II

105TH CONGRESS

1ST SESSION S. 1174

To improve the operations and governance of the Internal Revenue Service,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 12, 1997

Mr. MOYNIHAN (by request) introduced the following bill; which was read

twice and referred to the Committee on Finance

A BILL

To improve the operations and governance of the Internal

Revenue Service, 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; AMENDMENT OF THE 1986 CODE;

4 TABLE OF CONTENTS.

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

6 ‘‘Internal Revenue Service Improvement Act of 1997’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment

10 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.

3 (c) TABLE OF CONTENTS.—

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Sec. 2. Findings and purposes.

TITLE I—IMPROVEMENTS IN IRS MANAGEMENT AND OVERSIGHT

Sec. 101. Five-year term for IRS Commissioner.

Sec. 102. Institutionalized Executive branch oversight of the IRS; outside advice for the Secretary of the Treasury.

Sec. 103. Assistant Commissioner (Customer Service).

Sec. 104. Additional duties for the Taxpayer Advocate.

TITLE II—IMPROVING THE EFFICIENCY OF TAX

ADMINISTRATION

Sec. 201. Promotion of electronic filing.

Sec. 202. Cooperative agreements with State tax authorities.

TITLE III—PROVIDING FLEXIBILITY FOR THE IRS

Sec. 301. Improvements of personnel flexibilities.

Sec. 302. Authorization for appropriations.

4 SEC. 2. FINDINGS AND PURPOSES.

5 (a) The Congress finds that:

6 (1) The taxpayer would benefit from greater

7 continuity in IRS leadership and oversight.

8 (2) The enhanced oversight of the IRS by the

9 Secretary of the Treasury needs to be institutional10 ized.

11 (3) While the IRS has made considerable im12 provement in recent years, customer service at the

13 IRS continues to lag behind the level of service the

14 American people receive from the best private sector

15 organizations. The IRS should adopt the best cus16 tomer service practices of the private sector, consist-
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1 ent with the IRS’s overall mission of collecting the

2 tax revenues which are due.

3 (4) The taxpayer needs IRS to continue to im4 prove its use of technology for the benefit of Amer5 ican taxpayers and the IRS.

6 (5) The Secretary of the Treasury, the IRS,

7 and the taxpayer would benefit from increased pri8 vate sector advice regarding technology, customer

9 service, and modern management techniques.

10 (6) The IRS Taxpayer Advocate should be

11 given additional responsibilities and independence to

12 represent American taxpayers within the IRS.

13 (7) There should be increased use of electronic

14 filing for income tax returns and information report15 ing.

16 (8) The taxpayer needs IRS to have greater

17 flexibility to attract and retain high caliber person18 nel and to manage its human resources in ways that

19 fit its organizational needs.

20 (9) The taxpayer needs IRS to have adequate

21 and stable funding and budgeting to ensure continu22 ity in its effort to improve its performance.

23 (10) Improved cooperation between the IRS

24 and State tax authorities can reduce overall taxpayer

25 burden and improve the efficiency of tax collection.
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1 (b) The purposes of this Act are:

2 (1) To provide greater continuity in Internal

3 Revenue Service leadership.

4 (2) To enhance and institutionalize the over5 sight of the IRS by the Secretary of the Treasury.

6 (3) To ensure that taxpayers receive fair, im7 partial, timely, and courteous treatment from the In8 ternal Revenue Service, consistent with the overall

9 IRS mission of collecting taxes that are due.

10 (4) To ensure that the Secretary of the Treas11 ury and the IRS have the benefit of private sector

12 advice regarding technology, customer service, and

13 modern management techniques.

14 (5) To provide additional independence to the

15 IRS Taxpayer Advocate to represent American tax16 payers within the IRS.

17 (6) To establish the goal of paperless filing as

18 the preferred and most convenient means of filing

19 tax returns for the vast majority of taxpayers.

20 (7) To enable the Internal Revenue Service to

21 recruit and retain a first-class workforce that will be

22 rewarded for performance and held accountable for

23 working with taxpayers to solve problems.

24 (8) To improve cooperation between the Inter25 nal Revenue Service and State taxing authorities to
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1 reduce overall taxpayer burdens and improve the ef2 ficiency of tax collection.

3 TITLE I—IMPROVEMENTS IN IRS

4 MANAGEMENT AND OVERSIGHT

5 SEC. 101. FIVE-YEAR TERM FOR IRS COMMISSIONER.

6 (a) Section 7802(a) of the Internal Revenue Code of

7 1986 is amended to read as follows:

8 ‘‘(a) COMMISSIONER OF INTERNAL REVENUE.—

9 There shall be in the Department of the Treasury a Com10 missioner of Internal Revenue, who shall be appointed by

11 the President, by and with the advice and consent of the

12 Senate, for a term of five years. The Commissioner of In13 ternal Revenue shall have such duties and powers as may

14 be prescribed by the Secretary of the Treasury.’’.

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

16 subsection (a) shall apply to individuals appointed after

17 the date of the enactment of this Act.

18 SEC. 102. INSTITUTIONALIZED EXECUTIVE BRANCH OVER19 SIGHT OF THE IRS; OUTSIDE ADVICE FOR

20 THE SECRETARY OF THE TREASURY.

21 Section 7801 is amended to read as follows:

22 ‘‘SEC. 7801. AUTHORITY OF THE DEPARTMENT OF THE

23 TREASURY.

24 (a) POWERS AND DUTIES OF THE SECRETARY.—Ex25 cept as otherwise expressly provided by law, the adminis-
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1 tration and enforcement of this title shall be performed

2 by or under the supervision of the Secretary of the Treas3 ury.

4 ‘‘(b) INTERNAL REVENUE SERVICE MANAGEMENT

5 BOARD.—

6 ‘‘(1) There shall be within the Department of

7 the Treasury an Internal Revenue Service Manage8 ment Board (Management Board) which shall con9 sist of career and non-career employees, including—

10 ‘‘(A) the Deputy Secretary of the Treas11 ury, who shall serve as Chair of the Board;

12 ‘‘(B) the Assistant Secretary of the Treas13 ury (Management), who shall serve as Vice14 Chair;

15 ‘‘(C) the Commissioner of Internal Reve16 nue;

17 ‘‘(D) the Deputy Commissioner of Internal

18 Revenue;

19 ‘‘(E) the Assistant Secretary of the Treas20 ury (Tax Policy);

21 ‘‘(F) the Chief Information Officer of the

22 Department of the Treasury;

23 ‘‘(G) the Chief Information Officer of the

24 Internal Revenue Service;

25 ‘‘(H) the General Counsel of the Treasury;
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1 ‘‘(I) the Chief Counsel of the Internal Rev2 enue Service;

3 ‘‘(J) the Taxpayer Advocate of the Internal

4 Revenue Service;

5 ‘‘(K) a representative of the Office of Man6 agement and Budget designated by the Director

7 of such office;

8 ‘‘(L) a representative of an organization

9 that represents a substantial number of Inter10 nal Revenue Service employees designated by

11 the Secretary;

12 ‘‘(M) representatives of other government

13 agencies, with specific expertise relevant to the

14 issues faced by the Internal Revenue Service, as

15 may be determined from time to time by the

16 Secretary of the Treasury, designated by the

17 head of such agency;

18 ‘‘(N) such other officers or employees of

19 the Department of the Treasury as may be des20 ignated by the Secretary; and

21 ‘‘(O) such other individuals as may be des22 ignated by the Secretary.

23 ‘‘(2) A member of the Management Board de24 scribed in paragraph (1) may be removed by the
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1 Secretary or the official who designated such mem2 ber.

3 ‘‘(3) There shall be an Executive Committee of

4 the Management Board, the members of which shall

5 be appointed by the Secretary.

6 ‘‘(4) The Management Board shall support di7 rectly the Secretary’s oversight of the management

8 and operation of the Internal Revenue Service pur9 suant to subsection (a), including—

10 ‘‘(A) working through the Deputy Sec11 retary, assisting the Secretary of high-level

12 management issues and concerns affecting the

13 Internal Revenue Service, particularly those

14 that have a significant impact on taxpayer as15 sistance, communications and filings, customer

16 service, operations and modernization, and in

17 the review of performance plans and accom18 plishments of senior Internal Revenue Service

19 officials; and

20 ‘‘(B) acting through the Executive Com21 mittee, serving as the primary review body for

22 strategic decisions concerning modernization of

23 the Internal Revenue Service and tax adminis24 tration, including modernization direction,

25 strategy, recurring systemic problems affecting
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1 taxpayers, significant reorganization plans, per2 formance metrics, budgetary issues, major cap3 ital investments, procurement of property and

4 services, and compensation of personnel.

5 The Secretary also may appoint committees com6 posed of Management Board members and others to

7 provide advice on particular issues.

8 ‘‘(5) The Management Board shall meet at

9 least monthly and shall prescribe such by-laws or

10 procedures as the Management Board deems appro11 priate.

12 ‘‘(6) The Management Board shall prepare

13 semi-annual reports to the President and the Con14 gress describing the matters considered, and the

15 conclusions reached, by the Management Board,

16 which shall be transmitted by the Secretary of the

17 Treasury.

18 ‘‘(7) The Secretary of the Treasury shall pro19 vide the Management Board with career staff whose

20 responsibility shall be to provide support to the Man21 agement Board, administrative services, facilities,

22 experts on consultative services, and such financial

23 support as may be necessary for the performance of

24 its functions.
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1 ‘‘(8) The provisions of the Federal Advisory

2 Committee Act (5 U.S.C. App. 2) shall not apply to

3 the Management Board.

4 ‘‘(c) INTERNAL REVENUE SERVICE ADVISORY

5 BOARD.—

6 ‘‘(1) The Secretary shall establish an advisory

7 committee known as the ‘Internal Revenue Service

8 Advisory Board’ (Advisory Board).

9 ‘‘(A) The Advisory Board shall be com10 posed of up to 14 members appointed by the

11 Secretary from the private sector, including in12 dividuals with expertise in: customer service,

13 taxpayer advocacy technology, operating large

14 and small businesses, operating non-profit orga15 nizations, operating educational organizations,

16 the Internal Revenue Code, tax preparation,

17 and state tax administration. Appointments

18 shall be made without regard to political affili19 ation.

20 ‘‘(B) The Secretary shall designate an Ad21 visory Board member as Chairperson of the Ad22 visory Board.

23 ‘‘(C) Advisory Board members shall be ap24 pointed for three-year terms. With respect to

25 the initial appointments, however, the Secretary
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1 shall select, on a representative basis to the

2 maximum extent practicable, no more than five

3 of the members to serve three-year terms, no

4 more than five of the members to serve two5 year terms, and no more than four members to

6 serve one-year terms. The Secretary may re7 appoint an Advisory Board member whose term

8 has expired.

9 ‘‘(D) Any vacancy on the Advisory Board

10 shall be filled by the Secretary for the remain11 der of the original terms. Any Advisory Board

12 member whose term has expired may continue

13 to serve until a successor is appointed.

14 ‘‘(E) Any Advisory Board member may be

15 removed at the discretion of the Secretary.

16 ‘‘(2) The Advisory Board shall advise the Sec17 retary and the Management Board on the manage18 ment and operation of the Internal Revenue Service,

19 including ways to improve and modernize the Inter20 nal Revenue Service and enhance the fairness of the

21 administration of the Internal Revenue Code.

22 ‘‘(3) The Advisory Board shall meet at the call

23 of the Chair, but not less than four times per year,

24 and shall submit to the Secretary and the Manage25 ment Board a report regarding each such meeting.
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1 ‘‘(4) At the request of the Chair or Vice Chair

2 of the Management Board, the Advisory Board may

3 meet with and provide advice directly to the Man4 agement Board.

5 ‘‘(5) The Advisory Board shall prepare an An6 nual Report to Taxpayers, which the Secretary shall

7 submit to Congress not later than June 30 of each

8 year.

9 ‘‘(6) The provisions of the Federal Advisory

10 Committee Act (5 U.S.C. App. 2) shall apply to the

11 advisory Board, except that—

12 ‘‘(A) The Advisory Board shall function

13 for such period as may be necessary, and sec14 tion 14 of such Act (relating to termination of

15 advisory committees after two years) shall not

16 apply to the Advisory Board; and

17 ‘‘(B) The requirements of sections 10(a)

18 and (b) and section 11 of such Act (relating to

19 open meetings, public notice, public participa20 tion, and public availability of documents) shall

21 not apply to the Advisory Board to the extent

22 the Secretary determines that the disclosure of

23 the Advisory Board’s discussions would com24 promise the Advisory Board’s ability to provide
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1 candid advice or otherwise would be inappropri2 ate.

3 ‘‘(7) Members of the Advisory Board shall not

4 be paid for their time or services. While attending

5 Advisory Board meetings or otherwise engaging in

6 its business, Advisory Board members shall be reim7 bursed for their travel expenses as authorized by

8 section 5703 of title 5, United States Code. The

9 Secretary shall furnish the Advisory Board with nec10 essary staff and support services.

11 ‘‘(d) REPORTING TO CONGRESS.—The Secretary and

12 the Deputy Secretary shall annually—

13 ‘‘(1) submit a report to the Congress on their

14 stewardship of the Internal Revenue Service, and

15 ‘‘(2) appear together before an appropriate

16 committee of the House of Representatives and an

17 appropriate committee of the Senate to report on

18 such stewardship.

19 ‘‘(e) FUNCTIONS OF DEPARTMENT OF JUSTICE UN20 AFFECTED.—Nothing in this section or section 301(f) of

21 title 31 shall be considered to affect the duties, powers,

22 or functions imposed upon, or vested in, the Department

23 of Justice, or any officer thereof, by law existing on May

24 10, 1934.’’.
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1 SEC. 103. ASSISTANT COMMISSIONER (CUSTOMER SERV2 ICE).

3 (a) ASSISTANT COMMISSIONER (CUSTOMER SERV4 ICE).—Section 7802(c) of the Internal Revenue Code of

5 1986 is amended to read as follows:

6 ‘‘(c) ASSISTANT COMMISSIONER (CUSTOMER SERV7 ICE).—There is established within the Internal Revenue

8 Service an office to be known as the ‘Office for Customer

9 Service’ to be under the supervision and direction of an

10 Assistant Commissioner of Internal Revenue. The Assist11 ant Commissioner shall be responsible for all taxpayer as12 sistance, information and education.’’.

13 (b) CONFORMING AMENDMENT.—Section 6235 of the

14 Technical and Miscellaneous Revenue Act of 1988 is

15 amended by deleting subsection (b) and redesignating sub16 section (c) as subsection ‘‘(b)’’.

17 SEC. 104. ADDITIONAL DUTIES FOR THE TAXPAYER ADVO18 CATE.

19 Section 7802(d) of the Internal Revenue Code of

20 1986 is amended to read as follows:

21 (d) OFFICE OF TAXPAYER ADVOCATE.—

22 ‘‘(1) IN GENERAL.—

23 ‘‘(A) There is established in the Internal

24 Revenue Service an office to be known as the

25 ‘Office of the Taxpayer Advocate’. Such office

26 shall be under the supervision and direction of
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1 an official to be known as the ‘Taxpayer Advo2 cate’ who shall be appointed by and report di3 rectly to the Commissioner of Internal Revenue.

4 The Taxpayer Advocate may be compensated at

5 a level up to the same rate as the highest level

6 official reporting directly to the Deputy Com7 missioner of Internal Revenue.

8 ‘‘(B) As a qualification for appointment as

9 the Taxpayer Advocate, an individual must have

10 knowledge of the working of tax administration

11 systems, experience representing taxpayers be12 fore the Internal Revenue Service, or experience

13 with taxpayer rights issues.

14 ‘‘(C) An individual who, before being ap15 pointed as the Taxpayer Advocate, was an offi16 cer or employee of the Internal Revenue Service

17 may be so appointed only if such individual

18 agrees not to accept any employment with the

19 Internal Revenue Service for a period of five

20 years after ceasing to be the Taxpayer Advo21 cate.

22 ‘‘(2) FUNCTIONS OF OFFICE.—

23 ‘‘(A) IN GENERAL.—It shall be the func24 tion of the Office of Taxpayer Advocate to—
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1 ‘‘(i) assist taxpayers in resolving prob2 lems with the Internal Revenue Service,

3 ‘‘(ii) identify areas in which taxpayers

4 have problems in dealings with the Internal

5 Revenue Service,

6 ‘‘(iii) to the extent possible, propose

7 changes in the administrative practices of

8 the Internal Revenue Service to mitigate

9 problems identified under clause (ii), and

10 ‘‘(iv) identify potential legislative

11 changes which may be appropriate to miti12 gate such problems.

13 ‘‘(B) ANNUAL REPORTS.—

14 ‘‘(i) OBJECTIVES.—Not later than

15 June 30 of each calendar year after 1995,

16 the Taxpayer Advocate shall report to the

17 Committee on Ways and Means of the

18 House of Representatives and the Commit19 tee on Finance of the Senate on the objec20 tives of the Taxpayer Advocate for the fis21 cal year beginning in such calendar year.

22 Any such report shall contain full and sub23 stantive analysis, in addition to statistical

24 information.
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1 ‘‘(ii) ACTIVITIES.—Not later than De2 cember 31 of each calendar year after

3 1995, the Taxpayer Advocate shall report

4 to the Committee on Ways and Means of

5 the House of Representatives and the

6 Committee on Finance of the Senate on

7 the activities of the Taxpayer Advocate

8 during the fiscal year ending during such

9 calendar year. Any such report shall con10 tain full and substantive analysis, in addi11 tion to statistical information, and shall—

12 ‘‘(I) identify the initiatives the

13 Taxpayer Advocate has taken on im14 proving taxpayer services and Internal

15 Revenue Service responsiveness,

16 ‘‘(II) contain recommendations

17 received from individuals with the au18 thority to issue Taxpayer Assistance

19 Orders under section 7811,

20 ‘‘(III) contain a summary of at

21 least 20 of the most serious problems

22 encountered by taxpayers including a

23 description of the nature of such prob24 lems,
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1 ‘‘(IV) contain an inventory of the

2 items described in subclauses (I), (II),

3 and (III) for which action has been

4 taken and the result of such action,

5 ‘‘(V) contain an inventory of the

6 items described in subclauses (I), (II),

7 and (III) for which action remains to

8 be completed and the period during

9 which each item has remained on such

10 inventory,

11 ‘‘(VI) contain an inventory of the

12 items described in subclauses (I), (II),

13 and (III) for which no action has been

14 taken, the period during which each

15 item has remained on such inventory,

16 the reasons for the inaction, and iden17 tify any Internal Revenue Service offi18 cial who is responsible for such inac19 tion,

20 ‘‘(VII) identify any Taxpayer As21 sistance Order which was not honored

22 by the Internal Revenue Service in a

23 timely manner, as specified under sec24 tion 7811(b),
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1 ‘‘(VIII) contain recommendations

2 for such administrative and legislative

3 action as may be appropriate to re4 solve problems encountered by tax5 payers,

6 ‘‘(IX) describe the extent to

7 which regional taxpayer advocates

8 participate in the selection and eval9 uation of local taxpayer advocates,

10 ‘‘(X) identify areas of the tax law

11 that impose significant compliance

12 burdens on taxpayers or the Internal

13 Revenue Service, including specific

14 recommendations for remedying these

15 problems,

16 ‘‘(XI) contain a list supplied by

17 the National Director of Appeals

18 which identifies the 10 most litigated

19 issues for various categories of tax20 payers (e.g., individuals, self-employed

21 individuals, and small businesses), in22 cluding recommendations for mitigat23 ing such disputes, and
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1 ‘‘(XII) include such other infor2 mation as the Taxpayer Advocate may

3 deem advisable.

4 ‘‘(iii) REPORT TO BE SUBMITTED DI5 RECTLY.—Each report required under this

6 subparagraph shall be provided directly to

7 the Committees described in clauses (i)

8 and (ii) without any prior review or com9 ment from the Commissioner, the Sec10 retary of the Treasury, any other officer or

11 employee of the Department of the Treas12 ury, or the Office of Management and

13 Budget.

14 ‘‘(C) OTHER RESPONSIBILITIES.—The

15 Taxpayer Advocate also shall—

16 ‘‘(i) monitor the coverage and geo17 graphic allocation of taxpayer advocates,

18 ‘‘(ii) develop guidance to be distrib19 uted to all Internal Revenue Service offi20 cers and employees outlining the criteria

21 for referral of taxpayer inquiries to tax22 payer advocates,

23 ‘‘(iii) ensure that taxpayers have di24 rect access to the problem resolution pro-
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1 gram through a dedicated telephone num2 ber, and

3 ‘‘(iv) in conjunction with the Commis4 sioner, develop career paths for taxpayer

5 advocates choosing to make a career in the

6 Office of the Taxpayer Advocate.

7 ‘‘(3) RESPONSIBILITIES OF COMMISSIONER.—

8 The Commissioner of Internal Revenue shall estab9 lish procedures requiring a formal response to all

10 recommendations submitted to the Commissioner by

11 the Taxpayer Advocate within three months after

12 submission to the Commissioner.’’.

13 TITLE II—IMPROVING THE EFFI14 CIENCY OF TAX ADMINISTRA15 TION

16 SEC. 201 PROMOTION OF ELECTRONIC TAX ADMINISTRA17 TION.

18 (a) PROMOTION OF ELECTRONIC FILING; FACILITAT19 ING THE FILING OF ELECTRONIC RETURNS.—Section

20 6011 of the Internal Revenue Code of 1986 is amended

21 by adding the following new subsections:

22 ‘‘(g) PROMOTION OF ELECTRONIC FILING.—Not23 withstanding any other law, the Secretary is authorized

24 to promote the benefits of and encourage the use of elec25 tronic tax administration programs, as they become avail-
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1 able, through the use of mass communications and other

2 means.

3 ‘‘(h) INCENTIVE PAYMENTS.—Notwithstanding any

4 other provision of law, amounts appropriated to the Inter5 nal Revenue Service may be used by the Secretary to en6 courage the expanded use of electronic means to file re7 turns and other documents.

8 ‘‘(i) ALTERNATIVES TO ATTACHING DOCUMENTS TO

9 RETURNS.—If any section of this title requires a state10 ment or information supporting a return, the Secretary

11 may prescribe the method of submitting the statement or

12 information.’’.

13 (b)(1) AUTHORITY TO WAIVE SIGNATURE REQUIRE14 MENTS OR PRESCRIBE ALTERNATIVE METHODS OF VERI15 FYING RETURNS.—Part IV of subchapter A of chapter 61

16 is amended by adding at the end the following new section:

17 ‘‘SEC. 6066. AUTHORITY TO WAIVE SIGNATURE REQUIRE18 MENTS OR PRESCRIBE ALTERNATIVE METH19 ODS OF VERIFYING RETURNS.

20 ‘‘(a) AUTHORITY.—The Secretary may waive the re21 quirements of a signature for all returns or classes of re22 turns, or may provide for alternative methods of subscrib23 ing all returns, declarations, statements, or other docu24 ments required or permitted to be made or written under

25 internal revenue laws and regulations.
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1 ‘‘(b) TREATMENT OF ALTERNATIVE METHODS.—

2 Notwithstanding any other provision of law, any return,

3 declaration, statement or other document filed without sig4 nature under the authority of this section or verified,

5 signed or subscribed under any method adopted under

6 subsection (a) shall be treated for all purposes (both civil

7 and criminal, including penalties for perjury) in the same

8 manner as though signed and subscribed. Any such re9 turn, declaration, statement or other document shall be

10 presumed to have been actually submitted and subscribed

11 by the person on whose behalf it was submitted.

12 ‘‘(c) PUBLISHED GUIDANCE.—The Secretary shall

13 publish guidance as appropriate to define and implement

14 any waiver of the signature requirements.’’.

15 (2) CLERICAL AMENDMENT.—The table of sections

16 for part IV of subchapter A of chapter 61 is amended by

17 inserting after the item relating to section 6065 the follow18 ing new item:

‘‘Sec. 6066. Authority to waive signature requirements or prescribe alternative

methods of verifying returns.’’.

19 (c) ACKNOWLEDGMENT OF ELECTRONIC FILING.—

20 Section 7502(c) is amended to read as follows:

21 ‘‘(c) REGISTERED AND CERTIFIED MAILING; ELEC22 TRONIC FILING.—

23 ‘‘(1) REGISTERED MAIL.—For purposes of this

24 section, if any return, claim, statement, or other
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1 document, or payment, is sent by United States reg2 istered mail—

3 ‘‘(A) such registration shall be prima facie

4 evidence that the return, claim, statement, or

5 other document was delivered to the agency, of6 ficer, or office to which addressed; and

7 ‘‘(B) the date of registration shall be

8 deemed the postmark date.

9 ‘‘(2) CERTIFIED MAIL; ELECTRONIC FILING.—

10 The Secretary is authorized to provide by regula11 tions the extent to which the provisions of paragraph

12 (1) of this subsection with respect to prima facie evi13 dence of delivery and the date shall apply to certified

14 mail and electronic filing.’’.

15 SEC. 202. COOPERATIVE AGREEMENTS WITH STATE TAX

16 AUTHORITIES.

17 (a) IN GENERAL.—Chapter 77 of Subtitle F (relating

18 to miscellaneous provisions) of the Internal Revenue Code

19 of 1986 is amended by adding after section 7524 the fol20 lowing new section:

21 ‘‘SEC. 7525. TAX ADMINISTRATION AGREEMENTS.

22 ‘‘(a) IN GENERAL.—To the extent provided in regula23 tions, the Secretary is authorized to enter into tax admin24 istration agreements with any State agency, body, or com25 mission described in section 6103(d)(1). Under such
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1 agreements, the Secretary may delegate powers relating

2 to the administration of this title to officers and employees

3 of such State agency, body, or commission, only if such

4 officers and employees in exercising such powers are under

5 the supervision of the Secretary.

6 ‘‘(b) TAX ADMINISTRATION AGREEMENT DE7 FINED.—A tax administration agreement is a written

8 agreement entered into by the Secretary and a State agen9 cy, body, or commission described in section 6103(d)(1)

10 that provides for a delegation of tax administration powers

11 or a payment of reasonable compensation for activities

12 conducted by either party to the agreement. Each Federal

13 or State tax administration power to be exercised pursuant

14 to a tax administration agreement shall be performed in

15 accordance with the terms of the agreement to the extent

16 such terms do not conflict with the Federal or State laws

17 that otherwise authorize the respective tax administration

18 function.

19 ‘‘(c) JUDICIAL PROCEEDINGS.—

20 ‘‘(1) REVIEW BY THE UNITED STATES

21 COURTS.—Nothing in this subchapter shall give any

22 court of the United States any additional jurisdic23 tion nor diminish its jurisdiction.

24 ‘‘(2) PROHIBITION OF REVIEW BY THE STATE

25 COURTS.—No court or other tribunal of any State
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1 shall have jurisdiction to adjudicate in any action,

2 legal or equitable, the validity or scope of an assess3 ment of an internal revenue tax that is the subject

4 of a tax administration agreement.

5 ‘‘(3) LIMITATION ON PERSONAL JURISDIC6 TION.—No court or other tribunal of any State shall

7 have jurisdiction over an individual who exercises

8 Federal tax administration powers pursuant to a tax

9 administration agreement for actions relating to the

10 exercise of those powers.

11 ‘‘(d) PAYMENT FOR SERVICES.—The Secretary is au12 thorized to pay reasonable compensation for activities con13 ducted by a State pursuant to a tax administration agree14 ment. The Secretary is authorized to collect reasonable

15 compensation for activities conducted by the United States

16 pursuant to a tax administration agreement.

17 ‘‘(e) AVAILABILITY OF FUNDS.—Any funds appro18 priated for purposes of the administration of this title

19 shall be available for purposes of carrying out the Sec20 retary’s responsibilities under a tax administration agree21 ment. Any reasonable compensation received pursuant to

22 a tax administration agreement shall be credited to the

23 amounts so appropriated and shall remain available to the

24 Internal Revenue Service until expended to supplement

25 appropriations made available to the appropriations ac-
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1 counts in the fiscal year during which this provision is en2 acted and all fiscal years thereafter.

3 ‘‘(f) TAX TREATIES AND OTHER INTERNATIONAL

4 AGREEMENTS.—To the extent the provisions of this sub5 chapter or a tax administration agreement may conflict

6 with the terms of any tax treaty, or other international

7 agreement of the United States containing provisions re8 lating to taxation or the administration of tax laws, the

9 terms of the treaty or international agreement shall con10 trol.

11 ‘‘(g) EMPLOYEE STATUS.—Any officer or employee

12 of the United States acting pursuant to a tax administra13 tion agreement shall be deemed to remain a Federal em14 ployee. Except as otherwise expressly provided by the laws

15 of the United States, any officer or employee of a State

16 acting pursuant to a tax administration agreement shall

17 be deemed to remain a State employee.’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Section 6103(d) is amended—

20 (A) by amending paragraph (1) to read as

21 follows:

22 ‘‘(1)(A) IN GENERAL.—Returns and return in23 formation with respect to taxes imposed by chapters

24 1, 2, 6, 11, 12, 21, 23, 24, 31, 32, 44, 51, 52, and

25 subchapter D of chapter 36 shall be open to inspec-
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1 tion by, or disclosure to, any State agency, body, or

2 commission, or its legal representative, which is

3 charged under the laws of such State with the re4 sponsibility for the administration of State tax laws

5 for the purpose of, and only to the extent necessary

6 in—

7 ‘‘(i) the administration of such laws, in8 cluding any procedures with respect to locating,

9 any person who may be entitled to a refund; or

10 ‘‘(ii) the administration of Federal tax

11 laws pursuant to a tax administration agree12 ment entered into between such agency, body or

13 commission and the Secretary under section

14 7525.

15 ‘‘(B) WRITTEN REQUEST BY AGENCY HEAD RE16 QUIRED FOR DISCLOSURE.—The inspection of re17 turns and return information under this paragraph

18 shall be permitted, or disclosure of such returns and

19 return information made, only upon written request

20 by the head of such agency, body, or commission,

21 and only to the representatives of such agency, body,

22 or commission designated in such written request as

23 the individuals who are to inspect or receive the re24 turns or return information on behalf of such agen25 cy, body, or commission.
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1 ‘‘(C) PERMISSIBLE RECIPIENTS.—The rep2 resentatives of such agency, body, or commission to

3 whom disclosure is permitted under this paragraph

4 shall include only employees or legal representatives

5 of such agency, body, or commission, or a person de6 scribed in subsection (n) of this section. However,

7 notwithstanding the foregoing, disclosure shall not

8 be permitted to any individual who is the chief exec9 utive officer of such State.

10 ‘‘(D) CONFIDENTIAL INFORMANTS; IMPAIR11 MENT OF INVESTIGATIONS.—Return information

12 shall not be disclosed under this paragraph to the

13 extent that the Secretary determines that such dis14 closure would identify a confidential informant or se15 riously impair any civil or criminal tax investiga16 tion.’’; and

17 (B) by adding at the end the following new

18 paragraph (5):

19 ‘‘(5) JOINT RETURN FILING PROGRAMS.—

20 ‘‘(A) IN GENERAL.—Upon written request

21 by the head of any agency, body, or commission

22 described in paragraph (1), the Secretary may

23 disclose common data to such agency, body or

24 commission for the purpose of carrying out a
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1 joint return filing program entered into under

2 section 7525.

3 ‘‘(B) COMMON DATA DEFINED.—For pur4 poses of this paragraph, ‘common data’ means

5 any item of information that is required by both

6 Federal and State law to be attached to or in7 cluded on the respective Federal and State re8 turns.

9 ‘‘(C) PROCEDURES FOR STATE AGEN10 CIES.—Subsections (a)(2) and (p)(4) of this

11 section shall not apply with respect to any dis12 closures made pursuant to this paragraph.

13 However, common data disclosed pursuant to

14 this paragraph is subject to subsection (p)(8) of

15 this section.’’.

16 (2) Section 6103(p)(3) is amended—

17 (A) in subparagraph (A) by inserting

18 ‘‘(d),’’ after ‘‘subsections (c),’’, and

19 (B) in subparagraph (C)(i) by striking

20 ‘‘(d),’’.

21 (3) Section 7212(a) is amended by inserting

22 ‘‘or any State officer or employee who is authorized

23 to administer Federal tax laws pursuant to an

24 agreement authorized by section 7525’’ after ‘‘any
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S 1174 IS

1 officer or employee of the United States’’ in both

2 places it appears.

3 (4) Section 7213(a)(2) is amended by deleting

4 ‘‘(d),’’ and inserting instead ‘‘(d) (1), (2), (3), or

5 (4),’’.

6 (5) Section 7214 is amended—

7 (A) in subsection (a), by inserting ‘‘or any

8 State officer or employee who is authorized to

9 administer Federal tax laws pursuant to an

10 agreement authorized by section 7525’’ after

11 ‘‘Any officer or employee of the United States’’;

12 and

13 (B) in subsection (b), by inserting ‘‘or any

14 State employee who is authorized to administer

15 Federal tax laws pursuant to an agreement au16 thorized by section 7525’’ after ‘‘Any internal

17 revenue officer or employee’’.

18 (6) Section 7431(a)(1) is amended by inserting

19 ‘‘or any State employee who is authorized to admin20 ister Federal tax laws pursuant to an agreement au21 thorized by section 7525’’ after ‘‘If any officer or

22 employee of the United States’’.

23 (7) Section 7432(a) is amended by inserting

24 ‘‘or any State employee who is authorized to release

25 liens under section 6325 pursuant to an agreement
32

S 1174 IS

1 authorized by section 7525’’ after ‘‘If any officer or

2 employee of the Internal Revenue Service’’.

3 (8) Section 7433(a) is amended by inserting

4 ‘‘or any State employee who is authorized to collect

5 Federal taxes pursuant to an agreement authorized

6 by section 7525’’ after ‘‘If, in connection with any

7 collection of Federal tax with respect to a taxpayer,

8 any officer or employee of the Internal Revenue

9 Service’’.

10 (c) CLERICAL AMENDMENT.—The table of sections

11 for Chapter 77 is amended by adding at the end the fol12 lowing:

‘‘7525. Tax administration agreements.’’.

13 TITLE III—PROVIDING FLEXIBIL14 ITY FOR IRS MANAGEMENT

15 SEC. 301. IMPROVEMENTS IN PERSONNEL FLEXIBILITIES.

16 (a) IN GENERAL.—Part III of title 5, United States

17 Code, is amended by adding at the end the following new

18 subpart:

19 ‘‘Subpart I—Miscellaneous

20 CHAPTER 95—PERSONNEL FLEXIBILITIES

21 RELATING TO THE INTERNAL REVE22 NUE SERVICE

‘‘Sec.

‘‘9501. Internal Revenue Service personnel flexibilities.

‘‘9502. Pay authority for critical positions.

‘‘9503. Streamlined critical pay authority.

‘‘9504. Recruitment, retention, and relocation incentives.
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‘‘9505. Performance awards for senior executives.

‘‘9506. Limited appointments to career reserved Senior Executive Service positions.

‘‘9507. Streamlined demonstration project authority.

‘‘9508. General workforce performance management system.

‘‘9509. General workforce classification and pay.

‘‘9510. General workforce staffing.

1 ‘‘§ 9501. Internal Revenue Service personnel flexibili2 ties

3 ‘‘(a) Any flexibilities provided by sections 9502

4 through 9510 of this chapter shall be exercised in a man5 ner consistent with the following provisions of this title:

6 ‘‘(1) chapter 23 (relating to merit system prin7 ciples and prohibited personnel practices);

8 ‘‘(2) provisions relating to preference eligibles;

9 ‘‘(3) except as otherwise specifically provided,

10 section 5307 (relating to the aggregate limitation on

11 pay);

12 ‘‘(4) except as otherwise specifically provided,

13 chapter 71 (relating to labor-management relations);

14 and

15 ‘‘(5) subject to sections 1104 (b) and (c), as

16 though such authorities were delegated to the Sec17 retary of the Treasury under section 1104(a)(2).

18 ‘‘(b) The Secretary of the Treasury shall provide the

19 Office of Personnel Management with any information

20 that Office requires in carrying out its responsibilities

21 under this section.
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1 ‘‘(c) Employees within a unit to which a labor organi2 zation is accorded exclusive recognition under chapter 71

3 shall not be subject to any flexibility provided by sections

4 9507 through 9510 of this chapter unless the exclusive

5 representative and the internal Revenue Service have en6 tered into a written agreement which specifically provides

7 for the exercise of that flexibility. Such written agreement

8 may not be imposed by the Federal Services Impasses

9 Panel under section 7119.

10 ‘‘(d) For purposes of this chapter, the total annual

11 compensation payable at the Office of the Comptroller of

12 the Currency shall, for any year, be determined taking into

13 account only those forms of compensation that are taken

14 into account under section 5307(a) for purposes of such

15 year.

16 ‘‘§ 9502. Pay authority for critical positions

17 ‘‘When the Secretary of the Treasury seeks a grant

18 of authority pursuant to section 5377 for critical pay for

19 one or more positions at the Internal Revenue Service, the

20 Office of Management and Budget may fix the rate of

21 basic pay, notwithstanding section 5377(d)(2) and section

22 5307, at any rate up to the highest total annual compensa23 tion payable at the Office of the Comptroller of the Cur24 rency, provided that total annual compensation for individ25 uals appointed to such positions not exceed the highest
35

S 1174 IS

1 total annual compensation payable at the Office of the

2 Comptroller of the Currency.

3 ‘‘§ 9503. Streamlined critical pay authority

4 ‘‘Notwithstanding section 9502 of this title, and with5 out regard to the provisions of this title governing appoint6 ments in the competitive service or the Senior Executive

7 Service and the provisions of chapters 51 and 53 of this

8 title (relating to classification and pay rates), the Sec9 retary of the Treasury may, for a period of ten years from

10 the date of enactment of this section, establish, fix the

11 compensation of, and appoint individuals to, designated

12 critical technical and professional positions needed to

13 carry out the functions of the Internal Revenue Service,

14 provided that—

15 ‘‘(1) the positions—

16 ‘‘(A) require expertise of an extremely high

17 level in a technical or professional field; and

18 ‘‘(B) are critical to the Internal Revenue

19 Service’s successful accomplishment of an im20 portant mission;

21 ‘‘(2) exercise of the authority is necessary to re22 cruit or retain an individual exceptionally well quali23 fied for the position;

24 ‘‘(3) the number of such positions does not ex25 ceed at the time of any new appointment the number
36

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1 equal to 5 percent of the total number of employees

2 holding positions in the Internal Revenue Service the

3 rate of basic pay for which is not less than the mini4 mum rate of grade GS–15 of the General Schedule;

5 at pay levels equivalent to General Schedule grade

6 15 and higher;

7 ‘‘(4) designation of such positions shall be ap8 proved by the Secretary of the Treasury upon the

9 recommendation of the Internal Revenue Service

10 Management Board (established in section 7801(b)

11 of title 26, United States Code);

12 ‘‘(5) the terms of such appointments are limited

13 to no more than four years;

14 ‘‘(6) appointees to such positions were not In15 ternal Revenue Service employees immediately prior

16 to such appointment;

17 ‘‘(7) total annual compensation for any ap18 pointee to such positions does not exceed the highest

19 total annual compensation payable at the Office of

20 the Comptroller of the Currency;

21 ‘‘(8) all such positions shall be excluded from

22 the collective bargaining unit; and

23 ‘‘(9) individuals appointed pursuant to this sub24 section shall not be considered to be employees for

25 purposes of subchapter II of chapter 75 of this title.
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1 ‘‘§ 9504. Recruitment, retention, and relocation incen2 tives

3 ‘‘For a period of ten years from the date of enact4 ment of this Act and subject to approval by the Office

5 of Personnel Management, the Secretary of the Treasury

6 may provide for variations from the provisions of sections

7 5753 and 5754 governing payment of recruitment, reloca8 tion, and retention incentives.

9 ‘‘§ 9505. Performance awards for senior executives

10 ‘‘(a) For a period of ten years from the date of enact11 ment of this Act, Internal Revenue Service senior execu12 tives who have program management responsibility over

13 significant functions of the Internal Revenue Service may

14 be paid a performance bonus without regard to the limita15 tion in section 5384(b)(2) of this title if the Secretary of

16 the Treasury finds such award warranted based upon the

17 executive’s performance.

18 ‘‘(b) In evaluating an executive’s performance for

19 purposes of an award under this section, the Secretary of

20 the Treasury shall take into account the executive’s con21 tributions toward the successful accomplishment of goals

22 and objectives established under the Government Perform23 ance and Results Act of 1993 and other performance

24 metrics or plans established in consultation with the Inter25 nal Revenue Service Management Board.
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1 ‘‘(c) Any award in excess of 20 percent of an execu2 tive’s rate of basic pay must be approved by the Secretary

3 of the Treasury in consultation with the Internal Revenue

4 Service Management Board.

5 ‘‘(d) Notwithstanding section 5384(b)(3) of this title,

6 the Secretary of the Treasury shall determine the aggre7 gate amount of performance awards available to be paid

8 during any fiscal year under this section and section 5384

9 to career senior executives in the Internal Revenue Service

10 provided that such amount does not exceed an amount

11 equal to five percent of the aggregate amount of basic pay

12 paid to career senior executives in the Internal Revenue

13 Service during the preceding fiscal year. The Internal Rev14 enue Service shall not be included in the determination

15 under section 5384(b)(3) of the aggregate amount of per16 formance awards payable to career senior executives in the

17 Department of the Treasury outside of the Internal Reve18 nue Service.

19 ‘‘(e) Notwithstanding section 5307 of this title, a per20 formance bonus award may not be paid to an executive

21 in a calendar year if, or to the extent that, the executive’s

22 total annual compensation will exceed the maximum

23 amount of total annual compensation payable in the Office

24 of the Comptroller of the Currency.
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1 ‘‘§ 9506. Limited appointments to career reserved

2 Senior Executive Service positions

3 ‘‘Notwithstanding any other provision of law, in ap4 plying section 3132 of this title, a ‘career reserved posi5 tion’ in the Internal Revenue Service means a position des6 ignated under section 3132(b) which may be filled only

7 by—

8 ‘‘(1) a career appointee, or

9 ‘‘(2) a limited emergency appointee or a limited

10 term appointee who, immediately upon entering the

11 career-reserved position, was serving under a career

12 or career-conditional appointment outside the Senior

13 Executive Service or whose limited emergency or

14 limited term appointment is approved in advance by

15 the Office of Personnel Management.

16 ‘‘§ 9507. Streamlined demonstration project authority

17 ‘‘(a) The exercise of any of the flexibilities under sec18 tions 9502 through 9510 does not affect the authority of

19 the Secretary of the Treasury to implement for the Inter20 nal Revenue Service a demonstration project subject to

21 chapter 47 of this title, as provided in subsection (b).

22 ‘‘(b) In applying section 4703 of this title to a dem23 onstration project described in section 4701(a)(4) of this

24 title which involves the Internal Revenue Service—

25 ‘‘(1) section 4703(b)(1) shall be deemed to read

26 as follows:
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1 ‘‘ ‘(1) develop a plan for such project which de2 scribes its purpose, the employees to be covered, the

3 project itself, its anticipated outcomes, and the

4 method of evaluating the project;’;

5 ‘‘(2) section 4703(b)(3) shall not apply;

6 ‘‘(3) the 180-day notification period in section

7 4703(b)(4) shall be deemed to be a notification pe8 riod of 30 days;

9 ‘‘(4) section 4703(b)(6) shall be deemed to read

10 as follows:

11 ‘‘ ‘(6) provides each House of Congress with the

12 final version of the plan.’;

13 ‘‘(5) section 4703(c)(1) shall be deemed to read

14 as follows:

15 ‘‘ ‘(1) subchapter V of chapter 63 or subpart G

16 of part III of this title;’;

17 ‘‘(6) the requirements of sections 4703

18 (d)(1)(A) and (d)(2) shall not apply; and

19 ‘‘(7) notwithstanding section 4703(d)(1)(B),

20 based on an evaluation as provided in section

21 4703(h), the Office of Personnel Management and

22 the Secretary of the Treasury, except as otherwise

23 provided by this subsection, may waive the termi24 nation date of a demonstration project under section

25 4703(d). At least 90 days before waiving the termi-
41

S 1174 IS

1 nation date, the Office of Personnel Management

2 shall publish in the Federal Register a notice of its

3 intention to waive the termination date and shall in4 form in writing both Houses of Congress of its in5 tention.

6 ‘‘§ 9508. General workforce performance management

7 system

8 ‘‘(a) In lieu of a performance appraisal system estab9 lished under section 4302 of this title, the Secretary of

10 the Treasury may establish for all or part of the Internal

11 Revenue Service a performance management system

12 which—

13 ‘‘(1) maintains individual accountability by—

14 ‘‘(A) establishing one or more retention

15 standards for each employee related to the work

16 of the employee and expressed in terms of indi17 vidual performance, and communicating such

18 retention standards to employees;

19 ‘‘(B) making period determinations of

20 whether each employee meets or does not meet

21 the employee’s established retention standards;

22 and

23 ‘‘(C) taking actions, in accordance with ap24 plicable laws and regulations, with respect to

25 any employee whose performance does not meet
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S 1174 IS

1 established retention standards, including deny2 ing any increases in basic pay, promotions, and

3 credit for performance under section 3502 of

4 this title, and taking one or more of the follow5 ing actions:

6 ‘‘(i) reassignment;

7 ‘‘(ii) an action under chapter 43 or

8 chapter 75 of this title; or

9 ‘‘(iii) any other appropriate action to

10 resolve the performance problem; and

11 ‘‘(2) strengthens its effectiveness by—

12 ‘‘(A) establishing goals or objectives for in13 dividual, group, or organizational performance

14 (or any combination thereof), consistent with

15 the Internal Revenue Service’s performance

16 planning procedures, including those established

17 under the Government Performance and Re18 sults Act of 1993, and communicating such

19 goals or objectives to employees;

20 ‘‘(B) using such goals and objectives to

21 make performance distinctions among employ22 ees or groups of employees; and

23 ‘‘(C) using performance assessments as a

24 basis for granting employee awards, adjusting

25 an employee’s rate of basic pay, and other ap-
43

S 1174 IS

1 propriate personnel actions, in accordance with

2 applicable laws and regulations.

3 ‘‘(3) For purposes of subsection (a)(2), ‘per4 formance assessment’ means a determination of

5 whether or not retention standards established under

6 subsection (a)(1)(A) are met, and any additional

7 performance determination made on the basis of per8 formance goals and objectives established under sub9 section (a)(2)(A).

10 For purposes of this title, ‘unacceptable performance’ with

11 respect to an employee of the Internal Revenue Service

12 covered by a performance management system established

13 pursuant to this section means performance of the em14 ployee which fails to meet a retention standard established

15 under this subsection.

16 ‘‘(b)(1) The Secretary of the Treasury may establish

17 an awards program designed to provide incentives for and

18 recognition of organizational, group, and individual

19 achievements by providing for granting awards to employ20 ees who, as individuals or members of a group, contribute

21 to meeting the performance goals and objectives estab22 lished under this chapter by such means as a superior in23 dividual or group accomplishment, a documented produc24 tivity gain, or sustained superior performance.
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1 ‘‘(2) A cash award under subchapter I of chapter 45

2 may be granted to an employee of the Internal Revenue

3 Service without the need for any approval under section

4 4502(b).

5 ‘‘(c)(1) In applying sections 4303(b)(1)(A) and

6 7513(b)(1) of this title to employees of the Internal Reve7 nue Service, ‘30 days’ may be deemed to be ‘15 days’.

8 ‘‘(2) Nothwithstanding the second sentence of section

9 5335(c) of this title, an employee of the Internal Revenue

10 Service shall not have a right to appeal the denial of a

11 periodic step increase under section 5335 to the Merit Sys12 tems Protection Board.

13 ‘‘§ 9509. General workforce classification and pay

14 ‘‘(a)(1) The Secretary of the Treasury may, subject

15 to criteria to be prescribed by the Office of Personnel

16 Management, establish one or more broad-banded systems

17 covering all or any portion of the Internal Revenue Service

18 workforce.

19 ‘‘(2)(A) Except as provided subparagraph (B), for

20 purposes of this section, ‘broad-banded system’ means a

21 system for grouping positions for pay, job evaluation, and

22 other purposes that is different from the system estab23 lished under chapter 51 and subchapter III of chapter 53

24 of this title as a result of combining grades and related

25 ranges of rates of pay in one or more occupational series.
45

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1 ‘‘(B) With the approval of the Office of Personnel

2 Management, a broad-banded system established under

3 this section may either include or consist of positions that

4 otherwise would be subject to subchapter IV of chapter

5 53 or section 5376 of this title.

6 ‘‘(3) The Office of Personnel Management may re7 quire the Secretary of the Treasury to submit information

8 relating to broad-banded systems at the Internal Revenue

9 Service.

10 ‘‘(4) Except as otherwise provided under this section,

11 employees under a broad-banded system shall continue to

12 be subject to the laws and regulations covering employees

13 under the pay system that otherwise would apply to them.

14 ‘‘(5) The criteria to be prescribed by the Office of

15 Personnel Management shall, at a minimum—

16 ‘‘(A) ensure that the structure of any broad17 banded system maintains the principle of equal pay

18 for substantially equal work;

19 ‘‘(B) establish the minimum and maximum

20 number of grades that may be combined into pay

21 bands;

22 ‘‘(C) establish requirements for setting mini23 mum and maximum rates of pay in a pay band;

24 ‘‘(D) establish requirements for adjusting the

25 pay of an employee within a pay band;
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1 ‘‘(E) establish requirements for setting the pay

2 of a supervisory employee whose position is in a pay

3 band or who supervises employees whose positions

4 are in pay bands; and

5 ‘‘(F) establish requirements and methodologies

6 for setting the pay of an employee upon conversion

7 to a broad-banded system, initial appointment,

8 change of position or type of appointment (including

9 promotion, demotion, transfer, reassignment, rein10 statement, placement in another pay band, or move11 ment to a different geographic location), and move12 ment between a broad-banded system and another

13 pay system.

14 ‘‘(b) With the approval of the Office of Personnel

15 Management and in accordance with a plan for implemen16 tation submitted by the Secretary of the Treasury, the

17 Secretary may, with respect to Internal Revenue Service

18 employees who are covered by a broad-banded system es19 tablished under subsection (a), provide for variations from

20 the provisions of subchapter VI of chapter 53 of this title.

21 ‘‘§ 9510. General workforce staffing

22 ‘‘(a)(1) Except as otherwise provided by this section,

23 an employee of the Internal Revenue Service may be se24 lected for a permanent appointment in the competitive
47

S 1174 IS

1 service in the Internal Revenue Service through internal

2 competitive promotion procedures if:

3 ‘‘(A) the employee has completed, in the com4 petitive service, two years of current continuous

5 service under a term appointment or any combina6 tion of term appointments;

7 ‘‘(B) such term appointment or appointments

8 were made under competitive procedures prescribed

9 for permanent appointments;

10 ‘‘(C) the employee’s performance under such

11 term appointment or appointments met established

12 retention standards, or, if not covered by a perform13 ance management system established under section

14 9508, was rated at the fully successful level or high15 er (or equivalent thereof); and

16 ‘‘(D) the vacancy announcement for the term

17 appointment from which the conversion is made

18 stated that there was a potential for subsequent con19 version to a permanent appointment.

20 ‘‘(2) An appointment under this section may be made

21 only to a position in the same line of work as a position

22 to which the employee received a term appointment under

23 competitive procedures.

24 ‘‘(b)(1) Notwithstanding subchapter I of chapter 33

25 of this title, the Secretary of the Treasury may establish
48

S 1174 IS

1 category rating systems for evaluating job applicants for

2 Internal Revenue Service positions in the competitive serv3 ice under which qualified candidates are divided into two

4 or more quality categories on the basis of relative degrees

5 of merit, rather than assigned individual numerical rat6 ings.

7 ‘‘(2) Each applicant who meets the minimum quali8 fication requirements for the position to be filled shall be

9 assigned to an appropriate category based on an evalua10 tion of the applicant’s knowledge, skills, and abilities rel11 ative to those needed for successful performance in the

12 job to be filled.

13 ‘‘(3) Within each quality category established under

14 paragraph (1), preference eligibles shall be listed ahead

15 of individuals who are not preference eligibles. For other

16 than scientific and professional positions at or higher than

17 GS–9 (or equivalent), preference eligibles who have a com18 pensable service-connected disability of 10 percent or

19 more, and who meet the minimum qualification standards,

20 shall be listed in the highest quality category.

21 ‘‘(4) An appointing authority may select any appli22 cant from the highest quality category or, if fewer than

23 three candidates have been assigned to the highest quality

24 category, from a merged category consisting of the highest

25 and second highest quality categories.
49

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1 ‘‘(5) Notwithstanding paragraph (4), the appointing

2 authority may not pass over a preference eligible in the

3 same or higher category from which selection is made un4 less the requirements of section 3317(b) or 3318(b) of this

5 title, as applicable, are satisfied.

6 ‘‘(c) The Secretary of the Treasury may detail em7 ployees among the offices of the Internal Revenue Service

8 without regard to the 120-day limitation in section

9 3341(b) of this title.

10 ‘‘(d) Notwithstanding any other provision of law or

11 regulation, the Secretary of the Treasury may establish

12 a probationary period under section 3321 of this title of

13 up to three years for Internal Revenue Service positions

14 where the Secretary of the Treasury determines that the

15 nature of the work is such that a shorter period is insuffi16 cient to demonstrate complete proficiency in the position.

17 ‘‘(e) Nothing in this section exempts the Secretary

18 of the Treasury from—

19 ‘‘(1) any employment priority established under

20 direction of the President for the placement of sur21 plus or displaced employees; or

22 ‘‘(2) any obligation under a court order or de23 cree relating to the employment practices of the In24 ternal Revenue Service or the Department of the

25 Treasury.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for Part III of title 5, United States Code, is amended

3 by adding at the end the following:

‘‘Subpart I—Miscellaneous

‘‘95. Personnel flexibilities relating to the Internal Revenue Service ...... 9501’’.

4 SEC. 302. AUTHORIZATION FOR APPROPRIATIONS.

5 There are authorized to be appropriated from time

6 to time such sums as may be necessary to carry out the

7 purposes of this Act.

8 SEC. 303. INTERNAL REVENUE SERVICE FUNDING.

9 (a) FINDINGS.—The Congress finds that:

10 (1) The need of the Internal Revenue Service to

11 resolve any issues regarding their computer systems

12 and the century date change is the highest tech13 nology priority of the agency.

14 (2) Without stable and predictable funding, the

15 Internal Revenue Service is unable effectively and ef16 ficiently to plan and execute key programs for tax

17 law enforcement, tax processing, taxpayer assistance

18 and management.

19 (3) A lack of multi-year budgets for Internal

20 Revenue Service technology and capital investment

21 programs deters some contractors from working with

22 the agency and raises the costs of the changes nec23 essary to make technology an enabler of Internal

24 Revenue Service strategic objectives.
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1 (b) SENSE OF CONGRESS.—Based on these findings,

2 it is the sense of the Congress that:

3 (1) Internal Revenue Service efforts to resolve

4 any century date change computer issues should be

5 funded fully to provide for certain resolution of those

6 issues.

7 (2) The Internal Revenue Service budget for

8 tax law enforcement, tax processing, taxpayer assist9 ance and management should be maintained at no

10 less than current levels for the next three years.

11 (3) Multi-year budgets should be adopted for

12 Internal Revenue Service technology and capital in13 vestment programs in order to ensure stability in the

14 implementation of those programs.

Æ