II 

114TH CONGRESS 

1ST SESSION S. 949 

To provide a taxpayer bill of rights for small businesses. 

IN THE SENATE OF THE UNITED STATES 

APRIL 15, 2015 

Mr. CORNYN (for himself, Mr. HELLER, and Mr. ROBERTS) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide a taxpayer bill of rights for small businesses. 

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 ‘‘Small Business Taxpayer Bill of Rights Act of 2015’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Modification of standards for awarding of costs and certain fees. 

Sec. 3. Civil damages allowed for reckless or intentional disregard of internal 

revenue laws. 

Sec. 4. Modifications relating to certain offenses by officers and employees in 

connection with revenue laws. 

Sec. 5. Modifications relating to civil damages for unauthorized inspection or 

disclosure of returns and return information. 

Sec. 6. Interest abatement reviews. 

Sec. 7. Ban on ex parte discussions. 


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Sec. 8. Alternative dispute resolution procedures. 

Sec. 9. Extension of time for contesting IRS levy. 

Sec. 10. Waiver of installment agreement fee. 

Sec. 11. Suspension of running of period for filing petition of spousal relief and 

collection cases. 

Sec. 12. Venue for appeal of spousal relief and collection cases. 

Sec. 13. Increase in monetary penalties for certain unauthorized disclosures of 

information. 

Sec. 14. De novo tax court review of claims for equitable innocent spouse relief. 

Sec. 15. Ban on raising new issues on appeal. 

Sec. 16. Limitation on enforcement of liens against principal residences. 

Sec. 17. Additional provisions relating to mandatory termination for misconduct. 

Sec. 18. Extension of declaratory judgment procedures to social welfare organizations. 

Sec. 19. Review by the Treasury Inspector General for Tax Administration. 

1 SEC. 2. MODIFICATION OF STANDARDS FOR AWARDING OF 

2 COSTS AND CERTAIN FEES. 

3 (a) SMALL BUSINESSES ELIGIBLE WITHOUT RE4 GARD TO NET WORTH.—Subparagraph (D) of section 

5 7430(c)(4) of the Internal Revenue Code of 1986 is 

6 amended by striking ‘‘and’’ at the end of clause (i)(II), 

7 by striking the period at the end of clause (ii) and insert8 ing ‘‘, and’’, and by adding at the end the following new 

9 clause: 

10 ‘‘(iii) in the case of an eligible small 

11 business, the net worth limitation in clause 

12 (ii) of such section shall not apply.’’. 

13 (b) ELIGIBLE SMALL BUSINESS.—Paragraph (4) of 

14 section 7430(c) of the Internal Revenue Code of 1986 is 

15 amended by adding at the end the following new subpara16 graph: 

17 ‘‘(F) ELIGIBLE SMALL BUSINESS.—For 

18 purposes of subparagraph (D)(iii), the term ‘eliVerDate Sep 11 2014 03:57 Apr 18, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S949.IS S949

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1 gible small business’ means, with respect to any 

2 proceeding commenced in a taxable year— 

3 ‘‘(i) a corporation the stock of which 

4 is not publicly traded, 

5 ‘‘(ii) a partnership, or 

6 ‘‘(iii) a sole proprietorship, 

7 if the average annual gross receipts of such cor8 poration, partnership, or sole proprietorship for 

9 the 3-taxable-year period preceding such taxable 

10 year does not exceed $50,000,000. For pur11 poses of applying the test under the preceding 

12 sentence, rules similar to the rules of para13 graphs (2) and (3) of section 448(c) shall 

14 apply.’’. 

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

16 this section shall apply to proceedings commenced after 

17 the date of the enactment of this Act. 

18 SEC. 3. CIVIL DAMAGES ALLOWED FOR RECKLESS OR IN19 TENTIONAL DISREGARD OF INTERNAL REV20 ENUE LAWS. 

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

22 7433(b) of the Internal Revenue Code of 1986 is amended 

23 by striking ‘‘$1,000,000 ($100,000, in the case of neg24 ligence)’’ and inserting ‘‘$3,000,000 ($300,000, in the 

25 case of negligence)’’. 


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1 (b) EXTENSION OF TIME TO BRING ACTION.—Sec2 tion 7433(d)(3) of the Internal Revenue Code of 1986 is 

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

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

5 this section shall apply to actions of employees of the In6 ternal Revenue Service after the date of the enactment 

7 of this Act. 

8 SEC. 4. MODIFICATIONS RELATING TO CERTAIN OFFENSES 

9 BY OFFICERS AND EMPLOYEES IN CONNEC10 TION WITH REVENUE LAWS. 

11 (a) INCREASE IN PENALTY.—Section 7214 of the In12 ternal Revenue Code of 1986 is amended— 

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

14 inserting ‘‘$25,000’’, and 

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

16 inserting ‘‘$10,000’’. 

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

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

19 of this Act. 

20 SEC. 5. MODIFICATIONS RELATING TO CIVIL DAMAGES FOR 

21 UNAUTHORIZED INSPECTION OR DISCLO22 SURE OF RETURNS AND RETURN INFORMA23 TION. 

24 (a) INCREASE IN AMOUNT OF DAMAGES.—Subpara25 graph (A) of section 7431(c)(1) of the Internal Revenue 


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1 Code of 1986 is amended by striking ‘‘$1,000’’ and insert2 ing ‘‘$10,000’’. 

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

4 this section shall apply to inspections and disclosure occur5 ring on and after the date of the enactment of this Act. 

6 SEC. 6. INTEREST ABATEMENT REVIEWS. 

7 (a) FILING PERIOD FOR INTEREST ABATEMENT

8 CASES.— 

9 (1) IN GENERAL.—Subsection (h) of section 

10 6404 of the Internal Revenue Code of 1986 is 

11 amended— 

12 (A) by striking ‘‘REVIEW OF DENIAL’’ in 

13 the heading and inserting ‘‘JUDICIAL REVIEW’’, 

14 and 

15 (B) by striking ‘‘if such action is brought’’ 

16 and all that follows in paragraph (1) and in17 serting ‘‘if such action is brought— 

18 ‘‘(A) at any time after the earlier of— 

19 ‘‘(i) the date of the mailing of the 

20 Secretary’s final determination not to 

21 abate such interest, or 

22 ‘‘(ii) the date which is 180 days after 

23 the date of the filing with the Secretary (in 

24 such form as the Secretary may prescribe) 


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1 of a claim for abatement under this sec2 tion, and 

3 ‘‘(B) not later than the date which is 180 

4 days after the date described in subparagraph 

5 (A)(i).’’. 

6 (2) EFFECTIVE DATE.—The amendments made 

7 by this subsection shall apply to claims for abate8 ment of interest filed with the Secretary after the 

9 date of the enactment of this Act. 

10 (b) SMALL TAX CASE ELECTION FOR INTEREST

11 ABATEMENT CASES.— 

12 (1) IN GENERAL.—Subsection (f) of section 

13 7463 of the Internal Revenue Code of 1986 is 

14 amended— 

15 (A) by striking ‘‘and’’ at the end of para16 graph (1), 

17 (B) by striking the period at the end of 

18 paragraph (2) and inserting ‘‘, and’’, and 

19 (C) by adding at the end the following new 

20 paragraph: 

21 ‘‘(3) a petition to the Tax court under section 

22 6404(h) in which the amount of interest abatement 

23 sought does not exceed $50,000.’’. 

24 (2) EFFECTIVE DATE.—The amendments made 

25 by this subsection shall apply to— 


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1 (A) cases pending as of the day after the 

2 date of the enactment of this Act, and 

3 (B) cases commenced after such date of 

4 enactment. 

5 SEC. 7. BAN ON EX PARTE DISCUSSIONS. 

6 (a) IN GENERAL.—Notwithstanding section 

7 1001(a)(4) of the Internal Revenue Service Restructuring 

8 and Reform Act of 1998, the Internal Revenue Service 

9 shall prohibit any ex parte communications between offi10 cers in the Internal Revenue Service Office of Appeals and 

11 other Internal Revenue Service employees with respect to 

12 any matter pending before such officers. 

13 (b) TERMINATION OF EMPLOYMENT FOR MIS14 CONDUCT.—Subject to subsection (c), the Commissioner 

15 of Internal Revenue shall terminate the employment of 

16 any employee of the Internal Revenue Service if there is 

17 a final administrative or judicial determination that such 

18 employee committed any act or omission prohibited under 

19 subsection (a) in the performance of the employee’s official 

20 duties. Such termination shall be a removal for cause on 

21 charges of misconduct. 

22 (c) DETERMINATION OF COMMISSIONER.— 

23 (1) IN GENERAL.—The Commissioner of Inter24 nal Revenue may take a personnel action other than 


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1 termination for an act prohibited under subsection 

2 (a). 

3 (2) DISCRETION.—The exercise of authority 

4 under paragraph (1) shall be at the sole discretion 

5 of the Commissioner of Internal Revenue and may 

6 not be delegated to any other officer. At the sole dis7 cretion of the Commissioner of Internal Revenue, 

8 such Commissioner may establish a procedure which 

9 will be used to determine whether an individual 

10 should be referred to the Commissioner of Internal 

11 Revenue for a determination by the Commissioner 

12 under paragraph (1). 

13 (3) NO APPEAL.—Any determination of the 

14 Commissioner of Internal Revenue under this sub15 section may not be appealed in any administrative or 

16 judicial proceeding. 

17 (d) TIGTA REPORTING OF TERMINATION OR MITI18 GATION.—Section 7803(d)(1)(E) of the Internal Revenue 

19 Code of 1986 is amended by inserting ‘‘or section 7 of 

20 the Small Business Taxpayer Bill of Rights Act of 2015’’ 

21 after ‘‘1998’’. 


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1 SEC. 8. ALTERNATIVE DISPUTE RESOLUTION PROCE2 DURES. 

3 (a) IN GENERAL.—Section 7123 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(c) AVAILABILITY OF DISPUTE RESOLUTIONS.— 

7 ‘‘(1) IN GENERAL.—The procedures prescribed 

8 under subsection (b)(1) and the pilot program estab9 lished under subsection (b)(2) shall provide that a 

10 taxpayer may request mediation or arbitration in 

11 any case unless the Secretary has specifically ex12 cluded the type of issue involved in such case or the 

13 class of cases to which such case belongs as not ap14 propriate for resolution under such subsection. The 

15 Secretary shall make any determination that ex16 cludes a type of issue or a class of cases public with17 in 5 working days and provide an explanation for 

18 each determination. 

19 ‘‘(2) INDEPENDENT MEDIATORS.— 

20 ‘‘(A) IN GENERAL.—The procedures pre21 scribed under subsection (b)(1) shall provide 

22 the taxpayer an opportunity to elect to have the 

23 mediation conducted by an independent, neutral 

24 individual not employed by the Internal Rev25 enue Service Office of Appeals. 

26 ‘‘(B) COST AND SELECTION.— 


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1 ‘‘(i) IN GENERAL.—Any taxpayer 

2 making an election under subparagraph 

3 (A) shall be required— 

4 ‘‘(I) to share the costs of such 

5 independent mediator equally with the 

6 Internal Revenue Service Office of 

7 Appeals, and 

8 ‘‘(II) to limit the selection of the 

9 mediator to a roster of recognized na10 tional or local neutral mediators. 

11 ‘‘(ii) EXCEPTION.—Clause (i)(I) shall 

12 not apply to any taxpayer who is an indi13 vidual or who was a small business in the 

14 preceding calendar year if such taxpayer 

15 had an adjusted gross income that did not 

16 exceed 250 percent of the poverty level, as 

17 determined in accordance with criteria es18 tablished by the Director of the Office of 

19 Management and Budget, in the taxable 

20 year preceding the request. 

21 ‘‘(iii) SMALL BUSINESS.—For pur22 poses of clause (ii), the term ‘small busi23 ness’ has the meaning given such term 

24 under section 41(b)(3)(D)(iii). 


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1 ‘‘(3) AVAILABILITY OF PROCESS.—The proce2 dures prescribed under subsection (b)(1) and the 

3 pilot program established under subsection (b)(2) 

4 shall provide the opportunity to elect mediation or 

5 arbitration at the time when the case is first filed 

6 with the Office of Appeals and at any time before 

7 deliberations in the appeal commence.’’. 

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

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

10 of this Act. 

11 SEC. 9. EXTENSION OF TIME FOR CONTESTING IRS LEVY. 

12 (a) EXTENSION OF TIME FOR RETURN OF PROPERTY

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

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

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

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

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

18 is amended— 

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

20 and inserting ‘‘3 years’’, and 

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

22 inserting ‘‘3-year’’. 

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

24 this section shall apply to— 


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

2 of this Act, and 

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

4 month period under section 6343(b) of the Internal 

5 Revenue Code of 1986 (without regard to this sec6 tion) has not expired as of such date. 

7 SEC. 10. WAIVER OF INSTALLMENT AGREEMENT FEE. 

8 (a) IN GENERAL.—Section 6159 of the Internal Rev9 enue Code of 1986 is amended by redesignating subsection 

10 (f) as subsection (g) and by inserting after subsection (e) 

11 the following new subsection: 

12 ‘‘(f) WAIVER OF INSTALLMENT AGREEMENT FEE.— 

13 The Secretary shall waive the fees imposed on installment 

14 agreements under this section for any taxpayer with an 

15 adjusted gross income that does not exceed 250 percent 

16 of the poverty level, as determined in accordance with cri17 teria established by the Director of the Office of Manage18 ment and Budget, and who has agreed to make payments 

19 under the installment agreement by electronic payment 

20 through a debit instrument.’’. 

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

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

23 of this Act. 


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1 SEC. 11. SUSPENSION OF RUNNING OF PERIOD FOR FILING 

2 PETITION OF SPOUSAL RELIEF AND COLLEC3 TION CASES. 

4 (a) PETITIONS FOR SPOUSAL RELIEF.— 

5 (1) IN GENERAL.—Subsection (e) of section 

6 6015 of the Internal Revenue Code of 1986 is 

7 amended by adding at the end the following new 

8 paragraph: 

9 ‘‘(6) SUSPENSION OF RUNNING OF PERIOD FOR

10 FILING PETITION IN TITLE 11 CASES.—In the case 

11 of a person who is prohibited by reason of a case 

12 under title 11, United States Code, from filing a pe13 tition under paragraph (1)(A) with respect to a final 

14 determination of relief under this section, the run15 ning of the period prescribed by such paragraph for 

16 filing such a petition with respect to such final de17 termination shall be suspended for the period during 

18 which the person is so prohibited from filing such a 

19 petition, and for 60 days thereafter.’’. 

20 (2) EFFECTIVE DATE.—The amendment made 

21 by this subsection shall apply to petitions filed under 

22 section 6015(e) of the Internal Revenue Code of 

23 1986 after the date of the enactment of this Act. 

24 (b) COLLECTION PROCEEDINGS.— 


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1 (1) IN GENERAL.—Subsection (d) of section 

2 6330 of the Internal Revenue Code of 1986 is 

3 amended— 

4 (A) by striking ‘‘appeal such determination 

5 to the Tax Court’’ in paragraph (1) and insert6 ing ‘‘petition the Tax Court for review of such 

7 determination’’, 

8 (B) by striking ‘‘JUDICIAL REVIEW OF DE9 TERMINATION’’ in the heading of paragraph (1) 

10 and inserting ‘‘PETITION FOR REVIEW BY TAX

11 COURT’’, 

12 (C) by redesignating paragraph (2) as 

13 paragraph (3), and 

14 (D) by inserting after paragraph (1) the 

15 following new paragraph: 

16 ‘‘(2) SUSPENSION OF RUNNING OF PERIOD FOR

17 FILING PETITION IN TITLE 11 CASES.—In the case 

18 of a person who is prohibited by reason of a case 

19 under title 11, United States Code, from filing a pe20 tition under paragraph (1) with respect to a deter21 mination under this section, the running of the pe22 riod prescribed by such subsection for filing such a 

23 petition with respect to such determination shall be 

24 suspended for the period during which the person is 


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1 so prohibited from filing such a petition, and for 30 

2 days thereafter.’’. 

3 (2) CONFORMING AMENDMENT.—Subsection (c) 

4 of section 6320 of such Code is amended by striking 

5 ‘‘(2)(B)’’ and inserting ‘‘(3)(B)’’. 

6 (3) EFFECTIVE DATE.—The amendments made 

7 by this subsection shall apply to petitions filed under 

8 section 6330 of the Internal Revenue Code of 1986 

9 after the date of the enactment of this Act. 

10 SEC. 12. VENUE FOR APPEAL OF SPOUSAL RELIEF AND 

11 COLLECTION CASES. 

12 (a) IN GENERAL.—Paragraph (1) of section 7482(b) 

13 of the Internal Revenue Code of 1986 is amended— 

14 (1) by striking ‘‘or’’ at the end of subparagraph 

15 (E), 

16 (2) by striking the period at the end of sub17 paragraph (F)(ii) and inserting a comma, and 

18 (3) by inserting after subparagraph (F) the fol19 lowing new subparagraphs: 

20 ‘‘(G) in the case of a petition under section 

21 6015(e), the legal residence of the petitioner, or 

22 ‘‘(H) in the case of a petition under sec23 tion 6320 or 6330— 

24 ‘‘(i) the legal residence of the peti25 tioner if the petitioner is an individual, and 


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1 ‘‘(ii) the principal place of business or 

2 principal office or agency if the petitioner 

3 is an entity other than an individual.’’. 

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

5 this section shall apply to petitions filed after the date of 

6 enactment of this Act. 

7 SEC. 13. INCREASE IN MONETARY PENALTIES FOR CER8 TAIN UNAUTHORIZED DISCLOSURES OF IN9 FORMATION. 

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

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

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

13 ‘‘$10,000’’. 

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

15 this section shall apply to disclosures made after the date 

16 of the enactment of this Act. 

17 SEC. 14. DE NOVO TAX COURT REVIEW OF CLAIMS FOR EQ18 UITABLE INNOCENT SPOUSE RELIEF. 

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

20 6015(e)(1) of the Internal Revenue Code of 1986 is 

21 amended by adding at the end the following new flush sen22 tence: 

23 ‘‘Any review of a determination by the Sec24 retary with respect to a claim for equitable reVerDate Sep 11 2014 03:57 Apr 18, 2015 Jkt 049200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S949.IS S949

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1 lief under subsection (f) shall be reviewed de 

2 novo by the Tax Court.’’. 

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

4 this section shall apply to petitions filed or pending before 

5 the Tax Court on and after the date of the enactment of 

6 this Act. 

7 SEC. 15. BAN ON RAISING NEW ISSUES ON APPEAL. 

8 (a) IN GENERAL.—Chapter 77 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following new section: 

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

12 RAISING NEW ISSUES IN AN INTERNAL AP13 PEAL. 

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

15 determination initially made by the Internal Revenue 

16 Service, the Internal Revenue Service Office of Appeals 

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

18 the scope of the initial determination. 

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

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

21 following matters shall be considered to be not within the 

22 scope of a determination: 

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

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

25 subject of the appeal. 


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1 ‘‘(2) Any deficiency in tax which was not in2 cluded in the initial determination. 

3 ‘‘(3) Any theory or justification for a tax defi4 ciency which was not considered in the initial deter5 mination. 

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

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

8 construed to provide any limitation in addition to any limi9 tations in effect on the date of the enactment of this sec10 tion on the right of a taxpayer to raise an issue, theory, 

11 or justification on an appeal from a determination initially 

12 made by the Internal Revenue Service that was not within 

13 the scope of the initial determination.’’. 

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

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

16 end the following new item: 

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

internal appeal.’’. 

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

18 this section shall apply to matters filed or pending with 

19 the Internal Revenue Service Office of Appeals on or after 

20 the date of the enactment of this Act. 

21 SEC. 16. LIMITATION ON ENFORCEMENT OF LIENS AGAINST 

22 PRINCIPAL RESIDENCES. 

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

24 Revenue Code of 1986 is amended— 


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

2 following: 

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

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

5 paragraph: 

6 ‘‘(2) LIMITATION WITH RESPECT TO PRINCIPAL

7 RESIDENCE.— 

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

9 not apply to any property used as the principal 

10 residence of the taxpayer (within the meaning 

11 of section 121) unless the Secretary of the 

12 Treasury makes a written determination that— 

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

14 if sold, is insufficient to pay the tax or dis15 charge the liability, and 

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

17 economic hardship for the taxpayer. 

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

19 paragraph, the Secretary of the Treasury may 

20 not delegate any responsibilities under subpara21 graph (A) to any person other than— 

22 ‘‘(i) the Commissioner of Internal 

23 Revenue, or 


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1 ‘‘(ii) a district director or assistant 

2 district director of the Internal Revenue 

3 Service.’’. 

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

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

6 the enactment of this Act. 

7 SEC. 17. ADDITIONAL PROVISIONS RELATING TO MANDA8 TORY TERMINATION FOR MISCONDUCT. 

9 (a) TERMINATION OF UNEMPLOYMENT FOR INAP10 PROPRIATE REVIEW OF TAX-EXEMPT STATUS.—Section 

11 1203(b) of the Internal Revenue Service Restructuring 

12 and Reform Act of 1998 (26 U.S.C. 7804 note) is amend13 ed by striking ‘‘and’’ at the end of paragraph (9), by strik14 ing the period at the end of paragraph (10) and inserting 

15 ‘‘; and’’, and by adding at the end the following new para16 graph: 

17 ‘‘(11) in the case of any review of an applica18 tion for tax-exempt status by an organization de19 scribed in section 501(c) of the Internal Revenue 

20 Code of 1986, developing or using any methodology 

21 that applies disproportionate scrutiny to any appli22 cant based on the ideology expressed in the name or 

23 purpose of the organization.’’. 

24 (b) MANDATORY UNPAID ADMINISTRATIVE LEAVE

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


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1 the Internal Revenue Service Restructuring and Reform 

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

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

4 the preceding sentence, if the Commissioner of Internal 

5 Revenue takes a personnel action other than termination 

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

7 Commissioner shall place the employee on unpaid adminis8 trative leave for a period of not less than 30 days.’’. 

9 (c) LIMITATION ON ALTERNATIVE PUNISHMENT.— 

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

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

12 7804 note) is amended by striking ‘‘The Commissioner’’ 

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

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

15 SEC. 18. EXTENSION OF DECLARATORY JUDGMENT PROCE16 DURES TO SOCIAL WELFARE ORGANIZA17 TIONS. 

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

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

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

21 following new subparagraph: 

22 ‘‘(E) with respect to the initial classifica23 tion or continuing classification of an organiza24 tion described in section 501(c)(4) which is ex25 empt from tax under section 501(a), or’’. 


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

2 this section shall apply with respect to pleading filed after 

3 the date of the enactment of this Act. 

4 SEC. 19. REVIEW BY THE TREASURY INSPECTOR GENERAL 

5 FOR TAX ADMINISTRATION. 

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

7 Inspector General Act of 1978 (5 U.S.C. App.) is amend8 ed— 

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

10 the end; 

11 (2) by redesignating subparagraph (D) as sub12 paragraph (E); 

13 (3) by inserting after subparagraph (C) the fol14 lowing new subparagraph: 

15 ‘‘(D) shall— 

16 ‘‘(i) review any criteria employed by 

17 the Internal Revenue Service to select tax 

18 returns (including applications for recogni19 tion of tax-exempt status) for examination 

20 or audit, assessment or collection of defi21 ciencies, criminal investigation or referral, 

22 refunds for amounts paid, or any height23 ened scrutiny or review in order to deter24 mine whether the criteria discriminates 


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1 against taxpayers on the basis of race, reli2 gion, or political ideology; and 

3 ‘‘(ii) consult with the Internal Rev4 enue Service on recommended amendments 

5 to such criteria in order to eliminate any 

6 discrimination identified pursuant to the 

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

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

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

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

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

12 paragraph: 

13 ‘‘(3) Any semiannual report made by the Treas14 ury Inspector General for Tax Administration that is 

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

16 ‘‘(A) a statement affirming that the Treas17 ury Inspector General for Tax Administration 

18 has reviewed the criteria described in subsection 

19 (k)(1)(D) and consulted with the Internal Rev20 enue Service regarding such criteria; and 

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

22 such criteria that was identified as discrimina23 tory by the Treasury Inspector General for Tax 

24 Administration.’’. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS