(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to returns filed with respect to tax-
able years beginning after December 31, 2002.
SEC. 306. ACCESS OF NATIONAL TAXPAYER ADVOCATE TO
INDEPENDENT LEGAL COUNSEL.
Clause (i) of section 7803(c)(2)(D) (relating to per-
sonnel actions) is amended by striking ‘‘and’’ at the end
of subclause (I), by striking the period at the end of sub-
clause (II) and inserting ‘‘, and’’, and by adding at the
end the following new subclause:
‘‘(III) appoint a counsel in the
Office of the Taxpayer Advocate to re-
port solely to the National Taxpayer
Advocate.’’.
SEC. 307. PAYMENT OF MOTOR FUEL EXCISE TAX REFUNDS
BY DIRECT DEPOSIT.
(a) IN GENERAL.—Subchapter II of chapter 33 of
title 31, United States Code, is amended by adding at the
end the following new section:
‘‘§ 3337. Payment of motor fuel excise tax refunds by
direct deposit
‘‘The Secretary of the Treasury shall make payments
under sections 6420, 6421, and 6427 of the Internal Rev-
enue Code of 1986 by electronic funds transfer (as defined
in section 3332(j)(1)) if the person who is entitled to the
payment—
‘‘(1) elects to receive the payment by electronic
funds transfer; and
‘‘(2) satisfies the requirements of section
3332(g) with respect to such payment at such time
and in such manner as the Secretary may require.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter II of chapter 33 of title 31, United States
Code, is amended by adding at the end the following new
item:
‘‘3337. Payment of motor fuel excise tax refunds by direct deposit.’’.
SEC. 308. 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 (14), by striking
the period at the end of paragraph (15) and insert-
ing ‘‘; and’’, and by inserting after paragraph (15)
the following new paragraph:
‘‘(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) 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, 2002.
SEC. 309. HEALTH INSURANCE COSTS OF ELIGIBLE INDI-
VIDUALS.
(a) CONSUMER OPTIONS.—
(1) IN
GENERAL.—Paragraph (2) of section
35(e) is amended by adding at the end the following
new subparagraphs:
‘‘(C) 
WAIVER
BY
ELIGIBLE
INDIVID-
UALS.—With respect to any month, clauses (i)
and (ii) of subparagraph (A) shall not apply
with respect to any eligible individual and such
individual’s qualifying family members if such
individual—
‘‘(i) does not reside in a State which
the Secretary has identified by regulation,
guidance, or otherwise as a State in which
any coverage which—
‘‘(I) is described in any of sub-
paragraphs (C) through (H) of para-
graph (1), and
‘‘(II) meets the requirements of
subparagraphs (A) and (B) of this
paragraph,
is available to eligible individuals (and
their qualifying family members) residing
in the State, and
‘‘(ii) elects to waive the application of
clauses (i) and (ii) of subparagraph (A) of
this paragraph.
‘‘(D) 
ELECTION.—Any 
election 
made
under subparagraph (C)(ii) shall be effective for
the month for which such election is made and
for all subsequent months.
‘‘(E) TERMINATION.—Subparagraphs (C)
and (D) shall not apply to any month beginning
after December 31, 2004.’’.
(2) NO IMPACT ON STATE CONSUMER PROTEC-
TIONS.—Nothing in the amendment made by para-
graph (1) supercedes or otherwise affects the appli-
cation of State law relating to consumer insurance
protections (including State law implementing the
requirements of part B of title XXVII of the Public
Health Service Act).
(b) STATE-BASED CONTINUATION COVERAGE NOT
SUBJECT TO REQUIREMENTS.—Subparagraphs (A) and
(B)(i) of section 35(e)(2) are each amended by striking
‘‘subparagraphs (B) through (H)’’ and inserting ‘‘sub-
paragraphs (C) through (H)’’.
(c) EFFECTIVE DATE.—
(1) CONSUMER
OPTIONS.—The amendment
made by subsection (a) shall apply to months begin-
ning after the date of the enactment of this Act.
(2) STATE-BASED CONTINUATION COVERAGE.—
The amendments made by subsection (b) shall take
effect as if included in section 201(a) of the Trade
Act of 2002.
SEC. 310. SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.
(a) IN GENERAL.—Section 501 (relating to exemp-
tion from tax on corporations, certain trusts, etc.) is
amended by redesignating subsection (p) as subsection (q)
and by inserting after subsection (o) the following new
subsection:
‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—The exemption from tax
under subsection (a) with respect to any organiza-
tion described in paragraph (2), and the eligibility of
any organization described in paragraph (2) to apply
for recognition of exemption under subsection (a),
shall be suspended during the period described in
paragraph (3).
‘‘(2) TERRORIST ORGANIZATIONS.—An organi-
zation is described in this paragraph if such organi-
zation is designated or otherwise individually
identified—
‘‘(A) under section 212(a)(3)(B)(vi)(II) or
219 of the Immigration and Nationality Act as
a terrorist organization or foreign terrorist or-
ganization,
‘‘(B) in or pursuant to an Executive order
which is related to terrorism and issued under
the authority of the International Emergency
Economic Powers Act or section 5 of the
United Nations Participation Act of 1945 for
the purpose of imposing on such organization
an economic or other sanction, or
‘‘(C) in or pursuant to an Executive order
issued under the authority of any Federal law
if—
‘‘(i) the organization is designated or
otherwise individually identified in or pur-
suant to such Executive order as sup-
porting or engaging in terrorist activity (as
defined in section 212(a)(3)(B) of the Im-
migration and Nationality Act) or sup-
porting terrorism (as defined in section
140(d)(2) of the Foreign Relations Author-
ization Act, Fiscal Years 1988 and 1989);
and
‘‘(ii) such Executive order refers to
this subsection.
‘‘(3) PERIOD OF SUSPENSION.—With respect to
any organization described in paragraph (2), the pe-
riod of suspension—
‘‘(A) begins on the later of—
‘‘(i) the date of the first publication of
a designation or identification described in
paragraph (2) with respect to such organi-
zation, or
‘‘(ii) the date of the enactment of this
subsection, and
‘‘(B) ends on the first date that all des-
ignations and identifications described in para-
graph (2) with respect to such organization are
rescinded pursuant to the law or Executive
order under which such designation or identi-
fication was made.
‘‘(4) DENIAL
OF
DEDUCTION.—No deduction
shall be allowed under section 170, 545(b)(2),
556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for
any contribution to an organization described in
paragraph (2) during the period described in para-
graph (3).
‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL
CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC-
TION.—Notwithstanding section 7428 or any other
provision of law, no organization or other person
may challenge a suspension under paragraph (1), a
designation or identification described in paragraph
(2), the period of suspension described in paragraph
(3), or a denial of a deduction under paragraph (4)
in any administrative or judicial proceeding relating
to the Federal tax liability of such organization or
other person.
‘‘(6) ERRONEOUS DESIGNATION.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the tax exemption of any organi-
zation described in paragraph (2) is sus-
pended under paragraph (1),
‘‘(ii) each designation and identifica-
tion described in paragraph (2) which has
been made with respect to such organiza-
tion is determined to be erroneous pursu-
ant to the law or Executive order under
which such designation or identification
was made, and
‘‘(iii) the erroneous designations and
identifications result in an overpayment of
income tax for any taxable year by such
organization,
credit or refund (with interest) with respect to
such overpayment shall be made.
‘‘(B) WAIVER
OF
LIMITATIONS.—If the
credit or refund of any overpayment of tax de-
scribed in subparagraph (A)(iii) is prevented at
any time by the operation of any law or rule of
law (including res judicata), such credit or re-
fund may nevertheless be allowed or made if the
claim therefor is filed before the close of the 1-
year period beginning on the date of the last
determination 
described 
in 
subparagraph
(A)(ii).
‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex-
emption of any organization is suspended under this
subsection, the Internal Revenue Service shall up-
date the listings of tax-exempt organizations and
shall publish appropriate notice to taxpayers of such
suspension and of the fact that contributions to such
organization are not deductible during the period of
such suspension.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to designations made before, on,
or after the date of the enactment of this Act.
SEC. 311. EXTENSION OF JOINT REVIEW OF STRATEGIC
PLANS AND BUDGET FOR THE INTERNAL
REVENUE SERVICE.
(a) IN GENERAL.—Paragraph (2) of section 8021(f)
(relating to joint reviews) is amended by striking ‘‘2004’’
and inserting ‘‘2009’’.
(b) REPORT.—Subparagraph (C) of section 8022(3)
(regarding reports) is amended—
(1) by striking ‘‘2004’’ and inserting ‘‘2009’’,
and
(2) by striking ‘‘with respect to—’’ and all that
follows and inserting ‘‘with respect to the matters
addressed in the joint review referred to in section
8021(f)(2).’’.
TITLE IV—CONFIDENTIALITY
AND DISCLOSURE
SEC. 401. 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.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to requests made after the date
of the enactment of this Act.
SEC. 402. TAXPAYER REPRESENTATIVES NOT SUBJECT TO
EXAMINATION ON SOLE BASIS OF REPRESEN-
TATION OF TAXPAYERS.
(a) IN GENERAL.—Paragraph (1) of section 6103(h)
(relating to disclosure to certain Federal officers and em-
ployees for purposes of tax administration, etc.) is
amended—
(1) by striking ‘‘Returns’’ and inserting the fol-
lowing:
‘‘(A) IN GENERAL.—Returns’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(B) TAXPAYER REPRESENTATIVES.—Not-
withstanding subparagraph (A), the return of
the representative 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 officer or employee on the
sole basis of the representative’s relationship to
the taxpayer unless a supervisor 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 which is 180 days
after the date of the enactment of this Act.
SEC. 403. DISCLOSURE IN JUDICIAL OR ADMINISTRATIVE
TAX PROCEEDINGS OF RETURN AND RETURN
INFORMATION OF PERSONS WHO ARE NOT
PARTY TO SUCH PROCEEDINGS.
(a) IN GENERAL.—Paragraph (4) of section 6103(h)
(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 subparagraph:
‘‘(B) DISCLOSURE IN JUDICIAL OR ADMIN-
ISTRATIVE TAX PROCEEDINGS OF RETURN AND
RETURN INFORMATION OF PERSONS NOT PARTY
TO SUCH PROCEEDINGS.—
‘‘(i) NOTICE.—Return or return infor-
mation of any person who is not a party to
a judicial or administrative proceeding de-
scribed in this paragraph shall not be dis-
closed under clause (ii) or (iii) of subpara-
graph (A) until after the Secretary makes
a reasonable effort to give notice to such
person and an opportunity for such person
to request the deletion of matter from such
return or return information, including any
of the items referred to in paragraphs (1)
through (7) of section 6110(c). Such notice
shall include a statement of the issue or
issues the resolution of which is the reason
such return or return information is
sought. In the case of S corporations, part-
nerships, estates, and trusts, such notice
shall be made at the entity level.
‘‘(ii) DISCLOSURE LIMITED TO PERTI-
NENT PORTION.—The only portion of a re-
turn or return information described in
clause (i) which may be disclosed under
subparagraph (A) is that portion of such
return or return information that directly
relates to the resolution of an issue in such
proceeding.
‘‘(iii) EXCEPTIONS.—Clause (i) shall
not apply—
‘‘(I) to any civil action under sec-
tion 7407, 7408, or 7409,
‘‘(II) to any ex parte proceeding
for obtaining a search warrant, order
for entry on premises or safe deposit
boxes, or similar ex parte proceeding,
‘‘(III) to disclosure of third party
return information by indictment or
criminal information, or
‘‘(IV) if the Attorney General or
the Attorney General’s delegate deter-
mines that the application of such
clause would seriously impair a crimi-
nal tax investigation or proceeding.’’.
(b) CONFORMING AMENDMENTS.—Paragraph (4) of
section 6103(h) is amended by—
(1) by striking ‘‘PROCEEDINGS.—A return’’ and
inserting ‘‘PROCEEDINGS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a return’’;
(2) by redesignating subparagraphs (A), (B),
(C), and (D) as clauses (i), (ii), (iii), and (iv), re-
spectively, and by moving such clauses 2 ems to the
right; and
(3) in the matter following clause (iv) (as so re-
designated), by striking ‘‘subparagraph (A), (B), or
(C)’’ and inserting ‘‘clause (i), (ii), or (iii)’’ and by
moving such matter 2 ems to the right.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to proceedings commenced after
the date of the enactment of this Act.
SEC. 404. PROHIBITION OF DISCLOSURE OF TAXPAYER
IDENTIFICATION 
INFORMATION 
WITH 
RE-
SPECT TO DISCLOSURE OF ACCEPTED OF-
FERS-IN-COMPROMISE.
(a) GENERAL.—Paragraph (1) of section 6103(k)
(relating to disclosure of certain returns and return infor-
mation for tax administrative purposes) is amended by in-
serting ‘‘(other than the taxpayer’s address and TIN)’’
after ‘‘Return information’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to disclosures made after the date
of the enactment of this Act.
SEC. 405. 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
AND
OTHER AGENTS.—Notwithstanding any other provi-
sion of this section, no return or return information
shall be disclosed to any contractor or other agent
of a Federal, State, or local agency unless such
agency, to the satisfaction of the Secretary—
‘‘(A) has requirements in effect which re-
quire each such contractor or other agent which
would have access to returns or return informa-
tion to provide safeguards (within the meaning
of paragraph (4)) to protect the confidentiality
of such returns or return information,
‘‘(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
such contractor or other agent to determine
compliance with such requirements,
‘‘(C) submits the findings of the most re-
cent review conducted under subparagraph (B)
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 each such contractor
or other agent is in compliance with all such re-
quirements.
The certification required by subparagraph (D) shall
include the name and address of each contractor and
other agent, a description of the contract of the con-
tractor or other agent with the agency, and the du-
ration 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, 2003.
(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 2004.
SEC. 406. 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
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, sections 7213, 7213A, and
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
‘‘(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
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 AMENDMENTS.—
(1) Section 6103(c) is amended by striking
‘‘TAXPAYER.—The Secretary’’ and inserting ‘‘TAX-
PAYER.—
‘‘(1) IN GENERAL.—The Secretary’’.
(2) Section 7213(a)(1) is amended by striking
‘‘section 6103(n)’’ and inserting ‘‘subsections (c)
and (n) of section 6103’’.
(3) Section 7213A(a)(1)(B) is amended by
striking ‘‘subsection (l)(18) or (n) of section 6103’’
and inserting ‘‘subsection (c), (l)(18), or (n) of sec-
tion 6103’’.
(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. 407. 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 sub-
stantiates that such taxpayer’s return or return informa-
tion was inspected or disclosed in violation of any of the
provisions 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 405, 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
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. 408. 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.
SEC. 409. DISCLOSURE OF TAXPAYER IDENTITY FOR TAX
REFUND PURPOSES.
(a) IN GENERAL.—Paragraph (1) of section 6103(m)
(relating to disclosure of taxpayer identity information) is
amended by striking ‘‘and other media’’ and by inserting
‘‘, other media, and through any other means of mass
communication,’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 410. DISCLOSURE TO STATE OFFICIALS OF PROPOSED
ACTIONS RELATED TO SECTION 501(c)(3) OR-
GANIZATIONS.
(a) IN GENERAL.—Subsection (c) of section 6104 is
amended by striking paragraph (2) and inserting the fol-
lowing new paragraphs:
‘‘(2) DISCLOSURE OF PROPOSED ACTIONS.—
‘‘(A) SPECIFIC
NOTIFICATIONS.—In the
case of an organization to which paragraph (1)
applies, the Secretary may disclose to the ap-
propriate State officer—
‘‘(i) a notice of proposed refusal to
recognize such organization as an organi-
zation described in section 501(c)(3) or a
notice of proposed revocation of such orga-
nization’s recognition as an organization
exempt from taxation,
‘‘(ii) the issuance of a letter of pro-
posed deficiency of tax imposed under sec-
tion 507 or chapter 41 or 42, and
‘‘(iii) the names, addresses, and tax-
payer identification numbers of organiza-
tions that have applied for recognition as
organizations 
described 
in 
section
501(c)(3).
‘‘(B) ADDITIONAL DISCLOSURES.—Returns
and return information of organizations with
respect to which information is disclosed under
subparagraph (A) may be made available for in-
spection by or disclosed to an appropriate State
officer.
‘‘(C) PROCEDURES FOR DISCLOSURE.—In-
formation may be inspected or disclosed under
subparagraph (A) or (B) only—
‘‘(i) upon written request by an ap-
propriate State officer, and
‘‘(ii) for the purpose of, and only to
the extent necessary in, the administration
of State laws regulating such organiza-
tions.
Such information may only be inspected by or
disclosed to a person other than the appropriate
State officer if such person is an officer or em-
ployee of the State and is designated by the ap-
propriate State officer to receive the returns or
return information under this paragraph on be-
half of the appropriate State officer.
‘‘(D) DISCLOSURES OTHER THAN BY RE-
QUEST.—The Secretary may make available for
inspection or disclose returns and return infor-
mation of an organization to which paragraph
(1) applies to an appropriate State officer of
any State if the Secretary determines that such
inspection or disclosure may facilitate the reso-
lution of State or Federal issues relating to the
tax-exempt status of such organization.
‘‘(3) USE IN ADMINISTRATIVE AND JUDICIAL
CIVIL PROCEEDINGS.—Returns and return informa-
tion disclosed pursuant to this subsection may be
disclosed in administrative and judicial civil pro-
ceedings pertaining to the enforcement of State laws
regulating such organizations in a manner pre-
scribed by the Secretary similar to that for tax ad-
ministration proceedings under section 6103(h)(4).
‘‘(4) NO
DISCLOSURE
IF
IMPAIRMENT.—Re-
turns and return information shall not be disclosed
under this subsection, or in any proceeding described
in paragraph (3), to the extent that the Secretary
determines that such disclosure would seriously im-
pair Federal tax administration.
‘‘(5) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) RETURN
AND
RETURN
INFORMA-
TION.—The terms ‘return’ and ‘return informa-
tion’ have the respective meanings given to such
terms by section 6103(b).
‘‘(B) APPROPRIATE STATE OFFICER.—The
term ‘appropriate State officer’ means—
‘‘(i) the State attorney general, or
‘‘(ii) any other State official charged
with overseeing organizations of the type
described in section 501(c)(3).’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 6103(p)(3) is
amended by inserting ‘‘and section 6104(c)’’ after
‘‘section’’ in the first sentence.
(2) Paragraph (4) of section 6103(p) is
amended—
(A) in the matter preceding subparagraph
(A), by inserting ‘‘, or any appropriate State of-
ficer (as defined in section 6104(c)),’’ before
‘‘or any other person’’,
(B) in subparagraph (F)(i), by inserting
‘‘or any appropriate State officer (as defined in
section 6104(c)),’’ before ‘‘or any other per-
son’’, and
(C) in the matter following subparagraph
(F), by inserting ‘‘, an appropriate State officer
(as defined in section 6104(c)),’’ after ‘‘includ-
ing an agency’’ each place it appears.
(3) Paragraph (2) of section 7213(a) is amend-
ed by striking ‘‘6103.’’ and inserting ‘‘6103 or under
section 6104(c).’’.
(4) Paragraph (2) of section 7213A(a) is
amended by inserting ‘‘or 6104(c)’’ after ‘‘6103’’.
(5) Paragraph (2) of section 7431(a) is amend-
ed by inserting ‘‘(including any disclosure in viola-
tion of section 6104(c))’’ after ‘‘6103’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act but shall not apply to requests made before
such date.
SEC. 411. CONFIDENTIALITY OF TAXPAYER COMMUNICA-
TIONS WITH THE OFFICE OF THE TAXPAYER
ADVOCATE.
(a) IN GENERAL.—Subsection (c) of section 7803 is
amended by adding at the end the following new para-
graph:
‘‘(5) CONFIDENTIALITY OF TAXPAYER INFOR-
MATION.—
‘‘(A) IN GENERAL.—To the extent author-
ized by the National Taxpayer Advocate or pur-
suant to guidance issued under subparagraph
(B), any officer or employee of the Office of the
Taxpayer Advocate may withhold from the In-
ternal Revenue Service and the Department of
Justice any information provided by, or regard-
ing contact with, any taxpayer.
‘‘(B) ISSUANCE
OF
GUIDANCE.—In con-
sultation with the Chief Counsel for the Inter-
nal Revenue Service and subject to the approval
of the Commissioner of Internal Revenue, the
National Taxpayer Advocate may issue guid-
ance regarding the circumstances (including
with respect to litigation) under which, and the
persons to whom, employees of the Office of the
Taxpayer Advocate shall not disclose informa-
tion obtained from a taxpayer. To the extent to
which any provision of the Internal Revenue
Manual would require greater disclosure by em-
ployees of the Office of the Taxpayer Advocate
than the disclosure required under such guid-
ance, such provision shall not apply.
‘‘(C) EMPLOYEE
PROTECTION.—Section
7214(a)(8) shall not apply to any failure to re-
port knowledge or information if—
‘‘(i) such failure to report is author-
ized under subparagraph (A), and
‘‘(ii) such knowledge or information is
not of fraud committed by a person
against the United States under any rev-
enue law.’’.
(b) CONFORMING AMENDMENT.—Subparagraph (A)
of section 7803(c)(4) is amended by inserting ‘‘and’’ at
the end of clause (ii), by striking ‘‘; and’’ at the end of
clause (iii) and inserting a period, and by striking clause
(iv).
TITLE V—MISCELLANEOUS
SEC. 501. CLARIFICATION OF DEFINITION OF CHURCH TAX
INQUIRY.
Subsection (i) of section 7611 (relating to section not
to apply to criminal investigations, etc.) is amended by
striking ‘‘or’’ at the end of paragraph (4), by striking the
period at the end of paragraph (5) and inserting ‘‘, or’’,
and by inserting after paragraph (5) the following:
‘‘(6) information provided by the Secretary re-
lated to the standards for exemption from tax under
this title and the requirements under this title relat-
ing to unrelated business taxable income.’’.
SEC. 502. EXPANSION OF DECLARATORY JUDGMENT REM-
EDY TO TAX-EXEMPT ORGANIZATIONS.
(a) IN GENERAL.—Paragraph (1) of section 7428(a)
(relating to creation of remedy) is amended—
(1) in subparagraph (B) by inserting after
‘‘509(a))’’ the following: ‘‘or as a private operating
foundation (as defined in section 4942(j)(3))’’; and
(2) by amending subparagraph (C) to read as
follows:
‘‘(C) with respect to the initial qualifica-
tion or continuing qualification of an organiza-
tion as an organization described in subsection
(c) (other than paragraph (3)) or (d) of section
501 which is exempt from tax under section
501(a), or’’.
(b) COURT JURISDICTION.—Subsection (a) of section
7428 is amended in the material following paragraph (2)
by striking ‘‘United States Tax Court, the United States
Claims Court, or the district court of the United States
for the District of Columbia’’ and inserting the following:
‘‘United States Tax Court (in the case of any such deter-
mination or failure) or the United States Claims Court
or the district court of the United States for the District
of Columbia (in the case of a determination or failure with
respect to an issue referred to in subparagraph (A) or (B)
of paragraph (1)),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to pleadings filed with respect to
determinations (or requests for determinations) made
after the date of the enactment of this Act.
SEC. 503. EMPLOYEE MISCONDUCT REPORT TO INCLUDE
SUMMARY OF COMPLAINTS BY CATEGORY.
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section
7803(d)(2)(A) is amended by inserting before the semi-
colon at the end the following: ‘‘, including a summary
(by category) of the 10 most common complaints made
and the number of such common complaints’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to reporting periods
ending after the date of the enactment of this Act.
SEC. 504. ANNUAL REPORT ON AWARDS OF COSTS AND
CERTAIN 
FEES 
IN 
ADMINISTRATIVE 
AND
COURT PROCEEDINGS.
Not later than 3 months after the close of each Fed-
eral fiscal year after fiscal year 2003, the Treasury In-
spector General for Tax Administration shall submit a re-
port to Congress which specifies for such year—
(1) the number of payments made by the
United States pursuant to section 7430 of the Inter-
nal Revenue Code of 1986 (relating to awarding of
costs and certain fees);
(2) the amount of each such payment;
(3) an analysis of any administrative issue giv-
ing rise to such payments; and
(4) changes (if any) which will be implemented
as a result of such analysis and other changes (if
any) recommended by the Treasury Inspector Gen-
eral for Tax Administration as a result of such anal-
ysis.
SEC. 505. ANNUAL REPORT ON ABATEMENT OF PENALTIES.
Not later than 6 months after the close of each Fed-
eral fiscal year after fiscal year 2003, the Treasury In-
spector General for Tax Administration shall submit a re-
port to Congress on abatements of penalties under the In-
ternal Revenue Code of 1986 during such year, including
information on the reasons and criteria for such abate-
ments.
SEC. 506. 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
facsimile transmission, permit the use of alternative
means for the Internal Revenue Service to communicate
with taxpayers.
SEC. 507. EXPLANATION OF STATUTE OF LIMITATIONS AND
CONSEQUENCES OF FAILURE TO FILE.
The Secretary of the Treasury or the Secretary’s del-
egate shall, as soon as practicable but not later than 180
days after the date of the enactment of this Act, revise
the statement required by section 6227 of the Omnibus
Taxpayer Bill of Rights (Internal Revenue Service Publi-
cation No. 1), and any instructions booklet accompanying
a general income tax return form for taxable years begin-
ning after 2002 (including forms 1040, 1040A, 1040EZ,
and any similar or successor forms relating thereto), to
provide for an explanation of—
(1) the limitations imposed by section 6511 of
the Internal Revenue Code of 1986 on credits and
refunds; and
(2) the consequences under such section 6511
of the failure to file a return of tax.
SEC. 508. 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-
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.
SEC. 509. ENROLLED AGENTS.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the
following new section:
‘‘SEC. 7528. 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. 7528. 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.
SEC. 510. 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. 511. EXTENSION OF INTERNAL REVENUE SERVICE
USER FEES.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions), as amended by section 509, is further
amended by adding at the end the following new section:
‘‘SEC. 7529. INTERNAL REVENUE SERVICE USER FEES.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program requiring the payment of user fees for—
‘‘(1) requests to the Internal Revenue Service
for ruling letters, opinion letters, and determination
letters, and
‘‘(2) other similar requests.
‘‘(b) PROGRAM CRITERIA.—
‘‘(1) IN GENERAL.—The fees charged under the
program required by subsection (a)—
‘‘(A) shall vary according to categories (or
subcategories) established by the Secretary,
‘‘(B) shall be determined after taking into
account the average time for (and difficulty of)
complying with requests in each category (and
subcategory), and
‘‘(C) shall be payable in advance.
‘‘(2) EXEMPTIONS, ETC.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for such exemptions (and reduced fees)
under such program as the Secretary deter-
mines to be appropriate.
‘‘(B) EXEMPTION FOR CERTAIN REQUESTS
REGARDING
PENSION
PLANS.—The Secretary
shall not require payment of user fees under
such program for requests for determination
letters with respect to the qualified status of a
pension benefit plan maintained solely by 1 or
more eligible employers or any trust which is
part of the plan. The preceding sentence shall
not apply to any request—
‘‘(i) made after the later of—
‘‘(I) the fifth plan year the pen-
sion benefit plan is in existence, or
‘‘(II) the end of any remedial
amendment period with respect to the
plan beginning within the first 5 plan
years, or
‘‘(ii) made by the sponsor of any pro-
totype or similar plan which the sponsor
intends to market to participating employ-
ers.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of subparagraph (B)—
‘‘(i) PENSION
BENEFIT
PLAN.—The
term ‘pension benefit plan’ means a pen-
sion, profit-sharing, stock bonus, annuity,
or employee stock ownership plan.
‘‘(ii) 
ELIGIBLE
EMPLOYER.—The
term ‘eligible employer’ means an eligible
employer 
(as 
defined 
in 
section
408(p)(2)(C)(i)(I)) which has at least 1
employee who is not a highly compensated
employee (as defined in section 414(q))
and is participating in the plan. The deter-
mination of whether an employer is an eli-
gible employer under subparagraph (B)
shall be made as of the date of the request
described in such subparagraph.
‘‘(iii) DETERMINATION
OF
AVERAGE
FEES CHARGED.—For purposes of any de-
termination of average fees charged, any
request to which subparagraph (B) applies
shall not be taken into account.
‘‘(3) AVERAGE FEE REQUIREMENT.—The aver-
age fee charged under the program required by sub-
section (a) shall not be less than the amount deter-
mined under the following table:
Average
‘‘Category
Fee
Employee plan ruling and opinion ...........................................
$250
Exempt organization ruling .....................................................
$350
Employee plan determination ..................................................
$300
Exempt organization determination ........................................
$275
Chief counsel ruling .................................................................
$200.
‘‘(c) TERMINATION.—No fee shall be imposed under
this section with respect to requests made after September
30, 2013.’’.
(b) CONFORMING AMENDMENTS.—
(1) The table of sections for chapter 77 is
amended by adding at the end the following new
item:
‘‘Sec. 7529. Internal Revenue Service user fees.’’.
(2) Section 10511 of the Revenue Act of 1987
is repealed.
(3) Section 620 of the Economic Growth and
Tax Relief Reconciliation Act of 2001 is repealed.
(c) LIMITATIONS.—Notwithstanding any other provi-
sion of law, any fees collected pursuant to section 7527
of the Internal Revenue Code of 1986, as added by sub-
section (a), shall not be expended by the Internal Revenue
Service unless provided by an appropriations Act.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to requests made after the date
of the enactment of this Act.
TITLE VI—LOW-INCOME
TAXPAYER CLINICS
SEC. 601. LOW-INCOME TAXPAYER CLINICS.
(a) LIMITATION ON AMOUNT OF GRANTS.—Para-
graph (1) of section 7526(c) (relating to special rules and
limitations) is amended by striking ‘‘$6,000,000 per year’’
and inserting ‘‘$9,000,000 for 2004, $12,000,000 for
2005, and $15,000,000 for each year thereafter’’.
(b) PROMOTION
OF CLINICS.—Section 7526(c) is
amended by adding at the end the following new para-
graph:
‘‘(6) PROMOTION OF CLINICS.—The Secretary
is authorized to promote the benefits of and encour-
age the use of low-income taxpayer clinics through
the use of mass communications, referrals, and other
means.’’.
(c) USE
OF GRANTS
FOR OVERHEAD EXPENSES
PROHIBITED.—Section 7526(c), as amended by sub-
section (b), is further amended by adding at the end the
following new paragraph:
‘‘(7) USE
OF
GRANTS
FOR
OVERHEAD
EX-
PENSES PROHIBITED.—No grant made under this
section may be used for the general overhead ex-
penses of any institution sponsoring a qualified low-
income taxpayer clinic.’’.
(d) ELIGIBLE CLINICS.—
(1) IN
GENERAL.—Paragraph (2) of section
7526(b) is amended to read as follows:
‘‘(2) ELIGIBLE CLINIC.—The term ‘eligible clin-
ic’ means—
‘‘(A) any clinical program at an accredited
law, business, or accounting school in which
students represent low-income taxpayers in con-
troversies arising under this title; and
‘‘(B) any organization described in section
501(c) and exempt from tax under section
501(a) which satisfies the requirements of para-
graph (1) through representation of taxpayers
or referral of taxpayers to qualified representa-
tives.’’.
(2) CONFORMING AMENDMENT.—Subparagraph
(A) of section 7526(b)(1) is amended by striking
‘‘means a clinic’’ and inserting ‘‘means an eligible
clinic’’.
TITLE VII—FEDERAL-STATE UN-
EMPLOYMENT 
ASSISTANCE
AGREEMENTS
SEC. 701. APPLICABILITY OF CERTAIN FEDERAL-STATE
AGREEMENTS 
RELATING 
TO 
UNEMPLOY-
MENT ASSISTANCE.
Effective as of May 25, 2003, section 208 of Public
Law 107–147 is amended—
(1) in subsection (a)(2), by inserting ‘‘on or’’
after ‘‘ending’’; and
(2) in subsection (b), by striking ‘‘May 31’’
each place it appears and inserting ‘‘June 1’’.
Passed the House of Representatives June 19, 2003.
Attest:
Clerk.