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[House Report 114-636]
[From the U.S. Government Publishing Office]

114th Congress    }                                      {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                      {     114-636

======================================================================
 
                           DITTO ACT OF 2016

                                _______
                                

 June 21, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4921]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 4921) to amend chapter 31 of title 
44, United States Code, to require the maintenance of certain 
records for 3 years, and for other purposes, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................     3
Explanation of Amendments........................................     4
Committee Consideration..........................................     4
Roll Call Votes..................................................     4
Application of Law to the Legislative Branch.....................     4
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     4
Statement of General Performance Goals and Objectives............     4
Duplication of Federal Programs..................................     4
Disclosure of Directed Rule Makings..............................     4
Federal Advisory Committee Act...................................     5
Unfunded Mandate Statement.......................................     5
Earmark Identification...........................................     5
Committee Estimate...............................................     5
Budget Authority and Congressional Budget Office Cost Estimate...     5
Changes in Existing Law Made by the Bill, as Reported............     6
Minority Views...................................................     8

                     Committee Statement and Views

                          PURPOSE AND SUMMARY

    H.R. 4921, the Ditto Act of 2016, ensures that the Internal 
Revenue Service (IRS) maintains the same record-keeping 
standards as the agency expects from taxpayers. H.R. 4921 
amends Chapter 31 of title 44 U.S.C. to require the IRS to 
maintain any preserved record it obtains for at least three 
years. Further, the bill requires the IRS to maintain all 
additional records generated in relation to that produced 
record.

                  BACKGROUND AND NEED FOR LEGISLATION

    The IRS recommends or requires that taxpayers maintain 
certain tax-related documents for several years depending on 
``the action, expense, or event which the document 
records.''\1\ Specifically, IRS policy states that taxpayers 
``must keep [] records that support an item of income, 
deduction or credit shown on [a] tax return until the period of 
limitations for that tax return runs out.''\2\ The IRS defines 
``period of limitations'' as ``the period of time in which you 
can amend your tax return to claim a credit or refund, or the 
IRS can assess additional tax.''\3\ Under these guidelines, the 
IRS requires taxpayers to maintain records from three to seven 
years, and indefinitely ``if you do not file a return.''\4\
---------------------------------------------------------------------------
    \1\Internal Revenue Serv., How Long Should I Keep Records? (May 13, 
2016), https://www.irs.gov/businesses/small-businesses-self-employed/
how-long-should-i-keep-records.
    \2\Id.
    \3\Id.
    \4\Id.
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    However, the IRS's current internal policy controls 
concerning record maintenance are far less stringent than those 
required of the American taxpayer. Indeed, according to Jeff 
Tribiano, the Deputy Commissioner for Operations Support for 
the IRS, there is a significant need ``to preserve all records 
that are electronically generated by the workforce,'' which 
``became apparent when an issue arose in connection with the 
[IRS's] collection and production of documents related to a 
Freedom of Information Act case captioned Microsoft v. 
IRS.''\5\
---------------------------------------------------------------------------
    \5\IRS: Reviewing Its Legal Obligations, Document Preservation, and 
Data Security: Hearing Before the H. Comm. On Oversight and Gov't 
Reform, 114th Cong. 29-30 (2016) (statement of Jeff Tribiano, Deputy 
Comm'r for Operations Support, Internal Revenue Service) [hereinafter 
IRS Document Preservation Hearing]; Microsoft Corp. v. Internal Revenue 
Serv., No. 2:15CV00369 (W.D. Wash).
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    The IRS's struggle in appropriately retaining documents was 
also highlighted by its erasing of 422 backup tapes containing 
as many as 24,000 emails from Lois Lerner, the now former 
Director of the Exempt Organizations Division, on March 4, 
2014. The destruction of the backup tapes happened despite 
multiple legal obligations to preserve Lerner documents, 
including a subpoena issued by the Committee on Oversight and 
Government Reform on August 2, 2013 for ``[a]ll communications 
sent or received by Lois Lerner, from January 1, 2009, to 
August 2, 2013.''\6\
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    \6\H. Comm. on Oversight & Gov't Reform, Subpeona to Jacob Lew, 
Sec'y, Dep't of the Treasury (Aug. 2, 2013).
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    The destruction of the backup tapes was even more egregious 
given the confusion the IRS had regarding the state of Lerner's 
emails. On June 13, 2014, the IRS informed Congress that it was 
not able to recover all emails sent and received by Lerner 
between January 2009 and April 2011 because Lerner's hard drive 
had crashed.\7\ To date, no one has been held accountable for 
the loss of those documents.
---------------------------------------------------------------------------
    \7\Letter from Leonard Oursler, Internal Revenue Serv. to Hon. Ron 
Wyden & Hon. Orrin Hatch, S. Comm. On Finance (June 13, 2014).
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    Recordkeeping failures such as these should be unacceptable 
at the IRS. If the IRS is going to require taxpayers to 
diligently maintain information, the IRS should be held to the 
same standards. To reinforce this principle, H.R. 4921 provides 
further clarity that the IRS must maintain records submitted by 
taxpayers for at least three years. Additionally, just as the 
IRS asks taxpayers to keep supporting information, under H.R. 
4921 the IRS is also required to preserve any records created 
or derived from records submitted by a taxpayer for three 
years.
    Importantly, H.R. 4921 does not allow the IRS to destroy 
any records earlier than it would have if not for the bill. 
Rather, the bill would ensure a minimum preservation period for 
records the agency generates from documents it has asked the 
taxpayer to independently maintain. If enacted, this 
legislation will have two clear effects. First, it will better 
ensure the IRS is aware of the importance of its role as a 
record keeper. Second, it will encourage the IRS to be 
cognizant of the burdens it places on taxpayers in order to 
ensure it only asks of them what is necessary.

                          LEGISLATIVE HISTORY

    H.R. 4921, the Ditto Act of 2016, was introduced by 
Congressman Mark Walker (R-NC) on April 13, 2016 and referred 
to the Committee on Oversight and Government Reform.
    The Committee on Oversight and Government Reform considered 
H.R. 4921 at a business meeting on April 14, 2016. The 
Committee ordered H.R. 4921 favorably reported by voice vote.

                           Section-by-Section

Section 1. Short title

    Designates the short title of the bill as the ``Ditto Act 
of 2016''.

Section 2. Requirement to maintain records

    Amends Chapter 31 of title 44 to require the IRS to 
maintain any preserved record it obtains for at least three 
years. The IRS must also maintain any record related to the 
preserved record.
    Defines ``preserved record'' as any record maintained by a 
person other than the government pursuant to a rule, guidance, 
or other directive of the IRS that requires or recommends a 
person maintain a record for a period of time.
    Makes clear that nothing in the legislation shall be 
construed to limit the preservation of a preserved record for 
more than three years or shorten the period of time a preserved 
record is otherwise required to be maintained.
    Specifies that the amendments shall take effect on the date 
of enactment of this Act.

                       Explanation of Amendments

    No amendments were offered during Full Committee 
consideration of the bill.

                        Committee Consideration

    On April 14, 2016 the Committee met in open session and 
ordered reported favorably the bill, H.R. 4921, by voice vote, 
a quorum being present.

                            Roll Call Votes

    No roll call votes were requested or conducted during Full 
Committee consideration of H.R. 4921.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill clarifies IRS's recordkeeping responsibilities. As 
such this bill does not relate to employment or access to 
public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goal and objective of the bill is to amend chapter 31 of title 
44, United States Code, to require the maintenance of certain 
records for 3 years.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does not 
direct the completion of any specific rule makings within the 
meaning of 5 U.S.C. 551.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported bill include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
the Congressional Budget Office:

                                                      May 17, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4921, the Ditto 
Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4921--Ditto Act of 2016

    H.R. 4921 could require the Internal Revenue Service (IRS) 
to keep all records it obtains related to tax filers for at 
least three years if the agency requires tax filers to keep 
those same records.
    The IRS could react to this legislation in a number of 
different ways. For example, the IRS might retain records for a 
longer period of time, or it might require less information to 
be preserved by tax filers. Based on discussions with the IRS, 
CBO expects that under the bill the IRS would retain at least 
some records for a longer period than they now retain them, 
resulting in higher storage costs. CBO estimates that those 
costs would total about $2 million over the 2017-2021 period; 
such spending would be subject to the availability of 
appropriated funds.
    Because enacting the bill would not affect direct spending 
or revenues, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 4921 would not increase direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    H.R. 4921 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                      TITLE 44, UNITED STATES CODE

           *       *       *       *       *       *       *
           CHAPTER 31--RECORDS MANAGEMENT BY FEDERAL AGENCIES

Sec.
3101. Records management by agency heads; general duties.
     * * * * * * *
3108. Requirement to maintain records.
     * * * * * * *

Sec. 3108. Requirement to maintain records

  (a) In General.--If the Internal Revenue Service obtains a 
preserved record, the Internal Revenue Service shall preserve 
for not less than 3 years from the date on which the record was 
obtained--
          (1) the preserved record or a copy of the preserved 
        record; and
          (2) all records related to the preserved record.
  (b) Preserved Record Defined.--In this section, the term 
``preserved record'' means any record that is maintained by a 
person other than the Federal Government pursuant to a rule, 
guidance, or other directive from the Internal Revenue Service 
that requires or recommends the person maintain records for a 
particular period of time on a particular matter.
  (c) Rule of Construction.--Nothing in this section shall be 
construed as--
          (1) limiting the preservation of a preserved record 
        for a longer period of time than is required by this 
        section; or
          (2) shortening the period of time a preserved record 
        is otherwise required to be maintained.

           *       *       *       *       *       *       *

                             MINORITY VIEWS

    I oppose H.R. 4921. This bill would target only one agency, 
the Internal Revenue Service (IRS). Under this bill, the IRS 
would be required to comply with a special set of records 
requirements fashioned only for that agency.
    This bill would establish an arbitrary three-year retention 
period for any record ``maintained by a person other than the 
Federal Government pursuant to a rule, guidance or other 
directive'' from the IRS ``that requires or recommends the 
person maintain records for a particular period of time on a 
particular matter.''
    The IRS is already subject to the Federal Records Act just 
like every other federal agency. The IRS is already required to 
comply with records schedules approved by the National Archives 
and Records Administration (NARA) that ensure compliance with 
the Federal Records Act. The schedules require records to be 
preserved for set time periods depending on the type and value 
of the record.
    The majority has not identified a single example of an IRS 
records schedule that is deficient.
    NARA expressed concerns with this bill. NARA offered to 
work with the Committee to address any specific issues the 
Committee could identify with the IRS' recordkeeping practices. 
That is what the Committee should do if there is a legitimate 
concern rather than moving forward with this unnecessary bill. 
But the majority has declined to do so.
    The majority's report cites the IRS' erasure, or 
``degaussing,'' of backup tapes as part of its investigation of 
Lois Lerner's emails. The Treasury Inspector General for Tax 
Administration (TIGTA) found the tapes were erased as part of 
the IRS' normal recycling process and that IRS employees 
responsible for handling the backup tapes ``did not understand 
their responsibility to comply'' with a May 22, 2013, e-mail 
directive to preserve the tapes in light of ongoing 
investigations.\1\
---------------------------------------------------------------------------
    \1\Treasury Inspector General for Tax Administration, Report of 
Investigation: Exempt Organizations Data Loss (June 30, 2015) (#54-
1406-0008-1).
---------------------------------------------------------------------------
    TIGTA found no evidence that any IRS employees purposefully 
destroyed the tapes to conceal any emails. To the contrary, 
TIGTA concluded: ``No evidence was uncovered that any IRS 
employees had been directed to destroy or hide information from 
Congress, the DOJ, or TIGTA.''\2\
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    \2\Id.
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    This bill is unnecessary and does nothing to advance 
federal recordkeeping policies.
                                        Elijah E. Cummings,
                                                    Ranking Member.

                                  [all]
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