I 
107TH CONGRESS 
2D SESSION 
H. R. 5549
To amend the Internal Revenue Code of 1986 to provide for improved 
administrative efficiency and confidentiality under the internal revenue laws. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2002
Mr. HOUGHTON 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 provide 
for improved administrative efficiency and confidentiality 
under the internal revenue laws.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Tax Administration Efficiency and Confidentiality Act of 
2002’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
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shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc. 
TITLE I—EFFICIENCY OF TAX ADMINISTRATION 
Sec. 101. Revisions relating to termination of employment of Internal Revenue 
Service employees for misconduct. 
Sec. 102. Confirmation of authority of Tax Court to apply doctrine of equitable 
recoupment. 
Sec. 103. Jurisdiction of Tax Court over collection due process cases. 
Sec. 104. Office of Chief Counsel review of offers in compromise. 
Sec. 105. 15-day delay in due date for electronically filed individual income tax 
returns. 
TITLE II—CONFIDENTIALITY AND DISCLOSURE 
Sec. 201. Collection activities with respect to joint return disclosable to either 
spouse based on oral request. 
Sec. 202. Taxpayer representatives not subject to examination on sole basis of 
representation of taxpayers. 
Sec. 203. Compliance by contractors with confidentiality safeguards. 
Sec. 204. Higher standards for requests for and consents to disclosure. 
Sec. 205. Notice to taxpayer concerning administrative determination of brows-
ing; annual report. 
Sec. 206. Expanded disclosure in emergency circumstances. 
TITLE III—OTHER PROVISIONS 
Sec. 301. Better means of communicating with taxpayers. 
Sec. 302. Enrolled agents. 
Sec. 303. Financial management service fees. 
Sec. 304. Amendment to Treasury auction reforms.
TITLE I—EFFICIENCY OF TAX 
ADMINISTRATION 
SEC. 101. REVISIONS RELATING TO TERMINATION OF EM-
PLOYMENT OF INTERNAL REVENUE SERVICE 
EMPLOYEES FOR MISCONDUCT. 
(a) IN GENERAL.—Subchapter A of chapter 80 (re-
lating to application of internal revenue laws) is amended 
by inserting after section 7804 the following new section: 
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‘‘SEC. 7804A. DISCIPLINARY ACTIONS FOR MISCONDUCT. 
‘‘(a) DISCIPLINARY ACTIONS.—
‘‘(1) IN GENERAL.—Subject to subsection (c), 
the Commissioner shall take an action in accordance 
with the guidelines established under paragraph (2) 
against any employee of the Internal Revenue Serv-
ice if there is a final administrative or judicial deter-
mination that such employee committed any act or 
omission described under subsection (b) in the per-
formance of the employee’s official duties or where 
a nexus to the employee’s position exists. 
‘‘(2) GUIDELINES.—The Commissioner shall 
issue guidelines for determining the appropriate level 
of discipline, up to and including termination of em-
ployment, for committing any act or omission de-
scribed under subsection (b). 
‘‘(b) ACTS OR OMISSIONS.—The acts or omissions de-
scribed under this subsection are—
‘‘(1) willful failure to obtain the required ap-
proval signatures on documents authorizing the sei-
zure of a taxpayer’s home, personal belongings, or 
business assets; 
‘‘(2) willfully providing a false statement under 
oath with respect to a material matter involving a 
taxpayer or taxpayer representative; 
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‘‘(3) with respect to a taxpayer or taxpayer rep-
resentative, the willful violation of—
‘‘(A) any right under the Constitution of 
the United States; 
‘‘(B) any civil right established under—
‘‘(i) title VI or VII of the Civil Rights 
Act of 1964; 
‘‘(ii) title IX of the Education Amend-
ments of 1972; 
‘‘(iii) the Age Discrimination in Em-
ployment Act of 1967; 
‘‘(iv) the Age Discrimination Act of 
1975; 
‘‘(v) section 501 or 504 of the Reha-
bilitation Act of 1973; or
‘‘(vi) title I of the Americans with 
Disabilities Act of 1990; or 
‘‘(C) the Internal Revenue Service policy 
on unauthorized inspection of returns or return 
information; 
‘‘(4) willfully falsifying or destroying documents 
to conceal mistakes made by any employee with re-
spect to a matter involving a taxpayer or taxpayer 
representative; 
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‘‘(5) assault or battery on a taxpayer or tax-
payer representative, but only if there is a criminal 
conviction, or a final adverse judgment by a court in 
a civil case, with respect to the assault or battery; 
‘‘(6) willful violations of this title, Department 
of the Treasury regulations, or policies of the Inter-
nal Revenue Service (including the Internal Revenue 
Manual) for the purpose of retaliating against, or 
harassing, a taxpayer or taxpayer representative; 
‘‘(7) willful misuse of the provisions of section 
6103 for the purpose of concealing information from 
a congressional inquiry; 
‘‘(8) willful failure to file any return of tax re-
quired under this title on or before the date pre-
scribed therefor (including any extensions) when a 
tax is due and owing, unless such failure is due to 
reasonable cause and not due to willful neglect; 
‘‘(9) willful understatement of Federal tax li-
ability, unless such understatement is due to reason-
able cause and not due to willful neglect; and 
‘‘(10) threatening to audit a taxpayer, or to 
take other action under this title, for the purpose of 
extracting personal gain or benefit. 
‘‘(c) DETERMINATIONS OF COMMISSIONER.—
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‘‘(1) IN
GENERAL.—The Commissioner may 
take a personnel action other than a disciplinary ac-
tion provided for in the guidelines under subsection 
(a)(2) for an act or omission described under sub-
section (b). 
‘‘(2) DISCRETION.—The exercise of authority 
under paragraph (1) shall be at the sole discretion 
of the Commissioner and may not be delegated to 
any other officer. The Commissioner, in his sole dis-
cretion, may establish a procedure to determine if an 
individual should be referred to the Commissioner 
for a determination by the Commissioner under 
paragraph (1). 
‘‘(3) NO APPEAL.—Notwithstanding any other 
provision of law, any determination of the Commis-
sioner under this subsection may not be reviewed in 
any administrative or judicial proceeding. A finding 
that an act or omission described under subsection 
(b) occurred may be reviewed. 
‘‘(d) DEFINITION.—For the purposes of the provi-
sions described in clauses (i), (ii), and (iv) of subsection 
(b)(3)(B), references to a program or activity regarding 
Federal financial assistance or an education program or 
activity receiving Federal financial assistance shall include 
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any program or activity conducted by the Internal Rev-
enue Service for a taxpayer. 
‘‘(e) ANNUAL REPORT.—The Commissioner shall 
submit to Congress annually a report on disciplinary ac-
tions under this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 80 is amended by inserting after the item re-
lating to section 7804 the following new item:
‘‘Sec. 7804A. Disciplinary actions for misconduct.’’.
(c) REPEAL
OF SUPERSEDED SECTION.—Section 
1203 of the Internal Revenue Service Restructuring and 
Reform Act of 1998 (Public Law 105–206; 112 Stat. 720) 
is repealed. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 102. CONFIRMATION OF AUTHORITY OF TAX COURT 
TO 
APPLY 
DOCTRINE 
OF 
EQUITABLE 
RECOUPMENT. 
(a) CONFIRMATION OF AUTHORITY OF TAX COURT 
TO APPLY DOCTRINE OF EQUITABLE RECOUPMENT.—
Subsection (b) of section 6214 (relating to jurisdiction 
over other years and quarters) is amended by adding at 
the end the following new sentence: ‘‘Notwithstanding the 
preceding sentence, the Tax Court may apply the doctrine 
of equitable recoupment to the same extent that it is avail-
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able in civil tax cases before the district courts of the 
United States and the United States Court of Federal 
Claims.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any action or proceeding in the 
Tax Court with respect to which a decision has not become 
final (as determined under section 7481 of the Internal 
Revenue Code of 1986) as of the date of the enactment 
of this Act. 
SEC. 103. JURISDICTION OF TAX COURT OVER COLLECTION 
DUE PROCESS CASES. 
(a) IN GENERAL.—Section 6330(d)(1) (relating to 
judicial review of determination) is amended to read as 
follows: 
‘‘(1) JUDICIAL REVIEW OF DETERMINATION.—
The person may, within 30 days of a determination 
under this section, appeal such determination to the 
Tax Court (and the Tax Court shall have jurisdic-
tion with respect to such matter).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to judicial appeals filed after 
the date of the enactment of this Act. 
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SEC. 104. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS 
IN COMPROMISE. 
(a) IN GENERAL.—Section 7122(b) (relating to 
record) is amended by striking ‘‘Whenever a compromise’’ 
and all that follows through ‘‘his delegate’’ and inserting 
‘‘If the Secretary determines that an opinion of the Gen-
eral Counsel for the Department of the Treasury, or the 
Counsel’s delegate, is required with respect to a com-
promise, there shall be placed on file in the office of the 
Secretary such opinion’’. 
(b) CONFORMING AMENDMENTS.—Section 7122(b) is 
amended by striking the second and third sentences. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to offers-in-compromise submitted 
or pending on or after the date of the enactment of this 
Act.
SEC. 105. 15-DAY DELAY IN DUE DATE FOR ELECTRONI-
CALLY FILED INDIVIDUAL INCOME TAX RE-
TURNS. 
(a) IN GENERAL.—Section 6072 (relating to time for 
filing income tax returns) is amended by adding at the 
end the following new subsection: 
‘‘(f) ELECTRONICALLY FILED RETURNS OF INDIVID-
UALS.—
‘‘(1) IN GENERAL.—Returns of an individual 
under section 6012 or 6013 (other than an indi-
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vidual to whom subsection (c) applies) which are 
filed electronically—
‘‘(A) in the case of returns filed on the 
basis of a calendar year, shall be filed on or be-
fore the 30th day of April following the close of 
the calendar year, and 
‘‘(B) in the case of returns filed on the 
basis of a fiscal year, shall be filed on or before 
the last day of the 4th month following the 
close of the fiscal year. 
‘‘(2) 
ELECTRONIC
FILING.—Paragraph 
(1) 
shall not apply to any return unless—
‘‘(A) such return is accepted by the Sec-
retary, and 
‘‘(B) the balance due (if any) shown on 
such return is paid electronically in a manner 
prescribed by the Secretary. 
‘‘(3) SPECIAL RULES.—
‘‘(A) ESTIMATED TAX.—If—
‘‘(i) paragraph (1) applies to an indi-
vidual for any taxable year, and 
‘‘(ii) there is an overpayment of tax 
shown on the return for such year which 
the individual allows against the individ-
ual’s obligation under section 6641, 
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then, with respect to the amount so allowed, 
any reference in section 6641 to the April 15 
following such taxable year shall be treated as 
a reference to April 30. 
‘‘(B) REFERENCES TO DUE DATE.—Para-
graph (1) shall apply solely for purposes of de-
termining the due date for the individual’s obli-
gation to file and pay tax and, except as other-
wise provided by the Secretary, shall be treated 
as an extension of the due date for any other 
purpose under this title.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2001. 
TITLE II—CONFIDENTIALITY 
AND DISCLOSURE 
SEC. 201. COLLECTION ACTIVITIES WITH RESPECT TO 
JOINT RETURN DISCLOSABLE TO EITHER 
SPOUSE BASED ON ORAL REQUEST. 
(a) IN GENERAL.—Paragraph (8) of section 6103(e) 
(relating to disclosure of collection activities with respect 
to joint return) is amended by striking ‘‘in writing’’ the 
first place it appears. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to requests made after the date 
of the enactment of this Act. 
SEC. 202. TAXPAYER REPRESENTATIVES NOT SUBJECT TO 
EXAMINATION ON SOLE BASIS OF REPRESEN-
TATION OF TAXPAYERS. 
(a) IN GENERAL.—Subsection (h) of section 6103 
(relating to disclosure to certain Federal officers and em-
ployees for purposes of tax administration, etc.) is amend-
ed by adding at the end the following new paragraph: 
‘‘(7) TAXPAYER REPRESENTATIVES.—Notwith-
standing paragraph (1), the return of the represent-
ative of a taxpayer whose return is being examined 
by an officer or employee of the Department of the 
Treasury shall not be open to inspection by such of-
ficer or employee on the sole basis of the representa-
tive’s relationship to the taxpayer unless a super-
visor of such officer or employee has approved the 
inspection of the return of such representative on a 
basis other than by reason of such relationship.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
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SEC. 203. COMPLIANCE BY CONTRACTORS WITH CONFIDEN-
TIALITY SAFEGUARDS. 
(a) IN GENERAL.—Section 6103(p) (relating to State 
law requirements) is amended by adding at the end the 
following new paragraph: 
‘‘(9) DISCLOSURE TO CONTRACTORS.—Notwith-
standing any other provision of this section, no re-
turn or return information shall be disclosed by any 
officer or employee of any Federal agency or State 
to any contractor of such agency or State unless 
such agency or State—
‘‘(A) has requirements in effect which re-
quire each contractor of such agency or State 
which would have access to returns or return 
information to provide safeguards (within the 
meaning of paragraph (4)) to protect the con-
fidentiality of such returns or return informa-
tion, 
‘‘(B) agrees to conduct an annual, on-site 
review (mid-point review in the case of con-
tracts of less than 1 year in duration) of each 
contractor to determine compliance with such 
requirements, 
‘‘(C) submits the findings of the most re-
cent review conducted under subparagraph (B) 
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to the Secretary as part of the report required 
by paragraph (4)(E), and 
‘‘(D) certifies to the Secretary for the most 
recent annual period that all contractors are in 
compliance with all such requirements. 
The certification required by subparagraph (D) shall 
include the name and address of each contractor, a 
description of the contract of the contractor with the 
Federal agency or State, and the duration of such 
contract.’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (B) 
of section 6103(p)(8) is amended by inserting ‘‘or para-
graph (9)’’ after ‘‘subparagraph (A)’’. 
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to disclosures made after De-
cember 31, 2002.
(2) CERTIFICATIONS.—The first certification 
under section 6103(p)(9)(D) of the Internal Revenue 
Code of 1986, as added by subsection (a), shall be 
made with respect to calendar year 2003. 
SEC. 204. HIGHER STANDARDS FOR REQUESTS FOR AND 
CONSENTS TO DISCLOSURE. 
(a) IN GENERAL.—Subsection (c) of section 6103 
(relating to disclosure of returns and return information 
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to designee of taxpayer) is amended by adding at the end 
the following new paragraphs: 
‘‘(2) REQUIREMENTS
FOR
VALID
REQUESTS 
AND CONSENTS.—A request for or consent to disclo-
sure under paragraph (1) shall only be valid for pur-
poses of this section or sections 7213, 7213A, or 
7431 if—
‘‘(A) at the time of execution, such request 
or consent designates a recipient of such disclo-
sure and is dated, and 
‘‘(B) at the time such request or consent 
is submitted to the Secretary, the submitter of 
such request or consent certifies, under penalty 
of perjury, that such request or consent com-
plied with subparagraph (A). 
‘‘(3) RESTRICTIONS
ON
PERSONS
OBTAINING 
INFORMATION.—Any person shall, as a condition for 
receiving return or return information under para-
graph (1)— 
‘‘(A) ensure that such return and return 
information is kept confidential, 
‘‘(B) use such return and return informa-
tion only for the purpose for which it was re-
quested, and 
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‘‘(C) not disclose such return and return 
information except to accomplish the purpose 
for which it was requested, unless a separate 
consent from the taxpayer is obtained. 
‘‘(4) REQUIREMENTS
FOR
FORM
PRESCRIBED 
BY SECRETARY.—For purposes of this subsection, 
the Secretary shall prescribe a form for requests and 
consents which shall— 
‘‘(A) contain a warning, prominently dis-
played, informing the taxpayer that the form 
should not be signed unless it is completed, 
‘‘(B) state that if the taxpayer believes 
there is an attempt to coerce him to sign an in-
complete or blank form, the taxpayer should re-
port the matter to the Treasury Inspector Gen-
eral for Tax Administration, and 
‘‘(C) contain the address and telephone 
number of the Treasury Inspector General for 
Tax Administration.’’. 
(b) REPORT.—Not later than 18 months after the 
date of the enactment of this Act, the Treasury Inspector 
General for Tax Administration shall submit a report to 
the Congress on compliance with the designation and cer-
tification requirements applicable to requests for or con-
sent to disclosure of returns and return information under 
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section 6103(c) of the Internal Revenue Code of 1986, as 
amended by subsection (a). Such report shall—
(1) evaluate (on the basis of random sampling) 
whether—
(A) the amendment made by subsection (a) 
is achieving the purposes of this section; 
(B) requesters and submitters for such dis-
closure are continuing to evade the purposes of 
this section and, if so, how; and 
(C) the sanctions for violations of such re-
quirements are adequate; and 
(2) include such recommendations that the 
Treasury Inspector General for Tax Administration 
considers necessary or appropriate to better achieve 
the purposes of this section. 
(c) CONFORMING AMENDMENT.—Section 6103(c) is 
amended by striking ‘‘TAXPAYER.—The Secretary’’ and 
inserting ‘‘TAXPAYER.—
‘‘(1) IN GENERAL.—The Secretary’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to requests and consents made 
after 3 months after the date of the enactment of this 
Act.
SEC. 205. NOTICE TO TAXPAYER CONCERNING ADMINIS-
TRATIVE DETERMINATION OF BROWSING; AN-
NUAL REPORT. 
(a) NOTICE TO TAXPAYER.—Subsection (e) of section 
7431 (relating to notification of unlawful inspection and 
disclosure) is amended by adding at the end the following: 
‘‘The Secretary shall also notify such taxpayer if the 
Treasury Inspector General for Tax Administration deter-
mines that such taxpayer’s return or return information 
was inspected or disclosed in violation of any of the provi-
sions specified in paragraph (1), (2), or (3).’’. 
(b) REPORTS.—Subsection (p) of section 6103 (relat-
ing to procedure and recordkeeping), as amended by sec-
tion 245, is further amended by adding at the end the 
following new paragraph: 
‘‘(10) REPORT ON UNAUTHORIZED DISCLOSURE 
AND INSPECTION.—As part of the report required by
paragraph (3)(C) for each calendar year, the Sec-
retary shall furnish information regarding the unau-
thorized disclosure and inspection of returns and re-
turn information, including the number, status, and 
results of—
‘‘(A) administrative investigations, 
‘‘(B) civil lawsuits brought under section 
7431 (including the amounts for which such 
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lawsuits were settled and the amounts of dam-
ages awarded), and 
‘‘(C) criminal prosecutions.’’. 
(c) EFFECTIVE DATE.—
(1) NOTICE.—The amendment made by sub-
section (a) shall apply to determinations made after 
the date of the enactment of this Act. 
(2) REPORTS.—The amendment made by sub-
section (b) shall apply to calendar years ending after 
the date of the enactment of this Act. 
SEC. 206. EXPANDED DISCLOSURE IN EMERGENCY CIR-
CUMSTANCES. 
(a) IN GENERAL.—Section 6103(i)(3)(B) (relating to 
danger of death or physical injury) is amended by striking 
‘‘or State’’ and inserting ‘‘, State, or local’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
TITLE III—OTHER PROVISIONS. 
SEC. 301. BETTER MEANS OF COMMUNICATING WITH TAX-
PAYERS. 
Not later than 18 months after the date of the enact-
ment of this Act, the Treasury Inspector General for Tax 
Administration shall submit a report to Congress evalu-
ating whether technological advances, such as e-mail and 
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facsimile transmission, permit the use of alternative 
means for the Internal Revenue Service to communicate 
with taxpayers. 
SEC. 302. ENROLLED AGENTS. 
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the 
following new section: 
‘‘SEC. 7527. ENROLLED AGENTS. 
‘‘(a) IN GENERAL.—The Secretary may prescribe 
such regulations as may be necessary to regulate the con-
duct of enrolled agents in regards to their practice before 
the Internal Revenue Service. 
‘‘(b) USE OF CREDENTIALS.—Any enrolled agents 
properly licensed to practice as required under rules pro-
mulgated under section (a) herein shall be allowed to use 
the credentials or designation as ‘enrolled agent’, ‘EA’, or 
‘E.A.’.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 7525. Enrolled agents.’’.
(c) PRIOR REGULATIONS.—Nothing in the amend-
ments made by this section shall be construed to have any 
effect on part 10 of title 31, Code of Federal Regulations, 
or any other Federal rule or regulation issued before the 
date of the enactment of this Act. 
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SEC. 303. FINANCIAL MANAGEMENT SERVICE FEES. 
Notwithstanding any other provision of law, the Fi-
nancial Management Service may charge the Internal Rev-
enue Service, and the Internal Revenue Service may pay 
the Financial Management Service, a fee sufficient to 
cover the full cost of implementing a continuous levy pro-
gram under subsection (h) of section 6331 of the Internal 
Revenue Code of 1986. Any such fee shall be based on 
actual levies made and shall be collected by the Financial 
Management Service by the retention of a portion of 
amounts collected by levy pursuant to that subsection. 
Amounts received by the Financial Management Service 
as fees under that subsection shall be deposited into the 
account of the Department of the Treasury under section 
3711(g)(7) of title 31, United States Code, and shall be 
collected and accounted for in accordance with the provi-
sions of that section. The amount credited against the tax-
payer’s liability on account of the continuous levy shall 
be the amount levied, without reduction for the amount 
paid to the Financial Management Service as a fee. 
SEC. 304. AMENDMENT TO TREASURY AUCTION REFORMS. 
(a) IN GENERAL.—Clause (i) of section 202(c)(4)(B) 
of the Government Securities Act Amendments of 1993 
(31 U.S.C. 3121 note) is amended by inserting before the 
semicolon ‘‘(or, if earlier, at the time the Secretary re-
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leases the minutes of the meeting in accordance with para-
graph (2))’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to meetings held after the date 
of the enactment of this Act.
Æ
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