Simplify, Don’t Amplify the IRS Act

Bill: 118-s-1101
Sponsor: full_name: Sen. Braun, Mike [R-IN]
Introduced: 2023-03-30
Policy area: Taxation
Latest action: action_date: 2023-03-30
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2023-03-30
action_desc: Introduced in Senate
text: <p><strong>Simplify, Don't Amplify the IRS Act</strong></p> <p>This bill limits Internal Revenue Service (IRS) enforcement authority and modifies certain IRS reporting requirements.</p> <p>Among other provisions, the bill </p> <ul> <li> increases the gross receipts reporting threshold for certain religious and charitable organizations from $5,000 to $50,000;</li> <li> generally increases penalties for unauthorized disclosure of taxpayer information and for such disclosures by tax return preparers;</li> <li>requires the IRS to establish a fellowship program to recruit private sector tax experts to create a task force to. among other things, educate IRS employees on emerging issues, perform audits, and address offshore tax evasion; and </li> <li> sets forth provisions for reducing improper payments to taxpayers. </li> </ul> <p>The bill also requires the IRS to report annually on the tax gap estimate for the most recent taxable year. The IRS must use artificial intelligence to calculate an estimate of the tax gap. The bill defines <em>tax gap</em> as the difference between tax liabilities owed to the United States and those liabilities actually collected. </p> <p>The bill restricts funding for IRS audits and enforcement until the IRS publishes an updated tax gap projection.</p>

tv_txt: II 118th CONGRESS 1st Session S. 1101 IN THE SENATE OF THE UNITED STATES March 30, 2023 Mr. Braun (for himself and Mr. Scott of Florida ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Social Security Act to remove the restriction on the use of Coronavirus State Fiscal Recovery funds, to amend the Internal Revenue Code of 1986 to codify the Trump administration rule on reporting requirements of exempt organizations, and for other purposes.

1. Short title This Act may be cited as the Simplify, Don’t Amplify the IRS Act . I Provisions relating to tax administration and taxpayer protection 101. Preventing weaponization of the Internal Revenue Service (a) Organizations exempt from reporting (1) Gross receipts threshold Clause (ii) of section 6033(a)(3)(A) of the Internal Revenue Code of 1986 is amended by striking $5,000 and inserting $50,000 . (2) Organizations described Subparagraph (C) of section 6033(a)(3) of the Internal Revenue Code of 1986 is amended— (A) by striking and at the end of clause (v), (B) by striking the period at the end of clause (vi) and inserting a semicolon, and (C) by adding at the end the following new clauses: (vii) any other organization described in section 501(c) (other than a private foundation or a supporting organization described in section 509(a)(3)); and (viii) any organization (other than a private foundation or a supporting organization described in section 509(a)(3)) which is not described in section 170(c)(2)(A), or which is created or organized in a possession of the United States, which has no significant activity (including lobbying and political activity and the operation of a trade or business) other than investment activity in the United States. . (3) Effective date The amendments made by this subsection shall apply to taxable years ending after the date of the enactment of this Act. (b) Clarification of application to section 527 organizations (1) In general Paragraph (1) of section 6033(g) of the Internal Revenue Code of 1986 is amended— (A) by striking This section and inserting Except as otherwise provided by this subsection, this section , and (B) by striking for the taxable year. and inserting for the taxable year in the same manner as to an organization exempt from taxation under section 501(a). . (2) Effective date The amendments made by this subsection shall apply to taxable years ending after the date of the enactment of this Act. (c) Reporting of names and addresses of contributors (1) In general Paragraph (1) of section 6033(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following: Except as provided in subsections (b)(5) and (g)(2)(B), such annual return shall not be required to include the names and addresses of contributors to the organization. . (2) Application to section 527 organizations Paragraph (2) of section 6033(g) of the Internal Revenue Code of 1986 is amended— (A) by striking and at the end of subparagraph (A), (B) by redesignating subparagraph (B) as subparagraph (C), and (C) by inserting after subparagraph (A) the following new subparagraph: (B) containing the names and addresses of all substantial contributors, and . (3) Effective date The amendments made by this subsection shall apply to taxable years ending after the date of the enactment of this Act. 102. Limitation on taxpayer funded union official time for Internal Revenue Service employees (a) In general Section 7131 of title 5, United States Code, is amended by adding at the end the following: (e) The authority provided under subsection (d) shall not apply with respect to the Internal Revenue Service, or an employee of the Internal Revenue Service, during the period each year beginning on February 12 and ending on April 15. . (b) Conforming amendment Section 7131(d) of title 5, United States Code, is amended, in the matter preceding paragraph (1), by striking preceding and inserting other . (c) Application The amendments made by subsections (a) and (b) shall apply to any collective bargaining agreement entered into after the date of enactment of this section. 103. Protecting taxpayer privacy (a) Increase of penalty for unauthorized disclosure of taxpayer information (1) In general Paragraph (1) of section 7213(a) of the Internal Revenue Code of 1986 is amended by striking $5,000 and inserting $250,000 . (2) Disclosures by tax return preparers Subsection (a) of section 7216 of the Internal Revenue Code of 1986 is amended by striking $1,000 ($100,000 in the case of a disclosure or use to which section 6713(b) applies) and inserting $250,000 . (3) Effective date The amendments made by this subsection shall apply to disclosures made on or after the date of the enactment of this Act. (b) Removal (1) In general Section 7701(c)(1)(A) of title 5, United States Code, is amended by inserting or in the case of an action involving a removal from the service for an alleged violation of section 7213(a)(1) of the Internal Revenue Code of 1986, after described in section 4303, . (2) Rule of construction The amendments made by paragraph (1) may not be construed to permit an officer or employee of the United States to submit an appeal to the Merit Systems Protection Board if that individual is dismissed from office or discharged from employment upon conviction for a violation of section 7213(a)(1) of the Internal Revenue Code of 1986. II Restraints on IRS enforcement 201. Tax gap projection (a) In general Not later than 180 days after the date of the enactment of this section, and no later than July 31 annually thereafter, the Commissioner of Internal Revenue shall submit to Congress a projection detailing the tax gap estimate for the most recent taxable year as is practicable using the most recently available data, and including identification and detailed descriptions of the data used for such projection and clear identification of the amount of the projected tax gap associated with nonfiling, underreporting, and underpayment (including identifying the amount subject to collection actions). (b) Use of artificial intelligence To the extent practicable, for purposes of reducing the burden on taxpayers subject to National Research Program audits, the Commissioner shall use artificial intelligence, including neural machine learning, and other available data analysis tools, including commercial analytic data providers, to calculate a projection described in subsection (a). (c) National research program audits In calculating a projection described in subsection (a), the Commissioner of Internal Revenue shall not undertake more National Research Program audits in any one fiscal year than are undertaken in fiscal year 2022. (d) Tax gap For purposes of this section, the term tax gap means the difference between tax liabilities owed to the United States under the Internal Revenue Code of 1986 and those liabilities actually collected by the Internal Revenue Service. 202. JCT Report (a) In general Not later than 180 days after the submission of the first tax gap projection to Congress under section 201, and not later than 90 days after the submission of each successive submission, the Chief of Staff of the Joint Committee on Taxation shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report analyzing such projection, including— (1) identification of methodologies used, (2) any statistical or methodological uncertainties, (3) the effect of outdated data, if any, on the accuracy of such projection, and (4) such additional information as the Joint Committee on Taxation determines is useful for Congress to use to assess and analyze the tax gap projections provided by the Commissioner of Internal Revenue. (b) Release of information For purposes of facilitating the report described in subsection (a), the Secretary of the Treasury shall, in a timely manner, provide to the Joint Committee on Taxation such information as such committee requests. 203. Restriction on increased enforcement funds (a) In general Notwithstanding any other provision of law, no funds appropriated to the Department of the Treasury for audit and enforcement purposes in excess of the levels appropriated for such purposes in fiscal year 2022 may be expended for such purposes, including for salaries, expenses, and enforcement activities, until 180 days after the Internal Revenue Service publishes an updated tax gap projection pursuant to, and compliant with, section 201. (b) Sunset The provisions of subsection (a) shall not apply after the date which is one year after the date of the enactment of this section. 204. Restriction on increased funding for other specified purposes (a) In general Notwithstanding any other provision of law, no funds appropriated to the Department of the Treasury in excess of the levels appropriated for specified purposes in fiscal year 2022 may be expended for specified purposes. (b) Specified purposes For purposes of subsection (a), the term specified purposes means— (1) the implementation of new information reporting requirements on flows of deposits and withdrawals in individual and small-business banking accounts and other financial accounts, (2) the targeting of United States citizens in response to the exercise by such citizens of any legally protected or recognized right guaranteed under the First Amendment to the United States Constitution, (3) the targeting of a group for regulatory scrutiny based on the ideological beliefs of such group, (4) the auditing of individual taxpayers with an adjusted gross income of less than $400,000, and (5) the hiring under an agreement pursuant to the Intragovernmental Personnel Act of 1970 (sections 3371 et seq. of title 5, United States Code) or any other authority of an authorized researcher who is not a full time Federal employee to access data subject to privacy protections afforded by section 6103 of the Internal Revenue Code of 1986. 205. Efficient use of existing IRS resources For purposes of increasing enforcement actions in areas of high noncompliance and reducing the corporate audit no-change rate of the Internal Revenue Service to below 20 percent by 2024— (1) the Secretary (or the Secretary’s delegate) shall, not later than 180 days after the date of the enactment of this section— (A) update the methodology that is used for the selection of corporate returns for audit, and (B) reassign resources of the Internal Revenue Service such that the majority of high-income nonfilers are subject to enforcement actions, and (2) the Comptroller General of the United States shall, within one year after the date of the enactment of this section, issue a comprehensive report to Congress on information returns and data collected by the Internal Revenue Service that could be deployed for compliance activities but that are not currently used for such activities. 206. IRS Fellowship Program (a) Establishment Not later than September 30, 2024, the Commissioner of Internal Revenue (hereinafter known as the Commissioner ) after consultation with the Chief Counsel of the Internal Revenue Service (hereinafter known as the Chief Counsel ), shall establish within the Internal Revenue Service a fellowship program (hereinafter known as the program ) to recruit private sector tax experts to join the Internal Revenue Service to create and participate in the audit task force established under subsection (e). (b) Objective The Commissioner, after consultation with the Chief Counsel, shall design the program in a manner such that the program— (1) addresses such tax cases handled by the Internal Revenue Service as the Commissioner determines— (A) are the most complex, or (B) include new and emerging issues, and (2) recruits and retains outstanding and qualified tax experts. (c) Advertisement of program The Commissioner shall advertise the program in such a way as to attract mid-career tax professionals, including certified public accountants, tax attorneys, and such other tax professionals as the Commissioner determines are appropriately qualified to handle the most complex tax cases. (d) Structure (1) In general The program shall be staffed by not fewer than 30 fellows at the discretion of the Commissioner based on needs of the Internal Revenue Service and the availability of qualified candidates. (2) Term of service (A) In general Each fellow shall be hired for a 2-, 3-, or 4-year term of service. (B) Extensions (i) In general A fellow may apply for, and the Commissioner may grant, a 1-year extension of the fellowship. (ii) No limit on number of extensions There shall be no limit on the number of extensions under clause (i). (3) Fellowship vacancies The Commissioner, after consultation with the Chief Counsel, shall fill vacant fellowships— (A) in such a manner as to ensure that the program is staffed with no fewer than 15 fellows, and (B) as soon as practicable after the vacancy arises. (4) Hiring authority The Commissioner shall have authority to permanently hire a fellow at the end of the term of service for such fellow. (e) Task force Not later than the date on which the first fellowship is awarded under this section, the Commissioner shall establish a task force within the Internal Revenue Service and the office of the Chief Counsel in both national and regional office placements that includes the fellows hired pursuant to subsection (d), the purpose of which is to— (1) perform audit case selection, (2) educate Internal Revenue Service employees on emerging issues, (3) audit selected taxpayers, (4) address offshore tax evasion and issues implicating the Foreign Account Tax Compliance Act, and (5) identify, mentor, and train junior employees from the Internal Revenue Service with respect to audits. (f) Composition The task force established under subsection (e) may be composed of both— (1) fellows, and (2) permanent employees of the Internal Revenue Service. (g) Pay of fellows (1) In general The Secretary of the Treasury (or the Secretary’s delegate) shall determine, subject to the provisions of this subsection, the pay of fellows recruited under subsection (a). (2) Pay scale For purposes of paragraph (1), the pay of a fellow shall not be less than the minimum rate payable for GS–15 of the General Schedule and shall not exceed the amount of annual compensation (excluding expenses) specified in section 102 of title 3, United States Code. (h) Administration of program The Secretary may appoint a lead program officer to administer and advertise the program. (i) Annual review and report Not later than 1 year after the date on which the first fellowship is awarded under this section, and annually thereafter, the Commissioner shall submit to Congress a report containing— (1) an analysis of the effects of the program, (2) an analysis of the return on investment of the program, including calculations of all costs incurred and all tax revenue and penalties collected due to the work of the task force, (3) a description of the total number of fellows who apply each year, and (4) recommendations for changes to the program, if any. (j) Rules and regulations The Commissioner, with the approval of the Secretary of the Treasury (or the Secretary’s delegate, other than the Commissioner), shall promulgate such rules and regulations as may be necessary for the efficient administration of the program. III Provisions to reduce improper tax payments 301. Findings and purpose (a) Findings Congress finds that when the Internal Revenue Service makes payments to taxpayers, the Internal Revenue Services must make every effort to confirm that the right recipient is receiving the right payment for the right reason at the right time. (b) Purpose The purpose of this title is to— (1) reduce improper tax payments by the Internal Revenue Service— (A) by intensifying efforts to eliminate payment error, waste, fraud, and abuse; and (B) by continuing to ensure that the Internal Revenue Service provides accessible taxpayer services; (2) adopt a comprehensive set of policies, including— (A) transparency of significant improper tax payments; and (B) accountability for reducing improper tax payments; and (3) protect taxpayer services. 302. Improper tax payment defined For purposes of this title, the term improper tax payment means any credit or refund of an overpayment of a tax imposed under the Internal Revenue Code of 1986 that should not have been made or that was made in an incorrect amount. 303. Transparency (a) In general Not later than 90 days after the date of enactment of this section, the Secretary of the Treasury shall establish, in coordination with the Commissioner of Internal Revenue, annual targets for reducing improper tax payments made by the Internal Revenue Service. (b) Published information (1) In general Not later than 180 days after the date of enactment of this section, and annually thereafter, the Secretary of the Treasury shall publish on the internet information about improper tax payments made by the Internal Revenue Service. (2) Contents The information published under paragraph (1) shall include, subject to Federal privacy policies and to the extent permitted by law— (A) the name of the accountable official designated under section 304(a); (B) rates and amounts as of the date of enactment of this section, and historical rates and amounts, of improper tax payments made by the Internal Revenue Service, including, if known and appropriate, the causes of the improper tax payments; (C) rates and amounts as of the date of enactment of this section, and historical rates and amounts, of the recovery of improper tax payments (estimated on the basis of applicable samples where appropriate); and (D) the annual targets for reducing improper tax payments. (c) Methodology The methodology used for identifying and measuring improper tax payments under this section shall meet the requirement of section 3352(c)(1)(A) of title 31, United States Code. (d) Links The Commissioner of Internal Revenue shall prominently display on the homepage of the website of the Internal Revenue Service a link to internet-based resources for addressing improper tax payments, including the information published under subsection (b)(1). 304. Accountability and coordination (a) Accountable officials Not later than 120 days after the date of enactment of this section, the Commissioner of Internal Revenue shall designate an official to be accountable for meeting the reduction targets under section 303(a) without unduly burdening taxpayer services. (b) Report (1) In general Not later than 180 days after the date of enactment of this section, and annually thereafter, the official who is designated under subsection (a) shall provide the Director of the Office of Management and Budget and the appropriate congressional committees a report that includes— (A) the methodology used for identifying and measuring improper tax payments under section 303(c); (B) the plans for meeting the reduction targets under section 303(a); and (C) the plans and supporting analysis for ensuring that initiatives undertaken in accordance with this title do not unduly burden taxpayer services. (2) Appropriate congressional committees For purposes of paragraph (1), the term appropriate congressional committees means the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. (c) Duties of inspector general Not later than 60 days after the date on which the annual report required under subsection (b) is submitted, the Treasury Inspector General for Tax Administration shall— (1) assess the level of risk for improper tax payments by the Internal Revenue Service; (2) determine the extent of oversight warranted (in addition to oversight requirements under section 3353 of title 31, United States Code); and (3) provide the Commissioner of Internal Revenue with recommendations, if any, for modifying the methodology, improper tax payment reduction plans, or taxpayer services. (d) Agency failure (1) In general If the Internal Revenue Service does not demonstrate an improvement in reducing improper tax payments, fails to develop a plan to meet reduction targets under subsection (b)(1)(B), or fails to implement the plans described in subsection (b)(1)(C) for not less than 2 consecutive years, the official designated under subsection (a) shall submit to the Commissioner of Internal Revenue, the Treasury Inspector General for Tax Administration, and the Chief Financial Officer of the Internal Revenue Service a report that— (A) describe the likely causes of the lack or improvement or failure; and (B) proposes a remedial plan. (2) Review Annually, the Commissioner of Internal Revenue shall, with respect to a remedial plan proposed under paragraph (1)(B)— (A) review the remedial plan; and (B) in consultation with the Treasury Inspector General for Tax Administration and Chief Financial Officer of the Internal Revenue Service, forward the remedial plan and any additional comments and analysis to the Director of the Office of Management and Budget. 305. Policy proposals (a) In general Not later than 180 days after the date of enactment of this section, the Secretary of the Treasury, in consultation with the Commissioner of Internal Revenue and the Treasury Inspector General for Tax Administration, shall develop policy recommendations, including potential legislative proposals, designed to reduce improper tax payments, including improper tax payments caused by error, waste, fraud, and abuse, made by the Internal Revenue Service. (b) Inclusion The recommendations developed under subsection (a) shall be included, as appropriate, in the budget of the President under section 1105(a) of title 31, United States Code, for fiscal year 2024 and each fiscal year thereafter.