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statement and the tax return preparer acted in good
faith.
‘‘(b) UNDERSTATEMENT DUE TO WILLFUL OR RECK-
LESS CONDUCT.—
‘‘(1) IN
GENERAL.—Any tax return preparer
who prepares any return or claim for refund with re-
spect to which any part of an understatement of li-
ability is due to a conduct described in paragraph (2)
shall pay a penalty with respect to each such return
or claim in an amount equal to the greater of—
‘‘(A) $5,000, or
‘‘(B) 50 percent of the income derived (or to
be derived) by the tax return preparer with re-
spect to the return or claim.
‘‘(2) WILLFUL
OR
RECKLESS
CONDUCT.—Con-
duct described in this paragraph is conduct by the tax
return preparer which is—
‘‘(A) a willful attempt in any manner to
understate the liability for tax on the return or
claim, or
‘‘(B) a reckless or intentional disregard of
rules or regulations.
‘‘(3) REDUCTION IN PENALTY.—The amount of
any penalty payable by any person by reason of this
subsection for any return or claim for refund shall be
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reduced by the amount of the penalty paid by such
person by reason of subsection (a).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns prepared after the date of the
enactment of this Act.
SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND
CLAIMS.
(a) IN GENERAL.—Part I of subchapter B of chapter
68 (relating to assessable penalties) is amended by inserting
after section 6675 the following new section:
‘‘SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.
‘‘(a) CIVIL PENALTY.—If a claim for refund or credit
with respect to income tax (other than a claim for a refund
or credit relating to the earned income credit under section
32) is made for an excessive amount, unless it is shown
that the claim for such excessive amount has a reasonable
basis, the person making such claim shall be liable for a
penalty in an amount equal to 20 percent of the excessive
amount.
‘‘(b) EXCESSIVE AMOUNT.—For purposes of this sec-
tion, the term ‘excessive amount’ means in the case of any
person the amount by which the amount of the claim for
refund or credit for any taxable year exceeds the amount
of such claim allowable under this title for such taxable
year.
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‘‘(c) COORDINATION WITH OTHER PENALTIES.—This
section shall not apply to any portion of the excessive
amount of a claim for refund or credit on which a penalty
is imposed under part II of subchapter A of chapter 68.’’.
(b) CONFORMING AMENDMENT.—The table of sections
for part I of subchapter B of chapter 68 is amended by
inserting after the item relating to section 6675 the fol-
lowing new item:
‘‘Sec. 6676. Erroneous claim for refund or credit.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to any claim—
(1) filed or submitted after the date of the enact-
ment of this Act, or
(2) filed or submitted prior to such date but not
withdrawn before the date which is 30 days after such
date of enactment.
SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTER-
EST.
(a) IN GENERAL.—Paragraphs (1)(A) and (3)(A) of
section 6404(g) are each amended by striking ‘‘18-month
period’’ and inserting ‘‘36-month period’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to notices provided by the Secretary of the
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Treasury, or his delegate after the date which is 6
months after the date of the enactment of this Act.
(2) EXCEPTION FOR CERTAIN TAXPAYERS.—The
amendments made by this section shall not apply to
any taxpayer with respect to whom a suspension of
any interest, penalty, addition to tax, or other
amount is in effect on the date which is 6 months
after the date of the enactment of this Act.
SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TER-
MINATE INSTALLMENT AGREEMENTS.
(a) IN GENERAL.—Section 6159(b)(4) (relating to fail-
ure to pay an installment or any other tax liability when
due or to provide requested financial information) is
amended by striking ‘‘or’’ at the end of subparagraph (B),
by redesignating subparagraph (C) as subparagraph (E),
and by inserting after subparagraph (B) the following new
subparagraphs:
‘‘(C) to make a Federal tax deposit under
section 6302 at the time such deposit is required
to be made,
‘‘(D) to file a return of tax imposed under
this title by its due date (including extensions),
or’’.
(b) CONFORMING
AMENDMENT.—The heading for
paragraph (4) of section 6159(b) is amended by striking
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‘‘FAILURE TO PAY AN INSTALLMENT OR ANY OTHER TAX LI-
ABILITY WHEN DUE OR TO PROVIDE REQUESTED FINANCIAL
INFORMATION’’ and inserting ‘‘FAILURE
TO
MAKE
PAY-
MENTS OR DEPOSITS OR FILE RETURNS WHEN DUE OR TO
PROVIDE REQUESTED FINANCIAL INFORMATION’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to failures occurring on or after the date
of the enactment of this Act.
SEC. 554. 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, with his reasons therefor’’
and inserting ‘‘If the Secretary determines that an opinion
of the General Counsel for the Department of the Treasury,
or the Counsel’s delegate, is required with respect to a com-
promise, there shall be placed on file in the office of the
Secretary such opinion, with the reasons therefor’’.
(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.
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SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT
SERVICE RETENTION OF TRANSACTION FEES
FROM LEVIED AMOUNTS.
(a) IN GENERAL.—Subsection (h) of section 6331 (re-
lating to continuing levy on certain payments) is amended
by adding at the end the following new paragraph:
‘‘(4) IMPOSITION
OF
FINANCIAL
MANAGEMENT
SERVICES TRANSACTION FEES.—If the Secretary ap-
proves a levy under this subsection, the Secretary
may impose on the taxpayer a transaction fee suffi-
cient to cover the full cost of implementing the levy
under this subsection. Such fee—
‘‘(A) shall be treated as an expense under
section 6341,
‘‘(B) may be collected through a levy under
this subsection, and
‘‘(C) shall be in addition to the amount of
tax liability with respect to which such levy was
approved.’’.
(b) RETENTION OF FEES BY FINANCIAL MANAGEMENT
SERVICE.—The Financial Management Service may retain
the amount of any transaction fee imposed under section
6331(h)(4) of the Internal Revenue Code of 1986. Any
amount retained by the Financial Management Service
under that section shall be deposited into the account of the
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Department of the Treasury under section 3711(g)(7) of
title 31, United States Code.
(c) EFFECTIVE DATE.—The amendment made by this
section shall apply to amounts levied after the date of the
enactment of this Act.
SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.
Paragraph (6) of section 7608(c) (relating to applica-
tion of section) is amended by striking ‘‘2007’’ both places
it appears and inserting ‘‘2008’’.
SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE PO-
LITICAL AND EXCESS LOBBYING ACTIVITIES
OF SECTION 501(c)(3) ORGANIZATIONS.
(a) TAXES ON DISQUALIFYING LOBBYING EXPENDI-
TURES OF CERTAIN ORGANIZATIONS.—
(1) IN GENERAL.—Section 4912(a) (relating to
tax on organization) is amended by striking ‘‘5 per-
cent’’ and inserting ‘‘10 percent’’.
(2) TAX ON MANAGEMENT.—Section 4912(b) is
amended by striking ‘‘5 percent’’ and inserting ‘‘10
percent’’.
(b) TAXES ON POLITICAL EXPENDITURES OF SECTION
501(c)(3) ORGANIZATIONS.—
(1) IN GENERAL.—Section 4955(a) (relating to
initial taxes) is amended—
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(A) in paragraph (1), by striking ‘‘10 per-
cent’’ and inserting ‘‘20 percent’’, and
(B) in paragraph (2), by striking ‘‘21⁄2 per-
cent’’ and inserting ‘‘5 percent’’.
(2) INCREASED LIMITATION FOR MANAGERS.—
Section 4955(c)(2) is amended—
(A) by striking ‘‘$5,000’’ and inserting
‘‘$10,000’’, and
(B) by striking ‘‘$10,000’’ and inserting
‘‘$20,000’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR
EXEMPT ORGANIZATIONS.
(a) IN
GENERAL.—Subparagraph (A) of section
6652(c)(1) (relating to annual returns under section
6033(a)(1) or 6012(a)(6)) is amended by adding at the end
the following new sentence: ‘‘In the case of an organization
having gross receipts exceeding $25,000,000 for any year,
with respect to the return so required, the first sentence of
this subparagraph shall be applied by substituting ‘$250’
for ‘$20’ and, in lieu of applying the second sentence of
this subparagraph, the maximum penalty under this sub-
paragraph shall not exceed $125,000.’’.
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(b) CONFORMING AMENDMENT.—The third sentence of
section 6652(c)(1)(A) is amended by inserting ‘‘but not ex-
ceeding $25,000,000’’ after ‘‘$1,000,000’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns required to be filed on or after
January 1, 2008.
SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RE-
TURNS ELECTRONICALLY.
(a) IN GENERAL.—Part I of subchapter A of chapter
68 (relating to additions to the tax, additional amounts,
and assessable penalties) is amended by inserting after sec-
tion 6652 the following new section:
‘‘SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELEC-
TRONICALLY.
‘‘(a) IN GENERAL.—If a person fails to file a return
described in section 6651 or 6652(c)(1) in electronic form
as required under section 6011(e)—
‘‘(1) such failure shall be treated as a failure to
file such return (even if filed in a form other than
electronic form), and
‘‘(2) the penalty imposed under section 6651 or
6652(c), whichever is appropriate, shall be equal to
the greater of—
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‘‘(A) the amount of the penalty under such
section, determined without regard to this sec-
tion, or
‘‘(B) the amount determined under sub-
section (b).
‘‘(b) AMOUNT OF PENALTY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the penalty determined under this
subsection is equal to $40 for each day during which
a failure described under subsection (a) continues.
The maximum penalty under this paragraph on fail-
ures with respect to any 1 return shall not exceed the
lesser of $20,000 or 10 percent of the gross receipts of
the taxpayer for the year.
‘‘(2) INCREASED
PENALTIES
FOR
TAXPAYERS
WITH
GROSS
RECEIPTS
BETWEEN
$1,000,000
AND
$100,000,000.—
‘‘(A) TAXPAYERS
WITH
GROSS
RECEIPTS
BETWEEN $1,000,000 AND $25,000,000.—In the case
of a taxpayer having gross receipts exceeding
$1,000,000 but not exceeding $25,000,000 for
any year—
‘‘(i) the first sentence of paragraph (1)
shall be applied by substituting ‘$200’ for
‘$40’, and
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‘‘(ii) in lieu of applying the second
sentence of paragraph (1), the maximum
penalty under paragraph (1) shall not ex-
ceed $100,000.
‘‘(B) TAXPAYERS
WITH
GROSS
RECEIPTS
OVER $25,000,000.—Except as provided in para-
graph (3), in the case of a taxpayer having gross
receipts exceeding $25,000,000 for any year—
‘‘(i) the first sentence of paragraph (1)
shall be applied by substituting ‘$500’ for
‘$40’, and
‘‘(ii) in lieu of applying the second
sentence of paragraph (1), the maximum
penalty under paragraph (1) shall not ex-
ceed $250,000.
‘‘(3) INCREASED PENALTIES FOR CERTAIN TAX-
PAYERS
WITH
GROSS
RECEIPTS
EXCEEDING
$100,000,000.—In the case of a return described in sec-
tion 6651—
‘‘(A) TAXPAYERS
WITH
GROSS
RECEIPTS
BETWEEN
$100,000,000
AND
$250,000,000.—In the
case of a taxpayer having gross receipts exceed-
ing $100,000,000 but not exceeding $250,000,000
for any year—