II
115th CONGRESS
2d Session
S. 3278
IN THE SENATE OF THE UNITED STATES
July 26, 2018
Mr. Portman (for himself and Mr. Cardin) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide additional protections to taxpayers.
Short title; table of contents
Short title
This Act may be cited as the Protecting Taxpayers Act
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Amendment of Internal Revenue Code of 1986.
TITLE I—Management and Training
Sec. 101. Internal Revenue Service Management Board.
Sec. 102. Comprehensive training strategy.
Sec. 103. Streamlining centralized training program approval.
TITLE II—Taxpayer Protection
Sec. 201. Quarterly notices of delinquency.
Sec. 202. Regulation of tax return preparers.
Sec. 203. Misdirected tax refund deposits.
TITLE III—Small Business Tax Administration and Compliance
Sec. 301. Safe harbor for employer tip reporting.
Sec. 302. Information reporting of income from certain rentals of space in the beauty service industry.
Sec. 303. Release of Federal tax levies which cause business hardship.
Sec. 304. Extension of time for making S corporation elections.
Sec. 305. Quarterly reporting of estimated tax payments.
TITLE IV—Retirement plans and savings
Sec. 401. Expansion of employee plans compliance resolution system.
TITLE V—Assistance for low-income taxpayers
Sec. 501. Establishment of income threshold for referral to private debt collection.
Sec. 502. Return preparation programs for applicable taxpayers.
Sec. 503. Low-income taxpayer clinics.
Sec. 504. Low-income exception for payments otherwise required in connection with a submission of an offer-in-compromise.
TITLE VI—Appeals Process
Sec. 601. Right to independent conference.
Sec. 602. Access to case files.
Sec. 603. Ensuring taxpayer right to appeal.
Sec. 604. Limitation on designation of cases as not eligible for referral to Independent Office of Appeals.
Sec. 605. Procedures related to Secretarial authority to designate cases for litigation.
TITLE VII—Miscellaneous
Sec. 701. Modification of authority to issue designated summons.
Sec. 702. Streamlined critical pay authority for information technology positions.
Sec. 703. Uniform standards for the use of electronic signatures for disclosure authorizations to, and other authorizations of, practitioners.
Sec. 704. Limitation on access of non-Internal Revenue Service employees to returns and return information.
Amendment of Internal Revenue Code of 1986
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.
Management and Training
Internal Revenue Service Management Board
In general
Section 7802 is amended—
in the heading, by striking Oversight Board
and inserting Management Board
,
by striking Oversight Board
each place it appears and inserting Management Board
,
in subsection (b)—
in paragraph (1)—
in subparagraph (A), by striking six
and inserting four
,
by striking subparagraph (B) and inserting the following:
one non-voting member shall be the Deputy Secretary of the Treasury.
,
in subparagraph (C), by inserting non-voting
before member
, and
by adding at the end the following new subparagraph:
one non-voting member shall be the Deputy Inspector General for Tax Administration.
,
in paragraph (4), by striking Five members
and inserting Three voting members
, and
in paragraph (5), by striking subparagraph (B) and inserting the following:
Ex officio members
An individual described in subparagraph (B), (C), or (E) of paragraph (1) shall be removed upon termination of service in the office described in such subparagraph.
,
in subsection (c)(1)(B), by inserting and that all employees of the Internal Revenue Service are familiar with and act in accordance with the Taxpayer Bill of Rights
before the period, and
in subsection (d)—
in paragraph (1)—
in subparagraph (A), by striking and
at the end,
by striking subparagraph (B) and inserting the following:
long-range strategic plans, and
, and
by adding at the end the following:
an annual performance report and plan.
,
in paragraph (3)—
in subparagraph (B)—
by striking selection, evaluation, and compensation
and inserting selection and evaluation
, and
by striking and
at the end,
by redesignating subparagraph (C) as subparagraph (D), and
by inserting after subparagraph (B) the following:
review and approve the Commissioner's compensation of Internal Revenue Service senior executives described in subparagraph (B); and
,
in paragraph (4)—
in subparagraph (B), by striking and
at the end,
by redesignating subparagraph (C) as subparagraph (D), and
by inserting after subparagraph (B) the following:
review any changes made to such budget request by the Office of Management and Budget prior to submission of the President's annual budget request to Congress; and
, and
by inserting after paragraph (5) the following:
Audits
To direct the Treasury Inspector General for Tax Administration to perform an audit of any programs or operations of the Internal Revenue Service.
.
Conforming amendments
Section 4946(c)(7) is amended by striking Oversight Board
and inserting Management Board
.
Paragraph (6) of section 6103(h) is amended—
in the heading, by striking Oversight Board
and inserting Management Board
, and
by striking Oversight Board
each place it appears and inserting Management Board
.
Section 7803 is amended—
in subsection (a)(4), by striking Oversight Board
and inserting Management Board
, and
in subsection (c)—
in paragraph (1)(B)(ii), by striking Oversight Board
and inserting Management Board
, and
in paragraph (2)(B)(iii), by striking Oversight Board
and inserting Management Board
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.
Comprehensive training strategy
Not later than 1 year after the date of the enactment of this Act, the Commissioner of Internal Revenue, in consultation with the National Taxpayer Advocate, shall submit to Congress a written report providing a comprehensive training strategy for employees of the Internal Revenue Service, including—
a plan to streamline current training processes, including an assessment of the utility of further consolidating internal training programs, technology, and funding,
a plan to develop annual training regarding taxpayer rights, including the role of the Office of the Taxpayer Advocate,
a plan to improve technology-based training, including by developing or adopting state-of-the-art training delivery methods,
proposals to focus employee training on early, fair, and efficient resolution of taxpayer disputes and to ensure consistency of skill development and employee evaluation throughout the Internal Revenue Service,
recommendations for improvement of employee recruitment, and
a thorough assessment of the funding necessary to implement such strategy.
Streamlining centralized training program approval
The Secretary of the Treasury, or the Secretary's delegate, shall modify the policy promulgated under Treasury Directive 12–70 to permit employee training events (as defined by the Secretary or the Secretary's delegate) for employees of the Internal Revenue Service, the cost to the Internal Revenue Service of which exceeds $249,999 (but does not exceed $500,000), to be approved by a Deputy Commissioner of Internal Revenue.
Taxpayer Protection
Quarterly notices of delinquency
In general
Section 7524 is amended—
in the heading, by striking Annual
and inserting Quarterly
, and
by striking annually
and inserting each calendar quarter
.
Effective date
The amendments made by this section shall apply to any calendar quarter beginning after December 31, 2018.
Regulation of tax return preparers
In general
Subsection (a) of section 330 of title 31, United States Code, is amended—
by striking paragraph (1) and inserting the following:
regulate—
the practice of representatives of persons before the Department of the Treasury; and
the practice of tax return preparers; and
, and
in paragraph (2)—
by inserting or a tax return preparer to prepare tax returns
after practice
,
by inserting or tax return preparer
before demonstrate
, and
by inserting or in preparing their tax returns, claims for refund, or documents in connection with tax returns or claims for refund
after cases
in subparagraph (D).
Authority To sanction regulated tax return preparers
Subsection (c) of section 330 of title 31, United States Code, is amended—
by striking before the Department
,
by inserting or tax return preparer
after representative
each place it appears, and
in paragraph (4), by striking misleads or threatens
and all that follows and inserting
misleads or threatens—
any person being represented or any prospective person being represented; or
any person or prospective person whose tax return, claim for refund, or document in connection with a tax return or claim for refund, is being or may be prepared.
.
Minimum competency standards for tax return preparers
Section 330 of title 31, United States Code, is amended by adding at the end the following new subsection:
Tax return preparers
In general
Any tax return preparer shall demonstrate minimum competency standards under this subsection by—
obtaining an identifying number for securing proper identification of such preparer as described in section 6109(a)(4) of the Internal Revenue Code of 1986;
satisfying any examination and annual continuing education requirements as prescribed by the Secretary; and
completing a background check administered by the Secretary.
Exemption
The Secretary shall exempt tax return preparers who have been subject to comparable examination, continuing education requirements, and background checks administered by the Secretary or any comparable State licensing program. Such exemption shall extend directly to individuals who are supervised by such preparers and are not required to secure an identification number under section 6109(a)(4).
.
Tax return preparer defined
Section 330 of title 31, United States Code, as amended by subsection (c), is amended by adding at the end the following new subsection:
Tax return preparer
For purposes of this section—
In general
The term tax return preparer has the meaning given such term under section 7701(a)(36) of the Internal Revenue Code of 1986.
Tax return
The term tax return has the meaning given to the term return under section 6696(e)(1) of the Internal Revenue Code of 1986.
Claim for refund
The term claim for refund has the meaning given such term under section 6696(e)(2) of such Code.
.
Amendments with respect to identifying number
In general
Section 6109(a) is amended by striking paragraph (4) and inserting the following:
Furnishing identifying number of tax return preparer
In general
Any return or claim for refund prepared by a tax return preparer shall bear such identifying number for securing proper identification of such preparer, his employer, or both, as may be prescribed. For purposes of this paragraph, the terms return
and claim for refund
have the respective meanings given to such terms by section 6696(e).
Exception
Subparagraph (A) shall not apply to any tax return preparer who prepares a return or claim for refund under the supervision and direction of a tax return preparer who signs the return or claim for refund and is a certified public accountant, an attorney or enrolled agent.
.
Clarification of rescission authority
Section 6109 is amended by inserting after subsection (d) the following new subsection:
Authority To rescind identifying number of tax return preparer
In general
The Secretary may rescind an identifying number issued under subsection (a)(4) if—
after notice and opportunity for a hearing, the preparer is shown to be incompetent or disreputable (as such terms are used in subsection (c) of section 330 of title 31, United States Code), and
rescinding the identifying number would promote compliance with the requirements of this title and effective tax administration.
Records
If an identifying number is rescinded under paragraph (1), the Secretary shall place in the file in the Office of the Director of Professional Responsibility the opinion of the Secretary with respect to the determination, including—
a statement of the facts and circumstances relating to the determination, and
the reasons for the rescission.
.
GAO study and report on the exchange of information between the IRS and State taxation authorities
In general
Not later than 18 months after the date of the enactment of this Act, the Comptroller General shall conduct a study and submit to Congress a report on the sharing of information between the Secretary of the Treasury and State authorities, as authorized under section 6103(d) of the Internal Revenue Code of 1986, regarding identification numbers issued to paid tax return preparers and return preparer minimum standards.
Increased information sharing
The study and report described in paragraph (1) shall include an analysis of the impact that increased information sharing between Federal and State authorities would have on efforts to enforce minimum standards on paid tax return preparers.
Misdirected tax refund deposits
Section 6402 is amended by adding at the end the following new subsection:
Misdirected direct deposit refund
Not later than January 1, 2019, the Secretary shall prescribe regulations to establish procedures to allow for—
taxpayers to report instances in which a refund made by the Secretary by electronic funds transfer was erroneously delivered to an account at a financial institution for which the taxpayer is not the owner;
coordination with financial institutions for the purpose of—
identifying erroneous payments described in paragraph (1); and
recovery of the erroneously transferred amounts; and
the refund to be delivered to the correct account of the taxpayer.
.
Small Business Tax Administration and Compliance
Safe harbor for employer tip reporting
In general
Subsection (q) of section 3121 is amended—
by striking For purposes of this chapter
and inserting the following:
In general
For purposes of this chapter
, and
by adding at the end the following:
Tip program safe harbor
In the case of an employer for which 1 or more employees receive tips in the course of their employment which are considered remuneration for such employment under paragraph (1), the Secretary shall not initiate a tip examination (as that term is used in the model Tip Reporting Alternative Commitment agreement promulgated by the Internal Revenue Service) of the employer (except in relation to a tip examination of 1 or more employees or former employees of such employer) if such employer has demonstrated that it has—
established an educational program regarding the applicable laws relating to the proper reporting of tips received by employees for—
new employees, which shall include both verbal explanations and written materials; and
existing employees, which shall be conducted quarterly;
established procedures for employees who receive tips to, in accordance with section 6053(a), provide monthly reporting of their cash and charged services and any related tips of $20 or greater;
complied with any requirements applicable to employers for purposes of filing returns and collection and payment of taxes imposed with respect to tips received by employees; and
maintained employee records related to—
contact information for such employees; and
gross receipts from any services subject to tipping and charge receipts for such services for a period of not less than 4 calendar years after the calendar year to which such records relate.
.
Effective date
The amendments made by this section shall apply to tips received for services performed after December 31, 2018.
Information reporting of income from certain rentals of space in the beauty service industry
In general
Subpart B of part III of subchapter A of chapter 61 is amended by inserting after section 6050Y the following new section:
Returns with respect to income from certain rentals of space for beauty services
In general
Any person who, in connection with its trade or business or rental activity, receives rental income from 2 or more individuals providing beauty services in excess of $600 each for a calendar year for the rental of space to provide such beauty services to third-party patrons, shall make a return with respect to each such individual, at such time and in such manner as the Secretary shall prescribe, which shall include—
the name, address, and TIN of such individual,
the total amount received from such individual during such calendar year, including the date and amount of each payment, and
such additional information as the Secretary may require.
Statements To be furnished to persons with respect to whom information is required To be furnished
In general
Every person required to make a return under subsection (a) shall furnish to each individual whose name is required to be set forth in such return a written statement showing—
the name, address, and phone number of the information contact of the person required to make such return, and
the aggregate amount of payments to the person required to be shown on such return.
Furnishing of information
The written statement required under paragraph (1) shall be furnished to the individual on or before January 31 of the year following the calendar year for which the return under subsection (a) was made.
Regulations and guidance
The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.
Beauty service
For purposes of this section, the term beauty service means—
barbering and hair care,
nail care,
esthetics, and
body and spa treatments.
.
Conforming amendments
Section 6724(d)(1)(B) is amended by striking or
at the end of clause (xxv), by striking and
at the end of clause (xxvi) and inserting or
, and by inserting after clause (xxvi) the following new clause:
section 6050X(a) (relating to information reporting with respect to rentals of space for beauty services), and
.
Paragraph (2) of section 6724(d) is amended—
by striking or
at the end of subparagraph (II),
by striking the period at the end of the first subparagraph (JJ) and inserting a comma,
by redesignating the second subparagraph (JJ) as subparagraph (KK),
in subparagraph (KK), as redesignated by subparagraph (C), by striking the period at the end and inserting , or
, and
by inserting after subparagraph (KK) the following new subparagraph:
section 6050Z(b)(1) (relating to statements to providers of beauty services).
.
The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding after the item relating to section 6050Y the following new item:
.
Effective date
The amendments made by this section shall apply to calendar years after 2018.
Release of Federal tax levies which cause business hardship
In general
Subparagraph (D) of section 6343(a)(1) is amended by inserting or any trade or business of the taxpayer
before , or
.
Criteria for determining business hardship
Subsection (a) of section 6343 is amended by adding at the end the following new paragraph:
Criteria for determining business hardship
For purposes of making a determination under paragraph (1)(D), with respect to a trade or business of the taxpayer, the Secretary shall take into consideration—
the economic viability of such trade or business,
the nature and extent of the hardship, including the extent to which the taxpayer exercised ordinary business care and prudence, and
any hardships which would be caused to other individuals or businesses if such trade or business were liquidated.
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.
Extension of time for making S corporation elections
In general
Subsection (b) of section 1362 is amended to read as follows:
When made
In general
An election under subsection (a) may be made by a small business corporation for any taxable year not later than the due date for filing the return of the S corporation for such taxable year (including extensions).
Certain elections treated as made for next taxable year
If—
an election under subsection (a) is made for any taxable year within the period described in paragraph (1), but
either—
on 1 or more days in such taxable year and before the day on which the election was made the corporation did not meet the requirements of subsection (b) of section 1361, or
1 or more of the persons who held stock in the corporation during such taxable year and before the election was made did not consent to the election,
Authority to treat late elections, etc., as timely
If—
an election under subsection (a) is made for any taxable year after the date prescribed by this subsection for making such election for such taxable year or no such election is made for any taxable year, and
the Secretary determines that there was reasonable cause for the failure to timely make such election,
Election on timely filed returns
Except as otherwise provided by the Secretary, an election under subsection (a) for any taxable year may be made on a timely filed return of the S corporation for such taxable year.
Secretarial authority
The Secretary may prescribe such regulations, rules, or other guidance as may be necessary or appropriate for purposes of applying this subsection.
.
Coordination with certain other provisions
Qualified subchapter S subsidiaries
Section 1361(b)(3)(B) is amended by adding at the end the following flush sentence:
Rules similar to the rules of section 1362(b) shall apply with respect to any election under clause (ii).
.
Qualified subchapter S trusts
Section 1361(d)(2) is amended by striking subparagraph (D).
Revocations
Paragraph (1) of section 1362(d) is amended—
by striking subparagraph (D)
in subparagraph (C) and inserting subparagraphs (D) and (E)
, and
by adding at the end the following new subparagraph:
Authority to treat late revocations as timely
If—
a revocation under subparagraph (A) is made for any taxable year after the date prescribed by this paragraph for making such revocation for such taxable year or no such revocation is made for any taxable year, and
the Secretary determines that there was reasonable cause for the failure to timely make such revocation,
.
Effective date
In general
Except as otherwise provided in this subsection, the amendments made by this section shall apply to elections for taxable years beginning after December 31, 2018.
Revocations
The amendments made by subsection (c) shall apply to revocations after December 31, 2018.
Quarterly reporting of estimated tax payments
In general
The table contained in paragraph (2) of section 6654(c) is amended—
by striking June 15
and inserting July 15
, and
by striking September 15
and inserting October 15
.
Effective date
The amendments made by this section shall apply to installments due in taxable years beginning after December 31, 2018.
Retirement plans and savings
Expansion of employee plans compliance resolution system
In general
Except as otherwise provided in regulations prescribed by the Secretary of the Treasury or the Secretary's delegate (referred to in this section as the Secretary
), any inadvertent failure to comply with the rules applicable under section 401(a), 403(a), 403(b), 408(p), or 408(k) of the Internal Revenue Code of 1986 may be self-corrected under the Employee Plans Compliance Resolution System (as described in Revenue Procedure 2016–51 or any successor guidance), except to the extent that such failure was identified by Secretary prior to any actions that demonstrate a commitment to implement a self-correction.
Loan error
The Secretary of Labor shall treat any loan error corrected pursuant to subsection (a) as meeting the requirements of the Voluntary Fiduciary Correction Program of the Department of Labor.
EPCRS for IRAs
The Secretary shall expand the Employee Plans Compliance Resolution System to allow custodians of individual retirement plans to address inadvertent errors for which the owner of an individual retirement plan was not at fault, including (but not limited to)—
waivers of the excise tax that would otherwise apply under section 4974 of the Internal Revenue Code of 1986;
under the self-correction component of the Employee Plans Compliance Resolution System, waivers of the 60-day deadline for a rollover where the deadline is missed for reasons beyond the reasonable control of the account owner; and
rules permitting a nonspouse beneficiary to return distributions to an inherited individual retirement plan described in section 408(d)(3)(C) of the Internal Revenue Code of 1986 in a case where, due to an inadvertent error by a service provider, the beneficiary had reason to believe that the distribution could be rolled over without inclusion in income of any part of the distributed amount.
Required minimum distribution corrections
The Secretary shall expand the Employee Plans Compliance Resolution System to allow plans to which such system applies and custodians of individual retirement plans to self-correct, without an excise tax, any inadvertent errors pursuant to which a distribution is made no more than 180 days after it was required to be made.
Additional safe harbors
The Secretary shall expand the Employee Plans Compliance Resolution System (as described in Revenue Procedure 2016–51 or any successor guidance) to provide additional safe harbor means of correcting inadvertent failures described in subsection (a), including safe harbor means of calculating the earnings that must be restored to a plan in cases where plan assets have been depleted by reason of an inadvertent failure.
Assistance for low-income taxpayers
Establishment of income threshold for referral to private debt collection
In general
Section 6306(d)(3) is amended by striking or
at the end of subparagraph (C), by adding or
at the end of subparagraph (D), and by inserting after subparagraph (D) the following new subparagraph:
in the case of a tax receivable which is identified by the Secretary (or the Secretary's delegate) during the period beginning on the date which is 180 days after the date of the enactment of this Act and ending on December 31, 2019, a taxpayer who is an individual with adjusted gross income, as determined for the most recent taxable year for which such information is available, which does not exceed 250 percent of the applicable poverty level (as determined by the Secretary),
.
Effective date
The amendments made by this section shall apply to tax receivables identified by the Secretary of the Treasury (or the Secretary's delegate) after the date which is 180 days after the date of the enactment of this Act.
Return preparation programs for applicable taxpayers
In general
Chapter 77 is amended by inserting after section 7526 the following new section:
Return preparation programs for applicable taxpayers
Establishment of Volunteer Income Tax Assistance Matching Grant Program
The Secretary shall establish a Community Volunteer Income Tax Assistance Matching Grant Program under which the Secretary may, subject to the availability of appropriated funds, make grants to provide matching funds for the development, expansion, or continuation of qualified return preparation programs assisting applicable taxpayers and members of underserved populations.
Use of funds
In general
Qualified return preparation programs may use grants received under this section for—
ordinary and necessary costs associated with program operation in accordance with cost principles under the applicable Office of Management and Budget circular, including—
wages or salaries of persons coordinating the activities of the program,
developing training materials, conducting training, and performing quality reviews of the returns prepared under the program,
equipment purchases, and
vehicle-related expenses associated with remote or rural tax preparation services,
outreach and educational activities described in subsection (c)(2)(B), and
services related to financial education and capability, asset development, and the establishment of savings accounts in connection with tax return preparation.
Requirement of matching funds
A qualified return preparation program must provide matching funds on a dollar-for-dollar basis for all grants provided under this section. Matching funds may include—
the salary (including fringe benefits) of individuals performing services for the program,
the cost of equipment used in the program, and
other ordinary and necessary costs associated with the program.
Application
In general
Each applicant for a grant under this section shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require.
Priority
In awarding grants under this section, the Secretary shall give priority to applications which demonstrate—
assistance to applicable taxpayers, with emphasis on outreach to, and services for, such taxpayers,
taxpayer outreach and educational activities relating to eligibility and availability of income supports available through this title, including the earned income tax credit, and
specific outreach and focus on one or more underserved populations.
Amounts taken into account
In determining matching grants under this section, the Secretary shall only take into account amounts provided by the qualified return preparation program for expenses described in subsection (b).
Program adherence
In general
The Secretary shall establish procedures for, and shall conduct not less frequently than once every 5 calendar years during which a qualified return preparation program is operating under a grant under this section, periodic site visits—
to ensure the program is carrying out the purposes of this section, and
to determine whether the program meets such program adherence standards as the Secretary shall by regulation or other guidance prescribe.
Additional requirements for grant recipients not meeting program adherence standards
In the case of any qualified return preparation program which—
is awarded a grant under this section, and
is subsequently determined—
not to meet the program adherence standards described in paragraph (1)(B), or
not to be otherwise carrying out the purposes of this section,
Definitions
For purposes of this section—
Qualified return preparation program
The term qualified return preparation program
means any program—
which provides assistance to individuals, not less than 90 percent of whom are applicable taxpayers, in preparing and filing Federal income tax returns,
which is administered by a qualified entity,
in which all volunteers who assist in the preparation of Federal income tax returns meet the training requirements prescribed by the Secretary, and
which uses a quality review process which reviews 100 percent of all returns.
Qualified entity
In general
The term qualified entity
means any entity which—
is an eligible organization,
is in compliance with Federal tax filing and payment requirements,
is not debarred or suspended from Federal contracts, grants, or cooperative agreements, and
agrees to provide documentation to substantiate any matching funds provided pursuant to the grant program under this section.
Eligible organization
The term eligible organization means—
an institution of higher education which is described in section 102 (other than subsection (a)(1)(C) thereof) of the Higher Education Act of 1965 (20 U.S.C. 1002), 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,
an organization described in section 501(c) and exempt from tax under section 501(a),
a local government agency, including—
a county or municipal government agency, and
an Indian tribe, as defined in section 4(13) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(13)), including any tribally designated housing entity (as defined in section 4(22) of such Act (25 U.S.C. 4103(22))), tribal subsidiary, subdivision, or other wholly owned tribal entity,
a local, State, regional, or national coalition (with one lead organization which meets the eligibility requirements of clause (i), (ii), or (iii) acting as the applicant organization), or
in the case of applicable taxpayers and members of underserved populations with respect to which no organizations described in the preceding clauses are available—
a State government agency, or
an office providing Cooperative Extension services (as established at the land-grant colleges and universities under the Smith-Lever Act of May 8, 1914).
Applicable taxpayers
The term applicable taxpayer means a taxpayer whose income for the taxable year does not exceed an amount equal to the completed phaseout amount under section 32(b) for a married couple filing a joint return with 3 or more qualifying children, as determined in a revenue procedure or other published guidance.
Underserved population
The term underserved population includes populations of persons with disabilities, persons with limited English proficiency, Native Americans, individuals living in rural areas, members of the Armed Forces and their spouses, and the elderly.
Special rules and limitations
Duration of grants
Upon application of a qualified return preparation program, the Secretary is authorized to award a multi-year grant not to exceed 3 years.
Aggregate limitation
Unless otherwise provided by specific appropriation, the Secretary shall not allocate more than $30,000,000 per fiscal year (exclusive of costs of administering the program) to grants under this section.
Promotion of programs
In general
The Secretary shall promote tax preparation through qualified return preparation programs through the use of mass communications and other means.
Provision of information regarding qualified return preparation programs
The Secretary may provide taxpayers information regarding qualified return preparation programs receiving grants under this section.
VITA grantee referral
Qualified return preparation programs receiving a grant under this section are encouraged, in appropriate cases, to—
advise taxpayers of the availability of, and eligibility requirements for receiving, advice and assistance from qualified low-income taxpayer clinics receiving funding under section 7526, and
provide information regarding the location of, and contact information for, such clinics.
.
Clerical amendment
The table of sections for chapter 77 is amended by inserting after the item relating to section 7526 the following new item:
Sec. 7526A. Return preparation programs for applicable taxpayers.
.
Low-income taxpayer clinics
Promotion of clinics
Section 7526 is amended by adding at the end the following new subsection:
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.
.
IRS referrals to clinics
Subsection (c) of section 7526 is amended by adding at the end the following new paragraph:
IRS referrals
Notwithstanding any other provision of law, the Secretary may refer taxpayers to specific qualified low-income taxpayer clinics receiving funding under this section.
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.
Low-income exception for payments otherwise required in connection with a submission of an offer-in-compromise
In general
Section 7122(c) is amended by adding at the end the following new paragraph:
Exception for low-income taxpayers
Paragraph (1), and any user fee otherwise required in connection with the submission of an offer-in-compromise, shall not apply to any offer-in-compromise with respect to a taxpayer who is an individual with adjusted gross income, as determined for the most recent taxable year for which such information is available, which does not exceed 250 percent of the applicable poverty level (as determined by the Secretary).
.
Effective date
The amendment made by this section shall apply to offers-in-compromise submitted after the date of the enactment of this Act.
Appeals Process
Right to independent conference
In general
Section 1001 of the Internal Revenue Service Restructuring and Reform Act of 1998 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:
Right to independent conference
Under the organization plan of the Internal Revenue Service, a taxpayer shall have the right to a conference with the Internal Revenue Service Office of Appeals which does not include personnel from the Office of Chief Counsel for the Internal Revenue Service or the compliance functions of the Internal Revenue Service unless the taxpayer specifically consents to the participation of such personnel.
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Effective date
This section shall apply to conferences occurring after the date of the enactment of this Act.
Access to case files
In general
In the case of any specified taxpayer with respect to which a conference with the Internal Revenue Service Office of Appeals has been scheduled, the taxpayer shall be provided access to the nonprivileged portions of the case file on record regarding the disputed issues (other than documents provided by the taxpayer to the Internal Revenue Service) not later than 10 days before the date of such conference.
Taxpayer election To expedite conference
If the taxpayer so elects, subsection (a) shall be applied by substituting the date of such conference
for 10 days before the date of such conference
.
Specified taxpayer
For purposes of this section:
In general
The term specified taxpayer means—
in the case of any taxpayer who is a natural person, a taxpayer whose adjusted gross income does not exceed $400,000, and
in the case of any other taxpayer, a taxpayer whose gross receipts do not exceed $5,000,000.
Aggregation rule
Rules similar to the rules of section 448(c)(2) of the Internal Revenue Code of 1986 shall apply for purposes of paragraph (1)(B).
Effective date
This section shall apply to conferences occurring after the date which is 1 year after the date of the enactment of this Act.
Ensuring taxpayer right to appeal
In general
Subsection (a) of section 6212 is amended—
by striking In general.—If the Secretary
and inserting
In general.—
Authorization
If—
the Secretary
,
by striking 44, he is authorized
and inserting
44, and
the requirements of paragraph (2) have been met with respect to such deficiency,
the Secretary is authorized
, and
by adding at the end the following new paragraph:
Opportunity for administrative review in the Office of Appeals
In general
The requirements of this paragraph are met with respect to a deficiency if, prior to the issuance of the notice of deficiency under paragraph (1)—
the taxpayer has been issued a letter of proposed deficiency that explains the basis for the determination of deficiency and allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals, and
either—
the time provided in such letter for contacting the Office of Appeals has expired and the taxpayer has not so contacted such Office, or
the Office of Appeals has issued a decision with respect to such deficiency.
Frivolous tax positions
The Secretary is authorized to issue regulations limiting the application of subparagraph (A) in cases involving solely the failure or refusal to comply with the tax laws because of moral, religious, political, constitutional, conscientious, or similar grounds, or for other positions listed as frivolous under section 6702(c).
Cases designated for litigation
Subparagraph (A) shall not apply in the case of issues designated for litigation in accordance with section 7124.
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Opportunity for appeal if fewer than 60 days remain on statute of limitations
Section 6212 is amended by adding at the end the following new subsection:
Opportunity for appeal if fewer than 60 days remain on statute of limitations
In the case of any issues relating to a potential deficiency with respect to which 60 days or fewer remain in the period applicable under section 6501, if the taxpayer agrees to the extension of such period by 12 months, the Secretary shall issue a letter of proposed deficiency described in subsection (a)(2)(A)(i) allowing the taxpayer an opportunity for administrative review of such issues in the Internal Revenue Service Office of Appeals before a notice of deficiency is issued under this section. Rules similar to the rules of subsection (a)(2)(B) shall apply for purposes of this subsection.
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Effective date
The amendments made by this section shall apply to notices of deficiency issued after the date of the enactment of this Act.
Limitation on designation of cases as not eligible for referral to Independent Office of Appeals
In general
If any taxpayer which is in receipt of notice of deficiency authorized under section 6212 of the Internal Revenue Code of 1986 requests referral to the Internal Revenue Service Office of Appeals and such request is denied, the Commissioner of Internal Revenue shall provide such taxpayer a written notice which—
provides a detailed description of the facts involved, the basis for the decision to deny the request, and a detailed explanation of how the basis of such decision applies to such facts, and
describes the procedures proscribed under subsection (c) for protesting the decision to deny the request.
Report to Congress
The Commissioner of Internal Revenue shall submit a written report to Congress on an annual basis which includes the number of requests described in subsection (a) which were denied and the reasons (described by category) that such requests were denied.
Procedures for protesting denial of request
The Commissioner of Internal Revenue shall prescribe procedures for protesting to the Commissioner of Internal Revenue (personally and not through any delegate) a denial of a request described in subsection (a).
Not applicable to frivolous positions
This section shall not apply to a request for referral to the Internal Revenue Service Office of Appeals which is denied on the basis that the issue involved is a frivolous position (within the meaning of section 6702(c) of the Internal Revenue Code of 1986).
Procedures related to Secretarial authority to designate cases for litigation
In general
Chapter 74 is amended by redesignating section 7124 as section 7125 and by inserting after section 7123 the following new section:
Procedures related to Secretarial authority to designate cases for litigation
In general
For any matter which the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service have determined shall be designated for litigation, such determination shall be—
based on a joint written recommendation by the Commissioner of the relevant operating division of the Internal Revenue Service and the Division Counsel for such operating division, which shall include an explanation as to why the designation is preferable to other means of resolving the matter, and
made in consultation with the Associate Chief Counsel with relevant subject matter jurisdiction over such matter.
Notification prior to recommendation
Prior to submission of a recommendation described in subsection (a)(1), the Division Counsel for the relevant operating division of the Internal Revenue Service shall provide written notification to the taxpayer regarding the recommendation, including—
a description of the issues recommended for designation and the reasons for such recommendation, and
notification that the taxpayer’s views may be presented in writing or in person to the Division Counsel and the Commissioner of the relevant operating division—
within 60 days of such notification, or
prior to such other date as the taxpayer and the Division Counsel may agree.
Notification after recommendation
Not later than 30 days after submission of a recommendation described in subsection (a)(1), the Division Counsel for the relevant operating division of the Internal Revenue Service shall provide written notification to the taxpayer regarding submission of the recommendation, including notification that the taxpayer’s views may be presented in writing or in person to the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service—
within 60 days of such notification, or
prior to such other date as the taxpayer, the Commissioner of Internal Revenue, and the Chief Counsel for the Internal Revenue Service may agree.
Notice of approval of designation
For any matter which the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service have determined shall be designated for litigation—
the Division Counsel for the relevant operating division of the Internal Revenue Service shall provide written notification to the taxpayer regarding such determination, and
the jurisdiction of the Internal Revenue Service Office of Appeals over such matter shall be limited solely to any issues not included in such designation.
Rescinding of designation
The Chief Counsel for the Internal Revenue Service may rescind any designation of a matter for litigation if the Chief Counsel determines that continuation of such litigation does not serve the purpose for which such designation was originally made.
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Clerical amendment
The table of sections for chapter 74 is amended by striking the item relating to section 7124 and inserting the following new items:
Sec. 7124. Procedures related to Secretarial authority to designate cases for litigation.
Sec. 7125. Cross references.
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Effective date
The amendments made by this section shall apply to the designation of issues for litigation occurring after the date of the enactment of this Act.
Miscellaneous
Modification of authority to issue designated summons
In general
Paragraph (1) of section 6503(j) is amended by striking coordinated examination program
and inserting coordinated industry case program
.
Designated summons
Clause (i) of section 6503(j)(2)(A) is amended to read as follows:
the issuance of such summons is preceded by a review and written approval of such issuance by the Large Business and International Division Commissioner and the Division Counsel of the Office of Chief Counsel (or their successors)—
which clearly establishes that the taxpayer did not reasonably cooperate with reasonable requests by the Secretary for witnesses, documents, meetings, and interviews, and
which is attached to such summons,
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Burden of proof
Subsection (j) of section 6503 is amended by adding at the end the following new paragraph:
Burden of proof
In any court proceeding described in paragraph (3), the Secretary shall bear the burden of proving that the corporation described in paragraph (1) did not reasonably cooperate with reasonable requests by the Secretary for witnesses, documents, meetings, and interviews.
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Effective date
The amendments made by this section shall apply to summonses issued after the date of the enactment of this Act.
Streamlined critical pay authority for information technology positions
Authority
Section 9503(a) of title 5, United States Code, is amended—
in the matter preceding paragraph (1), by striking the Secretary of the Treasury
and all that follows through establish
and inserting the Secretary of the Treasury may, during the period beginning on October 1, 2018, and ending on September 30, 2023, establish
, and
in paragraph (1)(B), by striking the Internal Revenue Service's successful accomplishment of an important mission
and inserting the functionality of the information technology operations of the Internal Revenue Service
.
Recruitment, retention, relocation incentives, and relocation expenses
Section 9504 of title 5, United States Code, is amended—
in subsection (a)—
by striking Before September 30, 2013
and inserting During the period beginning on October 1, 2018, and ending on September 30, 2023
, and
by inserting for employees holding positions described in section 9503(a)(1)
after incentives
, and
in subsection (b)—
by striking Before September 30, 2013
and inserting During the period beginning on October 1, 2018, and ending on September 30, 2023
,
by striking employees transferred or reemployed
and inserting employees holding positions described in section 9503(a)(1) who are transferred or reemployed during such period
, and
by striking section 9502 or 9503 after June 1, 1998
and inserting section 9503 during such period
.
Performance awards for senior executives
Section 9505(a) of title 5, United States Code, is amended—
by striking Before September 30, 2013
and inserting During the period beginning on October 1, 2018, and ending on September 30, 2023
, and
by striking significant functions
and inserting the information technology operations
.
Effective date
The amendments made by this section shall apply to payments made on or after the date of the enactment of this Act.
Uniform standards for the use of electronic signatures for disclosure authorizations to, and other authorizations of, practitioners
Paragraph (3) of section 6061(b) is amended to read as follows:
Published guidance
In general
The Secretary shall publish guidance as appropriate to define and implement any waiver of the signature requirements or any method adopted under paragraph (1).
Electronic signatures for disclosure authorizations to, and other authorizations of, practitioners
Not later than 6 months after the date of the enactment of this subparagraph, the Secretary shall publish guidance to establish uniform standards and procedures for the acceptance of taxpayers’ signatures appearing in commercially provided electronic form with respect to any request for disclosure of a taxpayer's return or return information under section 6103(c) to a practitioner or any power of attorney granted by a taxpayer to a practitioner.
Practitioner
For purposes of subparagraph (B), the term practitioner means any individual in good standing who is regulated under section 330 of title 31, United States Code.
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Limitation on access of non-Internal Revenue Service employees to returns and return information
In general
Section 7602 is amended by adding at the end the following new subsection:
Limitation on access of persons other than Internal Revenue Service officers and employees
The Secretary shall not, under the authority of section 6103(n), provide any books, papers, records, or other data obtained pursuant to this section to any person authorized under section 6103(n), except when such person requires such information for the sole purpose of providing expert evaluation and assistance to the Internal Revenue Service. No person other than an officer or employee of the Internal Revenue Service or the Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony was obtained pursuant to this section.
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Effective date
In general
Except as provided in paragraph (2), the amendment made by this section shall take effect on the date of the enactment of this Act.
Application to contracts in effect
The amendment made by this section shall apply to any contract in effect under section 6103(n) of the Internal Revenue Code of 1986, pursuant to temporary Treasury Regulation section 301.7602–1T proposed in Internal Revenue Bulletin 2014–28, Treasury Regulation section 301.7602–1(b)(3), or any similar or successor regulation, that is in effect on the date of the enactment of this Act.