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S. 3156 (114th): Taxpayer Protection Act of 2016


The text of the bill below is as of Jul 12, 2016 (Placed on Calendar in the Senate). The bill was not enacted into law.


II

Calendar No. 554

114th CONGRESS

2d Session

S. 3156

[Report No. 114–298]

IN THE SENATE OF THE UNITED STATES

July 12, 2016

, from the Committee on Finance, reported the following original bill; which was read twice and placed on the calendar

A BILL

To provide enhanced protections for taxpayers from fraud and other illegal activities, and for other purposes.

1.

Short title; etc

(a)

Short title

This Act may be cited as the Taxpayer Protection Act of 2016.

(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.

(c)

Definitions

In this Act:

(1)

Applicable Congressional committees

The term applicable Congressional committees means the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

(2)

Comptroller General

The term Comptroller General means the Comptroller General of the United States.

(3)

Secretary

The term Secretary means the Secretary of the Treasury or the Secretary's delegate.

(d)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; etc.

TITLE I—Protection of Taxpayer Rights

Subtitle A—Reform of Assessment and Collection Procedures

Sec. 101. Report on IRS authority to compromise tax matters.

Sec. 102. Report on opportunity for hearing by the IRS Office of Appeals.

Sec. 103. Extending time limit for contesting IRS levy.

Sec. 104. Individuals held harmless on improper levy on retirement plans.

Sec. 105. Report on IRS audit criteria.

Subtitle B—Assistance to Individual Taxpayers in Filing Returns

Sec. 111. Return preparation programs for low-income taxpayers.

Sec. 112. Limiting redisclosures and uses of consent-based disclosures of tax return information.

Sec. 113. Clarification of equitable relief from joint liability.

Sec. 114. Modification of user fee requirements for installment agreements.

Sec. 115. Reports on Future State and similar online initiatives.

Sec. 116. Notice from IRS regarding closure of Taxpayer Assistance Centers.

Sec. 117. Recovery of certain improperly withheld severance payments.

Subtitle C—Whistleblower Protections

Sec. 121. Reports concerning whistleblower awards.

Sec. 122. Whistleblower reforms.

Subtitle D—Reform of Laws Governing Internal Revenue Service Employees

Sec. 131. Electronic record retention.

Sec. 132. Sense of the Senate on revision of the Hatch Act.

Sec. 133. Prohibition on rehiring former IRS employees who were involuntarily separated for misconduct.

Sec. 134. Authority to remove or transfer senior IRS executives who fail in their performance or engage in serious misconduct.

Sec. 135. Limit participation of third-party contractors for sworn testimony taken pursuant to a summons from the IRS.

Sec. 136. Notification of unauthorized inspection or disclosure of returns and return information.

Subtitle E—Exempt Organizations

Sec. 141. Mandatory e-filing by exempt organizations.

Sec. 142. Repeal of substantiation exception for certain charitable contributions reported by the donee organization.

Sec. 143. Prohibit the use of IRS funds for political targeting.

Sec. 144. Notification to exempt organizations prior to revoking exempt status for failing to file information returns.

TITLE II—Protection of Taxpayers from Identity Theft and Tax Fraud

Sec. 201. Single point of contact for identity theft victims.

Sec. 202. Protecting taxpayers from telephone scams.

Sec. 203. Information on identity theft and tax scams.

Sec. 204. Report on Federal employee wage and tax withholding reporting to State tax agencies.

Sec. 205. Notification of suspected identity theft.

I

Protection of Taxpayer Rights

A

Reform of Assessment and Collection Procedures

101.

Report on IRS authority to compromise tax matters

Not later than 12 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the applicable Congressional committees which evaluates—

(1)

how the Internal Revenue Service exercises its authority to compromise tax matters under section 7122 of the Internal Revenue Code of 1986, including any recommendations for such legislative and administrative actions as the Comptroller General determines appropriate, and

(2)

the role of the Office of the Chief Counsel for the Internal Revenue Service in consideration of offers under such section, including any recommendations regarding whether to amend or eliminate the requirement under subsection (b) of such section of a written opinion for cases in which the unpaid amount of tax assessed exceeds $50,000.

102.

Report on opportunity for hearing by the IRS Office of Appeals

Not later than 12 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the applicable Congressional committees which evaluates—

(1)

the reasoning put forth by the Internal Revenue Service for denying taxpayers an opportunity for administrative review through the Internal Revenue Service Office of Appeals,

(2)

the process used by the Internal Revenue Service for designating a case for litigation, including the methodology by which the Internal Revenue Service determines—

(A)

whether designating a case for litigation is in the interest of sound tax administration, and

(B)

whether there is a critical need for enforcement activity with respect to legal issues raised in a case,

(3)

the result of cases designated for litigation over the preceding 10 years, including cases in which a settlement was subsequently reached,

(4)

taxpayer access to the Internal Revenue Service Office of Appeals, including—

(A)

a comparison between States in which an Appeals Officer or a Settlement Officer has a permanent presence and States in which no such officer has a permanent presence, and

(B)

the effect on taxpayers in States in which an Appeals Officer or a Settlement Officer does not have a permanent presence, and

(5)

any relevant factors relating to resolution of cases by the Internal Revenue Service Office of Appeals, including the average amount of time for a taxpayer to initially meet with an Appeals Officer or a Settlement Officer, the average amount of time required to resolve a case, geographic and technological constraints, and taxpayer satisfaction with the appeals process of the Internal Revenue Service.

103.

Extending time limit for contesting IRS levy

(a)

Extension of Time for Return of Property Subject to Levy

Subsection (b) of section 6343 is amended by striking 9 months and inserting 2 years.

(b)

Period of Limitation on Suits

Subsection (c) of section 6532 is amended—

(1)

by striking 9 months in paragraph (1) and inserting 2 years, and

(2)

by striking 9-month in paragraph (2) and inserting 2-year.

(c)

Effective Date

The amendments made by this section shall apply to—

(1)

levies made after the date of the enactment of this Act, and

(2)

levies made on or before such date if the 9-month period has not expired under section 6343(b) or 6532(c), as applicable, of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) as of such date.

104.

Individuals held harmless on improper levy on retirement plans

(a)

In General

Section 6343 is amended by adding at the end the following new subsection:

(f)

Individuals Held Harmless on Wrongful Levy, etc. on Retirement Plan

(1)

In general

If the Secretary determines that an individual's account or benefit under an eligible retirement plan (as defined in section 402(c)(8)(B)) has been levied upon in a case to which subsection (b) or (d)(2)(A) applies and property or an amount of money is returned to the individual—

(A)

the individual may contribute such property or an amount equal to the sum of—

(i)

the amount of money so returned by the Secretary, and

(ii)

interest paid under subsection (c) on such amount of money,

into such eligible retirement plan if such contribution is permitted by the plan, or into an individual retirement plan (other than an endowment contract) to which a rollover contribution of a distribution from such eligible retirement plan is permitted, but only if such contribution is made not later than the due date (not including extensions) for filing the return of tax for the taxable year in which such property or amount of money is returned, and
(B)

the Secretary shall, at the time such property or amount of money is returned, notify such individual that a contribution described in subparagraph (A) may be made.

(2)

Treatment as rollover

The distribution on account of the levy and any contribution under paragraph (1) with respect to the return of such distribution shall be treated for purposes of this title as if such distribution and contribution were described in section 402(c), 402A(c)(3), 403(a)(4), 403(b)(8), 408(d)(3), 408A(d)(3), or 457(e)(16), whichever is applicable; except that—

(A)

the contribution shall be treated as having been made for the taxable year in which the distribution on account of the levy occurred, and the interest paid under subsection (c) shall be treated as earnings within the plan after the contribution and shall not be included in gross income, and

(B)

such contribution shall not be taken into account under section 408(d)(3)(B).

(3)

Refund, etc., of income tax on levy

(A)

In general

If any amount is includible in gross income for a taxable year by reason of a distribution on account of a levy referred to in paragraph (1) and any portion of such amount is treated as a rollover contribution under paragraph (2), any tax imposed by chapter 1 on such portion shall not be assessed, and if assessed shall be abated, and if collected shall be credited or refunded as an overpayment made on the due date for filing the return of tax for such taxable year.

(B)

Exception

Subparagraph (A) shall not apply to a rollover contribution under this subsection which is made from an eligible retirement plan which is not a Roth IRA or a designated Roth account (within the meaning of section 402A) to a Roth IRA or a designated Roth account under an eligible retirement plan.

(4)

Interest

Notwithstanding subsection (d), interest shall be allowed under subsection (c) in a case in which the Secretary makes a determination described in subsection (d)(2)(A) with respect to a levy upon an individual retirement plan.

(5)

Treatment of inherited accounts

For purposes of paragraph (1)(A), section 408(d)(3)(C) shall be disregarded in determining whether an individual retirement plan is a plan to which a rollover contribution of a distribution from the plan levied upon is permitted.

.

(b)

Effective Date

The amendment made by this section shall apply to amounts paid under subsections (b), (c), and (d)(2)(A) of section 6343 of the Internal Revenue Code of 1986 after December 31, 2016.

105.

Report on IRS audit criteria

Not later than 2 years after the date of the enactment of this Act, the Treasury Inspector General for Tax Administration shall submit a report to the applicable Congressional committees which contains the results of an audit of the criteria employed by the Internal Revenue Service for selecting tax returns for audit, assessment, criminal investigation, or any heightened scrutiny or review, including whether such criteria has been used to target taxpayers on the basis of political ideology, race, religion, or any other impermissible factor.

B

Assistance to Individual Taxpayers in Filing Returns

111.

Return preparation programs for low-income taxpayers

(a)

In general

Chapter 77 is amended by inserting after section 7526 the following new section:

7526A.

Return preparation programs for low-income taxpayers

(a)

Volunteer Income Tax Assistance Matching Grant Program

(1)

Establishment of Program

The Secretary, through the Internal Revenue Service, shall establish a Community Volunteer Income Tax Assistance Matching Grant Program (hereinafter in this section referred to as the VITA grant program). Except as otherwise provided in this section, the VITA grant program shall be administered in a manner which is substantially similar to the Community Volunteer Income Tax Assistance matching grants demonstration program established under title I of division D of the Consolidated Appropriations Act, 2008.

(2)

Matching grants

(A)

In general

The Secretary may, subject to the availability of appropriated funds, make available grants under the VITA grant program to provide matching funds for the development, expansion, or continuation of qualified return preparation programs assisting low-income taxpayers and members of underserved populations.

(B)

Application

In order to be eligible for a grant under this section, a qualified return preparation program shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may reasonably require.

(C)

Priority

In awarding grants under this section, the Secretary shall give priority to applications—

(i)

demonstrating assistance to low-income taxpayers, with emphasis on outreach to and services for such taxpayers,

(ii)

demonstrating taxpayer outreach and educational activities relating to eligibility and availability of income supports available through the Internal Revenue Code of 1986, such as the earned income tax credit, and

(iii)

demonstrating specific outreach and focus on one or more underserved populations.

(D)

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.

(3)

Aggregate limitation

Unless otherwise provided by specific appropriation, the Secretary shall not allocate more than $30,000,000 per fiscal year (exclusive of costs of administering the program) to carry out the purposes of this section.

(b)

Use of funds

(1)

In general

Qualified return preparation programs receiving a grant under this section may use the grant for—

(A)

ordinary and necessary costs associated with program operation in accordance with Cost Principles Circulars as set forth by the Office of Management and Budget, including—

(i)

for wages or salaries of persons coordinating the activities of the program,

(ii)

to develop training materials, conduct training, and perform quality reviews of the returns for which assistance has been provided under the program, and

(iii)

for equipment purchases and vehicle-related expenses associated with remote or rural tax preparation services,

(B)

outreach and educational activities described in subsection (a)(2)(C)(ii), and

(C)

services related to financial education and capability, asset development, and the establishment of savings accounts in connection with tax return preparation.

(2)

Use of grants for overhead expenses prohibited

No grant made under this section may be used for overhead expenses that are not directly related to any qualified return preparation program.

(c)

Promotion and referral

(1)

Promotion

The Secretary shall promote the benefits of, and encourage the use of, tax preparation through qualified return preparation programs through the use of mass communications, referrals, and other means.

(2)

Internal revenue service referrals

The Secretary may refer taxpayers to qualified return preparation programs receiving funding under this section.

(3)

VITA grantee referral

Qualified return preparation programs receiving a grant under this section are encouraged to refer, as appropriate, to local or regional Low Income Taxpayer Clinics individuals who are eligible to receive services at such clinics.

(d)

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 low-income taxpayers, in preparing and filing Federal income tax returns,

(B)

which is administered by a qualified entity,

(C)

in which all of the 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 (as described in subparagraph (B)),

(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 under the VITA grant program.

(B)

Eligible organization

(i)

In general

Subject to clause (ii), 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. 1088), 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) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code,

(III)

a local government agency, including—

(aa)

a county or municipal government agency, and

(bb)

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, or

(IV)

a local, State, regional, or national coalition (with one lead organization which meets the eligibility requirements of subclause (I), (II), or (III) acting as the applicant organization).

(ii)

Alternative eligible organization

If no eligible organization described in clause (i) is available to assist the targeted population or community, the term eligible organization shall include—

(I)

a State government agency, and

(II)

a Cooperative Extension Service office.

(3)

Low-income taxpayers

The term low-income taxpayer means a taxpayer who has income for the taxable year which does not exceed an amount equal to the completed phaseout amount under section 32(b) for a married couple filing a joint return with 3 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.

.

(b)

Clerical amendment

The table of sections for chapter 77 is amended by inserting after the item relating to section 7526 the following new item:

7526A. Return preparation programs for low-income taxpayers.

.

112.

Limiting redisclosures and uses of consent-based disclosures of tax return information

(a)

In general

Subsection (c) of section 6103 is amended by inserting at the end the following: Persons who receive return information under this subsection shall not use the information for any purpose other than the express purpose for which consent was granted and shall not disclose return information to any other person without the express permission of, or request by, the taxpayer..

(b)

Effective date

The amendment made by this section shall apply to disclosures made after the date of the enactment of this Act.

113.

Clarification of equitable relief from joint liability

(a)

In general

Section 6015 is amended—

(1)

in subsection (e), by adding at the end the following new paragraph:

(7)

Standard and scope of review

Any review of a determination made under this section shall be reviewed de novo by the Tax Court and shall be based upon—

(A)

the administrative record established at the time of the determination, and

(B)

any additional newly discovered or previously unavailable evidence.

, and

(2)

by amending subsection (f) to read as follows:

(f)

Equitable relief

(1)

In general

Under procedures prescribed by the Secretary, if—

(A)

taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either), and

(B)

relief is not available to such individual under subsection (b) or (c),

the Secretary may relieve such individual of such liability.
(2)

Limitation

A request for equitable relief under this subsection may be made with respect to any portion of any liability that—

(A)

has not been paid, provided that such request is made before the expiration of the applicable period of limitation under section 6502, or

(B)

has been paid, provided that such request is made during the period in which the individual could submit a timely claim for refund or credit of such payment.

.

(b)

Effective date

The amendments made by this section shall apply to petitions or requests filed or pending on or after the date of the enactment of this Act.

114.

Modification of user fee requirements for installment agreements

(a)

In general

Section 6159 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

(f)

Installment agreement fees

(1)

Limitation on fee amount

The amount of any fee imposed on an installment agreement under this section may not exceed the amount of such fee as in effect on the date of the enactment of this subsection.

(2)

Waiver or reimbursement

In the case of any taxpayer with an adjusted gross income, as determined for the most recent year for which such information is available, that does not exceed 250 percent of the applicable poverty level (as determined by the Secretary)—

(A)

if the taxpayer has agreed to make payments under the installment agreement by electronic payment through a debit instrument, no fee shall be imposed on an installment agreement under this section, and

(B)

if the taxpayer is unable to make payments under the installment agreement by electronic payment through a debit instrument, the Secretary shall, upon completion of the installment agreement, pay the taxpayer an amount equal to any such fees imposed.

.

(b)

Effective date

The amendments made by this section shall apply to agreements entered into on or after the date which is 60 days after the date of the enactment of this Act.

115.

Reports on Future State and similar online initiatives

(a)

Internal Revenue Service

Not later than 12 months after the date of the enactment of this Act, and annually thereafter, the Secretary shall submit a report to the applicable Congressional committees which provides information on the status of the efforts by the Internal Revenue Service to expand online taxpayer services, including a detailed assessment of any service which is proposed to be shifted to a self-service option.

(b)

Comptroller General

Not later than 12 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the applicable Congressional committees which—

(1)

evaluates the level of phone and in-person services provided by the Internal Revenue Service to taxpayers residing in any rural city, town, or unincorporated area which has a population of not more than 50,000 inhabitants, and

(2)

provides recommendations on measures the Internal Revenue Service could include in the development of its expanded online taxpayer services to protect the interests of taxpayers described in paragraph (1).

116.

Notice from IRS regarding closure of Taxpayer Assistance Centers

(a)

In general

Not later than 90 days before the date that a proposed closure of a Taxpayer Assistance Center would take effect, the Secretary shall submit a report to the applicable Congressional committees which provides the reasons for the proposed closure and a description of the taxpayer assistance services which will be provided by the Internal Revenue Service after the proposed closure takes effect to taxpayers in any rural city, town, or unincorporated area which has a population of not more than 50,000 inhabitants and would be affected by the proposed closure.

(b)

Treatment under Congressional Review Act

For purposes of applying chapter 8 of title 5, United States Code, any closure of a Taxpayer Assistance Center described in subsection (a) shall be treated as a major rule.

117.

Recovery of certain improperly withheld severance payments

(a)

Restoration of amounts improperly withheld for tax purposes from severance payments to veterans with combat-related injuries

(1)

In general

Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall—

(A)

identify—

(i)

the severance payments computed under section 1212 of title 10, United States Code, and paid by the Secretary of Defense after January 17, 1991—

(I)

which were excluded from gross income pursuant to section 104(a)(4) of the Internal Revenue Code of 1986, and

(II)

from which the Secretary of Defense withheld amounts for Federal income tax purposes, and

(ii)

the individuals to whom such severance payments were made, and

(B)

with respect to each person identified under subparagraph (A)(ii), provide—

(i)

notice of—

(I)

the amount of severance payments described in subparagraph (A)(i), and

(II)

such other information determined to be necessary by the Secretary to carry out the purposes of this section, and

(ii)

instructions for filing amended tax returns to recover improperly withheld amounts.

(2)

Extension of limitation on time for credit or refund

(A)

Period for filing claim

If a claim for credit or refund under section 6511(a) of the Internal Revenue Code of 1986 relates to a specified overpayment, the 3-year period of limitation prescribed by such subsection shall not expire before the date which is 1 year after the date the notice described in paragraph (1)(B) is provided. The allowable amount of credit or refund of a specified overpayment shall be determined without regard to section 6511(b)(2).

(B)

Specified overpayment

For purposes of subparagraph (A), the term specified overpayment means an overpayment, but only to the extent attributable to amounts withheld as described in paragraph (1)(A)(i).

(b)

Requirement that Secretary of Defense ensure amounts are not withheld for tax purposes from severance payments not considered gross income

The Secretary of Defense shall take such actions as may be necessary to ensure that amounts are not withheld for tax purposes from severance payments made by the Secretary of Defense to individuals when such payments are not considered gross income pursuant to section 104(a)(4) of the Internal Revenue Code of 1986.

(c)

Report to Congress

(1)

In general

After completing the identification required by subsection (a)(1) and not later than 15 months after the date of the enactment of this Act, the Secretary of Defense shall submit to the appropriate committees of Congress a report on the actions taken by the Secretary of Defense to carry out this section.

(2)

Contents

The report submitted under paragraph (1) shall include the following:

(A)

The number of individuals identified under subsection (a)(1)(A)(ii).

(B)

The aggregate amounts that the Secretary of Defense withheld which are described in subsection (a)(1)(A)(i)(II).

(C)

A description of the actions the Secretary of Defense plans to take to carry out subsection (b).

(3)

Appropriate committees of Congress defined

In this section, the term appropriate committees of Congress means—

(A)

the Committee on Armed Services, the Committee on Veterans' Affairs, and the Committee on Finance of the Senate, and

(B)

the Committee on Armed Services, the Committee on Veterans' Affairs, and the Committee on Ways and Means of the House of Representatives.

C

Whistleblower Protections

121.

Reports concerning whistleblower awards

(a)

Comptroller General

Not later than 12 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the applicable Congressional committees regarding whether, and to what extent, the Secretary has paid any whistleblower awards for information relating to—

(1)

violations under the Internal Revenue Code of 1986, or

(2)

violations of requirements mandated by subchapter II of chapter 53 of title 31, United States Code (commonly known as the Bank Secrecy Act) relating to the Report of Foreign Bank and Financial Accounts.

(b)

TIGTA

Not later than 12 months after the date of the enactment of this Act, the Treasury Inspector General for Tax Administration shall submit a report to the applicable Congressional committees which evaluates whether, and to what extent, the Secretary has asserted penalties for violations of requirements described in subsection (a)(2) in lieu of applicable penalties under the Internal Revenue Code of 1986.

122.

Whistleblower reforms

(a)

Modifications to disclosure rules for whistleblowers

(1)

In general

Section 6103(k) is amended by adding at the end the following new paragraph:

(13)

Disclosure to whistleblowers

(A)

In general

The Secretary may disclose, to any individual providing information relating to any purpose described in paragraph (1) or (2) of section 7623(a), return information related to the investigation of any taxpayer with respect to whom the individual has provided such information, but only to the extent that such disclosure is necessary in obtaining information, which is not otherwise reasonably available, with respect to the correct determination of tax liability for tax, or the amount to be collected with respect to the enforcement of any other provision of this title.

(B)

Updates on whistleblower investigations

The Secretary shall disclose to an individual providing information relating to any purpose described in paragraph (1) or (2) of section 7623(a) the following:

(i)

Not later than 30 days after a case for which the individual has provided information has been referred for an audit or examination, a notice with respect to such referral.

(ii)

Not later than 30 days after a taxpayer with respect to whom the individual has provided information has made a payment of tax with respect to tax liability to which such information relates, a notice with respect to such payment.

(iii)

Subject to such requirements and conditions as are prescribed by the Secretary, upon a written request by such individual—

(I)

information on the status and stage of any investigation or action related to such information, and

(II)

in the case of a determination of the amount of any award under section 7623(b), the reasons for such determination.

Clause (iii) shall not apply to any information if the Secretary determines that disclosure of such information would seriously impair Federal tax administration. Information described in clauses (i), (ii), and (iii) may be disclosed to a designee of the individual providing such information in accordance with guidance provided by the Secretary.

.

(2)

Conforming amendments

(A)

Confidentiality of information

Section 6103(a)(3) is amended by striking subsection (k)(10) and inserting paragraph (10) or (13) of subsection (k).

(B)

Penalty for unauthorized disclosure

Section 7213(a)(2) is amended by striking (k)(10) and inserting (k)(10) or (13).

(C)

Coordination with authority to disclose for investigative purposes

Section 6103(k)(6) is amended by adding at the end the following new sentence: This paragraph shall not apply to any disclosure to an individual providing information relating to any purpose described in paragraph (1) or (2) of section 7623(a) which is made under paragraph (13)(A)..

(b)

Protection against retaliation

Section 7623 is amended by adding at the end the following new subsection:

(c)

Civil action to protect against retaliation cases

(1)

Anti-retaliation whistleblower protection for employees

No employer or any officer, employee, contractor, subcontractor, or agent of such employer may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment (including through an act in the ordinary course of such employee's duties) in reprisal for any lawful act done by the employee—

(A)

to provide information, cause information to be provided, or otherwise assist in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of the internal revenue laws or any provision of Federal law relating to tax fraud, when the information or assistance is provided to the Internal Revenue Service, the Secretary of Treasury, the Treasury Inspector General for Tax Administration, the Comptroller General of the United States, the Department of Justice, the United States Congress, a person with supervisory authority over the employee, or any other person working for the employer who has the authority to investigate, discover, or terminate misconduct, or

(B)

to testify, participate in, or otherwise assist in any administrative or judicial action taken by the Internal Revenue Service relating to an alleged underpayment of tax or any violation of the internal revenue laws or any provision of Federal law relating to tax fraud.

(2)

Enforcement action

(A)

In general

A person who alleges discharge or other reprisal by any person in violation of paragraph (1) may seek relief under paragraph (3) by—

(i)

filing a complaint with the Secretary of Labor, or

(ii)

if the Secretary of Labor has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.

(B)

Procedure

(i)

In general

An action under subparagraph (A)(ii) shall be governed under the rules and procedures set forth in section 42121(b) of title 49, United States Code.

(ii)

Exception

Notification made under section 42121(b)(1) of title 49, United States Code, shall be made to the person named in the complaint and to the employer.

(iii)

Burdens of proof

An action brought under subparagraph (A)(ii) shall be governed by the legal burdens of proof set forth in section 42121(b) of title 49, United States Code, except that in applying such section—

(I)

behavior described in paragraph (1) shall be substituted for behavior described in paragraphs (1) through (4) of subsection (a) each place it appears in paragraph (2)(B) thereof, and

(II)

a violation of paragraph (1) shall be substituted for a violation of subsection (a) each place it appears.

(iv)

Statute of limitations

A complaint under subparagraph (A)(i) shall be filed not later than 180 days after the date on which the violation occurs.

(v)

Jury trial

A party to an action brought under subparagraph (A)(ii) shall be entitled to trial by jury.

(3)

Remedies

(A)

In general

An employee prevailing in any action under paragraph (2)(A) shall be entitled to all relief necessary to make the employee whole.

(B)

Compensatory damages

Relief for any action under subparagraph (A) shall include—

(i)

reinstatement with the same seniority status that the employee would have had, but for the reprisal,

(ii)

the sum of 200 percent of the amount of back pay and 100 percent of all lost benefits, with interest, and

(iii)

compensation for any special damages sustained as a result of the reprisal, including litigation costs, expert witness fees, and reasonable attorney fees.

(4)

Rights retained by employee

Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law, or under any collective bargaining agreement.

(5)

Nonenforceability of certain provisions waiving rights and remedies or requiring arbitration of disputes

(A)

Waiver of rights and remedies

The rights and remedies provided for in this subsection may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement.

(B)

Predispute arbitration agreements

No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this subsection.

.

(c)

Effective date

(1)

In general

The amendments made by subsection (a) shall apply to disclosures made after the date of the enactment of this Act.

(2)

Civil protection

The amendment made by subsection (b) shall take effect on the date of the enactment of this Act.

D

Reform of Laws Governing Internal Revenue Service Employees

131.

Electronic record retention

(a)

Retention of records

(1)

In general

Email records of the Internal Revenue Service shall be retained in an appropriate electronic system that supports records management and litigation requirements, including the capability to identify, retrieve, and retain the records, in accordance with the requirements described in paragraph (2).

(2)

Requirements

(A)

Prior to certification

The Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service shall retain all email records generated on or after the date of the enactment of this Act and before the date on which the Treasury Inspector General for Tax Administration makes the certification under subsection (c)(1).

(B)

Principal officers and specified employees

Not later than December 31, 2016, the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service shall maintain email records of all principal officers and specified employees of the Internal Revenue Service for a period of 15 years beginning on the date such record was generated.

(b)

Transmission of records to the National Archives

Not later than the last day of the 15-year period described in subsection (a)(2)(B), the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service shall transfer the email records of principal officers and specified employees of the Internal Revenue Service to the Archivist of the United States.

(c)

Compliance

(1)

Certification

On the date that the Treasury Inspector General for Tax Administration determines that the Internal Revenue Service has a program in place that complies with the requirements of subsections (a)(2)(B) and (b), the Treasury Inspector General for Tax Administration shall certify to the applicable Congressional committees that the Internal Revenue Service is in compliance with such requirements.

(2)

Reports

(A)

Interim report

Not later than September 30, 2016, the Treasury Inspector General for Tax Administration shall submit a report to the applicable Congressional committees on the steps being taken by the Commissioner of Internal Revenue and the Chief Counsel for the Internal Revenue Service to comply with the requirements of subsections (a)(2)(B) and (b).

(B)

Final report

Not later than April 1, 2017, the Treasury Inspector General for Tax Administration shall submit a report to the applicable Congressional committees describing whether the Internal Revenue Service is in compliance with the requirements of subsections (a)(2)(B) and (b).

(d)

Definitions

For purposes of this section—

(1)

Principal officer

The term principal officer means, with respect to the Internal Revenue Service—

(A)

any employee whose position is listed under the Internal Revenue Service in the most recent version of the United States Government Manual published by the Office of the Federal Register,

(B)

any employee who is a senior staff member reporting directly to the Commissioner of Internal Revenue or the Chief Counsel for the Internal Revenue Service, and

(C)

any associate counsel, deputy counsel, or division head in the Office of the Chief Counsel for the Internal Revenue Service.

(2)

Specified employee

The term specified employee means, with respect to the Internal Revenue Service, any employee who—

(A)

holds a Senior Executive Service position (as defined in section 3132 of title 5, United States Code) in the Internal Revenue Service or the Office of Chief Counsel for the Internal Revenue Service, and

(B)

is not a principal officer of the Internal Revenue Service.

132.

Sense of the Senate on revision of the Hatch Act

It is the sense of the Senate that clause (i) of section 7323(b)(2)(B) of title 5, United States Code, should be amended to include any employee of the Department of the Treasury who is primarily responsible for matters relating to organizations which are exempt from taxation pursuant to section 501(c) or 527 of the Internal Revenue Code of 1986.

133.

Prohibition on rehiring former IRS employees who were involuntarily separated for misconduct

(a)

In general

Section 7804 is amended by adding at the end the following new subsection:

(d)

Prohibition on rehiring employees involuntarily separated

The Commissioner may not employ any individual previously employed by the Commissioner who was removed for misconduct under this subchapter or chapter 43 or chapter 75 of title 5, United States Code, or whose employment was terminated under section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note).

.

(b)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendment made by subsection (a) shall apply with respect to any employee removed from employment before, on, or after the date of the enactment of this Act.

(2)

Exception

The amendment made by subsection (a) shall not apply to any employee who is employed by the Internal Revenue Service as of the date of the enactment of this Act with respect to any removal for misconduct which occurred before such date.

134.

Authority to remove or transfer senior IRS executives who fail in their performance or engage in serious misconduct

(a)

In general

Section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998 (26 U.S.C. 7804 note) is amended by adding at the end the following new subsection:

(f)

Removal of senior executives based on performance or misconduct

(1)

Removal or transfer

(A)

In general

The Commissioner of Internal Revenue (referred to in this subsection as the Commissioner) may remove an individual employed in a senior executive position at the Internal Revenue Service from the senior executive position if the Commissioner determines the performance or misconduct of the individual warrants such removal. If the Commissioner so removes such an individual, the Commissioner may—

(i)

remove the individual from the civil service (as defined in section 2101 of title 5, United States Code); or

(ii)

in the case of an individual described in subparagraph (B), transfer the individual from the senior executive position to a General Schedule position at any grade of the General Schedule for which the individual is qualified and that the Commissioner determines is appropriate.

(B)

Individuals eligible for transfer

An individual described in this subparagraph is an individual who—

(i)

previously occupied a permanent position within the competitive service (as that term is defined in section 2102 of title 5, United States Code);

(ii)

previously occupied a permanent position within the excepted service (as that term is defined in section 2103 of title 5, United States Code); or

(iii)

prior to employment in a senior executive position at the Internal Revenue Service, did not occupy any position within the Federal Government.

(2)

Pay of transferred individuals

(A)

In general

Notwithstanding any other provision of law, including the requirements of section 3594 of title 5, United States Code, any individual transferred to a General Schedule position under paragraph (1)(A)(ii) shall, beginning on the date of such transfer, receive the annual rate of pay applicable to such position.

(B)

Paid leave during appeal

An individual so transferred may not be placed on administrative leave or any other category of paid leave during the period during which an appeal (if any) under this section is ongoing, and may only receive pay if the individual reports for duty. If an individual so transferred does not report for duty, such individual shall not receive pay or other benefits pursuant to paragraph (5)(E).

(3)

Notice to Congress

Not later than 30 days after removing or transferring an individual from a senior executive position under paragraph (1), the Commissioner shall submit written notice of such removal or transfer and the reason for such removal or transfer to—

(A)

the Committee on Finance of the Senate;

(B)

the Committee on Homeland Security and Governmental Affairs of the Senate;

(C)

the Committee on Ways and Means of the House of Representatives; and

(D)

the Committee on Oversight and Government Reform of the House of Representatives.

(4)

Procedure

(A)

In general

The procedures under section 7543(b) of title 5, United States Code, shall not apply to a removal or transfer under this section.

(B)

Appeal to Merit System Protection Board

(i)

In general

Subject to clause (ii) and paragraph (5), any removal or transfer under paragraph (1) may be appealed to the Merit Systems Protection Board under section 7701 of title 5, United States Code.

(ii)

Deadline for appeal

An appeal under clause (i) of a removal or transfer may only be made if such appeal is made not later than 7 days after the date of such removal or transfer.

(5)

Expedited review by administrative law judge

(A)

In general

Upon receipt of an appeal under paragraph (4)(B)(i), the Merit Systems Protection Board shall refer such appeal to an administrative law judge pursuant to section 7701(b)(1) of title 5, United States Code. The administrative law judge shall expedite any such appeal under such section and, in any such case, shall issue a decision not later than 21 days after the date of the appeal.

(B)

Finality of decision

Notwithstanding any other provision of law, including section 7703 of title 5, United States Code, the decision of an administrative law judge under subparagraph (A) shall be final and shall not be subject to any further appeal.

(C)

Failure to reach decision

In any case in which the administrative law judge cannot issue a decision in accordance with the 21-day requirement under subparagraph (A), the removal or transfer is final. In such a case, the Merit Systems Protection Board shall, within 14 days after the date that such removal or transfer is final, submit to Congress and the Committees described in paragraph (3) a report that explains the reasons why a decision was not issued in accordance with such requirement.

(D)

Prohibition on stay of removal or transfer

The Merit Systems Protection Board or administrative law judge may not stay any removal or transfer under this subsection.

(E)

Period of review

During the period beginning on the date on which an individual appeals a removal from the civil service under paragraph (4) and ending on the date that the administrative law judge issues a final decision on such appeal, such individual may not receive any pay, awards, bonuses, incentives, allowances, differentials, student loan repayments, special payments, or benefits.

(F)

Relevant information to be provided

To the maximum extent practicable, the Commissioner shall provide to the Merit Systems Protection Board, and to any administrative law judge to whom an appeal under this section is referred, such information and assistance as may be necessary to ensure an appeal under this paragraph is expedited.

(6)

Relation to other provisions of law

(A)

In general

The authority provided by this subsection is in addition to, and shall not be construed to limit or diminish, the authority provided by—

(i)

subsections (a) and (c); and

(ii)

section 3592 or subchapter V of chapter 75 of title 5, United States Code.

(B)

Removal from Senior Executive Service

Section 3592(b)(1) of title 5, United States Code, does not apply to an action to remove or transfer an individual under this subsection.

(7)

Definitions

For purposes of this subsection:

(A)

Individual

The term individual means a career appointee (as that term is defined in section 3132(a)(4) of title 5, United States Code).

(B)

Misconduct

(i)

In general

Subject to clause (ii), the term misconduct includes neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function.

(ii)

Exception

The term misconduct shall not include any act or omission described in subsection (b).

(C)

Senior executive position

The term senior executive position means a Senior Executive Service position (as such term is defined in section 3132(a)(2) of title 5, United States Code).

.

(b)

Establishment of expedited review process

(1)

In general

Not later than 60 days after the date of the enactment of this Act, the Merit Systems Protection Board shall establish and put into effect a process to conduct expedited reviews in accordance with subsection (f) of section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998, as added by this Act.

(2)

Inapplicability of certain regulations

Section 1201.22 of title 5, Code of Federal Regulations, as in effect on the day before the date of the enactment of this Act, shall not apply to expedited reviews carried out under such section 1203(f).

(3)

Waiver

The Merit Systems Protection Board may waive any other regulation in order to provide for the expedited review required under such section 1203(f).

(4)

Review by Merit Systems Protection Board

Not later than 30 days after the date of the enactment of this Act, the Merit Systems Protection Board shall submit to the committees described in paragraph (3) of such section 1203(f) a report on the actions the Board plans to take to conduct expedited reviews under such section. Such report shall include a description of the resources the Board determines will be necessary to conduct such reviews and a description of whether any resources will be necessary to conduct such reviews that were not available to the Board on the day before the date of the enactment of this Act.

(c)

Temporary exemption from certain limitation on initiation of removal from senior executive service

During the 120-day period beginning on the date of the enactment of this Act, an action to remove an individual from the Senior Executive Service at the Internal Revenue Service pursuant to section 7543 of title 5, United States Code, may be initiated, notwithstanding section 3592(b) of such title, or any other provision of law.

(d)

Construction

Nothing in this section or section 1203(f) of the Internal Revenue Service Restructuring and Reform Act of 1998, as added by this Act, shall be construed to apply to an appeal of a removal, transfer, or other personnel action that was pending before the date of the enactment of this Act.

135.

Limit participation of third-party contractors for sworn testimony taken pursuant to a summons from the IRS

(a)

In general

Section 7602 is amended by adding at the end the following new subsection:

(f)

Limitation on access of persons other than IRS officers and employees

The authority granted under this section may not be delegated, directly or indirectly, to any person authorized to receive returns and return information under section 6103(n).

.

(b)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendment made by this section shall take effect on the date of the enactment of this Act.

(2)

Application to contracts in effect

The amendment made by this section shall apply to any contract in effect on the date of the enactment of this Act for an activity described in section 6103(n) of the Internal Revenue Code of 1986, pursuant to temporary Treasury Regulation section 301.7602-1T published in Internal Revenue Bulletin 2014-28 or any similar or successor regulation.

136.

Notification of unauthorized inspection or disclosure of returns and return information

(a)

In general

Subsection (e) of section 7431 is amended by adding at the end the following new sentences: The Secretary shall also notify such taxpayer if the Internal Revenue Service or a Federal or State agency (upon notice to the Secretary by such Federal or State agency) proposes an administrative determination as to disciplinary or adverse action against an employee arising from the employee’s unauthorized inspection or disclosure of the taxpayer’s return or return information. The notice described in this subsection shall include the date of the unauthorized inspection or disclosure and the rights of the taxpayer under such administrative determination..

(b)

Effective date

The amendment made by this section shall apply to determinations proposed after the date which is 180 days after the date of the enactment of this Act.

E

Exempt Organizations

141.

Mandatory e-filing by exempt organizations

(a)

In general

Section 6033 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

(n)

Mandatory electronic filing

Any organization required to file a return under this section shall file such return in electronic form.

.

(b)

Conforming amendment

Paragraph (7) of section 527(j) is amended by striking if the organization has and all that follows through such calendar year.

(c)

Inspection of electronically filed annual returns

Subsection (b) of section 6104 is amended by adding at the end the following: Any annual return required to be filed electronically under section 527(j)(7) or 6033(n) shall be made available by the Secretary to the public as soon as practicable in a machine readable format that does not permit alteration or manipulation of such return..

(d)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

(2)

Transitional relief

(A)

Small organizations

(i)

In general

In the case of any small organization or any other organization for which the Secretary determines the application of the amendments made by subsections (a) and (b) would cause undue burden, the Secretary may waive application of such amendments to either or both of the organization's first 2 taxable years beginning after the date of the enactment of this Act.

(ii)

Small organization

For purposes of clause (i), the term small organization means any organization—

(I)

the gross receipts of which for the taxable year are less than $200,000, and

(II)

the aggregate gross assets of which at the end of the taxable year are less than $500,000.

(B)

Organizations filing form 990–T

In the case of any organization described in section 511(a)(2) of the Internal Revenue Code of 1986 which is subject to the tax imposed by section 511(a)(1) of such Code on its unrelated business taxable income, or any organization required to file a return under section 6033 of such Code and include information under subsection (e) thereof, the Secretary may waive application of the amendments made by subsections (a) and (b) to either or both of the organization's first 2 taxable years beginning after the date of the enactment of this Act.

142.

Repeal of substantiation exception for certain charitable contributions reported by the donee organization

(a)

In general

Section 170(f)(8) is amended—

(1)

by striking subparagraph (D), and

(2)

by redesignating subparagraph (E) as subparagraph (D).

(b)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.

143.

Prohibit the use of IRS funds for political targeting

None of the funds made available under any Act may be used by the Internal Revenue Service to target citizens of the United States for exercising any right guaranteed under the First Amendment to the Constitution of the United States.

144.

Notification to exempt organizations prior to revoking exempt status for failing to file information returns

(a)

In general

Section 6033(j) is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph:

(2)

Requirement of notice

(A)

In general

Not later than 270 days after the date an organization described in paragraph (1) fails to file the annual return or notice referenced in paragraph (1) for 2 consecutive years, the Secretary shall notify the organization—

(i)

that the Internal Revenue Service has no record of such a return or notice from such organization for 2 consecutive years, and

(ii)

about the penalty that will occur under this subsection if the organization fails to file such a return or notice by the date of the next filing deadline.

The notification under the preceding sentence shall include information about how to comply with the filing requirements under subsection (a)(1) and (i).

.

(b)

Reinstatement without application

Paragraph (3) of section 6033(j), as redesignated under subsection (a), is amended—

(1)

by striking Any organization and inserting the following:

(A)

In general

Except as provided in subparagraph (B), any organization

, and

(2)

by adding at the end the following new subparagraph:

(B)

Retroactive reinstatement without application if actual notice not provided

If an organization described in paragraph (1)—

(i)

demonstrates to the satisfaction of the Secretary that the organization did not receive the notice required under paragraph (2), and

(ii)

files an annual return or notice referenced in paragraph (1) for the current year,

then the Secretary may reinstate the organization’s exempt status effective from the date of the revocation under paragraph (1) without the need for an application.

.

(c)

Effective date

The amendments made by this section shall apply to notices and returns required to be filed after December 31, 2015.

II

Protection of Taxpayers from Identity Theft and Tax Fraud

201.

Single point of contact for identity theft victims

(a)

In general

The Secretary shall establish and implement procedures to ensure that any taxpayer whose return has been delayed or otherwise adversely affected due to identity theft has a single point of contact at the Internal Revenue Service throughout the processing of the taxpayer's case. The single point of contact shall track the taxpayer's case to completion and coordinate with other specialized units to resolve case issues as quickly as possible.

(b)

Single point of contact

(1)

In general

For purposes of subsection (a), the single point of contact may consist of a team or subset of specially trained employees who—

(A)

have the ability to work across functions to resolve the issues involved in the taxpayer's case, and

(B)

shall be accountable for handling the case until its resolution.

(2)

Team or subset

The employees included within the team or subset described in paragraph (1) may change as required to meet the needs of the Internal Revenue Service, provided that procedures have been established to—

(A)

ensure continuity of records and case history, and

(B)

notify the taxpayer when appropriate.

202.

Protecting taxpayers from telephone scams

Not later than 12 months after the date of the enactment of this Act, the Treasury Inspector General for Tax Administration, in consultation with the Chairman of the Federal Communications Commission and the Chairman of the Federal Trade Commission, shall submit a report to the applicable Congressional committees which identifies potential technological solutions to help protect taxpayers from telephone calls from individuals who are falsely claiming to be calling from or on behalf of the Internal Revenue Service, including identifying communications providers that offer services designed to assist taxpayers in identifying or preventing such calls.

203.

Information on identity theft and tax scams

The Secretary shall provide to any taxpayer who has been placed on hold during a telephone call to any Internal Revenue Service help line the following information:

(1)

Information about common tax scams.

(2)

Information on where and how to report tax scams.

(3)

Additional advice on how taxpayers can protect themselves from identity theft and tax scams.

204.

Report on Federal employee wage and tax withholding reporting to State tax agencies

Not later than 12 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the applicable Congressional committees which provides an analysis of the process and timeline by which the following entities provide Federal employee wage and tax withholding information to State tax agencies:

(1)

The National Finance Center of the Department of Agriculture.

(2)

The Defense Finance and Accounting Service of the Department of Defense.

(3)

The National Business Center of the Department of the Interior.

(4)

The National Payroll Branch of the General Services Administration.

205.

Notification of suspected identity theft

(a)

In general

Chapter 77 is amended by adding at the end the following new section:

7529.

Notification of suspected identity theft

(a)

In general

If the Secretary determines that there has been or may have been an unauthorized use of the identity of any individual, the Secretary shall, without jeopardizing an investigation relating to tax administration—

(1)

as soon as practicable, notify the individual of such determination and provide—

(A)

instructions on how to file a report with law enforcement regarding the unauthorized use of the identity of the individual,

(B)

the identification of any forms necessary for the individual to complete and submit to law enforcement to permit access to personal information of the individual during the investigation,

(C)

information regarding actions the individual may take in order to protect the individual from harm relating to such unauthorized use, and

(D)

an offer of identity protection measures to be provided to the individual by the Internal Revenue Service, such as the use of an identity protection personal identification number (as defined in section 6109(e)), and

(2)

at the time the information described in paragraph (1) is provided (or, if not available at such time, as soon as practicable thereafter), issue additional notifications to such individual (or such individual's designee) regarding—

(A)

whether an investigation has been initiated in regards to such unauthorized use,

(B)

whether the investigation substantiated an unauthorized use of the identity of the individual, and

(C)

whether—

(i)

any action has been taken against a person relating to such unauthorized use, or

(ii)

any referral has been made for criminal prosecution of such person and, to the extent such information is available, whether such person has been criminally charged by indictment or information.

(b)

Employment-related identity theft

(1)

In general

For purposes of this section, the unauthorized use of the identity of an individual includes the unauthorized use of the identity of the individual to obtain employment.

(2)

Determination of employment-related identity theft

For purposes of this section, in making a determination as to whether there has been or may have been an unauthorized use of the identity of an individual to obtain employment, the Secretary shall review any information—

(A)

obtained from a statement described in section 6051 or an information return relating to compensation for services rendered other than as an employee, or

(B)

provided to the Internal Revenue Service by the Social Security Administration regarding any statement described in section 6051,

which indicates that the social security account number provided on such statement or information return does not correspond with the name provided on such statement or information return or the name on the tax return reporting the income which is included on such statement or information return.

.

(b)

Additional measures

(1)

Examination of both paper and electronic statements and returns

The Secretary shall examine the statements, information returns, and tax returns described in section 7529(b)(2) for any evidence of employment-related identity theft, regardless of whether such statements or returns are submitted electronically or on paper.

(2)

Improvement of effective return processing program with Social Security Administration

Section 232 of the Social Security Act (42 U.S.C. 432) is amended by inserting after the third sentence the following: For purposes of carrying out the return processing program described in the preceding sentence, the Commissioner of Social Security shall request, not less than annually, such information described in section 7529(b)(2) of the Internal Revenue Code of 1986 as may be necessary to ensure the accuracy of the records maintained by the Commissioner of Social Security related to the amounts of wages paid to, and the amounts of self-employment income derived by, individuals..

(3)

Underreporting of income

The Secretary shall establish procedures to ensure that income reported in connection with the unauthorized use of a taxpayer's identity is not taken into account in determining any penalty for underreporting of income by the victim of identity theft.

(c)

Clerical amendment

The table of sections for chapter 77 is amended by adding at the end the following new item:

Sec. 7529. Notification of suspected identity theft.

.

(d)

Effective date

The amendments made by this section shall apply to determinations made after the date of the enactment of this Act.

July 12, 2016

Read twice and placed on the calendar