[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3625 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 3625

     To amend the Internal Revenue Code of 1986 to consolidate the 
Inspectors General relating to the Department of the Treasury, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 21, 2003

Mr. Portman (for himself, Mr. Houghton, and Mr. Pomeroy) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Government Reform, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
     To amend the Internal Revenue Code of 1986 to consolidate the 
Inspectors General relating to the Department of the Treasury, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Department of the Treasury Inspector 
General Consolidation Act of 2003''.

SEC. 2. OFFICE OF THE TREASURY INSPECTOR GENERAL.

    (a) In General.--Subchapter A of chapter 80 of the Internal Revenue 
Code of 1986 is amended by inserting after section 7804 the following 
new section:

``SEC. 7804A. OFFICE OF THE TREASURY INSPECTOR GENERAL.

    ``(a) In General.--There shall be in the Department of the Treasury 
the Office of the Treasury Inspector General.
    ``(b) Treasury Inspector General.--
            ``(1) In general.--There shall be at the head of such 
        Office the Treasury Inspector General. The Treasury Inspector 
        General shall be under the authority, direction, and control of 
        the Secretary of the Treasury with respect to audits or 
        investigations, or the issuance of subpoenas, which require 
        access to sensitive information concerning--
                    ``(A) ongoing criminal investigations or 
                proceedings;
                    ``(B) undercover operations;
                    ``(C) the identity of confidential sources, 
                including protected witnesses;
                    ``(D) deliberations and decisions on policy 
                matters, including documented information used as a 
                basis for making policy decisions, the disclosure of 
                which could reasonably be expected to have a 
                significant influence on the economy or market 
                behavior;
                    ``(E) intelligence or counterintelligence matters; 
                or
                    ``(F) other matters the disclosure of which would 
                constitute a serious threat to national security.
            ``(2) Special rule relating to national interests of the 
        united states.--With respect to the information described under 
        paragraph (1), the Secretary of the Treasury may prohibit the 
        Treasury Inspector General from carrying out or completing any 
        audit or investigation, or from issuing any subpoena, after 
        such Inspector General has decided to initiate, carry out, or 
        complete such audit or investigation or to issue such subpoena, 
        if the Secretary determines that such prohibition is necessary 
        to prevent the disclosure of any information described under 
        paragraph (1) or to prevent significant impairment to the 
        national interests of the United States.
            ``(3) Notice of exercise of secretary's power.--If the 
        Secretary of the Treasury exercises any power under paragraph 
        (1) or (2), the Secretary of the Treasury shall notify the 
        Treasury Inspector General in writing stating the reasons for 
        such exercise. Within 30 days after receipt of any such notice, 
        the Treasury Inspector General shall transmit a copy of such 
        notice to the Committees on Governmental Affairs and Finance of 
        the Senate and the Committees on Government Operations and Ways 
        and Means of the House of Representatives, and to other 
        appropriate committees or subcommittees of the Congress.
            ``(4) Limitation on exercise of secretary's power.--The 
        Secretary of the Treasury may not exercise any power under 
        paragraph (1) or (2) with respect to the duties and 
        responsibilities of the Treasury Inspector General concerning 
        the Internal Revenue Service, the Internal Revenue Service 
        Oversight Board, or the Office of Chief Counsel of the Internal 
        Revenue Service.
    ``(c) Authority of Treasury Inspector General.--
            ``(1) Inspector general act of 1978.--The Office of the 
        Treasury Inspector General shall be deemed an establishment of 
        an office of Inspector General under the Inspector General Act 
        of 1978. The Treasury Inspector General shall exercise all 
        duties and responsibilities of an Inspector General of an 
        establishment with respect to the Department of the Treasury 
        and the Secretary of the Treasury.
            ``(2) General authority for audits and investigations.--
        Subject to subsection (b), the Treasury Inspector General may 
        initiate, conduct, and supervise such audits and investigations 
        in the Department of the Treasury as the Treasury Inspector 
        General considers appropriate.
            ``(3) Notice of audits and investigations.--If the Treasury 
        Inspector General initiates an audit or investigation under 
        paragraph (2), the Treasury Inspector General may provide the 
        head of the affected bureau or office that is the subject of 
        the audit or investigation with written notice that the 
        Treasury Inspector General has initiated such audit or 
        investigation. If the Treasury Inspector General issues a 
        notice under the preceding sentence, no other audit or 
        investigation shall be initiated into the matter under audit or 
        investigation by the Treasury Inspector General and any other 
        audit or investigation of such matter shall cease.
            ``(4) Additional duties.--
                    ``(A) Annual reporting.--The Treasury Inspector 
                General shall include in one of the semiannual reports 
under section 5 of the Inspector General Act of 1978--
                            ``(i) an evaluation of the compliance of 
                        the Internal Revenue Service with--
                                    ``(I) restrictions under section 
                                1204 of the Internal Revenue Service 
                                Restructuring and Reform Act of 1998 on 
                                the use of enforcement statistics to 
                                evaluate Internal Revenue Service 
                                employees,
                                    ``(II) restrictions under section 
                                7521 on directly contacting taxpayers 
                                who have indicated that they prefer 
                                their representatives be contacted,
                                    ``(III) required procedures under 
                                section 6320 upon the filing of a 
                                notice of a lien,
                                    ``(IV) required procedures under 
                                subchapter D of chapter 64 for seizure 
                                of property for collection of taxes, 
                                including required procedures under 
                                section 6330 regarding levies, and
                                    ``(V) restrictions under section 
                                3707 of the Internal Revenue Service 
                                Restructuring and Reform Act of 1998 on 
                                designation of taxpayers,
                            ``(ii) a review and a certification of 
                        whether or not the Secretary is complying with 
                        the requirements of section 6103(e)(8) to 
                        disclose information to an individual filing a 
                        joint return on collection activity involving 
                        the other individual filing the return,
                            ``(iii) information regarding extensions of 
                        the statute of limitations for assessment and 
                        collection of tax under section 6501 and the 
                        provision of notice to taxpayers regarding 
                        requests for such extension,
                            ``(iv) an evaluation of the adequacy and 
                        security of the technology of the Internal 
                        Revenue Service,
                            ``(v) any termination or mitigation under 
                        section 1203 of the Internal Revenue Service 
                        Restructuring and Reform Act of 1998,
                            ``(vi) information regarding improper 
                        denial of requests for information from the 
                        Internal Revenue Service identified under 
                        subparagraph (C)(i), and
                            ``(vii) information regarding any 
                        administrative or civil actions with respect to 
                        violations of the fair debt collection 
                        provisions of section 6304, including--
                                    ``(I) a summary of such actions 
                                initiated since the date of the last 
                                report, and
                                    ``(II) a summary of any judgments 
                                or awards granted as a result of such 
                                actions.
                    ``(B) Semiannual reports.--
                            ``(i) In general.--The Treasury Inspector 
                        General shall include in each semiannual report 
                        under section 5 of the Inspector General Act of 
                        1978--
                                    ``(I) the number of taxpayer 
                                complaints during the reporting period,
                                    ``(II) the number of employee 
                                misconduct and taxpayer abuse 
                                allegations received by the Internal 
                                Revenue Service or the Inspector 
                                General during the period from 
                                taxpayers, Internal Revenue Service 
                                employees, and other sources,
                                    ``(III) a summary of the status of 
                                such complaints and allegations, and
                                    ``(IV) a summary of the disposition 
                                of such complaints and allegations, 
                                including the outcome of any Department 
                                of Justice action and any monies paid 
                                as a settlement of such complaints and 
                                allegations.
                            ``(ii) Subclauses (III) and (IV) of clause 
                        (i) shall only apply to complaints and 
                        allegations of serious employee misconduct.
                    ``(C) Other responsibilities.--The Treasury 
                Inspector General shall--
                            ``(i) conduct periodic audits of a 
                        statistically valid sample of the total number 
                        of determinations made by the Internal Revenue 
                        Service to deny written requests to disclose 
                        information to taxpayers on the basis of 
                        section 6103 of this title or section 552(b)(7) 
                        of title 5, United States Code, and
                            ``(ii) establish and maintain a toll-free 
                        telephone number for taxpayers to use to 
                        confidentially register complaints of 
                        misconduct by Internal Revenue Service 
                        employees and incorporate the telephone number 
                        in the statement required by section 6227 of 
                        the Omnibus Taxpayer Bill of Rights (Internal 
                        Revenue Service Publication No. 1).
    ``(d) Relating to Administrative Review of Decisions.--An audit or 
investigation conducted by the Treasury Inspector General shall not 
affect a final decision of the Secretary under section 6406.
    ``(e) Transmission of Reports to Congress.--
            ``(1) In general.--Any report required to be transmitted by 
        the Secretary to the appropriate committees or subcommittees of 
        the Congress under section 5(d) of the Inspector General Act of 
        1978 shall also be transmitted, within the seven-day period 
        specified under such section, to the Committees on Governmental 
        Affairs and Finance of the Senate and the Committees on 
        Government Reform and Oversight and Ways and Means of the House 
        of Representatives.
            ``(2) Reports relating to the irs.--Any report made by the 
        Treasury Inspector General concerning the Internal Revenue 
        Service, the Internal Revenue Service Oversight Board, or the 
        Office of Chief Counsel of the Internal Revenue Service that is 
required to be transmitted by the Secretary to the appropriate 
committees or subcommittees of Congress under section 5(d) of the 
Inspector General of 1978 shall also be transmitted, within the 7-day 
period specified under such section, to the Internal Revenue Service 
Oversight Board and the Commissioner of Internal Revenue.
    ``(f) Additional Selection Criteria for Treasury Inspector 
General.--In addition to the requirements of the first sentence of 
section 3(a) of the Inspector General Act of 1978, the Treasury 
Inspector General should have demonstrated ability to lead a large and 
complex organization.
    ``(g)  Treasury Inspector General Not Employee of IRS.--An 
individual appointed to the position of Treasury Inspector General may 
not be an employee of the Internal Revenue Service--
            ``(1) during the 2-year period preceding the date of 
        appointment to such position, or
            ``(2) during the 5-year period following the date such 
        individual ends service in such position.
    ``(h) Criminal Authority.--
            ``(1) In general.--In addition to the duties and 
        responsibilities exercised by an Inspector General of an 
        establishment, the Treasury Inspector General--
                    ``(A) shall have the authority and duty to enforce 
                the criminal provisions within the scope of the 
                Treasury Inspector General's jurisdiction, powers, 
                duties and responsibilities as an Inspector General of 
                an establishment under the Inspector General Act of 
                1978 and under this section,
                    ``(B) in enforcing the criminal provisions 
                described in subparagraph (A), shall have the authority 
                to--
                            ``(i) execute and serve search warrants and 
                        arrest warrants, and serve subpoenas and 
                        summonses issued under authority of the United 
                        States,
                            ``(ii) make arrests without warrant for any 
                        offense against the United States relating to 
                        the laws under the jurisdiction, powers, duties 
                        and responsibilities of the Treasury Inspector 
                        General committed in the presence of an 
                        employee of the Treasury Inspector General 
                        authorized to enforce such laws, or for any 
                        felony cognizable under such laws if there is a 
                        reasonable ground to believe that the person to 
                        be arrested has committed or is committing any 
                        such felony,
                            ``(iii) make seizures of property subject 
                        to forfeiture under such laws, and
                            ``(iv) carry firearms,
                    ``(C) shall be responsible for protecting the 
                Department of the Treasury against external attempts to 
                corrupt or threaten employees of the Department of the 
                Treasury, but shall not be responsible for the 
                conducting of background checks, and
                    ``(D) may designate any employee in the Office of 
                the Treasury Inspector General to enforce such laws and 
                perform such functions referred to under subparagraphs 
                (A), (B), and (C).
            ``(2) Reporting to attorney general of united states.--
                    ``(A) In general.--In performing a law enforcement 
                function under paragraph (1), the Treasury Inspector 
                General shall report any reasonable grounds to believe 
                there has been a violation of Federal criminal law to 
                the Attorney General of the United States at an 
                appropriate time as determined by the Treasury 
                Inspector General, notwithstanding section 4(d) of the 
                Inspector General Act of 1978.
                    ``(B) Exception.--In the administration of section 
                5(d) of the Inspector General Act of 1978 and 
                subsection (e)(2) of this section, the Secretary of the 
                Treasury may transmit the required report at an 
                appropriate time as determined by the Secretary, if the 
                problem, abuse, or deficiency relates to--
                            ``(i) the performance of a law enforcement 
                        function under paragraph (1) of this 
                        subsection, and
                            ``(ii) sensitive information concerning 
                        matters under any of the subsection (b)(1)(A) 
                        through (F).
            ``(3) Rule of construction.--Nothing in this subsection 
        shall be construed to affect the authority of any other person 
        to carry out or enforce any provision specified in paragraph 
        (1).
    ``(i) Special Rules Relating to Internal Revenue Service.--
            ``(1) In general.--The Commissioner of Internal Revenue or 
        the Internal Revenue Service Oversight Board may request, in 
        writing, the Treasury Inspector General to conduct an audit or 
        investigation relating to the Internal Revenue Service, the 
        Internal Revenue Service Oversight Board, or the office of 
        Chief Counsel of the Internal Revenue Service. If the Treasury 
        Inspector General determines not to conduct such audit or 
        investigation, the Treasury Inspector General shall timely 
        provide a written explanation for such determination to the 
        person making the request.
            ``(2) Reports.--
                    ``(A) Audits.--Any final report of an audit 
                conducted by the Treasury Inspector General concerning 
                the Internal Revenue Service, the Internal Revenue 
                Service Oversight Board, or the Office of the Chief 
                Counsel of the Internal Revenue Service shall be timely 
                submitted by the Treasury Inspector General to the 
                Commissioner of Internal Revenue and the Internal 
                Revenue Service Oversight Board.
                    ``(B) Investigations.--The Treasury Inspector 
                General shall periodically submit to the Commissioner 
                and Board a list of investigations concerning the 
                Internal Revenue Service, the Internal Revenue Service 
                Oversight Board, or the Office of the Chief Counsel of 
                the Internal Revenue Service for which a final report 
has been completed by the Treasury Inspector General and shall provide 
a copy of any such report upon request of the Commissioner or Board.
                    ``(C) Application.--This paragraph applies 
                regardless of whether the applicable audit or 
                investigation is requested under paragraph (1).''.
    (b) Conforming Amendments to the Internal Revenue Code of 1986.--
            (1) The following provisions of the Internal Revenue Code 
        of 1986 are each amended by striking ``Treasury Inspector 
        General for Tax Administration'' each place it appears in the 
        headings and the text and inserting ``Treasury Inspector 
        General'':
                    (A) Section 6103(h)(6).
                    (B) Section 6103(k)(6).
                    (C) Section 7217(b).
                    (D) Section 7803(c)(2)(B)(iv).
            (2) Section 6103(p)(3) of such Code is amended by adding at 
        the end the following new subparagraph:
                    ``(D) Special rule relating to the treasury 
                inspector general.--The exception under subparagraph 
                (A) that the Secretary not be required to maintain 
                records or accountings shall not apply with respect to 
                the Treasury Inspector General.''.
            (3) Section 6103(p)(4) of such Code is amended by inserting 
        ``the Treasury Inspector General,'' before ``the General 
        Accounting Office''.
            (4) Section 7803 of such Code is amended by striking 
        subsection (d).
            (5) Section 7608(b) of such Code is amended by striking 
        ``of the Intelligence Division''.
    (c) Conforming Amendments to Inspector General Act of 1978.--
            (1) Section 2 of the Inspector General Act of 1978 (5 
        U.S.C. App.) is amended by striking ``established--'' and all 
        that follows and inserting ``established in each of such 
        establishments an Office of Inspector General.''.
            (2) The Inspector General Act of 1978 (5 U.S.C. App.) is 
        amended by striking section 8D.
    (d) Clerical Amendment.--The table of sections for subchapter A of 
chapter 80 of such Code is amended by inserting after the item relating 
to section 7804 the following new item:

                              ``Sec. 7804A. Office of the Treasury 
                                        Inspector General.''.

SEC. 3. TRANSFER OF OFFICE OF THE INSPECTOR GENERAL OF THE DEPARTMENT 
              OF THE TREASURY TO THE OFFICE OF TREASURY INSPECTOR 
              GENERAL FOR TAX ADMINISTRATION.

    (a) In General.--The Office of the Inspector General of the 
Department of the Treasury is hereby transferred to the Office of 
Treasury Inspector General for Tax Administration.
    (b) Abolishment of Office of the Inspector General of the 
Department of the Treasury.--Effective upon the transfer under 
subsection (a) and consistent with the Inspector General Act of 1978 
(as amended by this Act), the Office of Inspector General of the 
Department of the Treasury established by the Inspector General Act 
Amendments of 1988 is abolished.
    (c) Renaming of Treasury Inspector General for Tax 
Administration.--The Office of Treasury Inspector General for Tax 
Administration is hereby redesignated as the Office of the Treasury 
Inspector General.
    (d) Transfer of Functions, etc.--Subparagraph (L) of section 
9(a)(1) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended 
to read as follows:
                    ``(L) of the Department of the Treasury 
                (established by the Department of the Treasury 
                Inspector General Consolidation Act of 2003), the 
                offices of that department referred to as the `Office 
                of the Inspector General of the Department of the 
                Treasury' (established by the Inspector General Act 
                Amendments of 1988);''.

SEC. 4. SAVINGS PROVISIONS.

    (a) Completed or Pending Matters.--Completed or pending 
administrative actions, proceedings, orders, determinations, rules, 
regulations, personnel actions, permits, agreements, grants, contracts, 
certificates, licenses, registrations, privileges, or civil actions, of 
either the Inspector General of the Department of the Treasury or the 
Treasury Inspector General for Tax Administration shall not be affected 
by the enactment of this Act or the consolidation of the Office of the 
Inspector General of the Department of the Treasury and the Office of 
the Treasury Inspector General for Tax Administration under this Act as 
the Office of the Treasury Inspector General, but shall continue in 
effect according to their terms until amended, modified, superseded, 
terminated, set aside, or revoked, in accordance with law by an officer 
of the United States or a court of competent jurisdiction, or by 
operation of law.
    (b) References.--Any reference to either the Inspector General of 
the Department of the Treasury or the Treasury Inspector General for 
Tax Administration in any statute, Executive Order, rule, regulation, 
directive, or delegation of authority that precedes the effective date 
of this Act shall be deemed to be a reference to the Treasury Inspector 
General established under the Inspector General Act of 1978, as amended 
by this Act, unless otherwise provided by this Act or the Inspector 
General Act of 1978.

SEC. 5. TRANSITION PROVISION.

    The President may designate an individual to serve as the Treasury 
Inspector General (as consolidated under section 2 of this Act and the 
amendments made by this Act) until a Treasury Inspector General is 
appointed pursuant to section 3 of the Inspector General Act of 1978.

SEC. 6. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect 120 
days after the date of the enactment of this Act.
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