II 

113TH CONGRESS 

2D SESSION S. 2215 

To protect taxpayers from improper audits by the Internal Revenue Service. 

IN THE SENATE OF THE UNITED STATES 

APRIL 7, 2014 

Mr. CORNYN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To protect taxpayers from improper audits by the Internal 

Revenue Service. 

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; TABLE OF CONTENTS. 

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

5 ‘‘Eliminating Improper and Abusive IRS Audits Act of 

6 2014’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Civil damages allowed for reckless or intentional disregard of internal 

revenue laws. 

Sec. 3. Modifications relating to certain offenses by officers and employees in 

connection with revenue laws. 


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Sec. 4. Modifications relating to civil damages for unauthorized inspection or 

disclosure of returns and return information. 

Sec. 5. Extension of time for contesting IRS levy. 

Sec. 6. Increase in monetary penalties for certain unauthorized disclosures of 

information. 

Sec. 7. Ban on raising new issues on appeal. 

Sec. 8. Limitation on enforcement of liens against principal residences. 

Sec. 9. Additional provisions relating to mandatory termination for misconduct. 

Sec. 10. Extension of declaratory judgment procedures to social welfare organizations. 

Sec. 11. Review by the Treasury Inspector General for Tax Administration. 

1 SEC. 2. CIVIL DAMAGES ALLOWED FOR RECKLESS OR IN2 TENTIONAL DISREGARD OF INTERNAL REV3 ENUE LAWS. 

4 (a) INCREASE IN AMOUNT OF DAMAGES.—Section 

5 7433(b) of the Internal Revenue Code of 1986 is amended 

6 by striking ‘‘$1,000,000 ($100,000, in the case of neg7 ligence)’’ and inserting ‘‘$3,000,000 ($300,000, in the 

8 case of negligence)’’. 

9 (b) EXTENSION OF TIME TO BRING ACTION.—Sec10 tion 7433(d)(3) of the Internal Revenue Code of 1986 is 

11 amended by striking ‘‘2 years’’ and inserting ‘‘5 years’’. 

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

13 this section shall apply to actions of employees of the In14 ternal Revenue Service after the date of the enactment 

15 of this Act. 

16 SEC. 3. MODIFICATIONS RELATING TO CERTAIN OFFENSES 

17 BY OFFICERS AND EMPLOYEES IN CONNEC18 TION WITH REVENUE LAWS. 

19 (a) INCREASE IN PENALTY.—Section 7214 of the In20 ternal Revenue Code of 1986 is amended— 


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1 (1) by striking ‘‘$10,000’’ in subsection (a) and 

2 inserting ‘‘$25,000’’, and 

3 (2) by striking ‘‘$5,000’’ in subsection (b) and 

4 inserting ‘‘$10,000’’. 

5 (b) EFFECTIVE DATE.—The amendments made by 

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

7 of this Act. 

8 SEC. 4. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR 

9 UNAUTHORIZED INSPECTION OR DISCLO10 SURE OF RETURNS AND RETURN INFORMA11 TION. 

12 (a) INCREASE IN AMOUNT OF DAMAGES.—Subpara13 graph (A) of section 7431(c)(1) of the Internal Revenue 

14 Code of 1986 is amended by striking ‘‘$1,000’’ and insert15 ing ‘‘$10,000’’. 

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

17 this section shall apply to inspections and disclosure occur18 ring on and after the date of the enactment of this Act. 

19 SEC. 5. EXTENSION OF TIME FOR CONTESTING IRS LEVY. 

20 (a) EXTENSION OF TIME FOR RETURN OF PROPERTY

21 SUBJECT TO LEVY.—Subsection (b) of section 6343 of the 

22 Internal Revenue Code of 1986 is amended by striking ‘‘9 

23 months’’ and inserting ‘‘3 years’’. 


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1 (b) PERIOD OF LIMITATION ON SUITS.—Subsection 

2 (c) of section 6532 of the Internal Revenue Code of 1986 

3 is amended— 

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

5 and inserting ‘‘3 years’’, and 

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

7 inserting ‘‘3-year’’. 

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

9 this section shall apply to— 

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

11 of this Act, and 

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

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

14 of the Internal Revenue Code of 1986 (without re15 gard to this section) as of such date. 

16 SEC. 6. INCREASE IN MONETARY PENALTIES FOR CERTAIN 

17 UNAUTHORIZED DISCLOSURES OF INFORMA18 TION. 

19 (a) IN GENERAL.—Paragraphs (1), (2), (3), and (4) 

20 of section 7213(a) of the Internal Revenue Code of 1986 

21 are each amended by striking ‘‘$5,000’’ and inserting 

22 ‘‘$10,000’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to disclosures made after the date 

25 of the enactment of this Act. 


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1 SEC. 7. BAN ON RAISING NEW ISSUES ON APPEAL. 

2 (a) IN GENERAL.—Chapter 77 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following new section: 

5 ‘‘SEC. 7529. PROHIBITION ON INTERNAL REVENUE SERVICE 

6 RAISING NEW ISSUES IN AN INTERNAL AP7 PEAL. 

8 ‘‘(a) IN GENERAL.—In reviewing an appeal of any 

9 determination initially made by the Internal Revenue 

10 Service, the Internal Revenue Service Office of Appeals 

11 may not consider or decide any issue that is not within 

12 the scope of the initial determination. 

13 ‘‘(b) CERTAIN ISSUES DEEMED OUTSIDE OF SCOPE

14 OF DETERMINATION.—For purposes of subsection (a), the 

15 following matters shall be considered to be not within the 

16 scope of a determination: 

17 ‘‘(1) Any issue that was not raised in a notice 

18 of deficiency or an examiner’s report which is the 

19 subject of the appeal. 

20 ‘‘(2) Any deficiency in tax which was not in21 cluded in the initial determination. 

22 ‘‘(3) Any theory or justification for a tax defi23 ciency which was not considered in the initial deter24 mination. 

25 ‘‘(c) NO INFERENCE WITH RESPECT TO ISSUES

26 RAISED BY TAXPAYERS.—Nothing in this section shall be 


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1 construed to provide any limitation in addition to any limi2 tations in effect on the date of the enactment of this sec3 tion on the right of a taxpayer to raise an issue, theory, 

4 or justification on an appeal from a determination initially 

5 made by the Internal Revenue Service that was not within 

6 the scope of the initial determination.’’. 

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

8 for chapter 77 of such Code is amended by adding at the 

9 end the following new item: 

‘‘Sec. 7529. Prohibition on Internal Revenue Service raising new issues in an 

internal appeal.’’. 

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

11 this section shall apply to matters filed or pending with 

12 the Internal Revenue Service Office of Appeals on or after 

13 the date of the enactment of this Act. 

14 SEC. 8. LIMITATION ON ENFORCEMENT OF LIENS AGAINST 

15 PRINCIPAL RESIDENCES. 

16 (a) IN GENERAL.—Section 7403(a) of the Internal 

17 Revenue Code of 1986 is amended— 

18 (1) by striking ‘‘In any case’’ and inserting the 

19 following: 

20 ‘‘(1) IN GENERAL.—In any case’’, and 

21 (2) by adding at the end the following new 

22 paragraph: 

23 ‘‘(2) LIMITATION WITH RESPECT TO PRINCIPAL

24 RESIDENCE.— 


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1 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

2 not apply to any property used as the principal 

3 residence of the taxpayer (within the meaning 

4 of section 121) unless the Secretary of the 

5 Treasury makes a written determination that— 

6 ‘‘(i) all other property of the taxpayer, 

7 if sold, is insufficient to pay the tax or dis8 charge the liability, and 

9 ‘‘(ii) such action will not create an 

10 economic hardship for the taxpayer. 

11 ‘‘(B) DELEGATION.—For purposes of this 

12 paragraph, the Secretary of the Treasury may 

13 not delegate any responsibilities under subpara14 graph (A) to any person other than— 

15 ‘‘(i) the Commissioner of Internal 

16 Revenue, or 

17 ‘‘(ii) a district director or assistant 

18 district director of the Internal Revenue 

19 Service.’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to actions filed after the date of 

22 the enactment of this Act. 


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1 SEC. 9. ADDITIONAL PROVISIONS RELATING TO MANDA2 TORY TERMINATION FOR MISCONDUCT. 

3 (a) TERMINATION OF UNEMPLOYMENT FOR INAP4 PROPRIATE REVIEW OF TAX-EXEMPT STATUS.—Section 

5 1203(b) of the Internal Revenue Service Restructuring 

6 and Reform Act of 1998 (26 U.S.C. 7804 note) is amend7 ed by striking ‘‘and’’ at the end of paragraph (9), by strik8 ing the period at the end of paragraph (10) and inserting 

9 ‘‘; and’’, and by adding at the end the following new para10 graph: 

11 ‘‘(11) in the case of any review of an applica12 tion for tax-exempt status by an organization de13 scribed in section 501(c) of the Internal Revenue 

14 Code of 1986, developing or using any methodology 

15 that applies disproportionate scrutiny to any appli16 cant based on the ideology expressed in the name or 

17 purpose of the organization.’’. 

18 (b) MANDATORY UNPAID ADMINISTRATIVE LEAVE

19 FOR MISCONDUCT.—Paragraph (1) of Section 1203(c) of 

20 the Internal Revenue Service Restructuring and Reform 

21 Act of 1998 (26 U.S.C. 7804 note) is amended by adding 

22 at the end the following new sentence: ‘‘Notwithstanding 

23 the preceding sentence, if the Commissioner of Internal 

24 Revenue takes a personnel action other than termination 

25 for an act or omission described in subsection (b), the 


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1 Commissioner shall place the employee on unpaid adminis2 trative leave for a period of not less than 30 days.’’. 

3 (c) LIMITATION ON ALTERNATIVE PUNISHMENT.— 

4 Paragraph (1) of section 1203(c) of the Internal Revenue 

5 Service Restructuring and Reform Act of 1998 (26 U.S.C. 

6 7804 note) is amended by striking ‘‘The Commissioner’’ 

7 and inserting ‘‘Except in the case of an act or omission 

8 described in subsection (b)(3)(A), the Commissioner’’. 

9 SEC. 10. EXTENSION OF DECLARATORY JUDGMENT PROCE10 DURES TO SOCIAL WELFARE ORGANIZA11 TIONS. 

12 (a) IN GENERAL.—Section 7428(a)(1) of the Internal 

13 Revenue Code of 1986 is amended by striking ‘‘or’’ at the 

14 end of subparagraph (C) and by adding at the end the 

15 following new subparagraph: 

16 ‘‘(E) with respect to the initial classifica17 tion or continuing classification of an organiza18 tion described in section 501(c)(4) which is ex19 empt from tax under section 501(a), or’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply with respect to pleading filed after 

22 the date of the enactment of this Act. 


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1 SEC. 11. REVIEW BY THE TREASURY INSPECTOR GENERAL 

2 FOR TAX ADMINISTRATION. 

3 (a) REVIEW.—Subsection (k)(1) of section 8D of the 

4 Inspector General Act of 1978 (5 U.S.C. App.) is amend5 ed— 

6 (1) in subparagraph (C), by striking ‘‘and’’ at 

7 the end; 

8 (2) by redesignating subparagraph (D) as sub9 paragraph (E); 

10 (3) by inserting after subparagraph (C) the fol11 lowing new subparagraph: 

12 ‘‘(D) shall— 

13 ‘‘(i) review any criteria employed by 

14 the Internal Revenue Service to select tax 

15 returns (including applications for recogni16 tion of tax-exempt status) for examination 

17 or audit, assessment or collection of defi18 ciencies, criminal investigation or referral, 

19 refunds for amounts paid, or any height20 ened scrutiny or review in order to deter21 mine whether the criteria discriminates 

22 against taxpayers on the basis of race, reli23 gion, or political ideology; and 

24 ‘‘(ii) consult with the Internal Rev25 enue Service on recommended amendments 

26 to such criteria in order to eliminate any 


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1 discrimination identified pursuant to the 

2 review described in clause (i); and’’; and 

3 (4) in subparagraph (E), as so redesignated, by 

4 striking ‘‘and (C)’’ and inserting ‘‘(C), and (D)’’. 

5 (b) SEMIANNUAL REPORT.—Subsection (g) of such 

6 section is amended by adding at the end the following new 

7 paragraph: 

8 ‘‘(3) Any semiannual report made by the Treas9 ury Inspector General for Tax Administration that is 

10 required pursuant to section 5(a) shall include— 

11 ‘‘(A) a statement affirming that the Treas12 ury Inspector General for Tax Administration 

13 has reviewed the criteria described in subsection 

14 (k)(1)(D) and consulted with the Internal Rev15 enue Service regarding such criteria; and 

16 ‘‘(B) a description and explanation of any 

17 such criteria that was identified as discrimina18 tory by the Treasury Inspector General for Tax 

19 Administration.’’. 

Æ 


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