To ensure the successful development of the electronic Income Verification Express Service of the Internal Revenue Service by amending the Taxpayer First Act to clarify that taxpayer identity verification is the responsibility of users of the system rather than the taxpayer, and for other purposes.
Bill: H.R.9589 | Sponsor: Rep. McHenry, Patrick T. (R-NC)
Policy area: Taxation

Summary:
This bill modifies provisions of the Taxpayer First Act relating to taxpayer identity verification (i.e., the electronic Income Verification Express Service) and disclosures of taxpayer information.
The bill requires the Internal Revenue Service (IRS) to implement a program that insures that certain disclosures of taxpayer returns or return information are accomplished only after a financial institution or other relevant entity (other than the taxpayer) has formed a reasonable belief that the identity of the taxpayer has been authenticated.
The bill requires the IRS to ensure that the taxpayer information disclosure program complies with specified security standards and guidelines, including those relating to security and confidentiality of taxpayer information.
The bill prohibits the IRS from requiring a taxpayer seeking a disclosure of information to access any information technology system or service used by the IRS for any purpose relating to a disclosure, including identity verification or the provision of electronic consent.

To ensure the successful development of the electronic Income 
    Verification Express Service of the Internal Revenue Service by 
   amending the Taxpayer First Act to clarify that taxpayer identity 
 verification is the responsibility of users of the system rather than 
                 the taxpayer, 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. IDENTITY VERIFICATION RESPONSIBILITY.

    (a) In General.--Section 2201 of the Taxpayer First Act (Public Law 
116-25) is amended--
            (1) in subsection (a), by striking ``and'' at the end of 
        paragraph (1), by redesignating paragraph (2) as paragraph (3), 
        and by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) is accomplished only after a financial institution 
        (or a service provider, subsidiary, affiliate, agent, 
        subcontractor, or assignee of a financial institution) has 
        formed a reasonable belief that the identity of the taxpayer 
        has been authenticated; and''; and
            (2) in subsection (b), by striking ``by the Secretary to a 
        person seeking to verify the income or creditworthiness of a 
        taxpayer who is a borrower in the process of a loan 
        application'' and inserting ``, including business tax return 
        information, by the Secretary to a taxpayer or financial 
        institution (or a service provider, subsidiary, affiliate, 
        agent, subcontractor, or assignee of a financial institution) 
        designated by a taxpayer seeking to verify the income or 
        creditworthiness of a taxpayer who is a borrower in the process 
        of a financial application''.
    (b) Financial Institution Definition, Standards and Guidelines.--
Section 2201 of such Act is amended--
            (1) in subsection (c)--
                    (A) by striking ``The Secretary'' and inserting--
            ``(1) In general.--The Secretary''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Standards.--The Secretary shall ensure that any 
        standards and guidelines deemed applicable to the system 
        described in this section--
                    ``(A) Enable a taxpayer to provide the appropriate 
                designation and electronic consent to a financial 
                institution (or a service provider, subsidiary, 
                affiliate, agent, subcontractor, or assignee of a 
                financial institution), including those defined in 
                section 106 of the Electronic Signatures in Global and 
                National Commerce Act (15 U.S.C. 7006);
                    ``(B) Enable a financial institution (or a service 
                provider, subsidiary, affiliate, agent, subcontractor, 
                or assignee of a financial institution) to act upon 
                such designation and consent to request a qualified 
                disclosure directly with the system implemented 
                pursuant to this section; and
                    ``(C) Ensure the security and confidentiality of 
                taxpayer information, to the extent such standards and 
                guidelines do not conflict with other standards and 
                guidelines applicable to financial institutions.''; and
            (2) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively, and by inserting after subsection 
        (b) the following new subsection:
    ``(c) Financial Institution.--For purposes of this section, the 
term `financial institution' has the meaning given such term in section 
509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).''.
    (c) Limitation on Authority.--Section 2201 of such Act is amended 
by adding at the end the following new subsection:
    ``(f) Limitation on Authority.--The Secretary may not require a 
taxpayer seeking a qualified disclosure to access any information 
technology system or service used by or on behalf of the Internal 
Revenue Service pursuant to this section for any purpose relating to a 
qualified disclosure, including identity verification or the provision 
of electronic consent.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect as if included in section 2201 of the Taxpayer First Act (Public 
Law 116-25).
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