[Congressional Record Volume 149, Number 90 (Wednesday, June 18, 2003)]
[House]
[Pages H5514-H5535]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         TAXPAYER PROTECTION AND IRS ACCOUNTABILITY ACT OF 2003

  Mr. McCRERY. Mr. Speaker, pursuant to House Resolution 282, I call up 
the bill (H.R. 1528) to amend the Internal Revenue Code of 1986 to 
protect taxpayers and ensure accountability of the Internal Revenue 
Service, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 282, the bill 
is considered read for amendment.
  The text of H.R. 1528 is as follows:

                               H.R. 1528

       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 2003''.
       (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--PENALTY AND INTEREST REFORMS

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 Federal 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--TAX ADMINISTRATION REFORMS

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.
Sec. 306. Access of National Taxpayer Advocate to independent legal 
              counsel.
Sec. 307. Payment of motor fuel excise tax refunds by direct deposit.
Sec. 308. Family business tax simplification.
Sec. 309. Health insurance costs of eligible individuals.
Sec. 310. Suspension of tax-exempt status of terrorist organizations.

                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.

[[Page H5515]]

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.
Sec. 411. Confidentiality of taxpayer communications with the Office of 
              the Taxpayer Advocate.

                         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. Extension of Internal Revenue Service user fees.

                 TITLE VI--LOW-INCOME TAXPAYER CLINICS

Sec. 601. Low-income taxpayer clinics.

      TITLE VII--FEDERAL-STATE UNEMPLOYMENT ASSISTANCE AGREEMENTS.

Sec. 701. Applicability of certain Federal-State agreements relating to 
              unemployment assistance.

                 TITLE I--PENALTY AND INTEREST REFORMS

     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 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 $1,600, 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 $1,600 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, 2003.

     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.''.

[[Page H5516]]

       (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.
       ``(2) 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 0958.--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 0958, 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, 2003.

     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, 2004.

     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 is based on a position which the 
     Secretary has identified as frivolous under subsection (c).
       ``(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 within 30 days 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) 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.''.

       (c) 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).

[[Page H5517]]

     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''.
       (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, 2003.

     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--TAX ADMINISTRATION REFORMS

     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

[[Page H5518]]

     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 09206; 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.''.
       (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 returns filed with respect to taxable years 
     beginning after December 31, 2002.

     SEC. 306. ACCESS OF NATIONAL TAXPAYER ADVOCATE TO INDEPENDENT 
                   LEGAL COUNSEL.

       Clause (i) of section 7803(c)(2)(D) (relating to personnel 
     actions) is amended by striking ``and'' at the end of 
     subclause (I), by striking the period at the end of subclause 
     (II) and inserting ``, and'', and by adding at the end the 
     following new subclause:

       ``(III) appoint a counsel in the Office of the Taxpayer 
     Advocate to report solely to the National Taxpayer 
     Advocate.''.

     SEC. 307. PAYMENT OF MOTOR FUEL EXCISE TAX REFUNDS BY DIRECT 
                   DEPOSIT.

       (a) In General.--Subchapter II of chapter 33 of title 31, 
     United States Code, is amended by adding at the end the 
     following new section:

     ``1A3337. Payment of motor fuel excise tax refunds by direct 
       deposit

       ``The Secretary of the Treasury shall make payments under 
     sections 6420, 6421, and 6427 of the Internal Revenue Code of 
     1986 by electronic funds transfer (as defined in section 
     3332(j)(1)) if the person who is entitled to the payment--
       ``(1) elects to receive the payment by electronic funds 
     transfer; and
       ``(2) satisfies the requirements of section 3332(g) with 
     respect to such payment at such time and in such manner as 
     the Secretary may require.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 33 of title 31, United States Code, 
     is amended by adding at the end the following new item:

``3337. Payment of motor fuel excise tax refunds by direct deposit.''.

     SEC. 308. FAMILY BUSINESS TAX SIMPLIFICATION.

       (a) In General.--Section 761 (defining terms for purposes 
     of partnerships) is amended by redesignating subsection (f) 
     as subsection (g) and by inserting after subsection (e) the 
     following new subsection:
       ``(f) Qualified Joint Venture.--
       ``(1) In general.--In the case of a qualified joint venture 
     conducted by a husband and wife who file a joint return for 
     the taxable year, for purposes of this title--
       ``(A) such joint venture shall not be treated as a 
     partnership,
       ``(B) all items of income, gain, loss, deduction, and 
     credit shall be divided between the spouses in accordance 
     with their respective interests in the venture, and
       ``(C) each spouse shall take into account such spouse's 
     respective share of such items as if they were attributable 
     to a trade or business conducted by such spouse as a sole 
     proprietor.
       ``(2) Qualified joint venture.--For purposes of paragraph 
     (1), the term `qualified joint venture' means any joint 
     venture involving the conduct of a trade or business if--
       ``(A) the only members of such joint venture are a husband 
     and wife,
       ``(B) both spouses materially participate (within the 
     meaning of section 469(h) without regard to paragraph (5) 
     thereof) in such trade or business, and
       ``(C) both spouses elect the application of this 
     subsection.''.
       (b) Net Earnings From Self-Employment.--
       (1) Subsection (a) of section 1402 (defining net earnings 
     from self-employment) is amended by striking ``and'' at the 
     end of paragraph (14), by striking the period at the end of 
     paragraph (15) and inserting ``; and'', and by inserting 
     after paragraph (15) the following new paragraph:
       ``(16) notwithstanding the preceding provisions of this 
     subsection, each spouse's share of income or loss from a 
     qualified joint venture shall be taken into account as 
     provided in section 761(f) in determining net earnings from 
     self-employment of such spouse.''.
       (2) Subsection (a) of section 211 of the Social Security 
     Act (defining net earnings from self-employment) is amended 
     by striking ``and'' at the end of paragraph (14), by striking 
     the period at the end of paragraph (15) and inserting ``; 
     and'', and by inserting after paragraph (15) the following 
     new paragraph:
       ``(16) Notwithstanding the preceding provisions of this 
     subsection, each spouse's share of income or loss from a 
     qualified joint venture shall be taken into account as 
     provided in section 761(f) of the Internal Revenue Code of 
     1986 in determining net earnings from self-employment of such 
     spouse.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 309. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.

       (a) Consumer Options.--Paragraph (2) of section 35(e) is 
     amended by inserting at the end the following new 
     subparagraph:
       ``(C) Waiver by eligible individuals.--With respect to any 
     month which ends before January 1, 2006, this paragraph shall 
     not apply with respect to any eligible individual and such 
     individual's qualifying family members if such eligible 
     individual elects to waive the application of this 
     paragraph with respect to such month.''.

[[Page H5519]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to months beginning after the date of the 
     enactment of this Act.

     SEC. 310. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST 
                   ORGANIZATIONS.

       (a) In General.--Section 501 (relating to exemption from 
     tax on corporations, certain trusts, etc.) is amended by 
     redesignating subsection (p) as subsection (q) and by 
     inserting after subsection (o) the following new subsection:
       ``(p) Suspension of Tax-Exempt Status of Terrorist 
     Organizations.--
       ``(1) In general.--The exemption from tax under subsection 
     (a) with respect to any organization described in paragraph 
     (2), and the eligibility of any organization described in 
     paragraph (2) to apply for recognition of exemption under 
     subsection (a), shall be suspended during the period 
     described in paragraph (3).
       ``(2) Terrorist organizations.--An organization is 
     described in this paragraph if such organization is 
     designated or otherwise individually identified--
       ``(A) under section 212(a)(3)(B)(vi)(II) or 219 of the 
     Immigration and Nationality Act as a terrorist organization 
     or foreign terrorist organization,
       ``(B) in or pursuant to an Executive order which is related 
     to terrorism and issued under the authority of the 
     International Emergency Economic Powers Act or section 5 of 
     the United Nations Participation Act of 1945 for the purpose 
     of imposing on such organization an economic or other 
     sanction, or
       ``(C) in or pursuant to an Executive order issued under the 
     authority of any Federal law if--
       ``(i) the organization is designated or otherwise 
     individually identified in or pursuant to such Executive 
     order as supporting or engaging in terrorist activity (as 
     defined in section 212(a)(3)(B) of the Immigration and 
     Nationality Act) or supporting terrorism (as defined in 
     section 140(d)(2) of the Foreign Relations Authorization Act, 
     Fiscal Years 1988 and 1989); and
       ``(ii) such Executive order refers to this subsection.
       ``(3) Period of suspension.--With respect to any 
     organization described in paragraph (2), the period of 
     suspension--
       ``(A) begins on the later of--
       ``(i) the date of the first publication of a designation or 
     identification described in paragraph (2) with respect to 
     such organization, or
       ``(ii) the date of the enactment of this subsection, and
       ``(B) ends on the first date that all designations and 
     identifications described in paragraph (2) with respect to 
     such organization are rescinded pursuant to the law or 
     Executive order under which such designation or 
     identification was made.
       ``(4) Denial of deduction.--No deduction shall be allowed 
     under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 
     2106(a)(2), or 2522 for any contribution to an organization 
     described in paragraph (2) during the period described in 
     paragraph (3).
       ``(5) Denial of administrative or judicial challenge of 
     suspension or denial of deduction.--Notwithstanding section 
     7428 or any other provision of law, no organization or other 
     person may challenge a suspension under paragraph (1), a 
     designation or identification described in paragraph (2), the 
     period of suspension described in paragraph (3), or a denial 
     of a deduction under paragraph (4) in any administrative or 
     judicial proceeding relating to the Federal tax liability of 
     such organization or other person.
       ``(6) Erroneous designation.--
       ``(A) In general.--If--
       ``(i) the tax exemption of any organization described in 
     paragraph (2) is suspended under paragraph (1),
       ``(ii) each designation and identification described in 
     paragraph (2) which has been made with respect to such 
     organization is determined to be erroneous pursuant to the 
     law or Executive order under which such designation or 
     identification was made, and
       ``(iii) the erroneous designations and identifications 
     result in an overpayment of income tax for any taxable year 
     by such organization,

     credit or refund (with interest) with respect to such 
     overpayment shall be made.
       ``(B) Waiver of limitations.--If the credit or refund of 
     any overpayment of tax described in subparagraph (A)(iii) is 
     prevented at any time by the operation of any law or rule of 
     law (including res judicata), such credit or refund may 
     nevertheless be allowed or made if the claim therefor is 
     filed before the close of the 1-year period beginning on the 
     date of the last determination described in subparagraph 
     (A)(ii).
       ``(7) Notice of suspensions.--If the tax exemption of any 
     organization is suspended under this subsection, the Internal 
     Revenue Service shall update the listings of tax-exempt 
     organizations and shall publish appropriate notice to 
     taxpayers of such suspension and of the fact that 
     contributions to such organization are not deductible during 
     the period of such suspension.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to designations made before, on, or after the 
     date of the enactment of this Act.

                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.--Paragraph (1) of section 6103(h) (relating 
     to disclosure to certain Federal officers and employees for 
     purposes of tax administration, etc.) is amended--
       (1) by striking ``Returns'' and inserting the following:
       ``(A) In general.--Returns'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Taxpayer representatives.--Notwithstanding 
     subparagraph (A), 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 which is 180 days after 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)  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:

[[Page H5520]]

       ``(9) Disclosure to contractors and other agents.--
     Notwithstanding any other provision of this section, no 
     return or return information shall be disclosed to any 
     contractor or other agent of a Federal, State, or local 
     agency unless such agency, to the satisfaction of the 
     Secretary--
       ``(A) has requirements in effect which require each such 
     contractor or other agent 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 such contractor or other agent 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 each such contractor or other agent is in 
     compliance with all such requirements.

     The certification required by subparagraph (D) shall include 
     the name and address of each contractor and other agent, a 
     description of the contract of the contractor or other agent 
     with the agency, 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, 2003.
       (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 2004.

     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, sections 
     7213, 7213A, and 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 Amendments.--
       (1) Section 6103(c) is amended by striking ``Taxpayer.--The 
     Secretary'' and inserting ``Taxpayer.--
       ``(1) In General.--The Secretary''.
       (2) Section 7213(a)(1) is amended by striking ``section 
     6103(n)'' and inserting ``subsections (c) and (n) of section 
     6103''.
       (3) Section 7213A(a)(1)(B) is amended by striking 
     ``subsection (l)(18) or (n) of section 6103'' and inserting 
     ``subsection (c), (l)(18), or (n) of section 6103''.
       (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 
     substantiates 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, addresses, 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 a 
     person other than the appropriate State officer if such 
     person is an officer or employee of the State and is 
     designated by the appropriate State officer to receive the 
     returns or return information under this paragraph on behalf 
     of the appropriate State 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 or Federal issues relating to the 
     tax-exempt status of such organization.
       ``(3) Use in administrative and judicial civil 
     proceedings.--Returns and return information disclosed 
     pursuant to this subsection may be disclosed in 
     administrative and judicial civil 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).

[[Page H5521]]

       ``(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) any other State official charged with overseeing 
     organizations of the type described in section 501(c)(3).''.
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 6103(p)(3) is amended by 
     inserting ``and section 6104(c)'' after ``section'' in the 
     first sentence.
       (2) Paragraph (4) of section 6103(p) is amended--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, or any appropriate State officer (as defined in section 
     6104(c)),'' before ``or any other person'',
       (B) in subparagraph (F)(i), by inserting ``or any 
     appropriate State officer (as defined in section 6104(c)),'' 
     before ``or any other person'', and
       (C) in the matter following subparagraph (F), by inserting 
     ``, an appropriate State officer (as defined in section 
     6104(c)),'' after ``including an agency'' each place it 
     appears.
       (3) Paragraph (2) of section 7213(a) is amended by 
     inserting ``or under section 6104(c)'' after ``6103''.
       (4) Paragraph (2) of section 7213A(a) is amended by 
     inserting ``or 6104(c)'' after ``6103''.
       (5) Paragraph (2) of section 7431(a) is amended by 
     inserting ``(including any disclosure in violation of section 
     6104(c))'' after ``6103''.
       (c) 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.

     SEC. 411. CONFIDENTIALITY OF TAXPAYER COMMUNICATIONS WITH THE 
                   OFFICE OF THE TAXPAYER ADVOCATE.

       (a) In General.--Subsection (c) of section 7803 is amended 
     by adding at the end the following new paragraph:
       ``(5) Confidentiality of taxpayer information.--
       ``(A) In general.--To the extent authorized by the National 
     Taxpayer Advocate or pursuant to guidance issued under 
     subparagraph (B), any officer or employee of the Office of 
     the Taxpayer Advocate may withhold from the Internal Revenue 
     Service and the Department of Justice any information 
     provided by, or regarding contact with, any taxpayer.
       ``(B) Issuance of guidance.--In consultation with the Chief 
     Counsel for the Internal Revenue Service and subject to the 
     approval of the Commissioner of Internal Revenue, the 
     National Taxpayer Advocate may issue guidance regarding the 
     circumstances (including with respect to litigation) under 
     which, and the persons to whom, employees of the Office of 
     the Taxpayer Advocate shall not disclose information obtained 
     from a taxpayer. To the extent to which any provision of the 
     Internal Revenue Manual would require greater disclosure by 
     employees of the Office of the Taxpayer Advocate than the 
     disclosure required under such guidance, such provision shall 
     not apply.
       ``(C) Employee protection.--Section 7214(a)(8) shall not 
     apply to any failure to report knowledge or information if--
       ``(i) such failure to report is authorized under 
     subparagraph (A), and
       ``(ii) such knowledge or information is not of fraud 
     committed by a person against the United States under any 
     revenue law.''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     7803(c)(4) is amended by inserting ``and'' at the end of 
     clause (ii), by striking ``; and'' at the end of clause (iii) 
     and inserting a period, and by striking clause (iv).

                         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 subsection (c) (other than 
     paragraph (3)) or (d) of section 501 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 2003, 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 2003, 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 2002 
     (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. 7528. 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. 7528. Enrolled agents.''.

       (c) Prior Regulations.--Nothing in the amendments made by 
     this section shall be construed to have any effect on part 10 
     of

[[Page H5522]]

     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. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions), as amended by section 509, is further amended by 
     adding at the end the following new section:

     ``SEC. 7529. INTERNAL REVENUE SERVICE USER FEES.

       ``(a) General Rule.--The Secretary shall establish a 
     program requiring the payment of user fees for--
       ``(1) requests to the Internal Revenue Service for ruling 
     letters, opinion letters, and determination letters, and
       ``(2) other similar requests.
       ``(b) Program Criteria.--
       ``(1) In general.--The fees charged under the program 
     required by subsection (a)--
       ``(A) shall vary according to categories (or subcategories) 
     established by the Secretary,
       ``(B) shall be determined after taking into account the 
     average time for (and difficulty of) complying with requests 
     in each category (and subcategory), and
       ``(C) shall be payable in advance.
       ``(2) Exemptions, etc.--
       ``(A) In general.--The Secretary shall provide for such 
     exemptions (and reduced fees) under such program as the 
     Secretary determines to be appropriate.
       ``(B) Exemption for certain requests regarding pension 
     plans.--The Secretary shall not require payment of user fees 
     under such program for requests for determination letters 
     with respect to the qualified status of a pension benefit 
     plan maintained solely by 1 or more eligible employers or any 
     trust which is part of the plan. The preceding sentence shall 
     not apply to any request--
       ``(i) made after the later of--

       ``(I) the fifth plan year the pension benefit plan is in 
     existence, or
       ``(II) the end of any remedial amendment period with 
     respect to the plan beginning within the first 5 plan years, 
     or

       ``(ii) made by the sponsor of any prototype or similar plan 
     which the sponsor intends to market to participating 
     employers.
       ``(C) Definitions and special rules.--For purposes of 
     subparagraph (B)--
       ``(i) Pension benefit plan.--The term `pension benefit 
     plan' means a pension, profit-sharing, stock bonus, annuity, 
     or employee stock ownership plan.
       ``(ii) Eligible employer.--The term `eligible employer' 
     means an eligible employer (as defined in section 
     408(p)(2)(C)(i)(I)) which has at least 1 employee who is not 
     a highly compensated employee (as defined in section 414(q)) 
     and is participating in the plan. The determination of 
     whether an employer is an eligible employer under 
     subparagraph (B) shall be made as of the date of the request 
     described in such subparagraph.
       ``(iii) Determination of average fees charged.--For 
     purposes of any determination of average fees charged, any 
     request to which subparagraph (B) applies shall not be 
     taken into account.
       ``(3) Average fee requirement.--The average fee charged 
     under the program required by subsection (a) shall not be 
     less than the amount determined under the following table:

                                                                Average
``Category                                                          Fee
  Employee plan ruling and opinion............................$250 ....

  Exempt organization ruling..................................$350 ....

  Employee plan determination.................................$300 ....

  Exempt organization determination...........................$275 ....

  Chief counsel ruling........................................$200.....

       ``(c) Termination.--No fee shall be imposed under this 
     section with respect to requests made after September 30, 
     2013.''.
       (b) Conforming Amendments.--
       (1) The table of sections for chapter 77 is amended by 
     adding at the end the following new item:

``Sec. 7529. Internal Revenue Service user fees.''.

       (2) Section 10511 of the Revenue Act of 1987 is repealed.
       (3) Section 620 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is repealed.
       (c) Limitations.--Notwithstanding any other provision of 
     law, any fees collected pursuant to section 7527 of the 
     Internal Revenue Code of 1986, as added by subsection (a), 
     shall not be expended by the Internal Revenue Service unless 
     provided by an appropriations Act.
       (d) Effective Date.--The amendments made by this section 
     shall apply to requests made 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 2004, $12,000,000 for 2005, and $15,000,000 
     for each year thereafter''.
       (b) Promotion of Clinics.--Section 7526(c) is amended by 
     adding at the end the following new paragraph:
       ``(6) 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.''.
       (c) Use of Grants for Overhead Expenses Prohibited.--
     Section 7526(c), as amended by subsection (b), is further 
     amended by adding at the end the following new paragraph:
       ``(7) Use of grants for overhead expenses prohibited.--No 
     grant made under this section may be used for the general 
     overhead expenses of any institution sponsoring a qualified 
     low-income taxpayer clinic.''.
       (d) Eligible Clinics.--
       (1) In general.--Paragraph (2) of section 7526(b) is 
     amended to read as follows:
       ``(2) Eligible clinic.--The term `eligible clinic' means--
       ``(A) any clinical program at an accredited law, business, 
     or accounting school in which students represent low-income 
     taxpayers in controversies arising under this title; and
       ``(B) any organization described in section 501(c) and 
     exempt from tax under section 501(a) which satisfies the 
     requirements of paragraph (1) through representation of 
     taxpayers or referral of taxpayers to qualified 
     representatives.''.
       (2) Conforming amendment.--Subparagraph (A) of section 
     7526(b)(1) is amended by striking ``means a clinic'' and 
     inserting ``means an eligible clinic''.

      TITLE VII--FEDERAL-STATE UNEMPLOYMENT ASSISTANCE AGREEMENTS

     SEC. 701. APPLICABILITY OF CERTAIN FEDERAL-STATE AGREEMENTS 
                   RELATING TO UNEMPLOYMENT ASSISTANCE.

       Effective as of May 25, 2003, section 208 of Public Law 107 
     09147 is amended--
       (1) in subsection (a)(2), by inserting ``on or'' after 
     ``ending''; and
       (2) in subsection (b), by striking ``May 31'' each place it 
     appears and inserting ``June 1''.

  The SPEAKER pro tempore. Pursuant to House Resolution 282, the 
amendment in the nature of a substitute printed in the bill, modified 
by the amendment printed in part A of House Report 108-158, is adopted.
  The text of H.R. 1528, as amended, as modified, is as follows:

                               H.R. 1528

       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 2003''.
       (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--PENALTY AND INTEREST REFORMS

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 Federal 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--TAX ADMINISTRATION REFORMS

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.

[[Page H5523]]

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.
Sec. 306. Access of National Taxpayer Advocate to independent legal 
              counsel.
Sec. 307. Payment of motor fuel excise tax refunds by direct deposit.
Sec. 308. Family business tax simplification.
Sec. 309. Health insurance costs of eligible individuals.
Sec. 310. Suspension of tax-exempt status of terrorist organizations.
Sec. 311. Extension of joint review of strategic plans and budget for 
              the Interal Revenue Service.

                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.
Sec. 411. Confidentiality of taxpayer communications with the Office of 
              the Taxpayer Advocate.

                         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. Extension of Internal Revenue Service user fees.

                 TITLE VI--LOW-INCOME TAXPAYER CLINICS

Sec. 601. Low-income taxpayer clinics.

      TITLE VII--FEDERAL-STATE UNEMPLOYMENT ASSISTANCE AGREEMENTS.

Sec. 701. Applicability of certain Federal-State agreements relating to 
              unemployment assistance.

                 TITLE I--PENALTY AND INTEREST REFORMS

     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 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 $1,600, 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 $1,600 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, 2003.

     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

[[Page H5524]]

     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.
       ``(2) 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 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, 2003.

     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, 2004.

     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 is based on a position which the 
     Secretary has identified as frivolous under subsection (c).
       ``(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 within 30 days 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

[[Page H5525]]

     shall be in addition to any other penalty provided by law.''.
       (b) 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.''.

       (c) 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''.
       (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, 2003.

     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--TAX ADMINISTRATION REFORMS

     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

[[Page H5526]]

     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.''.
       (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.
       ``(4) Termination.--This subsection shall not apply to any 
     return filed with respect to a taxable year which begins 
     after December 31, 2005.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns filed with respect to taxable years 
     beginning after December 31, 2002.

     SEC. 306. ACCESS OF NATIONAL TAXPAYER ADVOCATE TO INDEPENDENT 
                   LEGAL COUNSEL.

       Clause (i) of section 7803(c)(2)(D) (relating to personnel 
     actions) is amended by striking ``and'' at the end of 
     subclause (I), by striking the period at the end of 
     subclause (II) and inserting ``, and'', and by adding at 
     the end the following new subclause:

       ``(III) appoint a counsel in the Office of the Taxpayer 
     Advocate to report solely to the National Taxpayer 
     Advocate.''.

     SEC. 307. PAYMENT OF MOTOR FUEL EXCISE TAX REFUNDS BY DIRECT 
                   DEPOSIT.

       (a) In General.--Subchapter II of chapter 33 of title 31, 
     United States Code, is amended by adding at the end the 
     following new section:

     ``Sec. 3337. Payment of motor fuel excise tax refunds by 
       direct deposit

       ``The Secretary of the Treasury shall make payments under 
     sections 6420, 6421, and 6427 of the Internal Revenue Code of 
     1986 by electronic funds transfer (as defined in section 
     3332(j)(1)) if the person who is entitled to the payment--
       ``(1) elects to receive the payment by electronic funds 
     transfer; and
       ``(2) satisfies the requirements of section 3332(g) with 
     respect to such payment at such time and in such manner as 
     the Secretary may require.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 33 of title 31, United States Code, 
     is amended by adding at the end the following new item:

``3337. Payment of motor fuel excise tax refunds by direct deposit.''.

     SEC. 308. FAMILY BUSINESS TAX SIMPLIFICATION.

       (a) In General.--Section 761 (defining terms for purposes 
     of partnerships) is amended by redesignating subsection (f) 
     as subsection (g) and by inserting after subsection (e) the 
     following new subsection:
       ``(f) Qualified Joint Venture.--
       ``(1) In general.--In the case of a qualified joint venture 
     conducted by a husband and wife who file a joint return for 
     the taxable year, for purposes of this title--
       ``(A) such joint venture shall not be treated as a 
     partnership,
       ``(B) all items of income, gain, loss, deduction, and 
     credit shall be divided between the spouses in accordance 
     with their respective interests in the venture, and
       ``(C) each spouse shall take into account such spouse's 
     respective share of such items as if they were attributable 
     to a trade or business conducted by such spouse as a sole 
     proprietor.
       ``(2) Qualified joint venture.--For purposes of paragraph 
     (1), the term `qualified joint venture' means any joint 
     venture involving the conduct of a trade or business if--
       ``(A) the only members of such joint venture are a husband 
     and wife,
       ``(B) both spouses materially participate (within the 
     meaning of section 469(h) without regard to paragraph (5) 
     thereof) in such trade or business, and
       ``(C) both spouses elect the application of this 
     subsection.''.
       (b) Net Earnings From Self-Employment.--
       (1) Subsection (a) of section 1402 (defining net earnings 
     from self-employment) is amended by striking ``and'' at the 
     end of paragraph (14), by striking the period at the end of 
     paragraph (15) and inserting ``; and'', and by inserting 
     after paragraph (15) the following new paragraph:
       ``(16) notwithstanding the preceding provisions of this 
     subsection, each spouse's share of income or loss from a 
     qualified joint venture shall be taken into account as 
     provided in section 761(f) in determining net earnings from 
     self-employment of such spouse.''.
       (2) Subsection (a) of section 211 of the Social Security 
     Act (defining net earnings from self-employment) is amended 
     by striking ``and'' at the end of paragraph (14), by striking 
     the period at the end of paragraph (15) and inserting ``; 
     and'', and by inserting after paragraph (15) the following 
     new paragraph:
       ``(16) Notwithstanding the preceding provisions of this 
     subsection, each spouse's share of income or loss from a 
     qualified joint venture shall be taken into account as 
     provided in section 761(f) of the Internal Revenue Code of 
     1986 in determining net earnings from self-employment of such 
     spouse.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 309. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.

       (a) Consumer Options.--
       (1) In general.--Paragraph (2) of section 35(e) is amended 
     by adding at the end the following new subparagraphs:
       ``(C) Waiver by eligible individuals.--With respect to any 
     month, clauses (i) and (ii) of subparagraph (A) shall not 
     apply with respect to any eligible individual and such 
     individual's qualifying family members if such individual--
       ``(i) does not reside in a State which the Secretary has 
     identified by regulation, guidance, or otherwise as a State 
     in which any coverage which--
       ``(I) is described in any of subparagraphs (C) through (H) 
     of paragraph (1), and
       ``(II) meets the requirements of subparagraphs (A) and (B) 
     of this paragraph,

     is available to eligible individuals (and their qualifying 
     family members) residing in the State, and

[[Page H5527]]

       ``(ii) elects to waive the application of clauses (i) and 
     (ii) of subparagraph (A) of this paragraph.
       ``(D) Election.--Any election made under subparagraph 
     (C)(ii) shall be effective for the month for which such 
     election is made and for all subsequent months.
       ``(E) Termination.--Subparagraphs (C) and (D) shall not 
     apply to any month beginning after December 31, 2004.''.
       (2) No impact on state consumer protections.--Nothing in 
     the amendment made by paragraph (1) supercedes or otherwise 
     affects the application of State law relating to consumer 
     insurance protections (including State law implementing the 
     requirements of part B of title XXVII of the Public Health 
     Service Act).
       (b) State-Based Continuation Coverage Not Subject to 
     Requirements.--Subparagraphs (A) and (B)(i) of section 
     35(e)(2) are each amended by striking ``subparagraphs (B) 
     through (H)'' and inserting ``subparagraphs (C) through 
     (H)''.
       (c) Effective Date.--
       (1) Consumer options.--The amendment made by subsection (a) 
     shall apply to months beginning after the date of the 
     enactment of this Act.
       (2) State-based continuation coverage.--The amendments made 
     by subsection (b) shall take effect as if included in section 
     201(a) of the Trade Act of 2002.

     SEC. 310. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST 
                   ORGANIZATIONS.

       (a) In General.--Section 501 (relating to exemption from 
     tax on corporations, certain trusts, etc.) is amended by 
     redesignating subsection (p) as subsection (q) and by 
     inserting after subsection (o) the following new subsection:
       ``(p) Suspension of Tax-Exempt Status of Terrorist 
     Organizations.--
       ``(1) In general.--The exemption from tax under subsection 
     (a) with respect to any organization described in paragraph 
     (2), and the eligibility of any organization described in 
     paragraph (2) to apply for recognition of exemption under 
     subsection (a), shall be suspended during the period 
     described in paragraph (3).
       ``(2) Terrorist organizations.--An organization is 
     described in this paragraph if such organization is 
     designated or otherwise individually identified--
       ``(A) under section 212(a)(3)(B)(vi)(II) or 219 of the 
     Immigration and Nationality Act as a terrorist organization 
     or foreign terrorist organization,
       ``(B) in or pursuant to an Executive order which is related 
     to terrorism and issued under the authority of the 
     International Emergency Economic Powers Act or section 5 of 
     the United Nations Participation Act of 1945 for the purpose 
     of imposing on such organization an economic or other 
     sanction, or
       ``(C) in or pursuant to an Executive order issued under the 
     authority of any Federal law if--
       ``(i) the organization is designated or otherwise 
     individually identified in or pursuant to such Executive 
     order as supporting or engaging in terrorist activity (as 
     defined in section 212(a)(3)(B) of the Immigration and 
     Nationality Act) or supporting terrorism (as defined in 
     section 140(d)(2) of the Foreign Relations Authorization Act, 
     Fiscal Years 1988 and 1989); and
       ``(ii) such Executive order refers to this subsection.
       ``(3) Period of suspension.--With respect to any 
     organization described in paragraph (2), the period of 
     suspension--
       ``(A) begins on the later of--
       ``(i) the date of the first publication of a designation or 
     identification described in paragraph (2) with respect to 
     such organization, or
       ``(ii) the date of the enactment of this subsection, and
       ``(B) ends on the first date that all designations and 
     identifications described in paragraph (2) with respect to 
     such organization are rescinded pursuant to the law or 
     Executive order under which such designation or 
     identification was made.
       ``(4) Denial of deduction.--No deduction shall be allowed 
     under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 
     2106(a)(2), or 2522 for any contribution to an organization 
     described in paragraph (2) during the period described in 
     paragraph (3).
       ``(5) Denial of administrative or judicial challenge of 
     suspension or denial of deduction.--Notwithstanding section 
     7428 or any other provision of law, no organization or other 
     person may challenge a suspension under paragraph (1), a 
     designation or identification described in paragraph (2), the 
     period of suspension described in paragraph (3), or a denial 
     of a deduction under paragraph (4) in any administrative or 
     judicial proceeding relating to the Federal tax liability of 
     such organization or other person.
       ``(6) Erroneous designation.--
       ``(A) In general.--If--
       ``(i) the tax exemption of any organization described in 
     paragraph (2) is suspended under paragraph (1),
       ``(ii) each designation and identification described in 
     paragraph (2) which has been made with respect to such 
     organization is determined to be erroneous pursuant to the 
     law or Executive order under which such designation or 
     identification was made, and
       ``(iii) the erroneous designations and identifications 
     result in an overpayment of income tax for any taxable year 
     by such organization,
     credit or refund (with interest) with respect to such 
     overpayment shall be made.
       ``(B) Waiver of limitations.--If the credit or refund of 
     any overpayment of tax described in subparagraph (A)(iii) is 
     prevented at any time by the operation of any law or rule of 
     law (including res judicata), such credit or refund may 
     nevertheless be allowed or made if the claim therefor is 
     filed before the close of the 1-year period beginning on the 
     date of the last determination described in subparagraph 
     (A)(ii).
       ``(7) Notice of suspensions.--If the tax exemption of any 
     organization is suspended under this subsection, the Internal 
     Revenue Service shall update the listings of tax-exempt 
     organizations and shall publish appropriate notice to 
     taxpayers of such suspension and of the fact that 
     contributions to such organization are not deductible during 
     the period of such suspension.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to designations made before, on, or after the 
     date of the enactment of this Act.

     SEC. 311. EXTENSION OF JOINT REVIEW OF STRATEGIC PLANS AND 
                   BUDGET FOR THE INTERNAL REVENUE SERVICE.

       (a) In General.--Paragraph (2) of section 8021(f) (relating 
     to joint reviews) is amended by striking ``2004'' and 
     inserting ``2009''.
       (b) Report.--Subparagraph (C) of section 8022(3) (regarding 
     reports) is amended--
       (1) by striking ``2004'' and inserting ``2009'', and
       (2) by striking ``with respect to--'' and all that follows 
     and inserting ``with respect to the matters addressed in the 
     joint review referred to in section 8021(f)(2).''.

                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.--Paragraph (1) of section 6103(h) (relating 
     to disclosure to certain Federal officers and employees for 
     purposes of tax administration, etc.) is amended--
       (1) by striking ``Returns'' and inserting the following:
       ``(A) In general.--Returns'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Taxpayer representatives.--Notwithstanding 
     subparagraph (A), 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 which is 180 days after 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 by 
     moving such clauses 2 ems to the right; and

[[Page H5528]]

       (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)  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 and other agents.--
     Notwithstanding any other provision of this section, no 
     return or return information shall be disclosed to any 
     contractor or other agent of a Federal, State, or local 
     agency unless such agency, to the satisfaction of the 
     Secretary--
       ``(A) has requirements in effect which require each such 
     contractor or other agent 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 such contractor or other agent 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 each such contractor or other agent is in 
     compliance with all such requirements.

     The certification required by subparagraph (D) shall include 
     the name and address of each contractor and other agent, a 
     description of the contract of the contractor or other agent 
     with the agency, 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, 2003.
       (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 2004.

     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, sections 
     7213, 7213A, and 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 Amendments.--
       (1) Section 6103(c) is amended by striking ``Taxpayer.--The 
     Secretary'' and inserting ``Taxpayer.--
       ``(1) In general.--The Secretary''.
       (2) Section 7213(a)(1) is amended by striking ``section 
     6103(n)'' and inserting ``subsections (c) and (n) of section 
     6103''.
       (3) Section 7213A(a)(1)(B) is amended by striking 
     ``subsection (l)(18) or (n) of section 6103'' and inserting 
     ``subsection (c), (l)(18), or (n) of section 6103''.
       (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 
     substantiates 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, addresses, 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 a 
     person other than the appropriate State officer if such 
     person is an officer or employee of the State and is 
     designated by the appropriate State officer to receive the 
     returns or return information under this paragraph on behalf 
     of the appropriate State officer.
       ``(D) Disclosures other than by request.--The Secretary may 
     make available for inspection or disclose returns and return 
     information

[[Page H5529]]

     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 or Federal issues relating to the 
     tax-exempt status of such organization.
       ``(3) Use in administrative and judicial civil 
     proceedings.--Returns and return information disclosed 
     pursuant to this subsection may be disclosed in 
     administrative and judicial civil 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) any other State official charged with overseeing 
     organizations of the type described in section 501(c)(3).''.
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 6103(p)(3) is amended by 
     inserting ``and section 6104(c)'' after ``section'' in the 
     first sentence.
       (2) Paragraph (4) of section 6103(p) is amended--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, or any appropriate State officer (as defined in section 
     6104(c)),'' before ``or any other person'',
       (B) in subparagraph (F)(i), by inserting ``or any 
     appropriate State officer (as defined in section 6104(c)),'' 
     before ``or any other person'', and
       (C) in the matter following subparagraph (F), by inserting 
     ``, an appropriate State officer (as defined in section 
     6104(c)),'' after ``including an agency'' each place it 
     appears.
       (3) Paragraph (2) of section 7213(a) is amended by striking 
     ``6103.'' and inserting ``6103 or under section 6104(c).''.
       (4) Paragraph (2) of section 7213A(a) is amended by 
     inserting ``or 6104(c)'' after ``6103''.
       (5) Paragraph (2) of section 7431(a) is amended by 
     inserting ``(including any disclosure in violation of section 
     6104(c))'' after ``6103''.
       (c) 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.

     SEC. 411. CONFIDENTIALITY OF TAXPAYER COMMUNICATIONS WITH THE 
                   OFFICE OF THE TAXPAYER ADVOCATE.

       (a) In General.--Subsection (c) of section 7803 is amended 
     by adding at the end the following new paragraph:
       ``(5) Confidentiality of taxpayer information.--
       ``(A) In general.--To the extent authorized by the National 
     Taxpayer Advocate or pursuant to guidance issued under 
     subparagraph (B), any officer or employee of the Office of 
     the Taxpayer Advocate may withhold from the Internal Revenue 
     Service and the Department of Justice any information 
     provided by, or regarding contact with, any taxpayer.
       ``(B) Issuance of guidance.--In consultation with the Chief 
     Counsel for the Internal Revenue Service and subject to the 
     approval of the Commissioner of Internal Revenue, the 
     National Taxpayer Advocate may issue guidance regarding the 
     circumstances (including with respect to litigation) under 
     which, and the persons to whom, employees of the Office of 
     the Taxpayer Advocate shall not disclose information obtained 
     from a taxpayer. To the extent to which any provision of the 
     Internal Revenue Manual would require greater disclosure by 
     employees of the Office of the Taxpayer Advocate than the 
     disclosure required under such guidance, such provision shall 
     not apply.
       ``(C) Employee protection.--Section 7214(a)(8) shall not 
     apply to any failure to report knowledge or information if--
       ``(i) such failure to report is authorized under 
     subparagraph (A), and
       ``(ii) such knowledge or information is not of fraud 
     committed by a person against the United States under any 
     revenue law.''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     7803(c)(4) is amended by inserting ``and'' at the end of 
     clause (ii), by striking ``; and'' at the end of clause (iii) 
     and inserting a period, and by striking clause (iv).

                         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 subsection (c) (other than 
     paragraph (3)) or (d) of section 501 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 2003, 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 2003, 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 2002 
     (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. 7528. 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. 7528. Enrolled agents.''.


[[Page H5530]]


       (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. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions), as amended by section 509, is further amended by 
     adding at the end the following new section:

     ``SEC. 7529. INTERNAL REVENUE SERVICE USER FEES.

       ``(a) General Rule.--The Secretary shall establish a 
     program requiring the payment of user fees for--
       ``(1) requests to the Internal Revenue Service for ruling 
     letters, opinion letters, and determination letters, and
       ``(2) other similar requests.
       ``(b) Program Criteria.--
       ``(1) In general.--The fees charged under the program 
     required by subsection (a)--
       ``(A) shall vary according to categories (or subcategories) 
     established by the Secretary,
       ``(B) shall be determined after taking into account the 
     average time for (and difficulty of) complying with requests 
     in each category (and subcategory), and
       ``(C) shall be payable in advance.
       ``(2) Exemptions, etc.--
       ``(A) In general.--The Secretary shall provide for such 
     exemptions (and reduced fees) under such program as the 
     Secretary determines to be appropriate.
       ``(B) Exemption for certain requests regarding pension 
     plans.--The Secretary shall not require payment of user fees 
     under such program for requests for determination letters 
     with respect to the qualified status of a pension benefit 
     plan maintained solely by 1 or more eligible employers or any 
     trust which is part of the plan. The preceding sentence shall 
     not apply to any request--
       ``(i) made after the later of--

       ``(I) the fifth plan year the pension benefit plan is in 
     existence, or
       ``(II) the end of any remedial amendment period with 
     respect to the plan beginning within the first 5 plan years, 
     or

       ``(ii) made by the sponsor of any prototype or similar plan 
     which the sponsor intends to market to participating 
     employers.
       ``(C) Definitions and special rules.--For purposes of 
     subparagraph (B)--
       ``(i) Pension benefit plan.--The term `pension benefit 
     plan' means a pension, profit-sharing, stock bonus, annuity, 
     or employee stock ownership plan.
       ``(ii) Eligible employer.--The term `eligible employer' 
     means an eligible employer (as defined in section 
     408(p)(2)(C)(i)(I)) which has at least 1 employee who is not 
     a highly compensated employee (as defined in section 414(q)) 
     and is participating in the plan. The determination of 
     whether an employer is an eligible employer under 
     subparagraph (B) shall be made as of the date of the request 
     described in such subparagraph.
       ``(iii) Determination of average fees charged.--For 
     purposes of any determination of average fees charged, any 
     request to which subparagraph (B) applies shall not be taken 
     into account.
       ``(3) Average fee requirement.--The average fee charged 
     under the program required by subsection (a) shall not be 
     less than the amount determined under the following table:

                                                                Average
``Category                                                          Fee
  Employee plan ruling and opinion............................$250 ....

  Exempt organization ruling..................................$350 ....

  Employee plan determination.................................$300 ....

  Exempt organization determination...........................$275 ....

  Chief counsel ruling........................................$200.....

       ``(c) Termination.--No fee shall be imposed under this 
     section with respect to requests made after September 30, 
     2013.''.
       (b) Conforming Amendments.--
       (1) The table of sections for chapter 77 is amended by 
     adding at the end the following new item:

``Sec. 7529. Internal Revenue Service user fees.''.

       (2) Section 10511 of the Revenue Act of 1987 is repealed.
       (3) Section 620 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is repealed.
       (c) Limitations.--Notwithstanding any other provision of 
     law, any fees collected pursuant to section 7527 of the 
     Internal Revenue Code of 1986, as added by subsection (a), 
     shall not be expended by the Internal Revenue Service unless 
     provided by an appropriations Act.
       (d) Effective Date.--The amendments made by this section 
     shall apply to requests made 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 2004, $12,000,000 for 2005, and $15,000,000 
     for each year thereafter''.
       (b) Promotion of Clinics.--Section 7526(c) is amended by 
     adding at the end the following new paragraph:
       ``(6) 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.''.
       (c) Use of Grants for Overhead Expenses Prohibited.--
     Section 7526(c), as amended by subsection (b), is further 
     amended by adding at the end the following new paragraph:
       ``(7) Use of grants for overhead expenses prohibited.--No 
     grant made under this section may be used for the general 
     overhead expenses of any institution sponsoring a qualified 
     low-income taxpayer clinic.''.
       (d) Eligible Clinics.--
       (1) In general.--Paragraph (2) of section 7526(b) is 
     amended to read as follows:
       ``(2) Eligible clinic.--The term `eligible clinic' means--
       ``(A) any clinical program at an accredited law, business, 
     or accounting school in which students represent low-income 
     taxpayers in controversies arising under this title; and
       ``(B) any organization described in section 501(c) and 
     exempt from tax under section 501(a) which satisfies the 
     requirements of paragraph (1) through representation of 
     taxpayers or referral of taxpayers to qualified 
     representatives.''.
       (2) Conforming amendment.--Subparagraph (A) of section 
     7526(b)(1) is amended by striking ``means a clinic'' and 
     inserting ``means an eligible clinic''.

      TITLE VII--FEDERAL-STATE UNEMPLOYMENT ASSISTANCE AGREEMENTS

     SEC. 701. APPLICABILITY OF CERTAIN FEDERAL-STATE AGREEMENTS 
                   RELATING TO UNEMPLOYMENT ASSISTANCE.

       Effective as of May 25, 2003, section 208 of Public Law 
     107-147 is amended--
       (1) in subsection (a)(2), by inserting ``on or'' after 
     ``ending''; and
       (2) in subsection (b), by striking ``May 31'' each place it 
     appears and inserting ``June 1''.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, it shall 
be in order to consider the further amendment printed in part B of the 
report, if offered by the gentleman from New York (Mr. Rangel) or his 
designee, which shall be considered read, and shall be debatable for 1 
hour, equally divided and controlled by the proponent and an opponent.
  The gentleman from Louisiana (Mr. McCrery) and the gentleman from 
North Dakota (Mr. Pomeroy) each will control 30 minutes.
  The Chair recognizes the gentleman from Louisiana (Mr. McCrery).
  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of the Taxpayer Protection and IRS 
Accountability Act. The title of this bill is a good summary for the 
fundamental principles contained in it. We are increasing protections 
for taxpayers from unfair actions by the IRS while at the same time we 
are making reforms in the IRS that will make the administration of our 
tax laws more accountable.
  Let me mention just a few of the ways we increase protections for 
taxpayers. The bill increases the confidentiality of taxpayer 
communications when they seek the assistance of the Taxpayer Advocate. 
The bill restricts the IRS from auditing the tax returns of taxpayer 
representatives simply based on their having prepared the returns of 
other taxpayers.
  And let me mention some of the ways we improve tax administration of 
the IRS.
  The bill allows the IRS to enter into installment agreements; to let 
a taxpayer pay an unpaid amount over 2 or 3 years without imposing the 
requirement that they pay the full amount. The IRS already has the 
authority to settle tax debts for less than the full amount. But when 
it comes to installment payments, the law requires the agreement to 
cover 100 percent of the debt. So in some cases, instead of the 
taxpayer paying $9,000 of a $10,000 debt, let us say, giving the IRS 
$500 every month, the IRS gets nothing.
  The bill improves the so-called ten deadly sins actions for which IRS 
employees can be fired, by removing some of the employee versus 
employee cases that have bogged down the system, but adding another 
standard, that of unauthorized browsing of taxpayer records to the list 
of offenses.
  Let me conclude by stressing that the health care tax credit 
provisions in this bill are sound, prudent and necessary. They do not 
overturn or weaken the State plans already in effect in

[[Page H5531]]

eight States, nor do they have any impact on State consumer 
protections. The waiver only applies to the preexisting condition and 
guarantee issues. And the waiver will only be in place until the end of 
2004.
  We want workers who have suffered a loss of their job and their 
health insurance to be able to receive the tax credit for health 
insurance. If we pass this bill, an estimated 12,000 workers will be 
able to obtain health insurance. Those workers, without this bill, 
would not be able to get health insurance.
  I support the bill, and I urge the House to support this bill.
  Mr. Speaker, I would like to say that the gentleman from Maryland 
(Mr. Cardin) has been instrumental in putting together the provisions 
of this bill, along with my colleague on the Committee on Ways and 
Means, the gentleman from Ohio (Mr. Portman). So I want to thank both 
of those gentlemen for the good work they have done on this 
legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. POMEROY. Mr. Speaker, I yield such to time as he may consume to 
the gentleman from Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Speaker, let me thank the gentleman for yielding me 
this time, and I want to acknowledge the work that both the gentleman 
from New York (Mr. Houghton) and the gentleman from North Dakota (Mr. 
Pomeroy) have done to develop a process in which we could look at the 
Taxpayer Bill of Rights with our staffs in order to make reasonable 
changes to protect taxpayers and their relationship with the Internal 
Revenue Service.
  The gentleman from Ohio (Mr. Portman) has been one of the leaders in 
the Congress of the United States on this issue, and I have worked with 
him on some of these matters, but the gentleman from North Dakota and 
the gentleman from New York, in their subcommittee of oversight, have 
really taken on, I think, the right process to review each of these 
provisions and to bring forward a group of noncontroversial changes in 
the Taxpayer Bill of Rights that are important to protect our 
constituents in their dealing with the Internal Revenue Service.
  So, Mr. Speaker, I start by saying there is a lot of good provisions. 
Most of the provisions in the underlying bill are important provisions 
that we need to act on and that have gone through the vetting process, 
which I think is appropriate for these types of changes. My concern is 
the amendment that was added that was not part of the Taxpayer Bill of 
Rights. I think we will have a chance later in this debate to correct 
that through an amendment or substitute that will be offered by the 
gentleman from New York (Mr. Rangel) that will incorporate all the good 
provisions of the underlying bill, but eliminate the provision that 
affects TAA.
  Let me talk for moment, if I might, about that one provision that I 
hope we will find a way to get out of the underlying legislation so 
that we can move forward with the Taxpayer Bill of Rights. That 
provision is a very controversial provision and a provision that I 
think does irreparable harm to a large number of our constituents who 
currently or may be without health insurance.
  We provided in the trade adjustment assistance provision where we 
could deal with workers who have lost their health benefits and their 
jobs as a result of foreign trade. That could be a clear example of 
what has happened to the steel industry in my community, where so many 
Bethlehem Steel workers lost their health benefits as a result of the 
financial woes caused by illegally dumped steel here in the United 
States.
  My concern with the TAA amendment that has been incorporated in the 
Taxpayer Bill of Rights is that it removes an important protection for 
these workers or retirees in getting health insurance that will cover 
them. In my own State of Maryland, we have taken advantage of the TAA 
law and the use of the Federal credit by establishing a State pool for 
these workers and retirees so they can get health benefits. By removing 
the protection that is in the law, we will be encouraging States to 
take away protections on preexisting conditions in underwriting.
  Mr. Speaker, I think it should be the policy of this body to cover 
all these workers and retirees. We should not be distinguishing between 
those who, in their most desperate need, have preexisting conditions. 
The bill is working as passed by the Congress. It is working in 
Maryland, it is working around the Nation. There is no need now to 
remove the protections that were included in the TAA legislation.
  So, Mr. Speaker, I will be urging my colleagues to support the 
substitute that will preserve the important provisions on the Taxpayer 
Bill of Rights but will remove this poison pill that could hurt many 
workers and retirees in communities' around the Nation.
  Mr. McCRERY. Mr. Speaker, I yield such time as he may consume to the 
gentleman from New York (Mr. Houghton), the chairman of the 
Subcommittee on Oversight of the Committee on Ways and Means.
  Mr. HOUGHTON. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I thank also the gentleman from North Dakota.
  The theme of this bill, and I, of course, support it, is to improve 
the IRS. Before I give a few quick examples, I do want to say that I 
have stood up here at least three times, and my script is getting musty 
because I have used the same words year after year. I hope that somehow 
we are going to be able to pass this legislation this year.
  But, basically, some of the examples are this. We allow the IRS to 
waive unfair penalties for honest taxpayers who make mistakes. We allow 
that. For example, a taxpayer who mails his return on April 15 with a 
check for $5,000, with a balance due, and he mistakenly puts the wrong 
stamp on it, he is in trouble. And the IRS cannot waive any penalties 
to people who make an honest mistake. I know of this personally because 
of a friend in my area who did this; owed lots and lots of money. There 
was no maneuverability on it.
  Another example is when the IRS erroneously assesses or levies a 
taxpayer's assets. There is a limited time during which the service can 
provide relief to the taxpayer. And this is, of course, especially 
unfair if the IRS ends up levying the taxpayer's retirement account.
  So let us say the IRS, just to take this a little more, misapplies a 
tax payment and consequently levies on a taxpayer's IRA account taking 
away $25,000. The IRS then later realizes its mistake, but it is unable 
to restore the IRA balance. That is problem we have here. Very, very 
inflexible rules. So the result under current laws does not make any 
sense at all.
  Now, this bill requires the IRS to extend the time limit for 
taxpayers to contest levies and requires the IRS to provide relief to 
taxpayers whose retirement accounts are affected.
  Lastly, and the gentleman from Louisiana, my good friend, also 
referred to the ten deadly sins that try to strike a balance between 
making sure that IRS employees are not engaging in improper behavior on 
the one hand and not placing a straitjacket on IRS employees and the 
commission on the other hand. These changes are strongly supported by 
former Commissioner Rossotti, who did an extraordinary job in 
reorganizing and putting more life into the IRS, and have the support 
of the National Treasury Employees Union.
  So I guess the only thing I can say to sum up, Mr. Speaker, is that 
this a good bill. I am honored to be able to join these gentlemen in 
urging my colleagues to support this legislation.

                              {time}  1545

  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would say in response to the gentleman from New York, 
what a privilege I feel it is to serve as a ranking member on the 
subcommittee chaired by the gentleman from New York (Mr. Houghton). He 
is an example of the leading effort in the Congress to forge bipartisan 
consensus and address in commonsense ways problems affecting the 
American people. That is precisely what the bill before us did, the 
bill that the gentleman from New York (Mr. Houghton) and I agreed to 
cosponsor until the week before it was to come to the Committee on Ways 
and Means, at which time we learned of an extraordinarily offensive 
provision added into the bill. This provision significantly changes and 
undermines essential consumer protections that exist for displaced 
workers as a result of trade agreements that are looking for health 
insurance.

[[Page H5532]]

  Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. 
McDermott) to elaborate on this feature of the bill and other points 
relative to the issue before us.
  (Mr. McDERMOTT asked and was given permission to revise and extend 
his remarks.)
  Mr. McDERMOTT. Mr. Speaker, the underlying bill here today is not in 
dispute. We had the same bill last year, and they could not get it 
through because they used it like they are using it this year. They 
used it sort of like a bun for a hotdog. Everybody wanted the bun, but 
they keeping sticking a poison pill into the hot dog. They did it last 
year with section 527, long forgotten. This year with great fanfare 
they passed the fast track bill. A lot of Members on this side of the 
aisle voted for the fast track bill. They said if we put in some 
protections for the workers, and Members said, oh, yes, that is right, 
we should give protections for the workers so that if because of trade 
they lose their job and they lose their health care benefits, we should 
provide some health care benefits for them.
  The bill was barely dry from the President signing it, and they 
started trying to take that out. The workers have got to think there is 
nobody in this place who is honest with them. The first time it 
happened, the gentleman on the other side went to the Committee on 
Armed Services and stuck it into one of their bills; and he got caught, 
and it got dropped out in the conference committee. So it has been 
brought back and put in here.
  Members know this bill will pass. The taxpayers deserve some relief 
and protection. So a bill like that is going to pass 435-0, so Members 
can stick in just about anything and figure it will slide by and nobody 
will notice it. What they have done to these workers, and I have 11,000 
in my State, and there are a few thousand in every State, they are 
going to go out thinking I have a 65 percent tax credit on my health 
care benefits and all I have to do is find a place to do this.
  Our State does not have a program yet, but they are working on it in 
the State legislature because they never put in the bill that the 
States have to establish programs. What is underlying here is a basic 
philosophic disagreement. The gentleman from Louisiana (Mr. McCrery) 
and I have been around on this a lot of times. It is the question of do 
people have an individual responsibility to take care of themselves, or 
should we take care of them collectively by developing a State program 
in this particular instance.
  Many States have put together plans, in spite of the fact that 
Congress gave them no direction. We put it in the bill, and it silently 
went out into the ether. Some States woke up and found it. New York and 
New Jersey and a few other States were paying attention, but about 30 
States have not found it yet. They have not put together a program, or 
their legislatures are not capable. I do not know why they have not 
done it. But here we come with an amendment which says you States which 
have not done it, you cannot have the consumer protections. If your 
State legislature says all individual programs have to have a 
guaranteed issue and they have to have no preexisting condition 
exclusions, then you can buy a policy.
  Mr. Speaker, a guy is 55 years old, he gets laid off in this trade 
adjustment and, he has got a little problem with his heart or kidneys 
or lungs. Now he has a preexisting condition, and he has a voucher in 
his hand and he goes to the insurance company, and they take his 
history. Oh, you have a kidney problem. Sorry, you have a preexisting 
condition. We cannot. Now many States have passed a law and said you 
cannot deny him. At that point he is out of luck. He has this promise 
of health care, and he cannot get at it.
  Somehow the Republicans think that we ought to take away those 
protections from workers. Now wait until they try to put a trade bill 
through here again and tell people that we are going to protect the 
workers. This is where we find out what they really mean about 
protecting the workers. They better know they are going to have to go 
out in the individual market and get their health care. If it is too 
expensive, tough. The other side says we gave them a 65 percent tax 
credit. But of course in order to get it, you have to be able to pay 
for the insurance. No provision is made for that.
  Mr. Speaker, this is a sham that was put in that fast track bill, and 
they have been trying to get rid of it ever since because they do not 
want the principle to be established that States can put together a 
program to take care of individuals in a group and buy group insurance. 
That is what is at issue here. This is not fair, and it is wrong and 
Members ought to vote the bill down.
  Mr. McCRERY. Mr. Speaker, I reserve the balance of my time.
  Mr. POMEROY. Mr. Speaker, I yield 3 minutes to the gentleman from 
Maine (Mr. Michaud).
  Mr. MICHAUD. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I rise today in opposition to the TAA health care tax 
credit rollback provision included in the Taxpayer Protection and IRS 
Accountability Act. Make no mistake, I support taxpayer protection and 
IRS accountability. But something is wrong, rotten in Congress today. 
Why would the House leadership try to slip in such a harmful provision 
in a noncontroversial bill?
  It is clearly a sneaky attempt to destroy workers' protections and 
help leverage big insurance companies' profits. There is no doubt this 
unpopular provision would never survive unless it was tucked into a 
popular bill such as this. This measure would strip away the 
protections for dislocated workers and allow insurers to cherry pick 
healthy workers and exclude those who are older or in poor health, 
those who need the coverage the most.
  Many dislocated workers in Maine are currently enrolled in this 
program. Our State has been among the first approved program in the 
Nation. These hard-working men and women have lost their jobs; they 
deserve some type of health care protection. I would ask the gentleman 
from New York (Mr. Houghton) to reconsider this provision. There are 
some areas in the State of Maine where unemployment is over 32 percent. 
There are other areas abutting that high-labor market area with double 
digit employment numbers because we are getting killed by imports 
because of our trade agreements. Granted, this is a 65 percent tax 
credit. However, when you are on unemployment, you have mortgage 
payments to make, automobile payments and health care payments. To come 
up with the employees' share, it is difficult. I hope Members oppose 
this bill until the TAA health care tax credit rollback provision is 
excluded.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. POMEROY asked and was given permission to revise and extend his 
remarks, and include extraneous material.)
  Mr. POMEROY. Mr. Speaker, I appreciate the gentleman's outstanding 
work on behalf of the displaced workers in the State of Maine and 
throughout the country.
  Let me try to put in perspective what this is all about. Let me note 
back in my days as the State insurance commissioner of North Dakota, I 
spent a lot of time working on issues, fundamental consumer protections 
for people buying health insurance. We believe it is critical when we 
have workers displaced because of trade agreements, they ought to have 
some assistance with the expenses they incur while looking for other 
careers and other ways to earn their livelihood.
  As a result, we got trade adjustment assistance in that last bill, 
and it provided for very meaningful assistance, support in purchasing 
the premium as well as very strong consumer protections in the purchase 
of that coverage. These protections include guaranteed issues; if you 
are sick or have some medical condition, it does not matter. You have 
the right to get that coverage, no preexisting condition exclusion. 
What that means is, say you want to get coverage but I have some 
disability maybe that occurred at work. They cannot exclude all medical 
conditions arising from that disability; they have to cover that, too. 
And then premiums have to be equitable with other premiums; benefits 
have to be comparable with other benefits.
  What the majority bill would do is allow a period where some of the 
most important consumer protections do not have to be offered, those 
providing for guaranteed issue, absolute right to get the coverage, 
those protecting against

[[Page H5533]]

having something excluded; those are also eliminated in this provision.
  We have been upset by this provision; and when I say ``we,'' I speak 
about a swath in the caucus that voted for the fast track trade 
authority and did so in part because of the protections of trade 
adjustment assistance.
  Mr. Speaker, I include for the Record a Dear Colleague written by the 
gentlewoman from California (Mrs. Tauscher) and signed by 15 Democrats 
who voted for the trade bill, all referencing the fact that this trade 
adjustment protection for displaced workers was an important part of 
them coming to agree that we ought to pass this trade bill.

Pro-trade House Democrats Fight to Keep Worker Assistance in Trade Bill

       Today, 15 House Democrats who voted for the Trade Promotion 
     Authority bill last year sent a strong letter to Ways and 
     Means Chairman Bill Thomas expressing their concern about his 
     efforts to rewrite guarantees for healthcare benefits for 
     displaced workers that were agreed to as part of the 
     comprehensive trade bill passed last year.
       The effort to keep Trade Adjustment Assistance as part of 
     future trade agreements is being led by Reps. Ellen Tauscher 
     (D-Calif.), Adam Smith (D-Wash.) and Cal Dooley (D-Calif.).
                                  ____

                                                    June 11, 2003.
     Hon. William M. Thomas,
     Chairman, Committee on Ways
     and Means.
       Dear Chairman Thomas: As pro-trade Democrats who supported 
     passage of Trade Promotional Authority and the Trade Act of 
     2002, we write to voice our concerns with your efforts to 
     rewrite the Trade Adjustment Assistance provision of this new 
     law.
       Inclusion of a strong and robust TAA provision was 
     paramount to our support of TPA and the Trade Act of 2002. 
     The commitments made during last year's debate are important 
     to us and those we represent.
       Specifically, we are very concerned that your efforts to 
     rewrite the healthcare provisions in TAA by adding language 
     to a non-trade related bill (Section 309; HR 1528, the 
     Taxpayer Protection and IRS Responsibility Act) vitiates your 
     commitments made during debate on TPA. More importantly, this 
     undermines Congress' commitment of providing healthcare tax 
     credits to displaced workers, regardless of their age or 
     health status.
       Under the guise of ``consumer choice,'' your provision 
     would eliminate key consumer protections designed to give 
     states the flexibility to develop pools and negotiate with 
     private insurance companies while still meeting the law's 
     consumer protection requirements. States are in the process 
     of developing these plans and have not indicated to Congress 
     problems with meeting the TAA requirements. And since 
     Congress has yet to consider a single FTA since its passage, 
     it seems counterproductive to change TAA at this time.
       The rules of TPA define Congress' role and responsibilities 
     during negotiations on individual bilateral trade agreements. 
     As proponents of trade, we take our oversight roles 
     seriously. We are equally serious in our commitment to the 
     TAA provisions of the law we worked hard to pass that provide 
     a safety net to those Americans displaced by new trade 
     agreements.
       We are hopeful you will reconsider rewriting the healthcare 
     provisions of TAA and remove this provision from HR 1528. We 
     are concerned that altering such a provision in unrelated 
     legislation may undermine the bipartisan consensus necessary 
     for the passage of future FTAs.
           Sincerely,
         Ellen O. Tauscher, Adam Smith, Cal Dooley, Susan Davis, 
           Jim Davis, William Jefferson, Rick Larsen, Dennis 
           Moore, Bob Etheridge, Harold Ford, Jr., Jane Harman, 
           Norman Dicks, Ken Lucus, Jim Matheson, Jim Moran.

  Mr. POMEROY. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman from 
North Dakota (Mr. Pomeroy) for his excellent work on this question and 
for bringing us together around this particular legislation which deals 
with fixing technical problems dealing with taxpayers' needs that all 
of us can join in. I thank the gentleman from Ohio (Mr. Portman) and 
the chairman of the subcommittee on this particular legislation, and I 
would like to say, if I could, that this is a bill that I would run to 
the floor to support.
  And the reason is because when I first came to Congress, the issue of 
advocacy for taxpayers was an enormous issue. In fact, we had a very 
serious problem in Houston, Texas, of insensitivity to taxpayers who 
were trying to do the right thing. So the very fact that this 
legislation, H.R. 1528, has 50 bipartisan and relatively 
noncontroversial taxpayer-rights provisions is one that I would want to 
support. In fact, title I of the proposed act increases the threshold 
in which a taxpayer would not incur penalties for underpayment. 
Because, in fact, my colleagues, those taxpayers are trying to pay 
their taxes. This is a good provision. This says if you underpay, it 
gives you a break to try to get in there and fix the problem.
  I would like to be supportive of those kinds of very effective tax 
provisions. There is something else in here that I very much 
appreciate. The bill eliminates the $50,000 threshold for adjustment of 
interest on erroneous refunds.

                              {time}  1600

  Some of us know of situations where those who tried to pay their 
taxes got an erroneous refund, and I believe the gentlewoman from 
California (Ms. Loretta Sanchez) had an issue on this and worked very 
hard on this issue. We now protect those innocent individuals who get a 
refund through no fault of their own and they get penalized.
  But lo and behold, I have voted for several bills dealing with 
enhancing trade, the African Growth and Opportunity Act, the Caribbean 
Basin Initiative, here we come with what we call a trade adjustment 
assistance health credit, and we do not know where this came from to my 
colleagues on the other side of the aisle, why they would put a poison 
pill that clearly takes away the protection. The elimination of the TAA 
health care program that would be imminent upon the enactment of this 
bill as drafted will negate consumer protections for eligible laid-off 
workers and certain pensioners who seek health care coverage. States 
that have not made health care coverage available to laid-off workers 
and pensioners by August 2003 would be able to ignore the TAA consumer 
protections, which ensure that all applicants could get coverage.
  Mr. Speaker, let me just say this. We have got a crisis in our 
States. We have got people being laid off, we have got 177,000 children 
being taken off of the CHIPs program in the State of Texas. We have got 
the child tax credit languishing in this body. Someone says that we 
cannot move that forward. People are hurting. How can we put this bill 
forward that has all these good provisions, clearing up the taxpayer 
rights, if you will, providing further help in advocating for taxpayer 
rights? Remember when I said taxpayer rights, that means we are helping 
those who pay taxes as well as those who helped build this country, and 
here we are penalizing them for those who may be laid off through no 
fault of their own.
  I would ask that we correct that poison pill, take it out, and let us 
support a bipartisan H.R. 1528. Mr. Speaker, I oppose the bill as it 
presently stands.
  Mr. Speaker, I rise in opposition to H.R. 1528, the House Resolution 
amending the Internal Revenue Code of 1986 to protect taxpayers and 
ensure accountability of the Internal Revenue Service (IRS). The bill's 
proposed changes purport to give taxpayers many improved rights and 
options in a bipartisan fashion. However, in operation, the bill will 
change the previously enacted ``Trade Adjustment Assistance (TAA) 
health care credit'' law much to the surprise of my fellow colleagues 
who understood it to be safely in place. I rather support the 
Substitute Amendment offered by Mr. Rangel that will allow us to revamp 
our effort to include the relevant provisions of the Senate-passed 
child tax credit expansion bill.
  The Resolution offers fifty bipartisan and relatively non-
controversial taxpayer rights provisions that deal with rules on 
interest payments, penalties, installment payments, levies, first-time 
errors, offers in compromise, and other areas that welcome reform. 
Title I of the proposed Act, among other things, increases the 
threshold in which a taxpayer would not incur penalties for 
underpayment, that is, create a ``safe harbor'' for taxpayers. It also 
expands the period in which underpayment interest is applied to cover 
the entire underpayment period. Interest paid on overpayments of income 
tax would be excluded from gross income in this program. Furthermore, 
the bill eliminates the $50,000 threshold for abatement of interest on 
erroneous refunds. Title II appears to offer taxpayers latitude by 
allowing the Commissioner of the IRS to enter into installment 
agreements with taxpayers who cannot remit payment on their obligations 
when due. The proposed extension from nine months to two years of the 
time for repayment of erroneous tax payments also appears 
very beneficial to taxpayers. Moreover, Title III amends the Code to 
give the Commissioner's rulings more finality, expands the legal 
purview of the Tax Court, consolidates the decision as to the proper 
forum for collection due process hearings, which would appear to

[[Page H5534]]

make the hearing process more efficient. This Title also proposes to 
extend the filing deadline for electronic taxpayers, protect the Office 
of the National Taxpayer Advocate; facilitate the payment process for 
motor fuel excise tax refunds; improve the tax status of husband and 
wife joint ventures filing joint returns; and penalizes designated 
terrorist organizations, among other things. Titles IV, V, VI, and VII 
deal with Confidentiality and Disclosure, Miscellaneous provisions, 
Low-Income Taxpayer Clinics, and Federal-State Unemployment Assistance 
Agreements.

  While the above proposed provisions promise, at the surface, to help 
all taxpayers in a forthright fashion, it contains a very troubling 
``poison pill'' provision that would eliminate workers' ability to 
obtain health coverage under the current Trade Adjustment Assistance 
(TAA) health care program. Furthermore, despite the myriad list of 
benefits to taxpayers that this bill will offer, it fails to give any 
relief to those working-class income taxpayers who have been 
marginalized by the extensive tax cuts of this Administration.
  The elimination of the TAA health care program that would be imminent 
upon the enactment of this bill as drafted will negate consumer 
protections for eligible laid-off workers and certain pensioners who 
seek health care coverage. States that have not made health coverage 
available to laid-off workers and pensioners by August 2003 would be 
able to ignore the TAA consumer protections which assure that (1) all 
applicants would get coverage under State plans and (2) preclude plans 
from excluding coverage for pre-existing health conditions. It is a 
tremendous concern to me that we are proposing to abrogate existing 
worker protections when no dysfunction has not been identified that 
would warrant such a change.
  Unlike the thousands of Houstonians laid off or terminated by 
American General, Compaq Computer Corp., Continental Airlines, Texaco 
and others this year, Enron's workers must contend with the company's 
bankruptcy filing and the threat it has posed to their remaining 
benefits. Although federal laws and limited insurance protect pension 
plans, a similar safety net does not exist for health care benefits. If 
an employer drops any coverage or consolidates plans for current 
employees, then the former workers have no rights to the old benefits 
and can only get what the employer offers. Furthermore, if an employer 
decides to stop offering health insurance altogether, the current 
employees and the COBRA participants will all lose their coverage. 
There is simply no legal obligation for employers to provide or 
continue health insurance. In addition, our employees are amenable to 
the threat of health care insurance cuts by employers who file under 
the bankruptcy code as this represents an attractive expense to cut. 
Corporations that attempt to reorganize under Chapter 11 tend to do so 
as a last resort because such actions undermine their abilities to 
retain key workers. Those with no hope of recovering from their 
financial troubles liquidate their assets under Chapter 7, terminate 
their health plans and other liabilities and cease to exist, leaving 
the employee with no options. For example, Bethlehem Steel Corp. and 
Wheeling-Pittsburgh Steel Corp., both of which are in Chapter 11 
proceedings, have asked Congress and the Bush administration to pay 
their health-care contractual obligations to approximately 600,000 
retirees of the two companies--estimated as high as $13 billion--so 
they can merge with U.S. Steel. They proposed the payment of the debt 
through a general appropriation or a tax on steel sold in the United 
States.

  Mr. Rangel's Substitute Amendment does not include anti-consumer 
changes to the TAA health credit law as does the drafted language of 
this bill. We have a duty to protect those who are most vulnerable to 
harmful tax treatment, and this Amendment would allow us to provide a 
safety net. Critical to my initiatives and the initiatives of many of 
my colleagues, the Amendment includes the provisions of the Senate-
passed child tax credit expansion bill and Senate-passed military tax 
relief bill. H.R. 1528 has more than adequate breadth to include these 
items. The Amendment also adds provisions that will serve to prevent 
abusive tax shelters and assist low and middle-income taxpayers in 
complying with the tax laws such as an Earned Income Tax Credit (EITC) 
simplification, a balanced IRS audit program, enhanced low-income 
taxpayer clinics, a prohibition on EITC pre-certifications, and limits 
on excessive tax refund anticipation loan interest rates. Along with 
the many above-mentioned bipartisan and non-controversial taxpayer 
provisions, this Substitute Amendment will make H.R. 1528 work for more 
taxpayers and for our children as well as to allow us to, at minimum, 
show some appreciation for the men and women who serve our Country.
  I oppose H.R. 1528 for the foregoing reasons and support the 
Substitute Amendment offered by Mr. Rangel. I would ask that my 
colleagues also vote in this fashion.
  Mr. POMEROY. Mr. Speaker, I yield myself such time as I may consume.
  I am going to close debate on my side of the aisle, and I would do so 
with the following comments. My friend and Ways and Means colleague, 
the gentleman from Louisiana, raises on the question of health coverage 
for displaced workers the important issue of whether or not coverage is 
actually available for these workers or might there be because of these 
preexisting conditions circumstances where no coverage is available and 
by insisting on these protections we are actually depriving these 
workers of the availability to get health coverage.
  I am pleased to respond to that concern by saying that negotiations 
at the State level are coming along very successfully, and so far 13 
States have been successful at getting insurance companies to enter 
into an agreement to provide the coverage to these displaced workers 
under the consumer protections in the bill. Thirteen States. What 
concerns us about raising this issue at this time is that we think it 
sends a very bad signal from Congress to the States and the insurance 
companies in negotiations with them, that they might not have to comply 
with these consumer protections.
  As an old insurance commissioner, I know darn well you give an 
insurance company the chance of not offering coverage to everybody, 
but, rather, cherry-picking, picking only the ones they want to cover 
as opposed to the mandate that they cover everybody, well, they are 
going to want to cherry-pick. Of course they are going to want to do 
that. If you give insurance companies the opportunity to say, well, 
we'll cover you except for the disability that you have or the 
preexisting health condition that you have, of course insurance 
companies are going to want to restrict their coverage from those 
medical features that are so troublesome to the displaced workers. We 
think that passing this bill with this provision in it is going to 
bring negotiations at the State level potentially to a standstill 
because the insurance companies are going to hold out for a sweeter 
deal, and what a sweet deal it would be.
  We are going to have a situation where the insurance companies, under 
the majority proposal, would be able to exclude who they want to. Of 
the individuals they underwrite, they will be able to exclude the 
medical conditions that they want to and they are still going to get 
the Federal Government paying 65 percent of the premium. Let us face 
it, it is not often you put forward Federal tax dollars to pay private 
insurance premiums. We have chosen to do so at this time because these 
are workers that lost their jobs because of trade agreements entered by 
this country. That is certified by the Department of Labor.
  We think under those circumstances, having lost their job through no 
fault of their own, because of trade agreements entered and ratified 
here in Congress, that those workers need some help while they get 
their lives back on track, get a new livelihood in place, and that help 
certainly includes health insurance coverage to protect them and their 
families. We are even going to help pay for it. Under these 
circumstances, let us not let the insurance companies run roughshod by 
excluding who they want, by excluding the medical conditions that they 
want. We have got to hold for the whole package, give these workers the 
absolute right to get the coverage they need and the absolute right to 
get coverage for all of their medical conditions, not just those the 
insurance company is going to want to pick.
  Work is coming along well at the State level. Again, 13 States 
concluding these agreements, others still in negotiation now. Now is 
not the time to take the pressure off. Now is not the time to give the 
insurance companies a pass. Now is not the time to walk away from the 
health care needs of our displaced workers. Hold the consumer 
protections, reject the majority bill, we will take this taxpayer 
protection right, remove the poison pill, bring it back here, as it 
should have been in the first place, and get on with reforming the Tax 
Code in the responsible ways but not in the ways that, because of the 
poison pill, hurt our displaced workers.
  Mr. Speaker, I yield back the balance of my time.
  Mr. McCRERY. Mr. Speaker, I yield myself the balance of my time.

[[Page H5535]]

  Mr. Speaker, the last point that the gentleman from North Dakota made 
about if this provision were to pass, then it could reduce the pressure 
on the States to enter into agreements which would create qualified 
plans under the trade bill we passed last year is a legitimate point. 
It is the only legitimate point he or his colleagues on the Democratic 
side have made today, but that is a legitimate point. We concede that. 
That is why we listened to the gentleman from North Dakota and his 
complaints earlier while the committee was considering this and we 
reduced the window within which unemployed workers could take advantage 
of this waiver.
  Under the provision, as it now stands in this bill, they would only 
have until the end of calendar year 2004 to waive their rights under 
the trade bill and take advantage of the tax credit to purchase 
insurance for themselves and their family. So I concede that that is a 
legitimate point. We do not want the States to stop their efforts to 
create plans that would qualify for the credit under the Trade Act. We 
do not think the States will. In fact, of the speakers that were 
offered by the other side of the aisle today, Maryland, the first 
speaker, the State of Maryland, already has a qualified plan in place, 
so this provision in the bill today will not affect unemployed workers 
in Maryland at all; North Dakota has a provision in place, so it will 
not affect unemployed workers in North Dakota. Texas is very close to 
having a provision ready, we are told. The only State that is behind in 
this process is the State of Washington.
  So we know that basically two-thirds of the States already either 
have a plan in place or are negotiating to get plans in place. The 
Treasury Department thinks, after researching this, that only about 20 
States or so would not have plans in place by this August. So this 
provision in this bill would not affect all of those States that have 
plans in place by this August, probably not until September or October 
because this bill will not make it through the process before this 
fall.
  But let us think about those States which for whatever reason, their 
legislatures do not meet this year, their insurance commissioner is not 
as adept as the gentleman from North Dakota was in getting these things 
done, for whatever reason, what about the unemployed workers in those 
States who want to use their credit to get insurance for their families 
and they do not have access to COBRA? They are left out in the cold.
  I would say to my good friends on the other side, do you not care 
about these people and their families? Do you not want them to use the 
generous tax credit that we provided to get health insurance for their 
families? If you do not pass the provision that is in this bill, they 
cannot get insurance and utilize the credit to get it. Period. You will 
leave them with nothing. You will leave them bare. They will not have 
insurance. That is the fact. That is what we are trying to correct. We 
are trying to make sure that all those unemployed workers who want to 
use the credit to cover their families can do so. And so we have said 
to the States that have not yet complied with the requirements of the 
Trade Act, we are going to give you one more year to do that.
  And in the meantime, any of your unemployed workers who want to use 
the tax credit can avail themselves of that by waiving the requirements 
of the Trade Act. It is not compulsory, it is voluntary, we are not 
going to twist anybody's arm to make them waive the requirements of the 
Trade Act. We are going to tell them if you want to waive that, you 
may. And if that enables you to use the tax credit to cover yourselves 
and your families, by golly, that is a good thing. And CBO estimates 
that 12,000 workers and their families will take advantage of this 
provision and will get coverage and who, if this bill does not pass, 
would not be able to get coverage.
  I think, Mr. Speaker, what we have heard today from the other side is 
a lot of obfuscation. The truth is they never wanted the health tax 
credit to be used for anything other than COBRA. That is the truth. It 
was we Republicans who insisted that we think about unemployed workers 
who did not happen to come from a big company or from a company with 
employment coverage that would qualify under COBRA. We said, what about 
the people who work for small businesses? What about the people who did 
not have any coverage, they had to get individual coverage? Should we 
not have some compassion for those unemployed workers as well, not just 
unionized workers? We battled and fought and scraped and finally won, 
got a compromise so that those workers could get some advantage from 
the tax credit.
  But the Democrats said, okay, we'll agree to the compromise, but 
we're going to have to have a provision that goes even further than the 
Republican-passed legislation, the Health Insurance Portability and 
Accountability Act, HIPAA.
  That was a Republican bill. Up until that time, there were no 
guarantees for workers changing jobs. Health insurance was not portable 
at all. Everybody was going to be subject to those conditions that the 
gentleman from North Dakota talked about, preexisting conditions, no 
guaranteed issue, until Republicans passed the bill in 1996, I believe, 
called HIPAA, which said that if you had 18 months prior coverage in 
the health insurance system, then you do not have to worry about 
getting covered again. Insurance companies offering health insurance 
must guarantee you issue of that plan. And you are not subject to any 
preexisting conditions clauses in those insurance plans.
  We did that. We passed that. We are the ones who put those guarantees 
in law. And so last year, we agreed for this small set of workers who 
lost their jobs because of trade actions or were covered under the 
Pension Benefit Guaranty Corporation that in that small set of workers, 
we would reduce that 18-month requirement to 3 months, so that if they 
only had 3 months prior coverage, they would not have to go through all 
the underwriting and so forth that workers used to have to go through 
before HIPAA. And we agreed to that. But now we find that we have large 
numbers of workers who are not able to avail themselves of the credit 
because States have not yet put into place plans that comply with that 
3-month prior coverage requirement.
  So in the meantime, while those States are getting those plans up and 
running, we say, let those individuals who want to waive that 
requirement, they may have had 18 months prior coverage and, therefore, 
they would still have those guarantees that the gentleman from North 
Dakota spoke about, why not let them voluntarily waive their 
requirements under the Trade Act, get the insurance for themselves and 
their families and then when all the States have these policies in 
place, the 3-month requirement will be there in those plans. I simply 
do not understand why the other side would object so strenuously to 
letting 12,000 families get health insurance who otherwise would not be 
able to get it if this provision does not pass.
  I urge the House to have compassion for these workers as well as 
workers with COBRA coverage and pass this bill today.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. LaTourette). All time for debate on the 
bill has expired.
  Pursuant to the order of the House of today, further proceedings on 
this bill will be postponed until tomorrow.

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