as determined by the Commissioner, a shorter period
would be insufficient for the incumbent to demonstrate
complete proficiency in such position.
‘‘(e) PROVISIONS THAT REMAIN APPLICABLE.—No
provision of this section exempts the Internal Revenue
Service from—
‘‘(1) any employment priorities established
under direction of the President for the placement of
surplus or displaced employees; or
‘‘(2) its obligations under any court order or
decree relating to the employment practices of the
Internal Revenue Service.
‘‘§ 9304. 
Flexibilities 
relating 
to 
demonstration
projects
‘‘(a) AUTHORITY TO CONDUCT.—The Commissioner
of Internal Revenue may, in accordance with this section,
conduct 1 or more demonstration projects to improve per-
sonnel management; provide increased individual account-
ability; eliminate obstacles to the removal of or imposing
any disciplinary action with respect to poor performers,
subject to the requirements of due process; expedite ap-
peals from adverse actions or performance-based actions;
and promote pay based on performance.
‘‘(b) GENERAL REQUIREMENTS.—Except as provided
in subsection (c), each demonstration project under this
section shall comply with the provisions of section 4703.
‘‘(c) SPECIAL RULES.—For purposes of any dem-
onstration project under this section—
‘‘(1) 
AUTHORITY
OF
COMMISSIONER.—The
Commissioner of Internal Revenue shall exercise the
authority provided to the Office of Personnel Man-
agement under section 4703.
‘‘(2) PROVISIONS NOT APPLICABLE.—The fol-
lowing provisions of section 4703 shall not apply:
‘‘(A) Paragraphs (3) through (6) of sub-
section (b).
‘‘(B) Paragraphs (1), (2)(B)(ii), and (4) of
subsection (c).
‘‘(C) Subsections (d) through (g).
‘‘(d) NOTIFICATION REQUIRED TO BE GIVEN.—
‘‘(1) TO
EMPLOYEES.—The Commissioner of
Internal Revenue shall notify employees likely to be
affected by a project proposed under this section at
least 90 days in advance of the date such project is
to take effect.
‘‘(2) TO CONGRESS AND OPM.—The Commis-
sioner of Internal Revenue shall, with respect to
each demonstration project under this section, pro-
vide each House of Congress and the Office of Per-
sonnel Management with a report, at least 30 days
in advance of the date such project is to take effect,
setting forth the final version of the plan for such
project. Such report shall, with respect to the project
to which it relates, include the information specified
in section 4703(b)(1).
‘‘(e) LIMITATIONS.—No demonstration project under
this section may—
‘‘(1) provide for a waiver of any regulation pre-
scribed under any provision of law referred to in
paragraph (2)(B)(i) or (3) of section 4703(c);
‘‘(2) provide for a waiver of subchapter V of
chapter 63 or subpart G of part III (or any regula-
tions prescribed under such subchapter or subpart);
‘‘(3) provide for a waiver of any law or regula-
tion relating to preference eligibles as defined in sec-
tion 2108 or subchapter II or III of chapter 73 (or
any regulations prescribed thereunder);
‘‘(4) permit collective bargaining over pay or
benefits, or require collective bargaining over any
matter which would not be required under section
7106; or
‘‘(5) include a system for measuring perform-
ance that provides for only 1 level of performance at
or above the level of fully successful or better.
‘‘(f) PERMISSIBLE PROJECTS.—Notwithstanding any
other provision of law, a demonstration project under this
section—
‘‘(1) may establish alternative means of resolv-
ing any dispute within the jurisdiction of the Equal
Employment Opportunity Commission, the Merit
Systems Protection Board, the Federal Labor Rela-
tions Authority, or the Federal Service Impasses
Panel; and
‘‘(2) may permit the Internal Revenue Service
to adopt any alternative dispute resolution procedure
that a private entity may lawfully adopt.
‘‘(g) CONSULTATION
AND
COORDINATION.—The
Commissioner of Internal Revenue shall consult with the
Director of the Office of Personnel Management in the
development and implementation of each demonstration
project under this section and shall submit such reports
to the Director as the Director may require. The Director
or the Commissioner of Internal Revenue may terminate
a demonstration project under this section if either of
them determines that the project creates a substantial
hardship on, or is not in the best interests of, the public,
the Federal Government, employees, or qualified appli-
cants for employment with the Internal Revenue Service.
‘‘(h) TERMINATION.—Each demonstration project
under this section shall terminate before the end of the
5-year period beginning on the date on which the project
takes effect, except that any such project may continue
beyond the end of such period, for not to exceed 2 years,
if the Commissioner of Internal Revenue, with the concur-
rence of the Director, determines such extension is nec-
essary to validate the results of the project. Not later than
6 months before the end of the 5-year period and any ex-
tension under the preceding sentence, the Commissioner
of Internal Revenue shall, with respect to the demonstra-
tion project involved, submit a legislative proposal to the
Congress if the Commissioner determines that such
project should be made permanent, in whole or in part.’’
(b) CLERICAL AMENDMENT.—The analysis for part
III of title 5, United States Code, is amended by adding
at the end the following:
‘‘Subpart I—Miscellaneous
‘‘93. Personnel Flexibilities Relating to the Internal Revenue
Service ..............................................................................................
9301’’.
(c) EFFECTIVE DATE.—This section shall take effect
on the date of enactment of this Act.
TITLE II—ELECTRONIC FILING
SEC. 201. ELECTRONIC FILING OF TAX AND INFORMATION
RETURNS.
(a) IN GENERAL.—It is the policy of the Congress
that paperless filing should be the preferred and most con-
venient means of filing tax and information returns, and
that by the year 2007, no more than 20 percent of all
such returns should be filed on paper.
(b) STRATEGIC PLAN.—
(1) IN
GENERAL.—Not later than 180 days
after the date of the enactment of this Act, the Sec-
retary of the Treasury or the Secretary’s delegate
(hereafter in this section referred to as the ‘‘Sec-
retary’’) shall establish a plan to eliminate barriers,
provide incentives, and use competitive market
forces to increase electronic filing gradually over the
next 10 years while maintaining processing times for
paper returns at 40 days. To the extent practicable,
such plan shall provide that all returns prepared
electronically for taxable years beginning after 2001
shall be filed electronically.
(2) 
ELECTRONIC
COMMERCE
ADVISORY
GROUP.—To ensure that the Secretary receives input
from the private sector in the development and im-
plementation of the plan required by paragraph (1),