such individual and any legal representative of 
such individual in contributing to such action. 
‘‘(B) NONAPPLICATION
OF
PARAGRAPH 
WHERE INDIVIDUAL IS ORIGINAL SOURCE OF 
INFORMATION.—Subparagraph (A) shall not 
apply if the information resulting in the initi-
ation of the action described in paragraph (1) 
was originally provided by the individual de-
scribed in paragraph (1). 
‘‘(3) REDUCTION IN OR DENIAL OF AWARD.— 
If the Whistleblower Office determines that the 
claim for an award under paragraph (1) or (2) is 
brought by an individual who planned and initiated 
the actions that led to the underpayment of tax or 
actions described in subsection (a)(2), then the 
Whistleblower Office may appropriately reduce such 
award. If such individual is convicted of criminal 
conduct arising from the role described in the pre-
ceding sentence, the Whistleblower Office shall deny 
any award. 
‘‘(4) APPEAL
OF
AWARD
DETERMINATION.— 
Any determination regarding an award under para-
graph (1), (2), or (3) may, within 30 days of such 
determination, be appealed to the Tax Court (and 
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the Tax Court shall have jurisdiction with respect to 
such matter). 
‘‘(5) APPLICATION OF THIS SUBSECTION.—This 
subsection shall apply with respect to any action— 
‘‘(A) against any taxpayer, but in the case 
of any individual, only if such individual’s gross 
income exceeds $200,000 for any taxable year 
subject to such action, and 
‘‘(B) if the tax, penalties, interest, addi-
tions to tax, and additional amounts in dispute 
exceed $20,000. 
‘‘(6) ADDITIONAL RULES.— 
‘‘(A) NO CONTRACT NECESSARY.—No con-
tract with the Internal Revenue Service is nec-
essary for any individual to receive an award 
under this subsection. 
‘‘(B) REPRESENTATION.—Any individual 
described in paragraph (1) or (2) may be rep-
resented by counsel. 
‘‘(C) SUBMISSION OF INFORMATION.—No 
award may be made under this subsection 
based on information submitted to the Sec-
retary unless such information is submitted 
under penalty of perjury. 
‘‘(c) WHISTLEBLOWER OFFICE.— 
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‘‘(1) IN GENERAL.—There is established in the 
Internal Revenue Service an office to be known as 
the ‘Whistleblower Office’ which— 
‘‘(A) shall at all times operate at the direc-
tion of the Commissioner and coordinate and 
consult with other divisions in the Internal Rev-
enue Service as directed by the Commissioner, 
‘‘(B) shall analyze information received 
from any individual described in subsection (b) 
and either investigate the matter itself or assign 
it to the appropriate Internal Revenue Service 
office, 
‘‘(C) shall monitor any action taken with 
respect to such matter, 
‘‘(D) shall inform such individual that it 
has accepted the individual’s information for 
further review, 
‘‘(E) may require such individual and any 
legal representative of such individual to not 
disclose any information so provided, 
‘‘(F) in its sole discretion may ask for ad-
ditional assistance from such individual or any 
legal representative of such individual, and 
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‘‘(G) shall determine the amount to be 
awarded to such individual under subsection 
(b). 
‘‘(2) REQUEST FOR ASSISTANCE.— 
‘‘(A) IN
GENERAL.—Any assistance re-
quested under paragraph (1)(F) shall be under 
the direction and control of the Whistleblower 
Office or the office assigned to investigate the 
matter under paragraph (1)(A). No individual 
or legal representative whose assistance is so re-
quested may by reason of such request rep-
resent himself or herself as an employee of the 
Federal Government. 
‘‘(B) FUNDING
OF
ASSISTANCE.—From 
the amounts available for expenditure under 
subsection (b), the Whistleblower Office may, 
with the agreement of the individual described 
in subsection (b), reimburse the costs incurred 
by any legal representative of such individual in 
providing assistance described in subparagraph 
(A). 
‘‘(d) REPORT BY SECRETARY.—The Secretary shall 
each year conduct a study and report to Congress on the 
use of this section, including— 
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‘‘(1) an analysis of the use of this section dur-
ing the preceding year and the results of such use, 
and 
‘‘(2) any legislative or administrative rec-
ommendations regarding the provisions of this sec-
tion and its application.’’. 
(b) ASSIGNMENT TO SPECIAL TRIAL JUDGES.— 
(1) IN GENERAL.—Section 7443A(b) (relating 
to proceedings which may be assigned to special trial 
judges) is amended by striking ‘‘and’’ at the end of 
paragraph (4), by redesignating paragraph (5) as 
paragraph (6), and by inserting after paragraph (4) 
the following new paragraph: 
‘‘(5) any proceeding under section 7623(b)(4), 
and’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
7443A(c) is amended by striking ‘‘or (4)’’ and in-
serting ‘‘(4), or (5)’’. 
(c) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES.—Subsection (a) of section 62 (relating 
to general rule defining adjusted gross income) is amended 
by inserting after paragraph (20) the following new para-
graph: 
‘‘(21) ATTORNEYS FEES RELATING TO AWARDS 
TO
WHISTLEBLOWERS.—Any deduction allowable 
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under this chapter for attorney fees and court costs 
paid by, or on behalf of, the taxpayer in connection 
with any award under section 7623(b) (relating to 
awards to whistleblowers). The preceding sentence 
shall not apply to any deduction in excess of the 
amount includible in the taxpayer’s gross income for 
the taxable year on account of such award.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to information provided on or after 
the date of the enactment of this Act. 
SEC. 3. INCREASE IN CRIMINAL MONETARY PENALTY LIMI-
TATION FOR THE UNDERPAYMENT OR OVER-
PAYMENT OF TAX DUE TO FRAUD. 
(a) IN GENERAL.— 
(1) ATTEMPT TO EVADE OR DEFEAT TAX.— 
Section 7201 (relating to attempt to evade or defeat 
tax) is amended— 
(A) by striking ‘‘$100,000 ($500,000’’ and 
inserting ‘‘$500,000 ($1,000,000’’, and 
(B) by striking ‘‘5 years’’ and inserting 
‘‘10 years’’. 
(2) WILLFUL FAILURE TO FILE RETURN, SUP-
PLY INFORMATION, OR PAY TAX.— 
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(A) IN GENERAL.—Section 7203 (relating 
to willful failure to file return, supply informa-
tion, or pay tax) is amended— 
(i) in the first sentence— 
(I) by striking ‘‘Any person’’ and 
inserting the following: 
‘‘(a) IN GENERAL.—Any person’’, and 
(II) by striking ‘‘$25,000’’ and 
inserting ‘‘$50,000’’, 
(ii) in the third sentence, by striking 
‘‘section’’ and inserting ‘‘subsection’’, and 
(iii) by adding at the end the fol-
lowing new subsection: 
‘‘(b) AGGRAVATED FAILURE TO FILE.— 
‘‘(1) IN GENERAL.—In the case of any failure 
described in paragraph (2), the first sentence of sub-
section (a) shall be applied by substituting— 
‘‘(A) ‘felony’ for ‘misdemeanor’, 
‘‘(B) ‘$500,000 ($1,000,000’ for ‘$50,000 
($100,000’, and 
‘‘(C) ‘10 years’ for ‘1 year’. 
‘‘(2) FAILURE DESCRIBED.—A failure described 
in this paragraph is— 
‘‘(A) a failure to make a return described 
in subsection (a) for a period of 3 or more con-
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secutive taxable years if the aggregate tax li-
ability for such period is not less than 
$100,000, or 
‘‘(B) a failure to make a return if the tax 
liability giving rise to the requirement to make 
such return is attributable to an activity which 
is a felony under any State or Federal law.’’. 
(B) PENALTY MAY BE APPLIED IN ADDI-
TION TO OTHER PENALTIES.—Section 7204 (re-
lating to fraudulent statement or failure to 
make statement to employees) is amended by 
striking ‘‘the penalty provided in section 6674’’ 
and inserting ‘‘the penalties provided in sections 
6674 and 7203(b)’’. 
(3) FRAUD AND FALSE STATEMENTS.—Section 
7206 (relating to fraud and false statements) is 
amended— 
(A) by striking ‘‘$100,000 ($500,000’’ and 
inserting ‘‘$500,000 ($1,000,000’’, and 
(B) by striking ‘‘3 years’’ and inserting ‘‘5 
years’’. 
(b) INCREASE IN MONETARY LIMITATION FOR UN-
DERPAYMENT
OR
OVERPAYMENT
OF
TAX
DUE
TO 
FRAUD.—Section 7206 (relating to fraud and false state-
ments), as amended by subsection (a)(3), is amended— 
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(1) by striking ‘‘Any person who—’’ and insert-
ing ‘‘(a) IN GENERAL.—Any person who—’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) INCREASE IN MONETARY LIMITATION FOR UN-
DERPAYMENT
OR
OVERPAYMENT
OF
TAX
DUE
TO 
FRAUD.—If any portion of any underpayment (as defined 
in section 6664(a)) or overpayment (as defined in section 
6401(a)) of tax required to be shown on a return is attrib-
utable to fraudulent action described in subsection (a), the 
applicable dollar amount under subsection (a) shall in no 
event be less than an amount equal to such portion. A 
rule similar to the rule under section 6663(b) shall apply 
for purposes of determining the portion so attributable.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to actions, and failures to act, oc-
curring after the date of the enactment of this Act. 
Æ 
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