John Lewis Taxpayer Protection Act
This bill sets forth provisions for the protection of taxpayers from abusive tax collection practices and provides other protections for low-income taxpayers.
Specifically, it
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3738 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3738
To amend the Internal Revenue Code of 1986 to reduce taxpayer burdens
and enhance taxpayer protections, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 4, 2021
Mr. Vela introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reduce taxpayer burdens
and enhance taxpayer protections, 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 ``John Lewis
Taxpayer Protection Act''.
(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, as amended.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--PROTECTION OF TAXPAYERS FROM ABUSIVE TAX COLLECTION PRACTICES
Sec. 101. Repeal of rules relating to tax collection contracts.
TITLE II--RELIEF FOR TAXPAYERS
Sec. 201. De minimis exclusion from gross income for discharge of
indebtedness of individuals.
Sec. 202. Repeal suspension of statute of limitations during pending
application for Taxpayer Assistance order.
Sec. 203. Limitation on levy on retirement savings.
Sec. 204. Tolling of limitation on levy recovery for disabled taxpayer.
Sec. 205. Extension of period to withdraw frivolous submission.
Sec. 206. Repeal of partial payment requirement on submissions of
offers-in-compromise.
TITLE III--ASSISTANCE LOW-INCOME TAXPAYERS
Sec. 301. EITC outreach.
TITLE IV--ENSURE TAXPAYER ACCESS TO COMPETENT TAX RETURN PREPARERS
Sec. 401. Regulation of tax return preparers.
Sec. 402. Tax information disclosure relating to tax return preparer
misconduct.
TITLE V--INCREASE FUNDING FOR SERVICES TO TAXPAYERS
Sec. 501. Low-income taxpayer clinics.
Sec. 502. Internal Revenue Service taxpayer services appropriations.
TITLE I--PROTECTION OF TAXPAYERS FROM ABUSIVE TAX COLLECTION PRACTICES
SEC. 101. REPEAL OF RULES RELATING TO TAX COLLECTION CONTRACTS.
(a) In General.--Sections 6306 and 6307 are hereby repealed, and
the table of sections for subchapter A of chapter 64 is amended by
striking the items relating to sections 6306 and 6307.
(b) Conforming Amendments.--
(1) Section 6103(k) is amended by striking paragraph (12).
(2) Section 7433A(a) is amended by inserting ``, as in
effect on the day before the date of the enactment of the John
Lewis Taxpayer Protection Act'' after ``as defined in section
6306(b)''.
(3) Section 7809(a) is amended by striking ``6306,''.
(4) Section 7811 is amended by striking subsection (g).
TITLE II--RELIEF FOR TAXPAYERS
SEC. 201. DE MINIMIS EXCLUSION FROM GROSS INCOME FOR DISCHARGE OF
INDEBTEDNESS OF INDIVIDUALS.
(a) In General.--Section 108(a)(1) is amended by striking ``or'' at
the end of subparagraph (D), by striking the period at the end of
subparagraph (E) and inserting ``, or'', and by adding at the end the
following new subparagraph:
``(F) the indebtedness discharged is qualified
individual indebtedness.''.
(b) Qualified Individual Indebtedness.--Section 108 is amended by
adding at the end the following new subsection:
``(j) Special Rules Relating to Qualified Individual
Indebtedness.--
``(1) Qualified individual indebtedness defined.--For
purposes of this section, the term `qualified individual
indebtedness' means any indebtedness of an individual other
than indebtedness which is--
``(A) discharged on account of services performed
for the lender, or
``(B) held at any time by a person related to such
individual.
For purposes of subparagraph (B), a person shall be treated as
related to another person if the relationship between such
persons would result in a disallowance of losses under section
267 or 707(b).
``(2) Dollar limitation.--The amount of qualified
individual indebtedness excluded from gross income under
subsection (a)(1)(F) with respect to any individual for any
taxable year shall not exceed the excess of--
``(A) $10,000, over
``(B) the aggregate amount excluded from the gross
income of such individual under subsection (a)(1) for
such taxable year and all prior taxable years
(determined without regard to any amount excludable
from gross income under subsection (a)(1)(F) for such
taxable year).
``(3) Joint returns.--In the case of a joint return--
``(A) the dollar limitation under paragraph (2)
shall be applied separately to each spouse, and
``(B) the taxpayer may elect to treat any
indebtedness of either spouse as indebtedness of the
other spouse.''.
(c) Coordination.--
(1) In general.--Section 108(a)(2) is amended by adding at
the end the following new subparagraph:
``(D) Precedence of individual indebtedness
exclusion.--
``(i) Individual indebtedness exclusion
takes precedence over insolvency exclusion
unless elected otherwise.--Paragraph (1)(B)
shall not apply to a discharge to which
paragraph (1)(F) applies unless the taxpayer
elects to apply paragraph (1)(B) in lieu of
paragraph (1)(F).
``(ii) Other exclusions take precedence.--
Subparagraph (F) shall not apply to a discharge
to which subparagraph (C), (D), or (E)
applies.''.
(2) Title 11 exclusion takes precedence.--Section
108(a)(2)(A) is amended by striking ``and (E)'' and inserting
``(E), and (F)''.
(d) Effective Date.--The amendments made by this section shall
apply to discharges of indebtedness after the date of the enactment of
this Act.
SEC. 202. REPEAL SUSPENSION OF STATUTE OF LIMITATIONS DURING PENDING
APPLICATION FOR TAXPAYER ASSISTANCE ORDER.
(a) In General.--Section 7811 is amended by striking subsection (d)
and redesignating subsections (e), (f), and (g) as subsections (d),
(e), and (f), respectively.
(b) Conforming Amendment.--Section 6306(k)(2) is amended by
striking ``section 7811(g)'' and inserting ``section 7811(f)''.
(c) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 203. LIMITATION ON LEVY ON RETIREMENT SAVINGS.
(a) In General.--Section 6334(a) is amended by adding at the end
the following new paragraph:
``(14) Retirement savings.--
``(A) In general.--Any individual's interest in a
qualified retirement plan--
``(i) before such individual has attained
normal retirement age (or 65 in the case of an
individual retirement account or a plan which
does not specify a normal retirement age), or
``(ii) after the attainment of such age if
the levy would create an economic hardship due
to the financial condition of the taxpayer
(within the meaning of 6343(a)(1)(D)).
``(B) Qualified retirement plan.--For purposes of
this paragraph, the term `qualified retirement plan'
means--
``(i) an individual retirement account, or
``(ii) a defined contribution plan which--
``(I) is described in section
401(a) and which includes a trust
exempt from tax under section 501(a),
``(II) is described in subsection
(a) or (b) of section 403, or
``(III) is an eligible deferred
compensation plan (as defined in
section 457(b)) of an eligible employer
described in section 457(e)(1)(A).
``(C) Exception for flagrant acts.--Subparagraph
(A) shall not apply if the Secretary determines that--
``(i) the taxpayer filed a fraudulent
return, or
``(ii) the taxpayer acted with the intent
to evade or defeat any tax imposed by this
title or the collection or payment thereof.''.
(b) Effective Date.--The amendment made by this section shall apply
to levies issued after December 31, 2020.
SEC. 204. TOLLING OF LIMITATION ON LEVY RECOVERY FOR DISABLED TAXPAYER.
(a) In General.--Section 6343(b) is amended by inserting after the
third sentence: ``In the case of an individual, the running of such 9-
month period shall be suspended during any period of such individual's
life that such individual is financially disabled (as defined in
section 6511(h)).''.
(b) Suits by Persons Other Than Taxpayers.--Section 6532(c)(1) is
amended by adding at the end the following: ``In the case of an
individual, the running of such 9-month period shall be suspended
during any period of such individual's life that such individual is
financially disabled (as defined in section 6511(h)).''.
SEC. 205. EXTENSION OF PERIOD TO WITHDRAW FRIVOLOUS SUBMISSION.
(a) In General.--Section 6702(b)(3) is amended by striking ``30
days'' and inserting ``60 days''.
(b) Effective Date.--The amendment made by this section shall apply
to notices provided after December 31, 2021.
SEC. 206. REPEAL OF PARTIAL PAYMENT REQUIREMENT ON SUBMISSIONS OF
OFFERS-IN-COMPROMISE.
(a) In General.--Section 7122 is amended by striking subsection (c)
and by redesignating subsections (d), (e), (f), and (g) as subsections
(c), (d), (e), and (f), respectively.
(b) Conforming Amendments.--
(1) Section 7122(d)(3) is amended by inserting ``and'' at
the end of the subparagraph (A), by striking ``, and'' at the
end of subparagraph (B) and inserting a period, and by striking
subparagraph (C).
(2) Section 7122, as amended by this section, is amended by
adding at the end the following new subsection:
``(g) Application of User Fee.--In the case of any assessed tax or
other amounts imposed under this title with respect to such tax which
is the subject of an offer-in-compromise, such tax or other amounts
shall be reduced by any user fee imposed under this title with respect
to such offer-in-compromise.''.
(3) Section 6159(g) is amended by striking ``section
7122(e)'' and inserting ``section 7122(d)''.
(c) Effective Date.--The amendments made by this section shall
apply to offers submitted after the date of the enactment of this Act.
TITLE III--ASSISTANCE LOW-INCOME TAXPAYERS
SEC. 301. EITC OUTREACH.
(a) In General.--Section 32 is amended by adding at the end the
following new subsection:
``(o) Notification of Potential Eligibility for Credit and
Refund.--
``(1) In general.--To the extent possible and on an annual
basis, the Secretary shall provide notice to each taxpayer
who--
``(A) did not claim the credit under subsection (a)
for any preceding taxable year for which credit or
refund is not precluded by section 6511, and
``(B) may be allowed such credit for any such
taxable year based on return or return information (as
defined in section 6103(b)) available to the Secretary,
that such taxpayer may be eligible to claim such credit and a
refund for such taxable year.
``(2) Notice.--Notice provided under paragraph (1) shall be
in writing and sent to the last known address of the
taxpayer.''.
(b) Effective Date.--The amendment made by this section shall take
effect on January 1, 2021.
TITLE IV--ENSURE TAXPAYER ACCESS TO COMPETENT TAX RETURN PREPARERS
SEC. 401. REGULATION OF TAX RETURN PREPARERS.
(a) In General.--Section 330(a) of title 31, United States Code, is
amended--
(1) by striking paragraph (1) and inserting the following:
``(1) regulate--
``(A) the practice of representatives of persons
before the Department of the Treasury; and
``(B) the practice of tax return preparers; and'',
and
(2) in paragraph (2)--
(A) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(B) by inserting ``or in preparing their tax
returns, claims for refund, or documents in connection
with tax returns or claims for refund'' after ``cases''
in subparagraph (D).
(b) Authority To Sanction Regulated Tax Return Preparers.--Section
330(c) of title 31, United States Code, is amended--
(1) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(2) in paragraph (4), by striking ``misleads or threatens''
and all that follows and inserting the following: ``misleads or
threatens--
``(A) any person being represented or any
prospective person being represented; or
``(B) any person or prospective person whose tax
return, claim for refund, or document in connection
with a tax return or claim for refund, is being or may
be prepared.''.
(c) Tax Return Preparer Defined.--Section 330 of title 31, United
States Code, is amended by adding at the end the following new
subsection:
``(f) Tax Return Preparer.--For purposes of this section--
``(1) In general.--The term `tax return preparer' has the
meaning given such term under section 7701(a)(36) of the
Internal Revenue Code of 1986.
``(2) Tax return.--The term `tax return' has the meaning
given to the term `return' under section 6696(e)(1) of such
Code.
``(3) Claim for refund.--The term `claim for refund' has
the meaning given such term under section 6696(e)(2) of such
Code.''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to returns and claims for refund for taxable years
beginning after the date of the enactment of this Act.
SEC. 402. TAX INFORMATION DISCLOSURE RELATING TO TAX RETURN PREPARER
MISCONDUCT.
Section 6103(k), as amended by section 101, is amended by inserting
after paragraph (11) at the end the following new paragraph:
``(12) Disclosure relating to tax return preparer
misconduct.--Under such procedures as the Secretary may
prescribe, the Secretary may disclose returns or return
information to the extent necessary to publish final decisions
by the Internal Revenue Service Office of Professional
Responsibility relating to tax return preparer misconduct.''.
TITLE V--INCREASE FUNDING FOR SERVICES TO TAXPAYERS
SEC. 501. LOW-INCOME TAXPAYER CLINICS.
(a) Increase in Authorized Grants.--Section 7526(c)(1) is amended
by striking ``$6,000,000'' and inserting ``$20,000,000''.
(b) Clerical Amendment.--Section 7526(c)(5) is amended by inserting
``qualified'' before ``low-income''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to grants made after the date of the enactment of
this Act.
SEC. 502. INTERNAL REVENUE SERVICE TAXPAYER SERVICES APPROPRIATIONS.
There is hereby appropriated, out of any money in the Treasury not
otherwise appropriated, for the fiscal year ending September 30, 2022,
for necessary expenses of the Internal Revenue Service to provide
taxpayer services, including pre-filing assistance and education,
filing and account services, taxpayer advocacy services, and other
services as authorized by 5 U.S.C. 3109, at such rates as may be
determined by the Commissioner, $2,406,000,000.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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