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[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1793 Introduced in Senate (IS)]

<DOC>

115th CONGRESS
  1st Session
                                S. 1793

To amend the Internal Revenue Code of 1986 to enhance taxpayer rights, 
                        and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 12, 2017

Mr. Grassley (for himself and Mr. Thune) 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 enhance taxpayer rights, 
                        and for other purposes.

    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 Enhancement Act of 2017''.
    (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 for this Act is as 
follows:

Sec. 1. Short title, etc.
                     TITLE I--THE RIGHT TO PRIVACY

Sec. 101. Civil damages for unauthorized disclosure or inspection.
Sec. 102. Compliance by contractors with confidentiality safeguards.
TITLE II--THE RIGHT TO APPEAL IN AN INDEPENDENT FORUM AND TO CHALLENGE 
           THE INTERNAL REVENUE SERVICE POSITION AND BE HEARD

Sec. 201. Increase in limitations on civil damages for certain 
                            unauthorized collection actions.
Sec. 202. Extension of time limit for contesting IRS levy.
           TITLE III--THE RIGHT TO A FAIR AND JUST TAX SYSTEM

Sec. 301. Waiver of user fee for installment agreements using automated 
                            withdrawals.
Sec. 302. Individuals held harmless on improper levy on retirement 
                            plans.
Sec. 303. Office of Chief Counsel review of offers-in-compromise.
Sec. 304. Increase in and expansion of individual estimated tax 
                            exception.
Sec. 305. Modifications to computation of individual estimated tax.
Sec. 306. Corporate estimated tax.
Sec. 307. Increase in large corporation threshold for estimated tax 
                            payments.
Sec. 308. Expansion of interest netting.
Sec. 309. Clarification of application of Federal tax deposit penalty.
                   TITLE IV--THE RIGHT TO BE INFORMED

Sec. 401. Collection activities with respect to joint return 
                            disclosable to either spouse based on oral 
                            request.
Sec. 402. Mandatory electronic filing for annual returns of exempt 
                            organizations.
                 TITLE V--THE RIGHT TO QUALITY SERVICE

Sec. 501. Free electronic filing.
Sec. 502. Access to appeals.

                     TITLE I--THE RIGHT TO PRIVACY

SEC. 101. CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE OR INSPECTION.

    (a) Notice to Taxpayer.--Subsection (e) of section 7431 is amended 
by adding at the end the following new sentences: ``The Secretary shall 
also notify such taxpayer if the Internal Revenue Service or, upon 
notice to the Secretary by a Federal or State agency, if such Federal 
or State agency, proposes an administrative determination as to 
disciplinary or adverse action against an employee arising from the 
employee's unauthorized inspection or disclosure of the taxpayer's 
return or return information. The notice described in this subsection 
shall include the date of the inspection or disclosure and the rights 
of the taxpayer under such administrative determination.''.
    (b) Payment Authority Clarified.--
            (1) In general.--Section 7431 is amended by adding at the 
        end the following new subsection:
    ``(i) Payment Authority.--Claims pursuant to subsection (a)(1) 
shall be payable out of funds appropriated under section 1304 of title 
31, United States Code.''.
            (2) Annual reports of payments.--The Secretary of the 
        Treasury shall annually report to the Committee on Finance of 
        the Senate and the Committee on Ways and Means of the House of 
        Representatives regarding payments made from the United States 
        Judgment Fund under section 7431(i) of the Internal Revenue 
        Code of 1986.
    (c) Burden of Proof for Good Faith Exception Rests With Person 
Making Inspection or Disclosure.--Section 7431(b) is amended by adding 
at the end the following new flush sentence:
``In any proceeding involving the existence of a good faith but 
erroneous interpretation of section 6103, the burden of proof with 
respect to such issue shall be on the person who made the inspection or 
disclosure, or in the case of a suit pursuant to paragraph (a)(1), the 
United States.''.
    (d) Reports.--Subsection (p) of section 6103 is amended by adding 
at the end the following new paragraph:
            ``(9) Report on willful unauthorized disclosure and 
        inspection.--As part of the report required by paragraph (3)(C) 
        for each calendar year, the Secretary shall furnish information 
        regarding the willful unauthorized disclosure and inspection of 
        returns and return information, including the number, status, 
        and results of--
                    ``(A) administrative investigations,
                    ``(B) civil lawsuits brought under section 7431 
                (including the amounts for which such lawsuits were 
                settled and the amounts of damages awarded), and
                    ``(C) criminal prosecutions.''.
    (e) Increase in Amount of Damages Per Violation.--
            (1) In general.--Subparagraph (A) of section 7431(c)(1) is 
        amended to read as follows:
                    ``(A) the sum of--
                            ``(i) $5,000 for each act of unauthorized 
                        inspection of a return or return information 
                        with respect to which such defendant is found 
                        liable, and
                            ``(ii) $10,000 for each act of unauthorized 
                        disclosure of a return or return information 
                        with respect to which such defendant is found 
                        liable, or''.
            (2) Punitive damages.--
                    (A) In general.--Section 7431(c) is amended by 
                redesignating paragraphs (2) and (3) as paragraphs (3) 
                and (4), respectively, and by inserting after paragraph 
                (1) the following new paragraph:
            ``(2) in the case of willful inspection or disclosure or an 
        inspection or disclosure which is the result of gross 
        negligence, punitive damages, plus''.
                    (B) Conforming amendment.--Subparagraph (B) of 
                section 7431(c)(1) is amended to read as follows:
                    ``(B) the actual damages sustained by the plaintiff 
                as a result of such unauthorized inspection or 
                disclosure, plus''.
    (f) Effective Dates.--
            (1) Notice.--The amendment made by subsection (a) shall 
        apply to determinations made after the date which is 180 days 
        after the date of the enactment of this Act.
            (2) Payment authority.--The amendment made by subsection 
        (b)(1) shall take effect on the date which is 180 days after 
        the date of the enactment of this Act.
            (3) Burden of proof.--The amendments made by subsection (c) 
        shall apply to inspections and disclosures occurring on and 
        after the date which is 180 days after the date of the 
        enactment of this Act.
            (4) Reports.--Subsection (b)(2) and the amendment made by 
        subsection (d) shall apply to calendar years ending after the 
        date which is 180 days after the date of the enactment of this 
        Act.
            (5) Increase in damages.--The amendment made by subsection 
        (e) shall apply to proceedings commenced after the date of the 
        enactment of this Act.

SEC. 102. COMPLIANCE BY CONTRACTORS WITH CONFIDENTIALITY SAFEGUARDS.

    (a) In General.--Section 6103(p), as amended by this Act, is 
amended by adding at the end the following new paragraph:
            ``(10) Disclosure to contractors and other agents.--
        Notwithstanding any other provision of this section, no return 
        or return information shall be disclosed to any contractor or 
        other agent of a Federal, State, or local agency unless such 
        agency, to the satisfaction of the Secretary--
                    ``(A) has requirements in effect which require each 
                such contractor or other agent which would have access 
                to returns or return information to provide safeguards 
                (within the meaning of paragraph (4)) to protect the 
                confidentiality of such returns or return information,
                    ``(B) agrees to conduct an on-site review every 3 
                years (or a mid-point review in the case of contracts 
                or agreements of less than 3 years in duration) of each 
                contractor or other agent to determine compliance with 
                such requirements,
                    ``(C) submits the findings of the most recent 
                review conducted under subparagraph (B) to the 
                Secretary as part of the report required by paragraph 
                (4)(E), and
                    ``(D) certifies to the Secretary for the most 
                recent annual period that such contractor or other 
                agent is in compliance with all such requirements.
        The certification required by subparagraph (D) shall include 
        the name and address of each contractor and other agent, a 
        description of the contract or agreement with such contractor 
        or other agent, and the duration of such contract or agreement. 
        The requirements of this paragraph shall not apply to 
        disclosures pursuant to subsection (n) for purposes of Federal 
        tax administration.''.
    (b) Conforming Amendment.--Subparagraph (B) of section 6103(p)(8) 
is amended by inserting ``or paragraph (10)'' after ``subparagraph 
(A)''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to disclosures made after the date of the enactment of 
        this Act.
            (2) Certifications.--The first certification under section 
        6103(p)(10)(D) of the Internal Revenue Code of 1986, as added 
        by subsection (a), shall be made with respect to the portion of 
        calendar year 2017 following the date of the enactment of this 
        Act.

TITLE II--THE RIGHT TO APPEAL IN AN INDEPENDENT FORUM AND TO CHALLENGE 
           THE INTERNAL REVENUE SERVICE POSITION AND BE HEARD

SEC. 201. INCREASE IN LIMITATIONS ON CIVIL DAMAGES FOR CERTAIN 
              UNAUTHORIZED COLLECTION ACTIONS.

    (a) In General.--Section 7433(b) is amended by striking 
``$1,000,000 ($100,000'' and inserting ``$1,500,000 ($150,000''.
    (b) Punitive Damages in the Case of Reckless or Intentional 
Action.--Subsection (b) of section 7433 is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively, and by moving such 
        subparagraphs 2 ems to the right,
            (2) by striking ``In any action'' and inserting the 
        following:
            ``(1) In general.--In any action'', and
            (3) by adding at the end the following new paragraph:
            ``(2) Punitive damages for willful and reckless actions.--
        In any action brought under subsection (a) or petition filed 
        under subsection (e) in which the defendant is found to be 
        liable and to have acted recklessly or intentionally, the court 
        may award the plaintiff punitive damages.''.
    (c) Period for Bringing Action.--Paragraph (3) of section 7433(d) 
is amended by striking ``the date the right of action accrues'' and 
inserting ``the later of the date of on which administrative remedies 
available within the Internal Revenue Service have been exhausted or 
the date on which the taxpayer reasonably could have discovered that 
the actions of the officer or employee were done in disregard of a 
provision of this title or any regulation promulgated under this 
title''.
    (d) Effective Date.--The amendments made by this section shall 
apply in the case of proceedings commenced after the date of the 
enactment of this Act.

SEC. 202. EXTENSION OF TIME LIMIT FOR CONTESTING IRS LEVY.

    (a) Extension of Time for Return of Property Subject to Levy.--
Subsection (b) of section 6343 is amended by striking ``9 months'' and 
inserting ``2 years''.
    (b) Period of Limitation on Suits.--Subsection (c) of section 6532 
is amended--
            (1) by striking ``9 months'' in paragraph (1) and inserting 
        ``2 years'', and
            (2) by striking ``9-month'' in paragraph (2) and inserting 
        ``2-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.

           TITLE III--THE RIGHT TO A FAIR AND JUST TAX SYSTEM

SEC. 301. WAIVER OF USER FEE FOR INSTALLMENT AGREEMENTS USING AUTOMATED 
              WITHDRAWALS.

    (a) In General.--Section 6159 is amended by redesignating 
subsections (e) and (f) as subsections (f) and (g), respectively, and 
by inserting after subsection (d) the following new subsection:
    ``(e) Waiver of User Fees for Installment Agreements Using 
Automated Withdrawals.--In the case of a taxpayer who enters into an 
installment agreement in which automated installment payments are 
agreed to, the Secretary shall waive the fee (if any) for entering into 
the installment agreement.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to agreements entered into on or after the date which is 180 days 
after the date of the enactment of this Act.

SEC. 302. INDIVIDUALS HELD HARMLESS ON IMPROPER LEVY ON RETIREMENT 
              PLANS.

    (a) In General.--Section 6343 is amended by adding at the end the 
following new subsection:
    ``(f) Individuals Held Harmless on Wrongful Levy, etc. on 
Retirement Plan.--
            ``(1) In general.--If the Secretary determines that an 
        individual's account or benefit under an eligible retirement 
        plan (as defined in section 402(c)(8)(B)) has been levied upon 
        in a case to which subsection (b) or (d)(2)(A) applies and 
        property or an amount of money is returned to the individual--
                    ``(A) the individual may contribute such property 
                or an amount equal to the sum of--
                            ``(i) the amount of money so returned by 
                        the Secretary, and
                            ``(ii) interest paid under subsection (c) 
                        on such amount of money,
                into such eligible retirement plan if such contribution 
                is permitted by the plan, or into an individual 
                retirement plan (other than an endowment contract) to 
                which a rollover contribution of a distribution from 
                such eligible retirement plan is permitted, but only if 
                such contribution is made not later than the due date 
                (not including extensions) for filing the return of tax 
                for the taxable year in which such property or amount 
                of money is returned, and
                    ``(B) the Secretary shall, at the time such 
                property or amount of money is returned, notify such 
                individual that a contribution described in 
                subparagraph (A) may be made.
            ``(2) Treatment as rollover.--The distribution on account 
        of the levy and any contribution under paragraph (1) with 
        respect to the return of such distribution shall be treated for 
        purposes of this title as if such distribution and contribution 
        were described in section 402(c), 402A(c)(3), 403(a)(4), 
        403(b)(8), 408(d)(3), 408A(d)(3), or 457(e)(16), whichever is 
        applicable; except that--
                    ``(A) the contribution shall be treated as having 
                been made for the taxable year in which the 
                distribution on account of the levy occurred, and the 
                interest paid under subsection (c) shall be treated as 
                earnings within the plan after the contribution and 
                shall not be included in gross income, and
                    ``(B) such contribution shall not be taken into 
                account under section 408(d)(3)(B).
            ``(3) Refund, etc., of income tax on levy.--
                    ``(A) In general.--If any amount is includible in 
                gross income for a taxable year by reason of a 
                distribution on account of a levy referred to in 
                paragraph (1) and any portion of such amount is treated 
                as a rollover contribution under paragraph (2), any tax 
                imposed by chapter 1 on such portion shall not be 
                assessed, and if assessed shall be abated, and if 
                collected shall be credited or refunded as an 
                overpayment made on the due date for filing the return 
                of tax for such taxable year.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a rollover contribution under this subsection which 
                is made from an eligible retirement plan which is not a 
                Roth IRA or a designated Roth account (within the 
                meaning of section 402A) to a Roth IRA or a designated 
                Roth account under an eligible retirement plan.
            ``(4) Interest.--Notwithstanding subsection (d), interest 
        shall be allowed under subsection (c) in a case in which the 
        Secretary makes a determination described in subsection 
        (d)(2)(A) with respect to a levy upon an individual retirement 
        plan.
            ``(5) Treatment of inherited accounts.--For purposes of 
        paragraph (1)(A), section 408(d)(3)(C) shall be disregarded in 
        determining whether an individual retirement plan is a plan to 
        which a rollover contribution of a distribution from the plan 
        levied upon is permitted.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid under subsections (b), (c), and (d)(2)(A) of section 
6343 of the Internal Revenue Code of 1986 after December 31, 2017.

SEC. 303. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-COMPROMISE.

    (a) In General.--Section 7122(b) is amended by striking ``Whenever 
a compromise'' and all that follows through ``his delegate'' and 
inserting ``If the Secretary determines that an opinion of the General 
Counsel for the Department of the Treasury, or the Counsel's delegate, 
is required with respect to a compromise, there shall be placed on file 
in the office of the Secretary such opinion''.
    (b) Conforming Amendments.--Section 7122(b) is amended by striking 
the second and third sentences.
    (c) Effective Date.--The amendments made by this section shall 
apply to offers-in-compromise submitted or pending on or after the date 
of the enactment of this Act.

SEC. 304. INCREASE IN AND EXPANSION OF INDIVIDUAL ESTIMATED TAX 
              EXCEPTION.

    (a) In General.--Paragraph (1) of section 6654(e) is amended to 
read as follows:
            ``(1) Where tax is small amount.--
                    ``(A) In general.--No addition to tax shall be 
                imposed under subsection (a) for any taxable year if--
                            ``(i) the excess (if any) of the tax shown 
                        on the return for such taxable year (or, if no 
                        return is filed, the tax) over the sum of--
                                    ``(I) the estimated tax paid for 
                                such taxable year, plus
                                    ``(II) credit allowable under 
                                section 31, is less than
                            ``(ii) $2,000.
                    ``(B) Exception.--
                            ``(i) In general.--No amount of estimated 
                        tax paid for a taxable year shall be taken into 
                        account under subparagraph (A)(i)(I) after the 
                        first due date (as determined under subsection 
                        (c)(2)) for which the individual's required 
                        installment was greater than zero and more than 
                        10 percent of the required installment was not 
                        paid by such date.
                            ``(ii) Order of crediting payments.--In 
                        determining whether a payment was made for 
                        purposes of clause (i), a payment of estimated 
                        tax shall be credited against unpaid required 
                        installments in the order in which such 
                        installments are required to be paid.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 305. MODIFICATIONS TO COMPUTATION OF INDIVIDUAL ESTIMATED TAX.

    (a) In General.--Section 6654 is amended by striking subsections 
(a) and (b) and inserting the following:
    ``(a) Addition to the Tax.--
            ``(1) In general.--Except as otherwise provided in this 
        section, in the case of any underpayment of estimated tax by an 
        individual for a taxable year, there shall be added to the tax 
        under chapter 1, the tax under chapter 2, and the tax under 
        chapter 2A for such taxable year the sum of the amounts 
        determined under paragraph (2) for each day for which there is 
        an underpayment.
            ``(2) Amount of addition to tax.--The amount determined 
        under this paragraph for any day shall be the product of--
                    ``(A) the underpayment rate established under 
                subsection (b)(2) for such day, multiplied by
                    ``(B) the amount of the underpayment for such day.
    ``(b) Amount of Underpayment; Underpayment Rate.--For purposes of 
subsection (a)--
            ``(1) Amount.--The amount of underpayment on any day shall 
        be the excess (if any) of--
                    ``(A) the sum of the required installments for the 
                taxable year the due dates for which are on or before 
                such day, over
                    ``(B) the sum of the amounts of estimated tax 
                payments made for such taxable year on or before such 
                day.
            ``(2) Determination of underpayment rate.--
                    ``(A) In general.--The underpayment rate with 
                respect to any day in an installment underpayment 
                period shall be the underpayment rate established under 
                section 6621 for the first day of the calendar quarter 
                in which such installment underpayment period begins.
                    ``(B) Installment underpayment period.--For 
                purposes of subparagraph (A), the term `installment 
                underpayment period' means the period beginning on the 
                day after the due date for a required installment and 
                ending on the due date for the subsequent required 
                installment (or in the case of the 4th required 
                installment, the 15th day of the 4th month following 
                the close of a taxable year).
                    ``(C) Daily rate.--The rate determined under 
                subparagraph (A) shall be applied on a daily basis and 
                shall be based on the assumption of 365 days in a 
                calendar year.
            ``(3) Termination of estimated tax underpayment.--No day 
        after the end of the installment underpayment period for the 
        4th required installment specified in paragraph (2)(B) for a 
        taxable year shall be treated as a day of underpayment with 
        respect to such taxable year.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 306. CORPORATE ESTIMATED TAX.

    (a) Increase in Small Tax Amount Exception.--Section 6655(f) is 
amended by striking ``$500'' and inserting ``$2,000''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.

SEC. 307. INCREASE IN LARGE CORPORATION THRESHOLD FOR ESTIMATED TAX 
              PAYMENTS.

    (a) In General.--Section 6655(g)(2) is amended--
            (1) by striking ``$1,000,000'' in subparagraph (A) and 
        inserting ``$1,500,000'',
            (2) by striking ``the $1,000,000 amount specified in 
        subparagraph (A)'' in subparagraph (B)(ii) and inserting ``the 
        amount in effect for the taxable year under subparagraph (A)'', 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2018, the $1,500,000 amount in subparagraph (A) 
                        shall be increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2017' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any dollar amount, 
                        after being increased under paragraph (1), is 
                        not a multiple of $1,000, such dollar amount 
                        shall be rounded to the next lowest multiple of 
                        $1,000.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 308. EXPANSION OF INTEREST NETTING.

    (a) In General.--Subsection (d) of section 6621 is amended by 
adding at the end the following new sentence: ``Solely for purposes of 
the preceding sentence, section 6611(e) shall not apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to interest accrued after December 31, 2017.

SEC. 309. CLARIFICATION OF APPLICATION OF FEDERAL TAX DEPOSIT PENALTY.

    Nothing in section 6656 of the Internal Revenue Code of 1986 shall 
be construed to permit the percentage specified in subsection 
(b)(1)(A)(iii) thereof to apply other than in a case where the failure 
is for more than 15 days.

                   TITLE IV--THE RIGHT TO BE INFORMED

SEC. 401. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN 
              DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL REQUEST.

    (a) In General.--Paragraph (8) of section 6103(e) is amended by 
striking ``in writing'' the first place it appears.
    (b) Effective Date.--The amendment made by this section shall apply 
to requests made after the date of the enactment of this Act.

SEC. 402. MANDATORY ELECTRONIC FILING FOR ANNUAL RETURNS OF EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Section 6033 is amended by redesignating 
subsection (n) as subsection (o) and by inserting after subsection (m) 
the following new subsection:
    ``(n) Mandatory Electronic Filing.--Any organization required to 
file a return under this section shall file such return in electronic 
form.''.
    (b) Inspection of Electronically Filed Annual Returns.--Subsection 
(b) of section 6104 is amended by adding at the end the following: 
``Any annual return required to be filed electronically under section 
6033(n) shall be made available by the Secretary to the public in 
machine readable format.''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
            (2) Transitional relief.--
                    (A) Small organizations.--
                            (i) In general.--In the case of any small 
                        organizations, or any other organizations for 
                        which the Secretary determines the application 
                        of the amendments made by subsection (a) would 
                        cause undue burden without a delay, the 
                        Secretary may delay the application of such 
                        amendments, but not later than taxable years 
                        beginning 2 years after the date of the 
                        enactment of this Act.
                            (ii) Small organization.--For purposes of 
                        clause (i), the term ``small organization'' 
                        means any organization--
                                    (I) the gross receipts of which for 
                                the taxable year are less than 
                                $200,000, and
                                    (II) the aggregate gross assets of 
                                which at the end of the taxable year 
                                are less than $500,000.
                    (B) Organizations filing form 990-T.--In the case 
                of any organization described in section 511(a)(2) of 
                the Internal Revenue Code of 1986 which is subject to 
                the tax imposed by section 511(a)(1) of such Code on 
                its unrelated business taxable income, or any 
                organization required to file a return under section 
                6033 of such Code and include information under 
                subsection (e) thereof, the Secretary may delay the 
                application of the amendments made by this section, but 
                not later than taxable years beginning 2 years after 
                the date of the enactment of this Act.

                 TITLE V--THE RIGHT TO QUALITY SERVICE

SEC. 501. FREE ELECTRONIC FILING.

    (a) In General.--The Secretary of the Treasury (or the Secretary's 
delegate) shall, in cooperation with the private sector technology 
industry, maintain a program that provides free individual income tax 
preparation and electronic filing services to low-income taxpayers and 
elderly taxpayers.
    (b) Requirements of Program.--The Secretary shall by regulation or 
other guidance prescribe with respect to the program--
            (1) the qualifications, selection process, and contract 
        term for businesses participating in the program,
            (2) a process for periodic review of businesses 
        participating in the program,
            (3) procedures for terminating business participation in 
        the program for failure to comply with any program 
        requirements, and
            (4) such other procedures as the Secretary determines are 
        necessary or appropriate to carry out the purposes of the 
        program.
    (c) Free File Program.--The Internal Revenue Service Free File 
program, as set forth in the notice published in the Federal Register 
on November 4, 2002 (67 Fed. Reg. 67247), shall be treated as meeting 
the requirements of subsection (a).

SEC. 502. ACCESS TO APPEALS.

    Subsection (b) of section 3465 of the Internal Revenue Service 
Restructuring and Reform Act of 1998 is amended by striking ``an 
appeals officer is regularly available within each State'' and 
inserting ``there is at least one appeals officer and one settlement 
officer located and permanently available in each State, the District 
of Columbia, and Puerto Rico''.
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