[Congressional Record Volume 160, Number 56 (Monday, April 7, 2014)]
[Senate]
[Pages S2196-S2197]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORNYN:
  S. 2215. A bill to protect taxpayers from improper audits by the 
Internal Revenue Service; to the Committee on Finance.
  Mr. CORNYN. 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. 2215

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Eliminating Improper and Abusive IRS Audits Act of 2014''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Civil damages allowed for reckless or intentional disregard of 
              internal revenue laws.
Sec. 3. Modifications relating to certain offenses by officers and 
              employees in connection with revenue laws.
Sec. 4. Modifications relating to civil damages for unauthorized 
              inspection or disclosure of returns and return 
              information.
Sec. 5. Extension of time for contesting IRS levy.
Sec. 6. Increase in monetary penalties for certain unauthorized 
              disclosures of information.
Sec. 7. Ban on raising new issues on appeal.
Sec. 8. Limitation on enforcement of liens against principal 
              residences.
Sec. 9. Additional provisions relating to mandatory termination for 
              misconduct.
Sec. 10. Extension of declaratory judgment procedures to social welfare 
              organizations.
Sec. 11. Review by the Treasury Inspector General for Tax 
              Administration.

     SEC. 2. CIVIL DAMAGES ALLOWED FOR RECKLESS OR INTENTIONAL 
                   DISREGARD OF INTERNAL REVENUE LAWS.

       (a) Increase in Amount of Damages.--Section 7433(b) of the 
     Internal Revenue Code of 1986 is amended by striking 
     ``$1,000,000 ($100,000, in the case of negligence)'' and 
     inserting ``$3,000,000 ($300,000, in the case of 
     negligence)''.
       (b) Extension of Time To Bring Action.--Section 7433(d)(3) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``2 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions of employees of the Internal Revenue 
     Service after the date of the enactment of this Act.

     SEC. 3. MODIFICATIONS RELATING TO CERTAIN OFFENSES BY 
                   OFFICERS AND EMPLOYEES IN CONNECTION WITH 
                   REVENUE LAWS.

       (a) Increase in Penalty.--Section 7214 of the Internal 
     Revenue Code of 1986 is amended--

[[Page S2197]]

       (1) by striking ``$10,000'' in subsection (a) and inserting 
     ``$25,000'', and
       (2) by striking ``$5,000'' in subsection (b) and inserting 
     ``$10,000''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 4. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR 
                   UNAUTHORIZED INSPECTION OR DISCLOSURE OF 
                   RETURNS AND RETURN INFORMATION.

       (a) Increase in Amount of Damages.--Subparagraph (A) of 
     section 7431(c)(1) of the Internal Revenue Code of 1986 is 
     amended by striking ``$1,000'' and inserting ``$10,000''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to inspections and disclosure occurring on and 
     after the date of the enactment of this Act.

     SEC. 5. EXTENSION OF TIME FOR CONTESTING IRS LEVY.

       (a) Extension of Time for Return of Property Subject to 
     Levy.--Subsection (b) of section 6343 of the Internal Revenue 
     Code of 1986 is amended by striking ``9 months'' and 
     inserting ``3 years''.
       (b) Period of Limitation on Suits.--Subsection (c) of 
     section 6532 of the Internal Revenue Code of 1986 is 
     amended--
       (1) in paragraph (1) by striking ``9 months'' and inserting 
     ``3 years'', and
       (2) in paragraph (2) by striking ``9-month'' and inserting 
     ``3-year''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) levies made after the date of the enactment of this 
     Act, and
       (2) levies made on or before such date if the 9-month 
     period has not expired under section 6343(b) of the Internal 
     Revenue Code of 1986 (without regard to this section) as of 
     such date.

     SEC. 6. INCREASE IN MONETARY PENALTIES FOR CERTAIN 
                   UNAUTHORIZED DISCLOSURES OF INFORMATION.

       (a) In General.--Paragraphs (1), (2), (3), and (4) of 
     section 7213(a) of the Internal Revenue Code of 1986 are each 
     amended by striking ``$5,000'' and inserting ``$10,000''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to disclosures made after the date of the 
     enactment of this Act.

     SEC. 7. BAN ON RAISING NEW ISSUES ON APPEAL.

       (a) In General.--Chapter 77 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     section:

     ``SEC. 7529. PROHIBITION ON INTERNAL REVENUE SERVICE RAISING 
                   NEW ISSUES IN AN INTERNAL APPEAL.

       ``(a) In General.--In reviewing an appeal of any 
     determination initially made by the Internal Revenue Service, 
     the Internal Revenue Service Office of Appeals may not 
     consider or decide any issue that is not within the scope of 
     the initial determination.
       ``(b) Certain Issues Deemed Outside of Scope of 
     Determination.--For purposes of subsection (a), the following 
     matters shall be considered to be not within the scope of a 
     determination:
       ``(1) Any issue that was not raised in a notice of 
     deficiency or an examiner's report which is the subject of 
     the appeal.
       ``(2) Any deficiency in tax which was not included in the 
     initial determination.
       ``(3) Any theory or justification for a tax deficiency 
     which was not considered in the initial determination.
       ``(c) No Inference With Respect to Issues Raised by 
     Taxpayers.--Nothing in this section shall be construed to 
     provide any limitation in addition to any limitations in 
     effect on the date of the enactment of this section on the 
     right of a taxpayer to raise an issue, theory, or 
     justification on an appeal from a determination initially 
     made by the Internal Revenue Service that was not within the 
     scope of the initial determination.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 of such Code is amended by adding at the end the following 
     new item:

``Sec. 7529. Prohibition on Internal Revenue Service raising new issues 
              in an internal appeal.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to matters filed or pending with the Internal 
     Revenue Service Office of Appeals on or after the date of the 
     enactment of this Act.

     SEC. 8. LIMITATION ON ENFORCEMENT OF LIENS AGAINST PRINCIPAL 
                   RESIDENCES.

       (a) In General.--Section 7403(a) of the Internal Revenue 
     Code of 1986 is amended--
       (1) by striking ``In any case'' and inserting the 
     following:
       ``(1) In general.--In any case'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Limitation with respect to principal residence.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     property used as the principal residence of the taxpayer 
     (within the meaning of section 121) unless the Secretary of 
     the Treasury makes a written determination that--
       ``(i) all other property of the taxpayer, if sold, is 
     insufficient to pay the tax or discharge the liability, and
       ``(ii) such action will not create an economic hardship for 
     the taxpayer.
       ``(B) Delegation.--For purposes of this paragraph, the 
     Secretary of the Treasury may not delegate any 
     responsibilities under subparagraph (A) to any person other 
     than--
       ``(i) the Commissioner of Internal Revenue, or
       ``(ii) a district director or assistant district director 
     of the Internal Revenue Service.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to actions filed after the date of the enactment 
     of this Act.

     SEC. 9. ADDITIONAL PROVISIONS RELATING TO MANDATORY 
                   TERMINATION FOR MISCONDUCT.

       (a) Termination of Unemployment for Inappropriate Review of 
     Tax-exempt Status.--Section 1203(b) of the Internal Revenue 
     Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804 
     note) is amended by striking ``and'' at the end of paragraph 
     (9), by striking the period at the end of paragraph (10) and 
     inserting ``; and'', and by adding at the end the following 
     new paragraph:
       ``(11) in the case of any review of an application for tax-
     exempt status by an organization described in section 501(c) 
     of the Internal Revenue Code of 1986, developing or using any 
     methodology that applies disproportionate scrutiny to any 
     applicant based on the ideology expressed in the name or 
     purpose of the organization.''.
       (b) Mandatory Unpaid Administrative Leave for Misconduct.--
     Paragraph (1) of Section 1203(c) of the Internal Revenue 
     Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804 
     note) is amended by adding at the end the following new 
     sentence: ``Notwithstanding the preceding sentence, if the 
     Commissioner of Internal Revenue takes a personnel action 
     other than termination for an act or omission described in 
     subsection (b), the Commissioner shall place the employee on 
     unpaid administrative leave for a period of not less than 30 
     days.''.
       (c) Limitation on Alternative Punishment.--Paragraph (1) of 
     section 1203(c) of the Internal Revenue Service Restructuring 
     and Reform Act of 1998 (26 U.S.C. 7804 note) is amended by 
     striking ``The Commissioner'' and inserting ``Except in the 
     case of an act or omission described in subsection (b)(3)(A), 
     the Commissioner''.

     SEC. 10. EXTENSION OF DECLARATORY JUDGMENT PROCEDURES TO 
                   SOCIAL WELFARE ORGANIZATIONS.

       (a) In General.--Section 7428(a)(1) of the Internal Revenue 
     Code of 1986 is amended by striking ``or'' at the end of 
     subparagraph (C) and by adding at the end the following new 
     subparagraph:
       ``(E) with respect to the initial classification or 
     continuing classification of an organization described in 
     section 501(c)(4) which is exempt from tax under section 
     501(a), or''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to pleading filed after the date of 
     the enactment of this Act.

     SEC. 11. REVIEW BY THE TREASURY INSPECTOR GENERAL FOR TAX 
                   ADMINISTRATION.

       (a) Review.--Subsection (k)(1) of section 8D of the 
     Inspector General Act of 1978 (5 U.S.C. App.) is amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) by redesignating subparagraph (D) as subparagraph (E);
       (3) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) shall--
       ``(i) review any criteria employed by the Internal Revenue 
     Service to select tax returns (including applications for 
     recognition of tax-exempt status) for examination or audit, 
     assessment or collection of deficiencies, criminal 
     investigation or referral, refunds for amounts paid, or any 
     heightened scrutiny or review in order to determine whether 
     the criteria discriminates against taxpayers on the basis of 
     race, religion, or political ideology; and
       ``(ii) consult with the Internal Revenue Service on 
     recommended amendments to such criteria in order to eliminate 
     any discrimination identified pursuant to the review 
     described in clause (i); and''; and
       (4) in subparagraph (E), as so redesignated, by striking 
     ``and (C)'' and inserting ``(C), and (D)''.
       (b) Semiannual Report.--Subsection (g) of such section is 
     amended by adding at the end the following new paragraph:
       ``(3) Any semiannual report made by the Treasury Inspector 
     General for Tax Administration that is required pursuant to 
     section 5(a) shall include--
       ``(A) a statement affirming that the Treasury Inspector 
     General for Tax Administration has reviewed the criteria 
     described in subsection (k)(1)(D) and consulted with the 
     Internal Revenue Service regarding such criteria; and
       ``(B) a description and explanation of any such criteria 
     that was identified as discriminatory by the Treasury 
     Inspector General for Tax Administration.''.

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