Congressional Record, Volume 156 Issue 53 (Thursday, April 15, 2010)

[Congressional Record Volume 156, Number 53 (Thursday, April 15, 2010)]
[Senate]
[Pages S2378-S2389]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. LEVIN (for himself, Mrs. Hutchison, Mr. Vitter, Ms.
Stabenow, Mr. Shelby, Ms. Collins, Mr. Brown of Ohio, and Ms.
Landrieu):
S. 3213. A bill to ensure that amounts credited to the Harbor
Maintenance Trust Fund are used for harbor maintenance; to the
Committee on Environment and Public Works.
Mr. LEVIN. Mr. President, today I am introducing the Harbor
Maintenance Act, a bill with bipartisan and multi-regional support that
would help ensure that funds deposited into the Harbor Maintenance
Trust Fund would be used for their intended purposes: to properly
maintain and operate our Federal harbors and ports.
The Harbor Maintenance Trust Fund, also known as the HMTF, was
created to collect fees in order to pay for the

[[Page S2379]]

maintenance and operation costs of Federal harbors and ports. While
nearly \1/4\ of the U.S. gross domestic product flows through these
harbors, over half of these important ports are not maintained to their
authorized dimensions. This results in less efficient and more
polluting transport, as well as an increased risk of vessel groundings
and collisions. One of the ways to ensure a robust and sustainable
economic recovery includes strengthening our Nation's infrastructure,
which includes our navigational infrastructure.
Every year, hundreds of millions of dollars are collected into the
HMTF but never spent, even though there are critical navigation needs.
For example, the Army Corps of Engineers estimates a backlog of about
15 million cubic yards of dredging needs at commercial federally-
authorized Great Lakes harbors and channels. This dredging backlog has
resulted in freighters getting stuck in channels, ships having to carry
reduced loads, and some shipments simply stopping altogether.Dredging
to proper depths is critical not only for Michigan's economy, but for
the Nation's economy, as these shipments include commodities that fuel
our Nation's industries, products for construction, fuel for heating
and cooling homes and businesses, and agricultural products for export.
Similar navigational infrastructure needs exist throughout our
country, and the range of cosponsors from different parts of the
country demonstrates this bill would help improve the navigational
infrastructure across the Nation. This bill also has the support of a
broad coalition called the Realize America's Maritime Promise, which is
made up of hundreds of port authorities, vessel operators, port
communities, public and private terminal operators, pilot associations,
dredging companies, shipbuilders, maritime labor unions, manufacturers,
bulk cargo owners and shippers, and other companies and associations
dependent on fully accessible navigation channels.
Currently, the HMTF has a surplus that exceeds $5 billion. Beginning
in 2003, funds appropriated for harbor and channel maintenance have
been significantly below annual HMTF collections. To help ensure these
backlogs do not continue to grow, this bill would allow any Member of
Congress to make a point of order against an appropriations bill if the
total revenue for that fiscal year, as projected in the President's
annual budget request, is not fully appropriated for its intended
navigational infrastructure purposes. Similar problems with funding
backlogs occurred with the Highway Trust Fund and the Airports and
Airways Trust Fund. Congress responded by enacting legislation to
address these problems. Congress should do the same for the Harbor
Maintenance Trust Fund. Our Nation's infrastructure--whether it be
roadways, airports, or ports and harbors--should be treated the same
way. Shipping by water is the most efficient means of transporting bulk
commodities, and we should make sure our Nation's navigational
infrastructure can effectively handle these shipments, rather than
allowing these ports and harbors to exist in a state of disrepair.
A sustainable economic recovery depends on strong infrastructure.
Passing this bill would help us advance our recovery and improve our
economic competitiveness. I urge your support.
______

By Mr. SPECTER (for himself, Mr. Feingold, and Mr. Kaufman):
S. 3214. A bill to prohibit any person from engaging in certain video
surveillance except under the same conditions authorized under chapter
119 of title 18, United States Code, or as authorized by the Foreign
Intelligence Surveillance Act of 1978; to the Committee on the
Judiciary.
Mr. SPECTER. Mr. President, I have sought recognition to introduce
the Surreptitious Video Surveillance Act of 2010, on behalf of Senator
Feingold, Senator Kaufman, and myself.
This is a bill which I submit is necessary to protect our citizens
from unwarranted intrusions in their homes. The bill regulates the use
of surreptitious video surveillance in private residences where there
is a reasonable expectation of privacy.
Earlier this year, in Lower Merion Township, a suburb of
Philadelphia, it was discovered that laptops taken home by students
could be activated by school officials and thereby see what was going
on inside a private residence.
Surprisingly, this kind of surreptitious surveillance is not
prohibited under Federal law. The wiretap laws specify it is a
violation of law to intercept a telephone conversation or to have a
microphone that overhears a private conversation, but if it is visual,
there is no prohibition.
This issue has been in the public domain since 1984--more than 25
years ago--when Judge Richard Posner, in the case captioned U.S. v.
Torres, said this:

Electronic interception, being by nature a continuing
rather than one-shot invasion, is even less discriminating
than a physical search, because it picks up private
conversations (most of which will usually have nothing to do
with any illegal activity) over a long period of time. . . .
[E]lectronic interception is thought to pose a greater
potential threat to personal privacy than physical searches.
. . . Television surveillance is identical in its
indiscriminate character to wiretapping and bugging.

Judge Posner identified the problem a long time ago. Yet it lay
dormant until this incident in Lower Merion Township brought it into
the public fore.
On March 29, in my capacity as chairman of the Judiciary Subcommittee
on Crime and Drugs, we conducted a hearing in Philadelphia. We had an
array of experts very forcefully identify the problem and the need for
corrective action.
The New York Times editorialized, on April 2, 2010, in favor of this
legislation.
I urge my colleagues to take a look at the bill. I think there is
likely to be widespread acceptance that in an era of warrantless
wiretaps, when privacy is so much at risk, we ought to fill the gap in
the law to cover this kind of electronic surveillance.
Mr. President, I ask unanimous consent that a copy of the New York
Times editorial dated April 2, 2010, the text of my full statement and
the text of the bill be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the New York Times, Apr. 2, 2010]

Editorial: About That Webcam

A Pennsylvania town has been roiled by a local high school
using cameras in school-issued laptops to spy on students.
Almost as shocking is the fact that the federal wiretap law
that should prohibit this kind of surveillance does not cover
spying done through photography and video in private
settings.
Senator Arlen Specter, a Democrat of Pennsylvania, is
proposing to amend the federal wiretap statute to prohibit
visual spying that is not approved by a court in advance.
Congress should move quickly to make this change.
Lower Merion, outside of Philadelphia, gave students at
Harriton High School laptops that they could take home to use
to do their work. It did not tell the students, however, that
the laptops were equipped with special software that allowed
them to observe the students through the computers' built-in
cameras. The purpose, the school district later explained,
was to protect the laptops from theft or damage.
Using this surveillance capability, school officials found
images that led them to believe that Blake Robbins, a 15-
year-old student, was using illegal drugs. Mr. Robbins said
the ``pills'' he was seen consuming were Mike and Ike
candies. His parents filed a lawsuit against the school
district, charging that it had illegally spied on their son.
Conducting video surveillance of students in their homes is
an enormous invasion of their privacy. If the district was
really worried about losing the laptops, it could have used
GPS devices to track their whereabouts or other less-
intrusive methods. Whatever it did, the school had a
responsibility to inform students that if they accepted the
laptops, they would also accept monitoring.
The law should also do more. The Wiretap Act prohibits
electronic eavesdropping on conversations and intercepting
transmitted communications, such as e-mail. It does not cover
visual surveillance. That was a mistake when parts of the law
were passed in 1986, but it is an even bigger problem today,
with the ubiquity of cellphone cameras, and online video
services.
The act should be amended to prohibit video and
photographic surveillance of people without their consent in
their homes, hotels, and any other place in which they have a
legitimate expectation of privacy.
____

Floor Statement of Senator Arlen Specter in Support of the
Surreptitious Video Surveillance Act of 2010

Mr. President, I have sought recognition to introduce the
Surreptitious Video Surveillance Act of 2010, a bill needed
to protect our citizens from unwarranted intrusions in their
homes. This bill regulates the use of surreptitious video
surveillance in private

[[Page S2380]]

residences where there is a reasonable expectation of
privacy.
In February of this year, national and international news
stories covered an alleged incident in the Lower Merion
School District in Montgomery County, PA. According to a
lawsuit filed in Federal court, the Harriton High School
administrators in Lower Merion allegedly engaged in
surreptitious video surveillance of a student in his bedroom
by using a remotely activated webcam on a school laptop. If
these allegations are true, the school engaged in a
significant invasion of an individual's fundamental right of
privacy. Michael and Holly Robbins, parents of the high
school student, allege that the school used a webcam, which
was part of a theft tracking software program installed in
each school-issued laptop, to remotely take photographs of
their son in their home. The parents allege that the school
district's actions amounted to ``spying'' and conducting
unlawful ``surveillance,'' and they claim that they were not
given prior notice that the school could remotely activate
the embedded webcam at any time.
This is something that could happen almost anywhere and at
any time in our country. Many corporations, government
agencies and schools loan laptops to employees and students.
And many of these laptops have webcams with the ability to
take video or still shots that can be operated remotely.
The alleged webcam spying case raises important and
fundamental issues concerning the rights of individuals to
privacy in their homes for themselves and for their children,
and shows how those rights can conflict with important rights
that owners of property have to conduct surveillance to
protect their property and to maintain safety.
On Monday, March 29, 2010, I chaired a Subcommittee on
Crime and Drugs field hearing in Philadelphia, Pennsylvania.
At that hearing, we heard from a host of experts that Title
III of the Omnibus Crime Control and Safe Streets Act, known
as the Federal Wiretap Act, does not forbid video
surveillance. Title III creates criminal and civil liability
for secretly recording conversations in a room or on the
telephone, as well as interceptions of email communications,
without a court order. But since the Wiretap Act was passed
in 1968, it has never covered silent visual images. This
conclusion is supported by a large body of case law and is
also bolstered by Congress' clear legislative history. After
studying the matter, I announced that I would introduce
legislation to close this gap in coverage. On April 2, 2010,
the New York Times editorial page noted I would introduce
legislation ``to amend the federal wiretap statute to
prohibit visual spying that is not approved by a court in
advance'' and went on to say, ``Congress should move quickly
to make this change.''
Technology is changing fast--faster than our federal laws
can keep up. More than 25 years ago, Judge Richard Posner in
United States v. Torres, 751 F.2d 875, 884-885 (7th Cir.
1984), saw the need for Congress to address video
surveillance when he wrote:

Electronic interception, being by nature a continuing
rather than one-shot invasion, is even less discriminating
than a physical search, because it picks up private
conversations (most of which will usually have nothing to do
with any illegal activity) over a long period of time . . .
[E]lectronic interception is thought to pose a greater
potential threat to personal privacy than physical searches .
. . Television surveillance is identical in its
indiscriminate character to wiretapping and bugging (emphasis
in original).

Holding that Title III did not apply to secret television
cameras placed by the government in a safe house to observe
members of the FALN terrorist organization build bombs, Judge
Posner specifically invited Congress to respond ``to the
issues discussed in this opinion by amending Title III to
bring television surveillance within its scope.''
The bill I am introducing today, the Surreptitious Video
Surveillance Act of 2010, makes that long overdue correction
to the law. The bill strikes the necessary and correct
balance of protecting important privacy rights without
proscribing the visual surveillance needed to protect our
property and safety. It does this simply by amending the
Federal Wiretap Act to treat video surveillance the same as
an interception of an electronic communication. Video
surveillance is defined in the bill to mean the intentional
recording of visual images of an individual in an area of a
residence that is not readily observable from a public
location and in which the individual has a reasonable
expectation of privacy.
The bill does not regulate video surveillance where another
resident or individual present in the residence consents to
the surveillance. Thus, the bill does not regulate cameras in
the workplace, does not prohibit the use of cameras in
undercover operations using confidential informants, and does
not include residential security systems that use video
cameras.
Many of us expect to be subject to certain kinds of video
surveillance when we leave our homes and go out each day--at
the ATM machine, at traffic lights, or in stores for example.
We expect this and we do not mind because we understand that
such surveillance helps to protect us and our property. What
we do not expect, however, is to be under visual surveillance
in our homes, in our bedrooms, and most especially, we do not
expect it for our children in our homes. Today cameras in
computers and in cell phones are ubiquitous, making it more
urgent that the Federal Wiretap Act be amended to prohibit
video surveillance of people without their consent in their
homes. I urge the Senate to make this long overdue correction
to the law and pass this bill quickly to protect important
privacy rights of all Americans.
____

S. 3214

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Surreptitious Video
Surveillance Act of 2010''.

SEC. 2. PROHIBITION ON USE OF VIDEO SURVEILLANCE.

(a) In General.--Chapter 119 of title 18, United States
Code, is amended by adding at the end the following:

``Sec. 2523. Prohibition on use of video surveillance

``(a) Definition.--In this section, the term `video
surveillance' means the intentional acquisition, capture, or
recording of a visual image or images of any individual if--
``(1) the individual is in an area of a temporary or
permanent residence that is not readily observable from a
public location;
``(2) the individual has a reasonable expectation of
privacy in the area; and
``(3) the visual image or images--
``(A) are made without the consent of--
``(i) an individual present in the area; or
``(ii) a resident of the temporary or permanent residence;
and
``(B) are--
``(i) produced using a device, apparatus, or other item
that was mailed, shipped, or transported in or affecting
interstate or foreign commerce by any means; or
``(ii) transported or transmitted, in or affecting, or
using any means or facility of, interstate or foreign
commerce, including by computer.
``(b) Prohibition on Video Surveillance.--It shall be
unlawful for any person to engage in any video surveillance,
except--
``(1) as provided in this section; or
``(2) as authorized under the Foreign Intelligence
Surveillance Act of 1978 (50 U.S.C. 1801 et seq.).
``(c) Treatment as Electronic Surveillance.--
``(1) In general.--Subject to paragraph (2)--
``(A) video surveillance shall be considered to be an
interception of an electronic communication for the purposes
of this chapter; and
``(B) it shall not be unlawful for a person to engage in
video surveillance if the video surveillance is conducted in
a manner or is of a type authorized under this chapter for
the interception of an electronic communication.
``(2) Exception.--Sections 2511(2)(c), 2511(2)(d), 2512,
2513, and 2518(10)(c) shall not apply to video surveillance.
``(3) Prohibition of use as evidence of video
surveillance.--
``(A) In general.--No part of the contents of video
surveillance and no evidence derived from video surveillance
may be received in evidence in any trial, hearing, or other
proceeding in or before any court, grand jury, department,
officer, agency, regulatory body, legislative committee, or
other authority of the United States, a State, or political
subdivision thereof if the disclosure of the video
surveillance would be in violation of this chapter.
``(B) Motion to suppress.--
``(i) In general.--Any aggrieved person in any trial,
hearing, or proceeding described in subparagraph (A) may move
to suppress the contents of any video surveillance conducted
under this chapter, or any evidence derived from the video
surveillance, on the grounds that--

``(I) the video surveillance was unlawfully conducted;
``(II) the order of authorization or approval under which
the video surveillance was conducted was insufficient on its
face; or
``(III) the video surveillance was not conducted in
conformity with the order of authorization or approval.

``(ii) Timing of motion.--A motion made under clause (i)
shall be made before the trial, hearing, or proceeding
unless--

``(I) there was no opportunity to make such motion; or
``(II) the aggrieved person described in clause (i) was not
aware of the grounds of the motion.

``(iii) Remedy.--If the motion made under clause (i) is
granted, the contents of the video surveillance, or evidence
derived from the video surveillance, shall be treated as
having been obtained in violation of this chapter.
``(iv) Inspection of evidence.--The judge, upon filing of a
motion under clause (i), may, in the discretion of the judge,
make available to the aggrieved person or counsel for the
aggrieved person for inspection such portions of the video
surveillance or evidence derived from the video surveillance
as the judge determines to be in the interests of justice.
``(v) Right to appeal.--

``(I) In general.--In addition to any other right to
appeal, the United States shall have the right to appeal from
an order granting a motion made under clause (i), or the
denial of an application for an order of approval, if the
United States attorney certifies to the judge or other
official granting the motion or denying the application that
the appeal is not taken for purposes of delay.

[[Page S2381]]

``(II) Filing deadline.--An appeal under subclause (I)
shall--

``(aa) be taken within 30 days after the date the order was
entered; and
``(bb) be diligently prosecuted.''.
(b) Chapter Analysis.--The table of sections for chapter
119 of title 18, United States Code, is amended by adding at
the end the following:

``2523. Prohibition on use of video surveillance.''.
______

By Mr. BINGAMAN (for himself, Mr. Schumer, Mr. Kerry, Mr.
Menendez, Mr. Akaka, Mr. Brown of Ohio, Mr. Dodd, Mr. Durbin,
Mr. Lieberman, Mr. Merkley, Mr. Pryor, and Mr. Udall of New
Mexico):
S. 3215. 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, on this annual Tax Day, I rise to
introduce the Taxpayer Protection and Assistance Act of 2007, a robust
package of reforms aimed at protecting the rights of all American
taxpayers. I am pleased that my colleagues on the Finance Committee,
Senators Schumer, Kerry, and Menendez, as well as Senators Akaka, Brown
of Ohio, Dodd, Durbin, Lieberman, Merkley, Pryor, and Udall of New
Mexico, are joining me in introducing this bill.
This act consists of numerous well-vetted provisions, which will
ensure 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.
First, the act clarifies taxpayers' rights and responsibilities by
requiring Treasury to publish an easy-to-understand Taxpayer Bill of
Rights, enumerating taxpayers' rights and obligation, and corresponding
Internal Revenue Code citations. As the National Taxpayer Advocate has
explained: ``The [Internal Revenue] Code contains no comprehensive
Taxpayer Bill of Rights that explicitly and transparently sets out
taxpayer rights and obligations. Taxpayers do have rights, but they are
scattered throughout the [Internal Revenue] Code and the Internal
Revenue Manual and are neither easily accessible nor written in plain
language that most taxpayers can understand.'' The act would rectify
these shortcomings, without conferring any rights or obligations not
already provided for under law.
Second, the act supports programs that assist low-income taxpayers.
It authorizes a $35 million grant program for Volunteer Income Tax
Assistance, VITA, programs. VITA programs across the country offer free
tax assistance to low- to moderate-income individuals who cannot afford
professional assistance. More than 75,000 VITA volunteers prepare basic
tax returns for these taxpayers; typically VITA programs focus on at
least one specific underserved group with special needs--such as
persons with disabilities, non-English speaking persons, Native
Americans, rural taxpayers, and the elderly. During the 2009 filing
season, VITA programs prepared more than 1.2 million tax returns and
brought back over $1.6 billion in tax refunds to working families.
I have seen firsthand the impact that free tax-preparation clinics
can have on taxpayers and their communities. In fact, New Mexico is
fortunate to have one of the nation's leading programs. Tax Help New
Mexico began 35 years ago at Central New Mexico Community College, CNM,
as a practical means of giving accounting students work experience in
tax preparation while serving a community need. But while 70 percent of
New Mexicans are eligible for Tax Help New Mexico's services, only 6.5
percent are able to take advantage. To enable community VITA programs
like Tax Help New Mexico to reach more underserved low-income
taxpayers, the act authorizes a $35 million IRS grant program.
Likewise, the act would strengthen Low-Income Taxpayer Clinics. These
clinics, typically operated by community organizations and law schools,
provide representation to low-income taxpayers in disputes with the
IRS. The act authorizes the Treasury Secretary to refer taxpayers to
these clinics. It also increases to $20 million annually the
authorization for LITC grant programs. This will provide a substantial
boost to clinics that serve this vital function, such as that which the
University of New Mexico Law School operates for taxpayers in my state.
Third, the act enhances the regulation of paid tax-return preparers.
Nearly all professions--from beauticians to mortuaries to opticians--
are regulated at the state level. But with only a handful of
exceptions, states do not regulate tax return preparers. Nor does the
federal government currently regulate unenrolled tax return preparers,
i.e., return preparers who are not CPAs, attorneys, enrolled agents, or
enrolled actuaries--all already regulated under IRS Circular 230. A
significant percentage of unenrolled preparers are well-trained and
maintain high ethical standards. But untrained and unscrupulous tax
return preparers can inflict serious harm on taxpayers and
significantly undermine tax compliance.
For years, taxpayers, tax professionals, and the National Taxpayer
Advocate have been calling for federal regulation of unenrolled
preparers. In early 2010, the IRS began taking steps to exercise
oversight over these unenrolled preparers. I applaud the IRS's
initiative. But it is still unclear that the IRS's program will be
sufficiently comprehensive. Moreover, many see a benefit in clarifying
the scope of the IRS's regulatory authority.
The act responds to these concerns by codifying a regulatory system
for unenrolled preparers. In order for a tax preparer to become
registered and authorized by Treasury, the act requires preparers to
pass a basic background check and an examination of competency and
ethics standards. To remain in good standing, preparers will be
required to satisfy continuing education requirements or be reexamined
every three years on changes in tax law and common preparation
mistakes. The act requires Treasury to maintain and publish for
taxpayers a comprehensive list of all authorized tax return preparers,
including Circular 230 preparers.
Fourth, the act creates an oversight system for tax refund delivery
products. Refund Anticipation Loans, RALs, are high-cost bank loans
secured by a taxpayer's expected refund--loans that typically last 7 to
14 days, until the actual IRS refund arrives and is used to repay the
loan. RALs are often aggressively marketed by paid income-tax
preparers, which advertise ``Instant Refunds'' or ``Quick Cash,''
sometimes disguising that they are selling advance loans on anticipated
tax refunds. According to the National Consumer Law Center: ``Tax
preparers and their bank partners made approximately 8.7 million RALs
during the 2007 tax-filing season. . . .'' In my state of New Mexico,
25 percent of taxpayers eligible for the Earned Income Tax Credit
received a RAL in 2005.
RALs might offer quick cash, but they are not a good deal for
taxpayers. As the National Consumer Law Center exposed in a 2009
report, the typical RAL of about $3,000 carries an annual percentage
rate, APR, from 77 percent to 140 percent. We know that our vulnerable
communities are particularly susceptible to RALs. In fact, a recent
study by the First Nations Development Institute and Center for
Responsible Lending found that RALs drained over $9.1 million from
Native American communities in 2005.
I am very troubled by the prevalence of RALs. And to begin addressing
problems associated with them, the act requires Treasury to establish a
registration program for those involved in the process of facilitating
a tax refund delivery product, RDP, including RALs. Additionally,
RDP facilitators will be required to disclose in writing and in an
easily understandable format the taxpayer's options for receiving tax
refunds, listed from least expensive to most expensive, the RDP's loan
terms and fee schedule, and any other costs that the taxpayer may incur
in filing a tax return. Moreover, the Act would prohibit Treasury from
issuing a Refund Indicator, a score on which RDP facilitators rely
before issuing a RDP, unless Treasury first determines that the
taxpayer's refund would not be prevented by debts the taxpayer owes on
student loans, child support, or by other provisions in the Tax Code.
This additional screen will minimize the likelihood that a taxpayer
will be issued a loan based on a refund claim that will not ultimately
materialize

[[Page S2382]]

and which the taxpayer would nonetheless be required to repay.

Fifth, the act requires additional protections before the IRS files a
federal tax lien. The IRS has a number of enforcement tools at its
disposal to ensure tax compliance, but use of these tools must be
balanced with the need to ensure taxpayers do not suffer unnecessary
long-term harm as a result. One such tool is the filing of a Notice of
Federal Tax Lien, NFTL, when a taxpayer owes back taxes. But as the
National Taxpayer Advocate explains in her 2009 Report to Congress:
``[The filing of a tax lien can significantly harm the taxpayer's
credit and affect his or her ability to obtain financing, find or
retain a job, secure affordable housing or insurance, and ultimately
pay the outstanding tax debt. For these reasons, the National Taxpayer
Advocate believes that the IRS should not automatically file NFTLs but
instead should carefully consider and balance these competing interests
when determining whether a lien filing is appropriate.'' In my state
alone, the IRS filed nearly 5,000 liens against taxpayers last year.
The act would require the IRS to make individualized determinations
before filing an NFTL, and in doing so to consider several enumerated
factors, including the amount due, the taxpayer's compliance history,
and any extenuating circumstances.
Sixth, the act establishes a demonstration program to provide
accounts to those who currently lack bank accounts. IRS data show that
of the 60 million Federal tax refunds that were issued via paper checks
in 2005, almost half went to households earning $30,000 or less. These
households are most likely to lack access to reasonably-priced
financial services--and thus most likely to pay a disproportionate
amount of their income to conduct routine financial transactions. Yet
the issuance of a refund check presents an important opportunity to
bring these low-income taxpayers into the financial mainstream. The act
authorizes Treasury to award eligible entities demonstration project
grants so that they can establish accounts for individuals who
currently lack bank accounts. The act also requires a study on the
feasibility of delivering tax refunds on debit, prepaid, and other
electronic cards.
Finally, the act requires the IRS to study processing information
returns and the effectiveness of collection alternatives. Currently,
the IRS processes income tax returns before it processes most
information returns, such as W-2s and 1099s. From the taxpayer's
perspective, this leads to millions of cases where taxpayers may
inadvertently make overclaims that the IRS does not identify until
months later, exposing the taxpayer not only to additional tax
liability, but to penalties and interest. This sequence also provides
opportunities for fraud and requires the IRS to devote resources that
should have not been paid and that it often cannot recover. The act
also directs Treasury to conduct a study to identify and recommend
legislative and administrative changes that would enable the IRS to
receive and process information reporting documents before it processes
tax returns. This should bring us closer to the goal of voluntary pre-
populated returns, which I understand are already available in most
OECD countries.
I have long maintained that our tax system depends 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 would be remiss if I did not acknowledge that this bill is the
product of considerable collaboration. It draws on many recommendations
of our National Taxpayer Advocate, Nina Olson. It also builds on input
we have received from national and local taxpayer advocacy
organizations, among them the Center for Economic Progress, Tax Help
New Mexico, and the Maryland CASH Campaign. I am grateful for these
stakeholders' participation.
These are long overdue reforms; I hope that the Senate will consider
them in this session.
Mr. President, 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. 3215

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
Bill of Rights Act of 2010''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; etc.

TITLE I--TAXPAYER RIGHTS AND OBLIGATIONS

Sec. 101. Statement of taxpayer rights and obligations.

TITLE II--PREPARATION OF TAX RETURNS

Sec. 201. Programs for the benefit of low-income taxpayers.
Sec. 202. Regulation of Federal income tax return preparers.
Sec. 203. Refund delivery products.
Sec. 204. Preparer penalties with respect to preparation of returns and
other submissions.
Sec. 205. Clarification of enrolled agent credentials.

TITLE III--IMPROVING TAXPAYER SERVICES

Sec. 301. Individualized lien determination required before filing
notice of lien.
Sec. 302. Ban on audit insurance.
Sec. 303. Public awareness.
Sec. 304. Clarification of taxpayer assistance order authority.
Sec. 305. Taxpayer advocate directives.
Sec. 306. Improved services for taxpayers.
Sec. 307. Taxpayer access to financial institutions.
Sec. 308. Additional studies.

TITLE I--TAXPAYER RIGHTS AND OBLIGATIONS

SEC. 101. STATEMENT OF TAXPAYER RIGHTS AND OBLIGATIONS.

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

``SEC. 7529. STATEMENT OF TAXPAYER RIGHTS AND OBLIGATIONS.

``(a) In General.--The Secretary, in consultation with the
National Taxpayer Advocate, shall publish a summary statement
of rights and obligations arising under this title. Such
statement shall provide citations to the main provisions of
this title which provide for the right or obligation (as the
case may be). This statement of rights and obligations does
not create or confer any rights or obligations not otherwise
provided for under this title.
``(b) Statement of Rights and Obligations.--The statement
of rights and obligations is as follows:
``(1) Taxpayer rights.--
``(A) Right to be informed (including adequate legal and
procedural guidance and information about taxpayer rights).
``(B) Right to be assisted.
``(C) Right to be heard.
``(D) Right to pay no more than the correct amount of tax.
``(E) Right of appeal (administrative and judicial).
``(F) Right to certainty (including guidance, periods of
limitation, no second exam, and closing agreements).
``(G) Right to privacy (including due process
considerations, least intrusive enforcement action, and
search and seizure protections).
``(H) Right to confidentiality.
``(I) Right to appoint a representative in matters before
the Internal Revenue Service.
``(J) Right to fair and just tax system (offer in
compromise, abatement, assistance from the Office of the
Taxpayer Advocate under section 7803(c), apology, and other
compensation payments).
``(2) Taxpayer obligations.--
``(A) Obligation to be honest.
``(B) Obligation to be cooperative.
``(C) Obligation to provide accurate information and
documents on time.
``(D) Obligation to keep records.
``(E) Obligation to pay taxes on time.''.
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:

``Sec. 7529. Statement of taxpayer rights and obligations.''.
(c) Effective Date.--The amendments made by this section
shall take effect 180 days after the date of the enactment of
this Act.

TITLE II--PREPARATION OF TAX RETURNS

SEC. 201. PROGRAMS FOR THE BENEFIT OF LOW-INCOME TAXPAYERS.

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

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

``(a) In General.--The Secretary may, subject to the
availability of appropriated funds, make grants to provide
matching funds for the development, expansion, or

[[Page S2383]]

continuation of qualified return preparation programs.
``(b) Definitions.--For purposes of this section--
``(1) Qualified return preparation program.--
``(A) In general.--The term `qualified return preparation
program' means a program--
``(i) which does not charge taxpayers for its return
preparation services,
``(ii) which operates programs which assist low-income
taxpayers, including those programs that serve taxpayers for
whom English is a second language, in preparing and filing
their Federal income tax returns, including schedules
reporting sole proprietorship or farm income, and
``(iii) in which all of the volunteers who assist in the
preparation of Federal income tax returns meet the training
requirements prescribed by the Secretary.
``(B) Assistance to low-income taxpayers.--For purposes of
subparagraph (A), a program is treated as assisting low-
income taxpayers if at least 90 percent of the taxpayers
assisted by the program 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) Program.--The term `program' includes--
``(A) a program at an institution of higher education
which--
``(i) is described in section 102 (other than subsection
(a)(1)(C) thereof) of the Higher Education Act of 1965 (20
U.S.C. 1088), as in effect on the date of the enactment of
this section, and which has not been disqualified from
participating in a program under title IV of such Act, and
``(ii) satisfies the requirements of paragraph (1) through
student assistance of taxpayers in return preparation and
filing,
``(B) an organization described in section 501(c) and
exempt from tax under section 501(a) which satisfies the
requirements of paragraph (1);
``(C) a regional, State or local coalition (with one lead
organization, which meets the eligibility requirements,
acting as the applicant organization);
``(D) a county or municipal government agency;
``(E) an Indian tribe, as defined in section 4(12) of the
Native American Housing Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4103(12), and includes any tribally
designated housing entity (as defined in section 4(21) of
such Act (25 U.S.C. 4103(21)), tribal subsidiary,
subdivision, or other wholly owned tribal entity;
``(F) a section 501(c)(5) organization;
``(G) a State government agency if no other eligible
organization is available to assist the targeted population
or community;
``(H) a Cooperative Extension Service office if no other
eligible organization is available to assist the targeted
population or community; and
``(I) a nonprofit Community Development Financial
Institution (CDFI) and federally- and State-charted credit
union that qualifies for a tax exemption under sections
501(c)(1) and 501(c)(14), respectively.
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $35,000,000 per year (exclusive of costs of
administering the program) to grants under this section.
``(2) Use of grants for overhead expenses prohibited.--No
grant made under this section may be used for overhead
expenses that are not directly related to any program or that
are incurred by any institution sponsoring such program.
``(3) Other applicable rules.--Rules similar to the rules
under paragraphs (2) through (6) of section 7526(c) shall
apply with respect to the awarding of grants to qualified
return preparation programs.
``(4) Promotion of programs.--The Secretary is authorized
to promote the benefits of and encourage the use of qualified
VITA Plus through the use of mass communications, referrals,
and other means.''.
(b) Low-Income Taxpayer Clinics.--
(1) Increase in authorized grants.--Paragraph (1) of
section 7526(c) (relating to aggregate limitation) is amended
by striking ``$6,000,000'' and inserting ``$20,000,000''.
(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 that are not directly related to the clinic or that
are 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.--Subsection (c) of section 7526
(relating to special rules and limitations), 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 qualified
low-income taxpayer clinics through the use of mass
communications, referrals, and other means.''.
(4) IRS referrals to clinics.--Subsection (c) of section
7526 (relating to special rules and limitations), as amended
by the preceding provisions of this subsection, is amended by
adding at the end the following new paragraph:
``(8) IRS referrals.--The Secretary may refer taxpayers to
qualified low-income taxpayer clinics receiving funding under
this section.''.
(5) Notice of availability of clinics in notice of
deficiency.--Subsection (a) of section 6212 (relating to
general rule for notice of deficiency) is amended by
inserting ``, as well as notice regarding the availability of
low-income taxpayer clinics and information about how to
contact them'' before the period at the end.
(6) Notice of availability of clinics in notice of hearing
upon filing of notice of lien.--Subsection (a) of section
6320 (relating to requirement of notice) is amended by adding
at the end the following new sentence: ``Such notice shall
include a notice to the taxpayer of the availability of low-
income taxpayer clinics and information about how to contact
them.''.
(7) Notice of availability of clinics in notice and
opportunity of hearing before levy.--Paragraph (3) of section
6330(a) is amended by adding at the end the following flush
sentence:
``Such notice shall include a notice to the taxpayer of the
availability of low-income taxpayer clinics and information
about how to contact them.''.
(c) 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. Volunteer income tax assistance plus.''.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.

SEC. 202. REGULATION OF FEDERAL INCOME TAX RETURN PREPARERS.

(a) In General.--Section 330(a)(1) of title 31, United
States Code, is amended by inserting ``(including tax return
preparers of Federal tax returns, documents, and other
submissions)'' after ``representatives''.
(b) Promulgation of Regulations.--The Secretary of the
Treasury shall prescribe regulations under section 330 of
title 31, United States Code, to regulate any tax return
preparers not otherwise regulated by the Secretary.
(c) Requirements.--Such regulations shall provide guidance
on the following:
(1) Examination.--
(A) In general.--In promulgating the regulations under
paragraph (1), the Secretary shall approve and oversee
eligibility examinations.
(B) 2 examinations.--One such examination shall be designed
to test technical knowledge and competency to prepare
individual returns, and the other examination shall be
designed to test technical knowledge and competency to
prepare business income tax returns.
(C) EITC.--The examination relating to individual returns
shall test knowledge and competency regarding properly
claiming the earned income tax credit under section 32 of the
Internal Revenue Code of 1986.
(D) Ethics.--Both examinations under subparagraph (B) shall
test knowledge regarding such ethical standards for the
preparation of such returns as determined appropriate by the
Secretary.
(E) Grandfather.--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 a State licensing
or State registration program eligibility examination that
the Secretary determines is comparable to either of the
eligibility examinations described in subparagraph (B) if
such exam is administered within 5 years after the date of
the issuance of the regulations under this section.
(2) Suitability standards.--The Secretary shall provide
suitability standards for practicing as a tax return
preparer, including tax compliance with the requirements of
the Internal Revenue Code of 1986.
(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 tax return preparer must renew
such eligibility.
(B) Continuing professional education requirements.--As
part of the renewal of eligibility, such regulations shall
require that each such tax return preparer show evidence of
completion of such continuing education or testing
requirements as specified by the Secretary.
(C) Nonmonetary sanctions.--
(i) The regulations under this section shall provide for
the denial, suspension or termination of such eligibility in
the event of any failure to comply with the requirements
promulgated hereunder.
(ii) Under such regulations, the Secretary shall establish
procedures for the appeal of any determination under this
paragraph.
(d) Penalty for Unauthorized Preparation of Returns.--
(1) In general.--In promulgating the regulations pursuant
to subsection (b), the Secretary shall impose a penalty of
$1,000 for each Federal tax return, document, or other
submission prepared by a tax return preparer

[[Page S2384]]

who is not in compliance with the regulations promulgated
under this section 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.
(2) Exception.--No penalty may be imposed under paragraph
(1) with respect to any failure if it is shown that such
failure is due to reasonable cause.
(e) Definitions.--For purposes of this section--
(1) Tax return preparer.--The term ``tax return preparer''
has the meaning given by section 7701(a)(36) of the Internal
Revenue Code of 1986, and includes any person requiring the
purchase of services, a financial product or goods in lieu of
or in addition to direct monetary payment.
(2) Secretary.--The terms ``Secretary of the Treasury'' and
``Secretary'' mean the Secretary of the Treasury or the
delegate of the Secretary.
(f) Public Awareness Campaign.--The Secretary 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.
(g) Effective Dates.--
(1) In general.--The amendment made by this section shall
take effect on the date of the enactment of the Act.
(2) Regulations.--The regulations required by section
330(d) of title 31, United States Code, shall be prescribed
not later than 2 years after the date of the enactment of
this Act.
(3) Full implementation.--The Secretary, taking into
consideration the complexity and magnitude of the
requirements set forth under this Act, may delay full
implementation of the regulations promulgated herein not
later than the fifth filing season after the enactment of
this Act.

SEC. 203. REFUND DELIVERY PRODUCTS.

(a) In General.--Chapter 77 (relating to miscellaneous
provisions), as amended by section 101, is amended by adding
at the end the following new section:

``SEC. 7530. REFUND DELIVERY PRODUCTS.

``(a) Registration.--
``(1) In general.--The Secretary shall by regulation
require each refund delivery product facilitator to register
annually with the Secretary.
``(2) Registration requirements.--A registration shall
under paragraph (1) shall include--
``(A) the name, address, and TIN of the refund delivery
product facilitator, and
``(B) the fee schedule of the facilitator for the year.
``(3) Display of registration certificate.--The certificate
of registration under paragraph (1) shall be displayed in the
facility of the refund delivery product facilitator in the
manner required by the Secretary.
``(b) Disclosure Requirements.--
``(1) In general.--Each refund delivery product facilitator
registered with the Secretary shall be subject to the
requirements of paragraphs (2) through (5).
``(2) Taxpayer education.--The requirements of this
paragraph are that the refund delivery product facilitator
makes available to consumers an informational pamphlet that--
``(A) sets forth options available for receiving tax
refunds, presented from least expensive to most expensive,
and
``(B) discusses short-term credit alternatives to utilizing
refund delivery products.
``(3) Nature of the transaction.--The requirements of this
paragraph are that, at the time of application for the refund
delivery product, the refund delivery product facilitator
specifically state in writing--
``(A) in the case of a refund delivery product which is a
refund loan--
``(i) that the applicant is applying for a loan based on
the applicant's anticipated income tax refund,
``(ii) the expected time within which the loan will be paid
to the applicant if such loan is approved, and
``(iii) that there is no guarantee that a refund will be
paid in full or received within a specified time period, and
that the applicant is responsible for the repayment of the
loan even if the refund is not paid in full or has been
delayed,
``(B) the time within which income tax refunds are
typically paid based upon the different filing options
available to the applicant, and
``(C) that the applicant may file an electronic return
without applying for a refund delivery product and the fee
for filing such an electronic return.
``(4) Fees, interest and amounts received.--The
requirements of this paragraph are that, at the time of
application for the refund delivery product, the refund
delivery product facilitator discloses to the applicant all
amounts to be received in connection with a refund delivery
product. Such disclosure shall include--
``(A) a copy of the fee schedule of the refund delivery
product facilitator,
``(B) in the case of a refund delivery product which is a
refund loan--
``(i) 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, and
``(ii) that the loan may have substantial fees and interest
charges that may exceed those of other sources of credit, and
the applicant should carefully consider--

``(I) whether such a loan is appropriate for the applicant,
and
``(II) other sources of credit,

``(C) typical fees and interest charges if a refund is not
paid or delayed,
``(D) the amount of a fee (if any) that will be charged if
the refund delivery product is not approved, and
``(E) administrative costs and any other amounts.
``(5) Other information.--The requirements of this
paragraph are that the refund delivery product facilitator
discloses any other information required to be disclosed by
the Secretary.
``(6) Disclosure requirement.--A disclosure under any of
the preceding paragraphs of this subsection shall not be
treated as meeting the requirements of the respective
paragraph unless the disclosure is written in a manner
calculated to be understood by the average consumer of refund
delivery products and provides sufficient information (as
determined in accordance with regulations prescribed by the
Secretary) to allow the consumer to understand such options
and credit alternatives.
``(c) Penalty.--
``(1) In general.--There is hereby imposed a penalty on any
refund delivery product facilitator who fails to register
with the Secretary pursuant to subsection (a) or fails to
meet a disclosure requirement under subsection (b).
``(2) Amount of penalty.--The amount of the penalty imposed
by paragraph (1) shall be the greater of--
``(A) $1,000, and
``(B) three times the amount of the refund loan, if
applicable, and refund delivery product facilitator-
determined fees charged with respect to each refund delivery
product provided by the refund delivery product facilitator
during the period in which the failure described in paragraph
(1) occurred.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the penalty imposed by
paragraph (1) to the extent that the payment of such penalty
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Conduct.--
``(1) Rules of conduct.--The Secretary shall prescribed
rules of conduct for refund delivery product facilitators
which are similar to the rules applicable to federally
authorized tax practitioners (as defined by section
7525(a)(3)(A)) under part 10 of title 31, Code of Federal
Regulations.
``(2) Limitation on approval as refund delivery product
facilitator.--For such period as the Secretary (in his
discretion) determines reasonable, the Secretary may not
register any person as a refund delivery product facilitator
under subsection (a) who the Secretary determines has engaged
in any conduct that would warrant disciplinary action under
the rules of conduct prescribed under paragraph (1) or under
part 10 of title 31, Code of Federal Regulations.
``(e) Other Limitations Relating to Refund Delivery
Products.--In any case in which a taxpayer has consented to
the release of the taxpayer's refund indicator to a refund
delivery product facilitator, the Secretary may only provide
information related to the refund indicator to a refund
delivery product facilitator who is registered under
subsection (a). For purposes of the preceding sentence, the
term `refund indicator' means a notification provided through
a tax return's acknowledgment file regarding whether a refund
will be paid. The Secretary may issue a refund indicator only
after the Secretary determines that the taxpayer's refund
would not be prevented by any provision of this title,
including any provision relating to refund offset to repay
debts for delinquent Federal or State taxes, student loans,
child support, or other Federal agency debt, whether the
taxpayer is claiming ineligible children for purposes of
certain tax benefits, and whether the refund will be held
pending a fraud investigation.
``(f) Definitions.--For purposes of this section--
``(1) Refund delivery product facilitator.--
``(A) In general.--The term `refund delivery product
facilitator' includes any electronic filing service provider
who--
``(i) solicits for, processes, receives, or accepts
delivery of an application for a refund delivery product, or
``(ii) facilitates the making of a refund delivery product
in any other manner.
``(B) Electronic filing service provider.--The term
`electronic filing service provider' includes any person who
is an electronic return originator, intermediate service
provider, or transmitter.
``(C) Electronic return originator.--The term `electronic
return originator' includes a person who originates the
electronic submission of income tax returns for another
person.

[[Page S2385]]

``(D) Intermediate service provider.--The term
`intermediate service provider' includes a person who assists
with processing return information between an electronic
return originator (or the taxpayer in the case of online
filing) and a transmitter.
``(E) Transmitter.--The term `transmitter' includes a
person who sends the electronic return data directly to the
Internal Revenue Service.
``(2) Refund delivery product.--The term `refund delivery
product' includes a refund loan and any other product sold to
a taxpayer for a fee or any other thing of value for the
purpose of receiving the taxpayer's anticipated federal tax
refund.
``(3) Refund loan.--The term `refund loan' includes 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.
``(g) Regulations.--
``(1) In general.--The Secretary may prescribe such
regulations as necessary to carry out this subchapter.
``(2) Burden of registration.--In promulgating such
regulations, the Secretary shall minimize the burden and cost
on the registrant.''.
(b) Public Awareness Campaign.--The Secretary of the
Treasury 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 delivery products (as defined by section 7530 of
the Internal Revenue Code of 1986), including--
(1) the need to compare the rates and fees of refund loans
with the rates and fees of conventional loans,
(2) the need to compare the amount of money received under
a refund delivery product after taking into consideration
such costs and fees with the total amount of the refund, and
(3) where and how taxpayers may lodge complaints concerning
refund delivery product facilitators.
(c) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:

``Sec. 7530. Refund delivery products.''.

(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect on the date of the enactment of the Act.
(2) Regulations.--The regulations required by section
7530(g) of the Internal Revenue Code of 1986 shall be
prescribed not later than 2 years after the date of the
enactment of this Act.
(3) Full implementation.--The Secretary of the Treasury,
taking into consideration the complexity and magnitude of the
requirements set forth under this Act, may delay full
implementation of the regulations promulgated under such
section not later than 5 years after the enactment of this
Act.

SEC. 204. PREPARER PENALTIES WITH RESPECT TO PREPARATION OF
RETURNS AND OTHER SUBMISSIONS.

(a) Inclusion of Other Submissions in Penalty Provisions.--
(1) Understatement of taxpayer's liability.--
(A) In general.--Section 6694 (relating to understatement
of taxpayer's liability by tax return preparer) is amended by
striking ``return or claim of refund'' each place it appears
and inserting ``return, claim of refund, or other
submission''.
(B) Conforming amendments.--Section 6694, as amended by
paragraph (1), is amended by striking ``return or claim''
each place it appears and inserting ``return, claim, or other
submission''.
(2) Other assessable penalties.--
(A) In general.--Section 6695 (relating to other assessable
penalties with respect to the preparation of tax returns for
other persons) is amended by striking ``return or claim of
refund'' each place it appears and inserting ``return, claim
of refund, or other submission''.
(B) Conforming amendments.--Section 6695, as amended by
paragraph (1), is amended by striking ``return or claim''
each place it appears and inserting ``return, claim, or other
submission''.
(b) Increase in Certain Other Assessable Penalty Amounts.--
(1) In general.--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 ``$50'' and inserting ``$1,000''.
(2) Removal of annual limitation.--Subsections (a), (b),
and (c) of section 6695 are each amended by striking the last
sentence thereof.
(c) Review by the Treasury Inspector General for Tax
Administration.--Subparagraph (A) of section 7803(d)(2) is
amended by striking ``and'' at the end of clause (iii), by
striking the period at the end of clause (iv) and inserting
``, and'', and 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,''.
(d) Additional Certification on Documents Other Than
Returns.--
(1) Identifying number required for all submissions to the
irs by tax return preparers.--The first sentence of paragraph
(4) of section 6109(a) is amended by striking ``return or
claim for refund'' and inserting ``return, claim for refund,
or other document''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to documents filed after the date of the
enactment of this Act.
(e) 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.
(f) Effective Date.--The regulations required by this
section shall be prescribed not later than one year after the
date of the enactment of this Act.

SEC. 205. CLARIFICATION OF ENROLLED AGENT CREDENTIALS.

Section 330 of title 31, United States Code, as amended by
section 202, is amended--
(1) by redesignating subsection (e) as subsection (f), and
(2) by inserting after subsection (d) the following new
subsection:
``(e) 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.'.''.

TITLE III--IMPROVING TAXPAYER SERVICES

SEC. 301. INDIVIDUALIZED LIEN DETERMINATION REQUIRED BEFORE
FILING NOTICE OF LIEN.

(a) In General.--Section 6323 is amended by adding at the
end the following new subsection:
``(k) Lien Determination Before Filing.--
``(1) In general.--The Secretary shall not file a notice of
lien before making an individualized lien determination.
``(2) Lien determination.--In making an individualized lien
determination with respect to a taxpayer, the Secretary shall
consider factors, including--
``(A) the amount due,
``(B) the lien filing fee,
``(C) the value of the taxpayer's equity in the property or
right to property,
``(D) the taxpayer's tax compliance history,
``(E) extenuating circumstances, if any, that explain the
delinquency, and
``(F) the effect of the filing on the taxpayer's ability to
obtain financing, generate future income, and pay current and
future tax liabilities.
``(3) Supervisory review.--In any case in which--
``(A) collecting a liability through a lien imposed under
section 6321 would create an economic hardship (within the
meaning of section 6343(a)(1)(D)), or
``(B) the taxpayer does not have significant equity in
property or right to property,

the Secretary shall not file a notice of lien unless the
supervisor of the employee making the lien determination
referenced in paragraph (2) also determines that the filing
is necessary.
``(4) Withdrawal of lien.--A lien filed in violation of
this subsection shall be withdrawn under subsection (j).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to liens filed after the date of the
enactment of this Act.

SEC. 302. BAN ON AUDIT INSURANCE.

Section 330 of title 31, United States Code, as amended by
sections 202 and 205, is amended by adding at the end the
following new subsection:
``(g) Ban on Audit Insurance.--No person admitted to
practice before the Department of the Treasury may directly
or indirectly offer or provide insurance or other form of
indemnification or reimbursement to cover a taxpayers'
assessment of federal tax, penalties, or interest.''.

SEC. 303. PUBLIC AWARENESS.

(a) In General.--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 recognized, certified, or registered
persons; revocation of registration.--The Secretary shall
furnish to the public--
``(A) the identity of any person who--
``(i) is an enrolled agent or is an attorney or certified
public accountant who either has a power of attorney on file
with the Internal Revenue Service or notifies the Internal
Revenue Service of their status as a preparer of Federal tax
returns,
``(ii) is certified under section 330(d) of title 31,
United States Code, as a tax return preparer, or
``(iii) is registered as a refund delivery product
facilitator pursuant to section 7530, and
``(B) information as to whether or not any person who is
otherwise suspended or disbarred is no longer so recognized,
certified, or registered (as the case may be).''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect not later than two years after the date of
enactment of this Act.

SEC. 304. CLARIFICATION OF TAXPAYER ASSISTANCE ORDER
AUTHORITY.

(a) In General.--Paragraph (2) of section 7811(b) 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:

[[Page S2386]]

``(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. 305. TAXPAYER ADVOCATE DIRECTIVES.

(a) In General.--Subchapter A of chapter 80 is amended by
inserting after section 7811 the following new section:

``SEC. 7811A. TAXPAYER ADVOCATE DIRECTIVES.

``(a) Authority to Issue.--The National Taxpayer Advocate
may issue a Taxpayer Advocate Directive to mandate
administrative or procedural changes to improve the operation
of a functional process or to grant relief to groups of
taxpayers (or all taxpayers) if its implementation will
protect the rights of taxpayers, prevent undue burden, ensure
equitable treatment, or provide an essential service to
taxpayers. A Taxpayer Advocate Directive may only be issued
by the National Taxpayer Advocate. The terms of a Taxpayer
Advocate Directive may require the Commissioner to implement
it within a specified period of time.
``(b) Authority to Modify or Rescind.--Any Taxpayer
Advocate Directive may be modified or rescinded--
``(1) only by the National Taxpayer Advocate, the
Commissioner of Internal Revenue, or the Deputy Commissioner
of Internal Revenue, and
``(2) only if a written explanation of the reasons for the
modification or rescission is provided to the National
Taxpayer Advocate.''.
(b) Annual Report.--
(1) In general.--Clause (ii) of section 7803(c)(2)(B) is
amended by redesignating subclauses (III) through (XI) as
subclauses (IV) through (XII), respectively, and by inserting
after subclause (II) the following new subclause:

``(III) contain Taxpayer Advocate Directives issued under
section 7811A;''.

(2) Conforming amendments.--Clause (ii) of section
7803(c)(2)(B), as amended by paragraph (1), is amended--
(A) by striking ``subclauses (I), (II), and (III)'' in
subclauses (V), (VI), and (VII) thereof and inserting
``subclauses (I), (II), (III), and (IV)'', and
(B) in subclause (VIII)--
(i) by inserting ``or Taxpayer Advocate Directive'' after
``Taxpayer Assistance Order'', and
(ii) by inserting ``or 7811A(a)'' after ``section
7811(b)''.
(c) Clerical Amendment.--The table of sections for
subchapter A of chapter 80 is amended by inserting after the
item relating to section 7811 the following new item:

``Sec. 7811A. Taxpayer advocate directives.''.

SEC. 306. IMPROVED SERVICES FOR TAXPAYERS.

(a) In General.--It is the sense of Congress that the
Internal Revenue Service should within 2 years--
(1) reduce the time between receipt of an electronically
filed return and issuance of a refund,
(2) expand assistance to low-income taxpayers,
(3) allocate resources to assist low-income taxpayers in
establishing accounts at financial institutions that receive
direct deposits from the United States Treasury,
(4) deliver tax refunds on debit cards, prepaid cards, and
other electronic means to assist individuals that do not have
access to financial accounts or institutions,
(5) establish a pilot program for satellite walk-in centers
to be located in rural underserved communities without easy
access to Internal Revenue Service Taxpayer Assistance
Centers by using office facilities currently occupied by the
Federal government, including United States Postal Service
and Social Security Administration facilities; such satellite
walk-in centers should have the capability to provide video-
conferencing services and scanning or other digitizing
functions to deliver, in an interactive manner, all service
and compliance functions currently available in Internal
Revenue Service Taxpayer Assistance Centers, and
(6) establish a pilot program for mobile tax return
preparation offices.
(b) Location of Service.--
(1) In general.--The mobile tax return filing offices
should be located in communities that the Secretary
determines have a high incidence of taxpayers claiming the
earned income tax credit, particularly in locations with few
community volunteer tax preparation clinics.
(2) Indian reservation.--At least one mobile tax return
filing office should be on or near an Indian reservation (as
defined in section 168(j)(6) of the Internal Revenue Code of
1986).

SEC. 307. TAXPAYER ACCESS TO FINANCIAL INSTITUTIONS.

(a) Establishment of Program.--The Secretary of the
Treasury may award demonstration project grants (including
multiyear awards) to eligible entities to provide accounts to
individuals who currently do not have an account with a
financial institution. The account would be held in a
federally insured depository institution.
(b) Priority.--Priority shall be given to demonstration
project proposals that provide accounts at low or no cost
and--
(1) that utilize new technologies such as the prepaid
product to expand access to financial services, in particular
for persons without bank accounts, with low access to
financial services, or low utilization of mainstream
financial services,
(2) that promote the development of new financial products
and services that are adequate to improve access to wealth
building financial services, which help integrate more
Americans into the financial mainstream,
(3) that promote education for these persons and depository
institutions concerning the availability and use of financial
services for and by such persons, and
(4) that include other such activities and projects as the
Secretary may determine are consistent with the purpose of
this section.
(c) 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) an organization described in 501(c)(5), and exempt from
tax under section 501(a), of such Code,
(I) a nonbank financial service provider, or
(J) 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
(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.
(F) Nonbank financial service provider.--The term ``nonbank
financial service provider'' mean an entity that engages in
financial services activities, as authorized under the
Federal Reserve Board, 12 Code of Federal Regulations Part
225, Regulation Y.
(d) Application.--An eligible entity shall submit an
application to the Secretary of the Treasury in such form and
containing such information as the Secretary may require.
(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) Power and Authority of the Secretary.--
(1) Assistance.--Subject to appropriations, the Secretary
of the Treasury may provide financial and technical
assistance to awardees for expanding the distribution of
financial services, including through financial services
electronic networks.
(2) Research and development.--The Secretary of the
Treasury may conduct or support such research and development
as the Secretary considers appropriate in order to further
the purpose of this section, including the collection of
information about access to financial services.
(3) Regulations.--The Secretary of the Treasury is
authorized to promulgate regulations to implement and
administer the program under this section.
(g) 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 feasibility of delivering tax refunds
on debit cards, prepaid cards, and other electronic means to
assist individuals that do not have access to financial
accounts or institutions.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress containing the results of the
study conducted under paragraph (1).

SEC. 308. ADDITIONAL STUDIES.

(a) Study on Accelerated Processing of Information
Returns.--
(1) Findings.--Congress finds the following:

[[Page S2387]]

(A) Under current procedures, the Internal Revenue Service
processes income tax returns before it processes most
information returns, including Forms W-2, which report wages
and tax withholding, and Forms 1099, which report interest,
dividends, and other payments.
(B) The sequence described in subparagraph (A) makes little
logical sense.
(C) From a taxpayer perspective, the sequence leads to
millions of cases where taxpayers inadvertently make
overclaims that the Internal Revenue Service does not
identify until months later, exposing the taxpayer not only
to a tax liability but to penalties and interest charges as
well.
(D) From the Federal Government's perspective, this
sequence creates opportunities for fraud and requires the
Internal Revenue Service to devote resources to recovering
refunds that should not have been paid and that it often
cannot recover.
(2) Study.--The Secretary of the Treasury, in consultation
with the National Taxpayer Advocate, shall conduct a study to
identify and recommend legislative and administrative changes
that would enable the Internal Revenue Service to receive and
process information reporting documents before it processes
tax returns. In conducting the study, the Secretary shall
consider, among other factors, the issues identified in the
National Taxpayer Advocate's 2009 Annual Report to Congress.
(3) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress describing the results of the
study conducted under paragraph (2).
(b) Study on the Effectiveness of Collection
Alternatives.--
(1) In general.--The Secretary of the Treasury, in
consultation with the National Taxpayer Advocate, shall
conduct a study to assess the effectiveness of collection
alternatives, especially offers in compromise, on long-term
tax compliance. Such a study shall analyze a group of
taxpayers who applied for offers in compromise 5 or more
years ago and compare the amount of revenue collected from
the taxpayers whose offers were accepted with the amount of
revenue collected from the taxpayers whose offers were
rejected, and compare, among the taxpayers whose offers were
rejected, the amount they offered with the amounts collected.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress containing the results of the
study conducted under paragraph (1).
______

By Mr. GRASSLEY:
S. 3216. A bill to amend title XVIII of the Social Security Act to
ensure Medicare beneficiary access to physicians, to ensure equitable
reimbursement under the Medicare program for all rural States, and to
eliminate sweetheart deals for frontier States; to the Committee on
Finance.
Mr. GRASSLEY. Mr. President, Medicare's payment system for physicians
is flawed in many ways. One of those flaws has for many years given
unfairly low payments to high quality areas like my own home state of
Iowa and many other rural States. The new health care reform law makes
some much-needed changes in that regard.
The legislation I am introducing today makes additional improvements
in addressing unfair geographic disparities in payment. It is intended
to provide more equitable rural health payments and improve rural
access to care for all rural states.
As many of you know, Medicare payment varies from one area to another
based on the geographic adjustments known as the Geographic Practice
Cost Indices or GPCIs. These geographic adjustments are intended to
equalize physician payment by reflecting differences in physician's
practice costs.
But they do not accurately represent those costs in Iowa or other
rural states. They have been a dismal failure in fact. They discourage
physicians from practicing in rural areas like New Mexico, Arkansas,
Missouri, and Iowa because they create such unfairly low Medicare
rates.
I introduced legislation in the last Congress, and again last year,
to correct these unwarranted payment disparities. Last fall, I offered
an amendment in the Senate Finance Committee mark up of health reform
legislation to reform the inequitable formula that has caused these
unduly low payments.
My amendment provided more equity and accuracy in calculating this
adjustment, and it provided a national solution to the problem. It was
accepted unanimously by the Senate Finance Committee, and it was
included in the Senate health reform bill, the Patient Protection and
Affordable Care Act, that was signed into law.
But, unfortunately, the rural equity that would be achieved by that
amendment has been endangered by another sweetheart deal that was added
to the Senate health care reform bill that is now the law.
This special deal was added behind closed doors, that is, the closed
doors of the majority leader. This special deal addresses geographic
disparities but it helps just five states at the expense of the other
45 states.
It was included in the Senate health reform bill for two Democratic
Senators from so-called ``frontier states.'' It's what I call the
``Frontier Freeloader.''
The Frontier Freeloader provision improves Medicare reimbursement in
so-called frontier states by establishing floors for the hospital wage
index and the physician practice expense GPCI.
A frontier state is defined as one with 50 percent or more frontier
counties, defined as counties with a population per square mile of less
than six.
The Frontier Freeloader deal ensures that higher payments go to just
five states--North Dakota, South Dakota, Montana, Wyoming and Utah--at
the expense of every other state.
It is another example of how the deals made behind closed doors to
garner votes led to bad policies, like the Cornhusker Kickback, the
Louisiana Purchase, and the Florida Gator-aid.
Now we have the Frontier Freeloader deal that became law when the
President signed the health care reform bill.
Iowa provides some of the highest quality care in the country but it
does not meet the definition of a frontier state. Certainly Iowa should
have been helped since Medicare reimbursement for hospitals and
physicians is lower in Iowa than in most of these so-called
``frontier'' states.
Medicare also pays much lower rates in other rural states, like
Arkansas and New Mexico, but they don't benefit from the Frontier
Freeloader because they don't meet the definition of a frontier state.
The Frontier Freeloader is even more egregious because Iowa--and
other States like Arkansas and New Mexico that don't benefit--are
paying for it! So, taxpayers in your state and mine--all the other 45
states--will kick in to pay the bill for these five states. And that's
just the cost for the next few years.
This sweetheart deal is not time-limited. The Frontier Freeloader
that benefits these five states continues forever while taxpayers in
your State and mine--the other 45--continue to pay the bills.
The bill I am introducing today would repeal the Frontier Freeloader
sweetheart deal.
We should improve physician payments for all rural states, not just a
select few. It is unfair to improve hospital payments for just a few
states. This bill would eliminate those special payment deals for just
5 States.
It would also improve physician payments for all rural states during
the transition to more accurate data.
The new health care reform law requires the Secretary of Health and
Human Services to limit the impact of the current unfair adjustments to
\1/2\ of the current adjustment in 2010 and 2011. This bill would use
some of the funds saved by repealing the frontier states deal to
increase physician payments more in rural states next year.
That would mean higher payments for all rural States, not higher
payments for just a few States.
Finally, the bill makes it clear that a side agreement reportedly
made between House members and the Secretary of Health and Human
Services for an Institute of Medicine study cannot interfere with the
legislative changes to the geographic adjustment for physician practice
expense that are now law.
My amendment in the Senate bill that became law improves the data
that the government uses to calculate geographic physician practice
costs.
The House health care reform bill called for a study by the Institute
of Medicine to make recommendations on geographic disparities.
It is unclear what agreement was made between Secretary Sebelius and
the House, since it was another backroom deal. It is also unclear what
advantage it holds for rural health care equity for beneficiaries and
physicians.
My amendment that is now the law requires Medicare officials to use
accurate data.
The legislation that I am introducing today would ensure that the
agreement

[[Page S2388]]

House members made with Secretary Sebelius--that somehow accompanies
the House health-care reconciliation bill--cannot undo the actual
legislative fix in the Senate health care bill that is now law.
If the Institute of Medicine comes up with different data or makes
recommendations that are not consistent with the requirements for the
geographic adjustments that are now law, we could be back where we
started, or even worse off. So this legislation would ensure that HHS
follows the legislative improvements just enacted to require more
accurate data for calculating these geographic adjustments.
To summarize, the bill does three main things:
First, it eliminates the unfair $2 billion Frontier Freeloader carve-
out for 5 States that ends up harming all the other rural States. As I
said earlier, that extra spending would continue forever if the
Frontier Freeloader is allowed to take effect.
Second, the bill helps provide greater rural health care access and
payment equity in a way that is fair to all taxpayers and states.
It would provide additional payments for physicians in all rural
States during the transition.
Finally, the bill would ensure that Medicare officials use accurate
data to calculate geographic adjustments as now required by the new
health care reform law.
This legislation helps ensure that seniors in all of rural America
continue to have access to needed health care.
It ensures rural health care equity nationwide.
______

By Mr. CONRAD (for himself and Mr. Sessions):
S. 3218. A bill to amend the Controlled Substances Act to clarify
that persons who enter into a conspiracy within the United States to
possess or traffic illegal controlled substances outside the United
States, or engage in conduct within the United States to aid or abet
drug trafficking outside the United States, may be criminally
prosecuted in the United States, and for other purposes; to the
Committee on the Judiciary.
Mr. CONRAD. Mr. President, the trafficking and use of illegal drugs
is an ongoing challenge in our Nation. It is incumbent upon the
Government to seek to prevent the flow of drugs into the country, and
limit the availability of drugs on our streets and in our communities.
It is for that purpose that I introduce the Drug Trafficking Safe
Harbor Elimination Act of 2010 with Senator Sessions.
This bill will close a loophole that could allow drug traffickers,
under certain circumstances, to operate with impunity in the United
States. In United States v. Lopez-Vanegas, the Eleventh Circuit Court
of Appeals held that where the object of a conspiracy is to possess
controlled substances outside the United States with the intent to
distribute outside the United States, there is no violation of U.S.
law, even if the conspiracy, including meetings, negotiations, and
arrangements to execute the drug transaction, occurs on U.S. soil.
Although a particular conspiracy may not be intended to bring illegal
drugs into the U.S., the same traffickers could very well act to bring
drugs across our own borders as their next crime. If we have a chance
to prosecute such criminals, we should do so.
In the Lopez-Vanegas case, the court stated that the statute relied
upon by Federal prosecutors could not be extended to conspiracies to
act outside of the U.S. because Congress had not expressed its
intention for the statute to be applied in such a manner. This
legislation provides Congress an opportunity to clarify its position.
While the binding effect of the Lopez-Vanegas case is now limited to
the Eleventh Circuit, it may influence other federal jurisdictions to
issue similar decisions. A wide-scale adoption of the reasoning in this
case could establish the United States as a safe haven for
international drug cartels, damage our relationships with the law
enforcement authorities of other nations, and hinder global
coordination to combat drug trafficking. Further, the profits and
operational capacities generated by extraterritorial drug transactions
could very well bolster the ability of drug cartels to distribute drugs
in the United States in the future. For these reasons, it is important
to close this loophole and give law enforcement the ability to
prosecute all drug trafficking conspiracies conducted in the United
States.
______

By Mr. DURBIN (for himself, Mr. Franken, and Mr. Whitehouse):
S. 3219. A bill to amend title 11, United States Code, with respect
to certain exceptions to discharge in bankruptcy; to the Committee on
the Judiciary.
Mr. DURBIN. Mr. President, three weeks ago, the Senate passed
significant student loan reform. It turns out that for the past several
decades, we have been paying banks $6 billion per year to be the middle
men in our student loan system. The bill we passed puts a stop to that.
Instead of lining the pockets of bankers like Al Lord at Sallie Mae, we
will originate all Federal student loans through the Direct Loan
Program and we will invest the savings, $68 billion, in education
priorities. We put $36 billion into Pell Grants to increase the grant
size and tie it to inflation. We also capped monthly student loan
payments at 10 percent of discretionary income to help ease repayment
for students in public service careers. We invested in historically
black colleges and universities, minority serving institutions,
community colleges, and state-based college access programs that help
students succeed in college. These reforms are essential in helping
students afford a college education.
Today, along with Senator Franken and Senator Whitehouse, I am
introducing a bill that will take an additional step in restoring
fairness in student lending by treating privately issued student loans
in bankruptcy the same way other types of private debt are treated. Our
bill, the Fairness for Struggling Students Act, will allow borrowers of
private student loans to discharge those loans in bankruptcy.
Representatives Cohen and Davis are introducing a similar bill in the
House.
Federally issued or guaranteed student loans have been protected
during personal bankruptcy since 1978. This is a good law that protects
Federal investments in higher education. In 2005, a provision was added
to law to protect the investments of private lenders that extend
private credit--not federally guaranteed student loans--to students.
With the 2005 protections in place, there is virtually no risk to
lenders making high-cost private loans to students at schools with low
graduation rates and even lower job placement rates. So the industry
has boomed over the past decade. Private student loan volume last year
was $11 billion.
But there is plenty of risk for student borrowers. The interest rates
and fees on private loans can be as onerous as credit cards. There are
reports of private loans with variable interest rates reaching 18
percent. Unlike Federal student loans, the Government does not impose
loan limits on private loans and does not regulate the terms or cost of
these loans. Some students who take out these loans find themselves
trapped under an enormous amount of debt that they cannot escape.
Today, I am pleased to introduce a bill that will give students who
find themselves in dire financial straits a chance at a new beginning.
My bill restores the bankruptcy law, as it pertains to private student
loans, back to where it was before the law was amended in 2005. Under
this legislation, privately issued student loans will once again be
dischargeable in bankruptcy. My bill also clarifies that the remaining
protections are specific to loans that were issued by or are guaranteed
by State and Federal Government.
Three weeks ago we ended the ability of lenders and banks to make
risk-free federal loans to students. It is time to also end the risk-
free nature of private student loans and restore fairness for student
borrowers.
Mr. President, 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. 3219

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Fairness for Struggling
Students Act of 2010''.

[[Page S2389]]

SEC. 2. EXCEPTIONS TO DISCHARGE.

Section 523(a)(8) of title 11, United States Code, is
amended by striking ``dependents, for'' and all that follows
through the end of subparagraph (B) and inserting
``dependents, for an educational benefit overpayment or loan
made, insured, or guaranteed by a governmental unit or made
under any program funded in whole or in part by a
governmental unit or an obligation to repay funds received
from a governmental unit as an educational benefit,
scholarship, or stipend;''.

____________________