[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5549 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5549

  To amend the Internal Revenue Code of 1986 to provide for improved 
   administrative efficiency and confidentiality under the internal 
                             revenue laws.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 3, 2002

 Mr. Houghton introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to provide for improved 
   administrative efficiency and confidentiality under the internal 
                             revenue laws.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Tax Administration 
Efficiency and Confidentiality Act of 2002''.
    (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.--

Sec. 1. Short title; etc.
               TITLE I--EFFICIENCY OF TAX ADMINISTRATION

Sec. 101. Revisions relating to termination of employment of Internal 
                            Revenue Service employees for misconduct.
Sec. 102. Confirmation of authority of Tax Court to apply doctrine of 
                            equitable recoupment.
Sec. 103. Jurisdiction of Tax Court over collection due process cases.
Sec. 104. Office of Chief Counsel review of offers in compromise.
Sec. 105. 15-day delay in due date for electronically filed individual 
                            income tax returns.
                TITLE II--CONFIDENTIALITY AND DISCLOSURE

Sec. 201. Collection activities with respect to joint return 
                            disclosable to either spouse based on oral 
                            request.
Sec. 202. Taxpayer representatives not subject to examination on sole 
                            basis of representation of taxpayers.
Sec. 203. Compliance by contractors with confidentiality safeguards.
Sec. 204. Higher standards for requests for and consents to disclosure.
Sec. 205. Notice to taxpayer concerning administrative determination of 
                            browsing; annual report.
Sec. 206. Expanded disclosure in emergency circumstances.
                      TITLE III--OTHER PROVISIONS

Sec. 301. Better means of communicating with taxpayers.
Sec. 302. Enrolled agents.
Sec. 303. Financial management service fees.
Sec. 304. Amendment to Treasury auction reforms.

               TITLE I--EFFICIENCY OF TAX ADMINISTRATION

SEC. 101. REVISIONS RELATING TO TERMINATION OF EMPLOYMENT OF INTERNAL 
              REVENUE SERVICE EMPLOYEES FOR MISCONDUCT.

    (a) In General.--Subchapter A of chapter 80 (relating to 
application of internal revenue laws) is amended by inserting after 
section 7804 the following new section:

``SEC. 7804A. DISCIPLINARY ACTIONS FOR MISCONDUCT.

    ``(a) Disciplinary Actions.--
            ``(1) In general.--Subject to subsection (c), the 
        Commissioner shall take an action in accordance with the 
        guidelines established under paragraph (2) against any employee 
        of the Internal Revenue Service if there is a final 
        administrative or judicial determination that such employee 
        committed any act or omission described under subsection (b) in 
        the performance of the employee's official duties or where a 
        nexus to the employee's position exists.
            ``(2) Guidelines.--The Commissioner shall issue guidelines 
        for determining the appropriate level of discipline, up to and 
        including termination of employment, for committing any act or 
        omission described under subsection (b).
    ``(b) Acts or Omissions.--The acts or omissions described under 
this subsection are--
            ``(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) willfully providing a false statement under oath with 
        respect to a material matter involving a taxpayer or taxpayer 
        representative;
            ``(3) with respect to a taxpayer or taxpayer 
        representative, the willful violation of--
                    ``(A) any right under the Constitution of the 
                United States;
                    ``(B) any civil right established under--
                            ``(i) title VI or VII of the Civil Rights 
                        Act of 1964;
                            ``(ii) title IX of the Education Amendments 
                        of 1972;
                            ``(iii) the Age Discrimination in 
                        Employment Act of 1967;
                            ``(iv) the Age Discrimination Act of 1975;
                            ``(v) section 501 or 504 of the 
                        Rehabilitation Act of 1973; or
                            ``(vi) title I of the Americans with 
                        Disabilities Act of 1990; or
                    ``(C) the Internal Revenue Service policy on 
                unauthorized inspection of returns or return 
                information;
            ``(4) willfully falsifying or destroying documents to 
        conceal mistakes made by any employee with respect to a matter 
        involving a taxpayer or taxpayer representative;
            ``(5) assault or battery on a taxpayer or taxpayer 
        representative, but only if there is a criminal conviction, or 
        a final adverse judgment by a court in a civil case, with 
        respect to the assault or battery;
            ``(6) willful violations of this title, Department of the 
        Treasury regulations, or policies of the Internal Revenue 
        Service (including the Internal Revenue Manual) for the purpose 
        of retaliating against, or harassing, a taxpayer or taxpayer 
        representative;
            ``(7) willful misuse of the provisions of section 6103 for 
        the purpose of concealing information from a congressional 
        inquiry;
            ``(8) willful failure to file any return of tax required 
        under this title on or before the date prescribed therefor 
        (including any extensions) when a tax is due and owing, unless 
        such failure is due to reasonable cause and not due to willful 
        neglect;
            ``(9) willful understatement of Federal tax liability, 
        unless such understatement is due to reasonable cause and not 
        due to willful neglect; and
            ``(10) threatening to audit a taxpayer, or to take other 
        action under this title, for the purpose of extracting personal 
        gain or benefit.
    ``(c) Determinations of Commissioner.--
            ``(1) In general.--The Commissioner may take a personnel 
        action other than a disciplinary action provided for in the 
        guidelines under subsection (a)(2) for an act or omission 
        described under subsection (b).
            ``(2) Discretion.--The exercise of authority under 
        paragraph (1) shall be at the sole discretion of the 
        Commissioner and may not be delegated to any other officer. The 
        Commissioner, in his sole discretion, may establish a procedure 
        to determine if an individual should be referred to the 
        Commissioner for a determination by the Commissioner under 
        paragraph (1).
            ``(3) No appeal.--Notwithstanding any other provision of 
        law, any determination of the Commissioner under this 
        subsection may not be reviewed in any administrative or 
        judicial proceeding. A finding that an act or omission 
        described under subsection (b) occurred may be reviewed.
    ``(d) Definition.--For the purposes of the provisions described in 
clauses (i), (ii), and (iv) of subsection (b)(3)(B), references to a 
program or activity regarding Federal financial assistance or an 
education program or activity receiving Federal financial assistance 
shall include any program or activity conducted by the Internal Revenue 
Service for a taxpayer.
    ``(e) Annual Report.--The Commissioner shall submit to Congress 
annually a report on disciplinary actions under this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 80 is 
amended by inserting after the item relating to section 7804 the 
following new item:

                              ``Sec. 7804A. Disciplinary actions for 
                                        misconduct.''.
    (c) Repeal of Superseded Section.--Section 1203 of the Internal 
Revenue Service Restructuring and Reform Act of 1998 (Public Law 105-
206; 112 Stat. 720) is repealed.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY DOCTRINE OF 
              EQUITABLE RECOUPMENT.

    (a) Confirmation of Authority of Tax Court To Apply Doctrine of 
Equitable Recoupment.--Subsection (b) of section 6214 (relating to 
jurisdiction over other years and quarters) is amended by adding at the 
end the following new sentence: ``Notwithstanding the preceding 
sentence, the Tax Court may apply the doctrine of equitable recoupment 
to the same extent that it is available in civil tax cases before the 
district courts of the United States and the United States Court of 
Federal Claims.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any action or proceeding in the Tax Court with respect to 
which a decision has not become final (as determined under section 7481 
of the Internal Revenue Code of 1986) as of the date of the enactment 
of this Act.

SEC. 103. JURISDICTION OF TAX COURT OVER COLLECTION DUE PROCESS CASES.

    (a) In General.--Section 6330(d)(1) (relating to judicial review of 
determination) is amended to read as follows:
            ``(1) Judicial review of determination.--The person may, 
        within 30 days of a determination under this section, appeal 
        such determination to the Tax Court (and the Tax Court shall 
        have jurisdiction with respect to such matter).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to judicial appeals filed after the date of the enactment of this 
Act.

SEC. 104. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS IN COMPROMISE.

    (a) In General.--Section 7122(b) (relating to record) is amended by 
striking ``Whenever a compromise'' and all that follows through ``his 
delegate'' and inserting ``If the Secretary determines that an opinion 
of the General Counsel for the Department of the Treasury, or the 
Counsel's delegate, is required with respect to a compromise, there 
shall be placed on file in the office of the Secretary such opinion''.
    (b) Conforming Amendments.--Section 7122(b) is amended by striking 
the second and third sentences.
    (c) Effective Date.--The amendments made by this section shall 
apply to offers-in-compromise submitted or pending on or after the date 
of the enactment of this Act.

SEC. 105. 15-DAY DELAY IN DUE DATE FOR ELECTRONICALLY FILED INDIVIDUAL 
              INCOME TAX RETURNS.

    (a) In General.--Section 6072 (relating to time for filing income 
tax returns) is amended by adding at the end the following new 
subsection:
    ``(f) Electronically Filed Returns of Individuals.--
            ``(1) In general.--Returns of an individual under section 
        6012 or 6013 (other than an individual to whom subsection (c) 
        applies) which are filed electronically--
                    ``(A) in the case of returns filed on the basis of 
                a calendar year, shall be filed on or before the 30th 
                day of April following the close of the calendar year, 
                and
                    ``(B) in the case of returns filed on the basis of 
                a fiscal year, shall be filed on or before the last day 
                of the 4th month following the close of the fiscal 
                year.
            ``(2) Electronic filing.--Paragraph (1) shall not apply to 
        any return unless--
                    ``(A) such return is accepted by the Secretary, and
                    ``(B) the balance due (if any) shown on such return 
                is paid electronically in a manner prescribed by the 
                Secretary.
            ``(3) Special rules.--
                    ``(A) Estimated tax.--If--
                            ``(i) paragraph (1) applies to an 
                        individual for any taxable year, and
                            ``(ii) there is an overpayment of tax shown 
                        on the return for such year which the 
                        individual allows against the individual's 
                        obligation under section 6641,
                then, with respect to the amount so allowed, any 
                reference in section 6641 to the April 15 following 
                such taxable year shall be treated as a reference to 
                April 30.
                    ``(B) References to due date.--Paragraph (1) shall 
                apply solely for purposes of determining the due date 
                for the individual's obligation to file and pay tax 
                and, except as otherwise provided by the Secretary, 
                shall be treated as an extension of the due date for 
                any other purpose under this title.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2001.

                TITLE II--CONFIDENTIALITY AND DISCLOSURE

SEC. 201. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN 
              DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL REQUEST.

    (a) In General.--Paragraph (8) of section 6103(e) (relating to 
disclosure of collection activities with respect to joint return) is 
amended by striking ``in writing'' the first place it appears.
    (b) Effective Date.--The amendment made by this section shall apply 
to requests made after the date of the enactment of this Act.

SEC. 202. TAXPAYER REPRESENTATIVES NOT SUBJECT TO EXAMINATION ON SOLE 
              BASIS OF REPRESENTATION OF TAXPAYERS.

    (a) In General.--Subsection (h) of section 6103 (relating to 
disclosure to certain Federal officers and employees for purposes of 
tax administration, etc.) is amended by adding at the end the following 
new paragraph:
            ``(7) Taxpayer representatives.--Notwithstanding paragraph 
        (1), the return of the representative of a taxpayer whose 
        return is being examined by an officer or employee of the 
        Department of the Treasury shall not be open to inspection by 
        such officer or employee on the sole basis of the 
        representative's relationship to the taxpayer unless a 
        supervisor of such officer or employee has approved the 
        inspection of the return of such representative on a basis 
        other than by reason of such relationship.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 203. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY SAFEGUARDS.

    (a) In General.--Section 6103(p) (relating to State law 
requirements) is amended by adding at the end the following new 
paragraph:
            ``(9) Disclosure to contractors.--Notwithstanding any other 
        provision of this section, no return or return information 
        shall be disclosed by any officer or employee of any Federal 
        agency or State to any contractor of such agency or State 
        unless such agency or State--
                    ``(A) has requirements in effect which require each 
                contractor of such agency or State 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 annual, on-site review 
                (mid-point review in the case of contracts of less than 
                1 year in duration) of each contractor 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 all contractors are in 
                compliance with all such requirements.
        The certification required by subparagraph (D) shall include 
        the name and address of each contractor, a description of the 
        contract of the contractor with the Federal agency or State, 
        and the duration of such contract.''.
    (b) Conforming Amendment.--Subparagraph (B) of section 6103(p)(8) 
is amended by inserting ``or paragraph (9)'' after ``subparagraph 
(A)''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to disclosures made after December 31, 2002.
            (2) Certifications.--The first certification under section 
        6103(p)(9)(D) of the Internal Revenue Code of 1986, as added by 
        subsection (a), shall be made with respect to calendar year 
        2003.

SEC. 204. HIGHER STANDARDS FOR REQUESTS FOR AND CONSENTS TO DISCLOSURE.

    (a) In General.--Subsection (c) of section 6103 (relating to 
disclosure of returns and return information to designee of taxpayer) 
is amended by adding at the end the following new paragraphs:
            ``(2) Requirements for valid requests and consents.--A 
        request for or consent to disclosure under paragraph (1) shall 
        only be valid for purposes of this section or sections 7213, 
        7213A, or 7431 if--
                    ``(A) at the time of execution, such request or 
                consent designates a recipient of such disclosure and 
                is dated, and
                    ``(B) at the time such request or consent is 
                submitted to the Secretary, the submitter of such 
                request or consent certifies, under penalty of perjury, 
                that such request or consent complied with subparagraph 
                (A).
            ``(3) Restrictions on persons obtaining information.--Any 
        person shall, as a condition for receiving return or return 
        information under paragraph (1)--
                    ``(A) ensure that such return and return 
                information is kept confidential,
                    ``(B) use such return and return information only 
                for the purpose for which it was requested, and
                    ``(C) not disclose such return and return 
                information except to accomplish the purpose for which 
                it was requested, unless a separate consent from the 
                taxpayer is obtained.
            ``(4) Requirements for form prescribed by secretary.--For 
        purposes of this subsection, the Secretary shall prescribe a 
        form for requests and consents which shall--
                    ``(A) contain a warning, prominently displayed, 
                informing the taxpayer that the form should not be 
                signed unless it is completed,
                    ``(B) state that if the taxpayer believes there is 
                an attempt to coerce him to sign an incomplete or blank 
                form, the taxpayer should report the matter to the 
                Treasury Inspector General for Tax Administration, and
                    ``(C) contain the address and telephone number of 
                the Treasury Inspector General for Tax 
                Administration.''.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Treasury Inspector General for Tax 
Administration shall submit a report to the Congress on compliance with 
the designation and certification requirements applicable to requests 
for or consent to disclosure of returns and return information under 
section 6103(c) of the Internal Revenue Code of 1986, as amended by 
subsection (a). Such report shall--
            (1) evaluate (on the basis of random sampling) whether--
                    (A) the amendment made by subsection (a) is 
                achieving the purposes of this section;
                    (B) requesters and submitters for such disclosure 
                are continuing to evade the purposes of this section 
                and, if so, how; and
                    (C) the sanctions for violations of such 
                requirements are adequate; and
            (2) include such recommendations that the Treasury 
        Inspector General for Tax Administration considers necessary or 
        appropriate to better achieve the purposes of this section.
    (c) Conforming Amendment.--Section 6103(c) is amended by striking 
``Taxpayer.--The Secretary'' and inserting ``Taxpayer.--
            ``(1) In general.--The Secretary''.
    (d) Effective Date.--The amendments made by this section shall 
apply to requests and consents made after 3 months after the date of 
the enactment of this Act.

SEC. 205. NOTICE TO TAXPAYER CONCERNING ADMINISTRATIVE DETERMINATION OF 
              BROWSING; ANNUAL REPORT.

    (a) Notice to Taxpayer.--Subsection (e) of section 7431 (relating 
to notification of unlawful inspection and disclosure) is amended by 
adding at the end the following: ``The Secretary shall also notify such 
taxpayer if the Treasury Inspector General for Tax Administration 
determines that such taxpayer's return or return information was 
inspected or disclosed in violation of any of the provisions specified 
in paragraph (1), (2), or (3).''.
    (b) Reports.--Subsection (p) of section 6103 (relating to procedure 
and recordkeeping), as amended by section 245, is further amended by 
adding at the end the following new paragraph:
            ``(10) Report on unauthorized disclosure and inspection.--
        As part of the report required by paragraph (3)(C) for each 
calendar year, the Secretary shall furnish information regarding the 
unauthorized disclosure and inspection of returns and return 
information, including the number, status, and results of--
                    ``(A) administrative investigations,
                    ``(B) civil lawsuits brought under section 7431 
                (including the amounts for which such lawsuits were 
                settled and the amounts of damages awarded), and
                    ``(C) criminal prosecutions.''.
    (c) Effective Date.--
            (1) Notice.--The amendment made by subsection (a) shall 
        apply to determinations made after the date of the enactment of 
        this Act.
            (2) Reports.--The amendment made by subsection (b) shall 
        apply to calendar years ending after the date of the enactment 
        of this Act.

SEC. 206. EXPANDED DISCLOSURE IN EMERGENCY CIRCUMSTANCES.

    (a) In General.--Section 6103(i)(3)(B) (relating to danger of death 
or physical injury) is amended by striking ``or State'' and inserting 
``, State, or local''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

                      TITLE III--OTHER PROVISIONS.

SEC. 301. BETTER MEANS OF COMMUNICATING WITH TAXPAYERS.

    Not later than 18 months after the date of the enactment of this 
Act, the Treasury Inspector General for Tax Administration shall submit 
a report to Congress evaluating whether technological advances, such as 
e-mail and facsimile transmission, permit the use of alternative means 
for the Internal Revenue Service to communicate with taxpayers.

SEC. 302. ENROLLED AGENTS.

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

``SEC. 7527. ENROLLED AGENTS.

    ``(a) In General.--The Secretary may prescribe such regulations as 
may be necessary to regulate the conduct of enrolled agents in regards 
to their practice before the Internal Revenue Service.
    ``(b) Use of Credentials.--Any enrolled agents properly licensed to 
practice as required under rules promulgated under section (a) herein 
shall be allowed to use the credentials or designation as `enrolled 
agent', `EA', or `E.A.'.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new item:

                              ``Sec. 7525. Enrolled agents.''.
    (c) Prior Regulations.--Nothing in the amendments made by this 
section shall be construed to have any effect on part 10 of title 31, 
Code of Federal Regulations, or any other Federal rule or regulation 
issued before the date of the enactment of this Act.

SEC. 303. FINANCIAL MANAGEMENT SERVICE FEES.

    Notwithstanding any other provision of law, the Financial 
Management Service may charge the Internal Revenue Service, and the 
Internal Revenue Service may pay the Financial Management Service, a 
fee sufficient to cover the full cost of implementing a continuous levy 
program under subsection (h) of section 6331 of the Internal Revenue 
Code of 1986. Any such fee shall be based on actual levies made and 
shall be collected by the Financial Management Service by the retention 
of a portion of amounts collected by levy pursuant to that subsection. 
Amounts received by the Financial Management Service as fees under that 
subsection shall be deposited into the account of the Department of the 
Treasury under section 3711(g)(7) of title 31, United States Code, and 
shall be collected and accounted for in accordance with the provisions 
of that section. The amount credited against the taxpayer's liability 
on account of the continuous levy shall be the amount levied, without 
reduction for the amount paid to the Financial Management Service as a 
fee.

SEC. 304. AMENDMENT TO TREASURY AUCTION REFORMS.

    (a) In General.--Clause (i) of section 202(c)(4)(B) of the 
Government Securities Act Amendments of 1993 (31 U.S.C. 3121 note) is 
amended by inserting before the semicolon ``(or, if earlier, at the 
time the Secretary releases the minutes of the meeting in accordance 
with paragraph (2))''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to meetings held after the date of the enactment of this Act.
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