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(B) FAILURES CORRECTED ON OR BEFORE 
AUGUST 1.—Section 6721(b)(2) is amended— 
(i) by striking ‘‘$30’’ and inserting 
‘‘$100’’, 
(ii) by striking ‘‘$50’’ and inserting 
‘‘$250’’, and 
(iii) by striking ‘‘$150,000’’ and in-
serting ‘‘$1,500,000’’. 
(3) LOWER
LIMITATION
FOR
PERSONS
WITH 
GROSS RECEIPTS OF NOT MORE THAN $5,000,000.— 
Section 6721(d)(1) is amended— 
(A) in subparagraph (A)— 
(i) by striking ‘‘$100,000’’ and insert-
ing ‘‘$1,000,000’’, and 
(ii) by striking ‘‘$250,000’’ and insert-
ing ‘‘$3,000,000’’, 
(B) in subparagraph (B)— 
(i) by striking ‘‘$25,000’’ and inserting 
‘‘$175,000’’, and 
(ii) by striking ‘‘$75,000’’ and insert-
ing ‘‘$500,000’’, and 
(C) in subparagraph (C)— 
(i) by striking ‘‘$50,000’’ and inserting 
‘‘$500,000’’, and 
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(ii) by striking ‘‘$150,000’’ and insert-
ing ‘‘$1,500,000’’. 
(4) PENALTY
IN
CASE
OF
INTENTIONAL
DIS-
REGARD.—Section 6721(e) is amended— 
(A) by striking ‘‘$100’’ in paragraph (2) 
and inserting ‘‘$500’’, 
(B) by striking ‘‘$250,000’’ in paragraph 
(3)(A) and inserting ‘‘$3,000,000’’. 
(b) FAILURE TO FURNISH CORRECT PAYEE STATE-
MENTS.— 
(1) IN GENERAL.—Section 6722(a) is amended— 
(A) by striking ‘‘$50’’ and inserting 
‘‘$250’’, and 
(B) by striking ‘‘$100,000’’ and inserting 
‘‘$1,000,000’’. 
(2) PENALTY
IN
CASE
OF
INTENTIONAL
DIS-
REGARD.—Section 6722(c) is amended— 
(A) by striking ‘‘$100’’ in paragraph (1) 
and inserting ‘‘$500’’, and 
(B) by striking ‘‘$100,000’’ in paragraph 
(2)(A) and inserting ‘‘$1,000,000’’. 
(c) FAILURE TO COMPLY WITH OTHER INFORMATION 
REPORTING REQUIREMENTS.—Section 6723 is amended— 
(1) by striking ‘‘$50’’ and inserting ‘‘$250’’, and 
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(2) by striking ‘‘$100,000’’ and inserting 
‘‘$1,000,000’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply with respect to information returns re-
quired to be filed on or after January 1, 2008. 
SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE OR-
GANIZATIONS. 
(a) IN
GENERAL.—The first sentence of section 
6011(e)(2) is amended to read as follows: ‘‘In prescribing 
regulations under paragraph (1), the Secretary shall take 
into account (among other relevant factors) the ability of 
the taxpayer to comply at reasonable cost with the require-
ments of such regulations.’’. 
(b) CONFORMING
AMENDMENT.—Section 6724 is 
amended by striking subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years ending on or after De-
cember 31, 2008. 
SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN 
NATIONAL DIRECTORY OF NEW HIRES FOR 
TAX ADMINISTRATION PURPOSES. 
(a) IN GENERAL.—Paragraph (3) of section 453(j) of 
the Social Security Act (42 U.S.C. 653(j)) is amended to 
read as follows: 
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‘‘(3) ADMINISTRATION OF FEDERAL TAX LAWS.— 
The Secretary of the Treasury shall have access to the 
information in the National Directory of New Hires 
for purposes of administering the Internal Revenue 
Code of 1986.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall take effect on the date of the enactment of this 
Act. 
SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMA-
TION TO FEDERAL BUREAU OF PRISONS. 
(a) DISCLOSURE.— 
(1) IN GENERAL.—Subsection (l) of section 6103 
(relating to disclosure of returns and return informa-
tion for purposes other than tax administration) is 
amended by adding at the end the following new 
paragraph: 
‘‘(22) DISCLOSURE OF RETURN INFORMATION OF 
PRISONERS TO FEDERAL BUREAU OF PRISONS.— 
‘‘(A) IN GENERAL.—Under such procedures 
as the Secretary may prescribe, the Secretary 
may disclose return information with respect to 
persons incarcerated in Federal prisons whom 
the Secretary believes filed or facilitated the fil-
ing of false or fraudulent returns to the head of 
the Federal Bureau of Prisons if the Secretary 
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determines that such disclosure is necessary to 
permit effective tax administration. 
‘‘(B) DISCLOSURE BY AGENCY TO EMPLOY-
EES.—The head of the Federal Bureau of Prisons 
may redisclose information received under sub-
paragraph (A)— 
‘‘(i) only to those officers and employ-
ees of the Bureau who are personally and 
directly engaged in taking administrative 
actions to address violations of administra-
tive rules and regulations of the prison fa-
cility, and 
‘‘(ii) solely for the purposes described 
in subparagraph (C). 
‘‘(C) RESTRICTION ON USE OF DISCLOSED 
INFORMATION.—Return 
information 
disclosed 
under this paragraph may be used only for the 
purposes of— 
‘‘(i) preventing the filing of false or 
fraudulent returns; and 
‘‘(ii) taking administrative actions 
against individuals who have filed or at-
tempted to file false or fraudulent returns.’’. 
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(2) PROCEDURES
AND
RECORD
KEEPING
RE-
LATED TO DISCLOSURE.—Subsection (p)(4) of section 
6103 is amended— 
(A) by striking ‘‘(14), or (17)’’ in the mat-
ter before subparagraph (A) and inserting ‘‘(14), 
(17), or (22)’’, and 
(B) by striking ‘‘(9), or (16)’’ in subpara-
graph (F)(i) and inserting ‘‘(9), (16), or (22)’’. 
(3) EVALUATION BY TREASURY INSPECTOR GEN-
ERAL FOR TAX ADMINISTRATION.—Paragraph (3) of 
section 7803(d) is amended by striking ‘‘and’’ at the 
end of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ‘‘; and’’, and 
by adding at the end the following new subparagraph: 
‘‘(C) not later than 3 years after the date of 
the enactment of section 6103(l)(22), submit a 
written report to Congress on the implementa-
tion of such section.’’. 
(b) ANNUAL REPORTS.— 
(1) IN GENERAL.—The Secretary of the Treasury 
shall submit to Congress and make publicly available 
an annual report on the filing of false and fraudulent 
returns by individuals incarcerated in Federal and 
State prisons. 
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(2) CONTENTS
OF
REPORT.—The report sub-
mitted under paragraph (1) shall contain statistics 
on the number of false or fraudulent returns associ-
ated with each Federal and State prison and such 
other information that the Secretary determines is 
appropriate. 
(3) EXCHANGE OF INFORMATION.—For the pur-
pose of gathering information necessary for the re-
ports required under paragraph (1), the Secretary of 
the Treasury shall enter into agreements with the 
head of the Federal Bureau of Prisons and the heads 
of State agencies charged with responsibility for ad-
ministration of State prisons under which the head of 
the Bureau or Agency provides to the Secretary not 
less frequently than annually the names and other 
identifying information of prisoners incarcerated at 
each facility administered by the Bureau or Agency. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to disclosures on or after January 1, 
2008. 
SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY 
RETURN PREPARERS. 
(a) APPLICATION OF RETURN PREPARER PENALTIES 
TO ALL TAX RETURNS.— 
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(1) DEFINITION OF TAX RETURN PREPARER.— 
Paragraph (36) of section 7701(a) (relating to income 
tax preparer) is amended— 
(A) by striking ‘‘income’’ each place it ap-
pears in the heading and the text, and 
(B) in subparagraph (A), by striking ‘‘sub-
title A’’ each place it appears and inserting ‘‘this 
title’’. 
(2) CONFORMING AMENDMENTS.— 
(A)(i) Section 6060 is amended by striking 
‘‘INCOME TAX RETURN PREPARERS’’ in the 
heading and inserting ‘‘TAX
RETURN
PRE-
PARERS’’. 
(ii) Section 6060(a) is amended— 
(I) by striking ‘‘an income tax return 
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’, 
(II) by striking ‘‘each income tax re-
turn preparer’’ and inserting ‘‘each tax re-
turn preparer’’, and 
(III) by striking ‘‘another income tax 
return preparer’’ and inserting ‘‘another 
tax return preparer’’. 
(iii) The item relating to section 6060 in 
the table of sections for subpart F of part III of 
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subchapter A of chapter 61 is amended by strik-
ing ‘‘income tax return preparers’’ and inserting 
‘‘tax return preparers’’. 
(iv) Subpart F of part III of subchapter A 
of chapter 61 is amended by striking ‘‘Income 
Tax Return Preparers’’ in the heading and 
inserting ‘‘Tax Return Preparers’’. 
(v) The item relating to subpart F in the 
table of subparts for part III of subchapter A of 
chapter 61 is amended by striking ‘‘income tax 
return preparers’’ and inserting ‘‘tax return pre-
parers’’. 
(B) Section 6103(k)(5) is amended— 
(i) by striking ‘‘income tax return pre-
parer’’ each place it appears and inserting 
‘‘tax return preparer’’, and 
(ii) by striking ‘‘income tax return 
preparers’’ each place it appears and insert-
ing ‘‘tax return preparers’’. 
(C)(i) Section 6107 is amended— 
(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARER’’ in the heading and in-
serting ‘‘TAX RETURN PREPARER’’, 
(II) by striking ‘‘an income tax return 
preparer’’ each place it appears in sub-
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sections (a) and (b) and inserting ‘‘a tax re-
turn preparer’’, 
(III) by striking ‘‘INCOME TAX RE-
TURN PREPARER’’ in the heading for sub-
section (b) and inserting ‘‘TAX RETURN 
PREPARER’’, and 
(IV) in subsection (c), by striking ‘‘in-
come tax return preparers’’ and inserting 
‘‘tax return preparers’’. 
(ii) The item relating to section 6107 in the 
table of sections for subchapter B of chapter 61 
is amended by striking ‘‘Income tax return pre-
parer’’ and inserting ‘‘Tax return preparer’’. 
(D) Section 6109(a)(4) is amended— 
(i) by striking ‘‘an income tax return 
preparer’’ and inserting ‘‘a tax return pre-
parer’’, and 
(ii) by striking ‘‘INCOME RETURN PRE-
PARER’’ in the heading and inserting ‘‘TAX 
RETURN PREPARER’’. 
(E) Section 6503(k)(4) is amended by strik-
ing ‘‘Income tax return preparers’’ and inserting 
‘‘Tax return preparers’’. 
(F)(i) Section 6694 is amended— 
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(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARER’’ in the heading and in-
serting ‘‘TAX RETURN PREPARER’’, 
(II) by striking ‘‘an income tax return 
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’, 
(III) in subsection (c)(2), by striking 
‘‘the income tax return preparer’’ and in-
serting ‘‘the tax return preparer’’, 
(IV) in subsection (e), by striking 
‘‘subtitle A’’ and inserting ‘‘this title’’, and 
(V) in subsection (f), by striking ‘‘in-
come tax return preparer’’ and inserting 
‘‘tax return preparer’’. 
(ii) The item relating to section 6694 in the 
table of sections for part I of subchapter B of 
chapter 68 is amended by striking ‘‘income tax 
return preparer’’ and inserting ‘‘tax return pre-
parer’’. 
(G)(i) Section 6695 is amended— 
(I) by striking ‘‘INCOME’’ in the head-
ing, and 
(II) by striking ‘‘an income tax return 
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’. 
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(ii) Section 6695(f) is amended— 
(I) by striking ‘‘subtitle A’’ and insert-
ing ‘‘this title’’, and 
(II) by striking ‘‘the income tax return 
preparer’’ and inserting ‘‘the tax return 
preparer’’. 
(iii) The item relating to section 6695 in 
the table of sections for part I of subchapter B 
of chapter 68 is amended by striking ‘‘income’’. 
(H) Section 6696(e) is amended by striking 
‘‘subtitle A’’ each place it appears and inserting 
‘‘this title’’. 
(I)(i) Section 7407 is amended— 
(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARERS’’ in the heading and 
inserting ‘‘TAX RETURN PREPARERS’’, 
(II) by striking ‘‘an income tax return 
preparer’’ each place it appears and insert-
ing ‘‘a tax return preparer’’, 
(III) by striking ‘‘income tax pre-
parer’’ both places it appears in subsection 
(a) and inserting ‘‘tax return preparer’’, 
and 
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(IV) by striking ‘‘income tax return’’ 
in subsection (a) and inserting ‘‘tax re-
turn’’. 
(ii) The item relating to section 7407 in the 
table of sections for subchapter A of chapter 76 
is amended by striking ‘‘income tax return pre-
parers’’ and inserting ‘‘tax return preparers’’. 
(J)(i) Section 7427 is amended— 
(I) by striking ‘‘INCOME
TAX
RE-
TURN PREPARERS’’ in the heading and 
inserting ‘‘TAX
RETURN
PREPARERS’’, 
and 
(II) by striking ‘‘an income tax return 
preparer’’ and inserting ‘‘a tax return pre-
parer’’. 
(ii) The item relating to section 7427 in the 
table of sections for subchapter B of chapter 76 
is amended to read as follows: 
‘‘Sec. 7427. Tax return preparers.’’. 
(b) MODIFICATION OF PENALTY FOR UNDERSTATE-
MENT OF TAXPAYER’S LIABILITY BY TAX RETURN PRE-
PARER.—Subsections (a) and (b) of section 6694 are 
amended to read as follows: 
‘‘(a) UNDERSTATEMENT DUE TO UNREASONABLE PO-
SITIONS.— 
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‘‘(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 position described in paragraph 
(2) shall pay a penalty with respect to each such re-
turn or claim in an amount equal to the greater of— 
‘‘(A) $1,000, 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) UNREASONABLE POSITION.—A position is 
described in this paragraph if— 
‘‘(A) the tax return preparer knew (or rea-
sonably should have known) of the position, 
‘‘(B) there was not a reasonable belief that 
the position would more likely than not be sus-
tained on its merits, and 
‘‘(C)(i) the position was not disclosed as 
provided in section 6662(d)(2)(B)(ii), or 
‘‘(ii) there was no reasonable basis for the 
position. 
‘‘(3) REASONABLE CAUSE EXCEPTION.—No pen-
alty shall be imposed under this subsection if it is 
shown that there is reasonable cause for the under-
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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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