System Transparency and Accountability for the IRS Act
Bill: H.R.7341 | Sponsor: Rep. Newhouse, Dan (R-WA)
Policy area: Taxation

Summary:
System Transparency and Accountability for the IRS Act
This bill requires the Internal Revenue Service to ensure that its employees are familiar with basic taxpayer rights, including the right to be informed, the right to quality service, and the right to privacy and confidentiality.
The bill also authorizes the Department of the Treasury to regulate tax return preparers, including by sanctioning preparers for incompetence and disreputable behavior and by establishing minimum competency standards for preparers.

To move the taxpayer bill of rights to the front of the Internal 
Revenue Code of 1986, to establish minimum competency standards for tax 
               return preparers, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``System Transparency and 
Accountability for the IRS Act''.

SEC. 2. PROMINENT DISPLAY OF TAXPAYER BILL OF RIGHTS.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
striking section 7803(a)(3) and by inserting the following before 
subtitle A:
``In discharging his duties, the Commissioner of Internal Revenue shall ensure 
        that employees of the Internal Revenue Service are familiar with and act 
        in accord with taxpayer rights as afforded by other provisions of this 
        title, including--
                  ``(1) the right to be informed,
                  ``(2) the right to quality service,
                  ``(3) the right to pay no more than the correct 
              amount of tax,
                  ``(4) the right to challenge the position of the 
              Internal Revenue Service and be heard,
                  ``(5) the right to appeal a decision of the Internal 
              Revenue Service in an independent forum,
                  ``(6) the right to finality,
                  ``(7) the right to privacy,
                  ``(8) the right to confidentiality,
                  ``(9) the right to retain representation, and
                  ``(10) the right to a fair and just tax system.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3. REGULATION OF TAX RETURN PREPARERS.

    (a) In General.--Subsection (a) of section 330 of title 31, United 
States Code, is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) regulate--
                    ``(A) the practice of representatives of persons 
                before the Department of the Treasury; and
                    ``(B) the practice of tax return preparers; and''; 
                and
            (2) in paragraph (2)--
                    (A) by inserting ``or a tax return preparer to 
                prepare tax returns'' after ``practice'';
                    (B) by inserting ``or tax return preparer'' before 
                ``demonstrate'';
                    (C) in subparagraph (C), by inserting ``and minimum 
                competency standards'' after ``necessary 
                qualifications''; and
                    (D) in subparagraph (D), by striking the period at 
                the end and inserting ``or in preparing their tax 
                returns, claims for refund, or documents in connection 
                with tax returns or claims for refund.''.
    (b) Authority To Sanction Regulated Tax Return Preparers.--
Subsection (c) of section 330 of title 31, United States Code, is 
amended--
            (1) by inserting ``or tax return preparer'' after 
        ``representative'' each place it appears; and
            (2) in paragraph (4), by striking ``misleads or threatens'' 
        and all that follows and inserting ``misleads or threatens--
                    ``(A) any person being represented or any 
                prospective person being represented; or
                    ``(B) any person or prospective person whose tax 
                return, claim for refund, or document in connection 
                with a tax return or claim for refund, is being or may 
                be prepared.''.
    (c) Minimum Competency Standards for Tax Return Preparers.--Section 
330 of title 31, United States Code, is amended by adding at the end 
the following new subsection:
    ``(f) Minimum Competency Standards for Tax Return Preparers.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        tax return preparer shall demonstrate minimum competency 
        standards under this subsection by--
                    ``(A) obtaining an identifying number for securing 
                proper identification of such preparer as described in 
                section 6109(a)(4) of the Internal Revenue Code of 
                1986;
                    ``(B) satisfying any examination and annual 
                continuing education requirements as prescribed by the 
                Secretary; and
                    ``(C) completing a background check administered by 
                the Secretary.
            ``(2) Exemption.--The Secretary shall exempt tax return 
        preparers who have been subject to comparable examination, 
        continuing education requirements, and background checks 
        administered by the Secretary or any comparable State licensing 
        program from the applicable requirements of paragraph (1). Such 
        exemption shall extend directly to individuals who are 
        supervised by such preparers and are not required to secure an 
        identification number under section 6109(a)(4) of the Internal 
        Revenue Code of 1986.
            ``(3) Reinstatement of registered tax return preparer 
        program.--The Secretary shall issue regulations under this 
        section reinstating the Registered Tax Return Preparer Program. 
        Examination of tax return prepares under such program shall be 
        limited to a one-time, basic individual income tax examination 
        and the annual continuing education requirement under such 
        program shall not exceed 15 hours.''.
    (d) Tax Return Preparer Defined.--Section 330 of title 31, United 
States Code, as amended by subsection (c), is amended by adding at the 
end the following new subsection:
    ``(g) Tax Return Preparer.--For purposes of this section--
            ``(1) In general.--The term `tax return preparer' has the 
        meaning given such term under section 7701(a)(36) of the 
        Internal Revenue Code of 1986.
            ``(2) Tax return.--The term `tax return' has the meaning 
        given to the term `return' under section 6696(e)(1) of the 
        Internal Revenue Code of 1986.
            ``(3) Claim for refund.--The term `claim for refund' has 
        the meaning given such term under section 6696(e)(2) of such 
        Code.''.
    (e) Amendments With Respect to Identifying Number.--
            (1) In general.--Paragraph (4) of section 6109(a) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
            ``(4) Furnishing identifying number of tax return 
        preparer.--
                    ``(A) In general.--Any return or claim for refund 
                prepared by a tax return preparer shall bear such 
                identifying number for securing proper identification 
                of such preparer, his employer, or both, as may be 
                prescribed. For purposes of this paragraph, the terms 
                `return' and `claim for refund' have the respective 
                meanings given to such terms in section 6696(e).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                with respect to the preparation of any return or claim 
                for refund by a tax return preparer if--
                            ``(i) such return or claim is prepared by 
                        such preparer while such preparer is employed 
                        by an attorney, certified public accountant, or 
                        enrolled agent firm, and
                            ``(ii) such preparer prepares such return 
                        or claim under the supervision and direction of 
                        a tax return preparer who signs such return or 
                        claim and is an attorney, certified public 
                        accountant, or enrolled agent.''.
            (2) Clarification of rescission authority.--Section 6109 of 
        such Code is amended by inserting after subsection (d) the 
        following new subsection:
    ``(e) Authority To Rescind Identifying Number of Tax Return 
Preparer.--
            ``(1) In general.--The Secretary may rescind an identifying 
        number issued under subsection (a)(4) if--
                    ``(A) after notice and opportunity for a hearing, 
                the preparer is shown to be incompetent or disreputable 
                (as such terms are used in subsection (c) of section 
                330 of title 31, United States Code), and
                    ``(B) rescinding the identifying number would 
                promote compliance with the requirements of this title 
                and effective tax administration.
            ``(2) Records.--If an identifying number is rescinded under 
        paragraph (1), the Secretary shall place in the file in the 
        Office of the Director of Professional Responsibility the 
        opinion of the Secretary with respect to the determination, 
        including--
                    ``(A) a statement of the facts and circumstances 
                relating to the determination, and
                    ``(B) the reasons for the rescission.''.
            (3) Effective date.--The amendments made by this section 
        shall take effect on the date which is 180 days after the date 
        of the enactment of this Act.

SEC. 4. REPORT.

    Not later than 180 days after the date of the enactment of this 
Act, the Secretary of the Treasury (or the Secretary's delegate) shall 
submit to Congress a report detailing the implementation of tax 
preparer minimum standards under section 330(f) of title 31, United 
States Code (as added by this Act).
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