Title II — H.R. 8700 (Introduced in House)

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.

“(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, 2020.

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 II — Relief for Taxpayers

II Relief for Taxpayers