(A) IN GENERAL.—Section 7443A(b) (re-
lating to proceedings which may be assigned to 
special trial judges) is amended by striking 
‘‘and’’ at the end of paragraph (4), by redesig-
nating paragraph (5) as paragraph (6), and by 
inserting after paragraph (4) the following new 
paragraph: 
‘‘(5) any proceeding under section 7623(b)(4), 
and’’. 
(B) CONFORMING
AMENDMENT.—Section 
7443A(c) is amended by striking ‘‘or (4)’’ and 
inserting ‘‘(4), or (5)’’. 
(3) DEDUCTION ALLOWED WHETHER OR NOT 
TAXPAYER ITEMIZES.—Subsection (a) of section 62 
(relating to general rule defining adjusted gross in-
come) is amended by inserting after paragraph (20) 
the following new paragraph: 
‘‘(21) ATTORNEYS FEES RELATING TO AWARDS 
TO
WHISTLEBLOWERS.—Any deduction allowable 
under this chapter for attorney fees and court costs 
paid by, or on behalf of, the taxpayer in connection 
with any award under section 7623(b) (relating to 
awards to whistleblowers). The preceding sentence 
shall not apply to any deduction in excess of the 
VerDate Aug 31 2005 
23:42 Jul 31, 2006
Jkt 049200
PO 00000
Frm 00068
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.PCS
H5970
ycherry on PROD1PC64 with BILLS
amount includible in the taxpayer’s gross income for 
the taxable year on account of such award.’’. 
(b) WHISTLEBLOWER OFFICE.— 
(1) IN
GENERAL.—Not later than the date 
which is 12 months after the date of the enactment 
of this Act, the Secretary of the Treasury shall issue 
guidance for the operation of a whistleblower pro-
gram to be administered in the Internal Revenue 
Service by an office to be known as the ‘‘Whistle-
blower Office’’ which— 
(A) shall at all times operate at the direc-
tion of the Commissioner of Internal Revenue 
and coordinate and consult with other divisions 
in the Internal Revenue Service as directed by 
the Commissioner of Internal Revenue, 
(B) shall analyze information received from 
any individual described in section 7623(b) of 
the Internal Revenue Code of 1986 and either 
investigate the matter itself or assign it to the 
appropriate Internal Revenue Service office, 
and 
(C) in its sole discretion, may ask for addi-
tional assistance from such individual or any 
legal representative of such individual. 
VerDate Aug 31 2005 
23:42 Jul 31, 2006
Jkt 049200
PO 00000
Frm 00069
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.PCS
H5970
ycherry on PROD1PC64 with BILLS
(2) REQUEST FOR ASSISTANCE.—The guidance 
issued under paragraph (1) shall specify that any as-
sistance requested under paragraph (1)(C) shall be 
under the direction and control of the Whistleblower 
Office or the office assigned to investigate the mat-
ter under paragraph (1)(A). No individual or legal 
representative whose assistance is so requested may 
by reason of such request represent himself or her-
self as an employee of the Federal Government. 
(c) REPORT BY SECRETARY.—The Secretary of the 
Treasury shall each year conduct a study and report to 
Congress on the use of section 7623 of the Internal Rev-
enue Code of 1986, including— 
(1) an analysis of the use of such section dur-
ing the preceding year and the results of such use, 
and 
(2) any legislative or administrative rec-
ommendations regarding the provisions of such sec-
tion and its application. 
(d) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to information provided on or 
after the date of the enactment of this Act. 
SEC. 237. FRIVOLOUS TAX SUBMISSIONS. 
(a) CIVIL PENALTIES.—Section 6702 is amended to 
read as follows: 
VerDate Aug 31 2005 
23:42 Jul 31, 2006
Jkt 049200
PO 00000
Frm 00070
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.PCS
H5970
ycherry on PROD1PC64 with BILLS
‘‘SEC. 6702. FRIVOLOUS TAX SUBMISSIONS. 
‘‘(a) CIVIL PENALTY
FOR FRIVOLOUS TAX RE-
TURNS.—A person shall pay a penalty of $5,000 if— 
‘‘(1) such person files what purports to be a re-
turn of a tax imposed by this title but which— 
‘‘(A) does not contain information on 
which the substantial correctness of the self-as-
sessment may be judged, or 
‘‘(B) contains information that on its face 
indicates that the self-assessment is substan-
tially incorrect, and 
‘‘(2) the conduct referred to in paragraph (1)— 
‘‘(A) is based on a position which the Sec-
retary has identified as frivolous under sub-
section (c), or 
‘‘(B) reflects a desire to delay or impede 
the administration of Federal tax laws. 
‘‘(b) CIVIL PENALTY
FOR SPECIFIED FRIVOLOUS 
SUBMISSIONS.— 
‘‘(1) IMPOSITION OF PENALTY.—Except as pro-
vided in paragraph (3), any person who submits a 
specified frivolous submission shall pay a penalty of 
$5,000. 
‘‘(2) SPECIFIED FRIVOLOUS SUBMISSION.—For 
purposes of this section— 
VerDate Aug 31 2005 
23:42 Jul 31, 2006
Jkt 049200
PO 00000
Frm 00071
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.PCS
H5970
ycherry on PROD1PC64 with BILLS