110TH CONGRESS 
1ST SESSION H. R. 1677
AN ACT 
To amend the Internal Revenue Code of 1986 to enhance 
taxpayer protections and outreach.
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 
‘‘Taxpayer Protection Act of 2007’’. 
(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 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title; etc. 
Sec. 2. Family business tax simplification. 
Sec. 3. Taxpayer notification of suspected identity theft. 
Sec. 4. Extension of time for return of property for wrongful levy. 
Sec. 5. Individuals held harmless on wrongful levy, etc., on individual retire-
ment plan. 
Sec. 6. Clarification of IRS unclaimed refund authority. 
Sec. 7. Prohibition on IRS debt indicators for predatory refund anticipation 
loans. 
Sec. 8. Prohibition on misuse of Department of the Treasury names and sym-
bols. 
Sec. 9. EITC outreach. 
Sec. 10. Modification of rules pertaining to FIRPTA nonforeign affidavits. 
Sec. 11. Disclosure of prisoner return information to Federal Bureau of Pris-
ons. 
Sec. 12. Increase in penalty for bad checks and money orders.
SEC. 2. FAMILY BUSINESS TAX SIMPLIFICATION. 
(a) IN GENERAL.—Section 761 (defining terms for 
purposes of partnerships) is amended by redesignating 
subsection (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection: 
‘‘(f) QUALIFIED JOINT VENTURE.—
‘‘(1) IN GENERAL.—In the case of a qualified 
joint venture conducted by a husband and wife who 
file a joint return for the taxable year, for purposes 
of this title—
‘‘(A) such joint venture shall not be treat-
ed as a partnership, 
‘‘(B) all items of income, gain, loss, deduc-
tion, and credit shall be divided between the 
spouses in accordance with their respective in-
terests in the venture, and 
‘‘(C) each spouse shall take into account 
such spouse’s respective share of such items as 
if they were attributable to a trade or business 
conducted by such spouse as a sole proprietor. 
‘‘(2) QUALIFIED
JOINT
VENTURE.—For pur-
poses of paragraph (1), the term ‘qualified joint ven-
ture’ means any joint venture involving the conduct 
of a trade or business if—
‘‘(A) the only members of such joint ven-
ture are a husband and wife, 
‘‘(B) both spouses materially participate 
(within the meaning of section 469(h) without 
regard to paragraph (5) thereof) in such trade 
or business, and
‘‘(C) both spouses elect the application of 
this subsection.’’. 
(b) NET EARNINGS FROM SELF-EMPLOYMENT.—
(1) Subsection (a) of section 1402 (defining net 
earnings from self-employment) is amended by strik-
ing ‘‘, and’’ at the end of paragraph (15) and insert-
ing a semicolon, by striking the period at the end of 
paragraph (16) and inserting ‘‘; and’’, and by insert-
ing after paragraph (16) the following new para-
graph: 
‘‘(17) notwithstanding the preceding provisions 
of this subsection, each spouse’s share of income or 
loss from a qualified joint venture shall be taken 
into account as provided in section 761(f) in deter-
mining net earnings from self-employment of such 
spouse.’’. 
(2) Subsection (a) of section 211 of the Social 
Security Act (defining net earnings from self-em-
ployment) is amended by striking ‘‘and’’ at the end 
of paragraph (14), by striking the period at the end 
of paragraph (15) and inserting ‘‘; and’’, and by in-
serting after paragraph (15) the following new para-
graph: 
‘‘(16) Notwithstanding the preceding provisions 
of this subsection, each spouse’s share of income or
loss from a qualified joint venture shall be taken 
into account as provided in section 761(f) of the In-
ternal Revenue Code of 1986 in determining net 
earnings from self-employment of such spouse.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 3. TAXPAYER NOTIFICATION OF SUSPECTED IDENTITY 
THEFT. 
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the 
following new section: 
‘‘SEC. 
7529. 
NOTIFICATION 
OF 
SUSPECTED 
IDENTITY 
THEFT. 
‘‘If, in the course of an investigation under section 
7206 (relating to fraud and false statements) or 7207 (re-
lating to fraudulent returns, statements, or other docu-
ments), the Secretary determines that there was or may 
have been an unauthorized use of the identity of the tax-
payer or dependents, the Secretary shall—
‘‘(1) as soon as practicable and without jeop-
ardizing such investigation, notify the taxpayer of 
such determination, and 
‘‘(2) if any person is criminally charged by in-
dictment or information under either of such sec-
tions, notify such taxpayer as soon as practicable of 
such charge.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 7529. Notification of suspected identity theft.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to determinations made after the 
date of the enactment of this Act. 
SEC. 4. EXTENSION OF TIME FOR RETURN OF PROPERTY 
FOR WRONGFUL LEVY. 
(a) EXTENSION OF TIME FOR RETURN OF PROPERTY 
SUBJECT TO LEVY.—Subsection (b) of section 6343 (re-
lating to return of property) is amended by striking ‘‘9 
months’’ and inserting ‘‘2 years’’. 
(b) PERIOD OF LIMITATION ON SUITS.—Subsection 
(c) of section 6532 (relating to suits by persons other than 
taxpayers) is amended—
(1) in paragraph (1) by striking ‘‘9 months’’ 
and inserting ‘‘2 years’’, and 
(2) in paragraph (2) by striking ‘‘9-month’’ and 
inserting ‘‘2-year’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to—
(1) levies made after the date of the enactment 
of this Act, and
(2) levies made on or before such date if the 9-
month period has not expired under section 6343(b) 
of the Internal Revenue Code of 1986 (without re-
gard to this section) as of such date. 
SEC. 5. INDIVIDUALS HELD HARMLESS ON WRONGFUL 
LEVY, ETC., ON INDIVIDUAL RETIREMENT 
PLAN. 
(a) IN GENERAL.—Section 6343 (relating to author-
ity to release levy and return property) is amended by add-
ing at the end the following new subsection: 
‘‘(f) INDIVIDUALS HELD HARMLESS ON WRONGFUL 
LEVY, ETC. ON INDIVIDUAL RETIREMENT PLAN.—
‘‘(1) IN GENERAL.—If the Secretary determines 
that an individual retirement plan has been levied 
upon in a case to which subsection (b) or (d)(2)(A) 
applies, an amount equal to the sum of—
‘‘(A) the amount of money returned by the 
Secretary on account of such levy, and 
‘‘(B) interest paid under subsection (c) on 
such amount of money, 
may be deposited into such individual retirement 
plan or any other individual retirement plan (other 
than an endowment contract) to which a rollover 
from the plan levied upon is permitted.
‘‘(2) TREATMENT AS ROLLOVER.—If amounts 
are deposited into an individual retirement plan 
under paragraph (1) not later than the 60th day 
after the date on which the individual receives the 
amounts under paragraph (1)—
‘‘(A) such deposit shall be treated as a 
rollover described in section 408(d)(3)(A)(i), 
‘‘(B) to the extent the deposit includes in-
terest paid under subsection (c), such interest 
shall not be includible in gross income, and 
‘‘(C) such deposit shall not be taken into 
account under section 408(d)(3)(B). 
For purposes of subparagraph (B), an amount shall 
be treated as interest only to the extent that the 
amount deposited exceeds the amount of the levy. 
‘‘(3) REFUND, ETC., OF
INCOME
TAX
ON 
LEVY.—If any amount is includible in gross income 
for a taxable year by reason of a levy referred to in 
paragraph (1) and any portion of such amount is 
treated as a rollover under paragraph (2), any tax 
imposed by chapter 1 on such portion shall not be 
assessed, and if assessed shall be abated, and if col-
lected shall be credited or refunded as an overpay-
ment made on the due date for filing the return of 
tax for such taxable year.
‘‘(4) INTEREST.—Notwithstanding subsection 
(d), interest shall be allowed under subsection (c) in 
a case in which the Secretary makes a determination 
described in subsection (d)(2)(A) with respect to a 
levy upon an individual retirement plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid under subsections 
(b), (c), and (d)(2)(A) of section 6343 of the Internal Rev-
enue Code of 1986 after the date of the enactment of this 
Act. 
SEC. 6. CLARIFICATION OF IRS UNCLAIMED REFUND AU-
THORITY. 
Section 6103(m)(1) (relating to tax refunds) is 
amended by inserting ‘‘, and through any other means of 
mass communication,’’ after ‘‘media’’. 
SEC. 7. PROHIBITION ON IRS DEBT INDICATORS FOR PRED-
ATORY REFUND ANTICIPATION LOANS. 
(a) IN GENERAL.—Subsection (f) of section 6011 (re-
lating to promotion of electronic filing) is amended by add-
ing at the end the following new paragraph: 
‘‘(3) PROHIBITION ON IRS DEBT INDICATORS 
FOR PREDATORY REFUND ANTICIPATION LOANS.—
‘‘(A) IN GENERAL.—In carrying out any 
program under this subsection, the Secretary 
shall not provide a debt indicator to any person
with respect to any refund anticipation loan if 
the Secretary determines that the business 
practices of such person involve refund anticipa-
tion loans and related charges and fees that are 
predatory. 
‘‘(B) REFUND ANTICIPATION LOAN.—For 
purposes of this paragraph, the term ‘refund 
anticipation loan’ means a loan of money or of 
any other thing of value to a taxpayer secured 
by the taxpayer’s anticipated receipt of a Fed-
eral tax refund. 
‘‘(C) IRS DEBT INDICATOR.—For purposes 
of this paragraph, the term ‘debt indicator’ 
means a notification provided through a tax re-
turn’s acknowledgment file that a refund will be 
offset to repay debts for delinquent Federal or 
State taxes, student loans, child support, or 
other Federal agency debt.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to determinations after the date 
of the enactment of this Act. 
SEC. 8. PROHIBITION ON MISUSE OF DEPARTMENT OF THE 
TREASURY NAMES AND SYMBOLS. 
(a) IN GENERAL.—Subsection (a) of section 333 of 
title 31, United States Code, is amended by inserting
‘‘internet domain address,’’ after ‘‘solicitation,’’ both 
places it appears. 
(b) 
PENALTY
FOR
MISUSE
BY
ELECTRONIC 
MEANS.—Subsections (c)(2) and (d)(1) of section 333 of 
such Code are each amended by inserting ‘‘or any other 
mass communications by electronic means,’’ after ‘‘tele-
cast,’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to violations occurring 
after the date of the enactment of this Act. 
SEC. 9. EITC OUTREACH. 
(a) IN GENERAL.—Section 32 (relating to earned in-
come) is amended by adding at the end the following new 
subsection: 
‘‘(n) NOTIFICATION OF POTENTIAL ELIGIBILITY FOR 
CREDIT AND REFUND.—
‘‘(1) IN GENERAL.—To the extent possible and 
on an annual basis, the Secretary shall provide to 
each taxpayer who—
‘‘(A) for any preceding taxable year for 
which credit or refund is not precluded by sec-
tion 6511, and 
‘‘(B) did not claim the credit under sub-
section (a) but may be allowed such credit for 
any such taxable year based on return or return
information (as defined in section 6103(b)) 
available to the Secretary, 
notice that such taxpayer may be eligible to claim 
such credit and a refund for such taxable year. 
‘‘(2) NOTICE.—Notice provided under para-
graph (1) shall be in writing and sent to the last 
known address of the taxpayer.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 10. MODIFICATION OF RULES PERTAINING TO FIRPTA 
NONFOREIGN AFFIDAVITS. 
(a) IN GENERAL.—Subsection (b) of section 1445 
(relating to exemptions) is amended by adding at the end 
the following: 
‘‘(9) ALTERNATIVE
PROCEDURE
FOR
FUR-
NISHING NONFOREIGN AFFIDAVIT.—For purposes of 
paragraphs (2) and (7)—
‘‘(A) IN
GENERAL.—Paragraph (2) shall 
be treated as applying to a transaction if, in 
connection with a disposition of a United States 
real property interest—
‘‘(i) the affidavit specified in para-
graph (2) is furnished to a qualified sub-
stitute, and
‘‘(ii) the qualified substitute furnishes 
a statement to the transferee stating, 
under penalty of perjury, that the qualified 
substitute has such affidavit in his posses-
sion. 
‘‘(B) REGULATIONS.—The Secretary shall 
prescribe such regulations as may be necessary 
or appropriate to carry out this paragraph.’’. 
(b) QUALIFIED SUBSTITUTE.—Subsection (f) of sec-
tion 1445 (relating to definitions) is amended by adding 
at the end the following new paragraph: 
‘‘(6) 
QUALIFIED
SUBSTITUTE.—The 
term 
‘qualified substitute’ means, with respect to a dis-
position of a United States real property interest—
‘‘(A) the person (including any attorney or 
title company) responsible for closing the trans-
action, other than the transferor’s agent, and 
‘‘(B) the transferee’s agent.’’. 
(c) EXEMPTION NOT TO APPLY IF KNOWLEDGE OR 
NOTICE THAT AFFIDAVIT OR STATEMENT IS FALSE.—
(1) IN
GENERAL.—Paragraph (7) of section 
1445(b) (relating to special rules for paragraphs (2) 
and (3)) is amended to read as follows:
‘‘(7) SPECIAL RULES FOR PARAGRAPHS (2), (3), 
AND (9).—Paragraph (2), (3), or (9) (as the case 
may be) shall not apply to any disposition—
‘‘(A) if—
‘‘(i) the transferee or qualified sub-
stitute has actual knowledge that the affi-
davit referred to in such paragraph, or the 
statement 
referred 
to 
in 
paragraph 
(9)(A)(ii), is false, or 
‘‘(ii) the transferee or qualified sub-
stitute receives a notice (as described in 
subsection (d)) from a transferor’s agent, 
transferee’s agent, or qualified substitute 
that such affidavit or statement is false, or 
‘‘(B) if the Secretary by regulations re-
quires the transferee or qualified substitute to 
furnish a copy of such affidavit or statement to 
the Secretary and the transferee or qualified 
substitute fails to furnish a copy of such affi-
davit or statement to the Secretary at such 
time and in such manner as required by such 
regulations.’’. 
(2) LIABILITY.—
(A) NOTICE.—Paragraph (1) of section 
1445(d) (relating to notice of false affidavit;
foreign corporations) is amended to read as fol-
lows: 
‘‘(1) NOTICE OF FALSE AFFIDAVIT; FOREIGN 
CORPORATIONS.—If—
‘‘(A) the transferor furnishes the trans-
feree or qualified substitute an affidavit de-
scribed in paragraph (2) of subsection (b) or a 
domestic corporation furnishes the transferee 
an affidavit described in paragraph (3) of sub-
section (b), and 
‘‘(B) in the case of—
‘‘(i) any transferor’s agent—
‘‘(I) such agent has actual knowl-
edge that such affidavit is false, or 
‘‘(II) in the case of an affidavit 
described in subsection (b)(2) fur-
nished by a corporation, such corpora-
tion is a foreign corporation, or 
‘‘(ii) any transferee’s agent or quali-
fied substitute, such agent or substitute 
has actual knowledge that such affidavit is 
false, 
such agent or qualified substitute shall so notify 
the transferee at such time and in such manner 
as the Secretary shall require by regulations.’’.
(B) FAILURE TO FURNISH NOTICE.—Para-
graph (2) of section 1445(d) (relating to failure 
to furnish notice) is amended to read as follows: 
‘‘(2) FAILURE TO FURNISH NOTICE.—
‘‘(A) IN
GENERAL.—If any transferor’s 
agent, transferee’s agent, or qualified substitute 
is required by paragraph (1) to furnish notice, 
but fails to furnish such notice at such time or 
times and in such manner as may be required 
by regulations, such agent or substitute shall 
have the same duty to deduct and withhold that 
the transferee would have had if such agent or 
substitute had complied with paragraph (1). 
‘‘(B) LIABILITY LIMITED TO AMOUNT OF 
COMPENSATION.—An agent’s or substitute’s li-
ability under subparagraph (A) shall be limited 
to the amount of compensation the agent or 
substitute derives from the transaction.’’. 
(C) 
CONFORMING
AMENDMENT.—The 
heading for section 1445(d) is amended by 
striking ‘‘OR TRANSFEREE’S AGENTS’’ and in-
serting ‘‘, TRANSFEREE’S AGENTS, OR QUALI-
FIED SUBSTITUTES’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions of United States
real property interests after the date of the enactment of 
this Act. 
SEC. 11. DISCLOSURE OF PRISONER RETURN INFORMA-
TION TO FEDERAL BUREAU OF PRISONS. 
(a) IN GENERAL.—Subsection (k) of section 6103 
(relating to disclosure of certain return and return infor-
mation for tax administration purposes) is amended by 
adding at the end the following new paragraph: 
‘‘(10) DISCLOSURE
OF
CERTAIN
RETURN
IN-
FORMATION OF PRISONERS TO FEDERAL BUREAU OF 
PRISONS.—
‘‘(A) IN
GENERAL.—Under such proce-
dures as the Secretary may prescribe, the Sec-
retary may disclose to the head of the Federal 
Bureau of Prisons any return information with 
respect to individuals incarcerated in Federal 
prison whom the Secretary has determined may 
have filed or facilitated the filing of a false re-
turn to the extent that the Secretary deter-
mines that such disclosure is necessary to per-
mit effective Federal tax administration. 
‘‘(B) RESTRICTION ON REDISCLOSURE.—
Notwithstanding subsection (n), the head of the 
Federal Bureau of Prisons may not disclose any 
information obtained under subparagraph (A)
to any person other than an officer or employee 
of such Bureau. 
‘‘(C) RESTRICTION ON USE OF DISCLOSED 
INFORMATION.—Return information received 
under this paragraph shall be used only for 
purposes of and to the extent necessary in tak-
ing administrative action to prevent the filing of 
false and fraudulent returns, including adminis-
trative actions to address possible violations of 
administrative rules and regulations of the pris-
on facility. 
‘‘(D) ANNUAL
REPORT.—In each of the 
calendar years 2007 through 2010, the Sec-
retary shall submit to Congress and make pub-
licly available a report on the filing of false and 
fraudulent returns by individuals incarcerated 
in Federal and State prisons. Such report shall 
include statistics on the number of false and 
fraudulent returns associated with each Federal 
and State prison. 
‘‘(E) TERMINATION.—No disclosure may 
be made under this paragraph after December 
31, 2010.’’.
(b) RECORDKEEPING.—Paragraph (4) of section 
6103(p) is amended by striking ‘‘(k)(8)’’ both places it 
appears and inserting ‘‘(k)(8) or (10)’’. 
(c) EVALUATION
BY TREASURY INSPECTOR GEN-
ERAL FOR TAX ADMINISTRATION.—Paragraph (3) of sec-
tion 7803(d) is amended by striking ‘‘and’’ at the end of 
subparagraph (A), by striking the period at the end of 
subparagraph (B) and inserting ‘‘; and’’, and by adding 
at the end the following new subparagraph: 
‘‘(C) not later than December 31, 2009, 
submit a written report to Congress on the im-
plementation of section 6103(k)(10).’’. 
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to disclosures made after December 31, 
2007. 
(2) ANNUAL REPORT.—Section 6103(k)(10)(D) 
of the Internal Revenue Code of 1986 (relating to 
annual reports), as added by this section, shall apply 
to reports submitted after the date of the enactment 
of this Act.