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To ensure the successful development of the electronic Income Verification Express Service of the Internal Revenue Service by amending the Taxpayer First Act to clarify that taxpayer identity verification is the responsibility of users of the system rather than the taxpayer, and for other purposes.

H.R. 3335 · 118th Congress · May 15, 2023 · Lineage

A BILL

Section 1 Identity verification responsibility

(a)
In general— Section 2201 of the Taxpayer First Act (Public Law 116–25) is amended—
(1)
in subsection (a), by striking “and” at the end of paragraph (1), by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following new paragraph:

“(2) is accomplished only after a financial institution (or a service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution) has formed a reasonable belief that the identity of the taxpayer has been authenticated; and”

(2)
in subsection (b), by striking “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” and inserting “, including business tax return information, by the Secretary to a taxpayer or financial institution (or a service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution) designated by a taxpayer seeking to verify the income or creditworthiness of a taxpayer who is in the process of a financial application”.
(b)
Financial institution definition, standards and guidelines— Section 2201(c) of such Act is amended—
(1)
in subsection (c)—
(A)
by striking “The Secretary” and inserting:

“(1) In general—The Secretary”

(B)
by adding at the end the following new paragraph:

“(2) Standards—The Secretary shall ensure that any standards and guidelines deemed applicable to the system described in this section—

“(A) Enable a taxpayer to provide the appropriate designation and electronic consent to a financial institution (or a service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution), including those defined in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006);

“(B) Enable a financial institution (or a service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution) to act upon such designation and consent to request a qualified disclosure directly with the system implemented pursuant to this section; and

“(C) Ensure the security and confidentiality of taxpayer information, to the extent such standards and guidelines do not conflict with other standards and guidelines applicable to financial institutions.”

(2)
by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection:

“(c) Financial institution—For purposes of this section, the term “financial institution” has the meaning given such term in section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).”

(c)
Limitation on authority— Section 2201 of such Act is amended by adding at the end the following new subsection:

“(f) Limitation on authority—The Secretary may not require a taxpayer seeking a qualified disclosure to access any information technology system or service used by or on behalf of the Internal Revenue Service pursuant to this section for any purpose relating to a qualified disclosure, including identity verification or the provision of electronic consent.”

(d)
Clarification regarding certain business tax return information available for disclosure— Section 2201 of such Act, as amended by subsection (c), is amended by adding at the end the following new subsection:

“(g) Program required To make certain information available for disclosure—The Secretary shall ensure that the program implemented under this section makes certain business tax return information available for disclosure, including, but not limited to, the following:

“(1) The following information from Schedule K–1 of Forms 1065 and 1120:

“(A) Names of owners.

“(B) Percentage of capital ownership of each owner.

“(C) Distributions to each owner.

“(D) In the case of Form 1065, direct payments to partners.

“(2) The following information from Schedule G of Form 1120:

“(A) Names of owners.

“(B) Percentage of capital ownership of each owner.

“(3) With respect to each entity identified on Schedule C of Form 1040, the following information from such Schedule:

“(A) Name of such entity.

“(B) Names of owners of such entity.

“(C) Income statement of each entity.

“(4) All information available on the following forms or schedules:

“(A) Schedule L.

“(B) Schedule M.

“(C) Form 1125–E.

“(D) Any schedules or supplemental schedules of Form 1040 (or any other personal income tax return form) which includes information related to any income, deduction, gain, loss, or credit which is derived in the conduct of any trade or business (other than the trade or business of being an employee).

“(5) NAICS codes with respect to all forms and schedules.”

(e)
Effective date—
(1)
In general— Except as otherwise provided in this subsection, the amendments made by this section shall take effect as if included in section 2201 of the Taxpayer First Act (Public Law 116–25).
(2)
Clarification regarding certain business tax return information available for disclosure— The amendment made by subsection (d) shall take effect on the date which is 1 year after the date of the enactment of this Act.