H.R. 3151 — what changed
Taxpayer First Act
From Introduced in House to Engrossed in House. 4 sections amended between Introduced in House and Engrossed in House.
Sec. 1001 Establishment of Internal Revenue Service Independent Office of Appeals
In general— Section 7803 is amended by adding at the end the following new subsection:
“(e) Independent Office of Appeals
“(1) Establishment—There is established in the Internal Revenue Service an office to be known as the “Internal Revenue Service Independent Office of Appeals”.
“(2) Chief of Appeals
“(A) In general—The Internal Revenue Service Independent Office of Appeals shall be under the supervision and direction of an official to be known as the “Chief of Appeals”. The Chief of Appeals shall report directly to the Commissioner of Internal Revenue and shall be entitled to compensation at the same rate as the highest rate of basic pay established for the Senior Executive Service under section 5382 of title 5, United States Code.
“(B) Appointment—The Chief of Appeals shall be appointed by the Commissioner of Internal Revenue without regard to the provisions of title 5, United States Code, relating to appointments in the competitive service or the Senior Executive Service.
“(C) Qualifications—An individual appointed under subparagraph (B) shall have experience and expertise in—
“(i) administration of, and compliance with, Federal tax laws,
“(ii) a broad range of compliance cases, and
“(iii) management of large service organizations.
“(3) Purposes and duties of Office—It shall be the function of the Internal Revenue Service Independent Office of Appeals to resolve Federal tax controversies without litigation on a basis which—
“(A) is fair and impartial to both the Government and the taxpayer,
“(B) promotes a consistent application and interpretation of, and voluntary compliance with, the Federal tax laws, and
“(C) enhances public confidence in the integrity and efficiency of the Internal Revenue Service.
“(4) Right of appeal—The resolution process described in paragraph (3) shall be generally available to all taxpayers.
“(5) Limitation on designation of cases as not eligible for referral to Independent Office of Appeals
“(A) In general—If any taxpayer which is in receipt of a notice of deficiency authorized under section 6212 requests referral to the Internal Revenue Service Independent Office of Appeals and such request is denied, the Commissioner of Internal Revenue shall provide such taxpayer a written notice which—
“(i) provides a detailed description of the facts involved, the basis for the decision to deny the request, and a detailed explanation of how the basis of such decision applies to such facts, and
“(ii) describes the procedures prescribed under subparagraph (C) for protesting the decision to deny the request.
“(B) Report to Congress—The Commissioner of Internal Revenue shall submit a written report to Congress on an annual basis which includes the number of requests described in subparagraph (A) which were denied and the reasons (described by category) that such requests were denied.
“(C) Procedures for protesting denial of request—The Commissioner of Internal Revenue shall prescribe procedures for protesting to the Commissioner of Internal Revenue a denial of a request described in subparagraph (A).
“(D) Not applicable to frivolous positions—This paragraph shall not apply to a request for referral to the Internal Revenue Service Independent Office of Appeals which is denied on the basis that the issue involved is a frivolous position (within the meaning of section 6702(c)).
“(6) Staff
“(A) In general—All personnel in the Internal Revenue Service Independent Office of Appeals shall report to the Chief of Appeals.
“(B) Access to staff of Office of the Chief Counsel—The Chief of Appeals shall have authority to obtain legal assistance and advice from the staff of the Office of the Chief Counsel. The Chief Counsel shall ensure, to the extent practicable, that such assistance and advice is provided by staff of the Office of the Chief Counsel who were not involved in the case with respect to which such assistance and advice is sought and who are not involved in preparing such case for litigation.
“(7) Access to case files
“(A) In general—In any case in which a conference with the Internal Revenue Service Independent Office of Appeals has been scheduled upon request of a specified taxpayer, the Chief of Appeals shall ensure that such taxpayer is provided access to the nonprivileged portions of the case file on record regarding the disputed issues (other than documents provided by the taxpayer to the Internal Revenue Service) not later than 10 days before the date of such conference.
“(B) Taxpayer election to expedite conference—If the taxpayer so elects, subparagraph (A) shall be applied by substituting “the date of such conference” for “10 days before the date of such conference”.
“(C) Specified taxpayer—For purposes of this paragraph—
“(i) In general—The term specified taxpayer means—
“(I) in the case of any taxpayer who is a natural person, a taxpayer whose adjusted gross income does not exceed $400,000 for the taxable year to which the dispute relates, and
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“(II) in the case of any other taxpayer, a taxpayer whose gross receipts do not exceed $5,000,000 $5 million for the taxable year to which the dispute relates.
“(ii) Aggregation rule—Rules similar to the rules of section 448(c)(2) shall apply for purposes of clause (i)(II).”
Conforming amendments—
The following provisions are each amended by striking “Internal Revenue Service Office of Appeals” and inserting “Internal Revenue Service Independent Office of Appeals”:
Section 6015(c)(4)(B)(ii)(I).
Section 6320(b)(1).
Subsections (b)(1) and (d)(3) of section 6330.
Section 6603(d)(3)(B).
Section 6621(c)(2)(A)(i).
Section 7122(e)(2).
Subsections (a), (b)(1), (b)(2), and (c)(1) of section 7123.
Subsections (c)(7)(B)(i) and (g)(2)(A) of section 7430.
Section 7522(b)(3).
Section 7612(c)(2)(A).
Section 7430(c)(2) is amended by striking “Internal Revenue Service Office of Appeals” each place it appears and inserting “Internal Revenue Service Independent Office of Appeals”.
The heading of section 6330(d)(3) is amended by inserting “independent” after “irs”.
Other references— Any reference in any provision of law, or regulation or other guidance, to the Internal Revenue Service Office of Appeals shall be treated as a reference to the Internal Revenue Service Independent Office of Appeals.
Savings provisions— Rules similar to the rules of paragraphs (2) through (6) of section 1001(b) of the Internal Revenue Service Restructuring and Reform Act of 1998 shall apply for purposes of this section (and the amendments made by this section).
Effective date—
In general— Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.
Access to case files— Section 7803(e)(7) of the Internal Revenue Code of 1986, as added by subsection (a), shall apply to conferences occurring after the date which is 1 year after the date of the enactment of this Act.
Sec. 1401 Return preparation programs for applicable taxpayers
In general— Chapter 77 is amended by inserting after section 7526 the following new section:
“7526A. Return preparation programs for applicable taxpayers
“(a) Establishment of Volunteer Income Tax Assistance Matching Grant Program—The Secretary shall establish a Community Volunteer Income Tax Assistance Matching Grant Program under which the Secretary may, subject to the availability of appropriated funds, make grants to provide matching funds for the development, expansion, or continuation of qualified return preparation programs assisting applicable taxpayers and members of underserved populations.
“(b) Use of funds
“(1) In general—Qualified return preparation programs may use grants received under this section for—
“(A) ordinary and necessary costs associated with program operation in accordance with cost principles under the applicable Office of Management and Budget circular, including—
“(i) wages or salaries of persons coordinating the activities of the program,
“(ii) developing training materials, conducting training, and performing quality reviews of the returns prepared under the program,
“(iii) equipment purchases, and
“(iv) vehicle-related expenses associated with remote or rural tax preparation services,
“(B) outreach and educational activities described in subsection (c)(2)(B), and
“(C) services related to financial education and capability, asset development, and the establishment of savings accounts in connection with tax return preparation.
“(2) Requirement of matching funds—A qualified return preparation program must provide matching funds on a dollar-for-dollar basis for all grants provided under this section. Matching funds may include—
“(A) the salary (including fringe benefits) of individuals performing services for the program,
“(B) the cost of equipment used in the program, and
“(C) other ordinary and necessary costs associated with the program.
“(c) Application
“(1) In general—Each applicant for a grant under this section shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require.
“(2) Priority—In awarding grants under this section, the Secretary shall give priority to applications which demonstrate—
“(A) assistance to applicable taxpayers, with emphasis on outreach to, and services for, such taxpayers,
“(B) taxpayer outreach and educational activities relating to eligibility and availability of income supports available through this title, including the earned income tax credit, and
“(C) specific outreach and focus on one or more underserved populations.
“(3) Amounts taken into account—In determining matching grants under this section, the Secretary shall only take into account amounts provided by the qualified return preparation program for expenses described in subsection (b).
“(d) Program adherence
“(1) In general—The Secretary shall establish procedures for, and shall conduct not less frequently than once every 5 calendar years during which a qualified return preparation program is operating under a grant under this section, periodic site visits—
“(A) to ensure the program is carrying out the purposes of this section, and
“(B) to determine whether the program meets such program adherence standards as the Secretary shall by regulation or other guidance prescribe.
“(2) Additional requirements for grant recipients not meeting program adherence standards—In the case of any qualified return preparation program which—
“(A) is awarded a grant under this section, and
“(B) is subsequently determined—
“(i) not to meet the program adherence standards described in paragraph (1)(B), or
“(ii) not to be otherwise carrying out the purposes of this section,
“(e) Definitions—For purposes of this section—
“(1) Qualified return preparation program—The term qualified return preparation program means any program—
“(A) which provides assistance to individuals, not less than 90 percent of whom are applicable taxpayers, in preparing and filing Federal income tax returns,
“(B) which is administered by a qualified entity,
“(C) in which all volunteers who assist in the preparation of Federal income tax returns meet the training requirements prescribed by the Secretary, and
“(D) which uses a quality review process which reviews 100 percent of all returns.
“(2) Qualified entity
“(A) In general—The term qualified entity means any entity which—
“(i) is an eligible organization,
“(ii) is in compliance with Federal tax filing and payment requirements,
“(iii) is not debarred or suspended from Federal contracts, grants, or cooperative agreements, and
“(iv) agrees to provide documentation to substantiate any matching funds provided pursuant to the grant program under this section.
“(B) Eligible organization—The term eligible organization means—
“(i) an institution of higher education which is described in section 102 (other than subsection (a)(1)(C) thereof) of the Higher Education Act of 1965 (20 U.S.C. 1002), as in effect on the date of the enactment of this section, and which has not been disqualified from participating in a program under title IV of such Act,
“(ii) an organization described in section 501(c) and exempt from tax under section 501(a),
“(iii) a local government agency, including—
“(I) a county or municipal government agency, and
“(II) an Indian tribe, as defined in section 4(13) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(13)), including any tribally designated housing entity (as defined in section 4(22) of such Act (25 U.S.C. 4103(22))), tribal subsidiary, subdivision, or other wholly owned tribal entity,
“(iv) a local, State, regional, or national coalition (with one lead organization which meets the eligibility requirements of clause (i), (ii), or (iii) acting as the applicant organization), or
“(v) in the case of applicable taxpayers and members of underserved populations with respect to which no organizations described in the preceding clauses are available—
“(I) a State government agency, or
“(II) an office providing Cooperative Extension services (as established at the land-grant colleges and universities under the Smith-Lever Act of May 8, 1914).
“(3) Applicable taxpayers—The term applicable taxpayer means a taxpayer whose income for the taxable year does not exceed an amount equal to the completed phaseout amount under section 32(b) for a married couple filing a joint return with three or more qualifying children, as determined in a revenue procedure or other published guidance.
“(4) Underserved population—The term underserved population includes populations of persons with disabilities, persons with limited English proficiency, Native Americans, individuals living in rural areas, members of the Armed Forces and their spouses, and the elderly.
“(f) Special rules and limitations
“(1) Duration of grants—Upon application of a qualified return preparation program, the Secretary is authorized to award a multi-year grant not to exceed 3 years.
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“(2) Aggregate limitation—Unless otherwise provided by specific appropriation, the Secretary shall not allocate more than $30,000,000 $30 million per fiscal year (exclusive of costs of administering the program) to grants under this section.
“(g) Promotion of programs
“(1) In general—The Secretary shall promote tax preparation through qualified return preparation programs through the use of mass communications and other means.
“(2) Provision of information regarding qualified return preparation programs—The Secretary may provide taxpayers information regarding qualified return preparation programs receiving grants under this section.
“(3) Referrals to low-income taxpayer clinics—Qualified return preparation programs receiving a grant under this section are encouraged, in appropriate cases, to—
“(A) advise taxpayers of the availability of, and eligibility requirements for receiving, advice and assistance from qualified low-income taxpayer clinics receiving funding under section 7526, and
“(B) provide information regarding the location of, and contact information for, such clinics.”
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. 2101 Management of Internal Revenue Service information technology
Duties and responsibilities of Internal Revenue Service Chief Information Officer— Section 7803, as amended by section 1001, is amended by adding at the end the following new subsection:
“(f) Internal Revenue Service Chief Information Officer
“(1) In general—There shall be in the Internal Revenue Service an Internal Revenue Service Chief Information Officer (hereafter referred to in this subsection as the “IRS CIO”) who shall be appointed by the Commissioner of Internal Revenue.
“(2) Centralized responsibility for Internal Revenue Service information technology—The Commissioner of Internal Revenue (and the Secretary) shall act through the IRS CIO with respect to all development, implementation, and maintenance of information technology for the Internal Revenue Service. Any reference in this subsection to the IRS CIO which directs the IRS CIO to take any action, or to assume any responsibility, shall be treated as a reference to the Commissioner of Internal Revenue acting through the IRS CIO.
“(3) General duties and responsibilities—The IRS CIO shall—
“(A) be responsible for the development, implementation, and maintenance of information technology for the Internal Revenue Service,
“(B) ensure that the information technology of the Internal Revenue Service is secure and integrated,
“(C) maintain operational control of all information technology for the Internal Revenue Service,
“(D) be the principal advocate for the information technology needs of the Internal Revenue Service, and
“(E) consult with the Chief Procurement Officer of the Internal Revenue Service to ensure that the information technology acquired for the Internal Revenue Service is consistent with—
“(i) the goals and requirements specified in subparagraphs (A) through (D), and
“(ii) the strategic plan developed under paragraph (4).
“(4) Strategic plan
“(A) In general—The IRS CIO shall develop and implement a multiyear strategic plan for the information technology needs of the Internal Revenue Service. Such plan shall—
“(i) include performance measurements of such technology and of the implementation of such plan,
“(ii) include a plan for an integrated enterprise architecture of the information technology of the Internal Revenue Service,
“(iii) include and take into account the resources needed to accomplish such plan,
“(iv) take into account planned major acquisitions of information technology by the Internal Revenue Service, and
“(v) align with the needs and strategic plan of the Internal Revenue Service.
“(B) Plan updates—The IRS CIO shall, not less frequently than annually, review and update the strategic plan under subparagraph (A) (including the plan for an integrated enterprise architecture described in subparagraph (A)(ii)) to take into account the development of new information technology and the needs of the Internal Revenue Service.
“(5) Scope of authority
“(A) Information technology—For purposes of this subsection, the term information technology has the meaning given such term by section 11101 of title 40, United States Code.
“(B) Internal Revenue Service—Any reference in this subsection to the Internal Revenue Service includes a reference to all components of the Internal Revenue Service, including—
“(i) the Office of the Taxpayer Advocate,
“(ii) the Criminal Investigation Division of the Internal Revenue Service, and
“(iii) except as otherwise provided by the Secretary with respect to information technology related to matters described in subsection (b)(3)(B), the Office of the Chief Counsel.”
Independent verification and validation of the Customer Account Data Engine 2 and Enterprise Case Management System—
In general— The Commissioner of Internal Revenue shall enter into a contract with an independent reviewer to verify and validate the implementation plans (including the performance milestones and cost estimates included in such plans) developed for the Customer Account Data Engine 2 and the Enterprise Case Management System.
Deadline for completion— Such contract shall require that such verification and validation be completed not later than the date which is 1 year after the date of the enactment of this Act.
Application to phases of CADE 2—
In general— Paragraphs (1) and (2) shall not apply to phase 1 of the Customer Account Data Engine 2 and shall apply separately to each other phase.
Deadline for completing plans— Not later than 1 year after the date of the enactment of this Act, the Commissioner of Internal Revenue shall complete the development of plans for all phases of the Customer Account Data Engine 2.
Deadline for completion of verification and validation of plans— In the case of any phase after phase 2 of the Customer Account Data Engine 2, paragraph (2) shall be applied by substituting “the date on which the plan for such phase was completed” for “the date of the enactment of this Act”.
Coordination of IRS CIO and Chief Procurement Officer of the Internal Revenue Service—
In general— The Chief Procurement Officer of the Internal Revenue Service shall—
identify all significant IRS information technology acquisitions and provide written notification to the Internal Revenue Service Chief Information Officer (hereafter referred to in this subsection as the “IRS CIO”) of each such acquisition in advance of such acquisition, and
regularly consult with the IRS CIO regarding acquisitions of information technology for the Internal Revenue Service, including meeting with the IRS CIO regarding such acquisitions upon request.
Significant IRS information technology acquisitions— For purposes of this subsection, the term significant IRS information technology acquisitions means—
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any acquisition of information technology for the Internal Revenue Service in excess of $1,000,000; $1 million; and
such other acquisitions of information technology for the Internal Revenue Service (or categories of such acquisitions) as the IRS CIO, in consultation with the Chief Procurement Officer of the Internal Revenue Service, may identify.
Scope— Terms used in this subsection which are also used in section 7803(f) of the Internal Revenue Code of 1986 (as added by subsection (a)) shall have the same meaning as when used in such section.
Sec. 2201 Disclosure of taxpayer information for third-party income verification
In general— Not later than 1 year after the close of the 2-year period described in subsection (d)(1), the Secretary of the Treasury or the Secretary’s delegate (hereafter referred to in this section as the “Secretary”) shall implement a program to ensure that any qualified disclosure—
is fully automated and accomplished through the internet; and
is accomplished in as close to real-time as is practicable.
Qualified disclosure— For purposes of this section, the term qualified disclosure means a disclosure under section 6103(c) of the Internal Revenue Code of 1986 of returns or return information by the Secretary to a person seeking to verify the income or creditworthiness of a taxpayer who is a borrower in the process of a loan application.
Application of security standards— The Secretary shall ensure that the program described in subsection (a) complies with applicable security standards and guidelines.
User fee—
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In general— During the 2-year period beginning on the first day of the 6th sixth calendar month beginning after the date of the enactment of this Act, the Secretary shall assess and collect a fee for qualified disclosures (in addition to any other fee assessed and collected for such disclosures) at such rates as the Secretary determines are sufficient to cover the costs related to implementing the program described in subsection (a), including the costs of any necessary infrastructure or technology.
Deposit of collections— Amounts received from fees assessed and collected under paragraph (1) shall be deposited in, and credited to, an account solely for the purpose of carrying out the activities described in subsection (a). Such amounts shall be available to carry out such activities without need of further appropriation and without fiscal year limitation.