I 
107TH CONGRESS 
2D SESSION 
H. R. 5763
To amend the Internal Revenue Code of 1986 to provide fairness in tax 
collection procedures and improved administrative efficiency and confiden-
tiality and to reform its penalty and interest provisions. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 22, 2002
Mr. THOMAS introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
fairness in tax collection procedures and improved admin-
istrative efficiency and confidentiality and to reform its 
penalty and interest provisions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Tax Administration Reform Act of 2002’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
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to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc. 
TITLE I—FAIRNESS IN TAX COLLECTION PROCEDURES 
Sec. 101. Partial payment of tax liability in installment agreements. 
Sec. 102. Extension of time for return of property. 
Sec. 103. Individuals held harmless on wrongful levy, etc., on individual retire-
ment plan. 
Sec. 104. Seven-day threshold on tolling of statute of limitations during tax re-
view. 
Sec. 105. Study of liens and levies. 
Sec. 106. Low-income taxpayer clinics. 
TITLE II—IMPROVED ADMINISTRATIVE EFFICIENCY AND 
CONFIDENTIALITY 
Subtitle A—Efficiency of Tax Administration 
Sec. 201. Revisions relating to termination of employment of Internal Revenue 
Service employees for misconduct. 
Sec. 202. Confirmation of authority of Tax Court to apply doctrine of equitable 
recoupment. 
Sec. 203. Jurisdiction of Tax Court over collection due process cases. 
Sec. 204. Office of Chief Counsel review of offers in compromise. 
Sec. 205. 15-day delay in due date for electronically filed individual income tax 
returns. 
Subtitle B—Confidentiality and Disclosure 
Sec. 211. Collection activities with respect to joint return disclosable to either 
spouse based on oral request. 
Sec. 212. Taxpayer representatives not subject to examination on sole basis of 
representation of taxpayers. 
Sec. 213. Compliance by contractors with confidentiality safeguards. 
Sec. 214. Higher standards for requests for and consents to disclosure. 
Sec. 215. Notice to taxpayer concerning administrative determination of brows-
ing; annual report. 
Sec. 216. Expanded disclosure in emergency circumstances. 
Sec. 217. Disclosure to State officials of proposed actions related to section 
501(c)(3) organizations. 
Subtitle C—Other Provisions 
Sec. 221. Better means of communicating with taxpayers. 
Sec. 222. Enrolled agents. 
Sec. 223. Financial management service fees. 
Sec. 224. Amendment to Treasury auction reforms. 
TITLE III—REFORM OF PENALTY AND INTEREST PROVISIONS 
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Sec. 301. Failure to pay estimated tax penalty converted to interest charge on 
accumulated unpaid balance. 
Sec. 302. Exclusion from gross income for interest on overpayments of income 
tax by individuals. 
Sec. 303. Abatement of interest. 
Sec. 304. Deposits made to suspend running of interest on potential underpay-
ments. 
Sec. 305. Expansion of interest netting for individuals. 
Sec. 306. Waiver of certain penalties for first-time unintentional minor errors. 
Sec. 307. Frivolous tax submissions. 
Sec. 308. Clarification of application of Federal tax deposit penalty.
TITLE I—FAIRNESS IN TAX 
COLLECTION PROCEDURES
SEC. 101. PARTIAL PAYMENT OF TAX LIABILITY IN IN-
STALLMENT AGREEMENTS. 
(a) IN GENERAL.—
(1) Section 6159(a) (relating to authorization 
of agreements) is amended—
(A) by striking ‘‘satisfy liability for pay-
ment of’’ and inserting ‘‘make payment on’’, 
and 
(B) by inserting ‘‘full or partial’’ after ‘‘fa-
cilitate’’. 
(2) Section 6159(c) (relating to Secretary re-
quired to enter into installment agreements in cer-
tain cases) is amended in the matter preceding para-
graph (1) by inserting ‘‘full’’ before ‘‘payment’’. 
(b) REQUIREMENT TO REVIEW PARTIAL PAYMENT 
AGREEMENTS EVERY TWO YEARS.—Section 6159 is 
amended by redesignating subsections (d) and (e) as sub-
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sections (e) and (f), respectively, and inserting after sub-
section (c) the following new subsection: 
‘‘(d) SECRETARY REQUIRED TO REVIEW INSTALL-
MENT AGREEMENTS FOR PARTIAL COLLECTION EVERY 
TWO YEARS.—In the case of an agreement entered into 
by the Secretary under subsection (a) for partial collection 
of a tax liability, the Secretary shall review the agreement 
at least once every 2 years.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to agreements entered into on or 
after the date of the enactment of this Act. 
SEC. 102. EXTENSION OF TIME FOR RETURN OF PROPERTY. 
(a) EXTENSION OF TIME FOR RETURN OF PROPERTY 
SUBJECT TO LEVY.—Subsection (b) of section 6343 (re-
lating to return of property) is amended by striking ‘‘9 
months’’ and inserting ‘‘2 years’’. 
(b) PERIOD OF LIMITATION ON SUITS.—Subsection 
(c) of section 6532 (relating to suits by persons other than 
taxpayers) is amended—
(1) in paragraph (1) by striking ‘‘9 months’’ 
and inserting ‘‘2 years’’, and 
(2) in paragraph (2) by striking ‘‘9-month’’ and 
inserting ‘‘2-year’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to—
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(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 re-
gard to this section) as of such date.
SEC. 103. INDIVIDUALS HELD HARMLESS ON WRONGFUL 
LEVY, ETC., ON INDIVIDUAL RETIREMENT 
PLAN. 
(a) IN GENERAL.—Section 6343 (relating to author-
ity to release levy and return property) is amended by add-
ing 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. 
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‘‘(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 dis-
tribution and deposit were part of a rollover de-
scribed 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 sec-
tion 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 paragraph (1) from the Secretary, and 
‘‘(C) such deposit shall not be taken into 
account under section 408(d)(3)(B). 
‘‘(3) REFUND, ETC., OF
INCOME
TAX
ON 
LEVY.—If any amount is includible in gross income 
for a taxable 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 col-
lected shall be credited or refunded as an overpay-
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ment 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 Rev-
enue Code of 1986 after December 31, 2002. 
SEC. 104. SEVEN-DAY THRESHOLD ON TOLLING OF STAT-
UTE OF LIMITATIONS DURING TAX REVIEW. 
(a) IN GENERAL.—Section 7811(d)(1) (relating to 
suspension 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. 105. STUDY OF LIENS AND LEVIES. 
The Secretary of the Treasury, or the Secretary’s del-
egate, shall conduct a study of the practices of the Inter-
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nal 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 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate. 
SEC. 106. 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 2002, $12,000,000 for 
2003, 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: 
‘‘(7) PROMOTION OF CLINICS.—The Secretary 
is authorized to promote the benefits of and encour-
age the use of low-income taxpayer clinics through 
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the use of mass communications, referrals, and other 
means.’’.
TITLE II—IMPROVED ADMINIS-
TRATIVE 
EFFICIENCY 
AND 
CONFIDENTIALITY 
Subtitle A—Efficiency of Tax 
Administration 
SEC. 201. REVISIONS RELATING TO TERMINATION OF EM-
PLOYMENT OF INTERNAL REVENUE SERVICE 
EMPLOYEES FOR MISCONDUCT. 
(a) IN GENERAL.—Subchapter A of chapter 80 (re-
lating 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 Serv-
ice 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. 
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‘‘(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;
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‘‘(iv) the Age Discrimination Act of 
1975; 
‘‘(v) section 501 or 504 of the Reha-
bilitation Act of 1973; or
‘‘(vi) title I of the Americans with 
Disabilities Act of 1990; or 
‘‘(C) the Internal Revenue Service policy 
on unauthorized inspection of returns or return 
information; 
‘‘(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 Inter-
nal 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; 
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‘‘(8) willful failure to file any return of tax re-
quired under this title on or before the date pre-
scribed 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 li-
ability, unless such understatement is due to reason-
able 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 
extracting personal gain or benefit. 
‘‘(c) DETERMINATIONS OF COMMISSIONER.—
‘‘(1) IN
GENERAL.—The Commissioner may 
take a personnel action other than a disciplinary ac-
tion provided for in the guidelines under subsection 
(a)(2) for an act or omission described under sub-
section (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 dis-
cretion, may establish a procedure to determine if an 
individual should be referred to the Commissioner 
for a determination by the Commissioner under 
paragraph (1). 
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‘‘(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 provi-
sions 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 Rev-
enue Service for a taxpayer. 
‘‘(e) ANNUAL REPORT.—The Commissioner shall 
submit to Congress annually a report on disciplinary ac-
tions under this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 80 is amended by inserting after the item re-
lating 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 repealed. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 202. 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.—
Subsection (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 avail-
able 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. 
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SEC. 203. JURISDICTION OF TAX COURT OVER COLLECTION 
DUE PROCESS CASES. 
(a) IN GENERAL.—Section 6330(d)(1) (relating to 
judicial review of determination) is amended to read as 
follows: 
‘‘(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 jurisdic-
tion with respect to such matter).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to judicial appeals filed after 
the date of the enactment of this Act. 
SEC. 204. 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 Gen-
eral 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’’. 
(b) CONFORMING AMENDMENTS.—Section 7122(b) is 
amended by striking the second and third sentences.
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(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. 205. 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 indi-
vidual 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 be-
fore the 30th day of April following the close of 
the calendar 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. 
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‘‘(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 individ-
ual’s obligation under section 6641, 
then, with respect to the amount so allowed, 
any reference in section 6641 to the April 15 
following 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 
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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 
December 31, 2001. 
Subtitle B—Confidentiality and 
Disclosure 
SEC. 211. 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. 212. TAXPAYER REPRESENTATIVES NOT SUBJECT TO 
EXAMINATION ON SOLE BASIS OF REPRESEN-
TATION OF TAXPAYERS. 
(a) IN GENERAL.—Subsection (h) of section 6103 
(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 paragraph: 
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‘‘(A) has requirements in effect which re-
quire each contractor of such agency or State 
which would have access to returns or return 
information 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 con-
tracts of less than 1 year in duration) of each 
contractor 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 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.’’.
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(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, 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. 214. 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 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 
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‘‘(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, 
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‘‘(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 
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(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 
inserting ‘‘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. 215. 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 deter-
mines that such taxpayer’s return or return information 
was inspected or disclosed in violation of any of the provi-
sions specified in paragraph (1), (2), or (3).’’. 
(b) REPORTS.—Subsection (p) of section 6103 (relat-
ing to procedure and recordkeeping), as amended by sec-
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tion 245, 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.
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SEC. 216. 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. 217. 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, 
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‘‘(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 organiza-
tions 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 representatives of the appropriate 
State officer designated as the individuals who 
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are to inspect or to receive the returns or re-
turn information under this paragraph on be-
half 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 reso-
lution of State and Federal issues relating to 
such organization. 
‘‘(3) USE IN JUDICIAL AND ADMINISTRATIVE 
PROCEEDINGS.—Returns and return information 
disclosed pursuant to this subsection may be dis-
closed in civil administrative and judicial proceedings 
pertaining to the enforcement of State laws regu-
lating such organizations in a manner prescribed by 
the Secretary similar to that for tax administration 
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 
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determines that such disclosure would seriously im-
pair Federal tax administration. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section—
‘‘(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 responsi-
bility for overseeing organizations of the 
type described in section 501(c)(3).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 6103 is amend-
ed—
(A) by inserting ‘‘or section 6104(c)’’ after 
‘‘this section’’ in paragraph (2), and 
(B) by striking ‘‘or subsection (n)’’ in 
paragraph (3) and inserting ‘‘subsection (n), or 
section 6104(c)’’. 
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(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 amend-
ed—
(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 de-
scribed in subsection (l)(16), or any appropriate 
State officer (as defined in section 6104(c))’’. 
(4) Paragraph (2) of section 7213(a) is amend-
ed by inserting ‘‘or under section 6104(c)’’ after 
‘‘6103’’. 
(5) Paragraph (2) of section 7213A(a) is 
amended by inserting ‘‘or 6104(c)’’ after ‘‘6103’’. 
(6) Paragraph (2) of section 7431(a) is amend-
ed by inserting ‘‘(including any disclosure in viola-
tion of section 6104(c))’’ after ‘‘6103’’.
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(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. 
Subtitle C—Other Provisions 
SEC. 221. 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. 222. ENROLLED AGENTS. 
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the 
following new section: 
‘‘SEC. 7527. 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-
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