[Congressional Record Volume 148, Number 37 (Tuesday, April 9, 2002)]
[House]
[Pages H1113-H1132]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1930
TAXPAYER PROTECTION AND IRS ACCOUNTABILITY ACT OF 2002
Mr. THOMAS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3991) to amend the Internal Revenue Code of 1986 to protect
taxpayers and ensure accountability of the Internal Revenue Service, as
amended.
The Clerk read as follows:
H.R. 3991
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Taxpayer
Protection and IRS Accountability Act of 2002''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--PENALTIES AND INTEREST
Sec. 101. Reduction of Federal tax deposit penalty.
Sec. 102. Failure to pay estimated tax penalty converted to interest
charge on accumulated unpaid balance.
Sec. 103. Exclusion from gross income for interest on overpayments of
income tax by individuals.
Sec. 104. Abatement of interest.
Sec. 105. Deposits made to suspend running of interest on potential
underpayments.
Sec. 106. Expansion of interest netting for individuals.
[[Page H1114]]
Sec. 107. Waiver of certain penalties for first-time unintentional
minor errors.
Sec. 108. Frivolous tax submissions.
TITLE II--FAIRNESS OF COLLECTION PROCEDURES
Sec. 201. Partial payment of tax liability in installment agreements.
Sec. 202. Additional considerations to be taken into account as bases
for accepting offer-in-compromise.
Sec. 203. Extension of time for return of property.
Sec. 204. Seven-day threshold on tolling of statute of limitations
during tax review.
Sec. 205. Study of liens and levies.
TITLE III--EFFICIENCY OF TAX ADMINISTRATION
Sec. 301. Revisions relating to termination of employment of Internal
Revenue Service employees for misconduct.
Sec. 302. Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment.
Sec. 303. Jurisdiction of Tax Court over collection due process cases.
Sec. 304. Office of Chief Counsel review of offers in compromise.
Sec. 305. Study of taxpayer notification alternatives.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
Sec. 401. Collection activities with respect to joint return
disclosable to either spouse based on oral request.
Sec. 402. Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers.
Sec. 403. Disclosure in judicial or administrative tax proceedings of
return and return information of persons who are not
party to such proceedings.
Sec. 404. Prohibition of disclosure of taxpayer identification
information with respect to disclosure of accepted
offers-in-compromise.
Sec. 405. Compliance by contractors with confidentiality safeguards.
Sec. 406. Higher standards for requests for and consents to disclosure.
Sec. 407. Notice to taxpayer concerning administrative determination of
browsing; annual report.
Sec. 408. Expanded disclosure in emergency circumstances.
Sec. 409. Disclosure of taxpayer identity for tax refund purposes.
TITLE V--MISCELLANEOUS
Sec. 501. Clarification of definition of church tax inquiry.
Sec. 502. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 503. Employee misconduct report to include summary of complaints
by category.
Sec. 504. Annual report on awards of costs and certain fees in
administrative and court proceedings.
Sec. 505. Annual report on abatement of penalties.
Sec. 506. Better means of communicating with taxpayers.
Sec. 507. Explanation of statute of limitations and consequences of
failure to file.
Sec. 508. Amendment to Treasury auction reforms.
Sec. 509. Enrolled agents.
TITLE VI--AUTHORIZATION OF APPROPRIATION
Sec. 601. Low-income taxpayer clinics.
TITLE I--PENALTIES AND INTEREST
SEC. 101. REDUCTION OF FEDERAL TAX DEPOSIT PENALTY.
(a) In General.--Subparagraph (A) of section 6656(b)(1) is
amended to read as follows:
``(A) In general.--Except as provided in subparagraph (B),
the term `applicable percentage' means 2 percent.''.
(b) Effective Date.--The amendment made by this section
shall apply to deposits required to be made after December
31, 2002.
SEC. 102. FAILURE TO PAY ESTIMATED TAX PENALTY CONVERTED TO
INTEREST CHARGE ON ACCUMULATED UNPAID BALANCE.
(a) Penalty Moved to Interest Chapter of Code.--The
Internal Revenue Code of 1986 is amended by redesignating
section 6654 as section 6641 and by moving section 6641 (as
so redesignated) from part I of subchapter A of chapter 68 to
the end of subchapter E of chapter 67 (as added by subsection
(e)(1) of this section).
(b) Penalty Converted to Interest Charge.--The heading and
subsections (a) and (b) of section 6641 (as so redesignated)
are amended to read as follows:
``SEC. 6641. INTEREST ON FAILURE BY INDIVIDUAL TO PAY
ESTIMATED INCOME TAX.
``(a) In General.--Interest shall be paid on any
underpayment of estimated tax by an individual for a taxable
year for each day of such underpayment. The amount of such
interest for any day shall be the product of the underpayment
rate established under subsection (b)(2) multiplied by the
amount of the underpayment.
``(b) Amount of Underpayment; Interest Rate.--For purposes
of subsection (a)--
``(1) Amount.--The amount of the underpayment on any day
shall be the excess of--
``(A) the sum of the required installments for the taxable
year the due dates for which are on or before such day, over
``(B) the sum of the amounts (if any) of estimated tax
payments made on or before such day on such required
installments.
``(2) Determination of interest rate.--
``(A) In general.--The underpayment rate with respect to
any day in an installment underpayment period shall be the
underpayment rate established under section 6621 for the
first day of the calendar quarter in which such installment
underpayment period begins.
``(B) Installment underpayment period.--For purposes of
subparagraph (A), the term `installment underpayment period'
means the period beginning on the day after the due date for
a required installment and ending on the due date for the
subsequent required installment (or in the case of the 4th
required installment, the 15th day of the 4th month following
the close of a taxable year).
``(C) Daily rate.--The rate determined under subparagraph
(A) shall be applied on a daily basis and shall be based on
the assumption of 365 days in a calendar year.
``(3) Termination of estimated tax interest.--No day after
the end of the installment underpayment period for the 4th
required installment specified in paragraph (2)(B) for a
taxable year shall be treated as a day of underpayment with
respect to such taxable year.''.
(c) Increase in Safe Harbor Where Tax is Small.--
(1) In general.--Clause (i) of section 6641(d)(1)(B) (as so
redesignated) is amended to read as follows:
``(i) the lesser of--
``(I) 90 percent of the tax shown on the return for the
taxable year (or, if no return is filed, 90 percent of the
tax for such year), or
``(II) the tax shown on the return for the taxable year
(or, if no return is filed, the tax for such year) reduced
(but not below zero) by $2,000, or''.
(2) Conforming amendment.--Subsection (e) of section 6641
(as so redesignated) is amended by striking paragraph (1) and
redesignating paragraphs (2) and (3) as paragraphs (1) and
(2), respectively.
(d) Conforming Amendments.--
(1) Paragraphs (1) and (2) of subsection (e) (as
redesignated by subsection (c)(2)) and subsection (h) of
section 6641 (as so designated) are each amended by striking
``addition to tax'' each place it occurs and inserting
``interest''.
(2) Section 167(g)(5)(D) is amended by striking ``6654''
and inserting ``6641''.
(3) Section 460(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(4) Section 3510(b) is amended--
(A) by striking ``section 6654'' in paragraph (1) and
inserting ``section 6641'';
(B) by amending paragraph (2)(B) to read as follows:
``(B) no interest would be required to be paid (but for
this section) under 6641 for such taxable year by reason of
the $2,000 amount specified in section
6641(d)(1)(B)(i)(II).'';
(C) by striking ``section 6654(d)(2)'' in paragraph (3) and
inserting ``section 6641(d)(2)''; and
(D) by striking paragraph (4).
(5) Section 6201(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(6) Section 6601(h) is amended by striking ``6654'' and
inserting ``6641''.
(7) Section 6621(b)(2)(B) is amended by striking ``addition
to tax under section 6654'' and inserting ``interest required
to be paid under section 6641''.
(8) Section 6622(b) is amended--
(A) by striking ``Penalty for'' in the heading; and
(B) by striking ``addition to tax under section 6654 or
6655'' and inserting ``interest required to be paid under
section 6641 or addition to tax under section 6655''.
(9) Section 6658(a) is amended--
(A) by striking ``6654, or 6655'' and inserting ``or 6655,
and no interest shall be required to be paid under section
6641,''; and
(B) by inserting ``or paying interest'' after ``the tax''
in paragraph (2)(B)(ii).
(10) Section 6665(b) is amended--
(A) in the matter preceding paragraph (1) by striking ``,
6654,''; and
(B) in paragraph (2) by striking ``6654 or''.
(11) Section 7203 is amended by striking ``section 6654 or
6655'' and inserting ``section 6655 or interest required to
be paid under section 6641''.
(e) Clerical Amendments.--
(1) Chapter 67 is amended by inserting after subchapter D
the following:
``Subchapter E--Interest on Failure by Individual to Pay Estimated
Income Tax
``Sec. 6641. Interest on failure by individual to pay estimated income
tax.''.
(2) The table of subchapters for chapter 67 is amended by
adding at the end the following new items:
``Subchapter D. Notice requirements.
``Subchapter E. Interest on failure by individual to pay estimated
income tax.''.
(3) The table of sections for part I of subchapter A of
chapter 68 is amended by striking the item relating to
section 6654.
(f) Effective Date.--The amendments made by this section
shall apply to installment payments for taxable years
beginning after December 31, 2002.
SEC. 103. EXCLUSION FROM GROSS INCOME FOR INTEREST ON
OVERPAYMENTS OF INCOME TAX BY INDIVIDUALS.
(a) In General.--Part III of subchapter B of chapter 1
(relating to items specifically excluded from gross income)
is amended by inserting after section 139 the following new
section:
[[Page H1115]]
``SEC. 139A. EXCLUSION FROM GROSS INCOME FOR INTEREST ON
OVERPAYMENTS OF INCOME TAX BY INDIVIDUALS.
``(a) In General.--In the case of an individual, gross
income shall not include interest paid under section 6611 on
any overpayment of tax imposed by this subtitle.
``(b) Exception.--Subsection (a) shall not apply in the
case of a failure to claim items resulting in the overpayment
on the original return if the Secretary determines that the
principal purpose of such failure is to take advantage of
subsection (a).
``(c) Special Rule for Determining Modified Adjusted Gross
Income.--For purposes of this title, interest not included in
gross income under subsection (a) shall not be treated as
interest which is exempt from tax for purposes of sections
32(i)(2)(B) and 6012(d) or any computation in which interest
exempt from tax under this title is added to adjusted gross
income.''.
(b) Clerical Amendment.--The table of sections for part III
of subchapter B of chapter 1 is amended by inserting after
the item relating to section 139 the following new item:
``Sec. 139A. Exclusion from gross income for interest on overpayments
of income tax by individuals.''.
(c) Effective Date.--The amendments made by this section
shall apply to interest received in calendar years beginning
after the date of the enactment of this Act.
SEC. 104. ABATEMENT OF INTEREST.
(a) Abatement of Interest With Respect to Erroneous Refund
Check Without Regard to Size of Refund.--Paragraph (2) of
section 6404(e) is amended by striking ``unless--'' and all
that follows and inserting ``unless the taxpayer (or a
related party) has in any way caused such erroneous
refund.''.
(b) Abatement of Interest to Extent Interest is
Attributable to Taxpayer Reliance on Written Statements of
the IRS.--Subsection (f) of section 6404 is amended--
(1) in the subsection heading, by striking ``Penalty or
Addition'' and inserting ``Interest, Penalty, or Addition'';
and
(2) in paragraph (1) and in subparagraph (B) of paragraph
(2), by striking ``penalty or addition'' and inserting
``interest, penalty, or addition''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to interest accruing on or after the
date of the enactment of this Act.
SEC. 105. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS.
(a) In General.--Subchapter B of chapter 67 (relating to
interest on overpayments) is amended by redesignating section
6612 as section 6613 and by inserting after section 6611 the
following new section:
``SEC. 6612. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS, ETC.
``(a) Authority To Make Deposits Other Than As Payment of
Tax.--A taxpayer may make a cash deposit with the Secretary
which may be used by the Secretary to pay any tax imposed
under subtitle A or B or chapter 41, 42, 43, or 44 which has
not been assessed at the time of the deposit. Such a deposit
shall be made in such manner as the Secretary shall
prescribe.
``(b) No Interest Imposed.--To the extent that such deposit
is used by the Secretary to pay tax, for purposes of section
6601 (relating to interest on underpayments), the tax shall
be treated as paid when the deposit is made.
``(c) Return of Deposit.--Except in a case where the
Secretary determines that collection of tax is in jeopardy,
the Secretary shall return to the taxpayer any amount of the
deposit (to the extent not used for a payment of tax) which
the taxpayer requests in writing.
``(d) Payment of Interest.--
``(1) In general.--For purposes of section 6611 (relating
to interest on overpayments), a deposit which is returned to
a taxpayer shall be treated as a payment of tax for any
period to the extent (and only to the extent) attributable to
a disputable tax for such period. Under regulations
prescribed by the Secretary, rules similar to the rules of
section 6601(e)(2) shall apply.
``(2) Disputable tax.--
``(A) In general.--For purposes of this section, the term
`disputable tax' means the amount of tax specified at the
time of the deposit as the taxpayer's reasonable estimate of
the maximum amount of any tax attributable to disputable
items.
``(B) Safe harbor based on 30-day letter.--In the case of a
taxpayer who has been issued a 30-day letter, the maximum
amount of tax under subparagraph (A) shall not be less
than the amount of the proposed deficiency specified in
such letter.
``(3) Other definitions.--For purposes of paragraph (2)--
``(A) Disputable item.--The term `disputable item' means
any item of income, gain, loss, deduction, or credit which
the taxpayer reasonably believes the Secretary has a
reasonable basis for disputing the treatment on the
taxpayer's return.
``(B) 30-day letter.--The term `30-day letter' means the
first letter of proposed deficiency which allows the taxpayer
an opportunity for administrative review in the Internal
Revenue Service Office of Appeals.
``(4) Rate of interest.--The rate of interest allowable
under this subsection shall be the Federal short-term rate
determined under section 6621(b), compounded daily.
``(e) Use of Deposits.--
``(1) Payment of tax.--Except as otherwise provided by the
taxpayer, deposits shall be treated as used for the payment
of tax in the order deposited.
``(B) Returns of deposits.--Deposits shall be treated as
returned to the taxpayer on a last-in, first-out basis.''
(b) Clerical Amendment.--The table of sections for
subchapter B of chapter 67 is amended by striking the last
item and inserting the following new items:
``Sec. 6612. Deposits made to suspend running of interest on potential
underpayments, etc.
``Sec. 6613. Cross references.''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to deposits made after the date of the enactment of
this Act.
(2) Coordination with deposits made under revenue procedure
84-58.--In the case of an amount held by the Secretary of the
Treasury or his delegate on the date of the enactment of this
Act as a deposit in the nature of a cash bond deposit
pursuant to Revenue Procedure 84-58, the date that the
taxpayer identifies such amount as a deposit made pursuant to
section 6612 of the Internal Revenue Code (as added by this
Act) shall be treated as the date such amount is deposited
for purposes of such section 6612.
SEC. 106. EXPANSION OF INTEREST NETTING FOR INDIVIDUALS.
(a) In General.--Subsection (d) of section 6621 (relating
to elimination of interest on overlapping periods of tax
overpayments and underpayments) is amended by adding at the
end the following: ``Solely for purposes of the preceding
sentence, section 6611(e) shall not apply in the case of an
individual.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to interest accrued after December 31, 2002.
SEC. 107. WAIVER OF CERTAIN PENALTIES FOR FIRST-TIME
UNINTENTIONAL MINOR ERRORS.
(a) In General.--Section 6651 (relating to failure to file
tax return or to pay tax) is amended by adding at the end the
following new subsection:
``(i) Treatment of first-time unintentional minor error.--
In the case of a return of tax imposed by subtitle A filed by
an individual, the Secretary may waive an addition to tax
under subsection (a) if--
``(1) the individual has a history of compliance with the
requirements of this title,
``(2) it is shown that the failure is due to an
unintentional minor error,
``(3) the penalty would otherwise be disproportionate to
the amount involved, and
``(4) waiving the penalty would promote compliance with the
requirements of this title and effective tax administration.
The preceding sentence shall not apply if the Secretary has
waived any addition to tax under this subsection with respect
to any prior failure by such individual.''
(b) Effective Date.--The amendment made by this section
shall take effect on January 1, 2003.
SEC. 108. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of Penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified frivolous submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 7811 (relating to taxpayer assistance
orders),
``(II) section 6159 (relating to agreements for payment of
tax liability in installments), or
``(III) section 7122 (relating to compromises).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified
[[Page H1116]]
frivolous submission and such person withdraws such
submission promptly after such notice, the penalty imposed
under paragraph (1) shall not apply with respect to such
submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''.
(b) Treatment of Frivolous Requests for Hearings before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''.
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''.
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested appeal''.
(c) Treatment of Frivolous Requests for Hearings upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested appeal''.
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-in-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, Etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''.
(e) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
TITLE II--FAIRNESS OF COLLECTION PROCEDURES
SEC. 201. PARTIAL PAYMENT OF TAX LIABILITY IN INSTALLMENT
AGREEMENTS.
(a) In General.--
(1) Section 6159(a) (relating to authorization of
agreements) is amended--
(A) by striking ``satisfy liability for payment of'' and
inserting ``make payment on'', and
(B) by inserting ``full or partial'' after ``facilitate''.
(2) Section 6159(c) (relating to Secretary required to
enter into installment agreements in certain cases) is
amended in the matter preceding paragraph (1) by inserting
``full'' before ``payment''.
(b) Requirement To Review Partial Payment Agreements Every
Two Years.--Section 6159 is amended by redesignating
subsections (d) and (e) as subsections (e) and (f),
respectively, and inserting after subsection (c) the
following new subsection:
``(d) Secretary Required To Review Installment Agreements
for Partial Collection Every Two Years.--In the case of an
agreement entered into by the Secretary under subsection (a)
for partial collection of a tax liability, the Secretary
shall review the agreement at least once every 2 years.''.
(c) Effective Date.--The amendments made by this section
shall apply to agreements entered into on or after the date
of the enactment of this Act.
SEC. 202. ADDITIONAL CONSIDERATIONS TO BE TAKEN INTO ACCOUNT
AS BASES FOR ACCEPTING OFFER-IN-COMPROMISE.
(a) In General.--Paragraph (3) of section 7122(c) (relating
to special rules relating to treatment of offers) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting a semicolon, and by adding at the end the following
new subparagraphs:
``(C) in all cases, consideration shall be given to--
``(i) whether the taxpayer has a history of complying with
the requirements of this title,
``(ii) whether there is evidence of an error by the
Internal Revenue Service in determining or administering the
tax which is the subject of the offer-in-compromise, and
``(iii) whether the taxpayer has made a good faith effort
to resolve and pay the liability;
``(D) a reasonable annual allowance shall be made for
voluntary payments for the support of any dependent (as
defined in section 152) of the taxpayer;
``(E) a reasonable allowance shall be made for payments on
unsecured debt of the taxpayer to the extent such debt is
attributable to Federal, State, or local income taxes,
medical care expenses, burial expenses, or other basic living
expenses; and
``(F) consideration shall be given to the level of the
taxpayer's education and financial and business experience
relative the complexity of the transaction giving rise to the
liability.''
(b) Limitations.--Subsection (c) of section 7122 is amended
by adding at the end the following new paragraph:
``(4) Limitations on certain factors in considering offer-
in-compromise.--
``(A) Period for certain considerations.--Subparagraph (E)
of paragraph (3) shall apply only during the 3-year period
beginning on whichever of the following is the earliest:
``(i) The date of the receipt by the taxpayer of the notice
of the decision of the Internal Revenue Service Office of
Appeals.
``(ii) The date of the notice of deficiency.
``(iii) The date on which the first letter of proposed
deficiency which allows the taxpayer an opportunity for
administrative review in the Internal Revenue Service Office
of Appeals is sent.
``(B) Dollar limitations.--
``(i) Allowances.--The allowances under subparagraphs (D)
and (E) shall not exceed the dollar amount in effect under
section 2503(b).
``(ii) Consideration of education and financial
sophistication.--Subparagraph (F) of paragraph (3) shall
apply only if the amount of the liability does not exceed the
dollar amount in effect under section 2503(b).''
(c) Effective Date.--The amendments made by this section
shall apply to proposed offers-in-compromise submitted after
the date of the enactment of this Act.
SEC. 203. EXTENSION OF TIME FOR RETURN OF PROPERTY.
(a) Extension of Time for Return of Property Subject to
Levy.--Subsection (b) of section 6343 (relating to return of
property) is amended by striking ``9 months'' and inserting
``2 years''.
(b) Period of Limitation on Suits.--Subsection (c) of
section 6532 (relating to suits by persons other than
taxpayers) is amended--
(1) in paragraph (1) by striking ``9 months'' and inserting
``2 years'', and
(2) in paragraph (2) by striking ``9-month'' and inserting
``2-year''.
(c) Effective Date.--The amendments made by this section
shall apply to--
(1) levies made after the date of the enactment of this
Act, and
(2) levies made on or before such date if the 9-month
period has not expired under section 6343(b) of the Internal
Revenue Code of 1986 (without regard to this section) as of
such date.
SEC. 204. SEVEN-DAY THRESHOLD ON TOLLING OF STATUTE OF
LIMITATIONS DURING TAX REVIEW.
(a) In General.--Section 7811(d)(1) (relating to suspension
of running of period of limitation) is amended by inserting
after ``application,'' the following: ``but only if the date
of such decision is at least 7 days after the date of the
taxpayer's application''.
(b) Effective Date.--The amendment made by this section
shall apply to applications filed after the date of the
enactment of this Act.
SEC. 205. STUDY OF LIENS AND LEVIES.
The Secretary of the Treasury, or the Secretary's delegate,
shall conduct a study of the practices of the Internal
Revenue Service concerning liens and levies. The study shall
examine--
(1) the declining use of liens and levies by the Internal
Revenue Service, and
(2) the practicality of recording liens and levying against
property in cases in which the cost of such actions exceeds
the amount to be realized from such property.
Not later than 1 year after the date of the enactment of this
Act, the Secretary shall submit such study to the Committee
on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate.
[[Page H1117]]
TITLE III--EFFICIENCY OF TAX ADMINISTRATION
SEC. 301. REVISIONS RELATING TO TERMINATION OF EMPLOYMENT OF
INTERNAL REVENUE SERVICE EMPLOYEES FOR
MISCONDUCT.
(a) In General.--Subchapter A of chapter 80 (relating to
application of internal revenue laws) is amended by inserting
after section 7804 the following new section:
``SEC. 7804A. TERMINATION OF EMPLOYMENT FOR MISCONDUCT.
``(a) In General.--Subject to subsection (c), the
Commissioner of Internal Revenue shall terminate the
employment of any employee of the Internal Revenue Service if
there is a final administrative or judicial determination
that such employee committed any act or omission described
under subsection (b) in the performance of the employee's
official duties or where a nexus to the employee's position
exists.
``(b) Acts or Omissions.--The acts or omissions referred to
under subsection (a) are--
``(1) willful failure to obtain the required approval
signatures on documents authorizing the seizure of a
taxpayer's home, personal belongings, or business assets;
``(2) willfully providing a false statement under oath with
respect to a material matter involving a taxpayer or taxpayer
representative;
``(3) with respect to a taxpayer or taxpayer
representative, the willful violation of--
``(A) any right under the Constitution of the United
States;
``(B) any civil right established under--
``(i) title VI or VII of the Civil Rights Act of 1964;
``(ii) title IX of the Education Amendments of 1972;
``(iii) the Age Discrimination in Employment Act of 1967;
``(iv) the Age Discrimination Act of 1975;
``(v) section 501 or 504 of the Rehabilitation Act of 1973;
or
``(vi) title I of the Americans with Disabilities Act of
1990; or
``(C) the Internal Revenue Service policy on unauthorized
inspection of returns or return information;
``(4) willfully falsifying or destroying documents to
conceal mistakes made by any employee with respect to a
matter involving a taxpayer or taxpayer representative;
``(5) assault or battery on a taxpayer or taxpayer
representative, but only if there is a criminal conviction,
or a final adverse judgment by a court in a civil case, with
respect to the assault or battery;
``(6) willful violations of this title, Department of the
Treasury regulations, or policies of the Internal Revenue
Service (including the Internal Revenue Manual) for the
purpose of retaliating against, or harassing, a taxpayer or
taxpayer representative;
``(7) willful misuse of the provisions of section 6103 for
the purpose of concealing information from a congressional
inquiry;
``(8) willful failure to file any return of tax required
under this title on or before the date prescribed therefor
(including any extensions) when a tax is due and owing,
unless such failure is due to reasonable cause and not due to
willful neglect;
``(9) willful understatement of Federal tax liability,
unless such understatement is due to reasonable cause and not
due to willful neglect; and
``(10) threatening to audit a taxpayer, or to take other
action under this title, for the purpose of extracting
personal gain or benefit.
``(c) Determinations of Commissioner.--
``(1) In general.--The Commissioner may take a personnel
action other than termination for an act or omission under
subsection (a).
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may not be delegated to any other officer.
The Commissioner, in his sole discretion, may establish a
procedure to determine if an individual should be referred to
the Commissioner for a determination by the Commissioner
under paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination of the Commissioner under this
subsection may not be reviewed in any administrative or
judicial proceeding. A finding that an act or omission
described in subsection (b) occurred may be reviewed.
``(d) Definition.--For the purposes of the provisions
described in clauses (i), (ii), and (iv) of subsection
(b)(3)(B), references to a program or activity regarding
Federal financial assistance or an education program or
activity receiving Federal financial assistance shall include
any program or activity conducted by the Internal Revenue
Service for a taxpayer.
``(e) Annual Report.--The Commissioner shall submit to
Congress annually a report on terminations of employment
under this section.''.
(b) Clerical Amendment.--The table of sections for chapter
80 is amended by inserting after the item relating to section
7804 the following new item:
``Sec. 7804A. Termination of employment for misconduct.''
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 302. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY
DOCTRINE OF EQUITABLE RECOUPMENT.
(a) Confirmation of Authority of Tax Court To Apply
Doctrine of Equitable Recoupment.--Subsection (b) of section
6214 (relating to jurisdiction over other years and quarters)
is amended by adding at the end the following new sentence:
``Notwithstanding the preceding sentence, the Tax Court may
apply the doctrine of equitable recoupment to the same extent
that it is available in civil tax cases before the district
courts of the United States and the United States Court of
Federal Claims.''.
(b) Effective Date.--The amendments made by this section
shall apply to any action or proceeding in the Tax Court with
respect to which a decision has not become final (as
determined under section 7481 of the Internal Revenue Code
of 1986) as of the date of the enactment of this Act.
SEC. 303. JURISDICTION OF TAX COURT OVER COLLECTION DUE
PROCESS CASES.
(a) In General.--Section 6330(d)(1) (relating to judicial
review of determination) is amended to read as follows:
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination to the Tax Court (and the Tax Court shall
have jurisdiction with respect to such matter).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to appeals filed after the date of the enactment
of this Act.
SEC. 304. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS IN
COMPROMISE.
(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate'' and inserting ``If the
Secretary determines that an opinion of the General Counsel
for the Department of the Treasury, or the Counsel's
delegate, is required with respect to a compromise, there
shall be placed on file in the office of the Secretary such
opinion''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.
SEC. 305. STUDY OF TAXPAYER NOTIFICATION ALTERNATIVES.
The Secretary of the Treasury, or the Secretary's delegate,
shall conduct a study of alternative methods of notifying
taxpayers of determinations and other actions of the
Secretary. The study shall examine the advantages and
disadvantages of--
(1) the use of certificates of mailing,
(2) modifications to certified or registered mail
requirements which eliminate return receipt requested, and
(3) modifications with respect to dual notices to taxpayers
filing a joint return and residing at the same address.
Not later than 1 year after the date of the enactment of this
Act, the Secretary shall submit such study to the Committee
on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
SEC. 401. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN
DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL
REQUEST.
(a) In General.--Paragraph (8) of section 6103(e) (relating
to disclosure of collection activities with respect to joint
return) is amended by striking ``in writing'' the first place
it appears.
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 402. TAXPAYER REPRESENTATIVES NOT SUBJECT TO EXAMINATION
ON SOLE BASIS OF REPRESENTATION OF TAXPAYERS.
(a) In General.--Subsection (h) of section 6103 (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended by adding at
the end the following new paragraph:
``(7) Taxpayer representatives.--Notwithstanding paragraph
(1), the return of the representative of a taxpayer whose
return is being examined by an officer or employee of the
Department of the Treasury shall not be open to inspection by
such officer or employee on the sole basis of the
representative's relationship to the taxpayer unless a
supervisor of such officer or employee has approved the
inspection of the return of such representative on a basis
other than by reason of such relationship.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 403. DISCLOSURE IN JUDICIAL OR ADMINISTRATIVE TAX
PROCEEDINGS OF RETURN AND RETURN INFORMATION OF
PERSONS WHO ARE NOT PARTY TO SUCH PROCEEDINGS.
(a) In General.--Paragraph (4) of section 6103(h) (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended by adding at
the end the following new subparagraph:
``(B) Disclosure in judicial or administrative tax
proceedings of return and return information of persons not
party to such proceedings.--
``(i) Notice.--Return or return information of any person
who is not a party to a judicial or administrative proceeding
described in paragraph (4) shall not be disclosed under
clause (ii) or (iii) of subparagraph (A) until after the
Secretary makes a section shall
[[Page H1118]]
take effect on the date of the enactment of this Act.
SEC. 403. DISCLOSURE IN JUDICIAL OR ADMINISTRATIVE TAX
PROCEEDINGS OF RETURN AND RETURN INFORMATION OF
PERSONS WHO ARE NOT PARTY TO SUCH PROCEEDINGS.
(a) In General.--Paragraph (4) of section 6103(h) (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended by adding at
the end the following new subparagraph:
``(B) Disclosure in judicial or administrative tax
proceedings of return and return information of persons not
party to such proceedings.--
``(i) Notice.--Return or return information of any person
who is not a party to a judicial or administrative proceeding
described in paragraph (4) shall not be disclosed under
clause (ii) or (iii) of subparagraph (A) until after the
Secretary makes a easonable effort to give notice to such
person and an opportunity for such person to request the
deletion of matter from such return or return information,
including any of the items referred to in paragraphs (1)
through (7) of section 6110(c). Such notice shall include a
statement of the issue or issues the resolution of which is
the reason such return or return information is sought. In
the case of S corporations, partnerships, estates, and
trusts, such notice shall be made at the entity level.
``(ii) Disclosure limited to pertinent portion.--The only
portion of a return or return information described in clause
(i) which may be disclosed under subparagraph (A) is that
portion of such return or return information that directly
relates to the resolution of an issue in such proceeding.
``(iii) Exceptions.--Clause (i) shall not apply to--
``(I) any ex parte proceeding for obtaining a search
warrant, order for entry on premises or safe deposit boxes,
or similar ex parte proceeding,
``(II) disclosure of third party return information by
indictment or criminal information, or
``(III) if the Secretary determines that the application of
such clause would seriously impair a criminal tax
investigation.''.
(b) Conforming Amendments.--Paragraph (4) of section
6103(h) is amended by--
(1) by striking ``proceedings.--A return'' and inserting
``proceedings.--
``(A) In general.--Except as provided in subparagraph (B),
a return'';
(2) by redesignating subparagraphs (A), (B), (C), and (D)
clauses (i), (ii), (iii), and (iv), respectively; and
(3) in the matter following clause (iv) (as so
redesignated), by striking ``subparagraph (A), (B), or (C)''
and inserting ``clause (i), (ii), or (iii)'' and by moving
such matter 2 ems to the right.
(c) Effective Date.--The amendments made by this section
shall apply to proceedings commenced after the date of the
enactment of this Act.
SEC. 404. PROHIBITION OF DISCLOSURE OF TAXPAYER
IDENTIFICATION INFORMATION WITH RESPECT TO
DISCLOSURE OF ACCEPTED OFFERS-IN-COMPROMISE.
(a) In General.--Paragraph (1) of section 6103(k) (relating
to disclosure of certain returns and return information for
tax administrative purposes) is amended by inserting ``(other
than the tax payer's address and TIN)'' after ``Return
information''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures made after the date of the
enactment of this Act.
SEC. 405. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY
SAFEGUARDS.
(a) In General.--Section 6103(p) (relating to State law
requirements) is amended by adding at the end the following
new paragraph:
``(9) Disclosure to contractors.--Notwithstanding any other
provision of this section, no return or return information
shall be disclosed by any officer or employee of any Federal
agency or State to any contractor of such agency or State
unless such agency or State--
``(A) has requirements in effect which require each
contractor of such agency or State which would have access to
returns or return information to provide safeguards (within
the meaning of paragraph (4)) to protect the confidentiality
of such returns or return information,
``(B) agrees to conduct an annual, on-site review (mid-
point review in the case of contracts of less than 1 year in
duration) of each contractor to determine compliance with
such requirements,
``(C) submits the findings of the most recent review
conducted under subparagraph (B) to the Secretary as part of
the report required by paragraph (4)(E), and
``(D) certifies to the Secretary for the most recent annual
period that all contractors are in compliance with all such
requirements.
The certification required by subparagraph (D) shall include
the name and address of each contractor, a description of the
contract of the contractor with the Federal agency or State,
and the duration of such contract.''.
(b) Conforming Amendment.--Subparagraph (B) of section
6103(p)(8) is amended by inserting ``or paragraph (9)'' after
``subparagraph (A)''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to disclosures made after December 31, 2002.
(2) Certifications.--The first certification under section
6103(p)(9)(D) of the Internal Revenue Code of 1986, as added
by subsection (a), shall be made with respect to calendar
year 2003.
SEC. 406. HIGHER STANDARDS FOR REQUESTS FOR AND CONSENTS TO
DISCLOSURE.
(a) In General.--Subsection (c) of section 6103 (relating
to disclosure of returns and return information to designee
of taxpayer) is amended by adding at the end the following
new paragraphs:
``(2) Requirements for valid requests and consents.--A
request for or consent to disclosure under paragraph (1)
shall only be valid for purposes of this section or sections
7213, 7213A, or 7431 if--
``(A) at the time of execution, such request or coe of
Service To Act on Determinations Treated as Exhaustion of
Remedies.--The second sentence of paragraph (2) of section
7428(b) (relating to exhaustion of administrative remedies)
is amended to read as follows: ``An organization which
requests the determination of an issue referred to in
subsection (a)(1) and which has taken, in a timely manner,
all reasonable steps to secure such determination, shall be
deemed to have exhausted its administrative remedies with
respect to--
``(A) a failure by the Secretary to make a determination
with respect to such issue, at the expiration of 270 days
after the date on which the request for such determination
was made, and
``(B) a failure by any office of the Internal Revenue
Service (other than the office which is responsible for
initial determinations with respect to such issue) to make a
determination with respect to such issue, at the expiration
of 450 days after the date on which such request was made.''.
(d) Effective Dates.--
(1) Declaratory judgment.--The amendments made by
subsections (a) and (b) shall apply to pleadings filed with
respect to determinations (or requests for determinations)
made after the date of the enactment of this Act.
(2) Failure of service to act.--The amendments made by
subsection (c) shall apply to applications received in the
national office of the Internal Revenue Service after the
date of the enactment of this Act.
SEC. 503. EMPLOYEE MISCONDUCT REPORT TO INCLUDE SUMMARY OF
COMPLAINTS BY CATEGORY.
(a) In General.--Clause (ii) of section 7803(d)(2)(A) is
amended by inserting before the semicolon at the end the
following: ``, including a summary (by category) of the 10
most common complaints made and the number of such common
complaints''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to reporting periods ending after
the date of the enactment of this Act.
SEC. 504. ANNUAL REPORT ON AWARDS OF COSTS AND CERTAIN FEES
IN ADMINISTRATIVE AND COURT PROCEEDINGS.
Not later than 3 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress which specifies for such year--
(1) the number of payments made by the United States
pursuant to section 7430 of the Internal Revenue Code of 1986
(relating to awarding of costs and certain fees);
(2) the amount of each such payment;
(3) an analysis of any administrative issue giving rise to
such payments; and
(4) changes (if any) which will be implemented as a result
of such analysis and other changes (if any) recommended by
the Treasury Inspector General for Tax Administration as a
result of such analysis.
SEC. 505. ANNUAL REPORT ON ABATEMENT OF PENALTIES.
Not later than 6 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress on abatements of penalties under the Internal
Revenue Code of 1986 during such year, including information
on the reasons and criteria for such abatements.
SEC. 506. BETTER MEANS OF COMMUNICATING WITH TAXPAYERS.
Not later than 18 months after the date of the enactment of
this Act, the Treasury Inspector General for Tax
Administration shall submit a report to Congress evaluating
whether technological advances, such as e-mail and facsimile
transmission, permit the use of alternative means for the
Internal Revenue Service to communicate with taxpayers.
SEC. 507. EXPLANATION OF STATUTE OF LIMITATIONS AND
CONSEQUENCES OF FAILURE TO FILE.
The Secretary of the Treasury or the Secretary's delegate
shall, as soon as practicable but not later than 180 days
after the date of the enactment of this Act, revise the
statement required by section 6227 of the Omnibus Taxpayer
Bill of Rights (Internal Revenue Service Publication No. 1),
and any instructions booklet accompanying a general income
tax return form for taxable years beginning in 2000 and later
(including forms 1040, 1040A, 1040EZ, and any similar or
successor forms relating thereto), to provide for an
explanation of--
(1) the limitations imposed by section 6511 of the Internal
Revenue Code of 1986 on credits and refunds; and
(2) the consequences under such section 6511 of the failure
to file a return of tax.
[[Page H1119]]
SEC. 508. AMENDMENT TO TREASURY AUCTION REFORMS.
(a) In General.--Clause (i) of section 202(c)(4)(B) of the
Government Securities Act Amendments of 1993 (31 U.S.C. 3121
note) is amended by inserting before the semicolon ``(or, if
earlier, at the time the Secretary releases the minutes of
the meeting in accordance with paragraph (2))''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to meetings held after the date of the enactment
of this Act.
SEC. 509. ENROLLED AGENTS.
(a) In General.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end the following new
section:
``SEC. 7527. ENROLLED AGENTS.
``(a) In General.--The Secretary may prescribe such
regulations as may be necessary to regulate the conduct of
enrolled agents in regards to their practice before the
Internal Revenue Service.
``(b) Use of Credentials.--Any enrolled agents properly
licensed to practice as required under rules promulgated
under section (a) herein shall be allowed to use the
credentials or designation as `enrolled agent', `EA', or
`E.A.'.''
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:
``Sec. 7525. Enrolled agents.''
(c) Prior Regulations.--Nothing in the amendments made by
this section shall be construed to have any effect on part 10
of title 31, Code of Federal Regulations, or any other
Federal rule or regulation issued before the date of the
enactment of this Act.
TITLE VI--AUTHORIZATION OF APPROPRIATION
SEC. 601. LOW-INCOME TAXPAYER CLINICS.
(a) Limitation on Amount of Grants.--Paragraph (1) of
section 7526(c) (relating to special rules and limitations)
is amended by striking ``$6,000,000 per year'' and inserting
``$9,000,000 for 2002, $12,000,000 for 2003, and $15,000,000
for each year thereafter''.
(b) Limitation on Use of Clinics for Tax Return
Preparation.--Section 7526(b)(1) is amended by adding at the
end the following new subparagraph:
``(C) Limitation regarding tax return preparation.--A
clinic meets the requirements of subparagraph (A)(ii)(II) if
the programs operated by the clinic do not include routine
tax return preparation.''.
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Taxpayer
Protection and IRS Accountability Act of 2002''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--PENALTIES AND INTEREST
Sec. 101. Failure to pay estimated tax penalty converted to interest
charge on accumulated unpaid balance.
Sec. 102. Exclusion from gross income for interest on overpayments of
income tax by individuals.
Sec. 103. Abatement of interest.
Sec. 104. Deposits made to suspend running of interest on potential
underpayments.
Sec. 105. Expansion of interest netting for individuals.
Sec. 106. Waiver of certain penalties for first-time unintentional
minor errors.
Sec. 107. Frivolous tax submissions.
Sec. 108. Clarification of application of tax deposit penalty.
TITLE II--FAIRNESS OF COLLECTION PROCEDURES
Sec. 201. Partial payment of tax liability in installment agreements.
Sec. 202. Extension of time for return of property.
Sec. 203. Individuals held harmless on wrongful levy, etc. on
individual retirement plan.
Sec. 204. Seven-day threshold on tolling of statute of limitations
during tax review.
Sec. 205. Study of liens and levies.
TITLE III--EFFICIENCY OF TAX ADMINISTRATION
Sec. 301. Revisions relating to termination of employment of Internal
Revenue Service employees for misconduct.
Sec. 302. Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment.
Sec. 303. Jurisdiction of Tax Court over collection due process cases.
Sec. 304. Office of Chief Counsel review of offers in compromise.
Sec. 305. 15-day delay in due date for electronically filed individual
income tax returns.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
Sec. 401. Collection activities with respect to joint return
disclosable to either spouse based on oral request.
Sec. 402. Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers.
Sec. 403. Disclosure in judicial or administrative tax proceedings of
return and return information of persons who are not
party to such proceedings.
Sec. 404. Prohibition of disclosure of taxpayer identification
information with respect to disclosure of accepted
offers-in-compromise.
Sec. 405. Compliance by contractors with confidentiality safeguards.
Sec. 406. Higher standards for requests for and consents to disclosure.
Sec. 407. Notice to taxpayer concerning administrative determination of
browsing; annual report.
Sec. 408. Expanded disclosure in emergency circumstances.
Sec. 409. Disclosure of taxpayer identity for tax refund purposes.
Sec. 410. Disclosure to State officials of proposed actions related to
section 501(c)(3) organizations.
TITLE V--MISCELLANEOUS
Sec. 501. Clarification of definition of church tax inquiry.
Sec. 502. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 503. Employee misconduct report to include summary of complaints
by category.
Sec. 504. Annual report on awards of costs and certain fees in
administrative and court proceedings.
Sec. 505. Annual report on abatement of penalties.
Sec. 506. Better means of communicating with taxpayers.
Sec. 507. Explanation of statute of limitations and consequences of
failure to file.
Sec. 508. Amendment to Treasury auction reforms.
Sec. 509. Enrolled agents.
Sec. 510. Financial Management Service fees.
Sec. 511. Capital gain treatment under section 631(b) to apply to
outright sales by land owner.
TITLE VI--LOW-INCOME TAXPAYER CLINICS
Sec. 601. Low-income taxpayer clinics.
TITLE VII--REVISIONS TO SECTION 527 ORGANIZATION DISCLOSURE PROVISIONS
Sec. 701. Modifications of reporting requirements for certain State and
local political organizations.
Sec. 702. Notification of interaction of reporting requirements.
Sec. 703. Technical corrections to section 527 organization disclosure
provisions.
TITLE I--PENALTIES AND INTEREST
SEC. 101. FAILURE TO PAY ESTIMATED TAX PENALTY CONVERTED TO
INTEREST CHARGE ON ACCUMULATED UNPAID BALANCE.
(a) Penalty Moved to Interest Chapter of Code.--The
Internal Revenue Code of 1986 is amended by redesignating
section 6654 as section 6641 and by moving section 6641 (as
so redesignated) from part I of subchapter A of chapter 68 to
the end of subchapter E of chapter 67 (as added by subsection
(e)(1) of this section).
(b) Penalty Converted to Interest Charge.--The heading and
subsections (a) and (b) of section 6641 (as so redesignated)
are amended to read as follows:
``SEC. 6641. INTEREST ON FAILURE BY INDIVIDUAL TO PAY
ESTIMATED INCOME TAX.
``(a) In General.--Interest shall be paid on any
underpayment of estimated tax by an individual for a taxable
year for each day of such underpayment. The amount of such
interest for any day shall be the product of the underpayment
rate established under subsection (b)(2) multiplied by the
amount of the underpayment.
``(b) Amount of Underpayment; Interest Rate.--For purposes
of subsection (a)--
``(1) Amount.--The amount of the underpayment on any day
shall be the excess of--
``(A) the sum of the required installments for the taxable
year the due dates for which are on or before such day, over
``(B) the sum of the amounts (if any) of estimated tax
payments made on or before such day on such required
installments.
``(2) Determination of interest rate.--
``(A) In general.--The underpayment rate with respect to
any day in an installment underpayment period shall be the
underpayment rate established under section 6621 for the
first day of the calendar quarter in which such installment
underpayment period begins.
``(B) Installment underpayment period.--For purposes of
subparagraph (A), the term `installment underpayment period'
means the period beginning on the day after the due date for
a required installment and ending on the due date for the
subsequent required installment (or in the case of the 4th
required installment, the 15th day of the 4th month following
the close of a taxable year).
``(C) Daily rate.--The rate determined under subparagraph
(A) shall be applied on a daily basis and shall be based on
the assumption of 365 days in a calendar year.
``(3) Termination of estimated tax interest.--No day after
the end of the installment
[[Page H1120]]
underpayment period for the 4th required installment
specified in paragraph (2)(B) for a taxable year shall be
treated as a day of underpayment with respect to such taxable
year.''.
(c) Increase in Safe Harbor Where Tax is Small.--
(1) In general.--Clause (i) of section 6641(d)(1)(B) (as so
redesignated) is amended to read as follows:
``(i) the lesser of--
``(I) 90 percent of the tax shown on the return for the
taxable year (or, if no return is filed, 90 percent of the
tax for such year), or
``(II) the tax shown on the return for the taxable year
(or, if no return is filed, the tax for such year) reduced
(but not below zero) by $2,000, or''.
(2) Conforming amendment.--Subsection (e) of section 6641
(as so redesignated) is amended by striking paragraph (1) and
redesignating paragraphs (2) and (3) as paragraphs (1) and
(2), respectively.
(d) Conforming Amendments.--
(1) Paragraphs (1) and (2) of subsection (e) (as
redesignated by subsection (c)(2)) and subsection (h) of
section 6641 (as so designated) are each amended by striking
``addition to tax'' each place it occurs and inserting
``interest''.
(2) Section 167(g)(5)(D) is amended by striking ``6654''
and inserting ``6641''.
(3) Section 460(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(4) Section 3510(b) is amended--
(A) by striking ``section 6654'' in paragraph (1) and
inserting ``section 6641'';
(B) by amending paragraph (2)(B) to read as follows:
``(B) no interest would be required to be paid (but for
this section) under 6641 for such taxable year by reason of
the $2,000 amount specified in section
6641(d)(1)(B)(i)(II).'';
(C) by striking ``section 6654(d)(2)'' in paragraph (3) and
inserting ``section 6641(d)(2)''; and
(D) by striking paragraph (4).
(5) Section 6201(b)(1) is amended by striking ``6654'' and
inserting ``6641''.
(6) Section 6601(h) is amended by striking ``6654'' and
inserting ``6641''.
(7) Section 6621(b)(2)(B) is amended by striking ``addition
to tax under section 6654'' and inserting ``interest required
to be paid under section 6641''.
(8) Section 6622(b) is amended--
(A) by striking ``Penalty for'' in the heading; and
(B) by striking ``addition to tax under section 6654 or
6655'' and inserting ``interest required to be paid under
section 6641 or addition to tax under section 6655''.
(9) Section 6658(a) is amended--
(A) by striking ``6654, or 6655'' and inserting ``or 6655,
and no interest shall be required to be paid under section
6641,''; and
(B) by inserting ``or paying interest'' after ``the tax''
in paragraph (2)(B)(ii).
(10) Section 6665(b) is amended--
(A) in the matter preceding paragraph (1) by striking ``,
6654,''; and
(B) in paragraph (2) by striking ``6654 or''.
(11) Section 7203 is amended by striking ``section 6654 or
6655'' and inserting ``section 6655 or interest required to
be paid under section 6641''.
(e) Clerical Amendments.--
(1) Chapter 67 is amended by inserting after subchapter D
the following:
``Subchapter E--Interest on Failure by Individual to Pay Estimated
Income Tax
``Sec. 6641. Interest on failure by individual to pay estimated income
tax.''.
(2) The table of subchapters for chapter 67 is amended by
adding at the end the following new items:
``Subchapter D. Notice requirements.
``Subchapter E. Interest on failure by individual to pay estimated
income tax.''.
(3) The table of sections for part I of subchapter A of
chapter 68 is amended by striking the item relating to
section 6654.
(f) Effective Date.--The amendments made by this section
shall apply to installment payments for taxable years
beginning after December 31, 2002.
SEC. 102. EXCLUSION FROM GROSS INCOME FOR INTEREST ON
OVERPAYMENTS OF INCOME TAX BY INDIVIDUALS.
(a) In General.--Part III of subchapter B of chapter 1
(relating to items specifically excluded from gross income)
is amended by inserting after section 139 the following new
section:
``SEC. 139A. EXCLUSION FROM GROSS INCOME FOR INTEREST ON
OVERPAYMENTS OF INCOME TAX BY INDIVIDUALS.
``(a) In General.--In the case of an individual, gross
income shall not include interest paid under section 6611 on
any overpayment of tax imposed by this subtitle.
``(b) Exception.--Subsection (a) shall not apply in the
case of a failure to claim items resulting in the overpayment
on the original return if the Secretary determines that the
principal purpose of such failure is to take advantage of
subsection (a).
``(c) Special Rule for Determining Modified Adjusted Gross
Income.--For purposes of this title, interest not included in
gross income under subsection (a) shall not be treated as
interest which is exempt from tax for purposes of sections
32(i)(2)(B) and 6012(d) or any computation in which interest
exempt from tax under this title is added to adjusted gross
income.''.
(b) Clerical Amendment.--The table of sections for part III
of subchapter B of chapter 1 is amended by inserting after
the item relating to section 139 the following new item:
``Sec. 139A. Exclusion from gross income for interest on overpayments
of income tax by individuals.''.
(c) Effective Date.--The amendments made by this section
shall apply to interest received in calendar years beginning
after the date of the enactment of this Act.
SEC. 103. ABATEMENT OF INTEREST.
(a) Abatement of Interest With Respect to Erroneous Refund
Check Without Regard to Size of Refund.--Paragraph (2) of
section 6404(e) is amended by striking ``unless--'' and all
that follows and inserting ``unless the taxpayer (or a
related party) has in any way caused such erroneous
refund.''.
(b) Abatement of Interest to Extent Interest is
Attributable to Taxpayer Reliance on Written Statements of
the IRS.--Subsection (f) of section 6404 is amended--
(1) in the subsection heading, by striking ``Penalty or
Addition'' and inserting ``Interest, Penalty, or Addition'';
and
(2) in paragraph (1) and in subparagraph (B) of paragraph
(2), by striking ``penalty or addition'' and inserting
``interest, penalty, or addition''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to interest accruing on or after the
date of the enactment of this Act.
SEC. 104. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS.
(a) In General.--Subchapter A of chapter 67 (relating to
interest on underpayments) is amended by adding at the end
the following new section:
``SEC. 6603. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS, ETC.
``(a) Authority To Make Deposits Other Than As Payment of
Tax.--A taxpayer may make a cash deposit with the Secretary
which may be used by the Secretary to pay any tax imposed
under subtitle A or B or chapter 41, 42, 43, or 44 which has
not been assessed at the time of the deposit. Such a deposit
shall be made in such manner as the Secretary shall
prescribe.
``(b) No Interest Imposed.--To the extent that such deposit
is used by the Secretary to pay tax, for purposes of section
6601 (relating to interest on underpayments), the tax shall
be treated as paid when the deposit is made.
``(c) Return of Deposit.--Except in a case where the
Secretary determines that collection of tax is in jeopardy,
the Secretary shall return to the taxpayer any amount of the
deposit (to the extent not used for a payment of tax) which
the taxpayer requests in writing.
``(d) Payment of Interest.--
``(1) In general.--For purposes of section 6611 (relating
to interest on overpayments), a deposit which is returned to
a taxpayer shall be treated as a payment of tax for any
period to the extent (and only to the extent) attributable to
a disputable tax for such period. Under regulations
prescribed by the Secretary, rules similar to the rules of
section 6611(b)(2) shall apply.
``(2) Disputable tax.--
``(A) In general.--For purposes of this section, the term
`disputable tax' means the amount of tax specified at the
time of the deposit as the taxpayer's reasonable estimate of
the maximum amount of any tax attributable to disputable
items.
``(B) Safe harbor based on 30-day letter.--In the case of a
taxpayer who has been issued a 30-day letter, the maximum
amount of tax under subparagraph (A) shall not be less than
the amount of the proposed deficiency specified in such
letter.
``(3) Other definitions.--For purposes of paragraph (2)--
``(A) Disputable item.--The term `disputable item' means
any item of income, gain, loss, deduction, or credit if the
taxpayer--
``(i) has a reasonable basis for its treatment of such
item, and
``(ii) reasonably believes that the Secretary also has a
reasonable basis for disallowing the taxpayer's treatment of
such item.
``(B) 30-day letter.--The term `30-day letter' means the
first letter of proposed deficiency which allows the taxpayer
an opportunity for administrative review in the Internal
Revenue Service Office of Appeals.
``(4) Rate of interest.--The rate of interest allowable
under this subsection shall be the Federal short-term rate
determined under section 6621(b), compounded daily.
``(e) Use of Deposits.--
``(1) Payment of tax.--Except as otherwise provided by the
taxpayer, deposits shall be treated as used for the payment
of tax in the order deposited.
``(B) Returns of deposits.--Deposits shall be treated as
returned to the taxpayer on a last-in, first-out basis.''.
(b) Clerical Amendment.--The table of sections for
subchapter A of chapter 67 is amended by adding at the end
the following new item:
``Sec. 6603. Deposits made to suspend running of interest on potential
underpayments, etc.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to deposits made after the date of the enactment of
this Act.
(2) Coordination with deposits made under revenue procedure
84-58.--In the case of an amount held by the Secretary of the
Treasury or his delegate on the date of the
[[Page H1121]]
enactment of this Act as a deposit in the nature of a cash
bond deposit pursuant to Revenue Procedure 84-58, the date
that the taxpayer identifies such amount as a deposit made
pursuant to section 6603 of the Internal Revenue Code (as
added by this Act) shall be treated as the date such amount
is deposited for purposes of such section 6603.
SEC. 105. EXPANSION OF INTEREST NETTING FOR INDIVIDUALS.
(a) In General.--Subsection (d) of section 6621 (relating
to elimination of interest on overlapping periods of tax
overpayments and underpayments) is amended by adding at the
end the following: ``Solely for purposes of the preceding
sentence, section 6611(e) shall not apply in the case of an
individual.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to interest accrued after December 31, 2002.
SEC. 106. WAIVER OF CERTAIN PENALTIES FOR FIRST-TIME
UNINTENTIONAL MINOR ERRORS.
(a) In General.--Section 6651 (relating to failure to file
tax return or to pay tax) is amended by adding at the end the
following new subsection:
``(i) Treatment of First-Time Unintentional Minor Errors.--
``(1) In general.--In the case of a return of tax imposed
by subtitle A filed by an individual, the Secretary may waive
an addition to tax under subsection (a) if--
``(A) the individual has a history of compliance with the
requirements of this title,
``(B) it is shown that the failure is due to an
unintentional minor error,
``(C) the penalty would be grossly disproportionate to the
action or expense that would have been needed to avoid the
error, and imposing the penalty would be against equity and
good conscience,
``(D) waiving the penalty would promote compliance with the
requirements of this title and effective tax administration,
and
``(E) the taxpayer took all reasonable steps to remedy the
error promptly after discovering it.
``(2) Exceptions.--Paragraph (1) shall not apply if--
``(A) the Secretary has waived any addition to tax under
this subsection with respect to any prior failure by such
individual,
``(B) the failure is a mathematical or clerical error (as
defined in section 6213(g)(2)), or
``(C) the failure is the lack of a required signature.''.
(b) Effective Date.--The amendment made by this section
shall take effect on January 1, 2003.
SEC. 107. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of Penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 7811 (relating to taxpayer assistance
orders),
``(II) section 6159 (relating to agreements for payment of
tax liability in installments), or
``(III) section 7122 (relating to compromises).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified frivolous submission and such person withdraws such
submission promptly after such notice, the penalty imposed
under paragraph (1) shall not apply with respect to such
submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''.
(b) Treatment of Frivolous Requests for Hearings Before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''.
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''.
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-in-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, Etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''.
(e) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''.
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
SEC. 108. CLARIFICATION OF APPLICATION OF FEDERAL TAX DEPOSIT
PENALTY.
Nothing in section 6656 of the Internal Revenue Code of
1986 shall be construed to permit the percentage specified in
subsection (b)(1)(A)(iii) thereof to apply other than in a
case where the failure is for more than 15 days.
TITLE II--FAIRNESS OF COLLECTION PROCEDURES
SEC. 201. PARTIAL PAYMENT OF TAX LIABILITY IN INSTALLMENT
AGREEMENTS.
(a) In General.--
(1) Section 6159(a) (relating to authorization of
agreements) is amended--
(A) by striking ``satisfy liability for payment of'' and
inserting ``make payment on'', and
(B) by inserting ``full or partial'' after ``facilitate''.
(2) Section 6159(c) (relating to Secretary required to
enter into installment agreements in certain cases) is
amended in the matter preceding paragraph (1) by inserting
``full'' before ``payment''.
(b) Requirement To Review Partial Payment Agreements Every
Two Years.--Section 6159 is amended by redesignating
subsections (d) and (e) as subsections (e) and (f),
respectively, and inserting after subsection (c) the
following new subsection:
``(d) Secretary Required To Review Installment Agreements
for Partial Collection Every Two Years.--In the case of an
agreement entered into by the Secretary under subsection (a)
for partial collection of a tax liability, the Secretary
shall review the agreement at least once every 2 years.''.
(c) Effective Date.--The amendments made by this section
shall apply to agreements entered into on or after the date
of the enactment of this Act.
SEC. 202. EXTENSION OF TIME FOR RETURN OF PROPERTY.
(a) Extension of Time for Return of Property Subject to
Levy.--Subsection (b) of section 6343 (relating to return of
property) is amended by striking ``9 months'' and inserting
``2 years''.
[[Page H1122]]
(b) Period of Limitation on Suits.--Subsection (c) of
section 6532 (relating to suits by persons other than
taxpayers) is amended--
(1) in paragraph (1) by striking ``9 months'' and inserting
``2 years'', and
(2) in paragraph (2) by striking ``9-month'' and inserting
``2-year''.
(c) Effective Date.--The amendments made by this section
shall apply to--
(1) levies made after the date of the enactment of this
Act, and
(2) levies made on or before such date if the 9-month
period has not expired under section 6343(b) of the Internal
Revenue Code of 1986 (without regard to this section) as of
such date.
SEC. 203. INDIVIDUALS HELD HARMLESS ON WRONGFUL LEVY, ETC. ON
INDIVIDUAL RETIREMENT PLAN.
(a) In General.--Section 6343 (relating to authority to
release levy and return property) is amended by adding at the
end the following new subsection:
``(f) Individuals Held Harmless on Wrongful Levy, Etc. on
Individual Retirement Plan.--
``(1) In general.--If the Secretary determines that an
individual retirement plan has been levied upon in a case to
which subsection (b) or (d)(2)(A) applies, an amount equal to
the sum of--
``(A) the amount of money returned by the Secretary on
account of such levy, and
``(B) interest paid under subsection (c) on such amount of
money,
may be deposited into an individual retirement plan (other
than an endowment contract) to which a rollover from the plan
levied upon is permitted.
``(2) Treatment as rollover.--The distribution on account
of the levy and any deposit under paragraph (1) with respect
to such distribution shall be treated for purposes of this
title as if such distribution and deposit were part of a
rollover described in section 408(d)(3)(A)(i); except that--
``(A) interest paid under subsection (c) shall be treated
as part of such distribution and as not includible in gross
income,
``(B) the 60-day requirement in such section shall be
treated as met if the deposit is made not later than the 60th
day after the day on which the individual receives an amount
under paragraph (1) from the Secretary, and
``(C) such deposit shall not be taken into account under
section 408(d)(3)(B).
``(3) Refund, etc., of income tax on levy.--If any amount
is includible in gross income for a taxable year by reason of
a levy referred to in paragraph (1) and any portion of such
amount is treated as a rollover under paragraph (2), any tax
imposed by chapter 1 on such portion shall not be assessed,
and if assessed shall be abated, and if collected shall be
credited or refunded as an overpayment made on the due date
for filing the return of tax for such taxable year.
``(4) Interest.--Notwithstanding subsection (d), interest
shall be allowed under subsection (c) in a case in which the
Secretary makes a determination described in subsection
(d)(2)(A) with respect to a levy upon an individual
retirement plan.''.
(b) Effective Date.--The amendment made by this section
shall apply to amounts paid under subsections (b), (c), and
(d)(2)(A) of section 6343 of the Internal Revenue Code of
1986 after December 31, 2002.
SEC. 204. SEVEN-DAY THRESHOLD ON TOLLING OF STATUTE OF
LIMITATIONS DURING TAX REVIEW.
(a) In General.--Section 7811(d)(1) (relating to suspension
of running of period of limitation) is amended by inserting
after ``application,'' the following: ``but only if the date
of such decision is at least 7 days after the date of the
taxpayer's application''.
(b) Effective Date.--The amendment made by this section
shall apply to applications filed after the date of the
enactment of this Act.
SEC. 205. STUDY OF LIENS AND LEVIES.
The Secretary of the Treasury, or the Secretary's delegate,
shall conduct a study of the practices of the Internal
Revenue Service concerning liens and levies. The study shall
examine--
(1) the declining use of liens and levies by the Internal
Revenue Service, and
(2) the practicality of recording liens and levying against
property in cases in which the cost of such actions exceeds
the amount to be realized from such property.
Not later than 1 year after the date of the enactment of this
Act, the Secretary shall submit such study to the Committee
on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate.
TITLE III--EFFICIENCY OF TAX ADMINISTRATION
SEC. 301. REVISIONS RELATING TO TERMINATION OF EMPLOYMENT OF
INTERNAL REVENUE SERVICE EMPLOYEES FOR
MISCONDUCT.
(a) In General.--Subchapter A of chapter 80 (relating to
application of internal revenue laws) is amended by inserting
after section 7804 the following new section:
``SEC. 7804A. DISCIPLINARY ACTIONS FOR MISCONDUCT.
``(a) Disciplinary Actions.--
``(1) In general.--Subject to subsection (c), the
Commissioner shall take an action in accordance with the
guidelines established under paragraph (2) against any
employee of the Internal Revenue Service if there is a final
administrative or judicial determination that such employee
committed any act or omission described under subsection (b)
in the performance of the employee's official duties or where
a nexus to the employee's position exists.
``(2) Guidelines.--The Commissioner shall issue guidelines
for determining the appropriate level of discipline, up to
and including termination of employment, for committing any
act or omission described under subsection (b).
``(b) Acts or Omissions.--The acts or omissions described
under this subsection are--
``(1) willful failure to obtain the required approval
signatures on documents authorizing the seizure of a
taxpayer's home, personal belongings, or business assets;
``(2) willfully providing a false statement under oath with
respect to a material matter involving a taxpayer or taxpayer
representative;
``(3) with respect to a taxpayer or taxpayer
representative, the willful violation of--
``(A) any right under the Constitution of the United
States;
``(B) any civil right established under--
``(i) title VI or VII of the Civil Rights Act of 1964;
``(ii) title IX of the Education Amendments of 1972;
``(iii) the Age Discrimination in Employment Act of 1967;
``(iv) the Age Discrimination Act of 1975;
``(v) section 501 or 504 of the Rehabilitation Act of 1973;
or
``(vi) title I of the Americans with Disabilities Act of
1990; or
``(C) the Internal Revenue Service policy on unauthorized
inspection of returns or return information;
``(4) willfully falsifying or destroying documents to
conceal mistakes made by any employee with respect to a
matter involving a taxpayer or taxpayer representative;
``(5) assault or battery on a taxpayer or taxpayer
representative, but only if there is a criminal conviction,
or a final adverse judgment by a court in a civil case, with
respect to the assault or battery;
``(6) willful violations of this title, Department of the
Treasury regulations, or policies of the Internal Revenue
Service (including the Internal Revenue Manual) for the
purpose of retaliating against, or harassing, a taxpayer or
taxpayer representative;
``(7) willful misuse of the provisions of section 6103 for
the purpose of concealing information from a congressional
inquiry;
``(8) willful failure to file any return of tax required
under this title on or before the date prescribed therefor
(including any extensions) when a tax is due and owing,
unless such failure is due to reasonable cause and not due to
willful neglect;
``(9) willful understatement of Federal tax liability,
unless such understatement is due to reasonable cause and not
due to willful neglect; and
``(10) threatening to audit a taxpayer, or to take other
action under this title, for the purpose of extracting
personal gain or benefit.
``(c) Determinations of Commissioner.--
``(1) In general.--The Commissioner may take a personnel
action other than a disciplinary action provided for in the
guidelines under subsection (a)(2) for an act or omission
described under subsection (b).
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may not be delegated to any other officer.
The Commissioner, in his sole discretion, may establish a
procedure to determine if an individual should be referred to
the Commissioner for a determination by the Commissioner
under paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination of the Commissioner under this
subsection may not be reviewed in any administrative or
judicial proceeding. A finding that an act or omission
described under subsection (b) occurred may be reviewed.
``(d) Definition.--For the purposes of the provisions
described in clauses (i), (ii), and (iv) of subsection
(b)(3)(B), references to a program or activity regarding
Federal financial assistance or an education program or
activity receiving Federal financial assistance shall include
any program or activity conducted by the Internal Revenue
Service for a taxpayer.
``(e) Annual Report.--The Commissioner shall submit to
Congress annually a report on disciplinary actions under this
section.''.
(b) Clerical Amendment.--The table of sections for chapter
80 is amended by inserting after the item relating to section
7804 the following new item:
``Sec. 7804A. Disciplinary actions for misconduct.''.
(c) Repeal of Superseded Section.--Section 1203 of the
Internal Revenue Service Restructuring and Reform Act of 1998
(Public Law 105-206; 112 Stat. 720) is repealed.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 302. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY
DOCTRINE OF EQUITABLE RECOUPMENT.
(a) Confirmation of Authority of Tax Court To Apply
Doctrine of Equitable Recoupment.--Subsection (b) of section
6214 (relating to jurisdiction over other years and quarters)
is amended by adding at the end the following new sentence:
``Notwithstanding the preceding sentence, the Tax Court may
apply the doctrine of equitable recoupment to the same extent
that it is available in civil tax cases before the district
courts of the United States and the United States Court of
Federal Claims.''.
[[Page H1123]]
(b) Effective Date.--The amendments made by this section
shall apply to any action or proceeding in the Tax Court with
respect to which a decision has not become final (as
determined under section 7481 of the Internal Revenue Code of
1986) as of the date of the enactment of this Act.
SEC. 303. JURISDICTION OF TAX COURT OVER COLLECTION DUE
PROCESS CASES.
(a) In General.--Section 6330(d)(1) (relating to judicial
review of determination) is amended to read as follows:
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination to the Tax Court (and the Tax Court shall
have jurisdiction with respect to such matter).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to judicial appeals filed after the date of the
enactment of this Act.
SEC. 304. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS IN
COMPROMISE.
(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate'' and inserting ``If the
Secretary determines that an opinion of the General Counsel
for the Department of the Treasury, or the Counsel's
delegate, is required with respect to a compromise, there
shall be placed on file in the office of the Secretary such
opinion''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.
SEC. 305. 15-DAY DELAY IN DUE DATE FOR ELECTRONICALLY FILED
INDIVIDUAL INCOME TAX RETURNS.
(a) In General.--Section 6072 (relating to time for filing
income tax returns) is amended by adding at the end the
following new subsection:
``(f) Electronically Filed Returns of Individuals.--
``(1) In general.--Returns of an individual under section
6012 or 6013 (other than an individual to whom subsection (c)
applies) which are filed electronically--
``(A) in the case of returns filed on the basis of a
calendar year, shall be filed on or before the 30th day of
April following the close of the calendar year, and
``(B) in the case of returns filed on the basis of a fiscal
year, shall be filed on or before the last day of the 4th
month following the close of the fiscal year.
``(2) Electronic filing.--Paragraph (1) shall not apply to
any return unless--
``(A) such return is accepted by the Secretary, and
``(B) the balance due (if any) shown on such return is paid
electronically in a manner prescribed by the Secretary.
``(3) Special rules.--
``(A) Estimated tax.--If--
``(i) paragraph (1) applies to an individual for any
taxable year, and
``(ii) there is an overpayment of tax shown on the return
for such year which the individual allows against the
individual's obligation under section 6641,
then, with respect to the amount so allowed, any reference in
section 6641 to the April 15 following such taxable year
shall be treated as a reference to April 30.
``(B) References to due date.--Paragraph (1) shall apply
solely for purposes of determining the due date for the
individual's obligation to file and pay tax and, except as
otherwise provided by the Secretary, shall be treated as an
extension of the due date for any other purpose under this
title.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2001.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
SEC. 401. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN
DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL
REQUEST.
(a) In General.--Paragraph (8) of section 6103(e) (relating
to disclosure of collection activities with respect to joint
return) is amended by striking ``in writing'' the first place
it appears.
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 402. TAXPAYER REPRESENTATIVES NOT SUBJECT TO EXAMINATION
ON SOLE BASIS OF REPRESENTATION OF TAXPAYERS.
(a) In General.--Subsection (h) of section 6103 (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended by adding at
the end the following new paragraph:
``(7) Taxpayer representatives.--Notwithstanding paragraph
(1), the return of the representative of a taxpayer whose
return is being examined by an officer or employee of the
Department of the Treasury shall not be open to inspection by
such officer or employee on the sole basis of the
representative's relationship to the taxpayer unless a
supervisor of such officer or employee has approved the
inspection of the return of such representative on a basis
other than by reason of such relationship.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 403. DISCLOSURE IN JUDICIAL OR ADMINISTRATIVE TAX
PROCEEDINGS OF RETURN AND RETURN INFORMATION OF
PERSONS WHO ARE NOT PARTY TO SUCH PROCEEDINGS.
(a) In General.--Paragraph (4) of section 6103(h) (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended by adding at
the end the following new subparagraph:
``(B) Disclosure in judicial or administrative tax
proceedings of return and return information of persons not
party to such proceedings.--
``(i) Notice.--Return or return information of any person
who is not a party to a judicial or administrative proceeding
described in this paragraph shall not be disclosed under
clause (ii) or (iii) of subparagraph (A) until after the
Secretary makes a reasonable effort to give notice to such
person and an opportunity for such person to request the
deletion of matter from such return or return information,
including any of the items referred to in paragraphs (1)
through (7) of section 6110(c). Such notice shall include a
statement of the issue or issues the resolution of which is
the reason such return or return information is sought. In
the case of S corporations, partnerships, estates, and
trusts, such notice shall be made at the entity level.
``(ii) Disclosure limited to pertinent portion.--The only
portion of a return or return information described in clause
(i) which may be disclosed under subparagraph (A) is that
portion of such return or return information that directly
relates to the resolution of an issue in such proceeding.
``(iii) Exceptions.--Clause (i) shall not apply--
``(I) to any civil action under section 7407, 7408, or
7409,
``(II) to any ex parte proceeding for obtaining a search
warrant, order for entry on premises or safe deposit boxes,
or similar ex parte proceeding,
``(III) to disclosure of third party return information by
indictment or criminal information, or
``(IV) if the Attorney General or the Attorney General's
delegate determines that the application of such clause would
seriously impair a criminal tax investigation or
proceeding.''.
(b) Conforming Amendments.--Paragraph (4) of section
6103(h) is amended by--
(1) by striking ``proceedings.--A return'' and inserting
``proceedings.--
``(A) In general.--Except as provided in subparagraph (B),
a return'';
(2) by redesignating subparagraphs (A), (B), (C), and (D)
as clauses (i), (ii), (iii), and (iv), respectively; and
(3) in the matter following clause (iv) (as so
redesignated), by striking ``subparagraph (A), (B), or (C)''
and inserting ``clause (i), (ii), or (iii)'' and by moving
such matter 2 ems to the right.
(c) Effective Date.--The amendments made by this section
shall apply to proceedings commenced after the date of the
enactment of this Act.
SEC. 404. PROHIBITION OF DISCLOSURE OF TAXPAYER
IDENTIFICATION INFORMATION WITH RESPECT TO
DISCLOSURE OF ACCEPTED OFFERS-IN-COMPROMISE.
(a) In General.--Paragraph (1) of section 6103(k) (relating
to disclosure of certain returns and return information for
tax administrative purposes) is amended by inserting ``(other
than the taxpayer's address and TIN)'' after ``Return
information''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures made after the date of the
enactment of this Act.
SEC. 405. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY
SAFEGUARDS.
(a) In General.--Section 6103(p) (relating to State law
requirements) is amended by adding at the end the following
new paragraph:
``(9) Disclosure to contractors.--Notwithstanding any other
provision of this section, no return or return information
shall be disclosed by any officer or employee of any Federal
agency or State to any contractor of such agency or State
unless such agency or State--
``(A) has requirements in effect which require each
contractor of such agency or State which would have access to
returns or return information to provide safeguards (within
the meaning of paragraph (4)) to protect the confidentiality
of such returns or return information,
``(B) agrees to conduct an annual, on-site review (mid-
point review in the case of contracts of less than 1 year in
duration) of each contractor to determine compliance with
such requirements,
``(C) submits the findings of the most recent review
conducted under subparagraph (B) to the Secretary as part of
the report required by paragraph (4)(E), and
``(D) certifies to the Secretary for the most recent annual
period that all contractors are in compliance with all such
requirements.
The certification required by subparagraph (D) shall include
the name and address of each contractor, a description of the
contract of the contractor with the Federal agency or State,
and the duration of such contract.''.
(b) Conforming Amendment.--Subparagraph (B) of section
6103(p)(8) is amended by inserting ``or paragraph (9)'' after
``subparagraph (A)''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to disclosures made after December 31, 2002.
[[Page H1124]]
(2) Certifications.--The first certification under section
6103(p)(9)(D) of the Internal Revenue Code of 1986, as added
by subsection (a), shall be made with respect to calendar
year 2003.
SEC. 406. HIGHER STANDARDS FOR REQUESTS FOR AND CONSENTS TO
DISCLOSURE.
(a) In General.--Subsection (c) of section 6103 (relating
to disclosure of returns and return information to designee
of taxpayer) is amended by adding at the end the following
new paragraphs:
``(2) Requirements for valid requests and consents.--A
request for or consent to disclosure under paragraph (1)
shall only be valid for purposes of this section or sections
7213, 7213A, or 7431 if--
``(A) at the time of execution, such request or consent
designates a recipient of such disclosure and is dated, and
``(B) at the time such request or consent is submitted to
the Secretary, the submitter of such request or consent
certifies, under penalty of perjury, that such request or
consent complied with subparagraph (A).
``(3) Restrictions on persons obtaining information.--Any
person shall, as a condition for receiving return or return
information under paragraph (1)--
``(A) ensure that such return and return information is
kept confidential,
``(B) use such return and return information only for the
purpose for which it was requested, and
``(C) not disclose such return and return information
except to accomplish the purpose for which it was requested,
unless a separate consent from the taxpayer is obtained.
``(4) Requirements for form prescribed by secretary.--For
purposes of this subsection, the Secretary shall prescribe a
form for requests and consents which shall--
``(A) contain a warning, prominently displayed, informing
the taxpayer that the form should not be signed unless it is
completed,
``(B) state that if the taxpayer believes there is an
attempt to coerce him to sign an incomplete or blank form,
the taxpayer should report the matter to the Treasury
Inspector General for Tax Administration, and
``(C) contain the address and telephone number of the
Treasury Inspector General for Tax Administration.''.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Treasury Inspector General for Tax
Administration shall submit a report to the Congress on
compliance with the designation and certification
requirements applicable to requests for or consent to
disclosure of returns and return information under section
6103(c) of the Internal Revenue Code of 1986, as amended by
subsection (a). Such report shall--
(1) evaluate (on the basis of random sampling) whether--
(A) the amendment made by subsection (a) is achieving the
purposes of this section;
(B) requesters and submitters for such disclosure are
continuing to evade the purposes of this section and, if so,
how; and
(C) the sanctions for violations of such requirements are
adequate; and
(2) include such recommendations that the Treasury
Inspector General for Tax Administration considers necessary
or appropriate to better achieve the purposes of this
section.
(c) Conforming Amendment.--Section 6103(c) is amended by
striking ``Taxpayer.--The Secretary'' and inserting
``Taxpayer.--
``(1) In General.--The Secretary''.
(d) Effective Date.--The amendments made by this section
shall apply to requests and consents made after 3 months
after the date of the enactment of this Act.
SEC. 407. NOTICE TO TAXPAYER CONCERNING ADMINISTRATIVE
DETERMINATION OF BROWSING; ANNUAL REPORT.
(a) Notice to Taxpayer.--Subsection (e) of section 7431
(relating to notification of unlawful inspection and
disclosure) is amended by adding at the end the following:
``The Secretary shall also notify such taxpayer if the
Treasury Inspector General for Tax Administration determines
that such taxpayer's return or return information was
inspected or disclosed in violation of any of the provisions
specified in paragraph (1), (2), or (3).''.
(b) Reports.--Subsection (p) of section 6103 (relating to
procedure and recordkeeping), as amended by section 405, is
further amended by adding at the end the following new
paragraph:
``(10) Report on unauthorized disclosure and inspection.--
As part of the report required by paragraph (3)(C) for each
calendar year, the Secretary shall furnish information
regarding the unauthorized disclosure and inspection of
returns and return information, including the number, status,
and results of--
``(A) administrative investigations,
``(B) civil lawsuits brought under section 7431 (including
the amounts for which such lawsuits were settled and the
amounts of damages awarded), and
``(C) criminal prosecutions.''.
(c) Effective Date.--
(1) Notice.--The amendment made by subsection (a) shall
apply to determinations made after the date of the enactment
of this Act.
(2) Reports.--The amendment made by subsection (b) shall
apply to calendar years ending after the date of the
enactment of this Act.
SEC. 408. EXPANDED DISCLOSURE IN EMERGENCY CIRCUMSTANCES.
(a) In General.--Section 6103(i)(3)(B) (relating to danger
of death or physical injury) is amended by striking ``or
State'' and inserting ``, State, or local''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 409. DISCLOSURE OF TAXPAYER IDENTITY FOR TAX REFUND
PURPOSES.
(a) In General.--Paragraph (1) of section 6103(m) (relating
to disclosure of taxpayer identity information) is amended by
striking ``and other media'' and by inserting ``, other
media, and through any other means of mass communication,''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 410. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS
RELATED TO SECTION 501(C)(3) ORGANIZATIONS.
(a) In General.--Subsection (c) of section 6104 is amended
by striking paragraph (2) and inserting the following new
paragraphs:
``(2) Disclosure of proposed actions.--
``(A) Specific notifications.--In the case of an
organization to which paragraph (1) applies, the Secretary
may disclose to the appropriate State officer--
``(i) a notice of proposed refusal to recognize such
organization as an organization described in section
501(c)(3) or a notice of proposed revocation of such
organization's recognition as an organization exempt from
taxation,
``(ii) the issuance of a letter of proposed deficiency of
tax imposed under section 507 or chapter 41 or 42, and
``(iii) the names and taxpayer identification numbers of
organizations that have applied for recognition as
organizations described in section 501(c)(3).
``(B) Additional disclosures.--Returns and return
information of organizations with respect to which
information is disclosed under subparagraph (A) may be made
available for inspection by or disclosed to an appropriate
State officer.
``(C) Procedures for disclosure.--Information may be
inspected or disclosed under subparagraph (A) or (B) only--
``(i) upon written request by an appropriate State officer,
and
``(ii) for the purpose of, and only to the extent necessary
in, the administration of State laws regulating such
organizations.
Such information may only be inspected by or disclosed to
representatives of the appropriate State officer designated
as the individuals who are to inspect or to receive the
returns or return information under this paragraph on behalf
of such officer.
``(D) Disclosures other than by request.--The Secretary may
make available for inspection or disclose returns and return
information of an organization to which paragraph (1) applies
to an appropriate State officer of any State if the Secretary
determines that such inspection or disclosure may facilitate
the resolution of State and Federal issues relating to such
organization.
``(3) Use in judicial and administrative proceedings.--
Returns and return information disclosed pursuant to this
subsection may be disclosed in civil administrative and
judicial proceedings pertaining to the enforcement of State
laws regulating such organizations in a manner prescribed by
the Secretary similar to that for tax administration
proceedings under section 6103(h)(4).
``(4) No disclosure if impairment.--Returns and return
information shall not be disclosed under this subsection, or
in any proceeding described in paragraph (3), to the extent
that the Secretary determines that such disclosure would
seriously impair Federal tax administration.
``(5) Definitions.--For purposes of this subsection--
``(A) Return and return information.--The terms `return'
and `return information' have the respective meanings given
to such terms by section 6103(b).
``(B) Appropriate state officer.--The term `appropriate
State officer' means--
``(i) the State attorney general, or
``(ii) the head of any State agency, body, or commission
which is charged under the laws of such State with
responsibility for overseeing organizations of the type
described in section 501(c)(3).''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 6103 is amended--
(A) by inserting ``or section 6104(c)'' after ``this
section'' in paragraph (2), and
(B) by striking ``or subsection (n)'' in paragraph (3) and
inserting ``subsection (n), or section 6104(c)''.
(2) Subparagraph (A) of section 6103(p)(3) is amended by
inserting ``and section 6104(c)'' after ``section'' in the
first sentence.
(3) Paragraph (4) of section 6103(p) is amended--
(A) in the matter preceding subparagraph (A), by striking
``(16) or any other person described in subsection (l)(16)''
and inserting ``(16), any other person described in
subsection (l)(16), or any appropriate State officer (as
defined in section 6104(c))'', and
(B) in subparagraph (F), by striking ``or any other person
described in subsection (l)(16)'' and inserting ``any other
person described in subsection (l)(16), or any appropriate
State officer (as defined in section 6104(c))''.
(4) Paragraph (2) of section 7213(a) is amended by
inserting ``or under section 6104(c)'' after ``6103''.
(5) Paragraph (2) of section 7213A(a) is amended by
inserting ``or 6104(c)'' after ``6103''.
[[Page H1125]]
(6) Paragraph (2) of section 7431(a) is amended by
inserting ``(including any disclosure in violation of section
6104(c))'' after ``6103''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act
but shall not apply to requests made before such date.
TITLE V--MISCELLANEOUS
SEC. 501. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.
Subsection (i) of section 7611 (relating to section not to
apply to criminal investigations, etc.) is amended by
striking ``or'' at the end of paragraph (4), by striking the
period at the end of paragraph (5) and inserting ``, or'',
and by inserting after paragraph (5) the following:
``(6) information provided by the Secretary related to the
standards for exemption from tax under this title and the
requirements under this title relating to unrelated business
taxable income.''.
SEC. 502. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-
EXEMPT ORGANIZATIONS.
(a) In General.--Paragraph (1) of section 7428(a) (relating
to creation of remedy) is amended--
(1) in subparagraph (B) by inserting after ``509(a))'' the
following: ``or as a private operating foundation (as defined
in section 4942(j)(3))''; and
(2) by amending subparagraph (C) to read as follows:
``(C) with respect to the initial qualification or
continuing qualification of an organization as an
organization described in section 501(c) (other than
paragraph (3)) which is exempt from tax under section 501(a),
or''.
(b) Court Jurisdiction.--Subsection (a) of section 7428 is
amended in the material following paragraph (2) by striking
``United States Tax Court, the United States Claims Court, or
the district court of the United States for the District of
Columbia'' and inserting the following: ``United States Tax
Court (in the case of any such determination or failure) or
the United States Claims Court or the district court of the
United States for the District of Columbia (in the case of a
determination or failure with respect to an issue referred to
in subparagraph (A) or (B) of paragraph (1)),''.
(c) Effective Date.--The amendments made by this section
shall apply to pleadings filed with respect to determinations
(or requests for determinations) made after the date of the
enactment of this Act.
SEC. 503. EMPLOYEE MISCONDUCT REPORT TO INCLUDE SUMMARY OF
COMPLAINTS BY CATEGORY.
(a) In General.--Clause (ii) of section 7803(d)(2)(A) is
amended by inserting before the semicolon at the end the
following: ``, including a summary (by category) of the 10
most common complaints made and the number of such common
complaints''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to reporting periods ending after
the date of the enactment of this Act.
SEC. 504. ANNUAL REPORT ON AWARDS OF COSTS AND CERTAIN FEES
IN ADMINISTRATIVE AND COURT PROCEEDINGS.
Not later than 3 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress which specifies for such year--
(1) the number of payments made by the United States
pursuant to section 7430 of the Internal Revenue Code of 1986
(relating to awarding of costs and certain fees);
(2) the amount of each such payment;
(3) an analysis of any administrative issue giving rise to
such payments; and
(4) changes (if any) which will be implemented as a result
of such analysis and other changes (if any) recommended by
the Treasury Inspector General for Tax Administration as a
result of such analysis.
SEC. 505. ANNUAL REPORT ON ABATEMENT OF PENALTIES.
Not later than 6 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress on abatements of penalties under the Internal
Revenue Code of 1986 during such year, including information
on the reasons and criteria for such abatements.
SEC. 506. BETTER MEANS OF COMMUNICATING WITH TAXPAYERS.
Not later than 18 months after the date of the enactment of
this Act, the Treasury Inspector General for Tax
Administration shall submit a report to Congress evaluating
whether technological advances, such as e-mail and facsimile
transmission, permit the use of alternative means for the
Internal Revenue Service to communicate with taxpayers.
SEC. 507. EXPLANATION OF STATUTE OF LIMITATIONS AND
CONSEQUENCES OF FAILURE TO FILE.
The Secretary of the Treasury or the Secretary's delegate
shall, as soon as practicable but not later than 180 days
after the date of the enactment of this Act, revise the
statement required by section 6227 of the Omnibus Taxpayer
Bill of Rights (Internal Revenue Service Publication No. 1),
and any instructions booklet accompanying a general income
tax return form for taxable years beginning after 2001
(including forms 1040, 1040A, 1040EZ, and any similar or
successor forms relating thereto), to provide for an
explanation of--
(1) the limitations imposed by section 6511 of the Internal
Revenue Code of 1986 on credits and refunds; and
(2) the consequences under such section 6511 of the failure
to file a return of tax.
SEC. 508. AMENDMENT TO TREASURY AUCTION REFORMS.
(a) In General.--Clause (i) of section 202(c)(4)(B) of the
Government Securities Act Amendments of 1993 (31 U.S.C. 3121
note) is amended by inserting before the semicolon ``(or, if
earlier, at the time the Secretary releases the minutes of
the meeting in accordance with paragraph (2))''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to meetings held after the date of the enactment
of this Act.
SEC. 509. ENROLLED AGENTS.
(a) In General.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end the following new
section:
``SEC. 7527. ENROLLED AGENTS.
``(a) In General.--The Secretary may prescribe such
regulations as may be necessary to regulate the conduct of
enrolled agents in regards to their practice before the
Internal Revenue Service.
``(b) Use of Credentials.--Any enrolled agents properly
licensed to practice as required under rules promulgated
under section (a) herein shall be allowed to use the
credentials or designation as `enrolled agent', `EA', or
`E.A.'.''.
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:
``Sec. 7525. Enrolled agents.''.
(c) Prior Regulations.--Nothing in the amendments made by
this section shall be construed to have any effect on part 10
of title 31, Code of Federal Regulations, or any other
Federal rule or regulation issued before the date of the
enactment of this Act.
SEC. 510. FINANCIAL MANAGEMENT SERVICE FEES.
Notwithstanding any other provision of law, the Financial
Management Service may charge the Internal Revenue Service,
and the Internal Revenue Service may pay the Financial
Management Service, a fee sufficient to cover the full cost
of implementing a continuous levy program under subsection
(h) of section 6331 of the Internal Revenue Code of 1986. Any
such fee shall be based on actual levies made and shall be
collected by the Financial Management Service by the
retention of a portion of amounts collected by levy pursuant
to that subsection. Amounts received by the Financial
Management Service as fees under that subsection shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code, and
shall be collected and accounted for in accordance with the
provisions of that section. The amount credited against the
taxpayer's liability on account of the continuous levy shall
be the amount levied, without reduction for the amount paid
to the Financial Management Service as a fee.
SEC. 511. CAPITAL GAIN TREATMENT UNDER SECTION 631(B) TO
APPLY TO OUTRIGHT SALES BY LAND OWNER.
(a) In General.--The first sentence of section 631(b) of
the Internal Revenue Code of 1986 (relating to disposal of
timber with a retained economic interest) is amended by
striking ``retains an economic interest in such timber'' and
inserting ``either retains an economic interest in such
timber or makes an outright sale of such timber''.
(b) Conforming Amendment.--The third sentence of section
631(b) of such Code is amended by striking ``The date of
disposal'' and inserting ``In the case of disposal of timber
with a retained economic interest, the date of disposal''.
(c) Effective Date.--The amendments made by this section
shall apply to sales after the date of the enactment of this
Act.
TITLE VI--LOW-INCOME TAXPAYER CLINICS
SEC. 601. LOW-INCOME TAXPAYER CLINICS.
(a) Limitation on Amount of Grants.--Paragraph (1) of
section 7526(c) (relating to special rules and limitations)
is amended by striking ``$6,000,000 per year'' and inserting
``$9,000,000 for 2002, $12,000,000 for 2003, and $15,000,000
for each year thereafter''.
(b) Limitation on Use of Clinics for Tax Return
Preparation.--Subparagraph (A) of section 7526(b)(1) is
amended by adding at the end the following flush language:
``The term does not include a clinic that provides routine
tax return preparation. The preceding sentence shall not
apply to return preparation in connection with a controversy
with the Internal Revenue Service.''.
(c) Promotion of Clinics.--Section 7526(c) is amended by
adding at the end the following new paragraph:
``(7) Promotion of clinics.--The Secretary is authorized to
promote the benefits of and encourage the use of low-income
taxpayer clinics through the use of mass communications,
referrals, and other means.''.
TITLE VII--REVISIONS TO SECTION 527 ORGANIZATION DISCLOSURE PROVISIONS
SEC. 701. MODIFICATIONS OF REPORTING REQUIREMENTS FOR CERTAIN
STATE AND LOCAL POLITICAL ORGANIZATIONS.
(a) Notification.--
(1) Paragraph (5) of section 527(i) (relating to
organizations must notify Secretary that they are section 527
organizations) is amended by striking ``or'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, or'', and by adding at the
end the following:
[[Page H1126]]
``(C) which is--
``(i) a political committee of a State or local candidate,
or
``(ii) a local committee of an entity which is a political
party under State law.''.
(2) Subparagraph (B) of section 527(j)(5) (relating to
coordination with other requirements) is amended to read as
follows:
``(B) to any organization which is--
``(i) a political committee of a State or local candidate,
or
``(ii) a State or local committee of an entity which is a
political party under State law,''.
(b) Exemption for Certain State and Local Political
Committees From Reporting Requirements.--
(1) In general.--Paragraph (5) of section 527(j) (relating
to required disclosures of expenditures and contributions) is
amended by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) to any organization which is an exempt State or local
political organization,''.
(2) Exempt state or local political organization.--
Subsection (e) of section 527 (relating to other definitions)
is amended by adding at the end the following new paragraph:
``(5) Exempt state or local political organization.--
``(A) In general.--The term `exempt State or local
political organization' means a political organization--
``(i) which does not engage in any exempt function other
than to influence or to attempt to influence the selection,
nomination, election, or appointment of any individual to any
State or local public office or office in a State or local
political organization,
``(ii) which is subject to State or local requirements to
submit reports containing information--
``(I) regarding individual expenditures from and
contributions to such organization, and
``(II) regarding the person who makes such contributions or
receives such expenditures,
which is substantially similar to the information which would
otherwise be required to be reported under this section, and
``(iii) with respect to which the reports referred to in
clause (ii) are made public by the agency with which such
reports are filed and are publicly available for inspection
in a manner similar to that required by section 6104(d)(1).
``(B) Participation of federal candidate or office
holder.--The term `exempt State or local political
organization' shall not include any organization otherwise
described in subparagraph (A) if a candidate for nomination
or election to Federal elective office or an individual who
holds such office--
``(i) controls or materially participates in the direction
of the organization, or
``(ii) directs, in whole or in part, expenditures or
fundraising activities of the organization.''.
(c) Annual Return Requirements.--
(1) Income tax returns required only where political
organization taxable income.--Paragraph (6) of section
6012(a) (relating to general rule of persons required to make
returns of income) is amended by striking ``or which has
gross receipts of $25,000 or more for the taxable year (other
than an organization to which section 527 applies solely by
reason of subsection (f)(1) of such section)''.
(2) Information returns.--Subsection (g) of section 6033
(relating to returns required by political organizations) is
amended to read as follows:
``(g) Returns Required by Political Organizations.--
``(1) In general.--Every political organization (within the
meaning of section 527(e)(1)), and every fund treated under
section 527(g) as if it constituted a political organization,
which has gross receipts of $25,000 or more for the taxable
year shall file a return--
``(A) containing the information required, and complying
with the other requirements, under subsection (a)(1) for
organizations exempt from taxation under section 501(a), and
``(B) containing such other information as the Secretary
deems necessary to carry out the provisions of this
subsection.
``(2) Exceptions from filing.--
``(A) Mandatory exceptions.--Paragraph (1) shall not apply
to an organization--
``(i) which is an exempt State or local political
organization (as defined in section 527(e)(5)),
``(ii) which is a State or local committee of a political
party, or political committee of a State or local candidate,
as defined by State law,
``(iii) which is a caucus or association of State or local
elected officials,
``(iv) which is a national association of State or local
officials,
``(v) which is an authorized committee (as defined in
section 301(6) of the Federal Election Campaign Act of 1971)
of a candidate for Federal office,
``(vi) which is a national committee (as defined in section
301(14) of the Federal Election Campaign Act of 1971) of a
political party, or
``(vii) to which section 527 applies for the taxable year
solely by reason of subsection (f)(1) of such section.
``(B) Discretionary exception.--The Secretary may relieve
any organization required under paragraph (1) to file an
information return from filing such a return where he
determines that such filing is not necessary to the efficient
administration of the internal revenue laws.''.
(d) Waiver of penalties.--Section 527 is amended by adding
at the end the following:
``(k) Authority To Waive.--The Secretary may waive all or
any portion of the--
``(1) tax assessed on an organization by reason of the
failure of the organization to give notice under subsection
(i), or
``(2) penalty imposed under subsection (j) for a failure to
file a report,
on a showing that such failure was due to reasonable cause
and not due to willful neglect.''.
(e) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
Public Law 106-230.
SEC. 702. NOTIFICATION OF INTERACTION OF REPORTING
REQUIREMENTS.
(a) In General.--The Secretary of the Treasury, in
consultation with the Federal Election Commission, shall
publicize information on--
(1) the effect of the amendments made by this Act, and
(2) the interaction of requirements to file a notification
or report under section 527 of the Internal Revenue Code of
1986 and reports under the Federal Election Campaign Act of
1971.
(b) Information.--Information provided under subsection (a)
shall be included in any appropriate form, instruction,
notice, or other guidance issued to the public by the
Secretary of the Treasury or the Federal Election Commission
regarding reporting requirements of political organizations
(as defined in section 527 of the Internal Revenue Code of
1986) or reporting requirements under the Federal Election
Campaign Act of 1971.
SEC. 703. TECHNICAL CORRECTIONS TO SECTION 527 ORGANIZATION
DISCLOSURE PROVISIONS.
(a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of
section 527(i) (relating to failure to notify) is amended by
adding at the end the following new sentence: ``For purposes
of the preceding sentence, the term `exempt function income'
means any amount described in a subparagraph of subsection
(c)(3), whether or not segregated for use for an exempt
function.''.
(b) Procedures for Assessment and Collection of Penalty.--
Paragraph (1) of section 527(j) (relating to required
disclosure of expenditures and contributions) is amended by
adding at the end the following new sentence: ``For purposes
of subtitle F, the penalty imposed by this paragraph shall be
assessed and collected in the same manner as penalties
imposed by section 6652(c).''.
(c) Application of Fraud Penalty.--Section 7207 (relating
to fraudulent returns, statements, and other documents) is
amended by striking ``pursuant to subsection (b) of section
6047 or pursuant to subsection (d) of section 6104'' and
inserting ``pursuant to section 6047(b), section 6104(d), or
subsection (i) or (j) of section 527''.
(d) Duplicate Electronic and Written Filings Not
Required.--Subparagraph (A) of section 527(i)(1) is amended
by striking ``, electronically and in writing,''.
(e) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to failures occurring on
or after the date of the enactment of this Act.
(2) Subsections (c) and (d).--The amendments made by
subsections (c) and (d) shall take effect as if included in
the amendments made by Public Law 106-230.
The SPEAKER pro tempore (Mrs. Biggert). Pursuant to the rule, the
gentleman from California (Mr. Thomas) and the gentleman from New York
(Mr. Rangel) each will control 20 minutes.
The Chair recognizes the gentleman from California (Mr. Thomas).
Mr. THOMAS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, the Taxpayer Protection and IRS Accountability Act of
2002 might be called modest, but if one looks at the particular
provisions, I think for those individuals engaged with the Internal
Revenue Service, I think they might find them relatively important.
The Chair would like to thank the gentleman from New York (Mr.
Houghton), the chairman of the Subcommittee on Oversight, and
especially the gentleman from Ohio (Mr. Portman) and the gentleman from
Maryland (Mr. Cardin) in their ongoing work in providing the committee
with excellent legislation.
As I said in announcing the call-up for the vote, that this bill was
amended. It was amended in committee. Two amendments were taken, one by
the gentleman from New York (Mr. Rangel), which would allow IRS
information to be provided to State Attorneys General. I think it is
significant that it was offered by the gentleman from New York. The
information is an examination of 501(c)(3) groups and whether they
would refuse, or whether there was a revocation or whether there was
[[Page H1127]]
a tax deficiency reported at the Federal level, that information to be
shared at the State level.
As my colleagues might imagine, how unseemly as it might be, there
are individuals and groups who tried to take advantage of the disaster
because of the events of September 11. There are individuals or groups
who seek to take advantage of the charitable nature of Americans and
New Yorkers as well. What this amendment does is allow the sharing of
Federal information to assist in the State's administering their laws
governing a charitable organization as well. Quite an appropriate
amendment, and it was accepted on a voice vote.
The gentleman from Ohio, I think, speaking as well for the gentleman
from Maryland, offered some specific amendments dealing with the way in
which the IRS commissioner would treat IRS employees who were engaged
in what have become now known as the ``10 deadly sins,'' based upon
recent legislation in which if an employee of the IRS examines forms
unauthorized, a number of them are grounds for immediate dismissal. As
my colleagues might guess, that kind of an administrative tool perhaps
is too extreme in some instances, and based upon the argument of the
two gentlemen, it seemed persuasive to provide a degree of discretion
to the commissioner in pursuing either disciplinary action or
dismissal.
In addition to that, there are some other specific provisions that
would greatly assist individuals who are interacting with the IRS, and
I will go into those in some detail later.
Madam Speaker, I reserve the balance of my time.
Mr. RANGEL. Madam Speaker, I yield myself such time as I may consume.
I want to support what the chairman of the committee has said and the
cooperative spirit that existed on the Ways and Means Committee under
the leadership of the gentleman from New York (Mr. Houghton) in working
with the gentleman from Pennsylvania (Mr. Coyne) and the gentleman from
Texas (Mr. Doggett) as well as the gentleman from Maryland (Mr. Cardin)
in correcting the duplicity that existed in terms of organizations
reporting political contributions.
We had worked so well together on this, it was almost frightening,
because it was done in an atmosphere that we do not normally enjoy on
the Ways and Means Committee. So it should not have come as any shock
to me when the bill that was overwhelmingly accepted by all members of
the committee, that the Chairman would put in a poison pill at the very
last minute that caused the committee to be divided on a party line
vote.
It just seems to me that at the height, when the whole Nation is
lauding the House and the Senate and the President for campaign finance
reform, that if we find some flaw or some mistake or some area that we
did not remove the fault, that we would take the opportunity under the
Taxpayer Protection and IRS Accountability Act, may not be the right
vehicle, but certainly that we would improve on what the House and
Senate has done.
Instead of that, this bill has a provision in it, a fatally flawed
provision, that opens up gaping loopholes in our campaign finance
disclosure laws, so big that every reform group in the Nation that
campaigned for campaign finance reform are now prepared to say that
this is no way for us to conduct business.
We do not take a good piece of legislation like the Taxpayer
Protection and IRS Accountability Act and then put a sleeper poison
pill in it to kill all of the good work that Members on both sides of
the aisle, led by the gentleman from Connecticut (Mr. Shays) and the
gentleman from Massachusetts (Mr. Meehan) and Senator McCain, the
person from the other body, we just do not do it. It is not fair, it is
not equitable, it is not moral. It just may be legal.
Then on top of that, to compound the moral failing of the way this
legislation comes to the floor, it is presented as though it is
noncontroversial, or certainly that is the reason why it goes on the
suspension calendar; no amendments, no opportunity for people who
disagree with parts of the bill to vote on an amendment. One does not
have to be a campaign manager to know that it was a party vote in the
committee. That sounds pretty controversial to me. Why not have it to
be at least a vote on the floor where people can at least express
themselves?
So it is not bad enough that my colleagues bring it out on the
Suspension Calendar, and I might add far too many tax bills are coming
out on the Suspension Calendar, but my colleagues are not asking that
we vote on it this evening. A lot of people may wonder why is it that
we would bring a bill out that is so popular that we put it on the
Suspension Calendar and not request a vote this evening?
The reason for it is that they do not even want Members to stick
around here to find out what the debate is on the bill. There are no
votes, so Members can now leave the floor, leave the Hill, and take
care of other business; because this issue, according to the
leadership, is not important enough for them to stay around and vote on
it. Oh, stay around and talk about it, if one will. It is just so
unfair when people have worked so hard to try to sneak this in in the
middle of the night, with no one on the floor, and do not even say vote
for it until tomorrow.
Then we come in tomorrow and there will be a vote, without any
debate, without any discussions. Because of what? Because the rules
prohibit it. How well packaged.
I think we will defeat this, not because we do not appreciate the
work that has been done by the Members on the base bill, but we are
going to defeat it just because people think that they can get away
with anything in this House. Some Republicans did not stand for it in
the committee, and I think many more Members are not going to stand for
this if my colleagues allow a vote on it at least tomorrow.
Madam Speaker, I reserve the balance of my time.
Mr. THOMAS. Madam Speaker, I yield myself such time as I might
consume.
I am kind of interested in the words that the gentleman from New York
used, ``filled with loopholes,'' ``fatally flawed,'' ``poison pill.'' I
find it ironic that two-thirds of the Democrats on the committee voted
for it. It is true all of the Republicans voted for it, and if my
colleagues spent the time to really look at what the provision the
gentleman was referring to in correcting current law does, the sum and
substance is to basically say if someone is reporting to an agency that
requires a person under the State and local laws of the State to
report, they also do not have to duplicate that reporting at the
Federal level if they are not involved in Federal activities. That is
the sum and substance of what it is that the gentleman from Texas (Mr.
Brady) offered and was included in the bill.
I find it interesting that there was a press conference today by the
very same gentleman that my friend and colleague from New York
mentioned, Senator McCain and Senator Lieberman, and, of course, the
bulk of that press conference was complaining about the current law,
that they do not like the current 527, the one that they put into
effect. It is not enough.
The answer is they will never be satisfied. And what we have to do is
look at what is reasonable and prudent, and numbers of groups have said
that the double reporting when we are not involved at the Federal level
is a significant burden. One would say, how burdensome is it? The IRS
form that they are required to fill out says, as part of the truth in
packaging and paperwork law, how many hours it requires to deal with
the form. The number on that form is 94 hours; 94 hours of filling out
a form in which someone was not involved in any way in a Federal
election because of the way in which the legislation was written.
What this bill does is correct that to say that there are no
loopholes, that people who are required to report in the previous law
are required to report today. The so-called stealth or phantom PACs are
required to report as current law requires. What we do is remove the
duplication.
Madam Speaker, I reserve the balance of my time.
Mr. RANGEL. Madam Speaker, I yield 3 minutes to the gentlewoman from
Florida (Mrs. Thurman), an outstanding member of our committee.
Mrs. THURMAN. Madam Speaker, I would say to our chairman that I think
one of the issues here is that we are really trying to get an
opportunity to
[[Page H1128]]
debate this issue, and not under the consent calendar, and to move it
along in a different manner.
I would also bring in today that we had a hearing in the Subcommittee
on Oversight that I know the gentleman from New York (Mr. Houghton) and
others have worked very hard on, and I want to remind the body that
this bill is actually called the Taxpayer Protection and IRS
Accountability Act, which I think is important for us to understand. I
was concerned when I went to this hearing today because there have been
some articles over the last couple of days that talk about Affluent
Avoid Scrutiny on Taxes Even as IRS Warns of Cheating. In my own
newspaper at home, Poorly Aimed Audits: The IRS is giving more scrutiny
to the returns of the working poor than to those of wealthy people who
have formed partnerships or special corporations. It is just not fair
and it makes little sense.
I think the point that the gentleman from New York (Mr. Rangel) is
making is that we are not going to have another Taxpayers Protection
Act come out of this House. We are not going to have the opportunity to
debate this again. But we do have the opportunity to do it now, and if
we went through the process of going to the Committee on Rules, looking
at some of these issues that the commissioner and other folks in this
country brought to our attention today, we might have the opportunity
to actually send a better bill than what potentially would come out of
here today.
I think there is a single issue here that I feel strongly about. We
are going to send our tax payments to the IRS on April 15th. Every
taxpayer has a right to believe that others are also paying their
taxes. They need to believe that tax cheaters are going to be
discovered, they are going to be audited, and they are going to be
punished and they are going to be treated like everybody else.
{time} 1945
I think we have some new information before this bill went through
the committee process. We have a process set up that we can use in a
debating process, to go to the Committee on Rules, fix some of these
issues; and I think it would be a much better bill and I think we would
find more support.
I would say I do not want to tell people at home that one out of 47
working-poor taxpayers will be audited, but only one of 145 of high-
income taxpayers and one in 400 partnerships get the same treatment. We
need to do something about that, and we do not need to wait. We need to
include this in the bill, and we need to do it in the right process.
Mr. THOMAS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I say to the gentlewoman that the record shows that
the gentlewoman voted for this bill. We are not limited by the number
of bills that we can report out. This bill was based upon previous
hearings. I am going to call shortly the chairman of the Subcommittee
on Oversight, who the gentlewoman discussed today; and it will very
likely lead to additional legislation, and we will move additional
bills.
The idea that we would hold hearings all year long and never move a
bill, and then try to pull it together at the end is a novel idea. We
might want to consider it, but it certainly runs against the tradition
of this House.
Madam Speaker, I yield 2 minutes to the gentleman from New York (Mr.
Houghton), the chairman of the Subcommittee on Oversight.
Mr. HOUGHTON. Madam Speaker, I am delighted to be able to talk about
this bill very briefly.
I know there is a contentious issue on 527. I do not think that it is
a serious one. Members can have their own opinions, but I think there
are enough safeguards to make it accountable. I want to talk about some
of the other important features.
The bill allows the IRS to waive unfair penalties. The bill allows
taxpayers more time to contest levies. The bill allows the IRS to
forgive interest when a taxpayer receives an erroneous refund. The bill
also makes several reforms on the 10 deadly sins. There is even an 11th
deadly sin now.
Madam Speaker, this bill is pro-taxpayer and promotes commonsense
solutions to some of the more frustrating issues that we are dealing
with. I hope my colleagues support the bill.
Mr. RANGEL. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I agree with the gentleman from New York (Mr.
Houghton) that it is a good bill, and it is totally unfair to have this
contentious idea included in this bill; and I ask for its defeat. This
provision should not be in the bill. It fatally flaws the good work
that has been done.
Madam Speaker, I yield 3 minutes to the gentleman from Massachusetts
(Mr. Meehan), one of the outstanding reformers of campaign finance, who
certainly knows good legislation when he sees it, and the gentleman
also knows a poison pill when he smells it, and thank the gentleman for
all of the fine work that he has done in campaign finance reform.
Mr. MEEHAN. Madam Speaker, I agree with the underlying bill as well.
I congratulate the bipartisanship of the Committee on Ways and Means
for coming together to put together a good bill; but, unfortunately,
there is a provision in this bill that even if Members disagree with
it, should not be part of a suspension.
Madam Speaker, just 2 weeks ago the President signed into law the
most comprehensive rewrite of this Nation's campaign finance laws in a
generation. It is an enormous step towards cleaner elections and a
better democracy. The ink on this new law is barely dry, and we are
already debating a proposal to add back the loopholes. The Taxpayer
Bill of Rights bill is a good bill, but it includes several provisions
that will torpedo key disclosure requirements for so-called stealth
PACs. These disclosure requirements were put in place by a law that
this Congress passed 2 years ago to shine sunlight on organizations
influencing Federal elections without disclosing a dime of their
expenditures or contributions.
This bill would exempt State and local PACs from Federal disclosure
requirements even where there is not adequate disclosure at the State
level. What does that mean? How do we know that States are going to
require disclosure of every single contribution. We cannot have
guarantees; that is why we needed a stealth PAC legislation.
There are so-called sham issue ads that disguise themselves as real
issue ads. They influence Federal elections. This bill is a loophole,
the beginning of what many of us are afraid will be a series of
loopholes designed to undermine campaign finance reform that this
Congress passed and the President of the United States signed.
This bill would permit State and local PACs for which Federal office
holders raise soft money, Federal office holders raising soft money to
qualify for this exemption from Federal filing requirements. That is
why this provision should not be in this bill.
All Members should be proud of what we have accomplished on campaign
finance reform. It was a historic effort by both sides of the aisle to
pass meaningful disclosure requirements, to rein in sham issue ads, and
to bring some accountability back to our Federal campaign finance
system, or any ads meant to influence a Federal election.
We should not be taking steps backwards after taking major steps
forward. Let us work together, as our colleagues on the other body have
said, and they have had a dialogue about this in a bipartisan,
responsible way to fix the 527 law. The gentleman from Texas (Mr.
Doggett) has been on this issue for some time. In fact, the gentleman
warned many of us 2 years ago when we were debating this legislation
that there might be a loophole. Let us do this the right way and not
undermine the wonderful work that this Congress has done on campaign
finance reform.
Mr. THOMAS. Madam Speaker, I yield myself 45 seconds.
Madam Speaker, perhaps the gentleman does not understand the law. The
sham issue ads are not involved with the IRS and the reporting
structure. If a Federal office holder influences a State and local PAC
decision, this says they have to report at the Federal level. If there
is Federal activity, they report at the Federal level. There is no
loophole that is created. What it gets rid of is duplication where if a
State and local PAC, not involved at the Federal level, that has to
report at the State and local level. And as the
[[Page H1129]]
gentleman indicated, he wants them to report on the Federal level even
though they are not involved in Federal activity.
At some point we have to ask ourselves whether continuing to use the
phrase ``why put in loopholes, why do a poison pill,'' Members ought to
look at the specifics of the legislation instead of the rhetoric, and
ought to respond to what is on the page instead of chasing bogeymen.
Madam Speaker, I yield 3 minutes to the gentleman from Ohio (Mr.
Portman), a valued member of the Committee on Ways and Means in helping
us write reasonable and responsive legislation, and not press releases.
Mr. PORTMAN. Madam Speaker, I rise this evening in strong support of
this legislation. It is good commonsense legislation that will help
protect taxpayers. This is a busy week for a lot of Americans. Millions
of us are filing our tax returns, trying to get them in by April 15.
This is time for us to provide a little bit of help.
In 1998, this Congress passed historic legislation to restructure and
reform the IRS and included over 50 new taxpayer rights and substantial
reforms to the way the IRS operates. This legislation tonight, I think,
builds on those efforts; and I commend the chairman and the gentleman
from New York (Mr. Houghton) for bringing it forward.
Madam Speaker, tax records do contain sensitive and personal
information; and no one, not even the employees of the IRS, should be
allowed to see them without a legitimate reason. This legislation makes
it very clear that there will be stiff penalties for IRS employees who
explore taxpayers' records without proper authorization.
It also encourages broader use of electronic filing. This is
extremely important. The IRS is able to process tax returns in a much
more timely fashion with electronic means. It is also less expensive
for the IRS; and, therefore, the taxpayers save money. And electronic
returns have been shown to be more accurate. There are fewer IRS
errors, and this is great news for taxpayers. We want to encourage it,
and so will extend the filing deadline until April 30 for those willing
to file electronically.
The legislation we are debating today also adds some commonsense
reform to IRS penalties. The gentleman from New York (Mr. Houghton)
talked about these earlier. Many individuals and companies make
innocent mistakes on their tax returns and are then hit with outrageous
fines and penalties. This bill allows the IRS to waive unfair penalties
for taxpayers with good records who have made honest mistakes.
The bill is good news for low-income taxpayers. It substantially
increases the funding available for low-income taxpayer clinics. This
is something that we put in place with the restructuring reform act,
the thought being that when low-income individuals are involved with
disputes with the IRS, they need a little help, and these clinics have
proven to be very successful in helping taxpayers who do not have the
means to be able to deal with the IRS when disputes arise. I commend
the chairman for bringing it forward and providing funding for it.
There are a lot of other important things that this legislation
accomplishes. We have heard from the other side of the aisle about the
section 527 provisions. As I see it, these are also sensible changes.
The changes in section 527 are in keeping with what our original intent
was in Congress in passing 527 reforms. This relates strictly to those
organizations and entities that only deal with State and local issues.
All it says is that we should not have burdensome and duplicative
filing requirements at the Federal level where there is a State filing.
This State filing has to be substantially similar, and any time there
is any Federal involvement in any way, taxpayers have to file at the
Federal level.
Madam Speaker, I do not see the loophole here. I think the
legislation we have on the bill this evening is going to help
taxpayers. It makes sense. It is the kind of stuff we ought to be doing
as we approach April 15 to help Americans with their dealings with the
IRS.
Mr. RANGEL. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, we are not going to hear too much debate because the
method selected by the leadership to bring this bill to the floor
actually restricts debate. I know that the chairman of the Committee on
Ways and Means says that most of us have restricted our understanding
of the bill to tax press releases and do not have a clear understanding
of the legislation.
I have to admit that the chairman is one of the brightest people that
we have in the House, if not in the Congress; but the gentleman does
not have a reputation of supporting campaign finance reform; and the
Members who think they understand it, like the gentleman from
Massachusetts (Mr. Meehan) and the gentleman from Connecticut (Mr.
Shays), and like the editorial writers of all of our major newspapers
that fought hard for campaign finance reform, while not nearly as
bright as the chairman, believe it is a flaw and believe it is a
loophole. So even a little compassion, even if we do not have debate,
can go a long way.
Madam Speaker, I yield 3 minutes to the gentlewoman from California
(Ms. Pelosi), the minority whip.
Ms. PELOSI. Madam Speaker, I thank the gentleman for yielding me this
time, and I associate myself with his very eloquent remarks about the
stealth nature in which this bill is being brought to the floor of the
House. Stealth is a good word for it. It is about abuses of stealth
PACs, which this bill would reinstitute.
Less than 2 weeks after President Bush signed a historic campaign
finance reform bill into law, the Republican leadership once again
wants to weaken one of its primary provisions. The New York Times calls
this bill a travesty, and a travesty it is. Two years ago this House
voted, under the leadership of our distinguished ranking member, the
gentleman from New York (Mr. Rangel), and a hard-working member of the
committee whose leadership was essential to this, the gentleman from
Texas (Mr. Doggett), to require that political organizations which are
exempt from taxation under section 527 of the IRS Code to disclose
their contributions and expenditures. One would think this would have
been made to order for the Republicans who have argued over time that
we did not need campaign finance reform, all we needed was disclosure.
And now this bill foils attempts at disclosure.
{time} 2000
This when it was passed was a major campaign finance reform
initiative adopted after abuses by the stealth PACs which ran attack
ads under the tax-exempt section of the code without meaningful
disclosure.
This proposal tonight would allow individuals to hide behind groups
to influence the political system without disclosing who they are or
where they got their money. The notion that this is simply an attempt
to get rid of duplicative reporting requirements was shown to be a
farce when the Republicans would not allow a proposed Democratic
amendment that would have eliminated duplication but still ensures that
there would be full disclosure. Instead, this bill opens up new
loopholes in the 527 reporting requirement and creates potential for
abuse. It is clearly an attempt by opponents of campaign finance reform
to begin to erode the excellent provisions of the Shays-Meehan bill.
I urge my colleagues to reject this travesty and seriously object to
the manner in which this bill was railroaded to the floor. This body
spent a good deal of time focusing on campaign finance reform. We had
to take extraordinary measures to get the bill heard on the floor of
this Congress with a discharge petition. The bill has passed both
Houses, it has been signed by the President of the United States, and
it is being undermined by the proposal that the Republicans are putting
on the floor today.
I urge our colleagues to vote ``no.''
Mr. THOMAS. Madam Speaker, it is my pleasure to yield 1\1/2\ minutes
to the gentleman from Arizona (Mr. Hayworth), a member of the
committee.
Mr. HAYWORTH. Madam Speaker, I listened with great interest to my
friend, the distinguished minority whip from the State of California,
and listened to her say vote ``no'' on this. Understand that a ``no''
vote means a lack of real reform where it counts: to allow people to
pay penalties to the IRS in a reasonable and rational way; to allow
[[Page H1130]]
those who have inadvertently made a mistake to be recused from the
wrath of a government charging them inordinately for a mistake they
made in good faith.
And speaking of good faith, does it not make sense to have those who
are involved in the political process report via the 527 situation
there? Indeed, we see we have form 990 here. We already know that
Members of Congress file a return form 1120POL which is required to be
made public.
And what is interesting, do you want to have bipartisanship? Even the
general counsel of the Democratic National Committee admits these
additional forms are unnecessary. Joe Sandler was recently quoted as
saying, ``It just doesn't make sense to require campaigns and parties
to file the forms as these organizations already provide detailed
disclosure of their finances.''
Full disclosure? Absolutely. Redundant disclosure targeting those who
are not even involved in the political process? Of course not. That is
what this bill does. That is why we should support it, in the spirit of
real reform and rational regulation, not bureaucratic overkill and
other alternative consequences.
Mr. THOMAS. Madam Speaker, it is my pleasure to yield 1-3/4 minutes
to the gentleman from Illinois (Mr. Weller).
Mr. WELLER. Madam Speaker, I commend the chairman for bringing to the
floor a bill which received bipartisan support in the Committee on Ways
and Means, a bill which was supported by two-thirds of the members of
the committee, both Democrat and Republican. It is taxpayer protection,
it is IRS accountability, it is IRS reform.
I would note the tax administration reforms that are included in this
are good. We are all interested in improving electronic filing and our
goal is 80 percent by the year 2007. Today, the IRS Commissioner noted
that the reforms regarding electronic filing today will help them
achieve that goal by allowing an extra 15 days for those who file
electronically.
But because so much of the discussion in this room has focused on the
527 provisions, I thought I would focus on them as well. Two years ago,
this House passed 527 reforms, legislation that was well intentioned.
We gave some surprises for some folks back home, our local officials
and our State legislators, and some local organizations who discovered
all of a sudden that the heavy hand of the IRS was targeted at them.
They were told that even though they are already reporting to the
county clerk in Grundy County, my home county, and they are already
reporting to the Illinois State Board of Elections, that they also have
to fill out a form to the IRS, and if they fail, even if they were
unaware of this law, that they faced IRS penalty.
I would note that this legislation eliminates double reporting by
State and local organizations and also allows the IRS to waive
penalties for unintentional violations. The opponents of this
legislation feel that is still okay. But here are the facts. If you are
run by a Member of Congress or you play a role in Federal campaigns,
you still have to file with the IRS. If you are solely a State or local
organization and only get involved in State or local issues, you file
as you currently do with the State board of elections or the local
county clerk. Why should someone who only has activity in Illinois file
with the IRS in Washington? Why should they not be allowed to do what
they have already done and file with the folks in Springfield?
Mr. THOMAS. Madam Speaker, it is my pleasure to yield 2 minutes to
the gentleman from Texas (Mr. Brady).
Mr. BRADY of Texas. Madam Speaker, one of the tenets in Washington is
if your argument does not have substance, describe it as a loophole.
The fact of the matter is Congress hates to admit its mistakes, and
this debate tonight is proof.
When Congress targeted unreported Federal PACs, stealth PACs, 2 years
ago in the bill that I supported, we unintentionally fired into the
crowd, putting new and burdensome Federal reporting requirements on a
lot of people we should have never done it to, these people like local
legislators, school board candidates, school bond issues, local
sheriffs, who have nothing to do with stealth PACs. It turned out to be
more like stealth legislation. They had no idea they got caught up as
innocent victims in this bill and are facing heavy penalties for
unknowingly violating Federal law.
Without Congress acting responsibly now to correct our mistake,
finding the true stealth PACs among the more than 13,000 unnecessary
reports is akin to searching for a needle in a haystack. You have to
ask yourself, what national policy interest is served by forcing local
candidates to report to Washington what they spent to buy the highest
bidder at the local county fair? We are trying to scrutinize stealth
PACs, not stealth FAA supporters. We took great care to follow the
intent of the law and everyone who files today will file tomorrow
because we have created no loopholes. In fact, we have strengthened
campaign finance reform by putting a spotlight on true stealth PACs and
relieving the mistaken, innocent victims from reporting in the future.
This bill is a win-win because it relieves those non-Federal
candidates and it is a bright white light on our stealth Federal PACs.
They will receive that greater scrutiny they deserve; that is, if
Congress is willing to own up to its mistake.
Mr. RANGEL. Madam Speaker, I yield 2 minutes to the gentleman from
Connecticut (Mr. Shays) who has displayed bipartisan leadership on the
question of campaign finance reform. We all are proud of him as a
Member.
Mr. SHAYS. Madam Speaker, I thank the gentleman for yielding me this
time. One of the problems when a bill has a name after you, it
personalizes the debate and it disguises really what is at issue. I
think that the one thing that unites opponents and proponents of
campaign finance reform is disclosure. We all said we were for it.
There is duplicative filing that needs to be addressed. But I really
believe that the 527 provision that is put in this bill, substantially
similar, defined by the States, is a loophole. It is not the camel's
head under the tent, something that can be a bigger problem in the
future. It will be a problem immediately.
The one thing we know with our campaign finance reform bill is 527s
are going to proliferate. We know that. Special interests will have a
greater say. We know that. That is what people on both sides of the
aisle argued for: Let the Americans have their say. But if you do not
disclose it, you have got a gigantic problem. And if you allow the
States to define ``substantially similar,'' you have a loophole. What
will happen is people will go to the State that has the biggest
loophole to disguise their expenditures and their contributions.
I really regret that this is in a good bill. But this provision is
deadly, I think, to disclosure. Therefore, we have no choice but to
oppose the bill and hopefully if it is defeated, it will be brought out
without this provision and then we can get a provision that will work.
The SPEAKER pro tempore (Mrs. Biggert). The gentleman from California
(Mr. Thomas) has 4 minutes and the gentleman from New York (Mr. Rangel)
has 2\1/2\ minutes.
Mr. RANGEL. I have one speaker left.
Mr. THOMAS. Madam Speaker, it is my pleasure to yield 2 minutes to
the gentleman from Louisiana (Mr. Vitter) who has been focusing on this
issue since the time that he arrived in Congress.
Mr. VITTER. Madam Speaker, I stand to strongly support this bill and
particularly the 527 provisions. I support it because I am a strong
advocate of reform and have a strong reform record, both in the
Congress and in the State legislature.
The gentleman from Connecticut (Mr. Shays) made some points, but I
think the logical extension of all of his comments is that we should
federalize every aspect of disclosure around the country and not have
any State systems State by State, because a political action committee
only qualifies for this exemption if they do not spend a penny on
Federal races. If they have any involvement in any Federal race
whatsoever, then they are still obligated to file under Federal law.
This exemption only applies to them if they are active purely on the
local and State level. Furthermore, even if that is the case, if a
Federal official is involved in a meaningful way in their activity,
then the exemption still does not apply for them.
[[Page H1131]]
Duplicative filing is not reform. It is the enemy of reform. Mounds
and mounds of useless paper is not productive for disclosure. It is the
enemy of disclosure. Therefore, making this corrective action is very
much consistent in promoting reform. And duplicative filing, burdensome
regulations, federalizing all campaign finance disclosure, that is not
reform, that is moving in the wrong direction. That is why I strongly
support this corrective legislation, the 527 provisions in this bill.
Mr. RANGEL. Madam Speaker, I yield the balance of my time to the
gentleman from Texas (Mr. Doggett), this outstanding member of the
Committee on Ways and Means, to close our debate. Since he led the
fight for reform in the tax committee, I think he can most eloquently
explain our position.
The SPEAKER pro tempore. The gentleman from Texas (Mr. Doggett) is
recognized for 2\1/2\ minutes.
Mr. DOGGETT. Madam Speaker, I thank the gentleman for yielding time.
This has been a truly historic year for reform, for genuine campaign
finance reform, for cleaning up our political system. It is so
troubling that at the very moment that the bipartisan Shays-Meehan,
McCain-Feingold bill was being approved across the Capitol, that here
in the House, some of those who have been the most effective in
delaying that reform from becoming a reality were working to undermine
it before it could even be signed into law with the approval of this
legislation.
When we banned soft money in that bipartisan reform, we knew that the
soft money would be out searching for a new home. What we did not know
was that the ``for rent'' sign for that new home would be up before the
reform law was even signed into being. It just goes to show that you
can dead-bolt the front door, but reform opponents will always be
seeking ways to get the money in the back window.
The 527 language in this bill does not require that each and every
contribution and expenditure be reported anywhere. That is a loophole.
The 527 language in this bill terminates all Federal disclosure, even
when Federal candidates and officeholders are actively participating in
raising funds. That is a loophole. I believe we need bipartisan
solutions on this issue, just like every other one that concerns
campaign finance. That is why the Senate agreed on a bipartisan answer
to the duplicative filing issue, put it in the President's tax bill,
and the conference committee, chaired by the gentleman from California
(Mr. Thomas), removed it last year from that tax bill.
{time} 2015
That is why the language that I offered as an alternative to deal
with duplicative filing in the committee-tracked language that Mr.
Lieberman and my Senator, Kay Bailey Hutchison, proposed. They have now
proposed some further improvement on that language, and I plan to
introduce the very same language and seek bipartisan support for it
here in the House, because some State and local officials do have
legitimate concern, and we ought to eliminate duplicative filing, but
we ought to do it without creating new gaps in the reform law that was
just signed by the President.
This morning, at a public citizen press conference that highlighted
how really extensive 527s are being used to abuse and funnel millions
into campaigns, John McCain, Joe Lieberman, and Russ Feingold said this
proposal will never become law. Let us save them the time, and
disapprove it this evening.
Mr. THOMAS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, it is really amazing when you listen to the
individuals argue why they do not want this to become law, the argument
that there is some duplication and that we ought to correct it. The
gentleman from Texas who just spoke did not spend too much time talking
about his suggested amendment which was defeated in committee, because
it will give you an idea of what they mean by duplicate. His amendment
said that any State or local government would be exempt from reporting
to the Federal level if the law they had in place was exactly identical
to the Federal law.
You heard the gentleman in the well on our side say that the only way
you are ever going to carry these arguments to their logical conclusion
is to make everything Federal, require everyone to report to the
Federal level.
The gentleman from New York wanted to know why this was included in a
bill which was labeled ``Taxpayer Protection and IRS Accountability.''
I can tell you why: Because the burden placed on these individuals is
to file Internal Revenue Service papers. They are irrelevant to the
activities at the Federal level that are carried on in the State and
local governments.
The Texas Funeral Directors Association, no Federal involvement, has
to file. The New York Physical Therapy Association, no Federal
involvement, has to file. The Baltimore Sitting Judges Committee, no
Federal involvement, has to file. Why? Because the law says they have
to file, not because they are involved in any way in Federal elections.
Let me underscore this point, because our opponents do not seem to
understand this. If you are involved, if you are dealing directly with
Federal elections, you are going to be required to continue to report
at the Federal level. If you are not, you will report to those
reporting requirements that are in place in the State and local level.
That is the sum and substance of this adjustment.
But if you really read Senator McCain and Senator Lieberman's
statements carefully, they do not even like the current law. What they
want is more intrusive specific reporting when you are not involved at
the Federal level. Disclosure only works if people believe it is
appropriate disclosure.
The gentleman from Connecticut's example was an example of someone
violating the law; not that this is a loophole. The activity that he
discussed, which said it was a loophole, is violating the law. It is
violating the law under current law, it would violating the law under
this amendment if it becomes law.
If you look at the good taxpayer provisions in this measure,
including removing duplication, this is a bill worth voting for, as 34
Members of the Committee on Ways and Means did, and I ask your support.
Madam Speaker, I include for the Record correspondence between the
Committee on Ways and Means and the Committee on Government Reform
regarding the jurisdictional matters on H.R. 3991.
Congress of the United States, House of Representatives,
Committee on Government Reform, Washington, DC, April
9, 2002.
Hon. J. Dennis Hastert,
Speaker, House of Representatives, Washington, DC.
Dear Mr. Speaker: On March 20, 2002, the Committee on Ways
and Means ordered reported H.R. 3991, the ``Taxpayer
Protection and IRS Accountability Act of 2002,'' as amended.
The bill was subsequently referred to the Committee on
Government Reform because section 301 of the amended bill
addressed matters that are within the jurisdiction of the
Committee on Government Reform under House Rule X, clause
1(h)(1).
After examining the amended bill and consulting with the
Committee on Ways and Means, the Committee on Government
Reform will not take any action on the bill in order to
expedite its consideration on the floor. This does not
constitute waiver of the Committee's jurisdiction over H.R.
3991. Furthermore, the Committee reserves its authority to
seek conferees on any provisions of the bill that fall within
the Committee's jurisdiction during any House-Senate
conference that may be convened on this legislation.
Sincerely,
Dan Burton,
Chairman.
____
Congress of the United States, House of Representatives,
Committee on Ways and Means, Washington, DC, April 9,
2002.
Hon. Dan Burton,
Chairman, Committee on Government Reform, Washington, DC.
Dear Chairman Burton: Thank you for your letter regarding
H.R. 3991, the ``Taxpayer Protection and IRS Accountability
Act of 2002.''
As you have noted, the Committee on Ways and Means has
ordered favorably reported H.R. 3991, the ``Taxpayer
Protection and IRS Accountability Act of 2002.'' I appreciate
your agreement to expedite the passage of this legislation
despite affecting provisions within the jurisdiction of the
Committee on Government Reform. I acknowledge your decision
to forego further action on the bill was based on our mutual
understanding that it will not prejudice the Committee on
Government Reform with respect to the appointment of
conferees or its jurisdictional prerogatives on this or
similar legislation.
Finally, I will include in the Congressional Record a copy
of our exchange of letters on
[[Page H1132]]
this matter. Thank you for your assistance and cooperation.
We look forward to working with you in the future.
Best regards,
Bill Thomas,
Chairman.
The SPEAKER pro tempore (Mrs. Biggert). The question is on the motion
offered by the gentleman from California (Mr. Thomas) that the House
suspend the rules and pass the bill, H.R. 3991, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. RANGEL. Madam Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Pursuant to clause 8, rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
The point of no quorum is considered withdrawn.
____________________