IB 

Union Calendar No. 362 

110TH CONGRESS 

2D SESSION H. R. 5719 

[Report No. 110–584] 

To amend the Internal Revenue Code of 1986 to conform return preparer 

penalty standards, delay implementation of withholding taxes on government contractors, enhance taxpayer protections, assist low-income taxpayers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 8, 2008 

Mr. RANGEL (for himself, Mr. MCDERMOTT, Mr. LEWIS of Georgia, Mr. POMEROY, Mr. EMANUEL, Mr. BLUMENAUER, Mr. KIND, Ms. BERKLEY, Mr. 

CROWLEY, Mr. MEEK of Florida, Mr. ELLISON, Ms. GIFFORDS, Mr. 

HALL of New York, Mr. MAHONEY of Florida, Mr. WALZ of Minnesota, 

Mr. WELCH of Vermont, and Mrs. JONES of Ohio) introduced the following bill; which was referred to the Committee on Ways and Means 

APRIL 14, 2008 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on April 8, 2008] 

A BILL 

To amend the Internal Revenue Code of 1986 to conform 

return preparer penalty standards, delay implementation 

of withholding taxes on government contractors, enhance 

taxpayer protections, assist low-income taxpayers, and 

for other purposes. 


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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 Assistance and Simplification Act of 2008’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 

7 expressly provided, whenever in this Act an amendment or 

8 repeal is expressed in terms of an amendment to, or repeal 

9 of, a section or other provision, the reference shall be consid10 ered to be made to a section or other provision of the Inter11 nal Revenue Code of 1986. 

12 (c) TABLE OF CONTENTS.—The table of contents of this 

13 Act is as follows: 

Sec. 1. Short title, etc. 

Sec. 2. Modification of penalty on understatement of taxpayer’s liability by tax 

return preparer. 

Sec. 3. Removal of cellular telephones (or similar telecommunications equipment) 

from listed property. 

Sec. 4. Delay of application of withholding requirement on certain governmental 

payments for goods and services. 

Sec. 5. Elderly and disabled individuals receiving in-home care under certain 

government programs not subject to employment tax provisions. 

Sec. 6. Referrals to low income taxpayer clinics permitted. 

Sec. 7. Programs for the benefit of low-income taxpayers. 

Sec. 8. EITC outreach. 

Sec. 9. Prohibition on IRS debt indicators for predatory refund anticipation 

loans. 

Sec. 10. Study on delivery of tax refunds. 

Sec. 11. Extension of time for return of property for wrongful levy. 

Sec. 12. Individuals held harmless on wrongful levy, etc., on individual retirement plan. 

Sec. 13. Taxpayer notification of suspected identity theft. 

Sec. 14. Repeal of authority to enter into private debt collection contracts. 

Sec. 15. Clarification of IRS unclaimed refund authority. 

Sec. 16. Prohibition on misuse of Department of the Treasury names and symbols. 

Sec. 17. Substantiation of amounts paid or distributed out of health savings account. 


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Sec. 18. Certain domestically controlled foreign persons performing services under 

contract with United States Government treated as American 

employers. 

Sec. 19. Time for payment of corporate estimated tax. 

1 SEC. 2. MODIFICATION OF PENALTY ON UNDERSTATEMENT 

2 OF TAXPAYER’S LIABILITY BY TAX RETURN 

3 PREPARER. 

4 (a) IN GENERAL.—Subsection (a) of section 6694 (re5 lating to understatement due to unreasonable positions) is 

6 amended to read as follows: 

7 ‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE PO8 SITIONS.— 

9 ‘‘(1) IN GENERAL.—If a tax return preparer— 

10 ‘‘(A) prepares any return or claim of refund 

11 with respect to which any part of an understate12 ment of liability is due to a position described 

13 in paragraph (2), and 

14 ‘‘(B) knew (or reasonably should have 

15 known) of the position, 

16 such tax return preparer shall pay a penalty with re17 spect to each such return or claim in an amount 

18 equal to the greater of $1,000 or 50 percent of the in19 come derived (or to be derived) by the tax return pre20 parer with respect to the return or claim. 

21 ‘‘(2) UNREASONABLE POSITION.— 

22 ‘‘(A) IN GENERAL.—Except as otherwise 

23 provided in this paragraph, a position is deVerDate Aug 31 2005 21:55 Apr 14, 2008 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H5719.RH H5719

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1 scribed in this paragraph unless there is or was 

2 substantial authority for the position. 

3 ‘‘(B) DISCLOSED POSITIONS.—If the posi4 tion was disclosed as provided in section 

5 6662(d)(2)(B)(ii)(I) and is not a position to 

6 which subparagraph (C) applies, the position is 

7 described in this paragraph unless there is a rea8 sonable basis for the position. 

9 ‘‘(C) TAX SHELTERS AND REPORTABLE

10 TRANSACTIONS.—If the position is with respect 

11 to a tax shelter (as defined in section 

12 6662(d)(2)(C)(ii)) or a reportable transaction to 

13 which section 6662A applies, the position is de14 scribed in this paragraph unless it is reasonable 

15 to believe that the position would more likely 

16 than not be sustained on its merits. 

17 ‘‘(3) REASONABLE CAUSE EXCEPTION.—No pen18 alty shall be imposed under this subsection if it is 

19 shown that there is reasonable cause for the under20 statement and the tax return preparer acted in good 

21 faith.’’. 

22 (b) EFFECTIVE DATE.—The amendment made by this 

23 section shall apply— 

24 (1) in the case of a position described in sub25 paragraph (A) or (B) of section 6694(a)(2) of the InVerDate Aug 31 2005 21:55 Apr 14, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H5719.RH H5719

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1 ternal Revenue Code of 1986 (as amended by this sec2 tion), to returns prepared after May 25, 2007, and 

3 (2) in the case of a position described in sub4 paragraph (C) of such section (as amended by this 

5 section), to returns prepared for taxable years ending 

6 after the date of the enactment of this Act. 

7 SEC. 3. REMOVAL OF CELLULAR TELEPHONES (OR SIMILAR 

8 TELECOMMUNICATIONS EQUIPMENT) FROM 

9 LISTED PROPERTY. 

10 (a) IN GENERAL.—Subparagraph (A) of section 

11 280F(d)(4) (defining listed property) is amended by insert12 ing ‘‘and’’ at the end of clause (iv), by striking clause (v), 

13 and by redesignating clause (vi) as clause (v). 

14 (b) EFFECTIVE DATE.—The amendment made by sub15 section (a) shall apply to taxable years beginning after De16 cember 31, 2008. 

17 SEC. 4. DELAY OF APPLICATION OF WITHHOLDING RE18 QUIREMENT ON CERTAIN GOVERNMENTAL 

19 PAYMENTS FOR GOODS AND SERVICES. 

20 (a) IN GENERAL.—Subsection (b) of section 511 of the 

21 Tax Increase Prevention and Reconciliation Act of 2005 is 

22 amended by striking ‘‘December 31, 2010’’ and inserting 

23 ‘‘December 31, 2011’’. 

24 (b) REPORT TO CONGRESS.—Not later than 6 months 

25 after the date of the enactment of this Act, the Secretary 


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1 of the Treasury shall submit to the Committee on Ways and 

2 Means of the House of Representatives and the Committee 

3 on Finance of the Senate a report with respect to the with4 holding requirements of section 3402(t) of the Internal Rev5 enue Code of 1986, including a detailed analysis of— 

6 (1) the problems, if any, which are anticipated 

7 in administering and complying with such require8 ments, 

9 (2) the burdens, if any, that such requirements 

10 will place on governments and businesses (taking into 

11 account such mechanisms as may be necessary to ad12 minister such requirements), and 

13 (3) the application of such requirements to small 

14 expenditures for services and goods by governments. 

15 SEC. 5. ELDERLY AND DISABLED INDIVIDUALS RECEIVING 

16 IN-HOME CARE UNDER CERTAIN GOVERN17 MENT PROGRAMS NOT SUBJECT TO EMPLOY18 MENT TAX PROVISIONS. 

19 (a) IN GENERAL.—Chapter 25 (relating to general 

20 provisions relating to employment taxes) is amended by 

21 adding at the end the following new section: 


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1 ‘‘SEC. 3511. ELDERLY AND DISABLED INDIVIDUALS RECEIV2 ING IN-HOME CARE UNDER CERTAIN GOV3 ERNMENT PROGRAMS. 

4 ‘‘(a) IN GENERAL.—In the case of amounts paid under 

5 a home care service program to a home care service provider 

6 by the fiscal administrator of such program— 

7 ‘‘(1) the home care service recipient shall not be 

8 liable for the payment of any taxes imposed under 

9 this subtitle with respect to amounts paid for the pro10 vision of services under such program, and 

11 ‘‘(2) the fiscal administrator shall be so liable. 

12 ‘‘(b) DEFINITIONS.—For purposes of this section— 

13 ‘‘(1) HOME CARE SERVICE PROGRAM.—The term 

14 ‘home care service program’ means a State or local 

15 government program— 

16 ‘‘(A) any portion of which is funded with 

17 Federal funds, and 

18 ‘‘(B) under which domestic services are pro19 vided to elderly or disabled individuals in their 

20 homes. 

21 Such term shall not include any program to the ex22 tent home care service recipients make payments to 

23 the home care service providers for such in-home do24 mestic services. 

25 ‘‘(2) HOME CARE SERVICE PROVIDER.—The term 

26 ‘home care service provider’ means any individual 


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1 who provides domestic services to a home care service 

2 recipient under a home care service program. 

3 ‘‘(3) HOME CARE SERVICE RECIPIENT.—The 

4 term ‘home care service recipient’ means any indi5 vidual receiving domestic services under a home care 

6 service program. 

7 ‘‘(4) FISCAL ADMINISTRATOR.—The term ‘fiscal 

8 administrator’ means any person or governmental en9 tity who pays amounts under a home care service 

10 program to home care service providers for the provi11 sion of domestic services under such program. 

12 ‘‘(c) RETURNS BY FISCAL ADMINISTRATOR.—For pur13 poses of this section— 

14 ‘‘(1) IN GENERAL.—Returns relating to taxes im15 posed or amounts required to be withheld under this 

16 subtitle shall be made under the identifying number 

17 of the fiscal administrator. 

18 ‘‘(2) IDENTIFICATION OF SERVICE RECIPIENT.— 

19 The fiscal administrator shall, to the extent required 

20 under regulations prescribed by the Secretary, make 

21 a return setting forth— 

22 ‘‘(A) the name, address, and identifying 

23 number of each home care service recipient for 

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1 trator under the home care services program, 

2 and 

3 ‘‘(B) such other information as the Sec4 retary may require. 

5 ‘‘(d) REGULATIONS.—The Secretary may prescribe 

6 such regulations or other guidance as may be necessary to 

7 carry out the purposes of this section, including requiring 

8 deposits of any tax imposed under this subtitle.’’. 

9 (b) SERVICE RECIPIENT IDENTIFICATION RETURN

10 TREATED AS INFORMATION RETURN.—Paragraph (3) of 

11 section 6724(d) is amended by striking ‘‘and’’ at the end 

12 of subparagraph (C)(ii), by striking the period at the end 

13 of subparagraph (D)(ii) and inserting ‘‘, and’’, and by add14 ing at the end the following new subparagraph: 

15 ‘‘(E) any requirement under section 

16 3511(c)(2).’’. 

17 (c) CLERICAL AMENDMENT.—The table of sections for 

18 chapter 25 is amended by adding at the end the following 

19 new item: 

‘‘Sec. 3511. Elderly and disabled individuals receiving in-home care under certain government programs.’’. 

20 (d) EFFECTIVE DATE.—The amendments made by this 

21 section shall apply to amounts paid after December 31, 

22 2008. 


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1 SEC. 6. REFERRALS TO LOW INCOME TAXPAYER CLINICS 

2 PERMITTED. 

3 (a) IN GENERAL.—Subsection (c) of section 7526 of 

4 the Internal Revenue Code of 1986 is amended by adding 

5 at the end the following new paragraph: 

6 ‘‘(6) TREASURY EMPLOYEES PERMITTED TO

7 REFER TAXPAYERS TO QUALIFIED LOW-INCOME TAX8 PAYER CLINICS.—Notwithstanding any other provi9 sion of law, officers and employees of the Department 

10 of the Treasury may refer taxpayers for advice and 

11 assistance to qualified low-income taxpayer clinics re12 ceiving funding under this section.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by this 

14 section shall apply to referrals made after the date of the 

15 enactment of this Act. 

16 SEC. 7. PROGRAMS FOR THE BENEFIT OF LOW-INCOME TAX17 PAYERS. 

18 (a) VOLUNTEER INCOME TAX ASSISTANCE PRO19 GRAMS.—Chapter 77 (relating to miscellaneous provisions) 

20 is amended by inserting after section 7526 the following 

21 new section: 

22 ‘‘SEC. 7526A. VOLUNTEER INCOME TAX ASSISTANCE PRO23 GRAMS. 

24 ‘‘(a) IN GENERAL.—The Secretary may, subject to the 

25 availability of appropriated funds, make grants to provide 


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1 matching funds for the development, expansion, or continu2 ation of volunteer income tax assistance programs. 

3 ‘‘(b) VOLUNTEER INCOME TAX ASSISTANCE PRO4 GRAM.—For purposes of this section, the term ‘volunteer in5 come tax assistance program’ means a program— 

6 ‘‘(1) which does not charge taxpayers for its re7 turn preparation services, 

8 ‘‘(2) which operates programs to assist low and 

9 moderate-income (as determined by the Secretary) 

10 taxpayers in preparing and filing their Federal in11 come tax returns, and 

12 ‘‘(3) in which all of the volunteers who assist in 

13 the preparation of Federal income tax returns meet 

14 the requirements prescribed by the Secretary. 

15 ‘‘(c) SPECIAL RULES AND LIMITATIONS.— 

16 ‘‘(1) AGGREGATE LIMITATION.—Unless otherwise 

17 provided by specific appropriation, the Secretary 

18 shall not allocate more than $10,000,000 per year (ex19 clusive of costs of administering the program) to 

20 grants under this section. 

21 ‘‘(2) OTHER APPLICABLE RULES.—Rules similar 

22 to the rules under paragraphs (2) through (6) of sec23 tion 7526(c) shall apply with respect to the awarding 

24 of grants to volunteer income tax assistance pro25 grams.’’. 


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1 (b) INCREASE IN AUTHORIZED GRANTS FOR LOW-IN2 COME TAXPAYER CLINICS.—Paragraph (1) of section 

3 7526(c) (relating to aggregate limitation) is amended by 

4 striking ‘‘$6,000,000’’ and inserting ‘‘$10,000,000’’. 

5 (c) CLERICAL AMENDMENTS.— 

6 (1) Section 7526(c)(5) is amended by inserting 

7 ‘‘qualified’’ before ‘‘low-income’’. 

8 (2) The table of sections for chapter 77 is amend9 ed by inserting after the item relating to section 7526 

10 the following new item: 

‘‘Sec. 7526A. Volunteer income tax assistance programs.’’. 

11 (d) EFFECTIVE DATE.—The amendments made by this 

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

13 Act. 

14 SEC. 8. EITC OUTREACH. 

15 (a) IN GENERAL.—Section 32 (relating to earned in16 come) is amended by adding at the end the following new 

17 subsection: 

18 ‘‘(n) NOTIFICATION OF POTENTIAL ELIGIBILITY FOR

19 CREDIT AND REFUND.— 

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

21 an annual basis, the Secretary shall provide to each 

22 taxpayer who— 

23 ‘‘(A) for any preceding taxable year for 

24 which credit or refund is not precluded by sec25 tion 6511, and 


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1 ‘‘(B) did not claim the credit under sub2 section (a) but may be allowed such credit for 

3 any such taxable year based on return or return 

4 information (as defined in section 6103(b)) 

5 available to the Secretary, 

6 notice that such taxpayer may be eligible to claim 

7 such credit and a refund for such taxable year. 

8 ‘‘(2) NOTICE.—Notice provided under paragraph 

9 (1) shall be in writing and sent to the last known ad10 dress of the taxpayer.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by this 

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

13 Act. 

14 SEC. 9. PROHIBITION ON IRS DEBT INDICATORS FOR PRED15 ATORY REFUND ANTICIPATION LOANS. 

16 (a) IN GENERAL.—Subsection (f) of section 6011 (re17 lating to promotion of electronic filing) is amended by add18 ing at the end the following new paragraph: 

19 ‘‘(3) PROHIBITION ON IRS DEBT INDICATORS FOR

20 PREDATORY REFUND ANTICIPATION LOANS.— 

21 ‘‘(A) IN GENERAL.—In carrying out any 

22 program under this subsection, the Secretary 

23 shall not provide a debt indicator to any person 

24 with respect to any refund anticipation loan if 

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1 tices of such person involve refund anticipation 

2 loans and related charges and fees that are pred3 atory. 

4 ‘‘(B) REFUND ANTICIPATION LOAN.—For 

5 purposes of this paragraph, the term ‘refund an6 ticipation loan’ means a loan of money or of any 

7 other thing of value to a taxpayer secured by the 

8 taxpayer’s anticipated receipt of a Federal tax 

9 refund. 

10 ‘‘(C) IRS DEBT INDICATOR.—For purposes 

11 of this paragraph, the term ‘debt indicator’ 

12 means a notification provided through a tax re13 turn’s acknowledgment file that a refund will be 

14 offset to repay debts for delinquent Federal or 

15 State taxes, student loans, child support, or other 

16 Federal agency debt.’’. 

17 (b) EFFECTIVE DATE.—The amendment made by this 

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

19 Act. 

20 SEC. 10. STUDY ON DELIVERY OF TAX REFUNDS. 

21 (a) IN GENERAL.—The Secretary of the Treasury, in 

22 consultation with the National Taxpayer Advocate, shall 

23 conduct a study on the feasibility of delivering tax refunds 

24 on debit cards, prepaid cards, and other electronic means 


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1 to assist individuals that do not have access to financial 

2 accounts or institutions. 

3 (b) REPORT.—Not later than 1 year after the date of 

4 the enactment of this Act, the Secretary of the Treasury 

5 shall submit a report to Congress containing the results of 

6 the study conducted under subsection (a). 

7 SEC. 11. EXTENSION OF TIME FOR RETURN OF PROPERTY 

8 FOR WRONGFUL LEVY. 

9 (a) EXTENSION OF TIME FOR RETURN OF PROPERTY

10 SUBJECT TO LEVY.—Subsection (b) of section 6343 (relat11 ing to return of property) is amended by striking ‘‘9 

12 months’’ and inserting ‘‘2 years’’. 

13 (b) PERIOD OF LIMITATION ON SUITS.—Subsection (c) 

14 of section 6532 (relating to suits by persons other than tax15 payers) is amended— 

16 (1) in paragraph (1) by striking ‘‘9 months’’ 

17 and inserting ‘‘2 years’’, and 

18 (2) in paragraph (2) by striking ‘‘9-month’’ and 

19 inserting ‘‘2-year’’. 

20 (c) EFFECTIVE DATE.—The amendments made by this 

21 section shall apply to— 

22 (1) levies made after the date of the enactment 

23 of this Act, and 

24 (2) levies made on or before such date if the 9- 

25 month period has not expired under section 6343(b) 


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1 of the Internal Revenue Code of 1986 (without regard 

2 to this section) as of such date. 

3 SEC. 12. INDIVIDUALS HELD HARMLESS ON WRONGFUL 

4 LEVY, ETC., ON INDIVIDUAL RETIREMENT 

5 PLAN. 

6 (a) IN GENERAL.—Section 6343 (relating to authority 

7 to release levy and return property) is amended by adding 

8 at the end the following new subsection: 

9 ‘‘(f) INDIVIDUALS HELD HARMLESS ON WRONGFUL

10 LEVY, ETC. ON INDIVIDUAL RETIREMENT PLAN.— 

11 ‘‘(1) IN GENERAL.—If the Secretary determines 

12 that an individual retirement plan has been levied 

13 upon in a case to which subsection (b) or (d)(2)(A) 

14 applies, an amount equal to the sum of— 

15 ‘‘(A) the amount of money returned by the 

16 Secretary on account of such levy, and 

17 ‘‘(B) interest paid under subsection (c) on 

18 such amount of money, 

19 may be deposited into such individual retirement 

20 plan or any other individual retirement plan (other 

21 than an endowment contract) to which a rollover 

22 from the plan levied upon is permitted. An amount 

23 may not be deposited into a Roth IRA under the pre24 ceding sentence unless the individual retirement plan 

25 levied upon was a Roth IRA at the time of such levy. 


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1 ‘‘(2) TREATMENT AS ROLLOVER.—If amounts are 

2 deposited into an individual retirement plan under 

3 paragraph (1) not later than the 60th day after the 

4 date on which the individual receives the amounts 

5 under paragraph (1)— 

6 ‘‘(A) such deposit shall be treated as a roll7 over described in section 408(d)(3)(A)(i), 

8 ‘‘(B) to the extent the deposit includes inter9 est paid under subsection (c), such interest shall 

10 not be includible in gross income, and 

11 ‘‘(C) such deposit shall not be taken into ac12 count under section 408(d)(3)(B). 

13 For purposes of subparagraph (B), an amount shall 

14 be treated as interest only to the extent that the 

15 amount deposited exceeds the amount of the levy. 

16 ‘‘(3) REFUND, ETC., OF INCOME TAX ON LEVY.— 

17 If any amount is includible in gross income for a tax18 able year by reason of a levy referred to in paragraph 

19 (1) and any portion of such amount is treated as a 

20 rollover under paragraph (2), any tax imposed by 

21 chapter 1 on such portion shall not be assessed, and 

22 if assessed shall be abated, and if collected shall be 

23 credited or refunded as an overpayment made on the 

24 due date for filing the return of tax for such taxable 

25 year. 


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1 ‘‘(4) INTEREST.—Notwithstanding subsection 

2 (d), interest shall be allowed under subsection (c) in 

3 a case in which the Secretary makes a determination 

4 described in subsection (d)(2)(A) with respect to a 

5 levy upon an individual retirement plan.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to amounts paid under subsections (b), 

8 (c), and (d)(2)(A) of section 6343 of the Internal Revenue 

9 Code of 1986 after the date of the enactment of this Act. 

10 SEC. 13. TAXPAYER NOTIFICATION OF SUSPECTED IDEN11 TITY THEFT. 

12 (a) IN GENERAL.—Chapter 77 (relating to miscella13 neous provisions) is amended by adding at the end the fol14 lowing new section: 

15 ‘‘SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY 

16 THEFT. 

17 ‘‘If, in the course of an investigation under the inter18 nal revenue laws, the Secretary determines that there was 

19 or may have been an unauthorized use of the identity of 

20 the taxpayer or a dependent of the taxpayer, the Secretary 

21 shall, to the extent permitted by law— 

22 ‘‘(1) as soon as practicable and without jeopard23 izing such investigation, notify the taxpayer of such 

24 determination, and 


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1 ‘‘(2) if any person is criminally charged by in2 dictment or information with respect to such unau3 thorized use, notify such taxpayer as soon as prac4 ticable of such charge.’’. 

5 (b) CLERICAL AMENDMENT.—The table of sections for 

6 chapter 77 is amended by adding at the end the following 

7 new item: 

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

8 (c) EFFECTIVE DATE.—The amendments made by this 

9 section shall apply to determinations made after the date 

10 of the enactment of this Act. 

11 SEC. 14. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE 

12 DEBT COLLECTION CONTRACTS. 

13 (a) IN GENERAL.—Subchapter A of chapter 64 is 

14 amended by striking section 6306. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Subchapter B of chapter 76 is amended by 

17 striking section 7433A. 

18 (2) Section 7811 is amended by striking sub19 section (g). 

20 (3) Section 1203 of the Internal Revenue Service 

21 Restructuring Act of 1998 is amended by striking 

22 subsection (e). 

23 (4) The table of sections for subchapter A of 

24 chapter 64 is amended by striking the item relating 

25 to section 6306. 


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1 (5) The table of sections for subchapter B of 

2 chapter 76 is amended by striking the item relating 

3 to section 7433A. 

4 (c) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as otherwise provided 

6 in this subsection, the amendments made by this sec7 tion shall take effect on the date of the enactment of 

8 this Act. 

9 (2) EXCEPTION FOR EXISTING CONTRACTS, 

10 ETC.—The amendments made by this section shall not 

11 apply to any contract which was entered into before 

12 March 1, 2008, and is not renewed or extended on or 

13 after such date. 

14 (3) UNAUTHORIZED CONTRACTS AND EXTEN15 SIONS TREATED AS VOID.—Any qualified tax collec16 tion contract (as defined in section 6306 of the Inter17 nal Revenue Code of 1986, as in effect before its re18 peal) which is entered into on or after March 1, 2008, 

19 and any extension or renewal on or after such date 

20 of any qualified tax collection contract (as so de21 fined), shall be void. 


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1 SEC. 15. CLARIFICATION OF IRS UNCLAIMED REFUND AU2 THORITY. 

3 Paragraph (1) of section 6103(m) (relating to tax re4 funds) is amended by inserting ‘‘, and through any other 

5 means of mass communication,’’ after ‘‘media’’. 

6 SEC. 16. PROHIBITION ON MISUSE OF DEPARTMENT OF THE 

7 TREASURY NAMES AND SYMBOLS. 

8 (a) IN GENERAL.—Subsection (a) of section 333 of title 

9 31, United States Code, is amended by inserting ‘‘Internet 

10 domain address,’’ after ‘‘solicitation,’’ both places it ap11 pears. 

12 (b) PENALTY FOR MISUSE BY ELECTRONIC MEANS.— 

13 Subsections (c)(2) and (d)(1) of section 333 of such Code 

14 are each amended by inserting ‘‘or any other mass commu15 nications by electronic means,’’ after ‘‘telecast,’’. 

16 (c) EFFECTIVE DATE.—The amendments made by this 

17 section shall apply with respect to violations occurring after 

18 the date of the enactment of this Act. 

19 SEC. 17. SUBSTANTIATION OF AMOUNTS PAID OR DISTRIB20 UTED OUT OF HEALTH SAVINGS ACCOUNT. 

21 (a) IN GENERAL.—Paragraph (1) of section 223(f) (re22 lating to amounts used for qualified medical expenses) is 

23 amended by inserting ‘‘(and, in the case of amounts paid 

24 or distributed after December 31, 2010, substantiated in a 

25 manner similar to the substantiation required for flexible 

26 spending arrangements)’’ after ‘‘account beneficiary’’. 


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1 (b) REPORTS.—Subsection (h) of section 223 (relating 

2 to reports) is amended— 

3 (1) by redesignating paragraphs (1) and (2) as 

4 subparagraphs (A) and (B), respectively, 

5 (2) by moving the text of subparagraphs (A) and 

6 (B) (as so redesignated) and the last sentence 2 ems 

7 to the right, 

8 (3) by striking ‘‘(h) REPORTS.—The Secretary 

9 may require—’’ and inserting the following: 

10 ‘‘(h) REPORTS.— 

11 ‘‘(1) IN GENERAL.—The Secretary may re12 quire—’’, and 

13 (4) by adding at the end the following new para14 graph: 

15 ‘‘(2) RELATING TO SUBSTANTIATION.—Not later 

16 than January 15 of each calendar year after 2011, 

17 the trustee of a health savings account shall make a 

18 report regarding such account to the Secretary and 

19 the account beneficiary setting forth— 

20 ‘‘(A) the name, address, and identifying 

21 number of the account beneficiary, and 

22 ‘‘(B) the amount paid or distributed out of 

23 such account for the preceding calendar year not 

24 substantiated in accordance with subsection 

25 (f)(1).’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply with respect to amounts paid or distrib3 uted out of health savings accounts after December 31, 2010. 

4 SEC. 18. CERTAIN DOMESTICALLY CONTROLLED FOREIGN 

5 PERSONS PERFORMING SERVICES UNDER 

6 CONTRACT WITH UNITED STATES GOVERN7 MENT TREATED AS AMERICAN EMPLOYERS. 

8 (a) FICA TAXES.—Section 3121 (relating to defini9 tions) is amended by adding at the end the following new 

10 subsection: 

11 ‘‘(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS

12 AMERICAN EMPLOYERS.— 

13 ‘‘(1) IN GENERAL.—If any employee of a foreign 

14 person is performing services in connection with a 

15 contract between the United States Government (or 

16 any instrumentality thereof) and any member of any 

17 domestically controlled group of entities which in18 cludes such foreign person, such foreign person shall 

19 be treated for purposes of this chapter as an Amer20 ican employer with respect to such services performed 

21 by such employee. 

22 ‘‘(2) DOMESTICALLY CONTROLLED GROUP OF EN23 TITIES.—For purposes of this subsection— 

24 ‘‘(A) IN GENERAL.—The term ‘domestically 

25 controlled group of entities’ means a controlled 


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24 

•HR 5719 RH

1 group of entities the common parent of which is 

2 a domestic corporation. 

3 ‘‘(B) CONTROLLED GROUP OF ENTITIES.— 

4 The term ‘controlled group of entities’ means a 

5 controlled group of corporations as defined in 

6 section 1563(a)(1), except that— 

7 ‘‘(i) ‘more than 50 percent’ shall be 

8 substituted for ‘at least 80 percent’ each 

9 place it appears therein, and 

10 ‘‘(ii) the determination shall be made 

11 without regard to subsections (a)(4) and 

12 (b)(2) of section 1563. 

13 A partnership or any other entity (other than a 

14 corporation) shall be treated as a member of a 

15 controlled group of entities if such entity is con16 trolled (within the meaning of section 954(d)(3)) 

17 by members of such group (including any entity 

18 treated as a member of such group by reason of 

19 this sentence). 

20 ‘‘(3) LIABILITY OF COMMON PARENT.—In the 

21 case of a foreign person who is a member of any do22 mestically controlled group of entities, the common 

23 parent of such group shall be jointly and severally 

24 liable for any tax under this chapter for which such 

25 foreign person is liable by reason of this subsection, 


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25 

•HR 5719 RH

1 and for any penalty imposed on such person by this 

2 title with respect to any failure to pay such tax or 

3 to file any return or statement with respect to such 

4 tax or wages subject to such tax. No deduction shall 

5 be allowed under this title for any liability imposed 

6 by the preceding sentence. 

7 ‘‘(4) COORDINATION.—Paragraph (1) shall not 

8 apply to any services which are covered by an agree9 ment under subsection (l). 

10 ‘‘(5) CROSS REFERENCE.—For relief from taxes 

11 in cases covered by certain international agreements, 

12 see sections 3101(c) and 3111(c).’’. 

13 (b) SOCIAL SECURITY BENEFITS.—Subsection (e) of 

14 section 210 of the Social Security Act (42 U.S.C. 410(e)) 

15 is amended— 

16 (1) by striking ‘‘(e) The term’’ and inserting 

17 ‘‘(e)(1) The term’’, 

18 (2) by redesignating clauses (1) through (6) as 

19 clauses (A) through (F), respectively, and 

20 (3) by adding at the end the following new para21 graph: 

22 ‘‘(2)(A) If any employee of a foreign person is per23 forming services in connection with a contract between the 

24 United States Government (or any instrumentality thereof) 

25 and any member of any domestically controlled group of 


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•HR 5719 RH

1 entities which includes such foreign person, such foreign 

2 person shall be treated as an American employer with re3 spect to such services performed by such employee. 

4 ‘‘(B) For purposes of this paragraph— 

5 ‘‘(i) The term ‘domestically controlled group of 

6 entities’ means a controlled group of entities the com7 mon parent of which is a domestic corporation. 

8 ‘‘(ii) The term ‘controlled group of entities’ 

9 means a controlled group of corporations as defined 

10 in section 1563(a)(1) of the Internal Revenue Code of 

11 1986, except that— 

12 ‘‘(I) ‘more than 50 percent’ shall be sub13 stituted for ‘at least 80 percent’ each place it ap14 pears therein, and 

15 ‘‘(II) the determination shall be made with16 out regard to subsections (a)(4) and (b)(2) of sec17 tion 1563 of such Code. 

18 A partnership or any other entity (other than a cor19 poration) shall be treated as a member of a controlled 

20 group of entities if such entity is controlled (within 

21 the meaning of section 954(d)(3) of such Code) by 

22 members of such group (including any entity treated 

23 as a member of such group by reason of this sen24 tence).’’. 


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•HR 5719 RH

1 (c) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to services performed after the date of 

3 the enactment of this Act. 

4 SEC. 19. TIME FOR PAYMENT OF CORPORATE ESTIMATED 

5 TAX. 

6 The percentage under subparagraph (C) of section 

7 401(1) of the Tax Increase Prevention and Reconciliation 

8 Act of 2005 in effect on the date of the enactment of this 

9 Act is increased by 0.25 percentage points. 


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Union Calendar No. 362 

110TH CONGRESS 

2D SESSION H. R. 5719 

[Report No. 110

–584] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

poses. assist low-income taxpayers, and for other purment contractors, enhance taxpayer protections, implementation of withholding taxes on governconform return preparer penalty standards, delay 

APRIL 14, 2008 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


hsrobinson on PROD1PC76 with BILLS