regard to the amount in controversy and may be brought
only within the later of—
‘‘(1) 6 years after the date of the filing of the
fraudulent information return, or
‘‘(2) 1 year after the date such fraudulent infor-
mation return would have been discovered by exercise
of reasonable care.
‘‘(d) COPY OF COMPLAINT FILED WITH IRS—Any
person bringing an action under subsection (a) shall pro-
vide a copy of the complaint to the Internal Revenue Service
upon the filing of such complaint with the court.
‘‘(e) FINDING
OF COURT TO INCLUDE CORRECT
AMOUNT OF PAYMENT.—The decision of the court awarding
damages in an action brought under subsection (a) shall
include a finding of the correct amount which should have
been reported in the information return.
‘‘(f) INFORMATION RETURN.—For purposes of this sec-
tion, the term ‘information return’ means any statement
described in section 6724(d)(1)(A).’’
(b) CLERICAL AMENDMENT.—The table of sections for
subchapter B of chapter 76 is amended by striking the item
relating to section 7434 and inserting the following:
‘‘Sec. 7434. Civil damages for fraudulent filing of information re-
turns.
‘‘Sec. 7435. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to fraudulent information returns filed
after the date of the enactment of this Act.
SEC. 602. REQUIREMENT TO CONDUCT REASONABLE INVES-
TIGATIONS OF INFORMATION RETURNS.
(a) GENERAL RULE.—Section 6201 (relating to assess-
ment authority) is amended by redesignating subsection (d)
as subsection (e) and by inserting after subsection (c) the
following new subsection:
‘‘(d) REQUIRED REASONABLE VERIFICATION OF IN-
FORMATION RETURNS.—In any court proceeding, if a tax-
payer asserts a reasonable dispute with respect to any item
of income reported on an information return filed with the
Secretary under subpart B or C of part III of subchapter
A of chapter 61 by a third party and the taxpayer has fully
cooperated with the Secretary (including providing, within
a reasonable period of time, access to and inspection of all
witnesses, information, and documents within the control
of the taxpayer as reasonably requested by the Secretary),
the Secretary shall have the burden of producing reasonable
and probative information concerning such deficiency in
addition to such information return.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
TITLE VII—AWARDING OF COSTS
AND CERTAIN FEES
SEC. 701. UNITED STATES MUST ESTABLISH THAT ITS POSI-
TION IN PROCEEDING WAS SUBSTANTIALLY
JUSTIFIED.
(a) GENERAL RULE.—Subparagraph (A) of section
7430(c)(4) (defining prevailing party) is amended by strik-
ing clause (i) and by redesignating clauses (ii) and (iii)
as clauses (i) and (ii), respectively.
(b) BURDEN OF PROOF ON UNITED STATES.—Para-
graph (4) of section 7430(c) is amended by redesignating
subparagraph (B) as subparagraph (C) and by inserting
after subparagraph (A) the following new subparagraph:
‘‘(B) EXCEPTION IF UNITED STATES ESTAB-
LISHES THAT ITS POSITION WAS SUBSTANTIALLY
JUSTIFIED.—
‘‘(i) GENERAL
RULE.—A party shall
not be treated as the prevailing party in a
proceeding to which subsection (a) applies if
the United States establishes that the posi-
tion of the United States in the proceeding
was substantially justified.
‘‘(ii) PRESUMPTION OF NO JUSTIFICA-
TION IF INTERNAL REVENUE SERVICE DID
NOT
FOLLOW
CERTAIN
PUBLISHED
GUID-
ANCE.—For purposes of clause (i), the posi-
tion of the United States shall be presumed
not to be substantially justified if the Inter-
nal Revenue Service did not follow its ap-
plicable published guidance in the adminis-
trative proceeding. Such presumption may
be rebutted.
‘‘(iii) APPLICABLE
PUBLISHED
GUID-
ANCE.—For purposes of clause (ii), the term
‘applicable published guidance’ means—
‘‘(I) regulations, revenue rulings,
revenue procedures, information re-
leases, notices, and announcements,
and
‘‘(II) any of the following which
are issued to the taxpayer: private let-
ter rulings, technical advice memo-
randa, and determination letters.’’
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 7430(c)(2) is
amended by striking ‘‘paragraph (4)(B)’’ and insert-
ing ‘‘paragraph (4)(C)’’.
(2) Subparagraph (C) of section 7430(c)(4), as
redesignated by subsection (b), is amended by striking
‘‘subparagraph (A)’’ and inserting ‘‘this paragraph’’.
(3) Sections 6404(g) and 6656(c)(1), as amended
by this Act, are each amended by striking ‘‘section
7430(c)(4)(A)(iii)’’ 
and 
inserting 
‘‘section
7430(c)(4)(A)(ii)’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply in the case of proceedings commenced
after the date of the enactment of this Act.
SEC. 702. INCREASED LIMIT ON ATTORNEY FEES.
(a) IN GENERAL.—Paragraph (1) of section 7430(c)
(defining reasonable litigation costs) is amended—
(1) by striking ‘‘$75’’ in clause (iii) of subpara-
graph (B) and inserting ‘‘$110’’,
(2) by striking ‘‘an increase in the cost of living
or’’ in clause (iii) of subparagraph (B), and
(3) by adding after clause (iii) the following:
‘‘In the case of any calendar year beginning after
1996, the dollar amount referred to in clause (iii)
shall be increased by an amount equal to such dollar
amount multiplied by the cost-of-living adjustment
determined under section 1(f)(3) for such calendar
year, by substituting ‘calendar year 1995’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof. If any
dollar amount after being increased under the preced-
ing sentence is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of
$10.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply in the case of proceedings commenced
after the date of the enactment of this Act.
SEC. 703. FAILURE TO AGREE TO EXTENSION NOT TAKEN
INTO ACCOUNT.
(a) IN GENERAL.—Paragraph (1) of section 7430(b)
(relating to requirement that administrative remedies be ex-
hausted) is amended by adding at the end the following new
sentence: ‘‘Any failure to agree to an extension of the time
for the assessment of any tax shall not be taken into account
for purposes of determining whether the prevailing party
meets the requirements of the preceding sentence.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply in the case of proceedings commenced
after the date of the enactment of this Act.
SEC. 704. AWARD OF LITIGATION COSTS PERMITTED IN DE-
CLARATORY JUDGMENT PROCEEDINGS.
(a) IN GENERAL.—Subsection (b) of section 7430 is
amended by striking paragraph (3) and by redesignating
paragraph (4) as paragraph (3).
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply in the case of proceedings commenced
after the date of the enactment of this Act.
TITLE VIII—MODIFICATION TO
RECOVERY 
OF 
CIVIL 
DAM-
AGES 
FOR 
UNAUTHORIZED
COLLECTION ACTIONS
SEC. 801. INCREASE IN LIMIT ON RECOVERY OF CIVIL DAM-
AGES FOR UNAUTHORIZED COLLECTION AC-
TIONS.
(a) GENERAL RULE.—Subsection (b) of section 7433
(relating to damages) is amended by striking ‘‘$100,000’’
and inserting ‘‘$1,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to actions by officers or employees
of the Internal Revenue Service after the date of the enact-
ment of this Act.
SEC. 802. COURT DISCRETION TO REDUCE AWARD FOR LITI-
GATION COSTS FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
(a) GENERAL
RULE.—Paragraph (1) of section
7433(d) (relating to civil damages for certain unauthorized
collection actions) is amended to read as follows:
‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED IF
ADMINISTRATIVE
REMEDIES
NOT
EXHAUSTED.—The
amount of damages awarded under subsection (b)
may be reduced if the court determines that the plain-
tiff has not exhausted the administrative remedies
available to such plaintiff within the Internal Reve-
nue Service.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply in the case of proceedings commenced
after the date of the enactment of this Act.
TITLE 
IX—MODIFICATIONS 
TO
PENALTY FOR FAILURE TO
COLLECT AND PAY OVER TAX
SEC. 901. PRELIMINARY NOTICE REQUIREMENT.
(a) IN GENERAL.—Section 6672 (relating to failure to
collect and pay over tax, or attempt to evade or defeat tax)
is amended by redesignating subsection (b) as subsection
(c) and by inserting after subsection (a) the following new
subsection:
‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
‘‘(1) IN GENERAL.—No penalty shall be imposed
under subsection (a) unless the Secretary notifies the
taxpayer in writing by mail to an address as deter-
mined under section 6212(b) that the taxpayer shall
be subject to an assessment of such penalty.
‘‘(2) TIMING OF NOTICE.—The mailing of the no-
tice described in paragraph (1) shall precede any no-
tice and demand of any penalty under subsection (a)
by at least 60 days.
‘‘(3) STATUTE OF LIMITATIONS.—If a notice de-
scribed in paragraph (1) with respect to any penalty
is mailed before the expiration of the period provided
by section 6501 for the assessment of such penalty
(determined without regard to this paragraph), the
period provided by such section for the assessment of
such penalty shall not expire before the later of—
‘‘(A) the date 90 days after the date on
which such notice was mailed, or
‘‘(B) if there is a timely protest of the pro-
posed assessment, the date 30 days after the Sec-
retary makes a final administrative determina-
tion with respect to such protest.
‘‘(4) EXCEPTION
FOR
JEOPARDY.—This sub-
section shall not apply if the Secretary finds that the
collection of the penalty is in jeopardy.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to proposed assessments made after
June 30, 1996.
SEC. 902. DISCLOSURE OF CERTAIN INFORMATION WHERE
MORE THAN 1 PERSON LIABLE FOR PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Subsection (e) of section 6103 (re-
lating to disclosure to persons having material interest), as
amended by section 403, is amended by adding at the end
the following new paragraph:
‘‘(9) DISCLOSURE
OF
CERTAIN
INFORMATION
WHERE MORE THAN 1 PERSON SUBJECT TO PENALTY
UNDER SECTION 6672.—If the Secretary determines
that a person is liable for a penalty under section
6672(a) with respect to any failure, upon request in
writing of such person, the Secretary shall disclose in
writing to such person—
‘‘(A) the name of any other person whom
the Secretary has determined to be liable for such
penalty with respect to such failure, and
‘‘(B) whether the Secretary has attempted to
collect such penalty from such other person, the
general nature of such collection activities, and
the amount collected.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
SEC. 903. RIGHT OF CONTRIBUTION WHERE MORE THAN 1
PERSON LIABLE FOR PENALTY FOR FAILURE
TO COLLECT AND PAY OVER TAX.
(a) IN GENERAL.—Section 6672 (relating to failure to
collect and pay over tax, or attempt to evade or defeat tax)
is amended by adding at the end the following new sub-
section:
‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY.—If more than 1 person
is liable for the penalty under subsection (a) with respect
to any tax, each person who paid such penalty shall be enti-
tled to recover from other persons who are liable for such
penalty an amount equal to the excess of the amount paid
by such person over such person’s proportionate share of
the penalty. Any claim for such a recovery may be made
only in a proceeding which is separate from, and is not
joined or consolidated with—
‘‘(1) an action for collection of such penalty
brought by the United States, or
‘‘(2) a proceeding in which the United States
files a counterclaim or third-party complaint for the
collection of such penalty.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to penalties assessed after the date
of the enactment of this Act.
SEC. 904. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT
ORGANIZATIONS 
EXEMPT 
FROM 
PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Section 6672 is amended by adding
at the end the following new subsection:
‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS
OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be im-
posed by subsection (a) on any unpaid, volunteer member
of any board of trustees or directors of an organization ex-
empt from tax under subtitle A if such member—
‘‘(1) is solely serving in an honorary capacity,
‘‘(2) does not participate in the day-to-day or fi-
nancial operations of the organization, and
‘‘(3) does not have actual knowledge of the fail-
ure on which such penalty is imposed.
The preceding sentence shall not apply if it results in no
person being liable for the penalty imposed by subsection
(a).’’
(b) PUBLIC INFORMATION REQUIREMENTS.—
(1) IN GENERAL.—The Secretary of the Treasury
or the Secretary’s delegate (hereafter in this subsection
referred to as the ‘‘Secretary’’) shall take such actions
as may be appropriate to ensure that employees are
aware of their responsibilities under the Federal tax
depository system, the circumstances under which em-
ployees may be liable for the penalty imposed by sec-
tion 6672 of the Internal Revenue Code of 1986, and
the responsibility to promptly report to the Internal
Revenue Service any failure referred to in subsection
(a) of such section 6672. Such actions shall include—
(A) printing of a warning on deposit cou-
pon booklets and the appropriate tax returns
that certain employees may be liable for the pen-
alty imposed by such section 6672, and
(B) the development of a special informa-
tion packet.
(2) DEVELOPMENT
OF
EXPLANATORY
MATE-
RIALS.—The Secretary shall develop materials ex-
plaining the circumstances under which board mem-
bers of tax-exempt organizations (including voluntary
and honorary members) may be subject to penalty
under section 6672 of such Code. Such materials shall
be made available to tax-exempt organizations.
(3) IRS INSTRUCTIONS.—The Secretary shall
clarify the instructions to Internal Revenue Service
employees on the application of the penalty under sec-
tion 6672 of such Code with regard to voluntary
members of boards of trustees or directors of tax-ex-
empt organizations.
TITLE 
X—MODIFICATIONS 
OF
RULES RELATING TO SUM-
MONSES
SEC. 1001. ENROLLED AGENTS INCLUDED AS THIRD-PARTY
RECORDKEEPERS.
(a) IN GENERAL.—Paragraph (3) of section 7609(a)
(relating to third-party recordkeeper defined) is amended
by striking ‘‘and’’ at the end of subparagraph (G), by strik-
ing the period at the end of subparagraph (H) and inserting
‘‘; and’’, and by adding at the end the following the sub-
paragraph:
‘‘(I) any enrolled agent.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to summonses issued after the date
of the enactment of this Act.
SEC. 1002. SAFEGUARDS RELATING TO DESIGNATED SUM-
MONSES.
(a) STANDARD OF REVIEW.—Subparagraph (A) of sec-
tion 6503(k)(2) (defining designated summons) is amended
by redesignating clauses (i) and (ii) as clauses (ii) and
(iii), respectively, and by inserting before clause (ii) (as so
redesignated) the following new clause:
‘‘(i) the issuance of such summons is
preceded by a review of such issuance by the
regional counsel of the Office of Chief Coun-
sel for the region in which the examination
of the corporation is being conducted,’’.
(b) LIMITATION ON PERSONS TO WHOM DESIGNATED
SUMMONS MAY BE ISSUED.—Paragraph (1) of section
6503(k) is amended by striking ‘‘with respect to any return
of tax by a corporation’’ and inserting ‘‘to a corporation
(or to any other person to whom the corporation has trans-
ferred records) with respect to any return of tax by such
corporation for a taxable year (or other period) for which
such corporation is being examined under the coordinated
examination program (or any successor program) of the In-
ternal Revenue Service’’.
(c) CLERICAL AMENDMENT.—Section 6503 is amended
by redesignating subsections (k) and (l) (as amended by this
section) as subsections (j) and (k), respectively.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to summonses issued after the date of
the enactment of this Act.
SEC. 1003. ANNUAL REPORT TO CONGRESS CONCERNING
DESIGNATED SUMMONSES.
Not later than December 31 of each calendar year after
1995, the Secretary of the Treasury or his delegate shall
report to the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the
Senate on the number of designated summonses (as defined
in section 6503(j) of the Internal Revenue Code of 1986)
which were issued during the preceding 12 months.
TITLE XI—RELIEF FROM RETRO-
ACTIVE 
APPLICATION 
OF
TREASURY 
DEPARTMENT
REGULATIONS
SEC. 1101. RELIEF FROM RETROACTIVE APPLICATION OF
TREASURY DEPARTMENT REGULATIONS.
(a) IN GENERAL.—Subsection (b) of section 7805 (re-
lating to rules and regulations) is amended to read as fol-
lows:
‘‘(b) RETROACTIVITY OF REGULATIONS.—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this subsection, no temporary, proposed, or final
regulation relating to the internal revenue laws shall
apply to any taxable period ending before the earliest
of the following dates:
‘‘(A) The date on which such regulation is
filed with the Federal Register.
‘‘(B) In the case of any final regulation, the
date on which any proposed or temporary regu-
lation to which such final regulation relates was
filed with the Federal Register.
‘‘(C) The date on which any notice substan-
tially describing the expected contents of any
temporary, proposed, or final regulation is is-
sued to the public.
‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU-
LATIONS.—Paragraph (1) shall not apply to regula-
tions filed or issued within 18 months of the date of
the enactment of the statutory provision to which the
regulation relates.
‘‘(3) PREVENTION
OF
ABUSE.—The Secretary
may provide that any regulation may take effect or
apply retroactively to prevent abuse.
‘‘(4) CORRECTION OF PROCEDURAL DEFECTS.—
The Secretary may provide that any regulation may
apply retroactively to correct a procedural defect in
the issuance of any prior regulation.
‘‘(5) INTERNAL
REGULATIONS.—The limitation
of paragraph (1) shall not apply to any regulation
relating to internal Treasury Department policies,
practices, or procedures.
‘‘(6) 
CONGRESSIONAL
AUTHORIZATION.—The
limitation of paragraph (1) may be superseded by a
legislative grant from Congress authorizing the Sec-
retary to prescribe the effective date with respect to
any regulation.
‘‘(7) ELECTION TO APPLY RETROACTIVELY.—The
Secretary may provide for any taxpayer to elect to
apply any regulation before the dates specified in
paragraph (1).
‘‘(8) APPLICATION TO RULINGS.—The Secretary
may prescribe the extent, if any, to which any ruling
(including any judicial decision or any administra-
tive determination other than by regulation) relating
to the internal revenue laws shall be applied without
retroactive effect.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply with respect to regulations which
relate to statutory provisions enacted on or after the date
of the enactment of this Act.
TITLE XII—MISCELLANEOUS
PROVISIONS
SEC. 1201. PHONE NUMBER OF PERSON PROVIDING PAYEE
STATEMENTS REQUIRED TO BE SHOWN ON
SUCH STATEMENT.
(a) GENERAL RULE.—The following provisions are
each amended by striking ‘‘name and address’’ and insert-
ing ‘‘name, address, and phone number of the information
contact’’:
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to statements required to be fur-
nished after December 31, 1996 (determined without regard
to any extension).
SEC. 1202. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the
Treasury or his delegate from any taxpayer and the Sec-
retary cannot associate such payment with such taxpayer,
the Secretary shall make reasonable efforts to notify the tax-
payer of such inability within 60 days after the receipt of
such payment.
SEC. 1203. UNAUTHORIZED ENTICEMENT OF INFORMATION
DISCLOSURE.
(a) IN GENERAL.—Subchapter B of chapter 76 (relat-
ing to proceedings by taxpayers and third parties), as
amended by section 601(a), is amended by redesignating
section 7435 as section 7436 and by inserting after section
7434 the following new section:
‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE-
MENT OF INFORMATION DISCLOSURE.
‘‘(a) IN GENERAL.—If any officer or employee of the
United States intentionally compromises the determination
or collection of any tax due from an attorney, certified pub-
lic accountant, or enrolled agent representing a taxpayer
in exchange for information conveyed by the taxpayer to
the attorney, certified public accountant, or enrolled agent
for purposes of obtaining advice concerning the taxpayer’s
tax liability, such taxpayer may bring a civil action for
damages against the United States in a district court of
the United States. Such civil action shall be the exclusive
remedy for recovering damages resulting from such actions.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the plaintiff in
an amount equal to the lesser of $500,000 or the sum of—
‘‘(1) actual, direct economic damages sustained
by the plaintiff as a proximate result of the informa-
tion disclosure, and
‘‘(2) the costs of the action.
Damages shall not include the taxpayer’s liability for any
civil or criminal penalties, or other losses attributable to
incarceration or the imposition of other criminal sanctions.
‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to this
section shall be payable out of funds appropriated under
section 1304 of title 31, United States Code.
‘‘(d) PERIOD FOR BRINGING ACTION.—Notwithstand-
ing any other provision of law, an action to enforce liability
created under this section may be brought without regard
to the amount in controversy and may be brought only
within 2 years after the date the actions creating such li-
ability would have been discovered by exercise of reasonable
care.
‘‘(e) MANDATORY STAY.—Upon a certification by the
Commissioner or the Commissioner’s delegate that there is
an ongoing investigation or prosecution of the taxpayer, the
district court before which an action under this section is
pending shall stay all proceedings with respect to such ac-
tion pending the conclusion of the investigation or prosecu-
tion.
‘‘(f) CRIME-FRAUD EXCEPTION.—Subsection (a) shall
not apply to information conveyed to an attorney, certified
public accountant, or enrolled agent for the purpose of per-
petrating a fraud or crime.’’
(b) CLERICAL AMENDMENT.—The table of sections for
subchapter B of chapter 76, as amended by section 601(b),
is amended by striking the item relating to section 7435
and by adding at the end the following new items:
‘‘Sec. 7435. Civil damages for unauthorized enticement of informa-
tion disclosure.
‘‘Sec. 7436. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to actions after the date of the enactment
of this Act.
SEC. 1204. ANNUAL REMINDERS TO TAXPAYERS WITH OUT-
STANDING DELINQUENT ACCOUNTS.
(a) IN GENERAL.—Chapter 77 (relating to miscellane-
ous provisions) is amended by adding at the end the follow-
ing new section:
‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
‘‘Not less often than annually, the Secretary shall send
a written notice to each taxpayer who has a tax delinquent
account of the amount of the tax delinquency as of the date
of the notice.’’
(b) CLERICAL AMENDMENT.—The table of sections for
chapter 77 is amended by adding at the end the following
new item:
‘‘Sec. 7524. Annual notice of tax delinquency.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to calendar years after 1996.
SEC. 1205. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER-
COVER OPERATIONS.
(a) IN GENERAL.—Paragraph (3) of section 7601(c)
of the Anti-Drug Abuse Act of 1988 is amended by striking
all that follows ‘‘this Act’’ and inserting a period.
(b) RESTORATION OF AUTHORITY FOR 5 YEARS.—Sub-
section (c) of section 7608 is amended by adding at the end
the following new paragraph:
‘‘(6) APPLICATION OF SECTION.—The provisions
of this subsection—
‘‘(A) shall apply after November 17, 1988,
and before January 1, 1990, and
‘‘(B) shall apply after the date of the enact-
ment of this paragraph and before January 1,
2001.
All amounts expended pursuant to this subsection
during the period described in subparagraph (B) shall
be recovered to the extent possible, and deposited in
the Treasury of the United States as miscellaneous re-
ceipts, before January 1, 2001.’’
(c) ENHANCED OVERSIGHT.—
(1) ADDITIONAL INFORMATION REQUIRED IN RE-
PORTS TO CONGRESS.—Subparagraph (B) of section
7608(c)(4) is amended—
(A) by striking ‘‘preceding the period’’ in
clause (ii),
(B) by striking ‘‘and’’ at the end of clause
(ii), and
(C) by striking clause (iii) and inserting
the following:
‘‘(iii) the number, by programs, of un-
dercover investigative operations closed in
the 1-year period for which such report is
submitted, and
‘‘(iv) the following information with
respect to each undercover investigative op-
eration pending as of the end of the 1-year
period for which such report is submitted or
closed during such 1-year period—
‘‘(I) the date the operation began
and the date of the certification re-
ferred to in the last sentence of para-
graph (1),
‘‘(II) the total expenditures under
the operation and the amount and use
of the proceeds from the operation,
‘‘(III) a detailed description of the
operation including the potential viola-
tion being investigated and whether the
operation is being conducted under
grand jury auspices, and
‘‘(IV) the results of the operation
including the results of criminal pro-
ceedings.’’
(2) AUDITS
REQUIRED
WITHOUT
REGARD
TO
AMOUNTS
INVOLVED.—Subparagraph (C) of section
7608(c)(5) is amended to read as follows:
‘‘(C) UNDERCOVER
INVESTIGATIVE
OPER-
ATION.—The term ‘undercover investigative oper-
ation’ means any undercover investigative oper-
ation of the Service; except that, for purposes of
subparagraphs (A) and (C) of paragraph (4),
such term only includes an operation which is
exempt from section 3302 or 9102 of title 31,
United States Code.’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
SEC. 1206. DISCLOSURE OF FORM 8300 INFORMATION ON
CASH TRANSACTIONS.
(a) IN GENERAL.—Subsection (l) of section 6103 (re-
lating to disclosure of returns and return information for
purposes other than tax administration) is amended by
adding at the end the following new paragraph:
‘‘(15) DISCLOSURE OF RETURNS FILED UNDER
SECTION 6050I.—The Secretary may, upon written re-
quest, disclose to officers and employees of—
‘‘(A) any Federal agency,
‘‘(B) any agency of a State or local govern-
ment, or
‘‘(C) any agency of the government of a for-
eign country,
information contained on returns filed under section
6050I. Any such disclosure shall be made on the same
basis, and subject to the same conditions, as apply to
disclosures of information on reports filed under sec-
tion 5313 of title 31, United States Code; except that
no disclosure under this paragraph shall be made for
purposes of the administration of any tax law.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (i) of section 6103 is amended by
striking paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is
amended—
(A) by striking ‘‘(7)(A)(ii), or (8)’’ and in-
serting ‘‘or (7)(A)(ii)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(3) The material preceding subparagraph (A) of
section 6103(p)(4) is amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’,
(B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and
inserting ‘‘(i)(3)(B)(i),’’, and
(C) by striking ‘‘or (12)’’ and inserting
‘‘(12), or (15)’’.
(4) Clause (ii) of section 6103(p)(4)(F) is
amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(5) Paragraph (2) of section 7213(a) is amended
by striking ‘‘or (12)’’ and inserting ‘‘(12), or (15)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 1207. DISCLOSURE OF RETURNS AND RETURN INFOR-
MATION TO DESIGNEE OF TAXPAYER.
Subsection (c) of section 6103 (relating to disclosure
of returns and return information to designee of taxpayer)
is amended by striking ‘‘written request for or consent to
such disclosure’’ and inserting ‘‘request for or consent to
such disclosure’’.
SEC. 1208. STUDY OF NETTING OF INTEREST ON OVERPAY-
MENTS AND LIABILITIES.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate shall—
(1) conduct a study of the manner in which the
Internal Revenue Service has implemented the netting
of interest on overpayments and underpayments and
of the policy and administrative implications of glob-
al netting, and
(2) before submitting the report of such study,
hold a public hearing to receive comments on the mat-
ters included in such study.
(b) REPORT.—The report of such study shall be sub-
mitted not later than 6 months after the date of the enact-
ment of this Act to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance
of the Senate.
SEC. 1209. EXPENSES OF DETECTION OF UNDERPAYMENTS
AND FRAUD, ETC.
(a) IN GENERAL.—Section 7623 (relating to expenses
of deduction and punishment of frauds) is amended to read
as follows:
‘‘SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS
AND FRAUD, ETC.
‘‘The Secretary, under regulations prescribed by the
Secretary, is authorized to pay such sums as he deems nec-
essary for—
‘‘(1) detecting underpayments of tax, and
‘‘(2) detecting and bringing to trial and punish-
ment persons guilty of violating the internal revenue
laws or conniving at the same,
in cases where such expenses are not otherwise provided for
by law. Any amount payable under the preceding sentence
shall be paid from the proceeds of amounts (other than in-
terest) collected by reason of the information provided, and
any amount so collected shall be available for such pay-
ments.’’.
(b) CLERICAL AMENDMENT.—The table of sections for
subchapter B of chapter 78 is amended by striking the item
relating to section 7623 and inserting the following new
item:
‘‘Sec. 7623. Expenses of detection of underpayments and fraud,
etc.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date which is 6 months after
the date of the enactment of this Act.
(d) REPORT.—The Secretary of the Treasury or his
delegate shall submit an annual report to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate on the payments
under section 7623 of the Internal Revenue Code of 1986
during the year and on the amounts collected for which such
payments were made.
SEC. 1210. USE OF PRIVATE DELIVERY SERVICES FOR TIME-
LY-MAILING-AS-TIMELY-FILING RULE.
Section 7502 (relating to timely mailing treated as
timely filing and paying) is amended by adding at the end
the following new subsection:
‘‘(f) TREATMENT OF PRIVATE DELIVERY SERVICES.—
‘‘(1) IN GENERAL.—Any reference in this section
to the United States mail shall be treated as includ-
ing a reference to any designated delivery service, and
any reference in this section to a postmark by the
United States Postal Service shall be treated as in-
cluding a reference to any date recorded or marked as
described in paragraph (2)(C) by any designated de-
livery service.
‘‘(2) DESIGNATED DELIVERY SERVICE.—For pur-
poses of this subsection, the term ‘designated delivery
service’ means any delivery service provided by a
trade or business if such service is designated by the
Secretary for purposes of this section. The Secretary
may designate a delivery service under the preceding
sentence only if the Secretary determines that such
service—
‘‘(A) is available to the general public,
‘‘(B) is at least as timely and reliable on a
regular basis as the United States mail,
‘‘(C) records electronically to its data base,
kept in the regular course of its business, or
marks on the cover in which any item referred
to in this section is to be delivered, the date on
which such item was given to such trade or busi-
ness for delivery, and
‘‘(D) meets such other criteria as the Sec-
retary may prescribe.
‘‘(3) EQUIVALENTS OF REGISTERED AND CER-
TIFIED
MAIL.—The Secretary may provide a rule
similar to the rule of paragraph (1) with respect to
any service provided by a designated delivery service
which is substantially equivalent to United States
registered or certified mail.’’
SEC. 1211. REPORTS ON MISCONDUCT OF IRS EMPLOYEES.
On or before June 1 of each calendar year after 1996,
the Secretary of the Treasury shall submit to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate a report on—
(1) all categories of instances involving the mis-
conduct of employees of the Internal Revenue Service
during the preceding calendar year, and
(2) the disposition during the preceding calendar
year of any such instances (without regard to the
year of the misconduct).
TITLE XIII—REVENUE OFFSETS
Subtitle A—Application of Failure-
to-Pay Penalty to Substitute Re-
turns
SEC. 1301. APPLICATION OF FAILURE-TO-PAY PENALTY TO
SUBSTITUTE RETURNS.
(a) GENERAL RULE.—Section 6651 (relating to failure
to file tax return or to pay tax) is amended by adding at
the end the following new subsection:
‘‘(g) TREATMENT OF RETURNS PREPARED BY SEC-
RETARY UNDER SECTION 6020(b).—In the case of any re-
turn made by the Secretary under section 6020(b)—
‘‘(1) such return shall be disregarded for pur-
poses of determining the amount of the addition
under paragraph (1) of subsection (a), but
‘‘(2) such return shall be treated as the return
filed by the taxpayer for purposes of determining the
amount of the addition under paragraphs (2) and (3)
of subsection (a).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply in the case of any return the due
date for which (determined without regard to extensions)
is after the date of the enactment of this Act.
Subtitle B—Exicse Taxes on
Amounts of Private Excess Benefits
SEC. 1311. EXCISE TAXES FOR FAILURE BY CERTAIN CHARI-
TABLE ORGANIZATIONS TO MEET CERTAIN
QUALIFICATION REQUIREMENTS.
(a) IN GENERAL.—Chapter 42 (relating to private
foundations and certain other tax-exempt organizations) is
amended by redesignating subchapter D as subchapter E
and by inserting after subchapter C the following new sub-
chapter:
‘‘Subchapter D—Failure by Certain Chari-
table 
Organizations 
To 
Meet 
Certain
Qualification Requirements
‘‘Sec. 4958. Taxes on excess benefit transactions.
‘‘SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.
‘‘(a) INITIAL TAXES.—
‘‘(1) ON THE DISQUALIFIED PERSON.—There is
hereby imposed on each excess benefit transaction a
tax equal to 25 percent of the excess benefit. The tax
imposed by this paragraph shall be paid by any dis-
qualified person referred to in subsection (f)(1) with
respect to such transaction.
‘‘(2) ON
THE
MANAGEMENT.—In any case in
which a tax is imposed by paragraph (1), there is
hereby imposed on the participation of any organiza-
tion manager in the excess benefit transaction, know-
ing that it is such a transaction, a tax equal to 10
percent of the excess benefit, unless such participation
is not willful and is due to reasonable cause. The tax
imposed by this paragraph shall be paid by any orga-
nization manager who participated in the excess ben-
efit transaction.
‘‘(b) ADDITIONAL TAX ON THE DISQUALIFIED PER-
SON.—In any case in which an initial tax is imposed by
subsection (a)(1) on an excess benefit transaction and the
excess benefit involved in such transaction is not corrected
within the taxable period, there is hereby imposed a tax
equal to 200 percent of the excess benefit involved. The tax
imposed by this subsection shall be paid by any disqualified
person referred to in subsection (f)(1) with respect to such
transaction.
‘‘(c) EXCESS BENEFIT TRANSACTION; EXCESS BENE-
FIT.—For purposes of this section—
‘‘(1) EXCESS BENEFIT TRANSACTION.—
‘‘(A) IN GENERAL.—The term ‘excess benefit
transaction’ means any transaction in which an
economic benefit is provided by an applicable
tax-exempt organization directly or indirectly to
or for the use of any disqualified person if the
value of the economic benefit provided exceeds the
value of the consideration (including the per-
formance of services) received for providing such
benefit. For purposes of the preceding sentence,
an economic benefit shall not be treated as con-
sideration for the performance of services unless
such organization clearly indicated its intent to
so treat such benefit.
‘‘(B) EXCESS BENEFIT.—The term ‘excess
benefit’ means the excess referred to in subpara-
graph (A).
‘‘(2) AUTHORITY TO INCLUDE CERTAIN OTHER
PRIVATE INUREMENT.—To the extent provided in reg-
ulations prescribed by the Secretary, the term ‘excess
benefit transaction’ includes any transaction in which
the amount of any economic benefit provided to or for
the use of a disqualified person is determined in
whole or in part by the revenues of 1 or more activi-
ties of the organization but only if such transaction
results in inurement not permitted under paragraph
(3) or (4) of section 501(c), as the case may be. In
the case of any such transaction, the excess benefit
shall be the amount of the inurement not so per-
mitted.
‘‘(d) SPECIAL RULES.—For purposes of this section—
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more
than 1 person is liable for any tax imposed by sub-
section (a) or subsection (b), all such persons shall be
jointly and severally liable for such tax.
‘‘(2) LIMIT FOR MANAGEMENT.—With respect to
any 1 excess benefit transaction, the maximum
amount of the tax imposed by subsection (a)(2) shall
not exceed $10,000.
‘‘(e) APPLICABLE TAX-EXEMPT ORGANIZATION.—For
purposes of this subchapter, the term ‘applicable tax-exempt
organization’ means—
‘‘(1) any organization which (without regard to
any excess benefit) would be described in paragraph
(3) or (4) of section 501(c) and exempt from tax
under section 501(a), and
‘‘(2) any organization which was described in
paragraph (1) at any time during the 5-year period
ending on the date of the transaction.
Such term shall not include a private foundation (as de-
fined in section 509(a)).
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion—
‘‘(1) DISQUALIFIED
PERSON.—The term ‘dis-
qualified person’ means, with respect to any trans-
action—
‘‘(A) any person who was, at any time dur-
ing the 5-year period ending on the date of such
transaction, in a position to exercise substantial
influence over the affairs of the organization,
‘‘(B) a member of the family of an individ-
ual described in subparagraph (A), and
‘‘(C) a 35-percent controlled entity.
‘‘(2) ORGANIZATION MANAGER.—The term ‘orga-
nization manager’ means, with respect to any appli-
cable tax-exempt organization, any officer, director,
or trustee of such organization (or any individual
having powers or responsibilities similar to those of
officers, directors, or trustees of the organization).
‘‘(3) 35-PERCENT CONTROLLED ENTITY.—
‘‘(A) IN
GENERAL.—The term ‘35-percent
controlled entity’ means—
‘‘(i) a corporation in which persons de-
scribed in subparagraph (A) or (B) of para-
graph (1) own more than 35 percent of the
total combined voting power,
‘‘(ii) a partnership in which such per-
sons own more than 35 percent of the prof-
its interest, and
‘‘(iii) a trust or estate in which such
persons own more than 35 percent of the
beneficial interest.
‘‘(B) CONSTRUCTIVE OWNERSHIP RULES.—
Rules similar to the rules of paragraphs (3) and
(4) of section 4946(a) shall apply for purposes of
this paragraph.
‘‘(4) FAMILY MEMBERS.—The members of an in-
dividual’s family shall be determined under section
4946(d); except that such members also shall include
the brothers and sisters (whether by the whole or half
blood) of the individual and their spouses.
‘‘(5) TAXABLE PERIOD.—The term ‘taxable pe-
riod’ means, with respect to any excess benefit trans-
action, the period beginning with the date on which
the transaction occurs and ending on the earliest of—
‘‘(A) the date of mailing a notice of defi-
ciency under section 6212 with respect to the tax
imposed by subsection (a)(1), or
‘‘(B) the date on which the tax imposed by
subsection (a)(1) is assessed.
‘‘(6) CORRECTION.—The terms ‘correction’ and
‘correct’ mean, with respect to any excess benefit
transaction, undoing the excess benefit to the extent
possible, and taking any additional measures nec-
essary to place the organization in a financial posi-
tion not worse than that in which it would be if the
disqualified person were dealing under the highest fi-
duciary standards.’’
(b) APPLICATION OF PRIVATE INUREMENT RULE TO
TAX-EXEMPT ORGANIZATIONS DESCRIBED
IN SECTION
501(c)(4).—
(1) IN
GENERAL.—Paragraph (4) of section
501(c) is amended by inserting ‘‘(A)’’ after ‘‘(4)’’ and
by adding at the end the following:
‘‘(B) Subparagraph (A) shall not apply to an
entity unless no part of the net earnings of such en-
tity inures to the benefit of any private shareholder
or individual.’’
(2) SPECIAL
RULE
FOR
CERTAIN
COOPERA-
TIVES.—In the case of an organization operating on
a cooperative basis which, before the date of the enact-
ment of this Act, was determined by the Secretary of
the Treasury or his delegate, to be described in section
501(c)(4) of the Internal Revenue Code of 1986 and
exempt from tax under section 501(a) of such Code,
the allocation or return of net margins or capital to
the members of such organization in accordance with
its incorporating statute and bylaws shall not be
treated for purposes of such Code as the inurement
of the net earnings of such organization to the benefit
of any private shareholder or individual. The preced-
ing sentence shall apply only if such statute and by-
laws are substantially as such statute and bylaws
were in existence on the date of the enactment of this
Act.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Subsection (e) of section 4955 is amended—
(A) by striking ‘‘SECTION 4945’’ in the
heading and inserting ‘‘SECTIONS 4945 AND
4958’’, and
(B) by inserting before the period ‘‘or an ex-
cess benefit for purposes of section 4958’’.
(2) Subsections (a), (b), and (c) of section 4963
are each amended by inserting ‘‘4958,’’ after ‘‘4955,’’.
(3) Subsection (e) of section 6213 is amended by
inserting ‘‘4958 (relating to private excess benefit),’’
before ‘‘4971’’.
(4) Paragraphs (2) and (3) of section 7422(g)
are each amended by inserting ‘‘4958,’’ after ‘‘4955,’’.
(5) Subsection (b) of section 7454 is amended by
inserting ‘‘or whether an organization manager (as
defined in section 4958(f)(2)) has ‘knowingly’ partici-
pated in an excess benefit transaction (as defined in
section 4958(c)),’’ after ‘‘section 4912(b),’’.
(6) The table of subchapters for chapter 42 is
amended by striking the last item and inserting the
following:
‘‘SUBCHAPTER D. Failure by certain charitable organizations to
meet certain qualification requirements.
‘‘SUBCHAPTER E. Abatement of first and second tier taxes in cer-
tain cases.’’
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
this section (other than subsection (b)) shall apply to
excess benefit transactions occurring on or after Sep-
tember 14, 1995.
(2) BINDING CONTRACTS.—The amendments re-
ferred to in paragraph (1) shall not apply to any
benefit arising from a transaction pursuant to any
written contract which was binding on September 13,
1995, and at all times thereafter before such trans-
action occurred.
(3) APPLICATION OF PRIVATE INUREMENT RULE
TO TAX-EXEMPT ORGANIZATIONS DESCRIBED IN SEC-
TION 501(c)(4).—
(A) IN
GENERAL.—The amendment made
by subsection (b) shall apply to inurement occur-
ring on or after September 14, 1995.
(B) BINDING CONTRACTS.—The amendment
made by subsection (b) shall not apply to any
inurement occurring before January 1, 1997,
pursuant to a written contract which was bind-
ing on September 13, 1995, and at all times
thereafter before such inurement occurred.
SEC. 1312. REPORTING OF CERTAIN EXCISE TAXES AND
OTHER INFORMATION.
(a) REPORTING BY ORGANIZATIONS DESCRIBED IN
SECTION 501(c)(3).—Subsection (b) of section 6033 (relat-
ing to certain organizations described in section 501(c)(3))
is amended by striking ‘‘and’’ at the end of paragraph (9),
by redesignating paragraph (10) as paragraph (14), and
by inserting after paragraph (9) the following new para-
graphs:
‘‘(10) the respective amounts (if any) of the taxes
paid by the organization during the taxable year
under the following provisions:
‘‘(A) section 4911 (relating to tax on excess
expenditures to influence legislation),
‘‘(B) section 4912 (relating to tax on dis-
qualifying lobbying expenditures of certain orga-
nizations), and
‘‘(C) section 4955 (relating to taxes on po-
litical expenditures of section 501(c)(3) organiza-
tions),
‘‘(11) the respective amounts (if any) of the taxes
paid by the organization, or any disqualified person
with respect to such organization, during the taxable
year under section 4958 (relating to taxes on private
excess benefit from certain charitable organizations),
‘‘(12) such information as the Secretary may re-
quire with respect to any excess benefit transaction
(as defined in section 4958),
‘‘(13) such information with respect to disquali-
fied persons as the Secretary may prescribe, and’’.
(b) 
ORGANIZATIONS
DESCRIBED
IN
SECTION
501(c)(4).—Section 6033 is amended by redesignating sub-
section (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection:
‘‘(f) CERTAIN ORGANIZATIONS DESCRIBED IN SECTION
501(c)(4).—Every 
organization 
described 
in 
section
501(c)(4) which is subject to the requirements of subsection
(a) shall include on the return required under subsection
(a) the information referred to in paragraphs (11), (12) and
(13) of subsection (b) with respect to such organization.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns for taxable years beginning
after the date of the enactment of this Act.
SEC. 1313. EXEMPT ORGANIZATIONS REQUIRED TO PRO-
VIDE COPY OF RETURN.
(a) REQUIREMENT TO PROVIDE COPY.—
(1) Subparagraph (A) of section 6104(e)(1) (re-
lating to public inspection of annual returns) is
amended to read as follows:
‘‘(A) IN GENERAL.—During the 3-year pe-
riod beginning on the filing date—
‘‘(i) a copy of the annual return filed
under section 6033 (relating to returns by
exempt organizations) by any organization
to which this paragraph applies shall be
made available by such organization for in-
spection during regular business hours by
any individual at the principal office of
such organization and, if such organization
regularly maintains 1 or more regional or
district offices having 3 or more employees,
at each such regional or district office, and
‘‘(ii) upon request of an individual
made at such principal office or such a re-
gional or district office, a copy of such an-
nual return shall be provided to such indi-
vidual without charge other than a reason-
able fee for any reproduction and mailing
costs.
The request described in clause (ii) must be made
in person or in writing. If the request under
clause (ii) is made in person, such copy shall be
provided immediately and, if made in writing,
shall be provided within 30 days.’’
(2) Clause (ii) of section 6104(e)(2)(A) is amend-
ed by inserting before the period at the end the follow-
ing: ‘‘(and, upon request of an individual made at
such principal office or such a regional or district of-
fice, a copy of the material requested to be available
for inspection under this subparagraph shall be pro-
vided (in accordance with the last sentence of para-
graph (1)(A)) to such individual without charge other
than reasonable fee for any reproduction and mailing
costs)’’.
(3) Subsection (e) of section 6104 is amended by
adding at the end the following new paragraph:
‘‘(3) LIMITATION.—Paragraph (1)(A)(ii) (and
the corresponding provision of paragraph (2)) shall
not apply to any request if, in accordance with regu-
lations promulgated by the Secretary, the organiza-
tion has made the requested documents widely avail-
able, or, the Secretary determines, upon application
by an organization, that such request is part of a
harassment campaign and that compliance with such
request is not in the public interest.’’
(b) INCREASE IN PENALTY FOR WILLFUL FAILURE TO
ALLOW PUBLIC INSPECTION OF CERTAIN RETURNS, ETC.—
Section 6685 is amended by striking ‘‘$1,000’’ and insert-
ing ‘‘$5,000’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to requests made on or after the 60th
day after the Secretary of the Treasury first issues the regu-
lations referred to section 6104(e)(3) of the Internal Reve-
nue Code of 1986 (as added by subsection (a)(3)).
SEC. 1314. INCREASE IN PENALTIES ON EXEMPT ORGANIZA-
TIONS FOR FAILURE TO FILE COMPLETE AND
TIMELY ANNUAL RETURNS.
(a) IN
GENERAL.—Subparagraph (A) of section
6652(c)(1) (relating to annual returns under section 6033)
is amended by striking ‘‘$10’’ and inserting ‘‘$20’’ and by
striking ‘‘$5,000’’ and inserting ‘‘$10,000’’.
(b) LARGER PENALTY
ON ORGANIZATIONS HAVING
GROSS RECEIPTS IN EXCESS OF $1,000,000.—Subpara-
graph (A) of section 6652(c)(1) is amended by adding at
the end the following new sentence: ‘‘In the case of an orga-
nization having gross receipts exceeding $1,000,000 for any
year, with respect to the return required under section 6033
for such year, the first sentence of this subparagraph shall
be applied by substituting ‘$100’ for ‘$20’ and, in lieu of
applying the second sentence of this subparagraph, the max-
imum penalty under this subparagraph shall not exceed
$50,000.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns for taxable years ending on
or after the date of the enactment of this Act.