I 

114TH CONGRESS 

2D SESSION H. R. 4912 

To amend the Internal Revenue Code of 1986 to reduce taxpayer burdens 

and enhance taxpayer protections, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 12, 2016 

Mr. LEWIS (for himself, Mr. RANGEL, Mr. MCDERMOTT, Mr. CROWLEY, Mr. 

PASCRELL, and Mr. DANNY K. DAVIS of Illinois) introduced the following 

bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

taxpayer burdens and enhance taxpayer protections, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Taxpayer Protection Act of 2016’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986, as amended. 

3 (c) TABLE OF CONTENTS.—The table of contents for 

4 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—PROTECTION OF TAXPAYERS FROM ABUSIVE TAX 

COLLECTION PRACTICES 

Sec. 101. Repeal of rules relating to tax collection contracts. 

TITLE II—RELIEF FOR TAXPAYERS 

Sec. 201. De minimis exclusion from gross income for discharge of indebtedness 

of individuals. 

Sec. 202. Repeal suspension of statute of limitations during pending application 

for Taxpayer Assistance order. 

Sec. 203. Limitation on levy on retirement savings. 

Sec. 204. Tolling of limitation on levy recovery for disabled taxpayer. 

Sec. 205. Extension of period to withdraw frivolous submission. 

Sec. 206. Repeal of partial payment requirement on submissions of offers-incompromise. 

TITLE III—ASSISTANCE FOR IDENTITY THEFT VICTIMS AND 

LOW-INCOME TAXPAYERS 

Sec. 301. Taxpayer notification of suspected identity theft. 

Sec. 302. Single point of contact for identity theft victims. 

Sec. 303. Referrals to low-income taxpayer clinics permitted. 

Sec. 304. EITC outreach. 

TITLE IV—ENSURE TAXPAYER ACCESS TO COMPETENT TAX 

RETURN PREPARERS 

Sec. 401. Regulation of tax return preparers. 

Sec. 402. Tax information disclosure relating to tax return preparer misconduct. 

TITLE V—INCREASE FUNDING FOR SERVICES TO TAXPAYERS 

Sec. 501. Low-income taxpayer clinics. 

Sec. 502. Internal Revenue Service taxpayer services appropriations. 


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1 TITLE I—PROTECTION OF TAX2 PAYERS FROM ABUSIVE TAX 

3 COLLECTION PRACTICES 

4 SEC. 101. REPEAL OF RULES RELATING TO TAX COLLEC5 TION CONTRACTS. 

6 (a) IN GENERAL.—Sections 6306 and 6307 are here7 by repealed, and the table of sections for subchapter A 

8 of chapter 64 is amended by striking the items relating 

9 to sections 6306 and 6307. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 6103(k) is amended by striking 

12 paragraph (12). 

13 (2) Section 7433A(a) is amended by inserting 

14 ‘‘, as in effect on the day before the date of the en15 actment of the Taxpayer Protection Act of 2016’’ 

16 after ‘‘as defined in section 6306(b)’’. 

17 (3) Section 7809(a) is amended by striking 

18 ‘‘6306,’’. 

19 (4) Section 7811 is amended by striking sub20 section (g). 


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1 TITLE II—RELIEF FOR 

2 TAXPAYERS 

3 SEC. 201. DE MINIMIS EXCLUSION FROM GROSS INCOME 

4 FOR DISCHARGE OF INDEBTEDNESS OF INDI5 VIDUALS. 

6 (a) IN GENERAL.—Section 108(a)(1) is amended by 

7 striking ‘‘or’’ at the end of subparagraph (D), by striking 

8 the period at the end of subparagraph (E) and inserting 

9 ‘‘, or’’, and by adding at the end the following new sub10 paragraph: 

11 ‘‘(F) the indebtedness discharged is quali12 fied individual indebtedness.’’. 

13 (b) QUALIFIED INDIVIDUAL INDEBTEDNESS.—Sec14 tion 108 is amended by adding at the end the following 

15 new subsection: 

16 ‘‘(j) SPECIAL RULES RELATING TO QUALIFIED INDI17 VIDUAL INDEBTEDNESS.— 

18 ‘‘(1) QUALIFIED INDIVIDUAL INDEBTEDNESS

19 DEFINED.—For purposes of this section, the term 

20 ‘qualified individual indebtedness’ means any indebt21 edness of an individual other than indebtedness 

22 which is— 

23 ‘‘(A) discharged on account of services per24 formed for the lender, or 


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1 ‘‘(B) held at any time by a person related 

2 to such individual. 

3 For purposes of subparagraph (B), a person shall be 

4 treated as related to another person if the relation5 ship between such persons would result in a dis6 allowance of losses under section 267 or 707(b). 

7 ‘‘(2) DOLLAR LIMITATION.—The amount of 

8 qualified individual indebtedness excluded from gross 

9 income under subsection (a)(1)(F) with respect to 

10 any individual for any taxable year shall not exceed 

11 the excess of— 

12 ‘‘(A) $10,000, over 

13 ‘‘(B) the aggregate amount excluded from 

14 the gross income of such individual under sub15 section (a)(1) for such taxable year and all 

16 prior taxable years (determined without regard 

17 to any amount excludable from gross income 

18 under subsection (a)(1)(F) for such taxable 

19 year). 

20 ‘‘(3) JOINT RETURNS.—In the case of a joint 

21 return— 

22 ‘‘(A) the dollar limitation under paragraph 

23 (2) shall be applied separately to each spouse, 

24 and 


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1 ‘‘(B) the taxpayer may elect to treat any 

2 indebtedness of either spouse as indebtedness of 

3 the other spouse.’’. 

4 (c) COORDINATION.— 

5 (1) IN GENERAL.—Section 108(a)(2) is amend6 ed by adding at the end the following new subpara7 graph: 

8 ‘‘(D) PRECEDENCE OF INDIVIDUAL IN9 DEBTEDNESS EXCLUSION.— 

10 ‘‘(i) INDIVIDUAL INDEBTEDNESS EX11 CLUSION TAKES PRECEDENCE OVER IN12 SOLVENCY EXCLUSION UNLESS ELECTED

13 OTHERWISE.—Paragraph (1)(B) shall not 

14 apply to a discharge to which paragraph 

15 (1)(F) applies unless the taxpayer elects to 

16 apply paragraph (1)(B) in lieu of para17 graph (1)(F). 

18 ‘‘(ii) OTHER EXCLUSIONS TAKE PREC19 EDENCE.—Subparagraph (F) shall not 

20 apply to a discharge to which subpara21 graph (C), (D), or (E) applies.’’. 

22 (2) TITLE 11 EXCLUSION TAKES PRECE23 DENCE.—Section 108(a)(2)(A) is amended by strik24 ing ‘‘and (E)’’ and inserting ‘‘(E), and (F)’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to discharges of indebtedness after 

3 the date of the enactment of this Act. 

4 SEC. 202. REPEAL SUSPENSION OF STATUTE OF LIMITA5 TIONS DURING PENDING APPLICATION FOR 

6 TAXPAYER ASSISTANCE ORDER. 

7 (a) IN GENERAL.—Section 7811 is amended by strik8 ing subsection (d) and redesignating subsections (e), (f), 

9 and (g) as subsections (d), (e), and (f), respectively. 

10 (b) CONFORMING AMENDMENT.—Section 6306(k)(2) 

11 is amended by striking ‘‘section 7811(g)’’ and inserting 

12 ‘‘section 7811(f)’’. 

13 (c) EFFECTIVE DATE.—The amendment made by 

14 this section shall take effect on the date of the enactment 

15 of this Act. 

16 SEC. 203. LIMITATION ON LEVY ON RETIREMENT SAVINGS. 

17 (a) IN GENERAL.—Section 6334(a) is amended by 

18 adding at the end the following new paragraph: 

19 ‘‘(14) RETIREMENT SAVINGS.— 

20 ‘‘(A) IN GENERAL.—Any individual’s inter21 est in a qualified retirement plan— 

22 ‘‘(i) before such individual has at23 tained normal retirement age (or 65 in the 

24 case of an individual retirement account or 


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1 a plan which does not specify a normal re2 tirement age), or 

3 ‘‘(ii) after the attainment of such age 

4 if the levy would create an economic hard5 ship due to the financial condition of the 

6 taxpayer (within the meaning of 

7 6343(a)(1)(D)). 

8 ‘‘(B) QUALIFIED RETIREMENT PLAN.—For 

9 purposes of this paragraph, the term ‘qualified 

10 retirement plan’ means— 

11 ‘‘(i) an individual retirement account, 

12 or 

13 ‘‘(ii) a defined contribution plan 

14 which— 

15 ‘‘(I) is described in section 

16 401(a) and which includes a trust ex17 empt from tax under section 501(a), 

18 ‘‘(II) is described in subsection 

19 (a) or (b) of section 403, or 

20 ‘‘(III) is an eligible deferred com21 pensation plan (as defined in section 

22 457(b)) of an eligible employer de23 scribed in section 457(e)(1)(A). 


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1 ‘‘(C) EXCEPTION FOR FLAGRANT ACTS.— 

2 Subparagraph (A) shall not apply if the Sec3 retary determines that— 

4 ‘‘(i) the taxpayer filed a fraudulent re5 turn, or 

6 ‘‘(ii) the taxpayer acted with the in7 tent to evade or defeat any tax imposed by 

8 this title or the collection or payment 

9 thereof.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply to levies issued after December 31, 

12 2016. 

13 SEC. 204. TOLLING OF LIMITATION ON LEVY RECOVERY 

14 FOR DISABLED TAXPAYER. 

15 (a) IN GENERAL.—Section 6343(b) is amended by in16 serting after the third sentence: ‘‘In the case of an indi17 vidual, the running of such 9-month period shall be sus18 pended during any period of such individual’s life that 

19 such individual is financially disabled (as defined in sec20 tion 6511(h)).’’. 

21 (b) SUITS BY PERSONS OTHER THAN TAXPAYERS.— 

22 Section 6532(c)(1) is amended by adding at the end the 

23 following: ‘‘In the case of an individual, the running of 

24 such 9-month period shall be suspended during any period 


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1 of such individual’s life that such individual is financially 

2 disabled (as defined in section 6511(h)).’’. 

3 SEC. 205. EXTENSION OF PERIOD TO WITHDRAW FRIVO4 LOUS SUBMISSION. 

5 (a) IN GENERAL.—Section 6702(b)(3) is amended by 

6 striking ‘‘30 days’’ and inserting ‘‘60 days’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to notices provided after December 

9 31, 2016. 

10 SEC. 206. REPEAL OF PARTIAL PAYMENT REQUIREMENT 

11 ON SUBMISSIONS OF OFFERS-IN-COM12 PROMISE. 

13 (a) IN GENERAL.—Section 7122 is amended by strik14 ing subsection (c) and by redesignating subsections (d), 

15 (e), (f), and (g) as subsection (c), (d), (e), and (f), respec16 tively. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Section 7122(d)(3) is amended by inserting 

19 ‘‘and’’ at the end of the subparagraph (A), by strik20 ing ‘‘, and’’ at the end of subparagraph (B) and in21 serting a period, and by striking subparagraph (C). 

22 (2) Section 7122, as amended by this section, 

23 is amended by adding at the end the following new 

24 subsection: 


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1 ‘‘(g) APPLICATION OF USER FEE.—In the case of 

2 any assessed tax or other amounts imposed under this title 

3 with respect to such tax which is the subject of an offer4 in-compromise, such tax or other amounts shall be reduced 

5 by any user fee imposed under this title with respect to 

6 such offer-in-compromise.’’. 

7 (3) Section 6159(f) is amended by striking 

8 ‘‘section 7122(e)’’ and inserting ‘‘section 7122(d)’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to offers submitted after the date 

11 of the enactment of this Act. 

12 TITLE III—ASSISTANCE FOR 

13 IDENTITY THEFT VICTIMS 

14 AND LOW-INCOME TAX15 PAYERS 

16 SEC. 301. TAXPAYER NOTIFICATION OF SUSPECTED IDEN17 TITY THEFT. 

18 (a) IN GENERAL.—Chapter 77 is amended by adding 

19 at the end the following new section: 

20 ‘‘SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY 

21 THEFT. 

22 ‘‘If the Secretary determines that there was an unau23 thorized use of the identity of any taxpayer, the Secretary 

24 shall— 


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1 ‘‘(1) as soon as practicable and without jeop2 ardizing an investigation relating to tax administra3 tion, notify the taxpayer, and 

4 ‘‘(2) if any person is criminally charged by in5 dictment or information relating to such unauthor6 ized use, notify such taxpayer as soon as practicable 

7 of such charge.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for chapter 77 is amended by adding at the end the fol10 lowing new item: 

‘‘Sec. 7529. Notification of suspected identity theft.’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to determinations made after the 

13 date of the enactment of this Act. 

14 SEC. 302. SINGLE POINT OF CONTACT FOR IDENTITY THEFT 

15 VICTIMS. 

16 Not later than 180 days after the date of the enact17 ment of this Act, the Secretary of the Treasury, or the 

18 Secretary’s delegate, shall establish new procedures to en19 sure that any taxpayer whose return has been delayed or 

20 otherwise adversely affected due to identity theft has a 

21 single point of contact at the Internal Revenue Service 

22 throughout the processing of his or her case. The single 

23 point of contact shall track the case of the taxpayer from 

24 start to finish and coordinate with other specialized units 

25 to resolve case issues as quickly as possible. 


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1 SEC. 303. REFERRALS TO LOW-INCOME TAXPAYER CLINICS 

2 PERMITTED. 

3 (a) IN GENERAL.—Section 7526(c) is amended by 

4 adding at the end the following new paragraph: 

5 ‘‘(6) TREASURY EMPLOYEES PERMITTED TO

6 REFER TAXPAYERS TO QUALIFIED LOW-INCOME TAX7 PAYER CLINICS.—Notwithstanding any other provi8 sion of law, officers and employees of the Depart9 ment of the Treasury may refer taxpayers for advice 

10 and assistance to qualified low-income taxpayer clin11 ics receiving funding under this section.’’. 

12 (b) EFFECTIVE DATE.—The amendment made by 

13 this section shall apply to referrals made after the date 

14 of the enactment of this Act. 

15 SEC. 304. EITC OUTREACH. 

16 (a) IN GENERAL.—Section 32 is amended by adding 

17 at the end the following new subsection: 

18 ‘‘(n) NOTIFICATION OF POTENTIAL ELIGIBILITY FOR

19 CREDIT AND REFUND.— 

20 ‘‘(1) IN GENERAL.—To the extent possible and 

21 on an annual basis, the Secretary shall provide to 

22 each taxpayer who— 

23 ‘‘(A) did not claim the credit under sub24 section (a) for any preceding taxable year for 

25 which credit or refund is not precluded by sec26 tion 6511, and 


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1 ‘‘(B) may be allowed such credit for any 

2 such taxable year based on return or return in3 formation (as defined in section 6103(b)) avail4 able to the Secretary, 

5 notice that such taxpayer may be eligible to claim 

6 such credit and a refund for such taxable year. 

7 ‘‘(2) NOTICE.—Notice provided under para8 graph (1) shall be in writing and sent to the last 

9 known address of the taxpayer.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall take effect on January 1, 2017. 

12 TITLE IV—ENSURE TAXPAYER 

13 ACCESS TO COMPETENT TAX 

14 RETURN PREPARERS 

15 SEC. 401. REGULATION OF TAX RETURN PREPARERS. 

16 (a) IN GENERAL.—Section 330(a) of title 31, United 

17 States Code, is amended— 

18 (1) by striking paragraph (1) and inserting the 

19 following: 

20 ‘‘(1) regulate— 

21 ‘‘(A) the practice of representatives of per22 sons before the Department of the Treasury; 

23 and 

24 ‘‘(B) the practice of tax return preparers; 

25 and’’, and 


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1 (2) in paragraph (2)— 

2 (A) by inserting ‘‘or tax return preparer’’ 

3 after ‘‘representative’’ each place it appears, 

4 and 

5 (B) by inserting ‘‘or in preparing their tax 

6 returns, claims for refund, or documents in con7 nection with tax returns or claims for refund’’ 

8 after ‘‘cases’’ in subparagraph (D). 

9 (b) AUTHORITY TO SANCTION REGULATED TAX RE10 TURN PREPARERS.—Section 330(c) of title 31, United 

11 States Code, is amended— 

12 (1) by inserting ‘‘or tax return preparer’’ after 

13 ‘‘representative’’ each place it appears, and 

14 (2) in paragraph (4), by striking ‘‘misleads or 

15 threatens’’ and all that follows and inserting the fol16 lowing: ‘‘misleads or threatens— 

17 ‘‘(A) any person being represented or any 

18 prospective person being represented; or 

19 ‘‘(B) any person or prospective person 

20 whose tax return, claim for refund, or document 

21 in connection with a tax return or claim for re22 fund, is being or may be prepared.’’. 

23 (c) TAX RETURN PREPARER DEFINED.—Section 330 

24 of title 31, United States Code, is amended by adding at 

25 the end the following new subsection: 


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1 ‘‘(f) TAX RETURN PREPARER.—For purposes of this 

2 section— 

3 ‘‘(1) IN GENERAL.—The term ‘tax return pre4 parer’ has the meaning given such term under sec5 tion 7701(a)(36) of the Internal Revenue Code of 

6 1986. 

7 ‘‘(2) TAX RETURN.—The term ‘tax return’ has 

8 the meaning given to the term ‘return’ under section 

9 6696(e)(1) of such Code. 

10 ‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 

11 refund’ has the meaning given such term under sec12 tion 6696(e)(2) of such Code.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply with respect to returns and claims 

15 for refund for taxable years beginning after the date of 

16 the enactment of this Act. 

17 SEC. 402. TAX INFORMATION DISCLOSURE RELATING TO 

18 TAX RETURN PREPARER MISCONDUCT. 

19 Section 6103(k) is amended by adding at the end the 

20 following new paragraph: 

21 ‘‘(13) DISCLOSURE RELATING TO TAX RETURN

22 PREPARER MISCONDUCT.—Under such procedures as 

23 the Secretary may prescribe, the Secretary may dis24 close returns or return information to the extent 

25 necessary to publish final decisions by the Internal 


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1 Revenue Service Office of Professional Responsibility 

2 relating to tax return preparer misconduct.’’. 

3 TITLE V—INCREASE FUNDING 

4 FOR SERVICES TO TAXPAYERS 

5 SEC. 501. LOW-INCOME TAXPAYER CLINICS. 

6 (a) INCREASE IN AUTHORIZED GRANTS.—Section 

7 7526(c)(1) is amended by striking ‘‘$6,000,000’’ and in8 serting ‘‘$20,000,000’’. 

9 (b) CLERICAL AMENDMENT.—Section 7526(c)(5) is 

10 amended by inserting ‘‘qualified’’ before ‘‘low-income’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply with respect to grants made after 

13 the date of the enactment of this Act. 

14 SEC. 502. INTERNAL REVENUE SERVICE TAXPAYER SERV15 ICES APPROPRIATIONS. 

16 There is hereby appropriated, out of any money in 

17 the Treasury not otherwise appropriated, for the fiscal 

18 year ending September 30, 2017, for necessary expenses 

19 of the Internal Revenue Service to provide taxpayer serv20 ices, including pre-filing assistance and education, filing 

21 and account services, taxpayer advocacy services, and 

22 other services as authorized by 5 U.S.C. 3109, at such 

23 rates as may be determined by the Commissioner, 

24 $2,406,000,000. 

Æ 


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