(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 regard
to this section) as of such date.
SEC. 203. INDIVIDUALS HELD HARMLESS ON WRONGFUL
LEVY, ETC. ON INDIVIDUAL RETIREMENT
PLAN.
(a) IN GENERAL.—Section 6343 (relating to authority
to release levy and return property) is amended by adding
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 an individual retirement plan
(other than an endowment contract) to which a roll-
over from the plan levied upon is permitted.
‘‘(2) TREATMENT AS ROLLOVER.—The distribu-
tion on account of the levy and any deposit under
paragraph (1) with respect to such distribution shall
be treated for purposes of this title as if such distribu-
tion and deposit were part of a rollover described in
section 408(d)(3)(A)(i); except that—
‘‘(A) interest paid under subsection (c) shall
be treated as part of such distribution and as not
includible in gross income,
‘‘(B) the 60-day requirement in such section
shall be treated as met if the deposit is made not
later than the 60th day after the day on which
the individual receives an amount under para-
graph (1) from the Secretary, and
‘‘(C) such deposit shall not be taken into ac-
count under section 408(d)(3)(B).
‘‘(3) REFUND, ETC., OF INCOME TAX ON LEVY.—
If any amount is includible in gross income for a tax-
able 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 collected shall be
credited or refunded as an overpayment 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 Revenue
Code of 1986 after December 31, 2002.
SEC. 204. SEVEN-DAY THRESHOLD ON TOLLING OF STAT-
UTE OF LIMITATIONS DURING TAX REVIEW.
(a) IN GENERAL.—Section 7811(d)(1) (relating to sus-
pension of running of period of limitation) is amended by
inserting after ‘‘application,’’ the following: ‘‘but only if the
date of such decision is at least 7 days after the date of
the taxpayer’s application’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to applications filed after the date of
the enactment of this Act.
SEC. 205. STUDY OF LIENS AND LEVIES.
The Secretary of the Treasury, or the Secretary’s dele-
gate, shall conduct a study of the practices of the Internal
Revenue Service concerning liens and levies. The study shall
examine—
(1) the declining use of liens and levies by the
Internal Revenue Service, and
(2) the practicality of recording liens and lev-
ying against property in cases in which the cost of
such actions exceeds the amount to be realized from
such property.
Not later than 1 year after the date of the enactment of
this Act, the Secretary shall submit such study to the Com-
mittee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate.
TITLE III—EFFICIENCY OF TAX
ADMINISTRATION
SEC. 301. REVISIONS RELATING TO TERMINATION OF EM-
PLOYMENT OF INTERNAL REVENUE SERVICE
EMPLOYEES FOR MISCONDUCT.
(a) IN GENERAL.—Subchapter A of chapter 80 (relat-
ing to application of internal revenue laws) is amended by
inserting after section 7804 the following new section:
‘‘SEC. 7804A. DISCIPLINARY ACTIONS FOR MISCONDUCT.
‘‘(a) DISCIPLINARY ACTIONS.—
‘‘(1) IN GENERAL.—Subject to subsection (c), the
Commissioner shall take an action in accordance with
the guidelines established under paragraph (2)
against any employee of the Internal Revenue Service
if there is a final administrative or judicial deter-
mination that such employee committed any act or
omission described under subsection (b) in the per-
formance of the employee’s official duties or where a
nexus to the employee’s position exists.
‘‘(2) GUIDELINES.—The Commissioner shall
issue guidelines for determining the appropriate level
of discipline, up to and including termination of em-
ployment, for committing any act or omission de-
scribed under subsection (b).
‘‘(b) ACTS OR OMISSIONS.—The acts or omissions de-
scribed under this subsection are—
‘‘(1) willful failure to obtain the required ap-
proval signatures on documents authorizing the sei-
zure of a taxpayer’s home, personal belongings, or
business assets;
‘‘(2) willfully providing a false statement under
oath with respect to a material matter involving a
taxpayer or taxpayer representative;
‘‘(3) with respect to a taxpayer or taxpayer rep-
resentative, the willful violation of—
‘‘(A) any right under the Constitution of the
United States;
‘‘(B) any civil right established under—
‘‘(i) title VI or VII of the Civil Rights
Act of 1964;
‘‘(ii) title IX of the Education Amend-
ments of 1972;
‘‘(iii) the Age Discrimination in Em-
ployment Act of 1967;
‘‘(iv) the Age Discrimination Act of
1975;
‘‘(v) section 501 or 504 of the Rehabili-
tation Act of 1973; or
‘‘(vi) title I of the Americans with Dis-
abilities Act of 1990; or
‘‘(C) the Internal Revenue Service policy on
unauthorized inspection of returns or return in-
formation;
‘‘(4) willfully falsifying or destroying documents
to conceal mistakes made by any employee with re-
spect to a matter involving a taxpayer or taxpayer
representative;
‘‘(5) assault or battery on a taxpayer or tax-
payer representative, but only if there is a criminal
conviction, or a final adverse judgment by a court in
a civil case, with respect to the assault or battery;
‘‘(6) willful violations of this title, Department of
the Treasury regulations, or policies of the Internal
Revenue Service (including the Internal Revenue
Manual) for the purpose of retaliating against, or
harassing, a taxpayer or taxpayer representative;
‘‘(7) willful misuse of the provisions of section
6103 for the purpose of concealing information from
a congressional inquiry;
‘‘(8) willful failure to file any return of tax re-
quired under this title on or before the date prescribed
therefor (including any extensions) when a tax is due
and owing, unless such failure is due to reasonable
cause and not due to willful neglect;
‘‘(9) willful understatement of Federal tax liabil-
ity, unless such understatement is due to reasonable
cause and not due to willful neglect; and
‘‘(10) threatening to audit a taxpayer, or to take
other action under this title, for the purpose of ex-
tracting personal gain or benefit.
‘‘(c) DETERMINATIONS OF COMMISSIONER.—
‘‘(1) IN GENERAL.—The Commissioner may take
a personnel action other than a disciplinary action
provided for in the guidelines under subsection (a)(2)
for an act or omission described under subsection (b).
‘‘(2) DISCRETION.—The exercise of authority
under paragraph (1) shall be at the sole discretion of
the Commissioner and may not be delegated to any
other officer. The Commissioner, in his sole discretion,
may establish a procedure to determine if an indi-
vidual should be referred to the Commissioner for a
determination by the Commissioner under paragraph
(1).
‘‘(3) NO
APPEAL.—Notwithstanding any other
provision of law, any determination of the Commis-
sioner under this subsection may not be reviewed in
any administrative or judicial proceeding. A finding
that an act or omission described under subsection (b)
occurred may be reviewed.
‘‘(d) DEFINITION.—For the purposes of the provisions
described in clauses (i), (ii), and (iv) of subsection
(b)(3)(B), references to a program or activity regarding
Federal financial assistance or an education program or
activity receiving Federal financial assistance shall include
any program or activity conducted by the Internal Revenue
Service for a taxpayer.
‘‘(e) ANNUAL REPORT.—The Commissioner shall sub-
mit to Congress annually a report on disciplinary actions
under this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections for
chapter 80 is amended by inserting after the item relating
to section 7804 the following new item:
‘‘Sec. 7804A. Disciplinary actions for misconduct.’’.
(c) REPEAL OF SUPERSEDED SECTION.—Section 1203
of the Internal Revenue Service Restructuring and Reform
Act of 1998 (Public Law 105–206; 112 Stat. 720) is re-
pealed.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 302. CONFIRMATION OF AUTHORITY OF TAX COURT TO
APPLY 
DOCTRINE 
OF 
EQUITABLE
RECOUPMENT.
(a) CONFIRMATION OF AUTHORITY OF TAX COURT TO
APPLY DOCTRINE
OF EQUITABLE RECOUPMENT.—Sub-
section (b) of section 6214 (relating to jurisdiction over
other years and quarters) is amended by adding at the end
the following new sentence: ‘‘Notwithstanding the preceding
sentence, the Tax Court may apply the doctrine of equitable
recoupment to the same extent that it is available in civil
tax cases before the district courts of the United States and
the United States Court of Federal Claims.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to any action or proceeding in the Tax
Court with respect to which a decision has not become final
(as determined under section 7481 of the Internal Revenue
Code of 1986) as of the date of the enactment of this Act.
SEC. 303. JURISDICTION OF TAX COURT OVER COLLECTION
DUE PROCESS CASES.
(a) IN GENERAL.—Section 6330(d)(1) (relating to ju-
dicial review of determination) is amended to read as fol-
lows:
‘‘(1) JUDICIAL
REVIEW
OF
DETERMINATION.—
The person may, within 30 days of a determination
under this section, appeal such determination to the
Tax Court (and the Tax Court shall have jurisdiction
with respect to such matter).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to judicial appeals filed after the
date of the enactment of this Act.
SEC. 304. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS
IN COMPROMISE.
(a) IN GENERAL.—Section 7122(b) (relating to record)
is amended by striking ‘‘Whenever a compromise’’ and all
that follows through ‘‘his delegate’’ and inserting ‘‘If the
Secretary determines that an opinion of the General Coun-
sel for the Department of the Treasury, or the Counsel’s del-
egate, is required with respect to a compromise, there shall
be placed on file in the office of the Secretary such opinion’’.
(b) CONFORMING AMENDMENTS.—Section 7122(b) is
amended by striking the second and third sentences.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to offers-in-compromise submitted or
pending on or after the date of the enactment of this Act.
SEC. 305. 15-DAY DELAY IN DUE DATE FOR ELECTRONI-
CALLY FILED INDIVIDUAL INCOME TAX RE-
TURNS.
(a) IN GENERAL.—Section 6072 (relating to time for
filing income tax returns) is amended by adding at the end
the following new subsection:
‘‘(f) ELECTRONICALLY FILED RETURNS OF INDIVID-
UALS.—
‘‘(1) IN
GENERAL.—Returns of an individual
under section 6012 or 6013 (other than an individual
to whom subsection (c) applies) which are filed
electronically—
‘‘(A) in the case of returns filed on the basis
of a calendar year, shall be filed on or before the
30th day of April following the close of the cal-
endar year, and
‘‘(B) in the case of returns filed on the basis
of a fiscal year, shall be filed on or before the last
day of the 4th month following the close of the
fiscal year.
‘‘(2) ELECTRONIC FILING.—Paragraph (1) shall
not apply to any return unless—
‘‘(A) such return is accepted by the Sec-
retary, and
‘‘(B) the balance due (if any) shown on
such return is paid electronically in a manner
prescribed by the Secretary.
‘‘(3) SPECIAL RULES.—
‘‘(A) ESTIMATED TAX.—If—
‘‘(i) paragraph (1) applies to an indi-
vidual for any taxable year, and
‘‘(ii) there is an overpayment of tax
shown on the return for such year which the
individual allows against the individual’s
obligation under section 6641,
then, with respect to the amount so allowed, any
reference in section 6641 to the April 15 fol-
lowing such taxable year shall be treated as a
reference to April 30.
‘‘(B) REFERENCES TO DUE DATE.—Para-
graph (1) shall apply solely for purposes of de-
termining the due date for the individual’s obli-
gation to file and pay tax and, except as other-
wise provided by the Secretary, shall be treated
as an extension of the due date for any other
purpose under this title.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2001.
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.—Subsection (h) of section 6103 (re-
lating to disclosure to certain Federal officers and employ-
ees for purposes of tax administration, etc.) is amended by
adding at the end the following new paragraph:
‘‘(7) TAXPAYER
REPRESENTATIVES.—Notwith-
standing paragraph (1), the return of the representa-
tive of a taxpayer whose return is being examined by
an officer or employee of the Department of the Treas-
ury shall not be open to inspection by such officer or
employee on the sole basis of the representative’s rela-
tionship 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 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 amended
by adding at the end the following new subparagraph:
‘‘(B) DISCLOSURE IN JUDICIAL OR ADMINIS-
TRATIVE TAX PROCEEDINGS OF RETURN AND RE-
TURN 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 per-
son and an opportunity for such person to
request the deletion of matter from such re-
turn 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, partnerships,
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 re-
turn or return information that directly re-
lates 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
(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) IN 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 fol-
lowing new paragraph:
‘‘(9) DISCLOSURE TO CONTRACTORS.—Notwith-
standing any other provision of this section, no re-
turn or return information shall be disclosed by any
officer or employee of any Federal agency or State to
any contractor of such agency or State unless such
agency or State—
‘‘(A) has requirements in effect which re-
quire each contractor of such agency or State
which would have access to returns or return in-
formation to provide safeguards (within the
meaning of paragraph (4)) to protect the con-
fidentiality of such returns or return informa-
tion,
‘‘(B) agrees to conduct an annual, on-site
review (mid-point review in the case of contracts
of less than 1 year in duration) of each con-
tractor to determine compliance with such re-
quirements,
‘‘(C) submits the findings of the most recent
review conducted under subparagraph (B) to the
Secretary as part of the report required by para-
graph (4)(E), and
‘‘(D) certifies to the Secretary for the most
recent annual period that all contractors are in
compliance with all such requirements.
The certification required by subparagraph (D) shall
include the name and address of each contractor, a
description of the contract of the contractor with the
Federal agency or State, and the duration of such
contract.’’.
(b) CONFORMING AMENDMENT.—Subparagraph (B) of
section 6103(p)(8) is amended by inserting ‘‘or paragraph
(9)’’ after ‘‘subparagraph (A)’’.
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to disclosures made after De-
cember 31, 2002.
(2) CERTIFICATIONS.—The first certification
under section 6103(p)(9)(D) of the Internal Revenue
Code of 1986, as added by subsection (a), shall be
made with respect to calendar year 2003.
SEC. 406. HIGHER STANDARDS FOR REQUESTS FOR AND
CONSENTS TO DISCLOSURE.
(a) IN GENERAL.—Subsection (c) of section 6103 (re-
lating 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 disclosure
under paragraph (1) shall only be valid for purposes
of this section or sections 7213, 7213A, or 7431 if—
‘‘(A) at the time of execution, such request
or consent designates a recipient of such disclo-
sure and is dated, and
‘‘(B) at the time such request or consent is
submitted to the Secretary, the submitter of such
request or consent certifies, under penalty of per-
jury, that such request or consent complied with
subparagraph (A).
‘‘(3) RESTRICTIONS ON PERSONS OBTAINING IN-
FORMATION.—Any person shall, as a condition for re-
ceiving return or return information under para-
graph (1)—
‘‘(A) ensure that such return and return in-
formation 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 in-
formation 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 Sec-
retary 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 incom-
plete or blank form, the taxpayer should report
the matter to the Treasury Inspector General 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 Con-
gress on compliance with the designation and certification
requirements applicable to requests for or consent to disclo-
sure 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 AMENDMENT.—Section 6103(c) is
amended by striking ‘‘TAXPAYER.—The Secretary’’ and in-
serting ‘‘TAXPAYER.—
‘‘(1) IN GENERAL.—The Secretary’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to requests and consents made after 3
months after the date of the enactment of this Act.
SEC. 407. NOTICE TO TAXPAYER CONCERNING ADMINISTRA-
TIVE 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 Treas-
ury Inspector General for Tax Administration determines
that such taxpayer’s return or return information was in-
spected 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 section
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 law-
suits were settled and the amounts of damages
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 com-
munication,’’.
(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) ap-
plies, the Secretary may disclose to the appro-
priate State officer—
‘‘(i) a notice of proposed refusal to rec-
ognize such organization as an organization
described in section 501(c)(3) or a notice of
proposed revocation of such organization’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 and taxpayer identi-
fication numbers of organizations that have
applied for recognition as organizations de-
scribed in section 501(c)(3).
‘‘(B) ADDITIONAL
DISCLOSURES.—Returns
and return information of organizations with re-
spect 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 appro-
priate State officer, and
‘‘(ii) for the purpose of, and only to the
extent necessary in, the administration of
State laws regulating such organizations.
Such information may only be inspected by or
disclosed to representatives of the appropriate
State officer designated as the individuals who
are to inspect or to receive the returns or return
information under this paragraph on behalf of
such 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 resolu-
tion of State and Federal issues relating to such
organization.
‘‘(3) USE
IN
JUDICIAL
AND
ADMINISTRATIVE
PROCEEDINGS.—Returns and return information dis-
closed pursuant to this subsection may be disclosed in
civil administrative and judicial proceedings per-
taining to the enforcement of State laws regulating
such organizations in a manner prescribed by the
Secretary similar to that for tax administration pro-
ceedings under section 6103(h)(4).
‘‘(4) NO DISCLOSURE IF IMPAIRMENT.—Returns
and return information shall not be disclosed under
this subsection, or in any proceeding described in
paragraph (3), to the extent that the Secretary deter-
mines that such disclosure would seriously impair
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) the head of any State agency,
body, or commission which is charged under
the laws of such State with responsibility
for overseeing organizations of the type de-
scribed in section 501(c)(3).’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 6103 is amended—
(A) by inserting ‘‘or section 6104(c)’’ after
‘‘this section’’ in paragraph (2), and
(B) by striking ‘‘or subsection (n)’’ in para-
graph (3) and inserting ‘‘subsection (n), or sec-
tion 6104(c)’’.
(2) Subparagraph (A) of section 6103(p)(3) is
amended by inserting ‘‘and section 6104(c)’’ after
‘‘section’’ in the first sentence.
(3) Paragraph (4) of section 6103(p) is
amended—
(A) in the matter preceding subparagraph
(A), by striking ‘‘(16) or any other person de-
scribed in subsection (l)(16)’’ and inserting
‘‘(16), any other person described in subsection
(l)(16), or any appropriate State officer (as de-
fined in section 6104(c))’’, and
(B) in subparagraph (F), by striking ‘‘or
any other person described in subsection (l)(16)’’
and inserting ‘‘any other person described in
subsection (l)(16), or any appropriate State offi-
cer (as defined in section 6104(c))’’.
(4) Paragraph (2) of section 7213(a) is amended
by inserting ‘‘or under section 6104(c)’’ after ‘‘6103’’.
(5) Paragraph (2) of section 7213A(a) is amend-
ed by inserting ‘‘or 6104(c)’’ after ‘‘6103’’.
(6) Paragraph (2) of section 7431(a) is amended
by inserting ‘‘(including any disclosure in violation
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.
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 qualification
or continuing qualification of an organization as
an organization described in section 501(c)
(other than paragraph (3)) 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 deter-
minations (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 semicolon 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 sub-
section (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 CER-
TAIN FEES IN ADMINISTRATIVE AND COURT
PROCEEDINGS.
Not later than 3 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress which specifies for such year—
(1) the number of payments made by the United
States pursuant to section 7430 of the Internal Rev-
enue 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 General
for Tax Administration as a result of such analysis.
SEC. 505. ANNUAL REPORT ON ABATEMENT OF PENALTIES.
Not later than 6 months after the close of each Federal
fiscal year after fiscal year 2001, the Treasury Inspector
General for Tax Administration shall submit a report to
Congress on abatements of penalties under the Internal Rev-
enue Code of 1986 during such year, including information
on the reasons and criteria for such abatements.
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 tax-
payers.
SEC. 507. EXPLANATION OF STATUTE OF LIMITATIONS AND
CONSEQUENCES OF FAILURE TO FILE.
The Secretary of the Treasury or the Secretary’s dele-
gate 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 Tax-
payer Bill of Rights (Internal Revenue Service Publication
No. 1), and any instructions booklet accompanying a gen-
eral income tax return form for taxable years beginning
after 2001 (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 re-
funds; 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 semi-
colon ‘‘(or, if earlier, at the time the Secretary releases the
minutes of the meeting in accordance with paragraph (2))’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (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 fol-
lowing new section:
‘‘SEC. 7527. ENROLLED AGENTS.
‘‘(a) IN GENERAL.—The Secretary may prescribe such
regulations as may be necessary to regulate the conduct of
enrolled agents in regards to their practice before the Inter-
nal 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 following
new item:
‘‘Sec. 7527. 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 program
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 sub-
section shall be deposited into the account of the Depart-
ment 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 provisions of that section. The
amount credited against the taxpayer’s liability on account
of the continuous levy shall be the amount levied, without
reduction for the amount paid to the Financial Manage-
ment Service as a fee.
SEC. 511. CAPITAL GAIN TREATMENT UNDER SECTION
631(b) TO APPLY TO OUTRIGHT SALES BY
LAND OWNER.
(a) IN GENERAL.—The first sentence of section 631(b)
of the Internal Revenue Code of 1986 (relating to disposal
of timber with a retained economic interest) is amended by
striking ‘‘retains an economic interest in such timber’’ and
inserting ‘‘either retains an economic interest in such tim-
ber or makes an outright sale of such timber’’.
(b) CONFORMING AMENDMENT.—The third sentence of
section 631(b) of such Code is amended by striking ‘‘The
date of disposal’’ and inserting ‘‘In the case of disposal of
timber with a retained economic interest, the date of dis-
posal’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales 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.—Paragraph
(1) of section 7526(c) (relating to special rules and limita-
tions) is amended by striking ‘‘$6,000,000 per year’’ and
inserting ‘‘$9,000,000 for 2002, $12,000,000 for 2003, and
$15,000,000 for each year thereafter’’.
(b) LIMITATION ON USE OF CLINICS FOR TAX RETURN
PREPARATION.—Subparagraph (A) of section 7526(b)(1) is
amended by adding at the end the following flush language:
‘‘The term does not include a clinic that provides
routine tax return preparation. The preceding
sentence shall not apply to return preparation in
connection with a controversy with the Internal
Revenue Service.’’.
(c) PROMOTION
OF
CLINICS.—Section 7526(c) is
amended by adding at the end the following new paragraph:
‘‘(7) PROMOTION OF CLINICS.—The Secretary is
authorized to promote the benefits of and encourage
the use of low-income taxpayer clinics through the use
of mass communications, referrals, and other means.’’.
TITLE VII—REVISIONS TO SEC-
TION 527 ORGANIZATION DIS-
CLOSURE PROVISIONS
SEC. 701. MODIFICATIONS OF REPORTING REQUIREMENTS
FOR CERTAIN STATE AND LOCAL POLITICAL
ORGANIZATIONS.
(a) NOTIFICATION.—
(1) Paragraph (5) of section 527(i) (relating to
organizations must notify Secretary that they are sec-
tion 527 organizations) is amended by striking ‘‘or’’
at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ‘‘, or’’,
and by adding at the end the following:
‘‘(C) which is—
‘‘(i) a political committee of a State or
local candidate, or
‘‘(ii) a local committee of an entity
which is a political party under State
law.’’.
(2) Subparagraph (B) of section 527(j)(5) (relat-
ing to coordination with other requirements) is
amended to read as follows:
‘‘(B) to any organization which is—
‘‘(i) a political committee of a State or
local candidate, or
‘‘(ii) a State or local committee of an
entity which is a political party under
State law,’’.
(b) EXEMPTION FOR CERTAIN STATE AND LOCAL PO-
LITICAL
COMMITTEES
FROM
REPORTING
REQUIRE-
MENTS.—
(1) IN
GENERAL.—Paragraph (5) of section
527(j) (relating to required disclosures of expenditures
and contributions) is amended by redesignating sub-
paragraphs (C), (D), and (E) as subparagraphs (D),
(E), and (F), respectively, and by inserting after sub-
paragraph (B) the following new subparagraph:
‘‘(C) to any organization which is an ex-
empt State or local political organization,’’.
(2) EXEMPT STATE OR LOCAL POLITICAL ORGA-
NIZATION.—Subsection (e) of section 527 (relating to
other definitions) is amended by adding at the end
the following new paragraph:
‘‘(5) EXEMPT STATE OR LOCAL POLITICAL ORGA-
NIZATION.—
‘‘(A) IN GENERAL.—The term ‘exempt State
or local political organization’ means a political
organization—
‘‘(i) which does not engage in any ex-
empt function other than to influence or to
attempt to influence the selection, nomina-
tion, election, or appointment of any indi-
vidual to any State or local public office or
office in a State or local political organiza-
tion,
‘‘(ii) which is subject to State or local
requirements to submit reports containing
information—
‘‘(I) regarding individual expend-
itures from and contributions to such
organization, and
‘‘(II) regarding the person who
makes such contributions or receives
such expenditures,
which is substantially similar to the infor-
mation which would otherwise be required
to be reported under this section, and
‘‘(iii) with respect to which the reports
referred to in clause (ii) are made public by
the agency with which such reports are filed
and are publicly available for inspection in
a manner similar to that required by sec-
tion 6104(d)(1).
‘‘(B) PARTICIPATION
OF
FEDERAL
CAN-
DIDATE OR OFFICE HOLDER.—The term ‘exempt
State or local political organization’ shall not
include any organization otherwise described in
subparagraph (A) if a candidate for nomination
or election to Federal elective office or an indi-
vidual who holds such office—
‘‘(i) controls or materially participates
in the direction of the organization, or
‘‘(ii) directs, in whole or in part, ex-
penditures or fundraising activities of the
organization.’’.
(c) ANNUAL RETURN REQUIREMENTS.—
(1) INCOME
TAX
RETURNS
REQUIRED
ONLY
WHERE
POLITICAL
ORGANIZATION
TAXABLE
IN-
COME.—Paragraph (6) of section 6012(a) (relating to
general rule of persons required to make returns of in-
come) is amended by striking ‘‘or which has gross re-
ceipts of $25,000 or more for the taxable year (other
than an organization to which section 527 applies
solely by reason of subsection (f)(1) of such section)’’.
(2) INFORMATION RETURNS.—Subsection (g) of
section 6033 (relating to returns required by political
organizations) is amended to read as follows:
‘‘(g) RETURNS REQUIRED BY POLITICAL ORGANIZA-
TIONS.—
‘‘(1) IN GENERAL.—Every political organization
(within the meaning of section 527(e)(1)), and every
fund treated under section 527(g) as if it constituted
a political organization, which has gross receipts of
$25,000 or more for the taxable year shall file a
return—
‘‘(A) containing the information required,
and complying with the other requirements,
under subsection (a)(1) for organizations exempt
from taxation under section 501(a), and
‘‘(B) containing such other information as
the Secretary deems necessary to carry out the
provisions of this subsection.
‘‘(2) EXCEPTIONS FROM FILING.—
‘‘(A) MANDATORY EXCEPTIONS.—Paragraph
(1) shall not apply to an organization—
‘‘(i) which is an exempt State or local
political organization (as defined in section
527(e)(5)),
‘‘(ii) which is a State or local com-
mittee of a political party, or political com-
mittee of a State or local candidate, as de-
fined by State law,
‘‘(iii) which is a caucus or association
of State or local elected officials,
‘‘(iv) which is a national association of
State or local officials,
‘‘(v) which is an authorized committee
(as defined in section 301(6) of the Federal
Election Campaign Act of 1971) of a can-
didate for Federal office,
‘‘(vi) which is a national committee
(as defined in section 301(14) of the Federal
Election Campaign Act of 1971) of a polit-
ical party, or
‘‘(vii) to which section 527 applies for
the taxable year solely by reason of sub-
section (f)(1) of such section.
‘‘(B) 
DISCRETIONARY
EXCEPTION.—The
Secretary may relieve any organization required
under paragraph (1) to file an information re-
turn from filing such a return where he deter-
mines that such filing is not necessary to the effi-
cient administration of the internal revenue
laws.’’.
(d) WAIVER OF PENALTIES.—Section 527 is amended
by adding at the end the following:
‘‘(k) AUTHORITY TO WAIVE.—The Secretary may
waive all or any portion of the—
‘‘(1) tax assessed on an organization by reason
of the failure of the organization to give notice under
subsection (i), or
‘‘(2) penalty imposed under subsection (j) for a
failure to file a report,
on a showing that such failure was due to reasonable cause
and not due to willful neglect.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the amendments
made by Public Law 106–230.
SEC. 702. NOTIFICATION OF INTERACTION OF REPORTING
REQUIREMENTS.
(a) IN GENERAL.—The Secretary of the Treasury, in
consultation with the Federal Election Commission, shall
publicize information on—
(1) the effect of the amendments made by this
Act, and
(2) the interaction of requirements to file a noti-
fication or report under section 527 of the Internal
Revenue Code of 1986 and reports under the Federal
Election Campaign Act of 1971.
(b) INFORMATION.—Information provided under sub-
section (a) shall be included in any appropriate form, in-
struction, notice, or other guidance issued to the public by
the Secretary of the Treasury or the Federal Election Com-
mission regarding reporting requirements of political orga-
nizations (as defined in section 527 of the Internal Revenue
Code of 1986) or reporting requirements under the Federal
Election Campaign Act of 1971.
SEC. 703. TECHNICAL CORRECTIONS TO SECTION 527 ORGA-
NIZATION DISCLOSURE PROVISIONS.
(a) UNSEGREGATED FUNDS NOT TO AVOID TAX.—
Paragraph (4) of section 527(i) (relating to failure to no-
tify) is amended by adding at the end the following new
sentence: ‘‘For purposes of the preceding sentence, the term
‘exempt function income’ means any amount described in
a subparagraph of subsection (c)(3), whether or not seg-
regated for use for an exempt function.’’.
(b) PROCEDURES FOR ASSESSMENT AND COLLECTION
OF PENALTY.—Paragraph (1) of section 527(j) (relating to
required disclosure of expenditures and contributions) is
amended by adding at the end the following new sentence:
‘‘For purposes of subtitle F, the penalty imposed by this
paragraph shall be assessed and collected in the same man-
ner as penalties imposed by section 6652(c).’’.
(c) APPLICATION OF FRAUD PENALTY.—Section 7207
(relating to fraudulent returns, statements, and other docu-
ments) is amended by striking ‘‘pursuant to subsection (b)
of section 6047 or pursuant to subsection (d) of section
6104’’ and inserting ‘‘pursuant to section 6047(b), section
6104(d), or subsection (i) or (j) of section 527’’.
(d) DUPLICATE ELECTRONIC AND WRITTEN FILINGS
NOT REQUIRED.—Subparagraph (A) of section 527(i)(1) is
amended by striking ‘‘, electronically and in writing,’’.
(e) EFFECTIVE DATES.—
(1) SUBSECTIONS (a) AND (b).—The amend-
ments made by subsections (a) and (b) shall apply to
failures occurring on or after the date of the enact-
ment of this Act.
(2) SUBSECTIONS (c) AND (d).—The amendments
made by subsections (c) and (d) shall take effect as if
included in the amendments made by Public Law
106–230.
Union Calendar No. 234
107TH CONGRESS
2D SESSION
H. R. 3991
[Report No. 107–394]
A BILL
To amend the Internal Revenue Code of 1986 to
protect taxpayers and ensure accountability of
the Internal Revenue Service.
APRIL 9, 2002
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed