I 

117TH CONGRESS 

1ST SESSION H. R. 3738 

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

and enhance taxpayer protections, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 4, 2021 

Mr. VELA introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

taxpayer burdens and enhance taxpayer protections, and 

for other purposes. 

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

3 SECTION 1. SHORT TITLE; ETC. 

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

5 ‘‘John Lewis Taxpayer Protection Act’’. 

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

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


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

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

4 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—PROTECTION OF TAXPAYERS FROM ABUSIVE TAX 

COLLECTION PRACTICES 

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

TITLE II—RELIEF FOR TAXPAYERS 

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

of individuals. 

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

for Taxpayer Assistance order. 

Sec. 203. Limitation on levy on retirement savings. 

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

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

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

TITLE III—ASSISTANCE LOW-INCOME TAXPAYERS 

Sec. 301. EITC outreach. 

TITLE IV—ENSURE TAXPAYER ACCESS TO COMPETENT TAX 

RETURN PREPARERS 

Sec. 401. Regulation of tax return preparers. 

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

TITLE V—INCREASE FUNDING FOR SERVICES TO TAXPAYERS 

Sec. 501. Low-income taxpayer clinics. 

Sec. 502. Internal Revenue Service taxpayer services appropriations. 

5 TITLE I—PROTECTION OF TAX6 PAYERS FROM ABUSIVE TAX 

7 COLLECTION PRACTICES 

8 SEC. 101. REPEAL OF RULES RELATING TO TAX COLLEC9 TION CONTRACTS. 

10 (a) IN GENERAL.—Sections 6306 and 6307 are here11 by repealed, and the table of sections for subchapter A 


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1 of chapter 64 is amended by striking the items relating 

2 to sections 6306 and 6307. 

3 (b) CONFORMING AMENDMENTS.— 

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

5 paragraph (12). 

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

7 ‘‘, as in effect on the day before the date of the en8 actment of the John Lewis Taxpayer Protection 

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

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

11 ‘‘6306,’’. 

12 (4) Section 7811 is amended by striking sub13 section (g). 

14 TITLE II—RELIEF FOR 

15 TAXPAYERS 

16 SEC. 201. DE MINIMIS EXCLUSION FROM GROSS INCOME 

17 FOR DISCHARGE OF INDEBTEDNESS OF INDI18 VIDUALS. 

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

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

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

22 ‘‘, or’’, and by adding at the end the following new sub23 paragraph: 

24 ‘‘(F) the indebtedness discharged is quali25 fied individual indebtedness.’’. 


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1 (b) QUALIFIED INDIVIDUAL INDEBTEDNESS.—Sec2 tion 108 is amended by adding at the end the following 

3 new subsection: 

4 ‘‘(j) SPECIAL RULES RELATING TO QUALIFIED INDI5 VIDUAL INDEBTEDNESS.— 

6 ‘‘(1) QUALIFIED INDIVIDUAL INDEBTEDNESS

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

8 ‘qualified individual indebtedness’ means any indebt9 edness of an individual other than indebtedness 

10 which is— 

11 ‘‘(A) discharged on account of services per12 formed for the lender, or 

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

14 to such individual. 

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

16 treated as related to another person if the relation17 ship between such persons would result in a dis18 allowance of losses under section 267 or 707(b). 

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

20 qualified individual indebtedness excluded from gross 

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

22 any individual for any taxable year shall not exceed 

23 the excess of— 

24 ‘‘(A) $10,000, over 


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1 ‘‘(B) the aggregate amount excluded from 

2 the gross income of such individual under sub3 section (a)(1) for such taxable year and all 

4 prior taxable years (determined without regard 

5 to any amount excludable from gross income 

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

7 year). 

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

9 return— 

10 ‘‘(A) the dollar limitation under paragraph 

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

12 and 

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

14 indebtedness of either spouse as indebtedness of 

15 the other spouse.’’. 

16 (c) COORDINATION.— 

17 (1) IN GENERAL.—Section 108(a)(2) is amend18 ed by adding at the end the following new subpara19 graph: 

20 ‘‘(D) PRECEDENCE OF INDIVIDUAL IN21 DEBTEDNESS EXCLUSION.— 

22 ‘‘(i) INDIVIDUAL INDEBTEDNESS EX23 CLUSION TAKES PRECEDENCE OVER IN24 SOLVENCY EXCLUSION UNLESS ELECTED

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


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1 apply to a discharge to which paragraph 

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

3 apply paragraph (1)(B) in lieu of para4 graph (1)(F). 

5 ‘‘(ii) OTHER EXCLUSIONS TAKE PREC6 EDENCE.—Subparagraph (F) shall not 

7 apply to a discharge to which subpara8 graph (C), (D), or (E) applies.’’. 

9 (2) TITLE 11 EXCLUSION TAKES PRECE10 DENCE.—Section 108(a)(2)(A) is amended by strik11 ing ‘‘and (E)’’ and inserting ‘‘(E), and (F)’’. 

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

13 this section shall apply to discharges of indebtedness after 

14 the date of the enactment of this Act. 

15 SEC. 202. REPEAL SUSPENSION OF STATUTE OF LIMITA16 TIONS DURING PENDING APPLICATION FOR 

17 TAXPAYER ASSISTANCE ORDER. 

18 (a) IN GENERAL.—Section 7811 is amended by strik19 ing subsection (d) and redesignating subsections (e), (f), 

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

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

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

23 ‘‘section 7811(f)’’. 


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

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

3 of this Act. 

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

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

6 adding at the end the following new paragraph: 

7 ‘‘(14) RETIREMENT SAVINGS.— 

8 ‘‘(A) IN GENERAL.—Any individual’s inter9 est in a qualified retirement plan— 

10 ‘‘(i) before such individual has at11 tained normal retirement age (or 65 in the 

12 case of an individual retirement account or 

13 a plan which does not specify a normal re14 tirement age), or 

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

16 if the levy would create an economic hard17 ship due to the financial condition of the 

18 taxpayer (within the meaning of 

19 6343(a)(1)(D)). 

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

21 purposes of this paragraph, the term ‘qualified 

22 retirement plan’ means— 

23 ‘‘(i) an individual retirement account, 

24 or 


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1 ‘‘(ii) a defined contribution plan 

2 which— 

3 ‘‘(I) is described in section 

4 401(a) and which includes a trust ex5 empt from tax under section 501(a), 

6 ‘‘(II) is described in subsection 

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

8 ‘‘(III) is an eligible deferred com9 pensation plan (as defined in section 

10 457(b)) of an eligible employer de11 scribed in section 457(e)(1)(A). 

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

13 Subparagraph (A) shall not apply if the Sec14 retary determines that— 

15 ‘‘(i) the taxpayer filed a fraudulent re16 turn, or 

17 ‘‘(ii) the taxpayer acted with the in18 tent to evade or defeat any tax imposed by 

19 this title or the collection or payment 

20 thereof.’’. 

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

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

23 2020. 


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1 SEC. 204. TOLLING OF LIMITATION ON LEVY RECOVERY 

2 FOR DISABLED TAXPAYER. 

3 (a) IN GENERAL.—Section 6343(b) is amended by in4 serting after the third sentence: ‘‘In the case of an indi5 vidual, the running of such 9-month period shall be sus6 pended during any period of such individual’s life that 

7 such individual is financially disabled (as defined in sec8 tion 6511(h)).’’. 

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

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

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

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

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

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

15 SEC. 205. EXTENSION OF PERIOD TO WITHDRAW FRIVO16 LOUS SUBMISSION. 

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

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

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

20 this section shall apply to notices provided after December 

21 31, 2021. 

22 SEC. 206. REPEAL OF PARTIAL PAYMENT REQUIREMENT 

23 ON SUBMISSIONS OF OFFERS-IN-COM24 PROMISE. 

25 (a) IN GENERAL.—Section 7122 is amended by strik26 ing subsection (c) and by redesignating subsections (d), 


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1 (e), (f), and (g) as subsections (c), (d), (e), and (f), respec2 tively. 

3 (b) CONFORMING AMENDMENTS.— 

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

5 ‘‘and’’ at the end of the subparagraph (A), by strik6 ing ‘‘, and’’ at the end of subparagraph (B) and in7 serting a period, and by striking subparagraph (C). 

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

9 is amended by adding at the end the following new 

10 subsection: 

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

12 any assessed tax or other amounts imposed under this title 

13 with respect to such tax which is the subject of an offer14 in-compromise, such tax or other amounts shall be reduced 

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

16 such offer-in-compromise.’’. 

17 (3) Section 6159(g) is amended by striking 

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

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

20 this section shall apply to offers submitted after the date 

21 of the enactment of this Act. 


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1 TITLE III—ASSISTANCE LOW2 INCOME TAXPAYERS 

3 SEC. 301. EITC OUTREACH. 

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

5 at the end the following new subsection: 

6 ‘‘(o) NOTIFICATION OF POTENTIAL ELIGIBILITY FOR

7 CREDIT AND REFUND.— 

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

9 on an annual basis, the Secretary shall provide no10 tice to each taxpayer who— 

11 ‘‘(A) did not claim the credit under sub12 section (a) for any preceding taxable year for 

13 which credit or refund is not precluded by sec14 tion 6511, and 

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

16 such taxable year based on return or return in17 formation (as defined in section 6103(b)) avail18 able to the Secretary, 

19 that such taxpayer may be eligible to claim such 

20 credit and a refund for such taxable year. 

21 ‘‘(2) NOTICE.—Notice provided under para22 graph (1) shall be in writing and sent to the last 

23 known address of the taxpayer.’’. 

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

25 this section shall take effect on January 1, 2021. 


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1 TITLE IV—ENSURE TAXPAYER 

2 ACCESS TO COMPETENT TAX 

3 RETURN PREPARERS 

4 SEC. 401. REGULATION OF TAX RETURN PREPARERS. 

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

6 States Code, is amended— 

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

8 following: 

9 ‘‘(1) regulate— 

10 ‘‘(A) the practice of representatives of per11 sons before the Department of the Treasury; 

12 and 

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

14 and’’, and 

15 (2) in paragraph (2)— 

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

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

18 and 

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

20 returns, claims for refund, or documents in con21 nection with tax returns or claims for refund’’ 

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

23 (b) AUTHORITY TO SANCTION REGULATED TAX RE24 TURN PREPARERS.—Section 330(c) of title 31, United 

25 States Code, is amended— 


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

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

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

4 threatens’’ and all that follows and inserting the fol5 lowing: ‘‘misleads or threatens— 

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

7 prospective person being represented; or 

8 ‘‘(B) any person or prospective person 

9 whose tax return, claim for refund, or document 

10 in connection with a tax return or claim for re11 fund, is being or may be prepared.’’. 

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

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

14 the end the following new subsection: 

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

16 section— 

17 ‘‘(1) IN GENERAL.—The term ‘tax return pre18 parer’ has the meaning given such term under sec19 tion 7701(a)(36) of the Internal Revenue Code of 

20 1986. 

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

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

23 6696(e)(1) of such Code. 


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

2 refund’ has the meaning given such term under sec3 tion 6696(e)(2) of such Code.’’. 

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

5 this section shall apply with respect to returns and claims 

6 for refund for taxable years beginning after the date of 

7 the enactment of this Act. 

8 SEC. 402. TAX INFORMATION DISCLOSURE RELATING TO 

9 TAX RETURN PREPARER MISCONDUCT. 

10 Section 6103(k), as amended by section 101, is 

11 amended by inserting after paragraph (11) at the end the 

12 following new paragraph: 

13 ‘‘(12) DISCLOSURE RELATING TO TAX RETURN

14 PREPARER MISCONDUCT.—Under such procedures as 

15 the Secretary may prescribe, the Secretary may dis16 close returns or return information to the extent 

17 necessary to publish final decisions by the Internal 

18 Revenue Service Office of Professional Responsibility 

19 relating to tax return preparer misconduct.’’. 

20 TITLE V—INCREASE FUNDING 

21 FOR SERVICES TO TAXPAYERS 

22 SEC. 501. LOW-INCOME TAXPAYER CLINICS. 

23 (a) INCREASE IN AUTHORIZED GRANTS.—Section 

24 7526(c)(1) is amended by striking ‘‘$6,000,000’’ and in25 serting ‘‘$20,000,000’’. 


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

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

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

4 this section shall apply with respect to grants made after 

5 the date of the enactment of this Act. 

6 SEC. 502. INTERNAL REVENUE SERVICE TAXPAYER SERV7 ICES APPROPRIATIONS. 

8 There is hereby appropriated, out of any money in 

9 the Treasury not otherwise appropriated, for the fiscal 

10 year ending September 30, 2022, for necessary expenses 

11 of the Internal Revenue Service to provide taxpayer serv12 ices, including pre-filing assistance and education, filing 

13 and account services, taxpayer advocacy services, and 

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

15 rates as may be determined by the Commissioner, 

16 $2,406,000,000. 

Æ 


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