[Congressional Record Volume 153, Number 67 (Wednesday, April 25, 2007)]
[Senate]
[Pages S5100-S5105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Smith, Mr. Kerry, Mr. Akaka, 
        Mr. Durbin, and Mr. Lieberman):
  S. 1219. A bill to amend the Internal Revenue Code of 1986 to provide 
taxpayer protection and assistance, and for other purposes; to the 
Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the ``Taxpayer 
Protection and Assistance Act of 2007'' with Senators Smith, Akaka, 
Durbin, Kerry, and Lieberman. My colleagues may recall that similar 
legislation, S. 832, was introduced last Congress and ultimately 
reported out of the Finance Committee last year but unfortunately it 
never made it to the floor of the Senate. This Congress, the House has 
already passed taxpayer rights legislation which makes me optimistic 
that many of these long overdue reforms may finally become law.
  This Act is a combination of a variety of well-vetted provisions that 
will ensure that our Nation's taxpayers are better able to prepare and 
file their tax returns each year in a fashion that is fair, reasonable 
and affordable. As long as we continue to require taxpayers to 
determine their own tax liability, Congress has a responsibility to 
ensure that we do not leave taxpayers vulnerable to abuses from those 
masquerading as tax professionals. The current environment is bad for 
everyone including the majority of tax return preparers who provide 
professional and much needed services to taxpayers in their 
communities. I encourage all of my colleagues to work with us to pass 
this legislation before the next filing season begins.
  The first section of the Taxpayer Protection and Assistance Act would 
create a $10 million matching grant program for lower income tax 
preparation clinics much like the program we currently have in place 
for tax controversies. I have seen first hand the impact free tax 
preparation clinics can have on taxpayers and their communities, as we 
are fortunate to have one of the best State-wide programs in the Nation 
in New Mexico. Tax Help New Mexico, which has been in operation for 
many years, helped over 20,000 New Mexicans prepare and file their 
returns last year, resulting in over $20 million in refunds--all 
without refund anticipation loans. This program has turned into one of 
the best delivery mechanisms for public assistance I have seen in the 
State and has been fortunate enough to receive additional funding from 
the Annie E. Casey Foundation and the McCune Foundation. In order to 
continue to grow, though, we need to do our part in Congress and give 
them matching funding so they can continue their outreach into new 
communities in need of assistance.
  The second set of provisions contained in this legislation would 
ensure that when taxpayers hire someone to help them with their tax 
returns they can be sure that the person is competent and professional. 
The first part of the bill makes sure that an enrolled agent, a tax 
professional licensed to practice before the IRS, shall have the 
exclusive right to describe him or herself as an ``enrolled agent,'' 
``EA,'' or ``E.A.'' In New Mexico, enrolled agents play an important 
role in helping taxpayers with problems with the IRS and with preparing 
their returns. Enrolled agents have earned the right to use their 
credentials. Furthermore, we should protect the credentials of those 
who have taken the rigorous exams and have experience in tax 
preparation rather than allow others to confuse the public into 
thinking they too have the same credentials.
  The next part of the bill requires the Secretary of the Treasury to 
determine what standards need to be met in order for a person to 
prepare tax returns commercially. Like all other tax professionals, 
this will require people who make a living preparing tax returns to 
pass a minimum competency exam and take brush up courses each year to 
keep up to date with changes in tax law. The majority of tax return 
preparers already meet these standards, including many who have 
received credentials from the State or from a nationally recognized 
association of accountants or tax return preparers. We provide specific 
authority to the Secretary to determine whether people who have already 
taken a written proficiency exam as part of some other tax return 
credentialing will need to take the new exam. The Secretary will be

[[Page S5102]]

able to exercise these authorizations only after thorough review of the 
specific examination and only for those examinations subsequently 
determined to be comparable. In that light, we urge the Secretary to 
exercise his authority in this area in a manner consistent with the 
goal of protecting taxpayers through ensuring the competency of 
enrolled preparers. The Treasury Department will also be required to 
operate a public awareness campaign so that taxpayers will know that 
they need to check to be sure that someone preparing their tax returns 
for a fee is qualified.
  The fourth set of provisions would directly address the problems with 
refund anticipation loans (RALs)--a problem throughout the country, but 
one that is particularly troublesome in New Mexico. First, this bill 
requires refund loan facilitators to register with the Treasury 
Department. Refund loan facilitators are those people who solicit, 
process, or otherwise facilitate the making of a refund anticipation 
loan in relation to a tax return being electronically filed. The 
legislation also requires these refund loan facilitators to properly 
disclose to taxpayers that they do not have to get a RAL in order to 
file their return electronically, as well as clearly disclose what all 
the costs involved with the loan. Finally, the refund loan facilitators 
must disclose to taxpayers when the loans would allow their refunds to 
be offset by the amount of the loan. Much like the public awareness 
campaign for advertising the credentials required for preparing Federal 
tax returns, the Act requires the Treasury Department to operate a 
program to educate the public on the real costs of RALs as compared to 
other forms of credit. This program will be funded, at least in part, 
by amounts collected from penalties imposed on refund loan facilitators 
who have broken the law.
  The next section of the bill is an issue that my colleague from 
Hawaii, Senator Akaka, has been actively working on for the last 
several years. This provision would authorize the Treasury Department 
to award grants to financial institutions or charitable groups that 
help low income taxpayers set up accounts at a bank or credit union. 
Because many taxpayers do not have checking or savings accounts, their 
refunds from IRS cannot be electronically wired to them. The 
alternative is to have the check mailed to the taxpayer or to have the 
refund immediately loaned to the taxpayer in the form of a RAL. Of 
course, getting people to set up a checking or savings account for 
purposes of receiving their tax refund will also have the benefits of 
getting many of these people to start saving for the first time.
  Finally, we have added two new provisions to clarify existing law. 
The first clarifies that the National Taxpayer Advocate has the 
authority to issue taxpayer assistance orders in cases involving 
closing agreements and compromises. The other clarifies that the 
Secretary of the Treasury has the authority to take into account a 
taxpayers specific facts and circumstances when evaluating an offer in 
compromise. Both of these provisions are the result of bipartisan 
negotiations and are an improvement to our tax system.
  I hope my colleagues will join with me and the cosponsors of this 
bill to pass this important legislation. Our voluntary tax system is 
dependent on taxpayers being able to receive the best advice and 
assistance possible. We have a responsibility to our Nation's taxpayers 
to make sure that they do receive such advice and assistance. This bill 
goes a long way toward that goal.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1219

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Taxpayer 
     Protection and Assistance Act of 2007''.
       (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.

     SEC. 2. LOW-INCOME TAXPAYER CLINICS.

       (a) Grants for Return Preparation Clinics.--
       (1) In general.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by inserting after section 7526 the 
     following new section:

     ``SEC. 7526A. RETURN PREPARATION CLINICS FOR LOW-INCOME 
                   TAXPAYERS.

       ``(a) In General.--The Secretary may, subject to the 
     availability of appropriated funds, make grants to provide 
     matching funds for the development, expansion, or 
     continuation of qualified return preparation clinics.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Qualified return preparation clinic.--
       ``(A) In general.--The term `qualified return preparation 
     clinic' means a clinic which--
       ``(i) does not charge more than a nominal fee for its 
     services (except for reimbursement of actual costs incurred), 
     and
       ``(ii) operates programs which assist low-income taxpayers, 
     including individuals for whom English is a second language, 
     in preparing and filing their Federal income tax returns, 
     including schedules reporting sole proprietorship or farm 
     income.
       ``(B) Assistance to low-income taxpayers.--A clinic is 
     treated as assisting low-income taxpayers under subparagraph 
     (A)(ii) if at least 90 percent of the taxpayers assisted by 
     the clinic have incomes which do not exceed 250 percent of 
     the poverty level, as determined in accordance with criteria 
     established by the Director of the Office of Management and 
     Budget.
       ``(2) Clinic.--The term `clinic' includes--
       ``(A) a clinical program at an eligible educational 
     institution (as defined in section 529(e)(5)) which satisfies 
     the requirements of paragraph (1) through student assistance 
     of taxpayers in return preparation and filing, and
       ``(B) an organization described in section 501(c) and 
     exempt from tax under section 501(a) which satisfies the 
     requirements of paragraph (1).
       ``(c) Special Rules and Limitations.--
       ``(1) Aggregate limitation.--Unless otherwise provided by 
     specific appropriation, the Secretary shall not allocate more 
     than $10,000,000 per year (exclusive of costs of 
     administering the program) to grants under this section.
       ``(2) Other applicable rules.--Rules similar to the rules 
     under paragraphs (2) through (7) of section 7526(c) shall 
     apply with respect to the awarding of grants to qualified 
     return preparation clinics.''.
       (2) Clerical amendment.--The table of sections for chapter 
     77 is amended by inserting after the item relating to section 
     7526 the following new item:

``Sec. 7526A. Return preparation clinics for low-income taxpayers.''.

       (b) Grants for Taxpayer Representation and Assistance 
     Clinics.--
       (1) Increase in authorized grants.--Section 7526(c)(1) 
     (relating to aggregate limitation) is amended by striking 
     ``$6,000,000'' and inserting ``$10,000,000''.
       (2) Use of grants for overhead expenses prohibited.--
       (A) In general.--Section 7526(c) (relating to special rules 
     and limitations) is amended by adding at the end the 
     following new paragraph:
       ``(6) Use of grants for overhead expenses prohibited.--No 
     grant made under this section may be used for the overhead 
     expenses of any clinic or of any institution sponsoring such 
     clinic.''.
       (B) Conforming amendments.--Section 7526(c)(5) is amended--
       (i) by inserting ``qualified'' before ``low-income'', and
       (ii) by striking the last sentence.
       (3) Promotion of clinics.--Section 7526(c), as amended by 
     paragraph (2), is amended by adding at the end the following 
     new paragraph:
       ``(7) Promotion of clinics.--The Secretary is authorized to 
     promote the benefits of and encourage the use of low-income 
     taxpayer clinics through the use of mass communications, 
     referrals, and other means.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to grants made after the date of the enactment of 
     this Act.

     SEC. 3. CLARIFICATION OF ENROLLED AGENT CREDENTIALS.

       Section 330 of title 31, United States Code, is amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively, and
       (2) by inserting after subsection (a) the following new 
     subsection:
       ``(b) Any enrolled agents properly licensed to practice as 
     required under rules promulgated under subsection (a) shall 
     be allowed to use the credentials or designation as `enrolled 
     agent', `EA', or `E.A.'.''.

     SEC. 4. REGULATION OF FEDERAL TAX RETURN PREPARERS.

       (a) Authorization.--Section 330(a)(1) of title 31, United 
     States Code, is amended by inserting ``(including compensated 
     preparers of Federal tax returns, documents, and other 
     submissions)'' after ``representatives''.
       (b) Requirement.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of the Treasury 
     shall prescribe regulations under section 330 of title 31, 
     United States Code--

[[Page S5103]]

       (A) to regulate those compensated preparers not otherwise 
     regulated under regulations promulgated under such section on 
     the date of the enactment of this Act, and
       (B) to carry out the provisions of, and amendments made by, 
     this section.
       (2) Examination.--
       (A) In general.--In promulgating the regulations under 
     paragraph (1), the Secretary shall develop (or approve) and 
     administer an eligibility examination designed to test--
       (i) the technical knowledge and competency of each preparer 
     described in paragraph (1)(A)--

       (I) to prepare Federal tax returns, including individual 
     and business income tax returns, and
       (II) to properly claim the earned income tax credit under 
     section 32 of the Internal Revenue Code of 1986 with respect 
     to such individual returns, and

       (ii) the knowledge of each such preparer regarding such 
     ethical standards for the preparation of such returns as 
     determined appropriate by the Secretary.
       (B) State licensing or registration programs.--The 
     Secretary is authorized to accept an individual as meeting 
     the eligibility examination requirement of this section if, 
     in lieu of the eligibility examination under this section, 
     the individual passed--
       (i) a State licensing or State registration program 
     eligibility examination that is comparable to the eligibility 
     examination established by the Secretary, or
       (ii) an eligibility examination administered by an existing 
     organization for tax return preparers that is comparable to 
     the eligibility examination established by the Secretary if 
     such test was administered prior to the issuance of the 
     regulations under this section.
       (3) Continuing eligibility.--
       (A) In general.--The regulations under paragraph (1) shall 
     require a renewal of eligibility every 3 years and shall set 
     forth the manner in which a preparer described in paragraph 
     (1)(A) must renew such eligibility.
       (B) Continuing education requirements.--As part of the 
     renewal of eligibility, such regulations shall require that 
     each such preparer show evidence of completion of such 
     continuing education requirements as specified by the 
     Secretary.
       (C) Nonmonetary sanctions.--The regulations under paragraph 
     (1) shall provide for the suspension or termination of such 
     eligibility in the event of any failure to comply with the 
     requirements for such eligibility.
       (4) Penalty for unauthorized preparation of returns, etc.--
     In promulgating the regulations under paragraph (1), the 
     Secretary shall impose a penalty of $1,000 for each Federal 
     tax return, document, or other submission prepared by a 
     preparer described in paragraph (1)(A) who is not in 
     compliance with the requirements of paragraph (2) or (3) or 
     who is suspended or disbarred from practice before the 
     Department of the Treasury under such regulations. Such 
     penalty shall be in addition to any other penalty which may 
     be imposed.
       (c) Office of Professional Responsibility.--Section 330 of 
     title 31, United States Code, is amended by adding at the end 
     the following new subsection:
       ``(e) Office of Professional Responsibility.--
       ``(1) In general.--There shall be in the Internal Revenue 
     Service an Office of Professional Responsibility the 
     functions of which shall be as prescribed by the Secretary of 
     the Treasury, including the carrying out of the purposes of 
     this section.
       ``(2) Director.--
       ``(A) In general.--The Office of Professional 
     Responsibility shall be under the supervision and direction 
     of an official known as the `Director, Office of Professional 
     Responsibility'. The Director, Office of Professional 
     Responsibility, shall report directly to the Commissioner of 
     Internal Revenue and shall be entitled to compensation at the 
     same rate as the highest rate of basic pay established for 
     the Senior Executive Service under section 5382 of title 5, 
     or, if the Secretary of the Treasury so determines, at a rate 
     fixed under section 9503 of such title.
       ``(B) Appointment.--The Director, Office of Professional 
     Responsibility, shall be appointed by the Secretary of the 
     Treasury without regard to the provisions of title 5 relating 
     to appointments in the competitive service or the Senior 
     Executive Service.
       ``(3) Hearing.--Any hearing on an action initiated by the 
     Director, Office of Professional Responsibility, to impose a 
     sanction under regulations promulgated under this section 
     shall be conducted in accordance with sections 556 and 557 of 
     title 5 by 1 or more administrative law judges appointed by 
     the Secretary of the Treasury under section 3105 of title 5.
       ``(4) Coordination with state sanction programs.--In 
     carrying out the purposes of this section, the Director, 
     Office of Professional Responsibility shall coordinate with 
     appropriate State officials in order to collect information 
     regarding representatives, employers, firms and other 
     entities which have been disciplined or suspended under State 
     or local rules.
       ``(5) Information on sanctions to be available to the 
     public.--
       ``(A) Sanctions initiated by action.--When an action is 
     initiated by the Director, Office of Professional 
     Responsibility, to impose a sanction under regulations 
     promulgated under this section, the pleadings, and the record 
     of the proceeding and hearing shall be open to the public 
     (subject to restrictions imposed under subparagraph (C)).
       ``(B) Sanction not initiated by action.--When a sanction 
     under regulations promulgated under this section (other than 
     a private reprimand) is imposed without initiation of an 
     action, the Director, Office of Professional Responsibility, 
     shall make available to the public information identifying 
     the representative, employer, firm, or other entity 
     sanctioned, as well as information about the conduct which 
     gave rise to the sanction (subject to restrictions imposed 
     under subparagraph (C)).
       ``(C) Restrictions on release of information.--Information 
     about clients of the representative, employer, firm, or other 
     entity and medical information with respect to the 
     representative shall not be released to the public or 
     discussed in an open hearing, except to the extent necessary 
     to understand the nature, scope, and impact of the conduct 
     giving rise to the sanction or proposed sanction. 
     Disagreements regarding the application of this subparagraph 
     shall be resolved by the administrative law judge or, when a 
     sanction is imposed without initiation of an action, by the 
     Director, Office of Professional Responsibility.
       ``(6) Fees.--Any fees imposed under regulations promulgated 
     under this section shall be available without fiscal year 
     limitation to the Office of Professional Responsibility for 
     the purpose of reimbursement of the costs of administering 
     and enforcing the requirements of such regulations.''.
       (d) Ban on Audit Insurance.--Section 330 of title 31, 
     United States Code, as amended by subsection (c), is amended 
     by adding at the end the following new subsection:
       ``(f) Ban on Audit Insurance.--No person admitted to 
     practice before the Department of the Treasury may directly 
     or indirectly offer or provide insurance to cover 
     professional fees and other expenses incurred in responding 
     to or defending an audit by the Internal Revenue Service.''.
       (e) Penalties.--
       (1) Increase in certain penalties.--Subsections (a), (b), 
     and (c) of section 6695 (relating to other assessable 
     penalties with respect to the preparation of income tax 
     returns for other persons) are each amended by striking ``a 
     penalty of $50'' and all that follows and inserting ``a 
     penalty equal to--
       ``(1) $1,000, or
       ``(2) in the case of 3 or more such failures in a calendar 
     year, $500 for each such failure.

     The preceding sentence shall not apply with respect to any 
     failure if such failure is due to reasonable cause and not 
     due to willful neglect.''.
       (2) Use of penalties.--Unless specifically appropriated 
     otherwise, there is authorized to be appropriated and is 
     appropriated to the Office of Professional Responsibility for 
     each fiscal year for the administration of the public 
     awareness campaign described in subsection (g) an amount 
     equal to the penalties collected during the preceding fiscal 
     year under sections 6694 and 6695 of the Internal Revenue 
     Code of 1986 and under the regulations promulgated under 
     section 330 of title 31, United States Code (by reason of 
     subsection (b)(1)).
       (3) Review by the treasury inspector general for tax 
     administration.--Section 7803(d)(2)(A) is amended--
       (A) by striking ``and'' at the end of clause (iii),
       (B) by striking the period at the end of clause (iv) and 
     inserting ``, and'', and
       (C) by adding at the end the following new clause:
       ``(v) a summary of the penalties assessed and collected 
     during the reporting period under sections 6694 and 6695 and 
     under the regulations promulgated under section 330 of title 
     31, United States Code, and a review of the procedures by 
     which violations are identified and penalties are assessed 
     under those sections,''.
       (f) Coordination With Section 6060(a).--The Secretary of 
     the Treasury shall coordinate the requirements under the 
     regulations promulgated under section 330 of title 31, United 
     States Code, with the return requirements of section 6060 of 
     the Internal Revenue Code of 1986.
       (g) Public Awareness Campaign.--The Secretary of the 
     Treasury or the Secretary's delegate shall conduct a public 
     information and consumer education campaign, utilizing paid 
     advertising--
       (1) to encourage taxpayers to use for Federal tax matters 
     only professionals who establish their competency under the 
     regulations promulgated under section 330 of title 31, United 
     States Code, and
       (2) to inform the public of the requirements that any 
     compensated preparer of tax returns, documents, and 
     submissions subject to the requirements under the regulations 
     promulgated under such section must sign the return, 
     document, or submission prepared for a fee and display notice 
     of such preparer's compliance under such regulations.
       (h) Additional Funds Available for Compliance Activities.--
     The Secretary of the Treasury may use any specifically 
     appropriated funds for earned income tax credit compliance to 
     improve and expand enforcement of the regulations promulgated 
     under section 330 of title 31, United States Code.
       (i) Additional Certification on Documents Other Than 
     Returns.--The Secretary of the Treasury shall require that 
     each document or other submission filed with the Internal 
     Revenue Service (other than a return signed by the taxpayer) 
     shall be signed under penalty of perjury and the identifying 
     number of any paid preparer who prepared such

[[Page S5104]]

     document (if any) under rules similar to the rules under 
     section 6109(a)(4).

     SEC. 5. CONTRACT AUTHORITY FOR EXAMINATIONS OF PREPARERS.

       The Secretary of the Treasury is authorized to contract for 
     the development or administration, or both, of any 
     examinations under the regulations promulgated under section 
     330 of title 31, United States Code.

     SEC. 6. REGULATION OF REFUND ANTICIPATION LOAN FACILITATORS.

       (a) Regulation of Refund Anticipation Loan Facilitators.--
       (1) In general.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by inserting at the end the following 
     new section:

     ``SEC. 7529. REFUND ANTICIPATION LOAN FACILITATORS.

       ``(a) Registration.--Each refund loan facilitator shall 
     register with the Secretary on an annual basis. As a part of 
     such registration, each refund loan facilitator shall provide 
     the Secretary with the name, address, and taxpayer 
     identification number of such facilitator, and the fee 
     schedule of such facilitator for the year of such 
     registration.
       ``(b) Disclosure.--Each refund loan facilitator shall 
     disclose to a taxpayer both orally and on a separate written 
     form at the time such taxpayer applies for a refund 
     anticipation loan the following information:
       ``(1) Nature of the transaction.--The refund loan 
     facilitator shall disclose--
       ``(A) that the taxpayer is applying for a loan that is 
     based upon the taxpayer's anticipated income tax refund,
       ``(B) the expected time within which the loan will be paid 
     to the taxpayer if such loan is approved,
       ``(C) the time frame in which income tax refunds are 
     typically paid based upon the different filing options 
     available to the taxpayer,
       ``(D) that there is no guarantee that a refund will be paid 
     in full or received within a specified time period and that 
     the taxpayer is responsible for the repayment of the loan 
     even if the refund is not paid in full or has been delayed,
       ``(E) if the refund loan facilitator has an agreement with 
     another refund loan facilitator (or any lender working in 
     conjunction with another refund loan facilitator) to offset 
     outstanding liabilities for previous refund anticipation 
     loans provided by such other refund loan facilitator, that 
     any refund paid to the taxpayer may be so offset and the 
     implication of any such offset,
       ``(F) that the taxpayer may file an electronic return 
     without applying for a refund anticipation loan and the fee 
     for filing such an electronic return, and
       ``(G) that the loan may have substantial fees and interest 
     charges that may exceed those of other sources of credit and 
     the taxpayer should carefully consider--
       ``(i) whether such a loan is appropriate for the taxpayer, 
     and
       ``(ii) other sources of credit.
       ``(2) Fees and interest.--The refund loan facilitator shall 
     disclose all refund anticipation loan fees with respect to 
     the refund anticipation loan. Such disclosure shall include--
       ``(A) a copy of the fee schedule of the refund loan 
     facilitator,
       ``(B) the typical fees and interest rates (using annual 
     percentage rates as defined by section 107 of the Truth in 
     Lending Act (15 U.S.C. 1606)) for several typical amounts of 
     such loans and of other types of consumer credit,
       ``(C) typical fees and interest charges if a refund is not 
     paid or delayed, and
       ``(D) the amount of a fee (if any) that will be charged if 
     the loan is not approved.
       ``(3) Other information.--The refund loan facilitator shall 
     disclose any other information required to be disclosed by 
     the Secretary.
       ``(c) Fines and Sanctions.--
       ``(1) In general.--The Secretary may impose a monetary 
     penalty on any refund loan facilitator who--
       ``(A) fails to register under subsection (a), or
       ``(B) fails to disclose any information required under 
     subsection (b).
       ``(2) Maximum monetary penalty.--Any monetary penalty 
     imposed under paragraph (1) shall not exceed--
       ``(A) in the case of a failure to register, the gross 
     income derived from all refund anticipation loans made during 
     the period the refund loan facilitator was not registered, 
     and
       ``(B) in the case of a failure to disclose information, the 
     gross income derived from all refund anticipation loans with 
     respect to which such failure applied.
       ``(3) Reasonable cause exceptions.--No penalty may be 
     imposed under this subsection with respect to any failure if 
     it is shown that such failure is due to reasonable cause.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Refund loan facilitator.--
       ``(A) In general.--The term `refund loan facilitator' means 
     any electronic return originator who--
       ``(i) solicits for, processes, receives, or accepts 
     delivery of an application for a refund anticipation loan, or
       ``(ii) facilitates the making of a refund anticipation loan 
     in any other manner.
       ``(B) Electronic return originator.--For purposes of 
     subparagraph (A), the term `electronic return originator' 
     means a person who originates the electronic submission of 
     income tax returns for another person.
       ``(2) Refund anticipation loan.--The term `refund 
     anticipation loan' means any loan of money or any other thing 
     of value to a taxpayer in connection with the taxpayer's 
     anticipated receipt of a Federal tax refund. Such term 
     includes a loan secured by the tax refund or an arrangement 
     to repay a loan from the tax refund.
       ``(3) Refund anticipation loan fees.--The term `refund 
     anticipation loan fees' means the fees, charges, interest, 
     and other consideration charged or imposed by the lender or 
     facilitator for the making of a refund anticipation loan.
       ``(e) Regulations.--The Secretary may prescribe such 
     regulations as necessary to implement the requirements of 
     this section.''.
       (2) Clerical amendment.--The table of sections for chapter 
     77, as amended by this Act, is amended by adding at the end 
     the following new item:

``Sec. 7529. Refund anticipation loan facilitators.''.

       (b) Disclosure of Penalty.--Section 6103(k) (relating to 
     disclosure of certain returns and return information for tax 
     administration purposes) is amended by adding at the end the 
     following new paragraph:
       ``(10) Disclosure of penalties on refund anticipation loan 
     facilitators.--The Secretary may disclose the name and 
     employer (including the employer's address) of any person 
     with respect to whom a penalty has been imposed under section 
     7529 and the amount of any such penalty.''.
       (c) Use of Penalties.--Unless specifically appropriated 
     otherwise, there is authorized to be appropriated and is 
     appropriated to the Internal Revenue Service for each fiscal 
     year for the administration of the public awareness campaign 
     described in subsection (d) an amount equal to the penalties 
     collected during the preceding fiscal year under section 7529 
     of the Internal Revenue Code of 1986.
       (d) Public Awareness Campaign.--The Secretary of the 
     Treasury or the Secretary's delegate shall conduct a public 
     information and consumer education campaign, utilizing paid 
     advertising, to educate the public on making sound financial 
     decisions with respect to refund anticipation loans (as 
     defined under section 7529 of the Internal Revenue Code of 
     1986), including the need to compare--
       (1) the rates and fees of such loans with the rates and 
     fees of conventional loans; and
       (2) the amount of money received under the loan after 
     taking into consideration such costs and fees with the total 
     amount of the refund.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date that is 1 year after the date 
     of the enactment of this Act.
       (f) Termination of Debt Indicator Program.--The Secretary 
     of the Treasury shall terminate the Debt Indicator program 
     announced in Internal Revenue Service Notice 9958 and may not 
     implement any similar program.

     SEC. 7. TAXPAYER ACCESS TO FINANCIAL INSTITUTIONS.

       (a) Establishment of Program.--The Secretary of the 
     Treasury is authorized to award demonstration project grants 
     (including multi-year grants) to eligible entities which 
     partner with volunteer and low-income preparation 
     organizations to provide tax preparation services and 
     assistance in connection with establishing an account in a 
     federally insured depository institution for individuals that 
     currently do not have such an account.
       (b) Eligible Entities.--
       (1) In general.--An entity is eligible to receive a grant 
     under this section if such an entity is--
       (A) an organization described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from tax under 
     section 501(a) of such Code,
       (B) a federally insured depository institution,
       (C) an agency of a State or local government,
       (D) a community development financial institution,
       (E) an Indian tribal organization,
       (F) an Alaska Native Corporation,
       (G) a Native Hawaiian organization,
       (H) a labor organization, or
       (I) a partnership comprised of 1 or more of the entities 
     described in the preceding subparagraphs.
       (2) Definitions.--For purposes of this section--
       (A) Federally insured depository institution.--The term 
     ``federally insured depository institution'' means any 
     insured depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813)) and any 
     insured credit union (as defined in section 101 of the 
     Federal Credit Union Act (12 U.S.C. 1752)).
       (B) Community development financial institution.--The term 
     ``community development financial institution'' means any 
     organization that has been certified as such pursuant to 
     section 1805.201 of title 12, Code of Federal Regulations.
       (C) Alaska native corporation.--The term ``Alaska Native 
     Corporation'' has the same meaning as the term ``Native 
     Corporation'' under section 3(m) of the Alaska Native Claims 
     Settlement Act (43 U.S.C. 1602(m)).
       (D) Native hawaiian organization.--The term ``Native 
     Hawaiian organization'' means any organization that--
       (i) serves and represents the interests of Native 
     Hawaiians, and

[[Page S5105]]

       (ii) has as a primary and stated purpose the provision of 
     services to Native Hawaiians.
       (E) Labor organization.--The term ``labor organization'' 
     means an organization--
       (i) in which employees participate,
       (ii) which exists for the purpose, in whole or in part, of 
     dealing with employers concerning grievances, labor disputes, 
     wages, rates of pay, hours of employment, or conditions of 
     work, and
       (iii) which is described in section 501(c)(5) of the 
     Internal Revenue Code of 1986.
       (c) Application.--An eligible entity desiring a grant under 
     this section shall submit an application to the Secretary of 
     the Treasury in such form and containing such information as 
     the Secretary may require.
       (d) Limitation on Administrative Costs.--A recipient of a 
     grant under this section may not use more than 6 percent of 
     the total amount of such grant in any fiscal year for the 
     administrative costs of carrying out the programs funded by 
     such grant in such fiscal year.
       (e) Evaluation and Report.--For each fiscal year in which a 
     grant is awarded under this section, the Secretary of the 
     Treasury shall submit a report to Congress containing a 
     description of the activities funded, amounts distributed, 
     and measurable results, as appropriate and available.
       (f) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Secretary of the Treasury, for the 
     grant program described in this section, $10,000,000, or such 
     additional amounts as deemed necessary, to remain available 
     until expended.
       (g) Regulations.--The Secretary of the Treasury is 
     authorized to promulgate regulations to implement and 
     administer the grant program under this section.
       (h) Study on Delivery of Tax Refunds.--
       (1) In general.--The Secretary of the Treasury, in 
     consultation with the National Taxpayer Advocate, shall 
     conduct a study on the payment of tax refunds through 
     Treasury debit cards or other electronic means to assist 
     individuals that do not have access to financial accounts or 
     institutions.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     submit a report to Congress containing the result of the 
     study conducted under subsection (a).

     SEC. 8. CLARIFICATION OF TAXPAYER ASSISTANCE ORDER AUTHORITY.

       (a) In General.--Section 7811(b)(2) is amended--
       (1) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E), respectively, and
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) chapter 74 (relating to closing agreements and 
     compromises),''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to orders issued after the date of the enactment 
     of this Act.

     SEC. 9. CLARIFICATION OF STANDARDS FOR EVALUATION OF 
                   COMPROMISE OFFERS.

       Section 7122(d)(1) is amended--
       (1) by inserting ``based on doubt as to liability, doubt as 
     to collectibility, or equitable consideration'' after 
     ``dispute'', and
       (2) by inserting at the end the following new paragraph:
       ``(4) Equitable consideration.--In prescribing guidelines 
     under paragraph (1), the Secretary shall compromise a 
     liability to promote effective tax administration when it is 
     inequitable to collect any unpaid tax (or any portion 
     thereof, including penalties and interest) based on all of 
     the facts and circumstances, including--
       ``(A) whether the taxpayer acted reasonably, responsibly, 
     and in good faith under the circumstances, such as, by taking 
     reasonable actions to avoid or mitigate the tax liability or 
     delayed resolution of such liability,
       ``(B) whether the taxpayer is a victim of a bad act by a 
     third party or any other unexpected event that significantly 
     contributed to the tax liability or delayed resolution of 
     such liability,
       ``(C) whether the taxpayer has a recent history of 
     compliance with tax filing and payment obligations (before 
     and after the situation that led to the current tax 
     liability) or has a reasonable explanation for previous 
     noncompliance,
       ``(D) whether any Internal Revenue Service processing 
     errors, systemic or employee-related, led to or significantly 
     contributed to the tax liability,
       ``(E) whether the Internal Revenue Service action or 
     inaction has unreasonably delayed resolution of the tax 
     liability, and
       ``(F) any other fact or circumstance that would lead a 
     reasonable person to conclude that a compromise would be 
     fair, equitable, and in the best interest of tax 
     administration.''.
                                 ______