by 
        substituting `During the period beginning on the date of the 
        enactment of section 7812 of the Internal Revenue Code of 1986, 
        and ending on September 30, 2025' for `Before September 30, 
        2013' each place it appears in subsections (a) and (b), and
          ``(3) section 9505 of such title shall be applied--
                  ``(A) by substituting `During the period beginning on 
                the date of the enactment of section 7812 of the 
                Internal Revenue Code of 1986, and ending on September 
                30, 2025' for `Before September 30, 2013' in subsection 
                (a), and
                  ``(B) by substituting `the information technology 
                operations' for `significant functions' in subsection 
                (a).''.
  (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 80 is amended by adding at the end the following new item:

``Sec. 7812. Streamlined critical pay authority for information 
technology positions.''.

 Subtitle C--Modernization of Consent-Based Income Verification System

SEC. 2201. DISCLOSURE OF TAXPAYER INFORMATION FOR THIRD-PARTY INCOME 
                    VERIFICATION.

  (a) In General.--Not later than 1 year after the close of the 2-year 
period described in subsection (d)(1), the Secretary of the Treasury or 
the Secretary's delegate (hereafter referred to in this section as the 
``Secretary'') shall implement a program to ensure that any qualified 
disclosure--
          (1) is fully automated and accomplished through the Internet; 
        and
          (2) is accomplished in as close to real-time as is 
        practicable.
  (b) Qualified Disclosure.--For purposes of this section, the term 
``qualified disclosure'' means a disclosure under section 6103(c) of 
the Internal Revenue Code of 1986 of returns or return information by 
the Secretary to a person seeking to verify the income or 
creditworthiness of a taxpayer who is a borrower in the process of a 
loan application.
  (c) Application of Security Standards.--The Secretary shall ensure 
that the program described in subsection (a) complies with applicable 
security standards and guidelines.
  (d) User Fee.--
          (1) In general.--During the 2-year period beginning on the 
        first day of the 6th calendar month beginning after the date of 
        the enactment of this Act, the Secretary shall assess and 
        collect a fee for qualified disclosures (in addition to any 
        other fee assessed and collected for such disclosures) at such 
        rates as the Secretary determines are sufficient to cover the 
        costs related to implementing the program described in 
        subsection (a), including the costs of any necessary 
        infrastructure or technology.
          (2) Deposit of collections.--Amounts received from fees 
        assessed and collected under paragraph (1) shall be deposited 
        in, and credited to, an account solely for the purpose of 
        carrying out the activities described in subsection (a). Such 
        amounts shall be available to carry out such activities without 
        need of further appropriation and without fiscal year 
        limitation.

SEC. 2202. LIMIT REDISCLOSURES AND USES OF CONSENT-BASED DISCLOSURES OF 
                    TAX RETURN INFORMATION.

  (a) In General.--Section 6103(c) is amended by adding at the end the 
following: ``Persons designated by the taxpayer under this subsection 
to receive return information shall not use the information for any 
purpose other than the express purpose for which consent was granted 
and shall not disclose return information to any other person without 
the express permission of, or request by, the taxpayer.''.
  (b) Application of Penalties.--Section 6103(a)(3) is amended by 
inserting ``subsection (c),'' after ``return information under''.
  (c) Effective Date.--The amendments made by this section shall apply 
to disclosures made after the date which is 180 days after the date of 
the enactment of this Act.

             Subtitle D--Expanded Use of Electronic Systems

SEC. 2301. ELECTRONIC FILING OF RETURNS.

  (a) In General.--Section 6011(e)(2)(A) is amended by striking ``250'' 
and inserting ``the applicable number of''.
  (b) Applicable Number.--Section 6011(e) is amended by striking 
paragraph (5) and inserting the following new paragraphs:
          ``(5) Applicable number.--
                  ``(A) In general.--For purposes of paragraph (2)(A), 
                the applicable number shall be--
                          ``(i) except as provided in subparagraph (B), 
                        in the case of calendar years before 2021, 250,
                          ``(ii) in the case of calendar year 2021, 
                        100, and
                          ``(iii) in the case of calendar years after 
                        2021, 10.
                  ``(B) Special rule for partnerships for 2018, 2019, 
                2020, and 2021.--In the case of a partnership, for any 
                calendar year before 2022, the applicable number shall 
                be--
                          ``(i) in the case of calendar year 2018, 200,
                          ``(ii) in the case of calendar year 2019, 
                        150,
                          ``(iii) in the case of calendar year 2020, 
                        100, and
                          ``(iv) in the case of calendar year 2021, 50.
          ``(6) Partnerships required to file on magnetic media.--
        Notwithstanding paragraph (2)(A), the Secretary shall require 
        partnerships having more than 100 partners to file returns on 
        magnetic media.''.
  (c) Returns Filed by a Tax Return Preparer.--Section 6011(e)(3) is 
amended by adding at the end the following new subparagraph:
                  ``(D) Exception for certain preparers located in 
                areas without internet access.--The Secretary may waive 
                the requirement of subparagraph (A) if the Secretary 
                determines, on the basis of an application by the tax 
                return preparer, that the preparer cannot meet such 
                requirement by reason of being located in a geographic 
                area which does not have access to internet service 
                (other than dial-up or satellite service).''.
  (d) Conforming Amendment.--Section 6724(c) is amended by striking 
``250 information returns (more than 100 information returns in the 
case of a partnership having more than 100 partners)'' and inserting 
``the applicable number (determined under section 6011(e)(5) with 
respect to the calendar year to which such returns relate) of 
information returns''.
  (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2302. UNIFORM STANDARDS FOR THE USE OF ELECTRONIC SIGNATURES FOR 
                    DISCLOSURE AUTHORIZATIONS TO, AND OTHER 
                    AUTHORIZATIONS OF, PRACTITIONERS.

  Section 6061(b)(3) is amended to read as follows:
          ``(3) Published guidance.--
                  ``(A) In general.--The Secretary shall publish 
                guidance as appropriate to define and implement any 
                waiver of the signature requirements or any method 
                adopted under paragraph (1).
                  ``(B) Electronic signatures for disclosure 
                authorizations to, and other authorizations of, 
                practitioners.--Not later than 6 months after the date 
                of the enactment of this subparagraph, the Secretary 
                shall publish guidance to establish uniform standards 
                and procedures for the acceptance of taxpayers' 
                signatures appearing in electronic form with respect to 
                any request for disclosure of a taxpayer's return or 
                return information under section 6103(c) to a 
                practitioner or any power of attorney granted by a 
                taxpayer to a practitioner.
                  ``(C) Practitioner.--For purposes of subparagraph 
                (B), the term `practitioner' means any individual in 
                good standing who is regulated under section 330 of 
                title 31, United States Code.''.

SEC. 2303. PAYMENT OF TAXES BY DEBIT AND CREDIT CARDS.

  Section 6311(d)(2) is amended by adding at the end the following: 
``The preceding sentence shall not apply to the extent that the 
Secretary ensures that any such fee or other consideration is fully 
recouped by the Secretary in the form of fees paid to the Secretary by 
persons paying taxes imposed under subtitle A with credit, debit, or 
charge cards pursuant to such contract. Notwithstanding the preceding 
sentence, the Secretary shall seek to minimize the amount of any fee or 
other consideration that the Secretary pays under any such contract.''.

SEC. 2304. AUTHENTICATION OF USERS OF ELECTRONIC SERVICES ACCOUNTS.

  Beginning 180 days after the date of the enactment of this Act, the 
Secretary of the Treasury (or the Secretary's delegate) shall verify 
the identity of any individual opening an e-Services account with the 
Internal Revenue Service before such individual is able to use the e-
Services tools.

                      Subtitle E--Other Provisions

SEC. 2401. REPEAL OF PROVISION REGARDING CERTAIN TAX COMPLIANCE 
                    PROCEDURES AND REPORTS.

  Section 2004 of the Internal Revenue Service Restructuring and Reform 
Act of 1998 (26 U.S.C. 6012 note) is repealed.

SEC. 2402. COMPREHENSIVE TRAINING STRATEGY.

  Not later than 1 year after the date of the enactment of this Act, 
the Commissioner of Internal Revenue shall submit to Congress a written 
report providing a comprehensive training strategy for employees of the 
Internal Revenue Service, including--
          (1) a plan to streamline current training processes, 
        including an assessment of the utility of further consolidating 
        internal training programs, technology, and funding;
          (2) a plan to develop annual training regarding taxpayer 
        rights, including the role of the Office of the Taxpayer 
        Advocate, for employees that interface with taxpayers and the 
        direct managers of such employees;
          (3) a plan to improve technology-based training;
          (4) proposals to--
                  (A) focus employee training on early, fair, and 
                efficient resolution of taxpayer disputes for employees 
                that interface with taxpayers and the direct managers 
                of such employees; and
                  (B) ensure consistency of skill development and 
                employee evaluation throughout the Internal Revenue 
                Service; and
          (5) a thorough assessment of the funding necessary to 
        implement such strategy.

                  TITLE III--MISCELLANEOUS PROVISIONS

Subtitle A--Reform of Laws Governing Internal Revenue Service Employees

SEC. 3001. PROHIBITION ON REHIRING ANY EMPLOYEE OF THE INTERNAL REVENUE 
                    SERVICE WHO WAS INVOLUNTARILY SEPARATED FROM 
                    SERVICE FOR MISCONDUCT.

  (a) In General.--Section 7804 is amended by adding at the end the 
following new subsection:
  ``(d) Prohibition on Rehiring Employees Involuntarily Separated.--The 
Commissioner may not hire any individual previously employed by the 
Commissioner who was removed for misconduct under this subchapter or 
chapter 43 or chapter 75 of title 5, United States Code, or whose 
employment was terminated under section 1203 of the Internal Revenue 
Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note).''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
with respect to the hiring of employees after the date of the enactment 
of this Act.

SEC. 3002. NOTIFICATION OF UNAUTHORIZED INSPECTION OR DISCLOSURE OF 
                    RETURNS AND RETURN INFORMATION.

  (a) In General.--Subsection (e) of section 7431 is amended by adding 
at the end the following new sentences: ``The Secretary shall also 
notify such taxpayer if the Internal Revenue Service or a Federal or 
State agency (upon notice to the Secretary by such Federal or State 
agency) proposes an administrative determination as to disciplinary or 
adverse action against an employee arising from the employee's 
unauthorized inspection or disclosure of the taxpayer's return or 
return information. The notice described in this subsection shall 
include the date of the unauthorized inspection or disclosure and the 
rights of the taxpayer under such administrative determination.''.
  (b) Effective Date.--The amendment made by this section shall apply 
to determinations proposed after the date which is 180 days after the 
date of the enactment of this Act.

        Subtitle B--Provisions Relating to Exempt Organizations

SEC. 3101. MANDATORY E-FILING BY EXEMPT ORGANIZATIONS.

  (a) In General.--Section 6033 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) the 
following new subsection:
  ``(n) Mandatory Electronic Filing.--Any organization required to file 
a return under this section shall file such return in electronic 
form.''.
  (b) Conforming Amendment.--Paragraph (7) of section 527(j) is amended 
by striking ``if the organization has'' and all that follows through 
``such calendar year''.
  (c) Inspection of Electronically Filed Annual Returns.--Subsection 
(b) of section 6104 is amended by adding at the end the following: 
``Any annual return required to be filed electronically under section 
6033(n) shall be made available by the Secretary to the public as soon 
as practicable in a machine readable format.''.
  (d) Effective Date.--
          (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
          (2) Transitional relief.--
                  (A) Small organizations.--
                          (i) In general.--In the case of any small 
                        organizations, or any other organizations for 
                        which the Secretary of the Treasury or the 
                        Secretary's delegate (hereafter referred to in 
                        this paragraph as the ``Secretary'') determines 
                        the application of the amendments made by this 
                        section would cause undue burden without a 
                        delay, the Secretary may delay the application 
                        of such amendments, but such delay shall not 
                        apply to any taxable year beginning on or after 
                        the date 2 years after of the enactment of this 
                        Act.
                          (ii) Small organization.--For purposes of 
                        clause (i), the term ``small organization'' 
                        means any organization--
                                  (I) the gross receipts of which for 
                                the taxable year are less than 
                                $200,000; and
                                  (II) the aggregate gross assets of 
                                which at the end of the taxable year 
                                are less than $500,000.
                  (B) Organizations filing form 990-T.--In the case of 
                any organization described in section 511(a)(2) of the 
                Internal Revenue Code of 1986 which is subject to the 
                tax imposed by section 511(a)(1) of such Code on its 
                unrelated business taxable income, or any organization 
                required to file a return under section 6033 of such 
                Code and include information under subsection (e) 
                thereof, the Secretary may delay the application of the 
                amendments made by this section, but such delay shall 
                not apply to any taxable year beginning on or after the 
                date 2 years after of the enactment of this Act.

SEC. 3102. NOTICE REQUIRED BEFORE REVOCATION OF TAX-EXEMPT STATUS FOR 
                    FAILURE TO FILE RETURN.

  (a) In General.--Section 6033(j)(1) is amended by striking ``If an 
organization'' and inserting the following:
                  ``(A) Notice.--If an organization described in 
                subsection (a)(1) or (i) fails to file the annual 
                return or notice required under either subsection for 2 
                consecutive years, the Secretary shall notify the 
                organization--
                          ``(i) that the Internal Revenue Service has 
                        no record of such a return or notice from such 
                        organization for 2 consecutive years, and
                          ``(ii) about the revocation that will occur 
                        under subparagraph (B) if the organization 
                        fails to file such a return or notice by the 
                        due date for the next such return or notice 
                        required to be filed.
                The notification under the preceding sentence shall 
                include information about how to comply with the filing 
                requirements under subsections (a)(1) and (i).
                  ``(B) Revocation.--If an organization''.
  (b) Effective Date.--The amendment made by this section shall apply 
to failures to file returns or notices for 2 consecutive years if the 
return or notice for the second year is required to be filed after 
December 31, 2019.

                     Subtitle C--Revenue Provision

SEC. 3201. INCREASE IN PENALTY FOR FAILURE TO FILE.

  (a) In General.--The second sentence of subsection (a) of section 
6651 is amended by striking ``$205'' and inserting ``$330''.
  (b) Inflation Adjustment.--Section 6651(j)(1) is amended--
          (1) by striking ``2014'' and inserting ``2020'',
          (2) by striking ``$205'' and inserting ``$330'', and
          (3) by striking ``2013'' and inserting ``2019''.
  (c) Effective Date.--The amendments made by this section shall apply 
to returns required to be filed after December 31, 2019.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The Taxpayer First Act of 2019, H.R. 1957, as reported by 
the Committee on Ways and Means, improves Internal Revenue 
Service (``IRS'') operations and the administration of the tax 
laws by strengthening taxpayer rights, enhancing customer 
service, advancing information technology, and restructuring 
the agency.

                 B. Background and Need for Legislation

    The last time Congress considered comprehensive revisions 
to IRS operations was the IRS Restructuring and Reform Act of 
1998 (``RRA98''). Two decades later, it is time to revisit the 
IRS and return the agency back to its mission: ``provide 
America's taxpayers top quality service by helping them 
understand and meet their tax responsibilities and by applying 
the tax law with integrity and fairness to all.''
    In RRA98, Congress directed the agency to create an 
independent process for taxpayers to appeal tax disputes. While 
the IRS initially established an independent process, over time 
the agency has exercised its discretion to prevent certain 
taxpayers from accessing the review process. Currently, some 
taxpayers do not trust that the IRS's independent review 
process is truly independent or accessible. Taxpayers do not 
have access to the IRS case against them unless they request it 
under the Freedom of Information Act. This process takes time, 
and not all taxpayers are aware that it is an option.
    Taxpayers frequently view the IRS as an enforcement-first 
agency, not simply the agency responsible for administering the 
Tax Code. The work of the Ways and Means Subcommittee on 
Oversight (``Oversight Subcommittee'') revealed areas where the 
IRS's use of enforcement tools exceeded Congressional intent. 
For example, while the IRS has the ability to seize assets of 
taxpayers suspected to be involved in criminal activity, the 
IRS has used that authority to seize assets from small 
businesses without proving that the taxpayers engaged in 
criminal activity. Similarly, the agency used a different 
seizure authority to seize and sell on the same day, property 
such as bridal gowns, sports memorabilia, and workout 
equipment. These needlessly accelerated sales subverted routine 
notice requirements and have in some cases resulted in the 
devastation of small businesses. Further, the Subcommittee's 
oversight work revealed that cases assigned to the private debt 
collection program were returned to IRS because the taxpayers 
could not afford to pay or were on Social Security supplemental 
or disability income.
    The IRS currently lacks a satisfactory comprehensive 
customer service strategy with metrics and benchmarks for 
measuring success. Additionally, the organizational structure 
of the IRS is 20 years old and needs updating. RRA98 directed 
the Commissioner of Internal Revenue to restructure the IRS by 
eliminating or substantially modifying the three-tier 
geographic structure (national, regional, and district) in 
place at the time and replacing it with an organizational 
structure that features operating units serving particular 
groups of taxpayers with similar needs. Given that 20 years has 
passed since RRA98, the mandated organization according to 
particular taxpayer groups no longer allows the IRS to organize 
itself efficiently to best meet its mission and address the 
cyber security and efficiency challenges it faces.
    Over the past two years, the Oversight Subcommittee has 
spent significant time reviewing the IRS's use of information 
technology (IT). The Oversight Subcommittee found that the IRS 
relies significantly on an ageing IT infrastructure, some of 
which date back to the 1960s, to administer the tax system. In 
addition to being expensive, outdated IRS IT systems also 
negatively impact taxpayers seeking to comply with their tax 
responsibilities, often resulting in frustrating, prolonged 
interactions with the IRS that could be more easily and 
seamlessly resolved online. In addition, as with many other 
public and private entities, the IRS has been subject to 
cyberattacks and fraud schemes that seek to exploit stolen 
taxpayer information in order to steal tax refunds.

                         C. Legislative History


Background

    H.R. 1957, the Taxpayer First Act of 2019, was introduced 
on March 28, 2019, and was referred to the Committee on Ways 
and Means and the Committee on Financial Services.

Committee action

    The Committee on Ways and Means marked up H.R. 1957, the 
Taxpayer First Act of 2019, on April 2, 2019, and ordered the 
bill, as amended, favorably reported (with a quorum being 
present).

Committee hearings

    The Committee on Ways and Means continually reviews IRS 
administration of the Federal tax laws. Most recently, in the 
114th through the 116th Congresses, the Oversight Subcommittee 
held hearings and roundtables on reforming the IRS with a focus 
on improving the taxpayer experience, enhancing customer 
service, limiting civil asset forfeiture authority by the 
agency, and reviewing recommendations of the National Taxpayer 
Advocate. Oversight Subcommittee hearings included:
           February 11, 2015: Protecting Small 
        Businesses from IRS Abuse (Part I);
           May 25, 2016: Protecting Small Businesses 
        from IRS Abuse (Part II);
           April 26, 2017: Examining the 2017 Tax 
        Filing Season;
           May 19, 2017: IRS Reform: Lessons Learned 
        from the National Taxpayer Advocate;
           September 13, 2017: IRS Reform: Resolving 
        Taxpayer Disputes;
           December 13, 2017: IRS Reform: The Taxpayer 
        Experience;
           January 30, 2018: Member Day Hearing on 
        Legislation to Improve Tax Administration;
           June 20, 2018: Update on IRS and DOJ Efforts 
        to Return Seized Funds to Taxpayers;
           September 26, 2018: IRS Taxpayer 
        Authentication: Strengthening Security While Ensuring 
        Access; and
           March 7, 2019: Hearing with the National 
        Taxpayer Advocate on the Tax Filing Season.
    Roundtables included:
           June 22, 2017: Reforming the IRS--Lessons 
        Learned from 1998, Roundtable Part I;
           July 12, 2017: Reforming the IRS--Lessons 
        Learned from 1998, Roundtable Part II;
           June 22, 2017: Reforming the IRS--Lessons 
        Learned from 1998, Roundtable Part I;
           July 12, 2017: Reforming the IRS--Lessons 
        Learned from 1998, Roundtable Part II;
           Oct. 12, 2017: IRS Security Summit; and
           Jan. 17, 2018: Briefing on the IRS's 
        Technology Roadmap.

                      II. EXPLANATION OF THE BILL


                    TITLE I--PUTTING TAXPAYERS FIRST


                     A. Independent Appeals Process


  1. ESTABLISHMENT OF INTERNAL REVENUE SERVICE INDEPENDENT OFFICE OF 
       APPEALS (SEC. 1001 OF THE BILL AND SEC. 7803 OF THE CODE)

                              PRESENT LAW

    RRA98 directed the Commissioner of Internal Revenue (the 
``Commissioner'') to restructure the IRS by establishing and 
implementing an organizational structure that features 
operating units serving particular groups of taxpayers with 
similar needs and ensures an independent appeals function 
within the IRS.\1\ Although the Code does not mandate the 
existence of an independent office within the IRS to review 
administrative determinations, it does require an independent 
administrative review of certain determinations,\2\ and further 
requires that the Commissioner ensure that the duties of IRS 
employees are executed in a manner consistent with rights 
inferred from other Code provisions.\3\
---------------------------------------------------------------------------
    \1\Pub. L. No. 105-206, sec. 1001(a).
    \2\See, e.g., secs. 6320 (notice and opportunity for hearing upon 
filing of notice of lien), 6330 (notice and opportunity for hearing 
before levy), 7122 (rejection of a proposed offer-in-compromise or 
installment agreement), as well as 7123 (alternative dispute resolution 
procedures).
    \3\Section 7803, as amended in 2015, embraces the taxpayer rights 
as general principles to be included in the training and evaluation of 
all employees.
---------------------------------------------------------------------------
    Under the general authority of the Secretary of the 
Treasury (``Secretary'') to interpret the Code and that of the 
Commissioner to administer the Code and to employ the persons 
necessary to do so,\4\ the IRS operates an Office of Appeals 
(``Appeals'') headed by a Chief, Appeals.\5\ That office 
traditionally functions as the settlement arm of the IRS. In 
doing so, it reviews administrative determinations arising both 
from collection and examination activities, and attempts to 
resolve them without need for litigation, including by using 
alternative dispute resolution methods such as arbitration or 
mediation. As a result, review of administrative actions is 
generally available prior to payment of any tax underlying the 
controversy. Exceptions occur, and include cases in which 
inadequate time remains on the limitations period for 
assessment and collection or those in which the only arguments 
raised by the taxpayer are frivolous positions.\6\
---------------------------------------------------------------------------
    \4\Secs. 7803(a) (The duties and powers include the power to 
administer, manage, conduct, direct, and supervise the execution and 
application of the internal revenue laws or related statutes and tax 
conventions to which the United States is a party, and to recommend to 
the President a candidate for Chief Counsel (and recommend the removal 
of the Chief Counsel)) and 7804 (The Commissioner is authorized to 
employ such persons as the Commissioner deems proper for the 
administration and enforcement of the internal revenue laws and is 
required to issue all necessary directions, instructions, orders, and 
rules applicable to such persons, including determination and 
designation of posts of duty), and 7805 (Secretary authority to 
interpret the Code).
    \5\According to its website, the Office of Appeals and its 
predecessors have existed since 1927. https://www.irs.gov/compliance/
appeals/appeals-an-independent-organization.
    \6\See section 6702(c), which requires that the Secretary 
periodically review and list positions that have been identified as 
frivolous for purposes of the frivolous return penalty.
---------------------------------------------------------------------------
    Similarly, if a case has reached a point at which 
litigation is initiated, the availability of consideration by 
Appeals may be limited. First, authority to settle cases 
referred to the Department of Justice for defense or initiation 
of litigation rests solely with that Department. Therefore, 
such cases are not eligible for referral to Appeals.\7\ The 
terms under which a case pending in the United States Tax Court 
(``Tax Court'') may be referred to Appeals are described in 
published guidance that centralizes the decision to withhold a 
case from Appeals to assure consistent standards are 
applied.\8\
---------------------------------------------------------------------------
    \7\Sec. 7122.
    \8\Rev. Proc. 2016-22, 26 C.F.R. sec. 601.106. Exceptions to the 
general rule in favor of requiring Appeals consideration include cases 
that are withheld in the interests of sound tax administration, among 
other reasons.
---------------------------------------------------------------------------
    Employees of Appeals are compensated in accordance with the 
rules governing Federal employment generally.\9\
---------------------------------------------------------------------------
    \9\Part III of Title 5 of the United States Code prescribes rules 
for Federal employment, including employment, retention, and management 
and employee issues.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee is aware that the Code does not currently 
require that all taxpayers be provided an opportunity to 
contest an administrative decision in Appeals, although most 
taxpayers are afforded that opportunity. To foster confidence 
in the integrity of the IRS and the independence of its 
administrative proceedings and to encourage voluntary 
compliance, the Committee believes it is advisable to codify 
the role of an independent administrative appeals function 
within the IRS and provide new guidelines for procedures that 
the IRS is to follow in the new office. In doing so, the 
Committee seeks to reassure taxpayers of the independence of 
the persons providing the administrative review.
    The new administrative guidelines required by this 
provision are intended to clarify the rules against ex parte 
communications, thus protecting taxpayer rights, while ensuring 
that employees in the new office are able to seek independent 
advice from the Office of Chief Counsel when appropriate; 
require that taxpayers be provided a pre-conference opportunity 
to review the case file about the taxpayers; and address the 
standards and processes related to denial of a taxpayer request 
for administrative review of a case. With respect to the 
latter, the Committee intends to restrict and provide oversight 
of the procedures and standards that the IRS must follow in 
denying requests for an independent administrative review to 
taxpayers who receive a notice of deficiency from the IRS.\10\ 
Finally, the Committee intends to exercise its oversight of the 
implementation of the new procedures by requiring that the IRS 
submit annual written reports on the number and type of cases 
that are denied independent administrative review.
---------------------------------------------------------------------------
    \10\Current published guidance on the availability of Appeals 
consideration are discussed in Rev. Proc. 2016-22, supra.
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    The provision codifies the requirement of an independent 
administrative appeals function by establishing within the IRS 
an office to be known as the Internal Revenue Service 
Independent Office of Appeals (``Independent Appeals'') and to 
be headed by an official known as the Chief of Appeals, as 
described below. The purposes and duties of the office as well 
as the taxpayers' general right to seek consideration by that 
office, subject to certain limitations, are described below.

Chief of Appeals and staff

    The provision grants authority to the Commissioner to 
appoint the Chief of Appeals, who is to be compensated at the 
same rate as the highest rate of basic pay established for the 
Senior Executive Service.\11\ The appointment is not subject to 
the rules under Title 5 of the United States Code that govern 
competitive service or the Senior Executive Service. The Chief 
of Appeals reports directly to the Commissioner of the IRS. The 
person appointed to the position is required to have experience 
in a broad range of Federal tax law controversies and 
management of large service organizations.
---------------------------------------------------------------------------
    \11\5 U.S.C. sec. 5382.
---------------------------------------------------------------------------
    The provision also confirms that the Chief of Appeals and 
her employees are to have access to legal assistance and advice 
from staff within the Office of Chief Counsel about cases 
pending at Independent Appeals. Chief Counsel is responsible 
for ensuring that the attorneys are able to provide independent 
advice. In doing so, to the extent practicable, staff assigned 
to answer inquiries from Independent Appeals should not include 
those involved in advising the IRS employees working directly 
on the case prior to its referral to Independent Appeals or in 
preparation of the case for litigation.

Functions of Independent Appeals

    Independent Appeals is intended to perform functions 
similar to those of the current Appeals. Independent Appeals is 
to resolve tax controversies and review administrative 
decisions of the IRS in a fair and impartial manner, for the 
purposes of enhancing public confidence, promoting voluntary 
compliance, and ensuring consistent application and 
interpretation of Federal tax laws. Resolution of tax 
controversies in this manner is generally available to all 
taxpayers, subject to reasonable exceptions that the Secretary 
may provide. Thus, cases of a type that are referred to Appeals 
under present law remain eligible for referral to Independent 
Appeals.
    The provision includes a savings clause that requires 
application of rules similar to those in RRA98 to ensure 
continuity of the validity of administrative and legal 
proceedings, including legal documents related to such 
proceedings and existing delegations of authority.

Enhancement of taxpayer access to Independent Appeals

    In making access to Independent Appeals generally available 
to all taxpayers, the establishment of the new office clarifies 
the rights of taxpayers to review administrative case files and 
to protest denial of access to Independent Appeals.
            Taxpayer access to case files
    The provision requires that the administrative case file 
referred to Independent Appeals be available to certain 
individual and small business taxpayers. The specified 
taxpayers that are eligible are (1) individuals with adjusted 
gross incomes not exceeding $400,000 and (2) entities with 
gross receipts not exceeding $5 million for the taxable year to 
which the dispute relates. In determining whether persons are 
within the scope of the latter category, rules similar to those 
used to determine whether persons should be treated as a single 
employer for purposes of cash method accounting are to be 
applied.\12\ Eligible taxpayers must be able to review the non-
privileged portions of materials developed by the IRS not later 
than 10 days prior to the requested conference with Independent 
Appeals. In providing the materials, the IRS need not produce 
for the taxpayer the documents that were initially provided to 
the IRS by the taxpayer. In addition, the taxpayer may elect to 
waive the 10-day period and accept access to the materials on 
the date of the scheduled conference.
---------------------------------------------------------------------------
    \12\The aggregation rules are found at section 448(c)(2).
---------------------------------------------------------------------------
            Cases not referred to Independent Appeals
    In cases in which the IRS has issued a notice of deficiency 
to a taxpayer, the Commissioner must prescribe notice and 
protest procedures for taxpayers whose request for Independent 
Appeals consideration is denied. Such protest procedures will 
be available to taxpayers who have received a notice of 
deficiency in cases other than those involving only frivolous 
positions within the meaning of the Code.\13\ The procedures 
must include a requirement that the Commissioner notify a 
taxpayer of the denial in a written statement that includes a 
statement of the facts underlying the basis for the denial of 
the request together with a detailed explanation of the reasons 
for denying the request for referral to Independent Appeals. In 
addition, the written notice must advise the taxpayer of the 
right to protest the denial of the request to the Commissioner 
and include information about how to lodge such a protest.
---------------------------------------------------------------------------
    \13\Sec. 6702(c).
---------------------------------------------------------------------------
    The Commissioner must provide to Congress an annual written 
report detailing the number of denials of access to Independent 
Appeals and the reasons for such denials.

                             EFFECTIVE DATE

    The provision is generally effective upon the date of 
enactment, except with regard to the portion of the provision 
allowing taxpayer access to case files, which is effective for 
cases in which the conference occurs more than one year after 
the date of enactment.

                          B. Improved Service


   1. COMPREHENSIVE CUSTOMER SERVICE STRATEGY (SEC. 1101 OF THE BILL)

                              PRESENT LAW

    The Code provides that the Commissioner has such duties and 
powers as prescribed by the Secretary.\14\ Unless otherwise 
specified by the Secretary, such duties and powers include the 
power to administer, manage, conduct, direct, and supervise the 
execution and application of the internal revenue laws or 
related statutes. In executing these duties, the Commissioner 
depends upon strategic plans that prioritize goals and manage 
its resources. In the current strategic plan, adding and 
enhancing tools and support to improve taxpayers and tax 
professionals' interactions with the IRS to meet their tax 
obligations is identified as one of the IRS's six strategic 
goals.\15\
---------------------------------------------------------------------------
    \14\Sec. 7803(a).
    \15\See Internal Revenue Service Strategic Plan FY2018-2022, 
Publication 3744, available at https://www.irs.gov/pub/irs-pdf/
p3744.pdf.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that it is important for the IRS to 
set priorities, align activities with mission-related goals and 
objectives, assign accountability, and develop and use 
information to monitor progress and evaluate results. The 
Committee believes that this information will provide the IRS 
with tools the IRS can use to monitor and evaluate how 
efficiently and effectively programs are achieving their 
intended purposes. The Committee further believes this 
provision is necessary to help determine whether public 
resources have been used to achieve the purposes for which they 
were appropriated.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary to develop a 
comprehensive strategy for customer service and to submit such 
plan to Congress not later than the date which is one year 
after the date of enactment. The strategy will include: (1) a 
plan to determine appropriate levels of online services, 
telephone call back services, and training of employees 
providing customer services, based on best practices of 
businesses and designed to meet reasonable customer 
expectations; (2) an assessment of all services that the IRS 
can co-locate with other Federal services or offer as self-
service options; (3) proposals for long-term improvements over 
the next 10 fiscal years, with appropriate short-term goals 
over the current and following fiscal year and mid-term goals 
over the next three to five fiscal years; (4) a plan to update 
guidance and training materials, including the Internal Revenue 
Manual, for customer service employees of the IRS to reflect 
such strategy; and (5) metrics for measuring the IRS's progress 
in implementing its strategy. Within two years after the date 
of enactment, the Secretary or the Secretary's delegate is 
required to make public the updated guidance and training 
materials in a user friendly fashion.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

            2. IRS FREE FILE PROGRAM (SEC. 1102 OF THE BILL)

                              PRESENT LAW

    The IRS has entered into cooperative relationships with 
commercial return preparation service providers (known as the 
Free File Alliance) to provide free Federal tax preparation and 
electronic filing services to eligible low-income or elderly 
taxpayers. Some of these providers also offer free State tax 
preparation. This arrangement is commonly known as the Free 
File Program. Taxpayers generally must select a designated 
service provider through the IRS's website to access commercial 
online software provided by the Free File Alliance companies to 
prepare and file their tax returns. To qualify, taxpayers must 
have adjusted gross income (AGI) of $66,000 or less (for 2018 
returns). Each participating company sets its own eligibility 
requirements and not all taxpayers will qualify to use the 
software of all companies. There is no fee for taxpayers using 
the Free File Program, and Free File Alliance companies also do 
not pay any fee to the IRS to participate in the program.

                           REASONS FOR CHANGE

    The Committee believes that the IRS Free File program 
should be maintained and enhanced because the program increases 
e-file participation, provides more free online options to 
taxpayers, and eases tax preparation and filing. The Committee 
also believes that identifying and implementing innovative new 
program features will be helpful in continuing to reduce the 
burden on taxpayers.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary, or the Secretary's 
delegate, in cooperation with the private sector, to maintain 
the current IRS Free File Program that provides free individual 
income tax preparation and electronic filing services to the 
lowest 70 percent of taxpayers by adjusted gross income 
(``AGI'') as ranked annually by the prior year taxpayer AGI 
data. The provision requires the IRS Free File Program to 
continue to make available to taxpayers at all income levels a 
basic, online electronic fillable forms utility. The provision 
further requires the IRS Free File Program work with State 
government agencies to enhance and expand the use of the 
program to provide needed benefits to taxpayers while reducing 
the cost of processing returns.
    The provision also requires the Secretary, or the 
Secretary's delegate, in cooperation with the private sector, 
to identify and implement innovative new program features to 
improve and simplify the taxpayer experience with completing 
and filing individual tax returns.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

 3. LOW-INCOME EXCEPTION FOR PAYMENTS OTHERWISE REQUIRED IN CONNECTION 
WITH A SUBMISSION OF AN OFFER-IN-COMPROMISE (SEC. 1103 OF THE BILL AND 
                         SEC. 7122 OF THE CODE)

                              PRESENT LAW

    The IRS is authorized to enter into offers-in-compromise 
under which the taxpayer and Federal government agree that a 
tax liability may be satisfied by payment of less than the full 
amount owed.\16\ An offer-in-compromise may be accepted on one 
of three grounds: (1) doubt as to liability, available in cases 
in which the validity of the actual tax liability is in 
question; (2) doubt as to collectability based on lack of 
sufficient assets from which the tax, interest, and penalties 
can be paid in full; or (3) effective tax administration, 
applicable in a case in which collection in full would cause 
the taxpayer economic hardship such that compromise rather than 
collection would better encourage tax compliance.\17\ If the 
unpaid tax liabilities total $50,000 or more, an offer-in-
compromise can be accepted only if a public report is filed, 
supported by a written opinion from the IRS Chief Counsel, 
stating the reasons for the compromise, the amounts of assessed 
tax, penalties and interest, and the amounts actually paid 
pursuant to the offer-in-compromise.\18\
---------------------------------------------------------------------------
    \16\Sec. 7122.
    \17\Treas. Reg. sec. 1.7122-1(b). For this purpose, economic 
hardship is defined under Treas. Reg. sec. 301.6343-1.
    \18\Sec. 7122(b); Treas. Reg. sec. 1.7122-1(e)(6). The $50,000 
threshold was raised from $500 in 1996. Sec. 503 of the Taxpayer Bill 
of Rights 2, Pub. L. No. 104-168.
---------------------------------------------------------------------------
    Taxpayers making a lump sum offer-in-compromise must 
include a nonrefundable payment of 20 percent of the lump sum 
with the initial offer (herein, ``upfront partial 
payment'').\19\ The IRS waives this upfront partial payment 
when an offer is submitted by a low-income taxpayer, defined as 
an individual who falls at or below 250 percent of the poverty 
guidelines published by the Department of Health and Human 
Services, or such other measure that is adopted by the 
Secretary (herein, ``low-income taxpayer'').\20\ Taxpayers 
seeking an offer-in-compromise involving periodic payments must 
provide a nonrefundable payment of the first installment that 
would be due if the offer were accepted.\21\
---------------------------------------------------------------------------
    \19\Sec. 7122(c)(1)(A).
    \20\Notice 2006-68, 2006-31 I.R.B. 105, July 31, 2006.
    \21\Sec. 7122(c)(1)(B).
---------------------------------------------------------------------------
    In general, a taxpayer is required to provide a user fee 
for processing the offer-in-compromise.\22\ However, no fee 
will be charged if an offer either is based solely on doubt as 
to liability or is made by a low-income taxpayer.\23\
---------------------------------------------------------------------------
    \22\Treas. Reg. sec. 300.3(b). The fee for processing an offer to 
compromise on or after January 1, 2014, is $186. Proposed Treasury 
regulations would increase the fee to $300. 81 Fed. Reg. 70654 (Nov. 
28, 2016).
    \23\Treas. Reg. sec. 300.3(b)(i) and (ii).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that the offer-in-compromise program 
has been successful in raising revenue both from offers and by 
bringing taxpayers back into the system. The Committee also 
believes that certain low-income taxpayers are unable to 
participate in the program because they cannot afford the user 
fee or upfront payment. The Committee believes that, with the 
low-income taxpayer exception, access to the program would be 
substantially increased resulting in improved ability to obtain 
the collectable portion of existing tax liabilities. The 
Committee believes that codifying the exception helps ensure 
that there will be no decrease in the number of legitimate 
offers submitted, the number of offers accepted, and the number 
of individuals reentering the tax system.

                        EXPLANATION OF PROVISION

    The provision codifies the current low-income taxpayer 
exception with respect to any user fee or upfront partial 
payment imposed with respect to any offer-in-compromise. The 
provision makes clear that the determination of low-income is 
based on the individual's adjusted gross income as determined 
for the most recent tax year for which such information is 
available.

                             EFFECTIVE DATE

    The provision applies to offers-in-compromise submitted 
after the date of enactment.

                        C. Sensible Enforcement


    1. INTERNAL REVENUE SERVICE SEIZURE REQUIREMENTS WITH RESPECT TO 
            STRUCTURING TRANSACTIONS (SEC. 1201 OF THE BILL)

                              PRESENT LAW

    The Bank Secrecy Act of 1970 (``BSA'') mandates a reporting 
and recordkeeping system that assists Federal law enforcement 
and regulatory agencies in the detection, monitoring, and 
tracing of certain monetary transactions.\24\ The reporting 
requirements are imposed on individuals, financial 
institutions, and non-financial trades and businesses that act 
similar to financial institutions.\25\ The requirements include 
reporting currency transactions exceeding $10,000.
---------------------------------------------------------------------------
    \24\The Bank Secrecy Act, 31 U.S.C. secs. 5311-5332.
    \25\31 U.S.C. sec. 5312(a)(1).
---------------------------------------------------------------------------
    To circumvent these reporting requirements, individuals 
sometimes structure cash transactions to fall below the $10,000 
reporting threshold (referred to as ``structuring''). In other 
words, instead of conducting a single transaction in currency 
in an amount that would require a report to be filed or record 
made by a financial institution, an individual conducts a 
series of currency transactions, willfully keeping each 
individual transaction at an amount below $10,000 to evade 
reporting or recording. Structuring can be used to conceal 
illegal cash-generating activities, such as the selling of 
narcotics, and to conceal income earned legally in order to 
evade the payment of taxes. Structuring (or attempts to 
structure) for the purpose of evading the reporting and 
recordkeeping requirements\26\ is subject to both civil and 
criminal penalties.\27\
---------------------------------------------------------------------------
    \26\31 U.S.C. sec. 5324(a); 31 U.S.C. sec 5322.
    \27\A person who willfully violates the law is subject to a fine of 
not more than $250,000, or imprisonment for not more than five years, 
or both. 31 U.S.C. sec. 5324(a); 31 U.S.C. sec. 5322.
---------------------------------------------------------------------------
    Present law authorizes forfeiture of property involved in 
transactions or attempted transactions\28\ in violation of 
these rules in accordance with the procedures governing civil 
forfeitures in money laundering cases.\29\
---------------------------------------------------------------------------
    \28\31 U.S.C. sec. 5317(c)(2).
    \29\See 18 U.S.C. sec. 981.
---------------------------------------------------------------------------
    The Secretary has delegated responsibility for implementing 
and enforcing the BSA to the Director, Financial Crimes 
Enforcement Network (``FinCEN''), who in turn re-delegated 
responsibility for civil compliance with the law to various 
Federal agencies including the IRS.\30\ The scope of that 
delegation of authority was expanded by the USA PATRIOT Act of 
2001,\31\ and includes authority to determine and enforce civil 
penalties.\32\ The IRS administers its delegated authority 
under the BSA through the IRS Small Business/Self-Employed 
Division, with assistance from the IRS Criminal Investigation 
Division (``IRS-CID'').
---------------------------------------------------------------------------
    \30\Treasury Order 180-01, available at https://www.treasury.gov/
about/role-of-treasury/orders-directives/Pages/to180-01.aspx, 
delegating authority to FinCEN. 31 C.F.R. sec. 103.56(b)(8). At the 
time of the initial delegation, FinCEN was an entity created by 
regulatory action, but has since been explicitly authorized by statute. 
31 U.S.C. sec. 310.
    \31\Treasury Order 180-01. For a discussion of the relationship 
between FinCEN and the agencies to which it re-delegated authority, 
see, Office of Inspector General, ``TERRORIST FINANCING/MONEY 
LAUNDERING: Responsibility for Bank Secrecy Act Is Spread Across Many 
Organizations,'' OIG-08-030 (April 9, 2008), available at https://
www.treasury.gov/about/organizational-structure/ig/Documents/
oig08030.pdf.
    \32\A penalty may be assessed before the end of the six-year period 
beginning on the date of the transaction with respect to which the 
penalty is assessed. 31 U.S.C. sec. 5321(b)(1). A civil action for 
collection may be commenced within two years of the later of the date 
of assessment and the date a judgment becomes final in any a related 
criminal action. 31 U.S.C. sec. 5321(b)(2).
---------------------------------------------------------------------------
    If a person prevails in a civil forfeiture proceeding 
involving seizure of currency, the United States is liable for 
reasonable attorney fees and other litigation costs reasonably 
incurred by the claimant, post-judgment interest, and interest 
actually paid to the United States from the date of seizure or 
arrest of the property that resulted from the investment of the 
property in an interest-bearing account or instrument as well 
as imputed interest for any period for which no interest was 
paid.\33\
---------------------------------------------------------------------------
    \33\28 U.S.C. sec. 2465(b)(1). The imputed interest that may be 
paid under that section is the amount that such currency, instruments, 
or proceeds would have earned at the rate applicable to the 30-day 
Treasury Bill, for any period for which no interest was paid (not 
including any period when the property reasonably was in use as 
evidence in an official proceeding or in conducting scientific tests 
for the purpose of collecting evidence), commencing 15 days after the 
property was seized by a Federal law enforcement agency, or was turned 
over to a Federal law enforcement agency by a State or local law 
enforcement agency.
---------------------------------------------------------------------------
    Prior to October 2014, the IRS provided partial relief in 
structuring transactions involving a first offense, a 
legitimate funding source, and no criminal conviction. The IRS 
procedures also required its criminal investigation division to 
consider additional mitigating or aggravating factors. On 
October 17, 2014, IRS-CID issued guidance on how it will 
conduct seizures and forfeitures in its structuring cases.\34\ 
Pursuant to this guidance, the IRS will not pursue seizure and 
forfeiture of funds associated only with so-called ``legal 
source'' structuring unless (1) there are exceptional 
circumstances justifying the seizure and forfeiture and (2) the 
case is approved by the Director of Field Operations.
---------------------------------------------------------------------------
    \34\Memorandum for Special Agents in Charge Criminal Investigation, 
October 17, 2014, available at http://ij.org/wp-content/uploads/2015/
07/IJ068495.pdf. Written Testimony of John A. Koskinen and Richard 
Weber, House Committee on Ways and Means Subcommittee on Oversight on 
"Financial Transaction Structuring," May 25, 2016, available at https:/
/www.irs.gov/uac/newsroom/written-testimony-of-john-a-koskinen-and-
richard-weber-before-the-house-committee-on-ways-and-means-
subcommittee-on-oversight-on-financial-transaction-structuring-may-25-
2016; New IRS Special Procedure to Allow Property Owners to Request 
Return of Property, Funds in Specific Structuring Cases, June 16, 2016, 
available at https://www.irs.gov/uac/newsroom/new-irs-special-
procedure-to-allow-property-owners-to-request-return-of-property-funds-
in-specific-structuring-cases; Letter to Chairman Roskam and Ranking 
Member Lewis summarizing planned actions, June 10, 2016, available at 
http://waysandmeans.house.gov/wp-content/uploads/2016/06/6.9-Roskam-
Lewis-Response-Letter-and-Enclosure.pdf.
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                           REASONS FOR CHANGE

    The Committee is aware that people sometimes structure 
series of cash transactions so that each transaction falls 
below $10,000 in order to circumvent BSA reporting and 
recordkeeping requirements. Structuring (or attempts to 
structure) for the purpose of evading the BSA reporting and 
record keeping requirements\35\ is subject to both civil and 
criminal penalties because structuring may represent an attempt 
to conceal illegal activities such as the selling of narcotics 
or evasion of taxes, for example.
---------------------------------------------------------------------------
    \35\31 U.S.C. secs. 5313(a), 5324(a).
---------------------------------------------------------------------------
    The Committee is also aware of numerous instances in which 
the IRS seized taxpayer assets on the basis of suspected 
structuring in violation of BSA reporting and recordkeeping 
rules. The Committee believes it is necessary to limit the 
authority of the IRS by requiring that the IRS show probable 
cause that funds subject to forfeiture for structuring were 
derived from an illegal source or connected to other criminal 
activity before the IRS can seize funds. The Committee also 
believes it is necessary to implement new procedural 
protections for persons whose assets the IRS has seized in such 
forfeiture actions, including a post-seizure hearing.

                        EXPLANATION OF PROVISION

    The provision provides that in the case of a suspected 
structuring violation, the IRS may only pursue seizure or 
forfeiture of assets if either the property to be seized was 
derived from an illegal source or the transactions were 
structured for the purpose of concealing a violation of a 
criminal law or regulation other than rules against 
structuring.
    The provision establishes post-seizure notice and review 
procedures for IRS seizures based on suspected structuring 
violations. The IRS must, within 30 days, make a good faith 
effort to find all persons with an ownership interest in the 
property seized and inform him or her of certain post-seizure 
hearing rights provided under the provision. This 30-day notice 
requirement may be extended an additional 30 days if the IRS 
can establish to a court probable cause of an imminent threat 
to national security or personal safety. If a notice recipient 
requests a court hearing within 30 days of the notice, the 
property is required to be returned unless the court finds that 
there is probable cause to believe that a structuring violation 
occurred involving such property and the property to be seized 
was derived from an illegal source or the funds were structured 
for the purpose of concealing the violation of a criminal law 
or regulation other than the structuring provisions of the BSA.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

2. EXCLUSION OF INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY SEIZED 
BY THE INTERNAL REVENUE SERVICE BASED ON STRUCTURING TRANSACTION (SEC. 
            1202 OF THE BILL AND NEW SEC. 139H OF THE CODE)

                              PRESENT LAW

    Nothing in the BSA or the administrative guidance issued by 
the IRS affects the Federal tax treatment of the interest that 
may be paid to a successful litigant in civil asset forfeiture 
proceedings. The Code provides no specific exclusion from gross 
income or deduction from adjusted gross income for interest 
received by a successful litigant pursuant to an action to 
recover property seized by the IRS pursuant to the BSA. 
Accordingly, the interest received is includable in gross 
income under the Code.

                           REASONS FOR CHANGE

    The Committee believes interest received from the Federal 
government on wrongly seized property should be exempt from 
income tax if a court determines the Government must return the 
funds and interest accrued to the victim of IRS abuse.

                        EXPLANATION OF PROVISION

    The provision amends the Code to exclude from gross income 
any interest received from the Federal Government in connection 
with an action to recover property seized by the IRS pursuant 
to a claimed violation of the structuring provisions of the 
BSA.

                             EFFECTIVE DATE

    The provision applies to interest received on or after the 
date of enactment.

  3. CLARIFICATION OF EQUITABLE RELIEF FROM JOINT LIABILITY (SEC. 1203 
                 OF THE BILL AND SEC. 6015 OF THE CODE)

                              PRESENT LAW

    If a married couple elects to file a tax return on which 
they report their income jointly, they are generally jointly 
and severally liable for the entire tax liability that should 
have been reported on the joint return.\36\ A spouse may be 
entitled to relief from joint liability, in whole or in part, 
under the innocent spouse relief provisions of the Code.
---------------------------------------------------------------------------
    \36\Sec. 6103(d).
---------------------------------------------------------------------------

Grounds for relief from joint liability

    There are three types of relief: general innocent spouse 
relief; relief for spouses no longer married or legally 
separated (separation of liabilities); and equitable relief. 
The grounds for relief and its scope differ among these three 
types of relief. In addition, the first two types of relief 
must be sought no later than two years after the date the IRS 
began collection activities against the electing spouse. For 
equitable relief, there is no limitations period in the 
statute.
    General relief from joint liability with respect to an 
understatement of tax is available to all joint filers who make 
a timely election for such relief and are able to establish the 
following.\37\ First, the electing spouse must establish that 
the underpayment is attributable to the erroneous items of the 
other spouse. Second, the electing spouse must show that at the 
time of signing the return, he or she did not know or have 
reason to know there was an understatement of tax. Finally, 
relief is granted only if it is inequitable to hold the 
electing spouse liable for the deficiency in tax, based on all 
facts and circumstances.
---------------------------------------------------------------------------
    \37\Sec. 6015(b).
---------------------------------------------------------------------------
    Separation of liabilities relief from joint liability with 
respect to a deficiency is available to persons who are no 
longer married, are legally separated, or were no longer living 
together in the 12 months ending with the date innocent spouse 
relief is elected.\38\ The individual electing relief on this 
basis must establish the portion of any deficiency that is 
appropriately allocable to him or her. Special rules are 
provided in the Code for determining allocation of items that 
benefit one spouse more than the other, property transfers, and 
children's liability. Relief otherwise available is not 
permitted with respect to items of which a spouse was aware at 
the time the return was signed and which contributed to a 
deficiency.
---------------------------------------------------------------------------
    \38\Sec. 6015(c).
---------------------------------------------------------------------------
    Equitable relief from joint liability may be available to 
those spouses who are ineligible under the provisions for 
general relief or separation of liabilities relief.\39\ Such 
relief is granted only if, taking into account all facts and 
circumstances, it is inequitable to hold the individual liable 
for the unpaid portion of tax or for a deficiency with respect 
to the joint return.
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    \39\Sec. 6015(f).
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Availability and scope of judicial review

    If an individual elects to have the general relief 
provision or the separation of liabilities relief provision 
apply with respect to a deficiency, the individual may petition 
the Tax Court to review unfavorable determinations by the IRS 
with respect to the claimed relief. The Tax Court has held that 
its authority to review such IRS determinations is under a de 
novo standard.\40\
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    \40\Sec. 6015(e)(1).
---------------------------------------------------------------------------
    The claim for relief from joint liability must be filed no 
later than 90 days after the notice of final determination on 
relief from joint liability and no earlier than the earlier of 
the mailing of such notice of final determination or the date 
which is six months after electing such relief. During the 
pendency of the Tax Court proceeding, or during the period in 
which a petition may be filed, collection action is restricted.
    In contrast to claims under the general relief or 
separation of liabilities provisions described above, the 
extent to which a denial of a claim for equitable relief from 
joint liability is also subject to judicial review by the Tax 
Court, the scope of that review, and the standard for any 
review have been the subject of conflicting appellate 
decisions. An abuse of discretion standard based on court 
review of the administrative record was held to be the correct 
standard in some instances,\41\ but other courts have permitted 
review of information beyond the administrative record while 
applying an abuse of discretion standard.\42\ Still others have 
applied a de novo standard to both the scope of the review and 
the standard of review.\43\
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    \41\Jonson v. Commissioner, 118 T.C. 106, 125 (2002), aff'd on 
other grounds, 353 F.3d 1181 (10th Cir. 2003); Mitchell v. 
Commissioner, 292 F.3d 800, 807 (D.C. Cir. 2002); Cheshire v. 
Commissioner, 282 F.3d 326, 337-38 (5th Cir. 2002).
    \42\Commissioner v. Neal, 557 F.3d 1262 (11th Cir. 2009).
    \43\Wilson v. Commissioner, 705 F.3d 980 (9th Cir. 2013), acq'd, 
I.R.B. 2013-25 (June 17, 2013); Porter v. Commissioner, 132 T.C. 203, 
132 T.C. No. 11 (2009).
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                           REASONS FOR CHANGE

    The Committee is aware that the extent to which a denial of 
a claim for equitable relief from joint liability is subject to 
judicial review by the Tax Court and the scope of any such 
review have been the subject of conflicting appellate 
decisions. As a result, persons residing in different states, 
but whose circumstances are otherwise similar, may be accorded 
different rights to judicial review under the Code. The 
Committee believes that such disparity of treatment can be 
avoided if the statute is clarified to confer a right to 
judicial review in all cases, and to specify the scope of such 
review.

                        EXPLANATION OF PROVISION

    Under the provision, Tax Court review of innocent spouse 
equitable relief cases is not limited to the administrative 
record, but it may consider evidence that is newly discovered 
or was previously unavailable. The provision also clarifies 
that the Tax Court has jurisdiction to review a denial of 
equitable claims for relief from joint liability, and is not 
limited to a review for abuse of discretion by the IRS.
    The provision allows taxpayers to request equitable relief 
with respect to any unpaid liability before the expiration of 
the collection period or, if paid, before the expiration of the 
applicable limitations period for claiming a refund or credit.

                             EFFECTIVE DATE

    The provision applies to petitions or requests filed or 
pending on or after the date of enactment.

4. MODIFICATION OF PROCEDURES FOR ISSUANCE OF THIRD-PARTY SUMMONS (SEC. 
              1204 OF THE BILL AND SEC. 7609 OF THE CODE)

                              PRESENT LAW

    The IRS has broad statutory authority to require production 
of information in the course of an examination.\44\ A request 
for information in the form of an administrative summons is 
enforceable if the IRS establishes its good faith, as evidenced 
by the factors enunciated by the Supreme Court in United States 
v. Powell.\45\ The U.S. Supreme Court articulated four basic 
elements necessary to establish that the government issued a 
summons in good faith: (1) the investigation must be conducted 
for a legitimate purpose; (2) the information sought is 
relevant to and ``may shed light on'' that legitimate purpose; 
(3) the requested information is not already in the possession 
of the IRS; and (4) the IRS complied with all statutorily 
required administrative steps.\46\ Subsequent to United States 
v. Powell, the legitimacy of using an administrative summons in 
furtherance of an investigation into criminal violations was 
validated in United States v. LaSalle National Bank,\47\ in 
which the Supreme Court determined that the dual civil and 
criminal purpose was legitimate, so long as there had not yet 
been a commitment to refer the case for prosecution.
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    \44\Sec. 7602.
    \45\United States v. Powell, 379 U.S. 48 (1964).
    \46\United States v. Powell, 379 U.S. 48, pp. 57-58 (1964).
    \47\437 U.S. 298 (1978); codified in section 7609(c).
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    The use of this summons authority to obtain information 
from third-parties is subject to certain procedural 
safeguards,\48\ but otherwise the same good faith elements are 
analyzed to determine whether the summons should be 
enforced.\49\ When the existence of a possibly non-compliant 
taxpayer is known but not his identity, as in the case of 
holders of offshore bank accounts or investors in particular 
abusive transactions, the IRS is able to issue a summons 
(referred to as a ``John Doe'' summons) to learn the identity 
of the taxpayer, but must first meet significantly greater 
statutory requirements to guard against fishing expeditions.
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    \48\Sec. 7609.
    \49\Tiffany Fine Arts, Inc. v. United States, 479 U.S. 310 (1985).
---------------------------------------------------------------------------
    An effort to learn the identity of unnamed John Does 
requires that the United States seek judicial review in an ex 
parte proceeding prior to issuance of the John Doe summons. In 
its application and supporting documents,\50\ the United States 
must establish that the information sought pertains to an 
ascertainable group of persons, that there is a reasonable 
basis to believe that taxes have been avoided, and that the 
information is not otherwise available.\51\ The reviewing court 
does not determine whether the John Doe summons will ultimately 
be enforceable. Once a court has determined that the predicate 
for issuance of a summons is met, the summons is served, and 
the summoned party served may challenge enforcement of the 
summons, based on the Powell factors. It is not entitled to 
judicial review of the ex parte ruling that permitted issuance 
of the summons.\52\ Nevertheless, enforcement of a John Doe 
summons is likely to be subject to time-consuming challenges, 
possibly warranting an extension of the limitations period.
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    \50\Sec. 7609(h)(2) provides that the determination will be made ex 
parte, solely on the pleadings.
    \51\Sec. 7609(f).
    \52\United States v. Samuels, Kramer & Co., and First Western 
Government Securities, Inc., 712 F.2d 1342 (9th Cir. 1983), which 
affirmed a lower court determination that the issuance of the John Doe 
summons was not subject to review, but reversed and remanded to permit 
a limited evidentiary hearing on whether the Powell standard was met.
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                           REASONS FOR CHANGE

    The Committee believes that the John Doe summons is a 
useful tool, but that it is important that the information 
sought in the summons be at least potentially relevant to the 
tax liability of an ascertainable group.
    The Committee also believes that the use of this important 
tool has at times potentially exceeded its intended purpose. A 
John Doe summons is not intended to be an opening bid for 
information from the party being served nor is it intended to 
be used for the purposes of a fishing expedition. Given the 
IRS's past use of this authority, the Committee feels it is 
necessary to clarify its intended usage.

                        EXPLANATION OF PROVISION

    The provision prevents the Secretary from issuing a John 
Doe summons unless the information sought to be obtained is 
narrowly tailored and pertains to the failure (or potential 
failure) of the person or group or class of persons referred to 
in the statute to comply with one or more provisions of the 
Code which have been identified. The provision is not intended 
to change the Powell standard or otherwise affect the IRS's 
burden of proof.

                             EFFECTIVE DATE

    The provision applies to summonses served after the date 
that is 45 days after the date of enactment.

  5. PRIVATE DEBT COLLECTION AND SPECIAL COMPLIANCE PERSONNEL PROGRAM 
           (SEC. 1205 OF THE BILL AND SEC. 6306 OF THE CODE)

                              PRESENT LAW

Qualified tax collection contracts

    The Code permits the IRS to use private debt collection 
companies to locate and contact taxpayers owing outstanding tax 
liabilities of any type\53\ and to arrange payment of those 
taxes by the taxpayers.\54\ For this purpose, the Secretary 
enters into qualified tax collection contracts for the 
collection of inactive tax receivables. Under these contracts, 
if the taxpayer cannot pay in full immediately, the private 
debt collection company offers the taxpayer an installment 
agreement providing for full payment of the taxes over a period 
of as long as five years.
---------------------------------------------------------------------------
    \53\This provision generally applies to any type of tax imposed 
under the Internal Revenue Code.
    \54\Sec. 6306.
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    Inactive tax receivables are defined as any tax receivable 
(i) removed from the active inventory for lack of resources or 
inability to locate the taxpayer, (ii) for which more than 1/3 
of the applicable limitations period has lapsed and no IRS 
employee has been assigned to collect the receivable; and (iii) 
for which, a receivable has been assigned for collection but 
more than 365 days have passed without interaction with the 
taxpayer or a third party for purposes of furthering the 
collection. Tax receivables are defined as any outstanding 
assessment which the IRS includes in potentially collectible 
inventory.
    Certain tax receivables are not eligible for collection 
under qualified tax collection contracts, if such receivable: 
(i) is subject to a pending or active offer-in-compromise or 
installment agreement; (ii) is classified as an innocent spouse 
case; (iii) involves a taxpayer identified by the Secretary as 
being (a) deceased, (b) under the age of 18, (c) in a 
designated combat zone, or (d) a victim of tax-related identity 
theft; (iv) is currently under examination, litigation, 
criminal investigation, or levy; or (v) is currently subject to 
a proper exercise of a right of appeal.

Special compliance personnel program

    An amount not greater than 25 percent of the amount 
collected under any qualified tax collection contract is to be 
used to fund a special compliance personnel program. The 
Secretary is required to establish an account for the hiring, 
training, and employment of special compliance personnel. No 
other source of funding for the program is permitted, and funds 
deposited in the special account are restricted to use for the 
program, including reimbursement of the IRS and other agencies 
for the cost of administering the qualified debt collection 
program and all costs associated with employment of special 
compliance personnel and the retraining and reassignment of 
other personnel as special compliance personnel. Special 
compliance personnel are individuals employed by the IRS to 
serve either as revenue officers performing field collection 
functions, or as persons operating the automated collection 
system.

                           REASONS FOR CHANGE

    The Committee believes that an exception from the private 
debt collection program is needed for certain low-income 
individual taxpayers to protect such taxpayers from entering 
into payment plans they cannot afford, which ultimately does 
not result in an increase in actual payments recovered. The 
Committee intends that by eliminating certain low-income 
taxpayers from the private debt collection program efforts can 
be focused on collecting debt from taxpayers with an ability to 
pay and higher dollar debts.
    The Committee also believes that modifying the definition 
of inactive tax receivables to include those in which more than 
two years has passed since assessment will result in an 
increase in actual payments recovered.
    The Committee further believes that codifying the current 
IRS practice permitting seven-year installment agreements for 
the private debt collection program will result in fairer tax 
administration and an increase in actual payments received.
    The Committee believes that, to ensure the special 
compliance personnel program is operating effectively, a 
clarification is needed to make clear that the IRS may use 
funds from the special compliance personnel program account for 
various program costs, including information technology 
associated with implementing the program.

                        EXPLANATION OF PROVISION

    The provision makes certain additional tax receivables of 
individual taxpayers ineligible for collection under qualified 
tax collection contracts. Such receivables involve a taxpayer 
(1) substantially all of whose income consists of disability 
insurance benefits under section 233 of the Social Security Act 
(referred to as Social Security Disability Insurance or SSDI) 
or supplemental security income benefits under title XVI of the 
Social Security Act (referred to as Supplemental Security 
Income or SSI) or (2) whose adjusted gross income, as 
determined for the most recent taxable year for which 
information is available, does not exceed 200 percent of the 
applicable poverty level (as determined by the Secretary).
    The provision also modifies the definition of inactive tax 
receivable by replacing the condition that more than 1/3 of the 
applicable limitations period has lapsed with the requirement 
that ``more than two years has passed since assessment.'' The 
provision retains the requirement that no IRS employee has been 
assigned to collect the receivable.
    The provision also modifies the definition of a qualified 
tax collection contract to allow the private debt collection 
company to offer the taxpayer an installment agreement 
providing for full payment of the taxes over a period of as 
long as seven years, replacing the current law period of five 
years.
    The provision clarifies that the IRS may use funds from the 
special compliance personnel program account for various 
program costs, including the costs of hiring any personnel, 
communications, software, technology, and reimbursement of the 
IRS or other government agencies for the cost of administering 
the qualified tax collection program.

                             EFFECTIVE DATE

    The provision to make certain tax receivables of individual 
taxpayers ineligible for collection under qualified tax 
collection contracts and the provision to modify the definition 
of inactive tax receivables applies to tax receivables 
identified by the Secretary (or the Secretary's delegate) after 
December 31, 2020.
    The provision to modify the definition of a qualified tax 
collection contract applies to contracts entered into after the 
date of enactment.
    The provision relating to the use of the special compliance 
personnel program account applies to amounts expended from the 
account after the date of enactment.

6. REFORM OF NOTICE OF CONTACT OF THIRD PARTIES (SEC. 1206 OF THE BILL 
                       AND SEC. 7602 OF THE CODE)

                              PRESENT LAW

    The IRS may not contact any person other than the taxpayer 
with respect to the determination or collection of the tax 
liability of the taxpayer without providing reasonable notice 
in advance to the taxpayer that the IRS may contact persons 
other than the taxpayer. The IRS is required to provide 
periodically to the taxpayer a record of persons contacted 
during the prior period by the IRS with respect to the 
determination or collection of that taxpayer's tax liability. 
This record is also required to be provided upon request of the 
taxpayer. This notice requirement does not apply to criminal 
tax matters, if the collection of the tax liability is in 
jeopardy, if the Secretary determines for good cause shown that 
disclosure may involve reprisal against any person, or if the 
taxpayer authorized the contact.

                           REASONS FOR CHANGE

    The Committee believes that the current notification 
requirement before the IRS contacts third parties regarding 
examination or collection activities is insufficient.\55\ Such 
contacts may have a chilling effect on the taxpayer's business 
and could damage the taxpayer's reputation in the community. 
The Committee believes that the provision's notification 
requirements will provide taxpayers more of an opportunity to 
resolve issues and volunteer information before the IRS 
contacts third parties.
---------------------------------------------------------------------------
    \55\Testimony of Kathy Petronchak, House Committee on Ways and 
Means, Subcommittee on Oversight Hearing on ``Resolving Taxpayer 
Disputes,'' September 13, 2017, p. 9, available at https://
waysandmeans.house.gov/wp-content/uploads/2017/09/20170913-OS-
Testimony-Petronchak.pdf (``Such notice is useless and does not 
effectively apprise taxpayers that such contact will be made, to whom 
it will be made, or that the taxpayer can request a third party contact 
report from the IRS.'').
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    The provision replaces the requirement that the IRS provide 
reasonable notice in advance to the taxpayer with a requirement 
that the taxpayer be provided, at least 45 days before the 
beginning of the period of contact, notice that contacts with 
persons other than the taxpayer are intended. The period of 
contact may not be greater than one year. However, notices are 
permitted to be issued to the same taxpayer with respect to the 
same tax liability with periods specified that, in the 
aggregate, exceed one year. The provision requires the notice 
to be provided only if there is a present intent at the time 
such notice is given for the IRS to make such contacts. This 
intent can be met on the basis of the assumption that the 
information sought to be obtained will not be obtained by other 
means before such contact.

                             EFFECTIVE DATE

    The provision applies to notices provided, and contacts 
made, after the date which is 45 days after the date of 
enactment.

7. MODIFICATION OF AUTHORITY TO ISSUE DESIGNATED SUMMONS (SEC. 1207 OF 
                 THE BILL AND SEC. 6503(J) OF THE CODE)

                              PRESENT LAW

    During an audit, the IRS may informally request that the 
taxpayer provide additional information necessary to arrive at 
a fair and accurate audit adjustment, if any adjustment is 
warranted. Not all taxpayers cooperate with such requests, 
whether by failing to respond or by providing inadequate or 
incomplete responses. In such cases, if the necessary 
information cannot be developed from other witnesses or 
sources, the IRS seeks information by issuing an administrative 
summons.\56\ If the taxpayer does not cooperate with the 
request in the summons, the IRS may refer the summons to the 
Department of Justice to seek and obtain an order for 
enforcement in Federal court. If the summons in question was 
issued to a third-party rather than the taxpayer, the taxpayer 
may petition the court to quash an administrative summons.\57\
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    \56\Sec. 7602.
    \57\Sec. 7609.
---------------------------------------------------------------------------
    In United States v. Powell,\58\ the U.S. Supreme Court 
articulated four basic elements necessary to establish that the 
government issued a summons in good faith: (1) the 
investigation must be conducted for a legitimate purpose; (2) 
the information sought is relevant to and ``may shed light on'' 
that legitimate purpose; (3) the requested information is not 
already in the possession of the IRS; and (4) the IRS complied 
with all statutorily required administrative steps. All 
petitions to enforce an administrative summons must include 
allegations and supporting declarations to establish that the 
good faith standards are met.\59\ Although the good faith 
standards established in United States v. Powell apply to all 
administrative summonses, they are not the sole source of 
limitations on the IRS's ability to compel production of 
information during an examination.\60\
---------------------------------------------------------------------------
    \58\United States v. Powell, 379 U.S. 48, pp. 57-58 (1964).
    \59\Department of Justice, Tax Division, Summons Enforcement 
Manual, (updated through July 2011), available at https://
www.justice.gov/sites/default/files/tax/legacy/2011/08/31/
SumEnfMan_July2011.pdf.
    \60\See, e.g., secs. 7602 (summonses in furtherance of a criminal 
investigation may be issued, provided that the IRS has not referred the 
investigation to the Department of Justice for prosecution of the 
taxpayer whose tax liability is the subject of the summons), 7609 
(summons issued to a third-party record-keeper), 7611 (examinations of 
churches), 7612 (summons for computer software). Summonses to obtain 
information responsive to a request for exchange of information under a 
tax treaty present special enforcement issues, both procedural and 
substantive as well. Mazurek v. United States, 271 F.3d 226 (5th Cir. 
2001).
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    Neither service of an administrative summons nor 
government-initiated action for judicial enforcement is 
sufficient to suspend the limitations period.\61\ As a result, 
in the case of an examination of complicated issues of a large 
corporation, involving voluminous records, numerous witness 
interviews, and possible expert reports, the general three-year 
period for assessment may be inadequate to allow for completion 
of an examination.\62\ In such cases, the limitations period is 
often but not always extended by agreement of the parties. An 
uncooperative taxpayer could force a premature conclusion to an 
audit by delaying responses and allowing the statute to expire. 
To guard against such situations in cases in which the IRS 
requires additional information and time to complete its 
work,\63\ the Code authorizes issuance of a designated summons 
that triggers suspension of the limitations period if judicial 
enforcement proceedings are initiated.
---------------------------------------------------------------------------
    \61\In the case of third-party summonses, the limitations period is 
suspended if a taxpayer named in the summons initiates a proceeding to 
quash the summons, or if compliance with the summons remains unresolved 
as of the date which is six months after service of the summons.
    \62\Sec. 6501 (income taxes are generally required to be assessed 
within three years after a taxpayer's return is filed, whether or not 
it was timely filed); sec. 6501(c) (there are several circumstances 
under which the general three-year limitations period does not begin to 
run, including failure to file a return or filing a false or fraudulent 
return with the intent to evade tax, extensions by agreement of the 
taxpayer and IRS, substantial omissions of income, or failure to 
disclose or report a listed transaction as required under section 6011 
on any return or statement for a taxable year); sec. 6503 (there are 
also circumstances under which the three-year limitations period is 
suspended, including the issuance of a designated summons).
    \63\In describing the provision when it was first enacted, the 
Conference report for the Omnibus Reconciliation Act of 1990 explained, 
``This provision is designed to preserve the ability of the IRS to 
conclude the audit and assess any taxes that may be due regardless of 
the length of time that it might take to obtain judicial resolution of 
the summons enforcement lawsuit.'' H. Rept. 101-964, p. 1073. Omnibus 
Budget Reconciliation Act of 1990, Conf. Rept. to Accompany H.R. 5835.
---------------------------------------------------------------------------
    A designated summons is an administrative summons that is 
issued to a large corporation (or person to whom the 
corporation has transferred the requested books and records) 
with respect to one or more taxable periods currently under 
examination in the Coordinated Industry Case program and meets 
three conditions. First, it must be reviewed and approved by 
the Division Commissioner and Division Counsel of the relevant 
IRS operating division or organization with jurisdiction over 
the return. Second, it must be issued at least 60 days before 
the expiration of the assessment limitations period (as 
extended). Finally, it must clearly state that it is a 
``designated summons.''\64\ No more than one designated summons 
may be issued with respect to a return under examination.
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    \64\Section 6503(j) refers to the regional officials and the 
Coordinated Examination Program or their successors. The Division 
Counsel and Commissioner of the relevant office with jurisdiction over 
the return have been identified in regulation as the appropriate 
successor officials. Treas. Reg. sec. 301.6503(j)-1. In addition, the 
Coordinated Industry Case program is the successor to the Coordinated 
Examination Program.
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    If a designated summons is issued, and the taxpayer 
complies without any judicial enforcement proceeding, no 
suspension of the limitations period occurs. If the government 
initiates enforcement proceedings, the limitations period is 
suspended for the judicial enforcement period of that summons 
and any related summonses, i.e., summonses relating to the same 
return and issued within 30 days after the issuance of the 
designated summons. If the court proceeding results in an order 
to comply with the summons, the limitations period is also 
suspended for a period of 120 days from the first day after the 
close of the judicial enforcement period. In addition, the 
limitations period expires no earlier than 60 days after the 
close of the judicial enforcement period, if the court does not 
order compliance with the summons.
    Since enactment of the designated summons provision in 
1990, few such summonses have been issued.\65\ The IRS is now 
required to submit annual reports to Congress on the number of 
designated summonses issued each year.\66\ Since 1995, three 
have been issued, most recently in 2014.\67\
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    \65\The earliest designated summons, involving a request to require 
testimony from an officer of Chevron Corporation, was enforced. United 
States v. Derr, 968, F.2d 943 (9th Cir. 1992). See also United States 
v. Norwest, 116 F.3d 1227 (8th Cir. 1997) (court enforced IRS request 
to produce tax preparation software licensed to Norwest) and United 
States v. Caltex Petroleum, 12 F. Supp. 2d 545 (N.D. Tex. 1998) (denied 
IRS request to produce the software code used to calculate foreign tax 
credits).
    \66\Sec. 1002(b) Taxpayers Bill of Rights Act 2, Pub. L. 104-168 
(1996).
    \67\United States v. Microsoft, Case No. C15-00102-RSM (W.D. Wash. 
May 5, 2017) (in ruling on validity of privileges, the Court ordered 
further document production in compliance with the designated summons 
and related summonses, pursuant to the earlier opinion enforcing the 
designated summons, at United States v. Microsoft, 154 F. Supp. 3d 1134 
(W.D. Wash. 2015)).
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                           REASONS FOR CHANGE

    The Committee recognizes that issuance of a designated 
summons is a serious step in the examination of a tax return, 
given the fact that litigation over the summons would suspend 
the running of the period for assessing additional tax against 
the taxpayer under audit. The Committee also recognizes that 
the mere threat of the use of this tool can cause concern for 
taxpayers. The Committee is also cognizant that these 
summonses, though rarely issued, are needed due to the 
complexity of audits and lack of cooperation that the IRS may 
face in some of the largest and most complex cases. In 
recognition of these competing concerns, the Committee believes 
that the administrative process for approval and review of such 
summons should be tightened by requiring that a written 
statement be attached to the summons, in which the IRS 
establishes the need for the summons and that the summons was 
approved by a Division Commissioner and the Chief Counsel. The 
latter may delegate the authority to review, but not below the 
level of the executive in the Office of Chief Counsel who is 
the counterpart to the Division Commissioner. The Committee 
does not intend that strengthening the administrative steps 
required in issuing the summons be construed to disturb the 
good-faith standards of United States v. Powell for determining 
whether the summons is enforceable.

                        EXPLANATION OF PROVISION

    Under the provision, issuance of a designated summons must 
be preceded by review and written approval of the summons by 
the head of the relevant operating division and the Chief 
Counsel. The written approval must state facts establishing 
that the IRS had previously made reasonable requests for the 
information and must be attached to the summons. In subsequent 
judicial proceedings concerning the enforceability of the 
summons, the IRS must establish that the prior reasonable 
requests for information were made.

                             EFFECTIVE DATE

    The provision applies to summonses issued after the date 
that is 45 days after the date of enactment.

 8. LIMITATION ON ACCESS OF NON-INTERNAL REVENUE SERVICE EMPLOYEES TO 
RETURNS AND RETURN INFORMATION (SEC. 1208 OF THE BILL AND SEC. 7602 OF 
                               THE CODE)

                              PRESENT LAW

Returns and return information

            General rule of confidentiality
    As a general rule, returns and return information are 
confidential and cannot be disclosed unless authorized by the 
Code.\68\ The definition of return information is very broad 
and generally includes any information received or collected by 
the IRS with respect to liability under the Code of any person 
for any tax, penalty, interest or offense. The term ``return 
information'' includes, among other items:
---------------------------------------------------------------------------
    \68\Sec. 6103(a).
---------------------------------------------------------------------------
          a taxpayer's identity, the nature, source, or amount 
        of his income, payments, receipts, deductions, 
        exemptions, credits, assets, liabilities, net worth, 
        tax liability, tax withheld, deficiencies, 
        overassessments, or tax payments, whether the 
        taxpayer's return was, is being, or will be examined or 
        subject to other investigation or processing, or any 
        other data, received by, recorded by, prepared by, 
        furnished to, or collected by the Secretary with 
        respect to a return or with respect to the 
        determination of the existence, or possible existence, 
        of liability (or the amount thereof) of any person 
        under this title for any tax, penalty, interest, fine, 
        forfeiture, or other imposition, or offense . . . .\69\
---------------------------------------------------------------------------
    \69\Sec. 6103(b)(2)(A).
---------------------------------------------------------------------------
            Disclosure exception for tax administration contracts 
                    (section 6103(n))
    There are several exceptions to the general rule of 
confidentiality. One exception permits the disclosure of 
returns and return information in connection with written 
contracts or agreements for the acquisition of property or 
services for tax administration purposes (``tax administration 
contractor'').\70\
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    \70\Sec. 6103(n).
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Summons authority

            In general
    For the purposes of ascertaining the correctness of any 
return, making a return when none has been made, determining 
the liability of any person for any internal revenue tax, and 
certain other purposes, the Secretary is authorized to examine 
any books, records, or other data which may be relevant or 
material to such inquiry, and to take such testimony of the 
person concerned, under oath, as may be relevant or material to 
such inquiry. The Secretary also is authorized to issue 
summonses to appear before the Secretary at the time and place 
named in the summons to produce books, records and other data 
and to give testimony, under oath, as may be relevant or 
material to such inquiry.
            Summons interview regulations
    Under the Treasury regulations, a person authorized to 
receive returns and return information as a tax administration 
contractor may receive and examine books, papers, records, or 
other data produced to comply with the summons, and, in the 
presence and under the guidance of an IRS officer or employee, 
participate fully in the interview of a witness summoned by the 
IRS to provide testimony under oath.\71\
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    \71\Treas. Reg. sec. 301.7602-1(b)(3).
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    Proposed Treasury regulations would narrow this authority 
by excluding non-government attorneys from receiving summoned 
books, papers, records, or other data, or from participating in 
the interview of a witness summoned by the IRS to provide 
testimony under oath.\72\ An exception to this general 
exclusion is provided with respect to non-government attorneys 
hired for their expertise in an area other than Federal tax 
law. The proposed regulations would allow the IRS to hire an 
attorney who has specialized knowledge of foreign, state, or 
local law, including tax law, or in non-tax substantive law, 
such as patent law, property law, or environmental law. It 
would not permit the IRS to hire an attorney for non-
substantive specialized knowledge, such as civil litigation 
skills. These changes are proposed to be effective for 
examinations begun and summonses served by the IRS on or after 
March 27, 2018.
---------------------------------------------------------------------------
    \72\Prop. Treas. Reg. sec. 301.7602-1(b)(3), 83 Fed. Reg. 13206 
(March 28, 2018).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The IRS's ability to hire outside attorneys as contractors 
and have them question witnesses during a summons interview has 
raised many concerns. While the Committee recognizes the IRS's 
need for specialized expertise in certain substantive areas, 
the Committee is concerned that the statutorily prescribed 
roles of Chief Counsel and the Department of Justice may be 
circumvented when outside lawyers are permitted to conduct the 
questioning of summoned witnesses on behalf of the government. 
Such questioning is a government function that should be 
performed by government employees. The Committee believes that 
only IRS employees or employees of the Office of Chief Counsel 
should question summoned witnesses on behalf of the government 
and restricts the contractor authority accordingly.

                        EXPLANATION OF PROVISION

    The provision provides that the Secretary shall not, under 
the authority of section 6103(n) (relating to tax 
administration contracts), provide to a tax administration 
contractor any books, papers, records or other data obtained by 
summons, except when such person requires such information for 
the sole purpose of providing expert evaluation and assistance 
to the IRS (including, for example, access to such information 
by translators). Further, no person other than an officer or 
employee of the IRS or Office of Chief Counsel may on behalf of 
the Secretary question a witness under oath whose testimony was 
obtained by summons. The provision is not intended to restrict 
the Office of Chief Counsel's ability to use court reporters, 
translators or interpreters, photocopy services, and other 
similar ancillary contractors.

                             EFFECTIVE DATE

    The provision takes effect on the date of enactment and 
shall not fail to apply to a contract in effect under section 
6103(n) merely because such contract was in effect before the 
date of enactment.

                    D. Organizational Modernization


1. OFFICE OF THE NATIONAL TAXPAYER ADVOCATE (SEC. 1301 OF THE BILL AND 
                       SEC. 7803(C) OF THE CODE)

                              PRESENT LAW

In general

    The Office of the Taxpayer Advocate (``OTA'') is expected 
to represent taxpayer interests independently in disputes with 
the IRS. The National Taxpayer Advocate (``NTA'') supervises 
the OTA. The NTA reports directly to the Commissioner and is 
entitled to compensation at the same rate as the highest rate 
of basic pay established for the Senior Executive Service under 
section 5382 of Title 5 of the United States Code, or if the 
Secretary so determines, at a rate fixed under section 9503 of 
such title.
    The OTA has four principal functions:
          1. to assist taxpayers in resolving problems with the 
        IRS;
          2. to identify areas in which taxpayers have problems 
        in dealing with the IRS;
          3. to propose changes in the administrative practices 
        of the IRS to mitigate problems identified in (2); and
          4. to identify potential legislative changes that may 
        be appropriate to mitigate such problems.

Taxpayer Assistance Orders

    A taxpayer can request a Taxpayer Assistance Order 
(``TAO'') if the taxpayer is suffering or about to suffer a 
``significant hardship'' as a result of the manner in which the 
internal revenue laws are being administered by the IRS.\73\ A 
TAO may require the IRS within a specified time period, to 
release property of the taxpayer that has been levied upon, or 
to cease any action, take any action as permitted by law, or 
refrain from taking any action with respect to the taxpayer 
under specified provisions.\74\
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    \73\Sec. 7811(a)(1)(A). Significant hardship is deemed to occur if 
one of four factors exists: (1) there is an immediate threat of adverse 
action; (2) there has been a delay of more than 30 days in resolving 
the taxpayer's problems; (3) the taxpayer will have to pay significant 
costs (including fees for professional services) if relief is not 
granted; or (4) the taxpayer will suffer irreparable injury, or a long 
term adverse impact if relief is not granted. Sec. 7811(a)(2). The NTA 
may also issue a TAO if the taxpayer meets requirements to be set forth 
in regulations. Sec. 7811(a)(1)(B).
    \74\Sec. 7811(b). The provisions specified in 7811(b) are: (1) 
chapter 64 (relating to collection), (2) subchapter B of chapter 70 
(relating to bankruptcy and receiverships), chapter 78 (relating to 
discovery of liability and enforcement of title) or any other provision 
of law which is specifically described by the NTA in such order. A TAO 
or action taken by the NTA applies to persons performing services under 
a qualified tax collection contract to the same extent and to the same 
manner as such order applies to the IRS.
---------------------------------------------------------------------------
    The Commissioner, or the Deputy Commissioner may rescind a 
TAO issued by the NTA, only if a written explanation of the 
reasons for the modification or rescission is provided to the 
NTA.\75\
---------------------------------------------------------------------------
    \75\Sec. 7811(c). The NTA also may modify or rescind a TAO issued 
by the NTA.
---------------------------------------------------------------------------

Taxpayer Assistance Directives

    While a TAO is specific to a particular taxpayer, a 
Taxpayer Assistance Directive (``TAD'') is systemic, intended 
to address groups of taxpayers. Delegation Order 13-3 
authorizes the NTA to issue TADs to mandate administrative or 
procedural changes to improve the operation of a functional 
process or to grant relief to groups of taxpayers (or all 
taxpayers) when implementation will protect the rights of 
taxpayers, prevent undue burden, ensure equitable treatment or 
provide an essential service to taxpayers.\76\ The authority to 
modify or rescind a TAD is delegated to Deputy Commissioner for 
Operations Support, Deputy Commissioner for Services and 
Enforcement, and to the NTA.
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    \76\Delegation Order 13-3, Internal Revenue Manual 1.2.50.4 
(January 17, 2001).
---------------------------------------------------------------------------

Annual reports

    The NTA is required to submit two reports annually to the 
House Committee on Ways and Means and to the Senate Finance 
Committee.\77\ One report, due June 30 of each year, covers the 
OTA's objectives for the fiscal year beginning in that calendar 
year. Besides statistical information, the report must contain 
a full and substantive analysis of the objectives.
---------------------------------------------------------------------------
    \77\Sec. 7803(c)(2)(B).
---------------------------------------------------------------------------
    The other report, due December 31 of each year, concerns 
the activities of the OTA. The content of this report is set by 
statute.\78\ Generally, the report must cover initiatives taken 
to improve taxpayer services and problems encountered, as well 
as the actions taken to resolve them and the results. 
Specifically, the report must cover the 20 most serious 
problems experienced by taxpayers. The report also must 
identify the 10 most litigated issues for each category of 
taxpayer and the areas of the tax law that impose significant 
compliance burdens on taxpayers or the IRS. Recommendations 
received from individuals with the authority to issue TAOs, and 
any TAO not promptly honored by the IRS, must also be included 
in the report. The report must also set forth recommendations 
for administrative and legislative action to resolve problems 
encountered by taxpayers.
---------------------------------------------------------------------------
    \78\Sec.7803(c)(2)(B)(ii)(I) through (XI).
---------------------------------------------------------------------------
    The NTA, is required by statute to submit the reports 
directly to the Congressional committees without prior review 
of the Commissioner, the Secretary, or any officer or employee 
of the Treasury, the Oversight Board, or the Office of 
Management and Budget (``OMB'').\79\
---------------------------------------------------------------------------
    \79\Sec. 7803(c)(2)(B)(iii).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee appreciates the work of the Taxpayer Advocate 
Service (``TAS''), under the direction of the NTA, and its role 
in elevating both taxpayer-specific and systemic problems to 
the attention of the Commissioner. The Committee is aware that 
the NTA has raised concerns about the extent to which issues 
identified by the NTA are given adequate attention, especially 
in the case of Taxpayer Advocate Directives. In order to 
evaluate the responsiveness of the agency to such concerns, to 
help ensure that the research underlying some proposals and 
issues identified in the NTA annual report to Congress is 
supported by appropriate statistical methodology, and to ensure 
that oversight is not unnecessarily duplicative or burdensome, 
the Committee proposes several changes. First, it modifies the 
handling of Taxpayer Advocate Directives to require greater 
transparency and ensure timely responses to concerns raised by 
the Taxpayer Advocate. Next, the Committee believes that the 
IRS Statistics of Income should assist the NTA in her work to 
provide meaningful statistics. Further, the Committee notes 
that there are several entities overseeing the IRS, namely 
Congress, the Government Accountability Office, and the 
Treasury Inspector General for Tax Administration (``TIGTA''). 
To avoid duplication of efforts, the Committee believes it is 
appropriate to require the NTA to coordinate with TIGTA. To 
further streamline and focus the NTA annual report, the 
Congress believes it is appropriate that the annual report 
discuss the 10 most serious problems encountered by taxpayers.

                        EXPLANATION OF PROVISION

Taxpayer Advocate Directives

    In the case of any TAD issued by the NTA pursuant to a 
delegation of authority from the Commissioner, the Commissioner 
or Deputy Commissioner shall modify, rescind or ensure 
compliance with such directive not later than 90 days after 
issuance of such directive. If the TAD is modified or rescinded 
by a Deputy Commissioner, the NTA may (not later than 90 days 
after such modification or rescission) appeal to the 
Commissioner and the Commissioner must (not later than 90 days 
after such appeal is made) either (1) ensure compliance with 
such directive as issued by the NTA, or (2) provide the NTA 
with the reasons for any modification or rescission made or 
upheld by the Commissioner pursuant to such appeal.
    The NTA's annual report is to identify any TAD that is not 
honored by the IRS in a timely manner.

Annual reports to Congress

    The provision modifies requirements of the annual report on 
NTA activities to require a summary of the 10 most serious 
problems encountered by taxpayers. Before beginning any 
research or study, the NTA is required to coordinate with the 
TIGTA to ensure that the NTA does not duplicate any action that 
TIGTA has already undertaken or has a detailed plan to 
undertake. The provision requires the IRS provide the NTA, upon 
request and to the extent practicable, with statistical support 
in connection with the preparation of the annual report on NTA 
activities. Such support is to include statistical studies, 
compilations and the review of information provided by the NTA 
for statistical validity and sound statistical methodology. 
With respect to any statistical information included in such 
report, the report is to include a statement of whether such 
statistical information was reviewed or provided by the IRS, 
and if so whether the IRS determined such information to be 
statistically valid and based on sound statistical methodology. 
The IRS's review and provision of statistical support does not 
violate the requirement that the report be submitted directly 
without prior review or comment from any officer or employee of 
the Department of the Treasury or specified other persons.

Salary of the National Taxpayer Advocate

    The provision eliminates the provision relating to the 
determination of the NTA's salary under section 9503 of Title 5 
of the United States Code. As under present law, the NTA is 
entitled to compensation at the same rate as the highest rate 
of basic pay established for the Senior Executive Service under 
section 5382 of Title 5 of the United States Code.

                             EFFECTIVE DATE

    The provision is generally effective on the date of 
enactment. The provision as it relates to the salary of the NTA 
applies to appointments to the position of the NTA made after 
March 31, 2019.

 2. MODERNIZATION OF INTERNAL REVENUE SERVICE ORGANIZATIONAL STRUCTURE 
                        (SEC. 1302 OF THE BILL)

                              PRESENT LAW

    RRA98 directed the Commissioner to restructure the IRS by 
eliminating or substantially modifying the three-tier 
geographic structure (national, regional, and district) in 
place at the time and replacing it with an organizational 
structure that features operating units serving particular 
groups of taxpayers with similar needs.\80\
---------------------------------------------------------------------------
    \80\Pub. L. No. 105-206, sec. 1001(a).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that the current IRS organizational 
structure is one of the factors contributing to the inability 
of the IRS to properly serve taxpayers. The Committee believes 
that the current structure needs to be modernized and 
streamlined to help enable the IRS to better serve taxpayers 
and provide the necessary level of services and accountability 
to taxpayers in an efficient manner. Accordingly, the Committee 
believes it appropriate to require the IRS to submit a 
comprehensive reorganization plan. The Committee believes that 
the revised structure should ensure taxpayers' rights are 
protected, information is kept secure, and that the IRS is 
approachable for taxpayers to ask questions and get assistance. 
Thus, the Committee seeks to provide flexibility to the IRS to 
reorganize its operations after the Commissioner determines 
that another organizational structure, different from past 
structures, would better serve taxpayers.

                        EXPLANATION OF PROVISION

    The Secretary (or the Secretary's delegate) is required to 
submit to Congress by September 30, 2020, a comprehensive 
written plan to redesign the organization of the IRS. The 
comprehensive plan will (1) ensure the successful 
implementation of the priorities specified by Congress in this 
bill; (2) prioritize taxpayer services to ensure that all 
taxpayers easily and readily receive the assistance they need; 
(3) streamline the structure of the agency including minimizing 
the duplication of services and responsibilities; (4) best 
position the IRS to combat cybersecurity and other threats to 
the IRS; and (5) address whether the Criminal Division of the 
IRS should report directly to the Commissioner.
    Beginning one year after the date on which a comprehensive 
plan to modify the organization of the IRS is submitted to 
Congress, the provision removes the RRA98 requirement of an 
organizational structure that features operating units serving 
particular groups of taxpayers with similar needs.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

                          E. Other Provisions


 1. RETURN PREPARATION PROGRAMS FOR APPLICABLE TAXPAYERS (SEC. 1401 OF 
                THE BILL AND NEW SEC. 7526A OF THE CODE)

                              PRESENT LAW

    The Code provides that the Secretary may allocate up to $6 
million per year for matching grants to certain qualified low-
income taxpayer clinics.\81\ Eligible clinics are those that 
charge no more than a nominal fee to either represent low-
income taxpayers in controversies with the IRS or provide tax 
information to individuals for whom English is a second 
language. No clinic can receive more than $100,000 per year.
---------------------------------------------------------------------------
    \81\Sec. 7526.
---------------------------------------------------------------------------
    A qualified low-income taxpayer clinic includes (1) a 
clinical program at an accredited law, business, or accounting 
school, in which students represent low-income taxpayers, or 
(2) an organization exempt from tax under Code section 501(c) 
that either represents low-income taxpayers or provides 
referral to qualified representatives. A clinic is treated as 
representing low-income taxpayers if (i) at least 90 percent of 
the taxpayers represented by the clinic have income that does 
not exceed 250 percent of the poverty level, as determined in 
accordance with criteria established by the Director of the 
OMB,\82\ and (ii) the amount in controversy for any taxable 
year is $50,000 or less.\83\
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    \82\For a family of four, the 2019 income limit in the 48 
contiguous states, Puerto Rico, and the District of Columbia is 
$64,375, available at https://www.irs.gov/advocate/low-income-taxpayer-
clinics/low-income-taxpayer-clinic-income-eligibility-guidelines.
    \83\Sec. 7463.
---------------------------------------------------------------------------
    While the Code does not provide funding for matching 
grants, funding for such grants was provided by the 
Consolidated Appropriations Act, 2019.\84\ Congress 
appropriated approximately $2.492 billion to the IRS for 
taxpayer services, of which not less than $18 million is to be 
made available for a Community Volunteer Income Tax Assistance 
(``VITA'') matching grants program for tax return preparation 
assistance. VITA is a program created by the IRS in 1969 that 
utilizes volunteers to provide tax return preparation and 
filing service assistance to certain low-income taxpayers and 
members of underserved populations.
---------------------------------------------------------------------------
    \84\Pub. L. No. 116-6, Div. D, Title I (February 15, 2019).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that it is important for the IRS to 
continue to provide matching grants for authorized programs 
that effectively assist low-income taxpayers and members of 
underserved populations in preparing their Federal income tax 
returns at no cost. The Committee also believes that these 
programs, which rely on the participation of trained 
volunteers, provide qualifying taxpayers with reliable and 
competent assistance that helps to ensure the accuracy and 
timeliness of the tax returns filed.

                        EXPLANATION OF PROVISION

    The provision codifies the VITA program and provides that 
the Secretary, unless otherwise provided by specific 
appropriation, may allocate from otherwise appropriated funds 
up to $30 million per year in matching grants to qualified 
entities for the development, expansion, or continuation of 
qualified tax return preparation programs assisting applicable 
taxpayers and members of underserved populations. The Secretary 
is authorized to award a multi-year grant not to exceed three 
years.
    The grant funds may be used for ordinary and necessary 
operation costs (including for wages or salaries of persons 
coordinating the activities of the program, to develop training 
materials, conduct training, and perform quality reviews of the 
returns for which assistance has been provided under the 
program, for equipment purchases, and for vehicle-related 
expenses associated with remote or rural tax preparation 
services), outreach and educational activities relating to the 
eligibility and availability of income supports available 
through the Code, and services related to financial education 
and capability, asset development, and the establishment of 
savings accounts in connection with tax return preparation.
    Matching funds are required to be provided on a dollar-for-
dollar basis for all grants provided. Matching funds may 
include: (1) the salary (including fringe benefits) of 
individuals performing services for the program; (2) the cost 
of equipment used in the program; and (3) other ordinary and 
necessary costs that may be associated with the program. 
Indirect expenses, including general overhead of any entity 
administering the program, are not counted as matching funds.
    In awarding grants, priority is given to applications that 
(1) demonstrate assistance to certain applicable taxpayers with 
an emphasis on outreach, (2) demonstrate taxpayer outreach and 
education around available income supports available through 
the Code, and (3) demonstrate specific outreach and focus on 
one or more underserved populations.
    The provision requires the Secretary to establish 
procedures for periodic site visits not less than once every 
five calendar years (i) to ensure the program is carrying out 
the stated purpose and (ii) to determine whether the VITA grant 
program meets certain program adherence standards as the 
Secretary will require. If any qualified return preparation 
program is awarded a grant and is subsequently determined not 
to meet the adherence standards or not to be carrying out the 
stated purposes, such program will not be eligible for 
additional grants unless the program provides sufficient 
documentation of corrective measures established to address any 
deficiencies determined.
    Qualified return preparation program means any program (1) 
that provides assistance to individuals, at least 90 percent of 
whom are applicable taxpayers, in preparing and filing Federal 
income tax returns, (2) that is administered by a qualified 
entity, (3) in which all volunteers who assist in the 
preparation of Federal income tax returns meet the training 
requirements prescribed by the Secretary, and (4) that uses a 
quality review process which reviews 100 percent of all 
returns. Qualified entity means any entity that (1) is an 
eligible organization (as defined), (2) is in compliance with 
Federal tax filing and payment requirements, (3) is not 
debarred or suspended from Federal contracts, grants, or 
cooperative agreements, and (4) agrees to provide documentation 
to substantiate any matching funds provided under the VITA 
grant program. Eligible organization means (1) an institution 
of higher education described in section 102 (other than 
subsection (a)(1)(C) thereof) of the Higher Education Act of 
1965, as in effect on the date of enactment, and that has not 
been disqualified from participating in a program under Title 
IV of such Act, (2) an exempt organization described in Code 
section 501(c), (3) a local government agency, including a 
county or municipal government agency, and an Indian tribe, as 
defined in section 4(13) of the Native American Housing 
Assistance and Self-Determination Act of 1996 (``Act''), 
including any tribally designated housing entity (as defined in 
such Act), tribal subsidiary, subdivision, or other wholly 
owned tribal entity, or (4) a local, State, regional, or 
national coalition (with one lead organization that meets the 
eligibility requirements described above acting as the 
applicant organization). If no eligible organization is 
available to assist the targeted population or community, the 
eligible organization includes a State government agency and a 
Cooperative Extension Service office.
    Applicable taxpayer means a taxpayer who has income for the 
taxable year that does not exceed an amount equal to the 
completed phaseout amount under section 32(b) for a married 
couple filing a joint return with three or more qualifying 
children, as determined in a revenue procedure or other 
published guidance.\85\ Underserved population includes 
populations of persons with disabilities, persons with limited 
English proficiency, Native Americans, individuals living in 
rural areas, members of the Armed Forces and their spouses, and 
the elderly.
---------------------------------------------------------------------------
    \85\For 2019, the amount is $55,952. Rev. Proc. 2018-57, 2018-49, 
I.R.B. 827, 832, December 3, 2018.
---------------------------------------------------------------------------
    The provision allows the IRS to use mass communications and 
other means to promote the benefits and encourage the use of 
the program. The Secretary can provide taxpayers information 
regarding qualified return preparation programs receiving 
grants and those programs are encouraged to advise taxpayers of 
the availability of, and eligibility requirements for 
receiving, advice and assistance from local or regional low-
income taxpayer clinics. The programs are also encouraged to 
provide taxpayers information regarding the location and 
contact information for the low-income taxpayer clinics.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

2. PROVISION OF INFORMATION REGARDING LOW-INCOME TAXPAYER CLINICS (SEC. 
              1402 OF THE BILL AND SEC. 7526 OF THE CODE)

                              PRESENT LAW

    The Code provides that the Secretary is authorized to 
provide up to $6 million per year in matching grants to certain 
qualified low-income taxpayer clinics.\86\ Eligible clinics are 
those that charge no more than a nominal fee to either 
represent low-income taxpayers in controversies with the IRS or 
provide tax information to individuals for whom English is a 
second language. No clinic can receive more than $100,000 per 
year.
---------------------------------------------------------------------------
    \86\Sec. 7526.
---------------------------------------------------------------------------
    A qualified low-income taxpayer clinic includes (1) a 
clinical program at an accredited law, business, or accounting 
school, in which students represent low-income taxpayers, or 
(2) an organization exempt from tax under Code section 501(c) 
that either represents low-income taxpayers or provides 
referral to qualified representatives. A low-income taxpayer is 
an individual whose income does not exceed 250 percent of the 
poverty level, as determined in accordance with criteria 
established by the Director of the OMB.
    The Department of the Treasury prohibits its officers and 
employees from referring taxpayers to qualified low-income 
taxpayer clinics for advice and assistance.\87\
---------------------------------------------------------------------------
    \87\5 C.F.R. sec. 3101.106(a).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that qualified low-income taxpayer 
clinics contribute to compliance with the tax laws by providing 
representation to taxpayers who might otherwise be uncertain 
about their rights and obligations under the law and lack the 
means to secure adequate representation. Accordingly, the 
Committee believes that officers and employees of the 
Department of the Treasury should be permitted to inform 
taxpayers of the existence of these clinics and refer taxpayers 
to such clinics for assistance.

                        EXPLANATION OF PROVISION

    The provision allows officers and employees of the 
Department of the Treasury to advise taxpayers of the 
availability of, and eligibility requirements for receiving, 
advice and assistance from qualified low-income taxpayer 
clinics that receive funding under the Code, and to provide 
location and contact information for such clinics.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

  3. NOTICE FROM IRS REGARDING CLOSURE OF TAXPAYER ASSISTANCE CENTERS 
                        (SEC. 1403 OF THE BILL)

                              PRESENT LAW

    The IRS operates Taxpayer Assistance Centers (``TAC'') 
around the country to provide face-to-face assistance with 
preparing tax returns and understanding tax laws.
    The IRS is not currently required to publish information to 
the public or give notice to Congress before closing a TAC.

                           REASONS FOR CHANGE

    The Committee is concerned about taxpayers who are unaware 
of the scheduled closure of a local TAC and may need to access 
in-person services. The Committee intends that the IRS provide 
information about TAC closures in advance both to the public 
and to Congress. The information should also include 
alternative sources of assistance for taxpayers.

                        EXPLANATION OF PROVISION

    The provision requires the IRS to publish (including by 
non-electronic means such as local press and other media), 90 
days in advance, a notice containing information identifying 
the TAC proposed for closure, the date of the proposed closure, 
and the relevant alternative sources of assistance that may be 
utilized by affected taxpayers. The provision also requires the 
IRS to provide, 90 days in advance, a report to Congress 
containing the information in the notice, the reasons for a 
proposed closure of the TAC, and other information as the 
Secretary may find appropriate.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

 4. RULES FOR SEIZURE AND SALE OF PERISHABLE GOODS RESTRICTED TO ONLY 
   PERISHABLE GOODS (SEC. 1404 OF THE BILL AND SEC. 6336 OF THE CODE)

                              PRESENT LAW

    Under the Code, if it is determined that any tangible 
property seized to satisfy unpaid taxes (1) is liable to 
perish, (2) is liable to become greatly reduced in price or 
value by keeping, or (3) cannot be kept without great expense, 
the property may be sold after it has been appraised and the 
owner has been given an opportunity to pay the appraised value 
or furnish bond for payment.\88\ The general procedures 
governing the sale of seized property that are set forth in the 
Code (e.g., requiring 10-day notice before sale and the 
determination of a minimum bid) are not applicable to sales of 
perishables.\89\ Instead, the streamlined procedures referred 
to above apply to the sale of perishable goods.\90\
---------------------------------------------------------------------------
    \88\Sec. 6336.
    \89\Sec. 6335.
    \90\Sec. 6336; Treas. Reg. sec. 301.6336-1.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that the IRS has in several 
instances incorrectly invoked the streamlined procedures 
described above. To prevent future abuses, the Committee 
believes that it is necessary to limit the streamlined 
procedures to goods that are liable to perish.

                        EXPLANATION OF PROVISION

    The provision limits the property that may be sold pursuant 
to the streamlined procedures to property that is liable to 
perish.

                             EFFECTIVE DATE

    The provision applies to property seized after the date of 
enactment.

 5. WHISTLEBLOWER REFORMS (SEC. 1405 OF THE BILL AND SEC. 6103 OF THE 
                                 CODE)

                              PRESENT LAW

In general

    Under section 7623, individuals who submit information 
leading to detection of underpayment of tax or to detection, 
trial, and punishment of persons guilty of violating internal 
revenue laws, may file a claim for an award of 15 to 30 percent 
of recovered funds resulting from such action.

Disclosure rules for whistleblowers

    Section 6103 provides a general rule of confidentiality for 
returns and return information: ``returns and return 
information shall be confidential and except as authorized by 
this Title . . . [none of the specified recipients] shall 
disclose any return or return information obtained by him . . . 
.''\91\ One of the exceptions to the general rule of 
confidentiality permits the IRS to make investigative 
disclosures of return information to third parties. The 
disclosures, subject to the conditions provided in regulations, 
are to be made to the extent necessary to obtain information, 
which is not otherwise reasonably available, with respect to 
the correct determination of tax, liability for tax, the amount 
to be collected, or with respect to the enforcement of any 
provision of Title 26.\92\ The third party recipient of the 
return information furnished during an investigative disclosure 
is not subject to the general rule of confidentiality provided 
by section 6103.
---------------------------------------------------------------------------
    \91\Sec. 6103(a).
    \92\Treas. Reg. sec. 301.6103(k)(6)-1.
---------------------------------------------------------------------------
    There is no provision of section 6103 to provide 
whistleblowers with status updates regarding what the IRS has 
done with the information provided by the whistleblower. Such 
status information would be the return information of the 
taxpayer being audited/investigated for additional tax 
liability.
    A taxpayer can file or sue for civil damages for the 
unauthorized disclosure and/or inspection of returns and return 
information.\93\ In addition, criminal penalties apply for the 
willful unauthorized disclosure or inspection of returns and 
return information.\94\
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    \93\Sec.7431.
    \94\Sec.7213 and 7213A.
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Protection against retaliation

    Though other statutes such as the False Claims Act\95\ 
currently protect some individuals from employer retaliation, 
those who file claims under the Code are not explicitly 
afforded these same protections.
---------------------------------------------------------------------------
    \95\31 U.S.C. sec. 3730(h)(2).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that modifications to the disclosure 
rules are necessary to improve communication with IRS 
whistleblowers so that they are appropriately informed of their 
claim and future whistleblowers are not discouraged from coming 
forward. ``The Committee also believes it is important that in 
appropriate cases the IRS fully utilize the whistleblower as a 
resource during the course of an investigation.'' The Committee 
further believes it is important to ensure that any additional 
taxpayer information received by whistleblowers under this 
provision is fully protected. The Committee additionally 
believes that by affording whistleblowers protections against 
retaliation from employers an employee will be more willing to 
come forward to report instances of tax shelters and fraud.

                        EXPLANATION OF PROVISION

    This provision amends section 6103 to: (1) allow the IRS to 
exchange information with whistleblowers to the extent 
disclosure is necessary in obtaining information, which is not 
otherwise reasonably available, with respect to the correct 
determination of tax liability or the amount to be collected 
with respect to the enforcement of any other provision of the 
Code; and (2) require the Secretary to notify the whistleblower 
as to the status of their case not later than 60 days after: 
(i) the case has been referred for an audit or examination; and 
(ii) the taxpayer makes a payment of tax with respect to the 
tax liability to which the information provided by the 
whistleblower relates. Subject to such requirements and 
conditions prescribed by the Secretary, upon written request by 
the whistleblower and so long as the disclosure would not 
seriously impair Federal tax administration, the Secretary is 
to provide information on the status and stage of any 
investigation, and in the case of a determination of the amount 
of any award, the reasons for such determination. To ensure 
taxpayer information is protected, whistleblowers receiving 
information under this provision are subject to the general 
rule of confidentiality and criminal penalties for unauthorized 
disclosure of taxpayer information.
    The provision adds to section 7623, anti-retaliation 
whistleblower protections for employees. A person who alleges 
discharge or other reprisal by any person in violation of these 
protections may file a complaint with the Secretary of Labor 
(within 180 days after the date on which the violation occurs), 
and if the Secretary of Labor has not issued a final decision 
on such complaint within 180 days (and the delay is not due to 
the bad faith of the claimant), an action may be brought in the 
appropriate district court. The remedies provided are 
consistent with those currently available under the False 
Claims Act, including compensatory damages or reinstatement, 
200 percent of back pay and all lost benefits, with interest, 
and compensation for other special damages including litigation 
costs, expert witness fees, and reasonable attorney fees.

                             EFFECTIVE DATE

    The modifications made to the disclosure rules apply to 
disclosures made after the date of enactment. The protections 
from retaliation are effective on the date of enactment.

        6. CUSTOMER SERVICE INFORMATION (SEC. 1406 OF THE BILL)

                              PRESENT LAW

    The Code provides that the Commissioner has such duties and 
powers as prescribed by the Secretary.\96\ Unless otherwise 
specified by the Secretary, such duties and powers include the 
power to administer, manage, conduct, direct, and supervise the 
execution and application of the internal revenue laws or 
related statutes. In executing these duties, the Commissioner 
depends upon strategic plans that prioritize goals and manage 
IRS's resources. In the current strategic plan, empowering and 
enabling all taxpayers to meet their tax obligations is 
identified as one of the IRS's six strategic goals.\97\
---------------------------------------------------------------------------
    \96\ Sec. 7803(a).
    \97\ See Internal Revenue Service Strategic Plan FY2018--2022, 
Publication 3744, available at https://www.irs.gov/pub/irs-pdf/
p3744.pdf.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that it is important for the IRS to 
provide quality customer service to taxpayers whose identities 
have been stolen and used to commit tax-related fraud. The IRS 
initially established the Identity Protection Specialized Unit 
(``IPSU'') to assist victims of identity theft, but taxpayers 
also were referred to other operating units of the IRS to deal 
with various aspects of their cases.\98\ The IRS then 
established the Identity Theft Victim Assistance (``IDTVA'') 
organization, which is staffed with specially trained employees 
who are able to assess each case, identify issues, and assist 
the taxpayer in getting the correct return filed, refunds 
issued, etc.\99\ In addition to these measures, the Committee 
believes providing information to the taxpayer about common tax 
scams, directions on where and how to report such activity, and 
tips on how to protect against identity theft and tax scams 
will improve customer service to taxpayers affected by tax-
related identity theft.
---------------------------------------------------------------------------
    \98\Treasury Inspector General for Tax Administration, Department 
of the Treasury, Most Taxpayers Whose Identities Have Been Stolen to 
Commit Refund Fraud Do Not Receive Quality Customer Service (TIGTA 
2012-40-050), May 2012.
    \99\A description of the services provided by the IDTVA 
organization is available at https://www.irs.gov/uac/Newsroom/IRS-
Identity-Theft-Victim-Assistance-How-It-Works.
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    The provision requires the IRS to provide the following 
information over the telephone, while taxpayers are on hold 
with the IRS's call center: information about common tax scams, 
direction to the taxpayer on where and how to report such 
activity, and tips on how to protect against identity theft and 
tax scams.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

7. MISDIRECTED TAX REFUND DEPOSITS (SEC. 1407 OF THE BILL AND SEC. 6402 
                              OF THE CODE)

                              PRESENT LAW

    The Internal Revenue Manual (``IRM'') defines an erroneous 
refund as the receipt of any money from the IRS to which the 
recipient is not entitled. The IRM provides procedures for IRS 
employees to identify and recover such erroneous refunds.\100\ 
In addition, the IRS website provides information to taxpayers 
who wish to return an erroneous refund that was issued to them, 
either by paper check or direct deposit.\101\
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    \100\Internal Revenue Service, Internal Revenue Manual, Erroneous 
Refunds, Ch. 21.4, sec. 21.4.5.2 (October 9, 2015).
    \101\Internal Revenue Service, Topic Number 161--Returning an 
Erroneous Refund--Paper Check or Direct Deposit, last updated January 
28, 2019, available at https://www.irs.gov/taxtopics/tc161.
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    The Code provides that any tax refunds which are 
erroneously made may be recovered by civil action brought in 
the name of the United States.\102\ Recovery of an erroneous 
refund by civil action is allowed if the action is begun within 
two years after the refund is made, or five years if it appears 
that any part of the refund was induced by fraud or 
misrepresentation.\103\
---------------------------------------------------------------------------
    \102\Sec. 7405.
    \103\Sec. 6532(b).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that a comprehensive customer 
service strategy includes allowing taxpayers to report 
instances in which refunds made by electronic funds transfer 
are made incorrectly, recovering misdirected payments, and 
delivering them to the correct accounts of taxpayers.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary to prescribe 
regulations within six months of the date of enactment of this 
Act to establish procedures to allow taxpayers to report 
instances in which a refund made by the Secretary by electronic 
funds transfer was not transferred to the account of the 
taxpayer, to coordinate with financial institutions to identify 
and recover these payments, and to deliver refunds to the 
correct accounts of taxpayers.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

                       TITLE II--21ST CENTURY IRS


                A. Cybersecurity and Identity Protection


  1. PUBLIC-PRIVATE PARTNERSHIP TO ADDRESS IDENTITY THEFT TAX REFUND 
                     FRAUD (SEC. 2001 OF THE BILL)

                              PRESENT LAW

    The Security Summit, formed in 2015, is a partnership of 
the IRS, State tax agencies, and the private-sector tax 
industry to address tax refund fraud caused by identity theft. 
In 2016, the Security Summit group members identified and 
agreed to share more than 20 data components relating to 
Federal and State returns to improve fraud detection and 
prevention. For example, group members are sharing computer 
device identification data tied to the return's origin, as well 
as the improper or repetitive use of the numbers that identify 
the internet address from where the return originates.\104\ Tax 
software providers agreed to enhance identity requirements and 
strengthen validation procedures for new and returning 
customers to protect their accounts from theft. Along with the 
IRS, 40 State departments of revenue, and 21 tax industry 
members have signed onto a Memorandum of Understanding 
regarding roles, responsibilities and information sharing 
pathways among the IRS, States and industry.\105\ In 2017, the 
IRS reported there was a 40 percent decline in the number of 
taxpayers reporting to the IRS that they are victims of 
identity theft, attributing the decline to the initiatives of 
the Security Summit.\106\
---------------------------------------------------------------------------
    \104\Internal Revenue Service, 2016 Security Summit: Protecting 
Taxpayers from Identity Theft Tax Refund Fraud (June 2016) p. 3, 
available at https://www.irs.gov/pub/newsroom/
6_2016_security_summit_report.pdf.
    \105\Ibid.
    \106\Internal Revenue Service, IR-2018-21, Key IRS Identity Theft 
Indicators Continue Dramatic Decline in 2017; Security Summit Marks 
2017 Progress Against Identity Theft (February 8, 2018).
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                           REASONS FOR CHANGE

    The Committee believes the Security Summit has been a 
successful and productive venue for governmental and private 
organizations to work together to address the growing problem 
of identity theft tax refund fraud. The Committee is encouraged 
by the proactive steps that the IRS has taken to address this 
issue and wants to ensure that these efforts continue going 
forward.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary (or the Secretary's 
delegate) to work collaboratively with the public and private 
sectors to protect taxpayers from identity theft tax refund 
fraud.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

2. RECOMMENDATIONS OF ELECTRONIC TAX ADMINISTRATION ADVISORY COMMITTEE 
     REGARDING IDENTITY THEFT REFUND FRAUD (SEC. 2002 OF THE BILL)

                              PRESENT LAW

    RRA98 authorized the Electronic Tax Administration Advisory 
Committee (``ETAAC''). ETAAC was intended to provide input to 
the IRS on electronic tax administration. ETAAC's 
responsibilities involve researching, analyzing, and making 
recommendations on a variety of electronic tax administration 
issues. Pursuant to RRA98, ETAAC reports to Congress annually 
concerning:
            IRS's progress on reaching its goal to 
        electronically receive 80 percent of tax and 
        information returns;
            Legislative changes assisting the IRS in 
        meeting the 80 percent goal;
            Status of the IRS's strategic plan for 
        electronic tax administration; and
            Effects of e-filing tax and information 
        returns on small businesses and the self-employed.
    ETAAC members come from State departments of revenue, large 
tax preparation companies, solo tax practitioners, tax software 
companies, financial services industry and low income and 
consumer advocacy groups.\107\
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    \107\Electronic Tax Administration Advisory Committee, Publication 
3415, Annual Report to Congress (June 2018), Appendix B, available at 
https://www.irs.gov/pub/irs-pdf/p3415.pdf.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    ETAAC's focus on electronic tax administration issues makes 
it a suitable entity to examine and make recommendations 
regarding methods to address identity theft and refund fraud 
after evaluating various stakeholder viewpoints. ETAAC already 
has amended its charter to focus on the issue of identity theft 
and refund fraud. This provision codifies the recent changes to 
ETAAC's charter and ensures that ETAAC will continue to examine 
this issue going forward. The Committee also finds ETAAC's 
annual reports to Congress, which include recommendations to 
improve the work of the Security Summit, to be valuable sources 
of information and would like to ensure that this work 
continues.

                        EXPLANATION OF PROVISION

    In addition to the requirements under present law, the 
provision requires ETAAC to study (including through organized 
public forums) and make recommendations to the Secretary 
regarding methods to prevent identity theft and refund fraud.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

 3. INFORMATION SHARING AND ANALYSIS CENTER (SEC. 2003 OF THE BILL AND 
                         SEC. 6103 OF THE CODE)

                              PRESENT LAW

Information Sharing and Analysis Center

    The Security Summit, formed in 2015, is a partnership of 
the IRS, State tax agencies, and the private-sector tax 
industry to address tax refund fraud caused by identity theft. 
In 2016, the Security Summit created an Identity Theft Tax 
Refund Fraud Information Sharing and Analysis Center 
(``ISAC'').\108\ The ISAC is a secure, web-based venue for 
States, industry and the IRS to share and exchange information. 
The ISAC enables the IRS and the States to work together with 
external third parties to serve as an early warning system for 
tax refund fraud, identity theft schemes, and cybersecurity 
issues. A third-party contractor hosts, maintains, and 
facilitates the web-based leads reporting and information 
sharing process for the ISAC.
---------------------------------------------------------------------------
    \108\Internal Revenue Service, 2016 Security Summit: Protecting 
Taxpayers from Identity Theft Tax Refund Fraud (June 2016), available 
at https://www.irs.gov/pub/newsroom/
6_2016_security_summit_report.pdf.sec.
---------------------------------------------------------------------------

Confidentiality and disclosure of return information

    As a general rule, returns and return information are 
confidential and cannot be disclosed unless authorized by the 
Code.\109\ The definition of return information is very broad 
and generally includes any information received or collected by 
the IRS with respect to liability under the Code of any person 
for any tax, penalty, interest or offense. The term ``return 
information'' includes, among other items:
---------------------------------------------------------------------------
    \109\Sec. 6103(a).
---------------------------------------------------------------------------
        a taxpayer's identity, the nature, source, or amount of 
        his income, payments, receipts, deductions, exemptions, 
        credits, assets, liabilities, net worth, tax liability, 
        tax withheld, deficiencies, overassessments, or tax 
        payments, whether the taxpayer's return was, is being, 
        or will be examined or subject to other investigation 
        or processing, or any other data, received by, recorded 
        by, prepared by, furnished to, or collected by the 
        Secretary with respect to a return or with respect to 
        the determination of the existence, or possible 
        existence, of liability (or the amount thereof) of any 
        person under this title for any tax, penalty, interest, 
        fine, forfeiture, or other imposition, or offense . . . 
        .\110\
---------------------------------------------------------------------------
    \110\Sec. 6103(b)(2)(A).
---------------------------------------------------------------------------
    There are several exceptions to the general rule of 
confidentiality. Such exceptions include provisions to permit 
disclosures to State tax administration officials, for IRS 
employees and officers to make investigative disclosures, and 
rules to allow one authorized party to disclose to another 
authorized party with the permission of the Commissioner.\111\
---------------------------------------------------------------------------
    \111\Sec. 6103(d) (disclosures to States), 6103(k)(6)(investigative 
disclosures) and the Treasury regulations under sec. 6103(p)(2)(B).
---------------------------------------------------------------------------
    The IRS exchanges confidential information with State tax 
agencies under the authority of section 6103(d). The 
disclosures are made pursuant to written request from the head 
of the State tax agency, which designates the State tax 
officials who can receive the information. The information can 
only be used for State tax purposes, not for general State 
civil or criminal law enforcement. The State officials can 
redisclose the information to other officers and employees of 
the State tax agency, the agency's legal representative, or the 
agency's contractors (but only for State tax administration 
purposes). The IRS uses this authority to alert State tax 
administration officials to tax refund fraud schemes.
    IRS officers and employees may disclose return information 
to the extent that such disclosure is necessary in obtaining 
information, which is not otherwise reasonably available, with 
respect to the correct determination of tax, liability for tax, 
or the amount to be collected, or with respect to the 
enforcement of any other provision of Title 26. Such 
disclosures are to be made only in such situations and under 
such conditions as the Secretary may prescribe by 
regulation.\112\ This provision generally cannot be used to 
provide confidential return information on an industry-wide 
basis to alert return preparers to potential fraud schemes.
---------------------------------------------------------------------------
    \112\Sec. 6103(k)(6); Treas. Reg. sec. 301.6103(k)(6)-1.
---------------------------------------------------------------------------
    Under the Treasury regulations, returns or return 
information that have been obtained by a Federal, State, or 
local agency, or its agents or contractors, in accordance with 
section 6103 (the first recipient) may be disclosed by the 
first recipient to another recipient authorized to receive such 
returns or return information under section 6103 (the second 
recipient).\113\ The disclosure must be approved by the 
Commissioner. The second recipient may receive only such 
returns or return information as authorized by the provision of 
section 6103 applicable to such recipient and only for a 
purpose authorized by and subject to any conditions imposed by 
section 6103, including applicable safeguards.
---------------------------------------------------------------------------
    \113\Treas. Reg. sec. 301.6103(p)(2)(B)-1.
---------------------------------------------------------------------------

Preparer disclosure penalties

    The Code provides for a civil penalty for a tax return 
preparer who (i) discloses any information furnished to the 
preparer for, or in connection with, the preparation of such 
return or (ii) uses such information for any purpose other than 
to prepare or assist in preparing any such return.\114\ There 
is a corresponding criminal penalty under section 7216 of the 
Code for knowing or reckless conduct. The same exceptions from 
the imposition of the criminal penalty apply for purposes of 
the civil penalty. In general, the penalty does not apply for 
disclosures permitted by the Code or pursuant to an order of a 
court. Further, the penalty does not apply to the use of 
information in the preparation of, or in connection with the 
preparation of State and local tax returns and declarations of 
estimated tax of the person to whom the information relates. 
The Code also permits the Secretary to provide additional 
exceptions through regulations. The Secretary has prescribed by 
regulation the circumstances not involving tax preparation in 
which disclosure and use of a taxpayer's information by a tax 
return preparer is permitted.\115\
---------------------------------------------------------------------------
    \114\Sec. 6713.
    \115\Treas. Reg. secs. 301.7216-1, 301.7216-2 and 301.7216-3.
---------------------------------------------------------------------------

Penalties for the unauthorized disclosure or inspection of return 
        information

    The unauthorized disclosure of a return or return 
information is a felony punishable by fine of up to $5,000, 
five years imprisonment or both. Unauthorized inspection is a 
misdemeanor, punishable by a fine of up to $1,000, one year 
imprisonment, or both.

                           REASONS FOR CHANGE

    As the profitability and ease of identity theft grows, the 
threat to the tax system from fraudulent tax refund filings 
increases. While the IRS has traditionally been more 
reactionary to external threats, the Committee is encouraged to 
see the IRS look for new and alternative ways to combat 
identity theft tax refund fraud, particularly through its 
participation in the ISAC pilot. The Committee believes there 
is a need for all parts of the tax system, including the IRS, 
State tax administrators, and return preparers, to work 
proactively together to combat identity theft tax refund fraud. 
To be effective in this collaboration, stakeholders with the 
ability to guard the tax system need to be able to receive the 
necessary information about potential risks quickly. Therefore, 
the Committee believes it is appropriate to provide a narrowly 
tailored exception to the general rules of confidentiality to 
facilitate alerts of potential tax refund fraud schemes and 
cyber security threats to the IRS.

                        EXPLANATION OF PROVISION

ISAC participation and performance metrics

    The provision provides that the Secretary (or the 
Secretary's delegate) may participate in an information sharing 
and analysis center. The purpose of such participation is to 
centralize, standardize and enhance data compilation and 
analysis to facilitate sharing actionable data and information 
with respect to identity theft tax refund fraud. The provision 
requires the Secretary (or the Secretary's delegate) to develop 
metrics for measuring the success of such center in detecting 
and preventing identity theft tax refund fraud.

Disclosure of return information to certain ISAC participants

            In general
    The provision authorizes the disclosure of specified return 
information to ISAC participants who have entered into a 
written information sharing agreement with the Secretary. Under 
such procedures and subject to such conditions as the Secretary 
may prescribe, the Secretary may disclose specified return 
information to specified ISAC participants if such disclosure 
is in furtherance of effective Federal tax administration 
relating to the following: (1) the detection or prevention of 
identity theft tax refund fraud; (2) validation of taxpayer 
identity; (3) authentication of taxpayer returns; or (4) the 
detection or prevention of cybersecurity threats to the IRS.
                Terminology
            Specified ISAC participant
    The term ``specified ISAC participant'' means any person 
designated by the Secretary as having primary responsibility 
for a function performed by the ISAC and any return preparer 
(or other person) subject to section 7216 and who is a 
participant in the ISAC. A person is only a specified ISAC 
participant if such person has entered into a written 
information sharing agreement with the Secretary. The 
information sharing agreement must set forth the terms and 
conditions for the disclosure of information to such person, 
including the requirements imposed on such person for the 
protection and safeguarding of such information. The 
information sharing agreement must require that recipients of 
return information under the provision are required to 
affirmatively report to TIGTA any unauthorized access or 
disclosure of information and any breaches of any system 
holding the information.
            Specified return information
    For purposes of the provision, the term ``specified return 
information'' means, in the case of a return filed 
electronically, which is in connection with a case of potential 
identity theft tax refund fraud, return information related to 
the electronic filing characteristics of such return. Such 
characteristics include: internet protocol address, device 
identification, email domain name, speed of completion, method 
of authentication, refund method, and such other return 
information relating to the electronic filing characteristics 
of such return as the Secretary may identify. In addition, with 
respect to a return prepared by a tax return preparer in 
connection with a case of potential identity theft refund 
fraud, ``specified return information'' also includes 
identifying information with respect to such tax return 
preparer, including the preparer taxpayer identification number 
(``PTIN'') and electronic filer identification number 
(``EFIN'') of such preparer.
    With respect to a return for which identity theft refund 
fraud has been confirmed by the Secretary (pursuant to such 
procedures as the Secretary may provide), ``specified return 
information'' also includes the name and taxpayer 
identification number of the taxpayer as it appears on the 
return, and any bank account and routing information provided 
for making a refund in connection with such return.
    Finally, in the case of any cybersecurity threat to the 
IRS, information similar to that associated with cases of 
potential identity theft refund fraud (e.g., electronic 
characteristics and preparer identifying information) are 
considered specified return information with respect to such 
threat.
            Restriction on use of disclosed information
    Any return information received by a specified ISAC 
participant under the provision is to be used only for the 
purposes of and to the extent necessary in (1) performing the 
function the person is designated to perform with respect to 
the ISAC, (2) facilitating authorized disclosures to return 
preparers who are specified ISAC participants, and (3) 
facilitating disclosures authorized under section 6103(d) to 
State tax authorities who are participants in the ISAC. Return 
information received by specified ISAC participants who are 
return preparers is treated for purposes of section 7216 as 
information furnished to such person for, or in connection 
with, the preparation of a return of tax.
            Data protection, safeguards, penalties
    As noted above, to be a specified ISAC participant, the 
person must enter into an information sharing agreement that 
includes, among other responsibilities, requirements for the 
protection and safeguarding of information received under the 
provision. The return information disclosed under the provision 
is subject to such protections and safeguards as the Secretary 
may require by regulations, other guidance, or written 
information sharing agreement. Recipients of return information 
under the provision are subject to civil and criminal penalties 
for the unauthorized disclosure or inspection of returns or 
return information.

                             EFFECTIVE DATE

    The provision is generally effective on the date of 
enactment. The disclosure provisions are effective for 
disclosures made on or after the date of enactment.

4. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY SAFEGUARDS (SEC. 2004 
                 OF THE BILL AND SEC. 6103 OF THE CODE)

                              PRESENT LAW

    Section 6103 permits the disclosure of returns and return 
information to State agencies, as well as to other Federal 
agencies for specified purposes. Section 6103(p)(4) requires, 
as a condition of receiving returns and return information, 
that State agencies (and others) provide safeguards as 
prescribed by the Secretary of the Treasury by regulation that 
are necessary or appropriate to protect the confidentiality of 
returns or return information.\116\ It also requires that a 
report be furnished to the Secretary at such time and 
containing such information as prescribed by the Secretary 
regarding the procedures established and utilized for ensuring 
the confidentiality of returns and return information.\117\ 
After an administrative review, the Secretary may take such 
actions as are necessary to ensure these requirements are met, 
including the refusal to disclose returns and return 
information.\118\
---------------------------------------------------------------------------
    \116\Sec. 6103(p)(4)(D).
    \117\Sec. 6103(p)(4)(E).
    \118\Sec. 6103(p)(4) (flush language) and (7); Treas. Reg. sec. 
301.6103(p)(7)-1.
---------------------------------------------------------------------------
    Under present law, employees of a State tax agency may 
disclose returns and return information to contractors for tax 
administration purposes.\119\ These disclosures can be made 
only to the extent necessary to procure contractually 
equipment, other property, or services, related to tax 
administration.\120\ The contractors can make redisclosures of 
returns and return information to their employees as necessary 
to accomplish the tax administration purposes of the contract, 
but only to contractor personnel whose duties require 
disclosure.\121\ Treasury regulations prohibit redisclosure to 
anyone other than contractor personnel without the written 
approval of the IRS.\122\
---------------------------------------------------------------------------
    \119\Sec. 6103(n) and Treas. Reg. sec. 301.6103(n)-1(a). ``Tax 
administration'' includes ``the administration, management, conduct, 
direction, and supervision of the execution and application of internal 
revenue laws or related statutes (or equivalent laws and statutes of a 
State). . .'' Sec. 6103(b)(4).
    \120\Treas. Reg. sec. 301.6013(n)-1(a). Such services include the 
processing, storage, transmission or reproduction of such returns or 
return information, the programming, maintenance, repair, or testing of 
equipment or other property, or the providing of other services for 
purposes of tax administration.
    \121\Treas. Reg. sec. 301.6103(n)-1(a) and (b). A disclosure is 
necessary if such procurement or the performance of such services 
cannot otherwise be reasonably, properly, or economically accomplished 
without such disclosure. Treas. Reg. sec. 301.6103(n)-1(b). The 
regulations limit the quantity of information to that needed to perform 
the contract.
    \122\Treas. Reg. sec. 301.6103(n)-1(a).
---------------------------------------------------------------------------
    By regulation, all contracts must provide that the 
contractor will comply with all applicable restrictions and 
conditions for protecting confidentiality prescribed by 
regulation, published rules or procedures, or written 
communication to the contractor.\123\ Failure to comply with 
such restrictions or conditions may cause the IRS to terminate 
or suspend the duties under the contract or the disclosures of 
returns and return information to the contractor.\124\ In 
addition, the IRS can suspend disclosures to the State tax 
agency until the IRS determines that the conditions are or will 
be satisfied.\125\ The IRS may take such other actions as are 
deemed necessary to ensure that such conditions or requirements 
are or will be satisfied.\126\
---------------------------------------------------------------------------
    \123\Treas. Reg. sec. 301.6103(n)-1(e)(3).
    \124\Treas. Reg. sec. 301.6103(n)-1(e)(4).
    \125\Ibid.
    \126\Ibid.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee notes the increasing use of contractors by 
government agencies to perform the work of the government. In 
the Committee's view, the IRS has insufficient resources to 
monitor the compliance of every contractor in addition to its 
other duties. Further, the Committee finds that it is 
appropriate to require that Federal, State, and local agency 
recipients of tax information monitor and certify that their 
contractors and other agents have in place adequate safeguards 
to protect this information.

                        EXPLANATION OF PROVISION

    The provision requires that a State, local, or Federal 
agency conduct on-site reviews every three years of all of its 
contractors or other agents receiving Federal returns and 
return information. If the duration of the contract or 
agreement is less than three years, a review is required at the 
mid-point of the contract. The purpose of the review is to 
assess the contractor's efforts to safeguard Federal returns 
and return information. This review is intended to cover secure 
storage, restricting access, computer security, and other 
safeguards deemed appropriate by the Secretary. Under the 
provision, the State, local, or Federal agency is required to 
submit a report of its findings to the IRS and certify annually 
that such contractors and other agents are in compliance with 
the requirements to safeguard the confidentiality of Federal 
returns and return information. The certification is required 
to include the name and address of each contractor or other 
agent with the agency, the duration of the contract, and a 
description of the contract or agreement with the State, local, 
or Federal agency.
    The provision does not apply to contracts for purposes of 
Federal tax administration. The provision does not alter or 
affect in any way the right of the IRS to conduct safeguard 
reviews of State, local, or Federal agency contractors or other 
agents. It also does not affect the right of the IRS to 
initially approve the safeguard language in the contract or 
agreement and the safeguards in place prior to any disclosures 
made in connection with such contracts or agreements.

                             EFFECTIVE DATE

    The provision is effective for disclosures made after 
December 31, 2022.

        5. REPORT ON ELECTRONIC PAYMENTS (SEC. 2005 OF THE BILL)

                              PRESENT LAW

    The Secretary is not currently required by Congress to 
examine expansion of electronic fund transfers.

                           REASONS FOR CHANGE

    The Committee is interested in creating secure, efficient, 
and innovative ways for taxpayers to receive their federal 
income tax refunds electronically. The Committee believes that 
the report will be helpful in accomplishing these goals.

                        EXPLANATION OF PROVISION

    Not later than two years after the date of the enactment, 
the Secretary, or the Secretary's delegate, in coordination 
with the Bureau of Fiscal Service and the IRS, and in 
consultation with private sector financial institutions, is 
required to submit a written report to Congress describing how 
the IRS can utilize new payment platforms to increase the 
number of tax refunds paid by electronic funds transfer. The 
report is required to consider the interests of reducing 
identity theft tax refund fraud, reducing the IRS's costs in 
delivering tax refunds, the costs and any associated fees 
charged to taxpayers (including monthly and point-of-service 
fees) to access their tax refunds, the impact on individuals 
who do not have access to financial accounts or institutions, 
and ensuring payments are made to accounts that comply with the 
Bank Secrecy Act\127\ and the USA PATRIOT Act of 2001.\128\ The 
report is required to include legislative recommendations 
necessary to accomplish these goals.
---------------------------------------------------------------------------
    \127\31 U.S.C. secs. 5311-5332.
    \128\Pub. L. No. 107-56.
---------------------------------------------------------------------------

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

 6. IDENTITY PROTECTION PERSONAL IDENTIFICATION NUMBERS (SEC. 2006 OF 
                               THE BILL)

                              PRESENT LAW

    In 2011, the IRS launched a pilot program to test the 
Identity Protection Personal Identification Number (``IP 
PIN''). The IP PIN is a unique six-digit identifier that 
authenticates a return filer as the legitimate taxpayer at the 
time the return is filed. The IP PIN allows taxpayers affected 
by identity theft to avoid delays in filing returns and 
receiving refunds. The IRS verifies the presence of the IP PIN 
at the time of filing, and rejects returns associated with a 
taxpayer's account where an IP PIN has been assigned but is 
missing. For the 2018 filing season, the IRS issued IP PINs to 
almost 3.5 million taxpayers who had identity theft markers on 
their tax accounts.\129\
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    \129\Inspector General for Tax Administration, Department of the 
Treasury, Results of the 2018 Filing Season (TIGTA 2019-40-013), 
December 19, 2018, available at https://www.treasury.gov/tigta/
auditreports/2019reports/201940013fr.pdf.
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    In January 2014, the IRS also started a limited pilot 
program under which taxpayers who obtained an electronic filing 
PIN through an IRS authentication website and live in the 
District of Columbia, Florida, or Georgia were provided an 
opportunity to obtain an IP PIN.\130\ These locations were 
selected because they had the highest per capita rate of tax-
related identity theft when the initiative was piloted. 
Residents in these places do not need to be identity theft 
victims to participate. Recently, the IRS expanded the program 
to allow taxpayer who filed their federal tax return last year 
as a resident of Michigan, California, Maryland, Nevada, 
Delaware, Illinois, or Rhode Island to be eligible for an IP 
PIN.
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    \130\Internal Revenue Service, FAQs about the Identity Protection 
Personal Identification Number (IP PIN), available at https://
www.irs.gov/identity-theft-fraud-scams/frequently-asked-questions-
about-the-identity-protection-personal-identification-number-ip-pin#q2.
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                           REASONS FOR CHANGE

    The Committee is aware that the use of an IP PIN is an 
effective means of preventing identity theft refund fraud via 
an electronically filed return. The Committee believes that the 
success of the pilot program for IP PINs warrants expansion of 
the program beyond the residents of the District of Columbia, 
Florida, and Georgia, and more recently Michigan, California, 
Maryland, Nevada, Delaware, Illinois, and Rhode Island, and 
persons who have already been subject to identity theft.

                        EXPLANATION OF PROVISION

    Within five years of the date of enactment, the Secretary 
or the Secretary's delegate is required to establish a program 
to issue an IP PIN to any individual residing in the United 
States who requests one to assist the Secretary in verifying 
the individual's true identity. For each calendar year 
beginning after the date of enactment, the Secretary is 
required to expand the issuance of IP PINs to individuals 
residing in such States as the Secretary deems appropriate, 
provided that the total number of States served by the program 
continues to increase.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

7. SINGLE POINT OF CONTACT FOR TAX-RELATED IDENTITY THEFT VICTIMS (SEC. 
                           2007 OF THE BILL)

                              PRESENT LAW

    Tax-related identity theft generally takes one of two 
forms: refund fraud or employment fraud. In refund fraud, a 
perpetrator may obtain a taxpayer's identifying information, 
submit an individual income tax return using a falsified Form 
W-2, Wage and Tax Statement, and fraudulently claim a refund. 
In employment fraud, the stolen identifying information is used 
in order to obtain employment. The returns then filed using the 
stolen identity may be based on the actual wages and 
withholding of the identity thief. Victims of the employment 
fraud include the individuals whose identifying information was 
stolen as well as the businesses whose systems may have been 
breached to obtain that personal information.
    The IRS describes its procedures for addressing both types 
of fraud in the Internal Revenue Manual.\131\ The IRS initially 
established the Identity Protection Specialized Unit (``IPSU'') 
to assist victims of identity theft, but taxpayers were also 
referred to other operating units of the IRS to deal with 
various aspects of their cases.\132\ Subsequently reorganized 
and renamed the Identity Theft Victim Assistance (``IDTVA'') 
organization, the unit is staffed with specially trained 
employees who are able to assess each case, identify issues, 
and assist the taxpayer in getting the correct return filed, 
refunds issued, etc.\133\ The IDTVA organization's work is 
coordinated by the IRS's Identity Protection Program through 
the auspices of an oversight office within the Wage and 
Investment Operating Division.\134\
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    \131\Internal Revenue Service, Internal Revenue Manual, Identity 
Protection and Victim Assistance, Ch. 23, sec. 25.23.1 et seq. (October 
2018).
    \132\Inspector General for Tax Administration, Department of the 
Treasury, Most Taxpayers Whose Identities Have Been Stolen to Commit 
Refund Fraud Do Not Receive Quality Customer Service (TIGTA 2012-40-
050), May 2012.
    \133\A description of the services provided by the IDTVA 
organization is available at https://www.irs.gov/uac/Newsroom/IRS-
Identity-Theft-Victim-Assistance-How-It-Works.
    \134\Internal Revenue Service, Internal Revenue Manual, Identity 
Protection and Victim Assistance, Ch. 23, sec. 25.23.1 et seq. (October 
2018).
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    If a victim thinks he or she is not being properly served 
by the IRS or the IDTVA organization, the victim may be 
eligible for assistance from the TAS. In such instances, the 
TAS will assign a case advocate to the taxpayer's account.

                           REASONS FOR CHANGE

    The Committee is concerned that taxpayers who are 
victimized by identity thieves experience delays in obtaining 
their tax refunds and find it difficult to work with multiple 
offices within the IRS. Requiring a single point of contact at 
the IRS to provide assistance to these victims is a common-
sense measure that will simplify the resolution of cases for 
taxpayers. Although the IRS has shown flexibility in adapting 
new procedures for handling identity theft cases, the Committee 
believes that a single point of contact for an identity theft 
victim is necessary.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary to establish 
procedures to implement a single point of contact for taxpayers 
adversely affected by identity theft. The single point of 
contact consists of a team of specially trained employees who 
can work across functions within the IRS to resolve problems 
for the victim and who are accountable for handling the case to 
completion. The makeup of the team may change as required to 
meet IRS's needs, but the procedures must ensure continuity of 
records and case history and may require notice to the taxpayer 
in appropriate instances.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

8. NOTIFICATION OF SUSPECTED IDENTITY THEFT (SEC. 2008 OF THE BILL AND 
                       NEW SEC. 7529 OF THE CODE)

                              PRESENT LAW

    Section 6103 provides that returns and return information 
are confidential and may not be disclosed by the IRS, other 
Federal employees, State employees, and certain others having 
access to the information except as provided in the Code.\135\ 
The definition of ``return information'' is very broad and 
includes any information gathered by the IRS with respect to a 
person's liability or possible liability under the Code for any 
tax, penalty, interest, fine, forfeiture, or other imposition 
or offense.\136\ Thus, information gathered by the IRS in 
connection with an investigation of a person for a Title 26 
offense, such as fraud, is the return information of the person 
being investigated and is subject to the confidentiality 
restrictions of section 6103.
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    \135\Sec. 6103(a).
    \136\Sec. 6103(b)(2).
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    As an exception to section 6103's general rule of 
confidentiality, the Code permits a taxpayer to receive his or 
her own tax return, and also can receive his or her return 
information if the Secretary determines that such disclosure 
would not seriously impair Federal tax administration.\137\ 
With respect to fraudulent tax returns, if the victim's name 
and Social Security number (``SSN'') are listed as either the 
primary or secondary taxpayer on a fraudulent return, a victim 
of identity theft, or a person authorized to obtain the 
identity theft victim's tax information, may request a redacted 
copy (one with some information blacked-out) of a fraudulent 
return that was filed and accepted by the IRS using the 
identity theft victim's name and SSN.\138\
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    \137\Sec. 6103(e)(1) and (7). The Code also permits the disclosure 
of returns and return information to such persons or persons the 
taxpayer may designate, if the request meets the requirements of the 
Treasury regulations and if it is determined that such disclosure would 
not seriously impair Federal tax administration. Sec. 6103(c).
    \138\See Internal Revenue Service, Instructions for Requesting Copy 
of Fraudulent Returns (March 18, 2019), available at https://
www.irs.gov/individuals/instructions-for-requesting-copy-of-fraudulent-
returns.
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    In cases not involving violations of Title 26, under a 
Privacy Act Notice, TIGTA is allowed to disclose information to 
complainants, victims, or their representatives (defined to be 
a complainant's or victim's legal counsel or a Senator or 
Representative whose assistance the complainant or victim has 
solicited) concerning the status and/or results of an 
investigation or case arising from the matters of which they 
complained and/or of which they were a victim, including, once 
the investigative subject has exhausted all reasonable appeals, 
any action taken. Information concerning the status of the 
investigation or case is limited strictly to whether the 
investigation or case is open or closed. Information concerning 
the results of the investigation or case is limited strictly to 
whether the allegations made in the complaint were 
substantiated or were not substantiated and, if the subject has 
exhausted all reasonable appeals, any action taken.\139\
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    \139\See 75 Fed. Reg. 20715 (April 20, 2010) (relating to TIGTA 
Office of Investigation files).
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                           REASONS FOR CHANGE

    The Committee notes that victims of identity theft are 
often unaware that their identity has been stolen or 
compromised. As a result, they are unable to take timely 
measures to limit damage from the theft and to secure their 
identity against further compromise. The Committee also notes 
that successful prosecution of identity thieves requires that 
the investigators exercise discretion in disclosing information 
to victims about an ongoing investigation. However, the 
Committee believes that victims must be provided an opportunity 
to safeguard their financial information and assets as soon as 
practicable.
    The Committee is aware that the unauthorized use of the 
identity of an individual to obtain employment causes severe 
hardship for the victims of this theft, including accusations 
of underreporting income and the loss of income-related 
benefits. Accordingly, to help protect these victims, in making 
a determination as to whether there has been or may have been 
an unauthorized use of identity for purposes of notifying the 
victim, the IRS is required to review information obtained from 
both its own internal processes on data mismatches as well as 
the information provided to the IRS by the Social Security 
Administration.

                        EXPLANATION OF PROVISION

    If the Secretary determines that there has been or may have 
been an unauthorized use of the identity of any individual, the 
provision requires the Secretary to, without jeopardizing an 
investigation relating to tax administration, as soon as 
practicable, notify the individual of such determination, and: 
(1) provide instructions to the individual about filing a 
report with law enforcement; (2) identify any steps to be taken 
by the individual to allow investigating law enforcement 
officials to access the taxpayer's personal information; (3) 
provide information regarding actions the individual may take 
to protect themselves from harm relating to the unauthorized 
use; and (4) offer identity protection measures to the 
individual, such as the use of an identity protection personal 
identification number.
    At the time this information is provided (or, if not 
available at such time, as soon as practicable thereafter), the 
Secretary shall issue additional notifications to such 
individual (or such individual's designee) regarding: (1) 
whether an investigation has been initiated in regards to such 
unauthorized use; (2) whether the investigation substantiated 
an unauthorized use of the taxpayer's identity; and (3) whether 
any action has been taken with respect to the individual who 
committed the substantiated violation, including whether any 
referral has been made for criminal prosecution of such 
individual, and, to the extent such information is available, 
whether such person has been criminally charged by indictment 
or information.
    For purposes of this provision, the unauthorized use of the 
identity of an individual includes the unauthorized use of the 
identity of the individual to obtain employment (herein 
``employment-related identity theft''). In making a 
determination as to whether there may have been an unauthorized 
use of the identity of an individual to obtain employment, the 
Secretary shall review certain information returns, as well as 
information provided to the IRS by the SSA, which indicates 
that the SSN used does not correspond with either the name on 
the information return or the name on the tax return reporting 
the income. This provision requires the Secretary to examine 
the statements, information returns, and tax returns described 
in the provision for any evidence of employment-related 
identity theft, regardless of whether such statements or 
returns are submitted electronically or on paper. The provision 
amends the Social Security Act to require the Commissioner of 
Social Security to request information described in the 
provision not less than annually. The provision also requires 
that the IRS establish procedures to ensure that income 
reported in connection with the unauthorized use of a 
taxpayer's identity is not taken into account in determining 
any penalty for underreporting of income by the victim of 
identity theft.

                             EFFECTIVE DATE

    The provision applies to determinations made after the date 
that is 6 months after the date of enactment.

 9. GUIDELINES FOR STOLEN IDENTITY THEFT REFUND FRAUD CASES (SEC. 2009 
                              OF THE BILL)

                              PRESENT LAW

    Disparate elements in the tax laws and administration are 
implicated in identity theft. The tax aspects of identity theft 
can generally occur in one of two ways. In refund fraud, a 
perpetrator obtains someone else's identifying information and 
submits an individual income tax return using the name and 
Social Security number of the victim, with a falsified Form W-
2, Wage and Tax Statement, and fraudulently claims a refund. In 
other cases, the stolen identifying information is used in 
order to obtain employment; the returns then filed by the 
persons employed using the stolen identity may be based on the 
actual wages and withholding. Victims of the fraud include the 
individuals whose identifying information was stolen as well as 
the businesses whose systems may have been breached to obtain 
that personal information.
    The IRS describes its procedures for addressing both types 
of fraud in its manual. Its work is coordinated by the IRS's 
Identity Protection Program through the auspices of an 
oversight office.\140\
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    \140\Internal Revenue Service, Internal Revenue Manual, Identity 
Protection and Victim Assistance, Ch. 23, sec. 25.23.1 et seq. (October 
2018).
---------------------------------------------------------------------------
    In the 2014 Annual Report to Congress, the NTA included a 
review of fraudulent refund claims that included the theft of a 
taxpayer's identity.\141\ The review found that such cases 
involved multiple issues requiring coordination among several 
business units of the IRS and took approximately six months to 
resolve. Identity theft victims were required to deal with 
multiple persons within the IRS to resolve the issues, either 
because a case involved multiple business units or was 
transferred among multiple employees within a business unit.
---------------------------------------------------------------------------
    \141\National Taxpayer Advocate, ``Identity Theft Case Review 
Report: A Statistical Analysis of Identity Theft Cases Closed in June 
2014,'' 2014 Annual Report to Congress, available at http://
www.taxpayeradvocate.irs.gov/reports-to-congress/2014-annual-report-to-
congress/research-studies.
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                           REASONS FOR CHANGE

    As the profitability and ease of identity theft grows, the 
threat to the tax system from fraudulent tax refund filings 
increases. The Committee believes there is a need to reduce the 
administrative burden on victims of tax-related identity theft, 
even as the IRS works proactively to combat such fraud.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary (or the Secretary's 
delegate), in consultation with the NTA, to develop and 
implement publicly available casework guidelines for the 
handling of refund fraud cases that would have the effect of 
reducing the administrative burdens on victims of identity 
theft. The guidelines may address both procedures and metrics 
for determining whether the procedures are successfully 
implemented. Among the issues to be considered are the 
standards for opening, assigning, reassigning or closing a 
case; the average length of time in which a case with an 
identity theft issue should be resolved; the average length of 
time a victim entitled to a tax refund may have to wait to 
receive such refund; and the number of IRS offices and 
employees with whom a victim should interact to resolve a case.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment, with 
guidelines to be implemented within one year of the date of 
enactment.

10. INCREASED PENALTY FOR IMPROPER DISCLOSURE OR USE OF INFORMATION BY 
 PREPARERS OF RETURNS (SEC. 2010 OF THE BILL AND SEC. 6713 OF THE CODE)

                              PRESENT LAW

    The Code provides both civil and criminal penalties for a 
tax return preparer who discloses any information furnished to 
the preparer for, or in connection with, the preparation of 
such return or uses such information for any purpose other than 
to prepare or assist in preparing, any such return. The civil 
penalty is $250 for each unauthorized disclosure or use up to 
$10,000 per calendar year.\142\ The corresponding criminal 
penalty under section 7216 provides that knowing or reckless 
conduct is a misdemeanor, subject to a fine up to $1,000, one 
year of imprisonment, or both, together with the costs of 
prosecution.
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    \142\Sec. 6713.
---------------------------------------------------------------------------
    Section 6103(b)(6) defines ``taxpayer identity'' as the 
name of the person with respect to whom a return is filed, his 
mailing address, his taxpayer identifying number or a 
combination thereof.

                           REASONS FOR CHANGE

    The Committee believes that taxpayer confidence in the 
trustworthiness of tax return preparers is an important element 
in tax administration. Those who are entrusted with the 
sensitive personal data of taxpayers should be held to a high 
standard, and violation of that trust when a return preparer 
uses or discloses a client's return information should be 
punished accordingly. The Committee does not believe that the 
current civil or criminal penalties adequately punishes the 
breach of trust involved in such disclosure.

                        EXPLANATION OF PROVISION

    The provision increases the civil penalty on the 
unauthorized disclosure or use of information by tax return 
preparers from $250 to $1,000 for cases in which the disclosure 
or use is made in connection with a crime relating to the 
misappropriation of another person's taxpayer identity 
(``taxpayer identity theft''). The provision also increases the 
calendar year limitation from $10,000 to $50,000. The calendar 
year limitation is applied separately with respect to 
disclosures or uses made in connection with taxpayer identity 
theft.
    The provision also increases the criminal penalty for 
knowing or reckless conduct to $100,000 in the case of 
disclosures or uses in connection with taxpayer identity theft.

                             EFFECTIVE DATE

    The provision applies to disclosures or uses on or after 
the date of enactment.

                B. Development of Information Technology


1. MANAGEMENT OF IRS INFORMATION TECHNOLOGY (SEC. 2101 OF THE BILL AND 
                         SEC. 7803 OF THE CODE)

                              PRESENT LAW

    The Code describes duties and responsibilities for the 
Commissioner, the Chief Counsel, and the OTA of the IRS.\143\ 
It does not presently enumerate duties and responsibilities of 
an IRS Chief Information Officer (``IRS CIO'').
---------------------------------------------------------------------------
    \143\Sec. 7803.
---------------------------------------------------------------------------
    Also, the Code does not explicitly provide for development 
and implementation of a multiyear strategic plan for the 
information technology needs of the IRS, and does not require 
verification and validation of major acquisitions of 
information technology by the IRS, including the Customer 
Account Data Engine 2 (``CADE 2'') and the Enterprise Case 
Management System (``ECM'').

                           REASONS FOR CHANGE

    The Committee believes it is important for the IRS to 
afford taxpayers peace of mind that their most sensitive 
information is being responsibly protected by their government, 
using the latest technology. The Committee believes the 
appointment of an IRS CIO with operational control of all 
information technology infrastructure for the IRS, and 
responsibility for the development and implementation of 
realistic multiyear strategic plans, in conjunction with the 
verification and validation of major acquisitions of 
information technology, are important components in the 
development, maintenance, and implementation of information 
technology that is secure and integrated.
    The Committee also has concerns about audits from the IRS's 
oversight bodies, which report that offices or divisions within 
the IRS, other than the office of information technology, have 
procured solutions that the Committee considers to be within 
the definition of information technology, but for which the 
office of information technology was not notified or consulted. 
The Committee believes that strengthening of the roles and 
responsibilities of the CIO and clarifying the definition of 
``information technology'' will assist the IRS in better 
administering and overseeing its information technology.
    The Committee believes that it is important to mandate the 
independent verification and validation of CADE 2 and ECM plans 
to ensure that the planning for each of these projects is 
reasonable and achievable. The Committee notes that the IRS has 
struggled for years to complete both of these projects. CADE 2, 
the IRS's replacement for the Individual Master File that 
houses individuals' tax account data, initially began 
development in 2009 with an estimated completion in 2015. 
However, to date, the IRS has spent almost $2 billion on this 
project and is not able to provide a completion date for all 
phases of the project. While the IRS initiated the ECM project 
in 2015, after initially selecting and procuring an ECM 
solution, the IRS later determined that this solution could not 
be deployed enterprise-wide. Both of these systems are central 
to the success of the IRS in meeting its mission. If Congress 
is to continue to support and fund these programs, certainty is 
needed that the IRS will be able to plan for and implement 
these programs.

                        EXPLANATION OF PROVISION

    Under the provision, the Commissioner is required to 
appoint an IRS CIO. The Commissioner and the Secretary will act 
through the IRS CIO with respect to the development, 
implementation, and maintenance of information technology for 
the IRS. The IRS CIO will be responsible for the development, 
implementation, and maintenance of information technology for 
the IRS, for ensuring that the information technology of the 
IRS is secure and integrated, for maintaining operational 
control of all information technology for the IRS, for acting 
as the principal advocate for the information technology needs 
of the IRS, and for consulting with the Chief Procurement 
Officer of the IRS to ensure that the information technology 
acquired for the IRS is consistent with the strategic plan, 
described below.
    The IRS CIO will also be responsible for developing and 
implementing a multiyear strategic plan for the information 
technology needs of the IRS. This plan should include 
performance measures of such technology and its implementation, 
and a plan for an integrated enterprise architecture of the 
information technology of the IRS. It should take into account 
the resources needed to accomplish such a plan, as well as 
planned major acquisitions of information technology by the 
IRS. The plan should also align with the needs and strategic 
plan of the IRS. The IRS CIO will review and update this plan 
at least once a year, taking into account the development of 
new information technology and the needs of the IRS.
    Under the provision, the Commissioner will develop plans 
for each phase of CADE 2, except phase one, and enter into a 
contract with an independent reviewer to verify and validate 
implementation plans developed for each phase, except phase 
one, and for the ECM. Furthermore, the Chief Procurement 
Officer of the IRS is directed to regularly consult with the 
IRS CIO and to identify all significant IRS information 
technology acquisitions in excess of $1,000,000, providing 
written notification to the IRS CIO of each such acquisition in 
advance of acquisition.
    The verification and validation of phase two of CADE 2 and 
the ECM are to be completed within one year after the date of 
enactment. The development of plans for all subsequent phases 
of CADE 2 should be completed within one year after the date of 
enactment and the verification and validation of each phase 
should be completed within one year after the date on which the 
plan for such phase is completed.

                             EFFECTIVE DATE

    The provision is generally effective on the date of 
enactment.

              2. INTERNET PLATFORM FOR FORM 1099 FILINGS 
                        (SEC. 2102 OF THE BILL)

                              PRESENT LAW

    The Code does not presently require the IRS to make 
available an internet platform for the preparation or filing of 
information returns, such as the Form 1099 series.

                           REASONS FOR CHANGE

    The Committee believes that it is desirable to provide a 
simple and secure manner for small businesses to file critical 
tax information returns electronically. The Committee further 
believes that such a secure manner of filing can be modeled on 
an existing online platform, Social Security Administration 
(``SSA'') Business Services Online. The Committee believes that 
an online platform for submitting information returns to the 
IRS, similar to SSA Business Services Online, could improve 
compliance of small business taxpayers while reducing their 
administrative burden. Businesses would be able to prepare and 
file information returns such as IRS Form 1099-MISC, 
Miscellaneous Income, online while preparing the payee 
statements and creating necessary business records.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary of the Treasury (or 
his or her delegate) to make available, by January 1, 2023, an 
internet website or other electronic medium (the ``website''), 
with a user interface and functionality similar to the Business 
Services Online Suite of Services provided by the Social 
Security Administration.\144\ The website will allow persons, 
with access to resources and guidance provided by the IRS, to 
prepare, file, and distribute Forms 1099, and maintain a record 
of completed, filed, and distributed Forms 1099. The Secretary 
is required to ensure that the services provided on the website 
are not a replacement for services currently provided by the 
IRS, and that the website comply with applicable security 
standards.
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    \144\Available at http://www.ssa.gov/bso/bsowelcome.htm.
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                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

   3. STREAMLINED CRITICAL PAY AUTHORITY FOR INFORMATION TECHNOLOGY 
    POSITIONS (SEC. 2103 OF THE BILL AND NEW SEC. 7812 OF THE CODE)

                              PRESENT LAW

    The IRS is currently subject to the personnel rules and 
procedures set forth in Title 5 of the United States Code. 
Under these rules, IRS employees generally are classified under 
the General Schedule or the Senior Executive Service.
    The RRA98 provided the IRS with certain personnel 
flexibilities, one of which was the streamlined critical pay 
authority.\145\ This authority was originally provided for 10 
years; it was extended on two occasions and ultimately expired 
on September 30, 2013.\146\
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    \145\Pub. L. No. 105-206, 112 Stat. 712 (1998).
    \146\In December 2007, the Consolidated Appropriations Act, 2008, 
Pub. L. No. 110-161, 121 Stat. 1844, (2008), extended the original 
deadline to July 23, 2013. Subsequently, the Consolidated and Further 
Continuing Appropriations Act 2013, Pub. L. No. 113-6, 127 Stat. 198 
(2013), extended the deadline to September 30, 2013.
---------------------------------------------------------------------------
    Under RRA98, the Secretary of the Treasury, or his 
delegate, was authorized to fix the compensation of, and 
appoint up to 40 individuals to, designated critical technical 
and professional positions, provided that: (1) the positions 
require expertise of an extremely high level in a technical or 
professional field and are critical to the IRS; (2) exercise of 
the authority is necessary to recruit or retain an individual 
exceptionally well qualified for the position; (3) designation 
of such positions is approved by the Secretary; (4) the terms 
of such appointments are limited to no more than four years; 
(5) appointees to such positions are not IRS employees 
immediately prior to such appointment; and (6) the total annual 
compensation for any position (including performance bonuses) 
does not exceed the rate of pay of the Vice President of the 
United States.
    These appointments would not be subject to the otherwise 
applicable requirements under Title 5. All such appointments 
would be excluded from the collective bargaining unit and the 
appointments would not be subject to approval of the OMB or the 
Office of Personnel Management.
    Also, OMB was authorized to approve increases in the pay 
level for certain critical pay positions requested by the 
Secretary. These critical pay positions would be critical, 
technical and professional positions other than those 
designated under the streamlined authority described above. OMB 
was authorized to approve requests for critical position pay up 
to the highest total compensation that does not exceed the rate 
of pay of the Vice President of the United States.
    According to TIGTA, during the years in which it had 
streamlined critical pay authority, the IRS exercised that 
authority to fill 168 positions, the majority of which were in 
the Information Technology function of the IRS.\147\
---------------------------------------------------------------------------
    \147\TIGTA, The Internal Revenue Service's Use of its Streamlined 
Critical Pay Authority,'' Ref. No. 2015-IE-R001 (December 5, 2014), 
available at https://www.treasury.gov/tigta/iereports/2015reports/
2015ier001fr.pdf.
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                           REASONS FOR CHANGE

    The Committee is aware that, in order to identify and 
prevent identity theft or refund fraud, the IRS has focused on 
improving its efforts in cybersecurity, by providing continuous 
monitoring of systems, replacing old technology, developing new 
authentication measures, and working with the private sector to 
identify best practices. To do so, the IRS must be able to 
recruit and retain experts from the private sector in highly 
specialized areas of information technology. The Committee 
believes that the IRS's ability to recruit such experts was 
aided by the now-expired streamlined critical pay authority, 
and believes that reauthorization is appropriate.

                        EXPLANATION OF PROVISION

    The provision reinstates streamlined critical pay authority 
at IRS for positions in its information technology operations 
that are necessary to ensure the functionality of such 
operations. Such authority is reinstated during the period 
beginning on the date of the enactment of section 7812 of the 
Code, and ending on September 30, 2025, for appointees to such 
positions who were not IRS employees prior to the date of 
enactment of this Act.
    The provision reinstates the ability to provide payment for 
recruitment, retention, relocation incentives, and relocation 
expenses for positions in information technology operations at 
the IRS. Such authority is reinstated during the period 
beginning on the date of the enactment of section 7812 of the 
Code, and ending on September 30, 2025.
    The provision also reinstates the ability to pay 
performance bonuses for senior executives who have program 
management responsibility over the information technology 
operations at the IRS. Such authority is reinstated during the 
period beginning on the date of the enactment of section 7812 
of the Code, and ending on September 30, 2025.

                             EFFECTIVE DATE

    The provision is effective for payments made on or after 
the date of enactment.

      C. Modernization of Consent-Based Income Verification System


     1. DISCLOSURE OF TAXPAYER INFORMATION FOR THIRD-PARTY INCOME 
     VERIFICATION (SEC. 2201 OF THE BILL AND SEC. 6103 OF THE CODE)

                              PRESENT LAW

Disclosure of return information with consent of the taxpayer

    As a general rule, returns and return information are 
confidential and cannot be disclosed unless authorized by Title 
26.\148\ Under section 6103(c), the IRS may disclose the return 
or return information of a taxpayer to a third party designated 
by the taxpayer in a request for or consent to such disclosure. 
Treasury regulations set forth the requirements for such 
consent.\149\ A request for consent to disclosure in written 
form must be a separate written document pertaining solely to 
the authorized disclosure. At the time the consent is signed 
and dated by the taxpayer, the written document must indicate: 
(1) the taxpayer's taxpayer identity information; (2) the 
identity of the person(s) to whom disclosure is to be made; (3) 
the type of return (or specified portion of the return) or 
return information (and the particular data) that is to be 
disclosed; and (4) the taxable year(s) covered by the return or 
return information. The regulations also require that the 
consent be submitted within 120 days of the date signed and 
dated by the taxpayer.
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    \148\Sec. 6103(a).
    \149\Treas. Reg. sec. 301.6103(c)-1. The regulations also specify 
the requirements for a nonwritten request for information or consent to 
disclosure to allow a third party to provide information or assistance 
relating to the taxpayer's return or to a transaction or other contact 
between the taxpayer and the IRS.
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Income Verification Express Service (IVES)

    Mortgage lenders and others in the financial community use 
the IRS's Income Verification Express Service (IVES) to confirm 
the income of a borrower during the processing of a loan 
application.\150\ Customers of IVES fax to a specified IRS 
office a signed Form 4506-T (``Request for Transcript of Tax 
Return'') or Form 4506T-EZ (``Short Form Request for Individual 
Tax Return Transcript''). The IRS provides three types of 
transcript information as part of the IVES program: (1) a 
return transcript; (2) Form W-2 (``Wage and Tax Statement'') 
transcript information; and (3) Form 1099\151\ transcript 
information.
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    \150\Internal Revenue Service, Income Verification Express Service, 
https://www.irs.gov/individuals/international-taxpayers/income-
verification-express-service (January 31, 2019).
    \151\There are various Forms 1099: Form 1099-B, Proceeds From 
Broker or Barter Exchange Transactions; Form 1099-DIV, Dividends and 
Distributions; 1099-INT, Interest Income; 1099-MISC, Miscellaneous 
Income; 1099-OID, Original Issue Discount; or 1099-R, Distributions 
From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, 
Insurance Contracts, etc.
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    The IRS imposes a $2.00 fee for each transcript requested. 
The requested transcript information is delivered to a secure 
mailbox on the IRS's e-Services electronic platform, generally 
within two to three business days.
    To participate in the IVES program, companies must register 
and identify employees to act as agents to receive transcripts 
on the company's behalf.\152\ According to the Form 13803 
(``Application to Participate in the Income Verification 
Express Services (IVES) Program''), the IRS conducts a 
suitability check on the applicant and all the principals 
listed on the application to determine the applicant's 
suitability to be an IVES participant. After an applicant 
passes the suitability check and the IRS completes processing 
the application, the IRS notifies the applicant of acceptance 
to participate in the program.
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    \152\Applicants also must choose one or more of the reasons listed 
on the form as the basis for using the IVES program: mortgage services, 
background check, credit check, banking service, licensing requirement, 
or other (must be specified).
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                           REASONS FOR CHANGE

    The Committee believes that fully automating the IVES 
program to allow for electronic submissions, as well as 
electronic responses, will reduce operational costs and reduce 
paperwork burdens for borrowers. The Committee also believes 
that automating the IVES program will increase small business 
access to capital, thereby making borrowing more affordable, 
easier, and safer for consumers and small business. The 
Committee intends that the automated process be as close to 
real time as possible while providing the same data fields 
currently provided by the non-automated version. While 
convenience is important, the Committee also wants to emphasize 
that convenience should not compromise the security of 
information within the system. Therefore, the Committee 
believes it is appropriate that the Secretary ensure that the 
program comply with applicable security standards, such as 
regulations and guidance provided by the National Institute of 
Standards and Technology.

                        EXPLANATION OF PROVISION

    As noted above, the current IVES program requires that 
transcript information requests be submitted to the IRS by fax 
and then the transcripts are furnished electronically to a 
secure mailbox. After a specified time period, the provision 
requires the Secretary (or his delegate) to implement a 
qualified disclosure program that is fully automated, 
accomplished through the Internet, and through which 
disclosures are accomplished in as close to real-time as is 
practicable. The program is to comply with applicable security 
standards and guidelines. The term ``qualified disclosure'' 
means a disclosure made pursuant to section 6103(c) to a person 
seeking to verify the income of a taxpayer who is a borrower in 
the process of a loan application. ``Qualified disclosure'' is 
intended as a reference to the types of disclosures made under 
the current IVES program. The provision is not intended to 
exclude current uses of the IVES program.
    To cover the costs of implementing such a program, for a 
two-year period beginning six months after the date of 
enactment, the Secretary is authorized to assess and collect a 
fee for qualified disclosures at such rates as the Secretary 
determines are sufficient to cover the costs related to 
implementing the program, including the costs of any necessary 
infrastructure or technology. Such fees are in addition to any 
other fee assessed and collected for such disclosures. The 
amounts received from the fees assessed and collected are to be 
deposited in and credited to an account solely for the purpose 
of carrying out the activities associated with implementing the 
qualified disclosure program. Not later than one year after the 
close of the two-year period, the Secretary is required to 
implement the program.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

  2. LIMIT REDISCLOSURES AND USES OF CONSENT-BASED DISCLOSURES OF TAX 
  RETURN INFORMATION (SEC. 2202 OF THE BILL AND SEC. 6103 OF THE CODE)

                              PRESENT LAW

In general

    As a general rule, returns and return information are 
confidential and cannot be disclosed unless authorized by Title 
26.\153\ Under section 6103(c), a taxpayer may designate in a 
request or consent to the disclosure by the IRS of his or her 
return or return information to a third party. Treasury 
regulations set forth the requirements for such consent.\154\ 
The request or consent may be in written or non-written form. 
The Treasury regulations require that the taxpayer sign and 
date a written consent. At the time the consent is signed and 
dated by the taxpayer, the written document must indicate (1) 
the taxpayer's identity information; (2) the identity of the 
person to whom disclosure is to be made; (3) the type of return 
(or specified portion of the return) or return information (and 
the particular data) that is to be disclosed; and (4) the 
taxable year covered by the return or return information. The 
regulations also require that the consent be submitted within 
120 days of the date signed and dated by the taxpayer. Present 
law does not require that a recipient receiving returns or 
return information by consent maintain the confidentiality of 
the information received. Under present law, the recipient is 
also free to use the information for purposes other than for 
which the information was solicited from the taxpayer.
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    \153\Sec. 6103(a).
    \154\Treas. Reg. sec. 301.6103(c)-1.
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Criminal penalties

    Under section 7206, it is a felony to willfully make and 
subscribe any document that contains or is verified by a 
written declaration that it is made under penalties of perjury 
and which such person does not believe to be true and correct 
as to every material matter.\155\ Upon conviction, such person 
may be fined up to $100,000 ($500,000 in the case of a 
corporation) or imprisoned up to three years, or both, together 
with the costs of prosecution.
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    \155\Sec. 7206(1).
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    Under section 7213, criminal penalties apply to: (1) 
willful unauthorized disclosures of returns and return 
information by Federal and State employees and other persons; 
(2) the offering of any item of material value in exchange for 
a return or return information and the receipt of such 
information pursuant to such an offer; and (3) the unauthorized 
disclosure of return information received by certain 
shareholders under the material interest provision of section 
6103. Under section 7213, a court can impose a fine up to 
$5,000, up to five years imprisonment, or both, together with 
the costs of prosecution. If the offense is committed by a 
Federal employee or officer, the employee or officer will be 
discharged from office upon conviction.
    Under section 7213A, the willful and unauthorized 
inspection of returns and return information can subject 
Federal and State employees and others to a maximum fine of 
$1,000, up to a year in prison, or both, in addition to the 
costs of prosecution. If the offense is committed by a Federal 
employee or officer, the employee or officer will be discharged 
from office upon conviction.

Civil damage remedies for unauthorized disclosure or inspection

    If a Federal employee makes an unauthorized disclosure or 
inspection, a taxpayer can bring suit against the United States 
in Federal district court. If a person other than a Federal 
employee makes an unauthorized disclosure or inspection, suit 
may be brought directly against such person. No liability 
results from a disclosure based on a good faith, but erroneous, 
interpretation of section 6103. A disclosure or inspection made 
at the request of the taxpayer will also relieve liability.
    Upon a finding of liability, a taxpayer can recover the 
greater of $1,000 per act of unauthorized disclosure (or 
inspection), or the sum of actual damages plus, in the case of 
an inspection or disclosure that was willful or the result of 
gross negligence, punitive damages. The taxpayer may also 
recover the costs of the action and, if found to be a 
prevailing party, reasonable attorney fees.
    The taxpayer has two years from the date of the discovery 
of the unauthorized inspection or disclosure to bring suit. The 
IRS is required to notify a taxpayer of an unauthorized 
inspection or disclosure as soon as practicable after any 
person is criminally charged by indictment or information for 
unlawful inspection or disclosure.

                           REASONS FOR CHANGE

    The Committee is concerned that information obtained by 
consent is not subject to the same protection and limits on use 
as currently applies to other taxpayer information. The 
Committee believes that this provision addresses the numerous 
privacy concerns raised by current law.

                        EXPLANATION OF PROVISION

    Under the provision, persons designated by the taxpayer to 
receive return information shall not use the information for 
any purpose other than the express purpose for which consent 
was granted and shall not disclose return information to any 
other person without the express permission of, or request by, 
the taxpayer.

                             EFFECTIVE DATE

    The provision is effective for disclosures made six months 
after the date of enactment.

                 D. Expanded Use of Electronic Systems


1. ELECTRONIC FILING OF RETURNS (SEC. 2301 OF THE BILL AND SEC. 6011 OF 
                               THE CODE)

                              PRESENT LAW

    RRA98 states a Congressional policy to promote the 
paperless filing of Federal tax returns. Section 2001(a) of 
RRA98 set a goal for the IRS to have at least 80 percent of all 
Federal tax and information returns filed electronically by 
2007.\156\ Section 2001(b) of RRA98 requires the IRS to 
establish a 10-year strategic plan to eliminate barriers to 
electronic filing.
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    \156\The Electronic Tax Administration Advisory Committee, the body 
charged with oversight of IRS progress in reaching that goal, projected 
an overall e-filing rate of 80.1 percent in the 2017 filing season 
based on all Federal returns. See Electronic Tax Administration 
Advisory Committee, Annual Report to Congress, June 2017, IRS Pub. 
3415, page 5.
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    Present law requires the Secretary to issue regulations 
regarding electronic filing and specifies certain limitations 
on the rules that may be included in such regulations.\157\ The 
statute requires that Federal income tax returns prepared by 
specified tax return preparers be filed electronically,\158\ 
and further requires that all partnerships with more than 100 
partners be required to file electronically. For taxpayers 
other than partnerships, the statute prohibits any requirement 
that persons who file fewer than 250 returns during a calendar 
year file electronically. With respect to individuals, estates, 
and trusts, the Secretary may permit, but generally cannot 
require, electronic filing of income tax returns. In crafting 
any of these required regulations, the Secretary must take into 
account the ability of taxpayers to comply at a reasonable 
cost.
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    \157\Sec. 6011(e). Sec. 6011(e) uses the term ``magnetic media'' 
and Treasury regulation section 301.6011-2 defines this term to include 
electronic filing.
    \158\Section 6011(e)(3)(B) defines a ``specified tax return 
preparer'' as any return preparer who reasonably expects to file more 
than 10 individual income tax returns during a calendar year.
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    The regulations require corporations that have assets of 
$10 million or more and file at least 250 returns during a 
calendar year to file electronically their Form 1120/1120S 
income tax returns (U.S. Corporation Income Tax Return/U.S. 
Income Tax Return for an S Corporation) and Form 990 
information returns (Return of Organization Exempt from Income 
Tax) for tax years ending on or after December 31, 2006.\159\ 
In determining whether the 250 returns threshold is met, income 
tax, excise tax, employment tax and information returns filed 
within one calendar year are counted.
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    \159\Treas. Reg. secs. 301.6011-5 and 301.6033-4.
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    The Code provides that failure to comply with information 
reporting requirements is subject to a failure to file correct 
information return penalty but provides a de minimis exception 
for failures that are attributable solely to noncompliance with 
the electronic filing requirements. Under the de minimis 
exception, failure to satisfy the electronic filing 
requirements results in imposition of a failure to file 
penalty\160\ if a failure arises with respect to (1) more than 
250 information returns; (2) more than 100 information returns 
in the case of a partnership having more than 100 partners; or 
(3) a return described in Section 6011(e)(4).\161\ Accordingly, 
there is a penalty waiver on the electronic filing requirements 
on the first 250 information returns or in the case of the 
first 100 information returns in partnerships with more than 
100 partners.
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    \160\Sec. 6721.
    \161\Sec. 6724.
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                           REASONS FOR CHANGE

    Consistent with the policy expressed in RRA98, the 
Committee supports paperless filing as the preferred and most 
convenient means of filing Federal tax and information returns. 
Electronic filing produces a number of benefits both for 
taxpayers and the IRS, including shorter processing times, 
fewer errors, and better data. The Committee believes that the 
efficiencies and cost savings achieved through electronic 
filing justify expanding such requirements. The Committee is 
aware that present law restricts the IRS's ability to expand 
the scope of returns that are required to be filed 
electronically. The Committee believes that the widespread 
adoption of computer technology since RRA98 has reduced the 
additional burden that mandatory e-filing imposes on taxpayers.

                        EXPLANATION OF PROVISION

    The provision relaxes the current restrictions on the 
authority of the Secretary to mandate electronic filing based 
on the number of returns required to be filed by a taxpayer in 
a given taxable period. First, it phases in a reduction in the 
threshold requirement that taxpayers have an obligation to file 
a specified number of returns and statements during a calendar 
year in order to be subject to a regulatory mandate. That 
threshold is reduced from 250 to 100 in the case of calendar 
year 2021, and from 100 to 10 in the case of calendar years 
after 2021. Notwithstanding these thresholds, in the case of a 
partnership the applicable number is 200 in the case of 
calendar year 2018, 150 in the case of calendar year 2019, 100 
in the case of calendar year 2020, and 50 in the case of 
calendar year 2021.\162\
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    \162\There is no change to the requirement that partnerships having 
more than 100 partners must file electronic returns notwithstanding 
these thresholds.
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    The provision authorizes the Secretary to waive the 
requirement that a Federal income tax return prepared by a 
specified tax return preparer be filed electronically if a tax 
return preparer applies for a waiver and demonstrates that the 
inability to file electronically is due to lack of internet 
availability (other than dial-up or satellite service) in the 
geographic location in which the return preparation business is 
operated.
    The provision modifies the special rule for failure to meet 
magnetic media requirements to conform to the changes made 
above.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

     2. UNIFORM STANDARDS FOR THE USE OF ELECTRONIC SIGNATURES FOR 
      DISCLOSURE AUTHORIZATIONS TO, AND OTHER AUTHORIZATIONS OF, 
    PRACTITIONERS (SEC. 2302 OF THE BILL AND SEC. 6061 OF THE CODE)

                              PRESENT LAW

Disclosure of return information by consent of the taxpayer

    As a general rule, returns and return information are 
confidential and cannot be disclosed unless authorized by the 
Code.\163\ Under section 6103(c), the IRS may disclose the 
return or return information of a taxpayer to a third party 
designated by the taxpayer in a request for or consent to such 
disclosure. Treasury regulations set forth the requirements for 
such consent.\164\ A request for consent to disclosure in 
written form must be a separate written document pertaining 
solely to the authorized disclosure. At the time the consent is 
signed and dated by the taxpayer, the written document must 
indicate (1) the taxpayer's taxpayer identity information; (2) 
the identity of the person(s) to whom disclosure is to be made; 
and (3) sufficient facts underlying the request for information 
or assistance to enable the IRS to determine the nature and 
extent of the information or assistance requested and the 
return or return information to be disclosed in order to comply 
with the taxpayer's request. The regulations also require that 
the consent be submitted within 120 days of the date signed and 
dated by the taxpayer.
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    \163\Sec. 6103(a).
    \164\Treas. Reg. sec. 301.6103(c)-1.
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Electronic signatures

    The Secretary is required to develop procedures for the 
acceptance of signatures in digital and other electronic 
form.\165\ Until such time as such procedures are in place, the 
Secretary may waive the requirement of a signature for, or 
provide for alternative methods of signing or subscribing, a 
particular type or class of return, declaration, statement or 
other document required or permitted to be made or written 
under the internal revenue laws and regulations. The Secretary 
is required to publish guidance as appropriate to define and 
implement any waiver of the signature requirements or 
alternative method of signing or subscribing. The IRS currently 
accepts electronic signatures for some applications, such as 
the Income Verification Express Services (``IVES'') 
program.\166\
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    \165\Sec. 6061.
    \166\Internal Revenue Service, Income Verification Express Services 
(IVES) Electronic Signature Requirements (August 2, 2018), available at 
https://www.irs.gov/individuals/international-taxpayers/income-
verification-express-services-ives-electronic-signature-requirements.
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    Section 12.101 of the Federal Acquisition Regulations 
require all Federal agencies to consider commercially available 
items in the acquisition process.\167\
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    \167\Specifically, section 12.101 provides that agencies: (1) 
conduct market research to determine whether commercial items or 
nondevelopmental items are available that could meet the agency's 
requirements; (2) acquire commercial items or nondevelopmental items 
when they are available to meet the needs of the agency; and (3) 
require prime contractors and subcontractors at all tiers to 
incorporate, to the maximum extent practicable, commercial items or 
nondevelopmental items as components of items supplied to the agency.
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IRS forms

    Form 2848 (Power of Attorney and Declaration of 
Representative) is used to authorize an individual to represent 
the taxpayer before the IRS. The individual must be eligible to 
practice before the IRS.
    Form 8821 (Tax Information Authorization) authorizes an 
individual or organization to request and inspect a taxpayer's 
confidential tax return information. Form 4506-T (Request for 
Transcript of Tax Return) authorizes an individual or 
organization to request and inspect transcripts of a taxpayer's 
confidential return information. These forms do not authorize 
an individual to represent the taxpayer before the IRS.

                           REASONS FOR CHANGE

    In the private sector, electronic signatures are widely 
accepted, and there are many commercially available options to 
facilitate the acceptance of electronic signatures. The 
Committee believes that the establishment of uniform guidance 
for verification of electronic signatures will reduce 
operational costs and facilitate practitioner representation. 
The Committee expects the IRS to apply a uniform approach to 
electronic signatures across IRS programs.

                        EXPLANATION OF PROVISION

    For a request for disclosure to a practitioner with consent 
of the taxpayer, or for any power of attorney granted by a 
taxpayer to a practitioner, the provision requires the 
Secretary to publish guidance to establish uniform standards 
and procedures for the acceptance of taxpayers' signatures 
appearing in electronic form with respect to such requests or 
power of attorney. Such guidance must be published within six 
months of the date of enactment. For purposes of the provision, 
a ``practitioner'' means an individual in good standing who is 
regulated under 31 U.S.C. sec. 330 (relating to practice before 
the Department of the Treasury).

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

  3. PAYMENT OF TAXES BY DEBIT AND CREDIT CARDS (SEC. 2303 OF THE BILL 
                       AND SEC. 6311 OF THE CODE)

                              PRESENT LAW

    The Code generally permits the payment of taxes by 
commercially acceptable means such as credit cards.\168\ The 
Secretary may not pay any fee or provide any other 
consideration in connection with the use of credit, debit, or 
charge cards for the payment of income taxes.\169\
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    \168\Sec. 6311.
    \169\Sec. 6311(d)(2).
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                           REASONS FOR CHANGE

    The Committee believes that removing the prohibition on the 
Secretary paying any fees or providing any other consideration 
in connection with the use of credit, debit, or charge cards 
will allow the IRS to realize benefits similar to those 
realized by any business that accepts payment by credit card, 
including a guarantee that the funds will be paid over and a 
reduction in the costs of handling paper checks. The Committee 
believes that the provision could result in increased 
collections by allowing taxpayers to more easily make a payment 
by credit card over the telephone without having to wait for 
the IRS to connect them to third party providers.

                        EXPLANATION OF PROVISION

    The provision removes the prohibition on paying any fees or 
providing any other consideration in connection with the use of 
credit, debit, or charge cards for the payment of income taxes 
to the extent taxpayers paying in this manner are fully 
responsible for any fees or consideration incurred. The 
provision requires the Secretary to seek to minimize the amount 
of any fee or other consideration that the Secretary pays under 
any contract.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

 4. AUTHENTICATION OF USERS OF ELECTRONIC SERVICES ACCOUNTS (SEC. 2304 
                              OF THE BILL)

                              PRESENT LAW

    The IRS has developed a suite of web-based products, called 
e-Services Online Tools for Tax Professionals, which provides 
multiple electronic products and services to tax professionals.

                           REASONS FOR CHANGE

    The Committee is aware that multi-factor authentication of 
the identity of users of online accounts increases the security 
of datasets. The Committee also believes that taxpayers are 
entitled to demand that the IRS carefully guard the sensitive 
information entrusted by taxpayers to the IRS.

                        EXPLANATION OF PROVISION

    The provision requires the IRS to verify the identity of 
any individual opening an e-Services account before he or she 
is able to use such services.

                             EFFECTIVE DATE

    The provision is effective not later than 180 days after 
the date of enactment.

                          F. Other Provisions


 1. REPEAL OF PROVISION REGARDING CERTAIN TAX COMPLIANCE PROCEDURES AND 
                    REPORTS (SEC. 2401 OF THE BILL)

                              PRESENT LAW

    Under present law, taxpayers generally are required to 
calculate their own tax liabilities and submit returns showing 
their calculations.\170\ Section 2004 of RRA98 requires the 
Secretary of the Treasury or his delegate (``Secretary'') to 
study the feasibility of, and develop procedures for, the 
implementation of a return-free tax system for appropriate 
individuals for taxable years beginning after 2007.\171\ The 
Secretary is required annually to report to the tax-writing 
committees on the progress of the development of such system. 
The Secretary was required to make the first report on the 
development of the return-free filing system to the tax-writing 
committees by June 30, 2000.
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    \170\Sec. 6012.
    \171\Pub. L. No. 105-206, sec. 2004.
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                           REASONS FOR CHANGE

    The Committee believes the reports required under RRA98 are 
unnecessary and that the Secretary's limited resources are 
better spent elsewhere.

                        EXPLANATION OF PROVISION

    The provision repeals section 2004 of RRA98.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

       2. COMPREHENSIVE TRAINING STRATEGY (SEC. 2402 OF THE BILL)

                              PRESENT LAW

    The Code provides that the Commissioner has such duties and 
powers as prescribed by the Secretary.\172\ Unless otherwise 
specified by the Secretary, such duties and powers include the 
power to administer, manage, conduct, direct, and supervise the 
execution and application of the internal revenue laws or 
related statutes. In executing these duties, the Commissioner 
depends upon strategic plans that prioritize goals and manage 
its resources. In the current strategic plan, cultivating a 
well-equipped, diverse, flexible and engaged workforce is 
identified as one of the IRS's six strategic goals.\173\
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    \172\Sec. 7803(a).
    \173\See Internal Revenue Service Strategic Plan FY2018-2022, 
Publication 3744, available at https://www.irs.gov/pub/irs-pdf/
p3744.pdf.
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    Within the IRS, the OTA is expected to represent taxpayer 
interests independently in disputes with the IRS. The OTA has 
four principal functions: (1) to assist taxpayers in resolving 
problems with the IRS; (2) to identify areas in which taxpayers 
have problems in dealing with the IRS; (3) to propose changes 
in the administrative practices of the IRS to mitigate problems 
in areas in which taxpayers have issues in dealing with the 
IRS; and (4) to identify potential legislative changes which 
may be appropriate to mitigate such problems.\174\ The NTA 
supervises the OTA. The NTA reports directly to the 
Commissioner.
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    \174\Sec. 7803(c).
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                           REASONS FOR CHANGE

    The Committee believes that a well-trained IRS workforce is 
an important element of the ability of the IRS to provide 
taxpayers with top-quality service, helping them understand and 
meet their tax responsibilities, and enforcing the law with 
integrity and fairness. By requiring that the Commissioner 
submit a report to Congress outlining a comprehensive training 
strategy for IRS employees, the Committee hopes to encourage 
the IRS to consider possible additions and improvements to 
current processes.

                        EXPLANATION OF PROVISION

    The provision requires that the Commissioner submit to 
Congress a written report providing a comprehensive training 
strategy for employees of the IRS. The report is to be 
submitted not later than one year after the date of enactment 
of this Act, and is to include: a plan to streamline current 
training processes, including an assessment of the utility of 
further consolidating internal training programs, technology, 
and funding; a plan to develop annual training regarding 
taxpayer rights, including the role of the OTA, for employees 
that interface with taxpayers and the direct managers of such 
employees; a plan to improve technology-based training; 
proposals to focus employee training on early, fair, and 
efficient resolution of taxpayer disputes for employees that 
interface with taxpayers and the direct managers of such 
employees, as well as ensure consistency of skill development 
and employee evaluation throughout the IRS; and a thorough 
assessment of the funding necessary to implement such a 
strategy.

                             EFFECTIVE DATE

    The provision is effective on the date of enactment.

                  TITLE III--MISCELLANEOUS PROVISIONS


     A. Reform of Laws Governing Internal Revenue Service Employees


    1. PROHIBITION ON REHIRING ANY EMPLOYEE OF THE INTERNAL REVENUE 
  SERVICE WHO WAS INVOLUNTARILY SEPARATED FROM SERVICE FOR MISCONDUCT 
           (SEC. 3001 OF THE BILL AND SEC. 7804 OF THE CODE)

                              PRESENT LAW

    Employees of the IRS are subject to rules governing Federal 
employment generally, as well as rules of conduct specific to 
Department of the Treasury and the IRS.\175\ Standards of 
Ethical Conduct for Employees of the Executive Branch are 
supplemented by additional rules applicable to employees of the 
Department of the Treasury.\176\
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    \175\Part III of Title 5 of the United States Code prescribes rules 
for Federal employment, including employment, retention, and management 
and employee issues.
    \176\Standards of Ethical Conduct for Employees of the Executive 
Branch, 5 C.F.R. Part 2635; Supplemental Standards of Ethical Conduct 
for Employees of the Department of the Treasury, 5 C.F.R. Part 3101; 
Department of the Treasury Employee Rules of Conduct, 31 C.F.R. Part 0.
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    The Code provides that the Commissioner has such duties and 
powers as prescribed by the Secretary.\177\ Unless otherwise 
specified by the Secretary, such duties and powers include the 
power to administer, manage, conduct, direct, and supervise the 
execution and application of the internal revenue laws or 
related statutes and tax conventions to which the United States 
is a party, and to recommend to the President a candidate for 
Chief Counsel (and recommend any removal of the Chief Counsel). 
Unless otherwise specified by the Secretary, the Commissioner 
is authorized to employ such persons as the Commissioner deems 
proper for the administration and enforcement of the internal 
revenue laws and is required to issue all necessary directions, 
instructions, orders, and rules applicable to such 
persons,\178\ including determination and designation of posts 
of duty.
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    \177\Sec. 7803(a).
    \178\Sec. 7804.
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    RRA98 requires the IRS to terminate an employee for certain 
proven violations committed by the employee in connection with 
the performance of official duties.\179\ The violations 
include: (1) willful failure to obtain the required approval 
signatures on documents authorizing the seizure of a taxpayer's 
home, personal belongings, or business assets; (2) providing a 
false statement under oath material to a matter involving a 
taxpayer; (3) with respect to a taxpayer, taxpayer 
representative, or other IRS employee, the violation of any 
right under the U.S. Constitution, or any civil right 
established under Titles VI or VII of the Civil Rights Act of 
1964, Title IX of the Educational Amendments of 1972, the Age 
Discrimination in Employment Act of 1967, the Age 
Discrimination Act of 1975, sections 501 or 504 of the 
Rehabilitation Act of 1973 and Title I of the Americans with 
Disabilities Act of 1990; (4) falsifying or destroying 
documents to conceal mistakes made by any employee with respect 
to a matter involving a taxpayer or a taxpayer representative; 
(5) assault or battery on a taxpayer or other IRS employee, but 
only if there is a criminal conviction or a final judgment by a 
court in a civil case, with respect to the assault or battery; 
(6) violations of the Code, Treasury Regulations, or policies 
of the IRS (including the Internal Revenue Manual) for the 
purpose of retaliating or harassing a taxpayer or other IRS 
employee; (7) willful misuse of section 6103 for the purpose of 
concealing data from a Congressional inquiry; (8) willful 
failure to file any tax return required under the Code on or 
before the due date (including extensions) unless failure is 
due to reasonable cause; (9) willful understatement of Federal 
tax liability, unless such understatement is due to reasonable 
cause; and (10) threatening to audit a taxpayer for the purpose 
of extracting personal gain or benefit.
---------------------------------------------------------------------------
    \179\Pub. L. No. 105-206, sec. 1203(b), July 22, 1998.
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    RRA98 provides non-delegable authority to the Commissioner 
to determine that mitigating factors exist, that, in the 
Commissioner's sole discretion, mitigate against terminating 
the employee. The Act also provides that the Commissioner, in 
his sole discretion, may establish a procedure to determine 
whether an individual should be referred for such a 
determination by the Commissioner. TIGTA is required to track 
employee terminations and terminations that would have occurred 
had the Commissioner not determined that there were mitigation 
factors and include such information in TIGTA's annual report 
to Congress.

                           REASONS FOR CHANGE

    TIGTA reported that between October 2009 and September 2013 
the IRS had rehired 141 former employees who had previously 
been dismissed involuntarily for cause.\180\ The types of 
misconduct that led to the involuntary dismissals included 
willful failure to file tax returns, unauthorized access to 
confidential tax information, falsification of official forms, 
abuse of leave, and other violations of IRS policies. The 
Committee believes that rehiring persons who were fired for 
such misconduct is improper and poses a serious risk to the 
confidentiality of the information entrusted to the IRS and 
erodes trust in the IRS. In order to restore trust in the 
integrity of IRS employees, and hold IRS officials accountable 
for their hiring practices, it is necessary to ban rehiring 
persons who were dismissed for cause.
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    \180\Inspector General for Tax Administration, Department of the 
Treasury, Additional Consideration of Prior Conduct and Performance 
Issues Is Needed When Hiring Former Employees (TIGTA 2015-10-006), 
December 30, 2014, available at https://www.treasury.gov/tigta/
auditreports/2015reports/201510006fr.pdf.
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                        EXPLANATION OF PROVISION

    Under the provision, a former employee of the IRS who was 
involuntarily separated due to misconduct under subchapter A of 
Chapter 80 of the Code, under chapters 43 or 75 of Title 5 of 
the United States Code, or whose employment was terminated 
under section 1203 of RRA98, cannot be reemployed by the IRS.

                             EFFECTIVE DATE

    The provision is effective with respect to the hiring of 
employees after the date of enactment.

  2. NOTIFICATION OF UNAUTHORIZED INSPECTION OR DISCLOSURE OF RETURNS 
  AND RETURN INFORMATION (SEC. 3002 OF THE BILL AND SEC. 7431 OF THE 
                                 CODE)

                              PRESENT LAW

    Section 7431 provides for civil damages resulting from an 
unauthorized disclosure of inspection of return information. If 
a Federal employee makes an unauthorized disclosure or 
inspection, a taxpayer can bring suit against the United States 
in Federal district court. If a person other than a Federal 
employee makes an unauthorized disclosure or inspection, suit 
may be brought directly against such person. No liability 
results from a disclosure based on a good faith, but erroneous, 
interpretation of section 6103. A disclosure or inspection made 
at the request of the taxpayer will also relieve liability.
    Upon a finding of liability, a taxpayer can recover the 
greater of $1,000 per act of unauthorized disclosure (or 
inspection), or the sum of actual damages plus, in the case of 
an inspection or disclosure that was willful or the result of 
gross negligence, punitive damages. The taxpayer may also 
recover the costs of the action and, if found to be a 
prevailing party, reasonable attorney fees.
    The taxpayer has two years from the date of the discovery 
of the unauthorized inspection or disclosure to bring suit. The 
IRS is required to notify a taxpayer of an unauthorized 
inspection or disclosure as soon as practicable after any 
person is criminally charged by indictment or information for 
unlawful inspection or disclosure.

                           REASONS FOR CHANGE

    The Committee believes that current law requiring the 
Secretary to notify a taxpayer about unauthorized inspection or 
disclosure only if the offending party is criminally charged is 
insufficient. The Committee believes the notification required 
under this provision is necessary to enhance the ability of a 
taxpayer to exercise his or her rights under the Code to bring 
a civil action for unauthorized inspection or disclosure.

                        EXPLANATION OF PROVISION

    The provision requires the Secretary to notify a taxpayer 
if the IRS or a Federal or State agency (upon notice to the 
Secretary by such Federal or State agency) proposes an 
administrative determination as to disciplinary or adverse 
action against an employee arising from the employee's 
unauthorized inspection or disclosure of the taxpayer's return 
or return information. The provision requires the notice to 
include the date of the unauthorized inspection or disclosure 
and the rights of the taxpayer as a result of such 
administrative determination.

                             EFFECTIVE DATE

    The provision is effective for determinations proposed 
after 180 days after the date of enactment.

             B. Provisions Relating to Exempt Organizations


 1. MANDATORY E-FILING BY EXEMPT ORGANIZATIONS (SEC. 3101 OF THE BILL 
                  AND SECS. 6033 AND 6104 OF THE CODE)

                              PRESENT LAW

In general

    RRA98 states a Congressional policy to promote the 
paperless filing of Federal tax returns. Section 2001(a) of 
RRA98 set a goal for the IRS to have at least 80 percent of all 
Federal tax and information returns filed electronically by 
2007.\181\ Section 2001(b) of RRA98 requires the IRS to 
establish a 10-year strategic plan to eliminate barriers to 
electronic filing.
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    \181\The Electronic Tax Administration Advisory Committee, the body 
charged with oversight of IRS progress in reaching that goal projected 
an overall e-filing rate of 80.1 percent in the 2017 filing season 
based on all Federal returns. See Electronic Tax Administration 
Advisory Committee, Annual Report to Congress, June 2017, IRS Pub. 
3415, page 5.
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    Present law requires the Secretary to issue regulations 
regarding electronic filing and specifies certain limitations 
on the rules that may be included in such regulations.\182\ The 
statute requires that Federal income tax returns prepared by 
specified tax return preparers be filed electronically,\183\ 
and that all partnerships with more than 100 partners file 
electronically. For taxpayers other than partnerships, the 
statute prohibits any requirement that persons who file fewer 
than 250 returns during a calendar year file electronically. 
With respect to individuals, estates, and trusts, the Secretary 
may permit, but generally cannot require, electronic filing of 
income tax returns. In crafting any of these required 
regulations, the Secretary must take into account the ability 
of taxpayers to comply at reasonable cost.
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    \182\Sec. 6011(e). Section 6011(e) uses the term ``magnetic 
media,'' which the Treasury regulation section 301.6011-2 defines to 
include electronic filing.
    \183\Section 6011(e)(3)(B) defines a ``specified tax return 
preparer'' as any return preparer who reasonably expects to file more 
than 10 individual income tax returns during a calendar year.
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    The regulations require corporations that have assets of 
$10 million or more and file at least 250 returns during a 
calendar year to file electronically their Form 1120/1120S 
income tax returns and Form 990 information returns for tax 
years ending on or after December 31, 2006.\184\ In determining 
whether the 250 return threshold is met, income tax, 
information, excise tax, and employment tax returns filed 
within one calendar year are counted.
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    \184\Treas. Reg. secs. 301.6011-5 and 301.6033-4.
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Tax-exempt organizations

    Most tax-exempt organizations are required to file an 
annual information return or notice in the Form 990 series. 
Since 2007, the smallest organizations--generally, those with 
gross receipts of less than $50,000--may provide an abbreviated 
notice on Form 990-N, sometimes referred to as an ``e-
postcard.'' Which form to file depends on the annual receipts, 
value of assets, and types of activities of the exempt 
organization. The public can view electronic images of Forms 
990, 990-EZ, and 990-PF online, or purchase hard or soft copies 
from the IRS.\185\
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    \185\See https://www.irs.gov/charities-non-profits/copies-of-eo-
returns-available, last updated August 16, 2018.
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    In general, only the largest and smallest tax-exempt 
organizations are required to electronically file their annual 
information returns. First, as indicated above, tax-exempt 
corporations that have assets of $10 million or more and that 
file at least 250 returns during a calendar year must 
electronically file their Form 990 information returns. Private 
foundations and charitable trusts, regardless of asset size, 
that file at least 250 returns during a calendar year are 
required to file electronically their Form 990-PF information 
returns.\186\ Finally, organizations that file Form 990-N (the 
e-postcard) also must electronically file.\187\
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    \186\Taxpayers can request waivers of the electronic filing 
requirement if they cannot meet that requirement due to technological 
constraints, or if compliance with the requirement would result in 
undue financial burden on the taxpayer. Treas. Sec. 301.6033-4.
    \187\See Form 990-N, ``Electronic Notice for Tax-exempt 
Organizations Not Required to File a Form 990 or 990-EZ.''
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                           REASONS FOR CHANGE

    The Committee believes that mandatory electronic filing by 
all tax-exempt organizations required to file information 
returns will improve efficiency, reduce costs and generally 
improve oversight of tax-exempt organizations. Electronic 
filing generally increases efficiency because it enables the 
IRS to make use of its computer infrastructure to identify 
returns with audit potential. This focus, in turn, allows the 
IRS to utilize its resources in areas in which such efforts 
would be most fruitful. Moreover, the reduction in processing 
costs incurred by the IRS as a result of electronic filing 
initiatives is well documented.
    The Committee believes it is important to increase the 
transparency of, and enhance public access to information 
about, tax-exempt organizations, particularly charitable 
organizations. Present law enables the public to know whether 
an entity purporting to be an exempt organization is in 
compliance with the Code by mandating that the IRS make certain 
documents available to the public. In complying with its 
obligation to release returns, the IRS makes the returns 
available in read-only format. Although many tax-exempt 
organizations already file their required returns 
electronically, a significant number of entities continue to 
file on paper. Because the IRS generally releases all returns 
in the same read-only format regardless of whether they were 
filed electronically or on paper, the IRS expends time and 
resources to conform all returns to a uniform format. The 
Committee believes that a broader requirement for electronic 
filing and the addition of a requirement that the information 
be released in machine-readable format will expedite the 
publication of the information that is required to be disclosed 
by the IRS and enhance its usability by stakeholders attempting 
to exercise oversight of tax-exempt organizations. Such 
stakeholders include not only members of the public who may 
support or donate to an organization, but also state and local 
officials charged with oversight responsibilities and 
responsibility for prosecuting fraudulent charities.

                        EXPLANATION OF PROVISION

    The provision extends the requirement to e-file to all tax-
exempt organizations required to file statements or returns in 
the Form 990 series or Form 8872 (``Political Organization 
Report of Contributions and Expenditures''). The provision also 
requires that the IRS make the information provided on the 
forms available to the public (consistent with the disclosure 
rules of section 6104 of the Code) in a machine-readable format 
as soon as practicable.

                             EFFECTIVE DATE

    The provision generally is effective for taxable years 
beginning after the date of enactment. Transition relief is 
provided for certain organizations. First, for certain small 
organizations or other organizations for which the Secretary 
determines that application of the e-filing requirement would 
constitute an undue hardship in the absence of additional 
transitional time, the requirement to file electronically must 
be implemented not later than taxable years beginning two years 
following the date of enactment. For this purpose, small 
organization means any organization: (1) the gross receipts of 
which for the taxable year are less than $200,000; and (2) the 
aggregate gross assets of which at the end of the taxable year 
are less than $500,000. In addition, the provision grants IRS 
the discretion to delay the effective date not later than 
taxable years beginning two years after the date of enactment 
for the filing of Form 990-T (reports of unrelated business 
taxable income or the payment of proxy tax under section 
6033(e)).

 2. NOTICE REQUIRED BEFORE REVOCATION OF TAX-EXEMPT STATUS FOR FAILURE 
  TO FILE RETURN (SEC. 3102 OF THE BILL AND SEC. 6033(J) OF THE CODE)

                              PRESENT LAW

Applications for tax exemption

            Section 501(c)(3) organizations
    Section 501(c)(3) organizations (with certain exceptions) 
are required to seek formal recognition of tax-exempt status by 
filing an application with the IRS (Form 1023 (Application for 
Recognition of Exemption under Section 501(c)(3) of the 
Internal Revenue Code) or Form 1023-EZ (Streamlined Application 
for Recognition of Exemption under Section 501(c)(3) of the 
Internal Revenue Code)).\188\ In response to the application, 
the IRS issues a determination letter or ruling either 
recognizing the applicant as tax-exempt or not. Certain 
organizations are not required to apply for recognition of tax-
exempt status in order to qualify as tax-exempt under section 
501(c)(3) but may do so. These organizations include churches, 
certain church-related organizations, organizations (other than 
private foundations) the gross receipts of which in each 
taxable year are normally not more than $5,000, and 
organizations (other than private foundations) subordinate to 
another tax-exempt organization that are covered by a group 
exemption letter.
---------------------------------------------------------------------------
    \188\See sec. 508(a).
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    A favorable determination by the IRS on an application for 
recognition of tax-exempt status generally will be retroactive 
to the date that the section 501(c)(3) organization was created 
if it files a completed Form 1023 within 15 months of the end 
of the month in which it was formed.\189\ If the organization 
does not file Form 1023 or files a late application, it will 
not be treated as tax-exempt under section 501(c)(3) for any 
period prior to the filing of an application for recognition of 
tax exemption.\190\ Contributions to section 501(c)(3) 
organizations that are subject to the requirement that the 
organization apply for recognition of tax-exempt status 
generally are not deductible from income, gift, or estate tax 
until the organization receives a determination letter from the 
IRS.\191\
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    \189\Pursuant to Treas. Reg. sec. 301.9100-2(a)(2)(iv), 
organizations are allowed an automatic 12-month extension as long as 
the application for recognition of tax exemption is filed within the 
extended, i.e., 27-month, period. The IRS also may grant an extension 
beyond the 27-month period if the organization is able to establish 
that it acted reasonably and in good faith and that granting relief 
will not prejudice the interests of the government. Treas. Reg. secs. 
301.9100-1 and 301.9100-3.
    \190\Treas. Reg. sec. 1.508-1(a)(1).
    \191\Sec. 508(d)(2)(B). Contributions made prior to receipt of a 
favorable determination letter may be deductible prior to the 
organization's receipt of such favorable determination letter if the 
organization has timely filed its application to be recognized as tax-
exempt. Treas. Reg. secs. 1.508-1(a) and 1.508-2(b)(1)(i)(b).
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            Other section 501(c) organizations
    Most other types of section 501(c) organizations--including 
organizations described within sections 501(c)(4) (social 
welfare organizations, etc.), 501(c)(5) (labor organizations, 
etc.), or 501(c)(6) (business leagues, etc.)--are not required 
to apply for recognition of tax-exempt status. Rather, 
organizations are exempt under these subsections if they 
satisfy the requirements applicable to such organizations. 
However, an organization that intends to operate as a section 
501(c)(4) organization must notify the Secretary no later than 
60 days after its formation that it is operating as such by 
filing form 8976 (Notice of Intent to Operate Under Section 
501(c)(4)). In addition, in order to obtain certain benefits 
such as public recognition of tax-exempt status, exemption from 
certain State taxes, and nonprofit mailing privileges, such 
organizations voluntarily may request a formal recognition of 
exempt status by filing a Form 1024 (Application for 
Recognition of Exemption under Section 501(a)) or Form 1024-A 
(Application for Recognition of Exemption under Section 
501(c)(4) of the Internal Revenue Code).

Annual information returns

    Exempt organizations are required to file an annual 
information return, Form 990 (Return of Organization Exempt 
From Income Tax), stating specifically the items of gross 
income, receipts, disbursements, and such other information as 
the Secretary may prescribe.\192\ Exempt from the requirement 
are churches, their integrated auxiliaries, and conventions or 
associations of churches; the exclusively religious activities 
of any religious order; certain institutions whose income is 
excluded from gross income under section 115; an interchurch 
organization of local units of a church; certain mission 
societies; certain church-affiliated elementary and high 
schools; and certain other organizations, including some that 
the IRS has relieved from the filing requirement pursuant to 
its statutory discretionary authority.\193\
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    \192\Sec. 6033(a). An organization that has not received a 
determination of its tax-exempt status, but that claims tax-exempt 
status under section 501(a), is subject to the same annual reporting 
requirements and exceptions as organizations that have received a tax-
exemption determination.
    \193\Sec. 6033(a)(3); Treas. Reg. secs. 1.6033-2(a)(2)(i) and 
(g)(1).
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    An organization that is required to file an information 
return, but that has gross receipts of less than $200,000 
during its taxable year, and total assets of less than $500,000 
at the end of its taxable year, may file Form 990-EZ. If an 
organization normally has gross receipts of $50,000 or less, it 
must file Form 990-N (``e-postcard''), if it chooses not to 
file Form 990 or Form 990-EZ. Private foundations are required 
to file Form 990-PF rather than Form 990.

Revocation of exempt status

            In general
    An organization that has received a favorable tax-exemption 
determination from the IRS generally may continue to rely on 
the determination as long as ``there are no substantial changes 
in the organization's character, purposes, or methods of 
operation.''\194\ A ruling or determination letter concluding 
that an organization is exempt from tax may, however, be 
revoked or modified: (1) by notice from the IRS to the 
organization to which the ruling or determination letter was 
originally issued; (2) by enactment of legislation or 
ratification of a tax treaty; (3) by a decision of the United 
States Supreme Court; (4) by issuance of temporary or final 
Regulations by the Treasury Department; (5) by issuance of a 
revenue ruling, a revenue procedure, or other statement in the 
Internal Revenue Bulletin; or (6) automatically, in the event 
the organization fails to file a required annual return or 
notice for three consecutive years (discussed in greater detail 
below).\195\ A revocation or modification of a determination 
letter or ruling may be retroactive if, for example, there has 
been a change in the applicable law, the organization omitted 
or misstated a material fact, or the organization has operated 
in a manner materially different from that originally 
represented.\196\ Upon revocation of tax-exemption or change in 
the classification of an organization (e.g., from public 
charity to private foundation status), the IRS publishes an 
announcement of such revocation or change in the Internal 
Revenue Bulletin.
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    \194\Treas. Reg. sec. 1.501(a)-1(a)(2).
    \195\Rev. Proc. 2019-5, sec. 12, 2019-1 I.R.B. 230, at p. 257 
(January 2, 2019).
    \196\Ibid. at p. 258.
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            Automatic revocation for failure to file information 
                    returns
    If an organization fails to file a required Form 990-series 
return or notice for three consecutive years, the 
organization's tax-exempt status is automatically revoked.\197\ 
A revocation for failure to file is effective from the date 
that the Secretary determines was the last day the organization 
could have timely filed the third required information return 
or notice. To again be recognized as tax-exempt, the 
organization must apply to the Secretary for recognition of 
tax-exemption, irrespective of whether the organization was 
required to make an application for recognition of tax-
exemption in order to gain tax-exemption originally.\198\
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    \197\Sec. 6033(j)(1).
    \198\Sec. 6033(j)(2).
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    If, upon application for tax-exempt status after an 
automatic revocation for failure to file an information return 
or notice, the organization shows to the satisfaction of the 
Secretary reasonable cause for failing to file the required 
returns or notices, the organization's tax-exempt status may, 
in the discretion of the Secretary, be reinstated retroactive 
to the date of revocation.\199\ An organization may not 
challenge under the Code's declaratory judgment procedures 
(section 7428) a revocation of tax-exemption made for failure 
to file annual information returns.
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    \199\Sec. 6033(j)(3); Rev. Proc. 2014-11, 2014-3 I.R.B. 411 
(January 13, 2014).
---------------------------------------------------------------------------
    The Secretary is authorized to publish a list of 
organizations whose exempt status is automatically revoked.

                           REASONS FOR CHANGE

    Present law does not require the IRS to notify an 
organization that already has failed to file a Form 990-series 
return or notice for two consecutive years that it is at risk 
of revocation if it fails to file for a third consecutive year. 
Many of the affected organizations are small and poorly funded, 
yet face increasing demand for their services from the 
communities they serve. As a result, revocation can pose a 
significant financial burden on these organizations and their 
communities. The Committee therefore believes it is appropriate 
to require the IRS to notify organizations that are at risk of 
losing tax-exempt status for failure to file Form 990-series 
returns or notices and to provide information to help the 
organization prevent the loss of its tax-exempt status.

                        EXPLANATION OF PROVISION

    The provision requires that the IRS provide notice to an 
organization that fails to file a Form 990-series return or 
notice for two consecutive years. The notice must state that 
the IRS has no record of having received such a return or 
notice from the organization for two consecutive years and 
inform the organization about the revocation of the 
organization's tax-exempt status that will occur if the 
organization fails to file such a return or notice by the due 
date for the next such return or notice. The notice must also 
contain information about how to comply with the annual 
information return and notice requirements under sections 
6033(a)(1) and 6033(i).

                             EFFECTIVE DATE

    The provision applies to failures to file returns or 
notices for two consecutive years if the return or notice for 
the second year is required to be filed after December 31, 
2019.

                          C. Revenue Provision


 1. INCREASE IN PENALTY FOR FAILURE TO FILE (SEC. 3201 OF THE BILL AND 
                       SEC. 6651(A) OF THE CODE)

                              PRESENT LAW

    The Federal tax system is one of ``self-assessment,'' i.e., 
taxpayers are required to declare their income, expenses, and 
ultimate tax due, while the IRS has the ability to propose 
subsequent changes. This voluntary system requires that 
taxpayers comply with deadlines and adhere to the filing 
requirements. While taxpayers may obtain extensions of time in 
which to file their returns, the Federal tax system consists of 
specific due dates of returns. In order to foster compliance in 
meeting these deadlines, Congress has enacted a penalty for the 
failure to timely file tax returns.\200\
---------------------------------------------------------------------------
    \200\See United States v. Boyle, 469 U.S. 241, 245 (1985).
---------------------------------------------------------------------------
    A taxpayer who fails to file a tax return on or before its 
due date is subject to a penalty equal to five percent of the 
net amount of tax due for each month that the return is not 
filed, up to a maximum of 25 percent of the net amount.\201\ If 
the failure to file a return is fraudulent, the taxpayer is 
subject to a penalty equal to 15 percent of the net amount of 
tax due for each month the return is not filed, up to a maximum 
of 75 percent of the net amount.\202\ The net amount of tax due 
is the amount of tax required to be shown on the return reduced 
by the amount of any part of the tax that is paid on or before 
the date prescribed for payment of the tax and by the amount of 
any credits against tax that may be claimed on the return.\203\ 
The penalty will not apply if it is shown that the failure to 
file was due to reasonable cause and not willful neglect.\204\
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    \201\Sec. 6651(a)(1).
    \202\Sec. 6651(f).
    \203\Sec. 6651(b)(1).
    \204\Sec. 6651(a)(1).
---------------------------------------------------------------------------
    If a return is filed more than 60 days after its due date, 
and unless it is shown that such failure is due to reasonable 
cause, then the failure to file penalty may not be less than 
the lesser of $205\205\ or 100 percent of the amount required 
to be shown as tax on the return.\206\ If a penalty for failure 
to file and a penalty for failure to pay tax shown on a return 
both apply for the same month, the amount of the penalty for 
failure to file for such month is reduced by the amount of the 
penalty for failure to pay tax shown on a return.\207\ If a 
return is filed more than 60 days after its due date, then the 
penalty for failure to pay tax shown on a return may not reduce 
the penalty for failure to file below the lesser of $205 or 100 
percent of the amount required to be shown on the return.\208\
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    \205\The $205 amount is adjusted for inflation.
    \206\Sec. 6651(a)(1) (flush language). For this minimum penalty to 
apply, the Tax Court has held, and the IRS acquiesced, that there must 
be an underpayment of tax. See Patronik-Holder v. Commissioner, 100 
T.C. 374 (1993) (citing the Conference Report to the Tax Equity and 
Fiscal Responsibility Act of 1982), AOD 1994-03, 1993-2 C.B. 1.
    \207\Sec. 6651(c)(1).
    \208\Ibid.
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    The failure to file penalty applies to all returns required 
to be filed under subchapter A of Chapter 61 (relating to 
income tax returns of an individual, fiduciary of an estate or 
trust, or corporation; self-employment tax returns, and estate 
and gift tax returns), subchapter A of chapter 51 (relating to 
distilled spirits, wines, and beer), subchapter A of chapter 52 
(relating to tobacco, cigars, cigarettes, and cigarette papers 
and tubes), and subchapter A of chapter 53 (relating to machine 
guns and certain other firearms).\209\ The failure to file 
penalty is adjusted annually to account for inflation. The 
failure to file penalty does not apply to any failure to pay 
estimated tax required to be paid by sections 6654 or 
6655.\210\
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    \209\Sec. 6651(a)(1).
    \210\Sec. 6651(e).
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                           REASONS FOR CHANGE

    The Committee notes that the penalties for failing to file 
tax returns have not been increased in several years. The 
Committee believes that increasing the penalties will encourage 
the filing of timely and accurate information returns, which, 
in turn, will improve overall tax administration.

                        EXPLANATION OF PROVISION

    Under the provision, if a return is filed more than 60 days 
after its due date, then the failure to file penalty may not be 
less than the lesser of $330 (adjusted for inflation) or 100 
percent of the amount required to be shown as tax on the 
return.

                             EFFECTIVE DATE

    The provision applies to returns with filing due dates 
(including extensions) after December 31, 2019.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, the following statement is made concerning the 
vote of the Committee on Ways and Means during the markup 
consideration of H.R. 1957, the Taxpayer First Act of 2019, on 
April 2, 2019.
    The Chairman's amendment in the nature of a substitute was 
adopted by a voice vote (with a quorum being present).
    The bill, H.R. 1957, as amended, was ordered favorably 
reported to the House of Representatives by a voice vote (with 
a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 1957, as 
reported.
    The bill, as reported, is estimated to increase Federal 
fiscal year budget receipts by $3 million dollars for the 
period 2019 through 2029.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that the revenue-reducing tax 
provision relating to the private debt collection and special 
compliance personnel program does not involve a new tax 
expenditure while the revenue-reducing tax provision relating 
to the exclusion of interest received in an action to recover 
property seized by the IRS based on a structuring transaction 
involves a new tax expenditure.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 5, 2019.
Hon. Richard Neal,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1957, the Taxpayer 
First Act of 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Bayard 
Meiser.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Bill summary: H.R. 1957 would change many of the rules that 
govern the Internal Revenue Service (IRS). The aim would be 
improving customer service and the process for assisting 
taxpayers with appeals and to combat identity theft and fraud. 
Provisions of the bill would restrict certain IRS enforcement 
activities, modify the agency's organization, change the 
operations of the U.S. tax court, create an automated system to 
verify taxpayer information for authorized users, modernize 
information technology systems in the IRS, and expand the use 
of electronic information systems within the agency.
    Estimated Federal cost: The estimated budgetary effect of 
H.R. 1957 is shown in Table 1. The costs of the legislation 
fall within budget function 800 (general government).

                                                                       TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 1957
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             By fiscal year, millions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                2019      2020      2021      2022      2023      2024      2025      2026      2027      2028      2029    2019-2024  2019-2029
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Increases or Decreases (-) in Revenues
 
Title I. Putting Taxpayers First............................         0         0        -8       -32       -48       -52       -54       -56       -58       -60       -62       -140       -431
Title II. 21st Century IRS..................................         *         *         *         *         *         *         *         *         *         *         *          *          *
Title III. Miscellaneous Provisions.........................         *         5        21        22        22        23        24        24        25        26        27         93        219
    Total Revenues..........................................         *         5        13       -10       -26       -29       -30       -32       -33       -34       -35        -47       -212
 
                                                                                  Decreases in Direct Spending
 
Title I. Putting Taxpayers First:
    Estimated Budget Authority..............................         0         0        -4       -16       -24       -26       -27       -28       -29       -30       -31        -70       -215
    Estimated Outlays.......................................         0         0        -4       -16       -24       -26       -27       -28       -29       -30       -31        -70       -215
 
                                                    Net Increase or Decrease (-) in the Deficit From Changes in Direct Spending and Revenues
Effect on the Deficit.......................................         *        -5       -17        -6        -2         3         3         4         4         4         4        -23         -3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding; * = between -$500,000 and $500,000.

    Basis of estimate: The Congressional Budget Act of 1974, as 
amended, stipulates that revenue estimates provided by the 
staff of the Joint Committee on Taxation (JCT) are the official 
estimates for all tax legislation considered by the Congress. 
CBO therefore incorporates those estimates into its cost 
estimates of the effects of legislation. Virtually all of the 
estimates for the provisions of H.R. 1957 were provided by 
JCT.\1\
---------------------------------------------------------------------------
    \1\For JCT's estimates of the provisions, which include detail 
beyond the summary presented below, see Joint Committee on Taxation, 
Estimated Revenue Effects of Revenue Provisions of the ``Taxpayer First 
Act of 2019,'' JCX-17-19 (April 2, 2019), https://go.usa.gov/xmxpy.
---------------------------------------------------------------------------

Revenues

    On net, JCT estimates, enacting the bill would decrease 
revenues by $212 million.
    Title I. Putting Taxpayers First. Title I would change the 
management and oversight of the IRS to improve customer service 
and the process of providing taxpayers with assistance for 
appeals, restrict certain IRS enforcement activities, and 
modify the agency's organization. JCT estimates that those 
provisions would, on net, reduce revenues by $431 million over 
the 2019-2029 period. CBO has not completed an estimate of the 
bill's costs that are subject to annual appropriation.
    Title II. 21st Century IRS. Title II would combat identity 
theft and tax refund fraud, create an automated system to 
verify taxpayer information for authorized users, modernize 
information technology systems within the IRS, and expand the 
use of electronic information systems within the IRS. JCT 
estimates that those provisions would increase revenues by less 
than $500,000 over the 2019-2029 period.
    Title III. Miscellaneous Provisions. Title III would make 
other changes to the laws governing the IRS, change the 
organization of the tax court, and increase the penalty for a 
return filed 60 days after its due date. JCT estimates that 
this provision would increase revenues by $219 million over the 
2019-2029 period.

Direct spending

    Title 1 of H.R. 1957 would prohibit the IRS from using 
private debt collectors in certain cases, which would reduce 
direct spending. Currently, the IRS contracts with private 
companies to collect delinquent federal taxes. Under those 
contracts, the IRS may allow businesses to retain up to 25 
percent of their collections; another 25 percent is available 
to the IRS to spend on enforcement. CBO and JCT estimate that 
repealing the private debt collection authority and allowing 
the current contracts to expire would reduce direct spending by 
$215 million over the 2019-2029 period, or 50 percent of the 
estimated reduction in revenues stemming from this provision.

Spending subject to appropriation

    CBO has not completed an estimate of the bill's costs that 
are subject to annual appropriation.

Uncertainty

    These budgetary estimates are uncertain because they rely 
on underlying projections and other estimates that are 
uncertain. Specifically, they are based in part on CBO's 
economic projections for the next decade under current law, and 
on estimates changes in taxpayers' behavior in response to 
changes in tax rules.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown above in 
Table 1.
    Increase in long-term deficits: JCT estimates that enacting 
H.R. 1957 would not increase on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2030.
    Mandates: JCT has reviewed H.R. 1957 and determined that it 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act.
    Estimate prepared by: Revenues: Staff of the Joint 
Committee on Taxation and Bayard Meiser; Federal costs: Matthew 
Pickford; Mandates: Staff of the Joint Committee on Taxation 
and Andrew Laughlin.
    Estimate reviewed by: Joshua Shakin, Chief, Revenue 
Estimating Unit; Kim Cawley, Chief, Natural and Physical 
Resources Cost Estimating Unit; H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis; John McClelland, 
Assistant Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated into 
the description portions of this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI clause 5(b) of the Rules of the House of 
Representatives provides, in part, that ``It shall not be in 
order to consider a bill, joint resolution, amendment, or 
conference report carrying a retroactive Federal income tax 
rate increase.'' The Committee has carefully reviewed the bill 
and states that the bill does not involve any retroactive 
Federal income tax rate increases within the meaning of the 
rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of RRA98 requires the staff of the Joint 
Committee on Taxation (in consultation with the Internal 
Revenue Service and the Treasury Department) to provide a tax 
complexity analysis. The complexity analysis is required for 
all legislation reported by the Senate Committee on Finance, 
the House Committee on Ways and Means, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code of 1986 
and has widespread applicability to individuals or small 
businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of RRA98 because the bill 
contains no provisions that amend the Internal Revenue Code of 
1986 and that have ``widespread applicability'' to individuals 
or small businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program, (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139, or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to section 6104 of 
title 31, United States Code.

                              H. Hearings

    In compliance with Sec. 103(i) of H. Res. 6 (116th 
Congress) the following hearing was used to develop or consider 
H.R. 1957: Subcommittee on Oversight, Committee on Ways and 
Means, Hearing with the National Taxpayer Advocate on the Tax 
Filing Season, held on March 7, 2019

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italics, existing law in 
which no change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter B--COMPUTATION OF TAXABLE INCOME

           *       *       *       *       *       *       *


        PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME


Sec. 101. Certain death payments.
     * * * * * * *
Sec. 139G. Assignments to Alaska Native Settlement Trusts.
Sec. 139H. Interest received in action to recover property seized by the 
          Internal Revenue Service based on structuring transaction.
Sec. 140. Cross references to other Acts.

           *       *       *       *       *       *       *


SEC. 139H. INTEREST RECEIVED IN ACTION TO RECOVER PROPERTY SEIZED BY 
                    THE INTERNAL REVENUE SERVICE BASED ON STRUCTURING 
                    TRANSACTION.

  Gross income shall not include any interest received from the 
Federal Government in connection with an action to recover 
property seized by the Internal Revenue Service pursuant to 
section 5317(c)(2) of title 31, United States Code, by reason 
of a claimed violation of section 5324 of such title.

           *       *       *       *       *       *       *


Subchapter F--EXEMPT ORGANIZATIONS

           *       *       *       *       *       *       *


PART VI--POLITICAL ORGANIZATIONS

           *       *       *       *       *       *       *


SEC. 527. POLITICAL ORGANIZATIONS.

  (a) General rule.--A political organization shall be subject 
to taxation under this subtitle only to the extent provided in 
this section. A political organization shall be considered an 
organization exempt from income taxes for the purpose of any 
law which refers to organizations exempt from income taxes.
  (b) Tax imposed.--A tax is hereby imposed for each taxable 
year on the political organization taxable income of every 
political organization. Such tax shall be computed by 
multiplying the political organization taxable income by the 
highest rate of tax specified in section 11(b).
  (c) Political organization taxable income defined.--
          (1) Taxable income defined.--For purposes of this 
        section, the political organization taxable income of 
        any organization for any taxable year is an amount 
        equal to the excess (if any) of--
                  (A) the gross income for the taxable year 
                (excluding any exempt function income), over
                  (B) the deductions allowed by this chapter 
                which are directly connected with the 
                production of the gross income (excluding 
                exempt function income), computed with the 
                modifications provided in paragraph (2).
          (2) Modifications.--For purposes of this subsection--
                  (A) there shall be allowed a specific 
                deduction of $100,
                  (B) no net operating loss deduction shall be 
                allowed under section 172, and
                  (C) no deduction shall be allowed under part 
                VIII of subchapter B (relating to special 
                deductions for corporations).
          (3) Exempt function income.--For purposes of this 
        subsection, the term ``exempt function income'' means 
        any amount received as--
                  (A) a contribution of money or other 
                property,
                  (B) membership dues, a membership fee or 
                assessment from a member of the political 
                organization,
                  (C) proceeds from a political fundraising or 
                entertainment event, or proceeds from the sale 
                of political campaign materials, which are not 
                received in the ordinary course of any trade or 
                business, or
                  (D) proceeds from the conducting of any bingo 
                game (as defined in section 513(f)(2)),
        to the extent such amount is segregated for use only 
        for the exempt function of the political organization.
  (d) Certain uses not treated as income to candidate.--For 
purposes of this title, if any political organization--
          (1) contributes any amount to or for the use of any 
        political organization which is treated as exempt from 
        tax under subsection (a) of this section,
          (2) contributes any amount to or for the use of any 
        organization described in paragraph (1) or (2) of 
        section 509(a) which is exempt from tax under section 
        501(a), or
          (3) deposits any amount in the general fund of the 
        Treasury or in the general fund of any State or local 
        government,
such amount shall be treated as an amount not diverted for the 
personal use of the candidate or any other person. No deduction 
shall be allowed under this title for the contribution or 
deposit of any amount described in the preceding sentence.
  (e) Other definitions.--For purposes of this section--
          (1) Political organization.--The term ``political 
        organization'' means a party, committee, association, 
        fund, or other organization (whether or not 
        incorporated) organized and operated primarily for the 
        purpose of directly or indirectly accepting 
        contributions or making expenditures, or both, for an 
        exempt function.
          (2) Exempt function.--The term ``exempt function'' 
        means the function of influencing or attempting to 
        influence the selection, nomination, election, or 
        appointment of any individual to any Federal, State, or 
        local public office or office in a political 
        organization, or the election of Presidential or Vice-
        Presidential electors, whether or not such individual 
        or electors are selected, nominated, elected, or 
        appointed. Such term includes the making of 
        expenditures relating to an office described in the 
        preceding sentence which, if incurred by the 
        individual, would be allowable as a deduction under 
        section 162(a).
          (3) Contributions.--The term ``contributions'' has 
        the meaning given to such term by section 271(b)(2).
          (4) Expenditures.--The term ``expenditures'' has the 
        meaning given to such term by section 271(b)(3).
          (5) Qualified State or local political 
        organization.--
                  (A) In general.--The term ``qualified State 
                or local political organization'' means a 
                political organization--
                          (i) all the exempt functions of which 
                        are solely for the purposes of 
                        influencing or attempting to influence 
                        the selection, nomination, election, or 
                        appointment of any individual to any 
                        State or local public office or office 
                        in a State or local political 
                        organization,
                          (ii) which is subject to State law 
                        that requires the organization to 
                        report (and it so reports)--
                                  (I) information regarding 
                                each separate expenditure from 
                                and contribution to such 
                                organization, and
                                  (II) information regarding 
                                the person who makes such 
                                contribution or receives such 
                                expenditure,
                 which would otherwise be required to be 
                reported under this section, and
                          (iii) with respect to which the 
                        reports referred to in clause (ii) are 
                        (I) made public by the agency with 
                        which such reports are filed, and (II) 
                        made publicly available for inspection 
                        by the organization in the manner 
                        described in section 6104(d).
                  (B) Certain State law differences 
                disregarded.--An organization shall not be 
                treated as failing to meet the requirements of 
                subparagraph (A)(ii) solely by reason of 1 or 
                more of the following:
                          (i) The minimum amount of any 
                        expenditure or contribution required to 
                        be reported under State law is not more 
                        than $300 greater than the minimum 
                        amount required to be reported under 
                        subsection (j).
                          (ii) The State law does not require 
                        the organization to identify 1 or more 
                        of the following:
                                  (I) The employer of any 
                                person who makes contributions 
                                to the organization.
                                  (II) The occupation of any 
                                person who makes contributions 
                                to the organization.
                                  (III) The employer of any 
                                person who receives 
                                expenditures from the 
                                organization.
                                  (IV) The occupation of any 
                                person who receives 
                                expenditures from the 
                                organization.
                                  (V) The purpose of any 
                                expenditure of the 
                                organization.
                                  (VI) The date any 
                                contribution was made to the 
                                organization.
                                  (VII) The date of any 
                                expenditure of the 
                                organization.
                  (C) De minimis errors.--An organization shall 
                not fail to be treated as a qualified State or 
                local political organization solely because 
                such organization makes de minimis errors in 
                complying with the State reporting requirements 
                and the public inspection requirements 
                described in subparagraph (A) as long as the 
                organization corrects such errors within a 
                reasonable period after the organization 
                becomes aware of such errors.
                  (D) Participation of Federal candidate or 
                office holder.--The term ``qualified State or 
                local political organization'' shall not 
                include any organization otherwise described in 
                subparagraph (A) if a candidate for nomination 
                or election to Federal elective public office 
                or an individual who holds such office--
                          (i) controls or materially 
                        participates in the direction of the 
                        organization,
                          (ii) solicits contributions to the 
                        organization (unless the Secretary 
                        determines that such solicitations 
                        resulted in de minimis contributions 
                        and were made without the prior 
                        knowledge and consent, whether explicit 
                        or implicit, of the organization or its 
                        officers, directors, agents, or 
                        employees), or
                          (iii) directs, in whole or in part, 
                        disbursements by the organization.
  (f) Exempt organization, which is not political organization, 
must include certain amounts in gross income.--
          (1) In general.--If an organization described in 
        section 501(c) which is exempt from tax under section 
        501(a) expends any amount during the taxable year 
        directly (or through another organization) for an 
        exempt function (within the meaning of subsection 
        (e)(2)), then, notwithstanding any other provision of 
        law, there shall be included in the gross income of 
        such organization for the taxable year, and shall be 
        subject to tax under subsection (b) as if it 
        constituted political organization taxable income, an 
        amount equal to the lesser of--
                  (A) the net investment income of such 
                organization for the taxable year, or
                  (B) the aggregate amount so expended during 
                the taxable year for such an exempt function.
          (2) Net investment income.--For purposes of this 
        subsection, the term ``net investment income'' means 
        the excess of--
                  (A) the gross amount of income from interest, 
                dividends, rents, and royalties, plus the 
                excess (if any) of gains from the sale or 
                exchange of assets over the losses from the 
                sale or exchange of assets, over
                  (B) the deductions allowed by this chapter 
                which are directly connected with the 
                production of the income referred to in 
                subparagraph (A).
        For purposes of the preceding sentence, there shall not 
        be taken into account items taken into account for 
        purposes of the tax imposed by section 511 (relating to 
        tax on unrelated business income).
          (3) Certain separate segregated funds.--For purposes 
        of this subsection and subsection (e)(1), a separate 
        segregated fund (within the meaning of section 610 of 
        title 18 or of any similar State statute, or within the 
        meaning of any State statute which permits the 
        segregation of dues moneys for exempt functions (within 
        the meaning of subsection (e)(2))) which is maintained 
        by an organization described in section 501(c) which is 
        exempt from tax under section 501(a) shall be treated 
        as a separate organization.
  (g) Treatment of newsletter funds.--
          (1) In general.--For purposes of this section, a fund 
        established and maintained by an individual who holds, 
        has been elected to, or is a candidate (within the 
        meaning of paragraph (3)) for nomination or election 
        to, any Federal, State, or local elective public 
        office, for use by such individual exclusively for the 
        preparation and circulation of such individual's 
        newsletter shall, except as provided in paragraph (2), 
        be treated as if such fund constituted a political 
        organization.
          (2) Additional modifications.--In the case of any 
        fund described in paragraph (1)--
                  (A) the exempt function shall be only the 
                preparation and circulation of the newsletter, 
                and
                  (B) the specific deduction provided by 
                subsection (c)(2)(A) shall not be allowed.
          (3) Candidate.--For purposes of paragraph (1), the 
        term ``candidate'' means, with respect to any Federal, 
        State, or local elective public office, an individual 
        who--
                  (A) publicly announces that he is a candidate 
                for nomination or election to such office, and
                  (B) meets the qualifications prescribed by 
                law to hold such office.
  (h) Special rule for principal campaign committees.--
          (1) In general.--In the case of a political 
        organization, which is a principal campaign committee, 
        paragraph (1) of subsection (b) shall be applied by 
        substituting ``the appropriate rates'' for ``the 
        highest rate''.
          (2) Principal campaign committee defined.--
                  (A) In general.--For purposes of this 
                subsection, the term ``principal campaign 
                committee'' means the political committee 
                designated by a candidate for Congress as his 
                principal campaign committee for purposes of--
                          (i) section 302(e) of the Federal 
                        Election Campaign Act of 1971 (52 
                        U.S.C. 30102(e)), and
                          (ii) this subsection.
                  (B) Designation.--A candidate may have only 1 
                designation in effect under subparagraph 
                (A)(ii) at any time and such designation--
                          (i) shall be made at such time and in 
                        such manner as the Secretary may 
                        prescribe by regulations, and
                          (ii) once made, may be revoked only 
                        with the consent of the Secretary.
                Nothing in this subsection shall be construed 
                to require any designation where there is only 
                one political committee with respect to a 
                candidate.
  (i) Organizations must notify Secretary that they are section 
527 organizations.--
          (1) In general.--Except as provided in paragraph (5), 
        an organization shall not be treated as an organization 
        described in this section--
                  (A) unless it has given notice to the 
                Secretary electronically that it is to be so 
                treated, or
                  (B) if the notice is given after the time 
                required under paragraph (2), the organization 
                shall not be so treated for any period before 
                such notice is given or, in the case of any 
                material change in the information required 
                under paragraph (3), for the period beginning 
                on the date on which the material change occurs 
                and ending on the date on which such notice is 
                given.
          (2) Time to give notice.--The notice required under 
        paragraph (1) shall be transmitted not later than 24 
        hours after the date on which the organization is 
        established or, in the case of any material change in 
        the information required under paragraph (3), not later 
        than 30 days after such material change.
          (3) Contents of notice.--The notice required under 
        paragraph (1) shall include information regarding--
                  (A) the name and address of the organization 
                (including any business address, if different) 
                and its electronic mailing address,
                  (B) the purpose of the organization,
                  (C) the names and addresses of its officers, 
                highly compensated employees, contact person, 
                custodian of records, and members of its Board 
                of Directors,
                  (D) the name and address of, and relationship 
                to, any related entities (within the meaning of 
                section 168(h)(4)),
                  (E) whether the organization intends to claim 
                an exemption from the requirements of 
                subsection (j) or section 6033, and
                  (F) such other information as the Secretary 
                may require to carry out the internal revenue 
                laws.
          (4) Effect of failure.--In the case of an 
        organization failing to meet the requirements of 
        paragraph (1) for any period, the taxable income of 
        such organization shall be computed by taking into 
        account any exempt function income (and any deductions 
        directly connected with the production of such income) 
        or, in the case of a failure relating to a material 
        change, by taking into account such income and 
        deductions only during the period beginning on the date 
        on which the material change occurs and ending on the 
        date on which notice is given under this subsection. 
        For purposes of the preceding sentence, the term 
        ``exempt function income'' means any amount described 
        in a subparagraph of subsection (c)(3), whether or not 
        segregated for use for an exempt function.
          (5) Exceptions.--This subsection shall not apply to 
        any organization--
                  (A) to which this section applies solely by 
                reason of subsection (f)(1),
                  (B) which reasonably anticipates that it will 
                not have gross receipts of $25,000 or more for 
                any taxable year, or
                  (C) which is a political committee of a State 
                or local candidate or which is a State or local 
                committee of a political party.
          (6) Coordination with other requirements.--This 
        subsection shall not apply to any person required 
        (without regard to this subsection) to report under the 
        Federal Election Campaign Act of 1971 (52 U.S.C. 30101 
        et seq.) as a political committee.
  (j) Required disclosure of expenditures and contributions.--
          (1) Penalty for failure.--In the case of--
                  (A) a failure to make the required 
                disclosures under paragraph (2) at the time and 
                in the manner prescribed therefor, or
                  (B) a failure to include any of the 
                information required to be shown by such 
                disclosures or to show the correct information,
        there shall be paid by the organization an amount equal 
        to the rate of tax specified in subsection (b)(1) 
        multiplied by the amount to which the failure relates. 
        For purposes of subtitle F, the amount imposed by this 
        paragraph shall be assessed and collected in the same 
        manner as penalties imposed by section 6652(c).
          (2) Required disclosure.--A political organization 
        which accepts a contribution, or makes an expenditure, 
        for an exempt function during any calendar year shall 
        file with the Secretary either--
                  (A)(i) in the case of a calendar year in 
                which a regularly scheduled election is held--
                                  (I) quarterly reports, 
                                beginning with the first 
                                quarter of the calendar year in 
                                which a contribution is 
                                accepted or expenditure is 
                                made, which shall be filed not 
                                later than the fifteenth day 
                                after the last day of each 
                                calendar quarter, except that 
                                the report for the quarter 
                                ending on December 31 of such 
                                calendar year shall be filed 
                                not later than January 31 of 
                                the following calendar year,
                                  (II) a pre-election report, 
                                which shall be filed not later 
                                than the twelfth day before (or 
                                posted by registered or 
                                certified mail not later than 
                                the fifteenth day before) any 
                                election with respect to which 
                                the organization makes a 
                                contribution or expenditure, 
                                and which shall be complete as 
                                of the twentieth day before the 
                                election, and
                                  (III) a post-general election 
                                report, which shall be filed 
                                not later than the thirtieth 
                                day after the general election 
                                and which shall be complete as 
                                of the twentieth day after such 
                                general election, and
                          (ii) in the case of any other 
                        calendar year, a report covering the 
                        period beginning January 1 and ending 
                        June 30, which shall be filed no later 
                        than July 31 and a report covering the 
                        period beginning July 1 and ending 
                        December 31, which shall be filed no 
                        later than January 31 of the following 
                        calendar year, or
                  (B) monthly reports for the calendar year, 
                beginning with the first month of the calendar 
                year in which a contribution is accepted or 
                expenditure is made, which shall be filed not 
                later than the twentieth day after the last day 
                of the month and shall be complete as if the 
                last day of the month, except that, in lieu of 
                filing the reports otherwise due in November 
                and December of any year in which a regularly 
                scheduled general election is held, a pre-
                general election report shall be filed in 
                accordance with subparagraph (A)(i)(II), a 
                post-general election report shall be filed in 
                accordance with subparagraph (A)(i)(III), and a 
                year end report shall be filed not later than 
                January 31 of the following calendar year.
          (3) Contents of report.--A report required under 
        paragraph (2) shall contain the following information:
                  (A) The amount, date, and purpose of each 
                expenditure made to a person if the aggregate 
                amount of expenditures to such person during 
                the calendar year equals or exceeds $500 and 
                the name and address of the person (in the case 
                of an individual, including the occupation and 
                name of employer of such individual).
                  (B) The name and address (in the case of an 
                individual, including the occupation and name 
                of employer of such individual) of all 
                contributors which contributed an aggregate 
                amount of $200 or more to the organization 
                during the calendar year and the amount and 
                date of the contribution.
        Any expenditure or contribution disclosed in a previous 
        reporting period is not required to be included in the 
        current reporting period.
          (4) Contracts to spend or contribute.--For purposes 
        of this subsection, a person shall be treated as having 
        made an expenditure or contribution if the person has 
        contracted or is otherwise obligated to make the 
        expenditure or contribution.
          (5) Coordination with other requirements.--This 
        subsection shall not apply--
                  (A) to any person required (without regard to 
                this subsection) to report under the Federal 
                Election Campaign Act of 1971 (52 U.S.C. 30101 
                et seq.) as a political committee,
                  (B) to any State or local committee of a 
                political party or political committee of a 
                State or local candidate,
                  (C) to any organization which is a qualified 
                State or local political organization,
                  (D) to any organization which reasonably 
                anticipates that it will not have gross 
                receipts of $25,000 or more for any taxable 
                year,
                  (E) to any organization to which this section 
                applies solely by reason of subsection (f)(1), 
                or
                  (F) with respect to any expenditure which is 
                an independent expenditure (as defined in 
                section 301 of such Act).
          (6) Election.--For purposes of this subsection, the 
        term ``election'' means--
                  (A) a general, special, primary, or runoff 
                election for a Federal office,
                  (B) a convention or caucus of a political 
                party which has authority to nominate a 
                candidate for Federal office,
                  (C) a primary election held for the selection 
                of delegates to a national nominating 
                convention of a political party, or
                  (D) a primary election held for the 
                expression of a preference for the nomination 
                of individuals for election to the office of 
                President.
          (7) Electronic filing.--Any report required under 
        paragraph (2) with respect to any calendar year shall 
        be filed in electronic form [if the organization has, 
        or has reason to expect to have, contributions 
        exceeding $50,000 or expenditures exceeding $50,000 in 
        such calendar year].
  (k) Public availability of notices and reports.--
          (1) In general.--The Secretary shall make any notice 
        described in subsection (i)(1) or report described in 
        subsection (j)(7) available for public inspection on 
        the Internet not later than 48 hours after such notice 
        or report has been filed (in addition to such public 
        availability as may be made under section 6104(d)(7)).
          (2) Access.--The Secretary shall make the entire 
        database of notices and reports which are made 
        available to the public under paragraph (1) searchable 
        by the following items (to the extent the items are 
        required to be included in the notices and reports):
                  (A) Names, States, zip codes, custodians of 
                records, directors, and general purposes of the 
                organizations.
                  (B) Entities related to the organizations.
                  (C) Contributors to the organizations.
                  (D) Employers of such contributors.
                  (E) Recipients of expenditures by the 
                organizations.
                  (F) Ranges of contributions and expenditures.
                  (G) Time periods of the notices and reports.
Such database shall be downloadable.
  (l) Authority to waive.--The Secretary may waive all or any 
portion of the--
          (1) tax assessed on an organization by reason of the 
        failure of the organization to comply with the 
        requirements of subsection (i), or
          (2) amount imposed under subsection (j) for a failure 
        to comply with the requirements thereof,
on a showing that such failure was due to reasonable cause and 
not due to willful neglect.

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Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *


CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *


                   Subchapter A--RETURNS AND RECORDS

PART II--TAX RETURNS OR STATEMENTS

           *       *       *       *       *       *       *


Subpart A--GENERAL REQUIREMENT

           *       *       *       *       *       *       *


SEC. 6011. GENERAL REQUIREMENT OF RETURN, STATEMENT, OR LIST.

  (a) General rule.--When required by regulations prescribed by 
the Secretary any person made liable for any tax imposed by 
this title, or with respect to the collection thereof, shall 
make a return or statement according to the forms and 
regulations prescribed by the Secretary. Every person required 
to make a return or statement shall include therein the 
information required by such forms or regulations.
  (b) Identification of taxpayer.--The Secretary is authorized 
to require such information with respect to persons subject to 
the taxes imposed by chapter 21 or chapter 24 as is necessary 
or helpful in securing proper identification of such persons.
  (c) Returns, etc., of DISCS and former DISCS and former 
FSC's.--
          (1) Records and information.--A DISC, former DISC, or 
        former FSC (as defined in section 922 as in effect 
        before its repeal by the FSC Repeal and 
        Extraterritorial Income Exclusion Act of 2000) shall 
        for the taxable year--
                  (A) furnish such information to persons who 
                were shareholders at any time during such 
                taxable year, and to the Secretary, and
                  (B) keep such records, as may be required by 
                regulations prescribed by the Secretary.
          (2) Returns.--A DISC shall file for the taxable year 
        such returns as may be prescribed by the Secretary by 
        forms or regulations.
  (d) Authority to require information concerning section 912 
allowances.--The Secretary may by regulations require any 
individual who receives allowances which are excluded from 
gross income under section 912 for any taxable year to include 
on his return of the taxes imposed by subtitle A for such 
taxable year such information with respect to the amount and 
type of such allowances as the Secretary determines to be 
appropriate.
  (e) Regulations requiring returns on magnetic media, etc..--
          (1) In general.--The Secretary shall prescribe 
        regulations providing standards for determining which 
        returns must be filed on magnetic media or in other 
        machine-readable form. Except as provided in paragraph 
        (3), the Secretary may not require returns of any tax 
        imposed by subtitle A on individuals, estates, and 
        trusts to be other than on paper forms supplied by the 
        Secretary.
          (2) Requirements of regulations.--In prescribing 
        regulations under paragraph (1), the Secretary--
                  (A) shall not require any person to file 
                returns on magnetic media unless such person is 
                required to file at least [250] the applicable 
                number of returns during the calendar year, and
                  (B) shall take into account (among other 
                relevant factors) the ability of the taxpayer 
                to comply at reasonable cost with the 
                requirements of such regulations.
          (3) Special rule for tax return preparers.--
                  (A) In general.--The Secretary shall require 
                that any individual income tax return prepared 
                by a tax return preparer be filed on magnetic 
                media if--
                          (i) such return is filed by such tax 
                        return preparer, and
                          (ii) such tax return preparer is a 
                        specified tax return preparer for the 
                        calendar year during which such return 
                        is filed.
                  (B) Specified tax return preparer.--For 
                purposes of this paragraph, the term 
                ``specified tax return preparer'' means, with 
                respect to any calendar year, any tax return 
                preparer unless such preparer reasonably 
                expects to file 10 or fewer individual income 
                tax returns during such calendar year.
                  (C) Individual income tax return.--For 
                purposes of this paragraph, the term 
                ``individual income tax return'' means any 
                return of the tax imposed by subtitle A on 
                individuals, estates, or trusts.
                  (D) Exception for certain preparers located 
                in areas without internet access.--The 
                Secretary may waive the requirement of 
                subparagraph (A) if the Secretary determines, 
                on the basis of an application by the tax 
                return preparer, that the preparer cannot meet 
                such requirement by reason of being located in 
                a geographic area which does not have access to 
                internet service (other than dial-up or 
                satellite service).
          (4) Special rule for returns filed by financial 
        institutions with respect to withholding on foreign 
        transfers.--The numerical limitation under paragraph 
        (2)(A) shall not apply to any return filed by a 
        financial institution (as defined in section 
        1471(d)(5)) with respect to tax for which such 
        institution is made liable under section 1461 or 
        1474(a).
          [(5) Special rules for partnerships.--
                  [(A) Partnerships permitted to be required to 
                file on magnetic media.--In the case of a 
                partnership, paragraph (2)(A) shall be applied 
                by substituting for ``250'' the following 
                amount:
                          [(i) In the case of returns and 
                        statements relating to calendar year 
                        2018, ``200''.
                          [(ii) In the case of returns and 
                        statements relating to calendar year 
                        2019, ``150''.
                          [(iii) In the case of returns and 
                        statements relating to calendar year 
                        2020, ``100''.
                          [(iv) In the case of returns and 
                        statements relating to calendar year 
                        2021, ``50''.
                          [(v) In the case of returns and 
                        statements relating to calendar years 
                        after 2021, ``20''.
                  [(B) Partnerships required to file on 
                magnetic media.--Notwithstanding subparagraph 
                (A) and paragraph (2)(A), the Secretary shall 
                require partnerships having more than 100 
                partners to file returns on magnetic media.]
          (5) Applicable number.--
                  (A) In general.--For purposes of paragraph 
                (2)(A), the applicable number shall be--
                          (i) except as provided in 
                        subparagraph (B), in the case of 
                        calendar years before 2021, 250,
                          (ii) in the case of calendar year 
                        2021, 100, and
                          (iii) in the case of calendar years 
                        after 2021, 10.
                  (B) Special rule for partnerships for 2018, 
                2019, 2020, and 2021.--In the case of a 
                partnership, for any calendar year before 2022, 
                the applicable number shall be--
                          (i) in the case of calendar year 
                        2018, 200,
                          (ii) in the case of calendar year 
                        2019, 150,
                          (iii) in the case of calendar year 
                        2020, 100, and
                          (iv) in the case of calendar year 
                        2021, 50.
          (6) Partnerships required to file on magnetic 
        media.--Notwithstanding paragraph (2)(A), the Secretary 
        shall require partnerships having more than 100 
        partners to file returns on magnetic media.
  (f) Promotion of electronic filing.--
          (1) In general.--The Secretary is authorized to 
        promote the benefits of and encourage the use of 
        electronic tax administration programs, as they become 
        available, through the use of mass communications and 
        other means.
          (2) Incentives.--The Secretary may implement 
        procedures to provide for the payment of appropriate 
        incentives for electronically filed returns.
  (g) Disclosure of reportable transaction to tax-exempt 
entity.--Any taxable party to a prohibited tax shelter 
transaction (as defined in section 4965(e)(1)) shall by 
statement disclose to any tax-exempt entity (as defined in 
section 4965(c)) which is a party to such transaction that such 
transaction is such a prohibited tax shelter transaction.
  (h) Income, estate, and gift taxes.--For requirement that 
returns of income, estate, and gift taxes be made whether or 
not there is tax liability, see subparts B and C.

Subpart B--INCOME TAX RETURNS

           *       *       *       *       *       *       *


SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.

  (a) In general.--Notwithstanding section 6013(d)(3)--
          (1) an individual who has made a joint return may 
        elect to seek relief under the procedures prescribed 
        under subsection (b); and
          (2) if such individual is eligible to elect the 
        application of subsection (c), such individual may, in 
        addition to any election under paragraph (1), elect to 
        limit such individual's liability for any deficiency 
        with respect to such joint return in the manner 
        prescribed under subsection (c).
Any determination under this section shall be made without 
regard to community property laws.
  (b) Procedures for relief from liability applicable to all 
joint filers.--
          (1) In general.--Under procedures prescribed by the 
        Secretary, if--
                  (A) a joint return has been made for a 
                taxable year;
                  (B) on such return there is an understatement 
                of tax attributable to erroneous items of one 
                individual filing the joint return;
                  (C) the other individual filing the joint 
                return establishes that in signing the return 
                he or she did not know, and had no reason to 
                know, that there was such understatement;
                  (D) taking into account all the facts and 
                circumstances, it is inequitable to hold the 
                other individual liable for the deficiency in 
                tax for such taxable year attributable to such 
                understatement; and
                  (E) the other individual elects (in such form 
                as the Secretary may prescribe) the benefits of 
                this subsection not later than the date which 
                is 2 years after the date the Secretary has 
                begun collection activities with respect to the 
                individual making the election,
        then the other individual shall be relieved of 
        liability for tax (including interest, penalties, and 
        other amounts) for such taxable year to the extent such 
        liability is attributable to such understatement.
          (2) Apportionment of relief.--If an individual who, 
        but for paragraph (1)(C), would be relieved of 
        liability under paragraph (1), establishes that in 
        signing the return such individual did not know, and 
        had no reason to know, the extent of such 
        understatement, then such individual shall be relieved 
        of liability for tax (including interest, penalties, 
        and other amounts) for such taxable year to the extent 
        that such liability is attributable to the portion of 
        such understatement of which such individual did not 
        know and had no reason to know.
          (3) Understatement.--For purposes of this subsection, 
        the term ``understatement'' has the meaning given to 
        such term by section 6662(d)(2)(A).
  (c) Procedures to limit liability for taxpayers no longer 
married or taxpayers legally separated or not living 
together.--
          (1) In general.--Except as provided in this 
        subsection, if an individual who has made a joint 
        return for any taxable year elects the application of 
        this subsection, the individual's liability for any 
        deficiency which is assessed with respect to the return 
        shall not exceed the portion of such deficiency 
        properly allocable to the individual under subsection 
        (d).
          (2) Burden of proof.--Except as provided in 
        subparagraph (A)(ii) or (C) of paragraph (3), each 
        individual who elects the application of this 
        subsection shall have the burden of proof with respect 
        to establishing the portion of any deficiency allocable 
        to such individual.
          (3) Election.--
                  (A) Individuals eligible to make election.--
                          (i) In general.--An individual shall 
                        only be eligible to elect the 
                        application of this subsection if--
                                  (I) at the time such election 
                                is filed, such individual is no 
                                longer married to, or is 
                                legally separated from, the 
                                individual with whom such 
                                individual filed the joint 
                                return to which the election 
                                relates; or
                                  (II) such individual was not 
                                a member of the same household 
                                as the individual with whom 
                                such joint return was filed at 
                                any time during the 12-month 
                                period ending on the date such 
                                election is filed.
                          (ii) Certain taxpayers ineligible to 
                        elect.--If the Secretary demonstrates 
                        that assets were transferred between 
                        individuals filing a joint return as 
                        part of a fraudulent scheme by such 
                        individuals, an election under this 
                        subsection by either individual shall 
                        be invalid (and section 6013(d)(3) 
                        shall apply to the joint return).
                  (B) Time for election.--An election under 
                this subsection for any taxable year may be 
                made at any time after a deficiency for such 
                year is asserted but not later than 2 years 
                after the date on which the Secretary has begun 
                collection activities with respect to the 
                individual making the election.
                  (C) Election not valid with respect to 
                certain deficiencies.--If the Secretary 
                demonstrates that an individual making an 
                election under this subsection had actual 
                knowledge, at the time such individual signed 
                the return, of any item giving rise to a 
                deficiency (or portion thereof) which is not 
                allocable to such individual under subsection 
                (d), such election shall not apply to such 
                deficiency (or portion). This subparagraph 
                shall not apply where the individual with 
                actual knowledge establishes that such 
                individual signed the return under duress.
          (4) Liability increased by reason of transfers of 
        property to avoid tax.--
                  (A) In general.--Notwithstanding any other 
                provision of this subsection, the portion of 
                the deficiency for which the individual 
                electing the application of this subsection is 
                liable (without regard to this paragraph) shall 
                be increased by the value of any disqualified 
                asset transferred to the individual.
                  (B) Disqualified asset.--For purposes of this 
                paragraph--
                          (i) In general.--The term 
                        ``disqualified asset'' means any 
                        property or right to property 
                        transferred to an individual making the 
                        election under this subsection with 
                        respect to a joint return by the other 
                        individual filing such joint return if 
                        the principal purpose of the transfer 
                        was the avoidance of tax or payment of 
                        tax.
                          (ii) Presumption.--
                                  (I) In general.--For purposes 
                                of clause (i), except as 
                                provided in subclause (II), any 
                                transfer which is made after 
                                the date which is 1 year before 
                                the date on which the first 
                                letter of proposed deficiency 
                                which allows the taxpayer an 
                                opportunity for administrative 
                                review in the [Internal Revenue 
                                Service Office of Appeals] 
                                Internal Revenue Service 
                                Independent Office of Appeals 
                                is sent shall be presumed to 
                                have as its principal purpose 
                                the avoidance of tax or payment 
                                of tax.
                                  (II) Exceptions.--Subclause 
                                (I) shall not apply to any 
                                transfer pursuant to a decree 
                                of divorce or separate 
                                maintenance or a written 
                                instrument incident to such a 
                                decree or to any transfer which 
                                an individual establishes did 
                                not have as its principal 
                                purpose the avoidance of tax or 
                                payment of tax.
  (d) Allocation of deficiency.--For purposes of subsection 
(c)--
          (1) In general.--The portion of any deficiency on a 
        joint return allocated to an individual shall be the 
        amount which bears the same ratio to such deficiency as 
        the net amount of items taken into account in computing 
        the deficiency and allocable to the individual under 
        paragraph (3) bears to the net amount of all items 
        taken into account in computing the deficiency.
          (2) Separate treatment of certain items.--If a 
        deficiency (or portion thereof) is attributable to--
                  (A) the disallowance of a credit; or
                  (B) any tax (other than tax imposed by 
                section 1 or 55) required to be included with 
                the joint return;
        and such item is allocated to one individual under 
        paragraph (3), such deficiency (or portion) shall be 
        allocated to such individual. Any such item shall not 
        be taken into account under paragraph (1).
          (3) Allocation of items giving rise to the 
        deficiency.--For purposes of this subsection--
                  (A) In general.--Except as provided in 
                paragraphs (4) and (5), any item giving rise to 
                a deficiency on a joint return shall be 
                allocated to individuals filing the return in 
                the same manner as it would have been allocated 
                if the individuals had filed separate returns 
                for the taxable year.
                  (B) Exception where other spouse benefits.--
                Under rules prescribed by the Secretary, an 
                item otherwise allocable to an individual under 
                subparagraph (A) shall be allocated to the 
                other individual filing the joint return to the 
                extent the item gave rise to a tax benefit on 
                the joint return to the other individual.
                  (C) Exception for fraud.--The Secretary may 
                provide for an allocation of any item in a 
                manner not prescribed by subparagraph (A) if 
                the Secretary establishes that such allocation 
                is appropriate due to fraud of one or both 
                individuals.
          (4) Limitations on separate returns disregarded.--If 
        an item of deduction or credit is disallowed in its 
        entirety solely because a separate return is filed, 
        such disallowance shall be disregarded and the item 
        shall be computed as if a joint return had been filed 
        and then allocated between the spouses appropriately. A 
        similar rule shall apply for purposes of section 86.
          (5) Child's liability.--If the liability of a child 
        of a taxpayer is included on a joint return, such 
        liability shall be disregarded in computing the 
        separate liability of either spouse and such liability 
        shall be allocated appropriately between the spouses.
  (e) Petition for review by Tax Court.--
          (1) In general.--In the case of an individual against 
        whom a deficiency has been asserted and who elects to 
        have subsection (b) or (c) apply, or in the case of an 
        individual who requests equitable relief under 
        subsection (f)--
                  (A) In general.--In addition to any other 
                remedy provided by law, the individual may 
                petition the Tax Court (and the Tax Court shall 
                have jurisdiction) to determine the appropriate 
                relief available to the individual under this 
                section if such petition is filed--
                          (i) at any time after the earlier 
                        of--
                                  (I) the date the Secretary 
                                mails, by certified or 
                                registered mail to the 
                                taxpayer's last known address, 
                                notice of the Secretary's final 
                                determination of relief 
                                available to the individual, or
                                  (II) the date which is 6 
                                months after the date such 
                                election is filed or request is 
                                made with the Secretary, and
                          (ii) not later than the close of the 
                        90th day after the date described in 
                        clause (i)(I).
                  (B) Restrictions applicable to collection of 
                assessment.--
                          (i) In general.--Except as otherwise 
                        provided in section 6851 or 6861, no 
                        levy or proceeding in court shall be 
                        made, begun, or prosecuted against the 
                        individual making an election under 
                        subsection (b) or (c) or requesting 
                        equitable relief under subsection (f) 
                        for collection of any assessment to 
                        which such election or request relates 
                        until the close of the 90th day 
                        referred to in subparagraph (A)(ii), 
                        or, if a petition has been filed with 
                        the Tax Court under subparagraph (A), 
                        until the decision of the Tax Court has 
                        become final. Rules similar to the 
                        rules of section 7485 shall apply with 
                        respect to the collection of such 
                        assessment.
                          (ii) Authority to enjoin collection 
                        actions.--Notwithstanding the 
                        provisions of section 7421(a), the 
                        beginning of such levy or proceeding 
                        during the time the prohibition under 
                        clause (i) is in force may be enjoined 
                        by a proceeding in the proper court, 
                        including the Tax Court. The Tax Court 
                        shall have no jurisdiction under this 
                        subparagraph to enjoin any action or 
                        proceeding unless a timely petition has 
                        been filed under subparagraph (A) and 
                        then only in respect of the amount of 
                        the assessment to which the election 
                        under subsection (b) or (c) relates or 
                        to which the request under subsection 
                        (f) relates.
          (2) Suspension of running of period of limitations.--
        The running of the period of limitations in section 
        6502 on the collection of the assessment to which the 
        petition under paragraph (1)(A) relates shall be 
        suspended--
                  (A) for the period during which the Secretary 
                is prohibited by paragraph (1)(B) from 
                collecting by levy or a proceeding in court and 
                for 60 days thereafter, and
                  (B) if a waiver under paragraph (5) is made, 
                from the date the claim for relief was filed 
                until 60 days after the waiver is filed with 
                the Secretary.
          (3) Limitation on Tax Court jurisdiction.--If a suit 
        for refund is begun by either individual filing the 
        joint return pursuant to section 6532--
                  (A) the Tax Court shall lose jurisdiction of 
                the individual's action under this section to 
                whatever extent jurisdiction is acquired by the 
                district court or the United States Court of 
                Federal Claims over the taxable years that are 
                the subject of the suit for refund, and
                  (B) the court acquiring jurisdiction shall 
                have jurisdiction over the petition filed under 
                this subsection.
          (4) Notice to other spouse.--The Tax Court shall 
        establish rules which provide the individual filing a 
        joint return but not making the election under 
        subsection (b) or (c) or the request for equitable 
        relief under subsection (f) with adequate notice and an 
        opportunity to become a party to a proceeding under 
        either such subsection.
          (5) Waiver.--An individual who elects the application 
        of subsection (b) or (c) or who requests equitable 
        relief under subsection (f) (and who agrees with the 
        Secretary's determination of relief) may waive in 
        writing at any time the restrictions in paragraph 
        (1)(B) with respect to collection of the outstanding 
        assessment (whether or not a notice of the Secretary's 
        final determination of relief has been mailed).
          (6) Suspension of running of period for filing 
        petition in title 11 cases.--In the case of a person 
        who is prohibited by reason of a case under title 11, 
        United States Code, from filing a petition under 
        paragraph (1)(A) with respect to a final determination 
        of relief under this section, the running of the period 
        prescribed by such paragraph for filing such a petition 
        with respect to such final determination shall be 
        suspended for the period during which the person is so 
        prohibited from filing such a petition, and for 60 days 
        thereafter.
          (7) Standard and scope of review.--Any review of a 
        determination made under this section shall be reviewed 
        de novo by the Tax Court and shall be based upon--
                  (A) the administrative record established at 
                the time of the determination, and
                  (B) any additional newly discovered or 
                previously unavailable evidence.
  [(f) Equitable relief.--Under procedures prescribed by the 
Secretary, if--
          [(1) taking into account all the facts and 
        circumstances, it is inequitable to hold the individual 
        liable for any unpaid tax or any deficiency (or any 
        portion of either); and
          [(2) relief is not available to such individual under 
        subsection (b) or (c),
the Secretary may relieve such individual of such liability.]
  (f) Equitable Relief.--
          (1) In general.--Under procedures prescribed by the 
        Secretary, if--
                  (A) taking into account all the facts and 
                circumstances, it is inequitable to hold the 
                individual liable for any unpaid tax or any 
                deficiency (or any portion of either), and
                  (B) relief is not available to such 
                individual under subsection (b) or (c),
        the Secretary may relieve such individual of such 
        liability.
          (2) Limitation.--A request for equitable relief under 
        this subsection may be made with respect to any portion 
        of any liability that--
                  (A) has not been paid, provided that such 
                request is made before the expiration of the 
                applicable period of limitation under section 
                6502, or
                  (B) has been paid, provided that such request 
                is made during the period in which the 
                individual could submit a timely claim for 
                refund or credit of such payment.
  (g) Credits and refunds.--
          (1) In general.--Except as provided in paragraphs (2) 
        and (3), notwithstanding any other law or rule of law 
        (other than section 6511, 6512(b), 7121, or 7122), 
        credit or refund shall be allowed or made to the extent 
        attributable to the application of this section.
          (2) Res judicata.--In the case of any election under 
        subsection (b) or (c) or of any request for equitable 
        relief under subsection (f), if a decision of a court 
        in any prior proceeding for the same taxable year has 
        become final, such decision shall be conclusive except 
        with respect to the qualification of the individual for 
        relief which was not an issue in such proceeding. The 
        exception contained in the preceding sentence shall not 
        apply if the court determines that the individual 
        participated meaningfully in such prior proceeding.
          (3) Credit and refund not allowed under subsection 
        (c).--No credit or refund shall be allowed as a result 
        of an election under subsection (c).
  (h) Regulations.--The Secretary shall prescribe such 
regulations as are necessary to carry out the provisions of 
this section, including--
          (1) regulations providing methods for allocation of 
        items other than the methods under subsection (d)(3); 
        and
          (2) regulations providing the opportunity for an 
        individual to have notice of, and an opportunity to 
        participate in, any administrative proceeding with 
        respect to an election made under subsection (b) or (c) 
        or a request for equitable relief made under subsection 
        (f) by the other individual filing the joint return.

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PART III--INFORMATION RETURNS

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Subpart A--INFORMATION CONCERNING PERSONS SUBJECT TO SPECIAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 6033. RETURNS BY EXEMPT ORGANIZATIONS.

  (a) Organizations required to file.--
          (1) In general.--Except as provided in paragraph (3), 
        every organization exempt from taxation under section 
        501(a) shall file an annual return, stating 
        specifically the items of gross income, receipts, and 
        disbursements, and such other information for the 
        purpose of carrying out the internal revenue laws as 
        the Secretary may by forms or regulations prescribe, 
        and shall keep such records, render under oath such 
        statements, make such other returns, and comply with 
        such rules and regulations as the Secretary may from 
        time to time prescribe; except that, in the discretion 
        of the Secretary, any organization described in section 
        401(a) may be relieved from stating in its return any 
        information which is reported in returns filed by the 
        employer which established such organization.
          (2) Being a party to certain reportable 
        transactions.--Every tax-exempt entity described in 
        section 4965(c) shall file (in such form and manner and 
        at such time as determined by the Secretary) a 
        disclosure of--
                  (A) such entity's being a party to any 
                prohibited tax shelter transaction (as defined 
                in section 4965(e)), and
                  (B) the identity of any other party to such 
                transaction which is known by such tax-exempt 
                entity.
          (3) Exceptions from filing.--
                  (A) Mandatory exceptions.--Paragraph (1) 
                shall not apply to--
                          (i) churches, their integrated 
                        auxiliaries, and conventions or 
                        associations of churches,
                          (ii) any organization (other than a 
                        private foundation, as defined in 
                        section 509(a)) described in 
                        subparagraph (C), the gross receipts of 
                        which in each taxable year are normally 
                        not more than $5,000, or
                          (iii) the exclusively religious 
                        activities of any religious order.
                  (B) Discretionary exceptions.--The Secretary 
                may relieve any organization required under 
                paragraph (1) (other than an organization 
                described in section 509(a)(3)) to file an 
                information return from filing such a return 
                where he determines that such filing is not 
                necessary to the efficient administration of 
                the internal revenue laws.
                  (C) Certain organizations.--The organizations 
                referred to in subparagraph (A)(ii) are--
                          (i) a religious organization 
                        described in section 501(c)(3);
                          (ii) an educational organization 
                        described in section 170(b)(1)(A)(ii);
                          (iii) a charitable organization, or 
                        an organization for the prevention of 
                        cruelty to children or animals, 
                        described in section 501(c)(3), if such 
                        organization is supported, in whole or 
                        in part, by funds contributed by the 
                        United States or any State or political 
                        subdivision thereof, or is primarily 
                        supported by contributions of the 
                        general public;
                          (iv) an organization described in 
                        section 501(c)(3), if such organization 
                        is operated, supervised, or controlled 
                        by or in connection with a religious 
                        organization described in clause (i);
                          (v) an organization described in 
                        section 501(c)(8); and
                          (vi) an organization described in 
                        section 501(c)(1), if such organization 
                        is a corporation wholly owned by the 
                        United States or any agency or 
                        instrumentality thereof, or a wholly-
                        owned subsidiary of such a corporation.
  (b) Certain organizations described in section 501(c)(3).--
Every organization described in section 501(c)(3) which is 
subject to the requirements of subsection (a) shall furnish 
annually information, at such time and in such manner as the 
Secretary may by forms or regulations prescribe, setting 
forth--
          (1) its gross income for the year,
          (2) its expenses attributable to such income and 
        incurred within the year,
          (3) its disbursements within the year for the 
        purposes for which it is exempt,
          (4) a balance sheet showing its assets, liabilities, 
        and net worth as of the beginning of such year,
          (5) the total of the contributions and gifts received 
        by it during the year, and the names and addresses of 
        all substantial contributors,
          (6) the names and addresses of its foundation 
        managers (within the meaning of section 4946(b)(1)) and 
        highly compensated employees,
          (7) the compensation and other payments made during 
        the year to each individual described in paragraph (6),
          (8) in the case of an organization with respect to 
        which an election under section 501(h) is effective for 
        the taxable year, the following amounts for such 
        organization for such taxable year:
                  (A) the lobbying expenditures (as defined in 
                section 4911(c)(1)),
                  (B) the lobbying nontaxable amount (as 
                defined in section 4911(c)(2)),
                  (C) the grass roots expenditures (as defined 
                in section 4911(c)(3)), and
                  (D) the grass roots nontaxable amount (as 
                defined in section 4911(c)(4)),
          (9) such other information with respect to direct or 
        indirect transfers to, and other direct or indirect 
        transactions and relationships with, other 
        organizations described in section 501(c) (other than 
        paragraph (3) thereof) or section 527 as the Secretary 
        may require to prevent--
                  (A) diversion of funds from the 
                organization's exempt purpose, or
                  (B) misallocation of revenues or expenses,
          (10) the respective amounts (if any) of the taxes 
        imposed on the organization, or any organization 
        manager of the organization, during the taxable year 
        under any of the following provisions (and the 
        respective amounts (if any) of reimbursements paid by 
        the organization during the taxable year with respect 
        to taxes imposed on any such organization manager under 
        any of such provisions):
                  (A) section 4911 (relating to tax on excess 
                expenditures to influence legislation),
                  (B) section 4912 (relating to tax on 
                disqualifying lobbying expenditures of certain 
                organizations),
                  (C) section 4955 (relating to taxes on 
                political expenditures of section 501(c)(3) 
                organizations), except to the extent that, by 
                reason of section 4962, the taxes imposed under 
                such section are not required to be paid or are 
                credited or refunded, and
                  (D) section 4959 (relating to taxes on 
                failures by hospital organizations),
          (11) the respective amounts (if any) of--
                  (A) the taxes imposed with respect to the 
                organization on any organization manager, or 
                any disqualified person, during the taxable 
                year under section 4958 (relating to taxes on 
                private excess benefit from certain charitable 
                organizations), and
                  (B) reimbursements paid by the organization 
                during the taxable year with respect to taxes 
                imposed under such section,
        except to the extent that, by reason of section 4962, 
        the taxes imposed under such section are not required 
        to be paid or are credited or refunded,
          (12) such information as the Secretary may require 
        with respect to any excess benefit transaction (as 
        defined in section 4958),
          (13) such information with respect to disqualified 
        persons as the Secretary may prescribe,
          (14) such information as the Secretary may require 
        with respect to disaster relief activities,
          (15) in the case of an organization to which the 
        requirements of section 501(r) apply for the taxable 
        year--
                  (A) a description of how the organization is 
                addressing the needs identified in each 
                community health needs assessment conducted 
                under section 501(r)(3) and a description of 
                any such needs that are not being addressed 
                together with the reasons why such needs are 
                not being addressed, and
                  (B) the audited financial statements of such 
                organization (or, in the case of an 
                organization the financial statements of which 
                are included in a consolidated financial 
                statement with other organizations, such 
                consolidated financial statement), and
          (16) such other information for purposes of carrying 
        out the internal revenue laws as the Secretary may 
        require.
For purposes of paragraph (8), if section 4911(f) applies to 
the organization for the taxable year, such organization shall 
furnish the amounts with respect to the affiliated group as 
well as with respect to such organization.
  (c) Additional provisions relating to private foundations.--
In the case of an organization which is a private foundation 
(within the meaning of section 509(a))--
          (1) the Secretary shall by regulations provide that 
        the private foundation shall include in its annual 
        return under this section such information (not 
        required to be furnished by subsection (b) or the forms 
        or regulations prescribed thereunder) as would have 
        been required to be furnished under section 6056 
        (relating to annual reports by private foundations) as 
        such section 6056 was in effect on January 1, 1979, and
          (2) the foundation managers shall furnish copies of 
        the annual return under this section to such State 
        officials, at such times, and under such conditions, as 
        the Secretary may by regulations prescribe.
Nothing in paragraph (1) shall require the inclusion of the 
name and address of any recipient (other than a disqualified 
person within the meaning of section 4946) of 1 or more 
charitable gifts or grants made by the foundation to such 
recipient as an indigent or needy person if the aggregate of 
such gifts or grants made by the foundation to such recipient 
during the year does not exceed $1,000.
  (d) Section to apply to nonexempt charitable trusts and 
nonexempt private foundations.--The following organizations 
shall comply with the requirements of this section in the same 
manner as organizations described in section 501(c)(3) which 
are exempt from tax under section 501(a):
          (1) Nonexempt charitable trusts.--A trust described 
        in section 4947(a)(1) (relating to nonexempt charitable 
        trusts).
          (2) Nonexempt private foundations.--A private 
        foundation which is not exempt from tax under section 
        501(a).
  (e) Special rules relating to lobbying activities.--
          (1) Reporting requirements.--
                  (A) In general.--If this subsection applies 
                to an organization for any taxable year, such 
                organization--
                          (i) shall include on any return 
                        required to be filed under subsection 
                        (a) for such year information setting 
                        forth the total expenditures of the 
                        organization to which section 162(e)(1) 
                        applies and the total amount of the 
                        dues or other similar amounts paid to 
                        the organization to which such 
                        expenditures are allocable, and
                          (ii) except as provided in paragraphs 
                        (2)(A)(i) and (3), shall, at the time 
                        of assessment or payment of such dues 
                        or other similar amounts, provide 
                        notice to each person making such 
                        payment which contains a reasonable 
                        estimate of the portion of such dues or 
                        other similar amounts to which such 
                        expenditures are so allocable.
                  (B) Organizations to which subsection 
                applies.--
                          (i) In general.--This subsection 
                        shall apply to any organization which 
                        is exempt from taxation under section 
                        501 other than an organization 
                        described in section 501(c)(3).
                          (ii) Special rule for in-house 
                        expenditures.--This subsection shall 
                        not apply to the in-house expenditures 
                        (within the meaning of section 
                        162(e)(4)(B)(ii)) of an organization 
                        for a taxable year if such expenditures 
                        do not exceed $2,000. In determining 
                        whether a taxpayer exceeds the $2,000 
                        limit under this clause, there shall 
                        not be taken into account overhead 
                        costs otherwise allocable to activities 
                        described in subparagraphs (A) and (D) 
                        of section 162(e)(1).
                          (iii) Coordination with section 
                        527(f).--This subsection shall not 
                        apply to any amount on which tax is 
                        imposed by reason of section 527(f).
                  (C) Allocation.--For purposes of this 
                paragraph--
                          (i) In general.--Expenditures to 
                        which section 162(e)(1) applies shall 
                        be treated as paid out of dues or other 
                        similar amounts to the extent thereof.
                          (ii) Carryover of lobbying 
                        expenditures in excess of dues.--If 
                        expenditures to which section 162(e)(1) 
                        applies exceed the dues or other 
                        similar amounts for any taxable year, 
                        such excess shall be treated as 
                        expenditures to which section 162(e)(1) 
                        applies which are paid or incurred by 
                        the organization during the following 
                        taxable year.
          (2) Tax imposed where organization does not notify.--
                  (A) In general.--If an organization--
                          (i) elects not to provide the notices 
                        described in paragraph (1)(A) for any 
                        taxable year, or
                          (ii) fails to include in such notices 
                        the amount allocable to expenditures to 
                        which section 162(e)(1) applies 
                        (determined on the basis of actual 
                        amounts rather than the reasonable 
                        estimates under paragraph (1)(A)(ii)),
                then there is hereby imposed on such 
                organization for such taxable year a tax in an 
                amount equal to the product of the highest rate 
                of tax imposed by section 11 for the taxable 
                year and the aggregate amount not included in 
                such notices by reason of such election or 
                failure.
                  (B) Waiver where future adjustments made.--
                The Secretary may waive the tax imposed by 
                subparagraph (A)(ii) for any taxable year if 
                the organization agrees to adjust its estimates 
                under paragraph (1)(A)(ii) for the following 
                taxable year to correct any failures.
                  (C) Tax treated as income tax.--For purposes 
                of this title, the tax imposed by subparagraph 
                (A) shall be treated in the same manner as a 
                tax imposed by chapter 1 (relating to income 
                taxes).
          (3) Exception where dues generally nondeductible.--
        Paragraph (1)(A) shall not apply to an organization 
        which establishes to the satisfaction of the Secretary 
        that substantially all of the dues or other similar 
        amounts paid by persons to such organization are not 
        deductible without regard to section 162(e).
  (f) Certain organizations described in section 501(c)(4).--
Every organization described in section 501(c)(4) which is 
subject to the requirements of subsection (a) shall include on 
the return required under subsection (a)--
          (1) the information referred to in paragraphs (11), 
        (12) and (13) of subsection (b) with respect to such 
        organization, and
          (2) in the case of the first such return filed by 
        such an organization after submitting a notice to the 
        Secretary under section 506(a), such information as the 
        Secretary shall by regulation require in support of the 
        organization's treatment as an organization described 
        in section 501(c)(4).
  (g) Returns required by political organizations.--
          (1) In general.--This section shall apply to a 
        political organization (as defined by section 
        527(e)(1)) which has gross receipts of $25,000 or more 
        for the taxable year. In the case of a political 
        organization which is a qualified State or local 
        political organization (as defined in section 
        527(e)(5)), the preceding sentence shall be applied by 
        substituting ``$100,000'' for ``$25,000''.
          (2) Annual returns.--Political organizations 
        described in paragraph (1) shall file an annual 
        return--
                  (A) containing the information required, and 
                complying with the other requirements, under 
                subsection (a)(1) for organizations exempt from 
                taxation under section 501(a), with such 
                modifications as the Secretary considers 
                appropriate to require only information which 
                is necessary for the purposes of carrying out 
                section 527, and
                  (B) containing such other information as the 
                Secretary deems necessary to carry out the 
                provisions of this subsection.
          (3) Mandatory exceptions from filing.--Paragraph (2) 
        shall not apply to an organization--
                  (A) which is a State or local committee of a 
                political party, or political committee of a 
                State or local candidate,
                  (B) which is a caucus or association of State 
                or local officials,
                  (C) which is an authorized committee (as 
                defined in section 301(6) of the Federal 
                Election Campaign Act of 1971) of a candidate 
                for Federal office,
                  (D) which is a national committee (as defined 
                in section 301(14) of the Federal Election 
                Campaign Act of 1971) of a political party,
                  (E) which is a United States House of 
                Representatives or United States Senate 
                campaign committee of a political party 
                committee,
                  (F) which is required to report under the 
                Federal Election Campaign Act of 1971 as a 
                political committee (as defined in section 
                301(4) of such Act), or
                  (G) to which section 527 applies for the 
                taxable year solely by reason of subsection 
                (f)(1) of such section.
          (4) Discretionary exception.--The Secretary may 
        relieve any organization required under paragraph (2) 
        to file an information return from filing such a return 
        if the Secretary determines that such filing is not 
        necessary to the efficient administration of the 
        internal revenue laws.
  (h) Controlling organizations.--Each controlling organization 
(within the meaning of section 512(b)(13)) which is subject to 
the requirements of subsection (a) shall include on the return 
required under subsection (a)--
          (1) any interest, annuities, royalties, or rents 
        received from each controlled entity (within the 
        meaning of section 512(b)(13)),
          (2) any loans made to each such controlled entity, 
        and
          (3) any transfers of funds between such controlling 
        organization and each such controlled entity.
  (i) Additional notification requirements.--Any organization 
the gross receipts of which in any taxable year result in such 
organization being referred to in subsection (a)(3)(A)(ii) or 
(a)(3)(B)--
          (1) shall furnish annually, in electronic form, and 
        at such time and in such manner as the Secretary may by 
        regulations prescribe, information setting forth--
                  (A) the legal name of the organization,
                  (B) any name under which such organization 
                operates or does business,
                  (C) the organization's mailing address and 
                Internet web site address (if any),
                  (D) the organization's taxpayer 
                identification number,
                  (E) the name and address of a principal 
                officer, and
                  (F) evidence of the continuing basis for the 
                organization's exemption from the filing 
                requirements under subsection (a)(1), and
          (2) upon the termination of the existence of the 
        organization, shall furnish notice of such termination.
  (j) Loss of exempt status for failure to file return or 
notice.--
          (1) In general.--[If an organization]
                  (A) Notice._If an organization described in 
                subsection (a)(1) or (i) fails to file the 
                annual return or notice required under either 
                subsection for 2 consecutive years, the 
                Secretary shall notify the organization--
                          (i) that the Internal Revenue Service 
                        has no record of such a return or 
                        notice from such organization for 2 
                        consecutive years, and 
                          (ii) about the revocation that will 
                        occur under subparagraph (B) if the 
                        organization fails to file such a 
                        return or notice by the due date for 
                        the next such return or notice required 
                        to be filed. 
        The notification under the preceding sentence shall 
        include information about how to comply with the filing 
        requirements under subsections (a)(1) and (i).
                  (B) Revocation._If an organization  described 
                in subsection (a)(1) or (i) fails to file an 
                annual return or notice required under either 
                subsection for 3 consecutive years, such 
                organization's status as an organization exempt 
                from tax under section 501(a) shall be 
                considered revoked on and after the date set by 
                the Secretary for the filing of the third 
                annual return or notice. The Secretary shall 
                publish and maintain a list of any organization 
                the status of which is so revoked.
          (2) Application necessary for reinstatement.--Any 
        organization the tax-exempt status of which is revoked 
        under paragraph (1) must apply in order to obtain 
        reinstatement of such status regardless of whether such 
        organization was originally required to make such an 
        application.
          (3) Retroactive reinstatement if reasonable cause 
        shown for failure.--If, upon application for 
        reinstatement of status as an organization exempt from 
        tax under section 501(a), an organization described in 
        paragraph (1) can show to the satisfaction of the 
        Secretary evidence of reasonable cause for the failure 
        described in such paragraph, the organization's exempt 
        status may, in the discretion of the Secretary, be 
        reinstated effective from the date of the revocation 
        under such paragraph.
  (k) Additional provisions relating to sponsoring 
organizations.--Every organization described in section 
4966(d)(1) shall, on the return required under subsection (a) 
for the taxable year--
          (1) list the total number of donor advised funds (as 
        defined in section 4966(d)(2)) it owns at the end of 
        such taxable year,
          (2) indicate the aggregate value of assets held in 
        such funds at the end of such taxable year, and
          (3) indicate the aggregate contributions to and 
        grants made from such funds during such taxable year.
  (l) Additional provisions relating to supporting 
organizations.--Every organization described in section 
509(a)(3) shall, on the return required under subsection (a)--
          (1) list the supported organizations (as defined in 
        section 509(f)(3)) with respect to which such 
        organization provides support,
          (2) indicate whether the organization meets the 
        requirements of clause (i), (ii), or (iii) of section 
        509(a)(3)(B), and
          (3) certify that the organization meets the 
        requirements of section 509(a)(3)(C).
  (m) Additional information required from CO-OP insurers.--An 
organization described in section 501(c)(29) shall include on 
the return required under subsection (a) the following 
information:
          (1) The amount of the reserves required by each State 
        in which the organization is licensed to issue 
        qualified health plans.
          (2) The amount of reserves on hand.
  (n) Mandatory Electronic Filing.--Any organization required 
to file a return under this section shall file such return in 
electronic form.
  [(n)] (o) Cross references.--For provisions relating to 
statements, etc., regarding exempt status of organizations, see 
section 6001.
  For reporting requirements as to certain liquidations, 
dissolutions, terminations, and contractions, see section 
6043(b). For provisions relating to penalties for failure to 
file a return required by this section, see section 6652(c).
  For provisions relating to information required in connection 
with certain plans of deferred compensation, see section 6058.

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PART IV--SIGNING AND VERIFYING OF RETURNS AND OTHER DOCUMENTS

           *       *       *       *       *       *       *


SEC. 6061. SIGNING OF RETURNS AND OTHER DOCUMENTS.

  (a) General rule.--Except as otherwise provided by subsection 
(b) and sections 6062 and 6063, any return, statement, or other 
document required to be made under any provision of the 
internal revenue laws or regulations shall be signed in 
accordance with forms or regulations prescribed by the 
Secretary.
  (b) Electronic signatures.--
          (1) In general.--The Secretary shall develop 
        procedures for the acceptance of signatures in digital 
        or other electronic form. Until such time as such 
        procedures are in place, the Secretary may--
                  (A) waive the requirement of a signature for; 
                or
                  (B) provide for alternative methods of 
                signing or subscribing,
        a particular type or class of return, declaration, 
        statement, or other document required or permitted to 
        be made or written under internal revenue laws and 
        regulations.
          (2) Treatment of alternative methods.--
        Notwithstanding any other provision of law, any return, 
        declaration, statement, or other document filed and 
        verified, signed, or subscribed under any method 
        adopted under paragraph (1)(B) shall be treated for all 
        purposes (both civil and criminal, including penalties 
        for perjury) in the same manner as though signed or 
        subscribed.
          [(3) Published guidance.--The Secretary shall publish 
        guidance as appropriate to define and implement any 
        waiver of the signature requirements or any method 
        adopted under paragraph (1).]
          (3) Published guidance.--
                  (A) In general.--The Secretary shall publish 
                guidance as appropriate to define and implement 
                any waiver of the signature requirements or any 
                method adopted under paragraph (1).
                  (B) Electronic signatures for disclosure 
                authorizations to, and other authorizations of, 
                practitioners.--Not later than 6 months after 
                the date of the enactment of this subparagraph, 
                the Secretary shall publish guidance to 
                establish uniform standards and procedures for 
                the acceptance of taxpayers' signatures 
                appearing in electronic form with respect to 
                any request for disclosure of a taxpayer's 
                return or return information under section 
                6103(c) to a practitioner or any power of 
                attorney granted by a taxpayer to a 
                practitioner.
                  (C) Practitioner.--For purposes of 
                subparagraph (B), the term ``practitioner'' 
                means any individual in good standing who is 
                regulated under section 330 of title 31, United 
                States Code.

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Subchapter B--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN 
                    INFORMATION.

  (a) General rule.--Returns and return information shall be 
confidential, and except as authorized by this title--
          (1) no officer or employee of the United States,
          (2) no officer or employee of any State, any local 
        law enforcement agency receiving information under 
        subsection (i)(1)(C) or (7)(A), any local child support 
        enforcement agency, or any local agency administering a 
        program listed in subsection (l)(7)(D) who has or had 
        access to returns or return information under this 
        section or section 6104(c), and
          (3) no other person (or officer or employee thereof) 
        who has or had access to returns or return information 
        under subsection (c), subsection (e)(1)(D)(iii), 
        [subsection (k)(10)] paragraph (10), (13), or (14) of 
        subsection (k), paragraph (6), (10), (12), (16), (19), 
        (20), or (21) of subsection (l), paragraph (2) or 
        (4)(B) of subsection (m), or subsection (n),
shall disclose any return or return information obtained by him 
in any manner in connection with his service as such an officer 
or an employee or otherwise or under the provisions of this 
section. For purposes of this subsection, the term ``officer or 
employee'' includes a former officer or employee.
  (b) Definitions.--For purposes of this section--
          (1) Return.--The term ``return'' means any tax or 
        information return, declaration of estimated tax, or 
        claim for refund required by, or provided for or 
        permitted under, the provisions of this title which is 
        filed with the Secretary by, on behalf of, or with 
        respect to any person, and any amendment or supplement 
        thereto, including supporting schedules, attachments, 
        or lists which are supplemental to, or part of, the 
        return so filed.
          (2) Return information.--The term ``return 
        information'' means--
                  (A) a taxpayer's identity, the nature, 
                source, or amount of his income, payments, 
                receipts, deductions, exemptions, credits, 
                assets, liabilities, net worth, tax liability, 
                tax withheld, deficiencies, overassessments, or 
                tax payments, whether the taxpayer's return 
                was, is being, or will be examined or subject 
                to other investigation or processing, or any 
                other data, received by, recorded by, prepared 
                by, furnished to, or collected by the Secretary 
                with respect to a return or with respect to the 
                determination of the existence, or possible 
                existence, of liability (or the amount thereof) 
                of any person under this title for any tax, 
                penalty, interest, fine, forfeiture, or other 
                imposition, or offense,
                  (B) any part of any written determination or 
                any background file document relating to such 
                written determination (as such terms are 
                defined in section 6110(b)) which is not open 
                to public inspection under section 6110,
                  (C) any advance pricing agreement entered 
                into by a taxpayer and the Secretary and any 
                background information related to such 
                agreement or any application for an advance 
                pricing agreement, and
                  (D) any agreement under section 7121, and any 
                similar agreement, and any background 
                information related to such an agreement or 
                request for such an agreement,
        but such term does not include data in a form which 
        cannot be associated with, or otherwise identify, 
        directly or indirectly, a particular taxpayer. Nothing 
        in the preceding sentence, or in any other provision of 
        law, shall be construed to require the disclosure of 
        standards used or to be used for the selection of 
        returns for examination, or data used or to be used for 
        determining such standards, if the Secretary determines 
        that such disclosure will seriously impair assessment, 
        collection, or enforcement under the internal revenue 
        laws.
          (3) Taxpayer return information.--The term ``taxpayer 
        return information'' means return information as 
        defined in paragraph (2) which is filed with, or 
        furnished to, the Secretary by or on behalf of the 
        taxpayer to whom such return information relates.
          (4) Tax administration.--The term ``tax 
        administration''--
                  (A) means--
                          (i) the administration, management, 
                        conduct, direction, and supervision of 
                        the execution and application of the 
                        internal revenue laws or related 
                        statutes (or equivalent laws and 
                        statutes of a State) and tax 
                        conventions to which the United States 
                        is a party, and
                          (ii) the development and formulation 
                        of Federal tax policy relating to 
                        existing or proposed internal revenue 
                        laws, related statutes, and tax 
                        conventions, and
                  (B) includes assessment, collection, 
                enforcement, litigation, publication, and 
                statistical gathering functions under such 
                laws, statutes, or conventions.
          (5) State.--
                  (A) In general.--The term ``State'' means--
                          (i) any of the 50 States, the 
                        District of Columbia, the Commonwealth 
                        of Puerto Rico, the Virgin Islands, 
                        Guam, American Samoa, and the 
                        Commonwealth of the Northern Mariana 
                        Islands,
                          (ii) for purposes of subsections 
                        (a)(2), (b)(4), (d)(1), (h)(4), and 
                        (p), any municipality--
                                  (I) with a population in 
                                excess of 250,000 (as 
                                determined under the most 
                                recent decennial United States 
                                census data available),
                                  (II) which imposes a tax on 
                                income or wages, and
                                  (III) with which the 
                                Secretary (in his sole 
                                discretion) has entered into an 
                                agreement regarding disclosure, 
                                and
                          (iii) for purposes of subsections 
                        (a)(2), (b)(4), (d)(1), (h)(4), and 
                        (p), any governmental entity--
                                  (I) which is formed and 
                                operated by a qualified group 
                                of municipalities, and
                                  (II) with which the Secretary 
                                (in his sole discretion) has 
                                entered into an agreement 
                                regarding disclosure.
                  (B) Regional income tax agencies.--For 
                purposes of subparagraph (A)(iii)--
                          (i) Qualified group of 
                        municipalities.--The term ``qualified 
                        group of municipalities'' means, with 
                        respect to any governmental entity, 2 
                        or more municipalities--
                                  (I) each of which imposes a 
                                tax on income or wages,
                                  (II) each of which, under the 
                                authority of a State statute, 
                                administers the laws relating 
                                to the imposition of such taxes 
                                through such entity, and
                                  (III) which collectively have 
                                a population in excess of 
                                250,000 (as determined under 
                                the most recent decennial 
                                United States census data 
                                available).
                          (ii) References to State law, etc..--
                        For purposes of applying subparagraph 
                        (A)(iii) to the subsections referred to 
                        in such subparagraph, any reference in 
                        such subsections to State law, 
                        proceedings, or tax returns shall be 
                        treated as references to the law, 
                        proceedings, or tax returns, as the 
                        case may be, of the municipalities 
                        which form and operate the governmental 
                        entity referred to in such 
                        subparagraph.
                          (iii) Disclosure to contractors and 
                        other agents.--Notwithstanding any 
                        other provision of this section, no 
                        return or return information shall be 
                        disclosed to any contractor or other 
                        agent of a governmental entity referred 
                        to in subparagraph (A)(iii) unless such 
                        entity, to the satisfaction of the 
                        Secretary--
                                  (I) has requirements in 
                                effect which require each such 
                                contractor or other agent which 
                                would have access to returns or 
                                return information to provide 
                                safeguards (within the meaning 
                                of subsection (p)(4)) to 
                                protect the confidentiality of 
                                such returns or return 
                                information,
                                  (II) agrees to conduct an on-
                                site review every 3 years (or a 
                                mid-point review in the case of 
                                contracts or agreements of less 
                                than 3 years in duration) of 
                                each contractor or other agent 
                                to determine compliance with 
                                such requirements,
                                  (III) submits the findings of 
                                the most recent review 
                                conducted under subclause (II) 
                                to the Secretary as part of the 
                                report required by subsection 
                                (p)(4)(E), and
                                  (IV) certifies to the 
                                Secretary for the most recent 
                                annual period that such 
                                contractor or other agent is in 
                                compliance with all such 
                                requirements.
                The certification required by subclause (IV) 
                shall include the name and address of each 
                contractor and other agent, a description of 
                the contract or agreement with such contractor 
                or other agent, and the duration of such 
                contract or agreement. The requirements of this 
                clause shall not apply to disclosures pursuant 
                to subsection (n) for purposes of Federal tax 
                administration and a rule similar to the rule 
                of subsection (p)(8)(B) shall apply for 
                purposes of this clause.
          (6) Taxpayer identity.--The term ``taxpayer 
        identity'' means the name of a person with respect to 
        whom a return is filed, his mailing address, his 
        taxpayer identifying number (as described in section 
        6109), or a combination thereof.
          (7) Inspection.--The terms ``inspected'' and 
        ``inspection'' mean any examination of a return or 
        return information.
          (8) Disclosure.--The term ``disclosure'' means the 
        making known to any person in any manner whatever a 
        return or return information.
          (9) Federal agency.--The term ``Federal agency'' 
        means an agency within the meaning of section 551(1) of 
        title 5, United States Code.
          (10) Chief executive officer.--The term ``chief 
        executive officer'' means, with respect to any 
        municipality, any elected official and the chief 
        official (even if not elected) of such municipality.
          (11) Terrorist incident, threat, or activity.--The 
        term ``terrorist incident, threat, or activity'' means 
        an incident, threat, or activity involving an act of 
        domestic terrorism (as defined in section 2331(5) of 
        title 18, United States Code) or international 
        terrorism (as defined in section 2331(1) of such 
        title).
  (c) Disclosure of returns and return information to designee 
of taxpayer.--The Secretary may, subject to such requirements 
and conditions as he may prescribe by regulations, disclose the 
return of any taxpayer, or return information with respect to 
such taxpayer, to such person or persons as the taxpayer may 
designate in a request for or consent to such disclosure, or to 
any other person at the taxpayer's request to the extent 
necessary to comply with a request for information or 
assistance made by the taxpayer to such other person. However, 
return information shall not be disclosed to such person or 
persons if the Secretary determines that such disclosure would 
seriously impair Federal tax administration. Persons designated 
by the taxpayer under this subsection to receive return 
information shall not use the information for any purpose other 
than the express purpose for which consent was granted and 
shall not disclose return information to any other person 
without the express permission of, or request by, the taxpayer.
  (d) Disclosure to State tax officials and State and local law 
enforcement agencies.--
          (1) In general.--Returns and return information with 
        respect to taxes imposed by chapters 1, 2, 6, 11, 12, 
        21, 23, 24, 31, 32, 44, 51, and 52 and subchapter D of 
        chapter 36 shall be open to inspection by, or 
        disclosure to, any State agency, body, or commission, 
        or its legal representative, which is charged under the 
        laws of such State with responsibility for the 
        administration of State tax laws for the purpose of, 
        and only to the extent necessary in, the administration 
        of such laws, including any procedures with respect to 
        locating any person who may be entitled to a refund. 
        Such inspection shall be permitted, or such disclosure 
        made, only upon written request by the head of such 
        agency, body, or commission, and only to the 
        representatives of such agency, body, or commission 
        designated in such written request as the individuals 
        who are to inspect or to receive the returns or return 
        information on behalf of such agency, body, or 
        commission. Such representatives shall not include any 
        individual who is the chief executive officer of such 
        State or who is neither an employee or legal 
        representative of such agency, body, or commission nor 
        a person described in subsection (n). However, such 
        return information shall not be disclosed to the extent 
        that the Secretary determines that such disclosure 
        would identify a confidential informant or seriously 
        impair any civil or criminal tax investigation.
          (2) Disclosure to State audit agencies.--
                  (A) In general.--Any returns or return 
                information obtained under paragraph (1) by any 
                State agency, body, or commission may be open 
                to inspection by, or disclosure to, officers 
                and employees of the State audit agency for the 
                purpose of, and only to the extent necessary 
                in, making an audit of the State agency, body, 
                or commission referred to in paragraph (1).
                  (B) State audit agency.--For purposes of 
                subparagraph (A), the term ``State audit 
                agency'' means any State agency, body, or 
                commission which is charged under the laws of 
                the State with the responsibility of auditing 
                State revenues and programs.
          (3) Exception for reimbursement under section 7624.--
        Nothing in this section shall be construed to prevent 
        the Secretary from disclosing to any State or local law 
        enforcement agency which may receive a payment under 
        section 7624 the amount of the recovered taxes with 
        respect to which such a payment may be made.
          (4) Availability and use of death information.--
                  (A) In general.--No returns or return 
                information may be disclosed under paragraph 
                (1) to any agency, body, or commission of any 
                State (or any legal representative thereof) 
                during any period during which a contract 
                meeting the requirements of subparagraph (B) is 
                not in effect between such State and the 
                Secretary of Health and Human Services.
                  (B) Contractual requirements.--A contract 
                meets the requirements of this subparagraph 
                if--
                          (i) such contract requires the State 
                        to furnish the Secretary of Health and 
                        Human Services information concerning 
                        individuals with respect to whom death 
                        certificates (or equivalent documents 
                        maintained by the State or any 
                        subdivision thereof) have been 
                        officially filed with it, and
                          (ii) such contract does not include 
                        any restriction on the use of 
                        information obtained by such Secretary 
                        pursuant to such contract, except that 
                        such contract may provide that such 
                        information is only to be used by the 
                        Secretary (or any other Federal agency) 
                        for purposes of ensuring that Federal 
                        benefits or other payments are not 
                        erroneously paid to deceased 
                        individuals.
                Any information obtained by the Secretary of 
                Health and Human Services under such a contract 
                shall be exempt from disclosure under section 
                552 of title 5, United States Code, and from 
                the requirements of section 552a of such title 
                5.
                  (C) Special exception.--The provisions of 
                subparagraph (A) shall not apply to any State 
                which on July 1, 1993, was not, pursuant to a 
                contract, furnishing the Secretary of Health 
                and Human Services information concerning 
                individuals with respect to whom death 
                certificates (or equivalent documents 
                maintained by the State or any subdivision 
                thereof) have been officially filed with it.
          (5) Disclosure for combined employment tax 
        reporting.--
                  (A) In general.--The Secretary may disclose 
                taxpayer identity information and signatures to 
                any agency, body, or commission of any State 
                for the purpose of carrying out with such 
                agency, body, or commission a combined Federal 
                and State employment tax reporting program 
                approved by the Secretary. Subsections (a)(2) 
                and (p)(4) and sections 7213 and 7213A shall 
                not apply with respect to disclosures or 
                inspections made pursuant to this paragraph.
                  (B) Termination.--The Secretary may not make 
                any disclosure under this paragraph after 
                December 31, 2007.
          (6) Limitation on disclosure regarding regional 
        income tax agencies treated as States.--For purposes of 
        paragraph (1), inspection by or disclosure to an entity 
        described in subsection (b)(5)(A)(iii) shall be for the 
        purpose of, and only to the extent necessary in, the 
        administration of the laws of the member municipalities 
        in such entity relating to the imposition of a tax on 
        income or wages. Such entity may not redisclose any 
        return or return information received pursuant to 
        paragraph (1) to any such member municipality.
  (e) Disclosure to persons having material interest.--
          (1) In general.--The return of a person shall, upon 
        written request, be open to inspection by or disclosure 
        to--
                  (A) in the case of the return of an 
                individual--
                          (i) that individual,
                          (ii) the spouse of that individual if 
                        the individual and such spouse have 
                        signified their consent to consider a 
                        gift reported on such return as made 
                        one-half by him and one-half by the 
                        spouse pursuant to the provisions of 
                        section 2513; or
                          (iii) the child of that individual 
                        (or such child's legal representative) 
                        to the extent necessary to comply with 
                        the provisions of section 1(g);
                  (B) in the case of an income tax return filed 
                jointly, either of the individuals with respect 
                to whom the return is filed;
                  (C) in the case of the return of a 
                partnership, any person who was a member of 
                such partnership during any part of the period 
                covered by the return;
                  (D) in the case of the return of a 
                corporation or a subsidiary thereof--
                          (i) any person designated by 
                        resolution of its board of directors or 
                        other similar governing body,
                          (ii) any officer or employee of such 
                        corporation upon written request signed 
                        by any principal officer and attested 
                        to by the secretary or other officer,
                          (iii) any bona fide shareholder of 
                        record owning 1 percent or more of the 
                        outstanding stock of such corporation,
                          (iv) if the corporation was an S 
                        corporation, any person who was a 
                        shareholder during any part of the 
                        period covered by such return during 
                        which an election under section 1362(a) 
                        was in effect, or
                          (v) if the corporation has been 
                        dissolved, any person authorized by 
                        applicable State law to act for the 
                        corporation or any person who the 
                        Secretary finds to have a material 
                        interest which will be affected by 
                        information contained therein;
                  (E) in the case of the return of an estate--
                          (i) the administrator, executor, or 
                        trustee of such estate, and
                          (ii) any heir at law, next of kin, or 
                        beneficiary under the will, of the 
                        decedent, but only if the Secretary 
                        finds that such heir at law, next of 
                        kin, or beneficiary has a material 
                        interest which will be affected by 
                        information contained therein; and
                  (F) in the case of the return of a trust--
                          (i) the trustee or trustees, jointly 
                        or separately, and
                          (ii) any beneficiary of such trust, 
                        but only if the Secretary finds that 
                        such beneficiary has a material 
                        interest which will be affected by 
                        information contained therein.
          (2) Incompetency.--If an individual described in 
        paragraph (1) is legally incompetent, the applicable 
        return shall, upon written request, be open to 
        inspection by or disclosure to the committee, trustee, 
        or guardian of his estate.
          (3) Deceased individuals.--The return of a decedent 
        shall, upon written request, be open to inspection by 
        or disclosure to--
                  (A) the administrator, executor, or trustee 
                of his estate, and
                  (B) any heir at law, next of kin, or 
                beneficiary under the will, of such decedent, 
                or a donee of property, but only if the 
                Secretary finds that such heir at law, next of 
                kin, beneficiary, or donee has a material 
                interest which will be affected by information 
                contained therein.
          (4) Title 11 cases and receivership proceedings.--
        If--
                  (A) there is a trustee in a title 11 case in 
                which the debtor is the person with respect to 
                whom the return is filed, or
                  (B) substantially all of the property of the 
                person with respect to whom the return is filed 
                is in the hands of a receiver,
        such return or returns for prior years of such person 
        shall, upon written request, be open to inspection by 
        or disclosure to such trustee or receiver, but only if 
        the Secretary finds that such trustee or receiver, in 
        his fiduciary capacity, has a material interest which 
        will be affected by information contained therein.
          (5) Individual's title 11 case.--
                  (A) In general.--In any case to which section 
                1398 applies (determined without regard to 
                section 1398(b)(1)), any return of the debtor 
                for the taxable year in which the case 
                commenced or any preceding taxable year shall, 
                upon written request, be open to inspection by 
                or disclosure to the trustee in such case.
                  (B) Return of estate available to debtor.--
                Any return of an estate in a case to which 
                section 1398 applies shall, upon written 
                request, be open to inspection by or disclosure 
                to the debtor in such case.
                  (C) Special rule for involuntary cases.--In 
                an involuntary case, no disclosure shall be 
                made under subparagraph (A) until the order for 
                relief has been entered by the court having 
                jurisdiction of such case unless such court 
                finds that such disclosure is appropriate for 
                purposes of determining whether an order for 
                relief should be entered.
          (6) Attorney in fact.--Any return to which this 
        subsection applies shall, upon written request, also be 
        open to inspection by or disclosure to the attorney in 
        fact duly authorized in writing by any of the persons 
        described in paragraph (1), (2), (3), (4), (5), (8), or 
        (9) to inspect the return or receive the information on 
        his behalf, subject to the conditions provided in such 
        paragraphs.
          (7) Return information.--Return information with 
        respect to any taxpayer may be open to inspection by or 
        disclosure to any person authorized by this subsection 
        to inspect any return of such taxpayer if the Secretary 
        determines that such disclosure would not seriously 
        impair Federal tax administration.
          (8) Disclosure of collection activities with respect 
        to joint return.--If any deficiency of tax with respect 
        to a joint return is assessed and the individuals 
        filing such return are no longer married or no longer 
        reside in the same household, upon request in writing 
        by either of such individuals, the Secretary shall 
        disclose in writing to the individual making the 
        request whether the Secretary has attempted to collect 
        such deficiency from such other individual, the general 
        nature of such collection activities, and the amount 
        collected. The preceding sentence shall not apply to 
        any deficiency which may not be collected by reason of 
        section 6502.
          (9) Disclosure of certain information where more than 
        1 person subject to penalty under section 6672.--If the 
        Secretary determines that a person is liable for a 
        penalty under section 6672(a) with respect to any 
        failure, upon request in writing of such person, the 
        Secretary shall disclose in writing to such person--
                  (A) the name of any other person whom the 
                Secretary has determined to be liable for such 
                penalty with respect to such failure, and
                  (B) whether the Secretary has attempted to 
                collect such penalty from such other person, 
                the general nature of such collection 
                activities, and the amount collected.
          (10) Limitation on certain disclosures under this 
        subsection.--In the case of an inspection or disclosure 
        under this subsection relating to the return of a 
        partnership, S corporation, trust, or an estate, the 
        information inspected or disclosed shall not include 
        any supporting schedule, attachment, or list which 
        includes the taxpayer identity information of a person 
        other than the entity making the return or the person 
        conducting the inspection or to whom the disclosure is 
        made.
          (11) Disclosure of information regarding status of 
        investigation of violation of this section.--In the 
        case of a person who provides to the Secretary 
        information indicating a violation of section 7213, 
        7213A, or 7214 with respect to any return or return 
        information of such person, the Secretary may disclose 
        to such person (or such person's designee)--
                  (A) whether an investigation based on the 
                person's provision of such information has been 
                initiated and whether it is open or closed,
                  (B) whether any such investigation 
                substantiated such a violation by any 
                individual, and
                  (C) whether any action has been taken with 
                respect to such individual (including whether a 
                referral has been made for prosecution of such 
                individual).
  (f) Disclosure to Committees of Congress.--
          (1) Committee on Ways and Means, Committee on 
        Finance, and Joint Committee on Taxation.--Upon written 
        request from the chairman of the Committee on Ways and 
        Means of the House of Representatives, the chairman of 
        the Committee on Finance of the Senate, or the chairman 
        of the Joint Committee on Taxation, the Secretary shall 
        furnish such committee with any return or return 
        information specified in such request, except that any 
        return or return information which can be associated 
        with, or otherwise identify, directly or indirectly, a 
        particular taxpayer shall be furnished to such 
        committee only when sitting in closed executive session 
        unless such taxpayer otherwise consents in writing to 
        such disclosure.
          (2) Chief of Staff of Joint Committee on Taxation.--
        Upon written request by the Chief of Staff of the Joint 
        Committee on Taxation, the Secretary shall furnish him 
        with any return or return information specified in such 
        request. Such Chief of Staff may submit such return or 
        return information to any committee described in 
        paragraph (1), except that any return or return 
        information which can be associated with, or otherwise 
        identify, directly or indirectly, a particular taxpayer 
        shall be furnished to such committee only when sitting 
        in closed executive session unless such taxpayer 
        otherwise consents in writing to such disclosure.
          (3) Other committees.--Pursuant to an action by, and 
        upon written request by the chairman of, a committee of 
        the Senate or the House of Representatives (other than 
        a committee specified in paragraph (1)) specially 
        authorized to inspect any return or return information 
        by a resolution of the Senate or the House of 
        Representatives or, in the case of a joint committee 
        (other than the joint committee specified in paragraph 
        (1)) by concurrent resolution, the Secretary shall 
        furnish such committee, or a duly authorized and 
        designated subcommittee thereof, sitting in closed 
        executive session, with any return or return 
        information which such resolution authorizes the 
        committee or subcommittee to inspect. Any resolution 
        described in this paragraph shall specify the purpose 
        for which the return or return information is to be 
        furnished and that such information cannot reasonably 
        be obtained from any other source.
          (4) Agents of committees and submission of 
        information to Senate or House of Representatives.--
                  (A) Committees described in paragraph (1).--
                Any committee described in paragraph (1) or the 
                Chief of Staff of the Joint Committee on 
                Taxation shall have the authority, acting 
                directly, or by or through such examiners or 
                agents as the chairman of such committee or 
                such chief of staff may designate or appoint, 
                to inspect returns and return information at 
                such time and in such manner as may be 
                determined by such chairman or chief of staff. 
                Any return or return information obtained by or 
                on behalf of such committee pursuant to the 
                provisions of this subsection may be submitted 
                by the committee to the Senate or the House of 
                Representatives, or to both. The Joint 
                Committee on Taxation may also submit such 
                return or return information to any other 
                committee described in paragraph (1), except 
                that any return or return information which can 
                be associated with, or otherwise identify, 
                directly or indirectly, a particular taxpayer 
                shall be furnished to such committee only when 
                sitting in closed executive session unless such 
                taxpayer otherwise consents in writing to such 
                disclosure.
                  (B) Other committees.--Any committee or 
                subcommittee described in paragraph (3) shall 
                have the right, acting directly, or by or 
                through no more than four examiners or agents, 
                designated or appointed in writing in equal 
                numbers by the chairman and ranking minority 
                member of such committee or subcommittee, to 
                inspect returns and return information at such 
                time and in such manner as may be determined by 
                such chairman and ranking minority member. Any 
                return or return information obtained by or on 
                behalf of such committee or subcommittee 
                pursuant to the provisions of this subsection 
                may be submitted by the committee to the Senate 
                or the House of Representatives, or to both, 
                except that any return or return information 
                which can be associated with, or otherwise 
                identify, directly or indirectly, a particular 
                taxpayer, shall be furnished to the Senate or 
                the House of Representatives only when sitting 
                in closed executive session unless such 
                taxpayer otherwise consents in writing to such 
                disclosure.
          (5) Disclosure by whistleblower.--Any person who 
        otherwise has or had access to any return or return 
        information under this section may disclose such return 
        or return information to a committee referred to in 
        paragraph (1) or any individual authorized to receive 
        or inspect information under paragraph (4)(A) if such 
        person believes such return or return information may 
        relate to possible misconduct, maladministration, or 
        taxpayer abuse.
  (g) Disclosure to President and certain other persons.--
          (1) In general.--Upon written request by the 
        President, signed by him personally, the Secretary 
        shall furnish to the President, or to such employee or 
        employees of the White House Office as the President 
        may designate by name in such request, a return or 
        return information with respect to any taxpayer named 
        in such request. Any such request shall state--
                  (A) the name and address of the taxpayer 
                whose return or return information is to be 
                disclosed,
                  (B) the kind of return or return information 
                which is to be disclosed,
                  (C) the taxable period or periods covered by 
                such return or return information, and
                  (D) the specific reason why the inspection or 
                disclosure is requested.
          (2) Disclosure of return information as to 
        Presidential appointees and certain other Federal 
        Government appointees.--The Secretary may disclose to a 
        duly authorized representative of the Executive Office 
        of the President or to the head of any Federal agency, 
        upon written request by the President or head of such 
        agency, or to the Federal Bureau of Investigation on 
        behalf of and upon written request by the President or 
        such head, return information with respect to an 
        individual who is designated as being under 
        consideration for appointment to a position in the 
        executive or judicial branch of the Federal Government. 
        Such return information shall be limited to whether 
        such individual--
                  (A) has filed returns with respect to the 
                taxes imposed under chapter 1 for not more than 
                the immediately preceding 3 years;
                  (B) has failed to pay any tax within 10 days 
                after notice and demand, or has been assessed 
                any penalty under this title for negligence, in 
                the current year or immediately preceding 3 
                years;
                  (C) has been or is under investigation for 
                possible criminal offenses under the internal 
                revenue laws and the results of any such 
                investigation; or
                  (D) has been assessed any civil penalty under 
                this title for fraud.
        Within 3 days of the receipt of any request for any 
        return information with respect to any individual under 
        this paragraph, the Secretary shall notify such 
        individual in writing that such information has been 
        requested under the provisions of this paragraph.
          (3) Restriction on disclosure.--The employees to whom 
        returns and return information are disclosed under this 
        subsection shall not disclose such returns and return 
        information to any other person except the President or 
        the head of such agency without the personal written 
        direction of the President or the head of such agency.
          (4) Restriction on disclosure to certain employees.--
        Disclosure of returns and return information under this 
        subsection shall not be made to any employee whose 
        annual rate of basic pay is less than the annual rate 
        of basic pay specified for positions subject to section 
        5316 of title 5, United States Code.
          (5) Reporting requirements.--Within 30 days after the 
        close of each calendar quarter, the President and the 
        head of any agency requesting returns and return 
        information under this subsection shall each file a 
        report with the Joint Committee on Taxation setting 
        forth the taxpayers with respect to whom such requests 
        were made during such quarter under this subsection, 
        the returns or return information involved, and the 
        reasons for such requests. The President shall not be 
        required to report on any request for returns and 
        return information pertaining to an individual who was 
        an officer or employee of the executive branch of the 
        Federal Government at the time such request was made. 
        Reports filed pursuant to this paragraph shall not be 
        disclosed unless the Joint Committee on Taxation 
        determines that disclosure thereof (including 
        identifying details) would be in the national interest. 
        Such reports shall be maintained by the Joint Committee 
        on Taxation for a period not exceeding 2 years unless, 
        within such period, the Joint Committee on Taxation 
        determines that a disclosure to the Congress is 
        necessary.
  (h) Disclosure to certain Federal officers and employees for 
purposes of tax administration, etc..--
          (1) Department of the Treasury.--Returns and return 
        information shall, without written request, be open to 
        inspection by or disclosure to officers and employees 
        of the Department of the Treasury whose official duties 
        require such inspection or disclosure for tax 
        administration purposes.
          (2) Department of Justice.--In a matter involving tax 
        administration, a return or return information shall be 
        open to inspection by or disclosure to officers and 
        employees of the Department of Justice (including 
        United States attorneys) personally and directly 
        engaged in, and solely for their use in, any proceeding 
        before a Federal grand jury or preparation for any 
        proceeding (or investigation which may result in such a 
        proceeding) before a Federal grand jury or any Federal 
        or State court, but only if--
                  (A) the taxpayer is or may be a party to the 
                proceeding, or the proceeding arose out of, or 
                in connection with, determining the taxpayer's 
                civil or criminal liability, or the collection 
                of such civil liability in respect of any tax 
                imposed under this title;
                  (B) the treatment of an item reflected on 
                such return is or may be related to the 
                resolution of an issue in the proceeding or 
                investigation; or
                  (C) such return or return information relates 
                or may relate to a transactional relationship 
                between a person who is or may be a party to 
                the proceeding and the taxpayer which affects, 
                or may affect, the resolution of an issue in 
                such proceeding or investigation.
          (3) Form of request.--In any case in which the 
        Secretary is authorized to disclose a return or return 
        information to the Department of Justice pursuant to 
        the provisions of this subsection--
                  (A) if the Secretary has referred the case to 
                the Department of Justice, or if the proceeding 
                is authorized by subchapter B of chapter 76, 
                the Secretary may make such disclosure on his 
                own motion, or
                  (B) if the Secretary receives a written 
                request from the Attorney General, the Deputy 
                Attorney General, or an Assistant Attorney 
                General for a return of, or return information 
                relating to, a person named in such request and 
                setting forth the need for the disclosure, the 
                Secretary shall disclose return or return the 
                information so requested.
          (4) Disclosure in judicial and administrative tax 
        proceedings.--A return or return information may be 
        disclosed in a Federal or State judicial or 
        administrative proceeding pertaining to tax 
        administration, but only--
                  (A) if the taxpayer is a party to the 
                proceeding, or the proceeding arose out of, or 
                in connection with, determining the taxpayer's 
                civil or criminal liability, or the collection 
                of such civil liability, in respect of any tax 
                imposed under this title;
                  (B) if the treatment of an item reflected on 
                such return is directly related to the 
                resolution of an issue in the proceeding;
                  (C) if such return or return information 
                directly relates to a transactional 
                relationship between a person who is a party to 
                the proceeding and the taxpayer which directly 
                affects the resolution of an issue in the 
                proceeding; or
                  (D) to the extent required by order of a 
                court pursuant to section 3500 of title 18, 
                United States Code, or rule 16 of the Federal 
                Rules of Criminal Procedure, such court being 
                authorized in the issuance of such order to 
                give due consideration to congressional policy 
                favoring the confidentiality of returns and 
                return information as set forth in this title.
        However, such return or return information shall not be 
        disclosed as provided in subparagraph (A), (B), or (C) 
        if the Secretary determines that such disclosure would 
        identify a confidential informant or seriously impair a 
        civil or criminal tax investigation.
          (5) Withholding of tax from social security 
        benefits.--Upon written request of the payor agency, 
        the Secretary may disclose available return information 
        from the master files of the Internal Revenue Service 
        with respect to the address and status of an individual 
        as a nonresident alien or as a citizen or resident of 
        the United States to the Social Security Administration 
        or the Railroad Retirement Board (whichever is 
        appropriate) for purposes of carrying out its 
        responsibilities for withholding tax under section 1441 
        from social security benefits (as defined in section 
        86(d)).
          (6) Internal Revenue Service Oversight Board.--
                  (A) In general.--Notwithstanding paragraph 
                (1), and except as provided in subparagraph 
                (B), no return or return information may be 
                disclosed to any member of the Oversight Board 
                described in subparagraph (A) or (D) of section 
                7802(b)(1) or to any employee or detailee of 
                such Board by reason of their service with the 
                Board. Any request for information not 
                permitted to be disclosed under the preceding 
                sentence, and any contact relating to a 
                specific taxpayer, made by any such individual 
                to an officer or employee of the Internal 
                Revenue Service shall be reported by such 
                officer or employee to the Secretary, the 
                Treasury Inspector General for Tax 
                Administration, and the Joint Committee on 
                Taxation.
                  (B) Exception for reports to the Board.--If--
                          (i) the Commissioner or the Treasury 
                        Inspector General for Tax 
                        Administration prepares any report or 
                        other matter for the Oversight Board in 
                        order to assist the Board in carrying 
                        out its duties; and
                          (ii) the Commissioner or such 
                        Inspector General determines it is 
                        necessary to include any return or 
                        return information in such report or 
                        other matter to enable the Board to 
                        carry out such duties,
                such return or return information (other than 
                information regarding taxpayer identity) may be 
                disclosed to members, employees, or detailees 
                of the Board solely for the purpose of carrying 
                out such duties.
  (i) Disclosure to Federal officers or employees for 
administration of Federal laws not relating to tax 
administration.--
          (1) Disclosure of returns and return information for 
        use in criminal investigations.--
                  (A) In general.--Except as provided in 
                paragraph (6), any return or return information 
                with respect to any specified taxable period or 
                periods shall, pursuant to and upon the grant 
                of an ex parte order by a Federal district 
                court judge or magistrate judge under 
                subparagraph (B), be open (but only to the 
                extent necessary as provided in such order) to 
                inspection by, or disclosure to, officers and 
                employees of any Federal agency who are 
                personally and directly engaged in--
                          (i) preparation for any judicial or 
                        administrative proceeding pertaining to 
                        the enforcement of a specifically 
                        designated Federal criminal statute 
                        (not involving tax administration) to 
                        which the United States or such agency 
                        is or may be a party, or pertaining to 
                        the case of a missing or exploited 
                        child,
                          (ii) any investigation which may 
                        result in such a proceeding, or
                          (iii) any Federal grand jury 
                        proceeding pertaining to enforcement of 
                        such a criminal statute to which the 
                        United States or such agency is or may 
                        be a party, or to such a case of a 
                        missing or exploited child,
                solely for the use of such officers and 
                employees in such preparation, investigation, 
                or grand jury proceeding.
                  (B) Application for order.--The Attorney 
                General, the Deputy Attorney General, the 
                Associate Attorney General, any Assistant 
                Attorney General, any United States attorney, 
                any special prosecutor appointed under section 
                593 of title 28, United States Code, or any 
                attorney in charge of a criminal division 
                organized crime strike force established 
                pursuant to section 510 of title 28, United 
                States Code, may authorize an application to a 
                Federal district court judge or magistrate 
                judge for the order referred to in subparagraph 
                (A). Upon such application, such judge or 
                magistrate judge may grant such order if he 
                determines on the basis of the facts submitted 
                by the applicant that--
                          (i) there is reasonable cause to 
                        believe, based upon information 
                        believed to be reliable, that a 
                        specific criminal act has been 
                        committed,
                          (ii) there is reasonable cause to 
                        believe that the return or return 
                        information is or may be relevant to a 
                        matter relating to the commission of 
                        such act, and
                          (iii) the return or return 
                        information is sought exclusively for 
                        use in a Federal criminal investigation 
                        or proceeding concerning such act (or 
                        any criminal investigation or 
                        proceeding, in the case of a matter 
                        relating to a missing or exploited 
                        child), and the information sought to 
                        be disclosed cannot reasonably be 
                        obtained, under the circumstances, from 
                        another source.
                  (C) Disclosure to state and local law 
                enforcement agencies in the case of matters 
                pertaining to a missing or exploited child.--
                          (i) In general.--In the case of an 
                        investigation pertaining to a missing 
                        or exploited child, the head of any 
                        Federal agency, or his designee, may 
                        disclose any return or return 
                        information obtained under subparagraph 
                        (A) to officers and employees of any 
                        State or local law enforcement agency, 
                        but only if--
                                  (I) such State or local law 
                                enforcement agency is part of a 
                                team with the Federal agency in 
                                such investigation, and
                                  (II) such information is 
                                disclosed only to such officers 
                                and employees who are 
                                personally and directly engaged 
                                in such investigation.
                          (ii) Limitation on use of 
                        information.--Information disclosed 
                        under this subparagraph shall be solely 
                        for the use of such officers and 
                        employees in locating the missing 
                        child, in a grand jury proceeding, or 
                        in any preparation for, or 
                        investigation which may result in, a 
                        judicial or administrative proceeding.
                          (iii) Missing child.--For purposes of 
                        this subparagraph, the term ``missing 
                        child'' shall have the meaning given 
                        such term by section 403 of the Missing 
                        Children's Assistance Act (42 U.S.C. 
                        5772).
                          (iv) Exploited child.--For purposes 
                        of this subparagraph, the term 
                        ``exploited child'' means a minor with 
                        respect to whom there is reason to 
                        believe that a specified offense 
                        against a minor (as defined by section 
                        111(7) of the Sex Offender Registration 
                        and Notification Act (42 U.S.C. 
                        16911(7))) 1 has or is 
                        occurring.
          (2) Disclosure of return information other than 
        taxpayer return information for use in criminal 
        investigations.--
                  (A) In general.--Except as provided in 
                paragraph (6), upon receipt by the Secretary of 
                a request which meets the requirements of 
                subparagraph (B) from the head of any Federal 
                agency or the Inspector General thereof, or, in 
                the case of the Department of Justice, the 
                Attorney General, the Deputy Attorney General, 
                the Associate Attorney General, any Assistant 
                Attorney General, the Director of the Federal 
                Bureau of Investigation, the Administrator of 
                the Drug Enforcement Administration, any United 
                States attorney, any special prosecutor 
                appointed under section 593 of title 28, United 
                States Code, or any attorney in charge of a 
                criminal division organized crime strike force 
                established pursuant to section 510 of title 
                28, United States Code, the Secretary shall 
                disclose return information (other than 
                taxpayer return information) to officers and 
                employees of such agency who are personally and 
                directly engaged in--
                          (i) preparation for any judicial or 
                        administrative proceeding described in 
                        paragraph (1)(A)(i),
                          (ii) any investigation which may 
                        result in such a proceeding, or
                          (iii) any grand jury proceeding 
                        described in paragraph (1)(A)(iii),
                solely for the use of such officers and 
                employees in such preparation, investigation, 
                or grand jury proceeding.
                  (B) Requirements.--A request meets the 
                requirements of this subparagraph if the 
                request is in writing and sets forth--
                          (i) the name and address of the 
                        taxpayer with respect to whom the 
                        requested return information relates;
                          (ii) the taxable period or periods to 
                        which such return information relates;
                          (iii) the statutory authority under 
                        which the proceeding or investigation 
                        described in subparagraph (A) is being 
                        conducted; and
                          (iv) the specific reason or reasons 
                        why such disclosure is, or may be, 
                        relevant to such proceeding or 
                        investigation.
                  (C) Taxpayer identity.--For purposes of this 
                paragraph, a taxpayer's identity shall not be 
                treated as taxpayer return information.
          (3) Disclosure of return information to apprise 
        appropriate officials of criminal or terrorist 
        activities or emergency circumstances.--
                  (A) Possible violations of Federal criminal 
                law.--
                          (i) In general.--Except as provided 
                        in paragraph (6), the Secretary may 
                        disclose in writing return information 
                        (other than taxpayer return 
                        information) which may constitute 
                        evidence of a violation of any Federal 
                        criminal law (not involving tax 
                        administration) to the extent necessary 
                        to apprise the head of the appropriate 
                        Federal agency charged with the 
                        responsibility of enforcing such law. 
                        The head of such agency may disclose 
                        such return information to officers and 
                        employees of such agency to the extent 
                        necessary to enforce such law.
                          (ii) Taxpayer identity.--If there is 
                        return information (other than taxpayer 
                        return information) which may 
                        constitute evidence of a violation by 
                        any taxpayer of any Federal criminal 
                        law (not involving tax administration), 
                        such taxpayer's identity may also be 
                        disclosed under clause (i).
                  (B) Emergency circumstances.--
                          (i) Danger of death or physical 
                        injury.--Under circumstances involving 
                        an imminent danger of death or physical 
                        injury to any individual, the Secretary 
                        may disclose return information to the 
                        extent necessary to apprise appropriate 
                        officers or employees of any Federal or 
                        State law enforcement agency of such 
                        circumstances.
                          (ii) Flight from Federal 
                        prosecution.--Under circumstances 
                        involving the imminent flight of any 
                        individual from Federal prosecution, 
                        the Secretary may disclose return 
                        information to the extent necessary to 
                        apprise appropriate officers or 
                        employees of any Federal law 
                        enforcement agency of such 
                        circumstances.
                  (C) Terrorist activities, etc..--
                          (i) In general.--Except as provided 
                        in paragraph (6), the Secretary may 
                        disclose in writing return information 
                        (other than taxpayer return 
                        information) that may be related to a 
                        terrorist incident, threat, or activity 
                        to the extent necessary to apprise the 
                        head of the appropriate Federal law 
                        enforcement agency responsible for 
                        investigating or responding to such 
                        terrorist incident, threat, or 
                        activity. The head of the agency may 
                        disclose such return information to 
                        officers and employees of such agency 
                        to the extent necessary to investigate 
                        or respond to such terrorist incident, 
                        threat, or activity.
                          (ii) Disclosure to the Department of 
                        Justice.--Returns and taxpayer return 
                        information may also be disclosed to 
                        the Attorney General under clause (i) 
                        to the extent necessary for, and solely 
                        for use in preparing, an application 
                        under paragraph (7)(D).
                          (iii) Taxpayer identity.--For 
                        purposes of this subparagraph, a 
                        taxpayer's identity shall not be 
                        treated as taxpayer return information.
          (4) Use of certain disclosed returns and return 
        information in judicial or administrative 
        proceedings.--
                  (A) Returns and taxpayer return 
                information.--Except as provided in 
                subparagraph (C), any return or taxpayer return 
                information obtained under paragraph (1) or 
                (7)(C) may be disclosed in any judicial or 
                administrative proceeding pertaining to 
                enforcement of a specifically designated 
                Federal criminal statute or related civil 
                forfeiture (not involving tax administration) 
                to which the United States or a Federal agency 
                is a party--
                          (i) if the court finds that such 
                        return or taxpayer return information 
                        is probative of a matter in issue 
                        relevant in establishing the commission 
                        of a crime or the guilt or liability of 
                        a party, or
                          (ii) to the extent required by order 
                        of the court pursuant to section 3500 
                        of title 18, United States Code, or 
                        rule 16 of the Federal Rules of 
                        Criminal Procedure.
                  (B) Return information (other than taxpayer 
                return information).--Except as provided in 
                subparagraph (C), any return information (other 
                than taxpayer return information) obtained 
                under paragraph (1), (2), (3)(A) or (C), or (7) 
                may be disclosed in any judicial or 
                administrative proceeding pertaining to 
                enforcement of a specifically designated 
                Federal criminal statute or related civil 
                forfeiture (not involving tax administration) 
                to which the United States or a Federal agency 
                is a party.
                  (C) Confidential informant; impairment of 
                investigations.--No return or return 
                information shall be admitted into evidence 
                under subparagraph (A)(i) or (B) if the 
                Secretary determines and notifies the Attorney 
                General or his delegate or the head of the 
                Federal agency that such admission would 
                identify a confidential informant or seriously 
                impair a civil or criminal tax investigation.
                  (D) Consideration of confidentiality 
                policy.--In ruling upon the admissibility of 
                returns or return information, and in the 
                issuance of an order under subparagraph 
                (A)(ii), the court shall give due consideration 
                to congressional policy favoring the 
                confidentiality of returns and return 
                information as set forth in this title.
                  (E) Reversible error.--The admission into 
                evidence of any return or return information 
                contrary to the provisions of this paragraph 
                shall not, as such, constitute reversible error 
                upon appeal of a judgment in the proceeding.
          (5) Disclosure to locate fugitives from justice.--
                  (A) In general.--Except as provided in 
                paragraph (6), the return of an individual or 
                return information with respect to such 
                individual shall, pursuant to and upon the 
                grant of an ex parte order by a Federal 
                district court judge or magistrate judge under 
                subparagraph (B), be open (but only to the 
                extent necessary as provided in such order) to 
                inspection by, or disclosure to, officers and 
                employees of any Federal agency exclusively for 
                use in locating such individual.
                  (B) Application for order.--Any person 
                described in paragraph (1)(B) may authorize an 
                application to a Federal district court judge 
                or magistrate judge for an order referred to in 
                subparagraph (A). Upon such application, such 
                judge or magistrate judge may grant such order 
                if he determines on the basis of the facts 
                submitted by the applicant that--
                          (i) a Federal arrest warrant relating 
                        to the commission of a Federal felony 
                        offense has been issued for an 
                        individual who is a fugitive from 
                        justice,
                          (ii) the return of such individual or 
                        return information with respect to such 
                        individual is sought exclusively for 
                        use in locating such individual, and
                          (iii) there is reasonable cause to 
                        believe that such return or return 
                        information may be relevant in 
                        determining the location of such 
                        individual.
          (6) Confidential informants; impairment of 
        investigations.--The Secretary shall not disclose any 
        return or return information under paragraph (1), (2), 
        (3)(A) or (C), (5), (7), or (8) if the Secretary 
        determines (and, in the case of a request for 
        disclosure pursuant to a court order described in 
        paragraph (1)(B) or (5)(B), certifies to the court) 
        that such disclosure would identify a confidential 
        informant or seriously impair a civil or criminal tax 
        investigation.
          (7) Disclosure upon request of information relating 
        to terrorist activities, etc..--
                  (A) Disclosure to law enforcement agencies.--
                          (i) In general.--Except as provided 
                        in paragraph (6), upon receipt by the 
                        Secretary of a written request which 
                        meets the requirements of clause (iii), 
                        the Secretary may disclose return 
                        information (other than taxpayer return 
                        information) to officers and employees 
                        of any Federal law enforcement agency 
                        who are personally and directly engaged 
                        in the response to or investigation of 
                        any terrorist incident, threat, or 
                        activity.
                          (ii) Disclosure to State and local 
                        law enforcement agencies.--The head of 
                        any Federal law enforcement agency may 
                        disclose return information obtained 
                        under clause (i) to officers and 
                        employees of any State or local law 
                        enforcement agency but only if such 
                        agency is part of a team with the 
                        Federal law enforcement agency in such 
                        response or investigation and such 
                        information is disclosed only to 
                        officers and employees who are 
                        personally and directly engaged in such 
                        response or investigation.
                          (iii) Requirements.--A request meets 
                        the requirements of this clause if--
                                  (I) the request is made by 
                                the head of any Federal law 
                                enforcement agency (or his 
                                delegate) involved in the 
                                response to or investigation of 
                                any terrorist incident, threat, 
                                or activity, and
                                  (II) the request sets forth 
                                the specific reason or reasons 
                                why such disclosure may be 
                                relevant to a terrorist 
                                incident, threat, or activity.
                          (iv) Limitation on use of 
                        information.--Information disclosed 
                        under this subparagraph shall be solely 
                        for the use of the officers and 
                        employees to whom such information is 
                        disclosed in such response or 
                        investigation.
                          (v) Taxpayer identity.--For purposes 
                        of this subparagraph, a taxpayer's 
                        identity shall not be treated as 
                        taxpayer return information.
                  (B) Disclosure to intelligence agencies.--
                          (i) In general.--Except as provided 
                        in paragraph (6), upon receipt by the 
                        Secretary of a written request which 
                        meets the requirements of clause (ii), 
                        the Secretary may disclose return 
                        information (other than taxpayer return 
                        information) to those officers and 
                        employees of the Department of Justice, 
                        the Department of the Treasury, and 
                        other Federal intelligence agencies who 
                        are personally and directly engaged in 
                        the collection or analysis of 
                        intelligence and counterintelligence 
                        information or investigation concerning 
                        any terrorist incident, threat, or 
                        activity. For purposes of the preceding 
                        sentence, the information disclosed 
                        under the preceding sentence shall be 
                        solely for the use of such officers and 
                        employees in such investigation, 
                        collection, or analysis.
                          (ii) Requirements.--A request meets 
                        the requirements of this subparagraph 
                        if the request--
                                  (I) is made by an individual 
                                described in clause (iii), and
                                  (II) sets forth the specific 
                                reason or reasons why such 
                                disclosure may be relevant to a 
                                terrorist incident, threat, or 
                                activity.
                          (iii) Requesting individuals.--An 
                        individual described in this 
                        subparagraph is an individual--
                                  (I) who is an officer or 
                                employee of the Department of 
                                Justice or the Department of 
                                the Treasury who is appointed 
                                by the President with the 
                                advice and consent of the 
                                Senate or who is the Director 
                                of the United States Secret 
                                Service, and
                                  (II) who is responsible for 
                                the collection and analysis of 
                                intelligence and 
                                counterintelligence information 
                                concerning any terrorist 
                                incident, threat, or activity.
                          (iv) Taxpayer identity.--For purposes 
                        of this subparagraph, a taxpayer's 
                        identity shall not be treated as 
                        taxpayer return information.
                  (C) Disclosure under ex parte orders.--
                          (i) In general.--Except as provided 
                        in paragraph (6), any return or return 
                        information with respect to any 
                        specified taxable period or periods 
                        shall, pursuant to and upon the grant 
                        of an ex parte order by a Federal 
                        district court judge or magistrate 
                        under clause (ii), be open (but only to 
                        the extent necessary as provided in 
                        such order) to inspection by, or 
                        disclosure to, officers and employees 
                        of any Federal law enforcement agency 
                        or Federal intelligence agency who are 
                        personally and directly engaged in any 
                        investigation, response to, or analysis 
                        of intelligence and counterintelligence 
                        information concerning any terrorist 
                        incident, threat, or activity. Return 
                        or return information opened to 
                        inspection or disclosure pursuant to 
                        the preceding sentence shall be solely 
                        for the use of such officers and 
                        employees in the investigation, 
                        response, or analysis, and in any 
                        judicial, administrative, or grand jury 
                        proceedings, pertaining to such 
                        terrorist incident, threat, or 
                        activity.
                          (ii) Application for order.--The 
                        Attorney General, the Deputy Attorney 
                        General, the Associate Attorney 
                        General, any Assistant Attorney 
                        General, or any United States attorney 
                        may authorize an application to a 
                        Federal district court judge or 
                        magistrate for the order referred to in 
                        clause (i). Upon such application, such 
                        judge or magistrate may grant such 
                        order if he determines on the basis of 
                        the facts submitted by the applicant 
                        that--
                                  (I) there is reasonable cause 
                                to believe, based upon 
                                information believed to be 
                                reliable, that the return or 
                                return information may be 
                                relevant to a matter relating 
                                to such terrorist incident, 
                                threat, or activity, and
                                  (II) the return or return 
                                information is sought 
                                exclusively for use in a 
                                Federal investigation, 
                                analysis, or proceeding 
                                concerning any terrorist 
                                incident, threat, or activity.
                  (D) Special rule for ex parte disclosure by 
                the IRS.--
                          (i) In general.--Except as provided 
                        in paragraph (6), the Secretary may 
                        authorize an application to a Federal 
                        district court judge or magistrate for 
                        the order referred to in subparagraph 
                        (C)(i). Upon such application, such 
                        judge or magistrate may grant such 
                        order if he determines on the basis of 
                        the facts submitted by the applicant 
                        that the requirements of subparagraph 
                        (C)(ii)(I) are met.
                          (ii) Limitation on use of 
                        information.--Information disclosed 
                        under clause (i)--
                                  (I) may be disclosed only to 
                                the extent necessary to apprise 
                                the head of the appropriate 
                                Federal law enforcement agency 
                                responsible for investigating 
                                or responding to a terrorist 
                                incident, threat, or activity, 
                                and
                                  (II) shall be solely for use 
                                in a Federal investigation, 
                                analysis, or proceeding 
                                concerning any terrorist 
                                incident, threat, or activity.
                 The head of such Federal agency may disclose 
                such information to officers and employees of 
                such agency to the extent necessary to 
                investigate or respond to such terrorist 
                incident, threat, or activity.
          (8) Comptroller General.--
                  (A) Returns available for inspection.--Except 
                as provided in subparagraph (C), upon written 
                request by the Comptroller General of the 
                United States, returns and return information 
                shall be open to inspection by, or disclosure 
                to, officers and employees of the Government 
                Accountability Office for the purpose of, and 
                to the extent necessary in, making--
                          (i) an audit of the Internal Revenue 
                        Service, the Bureau of Alcohol, 
                        Tobacco, Firearms, and Explosives, 
                        Department of Justice, or the Tax and 
                        Trade Bureau, Department of the 
                        Treasury, which may be required by 
                        section 713 of title 31, United States 
                        Code, or
                          (ii) any audit authorized by 
                        subsection (p)(6),
                except that no such officer or employee shall, 
                except to the extent authorized by subsection 
                (f) or (p)(6), disclose to any person, other 
                than another officer or employee of such office 
                whose official duties require such disclosure, 
                any return or return information described in 
                section 4424(a) in a form which can be 
                associated with, or otherwise identify, 
                directly or indirectly, a particular taxpayer, 
                nor shall such officer or employee disclose any 
                other return or return information, except as 
                otherwise expressly provided by law, to any 
                person other than such other officer or 
                employee of such office in a form which can be 
                associated with, or otherwise identify, 
                directly or indirectly, a particular taxpayer.
                  (B) Audits of other agencies.--
                          (i) In general.--Nothing in this 
                        section shall prohibit any return or 
                        return information obtained under this 
                        title by any Federal agency (other than 
                        an agency referred to in subparagraph 
                        (A)) or by a Trustee as defined in the 
                        District of Columbia Retirement 
                        Protection Act of 1997, for use in any 
                        program or activity from being open to 
                        inspection by, or disclosure to, 
                        officers and employees of the 
                        Government Accountability Office if 
                        such inspection or disclosure is--
                                  (I) for purposes of, and to 
                                the extent necessary in, making 
                                an audit authorized by law of 
                                such program or activity, and
                                  (II) pursuant to a written 
                                request by the Comptroller 
                                General of the United States to 
                                the head of such Federal 
                                agency.
                          (ii) Information from Secretary.--If 
                        the Comptroller General of the United 
                        States determines that the returns or 
                        return information available under 
                        clause (i) are not sufficient for 
                        purposes of making an audit of any 
                        program or activity of a Federal agency 
                        (other than an agency referred to in 
                        subparagraph (A)), upon written request 
                        by the Comptroller General to the 
                        Secretary, returns and return 
                        information (of the type authorized by 
                        subsection (l) or (m) to be made 
                        available to the Federal agency for use 
                        in such program or activity) shall be 
                        open to inspection by, or disclosure 
                        to, officers and employees of the 
                        Government Accountability Office for 
                        the purpose of, and to the extent 
                        necessary in, making such audit.
                          (iii) Requirement of notification 
                        upon completion of audit.--Within 90 
                        days after the completion of an audit 
                        with respect to which returns or return 
                        information were opened to inspection 
                        or disclosed under clause (i) or (ii), 
                        the Comptroller General of the United 
                        States shall notify in writing the 
                        Joint Committee on Taxation of such 
                        completion. Such notice shall include--
                                  (I) a description of the use 
                                of the returns and return 
                                information by the Federal 
                                agency involved,
                                  (II) such recommendations 
                                with respect to the use of 
                                returns and return information 
                                by such Federal agency as the 
                                Comptroller General deems 
                                appropriate, and
                                  (III) a statement on the 
                                impact of any such 
                                recommendations on 
                                confidentiality of returns and 
                                return information and the 
                                administration of this title.
                          (iv) Certain restrictions made 
                        applicable.--The restrictions contained 
                        in subparagraph (A) on the disclosure 
                        of any returns or return information 
                        open to inspection or disclosed under 
                        such subparagraph shall also apply to 
                        returns and return information open to 
                        inspection or disclosed under this 
                        subparagraph.
                  (C) Disapproval by Joint Committee on 
                Taxation.--Returns and return information shall 
                not be open to inspection or disclosed under 
                subparagraph (A) or (B) with respect to an 
                audit--
                          (i) unless the Comptroller General of 
                        the United States notifies in writing 
                        the Joint Committee on Taxation of such 
                        audit, and
                          (ii) if the Joint Committee on 
                        Taxation disapproves such audit by a 
                        vote of at least two-thirds of its 
                        members within the 30-day period 
                        beginning on the day the Joint 
                        Committee on Taxation receives such 
                        notice.
  (j) Statistical use.--
          (1) Department of Commerce.--Upon request in writing 
        by the Secretary of Commerce, the Secretary shall 
        furnish--
                  (A) such returns, or return information 
                reflected thereon, to officers and employees of 
                the Bureau of the Census, and
                  (B) such return information reflected on 
                returns of corporations to officers and 
                employees of the Bureau of Economic Analysis,
        as the Secretary may prescribe by regulation for the 
        purpose of, but only to the extent necessary in, the 
        structuring of censuses and national economic accounts 
        and conducting related statistical activities 
        authorized by law.
          (2) Federal Trade Commission.--Upon request in 
        writing by the Chairman of the Federal Trade 
        Commission, the Secretary shall furnish such return 
        information reflected on any return of a corporation 
        with respect to the tax imposed by chapter 1 to 
        officers and employees of the Division of Financial 
        Statistics of the Bureau of Economics of such 
        commission as the Secretary may prescribe by regulation 
        for the purpose of, but only to the extent necessary 
        in, administration by such division of legally 
        authorized economic surveys of corporations.
          (3) Department of Treasury.--Returns and return 
        information shall be open to inspection by or 
        disclosure to officers and employees of the Department 
        of the Treasury whose official duties require such 
        inspection or disclosure for the purpose of, but only 
        to the extent necessary in, preparing economic or 
        financial forecasts, projections, analyses, and 
        statistical studies and conducting related activities. 
        Such inspection or disclosure shall be permitted only 
        upon written request which sets forth the specific 
        reason or reasons why such inspection or disclosure is 
        necessary and which is signed by the head of the bureau 
        or office of the Department of the Treasury requesting 
        the inspection or disclosure.
          (4) Anonymous form.--No person who receives a return 
        or return information under this subsection shall 
        disclose such return or return information to any 
        person other than the taxpayer to whom it relates 
        except in a form which cannot be associated with, or 
        otherwise identify, directly or indirectly, a 
        particular taxpayer.
          (5) Department of Agriculture.--Upon request in 
        writing by the Secretary of Agriculture, the Secretary 
        shall furnish such returns, or return information 
        reflected thereon, as the Secretary may prescribe by 
        regulation to officers and employees of the Department 
        of Agriculture whose official duties require access to 
        such returns or information for the purpose of, but 
        only to the extent necessary in, structuring, 
        preparing, and conducting the census of agriculture 
        pursuant to the Census of Agriculture Act of 1997 
        (Public Law 105-113).
          (6) Congressional Budget Office.--Upon written 
        request by the Director of the Congressional Budget 
        Office, the Secretary shall furnish to officers and 
        employees of the Congressional Budget Office return 
        information for the purpose of, but only to the extent 
        necessary for, long-term models of the social security 
        and medicare programs.
  (k) Disclosure of certain returns and return information for 
tax administration purposes.--
          (1) Disclosure of accepted offers-in-compromise.--
        Return information shall be disclosed to members of the 
        general public to the extent necessary to permit 
        inspection of any accepted offer-in-compromise under 
        section 7122 relating to the liability for a tax 
        imposed by this title.
          (2) Disclosure of amount of outstanding lien.--If a 
        notice of lien has been filed pursuant to section 
        6323(f), the amount of the outstanding obligation 
        secured by such lien may be disclosed to any person who 
        furnishes satisfactory written evidence that he has a 
        right in the property subject to such lien or intends 
        to obtain a right in such property.
          (3) Disclosure of return information to correct 
        misstatements of fact.--The Secretary may, but only 
        following approval by the Joint Committee on Taxation, 
        disclose such return information or any other 
        information with respect to any specific taxpayer to 
        the extent necessary for tax administration purposes to 
        correct a misstatement of fact published or disclosed 
        with respect to such taxpayer's return or any 
        transaction of the taxpayer with the Internal Revenue 
        Service.
          (4) Disclosure to competent authority under tax 
        convention.--A return or return information may be 
        disclosed to a competent authority of a foreign 
        government which has an income tax or gift and estate 
        tax convention, or other convention or bilateral 
        agreement relating to the exchange of tax information, 
        with the United States but only to the extent provided 
        in, and subject to the terms and conditions of, such 
        convention or bilateral agreement.
          (5) State agencies regulating tax return preparers.--
        Taxpayer identity information with respect to any tax 
        return preparer, and information as to whether or not 
        any penalty has been assessed against such tax return 
        preparer under section 6694, 6695, or 7216, may be 
        furnished to any agency, body, or commission lawfully 
        charged under any State or local law with the 
        licensing, registration, or regulation of tax return 
        preparers. Such information may be furnished only upon 
        written request by the head of such agency, body, or 
        commission designating the officers or employees to 
        whom such information is to be furnished. Information 
        may be furnished and used under this paragraph only for 
        purposes of the licensing, registration, or regulation 
        of tax return preparers.
          (6) Disclosure by certain officers and employees for 
        investigative purposes.--An internal revenue officer or 
        employee and an officer or employee of the Office of 
        Treasury Inspector General for Tax Administration may, 
        in connection with his official duties relating to any 
        audit, collection activity, or civil or criminal tax 
        investigation or any other offense under the internal 
        revenue laws, disclose return information to the extent 
        that such disclosure is necessary in obtaining 
        information, which is not otherwise reasonably 
        available, with respect to the correct determination of 
        tax, liability for tax, or the amount to be collected 
        or with respect to the enforcement of any other 
        provision of this title. Such disclosures shall be made 
        only in such situations and under such conditions as 
        the Secretary may prescribe by regulation. This 
        paragraph shall not apply to any disclosure to an 
        individual providing information relating to any 
        purpose described in paragraph (1) or (2) of section 
        7623(a) which is made under paragraph (13)(A).
          (7) Disclosure of excise tax registration 
        information.--To the extent the Secretary determines 
        that disclosure is necessary to permit the effective 
        administration of subtitle D, the Secretary may 
        disclose--
                  (A) the name, address, and registration 
                number of each person who is registered under 
                any provision of subtitle D (and, in the case 
                of a registered terminal operator, the address 
                of each terminal operated by such operator), 
                and
                  (B) the registration status of any person.
          (8) Levies on certain government payments.--
                  (A) Disclosure of return information in 
                levies on Financial Management Service.--In 
                serving a notice of levy, or release of such 
                levy, with respect to any applicable government 
                payment, the Secretary may disclose to officers 
                and employees of the Financial Management 
                Service--
                          (i) return information, including 
                        taxpayer identity information,
                          (ii) the amount of any unpaid 
                        liability under this title (including 
                        penalties and interest), and
                          (iii) the type of tax and tax period 
                        to which such unpaid liability relates.
                  (B) Restriction on use of disclosed 
                information.--Return information disclosed 
                under subparagraph (A) may be used by officers 
                and employees of the Financial Management 
                Service only for the purpose of, and to the 
                extent necessary in, transferring levied funds 
                in satisfaction of the levy, maintaining 
                appropriate agency records in regard to such 
                levy or the release thereof, notifying the 
                taxpayer and the agency certifying such payment 
                that the levy has been honored, or in the 
                defense of any litigation ensuing from the 
                honor of such levy.
                  (C) Applicable government payment.--For 
                purposes of this paragraph, the term 
                ``applicable government payment'' means--
                          (i) any Federal payment (other than a 
                        payment for which eligibility is based 
                        on the income or assets (or both) of a 
                        payee) certified to the Financial 
                        Management Service for disbursement, 
                        and
                          (ii) any other payment which is 
                        certified to the Financial Management 
                        Service for disbursement and which the 
                        Secretary designates by published 
                        notice.
          (9) Disclosure of information to administer section 
        6311.--The Secretary may disclose returns or return 
        information to financial institutions and others to the 
        extent the Secretary deems necessary for the 
        administration of section 6311. Disclosures of 
        information for purposes other than to accept payments 
        by checks or money orders shall be made only to the 
        extent authorized by written procedures promulgated by 
        the Secretary.
          (10) Disclosure of certain returns and return 
        information to certain prison officials.--
                  (A) In general.--Under such procedures as the 
                Secretary may prescribe, the Secretary may 
                disclose to officers and employees of the 
                Federal Bureau of Prisons and of any State 
                agency charged with the responsibility for 
                administration of prisons any returns or return 
                information with respect to individuals 
                incarcerated in Federal or State prison systems 
                whom the Secretary has determined may have 
                filed or facilitated the filing of a false or 
                fraudulent return to the extent that the 
                Secretary determines that such disclosure is 
                necessary to permit effective Federal tax 
                administration.
                  (B) Disclosure to contractor-run prisons.--
                Under such procedures as the Secretary may 
                prescribe, the disclosures authorized by 
                subparagraph (A) may be made to contractors 
                responsible for the operation of a Federal or 
                State prison on behalf of such Bureau or 
                agency.
                  (C) Restrictions on use of disclosed 
                information.--Any return or return information 
                received under this paragraph shall be used 
                only for the purposes of and to the extent 
                necessary in taking administrative action to 
                prevent the filing of false and fraudulent 
                returns, including administrative actions to 
                address possible violations of administrative 
                rules and regulations of the prison facility 
                and in administrative and judicial proceedings 
                arising from such administrative actions.
                  (D) Restrictions on redisclosure and 
                disclosure to legal representatives.--
                Notwithstanding subsection (h)--
                          (i) Restrictions on redisclosure.--
                        Except as provided in clause (ii), any 
                        officer, employee, or contractor of the 
                        Federal Bureau of Prisons or of any 
                        State agency charged with the 
                        responsibility for administration of 
                        prisons shall not disclose any 
                        information obtained under this 
                        paragraph to any person other than an 
                        officer or employee or contractor of 
                        such Bureau or agency personally and 
                        directly engaged in the administration 
                        of prison facilities on behalf of such 
                        Bureau or agency.
                          (ii) Disclosure to legal 
                        representatives.--The returns and 
                        return information disclosed under this 
                        paragraph may be disclosed to the duly 
                        authorized legal representative of the 
                        Federal Bureau of Prisons, State 
                        agency, or contractor charged with the 
                        responsibility for administration of 
                        prisons, or of the incarcerated 
                        individual accused of filing the false 
                        or fraudulent return who is a party to 
                        an action or proceeding described in 
                        subparagraph (C), solely in preparation 
                        for, or for use in, such action or 
                        proceeding.
          (11) Disclosure of return information to Department 
        of State for purposes of passport revocation under 
        section 7345.--
                  (A) In general.--The Secretary shall, upon 
                receiving a certification described in section 
                7345, disclose to the Secretary of State return 
                information with respect to a taxpayer who has 
                a seriously delinquent tax debt described in 
                such section. Such return information shall be 
                limited to--
                          (i) the taxpayer identity information 
                        with respect to such taxpayer, and
                          (ii) the amount of such seriously 
                        delinquent tax debt.
                  (B) Restriction on disclosure.--Return 
                information disclosed under subparagraph (A) 
                may be used by officers and employees of the 
                Department of State for the purposes of, and to 
                the extent necessary in, carrying out the 
                requirements of section 32101 of the FAST Act.
          (12) Qualified tax collection contractors.--Persons 
        providing services pursuant to a qualified tax 
        collection contract under section 6306 may, if speaking 
        to a person who has identified himself or herself as 
        having the name of the taxpayer to which a tax 
        receivable (within the meaning of such section) 
        relates, identify themselves as contractors of the 
        Internal Revenue Service and disclose the business name 
        of the contractor, and the nature, subject, and reason 
        for the contact. Disclosures under this paragraph shall 
        be made only in such situations and under such 
        conditions as have been approved by the Secretary.
          (13) Disclosure to whistleblowers.--
                  (A) In general.--The Secretary may disclose, 
                to any individual providing information 
                relating to any purpose described in paragraph 
                (1) or (2) of section 7623(a), return 
                information related to the investigation of any 
                taxpayer with respect to whom the individual 
                has provided such information, but only to the 
                extent that such disclosure is necessary in 
                obtaining information, which is not otherwise 
                reasonably available, with respect to the 
                correct determination of tax liability for tax, 
                or the amount to be collected with respect to 
                the enforcement of any other provision of this 
                title.
                  (B) Updates on whistleblower 
                investigations.--The Secretary shall disclose 
                to an individual providing information relating 
                to any purpose described in paragraph (1) or 
                (2) of section 7623(a) the following:
                          (i) Not later than 60 days after a 
                        case for which the individual has 
                        provided information has been referred 
                        for an audit or examination, a notice 
                        with respect to such referral.
                          (ii) Not later than 60 days after a 
                        taxpayer with respect to whom the 
                        individual has provided information has 
                        made a payment of tax with respect to 
                        tax liability to which such information 
                        relates, a notice with respect to such 
                        payment.
                          (iii) Subject to such requirements 
                        and conditions as are prescribed by the 
                        Secretary, upon a written request by 
                        such individual--
                                  (I) information on the status 
                                and stage of any investigation 
                                or action related to such 
                                information, and
                                  (II) in the case of a 
                                determination of the amount of 
                                any award under section 
                                7623(b), the reasons for such 
                                determination.
                Clause (iii) shall not apply to any information 
                if the Secretary determines that disclosure of 
                such information would seriously impair Federal 
                tax administration. Information described in 
                clauses (i), (ii), and (iii) may be disclosed 
                to a designee of the individual providing such 
                information in accordance with guidance 
                provided by the Secretary.
          (14) Disclosure of return information for purposes of 
        cybersecurity and the prevention of identity theft tax 
        refund fraud.--
                  (A) In general.--Under such procedures and 
                subject to such conditions as the Secretary may 
                prescribe, the Secretary may disclose specified 
                return information to specified ISAC 
                participants to the extent that the Secretary 
                determines such disclosure is in furtherance of 
                effective Federal tax administration relating 
                to the detection or prevention of identity 
                theft tax refund fraud, validation of taxpayer 
                identity, authentication of taxpayer returns, 
                or detection or prevention of cybersecurity 
                threats.
                  (B) Specified isac participants.--For 
                purposes of this paragraph--
                          (i) In general.--The term ``specified 
                        ISAC participant'' means--
                                  (I) any person designated by 
                                the Secretary as having primary 
                                responsibility for a function 
                                performed with respect to the 
                                information sharing and 
                                analysis center described in 
                                section 2003(a) of the Taxpayer 
                                First Act of 2019, and
                                  (II) any person subject to 
                                the requirements of section 
                                7216 and which is a participant 
                                in such information sharing and 
                                analysis center.
                          (ii) Information sharing agreement.--
                        Such term shall not include any person 
                        unless such person has entered into a 
                        written agreement with the Secretary 
                        setting forth the terms and conditions 
                        for the disclosure of information to 
                        such person under this paragraph, 
                        including requirements regarding the 
                        protection and safeguarding of such 
                        information by such person.
                  (C) Specified return information.--For 
                purposes of this paragraph, the term 
                ``specified return information'' means--
                          (i) in the case of a return which is 
                        in connection with a case of potential 
                        identity theft refund fraud--
                                  (I) in the case of such 
                                return filed electronically, 
                                the internet protocol address, 
                                device identification, email 
                                domain name, speed of 
                                completion, method of 
                                authentication, refund method, 
                                and such other return 
                                information related to the 
                                electronic filing 
                                characteristics of such return 
                                as the Secretary may identify 
                                for purposes of this subclause, 
                                and
                                  (II) in the case of such 
                                return prepared by a tax return 
                                preparer, identifying 
                                information with respect to 
                                such tax return preparer, 
                                including the preparer taxpayer 
                                identification number and 
                                electronic filer identification 
                                number of such preparer,
                          (ii) in the case of a return which is 
                        in connection with a case of a identity 
                        theft refund fraud which has been 
                        confirmed by the Secretary (pursuant to 
                        such procedures as the Secretary may 
                        provide), the information referred to 
                        in subclauses (I) and (II) of clause 
                        (i), the name and taxpayer 
                        identification number of the taxpayer 
                        as it appears on the return, and any 
                        bank account and routing information 
                        provided for making a refund in 
                        connection with such return, and
                          (iii) in the case of any 
                        cybersecurity threat to the Internal 
                        Revenue Service, information similar to 
                        the information described in subclauses 
                        (I) and (II) of clause (i) with respect 
                        to such threat.
                  (D) Restriction on use of disclosed 
                information.--
                          (i) Designated third parties.--Any 
                        return information received by a person 
                        described in subparagraph (B)(i)(I) 
                        shall be used only for the purposes of 
                        and to the extent necessary in--
                                  (I) performing the function 
                                such person is designated to 
                                perform under such 
                                subparagraph,
                                  (II) facilitating disclosures 
                                authorized under subparagraph 
                                (A) to persons described in 
                                subparagraph (B)(i)(II), and
                                  (III) facilitating 
                                disclosures authorized under 
                                subsection (d) to participants 
                                in such information sharing and 
                                analysis center.
                          (ii) Return preparers.--Any return 
                        information received by a person 
                        described in subparagraph (B)(i)(II) 
                        shall be treated for purposes of 
                        section 7216 as information furnished 
                        to such person for, or in connection 
                        with, the preparation of a return of 
                        the tax imposed under chapter 1.
                  (E) Data protection and safeguards.--Return 
                information disclosed under this paragraph 
                shall be subject to such protections and 
                safeguards as the Secretary may require in 
                regulations or other guidance or in the written 
                agreement referred to in subparagraph (B)(ii). 
                Such written agreement shall include a 
                requirement that any unauthorized access to 
                information disclosed under this paragraph, and 
                any breach of any system in which such 
                information is held, be reported to the 
                Treasury Inspector General for Tax 
                Administration.
  (l) Disclosure of returns and return information for purposes 
other than tax administration.--
          (1) Disclosure of certain returns and return 
        information to Social Security Administration and 
        Railroad Retirement Board.--The Secretary may, upon 
        written request, disclose returns and return 
        information with respect to--
                  (A) taxes imposed by chapters 2, 21, and 24, 
                to the Social Security Administration for 
                purposes of its administration of the Social 
                Security Act;
                  (B) a plan to which part I of subchapter D of 
                chapter 1 applies, to the Social Security 
                Administration for purposes of carrying out its 
                responsibility under section 1131 of the Social 
                Security Act, limited, however to return 
                information described in section 6057(d); and
                  (C) taxes imposed by chapter 22, to the 
                Railroad Retirement Board for purposes of its 
                administration of the Railroad Retirement Act.
          (2) Disclosure of returns and return information to 
        the Department of Labor and Pension Benefit Guaranty 
        Corporation.--The Secretary may, upon written request, 
        furnish returns and return information to the proper 
        officers and employees of the Department of Labor and 
        the Pension Benefit Guaranty Corporation for purposes 
        of, but only to the extent necessary in, the 
        administration of titles I and IV of the Employee 
        Retirement Income Security Act of 1974.
          (3) Disclosure that applicant for Federal loan has 
        tax delinquent account.--
                  (A) In general.--Upon written request, the 
                Secretary may disclose to the head of the 
                Federal agency administering any included 
                Federal loan program whether or not an 
                applicant for a loan under such program has a 
                tax delinquent account.
                  (B) Restriction on disclosure.--Any 
                disclosure under subparagraph (A) shall be made 
                only for the purpose of, and to the extent 
                necessary in, determining the creditworthiness 
                of the applicant for the loan in question.
                  (C) Included Federal loan program defined.--
                For purposes of this paragraph, the term 
                ``included Federal loan program'' means any 
                program under which the United States or a 
                Federal agency makes, guarantees, or insures 
                loans.
          (4) Disclosure of returns and return information for 
        use in personnel or claimant representative matters.--
        The Secretary may disclose returns and return 
        information--
                  (A) upon written request--
                          (i) to an employee or former employee 
                        of the Department of the Treasury, or 
                        to the duly authorized legal 
                        representative of such employee or 
                        former employee, who is or may be a 
                        party to any administrative action or 
                        proceeding affecting the personnel 
                        rights of such employee or former 
                        employee; or
                          (ii) to any person, or to the duly 
                        authorized legal representative of such 
                        person, whose rights are or may be 
                        affected by an administrative action or 
                        proceeding under section 330 of title 
                        31, United States Code,
                solely for use in the action or proceeding, or 
                in preparation for the action or proceeding, 
                but only to the extent that the Secretary 
                determines that such returns or return 
                information is or may be relevant and material 
                to the action or proceeding; or
                  (B) to officers and employees of the 
                Department of the Treasury for use in any 
                action or proceeding described in subparagraph 
                (A), or in preparation for such action or 
                proceeding, to the extent necessary to advance 
                or protect the interests of the United States.
          (5) Social Security Administration.--Upon written 
        request by the Commissioner of Social Security, the 
        Secretary may disclose information returns filed 
        pursuant to part III of subchapter A of chapter 61 of 
        this subtitle for the purpose of--
                  (A) carrying out, in accordance with an 
                agreement entered into pursuant to section 232 
                of the Social Security Act, an effective return 
                processing program; or
                  (B) providing information regarding the 
                mortality status of individuals for 
                epidemiological and similar research in 
                accordance with section 1106(d) of the Social 
                Security Act.
          (6) Disclosure of return information to Federal, 
        State, and local child support enforcement agencies.--
                  (A) Return information from Internal Revenue 
                Service.--The Secretary may, upon written 
                request, disclose to the appropriate Federal, 
                State, or local child support enforcement 
                agency--
                          (i) available return information from 
                        the master files of the Internal 
                        Revenue Service relating to the social 
                        security account number (or numbers, if 
                        the individual involved has more than 
                        one such number), address, filing 
                        status, amounts and nature of income, 
                        and the number of dependents reported 
                        on any return filed by, or with respect 
                        to, any individual with respect to whom 
                        child support obligations are sought to 
                        be established or enforced pursuant to 
                        the provisions of part D of title IV of 
                        the Social Security Act and with 
                        respect to any individual to whom such 
                        support obligations are owing, and
                          (ii) available return information 
                        reflected on any return filed by, or 
                        with respect to, any individual 
                        described in clause (i) relating to the 
                        amount of such individual's gross 
                        income (as defined in section 61) or 
                        consisting of the names and addresses 
                        of payors of such income and the names 
                        of any dependents reported on such 
                        return, but only if such return 
                        information is not reasonably available 
                        from any other source.
                  (B) Disclosure to certain agents.--The 
                following information disclosed to any child 
                support enforcement agency under subparagraph 
                (A) with respect to any individual with respect 
                to whom child support obligations are sought to 
                be established or enforced may be disclosed by 
                such agency to any agent of such agency which 
                is under contract with such agency to carry out 
                the purposes described in subparagraph (C):
                          (i) The address and social security 
                        account number (or numbers) of such 
                        individual.
                          (ii) The amount of any reduction 
                        under section 6402(c) (relating to 
                        offset of past-due support against 
                        overpayments) in any overpayment 
                        otherwise payable to such individual.
                  (C) Restriction on disclosure.--Information 
                may be disclosed under this paragraph only for 
                purposes of, and to the extent necessary in, 
                establishing and collecting child support 
                obligations from, and locating, individuals 
                owing such obligations.
          (7) Disclosure of return information to Federal, 
        State, and local agencies administering certain 
        programs under the Social Security Act, the Food and 
        Nutrition Act of 2008, or title 38, United States Code, 
        or certain housing assistance programs.--
                  (A) Return information from Social Security 
                Administration.--The Commissioner of Social 
                Security shall, upon written request, disclose 
                return information from returns with respect to 
                net earnings from self-employment (as defined 
                in section 1402), wages (as defined in section 
                3121(a) or 3401(a)), and payments of retirement 
                income, which have been disclosed to the Social 
                Security Administration as provided by 
                paragraph (1) or (5) of this subsection, to any 
                Federal, State, or local agency administering a 
                program listed in subparagraph (D).
                  (B) Return information from Internal Revenue 
                Service.--The Secretary shall, upon written 
                request, disclose current return information 
                from returns with respect to unearned income 
                from the Internal Revenue Service files to any 
                Federal, State, or local agency administering a 
                program listed in subparagraph (D).
                  (C) Restriction on disclosure.--The 
                Commissioner of Social Security and the 
                Secretary shall disclose return information 
                under subparagraphs (A) and (B) only for 
                purposes of, and to the extent necessary in, 
                determining eligibility for, or the correct 
                amount of, benefits under a program listed in 
                subparagraph (D).
                  (D) Programs to which rule applies.--The 
                programs to which this paragraph applies are:
                          (i) a State program funded under part 
                        A of title IV of the Social Security 
                        Act;
                          (ii) medical assistance provided 
                        under a State plan approved under title 
                        XIX of the Social Security Act or 
                        subsidies provided under section 1860D-
                        14 of such Act;
                          (iii) supplemental security income 
                        benefits provided under title XVI of 
                        the Social Security Act, and federally 
                        administered supplementary payments of 
                        the type described in section 1616(a) 
                        of such Act (including payments 
                        pursuant to an agreement entered into 
                        under section 212(a) of Public Law 93-
                        66);
                          (iv) any benefits provided under a 
                        State plan approved under title I, X, 
                        XIV, or XVI of the Social Security Act 
                        (as those titles apply to Puerto Rico, 
                        Guam, and the Virgin Islands);
                          (v) unemployment compensation 
                        provided under a State law described in 
                        section 3304 of this title;
                          (vi) assistance provided under the 
                        Food and Nutrition Act of 2008;
                          (vii) State-administered 
                        supplementary payments of the type 
                        described in section 1616(a) of the 
                        Social Security Act (including payments 
                        pursuant to an agreement entered into 
                        under section 212(a) of Public Law 93-
                        66);
                          (viii)(I) any needs-based pension 
                        provided under chapter 15 of title 38, 
                        United States Code, or under any other 
                        law administered by the Secretary of 
                        Veterans Affairs;
                                  (II) parents' dependency and 
                                indemnity compensation provided 
                                under section 1315 of title 38, 
                                United States Code;
                                  (III) health-care services 
                                furnished under sections 
                                1710(a)(2)(G), 1710(a)(3), and 
                                1710(b) of such title; and
                                  (IV) compensation paid under 
                                chapter 11 of title 38, United 
                                States Code, at the 100 percent 
                                rate based solely on 
                                unemployability and without 
                                regard to the fact that the 
                                disability or disabilities are 
                                not rated as 100 percent 
                                disabling under the rating 
                                schedule; and
                          (ix) any housing assistance program 
                        administered by the Department of 
                        Housing and Urban Development that 
                        involves initial and periodic review of 
                        an applicant's or participant's income, 
                        except that return information may be 
                        disclosed under this clause only on 
                        written request by the Secretary of 
                        Housing and Urban Development and only 
                        for use by officers and employees of 
                        the Department of Housing and Urban 
                        Development with respect to applicants 
                        for and participants in such programs.
                Only return information from returns with 
                respect to net earnings from self-employment 
                and wages may be disclosed under this paragraph 
                for use with respect to any program described 
                in clause (viii)(IV).
          (8) Disclosure of certain return information by 
        Social Security Administration to Federal, State, and 
        local child support enforcement agencies.--
                  (A) In general.--Upon written request, the 
                Commissioner of Social Security shall disclose 
                directly to officers and employees of a Federal 
                or State or local child support enforcement 
                agency return information from returns with 
                respect to social security account numbers, net 
                earnings from self-employment (as defined in 
                section 1402), wages (as defined in section 
                3121(a) or 3401(a)), and payments of retirement 
                income which have been disclosed to the Social 
                Security Administration as provided by 
                paragraph (1) or (5) of this subsection.
                  (B) Restriction on disclosure.--The 
                Commissioner of Social Security shall disclose 
                return information under subparagraph (A) only 
                for purposes of, and to the extent necessary 
                in, establishing and collecting child support 
                obligations from, and locating, individuals 
                owing such obligations. For purposes of the 
                preceding sentence, the term ``child support 
                obligations'' only includes obligations which 
                are being enforced pursuant to a plan described 
                in section 454 of the Social Security Act which 
                has been approved by the Secretary of Health 
                and Human Services under part D of title IV of 
                such Act.
                  (C) State or local child support enforcement 
                agency.--For purposes of this paragraph, the 
                term ``State or local child support enforcement 
                agency'' means any agency of a State or 
                political subdivision thereof operating 
                pursuant to a plan described in subparagraph 
                (B).
          (9) Disclosure of alcohol fuel producers to 
        administrators of State alcohol laws.--Notwithstanding 
        any other provision of this section, the Secretary may 
        disclose--
                  (A) the name and address of any person who is 
                qualified to produce alcohol for fuel use under 
                section 5181, and
                  (B) the location of any premises to be used 
                by such person in producing alcohol for fuel,
        to any State agency, body, or commission, or its legal 
        representative, which is charged under the laws of such 
        State with responsibility for administration of State 
        alcohol laws solely for use in the administration of 
        such laws.
          (10) Disclosure of certain information to agencies 
        requesting a reduction under subsection (c), (d), (e), 
        or (f) of section 6402.--
                  (A) Return information from Internal Revenue 
                Service.--The Secretary may, upon receiving a 
                written request, disclose to officers and 
                employees of any agency seeking a reduction 
                under subsection (c), (d), (e), or (f) of 
                section 6402, to officers and employees of the 
                Department of Labor for purposes of 
                facilitating the exchange of data in connection 
                with a notice submitted under subsection 
                (f)(5)(C) of section 6402, and to officers and 
                employees of the Department of the Treasury in 
                connection with such reduction--
                          (i) taxpayer identity information 
                        with respect to the taxpayer against 
                        whom such a reduction was made or not 
                        made and with respect to any other 
                        person filing a joint return with such 
                        taxpayer,
                          (ii) the fact that a reduction has 
                        been made or has not been made under 
                        such subsection with respect to such 
                        taxpayer,
                          (iii) the amount of such reduction,
                          (iv) whether such taxpayer filed a 
                        joint return, and
                          (v) the fact that a payment was made 
                        (and the amount of the payment) to the 
                        spouse of the taxpayer on the basis of 
                        a joint return.
                  (B) Restriction on use of disclosed 
                information.--(i) Any officers and employees of 
                an agency receiving return information under 
                subparagraph (A) shall use such information 
                only for the purposes of, and to the extent 
                necessary in, establishing appropriate agency 
                records, locating any person with respect to 
                whom a reduction under subsection (c), (d), 
                (e), or (f) of section 6402 is sought for 
                purposes of collecting the debt with respect to 
                which the reduction is sought, or in the 
                defense of any litigation or administrative 
                procedure ensuing from a reduction made under 
                subsection (c), (d), (e), or (f) of section 
                6402.
                          (ii) Notwithstanding clause (i), 
                        return information disclosed to 
                        officers and employees of the 
                        Department of Labor may be accessed by 
                        agents who maintain and provide 
                        technological support to the Department 
                        of Labor's Interstate Connection 
                        Network (ICON) solely for the purpose 
                        of providing such maintenance and 
                        support.
          (11) Disclosure of return information to carry out 
        Federal Employees' Retirement System.--
                  (A) In general.--The Commissioner of Social 
                Security shall, on written request, disclose to 
                the Office of Personnel Management return 
                information from returns with respect to net 
                earnings from self-employment (as defined in 
                section 1402), wages (as defined in section 
                3121(a) or 3401(a)), and payments of retirement 
                income, which have been disclosed to the Social 
                Security Administration as provided by 
                paragraph (1) or (5).
                  (B) Restriction on disclosure.--The 
                Commissioner of Social Security shall disclose 
                return information under subparagraph (A) only 
                for purposes of, and to the extent necessary 
                in, the administration of chapters 83 and 84 of 
                title 5, United States Code.
          (12) Disclosure of certain taxpayer identity 
        information for verification of employment status of 
        medicare beneficiary and spouse of medicare 
        beneficiary.--
                  (A) Return information from Internal Revenue 
                Service.--The Secretary shall, upon written 
                request from the Commissioner of Social 
                Security, disclose to the Commissioner 
                available filing status and taxpayer identity 
                information from the individual master files of 
                the Internal Revenue Service relating to 
                whether any medicare beneficiary identified by 
                the Commissioner was a married individual (as 
                defined in section 7703) for any specified year 
                after 1986, and, if so, the name of the spouse 
                of such individual and such spouse's TIN.
                  (B) Return information from Social Security 
                Administration.--The Commissioner of Social 
                Security shall, upon written request from the 
                Administrator of the Centers for Medicare & 
                Medicaid Services, disclose to the 
                Administrator the following information:
                          (i) The name and TIN of each medicare 
                        beneficiary who is identified as having 
                        received wages (as defined in section 
                        3401(a)), above an amount (if any) 
                        specified by the Secretary of Health 
                        and Human Services, from a qualified 
                        employer in a previous year.
                          (ii) For each medicare beneficiary 
                        who was identified as married under 
                        subparagraph (A) and whose spouse is 
                        identified as having received wages, 
                        above an amount (if any) specified by 
                        the Secretary of Health and Human 
                        Services, from a qualified employer in 
                        a previous year--
                                  (I) the name and TIN of the 
                                medicare beneficiary, and
                                  (II) the name and TIN of the 
                                spouse.
                          (iii) With respect to each such 
                        qualified employer, the name, address, 
                        and TIN of the employer and the number 
                        of individuals with respect to whom 
                        written statements were furnished under 
                        section 6051 by the employer with 
                        respect to such previous year.
                  (C) Disclosure by Centers for Medicare & 
                Medicaid Services.--With respect to the 
                information disclosed under subparagraph (B), 
                the Administrator of the Centers for Medicare & 
                Medicaid Services may disclose--
                          (i) to the qualified employer 
                        referred to in such subparagraph the 
                        name and TIN of each individual 
                        identified under such subparagraph as 
                        having received wages from the employer 
                        (hereinafter in this subparagraph 
                        referred to as the ``employee'') for 
                        purposes of determining during what 
                        period such employee or the employee's 
                        spouse may be (or have been) covered 
                        under a group health plan of the 
                        employer and what benefits are or were 
                        covered under the plan (including the 
                        name, address, and identifying number 
                        of the plan),
                          (ii) to any group health plan which 
                        provides or provided coverage to such 
                        an employee or spouse, the name of such 
                        employee and the employee's spouse (if 
                        the spouse is a medicare beneficiary) 
                        and the name and address of the 
                        employer, and, for the purpose of 
                        presenting a claim to the plan--
                                  (I) the TIN of such employee 
                                if benefits were paid under 
                                title XVIII of the Social 
                                Security Act with respect to 
                                the employee during a period in 
                                which the plan was a primary 
                                plan (as defined in section 
                                1862(b)(2)(A) of the Social 
                                Security Act), and
                                  (II) the TIN of such spouse 
                                if benefits were paid under 
                                such title with respect to the 
                                spouse during such period, and
                          (iii) to any agent of such 
                        Administrator the information referred 
                        to in subparagraph (B) for purposes of 
                        carrying out clauses (i) and (ii) on 
                        behalf of such Administrator.
                  (D) Special rules.--
                          (i) Restrictions on disclosure.--
                        Information may be disclosed under this 
                        paragraph only for purposes of, and to 
                        the extent necessary in, determining 
                        the extent to which any medicare 
                        beneficiary is covered under any group 
                        health plan.
                          (ii) Timely response to requests.--
                        Any request made under subparagraph (A) 
                        or (B) shall be complied with as soon 
                        as possible but in no event later than 
                        120 days after the date the request was 
                        made.
                  (E) Definitions.--For purposes of this 
                paragraph--
                          (i) Medicare beneficiary.--The term 
                        ``medicare beneficiary'' means an 
                        individual entitled to benefits under 
                        part A, or enrolled under part B, of 
                        title XVIII of the Social Security Act, 
                        but does not include such an individual 
                        enrolled in part A under section 1818.
                          (ii) Group health plan.--The term 
                        ``group health plan'' means any group 
                        health plan (as defined in section 
                        5000(b)(1)).
                          (iii) Qualified employer.--The term 
                        ``qualified employer'' means, for a 
                        calendar year, an employer which has 
                        furnished written statements under 
                        section 6051 with respect to at least 
                        20 individuals for wages paid in the 
                        year.
          (13) Disclosure of return information to carry out 
        income contingent repayment of student loans.--
                  (A) In general.--The Secretary may, upon 
                written request from the Secretary of 
                Education, disclose to officers and employees 
                of the Department of Education return 
                information with respect to a taxpayer who has 
                received an applicable student loan and whose 
                loan repayment amounts are based in whole or in 
                part on the taxpayer's income. Such return 
                information shall be limited to--
                          (i) taxpayer identity information 
                        with respect to such taxpayer,
                          (ii) the filing status of such 
                        taxpayer, and
                          (iii) the adjusted gross income of 
                        such taxpayer.
                  (B) Restriction on use of disclosed 
                information.--Return information disclosed 
                under subparagraph (A) may be used by officers 
                and employees of the Department of Education 
                only for the purposes of, and to the extent 
                necessary in, establishing the appropriate 
                income contingent repayment amount for an 
                applicable student loan.
                  (C) Applicable student loan.--For purposes of 
                this paragraph, the term ``applicable student 
                loan'' means--
                          (i) any loan made under the program 
                        authorized under part D of title IV of 
                        the Higher Education Act of 1965, and
                          (ii) any loan made under part B or E 
                        of title IV of the Higher Education Act 
                        of 1965 which is in default and has 
                        been assigned to the Department of 
                        Education.
                  (D) Termination.--This paragraph shall not 
                apply to any request made after December 31, 
                2007.
          (14) Disclosure of return information to United 
        States Customs Service.--The Secretary may, upon 
        written request from the Commissioner of the United 
        States Customs Service, disclose to officers and 
        employees of the Department of the Treasury such return 
        information with respect to taxes imposed by chapters 1 
        and 6 as the Secretary may prescribe by regulations, 
        solely for the purpose of, and only to the extent 
        necessary in--
                  (A) ascertaining the correctness of any entry 
                in audits as provided for in section 509 of the 
                Tariff Act of 1930 (19 U.S.C. 1509), or
                  (B) other actions to recover any loss of 
                revenue, or to collect duties, taxes, and fees, 
                determined to be due and owing pursuant to such 
                audits.
          (15) Disclosure of returns filed under section 
        6050I.--The Secretary may, upon written request, 
        disclose to officers and employees of--
                  (A) any Federal agency,
                  (B) any agency of a State or local 
                government, or
                  (C) any agency of the government of a foreign 
                country,
        information contained on returns filed under section 
        6050I. Any such disclosure shall be made on the same 
        basis, and subject to the same conditions, as apply to 
        disclosures of information on reports filed under 
        section 5313 of title 31, United States Code; except 
        that no disclosure under this paragraph shall be made 
        for purposes of the administration of any tax law.
          (16) Disclosure of return information for purposes of 
        administering the District of Columbia Retirement 
        Protection Act of 1997.--
                  (A) In general.--Upon written request 
                available return information (including such 
                information disclosed to the Social Security 
                Administration under paragraph (1) or (5) of 
                this subsection), relating to the amount of 
                wage income (as defined in section 3121(a) or 
                3401(a)), the name, address, and identifying 
                number assigned under section 6109, of payors 
                of wage income, taxpayer identity (as defined 
                in section 6103(b)(6)), and the occupational 
                status reflected on any return filed by, or 
                with respect to, any individual with respect to 
                whom eligibility for, or the correct amount of, 
                benefits under the District of Columbia 
                Retirement Protection Act of 1997, is sought to 
                be determined, shall be disclosed by the 
                Commissioner of Social Security, or to the 
                extent not available from the Social Security 
                Administration, by the Secretary, to any duly 
                authorized officer or employee of the 
                Department of the Treasury, or a Trustee or any 
                designated officer or employee of a Trustee (as 
                defined in the District of Columbia Retirement 
                Protection Act of 1997), or any actuary engaged 
                by a Trustee under the terms of the District of 
                Columbia Retirement Protection Act of 1997, 
                whose official duties require such disclosure, 
                solely for the purpose of, and to the extent 
                necessary in, determining an individual's 
                eligibility for, or the correct amount of, 
                benefits under the District of Columbia 
                Retirement Protection Act of 1997.
                  (B) Disclosure for use in judicial or 
                administrative proceedings.--Return information 
                disclosed to any person under this paragraph 
                may be disclosed in a judicial or 
                administrative proceeding relating to the 
                determination of an individual's eligibility 
                for, or the correct amount of, benefits under 
                the District of Columbia Retirement Protection 
                Act of 1997.
          (17) Disclosure to National Archives and Records 
        Administration.--The Secretary shall, upon written 
        request from the Archivist of the United States, 
        disclose or authorize the disclosure of returns and 
        return information to officers and employees of the 
        National Archives and Records Administration for 
        purposes of, and only to the extent necessary in, the 
        appraisal of records for destruction or retention. No 
        such officer or employee shall, except to the extent 
        authorized by subsection (f), (i)(8), or (p), disclose 
        any return or return information disclosed under the 
        preceding sentence to any person other than to the 
        Secretary, or to another officer or employee of the 
        National Archives and Records Administration whose 
        official duties require such disclosure for purposes of 
        such appraisal.
          (18) Disclosure of return information for purposes of 
        carrying out a program for advance payment of credit 
        for health insurance costs of eligible individuals.--
        The Secretary may disclose to providers of health 
        insurance for any certified individual (as defined in 
        section 7527(c)) return information with respect to 
        such certified individual only to the extent necessary 
        to carry out the program established by section 7527 
        (relating to advance payment of credit for health 
        insurance costs of eligible individuals).
          (19) Disclosure of return information for purposes of 
        providing transitional assistance under medicare 
        discount card program.--
                  (A) In general.--The Secretary, upon written 
                request from the Secretary of Health and Human 
                Services pursuant to carrying out section 
                1860D-31 of the Social Security Act, shall 
                disclose to officers, employees, and 
                contractors of the Department of Health and 
                Human Services with respect to a taxpayer for 
                the applicable year--
                          (i)(I) whether the adjusted gross 
                        income, as modified in accordance with 
                        specifications of the Secretary of 
                        Health and Human Services for purposes 
                        of carrying out such section, of such 
                        taxpayer and, if applicable, such 
                        taxpayer's spouse, for the applicable 
                        year, exceeds the amounts specified by 
                        the Secretary of Health and Human 
                        Services in order to apply the 100 and 
                        135 percent of the poverty lines under 
                        such section, (II) whether the return 
                        was a joint return, and (III) the 
                        applicable year, or
                          (ii) if applicable, the fact that 
                        there is no return filed for such 
                        taxpayer for the applicable year.
                  (B) Definition of applicable year.--For the 
                purposes of this subsection, the term 
                ``applicable year'' means the most recent 
                taxable year for which information is available 
                in the Internal Revenue Service's taxpayer data 
                information systems, or, if there is no return 
                filed for such taxpayer for such year, the 
                prior taxable year.
                  (C) Restriction on use of disclosed 
                information.--Return information disclosed 
                under this paragraph may be used only for the 
                purposes of determining eligibility for and 
                administering transitional assistance under 
                section 1860D-31 of the Social Security Act.
          (20) Disclosure of return information to carry out 
        Medicare part B premium subsidy adjustment and part D 
        base beneficiary premium increase.--
                  (A) In general.--The Secretary shall, upon 
                written request from the Commissioner of Social 
                Security, disclose to officers, employees, and 
                contractors of the Social Security 
                Administration return information of a taxpayer 
                whose premium (according to the records of the 
                Secretary) may be subject to adjustment under 
                section 1839(i) or increase under section 
                1860D-13(a)(7) of the Social Security Act. Such 
                return information shall be limited to--
                          (i) taxpayer identity information 
                        with respect to such taxpayer,
                          (ii) the filing status of such 
                        taxpayer,
                          (iii) the adjusted gross income of 
                        such taxpayer,
                          (iv) the amounts excluded from such 
                        taxpayer's gross income under sections 
                        135 and 911 to the extent such 
                        information is available,
                          (v) the interest received or accrued 
                        during the taxable year which is exempt 
                        from the tax imposed by chapter 1 to 
                        the extent such information is 
                        available,
                          (vi) the amounts excluded from such 
                        taxpayer's gross income by sections 931 
                        and 933 to the extent such information 
                        is available,
                          (vii) such other information relating 
                        to the liability of the taxpayer as is 
                        prescribed by the Secretary by 
                        regulation as might indicate in the 
                        case of a taxpayer who is an individual 
                        described in subsection (i)(4)(B)(iii) 
                        of section 1839 of the Social Security 
                        Act that the amount of the premium of 
                        the taxpayer under such section may be 
                        subject to adjustment under subsection 
                        (i) of such section or increase under 
                        section 1860D-13(a)(7) of such Act and 
                        the amount of such adjustment, and
                          (viii) the taxable year with respect 
                        to which the preceding information 
                        relates.
                  (B) Restriction on use of disclosed 
                information.--
                          (i) In general.--Return information 
                        disclosed under subparagraph (A) may be 
                        used by officers, employees, and 
                        contractors of the Social Security 
                        Administration only for the purposes 
                        of, and to the extent necessary in, 
                        establishing the appropriate amount of 
                        any premium adjustment under such 
                        section 1839(i) or increase under such 
                        section 1860D-13(a)(7) or for the 
                        purpose of resolving taxpayer appeals 
                        with respect to any such premium 
                        adjustment or increase.
                          (ii) Disclosure to other agencies.--
                        Officers, employees, and contractors of 
                        the Social Security Administration may 
                        disclose--
                                  (I) the taxpayer identity 
                                information and the amount of 
                                the premium subsidy adjustment 
                                or premium increase with 
                                respect to a taxpayer described 
                                in subparagraph (A) to 
                                officers, employees, and 
                                contractors of the Centers for 
                                Medicare and Medicaid Services, 
                                to the extent that such 
                                disclosure is necessary for the 
                                collection of the premium 
                                subsidy amount or the increased 
                                premium amount,
                                  (II) the taxpayer identity 
                                information and the amount of 
                                the premium subsidy adjustment 
                                or the increased premium amount 
                                with respect to a taxpayer 
                                described in subparagraph (A) 
                                to officers and employees of 
                                the Office of Personnel 
                                Management and the Railroad 
                                Retirement Board, to the extent 
                                that such disclosure is 
                                necessary for the collection of 
                                the premium subsidy amount or 
                                the increased premium amount,
                                  (III) return information with 
                                respect to a taxpayer described 
                                in subparagraph (A) to officers 
                                and employees of the Department 
                                of Health and Human Services to 
                                the extent necessary to resolve 
                                administrative appeals of such 
                                premium subsidy adjustment or 
                                increased premium, and
                                  (IV) return information with 
                                respect to a taxpayer described 
                                in subparagraph (A) to officers 
                                and employees of the Department 
                                of Justice for use in judicial 
                                proceedings to the extent 
                                necessary to carry out the 
                                purposes described in clause 
                                (i).
          (21) Disclosure of return information to carry out 
        eligibility requirements for certain programs.--
                  (A) In general.--The Secretary, upon written 
                request from the Secretary of Health and Human 
                Services, shall disclose to officers, 
                employees, and contractors of the Department of 
                Health and Human Services return information of 
                any taxpayer whose income is relevant in 
                determining any premium tax credit under 
                section 36B or any cost-sharing reduction under 
                section 1402 of the Patient Protection and 
                Affordable Care Act or eligibility for 
                participation in a State medicaid program under 
                title XIX of the Social Security Act, a State's 
                children's health insurance program under title 
                XXI of the Social Security Act, or a basic 
                health program under section 1331 of Patient 
                Protection and Affordable Care Act. Such return 
                information shall be limited to--
                          (i) taxpayer identity information 
                        with respect to such taxpayer,
                          (ii) the filing status of such 
                        taxpayer,
                          (iii) the number of individuals for 
                        whom a deduction is allowed under 
                        section 151 with respect to the 
                        taxpayer (including the taxpayer and 
                        the taxpayer's spouse),
                          (iv) the modified adjusted gross 
                        income (as defined in section 36B) of 
                        such taxpayer and each of the other 
                        individuals included under clause (iii) 
                        who are required to file a return of 
                        tax imposed by chapter 1 for the 
                        taxable year,
                          (v) such other information as is 
                        prescribed by the Secretary by 
                        regulation as might indicate whether 
                        the taxpayer is eligible for such 
                        credit or reduction (and the amount 
                        thereof), and
                          (vi) the taxable year with respect to 
                        which the preceding information relates 
                        or, if applicable, the fact that such 
                        information is not available.
                  (B) Information to exchange and State 
                agencies.--The Secretary of Health and Human 
                Services may disclose to an Exchange 
                established under the Patient Protection and 
                Affordable Care Act or its contractors, or to a 
                State agency administering a State program 
                described in subparagraph (A) or its 
                contractors, any inconsistency between the 
                information provided by the Exchange or State 
                agency to the Secretary and the information 
                provided to the Secretary under subparagraph 
                (A).
                  (C) Restriction on use of disclosed 
                information.--Return information disclosed 
                under subparagraph (A) or (B) may be used by 
                officers, employees, and contractors of the 
                Department of Health and Human Services, an 
                Exchange, or a State agency only for the 
                purposes of, and to the extent necessary in--
                          (i) establishing eligibility for 
                        participation in the Exchange, and 
                        verifying the appropriate amount of, 
                        any credit or reduction described in 
                        subparagraph (A),
                          (ii) determining eligibility for 
                        participation in the State programs 
                        described in subparagraph (A).
          (22) Disclosure of return information to Department 
        of Health and Human Services for purposes of enhancing 
        Medicare program integrity.--
                  (A) In general.--The Secretary shall, upon 
                written request from the Secretary of Health 
                and Human Services, disclose to officers and 
                employees of the Department of Health and Human 
                Services return information with respect to a 
                taxpayer who has applied to enroll, or 
                reenroll, as a provider of services or supplier 
                under the Medicare program under title XVIII of 
                the Social Security Act. Such return 
                information shall be limited to--
                          (i) the taxpayer identity information 
                        with respect to such taxpayer;
                          (ii) the amount of the delinquent tax 
                        debt owed by that taxpayer; and
                          (iii) the taxable year to which the 
                        delinquent tax debt pertains.
                  (B) Restriction on disclosure.--Return 
                information disclosed under subparagraph (A) 
                may be used by officers and employees of the 
                Department of Health and Human Services for the 
                purposes of, and to the extent necessary in, 
                establishing the taxpayer's eligibility for 
                enrollment or reenrollment in the Medicare 
                program, or in any administrative or judicial 
                proceeding relating to, or arising from, a 
                denial of such enrollment or reenrollment, or 
                in determining the level of enhanced oversight 
                to be applied with respect to such taxpayer 
                pursuant to section 1866(j)(3) of the Social 
                Security Act.
                  (C) Delinquent tax debt.--For purposes of 
                this paragraph, the term ``delinquent tax 
                debt'' means an outstanding debt under this 
                title for which a notice of lien has been filed 
                pursuant to section 6323, but the term does not 
                include a debt that is being paid in a timely 
                manner pursuant to an agreement under section 
                6159 or 7122, or a debt with respect to which a 
                collection due process hearing under section 
                6330 is requested, pending, or completed and no 
                payment is required.
  (m) Disclosure of taxpayer identity information.--
          (1) Tax refunds.--The Secretary may disclose taxpayer 
        identity information to the press and other media for 
        purposes of notifying persons entitled to tax refunds 
        when the Secretary, after reasonable effort and lapse 
        of time, has been unable to locate such persons.
          (2) Federal claims.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the Secretary may, upon 
                written request, disclose the mailing address 
                of a taxpayer for use by officers, employees, 
                or agents of a Federal agency for purposes of 
                locating such taxpayer to collect or compromise 
                a Federal claim against the taxpayer in 
                accordance with sections 3711, 3717, and 3718 
                of title 31.
                  (B) Special rule for consumer reporting 
                agency.--In the case of an agent of a Federal 
                agency which is a consumer reporting agency 
                (within the meaning of section 603(f) of the 
                Fair Credit Reporting Act (15 U.S.C. 
                1681a(f))), the mailing address of a taxpayer 
                may be disclosed to such agent under 
                subparagraph (A) only for the purpose of 
                allowing such agent to prepare a commercial 
                credit report on the taxpayer for use by such 
                Federal agency in accordance with sections 
                3711, 3717, and 3718 of title 31.
          (3) National Institute for Occupational Safety and 
        Health.--Upon written request, the Secretary may 
        disclose the mailing address of taxpayers to officers 
        and employees of the National Institute for 
        Occupational Safety and Health solely for the purpose 
        of locating individuals who are, or may have been, 
        exposed to occupational hazards in order to determine 
        the status of their health or to inform them of the 
        possible need for medical care and treatment.
          (4) Individuals who owe an overpayment of Federal 
        Pell Grants or who have defaulted on student loans 
        administered by the Department of Education.--
                  (A) In general.--Upon written request by the 
                Secretary of Education, the Secretary may 
                disclose the mailing address of any taxpayer--
                          (i) who owes an overpayment of a 
                        grant awarded to such taxpayer under 
                        subpart 1 of part A of title IV of the 
                        Higher Education Act of 1965, or
                          (ii) who has defaulted on a loan--
                                  (I) made under part B, D, or 
                                E of title IV of the Higher 
                                Education Act of 1965, or
                                  (II) made pursuant to section 
                                3(a)(1) of the Migration and 
                                Refugee Assistance Act of 1962 
                                to a student at an institution 
                                of higher education,
                for use only by officers, employees, or agents 
                of the Department of Education for purposes of 
                locating such taxpayer for purposes of 
                collecting such overpayment or loan.
                  (B) Disclosure to educational institutions, 
                etc..--Any mailing address disclosed under 
                subparagraph (A)(i) may be disclosed by the 
                Secretary of Education to--
                          (i) any lender, or any State or 
                        nonprofit guarantee agency, which is 
                        participating under part B or D of 
                        title IV of the Higher Education Act of 
                        1965, or
                          (ii) any educational institution with 
                        which the Secretary of Education has an 
                        agreement under subpart 1 of part A, or 
                        part D or E, of title IV of such Act,
                for use only by officers, employees, or agents 
                of such lender, guarantee agency, or 
                institution whose duties relate to the 
                collection of student loans for purposes of 
                locating individuals who have defaulted on 
                student loans made under such loan programs for 
                purposes of collecting such loans.
          (5) Individuals who have defaulted on student loans 
        administered by the Department of Health and Human 
        Services.--
                  (A) In general.--Upon written request by the 
                Secretary of Health and Human Services, the 
                Secretary may disclose the mailing address of 
                any taxpayer who has defaulted on a loan made 
                under part C 1 of title VII of the 
                Public Health Service Act or under subpart II 
                of part B of title VIII of such Act, for use 
                only by officers, employees, or agents of the 
                Department of Health and Human Services for 
                purposes of locating such taxpayer for purposes 
                of collecting such loan.
                  (B) Disclosure to schools and eligible 
                lenders.--Any mailing address disclosed under 
                subparagraph (A) may be disclosed by the 
                Secretary of Health and Human Services to--
                          (i) any school with which the 
                        Secretary of Health and Human Services 
                        has an agreement under subpart II 
                        1 of part C of title VII of 
                        the Public Health Service Act or 
                        subpart II 1 of part B of 
                        title VIII of such Act, or
                          (ii) any eligible lender (within the 
                        meaning of section 737(4) 1 
                        of such Act) participating under 
                        subpart I 1 of part C of 
                        title VII of such Act,
                for use only by officers, employees, or agents 
                of such school or eligible lender whose duties 
                relate to the collection of student loans for 
                purposes of locating individuals who have 
                defaulted on student loans made under such 
                subparts for the purposes of collecting such 
                loans.
          (6) Blood Donor Locator Service.--
                  (A) In general.--Upon written request 
                pursuant to section 1141 of the Social Security 
                Act, the Secretary shall disclose the mailing 
                address of taxpayers to officers and employees 
                of the Blood Donor Locator Service in the 
                Department of Health and Human Services.
                  (B) Restriction on disclosure.--The Secretary 
                shall disclose return information under 
                subparagraph (A) only for purposes of, and to 
                the extent necessary in, assisting under the 
                Blood Donor Locator Service authorized persons 
                (as defined in section 1141(h)(1) of the Social 
                Security Act) in locating blood donors who, as 
                indicated by donated blood or products derived 
                therefrom or by the history of the subsequent 
                use of such blood or blood products, have or 
                may have the virus for acquired immune 
                deficiency syndrome, in order to inform such 
                donors of the possible need for medical care 
                and treatment.
                  (C) Safeguards.--The Secretary shall destroy 
                all related blood donor records (as defined in 
                section 1141(h)(2) of the Social Security Act) 
                in the possession of the Department of the 
                Treasury upon completion of their use in making 
                the disclosure required under subparagraph (A), 
                so as to make such records undisclosable.
          (7) Social security account statement furnished by 
        Social Security Administration.--Upon written request 
        by the Commissioner of Social Security, the Secretary 
        may disclose the mailing address of any taxpayer who is 
        entitled to receive a social security account statement 
        pursuant to section 1143(c) of the Social Security Act, 
        for use only by officers, employees or agents of the 
        Social Security Administration for purposes of mailing 
        such statement to such taxpayer.
  (n) Certain other persons.--Pursuant to regulations 
prescribed by the Secretary, returns and return information may 
be disclosed to any person, including any person described in 
section 7513(a), to the extent necessary in connection with the 
processing, storage, transmission, and reproduction of such 
returns and return information, the programming, maintenance, 
repair, testing, and procurement of equipment, and the 
providing of other services, for purposes of tax 
administration.
  (o) Disclosure of returns and return information with respect 
to certain taxes.--
          (1) Taxes imposed by subtitle E.--
                  (A) In general.--Returns and return 
                information with respect to taxes imposed by 
                subtitle E (relating to taxes on alcohol, 
                tobacco, and firearms) shall be open to 
                inspection by or disclosure to officers and 
                employees of a Federal agency whose official 
                duties require such inspection or disclosure.
                  (B) Use in certain proceedings.--Returns and 
                return information disclosed to a Federal 
                agency under subparagraph (A) may be used in an 
                action or proceeding (or in preparation for 
                such action or proceeding) brought under 
                section 625 of the American Jobs Creation Act 
                of 2004 for the collection of any unpaid 
                assessment or penalty arising under such Act.
          (2) Taxes imposed by chapter 35.--Returns and return 
        information with respect to taxes imposed by chapter 35 
        (relating to taxes on wagering) shall, notwithstanding 
        any other provision of this section, be open to 
        inspection by or disclosure only to such person or 
        persons and for such purpose or purposes as are 
        prescribed by section 4424.
  (p) Procedure and recordkeeping.--
          (1) Manner, time, and place of inspections.--Requests 
        for the inspection or disclosure of a return or return 
        information and such inspection or disclosure shall be 
        made in such manner and at such time and place as shall 
        be prescribed by the Secretary.
          (2) Procedure.--
                  (A) Reproduction of returns.--A reproduction 
                or certified reproduction of a return shall, 
                upon written request, be furnished to any 
                person to whom disclosure or inspection of such 
                return is authorized under this section. A 
                reasonable fee may be prescribed for furnishing 
                such reproduction or certified reproduction.
                  (B) Disclosure of return information.--Return 
                information disclosed to any person under the 
                provisions of this title may be provided in the 
                form of written documents, reproductions of 
                such documents, films or photoimpressions, or 
                electronically produced tapes, disks, or 
                records, or by any other mode or means which 
                the Secretary determines necessary or 
                appropriate. A reasonable fee may be prescribed 
                for furnishing such return information.
                  (C) Use of reproductions.--Any reproduction 
                of any return, document, or other matter made 
                in accordance with this paragraph shall have 
                the same legal status as the original, and any 
                such reproduction shall, if properly 
                authenticated, be admissible in evidence in any 
                judicial or administrative proceeding as if it 
                were the original, whether or not the original 
                is in existence.
          (3) Records of inspection and disclosure.--
                  (A) System of recordkeeping.--Except as 
                otherwise provided by this paragraph, the 
                Secretary shall maintain a permanent system of 
                standardized records or accountings of all 
                requests for inspection or disclosure of 
                returns and return information (including the 
                reasons for and dates of such requests) and of 
                returns and return information inspected or 
                disclosed under this section and section 
                6104(c). Notwithstanding the provisions of 
                section 552a(c) of title 5, United States Code, 
                the Secretary shall not be required to maintain 
                a record or accounting of requests for 
                inspection or disclosure of returns and return 
                information, or of returns and return 
                information inspected or disclosed, under the 
                authority of subsection (c), (e), (f)(5), 
                (h)(1), (3)(A), or (4), (i)(4), or (8)(A)(ii), 
                (k)(1), (2), (6), (8), or (9), (l)(1), (4)(B), 
                (5), (7), (8), (9), (10), (11), (12), (13), 
                (14), (15), (16), (17), or (18), (m), or (n). 
                The records or accountings required to be 
                maintained under this paragraph shall be 
                available for examination by the Joint 
                Committee on Taxation or the Chief of Staff of 
                such joint committee. Such record or accounting 
                shall also be available for examination by such 
                person or persons as may be, but only to the 
                extent, authorized to make such examination 
                under section 552a(c)(3) of title 5, United 
                States Code.
                  (B) Report by the Secretary.--The Secretary 
                shall, within 90 days after the close of each 
                calendar year, furnish to the Joint Committee 
                on Taxation a report with respect to, or 
                summary of, the records or accountings 
                described in subparagraph (A) in such form and 
                containing such information as such joint 
                committee or the Chief of Staff of such joint 
                committee may designate. Such report or summary 
                shall not, however, include a record or 
                accounting of any request by the President 
                under subsection (g) for, or the disclosure in 
                response to such request of, any return or 
                return information with respect to any 
                individual who, at the time of such request, 
                was an officer or employee of the executive 
                branch of the Federal Government. Such report 
                or summary, or any part thereof, may be 
                disclosed by such joint committee to such 
                persons and for such purposes as the joint 
                committee may, by record vote of a majority of 
                the members of the joint committee, determine.
                  (C) Public report on disclosures.--The 
                Secretary shall, within 90 days after the close 
                of each calendar year, furnish to the Joint 
                Committee on Taxation for disclosure to the 
                public a report with respect to the records or 
                accountings described in subparagraph (A) 
                which--
                          (i) provides with respect to each 
                        Federal agency, each agency, body, or 
                        commission described in subsection (d), 
                        (i)(3)(B)(i) or (7)(A)(ii), or (l)(6), 
                        and the Government Accountability 
                        Office the number of--
                                  (I) requests for disclosure 
                                of returns and return 
                                information,
                                  (II) instances in which 
                                returns and return information 
                                were disclosed pursuant to such 
                                requests or otherwise,
                                  (III) taxpayers whose 
                                returns, or return information 
                                with respect to whom, were 
                                disclosed pursuant to such 
                                requests, and
                          (ii) describes the general purposes 
                        for which such requests were made.
          (4) Safeguards.--Any Federal agency described in 
        subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or 
        (7), (j)(1), (2), or (5), (k)(8), (10), or (11), 
        (l)(1), (2), (3), (5), (10), (11), (13), (14), (17), or 
        (22) or (o)(1)(A), the Government Accountability 
        Office, the Congressional Budget Office, or any agency, 
        body, or commission described in subsection (d), 
        (i)(1)(C), (3)(B)(i), or (7)(A)(ii), or (k)(10), 
        (l)(6), (7), (8), (9), (12), (15), or (16), any 
        appropriate State officer (as defined in section 
        6104(c)), or any other person described in subsection 
        (k)(10), subsection (l)(10), (16), (18), (19), or (20), 
        or any entity described in subsection (l)(21), shall, 
        as a condition for receiving returns or return 
        information--
                  (A) establish and maintain, to the 
                satisfaction of the Secretary, a permanent 
                system of standardized records with respect to 
                any request, the reason for such request, and 
                the date of such request made by or of it and 
                any disclosure of return or return information 
                made by or to it;
                  (B) establish and maintain, to the 
                satisfaction of the Secretary, a secure area or 
                place in which such returns or return 
                information shall be stored;
                  (C) restrict, to the satisfaction of the 
                Secretary, access to the returns or return 
                information only to persons whose duties or 
                responsibilities require access and to whom 
                disclosure may be made under the provisions of 
                this title;
                  (D) provide such other safeguards which the 
                Secretary determines (and which he prescribes 
                in regulations) to be necessary or appropriate 
                to protect the confidentiality of the returns 
                or return information;
                  (E) furnish a report to the Secretary, at 
                such time and containing such information as 
                the Secretary may prescribe, which describes 
                the procedures established and utilized by such 
                agency, body, or commission, the Government 
                Accountability Office, or the Congressional 
                Budget Office for ensuring the confidentiality 
                of returns and return information required by 
                this paragraph; and
                  (F) upon completion of use of such returns or 
                return information--
                          (i) in the case of an agency, body, 
                        or commission described in subsection 
                        (d), (i)(3)(B)(i), (k)(10), or (l)(6), 
                        (7), (8), (9), or (16), any appropriate 
                        State officer (as defined in section 
                        6104(c)), or any other person described 
                        in subsection (k)(10) or subsection 
                        (l)(10), (16), (18), (19), or (20) 
                        return to the Secretary such returns or 
                        return information (along with any 
                        copies made therefrom) or make such 
                        returns or return information 
                        undisclosable in any manner and furnish 
                        a written report to the Secretary 
                        describing such manner,
                          (ii) in the case of an agency 
                        described in subsection (h)(2), (h)(5), 
                        (i)(1), (2), (3), (5) or (7), (j)(1), 
                        (2), or (5), (k)(8), (10), or (11), 
                        (l)(1), (2), (3), (5), (10), (11), 
                        (12), (13), (14), (15), (17), or (22), 
                        or (o)(1)(A) or any entity described in 
                        subsection (l)(21), the Government 
                        Accountability Office, or the 
                        Congressional Budget Office, either--
                                  (I) return to the Secretary 
                                such returns or return 
                                information (along with any 
                                copies made therefrom),
                                  (II) otherwise make such 
                                returns or return information 
                                undisclosable, or
                                  (III) to the extent not so 
                                returned or made undisclosable, 
                                ensure that the conditions of 
                                subparagraphs (A), (B), (C), 
                                (D), and (E) of this paragraph 
                                continue to be met with respect 
                                to such returns or return 
                                information, and
                          (iii) in the case of the Department 
                        of Health and Human Services for 
                        purposes of subsection (m)(6), destroy 
                        all such return information upon 
                        completion of its use in providing the 
                        notification for which the information 
                        was obtained, so as to make such 
                        information undisclosable;
        except that the conditions of subparagraphs (A), (B), 
        (C), (D), and (E) shall cease to apply with respect to 
        any return or return information if, and to the extent 
        that, such return or return information is disclosed in 
        the course of any judicial or administrative proceeding 
        and made a part of the public record thereof. If the 
        Secretary determines that any such agency, body, or 
        commission, including an agency, an appropriate State 
        officer (as defined in section 6104(c)), or any other 
        person described in subsection (k)(10) or subsection 
        (l)(10), (16), (18), (19), or (20) or any entity 
        described in subsection (l)(21), or the Government 
        Accountability Office or the Congressional Budget 
        Office, has failed to, or does not, meet the 
        requirements of this paragraph, he may, after any 
        proceedings for review established under paragraph (7), 
        take such actions as are necessary to ensure such 
        requirements are met, including refusing to disclose 
        returns or return information to such agency, body, or 
        commission, including an agency, an appropriate State 
        officer (as defined in section 6104(c)), or any other 
        person described in subsection (k)(10) or subsection 
        (l)(10), (16), (18), (19), or (20) or any entity 
        described in subsection (l)(21), or the Government 
        Accountability Office or the Congressional Budget 
        Office, until he determines that such requirements have 
        been or will be met. In the case of any agency which 
        receives any mailing address under paragraph (2), (4), 
        (6), or (7) of subsection (m) and which discloses any 
        such mailing address to any agent or which receives any 
        information under paragraph (6)(A), (10), (12)(B), or 
        (16) of subsection (l) and which discloses any such 
        information to any agent, or any person including an 
        agent described in subsection (l)(10) or (16), this 
        paragraph shall apply to such agency and each such 
        agent or other person (except that, in the case of an 
        agent, or any person including an agent described in 
        subsection (l)(10) or (16), any report to the Secretary 
        or other action with respect to the Secretary shall be 
        made or taken through such agency). For purposes of 
        applying this paragraph in any case to which subsection 
        (m)(6) applies, the term ``return information'' 
        includes related blood donor records (as defined in 
        section 1141(h)(2) of the Social Security Act).
          (5) Report on procedures and safeguards.--After the 
        close of each calendar year, the Secretary shall 
        furnish to each committee described in subsection 
        (f)(1) a report which describes the procedures and 
        safeguards established and utilized by such agencies, 
        bodies, or commissions, the Government Accountability 
        Office, and the Congressional Budget Office for 
        ensuring the confidentiality of returns and return 
        information as required by this subsection. Such report 
        shall also describe instances of deficiencies in, and 
        failure to establish or utilize, such procedures.
          (6) Audit of procedures and safeguards.--
                  (A) Audit by Comptroller General.--The 
                Comptroller General may audit the procedures 
                and safeguards established by such agencies, 
                bodies, or commissions and the Congressional 
                Budget Office pursuant to this subsection to 
                determine whether such safeguards and 
                procedures meet the requirements of this 
                subsection and ensure the confidentiality of 
                returns and return information. The Comptroller 
                General shall notify the Secretary before any 
                such audit is conducted.
                  (B) Records of inspection and reports by the 
                Comptroller General.--The Comptroller General 
                shall--
                          (i) maintain a permanent system of 
                        standardized records and accountings of 
                        returns and return information 
                        inspected by officers and employees of 
                        the Government Accountability Office 
                        under subsection (i)(8)(A)(ii) and 
                        shall, within 90 days after the close 
                        of each calendar year, furnish to the 
                        Secretary a report with respect to, or 
                        summary of, such records or accountings 
                        in such form and containing such 
                        information as the Secretary may 
                        prescribe, and
                          (ii) furnish an annual report to each 
                        committee described in subsection (f) 
                        and to the Secretary setting forth his 
                        findings with respect to any audit 
                        conducted pursuant to subparagraph (A).
                The Secretary may disclose to the Joint 
                Committee any report furnished to him under 
                clause (i).
          (7) Administrative review.--The Secretary shall by 
        regulations prescribe procedures which provide for 
        administrative review of any determination under 
        paragraph (4) that any agency, body, or commission 
        described in subsection (d) has failed to meet the 
        requirements of such paragraph.
          (8) State law requirements.--
                  (A) Safeguards.--Notwithstanding any other 
                provision of this section, no return or return 
                information shall be disclosed after December 
                31, 1978, to any officer or employee of any 
                State which requires a taxpayer to attach to, 
                or include in, any State tax return a copy of 
                any portion of his Federal return, or 
                information reflected on such Federal return, 
                unless such State adopts provisions of law 
                which protect the confidentiality of the copy 
                of the Federal return (or portion thereof) 
                attached to, or the Federal return information 
                reflected on, such State tax return.
                  (B) Disclosure of returns or return 
                information in State returns.--Nothing in 
                subparagraph (A) or paragraph (9) shall be 
                construed to prohibit the disclosure by an 
                officer or employee of any State of any copy of 
                any portion of a Federal return or any 
                information on a Federal return which is 
                required to be attached or included in a State 
                return to another officer or employee of such 
                State (or political subdivision of such State) 
                if such disclosure is specifically authorized 
                by State law.
          (9) Disclosure to contractors and other agents.--
        Notwithstanding any other provision of this section, no 
        return or return information shall be disclosed to any 
        contractor or other agent of a Federal, State, or local 
        agency unless such agency, to the satisfaction of the 
        Secretary--
                  (A) has requirements in effect which require 
                each such contractor or other agent which would 
                have access to returns or return information to 
                provide safeguards (within the meaning of 
                paragraph (4)) to protect the confidentiality 
                of such returns or return information,
                  (B) agrees to conduct an on-site review every 
                3 years (or a mid-point review in the case of 
                contracts or agreements of less than 3 years in 
                duration) of each contractor or other agent to 
                determine compliance with such requirements,
                  (C) submits the findings of the most recent 
                review conducted under subparagraph (B) to the 
                Secretary as part of the report required by 
                paragraph (4)(E), and
                  (D) certifies to the Secretary for the most 
                recent annual period that such contractor or 
                other agent is in compliance with all such 
                requirements.
        The certification required by subparagraph (D) shall 
        include the name and address of each contractor or 
        other agent, a description of the contract or agreement 
        with such contractor or other agent, and the duration 
        of such contract or agreement. The requirements of this 
        paragraph shall not apply to disclosures pursuant to 
        subsection (n) for purposes of Federal tax 
        administration.
  (q) Regulations.--The Secretary is authorized to prescribe 
such other regulations as are necessary to carry out the 
provisions of this section.

SEC. 6104. PUBLICITY OF INFORMATION REQUIRED FROM CERTAIN EXEMPT 
                    ORGANIZATIONS AND CERTAIN TRUSTS.

  (a) Inspection of applications for tax exemption or notice of 
status.--
          (1) Public inspection.--
                  (A) Organizations described in section 501 or 
                527.--If an organization described in section 
                501(c) or (d) is exempt from taxation under 
                section 501(a) for any taxable year or a 
                political organization is exempt from taxation 
                under section 527 for any taxable year, the 
                application filed by the organization with 
                respect to which the Secretary made his 
                determination that such organization was 
                entitled to exemption under section 501(a) or 
                notice of status filed by the organization 
                under section 527(i), together with any papers 
                submitted in support of such application or 
                notice, and any letter or other document issued 
                by the Internal Revenue Service with respect to 
                such application or notice shall be open to 
                public inspection at the national office of the 
                Internal Revenue Service. In the case of any 
                application or notice filed after the date of 
                the enactment of this subparagraph, a copy of 
                such application or notice and such letter or 
                document shall be open to public inspection at 
                the appropriate field office of the Internal 
                Revenue Service (determined under regulations 
                prescribed by the Secretary). Any inspection 
                under this subparagraph may be made at such 
                times, and in such manner, as the Secretary 
                shall by regulations prescribe. After the 
                application of any organization for exemption 
                from taxation under section 501(a) has been 
                opened to public inspection under this 
                subparagraph, the Secretary shall, on the 
                request of any person with respect to such 
                organization, furnish a statement indicating 
                the subsection and paragraph of section 501 
                which it has been determined describes such 
                organization.
                  (B) Pension, etc., plans.--The following 
                shall be open to public inspection at such 
                times and in such places as the Secretary may 
                prescribe:
                          (i) any application filed with 
                        respect to the qualification of a 
                        pension, profit-sharing, or stock bonus 
                        plan under section 401(a) or 403(a), an 
                        individual retirement account described 
                        in section 408(a), or an individual 
                        retirement annuity described in section 
                        408(b),
                          (ii) any application filed with 
                        respect to the exemption from tax under 
                        section 501(a) of an organization 
                        forming part of a plan or account 
                        referred to in clause (i),
                          (iii) any papers submitted in support 
                        of an application referred to in clause 
                        (i) or (ii), and
                          (iv) any letter or other document 
                        issued by the Internal Revenue Service 
                        and dealing with the qualification 
                        referred to in clause (i) or the 
                        exemption from tax referred to in 
                        clause (ii).
                Except in the case of a plan participant, this 
                subparagraph shall not apply to any plan 
                referred to in clause (i) having not more than 
                25 participants.
                  (C) Certain names and compensation not to be 
                opened to public inspection.--In the case of 
                any application, document, or other papers, 
                referred to in subparagraph (B), information 
                from which the compensation (including deferred 
                compensation) of any individual may be 
                ascertained shall not be open to public 
                inspection under subparagraph (B).
                  (D) Withholding of certain other 
                information.--Upon request of the organization 
                submitting any supporting papers described in 
                subparagraph (A) or (B), the Secretary shall 
                withhold from public inspection any information 
                contained therein which he determines relates 
                to any trade secret, patent, process, style of 
                work, or apparatus, of the organization, if he 
                determines that public disclosure of such 
                information would adversely affect the 
                organization. The Secretary shall withhold from 
                public inspection any information contained in 
                supporting papers described in subparagraph (A) 
                or (B) the public disclosure of which he 
                determines would adversely affect the national 
                defense.
          (2) Inspection by committees of Congress.--Section 
        6103(f) shall apply with respect to--
                  (A) the application for exemption of any 
                organization described in section 501(c) or (d) 
                which is exempt from taxation under section 
                501(a) for any taxable year or notice of status 
                of any political organization which is exempt 
                from taxation under section 527 for any taxable 
                year, and any application referred to in 
                subparagraph (B) of subsection (a)(1) of this 
                section, and
                  (B) any other papers which are in the 
                possession of the Secretary and which relate to 
                such application,
        as if such papers constituted returns.
          (3) Information available on Internet and in 
        person.--
                  (A) In general.--The Secretary shall make 
                publicly available, on the Internet and at the 
                offices of the Internal Revenue Service--
                          (i) a list of all political 
                        organizations which file a notice with 
                        the Secretary under section 527(i), and
                          (ii) the name, address, electronic 
                        mailing address, custodian of records, 
                        and contact person for such 
                        organization.
                  (B) Time to make information available.--The 
                Secretary shall make available the information 
                required under subparagraph (A) not later than 
                5 business days after the Secretary receives a 
                notice from a political organization under 
                section 527(i).
  (b) Inspection of annual returns.--The information required 
to be furnished by sections 6033, 6034, and 6058, together with 
the names and addresses of such organizations and trusts, shall 
be made available to the public at such times and in such 
places as the Secretary may prescribe. Nothing in this 
subsection shall authorize the Secretary to disclose the name 
or address of any contributor to any organization or trust 
(other than a private foundation, as defined in section 509(a) 
or a political organization exempt from taxation under section 
527) which is required to furnish such information. In the case 
of an organization described in section 501(d), this subsection 
shall not apply to copies referred to in section 6031(b) with 
respect to such organization. In the case of a trust which is 
required to file a return under section 6034(a), this 
subsection shall not apply to information regarding 
beneficiaries which are not organizations described in section 
170(c). Any annual return which is filed under section 6011 by 
an organization described in section 501(c)(3) and which 
relates to any tax imposed by section 511 (relating to 
imposition of tax on unrelated business income of charitable, 
etc., organizations) shall be treated for purposes of this 
subsection in the same manner as if furnished under section 
6033. Any annual return required to be filed electronically 
under section 6033(n) shall be made available by the Secretary 
to the public as soon as practicable in a machine readable 
format.
  (c) Publication to State officials.--
          (1) General rule for charitable organizations.--In 
        the case of any organization which is described in 
        section 501(c)(3) and exempt from taxation under 
        section 501(a), or has applied under section 508(a) for 
        recognition as an organization described in section 
        501(c)(3), the Secretary at such times and in such 
        manner as he may by regulations prescribe shall--
                  (A) notify the appropriate State officer of a 
                refusal to recognize such organization as an 
                organization described in section 501(c)(3), or 
                of the operation of such organization in a 
                manner which does not meet, or no longer meets, 
                the requirements of its exemption,
                  (B) notify the appropriate State officer of 
                the mailing of a notice of deficiency of tax 
                imposed under section 507 or chapter 41 or 42, 
                and
                  (C) at the request of such appropriate State 
                officer, make available for inspection and 
                copying such returns, filed statements, 
                records, reports, and other information, 
                relating to a determination under subparagraph 
                (A) or (B) as are relevant to any determination 
                under State law.
          (2) Disclosure of proposed actions related to 
        charitable organizations.--
                  (A) Specific notifications.--In the case of 
                an organization to which paragraph (1) applies, 
                the Secretary may disclose to the appropriate 
                State officer--
                          (i) a notice of proposed refusal to 
                        recognize such organization as an 
                        organization described in section 
                        501(c)(3) or a notice of proposed 
                        revocation of such organization's 
                        recognition as an organization exempt 
                        from taxation,
                          (ii) the issuance of a letter of 
                        proposed deficiency of tax imposed 
                        under section 507 or chapter 41 or 42, 
                        and
                          (iii) the names, addresses, and 
                        taxpayer identification numbers of 
                        organizations which have applied for 
                        recognition as organizations described 
                        in section 501(c)(3).
                  (B) Additional disclosures.--Returns and 
                return information of organizations with 
                respect to which information is disclosed under 
                subparagraph (A) may be made available for 
                inspection by or disclosed to an appropriate 
                State officer.
                  (C) Procedures for disclosure.--Information 
                may be inspected or disclosed under 
                subparagraph (A) or (B) only--
                          (i) upon written request by an 
                        appropriate State officer, and
                          (ii) for the purpose of, and only to 
                        the extent necessary in, the 
                        administration of State laws regulating 
                        such organizations.
                Such information may only be inspected by or 
                disclosed to a person other than the 
                appropriate State officer if such person is an 
                officer or employee of the State and is 
                designated by the appropriate State officer to 
                receive the returns or return information under 
                this paragraph on behalf of the appropriate 
                State officer.
                  (D) Disclosures other than by request.--The 
                Secretary may make available for inspection or 
                disclose returns and return information of an 
                organization to which paragraph (1) applies to 
                an appropriate State officer of any State if 
                the Secretary determines that such returns or 
                return information may constitute evidence of 
                noncompliance under the laws within the 
                jurisdiction of the appropriate State officer.
          (3) Disclosure with respect to certain other exempt 
        organizations.--Upon written request by an appropriate 
        State officer, the Secretary may make available for 
        inspection or disclosure returns and return information 
        of any organization described in section 501(c) (other 
        than organizations described in paragraph (1) or (3) 
        thereof) for the purpose of, and only to the extent 
        necessary in, the administration of State laws 
        regulating the solicitation or administration of the 
        charitable funds or charitable assets of such 
        organizations. Such information may only be inspected 
        by or disclosed to a person other than the appropriate 
        State officer if such person is an officer or employee 
        of the State and is designated by the appropriate State 
        officer to receive the returns or return information 
        under this paragraph on behalf of the appropriate State 
        officer.
          (4) Use in civil judicial and administrative 
        proceedings.--Returns and return information disclosed 
        pursuant to this subsection may be disclosed in civil 
        administrative and civil judicial proceedings 
        pertaining to the enforcement of State laws regulating 
        such organizations in a manner prescribed by the 
        Secretary similar to that for tax administration 
        proceedings under section 6103(h)(4).
          (5) No disclosure if impairment.--Returns and return 
        information shall not be disclosed under this 
        subsection, or in any proceeding described in paragraph 
        (4), to the extent that the Secretary determines that 
        such disclosure would seriously impair Federal tax 
        administration.
          (6) Definitions.--For purposes of this subsection--
                  (A) Return and return information.--The terms 
                ``return'' and ``return information'' have the 
                respective meanings given to such terms by 
                section 6103(b).
                  (B) Appropriate State officer.--The term 
                ``appropriate State officer'' means--
                          (i) the State attorney general,
                          (ii) the State tax officer,
                          (iii) in the case of an organization 
                        to which paragraph (1) applies, any 
                        other State official charged with 
                        overseeing organizations of the type 
                        described in section 501(c)(3), and
                          (iv) in the case of an organization 
                        to which paragraph (3) applies, the 
                        head of an agency designated by the 
                        State attorney general as having 
                        primary responsibility for overseeing 
                        the solicitation of funds for 
                        charitable purposes.
  (d) Public inspection of certain annual returns, reports, 
applications for exemption, and notices of status.--
          (1) In general.--In the case of an organization 
        described in subsection (c) or (d) of section 501 and 
        exempt from taxation under section 501(a) or an 
        organization exempt from taxation under section 
        527(a)--
                  (A) a copy of--
                          (i) the annual return filed under 
                        section 6033 (relating to returns by 
                        exempt organizations) by such 
                        organization,
                          (ii) any annual return which is filed 
                        under section 6011 by an organization 
                        described in section 501(c)(3) and 
                        which relates to any tax imposed by 
                        section 511 (relating to imposition of 
                        tax on unrelated business income of 
                        charitable, etc., organizations),
                          (iii) if the organization filed an 
                        application for recognition of 
                        exemption under section 501 or notice 
                        of status under section 527(i), the 
                        exempt status application materials or 
                        any notice materials of such 
                        organization, and
                          (iv) the reports filed under section 
                        527(j) (relating to required disclosure 
                        of expenditures and contributions) by 
                        such organization,
                shall be made available by such organization 
                for inspection during regular business hours by 
                any individual at the principal office of such 
                organization and, if such organization 
                regularly maintains 1 or more regional or 
                district offices having 3 or more employees, at 
                each such regional or district office, and
                  (B) upon request of an individual made at 
                such principal office or such a regional or 
                district office, a copy of such annual return, 
                reports, and exempt status application 
                materials or such notice materials shall be 
                provided to such individual without charge 
                other than a reasonable fee for any 
                reproduction and mailing costs.
        The request described in subparagraph (B) must be made 
        in person or in writing. If such request is made in 
        person, such copy shall be provided immediately and, if 
        made in writing, shall be provided within 30 days.
          (2) 3-year limitation on inspection of returns.--
        Paragraph (1) shall apply to an annual return filed 
        under section 6011 or 6033 only during the 3-year 
        period beginning on the last day prescribed for filing 
        such return (determined with regard to any extension of 
        time for filing).
          (3) Exceptions from disclosure requirement.--
                  (A) Nondisclosure of contributors, etc..--In 
                the case of an organization which is not a 
                private foundation (within the meaning of 
                section 509(a)) or a political organization 
                exempt from taxation under section 527, 
                paragraph (1) shall not require the disclosure 
                of the name or address of any contributor to 
                the organization. In the case of an 
                organization described in section 501(d), 
                paragraph (1) shall not require the disclosure 
                of the copies referred to in section 6031(b) 
                with respect to such organization.
                  (B) Nondisclosure of certain other 
                information.--Paragraph (1) shall not require 
                the disclosure of any information if the 
                Secretary withheld such information from public 
                inspection under subsection (a)(1)(D).
          (4) Limitation on providing copies.--Paragraph (1)(B) 
        shall not apply to any request if, in accordance with 
        regulations promulgated by the Secretary, the 
        organization has made the requested documents widely 
        available, or the Secretary determines, upon 
        application by an organization, that such request is 
        part of a harassment campaign and that compliance with 
        such request is not in the public interest.
          (5) Exempt status application materials.--For 
        purposes of paragraph (1), the term ``exempt status 
        application materials'' means the application for 
        recognition of exemption under section 501 and any 
        papers submitted in support of such application and any 
        letter or other document issued by the Internal Revenue 
        Service with respect to such application.
          (6) Notice materials.--For purposes of paragraph (1), 
        the term ``notice materials'' means the notice of 
        status filed under section 527(i) and any papers 
        submitted in support of such notice and any letter or 
        other document issued by the Internal Revenue Service 
        with respect to such notice.
          (7) Disclosure of reports by Internal Revenue 
        Service.--Any report filed by an organization under 
        section 527(j) (relating to required disclosure of 
        expenditures and contributions) shall be made available 
        to the public at such times and in such places as the 
        Secretary may prescribe.
          (8) Application to nonexempt charitable trusts and 
        nonexempt private foundations.--The organizations 
        referred to in paragraphs (1) and (2) of section 
        6033(d) shall comply with the requirements of this 
        subsection relating to annual returns filed under 
        section 6033 in the same manner as the organizations 
        referred to in paragraph (1).

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SEC. 6108. STATISTICAL PUBLICATIONS AND STUDIES.

  (a) Publication or other disclosure of statistics of 
income.--The Secretary shall prepare and publish not less than 
annually statistics reasonably available with respect to the 
operations of the internal revenue laws, including 
classifications of taxpayers and of income, the amounts claimed 
or allowed as deductions, exemptions, and credits, and any 
other facts deemed pertinent and valuable.
  (b) Special statistical studies.--The Secretary may, upon 
written request by any party or parties, make special 
statistical studies and compilations involving return 
information (as defined in section 6103(b)(2)) and furnish to 
such party or parties transcripts of any such special 
statistical study or compilation. A reasonable fee may be 
prescribed for the cost of the work or services performed for 
such party or parties.
  (c) Anonymous form.--No publication or other disclosure of 
statistics or other information required or authorized by 
subsection (a) or special statistical study authorized by 
subsection (b) shall in any manner permit the statistics, 
study, or any information so published, furnished, or otherwise 
disclosed to be associated with, or otherwise identify, 
directly or indirectly, a particular taxpayer.
  (d) Statistical Support for National Taxpayer Advocate.--Upon 
request of the National Taxpayer Advocate, the Secretary shall, 
to the extent practicable, provide the National Taxpayer 
Advocate with statistical support in connection with the 
preparation by the National Taxpayer Advocate of the annual 
report described in section 7803(c)(2)(B)(ii). Such statistical 
support shall include statistical studies, compilations, and 
the review of information provided by the National Taxpayer 
Advocate for statistical validity and sound statistical 
methodology.

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CHAPTER 64--COLLECTION

           *       *       *       *       *       *       *


Subchapter A--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 6306. QUALIFIED TAX COLLECTION CONTRACTS.

  (a) In general.--Nothing in any provision of law shall be 
construed to prevent the Secretary from entering into a 
qualified tax collection contract.
  (b) Qualified tax collection contract.--For purposes of this 
section, the term ``qualified tax collection contract'' means 
any contract which--
          (1) is for the services of any person (other than an 
        officer or employee of the Treasury Department)--
                  (A) to locate and contact any taxpayer 
                specified by the Secretary,
                  (B) to request full payment from such 
                taxpayer of an amount of Federal tax specified 
                by the Secretary and, if such request cannot be 
                met by the taxpayer, to offer the taxpayer an 
                installment agreement providing for full 
                payment of such amount during a period not to 
                exceed [5 years] 7 years, and
                  (C) to obtain financial information specified 
                by the Secretary with respect to such taxpayer,
          (2) prohibits each person providing such services 
        under such contract from committing any act or omission 
        which employees of the Internal Revenue Service are 
        prohibited from committing in the performance of 
        similar services,
          (3) prohibits subcontractors from--
                  (A) having contacts with taxpayers,
                  (B) providing quality assurance services, and
                  (C) composing debt collection notices, and
          (4) permits subcontractors to perform other services 
        only with the approval of the Secretary.
  (c) Collection of inactive tax receivables.--
          (1) In general.--Notwithstanding any other provision 
        of law, the Secretary shall enter into one or more 
        qualified tax collection contracts for the collection 
        of all outstanding inactive tax receivables.
          (2) Inactive tax receivables.--For purposes of this 
        section--
                  (A) In general.--The term ``inactive tax 
                receivable'' means any tax receivable if--
                          (i) at any time after assessment, the 
                        Internal Revenue Service removes such 
                        receivable from the active inventory 
                        for lack of resources or inability to 
                        locate the taxpayer,
                          (ii) [more than 1/3 of the period of 
                        the applicable statute of limitation 
                        has lapsed] more than 2 years has 
                        passed since assessment and such 
                        receivable has not been assigned for 
                        collection to any employee of the 
                        Internal Revenue Service, or
                          (iii) in the case of a receivable 
                        which has been assigned for collection, 
                        more than 365 days have passed without 
                        interaction with the taxpayer or a 
                        third party for purposes of furthering 
                        the collection of such receivable.
                  (B) Tax receivable.--The term ``tax 
                receivable'' means any outstanding assessment 
                which the Internal Revenue Service includes in 
                potentially collectible inventory.
  (d) Certain tax receivables not eligible for collection under 
qualified tax collections contracts.--A tax receivable shall 
not be eligible for collection pursuant to a qualified tax 
collection contract if such receivable--
          (1) is subject to a pending or active offer-in-
        compromise or installment agreement,
          (2) is classified as an innocent spouse case,
          (3) involves a taxpayer identified by the Secretary 
        as being--
                  (A) deceased,
                  (B) under the age of 18,
                  (C) in a designated combat zone, [or]
                  (D) a victim of tax-related identity theft,
                  (E) a taxpayer substantially all of whose 
                income consists of disability insurance 
                benefits under section 223 of the Social 
                Security Act or supplemental security income 
                benefits under title XVI of the Social Security 
                Act (including supplemental security income 
                benefits of the type described in section 1616 
                of such Act or section 212 of Public Law 93-
                66), or
                  (F) a taxpayer who is an individual with 
                adjusted gross income, as determined for the 
                most recent taxable year for which such 
                information is available, which does not exceed 
                200 percent of the applicable poverty level (as 
                determined by the Secretary),
          (4) is currently under examination, litigation, 
        criminal investigation, or levy, or
          (5) is currently subject to a proper exercise of a 
        right of appeal under this title.
  (e) Fees.--The Secretary may retain and use--
          (1) an amount not in excess of 25 percent of the 
        amount collected under any qualified tax collection 
        contract for the costs of services performed under such 
        contract, and
          (2) an amount not in excess of 25 percent of such 
        amount collected to fund the special compliance 
        personnel program account under section 6307.
The Secretary shall keep adequate records regarding amounts so 
retained and used. The amount credited as paid by any taxpayer 
shall be determined without regard to this subsection.
  (f) No Federal liability.--The United States shall not be 
liable for any act or omission of any person performing 
services under a qualified tax collection contract.
  (g) Application of Fair Debt Collection Practices Act.--The 
provisions of the Fair Debt Collection Practices Act (15 U.S.C. 
1692 et seq.) shall apply to any qualified tax collection 
contract, except to the extent superseded by section 6304, 
section 7602(c), or by any other provision of this title.
  (h) Contracting priority.--In contracting for the services of 
any person under this section, the Secretary shall utilize 
private collection contractors and debt collection centers on 
the schedule required under section 3711(g) of title 31, United 
States Code, including the technology and communications 
infrastructure established therein, to the extent such private 
collection contractors and debt collection centers are 
appropriate to carry out the purposes of this section.
  (i) Taxpayers in presidentially declared disaster areas.--The 
Secretary may prescribe procedures under which a taxpayer 
determined to be affected by a Federally declared disaster (as 
defined by section 165(i)(5)) may request--
          (1) relief from immediate collection measures by 
        contractors under this section, and
          (2) a return of the inactive tax receivable to the 
        inventory of the Internal Revenue Service to be 
        collected by an employee thereof.
  (j) Report to Congress.--Not later than 90 days after the 
last day of each fiscal year (beginning with the first such 
fiscal year ending after the date of the enactment of this 
subsection), the Secretary shall submit to the Committee on 
Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate a report with respect to 
qualified tax collection contracts under this section which 
shall include--
          (1) annually, with respect to such fiscal year--
                  (A) the total number and amount of tax 
                receivables provided to each contractor for 
                collection under this section,
                  (B) the total amounts collected (and amounts 
                of installment agreements entered into under 
                subsection (b)(1)(B)) with respect to each 
                contractor and the collection costs incurred 
                (directly and indirectly) by the Internal 
                Revenue Service with respect to such amounts,
                  (C) the impact of such contracts on the total 
                number and amount of unpaid assessments, and on 
                the number and amount of assessments collected 
                by Internal Revenue Service personnel after 
                initial contact by a contractor,
                  (D) the amount of fees retained by the 
                Secretary under subsection (e) and a 
                description of the use of such funds, and
                  (E) a disclosure safeguard report in a form 
                similar to that required under section 
                6103(p)(5), and
          (2) biannually (beginning with the second report 
        submitted under this subsection)--
                  (A) an independent evaluation of contractor 
                performance, and
                  (B) a measurement plan that includes a 
                comparison of the best practices used by the 
                private collectors to the collection techniques 
                used by the Internal Revenue Service and 
                mechanisms to identify and capture information 
                on successful collection techniques used by the 
                contractors that could be adopted by the 
                Internal Revenue Service.
  (k) Cross references.--
                  (1) For damages for certain unauthorized 
                collection actions by persons performing 
                services under a qualified tax collection 
                contract, see section 7433A.
                  (2) For application of Taxpayer Assistance 
                Orders to persons performing services under a 
                qualified tax collection contract, see section 
                7811(g).

SEC. 6307. SPECIAL COMPLIANCE PERSONNEL PROGRAM ACCOUNT.

  (a) Establishment of a special compliance personnel program 
account.--The Secretary shall establish an account within the 
Department for carrying out a program consisting of the hiring, 
training, and employment of special compliance personnel, and 
shall transfer to such account from time to time amounts 
retained by the Secretary under section 6306(e)(2).
  (b) Restrictions.--The program described in subsection (a) 
shall be subject to the following restrictions:
          (1) No funds shall be transferred to such account 
        except as described in subsection (a).
          (2) No other funds from any other source shall be 
        expended for special compliance personnel employed 
        under such program[, and no funds from such account 
        shall be expended for the hiring of any personnel other 
        than special compliance personnel.].
          (3) Notwithstanding any other authority, the 
        Secretary is prohibited from spending funds out of such 
        account [for any purpose other than for costs under 
        such program associated with the employment of special 
        compliance personnel and the retraining and 
        reassignment of current noncollections personnel as 
        special compliance personnel, and to reimburse the 
        Internal Revenue Service or other government agencies 
        for the cost of administering qualified tax collection 
        contracts under section 6306.] for other than program 
        costs.
  (c) Reporting.--Not later than March of each year, the 
Commissioner of Internal Revenue shall submit a report to the 
Committees on Finance and Appropriations of the Senate and the 
Committees on Ways and Means and Appropriations of the House of 
Representatives consisting of the following:
          (1) For the preceding fiscal year, all funds received 
        in the account established under subsection (a), 
        administrative and program costs for the program 
        described in such subsection, the number of special 
        compliance personnel hired and employed under the 
        program, and the amount of revenue actually collected 
        by such personnel.
          (2) For the current fiscal year, all actual and 
        estimated funds received or to be received in the 
        account, all actual and estimated administrative and 
        program costs, the number of all actual and estimated 
        special compliance personnel hired and employed under 
        the program, and the actual and estimated revenue 
        actually collected or to be collected by such 
        personnel.
          (3) For the following fiscal year, an estimate of all 
        funds to be received in the account, all estimated 
        administrative and program costs, the estimated number 
        of special compliance personnel hired and employed 
        under the program, and the estimated revenue to be 
        collected by such personnel.
  (d) Definitions.--For purposes of this section--
          (1) Special compliance personnel.--The term ``special 
        compliance personnel'' means individuals employed by 
        the Internal Revenue Service as field function 
        collection officers or in a similar position, or 
        employed to collect taxes using the automated 
        collection system or an equivalent replacement system.
          (2) Program costs.--The term ``program costs'' 
        means--
                  (A) total salaries (including locality pay 
                and bonuses), benefits, and employment taxes 
                for special compliance personnel employed or 
                trained under the program described in 
                subsection (a), [and]
                  (B) direct overhead costs, salaries, 
                benefits, and employment taxes relating to 
                support staff, rental payments, office 
                equipment and furniture, travel, data 
                processing services, vehicle costs, utilities, 
                [telecommunications] communications, software, 
                technology, postage, printing and reproduction, 
                supplies and materials, lands and structures, 
                insurance claims, and indemnities for special 
                compliance personnel hired and employed under 
                this section[.], and
                  (C) reimbursement of the Internal Revenue 
                Service or other government agencies for the 
                cost of administering the qualified tax 
                collection program under section 6306.
        For purposes of subparagraph (B), the cost of 
        management and supervision of special compliance 
        personnel shall be taken into account as direct 
        overhead costs to the extent such costs, when included 
        in total program costs under this paragraph, do not 
        represent more than 10 percent of such total costs.

           *       *       *       *       *       *       *


Subchapter B--RECEIPT OF PAYMENT

           *       *       *       *       *       *       *


SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

  (a) Authority to receive.--It shall be lawful for the 
Secretary to receive for internal revenue taxes (or in payment 
for internal revenue stamps) any commercially acceptable means 
that the Secretary deems appropriate to the extent and under 
the conditions provided in regulations prescribed by the 
Secretary.
  (b) Ultimate liability.--If a check, money order, or other 
method of payment, including payment by credit card, debit 
card, or charge card so received is not duly paid, or is paid 
and subsequently charged back to the Secretary, the person by 
whom such check, or money order, or other method of payment has 
been tendered shall remain liable for the payment of the tax or 
for the stamps, and for all legal penalties and additions, to 
the same extent as if such check, money order, or other method 
of payment had not been tendered.
  (c) Liability of banks and others.--If any certified, 
treasurer's, or cashier's check (or other guaranteed draft), or 
any money order, or any other means of payment that has been 
guaranteed by a financial institution (such as a credit card, 
debit card, or charge card transaction which has been 
guaranteed expressly by a financial institution) so received is 
not duly paid, the United States shall, in addition to its 
right to exact payment from the party originally indebted 
therefor, have a lien for--
          (1) the amount of such check (or draft) upon all 
        assets of the financial institution on which drawn,
          (2) the amount of such money order upon all the 
        assets of the issuer thereof, or
          (3) the guaranteed amount of any other transaction 
        upon all the assets of the institution making such 
        guarantee,
and such amount shall be paid out of such assets in preference 
to any other claims whatsoever against such financial 
institution, issuer, or guaranteeing institution, except the 
necessary costs and expenses of administration and the 
reimbursement of the United States for the amount expended in 
the redemption of the circulating notes of such financial 
institution.
  (d) Payment by other means.--
          (1) Authority to prescribe regulations.--The 
        Secretary shall prescribe such regulations as the 
        Secretary deems necessary to receive payment by 
        commercially acceptable means, including regulations 
        that--
                  (A) specify which methods of payment by 
                commercially acceptable means will be 
                acceptable,
                  (B) specify when payment by such means will 
                be considered received,
                  (C) identify types of nontax matters related 
                to payment by such means that are to be 
                resolved by persons ultimately liable for 
                payment and financial intermediaries, without 
                the involvement of the Secretary, and
                  (D) ensure that tax matters will be resolved 
                by the Secretary, without the involvement of 
                financial intermediaries.
          (2) Authority to enter into contracts.--
        Notwithstanding section 3718(f) of title 31, United 
        States Code, the Secretary is authorized to enter into 
        contracts to obtain services related to receiving 
        payment by other means where cost beneficial to the 
        Government. The Secretary may not pay any fee or 
        provide any other consideration under any such contract 
        for the use of credit, debit, or charge cards for the 
        payment of taxes imposed by subtitle A. The preceding 
        sentence shall not apply to the extent that the 
        Secretary ensures that any such fee or other 
        consideration is fully recouped by the Secretary in the 
        form of fees paid to the Secretary by persons paying 
        taxes imposed under subtitle A with credit, debit, or 
        charge cards pursuant to such contract. Notwithstanding 
        the preceding sentence, the Secretary shall seek to 
        minimize the amount of any fee or other consideration 
        that the Secretary pays under any such contract.
          (3) Special provisions for use of credit cards.--If 
        use of credit cards is accepted as a method of payment 
        of taxes pursuant to subsection (a)--
                  (A) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) by a 
                person by use of a credit card shall not be 
                subject to section 161 of the Truth in Lending 
                Act (15 U.S.C. 1666), or to any similar 
                provisions of State law, if the error alleged 
                by the person is an error relating to the 
                underlying tax liability, rather than an error 
                relating to the credit card account such as a 
                computational error or numerical transposition 
                in the credit card transaction or an issue as 
                to whether the person authorized payment by use 
                of the credit card,
                  (B) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) shall not 
                be subject to section 170 of the Truth in 
                Lending Act (15 U.S.C. 1666i), or to any 
                similar provisions of State law,
                  (C) a payment of internal revenue taxes (or a 
                payment for internal revenue stamps) by a 
                person by use of a debit card shall not be 
                subject to section 908 of the Electronic Fund 
                Transfer Act (15 U.S.C. 1693f), or to any 
                similar provisions of State law, if the error 
                alleged by the person is an error relating to 
                the underlying tax liability, rather than an 
                error relating to the debit card account such 
                as a computational error or numerical 
                transposition in the debit card transaction or 
                an issue as to whether the person authorized 
                payment by use of the debit card,
                  (D) the term ``creditor'' under section 
                103(g) of the Truth in Lending Act (15 U.S.C. 
                1602(g)) shall not include the Secretary with 
                respect to credit card transactions in payment 
                of internal revenue taxes (or payment for 
                internal revenue stamps), and
                  (E) notwithstanding any other provision of 
                law to the contrary, in the case of payment 
                made by credit card or debit card transaction 
                of an amount owed to a person as the result of 
                the correction of an error under section 161 of 
                the Truth in Lending Act (15 U.S.C. 1666) or 
                section 908 of the Electronic Fund Transfer Act 
                (15 U.S.C. 1693f), the Secretary is authorized 
                to provide such amount to such person as a 
                credit to that person's credit card or debit 
                card account through the applicable credit card 
                or debit card system.
  (e) Confidentiality of information.--
          (1) In general.--Except as otherwise authorized by 
        this subsection, no person may use or disclose any 
        information relating to credit or debit card 
        transactions obtained pursuant to section 6103(k)(9) 
        other than for purposes directly related to the 
        processing of such transactions, or the billing or 
        collection of amounts charged or debited pursuant 
        thereto.
          (2) Exceptions.--(A) Debit or credit card issuers or 
        others acting on behalf of such issuers may also use 
        and disclose such information for purposes directly 
        related to servicing an issuer's accounts.
                  (B) Debit or credit card issuers or others 
                directly involved in the processing of credit 
                or debit card transactions or the billing or 
                collection of amounts charged or debited 
                thereto may also use and disclose such 
                information for purposes directly related to--
                  (i) statistical risk and profitability 
                assessment;
                  (ii) transferring receivables, accounts, or 
                interest therein;
                  (iii) auditing the account information;
                  (iv) complying with Federal, State, or local 
                law; and
                  (v) properly authorized civil, criminal, or 
                regulatory investigation by Federal, State, or 
                local authorities.
          (3) Procedures.--Use and disclosure of information 
        under this paragraph shall be made only to the extent 
        authorized by written procedures promulgated by the 
        Secretary.
          (4) Cross reference.--For provision providing for 
        civil damages for violation of paragraph (1), see 
        section 7431.

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Subchapter C--LIEN FOR TAXES

           *       *       *       *       *       *       *


PART I--DUE PROCESS FOR LIENS

           *       *       *       *       *       *       *


SEC. 6320. NOTICE AND OPPORTUNITY FOR HEARING UPON FILING OF NOTICE OF 
                    LIEN.

  (a) Requirement of notice.--
          (1) In general.--The Secretary shall notify in 
        writing the person described in section 6321 of the 
        filing of a notice of lien under section 6323.
          (2) Time and method for notice.--The notice required 
        under paragraph (1) shall be--
                  (A) given in person;
                  (B) left at the dwelling or usual place of 
                business of such person; or
                  (C) sent by certified or registered mail to 
                such person's last known address,
        not more than 5 business days after the day of the 
        filing of the notice of lien.
          (3) Information included with notice.--The notice 
        required under paragraph (1) shall include in simple 
        and nontechnical terms--
                  (A) the amount of unpaid tax;
                  (B) the right of the person to request a 
                hearing during the 30-day period beginning on 
                the day after the 5-day period described in 
                paragraph (2);
                  (C) the administrative appeals available to 
                the taxpayer with respect to such lien and the 
                procedures relating to such appeals;
                  (D) the provisions of this title and 
                procedures relating to the release of liens on 
                property; and
                  (E) the provisions of section 7345 relating 
                to the certification of seriously delinquent 
                tax debts and the denial, revocation, or 
                limitation of passports of individuals with 
                such debts pursuant to section 32101 of the 
                FAST Act.
  (b) Right to fair hearing.--
          (1) In general.--If the person requests a hearing in 
        writing under subsection (a)(3)(B) and states the 
        grounds for the requested hearing, such hearing shall 
        be held by the [Internal Revenue Service Office of 
        Appeals] Internal Revenue Service Independent Office of 
        Appeals.
          (2) One hearing per period.--A person shall be 
        entitled to only one hearing under this section with 
        respect to the taxable period to which the unpaid tax 
        specified in subsection (a)(3)(A) relates.
          (3) Impartial officer.--The hearing under this 
        subsection shall be conducted by an officer or employee 
        who has had no prior involvement with respect to the 
        unpaid tax specified in subsection (a)(3)(A) before the 
        first hearing under this section or section 6330. A 
        taxpayer may waive the requirement of this paragraph.
          (4) Coordination with section 6330.--To the extent 
        practicable, a hearing under this section shall be held 
        in conjunction with a hearing under section 6330.
  (c) Conduct of hearing; review; suspensions.--For purposes of 
this section, subsections (c), (d) (other than paragraph (3)(B) 
thereof), (e), and (g) of section 6330 shall apply.

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Subchapter D--SEIZURE OF PROPERTY FOR COLLECTION OF TAXES

           *       *       *       *       *       *       *


PART I--DUE PROCESS FOR COLLECTIONS

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SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.

  (a) Requirement of notice before levy.--
          (1) In general.--No levy may be made on any property 
        or right to property of any person unless the Secretary 
        has notified such person in writing of their right to a 
        hearing under this section before such levy is made. 
        Such notice shall be required only once for the taxable 
        period to which the unpaid tax specified in paragraph 
        (3)(A) relates.
          (2) Time and method for notice.--The notice required 
        under paragraph (1) shall be--
                  (A) given in person;
                  (B) left at the dwelling or usual place of 
                business of such person; or
                  (C) sent by certified or registered mail, 
                return receipt requested, to such person's last 
                known address;
        not less than 30 days before the day of the first levy 
        with respect to the amount of the unpaid tax for the 
        taxable period.
          (3) Information included with notice.--The notice 
        required under paragraph (1) shall include in simple 
        and nontechnical terms--
                  (A) the amount of unpaid tax;
                  (B) the right of the person to request a 
                hearing during the 30-day period under 
                paragraph (2); and
                  (C) the proposed action by the Secretary and 
                the rights of the person with respect to such 
                action, including a brief statement which sets 
                forth--
                          (i) the provisions of this title 
                        relating to levy and sale of property;
                          (ii) the procedures applicable to the 
                        levy and sale of property under this 
                        title;
                          (iii) the administrative appeals 
                        available to the taxpayer with respect 
                        to such levy and sale and the 
                        procedures relating to such appeals;
                          (iv) the alternatives available to 
                        taxpayers which could prevent levy on 
                        property (including installment 
                        agreements under section 6159); and
                          (v) the provisions of this title and 
                        procedures relating to redemption of 
                        property and release of liens on 
                        property.
  (b) Right to fair hearing.--
          (1) In general.--If the person requests a hearing in 
        writing under subsection (a)(3)(B) and states the 
        grounds for the requested hearing, such hearing shall 
        be held by the [Internal Revenue Service Office of 
        Appeals] Internal Revenue Service Independent Office of 
        Appeals.
          (2) One hearing per period.--A person shall be 
        entitled to only one hearing under this section with 
        respect to the taxable period to which the unpaid tax 
        specified in subsection (a)(3)(A) relates.
          (3) Impartial officer.--The hearing under this 
        subsection shall be conducted by an officer or employee 
        who has had no prior involvement with respect to the 
        unpaid tax specified in subsection (a)(3)(A) before the 
        first hearing under this section or section 6320. A 
        taxpayer may waive the requirement of this paragraph.
  (c) Matters considered at hearing.--In the case of any 
hearing conducted under this section--
          (1) Requirement of investigation.--The appeals 
        officer shall at the hearing obtain verification from 
        the Secretary that the requirements of any applicable 
        law or administrative procedure have been met.
          (2) Issues at hearing.--
                  (A) In general.--The person may raise at the 
                hearing any relevant issue relating to the 
                unpaid tax or the proposed levy, including--
                          (i) appropriate spousal defenses;
                          (ii) challenges to the 
                        appropriateness of collection actions; 
                        and
                          (iii) offers of collection 
                        alternatives, which may include the 
                        posting of a bond, the substitution of 
                        other assets, an installment agreement, 
                        or an offer-in-compromise.
                  (B) Underlying liability.--The person may 
                also raise at the hearing challenges to the 
                existence or amount of the underlying tax 
                liability for any tax period if the person did 
                not receive any statutory notice of deficiency 
                for such tax liability or did not otherwise 
                have an opportunity to dispute such tax 
                liability.
          (3) Basis for the determination.--The determination 
        by an appeals officer under this subsection shall take 
        into consideration--
                  (A) the verification presented under 
                paragraph (1);
                  (B) the issues raised under paragraph (2); 
                and
                  (C) whether any proposed collection action 
                balances the need for the efficient collection 
                of taxes with the legitimate concern of the 
                person that any collection action be no more 
                intrusive than necessary.
          (4) Certain issues precluded.--An issue may not be 
        raised at the hearing if--
                  (A)(i) the issue was raised and considered at 
                a previous hearing under section 6320 or in any 
                other previous administrative or judicial 
                proceeding; and
                          (ii) the person seeking to raise the 
                        issue participated meaningfully in such 
                        hearing or proceeding;
                  (B) the issue meets the requirement of clause 
                (i) or (ii) of section 6702(b)(2)(A); or
                  (C) a final determination has been made with 
                respect to such issue in a proceeding brought 
                under subchapter C of chapter 63.
        This paragraph shall not apply to any issue with 
        respect to which subsection (d)(3)(B) applies.
  (d) Proceeding after hearing.--
          (1) Petition for review by Tax Court.--The person 
        may, within 30 days of a determination under this 
        section, petition the Tax Court for review of such 
        determination (and the Tax Court shall have 
        jurisdiction with respect to such matter).
          (2) Suspension of running of period for filing 
        petition in title 11 cases.--In the case of a person 
        who is prohibited by reason of a case under title 11, 
        United States Code, from filing a petition under 
        paragraph (1) with respect to a determination under 
        this section, the running of the period prescribed by 
        such subsection for filing such a petition with respect 
        to such determination shall be suspended for the period 
        during which the person is so prohibited from filing 
        such a petition, and for 30 days thereafter.
          (3) Jurisdiction retained at irs independent office 
        of appeals.--The [Internal Revenue Service Office of 
        Appeals] Internal Revenue Service Independent Office of 
        Appeals shall retain jurisdiction with respect to any 
        determination made under this section, including 
        subsequent hearings requested by the person who 
        requested the original hearing on issues regarding--
                  (A) collection actions taken or proposed with 
                respect to such determination; and
                  (B) after the person has exhausted all 
                administrative remedies, a change in 
                circumstances with respect to such person which 
                affects such determination.
  (e) Suspension of collections and statute of limitations.--
          (1) In general.--Except as provided in paragraph (2), 
        if a hearing is requested under subsection (a)(3)(B), 
        the levy actions which are the subject of the requested 
        hearing and the running of any period of limitations 
        under section 6502 (relating to collection after 
        assessment), section 6531 (relating to criminal 
        prosecutions), or section 6532 (relating to other 
        suits) shall be suspended for the period during which 
        such hearing, and appeals therein, are pending. In no 
        event shall any such period expire before the 90th day 
        after the day on which there is a final determination 
        in such hearing. Notwithstanding the provisions of 
        section 7421(a), the beginning of a levy or proceeding 
        during the time the suspension under this paragraph is 
        in force may be enjoined by a proceeding in the proper 
        court, including the Tax Court. The Tax Court shall 
        have no jurisdiction under this paragraph to enjoin any 
        action or proceeding unless a timely appeal has been 
        filed under subsection (d)(1) and then only in respect 
        of the unpaid tax or proposed levy to which the 
        determination being appealed relates.
          (2) Levy upon appeal.--Paragraph (1) shall not apply 
        to a levy action while an appeal is pending if the 
        underlying tax liability is not at issue in the appeal 
        and the court determines that the Secretary has shown 
        good cause not to suspend the levy.
  (f) Exceptions.--If--
          (1) the Secretary has made a finding under the last 
        sentence of section 6331(a) that the collection of tax 
        is in jeopardy,
          (2) the Secretary has served a levy on a State to 
        collect a Federal tax liability from a State tax 
        refund,
          (3) the Secretary has served a disqualified 
        employment tax levy, or
          (4) the Secretary has served a Federal contractor 
        levy,
this section shall not apply, except that the taxpayer shall be 
given the opportunity for the hearing described in this section 
within a reasonable period of time after the levy.
  (g) Frivolous requests for hearing, etc..--Notwithstanding 
any other provision of this section, if the Secretary 
determines that any portion of a request for a hearing under 
this section or section 6320 meets the requirement of clause 
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
treat such portion as if it were never submitted and such 
portion shall not be subject to any further administrative or 
judicial review.
  (h) Definitions related to exceptions.--For purposes of 
subsection (f)--
          (1) Disqualified employment tax levy.--A disqualified 
        employment tax levy is any levy in connection with the 
        collection of employment taxes for any taxable period 
        if the person subject to the levy (or any predecessor 
        thereof) requested a hearing under this section with 
        respect to unpaid employment taxes arising in the most 
        recent 2-year period before the beginning of the 
        taxable period with respect to which the levy is 
        served. For purposes of the preceding sentence, the 
        term ``employment taxes'' means any taxes under chapter 
        21, 22, 23, or 24.
          (2) Federal contractor levy.--A Federal contractor 
        levy is any levy if the person whose property is 
        subject to the levy (or any predecessor thereof) is a 
        Federal contractor.

PART II--LEVY

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SEC. 6336. SALE OF PERISHABLE GOODS.

  If the Secretary determines that any property seized is 
liable to perish [or become greatly reduced in price or value 
by keeping, or that such property cannot be kept without great 
expense], he shall appraise the value of such property and--
          (1) Return to owner.--If the owner of the property 
        can be readily found, the Secretary shall give him 
        notice of such determination of the appraised value of 
        the property. The property shall be returned to the 
        owner if, within such time as may be specified in the 
        notice, the owner--
                  (A) Pays to the Secretary an amount equal to 
                the appraised value, or
                  (B) Gives bond in such form, with such 
                sureties, and in such amount as the Secretary 
                shall prescribe, to pay the appraised amount at 
                such time as the Secretary determines to be 
                appropriate in the circumstances.
          (2) Immediate sale.--If the owner does not pay such 
        amount or furnish such bond in accordance with this 
        section, the Secretary shall as soon as practicable 
        make public sale of the property in accordance with 
        such regulations as may be prescribed by the Secretary.

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CHAPTER 65--ABATEMENTS, CREDITS, AND REFUNDS

           *       *       *       *       *       *       *


Subchapter A--PROCEDURE IN GENERAL

           *       *       *       *       *       *       *


SEC. 6402. AUTHORITY TO MAKE CREDITS OR REFUNDS.

  (a) General rule.--In the case of any overpayment, the 
Secretary, within the applicable period of limitations, may 
credit the amount of such overpayment, including any interest 
allowed thereon, against any liability in respect of an 
internal revenue tax on the part of the person who made the 
overpayment and shall, subject to subsections (c), (d), (e), 
and (f), refund any balance to such person.
  (b) Credits against estimated tax.--The Secretary is 
authorized to prescribe regulations providing for the crediting 
against the estimated income tax for any taxable year of the 
amount determined by the taxpayer or the Secretary to be an 
overpayment of the income tax for a preceding taxable year.
  (c) Offset of past-due support against overpayments.--The 
amount of any overpayment to be refunded to the person making 
the overpayment shall be reduced by the amount of any past-due 
support (as defined in section 464(c) of the Social Security 
Act) owed by that person of which the Secretary has been 
notified by a State in accordance with section 464 of such Act. 
The Secretary shall remit the amount by which the overpayment 
is so reduced to the State collecting such support and notify 
the person making the overpayment that so much of the 
overpayment as was necessary to satisfy his obligation for 
past-due support has been paid to the State. The Secretary 
shall apply a reduction under this subsection first to an 
amount certified by the State as past due support under section 
464 of the Social Security Act before any other reductions 
allowed by law. This subsection shall be applied to an 
overpayment prior to its being credited to a person's future 
liability for an internal revenue tax.
  (d) Collection of debts owed to Federal agencies.--
          (1) In general.--Upon receiving notice from any 
        Federal agency that a named person owes a past-due 
        legally enforceable debt (other than past-due support 
        subject to the provisions of subsection (c)) to such 
        agency, the Secretary shall--
                  (A) reduce the amount of any overpayment 
                payable to such person by the amount of such 
                debt;
                  (B) pay the amount by which such overpayment 
                is reduced under subparagraph (A) to such 
                agency; and
                  (C) notify the person making such overpayment 
                that such overpayment has been reduced by an 
                amount necessary to satisfy such debt.
          (2) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection 
        after such overpayment is reduced pursuant to 
        subsection (c) with respect to past-due support 
        collected pursuant to an assignment under section 
        408(a)(3) of the Social Security Act (42 U.S.C. 
        608(a)(3)) and before such overpayment is reduced 
        pursuant to subsections (e) and (f) and before such 
        overpayment is credited to the future liability for tax 
        of such person pursuant to subsection (b). If the 
        Secretary receives notice from a Federal agency or 
        agencies of more than one debt subject to paragraph (1) 
        that is owed by a person to such agency or agencies, 
        any overpayment by such person shall be applied against 
        such debts in the order in which such debts accrued.
          (3) Treatment of OASDI overpayments.--
                  (A) Requirements.--Paragraph (1) shall apply 
                with respect to an OASDI overpayment only if 
                the requirements of paragraphs (1) and (2) of 
                section 3720A(f) of title 31, United States 
                Code, are met with respect to such overpayment.
                  (B) Notice; protection of other persons 
                filing joint return.--
                          (i) Notice.--In the case of a debt 
                        consisting of an OASDI overpayment, if 
                        the Secretary determines upon receipt 
                        of the notice referred to in paragraph 
                        (1) that the refund from which the 
                        reduction described in paragraph (1)(A) 
                        would be made is based upon a joint 
                        return, the Secretary shall--
                                  (I) notify each taxpayer 
                                filing such joint return that 
                                the reduction is being made 
                                from a refund based upon such 
                                return, and
                                  (II) include in such 
                                notification a description of 
                                the procedures to be followed, 
                                in the case of a joint return, 
                                to protect the share of the 
                                refund which may be payable to 
                                another person.
                          (ii) Adjustments based on protections 
                        given to other taxpayers on joint 
                        return.--If the other person filing a 
                        joint return with the person owing the 
                        OASDI overpayment takes appropriate 
                        action to secure his or her proper 
                        share of the refund subject to 
                        reduction under this subsection, the 
                        Secretary shall pay such share to such 
                        other person. The Secretary shall 
                        deduct the amount of such payment from 
                        amounts which are derived from 
                        subsequent reductions in refunds under 
                        this subsection and are payable to a 
                        trust fund referred to in subparagraph 
                        (C).
                  (C) Deposit of amount of reduction into 
                appropriate trust fund.--In lieu of payment, 
                pursuant to paragraph (1)(B), of the amount of 
                any reduction under this subsection to the 
                Commissioner of Social Security, the Secretary 
                shall deposit such amount in the Federal Old-
                Age and Survivors Insurance Trust Fund or the 
                Federal Disability Insurance Trust Fund, 
                whichever is certified to the Secretary as 
                appropriate by the Commissioner of Social 
                Security.
                  (D) OASDI overpayment.--For purposes of this 
                paragraph, the term ``OASDI overpayment'' means 
                any overpayment of benefits made to an 
                individual under title II of the Social 
                Security Act.
  (e) Collection of past-due, legally enforceable State income 
tax obligations.--
          (1) In general.--Upon receiving notice from any State 
        that a named person owes a past-due, legally 
        enforceable State income tax obligation to such State, 
        the Secretary shall, under such conditions as may be 
        prescribed by the Secretary--
                  (A) reduce the amount of any overpayment 
                payable to such person by the amount of such 
                State income tax obligation;
                  (B) pay the amount by which such overpayment 
                is reduced under subparagraph (A) to such State 
                and notify such State of such person's name, 
                taxpayer identification number, address, and 
                the amount collected; and
                  (C) notify the person making such overpayment 
                that the overpayment has been reduced by an 
                amount necessary to satisfy a past-due, legally 
                enforceable State income tax obligation.
        If an offset is made pursuant to a joint return, the 
        notice under subparagraph (B) shall include the names, 
        taxpayer identification numbers, and addresses of each 
        person filing such return.
          (2) Offset permitted only against residents of State 
        seeking offset.--Paragraph (1) shall apply to an 
        overpayment by any person for a taxable year only if 
        the address shown on the Federal return for such 
        taxable year of the overpayment is an address within 
        the State seeking the offset.
          (3) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection--
                  (A) after such overpayment is reduced 
                pursuant to--
                          (i) subsection (a) with respect to 
                        any liability for any internal revenue 
                        tax on the part of the person who made 
                        the overpayment;
                          (ii) subsection (c) with respect to 
                        past-due support; and
                          (iii) subsection (d) with respect to 
                        any past-due, legally enforceable debt 
                        owed to a Federal agency; and
                  (B) before such overpayment is credited to 
                the future liability for any Federal internal 
                revenue tax of such person pursuant to 
                subsection (b).
        If the Secretary receives notice from one or more 
        agencies of the State of more than one debt subject to 
        paragraph (1) or subsection (f) that is owed by such 
        person to such an agency, any overpayment by such 
        person shall be applied against such debts in the order 
        in which such debts accrued.
          (4) Notice; consideration of evidence.--No State may 
        take action under this subsection until such State--
                  (A) notifies by certified mail with return 
                receipt the person owing the past-due State 
                income tax liability that the State proposes to 
                take action pursuant to this section;
                  (B) gives such person at least 60 days to 
                present evidence that all or part of such 
                liability is not past-due or not legally 
                enforceable;
                  (C) considers any evidence presented by such 
                person and determines that an amount of such 
                debt is past-due and legally enforceable; and
                  (D) satisfies such other conditions as the 
                Secretary may prescribe to ensure that the 
                determination made under subparagraph (C) is 
                valid and that the State has made reasonable 
                efforts to obtain payment of such State income 
                tax obligation.
          (5) Past-due, legally enforceable State income tax 
        obligation.--For purposes of this subsection, the term 
        ``past-due, legally enforceable State income tax 
        obligation'' means a debt--
                  (A)(i) which resulted from--
                                  (I) a judgment rendered by a 
                                court of competent jurisdiction 
                                which has determined an amount 
                                of State income tax to be due; 
                                or
                                  (II) a determination after an 
                                administrative hearing which 
                                has determined an amount of 
                                State income tax to be due; and
                          (ii) which is no longer subject to 
                        judicial review; or
                  (B) which resulted from a State income tax 
                which has been assessed but not collected, the 
                time for redetermination of which has expired, 
                and which has not been delinquent for more than 
                10 years.
        For purposes of this paragraph, the term ``State income 
        tax'' includes any local income tax administered by the 
        chief tax administration agency of the State.
          (6) Regulations.--The Secretary shall issue 
        regulations prescribing the time and manner in which 
        States must submit notices of past-due, legally 
        enforceable State income tax obligations and the 
        necessary information that must be contained in or 
        accompany such notices. The regulations shall specify 
        the types of State income taxes and the minimum amount 
        of debt to which the reduction procedure established by 
        paragraph (1) may be applied. The regulations may 
        require States to pay a fee to reimburse the Secretary 
        for the cost of applying such procedure. Any fee paid 
        to the Secretary pursuant to the preceding sentence 
        shall be used to reimburse appropriations which bore 
        all or part of the cost of applying such procedure.
          (7) Erroneous payment to State.--Any State receiving 
        notice from the Secretary that an erroneous payment has 
        been made to such State under paragraph (1) shall pay 
        promptly to the Secretary, in accordance with such 
        regulations as the Secretary may prescribe, an amount 
        equal to the amount of such erroneous payment (without 
        regard to whether any other amounts payable to such 
        State under such paragraph have been paid to such 
        State).
  (f) Collection of unemployment compensation debts.--
          (1) In general.--Upon receiving notice from any State 
        that a named person owes a covered unemployment 
        compensation debt to such State, the Secretary shall, 
        under such conditions as may be prescribed by the 
        Secretary--
                  (A) reduce the amount of any overpayment 
                payable to such person by the amount of such 
                covered unemployment compensation debt;
                  (B) pay the amount by which such overpayment 
                is reduced under subparagraph (A) to such State 
                and notify such State of such person's name, 
                taxpayer identification number, address, and 
                the amount collected; and
                  (C) notify the person making such overpayment 
                that the overpayment has been reduced by an 
                amount necessary to satisfy a covered 
                unemployment compensation debt.
        If an offset is made pursuant to a joint return, the 
        notice under subparagraph (C) shall include information 
        related to the rights of a spouse of a person subject 
        to such an offset.
          (2) Priorities for offset.--Any overpayment by a 
        person shall be reduced pursuant to this subsection--
                  (A) after such overpayment is reduced 
                pursuant to--
                          (i) subsection (a) with respect to 
                        any liability for any internal revenue 
                        tax on the part of the person who made 
                        the overpayment;
                          (ii) subsection (c) with respect to 
                        past-due support; and
                          (iii) subsection (d) with respect to 
                        any past-due, legally enforceable debt 
                        owed to a Federal agency; and
                  (B) before such overpayment is credited to 
                the future liability for any Federal internal 
                revenue tax of such person pursuant to 
                subsection (b).
        If the Secretary receives notice from a State or States 
        of more than one debt subject to paragraph (1) or 
        subsection (e) that is owed by a person to such State 
        or States, any overpayment by such person shall be 
        applied against such debts in the order in which such 
        debts accrued.
          (3) Notice; consideration of evidence.--No State may 
        take action under this subsection until such State--
                  (A) notifies the person owing the covered 
                unemployment compensation debt that the State 
                proposes to take action pursuant to this 
                section;
                  (B) provides such person at least 60 days to 
                present evidence that all or part of such 
                liability is not legally enforceable or is not 
                a covered unemployment compensation debt;
                  (C) considers any evidence presented by such 
                person and determines that an amount of such 
                debt is legally enforceable and is a covered 
                unemployment compensation debt; and
                  (D) satisfies such other conditions as the 
                Secretary may prescribe to ensure that the 
                determination made under subparagraph (C) is 
                valid and that the State has made reasonable 
                efforts to obtain payment of such covered 
                unemployment compensation debt.
          (4) Covered unemployment compensation debt.--For 
        purposes of this subsection, the term ``covered 
        unemployment compensation debt'' means--
                  (A) a past-due debt for erroneous payment of 
                unemployment compensation due to fraud or the 
                person's failure to report earnings which has 
                become final under the law of a State certified 
                by the Secretary of Labor pursuant to section 
                3304 and which remains uncollected;
                  (B) contributions due to the unemployment 
                fund of a State for which the State has 
                determined the person to be liable and which 
                remain uncollected; and
                  (C) any penalties and interest assessed on 
                such debt.
          (5) Regulations.--
                  (A) In general.--The Secretary may issue 
                regulations prescribing the time and manner in 
                which States must submit notices of covered 
                unemployment compensation debt and the 
                necessary information that must be contained in 
                or accompany such notices. The regulations may 
                specify the minimum amount of debt to which the 
                reduction procedure established by paragraph 
                (1) may be applied.
                  (B) Fee payable to Secretary.--The 
                regulations may require States to pay a fee to 
                the Secretary, which may be deducted from 
                amounts collected, to reimburse the Secretary 
                for the cost of applying such procedure. Any 
                fee paid to the Secretary pursuant to the 
                preceding sentence shall be used to reimburse 
                appropriations which bore all or part of the 
                cost of applying such procedure.
                  (C) Submission of notices through Secretary 
                of Labor.--The regulations may include a 
                requirement that States submit notices of 
                covered unemployment compensation debt to the 
                Secretary via the Secretary of Labor in 
                accordance with procedures established by the 
                Secretary of Labor. Such procedures may require 
                States to pay a fee to the Secretary of Labor 
                to reimburse the Secretary of Labor for the 
                costs of applying this subsection. Any such fee 
                shall be established in consultation with the 
                Secretary of the Treasury. Any fee paid to the 
                Secretary of Labor may be deducted from amounts 
                collected and shall be used to reimburse the 
                appropriation account which bore all or part of 
                the cost of applying this subsection.
          (6) Erroneous payment to State.--Any State receiving 
        notice from the Secretary that an erroneous payment has 
        been made to such State under paragraph (1) shall pay 
        promptly to the Secretary, in accordance with such 
        regulations as the Secretary may prescribe, an amount 
        equal to the amount of such erroneous payment (without 
        regard to whether any other amounts payable to such 
        State under such paragraph have been paid to such 
        State).
  (g) Review of reductions.--No court of the United States 
shall have jurisdiction to hear any action, whether legal or 
equitable, brought to restrain or review a reduction authorized 
by subsection (c), (d), (e), or (f). No such reduction shall be 
subject to review by the Secretary in an administrative 
proceeding. No action brought against the United States to 
recover the amount of any such reduction shall be considered to 
be a suit for refund of tax. This subsection does not preclude 
any legal, equitable, or administrative action against the 
Federal agency or State to which the amount of such reduction 
was paid or any such action against the Commissioner of Social 
Security which is otherwise available with respect to 
recoveries of overpayments of benefits under section 204 of the 
Social Security Act.
  (h) Federal agency.--For purposes of this section, the term 
``Federal agency'' means a department, agency, or 
instrumentality of the United States, and includes a Government 
corporation (as such term is defined in section 103 of title 5, 
United States Code).
  (i) Treatment of payments to States.--The Secretary may 
provide that, for purposes of determining interest, the payment 
of any amount withheld under subsection (c), (e), or (f) to a 
State shall be treated as a payment to the person or persons 
making the overpayment.
  (j) Cross reference.--For procedures relating to agency 
notification of the Secretary, see section 3721 of title 31, 
United States Code.
  (k) Refunds to certain fiduciaries of insolvent members of 
affiliated groups.--Notwithstanding any other provision of law, 
in the case of an insolvent corporation which is a member of an 
affiliated group of corporations filing a consolidated return 
for any taxable year and which is subject to a statutory or 
court-appointed fiduciary, the Secretary may by regulation 
provide that any refund for such taxable year may be paid on 
behalf of such insolvent corporation to such fiduciary to the 
extent that the Secretary determines that the refund is 
attributable to losses or credits of such insolvent 
corporation.
  (l) Explanation of reason for refund disallowance.--In the 
case of a disallowance of a claim for refund, the Secretary 
shall provide the taxpayer with an explanation for such 
disallowance.
  (m) Earliest date for certain refunds.--No credit or refund 
of an overpayment for a taxable year shall be made to a 
taxpayer before the 15th day of the second month following the 
close of such taxable year if a credit is allowed to such 
taxpayer under section 24 (by reason of subsection (d) thereof) 
or 32 for such taxable year.
  (n) Misdirected Direct Deposit Refund.--Not later than the 
date which is 6 months after the date of the enactment of the 
Taxpayer First Act of 2019, the Secretary shall prescribe 
regulations to establish procedures to allow for--
          (1) taxpayers to report instances in which a refund 
        made by the Secretary by electronic funds transfer was 
        not transferred to the account of the taxpayer;
          (2) coordination with financial institutions for the 
        purpose of--
                  (A) identifying the accounts to which 
                transfers described in paragraph (1) were made; 
                and
                  (B) recovery of the amounts so transferred; 
                and
          (3) the refund to be delivered to the correct account 
        of the taxpayer.

           *       *       *       *       *       *       *


CHAPTER 66--LIMITATIONS

           *       *       *       *       *       *       *


Subchapter A--LIMITATIONS ON ASSESSMENT AND COLLECTION

           *       *       *       *       *       *       *


SEC. 6503. SUSPENSION OF RUNNING OF PERIOD OF LIMITATION.

  (a) Issuance of statutory notice of deficiency.--
          (1) General rule.--The running of the period of 
        limitations provided in section 6501 or 6502 on the 
        making of assessments or the collection by levy or a 
        proceeding in court, in respect of any deficiency as 
        defined in section 6211 (relating to income, estate, 
        gift and certain excise taxes), shall (after the 
        mailing of a notice under section 6212(a)) be suspended 
        for the period during which the Secretary is prohibited 
        from making the assessment or from collecting by levy 
        or a proceeding in court (and in any event, if a 
        proceeding in respect of the deficiency is placed on 
        the docket of the Tax Court, until the decision of the 
        Tax Court becomes final), and for 60 days thereafter.
          (2) Corporation joining in consolidated income tax 
        return.--If a notice under section 6212(a) in respect 
        of a deficiency in tax imposed by subtitle A for any 
        taxable year is mailed to a corporation, the suspension 
        of the running of the period of limitations provided in 
        paragraph (1) of this subsection shall apply in the 
        case of corporations with which such corporation made a 
        consolidated income tax return for such taxable year.
  (b) Assets of taxpayer in control or custody of court.--The 
period of limitations on collection after assessment prescribed 
in section 6502 shall be suspended for the period the assets of 
the taxpayer are in the control or custody of the court in any 
proceeding before any court of the United States or of any 
State or of the District of Columbia, and for 6 months 
thereafter.
  (c) Taxpayer outside United States.--The running of the 
period of limitations on collection after assessment prescribed 
in section 6502 shall be suspended for the period during which 
the taxpayer is outside the United States if such period of 
absence is for a continuous period of at least 6 months. If the 
preceding sentence applies and at the time of the taxpayer's 
return to the United States the period of limitations on 
collection after assessment prescribed in section 6502 would 
expire before the expiration of 6 months from the date of his 
return, such period shall not expire before the expiration of 
such 6 months.
  (d) Extensions of time for payment of estate tax.--The 
running of the period of limitation for collection of any tax 
imposed by chapter 11 shall be suspended for the period of any 
extension of time for payment granted under the provisions of 
section 6161(a)(2) or (b)(2) or under the provisions of section 
6163 or 6166.
  (e) Extensions of time for payment of tax attributable to 
recoveries of foreign expropriation losses.--The running of the 
period of limitations for collection of the tax attributable to 
a recovery of a foreign expropriation loss (within the meaning 
of section 6167(f)) shall be suspended for the period of any 
extension of time for payment under subsection (a) or (b) of 
section 6167.
  (f) Wrongful seizure of or lien on property of third party.--
          (1) Wrongful seizure.--The running of the period 
        under section 6502 shall be suspended for a period 
        equal to the period from the date property (including 
        money) of a third party is wrongfully seized or 
        received by the Secretary to the date the Secretary 
        returns property pursuant to section 6343(b) or the 
        date on which a judgment secured pursuant to section 
        7426 with respect to such property becomes final, and 
        for 30 days thereafter. The running of such period 
        shall be suspended under this paragraph only with 
        respect to the amount of such assessment equal to the 
        amount of money or the value of specific property 
        returned.
          (2) Wrongful lien.--In the case of any assessment for 
        which a lien was made on any property, the running of 
        the period under section 6502 shall be suspended for a 
        period equal to the period beginning on the date any 
        person becomes entitled to a certificate under section 
        6325(b)(4) with respect to such property and ending on 
        the date which is 30 days after the earlier of--
                  (A) the earliest date on which the Secretary 
                no longer holds any amount as a deposit or bond 
                provided under section 6325(b)(4) by reason of 
                such deposit or bond being used to satisfy the 
                unpaid tax or being refunded or released; or
                  (B) the date that the judgment secured under 
                section 7426(b)(5) becomes final.
        The running of such period shall be suspended under 
        this paragraph only with respect to the amount of such 
        assessment equal to the value of the interest of the 
        United States in the property plus interest, penalties, 
        additions to the tax, and additional amounts 
        attributable thereto.
  (g) Suspension pending correction.--The running of the 
periods of limitations provided in sections 6501 and 6502 on 
the making of assessments or the collection by levy or a 
proceeding in court in respect of any tax imposed by chapter 42 
or section 507, 4971, or 4975 shall be suspended for any period 
described in section 507(g)(2) or during which the Secretary 
has extended the time for making correction under section 
4963(e).
  (h) Cases under title 11 of the United States Code.--The 
running of the period of limitations provided in section 6501 
or 6502 on the making of assessments or collection shall, in a 
case under title 11 of the United States Code, be suspended for 
the period during which the Secretary is prohibited by reason 
of such case from making the assessment or from collecting 
and--
          (1) for assessment, 60 days thereafter, and
          (2) for collection, 6 months thereafter.
  (i) Extension of time for payment of undistributed PFIC 
earnings tax liability.--The running of any period of 
limitations for collection of any amount of undistributed PFIC 
earnings tax liability (as defined in section 1294(b)) shall be 
suspended for the period of any extension of time under section 
1294 for payment of such amount.
  (j) Extension in case of certain summonses.--
          (1) In general.--If any designated summons is issued 
        by the Secretary to a corporation (or to any other 
        person to whom the corporation has transferred records) 
        with respect to any return of tax by such corporation 
        for a taxable year (or other period) for which such 
        corporation is being examined under the [coordinated 
        examination program] coordinated industry case program 
        (or any successor program) of the Internal Revenue 
        Service, the running of any period of limitations 
        provided in section 6501 on the assessment of such tax 
        shall be suspended--
                  (A) during any judicial enforcement period--
                          (i) with respect to such summons, or
                          (ii) with respect to any other 
                        summons which is issued during the 30-
                        day period which begins on the date on 
                        which such designated summons is issued 
                        and which relates to the same return as 
                        such designated summons, and
                  (B) if the court in any proceeding referred 
                to in paragraph (3) requires any compliance 
                with a summons referred to in subparagraph (A), 
                during the 120-day period beginning with the 
                1st day after the close of the suspension under 
                subparagraph (A).
        If subparagraph (B) does not apply, such period shall 
        in no event expire before the 60th day after the close 
        of the suspension under subparagraph (A).
          (2) Designated summons.--For purposes of this 
        subsection--
                  (A) In general.--The term ``designated 
                summons'' means any summons issued for purposes 
                of determining the amount of any tax imposed by 
                this title if--
                          [(i) the issuance of such summons is 
                        preceded by a review of such issuance 
                        by the regional counsel of the Office 
                        of Chief Counsel for the region in 
                        which the examination of the 
                        corporation is being conducted,]
                          (i) the issuance of such summons is 
                        preceded by a review and written 
                        approval of such issuance by the 
                        Commissioner of the relevant operating 
                        division of the Internal Revenue 
                        Service and the Chief Counsel which--
                                  (I) states facts clearly 
                                establishing that the Secretary 
                                has made reasonable requests 
                                for the information that is the 
                                subject of the summons, and
                                  (II) is attached to such 
                                summons,
                          (ii) such summons is issued at least 
                        60 days before the day on which the 
                        period prescribed in section 6501 for 
                        the assessment of such tax expires 
                        (determined with regard to extensions), 
                        and
                          (iii) such summons clearly states 
                        that it is a designated summons for 
                        purposes of this subsection.
                  (B) Limitation.--A summons which relates to 
                any return shall not be treated as a designated 
                summons if a prior summons which relates to 
                such return was treated as a designated summons 
                for purposes of this subsection.
          (3) Judicial enforcement period.--For purposes of 
        this subsection, the term ``judicial enforcement 
        period'' means, with respect to any summons, the 
        period--
                  (A) which begins on the day on which a court 
                proceeding with respect to such summons is 
                brought, and
                  (B) which ends on the day on which there is a 
                final resolution as to the summoned person's 
                response to such summons.
          (4) Establishment that reasonable requests for 
        information were made.--In any court proceeding 
        described in paragraph (3), the Secretary shall 
        establish that reasonable requests were made for the 
        information that is the subject of the summons.
  (k) Cross references.--For suspension in case of--
                          (1) Deficiency dividends of a 
                        personal holding company, see section 
                        547(f).
                          (2) Receiverships, see subchapter B 
                        of chapter 70.
                          (3) Claims against transferees and 
                        fiduciaries, see chapter 71.
                          (4) Tax return preparers, see section 
                        6694(c)(3).
                          (5) Deficiency dividends in the case 
                        of a regulated investment company or a 
                        real estate investment trust, see 
                        section 860(h).

           *       *       *       *       *       *       *


CHAPTER 67--INTEREST

           *       *       *       *       *       *       *


Subchapter A--INTEREST ON UNDERPAYMENTS

           *       *       *       *       *       *       *


SEC. 6603. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON POTENTIAL 
                    UNDERPAYMENTS, ETC.

  (a) Authority to make deposits other than as payment of 
tax.--A taxpayer may make a cash deposit with the Secretary 
which may be used by the Secretary to pay any tax imposed under 
subtitle A or B or chapter 41, 42, 43, or 44 which has not been 
assessed at the time of the deposit. Such a deposit shall be 
made in such manner as the Secretary shall prescribe.
  (b) No interest imposed.--To the extent that such deposit is 
used by the Secretary to pay tax, for purposes of section 6601 
(relating to interest on underpayments), the tax shall be 
treated as paid when the deposit is made.
  (c) Return of deposit.--Except in a case where the Secretary 
determines that collection of tax is in jeopardy, the Secretary 
shall return to the taxpayer any amount of the deposit (to the 
extent not used for a payment of tax) which the taxpayer 
requests in writing.
  (d) Payment of interest.--
          (1) In general.--For purposes of section 6611 
        (relating to interest on overpayments), except as 
        provided in paragraph (4), a deposit which is returned 
        to a taxpayer shall be treated as a payment of tax for 
        any period to the extent (and only to the extent) 
        attributable to a disputable tax for such period. Under 
        regulations prescribed by the Secretary, rules similar 
        to the rules of section 6611(b)(2) shall apply.
          (2) Disputable tax.--
                  (A) In general.--For purposes of this 
                section, the term ``disputable tax'' means the 
                amount of tax specified at the time of the 
                deposit as the taxpayer's reasonable estimate 
                of the maximum amount of any tax attributable 
                to disputable items.
                  (B) Safe harbor based on 30-day letter.--In 
                the case of a taxpayer who has been issued a 
                30-day letter, the maximum amount of tax under 
                subparagraph (A) shall not be less than the 
                amount of the proposed deficiency specified in 
                such letter.
          (3) Other definitions.--For purposes of paragraph 
        (2)--
                  (A) Disputable item.--The term ``disputable 
                item'' means any item of income, gain, loss, 
                deduction, or credit if the taxpayer--
                          (i) has a reasonable basis for its 
                        treatment of such item, and
                          (ii) reasonably believes that the 
                        Secretary also has a reasonable basis 
                        for disallowing the taxpayer's 
                        treatment of such item.
                  (B) 30-day letter.--The term ``30-day 
                letter'' means the first letter of proposed 
                deficiency which allows the taxpayer an 
                opportunity for administrative review in the 
                [Internal Revenue Service Office of Appeals] 
                Internal Revenue Service Independent Office of 
                Appeals.
          (4) Rate of interest.--The rate of interest under 
        this subsection shall be the Federal short-term rate 
        determined under section 6621(b), compounded daily.
  (e) Use of deposits.--
          (1) Payment of tax.--Except as otherwise provided by 
        the taxpayer, deposits shall be treated as used for the 
        payment of tax in the order deposited.
          (2) Returns of deposits.--Deposits shall be treated 
        as returned to the taxpayer on a last-in, first-out 
        basis.

           *       *       *       *       *       *       *


Subchapter C--DETERMINATION OF INTEREST RATE; COMPOUNDING OF INTEREST

           *       *       *       *       *       *       *


SEC. 6621. DETERMINATION OF RATE OF INTEREST.

  (a) General rule.--
          (1) Overpayment rate.--The overpayment rate 
        established under this section shall be the sum of--
                  (A) the Federal short-term rate determined 
                under subsection (b), plus
                  (B) 3 percentage points (2 percentage points 
                in the case of a corporation).
        To the extent that an overpayment of tax by a 
        corporation for any taxable period (as defined in 
        subsection (c)(3), applied by substituting 
        ``overpayment'' for ``underpayment'') exceeds $10,000, 
        subparagraph (B) shall be applied by substituting ``0.5 
        percentage point'' for ``2 percentage points''.
          (2) Underpayment rate.--The underpayment rate 
        established under this section shall be the sum of--
                  (A) the Federal short-term rate determined 
                under subsection (b), plus
                  (B) 3 percentage points.
  (b) Federal short-term rate.--For purposes of this section--
          (1) General rule.--The Secretary shall determine the 
        Federal short-term rate for the first month in each 
        calendar quarter.
          (2) Period during which rate applies.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the Federal short-term rate 
                determined under paragraph (1) for any month 
                shall apply during the first calendar quarter 
                beginning after such month.
                  (B) Special rule for individual estimated 
                tax.--In determining the addition to tax under 
                section 6654 for failure to pay estimated tax 
                for any taxable year, the Federal short-term 
                rate which applies during the 3rd month 
                following such taxable year shall also apply 
                during the first 15 days of the 4th month 
                following such taxable year.
          (3) Federal short-term rate.--The Federal short-term 
        rate for any month shall be the Federal short-term rate 
        determined during such month by the Secretary in 
        accordance with section 1274(d). Any such rate shall be 
        rounded to the nearest full percent (or, if a multiple 
        of 1/2 of 1 percent, such rate shall be increased to 
        the next highest full percent).
  (c) Increase in underpayment rate for large corporate 
underpayments.--
          (1) In general.--For purposes of determining the 
        amount of interest payable under section 6601 on any 
        large corporate underpayment for periods after the 
        applicable date, paragraph (2) of subsection (a) shall 
        be applied by substituting ``5 percentage points'' for 
        ``3 percentage points''.
          (2) Applicable date.--For purposes of this 
        subsection--
                  (A) In general.--The applicable date is the 
                30th day after the earlier of--
                          (i) the date on which the 1st letter 
                        of proposed deficiency which allows the 
                        taxpayer an opportunity for 
                        administrative review in the [Internal 
                        Revenue Service Office of Appeals] 
                        Internal Revenue Service Independent 
                        Office of Appeals is sent, or
                          (ii) the date on which the deficiency 
                        notice under section 6212 is sent.
                The preceding sentence shall be applied without 
                regard to any such letter or notice which is 
                withdrawn by the Secretary.
                  (B) Special rules.--
                          (i) Nondeficiency procedures.--In the 
                        case of any underpayment of any tax 
                        imposed by this title to which the 
                        deficiency procedures do not apply, 
                        subparagraph (A) shall be applied by 
                        taking into account any letter or 
                        notice provided by the Secretary which 
                        notifies the taxpayer of the assessment 
                        or proposed assessment of the tax.
                          (ii) Exception where amounts paid in 
                        full.--For purposes of subparagraph 
                        (A), a letter or notice shall be 
                        disregarded if, during the 30-day 
                        period beginning on the day on which it 
                        was sent, the taxpayer makes a payment 
                        equal to the amount shown as due in 
                        such letter or notice, as the case may 
                        be.
                          (iii) Exception for letters or 
                        notices involving small amounts.--For 
                        purposes of this paragraph, any letter 
                        or notice shall be disregarded if the 
                        amount of the deficiency or proposed 
                        deficiency (or the assessment or 
                        proposed assessment) set forth in such 
                        letter or notice is not greater than 
                        $100,000 (determined by not taking into 
                        account any interest, penalties, or 
                        additions to tax).
          (3) Large corporate underpayment.--For purposes of 
        this subsection--
                  (A) In general.--The term ``large corporate 
                underpayment'' means any underpayment of a tax 
                by a C corporation for any taxable period if 
                the amount of such underpayment for such period 
                exceeds $100,000.
                  (B) Taxable period.--For purposes of 
                subparagraph (A), the term ``taxable period'' 
                means--
                          (i) in the case of any tax imposed by 
                        subtitle A, the taxable year, or
                          (ii) in the case of any other tax, 
                        the period to which the underpayment 
                        relates.
  (d) Elimination of interest on overlapping periods of tax 
overpayments and underpayments.--To the extent that, for any 
period, interest is payable under subchapter A and allowable 
under subchapter B on equivalent underpayments and overpayments 
by the same taxpayer of tax imposed by this title, the net rate 
of interest under this section on such amounts shall be zero 
for such period.

           *       *       *       *       *       *       *


 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *


Subchapter A--ADDITIONS TO THE TAX AND ADDITIONAL AMOUNTS

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 6651. FAILURE TO FILE TAX RETURN OR TO PAY TAX.

  (a) Addition to the tax.--In case of failure--
          (1) to file any return required under authority of 
        subchapter A of chapter 61 (other than part III 
        thereof), subchapter A of chapter 51 (relating to 
        distilled spirits, wines, and beer), or of subchapter A 
        of chapter 52 (relating to tobacco, cigars, cigarettes, 
        and cigarette papers and tubes), or of subchapter A of 
        chapter 53 (relating to machine guns and certain other 
        firearms), on the date prescribed therefor (determined 
        with regard to any extension of time for filing), 
        unless it is shown that such failure is due to 
        reasonable cause and not due to willful neglect, there 
        shall be added to the amount required to be shown as 
        tax on such return 5 percent of the amount of such tax 
        if the failure is for not more than 1 month, with an 
        additional 5 percent for each additional month or 
        fraction thereof during which such failure continues, 
        not exceeding 25 percent in the aggregate;
          (2) to pay the amount shown as tax on any return 
        specified in paragraph (1) on or before the date 
        prescribed for payment of such tax (determined with 
        regard to any extension of time for payment), unless it 
        is shown that such failure is due to reasonable cause 
        and not due to willful neglect, there shall be added to 
        the amount shown as tax on such return 0.5 percent of 
        the amount of such tax if the failure is for not more 
        than 1 month, with an additional 0.5 percent for each 
        additional month or fraction thereof during which such 
        failure continues, not exceeding 25 percent in the 
        aggregate; or
          (3) to pay any amount in respect of any tax required 
        to be shown on a return specified in paragraph (1) 
        which is not so shown (including an assessment made 
        pursuant to section 6213(b)) within 21 calendar days 
        from the date of notice and demand therefor (10 
        business days if the amount for which such notice and 
        demand is made equals or exceeds $100,000), unless it 
        is shown that such failure is due to reasonable cause 
        and not due to willful neglect, there shall be added to 
        the amount of tax stated in such notice and demand 0.5 
        percent of the amount of such tax if the failure is for 
        not more than 1 month, with an additional 0.5 percent 
        for each additional month or fraction thereof during 
        which such failure continues, not exceeding 25 percent 
        in the aggregate.
In the case of a failure to file a return of tax imposed by 
chapter 1 within 60 days of the date prescribed for filing of 
such return (determined with regard to any extensions of time 
for filing), unless it is shown that such failure is due to 
reasonable cause and not due to willful neglect, the addition 
to tax under paragraph (1) shall not be less than the lesser of 
[$205] $330 or 100 percent of the amount required to be shown 
as tax on such return.
  (b) Penalty imposed on net amount due.--For purposes of--
          (1) subsection (a)(1), the amount of tax required to 
        be shown on the return shall be reduced by the amount 
        of any part of the tax which is paid on or before the 
        date prescribed for payment of the tax and by the 
        amount of any credit against the tax which may be 
        claimed on the return,
          (2) subsection (a)(2), the amount of tax shown on the 
        return shall, for purposes of computing the addition 
        for any month, be reduced by the amount of any part of 
        the tax which is paid on or before the beginning of 
        such month and by the amount of any credit against the 
        tax which may be claimed on the return, and
          (3) subsection (a)(3), the amount of tax stated in 
        the notice and demand shall, for the purpose of 
        computing the addition for any month, be reduced by the 
        amount of any part of the tax which is paid before the 
        beginning of such month.
  (c) Limitations and special rule.--
          (1) Additions under more than one paragraph.--With 
        respect to any return, the amount of the addition under 
        paragraph (1) of subsection (a) shall be reduced by the 
        amount of the addition under paragraph (2) of 
        subsection (a) for any month (or fraction thereof) to 
        which an addition to tax applies under both paragraphs 
        (1) and (2). In any case described in the last sentence 
        of subsection (a), the amount of the addition under 
        paragraph (1) of subsection (a) shall not be reduced 
        under the preceding sentence below the amount provided 
        in such last sentence.
          (2) Amount of tax shown more than amount required to 
        be shown.--If the amount required to be shown as tax on 
        a return is less than the amount shown as tax on such 
        return, subsections (a)(2) and (b)(2) shall be applied 
        by substituting such lower amount.
  (d) Increase in penalty for failure to pay tax in certain 
cases.--
          (1) In general.--In the case of each month (or 
        fraction thereof) beginning after the day described in 
        paragraph (2) of this subsection, paragraphs (2) and 
        (3) of subsection (a) shall be applied by substituting 
        ``1 percent'' for ``0.5 percent'' each place it 
        appears.
          (2) Description.--For purposes of paragraph (1), the 
        day described in this paragraph is the earlier of--
                  (A) the day 10 days after the date on which 
                notice is given under section 6331(d), or
                  (B) the day on which notice and demand for 
                immediate payment is given under the last 
                sentence of section 6331(a).
  (e) Exception for estimated tax.--This section shall not 
apply to any failure to pay any estimated tax required to be 
paid by section 6654 or 6655.
  (f) Increase in penalty for fraudulent failure to file.--If 
any failure to file any return is fraudulent, paragraph (1) of 
subsection (a) shall be applied--
          (1) by substituting ``15 percent'' for ``5 percent'' 
        each place it appears, and
          (2) by substituting ``75 percent'' for ``25 
        percent''.
  (g) Treatment of returns prepared by Secretary under section 
6020(b).--In the case of any return made by the Secretary under 
section 6020(b)--
          (1) such return shall be disregarded for purposes of 
        determining the amount of the addition under paragraph 
        (1) of subsection (a), but
          (2) such return shall be treated as the return filed 
        by the taxpayer for purposes of determining the amount 
        of the addition under paragraphs (2) and (3) of 
        subsection (a).
  (h) Limitation on penalty on individual's failure to pay for 
months during period of installment agreement.--In the case of 
an individual who files a return of tax on or before the due 
date for the return (including extensions), paragraphs (2) and 
(3) of subsection (a) shall each be applied by substituting 
``0.25'' for ``0.5'' each place it appears for purposes of 
determining the addition to tax for any month during which an 
installment agreement under section 6159 is in effect for the 
payment of such tax.
  (i) Application to imputed underpayment.--For purposes of 
this section, any failure to comply with section 
6226(b)(4)(A)(ii) shall be treated as a failure to pay the 
amount described in subclause (II) thereof and such amount 
shall be treated for purposes of this section as an amount 
shown as tax on a return specified in subsection (a)(1).
  (j) Adjustment for inflation.--
          (1) In general.--In the case of any return required 
        to be filed in a calendar year beginning after [2014] 
        2020, the [$205] $330 dollar amount under subsection 
        (a) shall be increased by an amount equal to such 
        dollar amount multiplied by the cost-of-living 
        adjustment determined under section 1(f)(3) for the 
        calendar year determined by substituting ``calendar 
        year [2013] 2019'' for ``calendar year 2016'' in 
        subparagraph (A)(ii) thereof.
          (2) Rounding.--If any amount adjusted under paragraph 
        (1) is not a multiple of $5, such amount shall be 
        rounded to the next lowest multiple of $5.

Subchapter B--ASSESSABLE PENALTIES

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

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SEC. 6713. DISCLOSURE OR USE OF INFORMATION BY PREPARERS OF RETURNS

  (a) Imposition of penalty.--If any person who is engaged in 
the business of preparing, or providing services in connection 
with the preparation of, returns of tax imposed by chapter 1, 
or any person who for compensation prepares any such return for 
any other person, and who--
          (1) discloses any information furnished to him for, 
        or in connection with, the preparation of any such 
        return, or
          (2) uses any such information for any purpose other 
        than to prepare, or assist in preparing, any such 
        return,
shall pay a penalty of $250 for each such disclosure or use, 
but the total amount imposed under this subsection on such a 
person for any calendar year shall not exceed $10,000.
  (b) Enhanced Penalty for Improper Use or Disclosure Relating 
to Identity Theft.--
          (1) In general.--In the case of a disclosure or use 
        described in subsection (a) that is made in connection 
        with a crime relating to the misappropriation of 
        another person's taxpayer identity (as defined in 
        section 6103(b)(6)), whether or not such crime involves 
        any tax filing, subsection (a) shall be applied--
                  (A) by substituting ``$1,000'' for ``$250'', 
                and
                  (B) by substituting ``$50,000'' for 
                ``$10,000''.
          (2) Separate application of total penalty 
        limitation.--The limitation on the total amount of the 
        penalty under subsection (a) shall be applied 
        separately with respect to disclosures or uses to which 
        this subsection applies and to which it does not apply.
  [(b)] (c) Exceptions.--The rules of section 7216(b) shall 
apply for purposes of this section.
  [(c)] (d) Deficiency procedures not to apply.--Subchapter B 
of chapter 63 (relating to deficiency procedures for income, 
estate, gift, and certain excise taxes) shall not apply in 
respect of the assessment or collection of any penalty imposed 
by this section.

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     PART II--FAILURE TO COMPLY WITH CERTAIN INFORMATION REPORTING 
REQUIREMENTS

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SEC. 6724. WAIVER; DEFINITIONS AND SPECIAL RULES

  (a) Reasonable cause waiver.--No penalty shall be imposed 
under this part with respect to any failure if it is shown that 
such failure is due to reasonable cause and not to willful 
neglect.
  (b) Payment of penalty.--Any penalty imposed by this part 
shall be paid on notice and demand by the Secretary and in the 
same manner as tax.
  (c) Special rule for failure to meet magnetic media 
requirements.--No penalty shall be imposed under section 6721 
solely by reason of any failure to comply with the requirements 
of the regulations prescribed under section 6011(e)(2), except 
to the extent that such a failure occurs with respect to more 
than [250 information returns (more than 100 information 
returns in the case of a partnership having more than 100 
partners)] the applicable number (determined under section 
6011(e)(5) with respect to the calendar year to which such 
returns relate) of information returns or with respect to a 
return described in section 6011(e)(4).
  (d) Definitions.--For purposes of this part--
          (1) Information return.--The term ``information 
        return'' means--
                  (A) any statement of the amount of payments 
                to another person required by--
                          (i) section 6041(a) or (b) (relating 
                        to certain information at source),
                          (ii) section 6042(a)(1) (relating to 
                        payments of dividends),
                          (iii) section 6044(a)(1) (relating to 
                        payments of patronage dividends),
                          (iv) section 6049(a) (relating to 
                        payments of interest),
                          (v) section 6050A(a) (relating to 
                        reporting requirements of certain 
                        fishing boat operators),
                          (vi) section 6050N(a) (relating to 
                        payments of royalties),
                          (vii) section 6051(d) (relating to 
                        information returns with respect to 
                        income tax withheld),
                          (viii) section 6050R (relating to 
                        returns relating to certain purchases 
                        of fish), or
                          (ix) section 110(d) (relating to 
                        qualified lessee construction 
                        allowances for short-term leases),
                  (B) any return required by--
                          (i) section 6041A(a) or (b) (relating 
                        to returns of direct sellers),
                          (ii) section 6043A(a) (relating to 
                        returns relating to taxable mergers and 
                        acquisitions),
                          (iii) section 6045(a) or (d) 
                        (relating to returns of brokers),
                          (iv) section 6045B(a) (relating to 
                        returns relating to actions affecting 
                        basis of specified securities),
                          (v) section 6050H(a) or (h)(1) 
                        (relating to mortgage interest received 
                        in trade or business from individuals),
                          (vi) section 6050I(a) or (g)(1) 
                        (relating to cash received in trade or 
                        business, etc.),
                          (vii) section 6050J(a) (relating to 
                        foreclosures and abandonments of 
                        security),
                          (viii) section 6050K(a) (relating to 
                        exchanges of certain partnership 
                        interests),
                          (ix) section 6050L(a) (relating to 
                        returns relating to certain 
                        dispositions of donated property),
                          (x) section 6050P (relating to 
                        returns relating to the cancellation of 
                        indebtedness by certain financial 
                        entities),
                          (xi) section 6050Q (relating to 
                        certain long-term care benefits),
                          (xii) section 6050S (relating to 
                        returns relating to payments for 
                        qualified tuition and related 
                        expenses),
                          (xiii) section 6050T (relating to 
                        returns relating to credit for health 
                        insurance costs of eligible 
                        individuals),
                          (xiv) section 6052(a) (relating to 
                        reporting payment of wages in the form 
                        of group-life insurance),
                          (xv) section 6050V (relating to 
                        returns relating to applicable 
                        insurance contracts in which certain 
                        exempt organizations hold interests),
                          (xvi) section 6053(c)(1) (relating to 
                        reporting with respect to certain 
                        tips),
                          (xvii) subsection (b) or (e) of 
                        section 1060 (relating to reporting 
                        requirements of transferors and 
                        transferees in certain asset 
                        acquisitions),
                          (xviii) section 4101(d) (relating to 
                        information reporting with respect to 
                        fuels taxes),
                          (xix) subparagraph (C) of section 
                        338(h)(10) (relating to information 
                        required to be furnished to the 
                        Secretary in case of elective 
                        recognition of gain or loss),
                          (xx) section 264(f)(5)(A)(iv) 
                        (relating to reporting with respect to 
                        certain life insurance and annuity 
                        contracts),
                          (xxi) section 6050U (relating to 
                        charges or payments for qualified long-
                        term care insurance contracts under 
                        combined arrangements),
                          (xxii) section 6039(a) (relating to 
                        returns required with respect to 
                        certain options),
                          (xxiii) section 6050W (relating to 
                        returns to payments made in settlement 
                        of payment card transactions),
                          (xxiv) section 6055 (relating to 
                        returns relating to information 
                        regarding health insurance coverage),
                          (xxv) section 6056 (relating to 
                        returns relating to certain employers 
                        required to report on health insurance 
                        coverage), or
                          (xxvi) section 6050Y (relating to 
                        returns relating to certain life 
                        insurance contract transactions), and 
                        2
                  (C) any statement of the amount of 
                payments to another person required to be made 
                to the Secretary under--
                          (i) section 408(i) (relating to 
                        reports with respect to individual 
                        retirement accounts or annuities), or
                          (ii) section 6047(d) (relating to 
                        reports by employers, plan 
                        administrators, etc.), and
                  (D) any statement required to be filed with 
                the Secretary under section 6035.
        Such term also includes any form, statement, or 
        schedule required to be filed with the Secretary under 
        chapter 4 or with respect to any amount from which tax 
        was required to be deducted and withheld under chapter 
        3 (or from which tax would be required to be so 
        deducted and withheld but for an exemption under this 
        title or any treaty obligation of the United States).
          (2) Payee statement.--The term ``payee statement'' 
        means any statement required to be furnished under--
                  (A) section 6031(b) or (c), 6034A, or 6037(b) 
                (relating to statements furnished by certain 
                pass-thru entities),
                  (B) section 6039(b) (relating to information 
                required in connection with certain options),
                  (C) section 6041(d) (relating to information 
                at source),
                  (D) section 6041A(e) (relating to returns 
                regarding payments of remuneration for services 
                and direct sales),
                  (E) section 6042(c) (relating to returns 
                regarding payments of dividends and corporate 
                earnings and profits),
                  (F) subsections (b) and (d) of section 6043A 
                (relating to returns relating to taxable 
                mergers and acquisitions),
                  (G) section 6044(e) (relating to returns 
                regarding payments of patronage dividends),
                  (H) section 6045(b) or (d) (relating to 
                returns of brokers),
                  (I) section 6045A (relating to information 
                required in connection with transfers of 
                covered securities to brokers),
                  (J) subsections (c) and (e) of section 6045B 
                (relating to returns relating to actions 
                affecting basis of specified securities),
                  (K) section 6049(c) (relating to returns 
                regarding payments of interest),
                  (L) section 6050A(b) (relating to reporting 
                requirements of certain fishing boat 
                operators),
                  (M) section 6050H(d) or (h)(2) (relating to 
                returns relating to mortgage interest received 
                in trade or business from individuals),
                  (N) section 6050I(e) or paragraph (4) or (5) 
                of section 6050I(g) (relating to cash received 
                in trade or business, etc.),
                  (O) section 6050J(e) (relating to returns 
                relating to foreclosures and abandonments of 
                security),
                  (P) section 6050K(b) (relating to returns 
                relating to exchanges of certain partnership 
                interests),
                  (Q) section 6050L(c) (relating to returns 
                relating to certain dispositions of donated 
                property),
                  (R) section 6050N(b) (relating to returns 
                regarding payments of royalties),
                  (S) section 6050P(d) (relating to returns 
                relating to the cancellation of indebtedness by 
                certain financial entities),
                  (T) section 6050Q(b) (relating to certain 
                long-term care benefits),
                  (U) section 6050R(c) (relating to returns 
                relating to certain purchases of fish),
                  (V) section 6051 (relating to receipts for 
                employees),
                  (W) section 6052(b) (relating to returns 
                regarding payment of wages in the form of 
                group-term life insurance),
                  (X) section 6053(b) or (c) (relating to 
                reports of tips),
                  (Y) section 6048(b)(1)(B) (relating to 
                foreign trust reporting requirements),
                  (Z) section 408(i) (relating to reports with 
                respect to individual retirement plans) to any 
                person other than the Secretary with respect to 
                the amount of payments made to such person,
                  (AA) section 6047(d) (relating to reports by 
                plan administrators) to any person other than 
                the Secretary with respect to the amount of 
                payments made to such person,
                  (BB) section 6050S(d) (relating to returns 
                relating to qualified tuition and related 
                expenses),
                  (CC) section 264(f)(5)(A)(iv) (relating to 
                reporting with respect to certain life 
                insurance and annuity contracts),
                  (DD) section 6050T (relating to returns 
                relating to credit for health insurance costs 
                of eligible individuals),