S. 3931

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3931 Introduced in Senate (IS)]

<DOC>

119th CONGRESS
2d Session
S. 3931

To improve services provided to taxpayers by the Internal Revenue 
Service.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

February 26, 2026

Mr. Crapo (for himself and Mr. Wyden) introduced the following bill; 
which was read twice and referred to the Committee on Finance

_______________________________________________________________________

A BILL

To improve services provided to taxpayers by the Internal Revenue 
Service.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title.--This Act may be cited as the ``Taxpayer 
Assistance and Service Act'' or the ``TAS Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment is expressed in terms of an 
amendment to 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) References to Secretary.--For purposes of this Act, 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--TAX ADMINISTRATION AND CUSTOMER SERVICE

Sec. 101. Digitization of tax returns and correspondence.
Sec. 102. Establishment of dashboard to inform taxpayers of backlogs 
and wait times.
Sec. 103. Expansion of electronic access to information about returns 
and refunds.
Sec. 104. Expansion of callback technology.
Sec. 105. Expansion of online accounts.
Sec. 106. Automation of refund offset bypass.
Sec. 107. Installment agreement fees eliminated for certain 
individuals.
Sec. 108. Individuals facing economic hardships informed of collection 
alternatives.
Sec. 109. Quarterly notices to certain taxpayers with delinquencies.
Sec. 110. Low-income taxpayer clinic funding unlocked.
Sec. 111. Chief Counsel reviews of offers-in-compromise streamlined.
Sec. 112. Modification of procedural requirements for penalties and 
disallowance periods.
Sec. 113. Return of amounts collected by IRS in excess of accepted 
offer-in-compromise amount.
Sec. 114. Extension of period for return of amounts subject to wrongful 
levy.
Sec. 115. Reports to Congress.
TITLE II--AMERICAN CITIZENS ABROAD

Sec. 201. Report on combined tax and foreign bank and financial account 
reporting.
Sec. 202. Study and reports on simplification.
Sec. 203. Simplification of currency exchanges rules.
Sec. 204. Increase in threshold for simplified foreign tax credit rules 
and reporting.
Sec. 205. Extension of time for persons outside of the United States to 
request abatement of math error.
TITLE III--JUDICIAL REVIEW

Sec. 301. Authorization of subpoenas before hearings to facilitate 
settlements.
Sec. 302. Clarification of Tax Court authority to order relief from a 
judgment or order.
Sec. 303. Authorization of special trial judges to hear additional 
cases and address contempt.
Sec. 304. Disqualification of judges and special trial judges.
Sec. 305. Notice and review with respect to multi-year bans on claiming 
credits.
Sec. 306. Authorization of de novo review of innocent spouse relief by 
the Tax Court and other courts.
Sec. 307. Clarification of certain court filing deadlines.
Sec. 308. Clarification of Tax Court jurisdiction to determine tax 
liability in collection due process 
appeals.
Sec. 309. Authorization of the Tax Court to issue refunds in collection 
due process cases.
Sec. 310. Authorization of the Tax Court to hear suits for refunds or 
credits.
Sec. 311. Authorization to use deficiency procedures for certain 
penalties.
Sec. 312. Authorization to allow claims for refund in certain cases 
where full tax not paid.
Sec. 313. Adjustment of threshold for small disputes.
TITLE IV--OFFICE OF THE TAXPAYER ADVOCATE

Sec. 401. NTA authorization to direct hire attorneys.
Sec. 402. NTA authorization to make personnel decisions.
Sec. 403. Access to Internal Revenue Service information, legal advice, 
and meetings.
Sec. 404. Repeal of limitation period suspension for taxpayers seeking 
assistance from TAS.
Sec. 405. Operations to assist taxpayers experiencing hardships during 
lapse in appropriations.
TITLE V--TAX RETURN PREPARERS

Sec. 501. Penalties for tax return preparers who improperly alter 
returns.
Sec. 502. Penalties for failure to provide valid preparer 
identification numbers.
Sec. 503. Penalties for improper tax preparation or misappropriation of 
refunds.
Sec. 504. Authority to deny, revoke, or suspend preparer tax 
identification numbers.
TITLE VI--APPEALS

Sec. 601. Authorization for Office of Appeals to hire attorneys.
Sec. 602. Authorization for Office of Appeals to direct hire certain 
individuals.
Sec. 603. Responses to claims for refund required; appeal of claims for 
refund authorized.
Sec. 604. Appeals of returned offers.
Sec. 605. Purposes and duties of Independent Office of Appeals; right 
of appeal clarified.
TITLE VII--WHISTLEBLOWERS

Sec. 701. Standard and scope of review of whistleblower award 
determinations.
Sec. 702. Exemption from sequestration.
Sec. 703. Whistleblower privacy protections.
Sec. 704. Modification of IRS whistleblower report.
Sec. 705. Interest on whistleblower awards.
Sec. 706. Correction regarding deductions for attorney's fees.
TITLE VIII--HOSTAGES

Sec. 801. Postponement of tax deadlines for hostages and individuals 
wrongfully detained abroad.
Sec. 802. Refund and abatement of penalties and fines paid by eligible 
individuals.
TITLE IX--SMALL BUSINESSES

Sec. 901. Implementation of voluntary withholding agreements for 
payments to independent contractors.
Sec. 902. Establishment of failure-to-pay penalty safe harbor for 
individuals.
Sec. 903. Extension of mailbox rule to electronic submissions and 
payments.
Sec. 904. Specificity of third-party contact notices.
TITLE X--MISCELLANEOUS

Sec. 1001. Authority for redisclosure of certain tax information 
related to education loans to the 
Congressional Budget Office.
Sec. 1002. Authorization to require large partnerships to file on 
magnetic media.
Sec. 1003. Limitation period not extended for victims of preparer 
fraud.
Sec. 1004. Technical amendment related to the Disaster Related 
Extension of Deadlines Act.

TITLE I--TAX ADMINISTRATION AND CUSTOMER SERVICE

SEC. 101. DIGITIZATION OF TAX RETURNS AND CORRESPONDENCE.

(a) Returns Accepted Electronically.--Any Federal tax return which 
any person is required to file with the Secretary, as well as any 
amendments to such return--
(1) may be filed by such person electronically, and
(2) if such return or amendment is filed electronically, 
shall be processed electronically by the Secretary.
(b) Digitization of Returns and Correspondence.--The Internal 
Revenue Service shall use optical character recognition technology (or 
any functionally similar technology) to transcribe--
(1) any return which is received by the Internal Revenue 
Service only in a paper form, or
(2) any correspondence which is received by the Internal 
Revenue Service only in a paper form.
(c) Exceptions.--
(1) In general.--Subsection (b) shall not apply to any 
technology to the extent that the Secretary determines such 
technology is slower or less reliable than--
(A) the process of manually transcribing returns or 
correspondence received in a paper form, or
(B) any other process that the Internal Revenue 
Service is using or would otherwise use.
(2) Report to congress.--Any exception to the application 
of a technology described in subsection (b) pursuant to 
paragraph (1) shall not take effect unless the Secretary 
provides a report to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the 
Senate regarding the determination made by the Secretary under 
such paragraph within 30 days of such determination.
(d) Effective Date.--This section shall apply to--
(1) any individual income tax return (as defined in section 
6011(e)(3)(C) of the Internal Revenue Code of 1986) received on 
or after January 1 of the first calendar year beginning more 
than 180 days after the date of enactment of this Act,
(2) any estate tax return (as described in section 6018 of 
such Code) or gift tax return (as described in section 6019 of 
such Code) received on or after January 1 of the first calendar 
year beginning more than 24 months after the date of enactment 
of this Act, and
(3) any other return or correspondence received on or after 
January 1 of the first calendar year beginning more than 18 
months after the date of enactment of this Act.

SEC. 102. ESTABLISHMENT OF DASHBOARD TO INFORM TAXPAYERS OF BACKLOGS 
AND WAIT TIMES.

(a) In General.--The Secretary shall require the Internal Revenue 
Service to provide in real time on its public website, to the extent 
practicable, the following:
(1) Separately with respect to each applicable phone number 
extension--
(A) the number of callers connected to speak 
directly with a representative of the Internal Revenue 
Service,
(B) the number of callers connected to speak with 
an automated system,
(C) the number of callers who are waiting to be 
connected to speak directly with a representative of 
the Internal Revenue Service or an automated system,
(D) the longest amount of time that any caller has 
been waiting to be connected to speak directly with a 
representative of the Internal Revenue Service, and
(E) whether callback service is currently 
available, and if not, when such service is scheduled 
to be available.
(2) An application or tool embedded on the website which--
(A) displays all of the information described in 
paragraph (1), and
(B) estimates the approximate wait time to speak 
directly with a representative of the Internal Revenue 
Service.
(3) An application programming interface which allows any 
person to access the information described in subsection (a)(1) 
using automation and to create an application or tool embedded 
on a website to display such information.
(4) For each applicable phone number extension, a summary 
of the information described in paragraph (1) with respect to 
the prior month, including--
(A) the average and median length of calls,
(B) the average and median amount of time that 
callers were speaking directly with a representative of 
the Internal Revenue Service,
(C) the number and percent of calls that were 
directed to an automated system,
(D) the number and percent of calls that were 
disconnected or terminated by the Internal Revenue 
Service,
(E) the number of callers who were transferred to 
another applicable phone number extension after the 
call was initially answered by a representative of the 
Internal Revenue Service,
(F) the average and median amount of time that 
callers described in subparagraph (E) were on hold 
following the transfer, and
(G) the number and percent of callers who indicated 
that they received the answers or service for which 
they were contacting the Internal Revenue Service.
(b) Detection of Automated Calls.--The Secretary shall require the 
Internal Revenue Service to use technology to detect and screen out 
automated calls.
(c) Information Regarding Delays.--For any week in which there was 
a significant delay with respect to any applicable item (referred to in 
this subsection as an ``applicable week''), the Secretary shall require 
the Internal Revenue Service to provide on its public website, during 
the week subsequent to the applicable week, information with respect to 
each such applicable item regarding the earliest date on which any such 
applicable items that were processed during the applicable week were 
received by the Internal Revenue Service.
(d) Definitions.--For purposes of this section--
(1) Applicable item.--The term ``applicable item'' means 
each category of tax return, claim, statement, or other 
document filed with the Internal Revenue Service.
(2) Applicable phone number extension.--The term 
``applicable phone number extension'' means any extension or 
application which may be reached by calling a phone number 
which is listed by the Internal Revenue Service on any website, 
publication, form, or instruction which is available to the 
public and--
(A) operated by the Internal Revenue Service 
accounts management function,
(B) operated by the Internal Revenue Service 
automated collection function,
(C) managed by the Internal Revenue Service Joint 
Operations Center,
(D) managed and staffed by a contractor on behalf 
of the Internal Revenue Service, or
(E) received not less than 200,000 calls during the 
preceding calendar year.
(3) Significant delay.--The term ``significant delay'' 
means, in the case of any applicable item for any week, the 
failure to process all of such applicable items which were 
received by the Internal Revenue Service at least 21 days 
before the first day of the week.
(e) Effective Date.--The requirements of this section shall apply 
to periods beginning after the date which is 12 months after the date 
of enactment of this Act.

SEC. 103. EXPANSION OF ELECTRONIC ACCESS TO INFORMATION ABOUT RETURNS 
AND REFUNDS.

Not later than January 1 of the first calendar year beginning more 
than 12 months after the date of enactment of this Act, through a 
website and mobile application, the Secretary shall provide 
individualized, specific, and up-to-date information to taxpayers 
regarding their tax returns and amended returns, including information 
with respect to whether the Internal Revenue Service has--
(1) received such return and entered such return into their 
systems,
(2) completed processing such return, including--
(A) the date on which the Internal Revenue Service 
issued any refund of any overpayment of tax,
(B) the estimated date on which the taxpayer can 
expect to receive such refund, and
(C)(i) if the refund will be issued by electronic 
fund transfer, the financial account to which such 
refund will be deposited, including--
(I) the partial or full account number for 
such account, and
(II) the name and routing number of the 
financial institution, or
(ii) if the refund will be issued by paper check, 
the address to which the check will be mailed, or
(3) suspended processing such return, including--
(A) the reason for the suspension, and
(B) in the case of any information which was 
requested by the Internal Revenue Service--
(i) the information requested,
(ii) the form and manner for submission of 
such information, and
(iii) the date on which such information is 
due to be submitted to the Internal Revenue 
Service.

SEC. 104. EXPANSION OF CALLBACK TECHNOLOGY.

It is the sense of Congress that--
(1) taxpayers contacting the Internal Revenue Service 
should have the option to receive a callback, and
(2) not later than calendar year 2028, the Internal Revenue 
Service should provide any taxpayer (including any taxpayer 
residing outside of the United States) the option to receive a 
callback for any call made by the taxpayer to an applicable 
phone number extension (as defined in section 102(d)(2) of this 
Act) which has not been answered within 5 minutes.

SEC. 105. EXPANSION OF ONLINE ACCOUNTS.

(a) In General.--Not later than January 1 of the first calendar 
year beginning more than 18 months after the date of enactment of this 
Act, the Secretary shall make available a website or mobile application 
which allows any taxpayer (including any taxpayer residing outside of 
the United States) the ability to--
(1) in a manner consistent with any applicable limitations 
under section 6103 of the Internal Revenue Code of 1986, view 
any return (as defined in section 6103(b)(1) of the Internal 
Revenue Code of 1986), document, notice, or letter (with the 
exception of any educational item which has no legal effect) 
which, during the applicable period (as defined in subsection 
(d)), has been--
(A) sent by the Internal Revenue Service to such 
taxpayer, or
(B) filed with (or, in the case of any document not 
required to be filed, sent to) the Internal Revenue 
Service--
(i) by such taxpayer,
(ii) by a person described in subsection 
(c) of section 6103 of the Internal Revenue 
Code of 1986 with respect to such taxpayer, or
(iii) with respect to such taxpayer in a 
manner described in subsection (e) of such 
section,
(2) with respect to any document, notice, or letter sent to 
such taxpayer by the Internal Revenue Service, respond to such 
document, notice, or letter by uploading or otherwise 
transmitting the taxpayer's response through the website or 
mobile application, and
(3) in the case of--
(A) any representative of such taxpayer who is 
authorized to practice before the Department of the 
Treasury pursuant to section 330 of title 31, United 
States Code,
(B) any tax return preparer (as defined in section 
7701(a)(36) of the Internal Revenue Code of 1986) with 
an identifying number (as described in section 
6109(a)(4) of such Code), or
(C) any qualified reporting agent,
permit such representative, preparer, or agent, to the extent 
authorized by the taxpayer, to access the information described 
in paragraph (1) or transmit any information described in 
paragraph (2).
(b) Availability for Viewing.--With respect to any return, 
document, notice, or letter described in paragraph (1) of subsection 
(a), such return, document, notice, or letter shall be made available 
for viewing by the taxpayer (or, pursuant to paragraph (3) of such 
subsection, any representative, tax return preparer, or qualified 
reporting agent authorized by the taxpayer) as soon as is practicable 
and within such periods as are established pursuant to regulations 
prescribed by the Secretary.
(c) Access to Multiple Accounts by Representative, Preparer, or 
Agent.--For purposes of subsection (a)(3), the website or mobile 
application shall allow a representative, tax return preparer, or 
qualified reporting agent to be able to access information for multiple 
taxpayers who have provided permission under such subsection without 
any requirement to individually and separately access the account of 
each such taxpayer.
(d) Applicable Period.--
(1) In general.--Subject to paragraph (2), for purposes of 
subsection (a)(1), the term ``applicable period'' means the 
preceding 6-year period.
(2) Prospective application.--The term ``applicable 
period'' shall not include any years ending before the date of 
enactment of this Act.
(e) Qualified Reporting Agent.--
(1) In general.--For purposes of this section, the term 
``qualified reporting agent'' means a person--
(A) which is properly authorized as an agent to 
sign and file employment tax returns, make related 
payments and deposits, and perform such other acts on 
behalf of a taxpayer under procedures set forth by the 
Secretary,
(B) which has met such requirements as may be 
established by the Secretary, and
(C) for which authorization has not been revoked or 
suspended by the Secretary pursuant to procedures 
established by the Secretary.
(2) Employment tax return.--For purposes of paragraph 
(1)(A), the term ``employment tax return'' means--
(A) any return required to be filed by an employer 
to report the obligations of the employer and its 
employees under section 3101, 3111, 3301, or 3402 of 
the Internal Revenue Code of 1986, and
(B) such other returns as designated by the 
Secretary.
(f) Preventing Unauthorized Disclosure of Return Information by 
Persons Designated by Taxpayers.--Not later than January 1 of the first 
calendar year beginning more than 18 months after the date of enactment 
of this Act, the Secretary shall--
(1) establish a program to investigate and address--
(A) any access, use, or disclosure of return 
information (as defined in section 6103(b) of the 
Internal Revenue Code of 1986) by any person which is 
in excess of the authorization permitted to such person 
pursuant to subsection (a)(3), and
(B) any related misconduct, and
(2) annually publish, on the public website of the Internal 
Revenue Service, the actions undertaken pursuant to the program 
described in paragraph (1), such as the number of complaints 
investigated, the number of persons whose access was revoked, 
and other relevant statistical data.
(g) Focus Groups.--For purposes of subsection (a), prior to the 
date that the website or mobile application described in such 
subsection is made available, the Secretary shall conduct focus groups 
with taxpayers and tax professionals to ensure that any amounts 
appropriated or otherwise made available for such purposes are expended 
in an appropriate manner.

SEC. 106. AUTOMATION OF REFUND OFFSET BYPASS.

(a) In General.--Section 6402(a) is amended--
(1) by striking ``In the case'' and inserting the 
following:
``(1) Authority.--Except as provided in paragraph (2), in 
the case'', and
(2) by adding at the end the following new paragraphs:
``(2) Special rule for certain individuals.--In the case of 
an overpayment with respect to any taxable year for which a 
credit is allowed to an applicable taxpayer under section 32, 
the Secretary shall, subject to subsections (c), (d), (e), and 
(f), refund such overpayment in an amount not to exceed the 
amount of the credit allowed under such section for such 
taxable year.
``(3) Applicable taxpayer.--For purposes of paragraph (2), 
the term `applicable taxpayer' means a taxpayer who was 
classified by the Secretary as currently not collectible 
(within the meaning of section 6343(e)) prior to the date on 
which the refund was requested by the taxpayer.''.
(b) Effective Date.--The amendments made by this section shall 
apply to offsets made after the date which is 12 months after the date 
of enactment of this Act.

SEC. 107. INSTALLMENT AGREEMENT FEES ELIMINATED FOR CERTAIN 
INDIVIDUALS.

(a) In General.--Section 6159(f) is amended by striking paragraph 
(2) and inserting the following:
``(2) Waiver.--No fee shall be imposed on an installment 
agreement under this section in the case of--
``(A) any taxpayer with an adjusted gross income, 
as determined for the most recent year for which such 
information is available, which does not exceed 250 
percent of the applicable poverty level (as determined 
by the Secretary), or
``(B) any taxpayer which has--
``(i) entered into the installment 
agreement using the public website of the 
Internal Revenue Service, and
``(ii) agreed to make payments under the 
installment agreement by electronic payment 
through a debit instrument.''.
(b) Effective Date.--The amendment made by this section shall apply 
to installment agreements entered into after the date which is 12 
months after the date of enactment of this Act.

SEC. 108. INDIVIDUALS FACING ECONOMIC HARDSHIPS INFORMED OF COLLECTION 
ALTERNATIVES.

(a) In General.--Not later than 12 months after the date of 
enactment of this Act, the Secretary shall--
(1) establish a program to identify taxpayers who--
(A) are reasonably likely to be experiencing an 
economic hardship, and
(B) have an unpaid tax liability, and
(2) in the case of any taxpayer described in paragraph (1) 
who requests to enter into an agreement described in section 
6159(a) of the Internal Revenue Code of 1986, provide such 
taxpayer with information regarding other options which the 
Internal Revenue Service makes available to taxpayers who have 
an unpaid tax liability and are experiencing an economic 
hardship, including--
(A) an agreement described in such section for 
partial collection of a tax liability,
(B) an offer-in-compromise (as described in section 
7122 of such Code), and
(C) classification as currently not collectible 
(within the meaning of section 6343(e) of such Code).
(b) Economic Hardship.--For purposes of this section, in 
determining whether a taxpayer is reasonably likely to be experiencing 
an economic hardship, such determination shall be made in the same 
manner as determined under section 6343(a)(1)(D) of the Internal 
Revenue Code of 1986 based on--
(1) the most recent income and asset data which the 
Secretary has received from a return or a report from, or with 
respect to, such taxpayer, and
(2) the schedules described in section 7122(d)(2)(A) of 
such Code.
(c) Report.--Not later than 2 years after the date of enactment of 
this Act, the Secretary, in consultation with the National Taxpayer 
Advocate, shall submit a report to the Committee on Ways and Means of 
the House of Representatives and the Committee on Finance of the Senate 
regarding--
(1) the accuracy of the Internal Revenue Service with 
respect to identifying taxpayers who are reasonably likely to 
be experiencing an economic hardship under subsection (a)(1),
(2) whether such identification procedures may be 
appropriately applied for other purposes, and
(3)(A) the number of taxpayers with an unpaid tax liability 
who were identified as reasonably likely to be experiencing an 
economic hardship under subsection (a)(1),
(B) the options described in subsection (a)(2) that were 
provided to such taxpayers, and
(C) the status of the tax liabilities of such taxpayers.

SEC. 109. QUARTERLY NOTICES TO CERTAIN TAXPAYERS WITH DELINQUENCIES.

(a) In General.--Section 7524 is amended--
(1) in the heading, by striking ``annual notice'' and 
inserting ``notice'',
(2) by striking ``Not less often than annually'' and 
inserting the following:
``(a) In General.--Except as provided in subsection (b), not less 
often than quarterly'', and
(3) by adding at the end the following:
``(b) Information on Penalties and Interest.--The notice described 
in subsection (a) shall include--
``(1) an estimate of the amount of penalties and interest 
that may accrue if the delinquent tax debt is not fully paid 
within the period remaining under section 6502(a), and
``(2) programs and services that can provide assistance to 
the taxpayer.
``(c) Exception.--The requirement under subsection (a) shall not 
apply--
``(1) during any period in which an agreement described in 
section 6159(a) or an accepted offer-in-compromise (as 
described in section 7122) is in effect, or
``(2) in the case of a taxpayer for which the Secretary has 
determined that the tax is not collectible (within the meaning 
of section 6343(e)).''.
(b) Conforming Amendment.--The table of sections for chapter 77 is 
amended by striking the item relating to section 7524 and inserting the 
following new item:

``Sec. 7524. Notice of tax delinquency.''.
(c) Effective Date.--The amendments made by this section shall take 
effect on the date which is 24 months after the date of enactment of 
this Act.

SEC. 110. LOW-INCOME TAXPAYER CLINIC FUNDING UNLOCKED.

(a) Matching Funds.--Paragraph (5) of section 7526(c) is amended to 
read as follows:
``(5) Requirement of matching funds.--
``(A) In general.--With respect to any grant 
provided to a low-income taxpayer clinic under this 
section, such clinic shall provide matching funds equal 
to the applicable percentage of the amount of such 
grant.
``(B) Matching funds.--
``(i) In general.--For purposes of this 
paragraph, the term `matching funds' may 
include--
``(I) the salary (including fringe 
benefits) of individuals performing 
services for the low-income taxpayer 
clinic, and
``(II) the cost of equipment used 
in the low-income taxpayer clinic.
``(ii) Exclusion.--For purposes of this 
paragraph, the term `matching funds' shall not 
include any indirect expenses, such as general 
overhead of the institution sponsoring the low-
income taxpayer clinic.
``(C) Applicable percentage.--For purposes of 
subparagraph (A), the applicable percentage shall be 
100 percent, except that the Secretary may establish a 
lower percentage (not below 25 percent) if the 
Secretary determines that such percentage would expand 
the coverage of the low-income taxpayer clinic to 
additional taxpayers.''.
(b) Technical Amendments.--Section 7526(c), as amended by 
subsection (a), is further amended--
(1) by striking paragraphs (1) and (2), and
(2) by redesignating paragraphs (3) through (6) as 
paragraphs (1) through (4).
(c) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after the date of enactment of this 
Act.

SEC. 111. CHIEF COUNSEL REVIEWS OF OFFERS-IN-COMPROMISE STREAMLINED.

(a) In General.--Section 7122(b) is amended by striking ``in any 
case'' and all that follows through ``his delegate'' and inserting ``in 
any case which the Secretary determines presents a significant legal 
issue, there shall be placed on file in the office of the Secretary the 
opinion of the General Counsel for the Department of the Treasury, or 
the Counsel's delegate''.
(b) Conforming Amendments.--Section 7122(b) is amended by striking 
the second and third sentences.
(c) Effective Date.--The amendments made by this section shall 
apply to offers-in-compromise submitted or pending on or after the date 
of the enactment of this Act.

SEC. 112. MODIFICATION OF PROCEDURAL REQUIREMENTS FOR PENALTIES AND 
DISALLOWANCE PERIODS.

(a) In General.--Section 6751(b) is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) In general.--No penalty under this title shall be 
assessed, and no disallowance period shall take effect, 
unless--
``(A) the decision (as defined by the Secretary in 
regulations) to apply such penalty or disallowance 
period, as applicable, is personally approved (in 
writing on an electronic form) by--
``(i) the immediate supervisor of the 
individual making such decision, or
``(ii) the Internal Revenue Service Office 
of Servicewide Penalties (or any successor 
organization), and
``(B) the approval described in subparagraph (A) is 
obtained on or before the date any appealable notice is 
sent to the taxpayer regarding the application of such 
penalty or disallowance period.'', and
(2) by adding at the end the following:
``(3) Appealable notice.--For purposes of this subsection, 
the term `appealable notice' means the first written notice 
issued to a taxpayer that provides the taxpayer an opportunity 
to--
``(A) appeal the decision to the Internal Revenue 
Service Independent Office of Appeals, or
``(B) petition a Federal court for review of the 
decision.''.
(b) Disallowance Period.--Section 6751 is amended by adding at the 
end the following new subsection:
``(d) Disallowance Period.--
``(1) In general.--For purposes of this section, the term 
`disallowance period' means--
``(A) with respect to any credit under section 24, 
the period determined under section 24(g)(1),
``(B) with respect to any credit under section 25A, 
the period determined under section 25A(b)(4)(A), and
``(C) with respect to any credit under section 32, 
the period determined under section 32(k)(1).
``(2) Approval required for disallowance period 
automatically calculated through electronic means.--With 
respect to the application of any disallowance period, 
subsection (b)(2)(B) shall not apply.''.
(c) Effective Date.--The amendments made by this section shall 
apply to notices sent after the date which is 12 months after the date 
of the enactment of this Act.
(d) Report.--Not later than 24 months after the date of enactment 
of this Act, and annually thereafter, the Secretary shall make publicly 
available a report regarding all penalties assessed by the Internal 
Revenue Service pursuant to the Internal Revenue Code of 1986 during 
the preceding calendar year, with all relevant data regarding such 
penalties to be collected and reported with respect to--
(1) every organizational unit of the Internal Revenue 
Service that has power to assess, abate, or otherwise enforce 
any penalty imposed by the Internal Revenue Service under the 
Internal Revenue Code of 1986, and
(2) the progression of such penalties at each step of the 
determination, assessment, and review processes, as well as the 
final result with respect to such penalties.

SEC. 113. RETURN OF AMOUNTS COLLECTED BY IRS IN EXCESS OF ACCEPTED 
OFFER-IN-COMPROMISE AMOUNT.

(a) In General.--Section 7122 is amended by adding at the end the 
following:
``(h) Return Amounts Collected in Excess of Payment Amount of 
Accepted Offer-in-Compromise.--
``(1) In general.--Subject to paragraph (2), in the case of 
any taxpayer for which an offer-in-compromise has been accepted 
under this section, any proceeds collected from such taxpayer 
after acceptance of the offer-in-compromise which are in excess 
of any remaining payments scheduled under such compromise shall 
be transferred to the taxpayer.
``(2) Exception.--Paragraph (1) shall not apply if--
``(A) the taxpayer and the Secretary have 
specifically agreed otherwise, or
``(B) the Secretary has--
``(i) determined that, under the terms of 
the compromise, such compromise is in default, 
and
``(ii) elected to terminate such 
compromise.''.
(b) Authority To Release Levy and Return Property.--Section 6343 is 
amended--
(1) in subsection (a)(1)--
(A) in subparagraph (D), by striking ``or'' at the 
end,
(B) in subparagraph (E), by striking the period at 
the end and inserting ``, or'', and
(C) by adding at the end the following 
subparagraph:
``(F) subject to subsection (h)(2) of section 7122, 
an offer-in-compromise is accepted under such section 
with respect to the liability for which the levy was 
imposed.'', and
(2) in subsection (d)(2)--
(A) in subparagraph (C), by striking ``or'' at the 
end,
(B) in subparagraph (D), by striking the comma at 
the end and inserting ``, or'', and
(C) by adding at the end the following 
subparagraph:
``(E) subject to subsection (h)(2) of section 7122, 
an offer-in-compromise is accepted under such section 
with respect to the liability for which the levy was 
imposed,''.
(c) Effective Date.--The amendments made by this section shall 
apply to any compromise made under section 7122 of the Internal Revenue 
Code of 1986 which is accepted by the Secretary after the date of 
enactment of this Act.

SEC. 114. EXTENSION OF PERIOD FOR RETURN OF AMOUNTS SUBJECT TO WRONGFUL 
LEVY.

(a) In General.--Section 6343(b) is amended, in the flush text 
following paragraph (3), by striking ``the date of such levy'' and 
inserting ``the date that the Secretary received any such amount''.
(b) Effective Date.--The amendments made by this section shall 
apply to any money levied upon or any amount of money received from the 
sale of property after the date which is 12 months after the date of 
enactment of this Act.

SEC. 115. REPORTS TO CONGRESS.

(a) Implementation.--Not later than the date which is 2 years after 
the date of enactment of this Act, the Secretary (following 
consultation with the National Taxpayer Advocate, the Treasury 
Inspector General for Tax Administration, and the Comptroller General 
of the United States) shall provide a report to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate regarding the actions taken by the Internal Revenue 
Service to implement this title and the amendments made by this title, 
including--
(1) an analysis of successes and challenges with respect to 
implementation of such title, and
(2) any recommendations to Congress with respect to the 
implementation or administration of such title.
(b) Fraud.--
(1) In general.--Not later than the date which is 12 months 
after the date of enactment of this Act, and annually 
thereafter, the Secretary shall provide a report to the 
Committee on Ways and Means of the House of Representatives and 
the Committee on Finance of the Senate regarding efforts made 
by the Internal Revenue Service to identify, prevent, and 
resolve each type of tax fraud, including first-person fraud 
and stolen identity refund fraud.
(2) Information included in report.--The report described 
in paragraph (1) shall include--
(A) a detailed description, timeline, and analysis 
of any efforts undertaken by the Internal Revenue 
Service and any of the other members of the Security 
Summit during the most recent tax filing season to 
address and prevent each type of tax fraud, including--
(i) any specific information or guidelines 
provided by the Internal Revenue Service to any 
of the other members of the Security Summit 
(and vice versa) with respect to tax fraud, 
including--
(I) any ``be on the lookout'' 
alerts or other warnings,
(II) updated guidelines or 
restrictions,
(III) potential threat analyses,
(IV) specific data or analytics, 
and
(V) any other actionable threat 
information, and
(ii) any specific recommendations provided 
by the Internal Revenue Service to any of the 
other members of the Security Summit (and vice 
versa) with respect to identifying, preventing, 
and resolving tax fraud, including any 
potential improvements to data, analytics, 
information sharing, and collaboration between 
the Internal Revenue Service and other members 
of the Security Summit,
(B) a detailed description and timeline of any 
interactions between the Internal Revenue Service and 
any provider of tax filing options which does not 
participate in the Security Summit, including--
(i) any specific information or guidelines 
provided by the Internal Revenue Service to 
such provider (and vice versa) with respect to 
each type of tax fraud, including any items 
described in subclauses (I) through (V) of 
subparagraph (A)(i), and
(ii) any specific recommendations provided 
by the Internal Revenue Service to such 
provider (and vice versa) with respect to 
identifying, preventing, and resolving tax 
fraud, including any potential improvements to 
data, analytics, information sharing, and 
collaboration between the Internal Revenue 
Service and such provider, and
(C) with respect to the most recently completed tax 
filing season--
(i) with respect to each specific type or 
form of tax fraud that has been identified by 
the Internal Revenue Service, any relevant data 
and analysis regarding the amount of such fraud 
during such tax filing season, including 
detailed numerical data regarding such fraud in 
relation to each separate Federal tax return 
form (including any amended returns) and the 
manner in which such returns were filed, and
(ii) the total dollar amount of fraudulent 
claims for refund--
(I) for which any disbursement was 
erroneously made, and
(II) which were identified and 
disallowed prior to any disbursement 
being made.
(3) Publicly available.--Data included in the report 
described in paragraph (1) shall be made available on the 
public website of the Internal Revenue Service, provided that 
such data is appropriately redacted by the Secretary.
(c) Complexity Report.--For purposes of section 4022 of the 
Internal Revenue Service Restructuring and Reform Act of 1998 (26 
U.S.C. 7801 note), the submission of the report required under section 
7803(c)(2)(B) of the Internal Revenue Code of 1986 shall not satisfy 
the requirement under subsection (a) of section 4022 of such Act to 
conduct an analysis of the sources of complexity in administration of 
the Federal tax laws and report the results of such analysis.

TITLE II--AMERICAN CITIZENS ABROAD

SEC. 201. REPORT ON COMBINED TAX AND FOREIGN BANK AND FINANCIAL ACCOUNT 
REPORTING.

(a) Study.--
(1) In general.--The Secretary of the Treasury (or the 
Secretary's delegate) shall conduct a study on--
(A) combining and simplifying reporting required 
under section 5314 of title 31, United States Code, and 
sections 6038, 6038A, 6038B, 6038C, 6038D, 6039F, 
6046A, and 6048 of the Internal Revenue Code of 1986; 
and
(B) eliminating duplicative requests for 
information from nonresident United States taxpayers.
(2) Consultation.--The study conducted under paragraph (1) 
shall include input from the National Taxpayer Advocate and 
nonresident United States taxpayers.
(b) Report.--Not later than 180 days after the date of enactment of 
this Act, the Secretary of the Treasury (or the Secretary's delegate) 
shall submit to Congress a report on the study conducted under 
subsection (a), which shall include any actions taken by the Secretary 
as a result of such study and any recommendations for legislative 
changes necessary to effectuate the goals described in paragraphs (1) 
and (2) of subsection (a).

SEC. 202. STUDY AND REPORTS ON SIMPLIFICATION.

(a) GAO Study and Report.--
(1) In general.--The Comptroller General of the United 
States shall conduct a study on the burdens of compliance with 
Federal tax laws applicable to individuals who are United 
States persons (as defined in section 7701(a)(30) of the 
Internal Revenue Code of 1986) living abroad.
(2) Factors considered.--The study conducted under 
subsection (a) shall identify problems relating to compliance 
of Federal tax laws for such United States persons, including 
burdens specific to low-income and moderate-income individuals, 
related to--
(A) understanding and complying with United States 
tax obligations, including obligations with respect 
to--
(i) the duty to file returns and pay taxes 
while living abroad, including in the absence 
of tax treaties that otherwise eliminate double 
taxation of income;
(ii) the filing (including through 
electronic means) of Federal tax returns and 
any reports required under section 5314 of 
title 31, United States Code, in a timely, 
accurate, and affordable manner;
(iii) foreign retirement plans treated as 
passive foreign investment companies; and
(iv) foreign currency gains;
(B) receiving and responding to inquiries from the 
Internal Revenue Service and the Financial Crimes 
Enforcement Network about returns and reports described 
in subparagraph (A)(ii), and access to services of such 
agencies with respect to such returns and reports;
(C) access to financial products and services 
abroad, including local retirement vehicles and bank 
accounts;
(D) access to affordable tax preparation services 
for United States income tax obligations; and
(E) compliance burdens that are disproportionate to 
the amount of tax owed.
(3) Report.--Not later than 1 year after the date of the 
enactment of this Act, the Comptroller General shall submit to 
the Secretary of the Treasury and to Congress, and make 
publicly available, a report on the study conducted under 
paragraph (1).
(b) Treasury Report.--Not later than 1 year after the date on which 
the Comptroller General submits the report under subsection (a)(3), the 
Secretary of the Treasury shall submit to Congress a report that 
describes--
(1) actions taken by the Department of the Treasury to 
address any problems identified by the Comptroller General in 
such report; and
(2) any legislation necessary to address such problems.

SEC. 203. SIMPLIFICATION OF CURRENCY EXCHANGES RULES.

(a) Increase in Threshold for Exclusion for Personal 
Transactions.--
(1) In general.--The second sentence of section 988(e)(2) 
is amended by striking ``$200'' and inserting ``$1,000''.
(2) Inflation adjustment.--Section 988(e) is amended by 
adding at the end the following new paragraph:
``(4) Inflation adjustment.--
``(A) In general.--In the case of any taxable year 
beginning after 2025, the $1,000 amount in paragraph 
(2) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment 
determined under section 1(f)(3) for the 
calendar year in which the taxable year begins, 
determined by substituting in subparagraph 
(A)(ii) thereof `calendar year 2024' for 
`calendar year 2016'.
``(B) Rounding.--If any amount as adjusted under 
subparagraph (A) is not a multiple of $50, such dollar 
amount shall be rounded to the next lowest multiple of 
$50.''.
(b) Foreign Currency Losses Related to Sales of Personal 
Residences.--
(1) In general.--Section 165(c) is amended by striking 
``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting a comma, and by adding 
at the end the following new paragraphs:
``(4) foreign currency losses not described in paragraph 
(1) or (2) with respect to qualified mortgage debt, but only to 
the extent of any gain recognized during the taxable year on 
the sale of a qualified residence (as defined in section 
163(h)(5)) which is located outside of the United States or any 
possession of the United States and which secures such 
qualified mortgage debt, and
``(5) losses (not described in paragraph (1) or (2)) from 
the sale or exchange of a qualified residence (as so defined) 
which is located outside of the United States or any possession 
of the United States, but only to the extent of any foreign 
currency gain recognized during the taxable year with respect 
to qualified mortgage debt secured by such qualified 
residence.''.
(2) Qualified mortgage debt.--Section 165 is amended by 
redesignating subsection (m) as subsection (n) and by inserting 
after subsection (l) the following new subsection:
``(m) Definitions Related to Qualified Mortgage Debt and Foreign 
Currency Gains and Losses.--For purposes of this section--
``(1) Qualified mortgage debt.--The term `qualified 
mortgage debt' means--
``(A) any acquisition indebtedness (as defined in 
section 163(h)(3)(B), determined without regard to 
clause (ii) thereof) of an individual,
``(B) any home equity indebtedness (as defined in 
section 163(h)(3)(C), determined without regard to 
clause (ii) thereof) of an individual, and
``(C) any other indebtedness (including any non-
debt that functions as debt) which is related to the 
purchase or ownership of real estate by, or for the 
benefit of, individuals and which is approved under 
regulations or guidance provided by the Secretary.
``(2) Foreign currency loss.--The term `foreign currency 
loss' means, with respect to any qualified mortgage debt, any 
loss which would be described in section 988(b)(2) if the 
transaction involving the qualified mortgage debt were treated 
as a section 988 transaction.
``(3) Foreign currency gain.--The term `foreign currency 
gain' means, with respect to any qualified mortgage debt, any 
gain which would be described in section 988(b)(1) if the 
transaction involving the qualified mortgage debt were treated 
as a section 988 transaction.''.
(3) Character and source of loss.--Section 165(f) is 
amended to read as follows:
(A) by striking ``Losses from'' and inserting the 
following:
``(1) In general.--Losses from'', and
(B) by adding at the end the following new 
paragraph:
``(2) Special rule for amounts attributable to qualified 
mortgage debt.--The character and source of any foreign 
currency loss with respect to qualified mortgage debt which is 
allowed under section 165(c)(4) shall be the same character and 
source as the character and source of the gain on the sale of 
the qualified residence which secures such qualified mortgage 
debt.
``(3) Special rule for losses from the sale or exchange of 
qualified residences.--The character and source of any loss 
from the sale or exchange of a qualified residence which is 
allowed under subsection (c)(5) shall be the same character and 
source as the character and source of the gain of the qualified 
mortgage debt secured by such qualified residence.''.
(4) Treatment of foreign currency loss deduction.--Section 
62(a) is amended by inserting after paragraph (21) the 
following new paragraph:
``(22) Certain foreign currency losses.--The deduction 
allowed by section 165(c)(4).''.
(c) Special Rule for Home Mortgage Refinancing Transactions.--
Section 989 is amended by redesignating subsection (c) as subsection 
(d) and by inserting after subsection (b) the following new subsection:
``(c) Special Rule for Home Mortgage Refinancing Transactions.--In 
the case of the refinancing of any qualified mortgage debt (as defined 
in section 165(m)) in a nonfunctional currency--
``(1) no foreign currency gain or loss shall be recognized, 
and
``(2) the amount of foreign currency gain or loss on the 
repayment of such debt shall be determined by reference to the 
liability of the borrower at the time the debt was originally 
incurred (as determined under regulations or other guidance 
prescribed by the Secretary).''.
(d) Election To Use Average Exchange Rate With Respect to Certain 
Foreign Currency Transactions.--Section 989, as amended by subsection 
(c), is further amended by redesignating subsection (d) as subsection 
(e) and by inserting after subsection (c) the following new subsection:
``(d) Election To Aggregate Transaction With Respect to Foreign 
Earned Income.--
``(1) In general.--In the case of a qualified individual 
who makes an election under this subsection--
``(A) all transactions during a calendar year which 
involve an item of qualified income or expense shall be 
treated as 1 transaction, and
``(B) the amount of foreign currency gain or loss 
attributable to such transaction shall be determined by 
using the average exchange rate for the calendar year.
``(2) Qualified individual.--For purposes of this 
subsection, the term `qualified individual' has the meaning 
given such term under section 911(d)(1).
``(3) Item of qualified income or expense.--For purposes of 
this subsection, the term `item of qualified income or expense' 
means--
``(A) foreign earned income (as defined in section 
911(b)(1)(A), determined without regard to section 
911(b)(1)(B)), and
``(B) any other item of income or expense specified 
by the Secretary in regulations.''.
(e) Effective Date.--The amendments made by this section shall 
apply to transactions in taxable years beginning after the date of the 
enactment of this Act.

SEC. 204. INCREASE IN THRESHOLD FOR SIMPLIFIED FOREIGN TAX CREDIT RULES 
AND REPORTING.

(a) In General.--Subparagraph (B) of section 904(j)(2) is amended 
by striking ``$300 ($600'' and inserting ``$1,000 ($2,000''.
(b) Inflation Adjustment.--Section 904(j) is amended by adding at 
the end the following new paragraph:
``(4) Inflation adjustment.--
``(A) In general.--In the case of any taxable year 
beginning in a calendar year after 2025, each of the 
dollar amounts under paragraph (2)(B) shall be 
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment 
determined under section 1(f)(3) for the 
calendar year in which the taxable year begins, 
determined by substituting in subparagraph 
(A)(ii) thereof `calendar year 2024' for 
`calendar year 2016'.
``(B) Rounding.--If any amount as adjusted under 
subparagraph (A) is not a multiple of $50, such dollar 
amount shall be rounded to the next lowest multiple of 
$50.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 205. EXTENSION OF TIME FOR PERSONS OUTSIDE OF THE UNITED STATES TO 
REQUEST ABATEMENT OF MATH ERROR.

(a) In General.--Section 6213(b)(2)(A) is amended by inserting 
``(120 days in the case of a notice addressed to a person outside the 
United States)'' after ``60 days''.
(b) Effective Date.--The amendment made by this section shall apply 
to notices sent after the date that is 180 days after the date of the 
enactment of this Act.

TITLE III--JUDICIAL REVIEW

SEC. 301. AUTHORIZATION OF SUBPOENAS BEFORE HEARINGS TO FACILITATE 
SETTLEMENTS.

Section 7456(a) is amended to read as follows:
``(a) In General.--
``(1) Administration of oaths.--For the efficient 
administration of the functions vested in the Tax Court or any 
division thereof, any judge or special trial judge, the clerk 
or the clerk's deputies, as such, or any other employee of the 
Tax Court designated in writing for the purpose by the chief 
judge, may administer oaths or affirmations.
``(2) Examination.--Any judge or special trial judge may 
examine parties or witnesses.
``(3) Subpoena authority.--Any judge or special trial judge 
may require, by subpoena ordered by the Tax Court or any 
division thereof and signed by the judge or special trial judge 
(or by the clerk of the Tax Court or by any other employee of 
the Tax Court when acting as deputy clerk), any of the 
following:
``(A) The attendance and testimony of parties or 
witnesses.
``(B) The production of books, papers, documents, 
electronically stored information, or tangible things 
from any place in the United States by any party or 
witness having custody or control thereof for purposes 
of discovery or for use of the things produced as 
evidence in accordance with the rules and orders of the 
Tax Court.
Any such subpoena shall be issued and served, and compliance 
therewith shall be compelled, as provided in the rules and 
orders of the Tax Court.
``(4) Depositions.--Pursuant to rules and orders of the 
Court, the deposition of a witness may be taken before any 
designated individual competent to administer oaths under this 
title. Any deposition testimony shall be reduced to writing by 
the individual taking the deposition, or under such 
individual's direction, and shall be subscribed by the 
deponent.''.

SEC. 302. CLARIFICATION OF TAX COURT AUTHORITY TO ORDER RELIEF FROM A 
JUDGMENT OR ORDER.

Section 7481 is amended--
(1) by striking ``and (d),'' in subsection (a) and 
inserting ``(d), and (e),''; and
(2) by adding at the end the following new subsection:
``(e) Relief From a Judgment or Order.--
``(1) Corrections based on clerical mistakes; oversights 
and omissions.--
``(A) In general.--The Tax Court may correct a 
clerical mistake, or a mistake arising from oversight 
or omission, whenever one is found in a judgment, 
order, or other part of the record. The Tax Court may 
do so on motion or on its own, with or without notice.
``(B) Appellate court leave required on appeal.--
After an appeal has been docketed in the appellate 
court, and while such appeal is pending, any such 
mistake may be corrected only with the appellate 
court's leave.
``(2) Grounds for relief from a final judgment or order.--
On motion and just terms, the Tax Court may relieve a party or 
its legal representative from a final judgment or order for any 
of the following reasons:
``(A) Mistake, inadvertence, surprise, or excusable 
neglect.
``(B) Newly discovered evidence that, with 
reasonable diligence, could not have been discovered in 
time to move for a new trial under rules prescribed by 
the Court and that would have a reasonable likelihood 
of changing the outcome.
``(C) Fraud (whether previously called intrinsic or 
extrinsic), misrepresentation, or misconduct by an 
opposing party.
``(D) The judgment is void.
``(E) Any other circumstance where justice so 
requires.
``(3) Timing and effect of the motion.--
``(A) Timing.--A motion under paragraph (2)--
``(i) must be made within a reasonable 
time, and
``(ii) in the case of a reason described in 
subparagraphs (A), (B), or (C), not later than 
1 year after the entry of the judgment or 
order.
``(B) Effect on finality.--While pending, any such 
motion does not affect the judgment's finality or 
suspend its operation.
``(4) Other powers to grant relief.--This subsection shall 
not limit the Tax Court's power to set aside a judgment for 
fraud on the Tax Court.
``(5) Court of appeals jurisdiction.--If the Tax Court 
provides relief from a judgment or order that is otherwise 
final under this section, either or both parties may obtain 
review of such relief by filing a notice of appeal under this 
subchapter within 90 days of the Court's judgment or order 
directing such relief.''.

SEC. 303. AUTHORIZATION OF SPECIAL TRIAL JUDGES TO HEAR ADDITIONAL 
CASES AND ADDRESS CONTEMPT.

(a) Consent to Assignment.--Section 7443A(b) is amended by striking 
``and'' at the end of paragraph (6), by redesignating paragraph (7) as 
paragraph (8), and by inserting after paragraph (6) the following new 
paragraph:
``(7) upon the consent of the parties, and pursuant to 
rules promulgated by the Tax Court, any proceeding not 
described in paragraphs (1) through (6), and''.
(b) Authorizing Special Trial Judge.--Section 7443A(c) is amended 
by striking ``or (6)'' and inserting ``(6), or (7)''.
(c) Contempt Authority.--Section 7443A is amended by adding at the 
end the following new subsection:
``(f) Incidental Powers.--A special trial judge appointed under 
this section shall have the independent power to punish for contempt of 
the authority of the Tax Court as provided in section 7456(c), except 
the sentence imposed by such a special trial judge for any contempt 
shall not exceed the penalties for a Class C misdemeanor as set forth 
in sections 3571(b)(6) and 3581(b)(8) of title 18, United States Code. 
This subsection shall not be construed to limit the authority of a 
special trial judge to order sanctions under any other statute or any 
rule of the Tax Court prescribed pursuant to section 7453.''.
(d) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect on the date the United States Tax Court adopts rules 
implementing the consent procedures of section 7443A.

SEC. 304. DISQUALIFICATION OF JUDGES AND SPECIAL TRIAL JUDGES.

(a) In General.--Part II of subchapter C of chapter 76 is amended 
by adding at the end the following new section:

``SEC. 7467. DISQUALIFICATION OF JUDGE OR SPECIAL TRIAL JUDGE.

``Section 455 of title 28, United States Code, shall apply to 
judges, special trial judges, and proceedings of the Tax Court.''.
(b) Clerical Amendment.--The table of sections for such part is 
amended by adding at the end the following new item:

``Sec. 7467. Disqualification of judge or special trial judge.''.

SEC. 305. NOTICE AND REVIEW WITH RESPECT TO MULTI-YEAR BANS ON CLAIMING 
CREDITS.

(a) Notice.--
(1) In general.--Section 6212(a) is amended--
(A) by striking ``If the'' and inserting the 
following:
``(1) Notice.--If the'',
(B) by striking ``Such notice shall include a 
notice'' and inserting the following:
``(2) Matters included.--Such notice shall include--
``(A) a notice'',
(C) by striking period at the end of the second 
sentence and inserting ``, and'', and
(D) by adding at the end the following new 
subparagraph:
``(B) in any case in which such deficiency for a 
taxable year is attributable to the denial of a credit 
under section 24, 25A, or 32, a statement--
``(i) identifying the credit or credits 
which are denied and providing the grounds for 
each such denial,
``(ii) informing the taxpayer that, unless 
the denial is overturned on appeal, the 
taxpayer will not be able to claim such credit 
for any subsequent taxable year unless the 
taxpayer provides information required by the 
Secretary to demonstrate eligibility for the 
credit, and
``(iii) in any case in which the Secretary 
has made a determination to impose a 
disallowance period under section 24(g)(1), 
25A(b)(4)(A), or 32(k)(1), providing the 
grounds for such disallowance period (and the 
length of the disallowance period unless 
overturned on appeal).''.
(2) Effective date.--The amendments made by this subsection 
shall apply to notices mailed 36 months after the date of 
enactment of this Act.
(b) Authority of the Tax Court.--
(1) In general.--Section 6214 is amended by redesignating 
subsection (e) as subsection (f) and by inserting after 
subsection (d) the following new subsection:
``(e) Jurisdiction With Respect to Multi-Year Bans With Respect to 
Certain Credits.--
``(1) In general.--The Tax Court shall have jurisdiction--
``(A) to redetermine the imposition of any 
disallowance period with respect to any credit under 
section 24, 25A, or 32 for the taxable year in which 
such disallowance period was imposed if the deficiency 
relates to such taxable year, and
``(B) to determine whether any such disallowance 
period should be imposed if claim therefor is asserted 
by the Secretary in the answer or an amended answer 
filed in accordance with the rules of the Tax Court.
``(2) Disallowance period.--For purposes of this 
subsection, the term `disallowance period' has the meaning 
given such term under section 6751(d).''.
(2) Effective date.--The amendments made by this subsection 
apply to petitions filed on or after the date of enactment of 
this Act.
(3) Transition rule for review of previously imposed 
disallowance periods.--
(A) In general.--In the case of any deficiency 
which is attributable to an entry on the return 
claiming a credit under section 24, 25A, or 32 of the 
Internal Revenue Code of 1986 for a taxable year in a 
disallowance period described in subparagraph (B), the 
Tax Court shall have jurisdiction to redetermine 
whether the disallowance period was properly imposed.
(B) Disallowance period described.--A disallowance 
period is described in this subparagraph if the notice 
of the deficiency under section 6212 of such Code for 
the taxable year with respect to which the 
determination to impose the disallowance period was 
made--
(i) did not include the grounds for such 
disallowance period, and
(ii) was mailed before the date that is 36 
months after the date of the enactment of this 
Act.
(C) Disallowance period.--For purposes of this 
paragraph, the term ``disallowance period'' has the 
meaning given such term under section 6751(d) of the 
Internal Revenue Code of 1986 (as added by this Act).
(D) Refunds.--Notwithstanding section 6512(b)(1) of 
the Internal Revenue Code of 1986, in the case of a 
petition with respect to a disallowance period 
described in subparagraph (B), the Tax Court shall have 
jurisdiction to determine the amount of an overpayment 
for any taxable year in the disallowance period, and 
such amount shall, notwithstanding section 6511, when 
the decision of the Tax Court has become final, be 
credited or refunded to the taxpayer. If a notice of 
appeal in respect of the decision of the Tax Court is 
filed under section 7483 of such Code, the Secretary of 
the Treasury (or the Secretary's delegate) is 
authorized to refund or credit the overpayment 
determined by the Tax Court to the extent the 
overpayment is not contested on appeal.
(c) Burden of Production.--
(1) In general.--Section 7491(c) is amended--
(A) by striking ``Notwithstanding'' and inserting 
the following:
``(1) In general.--Notwithstanding''.
(B) by striking ``with respect to the liability'' 
and inserting ``with respect to--
``(A) the liability'',
(C) by striking the period after ``title'' and 
inserting ``, and'',
(D) by adding at the end the following new 
paragraph:
``(A) the application of any disallowance period 
(as defined in section 6751(d)) to any individual.'', 
and
(E) by adding at the end the following new 
paragraph:
``(2) Standard of proof for certain disallowance periods.--
In the case of any court proceeding with respect to any 
disallowance period described in section 24(g)(1)(B)(ii), 
25A(b)(4)(A)(ii)(I), or 32(k)(1)(B)(i), the standard of proof 
shall be the same standard as required in a proceeding under 
section 7454(a).''.
(2) Effective date.--The amendments made by this subsection 
shall apply to court proceedings beginning after the date that 
is 36 months after the date of the enactment of this Act in 
connection with disallowance periods (as defined in section 
6751(d) of the Internal Revenue Code of 1986, as added by this 
Act) determined after such date.
(d) Modification of Disallowance Period.--
(1) Child tax credit.--Section 24(g)(1) is amended--
(A) in subparagraph (B), by striking ``for which 
there was a final determination that the taxpayer's 
claim of credit under this section was'' each place it 
appears in clauses (i) and (ii) and inserting ``for 
which a notice of deficiency has been sent under 
section 6212(a) which notifies the taxpayer that the 
taxpayer's claim of credit under this section was 
denied, or a determination that has become final under 
section 7481 has been made by the Tax Court to deny 
such claim,'', and
(B) by adding at the end the following new 
subparagraph:
``(C) Allowance of previously denied credits after 
tax court consideration.--Notwithstanding subparagraphs 
(A) and (B), a taxable year shall not be treated as a 
taxable year in the disallowance period if the Tax 
Court determines that the disallowance period was not 
properly imposed for such year pursuant to section 
6214(e).''.
(2) American opportunity tax credit.--Section 25A(b)(4)(A) 
is amended--
(A) in clause (ii), by striking ``for which there 
was a final determination that the taxpayer's claim of 
the American Opportunity Credit under this section 
was'' each place it appears in subclauses (I) and (II) 
and inserting ``for which a notice of deficiency has 
been sent under section 6212(a) which notifies the 
taxpayer that the taxpayer's claim of credit under this 
section was denied, or a determination that has become 
final under section 7481 has been made by the Tax Court 
to deny such claim,'', and
(B) by adding at the end the following new clause:
``(iii) Allowance of previously denied 
credits after tax court consideration.--
Notwithstanding clauses (i) and (ii), a taxable 
year shall not be treated as a taxable year in 
the disallowance period if the Tax Court 
determines that the disallowance period was not 
properly imposed for such year pursuant to 
section 6214(e).''.
(3) Earned income tax credit.--Section 32(k)(1) is 
amended--
(A) in subparagraph (B), by striking ``for which 
there was a final determination that the taxpayer's 
claim of credit under this section was'' each place it 
appears in clauses (i) and (ii) and inserting ``for 
which a notice of deficiency has been sent under 
section 6212(a) which notifies the taxpayer that the 
taxpayer's claim of credit under this section was 
denied, or a determination that has become final under 
section 7481 has been made by the Tax Court to deny 
such claim,'', and
(B) by adding at the end the following new 
subparagraph:
``(C) Allowance of previously denied credits after 
tax court consideration.--Notwithstanding subparagraphs 
(A) and (B), a taxable year shall not be treated as a 
taxable year in the disallowance period if the Tax 
Court determines that the disallowance period was not 
properly imposed for such year pursuant to section 
6214(e).''.
(4) Suspension of running of limitations period filing of a 
claim for credit or refund.--Section 6511(d) is amended by 
adding at the end the following new paragraph:
``(9) Special rules relating to disallowance periods.--The 
running of the periods described in subsections (a) and (b)(2) 
with respect to any claim for a credit allowed under section 
24, 25A, or 32 for any taxable year in a disallowance period 
(as defined in section 6751(d)) shall be suspended during any 
period in which the imposition of such disallowance period is 
pending before the Tax Court.''.
(5) Effective date.--
(A) In general.--The amendments made by paragraphs 
(1), (2), and (3) shall apply to--
(i) taxable years beginning after the date 
that is 36 months after the date of the 
enactment of this Act, and
(ii) disallowance periods (as defined in 
section 6751(d) of the Internal Revenue Code of 
1986, as added by this Act) in taxable years 
beginning on or before such date if the notice 
of deficiency for the taxable year with respect 
to which the determination to impose such 
disallowance period was made was sent after 
such date.
(B) Suspension of running of limitations period.--
The amendment made by paragraph (4) shall apply to 
petitions filed after the date of the enactment of this 
Act.

SEC. 306. AUTHORIZATION OF DE NOVO REVIEW OF INNOCENT SPOUSE RELIEF BY 
THE TAX COURT AND OTHER COURTS.

(a) Review.--Section 6015(e)(7) is amended by striking ``by the Tax 
Court and shall be based upon'' and all that follows and inserting a 
period.
(b) Effective Date.--The amendment made by this section shall apply 
to petitions and requests filed or pending on or after the date of the 
enactment of this Act.
(c) No Inference.--Nothing in the amendment made by this section 
shall be construed to limit the authority or jurisdiction of the Tax 
Court or any other court to grant relief under section 6015 of the 
Internal Revenue Code of 1986 or to review any relief granted under 
such section.

SEC. 307. CLARIFICATION OF CERTAIN COURT FILING DEADLINES.

(a) In General.--
(1) Treatment of deadlines.--Section 7451 is amended by 
redesignating subsection (b) as subsection (c) and by inserting 
after subsection (a) the following new subsection:
``(b) Treatment of Deadlines for Certain Petitions.--The deadlines 
for filing petitions under sections 6015(e)(1)(A), 6213(a), and 
6330(d)(1)(A) shall be considered nonjurisdictional claims-processing 
rules subject to waiver, forfeiture, estoppel and equitable tolling.''.
(2) Conforming amendment.--Section 7459(d) is amended--
(A) by striking ``If a petition'' and inserting the 
following:
``(1) In general.--If a petition'',
(B) by inserting ``, unless the dismissal is for 
lack of jurisdiction'' after ``determined by the 
Secretary'',
(C) by striking ``, or unless the dismissal is for 
lack of jurisdiction'', and
(D) by adding at the end the following new 
paragraph:
``(2) Exception.--Paragraph (1) shall not apply with 
respect to any dismissal which is solely based on a decision of 
the Tax Court that equitable tolling does not apply to extend 
the deadline for filing a petition.''.
(b) Tolling of Time in Certain Cases.--Section 7451(c), as 
redesignated by subsection (a), is amended by striking ``date'' and 
inserting ``day (in whole or in part)''.
(c) Effective Date.--The amendments made by this section shall 
apply to cases pending on or after the date of the enactment of this 
Act.
(d) No Inference.--The amendments made by subsection (a) shall not 
be construed to create any inference with respect to the treatment of--
(1) any case brought under section 6015(e)(1)(A), 6213(a), 
or 6330(d)(1)(A) of the Internal Revenue Code of 1986 for which 
there is a final determination by the Tax Court before the date 
of the enactment of this Act, or
(2) any other petition filed with the Tax Court under any 
other provision of the Internal Revenue Code of 1986 before, 
on, or after such date.

SEC. 308. CLARIFICATION OF TAX COURT JURISDICTION TO DETERMINE TAX 
LIABILITY IN COLLECTION DUE PROCESS APPEALS.

(a) In General.--Section 6330(c)(2)(B) is amended by inserting ``in 
the Tax Court (other than through a suit for a refund under section 
7442(b))'' after ``otherwise have an opportunity to dispute such tax 
liability''.
(b) Underlying Tax Liability.--Section 6330(c)(4) is amended by 
striking ``An issue may not be raised'' and inserting ``An issue which 
is not related to the amount or existence of the underlying tax 
liability may not be raised''.

SEC. 309. AUTHORIZATION OF THE TAX COURT TO ISSUE REFUNDS IN COLLECTION 
DUE PROCESS CASES.

(a) In General.--Section 6330(d)(1) is amended--
(1) by striking ``The person may'' and inserting the 
following:
``(A) In general.--The person may'',
(2) by inserting ``and, unless a challenge was precluded 
under subsection (c), with respect to the determination of any 
overpayments of tax for the taxable periods or events at issue 
in the determination'' after ``matter'', and
(3) by adding at the end the following new subparagraphs:
``(B) Determination and enforcement of 
overpayments.--Rules similar to the rules of paragraphs 
(1) and (2) of section 6512(b) shall apply for purposes 
of this paragraph.
``(C) Limitation on amount of credit or refund.--
``(i) In general.--In the case of any 
petition under subparagraph (A), no credit or 
refund shall be allowed or made of any portion 
of the tax unless the Tax Court determines as 
part of its decision that such portion was 
paid--
``(I) after the notice described in 
subsection (a)(1) or section 6320(a)(1) 
(as the case may be) was given,
``(II) within the period which 
would be applicable under section 
6511(b)(2), (c), or (d), if, on the 
date the notice described in subsection 
(a)(1) or section 6320(a)(1) (as the 
case may be) was given, a claim had 
been filed (whether or not filed) 
stating the grounds upon which the Tax 
Court finds that there is an 
overpayment, or
``(III) within the period which 
would be applicable under section 
6511(b)(2), (c), or (d), in respect of 
any claim for refund filed within the 
applicable period specified in section 
6511 and before the date the notice 
described in subsection (a)(1) or 
section 6320(a)(1) (as the case may be) 
was given--
``(aa) which had not been 
disallowed before that date,
``(bb) which had been 
disallowed before that date and 
in respect of which a timely 
suit for refund could have 
commenced as of that date, or
``(cc) in respect of which 
a suit for refund had been 
commenced before that date and 
within the period specified in 
section 6532.
In a case described in subclause (II) 
where the date the notice described in 
subsection (a)(1) or section 6320(a)(1) 
(as the case may be) is given is during 
the third year after the due date 
(determined without regard to any 
extensions) for filing the return of 
tax and no return was filed before such 
date, the applicable period under 
subsections (a) and (b)(2) of section 
6511 shall be 3 years.
``(ii) Date notice was given.--For purposes 
of this subparagraph--
``(I) if notice was given under 
subsection (a)(2) or section 6320(a)(2) 
by mail, the date the notice was given 
shall be the date such notice was 
mailed, and
``(II) if notice was given under 
subsection (a)(2) or 6320(a)(2) by 
leaving such notice at the dwelling or 
usual place of business of the person, 
the date the notice was given shall be 
the date such notice was left.''.
(b) Conforming Amendment.--Section 6330(e)(1) is amended by 
inserting ``section 6511 (relating to limitations on credit or 
refund),'' after ``section 6502 (relating to collection after 
assessment)''.
(c) Effective Date.--The amendments made by this section shall 
apply to cases pending on or after the date of the enactment of this 
Act.

SEC. 310. AUTHORIZATION OF THE TAX COURT TO HEAR SUITS FOR REFUNDS OR 
CREDITS.

(a) In General.--Section 7442 is amended--
(1) by striking ``The Tax Court'' and inserting the 
following:
``(a) In General.--The Tax Court'', and
(2) by adding at the end the following new subsection:
``(b) Actions for Refunds.--
``(1) Jurisdiction.--
``(A) In general.--In addition to any other court 
authorized by law, the Tax Court shall, subject to 
section 7422, have jurisdiction over any action, not 
exceeding the applicable amount, for the recovery of 
any internal revenue tax alleged to have been 
erroneously or illegally assessed or collected, or any 
penalty claimed to have been collected without 
authority or of any sum alleged to have been excessive 
or in any manner wrongfully collected under the 
internal revenue laws to the same extent as the 
district courts of the United States.
``(B) Applicable amount.--For purposes of this 
paragraph, the applicable amount means--
``(i) $2,000,000 for any one taxable year, 
in the case of taxes imposed by subtitle A,
``(ii) $2,000,000, in the case of the tax 
imposed by chapter 11,
``(iii) $2,000,000 for any one calendar 
year, in the case of the tax imposed by chapter 
12,
``(iv) $2,000,000 for any 1 taxable period 
(or, if there is no taxable period, taxable 
event) in the case of any tax imposed by 
subtitle C, D, or E, and
``(v) $2,000,000, in the case of any other 
amount collected.
``(2) Further notice of deficiency.--If the Secretary prior 
to the hearing of a suit brought by a taxpayer under paragraph 
(1) mails to the taxpayer a notice that a deficiency has been 
determined in respect of the tax which is the subject matter of 
the taxpayer's suit, the proceedings in the taxpayer's suit 
shall be stayed during the period of time in which the taxpayer 
may file a petition with the Tax Court for a redetermination of 
the asserted deficiency, and for 60 days thereafter. If the 
taxpayer files such a petition with the Tax Court, such 
petition shall be consolidated with the suit brought under 
paragraph (1).''.
(b) Conforming Amendments.--
(1) Section 7422(k) is amended by adding at the end the 
following new paragraph:
``(5) For jurisdiction of the Tax Court, see section 
7442(b).''.
(2) Section 7482(b)(1) is amended by striking ``or'' at the 
end of subparagraph (F), by striking the period at the end of 
subparagraph (G) and inserting ``, or'', and by adding at the 
end the following new subparagraph:
``(H) in the case of a petition under section 
7442(b)--
``(i) the legal residence of the petitioner 
if the petitioner is an individual, and
``(ii) the principal place of business or 
principal office or agency if the petitioner is 
an entity other than an individual.''.
(3) Section 1346(a) of title 28, United States Code, is 
amended--
(A) in the matter preceding paragraph (1), by 
striking ``, concurrent with the United States Court of 
Federal Claims,'',
(B) in paragraph (1), by striking ``Any'' and 
inserting ``Concurrent with the United States Court of 
Federal Claims and the Tax Court, any'', and
(C) in paragraph (2), by striking ``Any'' and 
inserting ``Concurrent with the United States Court of 
Federal Claims, any''.
(c) Effective Date.--The amendments made by this section shall 
apply to actions filed after the date that is 12 months after the date 
of the enactment of this Act.

SEC. 311. AUTHORIZATION TO USE DEFICIENCY PROCEDURES FOR CERTAIN 
PENALTIES.

(a) In General.--Chapter 63 is amended by adding at the end the 
following new subchapter:

``Subchapter D--Treatment of Penalties

``Sec. 6251. Assessment of certain penalties under deficiency 
procedures.

``SEC. 6251. ASSESSMENT OF CERTAIN PENALTIES UNDER DEFICIENCY 
PROCEDURES.

``(a) In General.--The Secretary may treat the amount of any 
applicable penalty as a deficiency of tax to which subchapter B applies 
(and such deficiency may be assessed as provided in such subchapter).
``(b) Applicable Penalty.--For purposes of this section--
``(1) In general.--The term `applicable penalty' means any 
penalty imposed under this title which the Secretary identifies 
in guidance as not otherwise assessable (determined without 
regard to this section).
``(2) Exception.--Such term shall not include any penalty 
expressly required to be recovered in a civil or criminal 
action.
``(c) Special Rules.--
``(1) Limitation on assessment after notice of 
deficiency.--If the Secretary sends a notice of deficiency with 
respect to an applicable penalty as provided in section 6212, 
the Secretary may not thereafter, except as otherwise provided 
in sections 6213 and 6215, assess such penalty for the same 
taxable period or with respect to the same act (or failure to 
act) occurring before the date of such notice unless such 
notice has been rescinded as provided in section 6212(d).
``(2) Additional deficiency letters restricted.--If the 
Secretary has mailed to the taxpayer a notice of deficiency as 
provided in section 6212(a) with respect to an applicable 
penalty, and the taxpayer files a petition with the Tax Court 
within the time prescribed in section 6213(a), the Secretary 
shall have no right to determine any additional deficiency with 
respect to an act (or failure to act) to which such petition 
relates.
``(3) Exceptions.--Paragraphs (1) and (2) shall not apply 
to any penalty imposed under section 6038(b)(2), 6038A(d)(2), 
or 6038D(d)(2).
``(4) Coordination with other provisions.--Any applicable 
penalty treated as a deficiency under this section shall be 
subject to the requirements of sections 6212, 6213, 6214, 6215, 
6503, and, as applicable, 6751(b).''.
(b) Conforming Amendment.--The table of subchapters for chapter 63 
is amended by adding at the end the following new item:

``subchapter d--treatment of penalties''.

(c) No Inference.--Nothing in the amendments made by this section 
shall be construed to create any inference with respect to the 
treatment of any applicable penalty (as defined in section 6251(b) of 
the Internal Revenue Code of 1986, as added by subsection (a)) before 
the date of the enactment of this Act.

SEC. 312. AUTHORIZATION TO ALLOW CLAIMS FOR REFUND IN CERTAIN CASES 
WHERE FULL TAX NOT PAID.

(a) In General.--Section 7422, as amended by this Act, is amended 
by redesignating subsection (k) as subsection (l) and by inserting 
after subsection (j) the following new subsection:
``(k) Special Rule for Actions Where There Is an Agreement in 
Effect With the Taxpayer Under Section 6159 or When the Taxpayer Is in 
Currently Not Collectible Status.--
``(1) In general.--The district courts of the United 
States, the United States Court of Federal Claims, and the Tax 
Court shall not fail to have jurisdiction over any applicable 
action brought by a taxpayer to determine the correct amount of 
tax liability of such taxpayer solely because the full amount 
of such liability has not been paid.
``(2) Applicable action.--For purposes of this subsection, 
the term `applicable action' means any action to determine the 
correct amount of the tax liability of such taxpayer (or for 
any refund with respect thereto) with respect to any amount if, 
as of the date such action is filed--
``(A) such amount--
``(i) is the subject of an agreement under 
section 6159 for which all installments the due 
date for which is on or before the date the 
action is filed have been paid, or
``(ii) has been determined by the Secretary 
to be not collectible (within the meaning of 
section 6343(e)), and
``(B) there is no pending procedural period with 
respect to such amount.
``(3) Pending procedural period.--For purposes of paragraph 
(2)(B), there is a pending procedural period with respect to an 
amount if--
``(A) a notice has been provided under section 6320 
or 6330 with respect to such amount, and
``(B)(i) the time period under such notice for 
requesting a hearing has not expired,
``(ii) a hearing has been requested, or
``(iii) the period under section 6330(d)(1) for 
appealing any determination of all issues considered at 
such a hearing has not expired.
``(4) Permissive dismissal.--
``(A) Request for dismissal.--The United States (or 
the Secretary, in the case of a case in the Tax Court) 
may request the dismissal of an applicable action if 
the taxpayer is no longer in compliance with an 
installment agreement under section 6159 or is no 
longer in currently not collectible status (within the 
meaning of section 6343(e)).
``(B) Court action.--In any case in which there is 
a request for dismissal under subparagraph (A), the 
court may, with or without taking any evidence or 
holding a hearing, dismiss the action with leave to 
refile when either the full amount of such liability 
has been paid or the conditions in paragraph (2) are 
met at the time of refiling. In deciding whether to 
dismiss the action, the court may consider the extent 
to which the action has proceeded, the extent to which 
full payment has been made, any burden that may result 
to the taxpayer, the United States, the Secretary, or 
the court from such dismissal (including reasons the 
taxpayer is no longer in compliance with an installment 
agreement under section 6159), and any other reason 
relating to the policy of the full payment rule. A 
dismissal under this paragraph shall not be reviewed by 
any other court.
``(5) Prohibition on collection of disallowed liability.--
If the court redetermines under paragraph (1) the correct 
amount of tax liability of the taxpayer, no part of such 
liability which is disallowed by a decision of such court which 
has become final may be collected by the Secretary, and amounts 
paid in excess of the amount determined by the court as 
correctly paid shall be refunded.''.
(b) Effective Date.--The amendments made by this section shall 
apply to actions filed on or after the date that is 12 months after the 
date of the enactment of this Act.

SEC. 313. ADJUSTMENT OF THRESHOLD FOR SMALL DISPUTES.

(a) In General.--Section 7463 is amended--
(1) by striking ``$50,000'' each place it appears in 
subsections (a) and (f) and inserting ``$100,000'', and
(2) by adding at the end the following new subsection:
``(g) Inflation Adjustment.--
``(1) In general.-- In the case of any petition or appeal 
filed in a calendar year beginning after 2026, each of the 
$100,000 amounts in subsections (a) and (f) shall be increased 
by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year, determined 
by substituting `calendar year 2025' for `calendar year 
2016' in subparagraph (A)(ii) thereof.
``(2) Rounding.--If any increase determined under paragraph 
(1) is not a multiple of $1,000, such increase shall be rounded 
to the next lowest multiple of $1,000.''.
(b) Conforming Amendments.--
(1) The heading for section 7463 is amended by striking 
``disputes involving $50,000 or less'' and inserting ``small 
disputes''.
(2) The item relating to section 7463 in the table of 
section for part II of subchapter C of chapter 76 is amended by 
striking ``Disputes involving $50,000 or less'' and inserting 
``Small disputes''.
(c) Effective Date.--The amendments made by this section shall 
apply to proceedings commencing after the date of the enactment of this 
Act.

TITLE IV--OFFICE OF THE TAXPAYER ADVOCATE

SEC. 401. NTA AUTHORIZATION TO DIRECT HIRE ATTORNEYS.

Section 7803(c)(2)(D) is amended--
(1) in clause (i)--
(A) in subclause (I), by striking ``and'' at the 
end,
(B) in subclause (II), by striking the period at 
the end and inserting ``; and'', and
(C) by adding at the end the following:
``(III) appoint counsel in the 
Office of the Taxpayer Advocate to 
report directly to the National 
Taxpayer Advocate or delegate 
thereof.'', and
(2) by adding at the end the following:
``(iii) Counsel.--For purposes of clause 
(i)(III)--
``(I) the National Taxpayer 
Advocate may utilize direct hire 
authority to recruit and appoint 
qualified applicants, without regard to 
any preference requirements,
``(II) any counsel appointed 
pursuant to such clause shall not 
report to the Chief Counsel for the 
Internal Revenue Service and shall not 
represent the Government in litigation,
``(III) any legal interpretation of 
counsel appointed pursuant to such 
clause shall not be binding on the 
Secretary, and
``(IV) pursuant to section 
301(f)(2) of title 31, United States 
Code, and subsection (b)(2)(A), the 
Chief Counsel for the Internal Revenue 
Service shall continue to provide 
advice to the National Taxpayer 
Advocate and the Office of the Taxpayer 
Advocate.''.

SEC. 402. NTA AUTHORIZATION TO MAKE PERSONNEL DECISIONS.

(a) In General.--Section 7803(c)(2)(D)(i)(II) is amended by 
striking ``any employee of any local office of a taxpayer advocate 
described in subclause (I)'' and inserting ``any officer or employee of 
the Office of the Taxpayer Advocate''.
(b) Effective Date.--The amendment made by this section shall take 
effect on the date which is 12 months after the date of enactment of 
this Act.

SEC. 403. ACCESS TO INTERNAL REVENUE SERVICE INFORMATION, LEGAL ADVICE, 
AND MEETINGS.

(a) In General.--Section 7803(c) is amended by adding at the end 
the following new paragraph:
``(6) Access to information and meetings.--
``(A) In general.--Upon request, the Commissioner 
shall provide the Office of the Taxpayer Advocate with 
access to any of the following:
``(i) In the case of any request made by a 
taxpayer for assistance by the Office of the 
Taxpayer Advocate which is open and pending--
``(I) any return or return 
information (as such terms are defined 
in section 6103(b)) which the National 
Taxpayer Advocate determines is 
necessary to assist such taxpayer,
``(II) any legal advice provided by 
the staff of the Office of Chief 
Counsel to any employee of the Internal 
Revenue Service (including any legal 
advice prepared in contemplation of 
litigation) which the National Taxpayer 
Advocate determines is necessary to 
assist such taxpayer, regardless of 
whether such legal advice cannot be 
disclosed to such taxpayer, and
``(III) any meeting between such 
taxpayer and any employee of the 
Internal Revenue Service.
``(ii) To the extent necessary to perform a 
full and substantive analysis included in any 
report described in paragraph (2)(B)--
``(I) any relevant document, data, 
or statistical information, and
``(II) any legal advice provided by 
the staff of the Office of the Chief 
Counsel to any employee of the Internal 
Revenue Service (including any legal 
advice prepared in contemplation of 
litigation).
``(iii) Legal advice from the staff of the 
Office of Chief Counsel on any matter or issue.
``(B) Deadline.--Access to any information, advice, 
or meeting described in subparagraph (A) shall be 
provided by the Commissioner not later than--
``(i) the date which is 2 weeks after the 
date on which a written request submitted by 
the Office of the Taxpayer Advocate has been 
received by the Commissioner, or
``(ii) such date as is otherwise agreed to 
by the Commissioner and the Office of the 
Taxpayer Advocate.
``(C) Meetings.--For purposes of subparagraph 
(A)(i)(III), the Commissioner shall be deemed to have 
satisfied the requirement under such subparagraph if 
the Commissioner has extended an invitation to attend 
the meeting to the Office of the Taxpayer Advocate, 
without regard to whether such an invitation was 
declined by any employee of the Office of the Taxpayer 
Advocate.
``(D) Privilege.--Any access provided to the Office 
of the Taxpayer Advocate pursuant to this paragraph 
with respect to information or legal advice from the 
staff of the Office of Chief Counsel shall have no 
effect on any privilege which otherwise applies to such 
information or legal advice.''.
(b) Annual Reports.--Section 7803(c)(2)(B)(ii) is amended--
(1) in subclause (XII), by striking ``and'' at the end,
(2) in subclause (XIII), by striking the period at the end 
and inserting ``; and'', and
(3) by adding at the end the following new subclause:
``(XIV) identify any failure by the 
Commissioner to provide access to any 
information, advice, or meeting 
described in subparagraph (A) of 
paragraph (6) by the date required 
under subparagraph (B) of such 
paragraph.''.
(c) Effective Date.--The amendment made by this section shall take 
effect on the date of enactment of this Act.

SEC. 404. REPEAL OF LIMITATION PERIOD SUSPENSION FOR TAXPAYERS SEEKING 
ASSISTANCE FROM TAS.

(a) In General.--Section 7811 is amended--
(1) by striking subsection (d), and
(2) by redesignating subsections (e) through (g) as 
subsections (d) through (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 amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 405. OPERATIONS TO ASSIST TAXPAYERS EXPERIENCING HARDSHIPS DURING 
LAPSE IN APPROPRIATIONS.

Notwithstanding section 1341(a) of title 31, United States Code, 
during any lapse in appropriations, the Commissioner and the Office of 
the Taxpayer Advocate may incur obligations in advance of 
appropriations for such amounts as may be necessary--
(1) to assist any taxpayer who is or may be experiencing an 
economic hardship (within the meaning of section 6343(a)(1)(D) 
of the Internal Revenue Code of 1986) as a result of any action 
or inaction by the Internal Revenue Service, and
(2) for the purpose of complying with any Taxpayer 
Assistance Order issued pursuant to section 7811 of such Code.

TITLE V--TAX RETURN PREPARERS

SEC. 501. PENALTIES FOR TAX RETURN PREPARERS WHO IMPROPERLY ALTER 
RETURNS.

(a) In General.--Paragraph (1) of section 6696(e) is amended to 
read as follows:
``(1) Return.--The term `return' means--
``(A) any return of any tax imposed by this title,
``(B) any administrative adjustment request under 
section 6227,
``(C) any partnership adjustment tracking report 
under section 6226(b)(4)(A), and
``(D) any other document purporting to be a return, 
request, or report described in subparagraphs (A) 
through (C).''.
(b) Effective Date.--The amendment made by this section shall take 
effect on the date of enactment of this Act.

SEC. 502. PENALTIES FOR FAILURE TO PROVIDE VALID PREPARER 
IDENTIFICATION NUMBERS.

(a) In General.--Section 6695 is amended--
(1) by striking subsection (c) and inserting the following:
``(c) Failure To Furnish Valid Identifying Number.--
``(1) In general.--
``(A) Penalty.--Any person who is a tax return 
preparer with respect to any return or claim for refund 
and who fails to furnish an identifying number which 
complies with section 6109(a)(4)(A) with respect to 
such return or claim shall pay a penalty of $250 for 
such failure.
``(B) Non-compliance.--For purposes of this 
paragraph, an identifying number shall be deemed to not 
comply with section 6109(a)(4)(A) if such identifying 
number--
``(i) is assigned to another person,
``(ii) does not exist,
``(iii) is inactive or expired,
``(iv) has been withdrawn,
``(v) is suspended or has been revoked, or
``(vi) is otherwise invalid for use by the 
tax return preparer.
``(2) Exception.--The penalty imposed under paragraph (1) 
shall not apply if it is shown that such failure is due to 
reasonable cause and not due to willful neglect.
``(3) Limitation.--The maximum penalty imposed under this 
subsection on any person with respect to documents filed during 
any calendar year shall not exceed $75,000.'',
(2) by redesignating subsection (h) as subsection (i),
(3) by inserting after subsection (g) the following new 
subsection:
``(h) Use of Invalid or Appropriated Electronic Filing 
Identification Number.--
``(1) In general.--Any person who is an electronic return 
originator with respect to any return or claim for refund who 
fails to use, with respect to such return or claim, an 
electronic filing identification number which is assigned to 
such person by the Secretary, shall pay a penalty of $250 for 
such failure, unless it is shown that such failure is due to 
reasonable cause and not due to willful neglect.
``(2) Definitions.--For purposes of this subsection--
``(A) Electronic return originator.--
``(i) In general.--The term `electronic 
return originator' means a person who 
originates the electronic submission of 1 or 
more returns or claims for refund on behalf of 
other taxpayers.
``(ii) Exceptions.--The term `electronic 
return originator' shall not include a person 
merely because such person originates an 
electronic submission described in clause (i)--
``(I) by providing services which 
are limited to typing, reproduction, or 
other mechanical assistance to a person 
described in such subclause,
``(II) at the direction of an 
employer (or of an officer or employee 
of the employer) by whom such person is 
regularly and continuously employed,
``(III) as a fiduciary, or
``(IV) in response to a 
determination by the Secretary that 
directly or indirectly affects the tax 
liability of a taxpayer.
``(B) Electronic filing identification number.--
``(i) In general.--The term `electronic 
filing identification number' means an 
identification number assigned by the Secretary 
to a person authorized to file returns in 
electronic format on behalf of other taxpayers.
``(ii) Suspension or revocation.--In the 
case of any electronic filing identification 
number which has been suspended or revoked by 
the Secretary, such number shall not be deemed 
valid for purposes of paragraph (1).'', and
(4) in subsection (i)(1), as redesignated by paragraph (2), 
by striking ``and (g)'' and inserting ``(g), and (h)''.
(b) Modification of Definition of Tax Return Preparer.--Section 
7701(a)(36) is amended--
(1) by striking subparagraph (A) and inserting the 
following:
``(A) In general.--The term `tax return preparer' 
means any person who prepares for compensation, or who 
employs one or more persons to prepare for 
compensation, any return of tax imposed by this title, 
any document purporting to be a return of tax imposed 
by this title, or any claim for refund of tax imposed 
by this title. For purposes of the preceding sentence, 
the preparation of a substantial portion of a return, 
document purporting to be a return, or claim for refund 
shall be treated as if it were the preparation of such 
return, document purporting to be a return, or claim 
for refund.'', and
(2) in subparagraph (B)--
(A) in clause (ii), by striking ``return or claim 
for refund'' and inserting ``return, document 
purporting to be a return, or claim for refund'', and
(B) in clause (iii), by striking ``return or claim 
for refund'' and inserting ``return, document 
purporting to be a return, or claim for refund''.
(c) Prevention of Inadvertent Errors Involving Identifying 
Numbers.--
(1) In general.--Not later than 18 months after the date of 
enactment of this Act, the Secretary shall establish a program 
to improve voluntary compliance with respect to requirements 
under subsections (c) and (h) of section 6695 of the Internal 
Revenue Code of 1986 (as amended by this section) and avoid the 
imposition of penalties under such subsections.
(2) Consultation.--The program described in paragraph (1) 
shall be established by the Secretary following consultation 
with--
(A) the National Taxpayer Advocate,
(B) qualified low-income taxpayer clinics that have 
received a grant under section 7526 of the Internal 
Revenue Code of 1986, and
(C) other relevant stakeholders.
(3) Opportunity to correct.--For purposes of the program 
described in paragraph (1), the Secretary shall--
(A) prior to acceptance for processing, identify--
(i) any return or claim for refund which 
has been electronically submitted and does not 
include an identifying number which complies 
with section 6109(a)(4)(A) of the Internal 
Revenue Code of 1986, and
(ii) any return or claim for refund which 
has been electronically submitted and does not 
include an electronic filing identification 
number (as defined in section 6695(h)(2)(B) of 
such Code), and
(B) provide an opportunity for the person who 
submitted such return or claim for refund to avoid 
imposition of a penalty under subsection (c) or (h) of 
section 6695 of such Code, as applicable, if the 
correct identifying number or electronic filing 
identification number is provided.
(d) Criminal Penalty.--
(1) In general.--Part I of subchapter A of chapter 75 is 
amended by adding at the end the following new section:

``SEC. 7218. WILLFUL FAILURE TO PROVIDE A VALID PREPARER IDENTIFICATION 
NUMBER.

``(a) In General.--Any tax return preparer who, with respect to any 
return, document purporting to be a return, or claim for refund 
willfully fails to furnish an identifying number which complies with 
section 6109(a)(4)(A) with respect to such return or document or 
willfully furnishes a preparer tax identification number which is 
described in section 6695(c)(1)(B) with intent to evade or defeat the 
application of any requirement under any provision of this title which 
requires such preparer to obtain and furnish such number, shall, in 
addition to any other penalties provided by law, be guilty of a felony 
and, upon conviction thereof, shall be fined not more than $50,000 
($100,000 in the case of a corporation), or imprisoned not more than 3 
years, or both, together with the costs of prosecution.
``(b) Preparer Tax Identification Number.--In this section, the 
term `preparer tax identification number' means an identifying number 
described in section 6109(a)(4)(A).''.
(2) Clerical amendment.--The table of sections for part I 
of subchapter A of chapter 75 is amended by adding at the end 
the following new item:

``Sec. 7218. Willful failure to provide a valid preparer identification 
number.''.
(e) Effective Date.--The amendments made by this section shall 
apply to returns or claims for refund filed after the date which is 18 
months after the date of enactment of this Act.

SEC. 503. PENALTIES FOR IMPROPER TAX PREPARATION OR MISAPPROPRIATION OF 
REFUNDS.

(a) Other Assessable Penalties With Respect to the Preparation of 
Tax Returns for Other Persons.--Section 6695, as amended by the 
preceding provisions of this Act, is amended--
(1) in subsection (a)--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$25,000'' and inserting 
``$50,000'',
(2) in subsection (b)--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$25,000'' and inserting 
``$75,000'',
(3) in subsection (d)--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$25,000'' and inserting 
``$50,000'',
(4) in subsection (e)--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$25,000'' and inserting 
``$75,000'',
(5) in subsection (g), by striking ``$500'' and inserting 
``$1,000'', and
(6) in subsection (i)(1)--
(A) by striking ``2014'' and inserting ``2025'', 
and
(B) by striking ``calendar year 2013'' and 
inserting ``calendar year 2024''.
(b) Misappropriation of Refunds.--
(1) In general.--Subsection (f) of section 6695 is amended 
to read as follows:
``(f) Misappropriation.--
``(1) In general.--Any person who is a tax return preparer 
who misappropriates any payment made in respect of the taxes 
imposed by this title which is issued to a taxpayer (other than 
the tax return preparer) shall pay a penalty in an amount 
determined under paragraph (2).
``(2) Penalty.--The amount of the penalty determined under 
this paragraph shall, with respect to each payment described in 
paragraph (1), be equal to the greater of--
``(A) $1,000, or
``(B) the full amount of such payment.
``(3) Exception.--Paragraph (1) shall not apply with 
respect to the deposit by a bank (within the meaning of section 
581) of the full amount of the payment in the taxpayer's 
account in such bank for the benefit of the taxpayer.''.
(2) Conforming amendment.--Section 6695(i)(1) is amended by 
striking ``(f),'' and inserting ``(f)(2)(A),''.

SEC. 504. AUTHORITY TO DENY, REVOKE, OR SUSPEND PREPARER TAX 
IDENTIFICATION NUMBERS.

(a) In General.--Section 6109 is amended--
(1) in subsection (a), by striking paragraph (4) and 
inserting the following:
``(4) Furnishing identifying number of tax return 
preparer.--
``(A) In general.--Any return, claim for refund, or 
document purporting to be a return or claim for refund 
which is prepared by a tax return preparer shall bear 
such identifying number for securing proper 
identification of such preparer, their employer, or 
both, as may be prescribed.
``(B) Suspension or revocation.--In the case of any 
identifying number which has been suspended or revoked 
by the Secretary under subsection (e), such number 
shall not be deemed valid for purposes of subparagraph 
(A).
``(C) Definitions.--For purposes of this section--
``(i) Specified practitioner.--The term 
`specified practitioner' means a certified 
public accountant, attorney, or enrolled 
agent--
``(I) who is--
``(aa) in good standing 
with the Department of the 
Treasury and State licensing 
authorities, and
``(bb) authorized to 
represent persons before the 
Department of the Treasury 
under section 330 of title 31, 
United States Code, and
``(II) whose professional license 
or certification has not been revoked 
or suspended.
``(ii) Return; claim for refund.--The terms 
`return' and `claim for refund' have the 
respective meanings given to such terms by 
section 6696(e).'', and
(2) by inserting after subsection (d) the following:
``(e) Identifying Number of Tax Return Preparer.--
``(1) In general.--The Secretary shall maintain a program 
for administration of preparer tax identification numbers 
required under subsection (a)(4), which shall include 
restrictions on the issuance of such numbers to any individual 
other than an individual who--
``(A) meets the suitability requirements of 
paragraph (2) and the education requirements of 
paragraph (3),
``(B) meets the state program requirements of 
paragraph (4), or
``(C) is a specified practitioner.
``(2) Demonstration of suitability.--
``(A) In general.--An individual meets the 
suitability requirements of this paragraph if such 
individual has demonstrated to the Secretary the 
individual's suitability to be a tax return preparer 
by--
``(i) providing such information as the 
Secretary determines necessary, and
``(ii) passing a background check, 
including a review by the Secretary regarding 
compliance with personal tax obligations.
``(B) Conduct demonstrating lack of suitability.--
For purposes of subparagraph (A), an individual shall 
be deemed to have failed to demonstrate their 
suitability to be a tax return preparer if--
``(i) any license or registration issued to 
such individual by a State to prepare tax 
returns has been suspended or revoked by such 
State, or
``(ii) the Secretary determines that such 
individual is described in clauses (ii) through 
(vi) of paragraph (5)(A).
``(C) Regulations and guidance.--The Secretary 
shall issue such regulations or other guidance as the 
Secretary determines necessary to carry out the 
purposes of this paragraph.
``(D) Prohibition on examinations.--For purposes of 
subparagraph (A), except as provided in paragraph 
(3)(C)(iii), the Secretary may not require an 
examination as a prerequisite for the assignment or 
renewal of a preparer tax identification number.
``(E) Grandfathering of prior background checks.--
``(i) In general.--Subject to clause (ii), 
for purposes of subparagraph (A)(ii), in the 
case of a class of individuals (as identified 
by the Secretary) who have passed a background 
check prior to the date of enactment of this 
subsection, the Secretary may deem such class 
of individuals to have satisfied the 
requirement under such subparagraph.
``(ii) Nonapplication to requirement 
regarding compliance with personal tax 
obligations.--Clause (i) shall not apply with 
respect to review by the Secretary under 
subparagraph (A)(ii) regarding compliance with 
personal tax obligations.
``(3) Educational programs.--
``(A) In general.--An individual shall meet the 
education requirements of this paragraph if such 
individual completes a specified number of hours of 
educational programs on ethics, professional 
responsibility, and tax law (including recently enacted 
Federal income tax legislation) as required by the 
Secretary prior to the assignment or renewal of a 
preparer tax identification number.
``(B) Additional educational requirements for 
renewal.--The Secretary may require any individual 
seeking the renewal of a preparer tax identification 
number to complete educational programs in addition to 
those required under subparagraph (A). Any educational 
programs required under this subparagraph shall be 
based on--
``(i) a review of returns which include the 
preparer tax identification number of such 
preparer, and
``(ii) any errors identified by the 
Secretary as part of the review described in 
clause (i).
``(C) Other requirements.--For purposes of this 
paragraph, the Secretary--
``(i) may not require a tax return preparer 
to annually complete more than 18 hours of 
educational programs,
``(ii) shall require that any educational 
program include written materials which satisfy 
such standards as are established by the 
Secretary,
``(iii) shall require that any educational 
program include a method to ensure that the tax 
return preparer attended the program and 
sufficiently understood the material presented, 
and
``(iv) may not direct any educational 
program to be completed through a specific 
provider.
``(D) Notice of failure to timely complete 
requirements.--The Secretary shall provide any tax 
return preparer who fails to complete the requirements 
of this paragraph notice of such failure and a 30-day 
period in which to cure such failure.
``(E) Publication of approved courses.--The 
Secretary shall publish, on the public website of the 
Internal Revenue Service--
``(i) a list of educational programs which 
have been determined by the Secretary to 
satisfy the requirement under clause (ii) of 
subparagraph (C) (and, if applicable, the 
requirement under clause (iii) of such 
subparagraph), including the providers of such 
programs, and
``(ii) any such requirements as the 
Secretary deems necessary to impose with 
respect to any additional programs required 
under subparagraph (B), provided that such 
requirements are similar to the requirements 
provided under section 330 of title 31, United 
States Code, or regulations prescribed 
thereunder.
``(4) Exemption.--
``(A) In general.--Subject to subparagraph (B), any 
individual meets the state program requirements of this 
paragraph if such individual maintains a valid State 
license or registration issued by a State licensing 
program or State registration program (including State 
tax education councils) which includes examination, 
education, and background check requirements that are 
comparable to the suitability requirements described in 
paragraph (2) and the education requirements described 
in paragraph (3).
``(B) Grandfathering of certain programs.--For 
purposes of subparagraph (A), with respect to 
determining whether a State licensing program or State 
registration program (including State tax education 
councils) includes examination, education, and 
background check requirements which are comparable to 
the suitability requirements described in paragraph (2) 
and the education requirements described in paragraph 
(3), such determination shall be made by the Secretary 
without regard to whether such requirements were 
included in such program at the time that such 
individual was licensed or registered under such 
program, provided that such requirements are, as of the 
date that such individual requested assignment or 
renewal of a preparer tax identification number under 
this subsection, presently included in such program.
``(5) Authority to revoke or suspend preparer tax 
identification number.--
``(A) In general.--The Secretary may suspend or 
revoke a preparer tax identification number if, after 
notice and opportunity for a hearing, the Secretary 
makes a determination that the tax return preparer--
``(i) has not met--
``(I) the suitability requirements 
of paragraph (2) and the education 
requirements of paragraph (3), or
``(II) the state program 
requirements of paragraph (4),
``(ii) is incompetent, as demonstrated by a 
repeated pattern of errors in returns that were 
prepared by such preparer which affected the 
determination of tax liability in such returns,
``(iii) is disreputable, as demonstrated 
by--
``(I) giving false or misleading 
information under paragraph (2)(A)(i),
``(II) willful failure to comply 
with personal tax obligations,
``(III) an unpaid tax delinquency--
``(aa) which is outstanding 
for greater than 180 days,
``(bb) which is not being 
actively disputed, and
``(cc) which is not--

``(AA) subject to 
an agreement or 
compromise under 
section 6159 or 7122,

``(BB) classified 
as currently not 
collectible (within the 
meaning of section 
6343(e)), or

``(CC) subject to a 
pending application for 
such an agreement, 
compromise, or status,

``(IV) revocation or suspension of 
any license or registration issued by a 
State for the preparation of tax 
returns,
``(V) conviction of any criminal 
offense--
``(aa) involving dishonesty 
or breach of trust, or
``(bb) which is punishable 
under this title,
``(VI) a final determination of 
liability for a penalty pursuant to 
section 6694, 6695(h), 6700, 6701, 
6702, or 6713,
``(VII) subject to an injunction 
under section 7407 or 7408, or
``(VIII) any conduct similar to the 
conduct described in subclauses (I) 
through (VII), as provided under 
regulations prescribed by the 
Secretary,
``(iv) in the case of a person subject to 
regulation under section 330 of title 31, 
United States Code, or regulations prescribed 
thereunder, has violated the requirements under 
such section or such regulations,
``(v) with intent to defraud, willfully and 
knowingly misleads or threatens--
``(I) the person whose return or 
claim for refund is being prepared, or
``(II) a prospective person seeking 
for a return or claim for refund to be 
prepared, or
``(vi) has engaged in conduct (as 
identified in regulations or guidance issued by 
the Secretary) which is similar to the conduct 
described in clauses (i) through (v) and that 
the denial, suspension, or revocation of such 
number would promote compliance with the 
requirements of this title and effective tax 
administration.
``(B) Monetary penalty.--
``(i) In general.--In addition to, or in 
lieu of, any suspension or revocation of a 
preparer tax identification number under 
subparagraph (A), the Secretary may impose a 
penalty in any amount not exceeding $5,000.
``(ii) Reduction.--Any penalty imposed 
under clause (i) shall be reduced by the amount 
of any penalty imposed under section 6694, 
6695, 6700, 6701, 6702, or 6713 with regard to 
the same conduct.
``(iii) Adjustment for inflation.--
``(I) In general.--In the case of 
any penalty imposed during any calendar 
year beginning after 2025, the dollar 
amount in clause (i) shall be increased 
by an amount equal to--
``(aa) such dollar amount, 
multiplied by
``(bb) the cost-of-living 
adjustment determined under 
section 1(f)(3) for the 
calendar year, determined by 
substituting `calendar year 
2024' for `calendar year 2016' 
in subparagraph (A)(ii) 
thereof.
``(II) Rounding.--If any amount 
determined under subclause (I) is not a 
multiple of $100, such amount shall be 
rounded to the nearest multiple of 
$100.
``(C) Reinstatement.--The Secretary shall, through 
regulations or other guidance, establish procedures to 
allow any tax return preparer whose preparer tax 
identification number has been suspended or revoked 
pursuant to subparagraph (A) to have such number 
reissued (or, in the case of a suspension, for such 
suspension to be terminated), provided that such 
preparer demonstrates, to the satisfaction of the 
Secretary, that--
``(i) the conduct described in such 
paragraph which was the basis for such 
suspension or revocation has been sufficiently 
addressed or resolved (such as through 
completion of educational programs described in 
paragraph (3) or reinstatement of a license 
issued by a State for the preparation of tax 
returns), and
``(ii) effective tax administration would 
be promoted by terminating the suspension of 
such number or reissuing such number to such 
preparer.
``(D) Preliminary suspension.--
``(i) In general.--After notice and 
opportunity to respond, the Secretary may 
suspend the preparer tax identification number 
of a tax return preparer for a period of not 
greater than 180 days if the Secretary 
determines that--
``(I) such tax return preparer has 
engaged in any conduct described in 
clauses (i) through (vi) of 
subparagraph (A), and
``(II) such suspension is necessary 
to prevent serious economic harm to 
taxpayers or serious impairment of 
effective tax administration, such as 
to prevent the filing of fraudulent 
returns or claims for refund.
``(ii) Limitation.--For purposes of clause 
(i), if the preparer tax identification number 
of a tax return preparer has been suspended 
pursuant to such clause 2 times during any 5-
year period, the Secretary may not issue an 
additional suspension pursuant to such clause 
with respect to such preparer during such 
period unless such suspension is subsequent to 
a determination by the Secretary to suspend or 
revoke the preparer tax identification number 
of such preparer pursuant to subparagraph (A).
``(E) Regulations.--Not later than 24 months after 
the date of enactment of this subsection, the Secretary 
shall issue such regulations or other guidance as the 
Secretary determines necessary to carry out the 
purposes of this paragraph, including--
``(i) guidelines that identify the 
particular penalty applicable to any conduct 
described in subparagraph (A), and
``(ii) the manner of notice and opportunity 
to respond for purposes of subparagraph (D).
``(F) No inference.--Nothing in this paragraph 
shall be construed to create any inference with respect 
to the definition or meaning of any term used in 
section 330 of title 31, United States Code, or 
regulations prescribed thereunder.
``(6) Appeal.--In the case of any tax return preparer for 
whom the Secretary has made a determination--
``(A) that such preparer has not met the 
requirements of paragraphs (2) and (3) or of paragraph 
(4) and that issuance of a preparer tax identification 
number should be denied,
``(B) under paragraph (5)(A) that the preparer tax 
identification number for such preparer should be 
suspended or revoked, or
``(C) that a penalty should be imposed pursuant to 
paragraph (5)(B),
such preparer shall be provided with an opportunity to appeal 
such determination pursuant to procedures (as established by 
the Secretary through regulations or other guidance) which are 
similar to the procedures provided under section 330 of title 
31, United States Code, and regulations prescribed thereunder.
``(7) Disclosure of final determinations.--
``(A) In general.--In the case of any 
determination--
``(i) in which an extended suspension or 
revocation of a preparer tax identification 
number is imposed under this subsection, and
``(ii) for which all administrative and 
judicial appeals are exhausted,
not later than 30 days following such determination, 
the Secretary shall publish such determination on the 
public website of the Internal Revenue Service, which 
shall include a statement of the facts and 
circumstances relating to such determination and the 
reasons for the determination.
``(B) Extended suspension.--For purposes of 
subparagraph (A), the term `extended suspension' means 
a suspension issued by the Secretary pursuant to 
paragraph (5)(A) for a period of greater than 180 days.
``(8) Preparer tax identification number.--For purposes of 
this subsection, the term `preparer tax identification number' 
means an identifying number described in subsection 
(a)(4)(A).''.
(b) Determinations Regarding Practice Before the Department.--
Section 330 of title 31, United States Code, is amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) the following:
``(e) Disclosure of Final Determinations.--In the case of any 
determination under subsection (c) or (d)--
``(1) in which a suspension, disbarment, or censure, or 
other penalty is imposed, and
``(2) for which all administrative and judicial appeals are 
exhausted,
not later than 30 days following such determination, the Secretary 
shall publish such determination on a public website, which shall 
include a statement of the facts and circumstances relating to such 
determination and the reasons for the determination.''.
(c) Disclosure Relating to Misconduct by Practitioners and Tax 
Return Preparers.--
(1) In general.--Section 6103(k) is amended by adding at 
the end the following new paragraph:
``(16) Disclosure relating to misconduct by practitioners 
and tax return preparers.--Under such procedures as the 
Secretary may prescribe, the Secretary may disclose returns and 
return information to the extent the Secretary determines it is 
necessary to publish determinations pursuant to section 
6109(e)(7) and section 330(e) of title 31, United States Code, 
provided that such disclosure is redacted to remove--
``(A) any name, address, or other identifying 
information with respect to any persons other than the 
representative or tax return preparer who is the 
subject of such determination, and
``(B) such other information as the Secretary 
determines appropriate to protect the privacy of such 
persons.''.
(2) Conforming amendment.--Section 6103(p)(3)(A) is amended 
by striking ``or (9)'' and inserting ``(9), or (16)''.
(d) Requirement To Include Identifying Number for Paid Preparer of 
Offer-in-Compromise.--
(1) In general.--Section 6109(a) is amended by inserting 
after paragraph (4) the following new paragraph:
``(5) Furnishing identifying number for offer-in-
compromise.--Any offer-in-compromise (as described in section 
7122), including any required schedule or statement, which has 
been prepared by any person for compensation shall include such 
identifying number as may be prescribed for securing proper 
identification of such person.''.
(2) Penalty.--Section 7122 is amended by adding at the end 
the following new subsection:
``(h) Failure To Furnish Identifying Number.--
``(1) In general.--
``(A) Penalty.--Any person who prepares an offer-
in-compromise (including any required schedule or 
statement) for compensation and who fails to include an 
identifying number which complies with section 
6109(a)(5) with respect to such offer-in-compromise 
shall pay a penalty of $250 for such failure.
``(B) Non-compliance.--For purposes of this 
paragraph, an identifying number shall be deemed to not 
comply with section 6109(a)(5) if such identifying 
number--
``(i) is assigned to another person,
``(ii) does not exist,
``(iii) is inactive or expired,
``(iv) has been withdrawn,
``(v) is suspended or has been revoked, or
``(vi) is otherwise invalid for use by the 
preparer.
``(C) Adjustment for inflation.--
``(i) In general.--In the case of any 
documents filed during any calendar year 
beginning after 2025, the $250 amount in 
subparagraph (A) shall be increased by an 
amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for the calendar year, 
determined by substituting `calendar 
year 2024' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
``(ii) Rounding.--If any amount determined 
under clause (i) is not a multiple of $10, such 
amount shall be rounded to the nearest multiple 
of $10.
``(2) Exception.--The penalty imposed under paragraph (1) 
shall not apply if it is shown that such failure is due to 
reasonable cause and not due to willful neglect.
``(3) Limitation.--
``(A) In general.--The maximum penalty imposed 
under this subsection on any person with respect to 
documents filed during any calendar year shall not 
exceed $75,000.
``(B) Adjustment for inflation.--
``(i) In general.--In the case of any 
penalty imposed during any calendar year 
beginning after 2025, the $75,000 amount in 
subparagraph (A) shall be increased by an 
amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for the calendar year, 
determined by substituting `calendar 
year 2024' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
``(ii) Rounding.--If any amount determined 
under clause (i) is not a multiple of $1,000, 
such amount shall be rounded to the nearest 
multiple of $1,000.
``(4) Other applicable rules.--Rules similar to the rules 
of section 6696 shall apply for purposes of this subsection.''.
(e) GAO Study and Report on the Exchange of Information Between the 
IRS and State Taxation Authorities.--
(1) In general.--Not later than 18 months after the date of 
the enactment of this Act, the Comptroller General of the 
United States shall conduct a study and submit to Congress a 
report on the sharing of information between the Secretary and 
State authorities, as authorized under subsections (d) and 
(k)(5) of section 6103 of the Internal Revenue Code of 1986, 
regarding identification numbers issued to paid tax return 
preparers and return preparer minimum standards.
(2) Increased information sharing.--The study and report 
described in paragraph (1) shall include an analysis of the 
impact that increased information sharing between Federal and 
State authorities would have on efforts to enforce minimum 
standards on paid tax return preparers.
(3) Audit of internal revenue service.--Section 6103(i)(8) 
is amended by adding at the end the following new subparagraph:
``(D) Application to study conducted under taxpayer 
assistance and service act.--For purposes of this 
paragraph, the study and report described in section 
504(e)(1) of the Taxpayer Assistance and Service Act 
shall be deemed to be an audit of the Internal Revenue 
Service.''.
(f) Publication of Common Errors and Penalties.--Not later than 36 
months after the date of the enactment of this Act and annually 
thereafter, the Commissioner of the Internal Revenue shall publish on 
the public website of the Internal Revenue Service--
(1) the 10 most frequent errors found on tax returns which 
were prepared by tax return preparers (as defined in section 
7701(a)(36) of the Internal Revenue Code of 1986) during the 
most recent calendar year for which data is available, and
(2) with respect to the preceding calendar year, the top 10 
reasons that tax return preparers were--
(A) subject to penalties imposed under the Internal 
Revenue Code of 1986, or
(B) otherwise disciplined under section 6109 of 
such Code or section 330 of title 31, United States 
Code.
(g) Rule of Construction.--Nothing in this section (or amendment 
made by this section) shall be construed to require the Secretary to 
eliminate or terminate any existing program or authority--
(1) which, pursuant to section 330 of title 31, United 
States Code, permits a tax return preparer to represent a 
taxpayer before the Department of the Treasury in cases in 
which such preparer prepared and signed the return of tax, or
(2) for publication of a public database on the website of 
the Internal Revenue Service of tax return preparers who have 
satisfied the requirements for issuance of a preparer tax 
identification number (as defined in section 6109(e)(8) of the 
Internal Revenue Code of 1986).
(h) Effective Date.--
(1) In general.--The amendments made by this section shall 
take effect on the date which is 180 days after the date of 
enactment of this Act.
(2) Transition rules for educational requirements for tax 
return preparers.--
(A) Annual filing season program.--In the case of 
any tax return preparer who, as of the date of 
enactment of this Act, has received a record of 
completion with respect to the Annual Filing Season 
Program established by the Internal Revenue Service, 
such tax return preparer shall be deemed to have 
satisfied the education requirements of section 
6109(e)(3) of the Internal Revenue Code of 1986 (as 
added by this section) for the calendar year for which 
such record of completion applies.
(B) Approved courses.--In the case of any entity 
which, as of the date of enactment of this Act, is 
approved to provide continuing education for purposes 
of the Annual Filing Season Program established by the 
Internal Revenue Service, such entity shall be deemed 
to satisfy the applicable requirements under section 
6109(e)(3) of the Internal Revenue Code of 1986 until 
the date on which the Secretary has--
(i) issued such regulations or other 
guidance as the Secretary determines necessary 
for purposes of establishing standards for 
educational programs under such section, and
(ii) pursuant to subparagraph (E) of such 
section, published a list of educational 
programs which have been determined by the 
Secretary to satisfy the applicable 
requirements under such section.

TITLE VI--APPEALS

SEC. 601. AUTHORIZATION FOR OFFICE OF APPEALS TO HIRE ATTORNEYS.

Subparagraph (B) of section 7803(e)(6) is amended to read as 
follows:
``(B) Hiring of counsel.--The Chief of Appeals 
shall have the authority to appoint counsel in the 
Internal Revenue Service Independent Office of Appeals 
to report directly to the Chief of Appeals. Any counsel 
appointed pursuant to this subparagraph shall not 
report to the Chief Counsel for the Internal Revenue 
Service and shall not represent the Government in 
litigation. Any legal interpretation of counsel 
appointed pursuant to this subparagraph shall not be 
binding on the Secretary.''.

SEC. 602. AUTHORIZATION FOR OFFICE OF APPEALS TO DIRECT HIRE CERTAIN 
INDIVIDUALS.

Section 7803(e)(6) is amended by adding at the end the following:
``(C) Authority to appoint individuals not employed 
by internal revenue service.--The Secretary may utilize 
direct hire authority to recruit and appoint qualified 
applicants, without regard to any notice or preference 
requirements, to positions within the Internal Revenue 
Service Independent Office of Appeals, provided that 
such applicants are not employees of the Internal 
Revenue Service engaged in enforcement functions.''.

SEC. 603. RESPONSES TO CLAIMS FOR REFUND REQUIRED; APPEAL OF CLAIMS FOR 
REFUND AUTHORIZED.

(a) In General.--Subsection (l) of section 6402 is amended to read 
as follows:
``(l) Explanation of Reason for Refund Disallowance; Appeals.--
``(1) In general.--Not later than the applicable date, the 
Secretary shall review any claim for refund, make a 
determination with respect to such claim, and, in the case of a 
disallowance of such claim (in whole or in part), provide the 
taxpayer with a detailed written explanation for such 
disallowance, which shall--
``(A) be mailed to the last known address of the 
taxpayer, and
``(B) in the case of any taxpayer entitled to an 
appeal of such determination, include instructions for 
appealing such disallowance to the Internal Revenue 
Service Independent Office of Appeals.
``(2) Failure to make timely determination.--
``(A) In general.--In the case of any claim for 
refund for which the Secretary fails to satisfy the 
requirements of paragraph (1) by the applicable date, 
for purposes of determining interest on any overpayment 
for any period subsequent to such date, the overpayment 
rate (as established under section 6621(a)(1)) shall be 
increased by 1 percentage point.
``(B) Limitation.--With respect to any claim for 
refund described in subparagraph (A), the amount of any 
increase in interest on any overpayment pursuant to 
such subparagraph shall not exceed $500.
``(C) Adjustment for inflation.--
``(i) In general.--In the case of any claim 
for refund filed during any calendar year 
beginning after 2026, the $500 amount in 
subparagraph (B) shall be increased by an 
amount equal to--
``(I) such dollar amount, 
multiplied by
``(II) the cost-of-living 
adjustment determined under section 
1(f)(3) for the calendar year, 
determined by substituting `calendar 
year 2024' for `calendar year 2016' in 
subparagraph (A)(ii) thereof.
``(ii) Rounding.--If any amount determined 
under clause (i) is not a multiple of $50, such 
amount shall be rounded to the nearest multiple 
of $50.
``(3) Appeals.--
``(A) In general.--Any disallowance of a claim for 
refund may, within 30 days after the date such 
disallowance is mailed (or, if mailed to an address 
outside of the United States, 90 days), be appealed to 
the Internal Revenue Service Independent Office of 
Appeals. Notwithstanding paragraph (4) of section 
6532(a), during the period in which any such appeal is 
pending before the Internal Revenue Service Independent 
Office of Appeals (and for 30 days thereafter), the 2-
year period in paragraph (1) of such section for filing 
suit for refund after disallowance of a claim shall be 
suspended.
``(B) Deemed disallowance.--For purposes of 
subparagraph (A), in the case of any claim for refund 
for which the Secretary has failed to make a 
determination with respect to such claim by the date 
described in paragraph (5)(A), the taxpayer may elect 
for such claim to be deemed to have been disallowed by 
the Secretary as of such date.
``(4) Frivolous claims.--
``(A) In general.--In the case of any frivolous 
claim--
``(i) paragraphs (1) and (3) shall not 
apply, and
``(ii) not later than the applicable date, 
written notification of the denial of such 
claim shall be mailed to the last known address 
of the taxpayer.
``(B) Definition.--For purposes of this paragraph, 
the term `frivolous claim' means a claim for refund 
which is based on a position which--
``(i) a Federal court has determined to be 
frivolous, and
``(ii) the Secretary has identified as 
frivolous for purposes of subsection (c) of 
section 6702.
``(5) Applicable date.--For purposes of this subsection, 
the term `applicable date' means, with respect to any claim for 
refund--
``(A) the date which is 12 months after the date of 
receipt of such claim by the Secretary, or
``(B) such other date as is agreed to by the 
Secretary and the taxpayer.''.
(b) Effective Date.--The amendment made by this section shall apply 
to any claim for refund received after the date which is 12 months 
after the date of enactment of this Act.

SEC. 604. APPEALS OF RETURNED OFFERS.

Section 7122(e) is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) for an independent administrative review of--
``(A) any determination that an offer-in-compromise 
be returned to the taxpayer because such offer-in-
compromise is not accepted for processing or is 
otherwise determined to be nonprocessable before such 
determination is communicated to the taxpayer, and
``(B) any rejection of a proposed offer-in-
compromise or installment agreement made by a taxpayer 
under this section or section 6159 before such 
rejection is communicated to the taxpayer, and'', and
(2) in paragraph (2), by striking ``any rejection of such 
offer or agreement'' and inserting ``any determination 
described in paragraph (1)(A) or any rejection described in 
paragraph (1)(B)''.

SEC. 605. PURPOSES AND DUTIES OF INDEPENDENT OFFICE OF APPEALS; RIGHT 
OF APPEAL CLARIFIED.

(a) In General.--Section 7803(e) is amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking ``and'' at the 
end,
(B) in subparagraph (C), by striking the period at 
the end and inserting ``, and'', and
(C) by adding at the end the following new 
subparagraph:
``(D) without exception, evaluates and considers 
all hazards of litigation in resolving any case 
referred to the Internal Revenue Service Independent 
Office of Appeals.'', and
(2) by striking paragraph (4) and inserting the following 
new paragraph:
``(4) Right of appeal.--
``(A) In general.--Except as otherwise provided 
under this title, the resolution process described in 
paragraph (3) shall be available to all taxpayers with 
respect to any determination by the Secretary 
concerning a Federal tax controversy, including--
``(i) liability for, or any claim for 
refund of, any tax,
``(ii) liability for, or any claim for 
refund of, any penalty or addition to tax,
``(iii) eligibility for alternatives to 
collection of a tax liability, such as an 
agreement or compromise under section 6159 or 
7122, or
``(iv) any exercise of discretion by the 
Secretary with respect to any determination 
described in clauses (i) through (iii).
``(B) Exceptions.--Subparagraph (A) shall not apply 
with respect to any appeal--
``(i) which is solely based on a challenge 
to the constitutionality or validity of any 
law, regulation, notice, revenue ruling, or 
revenue procedure issued by the Secretary, 
unless there is a final and unreviewable 
decision rendered by a Federal court that the 
relevant provision of such law, regulation, 
notice, revenue ruling, or revenue procedure 
which is being challenged is unconstitutional 
or otherwise invalid,
``(ii) which--
``(I) is based on a position 
which--
``(aa) a Federal court has 
determined to be frivolous, and
``(bb) the Secretary has 
identified as frivolous for 
purposes of subsection (c) of 
section 6702, or
``(II) relates to any penalty 
imposed under such section with respect 
to such position,
``(iii) which relates to any matter agreed 
upon pursuant to an agreement under section 
7121,
``(iv) subject to subparagraph (C), during 
any period in which--
``(I) the Secretary is actively 
investigating whether to refer the 
taxpayer to the Attorney General for 
criminal prosecution,
``(II) a recommendation made by the 
Secretary to the Attorney General for 
the criminal prosecution of the 
taxpayer for any offense connected with 
the administration or enforcement of 
the internal revenue laws is pending, 
or
``(III) any criminal prosecution of 
the taxpayer, or of any other person in 
a case in which the taxpayer is a 
witness, for any offense connected with 
the administration or enforcement of 
the internal revenue laws is pending, 
or
``(v) with respect to any issue in a case 
which, based on the relevant facts and 
circumstances of such case, the Chief Counsel 
for the Internal Revenue Service--
``(I) has designated for 
litigation, and
``(II) is prepared to proceed with 
such litigation in a timely manner.
``(C) Exception for certain criminal 
prosecutions.--Subparagraph (B)(iv) shall not apply if 
the Chief Counsel for the Internal Revenue Service 
determines that the resolution process described in 
paragraph (3) would not interfere with the criminal 
prosecution of a taxpayer.
``(D) Federal tax controversy.--For purposes of 
this paragraph, the term `Federal tax controversy' 
means a dispute described in paragraph (2) or (3) of 
section 301.7803-2 of title 26, Code of Federal 
Regulations (as in effect on the date of enactment of 
the Taxpayer Assistance and Service Act).''.

TITLE VII--WHISTLEBLOWERS

SEC. 701. STANDARD AND SCOPE OF REVIEW OF WHISTLEBLOWER AWARD 
DETERMINATIONS.

(a) In General.--Paragraph (4) of section 7623(b) is amended--
(1) by striking ``appealed to'' and inserting ``reviewed 
by''; and
(2) by adding at the end the following: ``Any review by the 
Tax Court under the preceding sentence shall be de novo and 
shall be based on the administrative record established at the 
time of the original determination and any additional newly 
discovered or previously unavailable evidence.''.
(b) Conforming Amendment.--The heading of paragraph (4) of section 
7623(b) is amended by striking ``Appeal'' and inserting ``Review''.
(c) Effective Date.--The amendments made by this section shall 
apply to petitions under section 7623(b)(4) of the Internal Revenue 
Code of 1986 which are pending on, or filed on or after, the date of 
the enactment of this Act.

SEC. 702. EXEMPTION FROM SEQUESTRATION.

(a) In General.--Section 255 of the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 905) is amended--
(1) by redesignating subsection (k) as subsection (l); and
(2) by inserting after subsection (j) the following:
``(k) Awards to Whistleblowers.--An award authorized under section 
7623 of the Internal Revenue Code of 1986 shall be exempt from 
reduction under any order issued under this part.''.
(b) Applicability.--The amendment made by this section shall apply 
to any sequestration order issued under the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) after the 
date of enactment of this Act.

SEC. 703. WHISTLEBLOWER PRIVACY PROTECTIONS.

(a) In General.--Paragraph (6) of section 7623(b) is amended by 
adding at the end the following new subparagraph:
``(D) Whistleblower anonymity before the tax 
court.--Notwithstanding sections 7458 and 7461, a 
whistleblower shall proceed anonymously before the Tax 
Court for all proceedings under this section absent a 
finding by the Tax Court that a societal interest 
exists for disclosing the whistleblower's identity 
which exceeds the potential harm disclosure could cause 
to the whistleblower.''.
(b) Effective Date.--The amendment made by this section shall apply 
to petitions filed with the Tax Court which are pending on, or filed on 
or after, the date of the enactment of this Act.

SEC. 704. MODIFICATION OF IRS WHISTLEBLOWER REPORT.

(a) In General.--Section 406(c) of division A of the Tax Relief and 
Health Care Act of 2006 is amended by striking ``such use,'' in 
paragraph (1) and inserting ``such use (which shall include a list and 
descriptions of the top tax avoidance schemes, not to exceed 10, 
disclosed by whistleblowers during such year),''.
(b) Effective Date.--The amendments made by this section shall 
apply to reports for fiscal years ending after the enactment of this 
Act.

SEC. 705. INTEREST ON WHISTLEBLOWER AWARDS.

(a) In General.--Section 7623(b) is amended by adding at the end 
the following new paragraph:
``(7) Interest.--
``(A) In general.--If the Secretary has not 
provided notice to an individual described in paragraph 
(1) of a preliminary award recommendation before the 
applicable date, the amount of any award under this 
subsection shall include interest from such date at the 
overpayment rate under section 6621(a).
``(B) Exception.--No interest shall accrue under 
this paragraph after the date on which the Secretary 
provides notice to the individual of a preliminary 
award recommendation.
``(C) Applicable date.--For purposes of this 
paragraph, the applicable date is the date that is 12 
months after the first date on which--
``(i) all of the proceeds resulting from 
actions subject to the award recommendation 
have been collected, and
``(ii) either--
``(I) the statutory period for 
filing a claim or suit for refund has 
expired, or
``(II) the taxpayers subject to the 
actions and the Secretary have agreed 
with finality to the tax or other 
liabilities for the periods at issue, 
and either the taxpayers have waived 
the right to file a claim or suit for 
refund or any claim or suit for refund 
has been resolved.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall 
take effect 180 days after the date of the enactment of this 
Act.
(2) Special rule.--If, as of the date described in 
paragraph (1)--
(A) the Secretary has not provided notice to the 
individual of a preliminary award recommendation as 
described in paragraph (7)(A) of section 7623(b) of the 
Internal Revenue Code of 1986, as added by this Act, 
and
(B) the applicable date provided in paragraph 
(7)(C) of such section, as so added, has passed,
the applicable date for purposes of such paragraph (7)(C) is 
the date that is 12 months after the date described in 
paragraph (1).

SEC. 706. CORRECTION REGARDING DEDUCTIONS FOR ATTORNEY'S FEES.

(a) In General.--Section 62(a)(21)(A)(i) is amended by striking 
``7623(b)'' and inserting ``7623''.
(b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

TITLE VIII--HOSTAGES

SEC. 801. POSTPONEMENT OF TAX DEADLINES FOR HOSTAGES AND INDIVIDUALS 
WRONGFULLY DETAINED ABROAD.

(a) In General.--Chapter 77 is amended by inserting after section 
7510 the following new section:

``SEC. 7511. TIME FOR PERFORMING CERTAIN ACTS POSTPONED FOR HOSTAGES 
AND INDIVIDUALS WRONGFULLY DETAINED ABROAD.

``(a) Time To Be Disregarded.--
``(1) In general.--The period during which an applicable 
individual was unlawfully or wrongfully detained abroad, or 
held hostage abroad, shall be disregarded in determining, under 
the internal revenue laws, in respect of any tax liability of 
such individual--
``(A) whether any of the acts described in section 
7508(a)(1) were performed within the time prescribed 
thereof (determined without regard to extension under 
any other provision of this subtitle for periods after 
the initial date (as determined by the Secretary) on 
which such individual was unlawfully or wrongfully 
detained abroad or held hostage abroad),
``(B) the amount of any interest, penalty, 
additional amount, or addition to the tax for periods 
after such date, and
``(C) the amount of any credit or refund.
``(2) Application to spouse.--The provisions of paragraph 
(1) shall apply to the spouse of any individual entitled to the 
benefits of such paragraph.
``(3) Special rule for overpayments.--The rules of section 
7508(b) shall apply for purposes of this section.
``(b) Applicable Individual.--
``(1) In general.--For purposes of this section, the term 
`applicable individual' means any individual who is--
``(A) a United States national unlawfully or 
wrongfully detained abroad, as determined under section 
302 of the Robert Levinson Hostage Recovery and 
Hostage-Taking Accountability Act (22 U.S.C. 1741), or
``(B) a United States national taken hostage 
abroad, as determined pursuant to the findings of the 
Hostage Recovery Fusion Cell (as described in section 
304 of the Robert Levinson Hostage Recovery and 
Hostage-Taking Accountability Act (22 U.S.C. 1741(b))).
``(2) Information provided to treasury.--For purposes of 
identifying individuals described in paragraph (1), not later 
than January 1, 2027, and annually thereafter--
``(A) the Secretary of State shall provide the 
Secretary with a list of the individuals described in 
paragraph (1)(A), as well as any other information 
necessary to identify such individuals, and
``(B) the Attorney General, acting through the 
Hostage Recovery Fusion Cell, shall provide the 
Secretary with a list of the individuals described in 
paragraph (1)(B), as well as any other information 
necessary to identify such individuals.
``(c) Modification of Treasury Databases and Information Systems.--
The Secretary shall update, as necessary, any database or information 
system of the Department of the Treasury in order to ensure that the 
provisions of subsection (a) are applied with respect to each 
applicable individual.
``(d) Refund and Abatement of Penalties and Fines Imposed Prior to 
Identification as Applicable Individual.--In the case of any applicable 
individual--
``(1) for whom any interest, penalty, additional amount, or 
addition to the tax in respect to any tax liability for any 
taxable year ending during the period described in subsection 
(a)(1) was assessed or collected, and
``(2) who was, subsequent to such assessment or collection, 
determined to be an individual described in subparagraph (A) or 
(B) of subsection (b)(1),
the Secretary shall abate any such assessment and refund any amount 
collected to such applicable individual in the same manner as any 
refund of an overpayment of tax under section 6402.''.
(b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by inserting after the item relating to section 7510 the 
following new item:

``Sec. 7511. Time for performing certain acts postponed for hostages 
and individuals wrongfully detained 
abroad.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of enactment of this Act.

SEC. 802. REFUND AND ABATEMENT OF PENALTIES AND FINES PAID BY ELIGIBLE 
INDIVIDUALS.

(a) In General.--Section 7511, as added by section 801 of this Act, 
is amended by adding at the end the following new subsection:
``(e) Refund and Abatement of Penalties and Fines Paid by Eligible 
Individuals.--
``(1) In general.--
``(A) Establishment.--Not later than January 1, 
2027, the Secretary (in consultation with the Secretary 
of State and the Attorney General) shall establish a 
program to allow any eligible individual (or the spouse 
or any dependent (as defined in section 152) of such 
individual) to apply for a refund or an abatement of 
any amount described in paragraph (2) (including 
interest) to the extent such amount was attributable to 
the applicable period.
``(B) Identification of individuals.--Not later 
than January 1, 2027, the Secretary of State and the 
Attorney General, acting through the Hostage Recovery 
Fusion Cell (as described in section 304 of the Robert 
Levinson Hostage Recovery and Hostage-Taking 
Accountability Act (22 U.S.C. 1741(b))), shall--
``(i) compile a list, based on such 
information as is available, of individuals who 
were applicable individuals during the 
applicable period, and
``(ii) provide the list described in clause 
(i) to the Secretary.
``(C) Notice.--For purposes of carrying out the 
program described in subparagraph (A), the Secretary 
(in consultation with the Secretary of State and the 
Attorney General) shall, with respect to any individual 
identified under subparagraph (B), provide notice to 
such individual--
``(i) in the case of an individual who has 
been released on or before the date of 
enactment of this subsection, not later than 90 
days after the date of enactment of this 
subsection, or
``(ii) in the case of an individual who is 
released after the date of enactment of this 
subsection, not later than 90 days after the 
date on which such individual is released,
that such individual may be eligible for a refund or an 
abatement of any amount described in paragraph (2) 
pursuant to the program described in subparagraph (A).
``(D) Authorization.--
``(i) In general.--Subject to clause (ii), 
in the case of any refund described in 
subparagraph (A), the Secretary shall issue 
such refund to the eligible individual in the 
same manner as any refund of an overpayment of 
tax under section 6402.
``(ii) Extension of limitation on time for 
refund.--With respect to any refund under 
subparagraph (A)--
``(I) the 3-year period of 
limitation prescribed by section 
6511(a) shall be extended until the end 
of the 1-year period beginning on the 
date that the notice described in 
subparagraph (C) is provided to the 
eligible individual, and
``(II) any limitation under section 
6511(b)(2) shall not apply.
``(2) Eligible individual.--For purposes of this 
subsection, the term `eligible individual' means any applicable 
individual who, for any taxable year ending during the 
applicable period, paid or incurred any interest, penalty, 
additional amount, or addition to the tax in respect to any tax 
liability for such year of such individual based on a 
determination that an act described in section 7508(a)(1) which 
was not performed by the time prescribed therefor (without 
regard to any extensions).
``(3) Applicable period.--For purposes of this subsection, 
the term `applicable period' means the period--
``(A) beginning on January 1, 2021, and
``(B) ending on the date of enactment of this 
subsection.''.
(b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending on or before the date of enactment of this Act.

TITLE IX--SMALL BUSINESSES

SEC. 901. IMPLEMENTATION OF VOLUNTARY WITHHOLDING AGREEMENTS FOR 
PAYMENTS TO INDEPENDENT CONTRACTORS.

(a) In General.--Section 3402(p) is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph (2) the 
following new paragraph:
``(3) Voluntary withholding on certain non-wage 
remuneration.--
``(A) In general.--If, at the time a payment of 
applicable non-wage remuneration is made to any person, 
there is a voluntary agreement in effect between the 
person making and the person receiving the payment that 
the applicable non-wage remuneration be subject to 
withholding, then for purposes of this chapter and so 
much of subtitle F as relates to this chapter, such 
payment shall be treated as if it were a payment of 
wages by an employer to an employee.
``(B) Applicable non-wage remuneration.--For 
purposes of this subsection, the term `applicable non-
wage remuneration' means remuneration for services 
performed by an individual which (without regard to 
this paragraph) does not constitute wages.
``(C) Regulations and guidance.--Not later than the 
date that is 18 months after the date of the enactment 
of this subparagraph, the Secretary shall issue such 
regulations or other guidance as may be necessary or 
appropriate to carry out the provisions of this 
section, including such regulations or guidance for 
determining the amount to be deducted and withheld and 
the types of payments which are considered to be 
applicable non-wage remuneration.''.

SEC. 902. ESTABLISHMENT OF FAILURE-TO-PAY PENALTY SAFE HARBOR FOR 
INDIVIDUALS.

(a) In General.--Section 6651(c) is amended by adding at the end 
the following new paragraph:
``(3) No penalty for failure to pay income tax for 
individuals who timely pay 125 percent of income tax liability 
for prior year.--
``(A) In general.--Subsection (a)(2) shall not 
apply with respect to an income tax return of an 
individual if such individual pays, on or before the 
date prescribed for the payment of the tax with respect 
to which such return relates (determined with regard to 
any extension of time for payment), 125 percent of the 
amount of tax shown on the income tax return of such 
individual for the immediately preceding taxable year.
``(B) Failure to file; short taxable years.--
Subparagraph (A) shall not apply--
``(i) if the individual does not file an 
income tax return for the taxable year 
described in subparagraph (A) on or before the 
date prescribed therefor (determined with 
regard to any extension of time for filing),
``(ii) if the individual did not file an 
income tax return for the immediately preceding 
taxable year referred to in subparagraph (A) on 
or before the date prescribed therefor 
(determined with regard to any extension of 
time for filing), or
``(iii) if the immediately preceding 
taxable year referred to in subparagraph (A) 
was less than 12 months.
``(C) Joint returns.--
``(i) Individuals not filing joint returns 
for the preceding taxable year.--In the case of 
a joint return, if the taxpayer did not file a 
joint return for the immediately preceding 
taxable year referred to in subparagraph (A), 
the amounts shown on the income tax returns of 
both spouses for such immediately preceding 
taxable year shall be taken into account under 
subparagraph (A).
``(ii) Individuals filing joint returns for 
the preceding taxable year.--
``(I) In general.--Except as 
provided in subclause (II) or otherwise 
provided by the Secretary, if the 
individual does not file a joint return 
for the taxable year to which 
subparagraph (A) applies and filed a 
joint return for the immediately 
preceding taxable year on or before the 
date prescribed therefor (determined 
with regard to any extension of time 
for filing), the entire amount of tax 
shown on such joint return shall be 
taken into account under subparagraph 
(A).
``(II) Election to recompute 
preceding year tax.--If a taxpayer to 
whom clause (I) applies elects, in such 
form and such manner as the Secretary 
may provide, to recompute the tax for 
the immediately preceding taxable year 
as if the taxpayer was a married 
individual filing a separate return, 
only the amount shown on such 
recomputed separate return shall be 
taken into account under subparagraph 
(A).
``(D) Exception not applicable unless additional 
payments are made with timely filed return.--
Subparagraph (A) shall not apply with respect to any 
period beginning after the date prescribed for filing 
the income tax return for the taxable year (including 
extensions thereof).''.
(b) Conforming Amendment.--The heading of section 6651(c) is 
amended by striking ``Rule'' and inserting ``Rules''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date which is 12 months 
after the date of enactment of this Act.

SEC. 903. EXTENSION OF MAILBOX RULE TO ELECTRONIC SUBMISSIONS AND 
PAYMENTS.

(a) In General.--Section 7502(c) is amended--
(1) in the heading, by inserting ``and Payment'' after 
``Filing'',
(2) in paragraph (2)--
(A) in the heading, by striking ``; electronic 
filing'', and
(B) by striking ``and electronic filing'', and
(3) by adding at the end the following:
``(3) Electronic filing and payment.--
``(A) In general.--In the case of any document or 
payment which the Secretary has permitted to be filed 
or made by electronic means, if such document or 
payment is--
``(i) authorized to be submitted by the 
taxpayer using a permitted electronic means to 
the agency, officer, or office to which the 
document was required to be filed (or payment 
was required to be made) on or before the 
prescribed date (or within the period required) 
with respect to such document or payment, and
``(ii) received (or, in the case of a 
payment, received and accounted for) no later 
than 3 business days after the prescribed date 
or period required with respect to such 
document or payment,
the date that such document or payment was authorized 
to be submitted (as described in clause (i)) shall be 
deemed to be the date that such document was filed or 
such payment was made.
``(B) Exception.--This paragraph shall not apply to 
any payment if Secretary determines that the taxpayer 
(or any intermediary used by the taxpayer) used a 
system designed with a principal purpose of delaying 
the transfer of funds to the Treasury to derive 
economic benefit from the period of such delay.
``(C) Regulations.--Not later than the date which 
is 1 year after the date of enactment of the Taxpayer 
Assistance and Service Act, the Secretary shall issue 
such regulations or other guidance as the Secretary 
determines necessary to carry out the purposes of this 
paragraph, including regulations or other guidance 
describing the records or proof sufficient to 
demonstrate timely electronic submission.
``(b) Effective Date.--The amendments made by subsection (a) shall 
apply to any document or payment sent on or after the date which is 1 
year after the date of enactment of this Act.''.

SEC. 904. SPECIFICITY OF THIRD-PARTY CONTACT NOTICES.

(a) In General.--Paragraph (1) of section 7602(c) is amended--
(1) by striking ``and'' at the end of subparagraph (A),
(2) by redesignating subparagraph (B) as subparagraph (C) 
and by inserting after subparagraph (A) the following new 
subparagraph:
``(B) in any case in which the information sought 
to be obtained from such other persons could reasonably 
be provided by the taxpayer, identifies the item of 
information intended to be sought from such persons, 
and'', and
(3) by amending subparagraph (C), as redesignated by 
paragraph (2), to read as follows:
``(C) provides the taxpayer with reasonable 
opportunity and a period of not less than 45 days (or 
more, if the taxpayer requests additional time and 
shows reasonable cause) to respond, including by 
providing the information described in subparagraph 
(B), before contact is made with such other persons.''.
(b) Exception.--Section 7602(c)(3) is amended--
(1) by redesignating subparagraphs (A), (B), and (C) as 
clauses (i), (ii), and (iii), respectively, and by moving such 
clauses 2 ems to the right,
(2) by striking ``This subsection'' and inserting the 
following:
``(A) In general.--This subsection'', and
(3) by adding at the end the following new subparagraph:
``(B) Good cause.--For purposes of subparagraph 
(A)(ii), good cause includes a reasonable belief that 
compliance with this subsection will lead to--
``(i) attempts by any person to conceal, 
remove, destroy, or alter records or assets 
that may be relevant to any tax examination or 
collection activity;
``(ii) attempts by any person to prevent 
other persons, through intimidation, bribery, 
or collusion, from communicating any 
information that may be relevant to any tax 
examination or collection activity; or
``(iii) attempts by any person to flee, or 
otherwise avoid testifying or producing records 
that may be relevant to any tax examination or 
collection activity.''.
(c) Effective Date.--The amendments made by this section shall 
apply to notices provided under section 7602(c) of the Internal Revenue 
Code of 1986 after the date that is 12 months after the date of the 
enactment of this Act.

TITLE X--MISCELLANEOUS

SEC. 1001. AUTHORITY FOR REDISCLOSURE OF CERTAIN TAX INFORMATION 
RELATED TO EDUCATION LOANS TO THE CONGRESSIONAL BUDGET 
OFFICE.

(a) In General.--Section 6103(l)(13)(D) is amended by adding at the 
end the following new clause:
``(vii) Redisclosure to the congressional 
budget office.--Authorized persons may, upon 
written request by the Director of the 
Congressional Budget Office to the Secretary of 
Education, redisclose return information 
received under subparagraphs (A), (B), and (C) 
to officers and employees of the Congressional 
Budget Office for the purpose of, but only to 
the extent necessary in, carrying out the 
purposes described in subclause (III) of clause 
(i).''.
(b) Conforming Amendment.--Section 6103(l)(13)(F) is amended by 
striking ``(iv) (v), or (vi)'' and inserting ``(iv), (v), (vi), or 
(vii)''.
(c) Effective Date.--The amendments made by this section shall 
apply to disclosures made after the date of the enactment of this Act.
(d) Reports.--The Secretary of Education shall annually submit a 
written report to the Secretary of the Treasury--
(1) regarding redisclosures of return information under 
subparagraph (D)(vii) of section 6103(l)(13) of the Internal 
Revenue Code of 1986 (as added by this section), including the 
number of such redisclosures; and
(2) regarding any unauthorized use, access, or disclosure 
of return information disclosed under such section.

SEC. 1002. AUTHORIZATION TO REQUIRE LARGE PARTNERSHIPS TO FILE ON 
MAGNETIC MEDIA.

(a) In General.--Section 6011(e) is amended--
(1) by striking the first paragraph (6), as added by 
section 2301(b) of the Taxpayer First Act, and inserting the 
following:
``(6) Partnerships required to file on magnetic media.--
Notwithstanding paragraph (2)(A), the Secretary shall require a 
partnership to file returns on magnetic media if, at the close 
of the partnership's taxable year--
``(A) the partnership has more than 50 partners, or
``(B) the value of the partnership's assets equals 
or exceeds $1,000,000, as determined under regulations 
prescribed by the Secretary.'', and
(2) by redesignating the second paragraph (6), as added by 
section 202(d) of the Setting Every Community Up for Retirement 
Enhancement Act of 2019, as paragraph (7).
(b) Effective Date.--The amendments made by this section shall 
apply to returns filed on or after January 1 of the first calendar year 
beginning after the date of enactment of this Act.

SEC. 1003. LIMITATION PERIOD NOT EXTENDED FOR VICTIMS OF PREPARER 
FRAUD.

(a) In General.--Section 6501(c)(1) is amended by inserting ``by 
the taxpayer'' after ``intent''.
(b) Effective Date.--The amendment made by this section shall apply 
to assessments made or proceedings begun after the date of enactment of 
this Act.

SEC. 1004. TECHNICAL AMENDMENT RELATED TO THE DISASTER RELATED 
EXTENSION OF DEADLINES ACT.

(a) In General.--Subsection (f) of section 7508A (as added by the 
Disaster Related Extension of Deadlines Act) is redesignated as 
subsection (g).
(b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 2(a) of the Disaster Related Extension 
of Deadlines Act.
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