1.
(a)This Act may be cited
as the Taxpayer Advocacy and
Government Accountability Promotion Act of 2010
or the
TAX GAP Act of
2010
.
(b)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)The table of contents for this Act is as follows:
Sec. 1. Short title,
etc.
TITLE I—Improved information reporting
Sec. 101. Automatic reporting on certain government payments
for property and services.
Sec. 102. Improved reporting by sole proprietors.
Sec. 103. Information reporting for rental property expense
payments.
Sec. 104. Additional information on returns relating to
mortgage interest.
Sec. 105. Requirements for withholding with respect to payments
to contractors.
Sec. 106. Information reporting on bank accounts.
Sec. 107. Electronic filing requirements and clarification of
role of paid preparers.
Sec. 108. Impact assessment of Internal Revenue Service
capabilities to utilize information reporting.
TITLE II—Tax payments by government contractors
Sec. 201. Application of continuous levy to tax liabilities of
certain Federal contractors.
Sec. 202. Continuous levy on payments to Medicaid providers and
suppliers.
Sec. 203. Application of levy to payments to Federal vendors
relating to property.
Sec. 204. Authorization for Financial Management Service
retention of transaction fees from levied amounts.
TITLE III—Taxpayer fairness and protection
Sec. 301. Taxpayer assistance and tax simplification
report.
Sec. 302. De minimis apology payments pilot
program.
TITLE IV—Clarification of penalties and liabilities
Sec. 401. Increase in information return penalties.
Sec. 402. Elimination of restriction on offsetting refunds from
former residents.
Sec. 403. Study and report on tax penalties.
TITLE V—Understanding the tax gap
Sec. 501. Tax gap strategy and reports.
Sec. 502. Studies on the impact of tax gap
legislation.
Sec. 503. Reports on worker misclassification.
<enum>I</enum><header>Improved
information reporting</header>
<section id="id9CC1D9D608E04D9B8C59682CDFBBF405"><enum>101.</enum><header>Automatic
reporting on certain government payments for property and services</header>
<subsection id="idD4B0B401EF9B422A84EAEFE2CB711367"><enum>(a)</enum><header>In
general</header><text>Section 6041, as amended by section 9006 of the Patient
Protection and Affordable Care Act, is amended by redesignating subsection (i)
as subsection (j) and by inserting after subsection (h) the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="id878046CCDA634FF1AD67F063440C4409" style="OLC">
<subsection id="id239744D93FD44FD88498BC72DCFB8573"><enum>(i)</enum><header>Applications to
governmental units</header><text>For purposes of this section—</text>
<paragraph id="IDcc16097ec62043b48ebbf2923ed5863c"><enum>(1)</enum><header>Treated as
persons</header><text>The term <term>person</term> includes any governmental
unit (and any agency or instrumentality thereof).</text>
</paragraph><paragraph id="ID4b2627800bdc45afb7d25849d0ac5767"><enum>(2)</enum><header>Special
rules</header><text>In the case of any payment by a governmental entity or any
agency or instrumentality thereof—</text>
<subparagraph id="IDca50f956bf9348bfb08fee884ad5e8ad"><enum>(A)</enum><text>subsection (a)
shall be applied without regard to the trade or business requirement contained
therein, and</text>
</subparagraph><subparagraph id="IDfb8fbdcc72d648b0b50ab871b6aa2bd3"><enum>(B)</enum><text>any return under
this section shall be made by the officer or employee having control of the
payment or appropriately designated for the purpose of making such
return.</text>
</subparagraph></paragraph><paragraph id="IDb41695eb00b54fc8a222a9c54106915e"><enum>(3)</enum><header>Exceptions</header><text>This
subsection shall not apply to such payments as the Secretary may specify in
regulations prescribed after the date of the enactment of this subsection. Such
regulations may include—</text>
<subparagraph id="id5B07A2FB295D4B25B1C30536BB296153"><enum>(A)</enum><text>payments of
interest,</text>
</subparagraph><subparagraph id="id1879BFAD42A54195B041FD40EBD8F614"><enum>(B)</enum><text>payments for real
property,</text>
</subparagraph><subparagraph id="id73B585AC0173435ABD19C108C81151EB"><enum>(C)</enum><text>payments to
entities exempt from tax or foreign governments,</text>
</subparagraph><subparagraph id="id6AB58B0A79534B058116F0D4EEFD4765"><enum>(D)</enum><text>intergovernmental
payments,</text>
</subparagraph><subparagraph id="id3F238C1567E04BB7ADC8EBC66309C500"><enum>(E)</enum><text>payments made
pursuant to classified or confidential contracts, including contracts described
in section 6050M(e)(3) with respect to which the requirements of section
6050M(e)(2) are met, and</text>
</subparagraph><subparagraph id="id156407E4E6B84BCF83DD103031613A16"><enum>(F)</enum><text>any other payment
with respect to which reporting is required under another provision of this
title.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id8B229E6180664896AC770F43BE01E82B"><enum>(b)</enum><header>Conforming
amendments to returns by governments regarding payments of remuneration for
services and direct sales to corporations</header><text>Paragraph (3) of
section 6041A(d) is amended—</text>
<paragraph id="idAB63F2E3D774404091FB70CA1A9ABF9D"><enum>(1)</enum><text>by striking
<quote><header-in-text level="paragraph" style="OLC">by federal executive
agencies</header-in-text></quote> in the heading,</text>
</paragraph><paragraph id="id511255428C4A43E79601FD1110887011"><enum>(2)</enum><text>by striking
<quote>by any Federal executive agency (as defined in section 6050M(b))</quote>
in subparagraph (A) and inserting <quote>by any governmental entity or any
agency or instrumentality thereof</quote>, and</text>
</paragraph><paragraph id="id05011BE3F28241FF9878BB285DE9AA2B"><enum>(3)</enum><text>by inserting
<quote>classified or confidential contracts, including</quote> after
<quote>services under</quote> in subparagraph (B)(i).</text>
</paragraph></subsection><subsection id="idAB6DA58637D54A82973852E0E29247D6"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to payments
made after December 31, 2011.</text>
</subsection></section><section id="id069B924D643B494BB1459787D5DED46C"><enum>102.</enum><header>Improved
reporting by sole proprietors</header>
<subsection id="ID34da396aecae4b5f9e57d498f51ec391"><enum>(a)</enum><header>Revision of
Schedule C</header><text>Not later than December 31, 2011, the Secretary of the
Treasury shall revise Schedule C to require that taxpayers engaged in a trade
or business provide the information required under this subsection.</text>
<paragraph id="id4F698CAA5493420EB73C2FDB16753E10"><enum>(1)</enum><header>Additional
gross receipts information</header><text>With respect to the gross receipts of
the taxpayer from any trade or business, Schedule C shall require the taxpayer
to provide the following:</text>
<subparagraph id="id5E4B6895D6244DE1A21A4381452DA61E"><enum>(A)</enum><text>The total of
amount of gross receipts or sales reported to the taxpayer through payee
statements (as defined in section 6724(d)(2) of the Internal Revenue Code of
1986) and the number of such payee statements received by the taxpayer.</text>
</subparagraph><subparagraph id="idFE760EE70954467D897BE7CB1493F4C1"><enum>(B)</enum><text>The total of
amount of gross receipts or sales not included under subparagraph (A).</text>
</subparagraph></paragraph><paragraph id="ID821d3de114f94b03ae16e0f23539031d"><enum>(2)</enum><header>Additional
expense information</header><text>With respect to payments made by the taxpayer
in connection with any trade or business, Schedule C shall require the taxpayer
to provide the following:</text>
<subparagraph id="id9D5CF69AAA9D45F1968E316C8F07F6C8"><enum>(A)</enum><text>The total of
amounts reported by the taxpayer through payee statements (as so
defined).</text>
</subparagraph><subparagraph id="id6BF4E6A130FD44BA8DBE5301A3AB52EC"><enum>(B)</enum><text>The number of
payee statements (as so defined) furnished by the taxpayer.</text>
</subparagraph><subparagraph id="idDEC9C670DCDD4C879EE213B9DCDC15A5"><enum>(C)</enum><text>Such other
information as required by the Secretary with respect to payments in connection
with—</text>
<clause id="idCC0ACCD119EC4D4DB79FB00CFEB21051"><enum>(i)</enum><text>goods, and</text>
</clause><clause id="id61067A09E73B4235A13E610FE97FE782"><enum>(ii)</enum><text>services.</text>
</clause></subparagraph></paragraph><paragraph id="IDf1dedd0fc09c44529905772d12d58881"><enum>(3)</enum><header>Perjury</header><text>Schedule
C shall require the taxpayer to declare, under penalties of perjury, that the
taxpayer filed all information returns required under section 6041 of the
Internal Revenue Code of 1986 with respect to payments in the course of a trade
or business made during the taxable year.</text>
</paragraph></subsection><subsection id="ID47cc5eac80d145399ba07b2c5015d5b9"><enum>(b)</enum><header>Report on
improving voluntary compliance by sole proprietors</header>
<paragraph id="id3157800413A14EF49C7B9FA89E67CA23"><enum>(1)</enum><header>In
general</header><text>Not later than 3 years after the date of the enactment of
this Act, the Secretary of the Treasury shall submit to Congress a report
setting forth recommendations on—</text>
<subparagraph id="idC1FB2AC3CDD1415AA810130C47FAB7D4"><enum>(A)</enum><text>whether the
Internal Revenue Service should provide additional assistance to first-time
Schedule C filers by means of regular communications, a small business hotline,
a published resource guide, or automatic or computer-generated
<quote>soft</quote> notices,</text>
</subparagraph><subparagraph id="id33DFB42C08284577AF6B137CC786582B"><enum>(B)</enum><text>ways in which the
Internal Revenue Service can work with small businesses, trade representatives,
tax preparation software firms, and paid preparer representatives to determine
whether and how specific changes to existing education and guidance would help
those filing the Schedule C,</text>
</subparagraph><subparagraph id="id7884B408E3C2499F9AFEF46CDFD93B00"><enum>(C)</enum><text>ways to clarify
the instructions for Schedule C to indicate that information returns may be
required to be filed by sole proprietors who deduct expenses for wages, fees,
and commissions,</text>
</subparagraph><subparagraph id="id742721D5E1284DFEBF316F53E6AB92A0"><enum>(D)</enum><text>suggested changes
to the Internal Revenue Service's electronic and computer-based system for
filing information returns to accommodate those filing information returns on
payments made to sole proprietors, including whether the Internal Revenue
Service should develop an Internet-based system for filing information
returns,</text>
</subparagraph><subparagraph id="idC71CF8D5A8FF4A138B647CADE62346F3"><enum>(E)</enum><text>identification
and analysis of the best practices that are utilized by States and by foreign
governments with respect to encouraging voluntary tax compliance by sole
proprietors, and ways these best practices may be adopted by the Internal
Revenue Service,</text>
</subparagraph><subparagraph id="idF69AAF8126664FE187426231053F6600"><enum>(F)</enum><text>methods to reduce
the information gap between sole proprietors and the Internal Revenue
Service,</text>
</subparagraph><subparagraph id="idE0DE4B3A965E4AF0A2A6E7D7243FDEE6"><enum>(G)</enum><text>whether, in the
case of tax returns containing income from a trade or business, the inclusion
of a checkbox or other indicator indicating whether the taxpayer had a
1099–MISC filing requirement would affect voluntary compliance by taxpayers,
and</text>
</subparagraph><subparagraph id="id7F55B676543941038DC67868AB9C1B68"><enum>(H)</enum><text>such other
improvements with respect to improving voluntary compliance by sole proprietors
as the Secretary determines is appropriate.</text>
</subparagraph></paragraph><paragraph id="idDE11F787ACF7467E879659CE823EC98D"><enum>(2)</enum><header>Use of
data</header><text>The recommendations submitted in the report under paragraph
(1) shall, wherever possible, be based on empirical data, agency-conducted
tests, and quantitative evidence.</text>
</paragraph></subsection></section><section id="id36F5785EB80D405DB20294A0F0D20972"><enum>103.</enum><header>Information
reporting for rental property expense payments</header>
<subsection id="id2F3DA90AE436453DAFFE8FA2EABF7F6D"><enum>(a)</enum><header>In
general</header><text>Section 6041, as amended by section 101, is amended by
redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k),
respectively, and by inserting after subsection (g) the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="idDD2CD03CB7474858BAB377774CD04780" style="OLC">
<subsection id="idB526DA4191D44F5797A69DF5EA715FD8"><enum>(h)</enum><header>Treatment of
rental property expense payments</header>
<paragraph id="id45D093651C4A425A86AF945CAD79A0B1"><enum>(1)</enum><header>In
general</header><text>Solely for purposes of subsection (a) and except as
provided in paragraph (2), a person receiving rental income from real estate
shall be considered to be engaged in a trade or business of renting
property.</text>
</paragraph><paragraph commented="no" id="id7F761B6741274009A948F7CAC73E2D59"><enum>(2)</enum><header>Exceptions</header><text>Paragraph
(1) shall not apply to—</text>
<subparagraph commented="no" id="id77BF9C65096C459298895AA9102D0A4D"><enum>(A)</enum><text>any individual,
including any individual who is an active member of the uniformed services, if
substantially all rental income is derived from renting the principal residence
(within the meaning of section 121) of such individual on a temporary
basis,</text>
</subparagraph><subparagraph commented="no" id="id908F6946B08D4288B793D5595EF78546"><enum>(B)</enum><text>any individual
who receives rental income of not more than the minimal amount, as determined
under regulations prescribed by the Secretary, and</text>
</subparagraph><subparagraph commented="no" id="id6C7F6A87978441979B97708FCFA73D13"><enum>(C)</enum><text>any other
individual for whom the requirements of this section would cause hardship, as
determined by the
Secretary.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idD27A3B4C6CCD4E5D8B66E9EAA136CB29"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to payments
made after December 31, 2011.</text>
</subsection></section><section id="idCEF4B3DDD86E46A4A9628D2993553B8A"><enum>104.</enum><header>Additional
information on returns relating to mortgage interest</header>
<subsection id="id2F73E916D9534A40A3AE22A3CAC9921F"><enum>(a)</enum><header>In
general</header><text>Paragraph (2) of section 6050H(b) is amended by striking
<quote>and</quote> at the end of subparagraph (C), by redesignating
subparagraph (D) as subparagraph (G), and by inserting after subparagraph (C)
the following new subparagraphs:</text>
<quoted-block display-inline="no-display-inline" id="idC3AA6E3183874948A0376F7126307E34" style="OLC">
<subparagraph id="id0EFE63AA51A546EBA0EC49F711997F8A"><enum>(D)</enum><text>the unpaid
balance with respect to such mortgage,</text>
</subparagraph><subparagraph id="id2310D18C883E47CDBE335BC62D0C2430"><enum>(E)</enum><text>the address of
the property securing such mortgage, and</text>
</subparagraph><subparagraph commented="no" id="id255DEC78DCDD460991EBB2EF1D871E47"><enum>(F)</enum><text>information with
respect to whether the mortgage is a refinancing that occurred in such calendar
year.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id2CE7F2906453424581612A69D5B40818"><enum>(b)</enum><header>Payee
statements</header><text>Subsection (d) of section 6050H is amended by striking
<quote>and</quote> at the end of paragraph (1), by striking the period at the
end of paragraph (2) and inserting <quote>, and</quote>, and by inserting after
paragraph (2) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id5EE330B39F6840679BB5B686FA642ECA" style="OLC">
<paragraph id="idAC4A78F388B84F67A8E68DEA9AF3D133"><enum>(3)</enum><text>the information
required to be included on the return under subparagraphs (D), (E), and (F) of
subsection
(b)(2).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id39267BC9F50748448E3EFEE166CE11F2"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to returns
and statements the due date for which (determined without regard for
extensions) is after December 31, 2011.</text>
</subsection></section><section id="id51240D76531B46DCA0E371B1C53CF1D6"><enum>105.</enum><header>Requirements
for withholding with respect to payments to contractors</header>
<subsection id="idC5A3C00212B040D49D6F86C995E1033D"><enum>(a)</enum><header>In
general</header>
<paragraph id="idACE21996CF6542458FC4500439173891"><enum>(1)</enum><header>Requirement</header><text>Paragraph
(1) of section 3406(a) is amended by striking <quote>or</quote> at the end of
subparagraph (C), by inserting <quote>or</quote> at the end of subparagraph
(D), and by inserting after subparagraph (D) the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id2F6C15A9153A4F788315E04665D5DC5A" style="OLC">
<subparagraph id="idF4A9EF32A5724C62B1FB234271648AF5"><enum>(E)</enum><text>the Secretary has
not provided verification to the payor that the TIN furnished by the payee is
correct,</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idD2BF47EE8CE8433CA576DF3040A9BA46"><enum>(2)</enum><header>Application
only to certain transactions</header><text>Subsection (a) of section 3406 is
amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id80C33818AF404853A165F2CB699374A6" style="OLC">
<paragraph id="id64212C279BB642F588D628B779B2871B"><enum>(3)</enum><header>Subparagraph
<enum-in-header>(E)</enum-in-header> of paragraph
<enum-in-header>(1)</enum-in-header> applies only to certain other reportable
payments</header><text>Subparagraph (E) of paragraph (1) shall only apply to
other reportable payments described in subparagraph (B) of subsection
(b)(3).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id672A4C239E964AB7BF431A452F937BAA"><enum>(3)</enum><header>Period of
withholding</header>
<subparagraph id="idB7A10D30A0FD47F49C8036E11AC318FA"><enum>(A)</enum><header>In
general</header><text>Section 3406(e) is amended by redesignating paragraph (5)
as paragraph (6) and by inserting after paragraph (4) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id66DE959F27B442849FD1E25B4DF6ED71" style="OLC">
<paragraph id="idDDB3F83B42554EA887622D55D5AD436C"><enum>(5)</enum><header>No matching
TIN</header><text>In any case in which the Secretary has not provided
verification to the payor that the TIN furnished by the payee is correct
pursuant to subsection (a)(1)(E), subsection (a) shall apply to such payment
and any subsequent such payment made by the payor after the date such TIN was
submitted to the Secretary for verification until the payee furnishes another
TIN in the manner required and such TIN is verified by the Secretary as
correct.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="idAA5C176ADBC648A2B4E3C13E56F8618C"><enum>(B)</enum><header>Conforming
amendment</header><text>Paragraph (2) of section 3406(e) is amended by
inserting <quote>pursuant to subsection (a)(1)(B),</quote> after <quote>is
incorrect</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="idE98C40EBD4BD47C59D2BA8F8CDDBFD89"><enum>(b)</enum><header>Voluntary
withholding</header><text>Section 3402(p) is amended by redesignating paragraph
(3) as paragraph (4) and by inserting after paragraph (2) the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="idC55A5818F1EC4C1DA4DDCE9ED314800C" style="OLC">
<paragraph id="idC9BE0D0085D7431BA7BC8A3EF361CBCA"><enum>(3)</enum><header>Certain
payments to contractors</header>
<subparagraph id="id08D8CFF48F9840D5AB1018B110C92E43"><enum>(A)</enum><header>In
general</header><text>If, at the time of any specified payment to any person, a
request by such person is in effect that such payment be subject to withholding
under this chapter, the person making such payment shall deduct and withhold
from such payment an amount equal to the rate in effect under such
request.</text>
</subparagraph><subparagraph id="idC9FE9C1366DE4F55ADBD12F65374B59C"><enum>(B)</enum><header>Specified
payment</header><text>For purposes of this paragraph, the term <term>specified
payment</term> means any payment described in subparagraph (A) or (B) of
section 3406(b)(3).</text>
</subparagraph><subparagraph id="idF3145A65D6B442D897986AF7A9B557F5"><enum>(C)</enum><header>Request</header><text>A
request to subject a specified payment to withholding shall be made at such
time and in such manner as the Secretary may by regulations prescribe, and
shall specify a uniform percentage of withholding which is equal to any rate at
which tax is imposed under subsection (a), (b), (c), or (d) of section 1, as
appropriate,</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id8C9971721AE94950ADDC75CEB0F4621D"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="id1B27740C24074BF3B0D6EEA26A8C3A40"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to payments made after December 31, 2011.</text>
</paragraph><paragraph id="idE3B835AFF18A40DFAFCBC8E0C9F91978"><enum>(2)</enum><header>Certification</header><text>The
amendments made by subsection (a) shall not take effect before the date on
which the Secretary of the Treasury has certified that there is a system in
place to provide notifications in an accurate and timely manner regarding the
verification of taxpayer identification numbers submitted pursuant to section
3406(a)(1)(E) of the Internal Revenue Code of 1986 (as added by subsection
(a)).</text>
</paragraph></subsection></section><section commented="no" id="id076812691B484AE793B17169E5D0D8CD"><enum>106.</enum><header>Information
reporting on bank accounts</header>
<subsection commented="no" id="id242EBCA95ECC43B0A79A7CFFDF551DCF"><enum>(a)</enum><header>Elimination of
minimum interest requirement</header>
<paragraph commented="no" id="idDA244F0B986348DA8D1EA3891579B4F5"><enum>(1)</enum><header>In
general</header><text>Section 6049(a) is amended by striking <quote>aggregating
$10 or more</quote> each place it appears.</text>
</paragraph><paragraph commented="no" id="idE1BC439D92EE49E8A779FD309FA2E2AF"><enum>(2)</enum><header>Conforming
amendments</header><text>Subparagraph (C) of section 6049(d)(5) is
amended—</text>
<subparagraph commented="no" id="id0B0C8F67BDFA42769994B11A50BB68BE"><enum>(A)</enum><text>by striking
<quote>which involves the payment of $10 or more of interest</quote>,
and</text>
</subparagraph><subparagraph commented="no" id="id648CB58FAB2B415F97BE310F27075A00"><enum>(B)</enum><text>by striking
<quote><header-in-text level="subparagraph" style="OLC">in the case of
transactions involving $10 or more</header-in-text></quote> in the
heading.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idD6D752C40E3B413EA76DB8EE86D64514"><enum>(3)</enum><header>Effective
date</header><text>The amendments made by this subsection shall apply to
returns filed after December 31, 2011.</text>
</paragraph></subsection><subsection commented="no" id="id3805DC2F5C464F4B8063735D606CC75C"><enum>(b)</enum><header>Reporting of
non-Interest bearing deposits</header>
<paragraph commented="no" id="id4BFF58D2DCED43958BB0B70548C9E780"><enum>(1)</enum><header>In
general</header><text>Subpart B of part III of subchapter A of chapter 61 is
amended by inserting after section 6049 the following new section:</text>
<quoted-block display-inline="no-display-inline" id="id89B75DF7B68F40319DF7EE978FE0AB9B" style="OLC">
<section commented="no" id="id2AD6C109D23F4CF6A1020DE38F245962"><enum>6049A.</enum><header>Returns
regarding non-interest bearing deposits</header>
<subsection commented="no" id="idB35C614459EC40879A8538783D14B8CA"><enum>(a)</enum><header>Requirement of
reporting</header><text>Every person who holds a reportable deposit during any
calendar year shall make a return according to the forms or regulations
prescribed by the Secretary, setting forth the name and address of the person
for whom such deposit was held.</text>
</subsection><subsection commented="no" id="idD0BABC64C26E4C268F5A4C1E35BA5A83"><enum>(b)</enum><header>Reportable
deposit</header><text>For purposes of this section—</text>
<paragraph commented="no" id="idB7D6A91B6B9E47118ED32F9BAD2DF020"><enum>(1)</enum><header>In
general</header><text>The term <term>reportable deposit</term> means—</text>
<subparagraph commented="no" id="idAA8455C42A9A470881A25724857E3FA9"><enum>(A)</enum><text>any amount on
deposit with—</text>
<clause commented="no" id="id18644AF0770B44B497728CE86E57851C"><enum>(i)</enum><text>a person carrying
on the banking business,</text>
</clause><clause commented="no" id="idB5ABD0414A2F42A99AC703EFD0961949"><enum>(ii)</enum><text>a mutual savings
bank, a savings and loan association, a building and loan association, a
cooperative bank, a homestead association, a credit union, an industrial loan
association or bank, or any similar organization,</text>
</clause><clause commented="no" id="id4B0D9425149E47C7BBF58397D0D615CB"><enum>(iii)</enum><text>a broker (as
defined in section 6045(c)), or</text>
</clause><clause commented="no" id="id53A2279DCE9944DE8759C3482140860F"><enum>(iv)</enum><text>any other person
provided in regulations prescribed by the Secretary, or</text>
</clause></subparagraph><subparagraph commented="no" id="id6EE00F4782B040E1A8B227F9E60D91B8"><enum>(B)</enum><text>to the extent
provided by the Secretary in regulations, any amount held by an insurance
company, an investment company (as defined in section 3 of the Investment
Company Act of 1940), or held in other pooled funds or trusts.</text>
</subparagraph></paragraph><paragraph commented="no" id="id2677734A84E042FF98624907C80D4B1C"><enum>(2)</enum><header>Exceptions</header><text>Such
term shall not include—</text>
<subparagraph commented="no" id="id3C4FAB50F9414C0FA5A1B1E493F68CD0"><enum>(A)</enum><text>any amount with
respect to which a report is made under section 6049,</text>
</subparagraph><subparagraph commented="no" id="id5B6295285C28491CAB914F67EE148267"><enum>(B)</enum><text>any amount on
deposit with or held by a natural person,</text>
</subparagraph><subparagraph commented="no" id="idC1E30921E58945699CB8D9B5442ADDCE"><enum>(C)</enum><text>except to the
extent provided in regulations, any amount—</text>
<clause commented="no" id="id6AD5496D295B49E29CE68365DBB2597A"><enum>(i)</enum><text>held with respect
to a person described in section 6049(b)(4),</text>
</clause><clause commented="no" id="idEE9060E367724F35926C1A11D77419F8"><enum>(ii)</enum><text>with respect to
which section 6049(b)(5) would apply if a payment were made with respect to
such amount, or</text>
</clause><clause commented="no" id="id5B20431C949F46B19ED5E6124B6728B2"><enum>(iii)</enum><text>on deposit with
or held by a person described in section 6049(b)(2)(C), or</text>
</clause></subparagraph><subparagraph commented="no" id="idCBF0A118FF914D138DC88AA6097026E0"><enum>(D)</enum><text>any amount for
which the Secretary determines there is already sufficient reporting.</text>
</subparagraph></paragraph></subsection><subsection id="ID15880f51595a4cfe9b9c89da4756eabd"><enum>(c)</enum><header>Statements To
be furnished to persons with respect to whom information is required</header>
<paragraph id="ID11bf2f7f0d584c138d224edcbaa9c5a2"><enum>(1)</enum><header>In
general</header><text>Every person required to make a return under subsection
(a) shall furnish to each person whose name is required to be set forth in such
return a written statement showing—</text>
<subparagraph id="IDf197ee0faa244e34af861ab69bc4a471"><enum>(A)</enum><text>the name,
address, and phone number of the information contact of the person required to
make such return, and</text>
</subparagraph><subparagraph id="IDc39d3c56124d4fa8a45c15da36b25f78"><enum>(B)</enum><text>the reportable
account with respect to which such return was made.</text>
</subparagraph></paragraph><paragraph id="IDe2f26795be47414d8d88155316eac939"><enum>(2)</enum><header>Time and form
of statement</header><text>The written statement under paragraph (1)—</text>
<subparagraph id="ID34d880c423324f0f90fced96d76e3cb2"><enum>(A)</enum><text>shall be
furnished at a time and in a manner similar to the time and manner that
statements are required to be filed under section 6049(c)(2), and</text>
</subparagraph><subparagraph id="ID83c12dde1b324028900e3677a77494f1"><enum>(B)</enum><text>shall be in such
form as the Secretary may prescribe by regulations.</text>
</subparagraph></paragraph></subsection><subsection id="id6FD726213AF44964ABB39D9CC403E4D9"><enum>(d)</enum><header>Person</header><text>For
purposes of this section, the term <term>person</term> includes any
governmental unit and any agency or instrumentality thereof and any
international organization and any agency or instrumentality
thereof.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="IDc83b34b2cfba4ceb982716836032f25b"><enum>(2)</enum><header>Assessable
penalties</header>
<subparagraph id="IDf38740ecf2e249f7b0cf573f252b8078"><enum>(A)</enum><header>Failure to file
return</header><text>Subparagraph (B) of section 6724(d)(1) is amended by
striking <quote>or</quote> at the end of clause (xxii), by striking
<quote>and</quote> at the end of clause (xxiv) and inserting <quote>or</quote>,
and by inserting after clause (xxiv) the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="id142633D1599A41DAB8222F3A54D07001" style="OLC">
<clause id="IDf6d1826b11f14eccbd5f428d4dfe8488"><enum>(xxvi)</enum><text>section 6049A,
and</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="IDca3e92ddfb7c459296ab7840aca5f310"><enum>(B)</enum><header>Failure to file
payee statement</header><text>Paragraph (2) of section 6724(d) is amended by
striking <quote>or</quote> at the end of subparagraph (FF), by striking the
period at the end of subparagraph (GG) and inserting <quote>, or</quote> and by
inserting after subparagraph (GG) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="idB424700DB4984649B2B81CD9DF32EBFA" style="OLC">
<subparagraph id="ID39e4c4badc094d6ca602bfbd0762b5d7"><enum>(HH)</enum><text>section
6055(c).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph commented="no" id="id7D5D637B9A5B4314882B347026F98D28"><enum>(3)</enum><header>Clerical
amendment</header><text>The table of section for subpart B of part III of
subchapter A of chapter 61 is amended by inserting after the item relating to
section 6049 the following new item:</text>
<quoted-block id="idec980d19-7250-420a-a7fe-8e527b8d237f" style="OLC">
<toc>
<toc-entry idref="id2AD6C109D23F4CF6A1020DE38F245962" level="section">Sec. 6049A. Returns regarding non-interest bearing
deposits.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id4020725C2F3E4E44AC3BCAC5076A8AC9"><enum>(4)</enum><header>Effective
date</header><text>The amendments made by this subsection shall apply to
returns filed after December 31, 2011.</text>
</paragraph></subsection></section><section id="ID38A17A53072A4DAFA1BCA0227B71E095"><enum>107.</enum><header>Electronic
filing requirements and clarification of role of paid preparers</header>
<subsection id="id31AA18FEA74B404CA13A38B06A284CEC"><enum>(a)</enum><header>Lower threshold
for required electronic filing by paid preparers</header>
<paragraph id="id6B497E61AABF4B1FBC445FE302377B4F"><enum>(1)</enum><header>In
general</header><text>Section 6011(e)(3)(B) is amended by striking
<quote>10</quote> and inserting <quote>5</quote>.</text>
</paragraph><paragraph id="id92394EDBDB1B4126B17402E1320ECBE3"><enum>(2)</enum><header>Penalty</header><text>Section
6695 is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id65C955939A0F447A9527B98795F96606" style="OLC">
<subsection id="ID294ba297d48e454d8d9118baa7ce0aee"><enum>(h)</enum><header>Failure To file
return on magnetic media</header><text>Any person who is a tax return preparer
with respect to any individual income tax return and who must file such return
on magnetic media pursuant to the requirement of section 6011(e)(3) and fails
to comply with the requirements of section 6011(e)(3) shall pay a penalty of
$50 for such failure unless it is shown that such failure is due to reasonable
cause and not due to willful neglect. The maximum penalty imposed under this
subsection on any person with respect to individual income tax returns filed
during any calendar year shall not exceed
$25,000.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="idB34C125C036B4EC4B12F030195592BD8"><enum>(3)</enum><header>Effective
date</header><text>The amendments made by this subsection shall apply to
returns filed for taxable years beginning after December 31, 2010.</text>
</paragraph></subsection><subsection commented="no" id="id84C5C2908197406097DF5ABAD5689DD1"><enum>(b)</enum><header>Proposal on
automated bar coding</header><text>The Secretary of the Treasury, in
consultation with the Commissioner of the Internal Revenue Service, shall
develop a proposal to require unique identifying numbers and bar codes, or such
other unique identifying system as the Secretary determines appropriate, with
respect to each version of software used for the purpose of preparing tax
returns.</text>
</subsection></section><section commented="no" id="idD63AEE5B8F5A4906B421734B649A3626"><enum>108.</enum><header>Impact
assessment of Internal Revenue Service capabilities to utilize information
reporting</header>
<subsection commented="no" id="idBD6869EB5AD84E18B60FFCD87F05C551"><enum>(a)</enum><header>Initial
assessment</header>
<paragraph commented="no" id="idCABAB6921FD04F74B2631333B3AEF325"><enum>(1)</enum><header>In
general</header><text>The Secretary of the Treasury shall conduct an impact
assessment to determine whether the Internal Revenue Service has the sufficient
resources, personnel, infrastructure, technology, and computer hardware and
software capacity to incorporate expanded information reporting.</text>
</paragraph><paragraph commented="no" id="idE22D05255EC54AA0B1D59E76943DF64B"><enum>(2)</enum><header>Expanded
information reporting</header><text>For purposes of this section, the term
<term>expanded information reporting</term> includes—</text>
<subparagraph commented="no" id="id937D3C1882394960833E8EF5CBD9E20C"><enum>(A)</enum><text>all information
reporting required under this Act and the amendments made by this Act,
and</text>
</subparagraph><subparagraph commented="no" id="id59777DC406A54CEA9C2388A8A5E9901F"><enum>(B)</enum><text>any information
reporting required under the Internal Revenue Code of 1986 that was not
required under such Code before January 1, 2001.</text>
</subparagraph></paragraph><paragraph commented="no" id="id6D90CB3D8FA94ABA9CA47BEB39C3FEF5"><enum>(3)</enum><header>Matters
included</header>
<subparagraph commented="no" id="id72819FECFBE14E9080FE4BD41A6C6641"><enum>(A)</enum><header>Computer
systems</header><text>The impact assessment required under paragraph (1) shall
include an assessment of the computer program capabilities of the Internal
Revenue Service to match the information on tax returns with other information
reported to the Internal Revenue Service and to modify tax schedules to capture
the information to be matched. Such assessment shall address—</text>
<clause commented="no" id="id95F1F3BF7AEF4417BFB1324EAA4D85B6"><enum>(i)</enum><text>how effectively
the Internal Revenue Service has followed through and implemented data matching
systems for expanded information reporting,</text>
</clause><clause commented="no" id="idFADF4887DA1345CAAD683EDAB81671BE"><enum>(ii)</enum><text>whether the
Internal Revenue Service needs to modify its computer systems so that
discrepancies between information collected through expanded information
reporting and information reported on tax returns can be identified, and</text>
</clause><clause commented="no" id="id3F4AE9C9DFB74D9E80D24DFEF7C6968A"><enum>(iii)</enum><text>whether
information on tax returns (and accompanying schedules) should be
modified.</text>
</clause></subparagraph><subparagraph commented="no" id="idF88A018EEAA14D0394B75EE26E0E26ED"><enum>(B)</enum><header>Recommendations</header><text>The
initial assessment shall include specific recommendations on—</text>
<clause commented="no" id="id5345BC7615E349F5B5FA8BE824B058C2"><enum>(i)</enum><text>how any current
efforts with respect to the matters assessed may be improved or expanded upon,
and</text>
</clause><clause commented="no" id="id87938EC442EA42E0BE075B3303A39CD7"><enum>(ii)</enum><text>any new,
additional efforts that should be made to improve, upgrade, or accelerate the
processing of the matters assessed.</text>
</clause></subparagraph></paragraph><paragraph commented="no" id="id90B50B58362B4B1C8612AA6F764EC27E"><enum>(4)</enum><header>Report</header><text>Not
later than December 31, 2013, the Secretary of the Treasury shall submit to
Congress a report on the assessment required under paragraph (1).</text>
</paragraph><paragraph id="idCF178B0B58E64663959404997DBE13FE"><enum>(5)</enum><header>Use of
data</header><text>The assessment under paragraph (1) and the report under
paragraph (4) shall, wherever possible, be based on empirical data,
agency-conducted tests, and quantitative evidence.</text>
</paragraph><paragraph commented="no" id="id21A0016AB86C448D88A043DBECEBBCB2"><enum>(6)</enum><header>Adoption of
recommendations</header><text>Not later than 1 year after the report under
paragraph (4) is submitted, the Commissioner of Internal Revenue shall
implement any recommendations contained in such report which do not require
Congressional action and which can be implemented administratively.</text>
</paragraph></subsection><subsection id="ID0f4d6b2b0ae74b3d87a474dc4dd2bbc2"><enum>(b)</enum><header>Follow-Up
report</header>
<paragraph id="id40302C7E49FD48D49C8C3B30DB88028B"><enum>(1)</enum><header>In
general</header><text>Not later than 3 years after the report under subsection
(a) is submitted, the Secretary of the Treasury shall submit to Congress a
follow-up report on the implementation of any recommendations included in the
report submitted under subsection (a)(4).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id67B1D64A7DA943DBBF6A422ED1F6D8BE"><enum>(2)</enum><header>Matters
included</header><text>The report submitted under paragraph (1) shall include
recommendations for new, additional proposals which were not included in the
report under subsection (a)(4) but which should be made to improve or upgrade
the resources, personnel, infrastructure, technology, and computer hardware and
software capacities of the Internal Revenue Service with respect to expanded
information reporting.</text>
</paragraph></subsection></section><enum>II</enum><header>Tax
payments by government contractors</header>
<section commented="no" display-inline="no-display-inline" id="H4B80ABE1B2ED494FB0ADC8DED22FC767" section-type="subsequent-section"><enum>201.</enum><header display-inline="yes-display-inline">Application of continuous levy to tax
liabilities of certain Federal contractors</header>
<subsection id="idAAA591D38F21449799B0D73361540477"><enum>(a)</enum><header>In
general</header><text>Section 6330(f) (relating to jeopardy and State refund
collection) is amended—</text>
<paragraph id="id6700616A72004CDA891AF322DEF30229"><enum>(1)</enum><text>by striking
<quote>or</quote> at the end of paragraph (2),</text>
</paragraph><paragraph id="idD51FE6C590AA495FBBF59D870BBD6C7D"><enum>(2)</enum><text>by striking the
comma at the end of paragraph (3) and inserting <quote>; or</quote>,</text>
</paragraph><paragraph id="id4965412298F54DDD87D6D6577A875779"><enum>(3)</enum><text>by inserting
after paragraph (3) the following new paragraph:</text>
<quoted-block act-name="" id="id8CC5938483E34465ACA3413C36B1C62B" style="OLC">
<paragraph id="id3CA9F69CE6F64C2CA82D9126EF481321"><enum>(4)</enum><text>the Secretary has
approved a levy, including a continuing levy under section 6331(h)(1), on any
specified payment described in section
6331(h)(3),</text>
</paragraph><after-quoted-block>,
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="idB2E99B46FE704547A46DC1E5489B24E2"><enum>(4)</enum><text>by striking the
heading and inserting <quote><header-in-text level="subsection" style="OLC">Jeopardy, State refund, and collection from Federal vendor
payments</header-in-text></quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idF87283C254B34AE38957FFFAE2CC4EFD"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to levies
issued after the date of the enactment of this Act.</text>
</subsection></section><section id="id82A75A0B825E458B80B30093DA02FFE6" section-type="subsequent-section"><enum>202.</enum><header>Continuous levy on
payments to Medicaid providers and suppliers</header>
<subsection id="id28D7788156F7441089067C55707C350F"><enum>(a)</enum><header>In
general</header><text>Section 6331(h)(2) (defining specified payment) is
amended by striking <quote>and</quote> at the end of subparagraph (B), by
striking the period at the end of subparagraph (C) and inserting <quote>,
and</quote>, and by adding at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id71F6C7EE1BC44232A6EAC7A41E809C5C" style="OLC">
<subparagraph id="id249ED9890CB4488EB629A4490E31B64A"><enum>(D)</enum><text>any payment to
any Medicaid provider or supplier under a State plan under title XIX of the
Social Security
Act.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id2A0ADE02E6E64B9092126EC7E7BD5CAC"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to levies
issued after December 31, 2011.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H3BFC40FD871A4BF48EFD6CE4E82DCE17" section-type="subsequent-section"><enum>203.</enum><header display-inline="yes-display-inline">Application of levy to payments to Federal
vendors relating to property</header>
<subsection commented="no" display-inline="no-display-inline" id="H36DA5479FF754A0A870AEFB456C1454B"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/6331">Section 6331(h)(3)</external-xref> is amended by
striking <quote>goods or services</quote> and inserting <quote>property, goods,
or services</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HA4ED4C7095674E34A46F22B030F4C81C"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to levies issued after the date of the enactment of
this Act.</text>
</subsection></section><section id="ID7527D98F227F4000854F1F50EA51B7A5"><enum>204.</enum><header>Authorization
for Financial Management Service retention of transaction fees from levied
amounts</header><text display-inline="no-display-inline">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.</text>
</section><enum>III</enum><header>Taxpayer
fairness and protection</header>
<section id="id0C56B4E882D447158D4EBF390843C04A"><enum>301.</enum><header>Taxpayer
assistance and tax simplification report</header>
<subsection id="idED68085EA6964E5BB5C6ED50FB872B44"><enum>(a)</enum><header>In
general</header><text>Not later than 2 years after the date of the enactment of
this Act, the Secretary of the Treasury, in consultation with the Commissioner
of the Internal Revenue Service, shall submit to Congress a report on taxpayer
assistance and tax simplification.</text>
</subsection><subsection id="idCE58FF97BED34C6EAF3AECC1814D9BA9"><enum>(b)</enum><header>Matters
included</header><text>The report required under subsection (a) shall be based
on examinations of tax policy and of tax compliance enforcement and shall
include the following:</text>
<paragraph id="ID546c5bb5ac474cf586f9aea64fc87bbf"><enum>(1)</enum><text>An assessment of
the current and proposed efforts of the Internal Revenue Service with respect
to the simplification of tax forms, publications, and filing requirements for
individual taxpayers and for sole proprietor taxpayers, including additional,
plain-language guidance for taxpayers. Such assessment shall include specific
recommendations on—</text>
<subparagraph id="idE9670E02377D4AEAADBF854AA43B779D"><enum>(A)</enum><text>how these or
additional efforts may be improved or expanded upon, including through paid
preparers and tax preparation software, and</text>
</subparagraph><subparagraph id="idB99501C230C04E5882A0011126395778"><enum>(B)</enum><text>requiring or
encouraging the Internal Revenue Service, to the maximum extent possible, to
test its forms and publications on actual taxpayers prior to
publication.</text>
</subparagraph></paragraph><paragraph id="IDf37315bc30834726b04ed431d2ea9cf6"><enum>(2)</enum><text>An assessment of
the current efforts of the Internal Revenue Service—</text>
<subparagraph id="id21763638A6D840F580DFB87058EF4DF6"><enum>(A)</enum><text>to reduce the
time between receipt of an electronically filed tax return and the issuance of
a refund, and</text>
</subparagraph><subparagraph id="idA5BC8054A15C41379755C1EF5CBD53CA"><enum>(B)</enum><text>to reduce the
time between receipt of a manually filed tax return and the issuance of a
refund.</text>
</subparagraph></paragraph><paragraph id="ID0a7abf54dda14c8fa8786c67f66a6b91"><enum>(3)</enum><text>An assessment of
the efforts of the Internal Revenue Service to induce voluntary compliance by
individual taxpayers and sole proprietor taxpayers, with a particular focus on
current efforts to reduce administrative and compliance burdens. Such
assessment shall include specific recommendations on how voluntary compliance
may be improved or expanded upon, particularly in an environment where most
taxpayers use paid preparers or tax preparation software.</text>
</paragraph><paragraph id="IDa1df6f6cb8cd412ba8813fc65c7e4a63"><enum>(4)</enum><text>An assessment of
the current efforts of the Internal Revenue Service to improve taxpayer
service, including through outreach programs, taxpayer education, preparer
education, tax software industry coordination, and expanded availability of
online, Internet-based tax information and filing services offered by the
Internal Revenue Service. Such assessment shall include specific
recommendations on how these or additional efforts may be improved or expanded
upon.</text>
</paragraph><paragraph id="ID9c186e8641df4520ac76b2c17a7ca3b3"><enum>(5)</enum><text>An assessment of
the efficacy of previous Internal Revenue Service efforts with respect to
settlement initiatives, including the effect of such initiatives on improving
compliance and reducing current and future revenues lost due to tax evasion.
Such assessment shall include specific recommendations on how, or whether,
these or additional efforts may be improved or expanded upon.</text>
</paragraph><paragraph id="ID89ead9fbf9974d1091208e4718bbdc07"><enum>(6)</enum><text>An assessment of
the personnel, infrastructure, information technology, and capabilities of the
Internal Revenue Service with respect to ensuring and promoting taxpayer
service, encouraging voluntary compliance, enforcing involuntary
compliance.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idBECB96103CFA43F288800DA11414D775"><enum>(c)</enum><header>Use of
data</header><text>The report under subsection (a) shall, wherever possible, be
based on empirical data, agency-conducted tests, and quantitative
evidence.</text>
</subsection></section><section id="idFCCDA30184794FCBBE3897CE506197FD"><enum>302.</enum><header>De minimis
apology payments pilot program</header>
<subsection id="idE3E1CD5CF0AB4EABAC8702A3082C0BC3"><enum>(a)</enum><header>In
general</header><text>Section 7811(b) is amended by striking <quote>or</quote>
at the end of paragraph (1), by striking the period and inserting <quote>,
or</quote> at the end of paragraph (2)(D), and adding at the end the following
new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="id25AB2B352C564A429BF424BEB6952783" style="OLC">
<paragraph id="idECE80997F3784C90BE0FC6DA621540F3"><enum>(3)</enum><text>in the case of
any order issued during 2011 or 2012, to make an apology payment under
subsection
(h).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id37C9FF54F5DD4CE690229A1CAF533ED8"><enum>(b)</enum><header>Apology
payment</header><text>Section 7811 is amended by adding at the end the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idFA46302656484FE988B2E54070D812B6" style="OLC">
<subsection id="idFEE09767FAA54E3E8F06C28A47B576BF"><enum>(h)</enum><header>Apology payment
program</header>
<paragraph id="idE4386DF200764F458970FD3E635F2318"><enum>(1)</enum><header>In
general</header><text>A taxpayer assistance order may require the Secretary to
provide an apology payment on behalf of the Internal Revenue Service to the
taxpayer under this subsection in any case in which the National Taxpayer
Advocate determines that any action or inaction by the Internal Revenue Service
has caused excess expense or undue burden on a taxpayer.</text>
</paragraph><paragraph id="id9FC306101E8A4CBDA47E384FA353E071"><enum>(2)</enum><header>Taxpayer
limitations</header><text>In the case of any apology payment required under
this subsection to any taxpayer with respect to any taxable year—</text>
<subparagraph id="idBCB0E47EB5804130A3ED1021FDC478D4"><enum>(A)</enum><text>such payment
shall not be less than $100, and</text>
</subparagraph><subparagraph id="idCC7CEB8CE97B4409B1BA6BC0189E4E98"><enum>(B)</enum><text>such payment
shall not exceed $1,000.</text>
</subparagraph></paragraph><paragraph id="id3A2DF06F5219474789617E6BBDCE9EB5"><enum>(3)</enum><header>Aggregate
yearly limitation</header><text>The amount of apology payments which the
National Taxpayer Advocate may require to be paid for any fiscal year shall not
exceed
$250,000.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="idF8AD227EFACF4187B4977DFED3990A82"><enum>(c)</enum><header>Reports</header><text>Clause
(ii) of section 7803(c)(2)(A) is amended by striking <quote>and</quote> at the
end of subclause (X), by redesignating subclause (XI) as subclause (XII), and
by inserting after subclause (X) the following new subclause:</text>
<quoted-block display-inline="no-display-inline" id="id6B663D3D99614F25839F686790BD89BB" style="OLC">
<subclause id="id5C7D7FE879964A3CAFCDA43012CBB509"><enum>(XI)</enum><text>contain a
summary of all Taxpayer Assistance Orders which require an apology payment
under section 7811(h),
and</text>
</subclause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id6F156D1E0F0F45BA994CB542B3987532"><enum>(d)</enum><header>Exclusion of
apology payments from gross income</header>
<paragraph id="idB298CE28131942508869D315CB679BBB"><enum>(1)</enum><header>In
general</header><text>Part III of subchapter B of chapter 1 is amended by
inserting before section 140 the following new section:</text>
<quoted-block display-inline="no-display-inline" id="idC4A66FB0EDE44B5DB9F384404FB47133" style="OLC">
<section id="idB9F17D271AFB42988BE3D3FB7A0831E4"><enum>139F.</enum><header>Internal
Revenue Service apology payments</header><text display-inline="no-display-inline">Gross income shall not include any apology
payment received by a taxpayer as a result of a Taxpayer Assistance Order
described in section
7811(h).</text>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="id54F93CAE90804BA1AB97AC13B0E9B1AC"><enum>(2)</enum><header>Clerical
amendment</header><text>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:</text>
<quoted-block id="id01779b5c-9f75-4b00-a27b-b073adc5812f" style="OLC">
<toc>
<toc-entry idref="idB9F17D271AFB42988BE3D3FB7A0831E4" level="section">Sec. 139F. Internal Revenue Service apology
payments.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="id5153ECC468D44B4693301B44BD0C0CAE"><enum>(e)</enum><header>Effective
dates</header>
<paragraph id="id24E7627797214DAC8D641988400C7F06"><enum>(1)</enum><header>In
general</header><text>The amendments made by subsections (a) and (b) shall
apply to orders issued after December 31, 2010.</text>
</paragraph><paragraph id="id7A697027AF274613AC05F365111BD506"><enum>(2)</enum><header>Reports</header><text>The
amendments made by subsection (c) shall apply to reports required to be
submitted after December 31, 2010.</text>
</paragraph><paragraph id="id82E2637B2DD84E658253DF81A579A932"><enum>(3)</enum><header>Exclusion</header><text>The
amendments made by subsection (d) shall apply to taxable years beginning after
December 31, 2010.</text>
</paragraph></subsection><subsection id="idD2D505B888914FF4B7723E70D7A36CE6"><enum>(f)</enum><header>Study and
report on apology payments program</header><text>Not later than December 31,
2013, the Secretary of the Treasury shall submit to Congress a report on the
apology payments program under the amendments made by this section. Such report
shall contain—</text>
<paragraph id="ID574f936614ec43bfb0a3be9843e3f103"><enum>(1)</enum><text>an evaluation
of—</text>
<subparagraph id="id42119D3A6AFF4A7F89BB092AA68D9024"><enum>(A)</enum><text>the merits and
effects of such program on—</text>
<clause id="idC646EAF36CCE423D9D0360E68A707141"><enum>(i)</enum><text>taxpayers who
received payments under section 7811(h), and</text>
</clause><clause id="idAC4129502BB545ABAF93F7CF2FB86804"><enum>(ii)</enum><text>the Internal
Revenue Service, and</text>
</clause></subparagraph><subparagraph id="id2BFFA96D98A845FBA0C3EB186A96BF53"><enum>(B)</enum><text>the impact of the
program on all taxpayers and the public, and</text>
</subparagraph></paragraph><paragraph id="idA6A54507231E4BE89A2C36F663EC2285"><enum>(2)</enum><text>recommendations
whether the program should be extended, and, if so, whether and how it should
be improved.</text>
</paragraph></subsection></section><enum>IV</enum><header>Clarification of
penalties and liabilities</header>
<section commented="no" display-inline="no-display-inline" id="H56BBC58687584996B54B04F2A92EA7B3" section-type="subsequent-section"><enum>401.</enum><header display-inline="yes-display-inline">Increase in information return
penalties</header>
<subsection commented="no" display-inline="no-display-inline" id="HE8DB4B719C254F3DA917D3F52E4BB73D"><enum>(a)</enum><header display-inline="yes-display-inline">Failure To file correct information
returns</header>
<paragraph commented="no" display-inline="no-display-inline" id="HF36DCD7302F64D0F9294CFD11F462926"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subsections (a)(1), (b)(1)(A), and
(b)(2)(A) of section 6721 are each amended by striking <quote>$50</quote> and
inserting <quote>$150</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HC5C603CC5ACD4693BDBCBD80227D6778"><enum>(2)</enum><header display-inline="yes-display-inline">Aggregate annual limitation</header><text display-inline="yes-display-inline">Subsections (a)(1), (d)(1)(A), and
(e)(3)(A) of section 6721 are each amended by striking <quote>$250,000</quote>
and inserting <quote>$2,000,000</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H9B7072DBA6FC466484AE50E933E8A863"><enum>(b)</enum><header display-inline="yes-display-inline">Reduction where correction within 30
days</header>
<paragraph commented="no" display-inline="no-display-inline" id="H99C30DB350884448BC1E98F7B4375BD1"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subparagraph (A) of
<external-xref legal-doc="usc" parsable-cite="usc/26/6721">section
6721(b)(1)</external-xref> is amended by striking <quote>$15</quote> and
inserting <quote>$45</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H33C6B796EDBC41638878855F5A9F7CFB"><enum>(2)</enum><header display-inline="yes-display-inline">Aggregate annual limitation</header><text display-inline="yes-display-inline">Subsections (b)(1)(B) and (d)(1)(B) of
section 6721 are each amended by striking <quote>$75,000</quote> and inserting
<quote>$350,000</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H1317E3A727794400ABD0F1DE6668FC73"><enum>(c)</enum><header display-inline="yes-display-inline">Reduction where correction on or before
August 1</header>
<paragraph commented="no" display-inline="no-display-inline" id="H712A7E17C8634345A489CFD7BA75991B"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subparagraph (A) of
<external-xref legal-doc="usc" parsable-cite="usc/26/6721">section
6721(b)(2)</external-xref> is amended by striking <quote>$30</quote> and
inserting <quote>$90</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H2D432B878E2C4D8F9A23BC79AF517BF2"><enum>(2)</enum><header display-inline="yes-display-inline">Aggregate annual limitation</header><text display-inline="yes-display-inline">Subsections (b)(2)(B) and (d)(1)(C) of
section 6721 are each amended by striking <quote>$150,000</quote> and inserting
<quote>$750,000</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H5DA4A888F01644A483A6134E244D5AC8"><enum>(d)</enum><header display-inline="yes-display-inline">Aggregate annual limitations for persons
with gross receipts of not more than $5,000,000</header>
<paragraph commented="no" display-inline="no-display-inline" id="id9828710937234EE2AC96BDBAD368F4B0"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
<external-xref legal-doc="usc" parsable-cite="usc/26/6721">section
6721(d)</external-xref> is amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="H7FE8887BAD034C2196213486BA5803FA"><enum>(A)</enum><text display-inline="yes-display-inline">by striking <quote>$100,000</quote> in
subparagraph (A) and inserting <quote>$750,000</quote>,</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H21721D1EDA2E443DAC0F1971AF8BBC1E"><enum>(B)</enum><text display-inline="yes-display-inline">by striking <quote>$25,000</quote> in
subparagraph (B) and inserting <quote>$100,000</quote>, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="H2D44CA52D4D942769C18B5A742842CFE"><enum>(C)</enum><text display-inline="yes-display-inline">by striking <quote>$50,000</quote> in
subparagraph (C) and inserting <quote>$300,000</quote>.</text>
</subparagraph></paragraph><paragraph commented="no" id="idFC2E0BCA596244E595EC9999D71D39F7"><enum>(2)</enum><header>Technical
amendment</header><text>Paragraph (1) of section 6721(d) is amended by striking
<quote>such taxable year</quote> and inserting <quote>such calendar
year</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HC85B33829EE5475B905D1AA84EF2ADD2"><enum>(e)</enum><header display-inline="yes-display-inline">Penalty in case of intentional
disregard</header><text display-inline="yes-display-inline">Paragraph (2) of
<external-xref legal-doc="usc" parsable-cite="usc/26/6721">section
6721(e)</external-xref> is amended by striking <quote>$100</quote> and
inserting <quote>$400</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HB458F770D9B24D69985FA6949B496A15"><enum>(f)</enum><header display-inline="yes-display-inline">Adjustment for inflation</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/6721">Section 6721</external-xref> is amended by adding
at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H7C32B06F6E37489AB7E677B4EEBF9703" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="H2952B986E6CD409D84B4E4CF4808F8D2"><enum>(f)</enum><header display-inline="yes-display-inline">Adjustment for inflation</header>
<paragraph commented="no" display-inline="no-display-inline" id="H1FAC173CAC674A21900203D46B55F8A8"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">In the case of any calendar year beginning
after 2012, each of the dollar amounts under subsections (a), (b), (d) (other
than paragraph (2)(A) thereof), and (e) shall be increased by such dollar
amount multiplied by the cost-of-living adjustment determined under section
1(f)(3) determined by substituting <quote>calendar year 2011</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H59A725F23CD5413FBC4A4B567F7E62F3"><enum>(2)</enum><header display-inline="yes-display-inline">Rounding</header><text display-inline="yes-display-inline">If any amount adjusted under paragraph
(1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="HC89329A203ED4980AE2D6928D643099E"><enum>(A)</enum><text display-inline="yes-display-inline">is not less than $75,000 and is not a
multiple of $500, such amount shall be rounded to the next lowest multiple of
$500, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HEC95632CAFD4405181A96854CAAA21FA"><enum>(B)</enum><text display-inline="yes-display-inline">is not described in subparagraph (A) and is
not a multiple of $10, such amount shall be rounded to the next lowest multiple
of
$10.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE5489CE778644513A84AB4B3EA2AD738"><enum>(g)</enum><header>Other
information reporting requirements</header><text>Section 6723 is
amended—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id3C8CD9F25D5E476EAE4D6E59529CE9F0"><enum>(1)</enum><text>by striking
<quote>$50</quote> and inserting <quote>$150</quote>, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idF67C28F2EAF947688E9A0203FC41FB78"><enum>(2)</enum><text>by striking
<quote>$100,000</quote> and inserting <quote>$750,000</quote>.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id539DD01C9A804CDF8AF2A2253D7FCAC1"><enum>(h)</enum><header>Failure To
furnish correct payee statements</header><text>Section 6722 of the Internal
Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id098F93C790E7447687F0589C2034C1B2" style="OLC">
<section id="id0CD80E44D9B5453A8EF60DCF69B72B07"><enum>6722.</enum><header>Failure to
furnish correct payee statements</header>
<subsection id="id30094E91EF004A238D73818E11BF2752"><enum>(a)</enum><header>Imposition of
penalty</header>
<paragraph id="id13172F73C99F4DDFB6367D84F4A1CFF7"><enum>(1)</enum><header>General
rule</header><text>In the case of each failure described in paragraph (2) by
any person with respect to a payee statement, such person shall pay a penalty
of $150 for each statement with respect to which such a failure occurs, but the
total amount imposed on such person for all such failures during any calendar
year shall not exceed $2,000,000.</text>
</paragraph><paragraph id="id19BE4FACB0844C9F8E1930673259015B"><enum>(2)</enum><header>Failures
subject to penalty</header><text>For purposes of paragraph (1), the failures
described in this paragraph are—</text>
<subparagraph id="id4EA0F2B0F3D4445BBB3DAF3B98D44520"><enum>(A)</enum><text>any failure to
furnish a payee statement on or before the date prescribed therefor to the
person to whom such statement is required to be furnished, and</text>
</subparagraph><subparagraph id="id308ED983831A48EF9AE0F019D066DDC0"><enum>(B)</enum><text>any failure to
include all of the information required to be shown on a payee statement or the
inclusion of incorrect information.</text>
</subparagraph></paragraph></subsection><subsection id="idD52781A78D144823BD6469283073F5A5"><enum>(b)</enum><header>Reduction where
correction in specified period</header>
<paragraph id="id2F570301F292404491BA3CB659DAAA88"><enum>(1)</enum><header>Correction
within 30 days</header><text>If any failure described in subsection (a)(2) is
corrected on or before the day 30 days after the required filing date—</text>
<subparagraph id="id9AC1BCE042DE401F8AA8DDBFEE04DFBB"><enum>(A)</enum><text>the penalty
imposed by subsection (a) shall be $45 in lieu of $150, and</text>
</subparagraph><subparagraph id="id8F2389AC6A084F2E8BC3A6005B977858"><enum>(B)</enum><text>the total amount
imposed on the person for all such failures during any calendar year which are
so corrected shall not exceed $350,000.</text>
</subparagraph></paragraph><paragraph id="id2DE02691E0C24BD294B551F58847B475"><enum>(2)</enum><header>Failures
corrected on or before August 1</header><text>If any failure described in
subsection (a)(2) is corrected after the 30th day referred to in paragraph (1)
but on or before August 1 of the calendar year in which the required filing
date occurs—</text>
<subparagraph id="idF737EA7F97E044E29247551C99811D84"><enum>(A)</enum><text>the penalty
imposed by subsection (a) shall be $90 in lieu of $150, and</text>
</subparagraph><subparagraph id="id8A2A899DA4384A5DAF8ECD93FA5143E1"><enum>(B)</enum><text>the total amount
imposed on the person for all such failures during the calendar year which are
so corrected shall not exceed $750,000.</text>
</subparagraph></paragraph></subsection><subsection id="id5713BE16EE0046898F347AE61B403068"><enum>(c)</enum><header>Exception for
de minimis failures</header>
<paragraph id="P29D804CB141446DEA010D9CCE1497544"><enum>(1)</enum><header>In
general</header><text>If—</text>
<subparagraph id="P7FB47E0304764DA2B95E23FC82320DCD"><enum>(A)</enum><text>a payee statement
is furnished to the person to whom such statement is required to be
furnished,</text>
</subparagraph><subparagraph id="PBB05F51AC0A94F97A3DF32859E66F3C3"><enum>(B)</enum><text>there is a failure
described in subsection (a)(2)(B) (determined after the application of section
6724(a)) with respect to such statement, and</text>
</subparagraph><subparagraph id="P3C99131C6E7E4A52BD44D393B64C4712"><enum>(C)</enum><text>such failure is
corrected on or before August 1 of the calendar year in which the required
filing date occurs,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">for
purposes of this section, such statement shall be treated as having been
furnished with all of the correct required information.</continuation-text></paragraph><paragraph id="PB74CF88CF3B84C959D7F42E2EC13F7D7"><enum>(2)</enum><header>Limitation</header><text>The
number of payee statements to which paragraph (1) applies for any calendar year
shall not exceed the greater of—</text>
<subparagraph id="PDD77FABD80894B5E95438E2D12A0F104"><enum>(A)</enum><text>10, or</text>
</subparagraph><subparagraph id="P36198E81511A494BB0B76E039EF37F80"><enum>(B)</enum><text>one-half of 1
percent of the total number of payee statements required to be filed by the
person during the calendar year.</text>
</subparagraph></paragraph></subsection><subsection id="idD58423E906BA43D09AE803FF301E681A"><enum>(d)</enum><header>Lower
limitations for persons with gross receipts of not more than
$5,000,000</header>
<paragraph id="idEB24071F72BB47859B59E31D87560D79"><enum>(1)</enum><header>In
general</header><text>If any person meets the gross receipts test of paragraph
(2) with respect to any calendar year, with respect to failures during such
calendar year—</text>
<subparagraph id="id9544759389174CAEBFF0215099B4DDC3"><enum>(A)</enum><text>subsection (a)(1)
shall be applied by substituting <quote>$750,000</quote> for
<quote>$2,000,000</quote>,</text>
</subparagraph><subparagraph id="idF20C932E8FDB484EAA87097D6540FB2F"><enum>(B)</enum><text>subsection
(b)(1)(B) shall be applied by substituting <quote>$100,000</quote> for
<quote>$350,000</quote>, and</text>
</subparagraph><subparagraph id="idAEA287E1E9CD48519B4DB2F4563221FC"><enum>(C)</enum><text>subsection
(b)(2)(B) shall be applied by substituting <quote>$300,000</quote> for
<quote>$750,000</quote>.</text>
</subparagraph></paragraph><paragraph id="id4047EC5E5B2A4F5982FAEA1575DFE901"><enum>(2)</enum><header>Gross receipts
test</header><text>A person meets the gross receipts test of this paragraph if
such person meets the gross receipts test of section 6721(d)(2).</text>
</paragraph></subsection><subsection id="id23FB3195E7AE4D0FB5FA70D36A6A1B60"><enum>(e)</enum><header>Penalty in case
of intentional disregard</header><text>If 1 or more failures to which
subsection (a) applies are due to intentional disregard of the requirement to
furnish a payee statement (or the correct information reporting requirement),
then, with respect to each such failure—</text>
<paragraph id="id83761569999C41C9BA88DEF8650C3F01"><enum>(1)</enum><text>subsections (b),
(c), and (d) shall not apply,</text>
</paragraph><paragraph id="idC90FD8D7212F4CEA9F72D2F1295CEC04"><enum>(2)</enum><text>the penalty
imposed under subsection (a)(1) shall be $400, or, if greater—</text>
<subparagraph id="id7A888FEDCC53411B891257043330D377"><enum>(A)</enum><text>in the case of a
payee statement other than a statement required under section 6045(b), 6041A(e)
(in respect of a return required under section 6041A(b)), 6050H(d), 6050J(e),
6050K(b), or 6050L(c), 10 percent of the aggregate amount of the items required
to be reported correctly, or</text>
</subparagraph><subparagraph id="id41B965F6C50645D18D1A6C8E004829BC"><enum>(B)</enum><text>in the case of a
payee statement required under section 6045(b), 6050K(b), or 6050L(c), 5
percent of the aggregate amount of the items required to be reported correctly,
and</text>
</subparagraph></paragraph><paragraph id="id3148F6B614094EB5BD86CEDDEE0824D2"><enum>(3)</enum><text>in the case of
any penalty determined under paragraph (2)—</text>
<subparagraph id="id85EDD27C762740CBAFCF5F64C68CD90F"><enum>(A)</enum><text>the $1,500,000
limitation under subsection (a) shall not apply, and</text>
</subparagraph><subparagraph id="id39BD67B5433940359166757D15B6A651"><enum>(B)</enum><text>such penalty
shall not be taken into account in applying such limitation to penalties not
determined under paragraph (2).</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id6E21D1371FEB4EF0B53C5F4DC0401044"><enum>(f)</enum><header display-inline="yes-display-inline">Adjustment for inflation</header>
<paragraph commented="no" display-inline="no-display-inline" id="idF6B78D566C934D5FAAB3C8CCD5EFA287"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">For each fifth calendar year beginning
after 2012, each of the dollar amounts under subsections (a), (b), (d)(1), and
(e) shall be increased by such dollar amount multiplied by the cost-of-living
adjustment determined under section 1(f)(3) determined by substituting
<quote>calendar year 2011</quote> for <quote>calendar year 1992</quote> in
subparagraph (B) thereof.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id17A8AA009CDD4C9686275C65470DB279"><enum>(2)</enum><header display-inline="yes-display-inline">Rounding</header><text display-inline="yes-display-inline">If any amount adjusted under paragraph
(1)—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idD661F72BC1544743A062956F7D5BD90C"><enum>(A)</enum><text display-inline="yes-display-inline">is not less than $75,000 and is not a
multiple of $500, such amount shall be rounded to the next lowest multiple of
$500, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id69C011BC64254E89829DAC6AE1664493"><enum>(B)</enum><text display-inline="yes-display-inline">is not described in subparagraph (A) and is
not a multiple of $10, such amount shall be rounded to the next lowest multiple
of
$10.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H6F1BEA1B78C84F6C81DA71A1F476F3BD"><enum>(i)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply with respect to information returns required to be
filed on or after January 1, 2011.</text>
</subsection></section><section id="ID5B4247CE6CE34FFEA5DBA5AA05E55D40"><enum>402.</enum><header>Elimination of
restriction on offsetting refunds from former residents</header>
<subsection id="id5E872AD13A8C4A93AFD1CAD274722BD3"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 6402(e)
(relating to collection of past-due, legally enforceable State income tax
obligations) is amended by striking paragraph (2) and by redesignating
paragraphs (3), (4), (5), (6), and (7) as paragraphs (2), (3), (4), (5), and
(6), respectively.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idE677F5E59FCE4CAA8B962DCF2621934C"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to refunds
payable for taxable years ending after the date of the enactment of this
Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id92962A8B7757453EB895A65186B3A1E8"><enum>403.</enum><header>Study and
report on tax penalties</header>
<subsection commented="no" display-inline="no-display-inline" id="idC741494645B741289BE1CDFAA38E97E3"><enum>(a)</enum><header>Study</header>
<paragraph commented="no" display-inline="no-display-inline" id="idE963FAEB1BF64C31BC6D2A9C5078E825"><enum>(1)</enum><header>In
general</header><text>The Secretary of the Treasury, in consultation with the
Commissioner of the Internal Revenue Service, shall conduct an empirical study
to quantify the effect of penalties imposed under the Internal Revenue Code of
1986.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id8FEAF9476AFC4B04945B0FF750071247"><enum>(2)</enum><header>Matters
included</header><text>The matters studied under paragraph (1) shall include
the following:</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id8B8C5209F74B41C48E3BA83D05B20F6A"><enum>(A)</enum><text>The deterrent
effect of providing additional, clearer, and advanced notice regarding the
potential penalties under the Internal Revenue Code of 1986 to—</text>
<clause commented="no" display-inline="no-display-inline" id="idD30197234B364AD49A9A006BB366961C"><enum>(i)</enum><text>taxpayers in
general, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="id50EC63AC6B9D49FA95CCDB317A6F106B"><enum>(ii)</enum><text>taxpayers in
categories with higher noncompliance rates specifically.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idA97668959CD740EA970D2146C4E62354"><enum>(B)</enum><text>The fairness of
such penalties with respect to horizontal equity, proportionality, and
procedure.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id10C33DC124A54CADB9ADCEE1EB223AE0"><enum>(C)</enum><text>The comprehension
and understandability of such penalties among taxpayers.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8510208A31BA4C57977B758ED5A37125"><enum>(D)</enum><text>The effectiveness
of such penalties, including the effect of such penalties on encouraging
voluntary compliance.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFCB2276731914DD197D51E1E2995A54D"><enum>(E)</enum><text>The ease of
administration of such penalties and the amount of discretion involved in
applying such penalties.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id81FFF1371D0B4D0B8A63391B2B105B6B"><enum>(F)</enum><text>The authority to
abate such penalties if a taxpayer can demonstrate a reasonable cause.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idFF3521A323C0478EBDF725315B0467FB"><enum>(b)</enum><header>Report</header><text>Not
later than 2 years after the date of the enactment of this Act, the Secretary
of the Treasury shall submit to Congress a report on the results of the study
conducted under subsection (a), together with any recommendations for reforming
the penalties imposed under the Internal Revenue Code of 1986 based on such
study.</text>
</subsection><subsection id="id64D0335DE8944FC996C6B153E62E02D8"><enum>(c)</enum><header>Use of
data</header><text>The report and recommendations under subsection (b) shall,
wherever possible, be based on empirical data, agency-conducted tests, and
quantitative evidence.</text>
</subsection></section><enum>V</enum><header>Understanding the
tax gap</header>
<section id="idCAB7B0183EDC41BEB6BB155D210DD443"><enum>501.</enum><header>Tax gap
strategy and reports</header>
<subsection id="IDe7e519a889db4c80bdcaaf3bd5fdfa65"><enum>(a)</enum><header>Comprehensive
strategy for reducing the tax gap</header>
<paragraph id="idC6E940593349418AA74BC22F9B40FB51"><enum>(1)</enum><header>In
general</header><text>The Secretary of the Treasury shall submit to Congress
comprehensive and detailed reports on a strategy for reducing the tax gap. Such
reports shall include—</text>
<subparagraph id="idFB9AB7BD82B94E79B30077199989787A"><enum>(A)</enum><text>a detailed
assessment of the major sources and causes of the tax gap, and</text>
</subparagraph><subparagraph id="id7917967E16A24B019E13A79371E8F3FA"><enum>(B)</enum><text>a goal for
reducing the tax gap and components of the tax gap.</text>
</subparagraph></paragraph><paragraph id="id35B750C8166640598328FC8E66A730D0"><enum>(2)</enum><header>Time for
submitting reports</header>
<subparagraph id="id6EA24F5CBBFE4D48AECAC77F05B258C5"><enum>(A)</enum><header>Initial
report</header><text>The first report required under paragraph (1) shall be
submitted not later than December 31, 2011.</text>
</subparagraph><subparagraph id="id5BA0291516C6463FBBD28B7C16B1F107"><enum>(B)</enum><header>Subsequent
reports</header><text>The Secretary of the Treasury shall submit additional
reports under paragraph (1) not later than 5 years after the date on which the
most recent preceding report was submitted under paragraph (1).</text>
</subparagraph></paragraph><paragraph id="idFE8A187EA2ED488A98B4726C99C25031"><enum>(3)</enum><header>Use of
data</header><text>Any report submitted under this subsection shall, wherever
possible, be based on empirical data, agency-conducted tests, and quantitative
evidence.</text>
</paragraph></subsection><subsection id="IDd5a170f5d9794b9ba4b9b99b92fcac2c"><enum>(b)</enum><header>Annual tax gap
report</header>
<paragraph id="id01BDB16D56FA499182FE86E1AA16A0BA"><enum>(1)</enum><header>In
general</header><text>Not later than December 31 of each year beginning after
2011, the Secretary of the Treasury shall submit to Congress a report on the
most recent estimates of the tax gap.</text>
</paragraph><paragraph id="idBA2736AAC41F4865A60EF9A239941999"><enum>(2)</enum><header>Matters
included</header><text>The report submitted under paragraph (1) shall
include—</text>
<subparagraph id="id3CA4CA3C364848488E280E1042ADE08F"><enum>(A)</enum><text>an update on any
studies and pilot projects of the Internal Revenue Service associated with
specific areas of the tax gap,</text>
</subparagraph><subparagraph id="id4F5316D9845E4FF3AA61A6C3B66925EF"><enum>(B)</enum><text>an assessment of
how the Internal Revenue Service has aligned its enforcement and compliance
efforts with the goals and recommendations set forth in the most recent report
submitted under subsection (a),</text>
</subparagraph><subparagraph id="id08D193E640584D8D9955E968C7580C8B"><enum>(C)</enum><text>a detailed
assessment of how effectively the Internal Revenue Service is making full use
of the collected information to determine the causes of, and potential
solutions for, the tax gap,</text>
</subparagraph><subparagraph id="idE6EEE05225C240CDAE5E04E188DE4A5C"><enum>(D)</enum><text>a detailed
assessment of the benefits gained from the tax gap estimation and analysis
efforts, including service and enforcement improvements, regulatory changes,
and statutory changes resulting from those efforts, and</text>
</subparagraph><subparagraph id="idB673EB97DEC84A33A818C712721DFD33"><enum>(E)</enum><text>an update and
detailed assessment of examination initiatives of the Internal Revenue Service,
including information sharing between the Internal Revenue Service and State
revenue agencies.</text>
</subparagraph></paragraph></subsection><subsection id="id5DA529A16A024D79833714D7E36FCE5C"><enum>(c)</enum><header>Tax
gap</header><text>For purposes of this section, the term <term>tax gap</term>
means, with respect to any tax year, the difference between—</text>
<paragraph id="id5593BD1E09F94A4094215A2EA7C5AA7F"><enum>(1)</enum><text>the amount of
taxes owed by taxpayers under the Internal Revenue Code of 1986 for such tax
year, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idEBE4EBFDDC2948CF8DA3D2ED5EB01A51"><enum>(2)</enum><text>the amount of
revenue paid voluntarily and timely by taxpayers under such Code for such tax
year.</text>
</paragraph></subsection></section><section id="id7C61B14B3318408B902AFFBF5E1D0CC2"><enum>502.</enum><header>Studies on the
impact of tax gap legislation</header>
<subsection id="ID1caf4e230a824c8a89f5cd8383aee5c9"><enum>(a)</enum><header>Study of return
on investment</header>
<paragraph id="id048254830AC046E481AF4D2A7F7BAFDA"><enum>(1)</enum><header>Matters
studied</header>
<subparagraph id="id199EE8B106624F6A92E820E0981B8C7F"><enum>(A)</enum><header>In
general</header><text>The Secretary of the Treasury shall conduct a study
on—</text>
<clause id="idAD066A865FE04296ACDAE31B2D1C0557"><enum>(i)</enum><text>the
revenue increases, and</text>
</clause><clause id="id2ACBB57AFC6C4F499DE361EABDD42BB8"><enum>(ii)</enum><text>the
costs,</text>
</clause><continuation-text continuation-text-level="subparagraph">with
respect to tax gap legislation.</continuation-text></subparagraph><subparagraph id="idA524B6D5CF744868B16AF799F8CCF803"><enum>(B)</enum><header>Tax gap
legislation</header><text>For purposes of this section, the term <term>tax gap
legislation</term> means the provisions of, and amendments made by—</text>
<clause id="idCD76C6C7CEBC4722B647D01F523E025A"><enum>(i)</enum><text>this Act,</text>
</clause><clause id="id07C58E3445234E67A47D49935B917FF7"><enum>(ii)</enum><text>section 403 of
the Energy Improvement and Extension Act of 2008 (relating to broker reporting
of customer's basis in securities transactions),</text>
</clause><clause id="id86A869CE65F2447BA5C7F348F71B5FDF"><enum>(iii)</enum><text>section 3091 of
the housing Assistance Tax Act of 2008 (relating to returns relating to
payments made in settlement of payment card and third party network
transactions), and</text>
</clause><clause id="idCD451DBAC744400CB7C5C1370F674AAE"><enum>(iv)</enum><text>such other Acts,
as determined appropriate by the Secretary of the Treasury.</text>
</clause></subparagraph></paragraph><paragraph id="id7B0A4A584C46406E99E80628D8F0DD65"><enum>(2)</enum><header>Revenue
increases</header><text>The revenue increases considered in the study conducted
under paragraph (1) shall include—</text>
<subparagraph id="id02E427D0A086437B96639AC0F4CD7E3E"><enum>(A)</enum><text>revenue collected
from enforcement efforts,</text>
</subparagraph><subparagraph id="id77E0B30658384D8182360C815D0FAF77"><enum>(B)</enum><text>revenue increases
from voluntary compliance by taxpayers in response to tax gap legislation
(including cases in which the Internal Revenue Service has not yet effectively
or fully implemented a data matching system), and</text>
</subparagraph><subparagraph id="id727BCABFD0D547E0AAFD5FE1F7FE4F57"><enum>(C)</enum><text>any other revenue
savings, including administrative and other cost savings to the government and
to taxpayers.</text>
</subparagraph></paragraph><paragraph id="idA6D490C193B447CAA678244CF97177B7"><enum>(3)</enum><header>Costs</header><text>The
costs considered in this study conducted under paragraph (1) shall
include—</text>
<subparagraph id="id32F5E10C25CF4043BE22B799F56F668A"><enum>(A)</enum><text>administrative
and other costs of the Internal Revenue Service,</text>
</subparagraph><subparagraph id="idC44289D6C4464A34BD7F1F97EB9D644F"><enum>(B)</enum><text>compliance costs
to taxpayers, and</text>
</subparagraph><subparagraph id="id9BCDBAAF2A9B4A5BB3E8D9DB148134CB"><enum>(C)</enum><text>compliance costs
to any affected third parties, such as persons required to file information
returns.</text>
</subparagraph></paragraph></subsection><subsection id="id24CD3816D9D543A6A156CFD4F21CAC97"><enum>(b)</enum><header>Reports</header>
<paragraph id="id2A5755FF9BB9407C905CD44C8DCD8F8F"><enum>(1)</enum><header>Initial
report</header>
<subparagraph id="idE4F34F478C5A4CA1BF3979A221C21666"><enum>(A)</enum><header>In
general</header><text>Not later than 4 years after the date of the enactment of
this Act, the Secretary of the Treasury shall submit to Congress a report on
the matters studied under subsection (a).</text>
</subparagraph><subparagraph id="id9F5F5145CB77462088FF8E23E8119AEB"><enum>(B)</enum><header>Assessment with
respect to data limitations</header><text>The report under subparagraph (A)
shall include—</text>
<clause id="id703B87B570FC4B9D94AB8D0ACE0C8418"><enum>(i)</enum><text>an
assessment of the limitations of the Internal Revenue Service with respect to
the collection of data used to assess the matters studied under subsection (a),
and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idF075B452338E495D9BF0A74B3422D338"><enum>(ii)</enum><text>recommendations
regarding steps to overcome any such limitations.</text>
</clause></subparagraph></paragraph><paragraph id="IDf3488af6532f4b9a86561d5cb1838a29"><enum>(2)</enum><header>Follow-up
report</header>
<subparagraph id="id7DF3146B46674A88A6771645DE9C23C7"><enum>(A)</enum><header>In
general</header><text>Not later than 3 years after the date on which the report
under paragraph (1) is submitted, the Secretary of the Treasury shall submit to
Congress a follow-up report on the matters studied under subsection (a).</text>
</subparagraph><subparagraph id="idC68F6EAD020F4992AA7A5632EDFD2392"><enum>(B)</enum><header>Assessment with
respect to implementation of recommendations</header><text>The report under
subparagraph (A) shall include an assessment on the implementation of the
recommendations included in the report submitted under paragraph (1).</text>
</subparagraph></paragraph></subsection></section><section id="HDDFF70C560AD47C8B454946344AEA2D6"><enum>503.</enum><header>Reports on
worker misclassification</header>
<subsection id="idB696C5642C0844BF9F4C4CB94F642611"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The Secretary of the
Treasury shall submit to Congress reports on worker misclassification.</text>
</subsection><subsection id="idA67A6D8626B44063951ECDC2F2C83376"><enum>(b)</enum><header>Matters
included</header><text display-inline="yes-display-inline">Such reports shall
include the following:</text>
<paragraph id="H8AB3950195F048CD83E3F0EEB0908101"><enum>(1)</enum><text>Information on the
number and type of enforcement actions against, and examinations of, employers
who have misclassified workers.</text>
</paragraph><paragraph id="HD104A1A0B7CE40EEA1072C736C05CEE7"><enum>(2)</enum><text>Relief obtained as
a result of such actions against, and examinations of, employers who have
misclassified workers.</text>
</paragraph><paragraph id="idEB3D7FD88B14427BADCA3AB4E5D1C383"><enum>(3)</enum><text>An assessment
of—</text>
<subparagraph id="id56923112F2FB497098EDCE6BCB2BC54A"><enum>(A)</enum><text>the level of
awareness of firms and workers about the ability to file for a determination of
worker classification made by the Internal Revenue Service, and</text>
</subparagraph><subparagraph id="id5428C12DEC9442519433253D0863D88A"><enum>(B)</enum><text>any deterrent to
filing for such a determination, including the fear of potential adverse
responses or retaliation from a firm.</text>
</subparagraph></paragraph><paragraph id="H14FCB4DD4C864CBC9CA60107B91181DA"><enum>(4)</enum><text>An overall
estimate of the number of employers misclassifying workers, the number of
workers affected, and the industries involved.</text>
</paragraph><paragraph id="H275043FBC52D4CB78D9C316F8257F2BE"><enum>(5)</enum><text>The estimated
impact of such misclassification on the Federal tax system.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H52C937CF630C4BE18846A6C4FBB5645D"><enum>(6)</enum><text display-inline="yes-display-inline">Information for improving compliance with
worker classification laws and guidelines, reducing the portion of the tax gap
allocable to this type of misreporting, and other relevant
recommendations.</text>
</paragraph></subsection><subsection id="idE348ED9DB64846AD86F8BD169D50E632"><enum>(c)</enum><header>Time for
submitting reports</header>
<paragraph id="id7CE1C43A5584478D80BDFB00E9471070"><enum>(1)</enum><header>Initial
report</header><text>The first report required under subsection (a) shall be
submitted not later than 3 years after the date of the enactment of this
Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idC954F977EE1F427A9EAE4CB739CD9E40"><enum>(2)</enum><header>Subsequent
reports</header><text>The Secretary of the Treasury shall submit additional
reports under paragraph (1) not later than 5 years after the date on which the
most recent preceding report was submitted under paragraph (1).</text>
</paragraph></subsection></section>