Taxpayer Bill of Rights Act of 2010 - Amends the Internal Revenue Code to require the Secretary of the Treasury, in consultation with the National Taxpayer Advocate, to publish a summary statement of taxpayer rights and obligations.
Authorizes the Secretary to make grants to develop, expand, or continue volunteer income tax assistance programs to assist low-income taxpayers.
Increases the grant funding for low-income taxpayer clinics.
Requires the Secretary to: (1) prescribe regulations for the regulation of tax return preparers; (2) require the annual registration of refund delivery product facilitators; and (3) furnish to the public the identity of any person who is an enrolled agent, attorney, or certified public accountant on file with the Internal Revenue Service (IRS), who is a tax return preparer, or who is registered as a refund delivery product facilitator.
Applies the penalty for understatements of taxpayer liability by tax return preparers to tax submissions other than tax returns or claims for refunds.
Requires the Secretary to make an individualized lien determination before filing a notice of lien and to consider specified factors in making such determination, including the amount due, the value of the taxpayer's equity in property, the taxpayer's compliance history, and extenuating circumstances, if any, that explain the tax delinquency.
Prohibits persons licensed to practice before the Department of the Treasury from directly or indirectly offering or providing audit insurance.
Authorizes the National Taxpayer Advocate to issue Taxpayer Advocate directives for granting relief to taxpayers.
Expresses the sense of Congress that the IRS should take specified steps within two years to improve service to taxpayers.
Authorizes the Secretary to award demonstration project grants to provide access to accounts at financial institutions for taxpayers who do not currently have such access.
Requires studies to: (1) enable the IRS to receive and process information reporting documents before it processes tax returns; and (2) assess the effectiveness of collection alternatives, especially offers in compromise, on long-term tax compliance.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5047 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5047
To amend the Internal Revenue Code of 1986 to provide taxpayer
protection and assistance, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 15, 2010
Mr. Becerra introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Financial Services, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide taxpayer
protection and assistance, 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 Bill of
Rights Act of 2010''.
(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) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--TAXPAYER RIGHTS AND OBLIGATIONS
Sec. 101. Statement of taxpayer rights and obligations.
TITLE II--PREPARATION OF TAX RETURNS
Sec. 201. Programs for the benefit of low-income taxpayers.
Sec. 202. Regulation of Federal income tax return preparers.
Sec. 203. Refund delivery products.
Sec. 204. Preparer penalties with respect to preparation of returns and
other submissions.
Sec. 205. Clarification of enrolled agent credentials.
TITLE III--IMPROVING TAXPAYER SERVICES
Sec. 301. Individualized lien determination required before filing
notice of lien.
Sec. 302. Ban on audit insurance.
Sec. 303. Public awareness.
Sec. 304. Clarification of taxpayer assistance order authority.
Sec. 305. Taxpayer advocate directives.
Sec. 306. Improved services for taxpayers.
Sec. 307. Taxpayer access to financial institutions.
Sec. 308. Additional studies.
TITLE I--TAXPAYER RIGHTS AND OBLIGATIONS
SEC. 101. STATEMENT OF TAXPAYER RIGHTS AND OBLIGATIONS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions)
is amended by adding at the end the following new section:
``SEC. 7529. STATEMENT OF TAXPAYER RIGHTS AND OBLIGATIONS.
``(a) In General.--The Secretary, in consultation with the National
Taxpayer Advocate, shall publish a summary statement of rights and
obligations arising under this title. Such statement shall provide
citations to the main provisions of this title which provide for the
right or obligation (as the case may be). This statement of rights and
obligations does not create or confer any rights or obligations not
otherwise provided for under this title.
``(b) Statement of Rights and Obligations.--The statement of rights
and obligations is as follows:
``(1) Taxpayer rights.--
``(A) Right to be informed (including adequate
legal and procedural guidance and information about
taxpayer rights).
``(B) Right to be assisted.
``(C) Right to be heard.
``(D) Right to pay no more than the correct amount
of tax.
``(E) Right of appeal (administrative and
judicial).
``(F) Right to certainty (including guidance,
periods of limitation, no second exam, and closing
agreements).
``(G) Right to privacy (including due process
considerations, least intrusive enforcement action, and
search and seizure protections).
``(H) Right to confidentiality.
``(I) Right to appoint a representative in matters
before the Internal Revenue Service.
``(J) Right to fair and just tax system (offer in
compromise, abatement, assistance from the Office of
the Taxpayer Advocate under section 7803(c), apology,
and other compensation payments).
``(2) Taxpayer obligations.--
``(A) Obligation to be honest.
``(B) Obligation to be cooperative.
``(C) Obligation to provide accurate information
and documents on time.
``(D) Obligation to keep records.
``(E) Obligation to pay taxes on time.''.
(b) Clerical Amendment.--The table of sections for chapter 77 is
amended by adding at the end the following new item:
``Sec. 7529. Statement of taxpayer rights and obligations.''.
(c) Effective Date.--The amendments made by this section shall take
effect 180 days after the date of the enactment of this Act.
TITLE II--PREPARATION OF TAX RETURNS
SEC. 201. PROGRAMS FOR THE BENEFIT OF LOW-INCOME TAXPAYERS.
(a) Volunteer Income Tax Assistance Plus.--Chapter 77 (relating to
miscellaneous provisions) is amended by inserting after section 7526
the following new section:
``SEC. 7526A. VOLUNTEER INCOME TAX ASSISTANCE PLUS.
``(a) In General.--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.
``(b) Definitions.--For purposes of this section--
``(1) Qualified return preparation program.--
``(A) In general.--The term `qualified return
preparation program' means a program--
``(i) which does not charge taxpayers for
its return preparation services,
``(ii) which operates programs which assist
low-income taxpayers, including those programs
that serve taxpayers for whom English is a
second language, in preparing and filing their
Federal income tax returns, including schedules
reporting sole proprietorship or farm income,
and
``(iii) in which all of the volunteers who
assist in the preparation of Federal income tax
returns meet the training requirements
prescribed by the Secretary.
``(B) Assistance to low-income taxpayers.--For
purposes of subparagraph (A), a program is treated as
assisting low-income taxpayers if at least 90 percent
of the taxpayers assisted by the program have incomes
which do not exceed 250 percent of the poverty level,
as determined in accordance with criteria established
by the Director of the Office of Management and Budget.
``(2) Program.--The term `program' includes--
``(A) a program at an institution of higher
education which--
``(i) is described in section 102 (other
than subsection (a)(1)(C) thereof) of the
Higher Education Act of 1965 (20 U.S.C. 1088),
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, and
``(ii) satisfies the requirements of
paragraph (1) through student assistance of
taxpayers in return preparation and filing;
``(B) an organization described in section 501(c)
and exempt from tax under section 501(a) which
satisfies the requirements of paragraph (1);
``(C) a regional, State or local coalition (with
one lead organization, which meets the eligibility
requirements, acting as the applicant organization);
``(D) a county or municipal government agency;
``(E) an Indian tribe, as defined in section 4(12)
of the Native American Housing Assistance and Self-
Determination Act of 1996 (25 U.S.C. 4103(12)), and
includes any tribally designated housing entity (as
defined in section 4(21) of such Act (25 U.S.C.
4103(21)), tribal subsidiary, subdivision, or other
wholly owned tribal entity;
``(F) a section 501(c)(5) organization;
``(G) a State government agency if no other
eligible organization is available to assist the
targeted population or community;
``(H) a Cooperative Extension Service office if no
other eligible organization is available to assist the
targeted population or community; and
``(I) a nonprofit Community Development Financial
Institution (CDFI) and federally- and State-chartered
credit union that qualifies for a tax exemption under
sections 501(c)(1) and 501(c)(14), respectively.
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $35,000,000 per year (exclusive of costs of administering
the program) to grants under this section.
``(2) Use of grants for overhead expenses prohibited.--No
grant made under this section may be used for overhead expenses
that are not directly related to any program or that are
incurred by any institution sponsoring such program.
``(3) Other applicable rules.--Rules similar to the rules
under paragraphs (2) through (6) of section 7526(c) shall apply
with respect to the awarding of grants to qualified return
preparation programs.
``(4) Promotion of programs.--The Secretary is authorized
to promote the benefits of and encourage the use of qualified
VITA Plus through the use of mass communications, referrals,
and other means.''.
(b) Low-Income Taxpayer Clinics.--
(1) Increase in authorized grants.--Paragraph (1) of
section 7526(c) (relating to aggregate limitation) is amended
by striking ``$6,000,000'' and inserting ``$20,000,000''.
(2) Use of grants for overhead expenses prohibited.--
(A) In general.--Section 7526(c) (relating to
special rules and limitations) is amended by adding at
the end the following new paragraph:
``(6) Use of grants for overhead expenses prohibited.--No
grant made under this section may be used for the overhead
expenses that are not directly related to the clinic or that
are of any institution sponsoring such clinic.''.
(B) Conforming amendments.--Section 7526(c)(5) is
amended--
(i) by inserting ``qualified'' before
``low-income'', and
(ii) by striking the last sentence.
(3) Promotion of clinics.--Subsection (c) of section 7526
(relating to special rules and limitations), as amended by
paragraph (2), is amended by adding at the end the following
new paragraph:
``(7) Promotion of clinics.--The Secretary is authorized to
promote the benefits of and encourage the use of qualified low-
income taxpayer clinics through the use of mass communications,
referrals, and other means.''.
(4) IRS referrals to clinics.--Subsection (c) of section
7526 (relating to special rules and limitations), as amended by
the preceding provisions of this subsection, is amended by
adding at the end the following new paragraph:
``(8) IRS referrals.--The Secretary may refer taxpayers to
qualified low-income taxpayer clinics receiving funding under
this section.''.
(5) Notice of availability of clinics in notice of
deficiency.--Subsection (a) of section 6212 (relating to
general rule for notice of deficiency) is amended by inserting
``, as well as notice regarding the availability of low-income
taxpayer clinics and information about how to contact them''
before the period at the end.
(6) Notice of availability of clinics in notice of hearing
upon filing of notice of lien.--Subsection (a) of section 6320
(relating to requirement of notice) is amended by adding at the
end the following new sentence: ``Such notice shall include a
notice to the taxpayer of the availability of low-income
taxpayer clinics and information about how to contact them.''.
(7) Notice of availability of clinics in notice and
opportunity of hearing before levy.--Paragraph (3) of section
6330(a) is amended by adding at the end the following flush
sentence:
``Such notice shall include a notice to the taxpayer of the
availability of low-income taxpayer clinics and information
about how to contact them.''.
(c) 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. Volunteer income tax assistance plus.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 202. REGULATION OF FEDERAL INCOME TAX RETURN PREPARERS.
(a) In General.--Section 330(a)(1) of title 31, United States Code,
is amended by inserting ``(including tax return preparers of Federal
tax returns, documents, and other submissions)'' after
``representatives''.
(b) Promulgation of Regulations.--The Secretary of the Treasury
shall prescribe regulations under section 330 of title 31, United
States Code, to regulate any tax return preparers not otherwise
regulated by the Secretary.
(c) Requirements.--Such regulations shall provide guidance on the
following:
(1) Examination.--
(A) In general.--In promulgating the regulations
under paragraph (1), the Secretary shall approve and
oversee eligibility examinations.
(B) Two examinations.--One such examination shall
be designed to test technical knowledge and competency
to prepare individual returns, and the other
examination shall be designed to test technical
knowledge and competency to prepare business income tax
returns.
(C) EITC.--The examination relating to individual
returns shall test knowledge and competency regarding
properly claiming the earned income tax credit under
section 32 of the Internal Revenue Code of 1986.
(D) Ethics.--Both examinations under subparagraph
(B) shall test knowledge regarding such ethical
standards for the preparation of such returns as
determined appropriate by the Secretary.
(E) Grandfather.--The Secretary is authorized to
accept an individual as meeting the eligibility
examination requirement of this section if, in lieu of
the eligibility examination under this section, the
individual passed a State licensing or State
registration program eligibility examination that the
Secretary determines is comparable to either of the
eligibility examinations described in subparagraph (B)
if such exam is administered within 5 years after the
date of the issuance of the regulations under this
section.
(2) Suitability standards.--The Secretary shall provide
suitability standards for practicing as a tax return preparer,
including tax compliance with the requirements of the Internal
Revenue Code of 1986.
(3) Continuing eligibility.--
(A) In general.--The regulations under paragraph
(1) shall require a renewal of eligibility every 3
years and shall set forth the manner in which a tax
return preparer must renew such eligibility.
(B) Continuing professional education
requirements.--As part of the renewal of eligibility,
such regulations shall require that each such tax
return preparer show evidence of completion of such
continuing education or testing requirements as
specified by the Secretary.
(C) Nonmonetary sanctions.--
(i) The regulations under this section
shall provide for the denial, suspension or
termination of such eligibility in the event of
any failure to comply with the requirements
promulgated hereunder.
(ii) Under such regulations, the Secretary
shall establish procedures for the appeal of
any determination under this paragraph.
(d) Penalty for Unauthorized Preparation of Returns.--
(1) In general.--In promulgating the regulations pursuant
to subsection (b), the Secretary shall impose a penalty of
$1,000 for each Federal tax return, document, or other
submission prepared by a tax return preparer who is not in
compliance with the regulations promulgated under this section
or who is suspended or disbarred from practice before the
Department of the Treasury under such regulations. Such penalty
shall be in addition to any other penalty which may be imposed.
(2) Exception.--No penalty may be imposed under paragraph
(1) with respect to any failure if it is shown that such
failure is due to reasonable cause.
(e) Definitions.--For purposes of this section--
(1) Tax return preparer.--The term ``tax return preparer''
has the meaning given by section 7701(a)(36) of the Internal
Revenue Code of 1986, and includes any person requiring the
purchase of services, a financial product or goods in lieu of
or in addition to direct monetary payment.
(2) Secretary.--The terms ``Secretary of the Treasury'' and
``Secretary'' mean the Secretary of the Treasury or the
delegate of the Secretary.
(f) Public Awareness Campaign.--The Secretary shall conduct a
public information and consumer education campaign, utilizing paid
advertising--
(1) to encourage taxpayers to use for Federal tax matters
only professionals who establish their competency under the
regulations promulgated under section 330 of title 31, United
States Code, and
(2) to inform the public of the requirements that any
compensated preparer of tax returns, documents, and submissions
subject to the requirements under the regulations promulgated
under such section must sign the return, document, or
submission prepared for a fee and display notice of such
preparer's compliance under such regulations.
(g) Effective Dates.--
(1) In general.--The amendment made by this section shall
take effect on the date of the enactment of the Act.
(2) Regulations.--The regulations required by section
330(d) of title 31, United States Code, shall be prescribed not
later than 2 years after the date of the enactment of this Act.
(3) Full implementation.--The Secretary, taking into
consideration the complexity and magnitude of the requirements
set forth under this Act, may delay full implementation of the
regulations promulgated herein not later than the fifth filing
season after the enactment of this Act.
SEC. 203. REFUND DELIVERY PRODUCTS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions),
as amended by section 101, is amended by adding at the end the
following new section:
``SEC. 7530. REFUND DELIVERY PRODUCTS.
``(a) Registration.--
``(1) In general.--The Secretary shall by regulation
require each refund delivery product facilitator to register
annually with the Secretary.
``(2) Registration requirements.--A registration shall
under paragraph (1) shall include--
``(A) the name, address, and TIN of the refund
delivery product facilitator, and
``(B) the fee schedule of the facilitator for the
year.
``(3) Display of registration certificate.--The certificate
of registration under paragraph (1) shall be displayed in the
facility of the refund delivery product facilitator in the
manner required by the Secretary.
``(b) Disclosure Requirements.--
``(1) In general.--Each refund delivery product facilitator
registered with the Secretary shall be subject to the
requirements of paragraphs (2) through (5).
``(2) Taxpayer education.--The requirements of this
paragraph are that the refund delivery product facilitator
makes available to consumers an informational pamphlet that--
``(A) sets forth options available for receiving
tax refunds, presented from least expensive to most
expensive, and
``(B) discusses short-term credit alternatives to
utilizing refund delivery products.
``(3) Nature of the transaction.--The requirements of this
paragraph are that, at the time of application for the refund
delivery product, the refund delivery product facilitator
specifically state in writing--
``(A) in the case of a refund delivery product
which is a refund loan--
``(i) that the applicant is applying for a
loan based on the applicant's anticipated
income tax refund,
``(ii) the expected time within which the
loan will be paid to the applicant if such loan
is approved, and
``(iii) that there is no guarantee that a
refund will be paid in full or received within
a specified time period, and that the applicant
is responsible for the repayment of the loan
even if the refund is not paid in full or has
been delayed,
``(B) the time within which income tax refunds are
typically paid based upon the different filing options
available to the applicant, and
``(C) that the applicant may file an electronic
return without applying for a refund delivery product
and the fee for filing such an electronic return.
``(4) Fees, interest and amounts received.--The
requirements of this paragraph are that, at the time of
application for the refund delivery product, the refund
delivery product facilitator discloses to the applicant all
amounts to be received in connection with a refund delivery
product. Such disclosure shall include--
``(A) a copy of the fee schedule of the refund
delivery product facilitator,
``(B) in the case of a refund delivery product
which is a refund loan--
``(i) the typical fees and interest rates
(using annual percentage rates as defined by
section 107 of the Truth in Lending Act (15
U.S.C. 1606)) for several typical amounts of
such loans and of other types of consumer
credit, and
``(ii) that the loan may have substantial
fees and interest charges that may exceed those
of other sources of credit, and the applicant
should carefully consider--
``(I) whether such a loan is
appropriate for the applicant, and
``(II) other sources of credit,
``(C) typical fees and interest charges if a refund
is not paid or delayed,
``(D) the amount of a fee (if any) that will be
charged if the refund delivery product is not approved,
and
``(E) administrative costs and any other amounts.
``(5) Other information.--The requirements of this
paragraph are that the refund delivery product facilitator
discloses any other information required to be disclosed by the
Secretary.
``(6) Disclosure requirement.--A disclosure under any of
the preceding paragraphs of this subsection shall not be
treated as meeting the requirements of the respective paragraph
unless the disclosure is written in a manner calculated to be
understood by the average consumer of refund delivery products
and provides sufficient information (as determined in
accordance with regulations prescribed by the Secretary) to
allow the consumer to understand such options and credit
alternatives.
``(c) Penalty.--
``(1) In general.--There is hereby imposed a penalty on any
refund delivery product facilitator who fails to register with
the Secretary pursuant to subsection (a) or fails to meet a
disclosure requirement under subsection (b).
``(2) Amount of penalty.--The amount of the penalty imposed
by paragraph (1) shall be the greater of--
``(A) $1,000, and
``(B) three times the amount of the refund loan, if
applicable, and refund delivery product facilitator-
determined fees charged with respect to each refund
delivery product provided by the refund delivery
product facilitator during the period in which the
failure described in paragraph (1) occurred.
``(3) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the penalty imposed by
paragraph (1) to the extent that the payment of such penalty
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Conduct.--
``(1) Rules of conduct.--The Secretary shall prescribe
rules of conduct for refund delivery product facilitators which
are similar to the rules applicable to federally authorized tax
practitioners (as defined by section 7525(a)(3)(A)) under part
10 of title 31, Code of Federal Regulations.
``(2) Limitation on approval as refund delivery product
facilitator.--For such period as the Secretary (in his
discretion) determines reasonable, the Secretary may not
register any person as a refund delivery product facilitator
under subsection (a) who the Secretary determines has engaged
in any conduct that would warrant disciplinary action under the
rules of conduct prescribed under paragraph (1) or under part
10 of title 31, Code of Federal Regulations.
``(e) Other Limitations Relating to Refund Delivery Products.--In
any case in which a taxpayer has consented to the release of the
taxpayer's refund indicator to a refund delivery product facilitator,
the Secretary may only provide information related to the refund
indicator to a refund delivery product facilitator who is registered
under subsection (a). For purposes of the preceding sentence, the term
`refund indicator' means a notification provided through a tax return's
acknowledgement file regarding whether a refund will be paid. The
Secretary may issue a refund indicator only after the Secretary
determines that the taxpayer's refund would not be prevented by any
provision of this title, including any provision relating to refund
offset to repay debts for delinquent Federal or State taxes, student
loans, child support, or other Federal agency debt, whether the
taxpayer is claiming ineligible children for purposes of certain tax
benefits, and whether the refund will be held pending a fraud
investigation.
``(f) Definitions.--For purposes of this section--
``(1) Refund delivery product facilitator.--
``(A) In general.--The term `refund delivery
product facilitator' includes any electronic filing
service provider who--
``(i) solicits for, processes, receives, or
accepts delivery of an application for a refund
delivery product, or
``(ii) facilitates the making of a refund
delivery product in any other manner.
``(B) Electronic filing service provider.--The term
`electronic filing service provider' includes any
person who is an electronic return originator,
intermediate service provider, or transmitter.
``(C) Electronic return originator.--The term
`electronic return originator' includes a person who
originates the electronic submission of income tax
returns for another person.
``(D) Intermediate service provider.--The term
`intermediate service provider' includes a person who
assists with processing return information between an
electronic return originator (or the taxpayer in the
case of online filing) and a transmitter.
``(E) Transmitter.--The term `transmitter' includes
a person who sends the electronic return data directly
to the Internal Revenue Service.
``(2) Refund delivery product.--The term `refund delivery
product' includes a refund loan and any other product sold to a
taxpayer for a fee or any other thing of value for the purpose
of receiving the taxpayer's anticipated federal tax refund.
``(3) Refund loan.--The term `refund loan' includes any
loan of money or any other thing of value to a taxpayer in
connection with the taxpayer's anticipated receipt of a Federal
tax refund. Such term includes a loan secured by the tax refund
or an arrangement to repay a loan from the tax refund.
``(g) Regulations.--
``(1) In general.--The Secretary may prescribe such
regulations as necessary to carry out this subchapter.
``(2) Burden of registration.--In promulgating such
regulations, the Secretary shall minimize the burden and cost
on the registrant.''.
(b) Public Awareness Campaign.--The Secretary of the Treasury shall
conduct a public information and consumer education campaign, utilizing
paid advertising, to educate the public on making sound financial
decisions with respect to refund delivery products (as defined by
section 7530 of the Internal Revenue Code of 1986), including--
(1) the need to compare the rates and fees of refund loans
with the rates and fees of conventional loans,
(2) the need to compare the amount of money received under
a refund delivery product after taking into consideration such
costs and fees with the total amount of the refund, and
(3) where and how taxpayers may lodge complaints concerning
refund delivery product facilitators.
(c) Clerical Amendment.--The table of sections for chapter 77 is
amended by adding at the end the following new item:
``Sec. 7530. Refund delivery products.''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect on the date of the enactment of the Act.
(2) Regulations.--The regulations required by section
7530(g) of the Internal Revenue Code of 1986 shall be
prescribed not later than 2 years after the date of the
enactment of this Act.
(3) Full implementation.--The Secretary of the Treasury,
taking into consideration the complexity and magnitude of the
requirements set forth under this Act, may delay full
implementation of the regulations promulgated under such
section not later than 5 years after the enactment of this Act.
SEC. 204. PREPARER PENALTIES WITH RESPECT TO PREPARATION OF RETURNS AND
OTHER SUBMISSIONS.
(a) Inclusion of Other Submissions in Penalty Provisions.--
(1) Understatement of taxpayer's liability.--
(A) In general.--Section 6694 (relating to
understatement of taxpayer's liability by tax return
preparer) is amended by striking ``return or claim of
refund'' each place it appears and inserting ``return,
claim of refund, or other submission''.
(B) Conforming amendments.--Section 6694, as
amended by paragraph (1), is amended by striking
``return or claim'' each place it appears and inserting
``return, claim, or other submission''.
(2) Other assessable penalties.--
(A) In general.--Section 6695 (relating to other
assessable penalties with respect to the preparation of
tax returns for other persons) is amended by striking
``return or claim of refund'' each place it appears and
inserting ``return, claim of refund, or other
submission''.
(B) Conforming amendments.--Section 6695, as
amended by paragraph (1), is amended by striking
``return or claim'' each place it appears and inserting
``return, claim, or other submission''.
(b) Increase in Certain Other Assessable Penalty Amounts.--
(1) In general.--Subsections (a), (b), and (c) of section
6695 (relating to other assessable penalties with respect to
the preparation of income tax returns for other persons) are
each amended by striking ``$50'' and inserting ``$1,000''.
(2) Removal of annual limitation.--Subsections (a), (b),
and (c) of section 6695 are each amended by striking the last
sentence thereof.
(c) Review by the Treasury Inspector General for Tax
Administration.--Subparagraph (A) of section 7803(d)(2) is amended by
striking ``and'' at the end of clause (iii), by striking the period at
the end of clause (iv) and inserting ``, and'', and by adding at the
end the following new clause:
``(v) a summary of the penalties assessed
and collected during the reporting period under
sections 6694 and 6695 and under the
regulations promulgated under section 330 of
title 31, United States Code, and a review of
the procedures by which violations are
identified and penalties are assessed under
those sections,''.
(d) Additional Certification on Documents Other Than Returns.--
(1) Identifying number required for all submissions to the
irs by tax return preparers.--The first sentence of paragraph
(4) of section 6109(a) is amended by striking ``return or claim
for refund'' and inserting ``return, claim for refund, or other
document''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to documents filed after the date of the enactment
of this Act.
(e) Coordination With Section 6060(a).--The Secretary of the
Treasury shall coordinate the requirements under the regulations
promulgated under section 330 of title 31, United States Code, with the
return requirements of section 6060 of the Internal Revenue Code of
1986.
(f) Effective Date.--The regulations required by this section shall
be prescribed not later than one year after the date of the enactment
of this Act.
SEC. 205. CLARIFICATION OF ENROLLED AGENT CREDENTIALS.
Section 330 of title 31, United States Code, as amended by section
202, is amended--
(1) by redesignating subsection (e) as subsection (f), and
(2) by inserting after subsection (d) the following new
subsection:
``(e) Any enrolled agents properly licensed to practice as required
under rules promulgated under subsection (a) shall be allowed to use
the credentials or designation as `enrolled agent', `EA', or `E.A.'.''.
TITLE III--IMPROVING TAXPAYER SERVICES
SEC. 301. INDIVIDUALIZED LIEN DETERMINATION REQUIRED BEFORE FILING
NOTICE OF LIEN.
(a) In General.--Section 6323 is amended by adding at the end the
following new subsection:
``(k) Lien Determination Before Filing.--
``(1) In general.--The Secretary shall not file a notice of
lien before making an individualized lien determination.
``(2) Lien determination.--In making an individualized lien
determination with respect to a taxpayer, the Secretary shall
consider factors, including--
``(A) the amount due,
``(B) the lien filing fee,
``(C) the value of the taxpayer's equity in the
property or right to property,
``(D) the taxpayer's tax compliance history,
``(E) extenuating circumstances, if any, that
explain the delinquency, and
``(F) the effect of the filing on the taxpayer's
ability to obtain financing, generate future income,
and pay current and future tax liabilities.
``(3) Supervisory review.--In any case in which--
``(A) collecting a liability through a lien imposed
under section 6321 would create an economic hardship
(within the meaning of section 6343(a)(1)(D)), or
``(B) the taxpayer does not have significant equity
in property or right to property,
the Secretary shall not file a notice of lien unless the
supervisor of the employee making the lien determination
referenced in paragraph (2) also determines that the filing is
necessary.
``(4) Withdrawal of lien.--A lien filed in violation of
this subsection shall be withdrawn under subsection (j).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to liens filed after the date of the enactment of
this Act.
SEC. 302. BAN ON AUDIT INSURANCE.
Section 330 of title 31, United States Code, as amended by sections
202 and 205, is amended by adding at the end the following new
subsection:
``(g) Ban on Audit Insurance.--No person admitted to practice
before the Department of the Treasury may directly or indirectly offer
or provide insurance or other form of indemnification or reimbursement
to cover a taxpayer's assessment of federal tax, penalties, or
interest.''.
SEC. 303. PUBLIC AWARENESS.
(a) In General.--Section 6103(k) (relating to disclosure of certain
returns and return information for tax administration purposes) is
amended by adding at the end the following new paragraph:
``(10) Disclosure of recognized, certified, or registered
persons; revocation of registration.--The Secretary shall
furnish to the public--
``(A) the identity of any person who--
``(i) is an enrolled agent or is an
attorney or certified public accountant who
either has a power of attorney on file with the
Internal Revenue Service or notifies the
Internal Revenue Service of their status as a
preparer of Federal tax returns,
``(ii) is certified under section 330(d) of
title 31, United States Code, as a tax return
preparer, or
``(iii) is registered as a refund delivery
product facilitator pursuant to section 7530,
and
``(B) information as to whether or not any person
who is otherwise suspended or disbarred is no longer so
recognized, certified, or registered (as the case may
be).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect not later than two years after the date of enactment of
this Act.
SEC. 304. CLARIFICATION OF TAXPAYER ASSISTANCE ORDER AUTHORITY.
(a) In General.--Paragraph (2) of section 7811(b) is amended--
(1) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively, and
(2) by inserting after subparagraph (B) the following new
subparagraph:
``(C) chapter 74 (relating to closing agreements
and compromises),''.
(b) Effective Date.--The amendments made by this section shall
apply to orders issued after the date of the enactment of this Act.
SEC. 305. TAXPAYER ADVOCATE DIRECTIVES.
(a) In General.--Subchapter A of chapter 80 is amended by inserting
after section 7811 the following new section:
``SEC. 7811A. TAXPAYER ADVOCATE DIRECTIVES.
``(a) Authority To Issue.--The National Taxpayer Advocate may issue
a Taxpayer Advocate Directive to mandate administrative or procedural
changes to improve the operation of a functional process or to grant
relief to groups of taxpayers (or all taxpayers) if its implementation
will protect the rights of taxpayers, prevent undue burden, ensure
equitable treatment, or provide an essential service to taxpayers. A
Taxpayer Advocate Directive may only be issued by the National Taxpayer
Advocate. The terms of a Taxpayer Advocate Directive may require the
Commissioner to implement it within a specified period of time.
``(b) Authority To Modify or Rescind.--Any Taxpayer Advocate
Directive may be modified or rescinded--
``(1) only by the National Taxpayer Advocate, the
Commissioner of Internal Revenue, or the Deputy Commissioner of
Internal Revenue, and
``(2) only if a written explanation of the reasons for the
modification or rescission is provided to the National Taxpayer
Advocate.''.
(b) Annual Report.--
(1) In general.--Clause (ii) of section 7803(c)(2)(B) is
amended by redesignating subclauses (III) through (XI) as
subclauses (IV) through (XII), respectively, and by inserting
after subclause (II) the following new subclause:
``(III) contain Taxpayer Advocate
Directives issued under section
7811A;''.
(2) Conforming amendments.--Clause (ii) of section
7803(c)(2)(B), as amended by paragraph (1), is amended--
(A) by striking ``subclauses (I), (II), and (III)''
in subclauses (V), (VI), and (VII) thereof and
inserting ``subclauses (I), (II), (III), and (IV)'',
and
(B) in subclause (VIII)--
(i) by inserting ``or Taxpayer Advocate
Directive'' after ``Taxpayer Assistance
Order'', and
(ii) by inserting ``or 7811A(a)'' after
``section 7811(b)''.
(c) Clerical Amendment.--The table of sections for subchapter A of
chapter 80 is amended by inserting after the item relating to section
7811 the following new item:
``Sec. 7811A. Taxpayer advocate directives.''.
SEC. 306. IMPROVED SERVICES FOR TAXPAYERS.
(a) In General.--It is the sense of Congress that the Internal
Revenue Service should within 2 years--
(1) reduce the time between receipt of an electronically
filed return and issuance of a refund,
(2) expand assistance to low-income taxpayers,
(3) allocate resources to assist low-income taxpayers in
establishing accounts at financial institutions that receive
direct deposits from the United States Treasury,
(4) deliver tax refunds on debit cards, prepaid cards, and
other electronic means to assist individuals that do not have
access to financial accounts or institutions,
(5) establish a pilot program for satellite walk-in centers
to be located in rural underserved communities without easy
access to Internal Revenue Service Taxpayer Assistance Centers
by using office facilities currently occupied by the Federal
Government, including United States Postal Service and Social
Security Administration facilities; such satellite walk-in
centers should have the capability to provide video-
conferencing services and scanning or other digitizing
functions to deliver, in an interactive manner, all service and
compliance functions currently available in Internal Revenue
Service Taxpayer Assistance Centers, and
(6) establish a pilot program for mobile tax return
preparation offices.
(b) Location of Service.--
(1) In general.--The mobile tax return filing offices
should be located in communities that the Secretary determines
have a high incidence of taxpayers claiming the earned income
tax credit, particularly in locations with few community
volunteer tax preparation clinics.
(2) Indian reservation.--At least one mobile tax return
filing office should be on or near an Indian reservation (as
defined in section 168(j)(6) of the Internal Revenue Code of
1986).
SEC. 307. TAXPAYER ACCESS TO FINANCIAL INSTITUTIONS.
(a) Establishment of Program.--The Secretary of the Treasury may
award demonstration project grants (including multiyear awards) to
eligible entities to provide accounts to individuals who currently do
not have an account with a financial institution. The account would be
held in a federally insured depository institution.
(b) Priority.--Priority shall be given to demonstration project
proposals that provide accounts at low or no cost and--
(1) that utilize new technologies such as the prepaid
product to expand access to financial services, in particular
for persons without bank accounts, with low access to financial
services, or low utilization of mainstream financial services,
(2) that promote the development of new financial products
and services that are adequate to improve access to wealth
building financial services, which help integrate more
Americans into the financial mainstream,
(3) that promote education for these persons and depository
institutions concerning the availability and use of financial
services for and by such persons, and
(4) that include other such activities and projects as the
Secretary may determine are consistent with the purpose of this
section.
(c) Eligible Entities.--
(1) In general.--An entity is eligible to receive a grant
under this section if such an entity is--
(A) an organization described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from
tax under section 501(a) of such Code,
(B) a federally insured depository institution,
(C) an agency of a State or local government,
(D) a community development financial institution,
(E) an Indian tribal organization,
(F) an Alaska Native Corporation,
(G) a Native Hawaiian organization,
(H) an organization described in 501(c)(5), and
exempt from tax under section 501(a), of such Code,
(I) a nonbank financial service provider, or
(J) a partnership comprised of 1 or more of the
entities described in the preceding subparagraphs.
(2) Definitions.--For purposes of this section--
(A) Federally insured depository institution.--The
term ``federally insured depository institution'' means
any insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)) and any insured credit union (as defined
in section 101 of the Federal Credit Union Act (12
U.S.C. 1752)).
(B) Community development financial institution.--
The term ``community development financial
institution'' means any organization that has been
certified as such pursuant to section 1805.201 of title
12, Code of Federal Regulations.
(C) Alaska native corporation.--The term ``Alaska
Native Corporation'' has the same meaning as the term
``Native Corporation'' under section 3(m) of the Alaska
Native Claims Settlement Act (43 U.S.C. 1602(m)).
(D) Native hawaiian organization.--The term
``Native Hawaiian organization'' means any organization
that--
(i) serves and represents the interests of
Native Hawaiians, and
(ii) has as a primary and stated purpose
the provision of services to Native Hawaiians.
(E) Labor organization.--The term ``labor
organization'' means an organization--
(i) in which employees participate,
(ii) which exists for the purpose, in whole
or in part, of dealing with employers
concerning grievances, labor disputes, wages,
rates of pay, hours of employment, or
conditions of work, and
(iii) which is described in section
501(c)(5) of the Internal Revenue Code of 1986.
(F) Nonbank financial service provider.--The term
``nonbank financial service provider'' mean an entity
that engages in financial services activities, as
authorized under the Federal Reserve Board, 12 Code of
Federal Regulations Part 225, Regulation Y.
(d) Application.--An eligible entity shall submit an application to
the Secretary of the Treasury in such form and containing such
information as the Secretary may require.
(e) Evaluation and Report.--For each fiscal year in which a grant
is awarded under this section, the Secretary of the Treasury shall
submit a report to Congress containing a description of the activities
funded, amounts distributed, and measurable results, as appropriate and
available.
(f) Power and Authority of the Secretary.--
(1) Assistance.--Subject to appropriations, the Secretary
of the Treasury may provide financial and technical assistance
to awardees for expanding the distribution of financial
services, including through financial services electronic
networks.
(2) Research and development.--The Secretary of the
Treasury may conduct or support such research and development
as the Secretary considers appropriate in order to further the
purpose of this section, including the collection of
information about access to financial services.
(3) Regulations.--The Secretary of the Treasury is
authorized to promulgate regulations to implement and
administer the program under this section.
(g) Study on Delivery of Tax Refunds.--
(1) In general.--The Secretary of the Treasury, in
consultation with the National Taxpayer Advocate, shall conduct
a study on the feasibility of delivering tax refunds on debit
cards, prepaid cards, and other electronic means to assist
individuals that do not have access to financial accounts or
institutions.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress containing the results of the study
conducted under paragraph (1).
SEC. 308. ADDITIONAL STUDIES.
(a) Study on Accelerated Processing of Information Returns.--
(1) Findings.--Congress finds the following:
(A) Under current procedures, the Internal Revenue
Service processes income tax returns before it
processes most information returns, including Forms W-
2, which report wages and tax withholding, and Forms
1099, which report interest, dividends, and other
payments.
(B) The sequence described in subparagraph (A)
makes little logical sense.
(C) From a taxpayer perspective, the sequence leads
to millions of cases where taxpayers inadvertently make
overclaims that the Internal Revenue Service does not
identify until months later, exposing the taxpayer not
only to a tax liability but to penalties and interest
charges as well.
(D) From the Federal Government's perspective, this
sequence creates opportunities for fraud and requires
the Internal Revenue Service to devote resources to
recovering refunds that should not have been paid and
that it often cannot recover.
(2) Study.--The Secretary of the Treasury, in consultation
with the National Taxpayer Advocate, shall conduct a study to
identify and recommend legislative and administrative changes
that would enable the Internal Revenue Service to receive and
process information reporting documents before it processes tax
returns. In conducting the study, the Secretary shall consider,
among other factors, the issues identified in the National
Taxpayer Advocate's 2009 Annual Report to Congress.
(3) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress describing the results of the study
conducted under paragraph (2).
(b) Study on the Effectiveness of Collection Alternatives.--
(1) In general.--The Secretary of the Treasury, in
consultation with the National Taxpayer Advocate, shall conduct
a study to assess the effectiveness of collection alternatives,
especially offers in compromise, on long-term tax compliance.
Such a study shall analyze a group of taxpayers who applied for
offers in compromise 5 or more years ago and compare the amount
of revenue collected from the taxpayers whose offers were
accepted with the amount of revenue collected from the
taxpayers whose offers were rejected, and compare, among the
taxpayers whose offers were rejected, the amount they offered
with the amounts collected.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress containing the results of the study
conducted under paragraph (1).
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E559)
Referred to House Ways and Means
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to House Financial Services
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