Section 1 Short title
This Act may be cited as the “Exempt Organization Simplification and Taxpayer Protection Act of 2013”.
Exempt Organization Simplification and Taxpayer Protection Act of 2013
A BILL
To amend the Internal Revenue Code of 1986 to reform rules relating to 501(c)(4) organizations and provide certain taxpayer protections, and for other purposes.
Sec. 2 Organizations required to notify Secretary of intent to operate as 501(c)(4)
In general— Part I of subchapter F of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“506. Organizations required to notify Secretary of intent to operate as 501(c)(4)
“(a) In general—An organization described in section 501(c)(4) shall, not later than 60 days after the organization is established, notify the Secretary (in such manner as the Secretary shall by regulation prescribe) that it is operating as such.
“(b) Contents of notice—The notice required under subsection (a) shall include the following information:
“(1) The name, address, and taxpayer identification number of the organization.
“(2) The date on which, and the State under the laws of which, the organization was organized.
“(3) A statement of the purpose of the organization.
“(c) Acknowledgment of receipt—Not later than 60 days after receipt of such a notice, the Secretary shall send to the organization an acknowledgment of such receipt.
“(d) Extension for reasonable cause—The Secretary may, for reasonable cause, extend the 60-day period described in subsection (a).
“(e) User fee—The Secretary shall impose a reasonable user fee for submission of the notice under subsection (a).
“(f) Request for determination—Upon request by an organization to be treated as an organization described in section 501(c)(4), the Secretary may issue a determination with respect to such treatment. Such request shall be treated for purposes of section 6104 as an application for exemption from taxation under section 501(a).”
Supporting information with first return— Paragraph (1) of section 6033(f) of such Code is amended—
by striking the period at the end and inserting “, and”,
by striking “include on the return required under subsection (a) the information” and inserting the following:
“(1) the information”
by adding at the end the following new paragraph:
“(2) in the case of the first such return filed by such an organization after submitting a notice to the Secretary under section 506(a), such information as the Secretary shall by regulation require in support of the organization’s treatment as an organization described in section 501(c)(4).”
Failure To file initial notification— Subsection (c) of section 6652 of such Code is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph:
“(4) Notices under section 506
“(A) Penalty on organization—In the case of a failure to submit a notice required under section 506(a) (relating to organizations required to notify Secretary of intent to operate as 501(c)(4)) on the date and in the manner prescribed therefor, there shall be paid by the organization failing to so submit $20 for each day during which such failure continues, but the total amount imposed under this subparagraph on any organization for failure to submit any one notice shall not exceed $5,000.
“(B) Managers—The Secretary may make written demand on an organization subject to penalty under subparagraph (A) specifying in such demand a reasonable future date by which the notice shall be submitted for purposes of this subparagraph. If such notice is not submitted on or before such date, there shall be paid by the person failing to so submit $20 for each day after the expiration of the time specified in the written demand during which such failure continues, but the total amount imposed under this subparagraph on all persons for failure to submit any one notice shall not exceed $5,000.”
Clerical amendment— The table of sections for part I of subchapter F of chapter 1 of such Code is amended by adding at the end the following new item:
Effective date—
In general— The amendments made by this section shall apply to organizations which are described in section 501(c)(4) of the Internal Revenue Code of 1986 and organized after December 31, 2014.
Certain existing organizations— In the case of any other organization described in section 501(c)(4) of such Code, the amendments made by this section shall apply to such organization only if, on or before the date of the enactment of this Act—
such organization has not applied for a written determination of recognition as an organization described in section 501(c)(4) of such Code, and
such organization has not filed at least one annual return or notice required under subsection (a)(1) or (i) (as the case may be) of section 6033 of such Code.
Sec. 3 Declaratory judgments for 501(c)(4) organizations
In general— Paragraph (1) of section 7428(a) of the Internal Revenue Code of 1986 is amended by striking “or” at the end of subparagraph (C) and by inserting after subparagraph (D) the following new subparagraph:
“(E) with respect to the initial classification or continuing classification of an organization described in section 501(c)(4) which is exempt from tax under section 501(a), or”
Effective date— The amendments made by this section shall apply to pleadings filed after the date of the enactment of this Act.
Sec. 4 Release of information regarding the status of certain investigations
In general— Subsection (e) of section 6103 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(11) Disclosure of information regarding status of investigation of violation of this section—In the case of a person who provides to the Secretary information indicating a violation of section 7213, 7213A, or 7214 with respect to any return or return information of such person, the Secretary may disclose to such person (or such person’s designee)—
“(A) whether an investigation based on the person’s provision of such information has been initiated and whether it is open or closed,
“(B) whether any such investigation substantiated such a violation by any individual, and
“(C) whether any action has been taken with respect to such individual (including whether a referral has been made for prosecution of such individual).”
Effective date— The amendment made by this section shall take effect on the date of the enactment of this Act.
Sec. 5 Review of Internal Revenue Service examination selection procedures
In general— The Comptroller General of the United States shall conduct a study of each Internal Revenue Service operating division to assess the process used for determining how enforcement cases are selected and processed. Such study shall include a review of the following:
The standards each such operating division has established for enforcement case selection (including any automated or discretionary selection processes) and case work, and whether such standards meet the objectives of impartiality, objectivity, compliance, and minimizing taxpayer burden.
The extent to which any cases are initiated by referrals or complaints from inside or outside of the operating division (including from outside of the Internal Revenue Service).
The Internal Revenue Service controls (including management reviews and regular updates) for assuring that its standards for enforcement cases (and handling of referrals and complaints) in each operating division are sufficient for achieving the objectives described in paragraph (1).
The Internal Revenue Service controls (including training, monitoring, and quality assessments) for assuring that its standards are adhered to by all division personnel and the effectiveness of such controls.
Whether the existing standards and controls provide reasonable assurance that each division’s enforcement processes meet the Internal Revenue Service objectives of impartiality, objectivity, compliance, and minimizing taxpayer burden.
Initial report— Not later than 1 year after the date of the enactment of this section, the Comptroller General shall submit to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, and the Secretary of the Treasury a report on the results of such study. Such report shall include such recommendations as the Comptroller General may deem advisable.
Follow-Up on recommendations— Not later than 180 days after a report is submitted with respect to an operating division under subsection (b), the Comptroller General shall conduct a follow-up study, and submit to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, and the Secretary of the Treasury a report, on whether any recommendations to improve case selection and case work processes have been implemented and are working as intended.
Continuing case management studies and reports—
In general— After a report is submitted under subsection (b), the Comptroller General shall conduct follow-up studies and reports in the same manner as provided in subsections (a) and (b) with respect to each operating division of the Internal Revenue Service and shall include in such study and report a review of whether any previous recommendations to improve case selection and case work processes have been implemented and are working as intended.
Frequency— Each such report with respect to an operating division shall be submitted not later than 4 years after the date the most recent report was submitted with respect to such operating division under subsection (b) or this subsection. The Comptroller General shall submit no fewer than 1 such report each year.
Sec. 6 IRS employees prohibited from using personal email accounts for official business
No officer or employee of the Internal Revenue Service may use a personal email account to conduct any official business of the Government.