HR 6495 — Taxpayer Notification and Privacy Act

CHANGES IN EXISTING LAW MADE BY THE BILL,
 AS REPORTED

 In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows.

 Changes in Existing Law Made by the Bill, as Reported

 In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 INTERNAL REVENUE CODE OF 1986

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Subtitle F--Procedure and Administration

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 CHAPTER 78--DISCOVERY OF LIABILITY AND ENFORCEMENT OF TITLE

Subchapter A--EXAMINATION AND INSPECTION

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SEC. 7602. EXAMINATION OF BOOKS AND WITNESSES.

 (a) Authority to summon, etc..--For the purpose of 
ascertaining the correctness of any return, making a return 
where none has been made, determining the liability of any 
person for any internal revenue tax or the liability at law or 
in equity of any transferee or fiduciary of any person in 
respect of any internal revenue tax, or collecting any such 
liability, the Secretary is authorized--
 (1) To examine any books, papers, records, or other 
 data which may be relevant or material to such inquiry;
 (2) To summon the person liable for tax or required 
 to perform the act, or any officer or employee of such 
 person, or any person having possession, custody, or 
 care of books of account containing entries relating to 
 the business of the person liable for tax or required 
 to perform the act, or any other person the Secretary 
 may deem proper, to appear before the Secretary at a 
 time and place named in the summons and to produce such 
 books, papers, records, or other data, and to give such 
 testimony, under oath, as may be relevant or material 
 to such inquiry; and
 (3) To take such testimony of the person concerned, 
 under oath, as may be relevant or material to such 
 inquiry.
 (b) Purpose may include inquiry into offense.--The purposes 
for which the Secretary may take any action described in 
paragraph (1), (2), or (3) of subsection (a) include the 
purpose of inquiring into any offense connected with the 
administration or enforcement of the internal revenue laws.
 (c) Notice of contact of third parties.--
 (1) General notice.--An officer or employee of the 
 Internal Revenue Service may not contact any person 
 other than the taxpayer with respect to the 
 determination or collection of the tax liability of 
 such taxpayer unless such contact occurs during a 
 period (not greater than 1 year) which is specified in 
 a notice which--
 (A) informs the taxpayer that contacts with 
 persons other than the taxpayer are intended to 
 be made during such period, [and]
 (B) in any case in which the information 
 sought to be obtained from such other persons 
 is related to determining tax liability, has 
 not been previously requested from the 
 taxpayer, and could reasonably be provided by 
 the taxpayer, identifies each specific item of 
 information intended to be sought from such 
 persons, and
 [(B) except as otherwise provided by the 
 Secretary, is provided to the taxpayer not 
 later than 45 days before the beginning of such 
 period.]
 (C) except as otherwise provided by the 
 Secretary, 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 before contact is made with such other 
 persons.
 Nothing in the preceding sentence shall prevent the 
 issuance of notices to the same taxpayer with respect 
 to the same tax liability with periods specified 
 therein that, in the aggregate, exceed 1 year. A notice 
 shall not be issued under this paragraph unless there 
 is an intent at the time such notice is issued to 
 contact persons other than the taxpayer during the 
 period specified in such notice. The preceding sentence 
 shall not prevent the issuance of a notice if the 
 requirement of such sentence is met on the basis of the 
 assumption that the information sought to be obtained 
 by such contact will not be obtained by other means 
 before such contact.
 (2) Notice of specific contacts.--The Secretary shall 
 periodically provide to a taxpayer a record of persons 
 contacted during such period by the Secretary with 
 respect to the determination or collection of the tax 
 liability of such taxpayer. Such record shall also be 
 provided upon request of the taxpayer.
 (3) Exceptions.--[This subsection]
 (A) In general._This subsection shall not 
 apply--
 [(A)] (i) to any contact which the 
 taxpayer has authorized;
 [(B)] (ii) if the Secretary 
 determines for good cause shown that 
 such notice would jeopardize collection 
 of any tax or such notice may involve 
 reprisal against any person; or
 [(C)] (iii) with respect to any 
 pending criminal investigation.
 (B) Exception for information specificity.--
 Subparagraph (B) of paragraph (1) shall not 
 apply to information sought from a person other 
 than the taxpayer if the Secretary determines 
 that such information is necessary.
 (d) No administrative summons when there is Justice 
Department referral.--
 (1) Limitation of authority.--No summons may be 
 issued under this title, and the Secretary may not 
 begin any action under section 7604 to enforce any 
 summons, with respect to any person if a Justice 
 Department referral is in effect with respect to such 
 person.
 (2) Justice Department referral in effect.--For 
 purposes of this subsection--
 (A) In general.--A Justice Department 
 referral is in effect with respect to any 
 person if--
 (i) the Secretary has recommended to 
 the Attorney General a grand jury 
 investigation of, or the criminal 
 prosecution of, such person for any 
 offense connected with the 
 administration or enforcement of the 
 internal revenue laws, or
 (ii) any request is made under 
 section 6103(h)(3)(B) for the 
 disclosure of any return or return 
 information (within the meaning of 
 section 6103(b)) relating to such 
 person.
 (B) Termination.--A Justice Department 
 referral shall cease to be in effect with 
 respect to a person when--
 (i) the Attorney General notifies the 
 Secretary, in writing, that--
 (I) he will not prosecute 
 such person for any offense 
 connected with the 
 administration or enforcement 
 of the internal revenue laws,
 (II) he will not authorize a 
 grand jury investigation of 
 such person with respect to 
 such an offense, or
 (III) he will discontinue 
 such a grand jury 
 investigation,
 (ii) a final disposition has been 
 made of any criminal proceeding 
 pertaining to the enforcement of the 
 internal revenue laws which was 
 instituted by the Attorney General 
 against such person, or
 (iii) the Attorney General notifies 
 the Secretary, in writing, that he will 
 not prosecute such person for any 
 offense connected with the 
 administration or enforcement of the 
 internal revenue laws relating to the 
 request described in subparagraph 
 (A)(ii).
 (3) Taxable years, etc., treated separately.--For 
 purposes of this subsection, each taxable period (or, 
 if there is no taxable period, each taxable event) and 
 each tax imposed by a separate chapter of this title 
 shall be treated separately.
 (e) Limitation on examination on unreported income.--The 
Secretary shall not use financial status or economic reality 
examination techniques to determine the existence of unreported 
income of any taxpayer unless the Secretary has a reasonable 
indication that there is a likelihood of such unreported 
income.
 (f) Limitation on access of persons other than Internal 
Revenue Service officers and employees.--The Secretary shall 
not, under the authority of section 6103(n), provide any books, 
papers, records, or other data obtained pursuant to this 
section to any person authorized under section 6103(n), except 
when such person requires such information for the sole purpose 
of providing expert evaluation and assistance to the Internal 
Revenue Service. No person other than an officer or employee of 
the Internal Revenue Service or the Office of Chief Counsel 
may, on behalf of the Secretary, question a witness under oath 
whose testimony was obtained pursuant to this section.

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