[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5719 Reported in House (RH)]






                                                 Union Calendar No. 362
110th CONGRESS
  2d Session
                                H. R. 5719

                          [Report No. 110-584]

 To amend the Internal Revenue Code of 1986 to conform return preparer 
    penalty standards, delay implementation of withholding taxes on 
government contractors, enhance taxpayer protections, assist low-income 
                   taxpayers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 8, 2008

   Mr. Rangel (for himself, Mr. McDermott, Mr. Lewis of Georgia, Mr. 
   Pomeroy, Mr. Emanuel, Mr. Blumenauer, Mr. Kind, Ms. Berkley, Mr. 
 Crowley, Mr. Meek of Florida, Mr. Ellison, Ms. Giffords, Mr. Hall of 
 New York, Mr. Mahoney of Florida, Mr. Walz of Minnesota, Mr. Welch of 
 Vermont, and Mrs. Jones of Ohio) introduced the following bill; which 
            was referred to the Committee on Ways and Means

                             April 14, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                                8, 2008]

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to conform return preparer 
    penalty standards, delay implementation of withholding taxes on 
government contractors, enhance taxpayer protections, assist low-income 
                   taxpayers, 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, ETC.

    (a) Short Title.--This Act may be cited as the ``Taxpayer 
Assistance and Simplification Act of 2008''.
    (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 of this Act is as 
follows:

Sec. 1. Short title, etc.
Sec. 2. Modification of penalty on understatement of taxpayer's 
                            liability by tax return preparer.
Sec. 3. Removal of cellular telephones (or similar telecommunications 
                            equipment) from listed property.
Sec. 4. Delay of application of withholding requirement on certain 
                            governmental payments for goods and 
                            services.
Sec. 5. Elderly and disabled individuals receiving in-home care under 
                            certain government programs not subject to 
                            employment tax provisions.
Sec. 6. Referrals to low income taxpayer clinics permitted.
Sec. 7. Programs for the benefit of low-income taxpayers.
Sec. 8. EITC outreach.
Sec. 9. Prohibition on IRS debt indicators for predatory refund 
                            anticipation loans.
Sec. 10. Study on delivery of tax refunds.
Sec. 11. Extension of time for return of property for wrongful levy.
Sec. 12. Individuals held harmless on wrongful levy, etc., on 
                            individual retirement plan.
Sec. 13. Taxpayer notification of suspected identity theft.
Sec. 14. Repeal of authority to enter into private debt collection 
                            contracts.
Sec. 15. Clarification of IRS unclaimed refund authority.
Sec. 16. Prohibition on misuse of Department of the Treasury names and 
                            symbols.
Sec. 17. Substantiation of amounts paid or distributed out of health 
                            savings account.
Sec. 18. Certain domestically controlled foreign persons performing 
                            services under contract with United States 
                            Government treated as American employers.
Sec. 19. Time for payment of corporate estimated tax.

SEC. 2. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER'S 
              LIABILITY BY TAX RETURN PREPARER.

    (a) In General.--Subsection (a) of section 6694 (relating to 
understatement due to unreasonable positions) is amended to read as 
follows:
    ``(a) Understatement Due to Unreasonable Positions.--
            ``(1) In general.--If a tax return preparer--
                    ``(A) prepares any return or claim of refund with 
                respect to which any part of an understatement of 
                liability is due to a position described in paragraph 
                (2), and
                    ``(B) knew (or reasonably should have known) of the 
                position,
        such tax return preparer shall pay a penalty with respect to 
        each such return or claim in an amount equal to the greater of 
        $1,000 or 50 percent of the income derived (or to be derived) 
        by the tax return preparer with respect to the return or claim.
            ``(2) Unreasonable position.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, a position is described in this 
                paragraph unless there is or was substantial authority 
                for the position.
                    ``(B) Disclosed positions.--If the position was 
                disclosed as provided in section 6662(d)(2)(B)(ii)(I) 
                and is not a position to which subparagraph (C) 
                applies, the position is described in this paragraph 
                unless there is a reasonable basis for the position.
                    ``(C) Tax shelters and reportable transactions.--If 
                the position is with respect to a tax shelter (as 
                defined in section 6662(d)(2)(C)(ii)) or a reportable 
                transaction to which section 6662A applies, the 
                position is described in this paragraph unless it is 
                reasonable to believe that the position would more 
                likely than not be sustained on its merits.
            ``(3) Reasonable cause exception.--No penalty shall be 
        imposed under this subsection if it is shown that there is 
        reasonable cause for the understatement and the tax return 
        preparer acted in good faith.''.
    (b) Effective Date.--The amendment made by this section shall 
apply--
            (1) in the case of a position described in subparagraph (A) 
        or (B) of section 6694(a)(2) of the Internal Revenue Code of 
        1986 (as amended by this section), to returns prepared after 
        May 25, 2007, and
            (2) in the case of a position described in subparagraph (C) 
        of such section (as amended by this section), to returns 
        prepared for taxable years ending after the date of the 
        enactment of this Act.

SEC. 3. REMOVAL OF CELLULAR TELEPHONES (OR SIMILAR TELECOMMUNICATIONS 
              EQUIPMENT) FROM LISTED PROPERTY.

    (a) In General.--Subparagraph (A) of section 280F(d)(4) (defining 
listed property) is amended by inserting ``and'' at the end of clause 
(iv), by striking clause (v), and by redesignating clause (vi) as 
clause (v).
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2008.

SEC. 4. DELAY OF APPLICATION OF WITHHOLDING REQUIREMENT ON CERTAIN 
              GOVERNMENTAL PAYMENTS FOR GOODS AND SERVICES.

    (a) In General.--Subsection (b) of section 511 of the Tax Increase 
Prevention and Reconciliation Act of 2005 is amended by striking 
``December 31, 2010'' and inserting ``December 31, 2011''.
    (b) Report to Congress.--Not later than 6 months after the date of 
the enactment of this Act, the Secretary of the Treasury 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 the 
withholding requirements of section 3402(t) of the Internal Revenue 
Code of 1986, including a detailed analysis of--
            (1) the problems, if any, which are anticipated in 
        administering and complying with such requirements,
            (2) the burdens, if any, that such requirements will place 
        on governments and businesses (taking into account such 
        mechanisms as may be necessary to administer such 
        requirements), and
            (3) the application of such requirements to small 
        expenditures for services and goods by governments.

SEC. 5. ELDERLY AND DISABLED INDIVIDUALS RECEIVING IN-HOME CARE UNDER 
              CERTAIN GOVERNMENT PROGRAMS NOT SUBJECT TO EMPLOYMENT TAX 
              PROVISIONS.

    (a) In General.--Chapter 25 (relating to general provisions 
relating to employment taxes) is amended by adding at the end the 
following new section:

``SEC. 3511. ELDERLY AND DISABLED INDIVIDUALS RECEIVING IN-HOME CARE 
              UNDER CERTAIN GOVERNMENT PROGRAMS.

    ``(a) In General.--In the case of amounts paid under a home care 
service program to a home care service provider by the fiscal 
administrator of such program--
            ``(1) the home care service recipient shall not be liable 
        for the payment of any taxes imposed under this subtitle with 
        respect to amounts paid for the provision of services under 
        such program, and
            ``(2) the fiscal administrator shall be so liable.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Home care service program.--The term `home care 
        service program' means a State or local government program--
                    ``(A) any portion of which is funded with Federal 
                funds, and
                    ``(B) under which domestic services are provided to 
                elderly or disabled individuals in their homes.
        Such term shall not include any program to the extent home care 
        service recipients make payments to the home care service 
        providers for such in-home domestic services.
            ``(2) Home care service provider.--The term `home care 
        service provider' means any individual who provides domestic 
        services to a home care service recipient under a home care 
        service program.
            ``(3) Home care service recipient.--The term `home care 
        service recipient' means any individual receiving domestic 
        services under a home care service program.
            ``(4) Fiscal administrator.--The term `fiscal 
        administrator' means any person or governmental entity who pays 
        amounts under a home care service program to home care service 
        providers for the provision of domestic services under such 
        program.
    ``(c) Returns by Fiscal Administrator.--For purposes of this 
section--
            ``(1) In general.--Returns relating to taxes imposed or 
        amounts required to be withheld under this subtitle shall be 
        made under the identifying number of the fiscal administrator.
            ``(2) Identification of service recipient.--The fiscal 
        administrator shall, to the extent required under regulations 
        prescribed by the Secretary, make a return setting forth--
                    ``(A) the name, address, and identifying number of 
                each home care service recipient for whom amounts are 
                paid by such fiscal administrator under the home care 
                services program, and
                    ``(B) such other information as the Secretary may 
                require.
    ``(d) Regulations.--The Secretary may prescribe such regulations or 
other guidance as may be necessary to carry out the purposes of this 
section, including requiring deposits of any tax imposed under this 
subtitle.''.
    (b) Service Recipient Identification Return Treated as Information 
Return.--Paragraph (3) of section 6724(d) is amended by striking 
``and'' at the end of subparagraph (C)(ii), by striking the period at 
the end of subparagraph (D)(ii) and inserting ``, and'', and by adding 
at the end the following new subparagraph:
                    ``(E) any requirement under section 3511(c)(2).''.
    (c) Clerical Amendment.--The table of sections for chapter 25 is 
amended by adding at the end the following new item:

``Sec. 3511. Elderly and disabled individuals receiving in-home care 
                            under certain government programs.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid after December 31, 2008.

SEC. 6. REFERRALS TO LOW INCOME TAXPAYER CLINICS PERMITTED.

    (a) In General.--Subsection (c) of section 7526 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(6) Treasury employees permitted to refer taxpayers to 
        qualified low-income taxpayer clinics.--Notwithstanding any 
        other provision of law, officers and employees of the 
        Department of the Treasury may refer taxpayers for advice and 
        assistance to qualified low-income taxpayer clinics receiving 
        funding under this section.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to referrals made after the date of the enactment of this Act.

SEC. 7. PROGRAMS FOR THE BENEFIT OF LOW-INCOME TAXPAYERS.

    (a) Volunteer Income Tax Assistance Programs.--Chapter 77 (relating 
to miscellaneous provisions) is amended by inserting after section 7526 
the following new section:

``SEC. 7526A. VOLUNTEER INCOME TAX ASSISTANCE PROGRAMS.

    ``(a) In General.--The Secretary may, subject to the availability 
of appropriated funds, make grants to provide matching funds for the 
development, expansion, or continuation of volunteer income tax 
assistance programs.
    ``(b) Volunteer Income Tax Assistance Program.--For purposes of 
this section, the term `volunteer income tax assistance program' means 
a program--
            ``(1) which does not charge taxpayers for its return 
        preparation services,
            ``(2) which operates programs to assist low and moderate-
        income (as determined by the Secretary) taxpayers in preparing 
        and filing their Federal income tax returns, and
            ``(3) in which all of the volunteers who assist in the 
        preparation of Federal income tax returns meet the requirements 
        prescribed by the Secretary.
    ``(c) Special Rules and Limitations.--
            ``(1) Aggregate limitation.--Unless otherwise provided by 
        specific appropriation, the Secretary shall not allocate more 
        than $10,000,000 per year (exclusive of costs of administering 
        the program) to grants under this section.
            ``(2) Other applicable rules.--Rules similar to the rules 
        under paragraphs (2) through (6) of section 7526(c) shall apply 
        with respect to the awarding of grants to volunteer income tax 
        assistance programs.''.
    (b) Increase in Authorized Grants for Low-Income Taxpayer 
Clinics.--Paragraph (1) of section 7526(c) (relating to aggregate 
limitation) is amended by striking ``$6,000,000'' and inserting 
``$10,000,000''.
    (c) Clerical Amendments.--
            (1) Section 7526(c)(5) is amended by inserting 
        ``qualified'' before ``low-income''.
            (2) The table of sections for chapter 77 is amended by 
        inserting after the item relating to section 7526 the following 
        new item:

``Sec. 7526A. Volunteer income tax assistance programs.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 8. EITC OUTREACH.

    (a) In General.--Section 32 (relating to earned income) is amended 
by adding at the end the following new subsection:
    ``(n) Notification of Potential Eligibility for Credit and 
Refund.--
            ``(1) In general.--To the extent possible and on an annual 
        basis, the Secretary shall provide to each taxpayer who--
                    ``(A) for any preceding taxable year for which 
                credit or refund is not precluded by section 6511, and
                    ``(B) did not claim the credit under subsection (a) 
                but may be allowed such credit for any such taxable 
                year based on return or return information (as defined 
                in section 6103(b)) available to the Secretary,
        notice that such taxpayer may be eligible to claim such credit 
        and a refund for such taxable year.
            ``(2) Notice.--Notice provided under paragraph (1) shall be 
        in writing and sent to the last known address of the 
        taxpayer.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 9. PROHIBITION ON IRS DEBT INDICATORS FOR PREDATORY REFUND 
              ANTICIPATION LOANS.

    (a) In General.--Subsection (f) of section 6011 (relating to 
promotion of electronic filing) is amended by adding at the end the 
following new paragraph:
            ``(3) Prohibition on irs debt indicators for predatory 
        refund anticipation loans.--
                    ``(A) In general.--In carrying out any program 
                under this subsection, the Secretary shall not provide 
                a debt indicator to any person with respect to any 
                refund anticipation loan if the Secretary determines 
                that the business practices of such person involve 
                refund anticipation loans and related charges and fees 
                that are predatory.
                    ``(B) Refund anticipation loan.--For purposes of 
                this paragraph, the term `refund anticipation loan' 
                means a loan of money or of any other thing of value to 
                a taxpayer secured by the taxpayer's anticipated 
                receipt of a Federal tax refund.
                    ``(C) IRS debt indicator.--For purposes of this 
                paragraph, the term `debt indicator' means a 
                notification provided through a tax return's 
                acknowledgment file that a refund will be offset to 
                repay debts for delinquent Federal or State taxes, 
                student loans, child support, or other Federal agency 
                debt.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 10. STUDY ON DELIVERY OF TAX REFUNDS.

    (a) In General.--The Secretary of the Treasury, in consultation 
with the National Taxpayer Advocate, shall conduct a study on the 
feasibility of delivering tax refunds on debit cards, prepaid cards, 
and other electronic means to assist individuals that do not have 
access to financial accounts or institutions.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury shall submit a report to 
Congress containing the results of the study conducted under subsection 
(a).

SEC. 11. EXTENSION OF TIME FOR RETURN OF PROPERTY FOR WRONGFUL LEVY.

    (a) Extension of Time for Return of Property Subject to Levy.--
Subsection (b) of section 6343 (relating to return of property) is 
amended by striking ``9 months'' and inserting ``2 years''.
    (b) Period of Limitation on Suits.--Subsection (c) of section 6532 
(relating to suits by persons other than taxpayers) is amended--
            (1) in paragraph (1) by striking ``9 months'' and inserting 
        ``2 years'', and
            (2) in paragraph (2) by striking ``9-month'' and inserting 
        ``2-year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to--
            (1) levies made after the date of the enactment of this 
        Act, and
            (2) levies made on or before such date if the 9-month 
        period has not expired under section 6343(b) of the Internal 
        Revenue Code of 1986 (without regard to this section) as of 
        such date.

SEC. 12. INDIVIDUALS HELD HARMLESS ON WRONGFUL LEVY, ETC., ON 
              INDIVIDUAL RETIREMENT PLAN.

    (a) In General.--Section 6343 (relating to authority to release 
levy and return property) is amended by adding at the end the following 
new subsection:
    ``(f) Individuals Held Harmless on Wrongful Levy, etc. on 
Individual Retirement Plan.--
            ``(1) In general.--If the Secretary determines that an 
        individual retirement plan has been levied upon in a case to 
        which subsection (b) or (d)(2)(A) applies, an amount equal to 
        the sum of--
                    ``(A) the amount of money returned by the Secretary 
                on account of such levy, and
                    ``(B) interest paid under subsection (c) on such 
                amount of money,
        may be deposited into such individual retirement plan or any 
        other individual retirement plan (other than an endowment 
        contract) to which a rollover from the plan levied upon is 
        permitted. An amount may not be deposited into a Roth IRA under 
        the preceding sentence unless the individual retirement plan 
        levied upon was a Roth IRA at the time of such levy.
            ``(2) Treatment as rollover.--If amounts are deposited into 
        an individual retirement plan under paragraph (1) not later 
        than the 60th day after the date on which the individual 
        receives the amounts under paragraph (1)--
                    ``(A) such deposit shall be treated as a rollover 
                described in section 408(d)(3)(A)(i),
                    ``(B) to the extent the deposit includes interest 
                paid under subsection (c), such interest shall not be 
                includible in gross income, and
                    ``(C) such deposit shall not be taken into account 
                under section 408(d)(3)(B).
        For purposes of subparagraph (B), an amount shall be treated as 
        interest only to the extent that the amount deposited exceeds 
        the amount of the levy.
            ``(3) Refund, etc., of income tax on levy.--If any amount 
        is includible in gross income for a taxable year by reason of a 
        levy referred to in paragraph (1) and any portion of such 
        amount is treated as a rollover under paragraph (2), any tax 
        imposed by chapter 1 on such portion shall not be assessed, and 
        if assessed shall be abated, and if collected shall be credited 
        or refunded as an overpayment made on the due date for filing 
        the return of tax for such taxable year.
            ``(4) Interest.--Notwithstanding subsection (d), interest 
        shall be allowed under subsection (c) in a case in which the 
        Secretary makes a determination described in subsection 
        (d)(2)(A) with respect to a levy upon an individual retirement 
        plan.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid under subsections (b), (c), and (d)(2)(A) of section 
6343 of the Internal Revenue Code of 1986 after the date of the 
enactment of this Act.

SEC. 13. TAXPAYER NOTIFICATION OF SUSPECTED IDENTITY THEFT.

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

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

    ``If, in the course of an investigation under the internal revenue 
laws, the Secretary determines that there was or may have been an 
unauthorized use of the identity of the taxpayer or a dependent of the 
taxpayer, the Secretary shall, to the extent permitted by law--
            ``(1) as soon as practicable and without jeopardizing such 
        investigation, notify the taxpayer of such determination, and
            ``(2) if any person is criminally charged by indictment or 
        information with respect to such unauthorized use, notify such 
        taxpayer as soon as practicable of such charge.''.
    (b) 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.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to determinations made after the date of the enactment of this 
Act.

SEC. 14. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT COLLECTION 
              CONTRACTS.

    (a) In General.--Subchapter A of chapter 64 is amended by striking 
section 6306.
    (b) Conforming Amendments.--
            (1) Subchapter B of chapter 76 is amended by striking 
        section 7433A.
            (2) Section 7811 is amended by striking subsection (g).
            (3) Section 1203 of the Internal Revenue Service 
        Restructuring Act of 1998 is amended by striking subsection 
        (e).
            (4) The table of sections for subchapter A of chapter 64 is 
        amended by striking the item relating to section 6306.
            (5) The table of sections for subchapter B of chapter 76 is 
        amended by striking the item relating to section 7433A.
    (c) 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) Exception for existing contracts, etc.--The amendments 
        made by this section shall not apply to any contract which was 
        entered into before March 1, 2008, and is not renewed or 
        extended on or after such date.
            (3) Unauthorized contracts and extensions treated as 
        void.--Any qualified tax collection contract (as defined in 
        section 6306 of the Internal Revenue Code of 1986, as in effect 
        before its repeal) which is entered into on or after March 1, 
        2008, and any extension or renewal on or after such date of any 
        qualified tax collection contract (as so defined), shall be 
        void.

SEC. 15. CLARIFICATION OF IRS UNCLAIMED REFUND AUTHORITY.

    Paragraph (1) of section 6103(m) (relating to tax refunds) is 
amended by inserting ``, and through any other means of mass 
communication,'' after ``media''.

SEC. 16. PROHIBITION ON MISUSE OF DEPARTMENT OF THE TREASURY NAMES AND 
              SYMBOLS.

    (a) In General.--Subsection (a) of section 333 of title 31, United 
States Code, is amended by inserting ``Internet domain address,'' after 
``solicitation,'' both places it appears.
    (b) Penalty for Misuse by Electronic Means.--Subsections (c)(2) and 
(d)(1) of section 333 of such Code are each amended by inserting ``or 
any other mass communications by electronic means,'' after 
``telecast,''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to violations occurring after the date of the 
enactment of this Act.

SEC. 17. SUBSTANTIATION OF AMOUNTS PAID OR DISTRIBUTED OUT OF HEALTH 
              SAVINGS ACCOUNT.

    (a) In General.--Paragraph (1) of section 223(f) (relating to 
amounts used for qualified medical expenses) is amended by inserting 
``(and, in the case of amounts paid or distributed after December 31, 
2010, substantiated in a manner similar to the substantiation required 
for flexible spending arrangements)'' after ``account beneficiary''.
    (b) Reports.--Subsection (h) of section 223 (relating to reports) 
is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively,
            (2) by moving the text of subparagraphs (A) and (B) (as so 
        redesignated) and the last sentence 2 ems to the right,
            (3) by striking ``(h) Reports.--The Secretary may require--
        '' and inserting the following:
    ``(h) Reports.--
            ``(1) In general.--The Secretary may require--'', and
            (4) by adding at the end the following new paragraph:
            ``(2) Relating to substantiation.--Not later than January 
        15 of each calendar year after 2011, the trustee of a health 
        savings account shall make a report regarding such account to 
        the Secretary and the account beneficiary setting forth--
                    ``(A) the name, address, and identifying number of 
                the account beneficiary, and
                    ``(B) the amount paid or distributed out of such 
                account for the preceding calendar year not 
                substantiated in accordance with subsection (f)(1).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to amounts paid or distributed out of health savings 
accounts after December 31, 2010.

SEC. 18. CERTAIN DOMESTICALLY CONTROLLED FOREIGN PERSONS PERFORMING 
              SERVICES UNDER CONTRACT WITH UNITED STATES GOVERNMENT 
              TREATED AS AMERICAN EMPLOYERS.

    (a) FICA Taxes.--Section 3121 (relating to definitions) is amended 
by adding at the end the following new subsection:
    ``(z) Treatment of Certain Foreign Persons as American Employers.--
            ``(1) In general.--If any employee of a foreign person is 
        performing services in connection with a contract between the 
        United States Government (or any instrumentality thereof) and 
        any member of any domestically controlled group of entities 
        which includes such foreign person, such foreign person shall 
        be treated for purposes of this chapter as an American employer 
        with respect to such services performed by such employee.
            ``(2) Domestically controlled group of entities.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `domestically 
                controlled group of entities' means a controlled group 
                of entities the common parent of which is a domestic 
                corporation.
                    ``(B) Controlled group of entities.--The term 
                `controlled group of entities' means a controlled group 
                of corporations as defined in section 1563(a)(1), 
                except that--
                            ``(i) `more than 50 percent' shall be 
                        substituted for `at least 80 percent' each 
                        place it appears therein, and
                            ``(ii) the determination shall be made 
                        without regard to subsections (a)(4) and (b)(2) 
                        of section 1563.
                A partnership or any other entity (other than a 
                corporation) shall be treated as a member of a 
                controlled group of entities if such entity is 
                controlled (within the meaning of section 954(d)(3)) by 
                members of such group (including any entity treated as 
                a member of such group by reason of this sentence).
            ``(3) Liability of common parent.--In the case of a foreign 
        person who is a member of any domestically controlled group of 
        entities, the common parent of such group shall be jointly and 
        severally liable for any tax under this chapter for which such 
        foreign person is liable by reason of this subsection, and for 
        any penalty imposed on such person by this title with respect 
        to any failure to pay such tax or to file any return or 
        statement with respect to such tax or wages subject to such 
        tax. No deduction shall be allowed under this title for any 
        liability imposed by the preceding sentence.
            ``(4) Coordination.--Paragraph (1) shall not apply to any 
        services which are covered by an agreement under subsection 
        (l).
            ``(5) Cross reference.--For relief from taxes in cases 
        covered by certain international agreements, see sections 
        3101(c) and 3111(c).''.
    (b) Social Security Benefits.--Subsection (e) of section 210 of the 
Social Security Act (42 U.S.C. 410(e)) is amended--
            (1) by striking ``(e) The term'' and inserting ``(e)(1) The 
        term'',
            (2) by redesignating clauses (1) through (6) as clauses (A) 
        through (F), respectively, and
            (3) by adding at the end the following new paragraph:
    ``(2)(A) If any employee of a foreign person is performing services 
in connection with a contract between the United States Government (or 
any instrumentality thereof) and any member of any domestically 
controlled group of entities which includes such foreign person, such 
foreign person shall be treated as an American employer with respect to 
such services performed by such employee.
    ``(B) For purposes of this paragraph--
            ``(i) The term `domestically controlled group of entities' 
        means a controlled group of entities the common parent of which 
        is a domestic corporation.
            ``(ii) The term `controlled group of entities' means a 
        controlled group of corporations as defined in section 
        1563(a)(1) of the Internal Revenue Code of 1986, except that--
                    ``(I) `more than 50 percent' shall be substituted 
                for `at least 80 percent' each place it appears 
                therein, and
                    ``(II) the determination shall be made without 
                regard to subsections (a)(4) and (b)(2) of section 1563 
                of such Code.
        A partnership or any other entity (other than a corporation) 
        shall be treated as a member of a controlled group of entities 
        if such entity is controlled (within the meaning of section 
        954(d)(3) of such Code) by members of such group (including any 
        entity treated as a member of such group by reason of this 
        sentence).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to services performed after the date of the enactment of this Act.

SEC. 19. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAX.

    The percentage under subparagraph (C) of section 401(1) of the Tax 
Increase Prevention and Reconciliation Act of 2005 in effect on the 
date of the enactment of this Act is increased by 0.25 percentage 
points.
                                                 Union Calendar No. 362

110th CONGRESS

  2d Session

                               H. R. 5719

                          [Report No. 110-584]

_______________________________________________________________________

                                 A BILL

 To amend the Internal Revenue Code of 1986 to conform return preparer 
    penalty standards, delay implementation of withholding taxes on 
government contractors, enhance taxpayer protections, assist low-income 
                   taxpayers, and for other purposes.

_______________________________________________________________________

                             April 14, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed