Title: Taxpayer First Act of 2018
Policy area: Taxation

Summary:
Taxpayer First Act of 2018
This bill modifies several administrative procedures and policies of the Internal Revenue Service (IRS).
The bill includes provisions regarding

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3246 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  2d Session
                                S. 3246

  To provide enhanced protections for taxpayers from fraud and other 
              illegal activities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 19, 2018

  Mr. Hatch (for himself, Mr. Wyden, Mr. Grassley, Ms. Cantwell, Mr. 
 Roberts, Mr. Cardin, Mr. Thune, Mr. Bennet, Mr. Isakson, Mr. Warner, 
 Mr. Scott, Mr. Cassidy, and Mrs. McCaskill) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To provide enhanced protections for taxpayers from fraud and other 
              illegal activities, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``Taxpayer First Act 
of 2018''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Secretary.--In this Act, the term ``Secretary'' means the 
Secretary of the Treasury or the Secretary's delegate.
    (d) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.
                      TITLE I--TAXPAYER PROTECTION

               Subtitle A--Protection of Taxpayer Rights

      PART I--Assistance to Individual Taxpayers in Filing Returns

Sec. 1001. Return preparation programs for applicable taxpayers.
Sec. 1002. Limit redisclosures and uses of consent-based disclosures of 
                            tax return information.
Sec. 1003. Clarification of equitable relief from joint liability.
Sec. 1004. Notice from IRS regarding closure of Taxpayer Assistance 
                            Centers.
                   PART II--Whistleblower Protections

Sec. 1011. Whistleblower reforms.
 PART III--Reform of Laws Governing Internal Revenue Service Employees

Sec. 1021. Electronic record retention.
Sec. 1022. Prohibition on rehiring former IRS employees who were 
                            involuntarily separated for misconduct.
Sec. 1023. Authority to remove or transfer senior IRS executives who 
                            fail in their performance or engage in 
                            serious misconduct.
Sec. 1024. Limitation on access of non-Internal Revenue Service 
                            employees to returns and return 
                            information.
Sec. 1025. Notification of unauthorized inspection or disclosure of 
                            returns and return information.
                     PART IV--Exempt Organizations

Sec. 1031. Mandatory e-filing by exempt organizations.
Sec. 1032. Prohibit the use of IRS funds for political targeting.
Sec. 1033. Notice required before revocation of tax exempt status for 
                            failure to file return.
                       PART V--IRS Audit Criteria

Sec. 1041. Report on IRS audit criteria.
 Subtitle B--Protection of Taxpayers From Identity Theft and Tax Fraud

Sec. 1101. Single point of contact for tax-related identity theft 
                            victims.
Sec. 1102. Information on identity theft and tax scams.
Sec. 1103. Notification of suspected identity theft.
               TITLE II--STOLEN IDENTITY FRAUD PREVENTION

       Subtitle A--Identity Theft and Tax Refund Fraud Prevention

                       PART I--General Provisions

Sec. 2001. Guidelines for stolen identity refund fraud cases.
Sec. 2002. Increased penalty for improper disclosure or use of 
                            information by preparers of returns.
  PART II--Administrative Authority To Prevent Identity Theft and Tax 
                              Refund Fraud

Sec. 2011. Authority to transfer Internal Revenue Service 
                            appropriations to combat tax fraud.
Sec. 2012. Streamlined critical pay authority for information 
                            technology positions.
Sec. 2013. Access to the National Directory of New Hires to identify 
                            and prevent fraudulent tax return filings 
                            and claims for refund.
Sec. 2014. Repeal of provision regarding certain tax compliance 
                            procedures and reports.
      Subtitle B--Improvements to Electronic Filing of Tax Returns

Sec. 2101. Identity protection personal identification numbers.
Sec. 2102. Electronic filing of returns.
Sec. 2103. Internet platform for Form 1099 filings.
Sec. 2104. Requirement that electronically prepared paper returns 
                            include scannable code.
Sec. 2105. Authentication of users of electronic services accounts.

                      TITLE I--TAXPAYER PROTECTION

               Subtitle A--Protection of Taxpayer Rights

      PART I--ASSISTANCE TO INDIVIDUAL TAXPAYERS IN FILING RETURNS

SEC. 1001. RETURN PREPARATION PROGRAMS FOR APPLICABLE TAXPAYERS.

    (a) In General.--Chapter 77 is amended by inserting after section 
7526 the following new section:

``SEC. 7526A. RETURN PREPARATION PROGRAMS FOR APPLICABLE TAXPAYERS.

    ``(a) Establishment of Volunteer Income Tax Assistance Matching 
Grant Program.--The Secretary shall establish a Community Volunteer 
Income Tax Assistance Matching Grant Program under which the Secretary 
may, subject to the availability of appropriated funds, make grants to 
provide matching funds for the development, expansion, or continuation 
of qualified return preparation programs assisting applicable taxpayers 
and members of underserved populations.
    ``(b) Use of Funds.--
            ``(1) In general.--Qualified return preparation programs 
        may use grants received under this section for--
                    ``(A) ordinary and necessary costs associated with 
                program operation in accordance with cost principles 
                under the applicable Office of Management and Budget 
                circular, including--
                            ``(i) wages or salaries of persons 
                        coordinating the activities of the program,
                            ``(ii) developing training materials, 
                        conducting training, and performing quality 
                        reviews of the returns prepared under the 
                        program,
                            ``(iii) equipment purchases, and
                            ``(iv) vehicle-related expenses associated 
                        with remote or rural tax preparation services,
                    ``(B) outreach and educational activities described 
                in subsection (c)(2)(B), and
                    ``(C) services related to financial education and 
                capability, asset development, and the establishment of 
                savings accounts in connection with tax return 
                preparation.
            ``(2) Requirement of matching funds.--A qualified return 
        preparation program must provide matching funds on a dollar-
        for-dollar basis for all grants provided under this section. 
        Matching funds may include--
                    ``(A) the salary (including fringe benefits) of 
                individuals performing services for the program,
                    ``(B) the cost of equipment used in the program, 
                and
                    ``(C) other ordinary and necessary costs associated 
                with the program.
        Indirect expenses, including general overhead of any entity 
        administering the program, shall not be counted as matching 
        funds.
    ``(c) Application.--
            ``(1) In general.--Each applicant for a grant under this 
        section shall submit an application to the Secretary at such 
        time, in such manner, and containing such information as the 
        Secretary may reasonably require.
            ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to applications which 
        demonstrate--
                    ``(A) assistance to applicable taxpayers, with 
                emphasis on outreach to, and services for, such 
                taxpayers,
                    ``(B) taxpayer outreach and educational activities 
                relating to eligibility and availability of income 
                supports available through this title, including the 
                earned income tax credit, and
                    ``(C) specific outreach and focus on one or more 
                underserved populations.
            ``(3) Amounts taken into account.--In determining matching 
        grants under this section, the Secretary shall only take into 
        account amounts provided by the qualified return preparation 
        program for expenses described in subsection (b).
    ``(d) Program Adherence.--
            ``(1) In general.--The Secretary shall establish procedures 
        for, and shall conduct not less frequently than once every 5 
        calendar years during which a qualified return preparation 
        program is operating under a grant under this section, periodic 
        site visits--
                    ``(A) to ensure the program is carrying out the 
                purposes of this section, and
                    ``(B) to determine whether the program meets such 
                program adherence standards as the Secretary shall by 
                regulation or other guidance prescribe.
            ``(2) Additional requirements for grant recipients not 
        meeting program adherence standards.--In the case of any 
        qualified return preparation program which--
                    ``(A) is awarded a grant under this section, and
                    ``(B) is subsequently determined--
                            ``(i) not to meet the program adherence 
                        standards described in paragraph (1)(B), or
                            ``(ii) not to be otherwise carrying out the 
                        purposes of this section,
        such program shall not be eligible for any additional grants 
        under this section unless such program provides sufficient 
        documentation of corrective measures established to address any 
        such deficiencies determined.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Qualified return preparation program.--The term 
        `qualified return preparation program' means any program--
                    ``(A) which provides assistance to individuals, not 
                less than 90 percent of whom are applicable taxpayers, 
                in preparing and filing Federal income tax returns,
                    ``(B) which is administered by a qualified entity,
                    ``(C) in which all volunteers who assist in the 
                preparation of Federal income tax returns meet the 
                training requirements prescribed by the Secretary, and
                    ``(D) which uses a quality review process which 
                reviews 100 percent of all returns.
            ``(2) Qualified entity.--
                    ``(A) In general.--The term `qualified entity' 
                means any entity which--
                            ``(i) is an eligible organization,
                            ``(ii) is in compliance with Federal tax 
                        filing and payment requirements,
                            ``(iii) is not debarred or suspended from 
                        Federal contracts, grants, or cooperative 
                        agreements, and
                            ``(iv) agrees to provide documentation to 
                        substantiate any matching funds provided 
                        pursuant to the grant program under this 
                        section.
                    ``(B) Eligible organization.--The term `eligible 
                organization' means--
                            ``(i) an institution of higher education 
                        which is described in section 102 (other than 
                        subsection (a)(1)(C) thereof) of the Higher 
                        Education Act of 1965 (20 U.S.C. 1002), as in 
                        effect on the date of the enactment of this 
                        section, and which has not been disqualified 
                        from participating in a program under title IV 
                        of such Act,
                            ``(ii) an organization described in section 
                        501(c) and exempt from tax under section 
                        501(a),
                            ``(iii) a local government agency, 
                        including--
                                    ``(I) a county or municipal 
                                government agency, and
                                    ``(II) an Indian tribe, as defined 
                                in section 4(13) of the Native American 
                                Housing Assistance and Self-
                                Determination Act of 1996 (25 U.S.C. 
                                4103(13)), including any tribally 
                                designated housing entity (as defined 
                                in section 4(22) of such Act (25 U.S.C. 
                                4103(22))), tribal subsidiary, 
                                subdivision, or other wholly owned 
                                tribal entity,
                            ``(iv) a local, State, regional, or 
                        national coalition (with one lead organization 
                        which meets the eligibility requirements of 
                        clause (i), (ii), or (iii) acting as the 
                        applicant organization), or
                            ``(v) in the case of applicable taxpayers 
                        and members of underserved populations with 
                        respect to which no organizations described in 
                        the preceding clauses are available--
                                    ``(I) a State government agency, or
                                    ``(II) an office providing 
                                Cooperative Extension services (as 
                                established at the land-grant colleges 
                                and universities under the Smith-Lever 
                                Act of May 8, 1914).
            ``(3) Applicable taxpayers.--The term `applicable taxpayer' 
        means a taxpayer whose income for the taxable year does not 
        exceed an amount equal to the completed phaseout amount under 
        section 32(b) for a married couple filing a joint return with 
        three or more qualifying children, as determined in a revenue 
        procedure or other published guidance.
            ``(4) Underserved population.--The term `underserved 
        population' includes populations of persons with disabilities, 
        persons with limited English proficiency, Native Americans, 
        individuals living in rural areas, members of the Armed Forces 
        and their spouses, and the elderly.
    ``(f) Special Rules and Limitations.--
            ``(1) Duration of grants.--Upon application of a qualified 
        return preparation program, the Secretary is authorized to 
        award a multi-year grant not to exceed 3 years.
            ``(2) Aggregate limitation.--Unless otherwise provided by 
        specific appropriation, the Secretary shall not allocate more 
        than $30,000,000 per fiscal year (exclusive of costs of 
        administering the program) to grants under this section.
    ``(g) Promotion of Programs.--
            ``(1) In general.--The Secretary shall promote tax 
        preparation through qualified return preparation programs 
        through the use of mass communications and other means.
            ``(2) Provision of information regarding qualified return 
        preparation programs.--The Secretary may provide taxpayers 
        information regarding qualified return preparation programs 
        receiving grants under this section.
            ``(3) VITA grantee referral.--Qualified return preparation 
        programs receiving a grant under this section are encouraged, 
        in appropriate cases, to--
                    ``(A) advise taxpayers of the availability of, and 
                eligibility requirements for receiving, advice and 
                assistance from qualified low-income taxpayer clinics 
                receiving funding under section 7526, and
                    ``(B) provide information regarding the location 
                of, and contact information for, such clinics.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by inserting after the item relating to section 7526 the 
following new item:

``Sec. 7526A. Return preparation programs for applicable taxpayers.''.

SEC. 1002. LIMIT REDISCLOSURES AND USES OF CONSENT-BASED DISCLOSURES OF 
              TAX RETURN INFORMATION.

    (a) In General.--Section 6103(c) is amended by adding at the end 
the following: ``Persons designated by the taxpayer under this 
subsection to receive return information shall not use the information 
for any purpose other than the express purpose for which consent was 
granted and shall not disclose return information to any other person 
without the express permission of, or request by, the taxpayer.''.
    (b) Application of Penalties.--Section 6103(a)(3) is amended by 
inserting ``subsection (c),'' after ``return information under''.
    (c) Effective Date.--The amendments made by this section shall 
apply to disclosures made after the date that is 6 months after the 
date of the enactment of this Act.

SEC. 1003. CLARIFICATION OF EQUITABLE RELIEF FROM JOINT LIABILITY.

    (a) In General.--Section 6015 is amended--
            (1) in subsection (e), by adding at the end the following 
        new paragraph:
            ``(7) Standard and scope of review.--Any review of a 
        determination made under this section shall be reviewed de novo 
        by the Tax Court and shall be based upon--
                    ``(A) the administrative record established at the 
                time of the determination, and
                    ``(B) any additional newly discovered or previously 
                unavailable evidence.''; and
            (2) by amending subsection (f) to read as follows:
    ``(f) Equitable Relief.--
            ``(1) In general.--Under procedures prescribed by the 
        Secretary, if--
                    ``(A) taking into account all the facts and 
                circumstances, it is inequitable to hold the individual 
                liable for any unpaid tax or any deficiency (or any 
                portion of either), and
                    ``(B) relief is not available to such individual 
                under subsection (b) or (c),
        the Secretary may relieve such individual of such liability.
            ``(2) Limitation.--A request for equitable relief under 
        this subsection may be made with respect to any portion of any 
        liability that--
                    ``(A) has not been paid, provided that such request 
                is made before the expiration of the applicable period 
                of limitation under section 6502, or
                    ``(B) has been paid, provided that such request is 
                made during the period in which the individual could 
                submit a timely claim for refund or credit of such 
                payment.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to petitions or requests filed or pending on or after the date of 
the enactment of this Act.

SEC. 1004. NOTICE FROM IRS REGARDING CLOSURE OF TAXPAYER ASSISTANCE 
              CENTERS.

    Not later than 90 days before the date that a proposed closure of a 
Taxpayer Assistance Center would take effect, the Secretary shall--
            (1) make publicly available (including by non-electronic 
        means) a notice which--
                    (A) identifies the Taxpayer Assistance Center 
                proposed for closure and the date of such proposed 
                closure; and
                    (B) identifies the relevant alternative sources of 
                taxpayer assistance which may be utilized by taxpayers 
                affected by such proposed closure; and
            (2) submit to Congress a written report that includes--
                    (A) the information included in the notice 
                described in paragraph (1);
                    (B) the reasons for such proposed closure; and
                    (C) such other information as the Secretary may 
                determine appropriate.

                   PART II--WHISTLEBLOWER PROTECTIONS

SEC. 1011. WHISTLEBLOWER REFORMS.

    (a) Modifications to Disclosure Rules for Whistleblowers.--
            (1) In general.--Section 6103(k) is amended by adding at 
        the end the following new paragraph:
            ``(13) Disclosure to whistleblowers.--
                    ``(A) In general.--The Secretary may disclose, to 
                any individual providing information relating to any 
                purpose described in paragraph (1) or (2) of section 
                7623(a), return information related to the 
                investigation of any taxpayer with respect to whom the 
                individual has provided such information, but only to 
                the extent that such disclosure is necessary in 
                obtaining information, which is not otherwise 
                reasonably available, with respect to the correct 
                determination of tax liability for tax, or the amount 
                to be collected with respect to the enforcement of any 
                other provision of this title.
                    ``(B) Updates on whistleblower investigations.--The 
                Secretary shall disclose to an individual providing 
                information relating to any purpose described in 
                paragraph (1) or (2) of section 7623(a) the following:
                            ``(i) Not later than 60 days after a case 
                        for which the individual has provided 
                        information has been referred for an audit or 
                        examination, a notice with respect to such 
                        referral.
                            ``(ii) Not later than 60 days after a 
                        taxpayer with respect to whom the individual 
                        has provided information has made a payment of 
                        tax with respect to tax liability to which such 
                        information relates, a notice with respect to 
                        such payment.
                            ``(iii) Subject to such requirements and 
                        conditions as are prescribed by the Secretary, 
                        upon a written request by such individual--
                                    ``(I) information on the status and 
                                stage of any investigation or action 
                                related to such information, and
                                    ``(II) in the case of a 
                                determination of the amount of any 
                                award under section 7623(b), the 
                                reasons for such determination.
                Clause (iii) shall not apply to any information if the 
                Secretary determines that disclosure of such 
                information would seriously impair Federal tax 
                administration. Information described in clauses (i), 
                (ii), and (iii) may be disclosed to a designee of the 
                individual providing such information in accordance 
                with guidance provided by the Secretary.''.
            (2) Conforming amendments.--
                    (A) Confidentiality of information.--Section 
                6103(a)(3) is amended by striking ``subsection 
                (k)(10)'' and inserting ``paragraph (10) or (13) of 
                subsection (k)''.
                    (B) Penalty for unauthorized disclosure.--Section 
                7213(a)(2) is amended by striking ``(k)(10)'' and 
                inserting ``(k)(10) or (13)''.
                    (C) Coordination with authority to disclose for 
                investigative purposes.--Section 6103(k)(6) is amended 
                by adding at the end the following new sentence: ``This 
                paragraph shall not apply to any disclosure to an 
                individual providing information relating to any 
                purpose described in paragraph (1) or (2) of section 
                7623(a) which is made under paragraph (13)(A).''.
    (b) Protection Against Retaliation.--Section 7623 is amended by 
adding at the end the following new subsection:
    ``(d) Civil Action To Protect Against Retaliation Cases.--
            ``(1) Anti-retaliation whistleblower protection for 
        employees.--No employer or any officer, employee, contractor, 
        subcontractor, or agent of such employer may discharge, demote, 
        suspend, threaten, harass, or in any other manner discriminate 
        against an employee in the terms and conditions of employment 
        (including through an act in the ordinary course of such 
        employee's duties) in reprisal for any lawful act done by the 
        employee--
                    ``(A) to provide information, cause information to 
                be provided, or otherwise assist in an investigation 
                regarding underpayment of tax or any conduct which the 
                employee reasonably believes constitutes a violation of 
                the internal revenue laws or any provision of Federal 
                law relating to tax fraud, when the information or 
                assistance is provided to the Internal Revenue Service, 
                the Secretary of Treasury, the Treasury Inspector 
                General for Tax Administration, the Comptroller General 
                of the United States, the Department of Justice, the 
                United States Congress, a person with supervisory 
                authority over the employee, or any other person 
                working for the employer who has the authority to 
                investigate, discover, or terminate misconduct, or
                    ``(B) to testify, participate in, or otherwise 
                assist in any administrative or judicial action taken 
                by the Internal Revenue Service relating to an alleged 
                underpayment of tax or any violation of the internal 
                revenue laws or any provision of Federal law relating 
                to tax fraud.
            ``(2) Enforcement action.--
                    ``(A) In general.--A person who alleges discharge 
                or other reprisal by any person in violation of 
                paragraph (1) may seek relief under paragraph (3) by--
                            ``(i) filing a complaint with the Secretary 
                        of Labor, or
                            ``(ii) if the Secretary of Labor has not 
                        issued a final decision within 180 days of the 
                        filing of the complaint and there is no showing 
                        that such delay is due to the bad faith of the 
                        claimant, bringing an action at law or equity 
                        for de novo review in the appropriate district 
                        court of the United States, which shall have 
                        jurisdiction over such an action without regard 
                        to the amount in controversy.
                    ``(B) Procedure.--
                            ``(i) In general.--An action under 
                        subparagraph (A)(i) shall be governed under the 
                        rules and procedures set forth in section 
                        42121(b) of title 49, United States Code.
                            ``(ii) Exception.--Notification made under 
                        section 42121(b)(1) of title 49, United States 
                        Code, shall be made to the person named in the 
                        complaint and to the employer.
                            ``(iii) Burdens of proof.--An action 
                        brought under subparagraph (A)(ii) shall be 
                        governed by the legal burdens of proof set 
                        forth in section 42121(b) of title 49, United 
                        States Code, except that in applying such 
                        section--
                                    ``(I) `behavior described in 
                                paragraph (1)' shall be substituted for 
                                `behavior described in paragraphs (1) 
                                through (4) of subsection (a)' each 
                                place it appears in paragraph (2)(B) 
                                thereof, and
                                    ``(II) `a violation of paragraph 
                                (1)' shall be substituted for `a 
                                violation of subsection (a)' each place 
                                it appears.
                            ``(iv) Statute of limitations.--A complaint 
                        under subparagraph (A)(i) shall be filed not 
                        later than 180 days after the date on which the 
                        violation occurs.
                            ``(v) Jury trial.--A party to an action 
                        brought under subparagraph (A)(ii) shall be 
                        entitled to trial by jury.
            ``(3) Remedies.--
                    ``(A) In general.--An employee prevailing in any 
                action under paragraph (2)(A) shall be entitled to all 
                relief necessary to make the employee whole.
                    ``(B) Compensatory damages.--Relief for any action 
                under subparagraph (A) shall include--
                            ``(i) reinstatement with the same seniority 
                        status that the employee would have had, but 
                        for the reprisal,
                            ``(ii) the sum of 200 percent of the amount 
                        of back pay and 100 percent of all lost 
                        benefits, with interest, and
                            ``(iii) compensation for any special 
                        damages sustained as a result of the reprisal, 
                        including litigation costs, expert witness 
                        fees, and reasonable attorney fees.
            ``(4) Rights retained by employee.--Nothing in this section 
        shall be deemed to diminish the rights, privileges, or remedies 
        of any employee under any Federal or State law, or under any 
        collective bargaining agreement.
            ``(5) Nonenforceability of certain provisions waiving 
        rights and remedies or requiring arbitration of disputes.--
                    ``(A) Waiver of rights and remedies.--The rights 
                and remedies provided for in this subsection may not be 
                waived by any agreement, policy form, or condition of 
                employment, including by a predispute arbitration 
                agreement.
                    ``(B) Predispute arbitration agreements.--No 
                predispute arbitration agreement shall be valid or 
                enforceable, if the agreement requires arbitration of a 
                dispute arising under this subsection.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to disclosures made after the date of the enactment 
        of this Act.
            (2) Civil protection.--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

 PART III--REFORM OF LAWS GOVERNING INTERNAL REVENUE SERVICE EMPLOYEES

SEC. 1021. ELECTRONIC RECORD RETENTION.

    (a) Retention of Records.--
            (1) In general.--Email records of the Internal Revenue 
        Service shall be retained in an appropriate electronic system 
        that supports records management and litigation requirements, 
        including the capability to identify, retrieve, and retain the 
        records, in accordance with the requirements described in 
        paragraph (2).
            (2) Requirements.--
                    (A) Prior to certification.--The Commissioner of 
                Internal Revenue and the Chief Counsel for the Internal 
                Revenue Service shall retain all email records 
                generated on or after the date of the enactment of this 
                Act and before the date on which the Treasury Inspector 
                General for Tax Administration makes the certification 
                under subsection (c)(1).
                    (B) Principal officers and specified employees.--
                Not later than December 31, 2019, the Commissioner of 
                Internal Revenue and the Chief Counsel for the Internal 
                Revenue Service shall maintain email records of all 
                principal officers and specified employees of the 
                Internal Revenue Service for a period of not less than 
                15 years beginning on the date such record was 
                generated.
    (b) Transmission of Records to the National Archives.--Not later 
than the last day of the period described in subsection (a)(2)(B), the 
Commissioner of Internal Revenue and the Chief Counsel for the Internal 
Revenue Service shall transfer the email records of principal officers 
and specified employees of the Internal Revenue Service to the 
Archivist of the United States.
    (c) Compliance.--
            (1) Certification.--On the date that the Treasury Inspector 
        General for Tax Administration determines that the Internal 
        Revenue Service has a program in place that complies with the 
        requirements of subsections (a)(2)(B) and (b), the Treasury 
        Inspector General for Tax Administration shall certify to the 
        Committee on Ways and Means of the House of Representatives and 
        the Committee on Finance of the Senate that the Internal 
        Revenue Service is in compliance with such requirements.
            (2) Reports.--
                    (A) Interim report.--Not later than December 31, 
                2019, the Treasury Inspector General for Tax 
                Administration shall submit a report to the Committee 
                on Ways and Means of the House of Representatives and 
                the Committee on Finance of the Senate on the steps 
                being taken by the Commissioner of Internal Revenue and 
                the Chief Counsel for the Internal Revenue Service to 
                comply with the requirements of subsections (a)(2)(B) 
                and (b).
                    (B) Final report.--Not later than April 1, 2020, 
                the Treasury Inspector General for Tax Administration 
                shall submit a report to the Committee on Ways and 
                Means of the House of Representatives and the Committee 
                on Finance of the Senate describing whether the 
                Internal Revenue Service is in compliance with the 
                requirements of subsections (a)(2)(B) and (b).
    (d) Definitions.--For purposes of this section--
            (1) Principal officer.--The term ``principal officer'' 
        means, with respect to the Internal Revenue Service--
                    (A) any employee whose position is listed under the 
                Internal Revenue Service in the most recent version of 
                the United States Government Manual published by the 
                Office of the Federal Register;
                    (B) any employee who is a senior staff member 
                reporting directly to the Commissioner of Internal 
                Revenue or the Chief Counsel for the Internal Revenue 
                Service; and
                    (C) any associate counsel, deputy counsel, or 
                division head in the Office of the Chief Counsel for 
                the Internal Revenue Service.
            (2) Specified employee.--The term ``specified employee'' 
        means, with respect to the Internal Revenue Service, any 
        employee who--
                    (A) holds a Senior Executive Service position (as 
                defined in section 3132 of title 5, United States Code) 
                in the Internal Revenue Service or the Office of Chief 
                Counsel for the Internal Revenue Service; and
                    (B) is not a principal officer of the Internal 
                Revenue Service.

SEC. 1022. PROHIBITION ON REHIRING FORMER IRS EMPLOYEES WHO WERE 
              INVOLUNTARILY SEPARATED FOR MISCONDUCT.

    (a) In General.--Section 7804 is amended by adding at the end the 
following new subsection:
    ``(d) Prohibition on Rehiring Employees Involuntarily Separated.--
Notwithstanding any other provision of law, the Commissioner may not 
hire any individual previously employed by the Commissioner--
            ``(1) who was removed for misconduct or unacceptable 
        performance under this subchapter, chapter 43 or chapter 75 of 
        title 5, United States Code, or a similar provision of law,
            ``(2) who has voluntarily separated after receiving a 
        notice of proposed action of removal for misconduct or 
        unacceptable performance, or
            ``(3) whose employment was terminated under section 1203 of 
        the Internal Revenue Service Restructuring and Reform Act of 
        1998 (26 U.S.C. 7804 note).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to the hiring of employees after the date of the 
enactment of this Act.

SEC. 1023. AUTHORITY TO REMOVE OR TRANSFER SENIOR IRS EXECUTIVES WHO 
              FAIL IN THEIR PERFORMANCE OR ENGAGE IN SERIOUS 
              MISCONDUCT.

    (a) In General.--Section 1203 of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note) is amended 
by adding at the end the following new subsection:
    ``(f) Removal of Senior Executives Based on Performance or 
Misconduct.--
            ``(1) Removal or transfer.--
                    ``(A) In general.--The Commissioner of Internal 
                Revenue (referred to in this subsection as the 
                `Commissioner') may remove an individual employed in a 
                senior executive position at the Internal Revenue 
                Service from the senior executive position if the 
                Commissioner determines the performance or misconduct 
                of the individual warrants such removal. If the 
                Commissioner so removes such an individual, the 
                Commissioner may--
                            ``(i) remove the individual from the civil 
                        service (as defined in section 2101 of title 5, 
                        United States Code); or
                            ``(ii) in the case of an individual 
                        described in subparagraph (B), transfer the 
                        individual from the senior executive position 
                        to a General Schedule position at any grade of 
                        the General Schedule for which the individual 
                        is qualified and that the Commissioner 
                        determines is appropriate.
                    ``(B) Individuals eligible for transfer.--An 
                individual described in this subparagraph is an 
                individual who--
                            ``(i) previously occupied a permanent 
                        position within the competitive service (as 
                        that term is defined in section 2102 of title 
                        5, United States Code);
                            ``(ii) previously occupied a permanent 
                        position within the excepted service (as that 
                        term is defined in section 2103 of title 5, 
                        United States Code); or
                            ``(iii) prior to employment in a senior 
                        executive position at the Internal Revenue 
                        Service, did not occupy any position within the 
                        Federal Government.
            ``(2) Pay of transferred individuals.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, including the requirements of section 
                3594 of title 5, United States Code, any individual 
                transferred to a General Schedule position under 
                paragraph (1)(A)(ii) shall, beginning on the date of 
                such transfer, receive the annual rate of pay 
                applicable to such position.
                    ``(B) Paid leave during appeal.--An individual so 
                transferred may not be placed on administrative leave 
                or any other category of paid leave during the period 
                during which an appeal (if any) under this section is 
                ongoing, and may only receive pay if the individual 
                reports for duty. If an individual so transferred does 
                not report for duty, such individual shall not receive 
                pay or other benefits pursuant to paragraph (5)(E).
            ``(3) Notice to congress.--Not later than 30 days after 
        removing or transferring an individual from a senior executive 
        position under paragraph (1), the Commissioner shall submit 
        written notice of such removal or transfer and the reason for 
        such removal or transfer to--
                    ``(A) the Committee on Finance of the Senate;
                    ``(B) the Committee on Homeland Security and 
                Governmental Affairs of the Senate;
                    ``(C) the Committee on Ways and Means of the House 
                of Representatives; and
                    ``(D) the Committee on Oversight and Government 
                Reform of the House of Representatives.
            ``(4) Procedure.--
                    ``(A) In general.--The procedures under section 
                7543(b) of title 5, United States Code, shall not apply 
                to a removal or transfer under this section.
                    ``(B) Appeal to merit system protection board.--
                            ``(i) In general.--Subject to clause (ii) 
                        and paragraph (5), any removal or transfer 
                        under paragraph (1) may be appealed to the 
                        Merit Systems Protection Board under section 
                        7701 of title 5, United States Code.
                            ``(ii) Deadline for appeal.--An appeal 
                        under clause (i) of a removal or transfer may 
                        only be made if such appeal is made not later 
                        than 7 days after the date of such removal or 
                        transfer.
            ``(5) Expedited review by administrative law judge.--
                    ``(A) In general.--Upon receipt of an appeal under 
                paragraph (4)(B)(i), the Merit Systems Protection Board 
                shall refer such appeal to an administrative law judge 
                pursuant to section 7701(b)(1) of title 5, United 
                States Code. The administrative law judge shall 
                expedite any such appeal under such section and, in any 
                such case, shall issue a decision not later than 21 
                days after the date of the appeal.
                    ``(B) Finality of decision.--Notwithstanding any 
                other provision of law, including section 7703 of title 
                5, United States Code, the decision of an 
                administrative law judge under subparagraph (A) shall 
                be final and shall not be subject to any further 
                appeal.
                    ``(C) Failure to reach decision.--In any case in 
                which the administrative law judge cannot issue a 
                decision in accordance with the 21-day requirement 
                under subparagraph (A), the removal or transfer is 
                final. In such a case, the Merit Systems Protection 
                Board shall, within 14 days after the date that such 
                removal or transfer is final, submit to Congress and 
                the Committees described in paragraph (3) a report that 
                explains the reasons why a decision was not issued in 
                accordance with such requirement.
                    ``(D) Prohibition on stay of removal or transfer.--
                The Merit Systems Protection Board or administrative 
                law judge may not stay any removal or transfer under 
                this subsection.
                    ``(E) Period of review.--During the period 
                beginning on the date on which an individual appeals a 
                removal from the civil service under paragraph (4) and 
                ending on the date that the administrative law judge 
                issues a final decision on such appeal, such individual 
                may not receive any pay, awards, bonuses, incentives, 
                allowances, differentials, student loan repayments, 
                special payments, or benefits.
                    ``(F) Relevant information to be provided.--To the 
                maximum extent practicable, the Commissioner shall 
                provide to the Merit Systems Protection Board, and to 
                any administrative law judge to whom an appeal under 
                this section is referred, such information and 
                assistance as may be necessary to ensure an appeal 
                under this paragraph is expedited.
            ``(6) Relation to other provisions of law.--
                    ``(A) In general.--The authority provided by this 
                subsection is in addition to, and shall not be 
                construed to limit or diminish, the authority provided 
                by--
                            ``(i) subsections (a) and (c); and
                            ``(ii) section 3592 or subchapter V of 
                        chapter 75 of title 5, United States Code.
                    ``(B) Removal from senior executive service.--
                Section 3592(b)(1) of title 5, United States Code, does 
                not apply to an action to remove or transfer an 
                individual under this subsection.
            ``(7) Definitions.--For purposes of this subsection:
                    ``(A) Individual.--The term `individual' means a 
                career appointee (as that term is defined in section 
                3132(a)(4) of title 5, United States Code).
                    ``(B) Misconduct.--
                            ``(i) In general.--Subject to clause (ii), 
                        the term `misconduct' includes neglect of duty, 
                        malfeasance, or failure to accept a directed 
                        reassignment or to accompany a position in a 
                        transfer of function.
                            ``(ii) Exception.--The term `misconduct' 
                        shall not include any act or omission described 
                        in subsection (b).
                    ``(C) Senior executive position.--The term `senior 
                executive position' means a Senior Executive Service 
                position (as such term is defined in section 3132(a)(2) 
                of title 5, United States Code).''.
    (b) Establishment of Expedited Review Process.--
            (1) In general.--Not later than 60 days after the date of 
        the enactment of this Act, the Merit Systems Protection Board 
        shall establish and put into effect a process to conduct 
        expedited reviews in accordance with subsection (f) of section 
        1203 of the Internal Revenue Service Restructuring and Reform 
        Act of 1998, as added by this Act.
            (2) Inapplicability of certain regulations.--Section 
        1201.22 of title 5, Code of Federal Regulations, as in effect 
        on the day before the date of the enactment of this Act, shall 
        not apply to expedited reviews carried out under section 
        1203(f) of the Internal Revenue Service Restructuring and 
        Reform Act of 1998, as added by this Act.
            (3) Waiver.--The Merit Systems Protection Board may waive 
        any other regulation in order to provide for the expedited 
        review required under section 1203(f) of the Internal Revenue 
        Service Restructuring and Reform Act of 1998, as added by this 
        Act.
            (4) Review by merit systems protection board.--Not later 
        than 30 days after the date of the enactment of this Act, the 
        Merit Systems Protection Board shall submit to the committees 
        described in paragraph (3) of section 1203(f) of the Internal 
        Revenue Service Restructuring and Reform Act of 1998, as added 
        by this Act, a report on the actions the Board plans to take to 
        conduct expedited reviews under such section. Such report shall 
        include a description of the resources the Board determines 
        will be necessary to conduct such reviews and a description of 
        whether any resources will be necessary to conduct such reviews 
        that were not available to the Board on the day before the date 
        of the enactment of this Act.
    (c) Temporary Exemption From Certain Limitation on Initiation of 
Removal From Senior Executive Service.--During the 120-day period 
beginning on the date of the enactment of this Act, an action to remove 
an individual from the Senior Executive Service at the Internal Revenue 
Service pursuant to section 7543 of title 5, United States Code, may be 
initiated, notwithstanding section 3592(b) of such title, or any other 
provision of law.
    (d) Construction.--Nothing in this section or section 1203(f) of 
the Internal Revenue Service Restructuring and Reform Act of 1998, as 
added by this Act, shall be construed to apply to an appeal of a 
removal, transfer, or other personnel action that was pending before 
the date of the enactment of this Act.

SEC. 1024. LIMITATION ON ACCESS OF NON-INTERNAL REVENUE SERVICE 
              EMPLOYEES TO RETURNS AND RETURN INFORMATION.

    (a) In General.--Section 7602 is amended by adding at the end the 
following new subsection:
    ``(f) Limitation on Access of Persons Other Than Internal Revenue 
Service Officers and Employees.--The Secretary shall not, under the 
authority of section 6103(n), provide any books, papers, records, or 
other data obtained pursuant to this section to any person authorized 
under section 6103(n), except when such person requires such 
information for the sole purpose of providing expert evaluation and 
assistance to the Internal Revenue Service. No person other than an 
officer or employee of the Internal Revenue Service or the Office of 
Chief Counsel may, on behalf of the Secretary, question a witness under 
oath whose testimony was obtained pursuant to this section.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall take effect on the date of 
        the enactment of this Act.
            (2) Application to contracts in effect.--The amendment made 
        by this section shall apply to any contract in effect under 
        section 6103(n) of the Internal Revenue Code of 1986, pursuant 
        to temporary Treasury Regulation section 301.7602-1T proposed 
        in Internal Revenue Bulletin 2014-28, Treasury Regulation 
        section 301.7602-1(b)(3), or any similar or successor 
        regulation, that is in effect on the date of the enactment of 
        this Act.

SEC. 1025. NOTIFICATION OF UNAUTHORIZED INSPECTION OR DISCLOSURE OF 
              RETURNS AND RETURN INFORMATION.

    (a) In General.--Subsection (e) of section 7431 is amended by 
adding at the end the following new sentences: ``The Secretary shall 
also notify such taxpayer if the Internal Revenue Service or a Federal 
or State agency (upon notice to the Secretary by such Federal or State 
agency) proposes an administrative determination as to disciplinary or 
adverse action against an employee arising from the employee's 
unauthorized inspection or disclosure of the taxpayer's return or 
return information. The notice described in this subsection shall 
include the date of the unauthorized inspection or disclosure and the 
rights of the taxpayer under such administrative determination.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to determinations proposed after the date which is 180 days after the 
date of the enactment of this Act.

                     PART IV--EXEMPT ORGANIZATIONS

SEC. 1031. MANDATORY E-FILING BY EXEMPT ORGANIZATIONS.

    (a) In General.--Section 6033 is amended by redesignating 
subsection (n) as subsection (o) and by inserting after subsection (m) 
the following new subsection:
    ``(n) Mandatory Electronic Filing.--Any organization required to 
file a return under this section shall file such return in electronic 
form.''.
    (b) Conforming Amendment.--Paragraph (7) of section 527(j) is 
amended by striking ``if the organization has'' and all that follows 
through ``such calendar year''.
    (c) Inspection of Electronically Filed Annual Returns.--Subsection 
(b) of section 6104 is amended by adding at the end the following: 
``Any annual return required to be filed electronically under section 
6033(n) shall be made available by the Secretary to the public as soon 
as practicable in a machine readable format.''.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
            (2) Transitional relief.--
                    (A) Small organizations.--
                            (i) In general.--In the case of any small 
                        organizations, or any other organizations for 
                        which the Secretary of the Treasury or the 
                        Secretary's delegate (hereafter referred to in 
                        this paragraph as the ``Secretary'') determines 
                        the application of the amendments made by this 
                        section would cause undue burden without a 
                        delay, the Secretary may delay the application 
                        of such amendments, but not later than taxable 
                        years beginning 2 years after the date of the 
                        enactment of this Act.
                            (ii) Small organization.--For purposes of 
                        clause (i), the term ``small organization'' 
                        means any organization--
                                    (I) the gross receipts of which for 
                                the taxable year are less than 
                                $200,000; and
                                    (II) the aggregate gross assets of 
                                which at the end of the taxable year 
                                are less than $500,000.
                    (B) Organizations filing form 990-T.--In the case 
                of any organization described in section 511(a)(2) of 
                the Internal Revenue Code of 1986 which is subject to 
                the tax imposed by section 511(a)(1) of such Code on 
                its unrelated business taxable income, or any 
                organization required to file a return under section 
                6033 of such Code and include information under 
                subsection (e) thereof, the Secretary may delay the 
                application of the amendments made by this section, but 
                not later than taxable years beginning 2 years after 
                the date of the enactment of this Act.

SEC. 1032. PROHIBIT THE USE OF IRS FUNDS FOR POLITICAL TARGETING.

    None of the funds made available under any Act may be used by the 
Internal Revenue Service to target citizens of the United States for 
exercising any right guaranteed under the First Amendment to the 
Constitution of the United States.

SEC. 1033. NOTICE REQUIRED BEFORE REVOCATION OF TAX EXEMPT STATUS FOR 
              FAILURE TO FILE RETURN.

    (a) In General.--Section 6033(j)(1) is amended by striking ``If an 
organization'' and inserting the following:
                    ``(A) Notice.--
                            ``(i) In general.--After an organization 
                        described in subsection (a)(1) or (i) fails to 
                        file the annual return or notice required under 
                        either subsection for 2 consecutive years, the 
                        Secretary shall notify the organization--
                                    ``(I) that the Internal Revenue 
                                Service has no record of such a return 
                                or notice from such organization for 2 
                                consecutive years, and
                                    ``(II) about the revocation that 
                                will occur under subparagraph (B) if 
                                the organization fails to file such a 
                                return or notice by the due date for 
                                the next such return or notice required 
                                to be filed.
                        The notification under the preceding sentence 
                        shall include information about how to comply 
                        with the filing requirements under subsection 
                        (a)(1) and (i).
                    ``(B) Revocation.--If an organization''.
    (b) Effective Date.--The amendment made by this section shall apply 
to failures to file returns or notices for 2 consecutive years if the 
return or notice for the second year is required to be filed after 
December 31, 2018.

                       PART V--IRS AUDIT CRITERIA

SEC. 1041. REPORT ON IRS AUDIT CRITERIA.

    Not later than 2 years after the date of the enactment of this Act, 
the Treasury Inspector General for Tax Administration shall submit a 
report to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate which 
contains the results of an audit of the criteria employed by the 
Internal Revenue Service for selecting tax returns for audit, 
assessment, criminal investigation, or any heightened scrutiny or 
review, including whether such criteria has been used to target 
taxpayers on the basis of political ideology, race, religion, or any 
other impermissible factor.

 Subtitle B--Protection of Taxpayers From Identity Theft and Tax Fraud

SEC. 1101. SINGLE POINT OF CONTACT FOR TAX-RELATED IDENTITY THEFT 
              VICTIMS.

    (a) In General.--The Secretary shall establish and implement 
procedures to ensure that any taxpayer whose return has been delayed or 
otherwise adversely affected due to tax-related identity theft has a 
single point of contact at the Internal Revenue Service throughout the 
processing of the taxpayer's case. The single point of contact shall 
track the taxpayer's case to completion and coordinate with other 
Internal Revenue Service employees to resolve case issues as quickly as 
possible.
    (b) Single Point of Contact.--
            (1) In general.--For purposes of subsection (a), the single 
        point of contact shall consist of a team or subset of specially 
        trained employees who--
                    (A) have the ability to work across functions to 
                resolve the issues involved in the taxpayer's case; and
                    (B) shall be accountable for handling the case 
                until its resolution.
            (2) Team or subset.--The employees included within the team 
        or subset described in paragraph (1) may change as required to 
        meet the needs of the Internal Revenue Service, provided that 
        procedures have been established to--
                    (A) ensure continuity of records and case history; 
                and
                    (B) notify the taxpayer when appropriate.

SEC. 1102. INFORMATION ON IDENTITY THEFT AND TAX SCAMS.

    The Secretary shall provide to any taxpayer who has been placed on 
hold during a telephone call to any Internal Revenue Service help line 
the following information:
            (1) Information about common tax scams.
            (2) Information on where and how to report tax scams.
            (3) Additional advice on how taxpayers can protect 
        themselves from identity theft and tax scams.

SEC. 1103. NOTIFICATION OF SUSPECTED IDENTITY THEFT.

    (a) In General.--Chapter 77 is amended by adding at the end the 
following new section:

``SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY THEFT.

    ``(a) In General.--If the Secretary determines that there has been 
or may have been an unauthorized use of the identity of any individual, 
the Secretary shall, without jeopardizing an investigation relating to 
tax administration--
            ``(1) as soon as practicable, notify the individual of such 
        determination and provide--
                    ``(A) instructions on how to file a report with law 
                enforcement regarding the unauthorized use of the 
                identity of the individual,
                    ``(B) the identification of any forms necessary for 
                the individual to complete and submit to law 
                enforcement to permit access to personal information of 
                the individual during the investigation,
                    ``(C) information regarding actions the individual 
                may take in order to protect the individual from harm 
                relating to such unauthorized use, and
                    ``(D) an offer of identity protection measures to 
                be provided to the individual by the Internal Revenue 
                Service, such as the use of an identity protection 
                personal identification number, and
            ``(2) at the time the information described in paragraph 
        (1) is provided (or, if not available at such time, as soon as 
        practicable thereafter), issue additional notifications to such 
        individual (or such individual's designee) regarding--
                    ``(A) whether an investigation has been initiated 
                in regards to such unauthorized use,
                    ``(B) whether the investigation substantiated an 
                unauthorized use of the identity of the individual, and
                    ``(C) whether--
                            ``(i) any action has been taken against a 
                        person relating to such unauthorized use, or
                            ``(ii) any referral has been made for 
                        criminal prosecution of such person and, to the 
                        extent such information is available, whether 
                        such person has been criminally charged by 
                        indictment or information.
    ``(b) Employment-Related Identity Theft.--
            ``(1) In general.--For purposes of this section, the 
        unauthorized use of the identity of an individual includes the 
        unauthorized use of the identity of the individual to obtain 
        employment.
            ``(2) Determination of employment-related identity theft.--
        For purposes of this section, in making a determination as to 
        whether there has been or may have been an unauthorized use of 
        the identity of an individual to obtain employment, the 
        Secretary shall review any information--
                    ``(A) obtained from a statement described in 
                section 6051 or an information return relating to 
                compensation for services rendered other than as an 
                employee, or
                    ``(B) provided to the Internal Revenue Service by 
                the Social Security Administration regarding any 
                statement described in section 6051,
        which indicates that the social security account number 
        provided on such statement or information return does not 
        correspond with the name provided on such statement or 
        information return or the name on the tax return reporting the 
        income which is included on such statement or information 
        return.''.
    (b) Additional Measures.--
            (1) Examination of both paper and electronic statements and 
        returns.--The Secretary shall examine the statements, 
        information returns, and tax returns described in section 
        7529(b)(2) of the Internal Revenue Code of 1986 (as added by 
        subsection (a)) for any evidence of employment-related identity 
        theft, regardless of whether such statements or returns are 
        submitted electronically or on paper.
            (2) Improvement of effective return processing program with 
        social security administration.--Section 232 of the Social 
        Security Act (42 U.S.C. 432) is amended by inserting after the 
        third sentence the following: ``For purposes of carrying out 
        the return processing program described in the preceding 
        sentence, the Commissioner of Social Security shall request, 
        not less than annually, such information described in section 
        7529(b)(2) of the Internal Revenue Code of 1986 as may be 
        necessary to ensure the accuracy of the records maintained by 
        the Commissioner of Social Security related to the amounts of 
        wages paid to, and the amounts of self-employment income 
        derived by, individuals.''.
            (3) Underreporting of income.--The Secretary shall 
        establish procedures to ensure that income reported in 
        connection with the unauthorized use of a taxpayer's identity 
        is not taken into account in determining any penalty for 
        underreporting of income by the victim of identity theft.
    (c) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new item:

``Sec. 7529. Notification of suspected identity theft.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to determinations made after the date that is 6 months after the 
date of the enactment of this Act.

               TITLE II--STOLEN IDENTITY FRAUD PREVENTION

       Subtitle A--Identity Theft and Tax Refund Fraud Prevention

                       PART I--GENERAL PROVISIONS

SEC. 2001. GUIDELINES FOR STOLEN IDENTITY REFUND FRAUD CASES.

    (a) In General.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary, in consultation with the National 
Taxpayer Advocate, shall develop and implement publicly available 
guidelines for management of cases involving stolen identity refund 
fraud in a manner that reduces the administrative burden on taxpayers 
who are victims of such fraud.
    (b) Standards and Procedures To Be Considered.--The guidelines 
described in subsection (a) may include--
            (1) standards for--
                    (A) the average length of time in which a case 
                involving stolen identity refund fraud should be 
                resolved;
                    (B) the maximum length of time, on average, a 
                taxpayer who is a victim of stolen identity refund 
                fraud and is entitled to a tax refund which has been 
                stolen should have to wait to receive such refund; and
                    (C) the maximum number of offices and employees 
                within the Internal Revenue Service with whom a 
                taxpayer who is a victim of stolen identity refund 
                fraud should be required to interact in order to 
                resolve a case;
            (2) standards for opening, assigning, reassigning, or 
        closing a case involving stolen identity refund fraud; and
            (3) procedures for implementing and accomplishing the 
        standards described in paragraphs (1) and (2), and measures for 
        evaluating such procedures and determining whether such 
        standards have been successfully implemented.

SEC. 2002. INCREASED PENALTY FOR IMPROPER DISCLOSURE OR USE OF 
              INFORMATION BY PREPARERS OF RETURNS.

    (a) In General.--Section 6713 is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Enhanced Penalty for Improper Use or Disclosure Relating to 
Identity Theft.--
            ``(1) In general.--In the case of a disclosure or use 
        described in subsection (a) that is made in connection with a 
        crime relating to the misappropriation of another person's 
        taxpayer identity (as defined in section 6103(b)(6)), whether 
        or not such crime involves any tax filing, subsection (a) shall 
        be applied--
                    ``(A) by substituting `$1,000' for `$250', and
                    ``(B) by substituting `$50,000' for `$10,000'.
            ``(2) Separate application of total penalty limitation.--
        The limitation on the total amount of the penalty under 
        subsection (a) shall be applied separately with respect to 
        disclosures or uses to which this subsection applies and to 
        which it does not apply.''.
    (b) Criminal Penalty.--Section 7216(a) is amended by striking 
``$1,000'' and inserting ``$1,000 ($100,000 in the case of a disclosure 
or use to which section 6713(b) applies)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to disclosures or uses on or after the date of the enactment of 
this Act.

  PART II--ADMINISTRATIVE AUTHORITY TO PREVENT IDENTITY THEFT AND TAX 
                              REFUND FRAUD

SEC. 2011. AUTHORITY TO TRANSFER INTERNAL REVENUE SERVICE 
              APPROPRIATIONS TO COMBAT TAX FRAUD.

    (a) In General.--For any fiscal year, in addition to any other 
authority to transfer amounts appropriated to an Internal Revenue 
Service account, the Commissioner of Internal Revenue (referred to in 
this section as the ``Commissioner'') may transfer not more than 
$10,000,000 to any account of the Internal Revenue Service from amounts 
appropriated to other Internal Revenue Service accounts. Any amounts so 
transferred shall be used solely for the purposes of preventing, 
detecting, and resolving potential cases of tax fraud, which may 
include educating taxpayers about common tax fraud scams and how to 
protect themselves from such scams.
    (b) Limitation.--The Commissioner shall not transfer any amounts 
described in subsection (a) unless the Commissioner has determined that 
taxpayer services provided by the Internal Revenue Service to the 
public (including telephone operations, forms and publications, and 
similar types of taxpayer assistance) will not be impaired by such 
transfer.

SEC. 2012. STREAMLINED CRITICAL PAY AUTHORITY FOR INFORMATION 
              TECHNOLOGY POSITIONS.

    (a) Authority.--Section 9503(a) of title 5, United States Code, is 
amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``the Secretary of the Treasury'' and all that follows through 
        ``establish'' and inserting ``the Secretary of the Treasury 
        may, during the period beginning on October 1, 2018, and ending 
        on September 30, 2023, establish''; and
            (2) in paragraph (1)(B), by striking ``the Internal Revenue 
        Service's successful accomplishment of an important mission'' 
        and inserting ``the functionality of the information technology 
        operations of the Internal Revenue Service''.
    (b) Recruitment, Retention, Relocation Incentives, and Relocation 
Expenses.--Section 9504 of title 5, United States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking ``Before September 30, 2013'' and 
                inserting ``During the period beginning on October 1, 
                2018, and ending on September 30, 2023''; and
                    (B) by inserting ``for employees holding positions 
                described in section 9503(a)(1)'' after ``incentives''; 
                and
            (2) in subsection (b)--
                    (A) by striking ``Before September 30, 2013'' and 
                inserting ``During the period beginning on October 1, 
                2018, and ending on September 30, 2023'';
                    (B) by striking ``employees transferred or 
                reemployed'' and inserting ``employees holding 
                positions described in section 9503(a)(1) who are 
                transferred or reemployed during such period''; and
                    (C) by striking ``section 9502 or 9503 after June 
                1, 1998'' and inserting ``section 9503 during such 
                period''.
    (c) Performance Awards for Senior Executives.--Section 9505(a) of 
title 5, United States Code, is amended--
            (1) by striking ``Before September 30, 2013'' and inserting 
        ``During the period beginning on October 1, 2018, and ending on 
        September 30, 2023''; and
            (2) by striking ``significant functions'' and inserting 
        ``the information technology operations''.
    (d) Effective Date.--The amendments made by this section shall 
apply to payments made on or after the date of the enactment of this 
Act.

SEC. 2013. ACCESS TO THE NATIONAL DIRECTORY OF NEW HIRES TO IDENTIFY 
              AND PREVENT FRAUDULENT TAX RETURN FILINGS AND CLAIMS FOR 
              REFUND.

    (a) In General.--Paragraph (3) of section 453(i) of the Social 
Security Act (42 U.S.C. 653(i)) is amended to read as follows:
            ``(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 the purposes of--
                    ``(A) administering section 32 of the Internal 
                Revenue Code of 1986,
                    ``(B) verifying a claim with respect to employment 
                in a tax return, and
                    ``(C) identifying and preventing fraudulent tax 
                return filings and claims for refund under 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. 2014. REPEAL OF PROVISION REGARDING CERTAIN TAX COMPLIANCE 
              PROCEDURES AND REPORTS.

    Section 2004 of the Internal Revenue Service Restructuring and 
Reform Act of 1998 (26 U.S.C. 6012 note) is repealed.

      Subtitle B--Improvements to Electronic Filing of Tax Returns

SEC. 2101. IDENTITY PROTECTION PERSONAL IDENTIFICATION NUMBERS.

    Not later than 5 years after the date of the enactment of this Act, 
the Secretary shall establish a program to issue, upon the request of 
any individual, a number which may be used in connection with such 
individual's social security number (or other identifying information 
with respect to such individual as determined by the Secretary) to 
assist the Secretary in verifying such individual's identity.

SEC. 2102. ELECTRONIC FILING OF RETURNS.

    (a) In General.--Section 6011(e)(2)(A) is amended by striking 
``250'' and inserting ``the applicable number of''.
    (b) Applicable Number.--Section 6011(e) is amended by striking 
paragraph (5) and inserting the following new paragraphs:
            ``(5) Applicable number.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(A), the applicable number shall be--
                            ``(i) except as provided in subparagraph 
                        (B), in the case of calendar years before 2020, 
                        250,
                            ``(ii) in the case of calendar year 2020, 
                        100, and
                            ``(iii) in the case of calendar years after 
                        2020, 10.
                    ``(B) Special rule for partnerships for 2018 and 
                2019.--In the case of a partnership, for any calendar 
                year before 2020, the applicable number shall be--
                            ``(i) in the case of calendar year 2018, 
                        200, and
                            ``(ii) in the case of calendar year 2019, 
                        150.
            ``(6) Partnerships required to file on magnetic media.--
        Notwithstanding paragraph (2)(A), the Secretary shall require 
        partnerships having more than 100 partners to file returns on 
        magnetic media.''.
    (c) Returns Filed by a Tax Return Preparer.--Section 6011(e)(3) is 
amended by adding at the end the following new subparagraph:
                    ``(D) Exception for certain preparers located in 
                areas without internet access.--The Secretary may waive 
                the requirement of subparagraph (A) if the Secretary 
                determines, on the basis of an application by the tax 
                return preparer, that the preparer cannot meet such 
                requirement by reason of being located in a geographic 
                area which does not have access to internet service 
                (other than dial-up or satellite service).''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2103. INTERNET PLATFORM FOR FORM 1099 FILINGS.

    (a) In General.--Not later than January 1, 2023, the Secretary 
shall make available an Internet website or other electronic media, 
with a user interface and functionality similar to the Business 
Services Online Suite of Services provided by the Social Security 
Administration, that will provide access to resources and guidance 
provided by the Internal Revenue Service and will allow persons to--
            (1) prepare and file Forms 1099;
            (2) prepare Forms 1099 for distribution to recipients other 
        than the Internal Revenue Service; and
            (3) maintain a record of completed and submitted Forms 
        1099.
    (b) Electronic Services Treated as Supplemental; Application of 
Security Standards.--The Secretary shall ensure that the services 
described in subsection (a)--
            (1) are a supplement to, and not a replacement for, other 
        services provided by the Internal Revenue Service to taxpayers; 
        and
            (2) comply with applicable security standards and 
        guidelines.

SEC. 2104. REQUIREMENT THAT ELECTRONICALLY PREPARED PAPER RETURNS 
              INCLUDE SCANNABLE CODE.

    (a) In General.--Subsection (e) of section 6011, as amended by 
section 2102(b) of this Act, is amended by adding at the end the 
following new paragraph:
            ``(7) Special rule for returns prepared electronically and 
        submitted on paper.--The Secretary shall require that any 
        return of tax which is prepared electronically, but is printed 
        and filed on paper, bear a code which can, when scanned, 
        convert such return to electronic format.''.
    (b) Conforming Amendment.--Paragraph (1) of section 6011(e) is 
amended by striking ``paragraph (3)'' and inserting ``paragraphs (3) 
and (7)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns of tax the due date for which (determined without 
regard to extensions) is after December 31, 2019.

SEC. 2105. AUTHENTICATION OF USERS OF ELECTRONIC SERVICES ACCOUNTS.

    Beginning 180 days after the date of the enactment of this Act, the 
Secretary shall verify the identity of any individual opening an e-
Services account with the Internal Revenue Service before such 
individual is able to use the e-Services tools.
                                 <all>