[House Report 114-67]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 114-67
===================================================================
ENSURING TAX EXEMPT ORGANIZATIONS THE RIGHT TO APPEAL ACT
_______
April 13, 2015.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted
the following
R E P O R T
[To accompany H.R. 1314]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1314) to amend the Internal Revenue Code of 1986 to
provide for a right to an administrative appeal relating to
adverse determinations of tax-exempt status of certain
organizations, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND............................................2
A. Purpose and Summary................................... 2
B. Background and Need for Legislation................... 2
C. Legislative History................................... 3
II. EXPLANATION OF THE BILL...........................................3
A. Require the Secretary of the Treasury to Describe
Administrative Appeals Procedures Relating to Adverse
Determinations of Tax-Exempt Status of Certain
Organizations (sec. 2 of the bill and sec. 7123 of
the Code)............................................ 3
III.VOTES OF THE COMMITTEE............................................8
IV. BUDGET EFFECTS OF THE BILL........................................8
A. Committee Estimate of Budgetary Effects............... 8
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 9
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 9
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......10
A. Committee Oversight Findings and Recommendations...... 10
B. Statement of General Performance Goals and Objectives. 10
C. Information Relating to Unfunded Mandates............. 10
D. Applicability of House Rule XXI 5(b).................. 10
E. Tax Complexity Analysis............................... 10
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits.............................. 11
G. Duplication of Federal Programs....................... 11
H. Disclosure of Directed Rule Makings................... 11
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............11
A. Text of Existing Law Amended or Repealed by the Bill,
as Reported.......................................... 11
B. Changes in Existing Law Proposed by the Bill, as
Reported............................................. 12
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ensuring Tax Exempt Organizations the
Right to Appeal Act''.
SEC. 2. ADMINISTRATIVE APPEAL RELATING TO ADVERSE DETERMINATIONS OF
TAX-EXEMPT STATUS OF CERTAIN ORGANIZATIONS.
(a) In General.--Section 7123 of the Internal Revenue Code of 1986 is
amended by adding at the end of the following:
``(c) Administrative Appeal Relating to Adverse Determination of Tax-
Exempt Status of Certain Organizations.--
``(1) In general.--The Secretary shall prescribe procedures
under which an organization which claims to be described in
section 501(c) may request an administrative appeal (including
a conference relating to such appeal if requested by the
organization) to the Internal Revenue Service Office of Appeals
of an adverse determination described in paragraph (2).
``(2) Adverse determinations.--For purposes of paragraph (1),
an adverse determination is described in this paragraph if such
determination is adverse to an organization with respect to--
``(A) the initial qualification or continuing
qualification of the organization as exempt from tax
under section 501(a) or as an organization described in
section 170(c)(2),
``(B) the initial classification or continuing
classification of the organization as a private
foundation under section 509(a), or
``(C) the initial classification or continuing
classification of the organization as a private
operating foundation under section 4942(j)(3).''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
to determinations made on or after May 19, 2014.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 1314, reported by the Committee on Ways and Means,
requires the Treasury Secretary to establish procedures under
which an organization claiming exemption from tax under section
501(c), or certain other provisions, of the Internal Revenue
Code (the ``Code'') but receiving an adverse determination as
to either initial classification or a continuing classification
may request an administrative appeal to the Internal Revenue
Service (``IRS'') Office of Appeals. The bill would be
effective for appeals of determinations made after May 19,
2014.
B. Background and Need for Legislation
Through its investigation of IRS targeting of certain tax-
exempt organizations, the Committee learned that section 501(c)
organizations selected for review and later denied by the IRS
Exempt Organizations Technical office in Washington, D.C.,
rather than the field office in Cincinnati, were being denied
their right to an independent appeal as required by the
Internal Revenue Service Restructuring and Reform Act of 1998
(Pub. L. 105-206).
When this abuse was disclosed, the IRS issued interim
guidance on May 19, 2014, to provide that all groups subject to
an adverse determination would be granted a right to appeal.
H.R. 1314 codifies that guidance.
C. Legislative History
Background
H.R. 1314 was introduced on March 3, 2015, and was referred
to the Committee on Ways and Means. The same legislation, H.R.
5419, passed the House of Representatives in the 113th Congress
under suspension of the rules by voice vote on September 16,
2014.
Committee action
The Committee on Ways and Means marked up H.R. 1314, the
``Ensuring Tax Exempt Organizations the Right to Appeal Act,''
on March 25, 2015, and ordered the bill, as amended, favorably
reported (with a quorum being present).
Committee hearings
The need for reform regarding the determination of the tax-
exempt status of certain organizations was discussed during
multiple Committee hearings during the 113th Congress:
Oversight Subcommittee Hearing on the IRS
Operations and the 2014 Tax Return Filing Season (May 7, 2014).
Full Committee Hearing with IRS Commissioner
Koskinen (June 20, 2014).
II. EXPLANATION OF THE BILL
A. Require the Secretary of the Treasury To Describe Administrative
Appeals Procedures Relating to Adverse Determinations of Tax-Exempt
Status of Certain Organizations (sec. 2 of the bill and sec. 7123 of
the Code)
PRESENT LAW
Section 501(c) organizations
Section 501(c) describes certain organizations that are
exempt from Federal income tax under section 501(a). Section
501(c) organizations include, among others, charitable
organizations (501(c)(3)), social welfare organizations
(501(c)(4)),\1\ labor organizations (501(c)(5)), and trade
associations and business leagues (501(c)(6)). In addition to
being exempt from Federal income tax, section 501(c)(3)
organizations generally are eligible to receive tax deductible
contributions. Section 501(c)(3) organizations are subject to
operational rules and restrictions that do not apply to many
other types of tax-exempt organizations.
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\1\Section 501(c)(4) provides tax exemption for civic leagues or
organizations not organized for profit but operated exclusively for the
promotion of social welfare, and no part of the net earnings of which
inures to the benefit of any private shareholder or individual. An
organization is operated exclusively for the promotion of social
welfare if it is engaged primarily in promoting in some way the common
good and general welfare of the people of a community. Treas. Reg. sec.
1.501(c)(4)-1(a)(2). The promotion of social welfare does not include
direct or indirect participation or intervention in political campaigns
on behalf of or in opposition to any candidate for public office;
however, social welfare organizations are permitted to engage in
political activity so long as the organization remains engaged
primarily in activities that promote social welfare. The lobbying
activities of a social welfare organization generally are not limited.
An organization is not operated primarily for the promotion of social
welfare if its primary activity is operating a social club for the
benefit, pleasure, or recreation of its members, or is carrying on a
business with the general public in a manner similar to organizations
that are operated for profit.
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Application for tax exemption
Section 501(c)(3) organizations
Section 501(c)(3) organizations (with certain exceptions)
are required to seek formal recognition of tax-exempt status by
filing an application with the IRS(Form 1023).\2\ In response
to the application, the IRS issues a determination letter or
ruling either recognizing the applicant as tax-exempt or not.
Certain organizations are not required to apply for recognition
of tax-exempt status in order to qualify as tax-exempt under
section 501(c)(3) but may do so. These organizations include
churches, certain church-related organizations, organizations
(other than private foundations) the gross receipts of which in
each taxable year are normally not more than $5,000, and
organizations (other than private foundations) subordinate to
another tax-exempt organization that are covered by a group
exemption letter.
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\2\See sec. 508(a).
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A favorable determination by the IRS on an application for
recognition of tax-exempt status will be retroactive to the
date that the section 501(c)(3) organization was created if it
files a completed Form 1023 within 15 months of the end of the
month in which it was formed.\3\ If the organization does not
file Form 1023 or files a late application, it will not be
treated as tax-exempt under section 501(c)(3) for any period
prior to the filing of an application for recognition of tax
exemption.\4\ Contributions to section 501(c)(3) organizations
that are subject to the requirement that the organization apply
for recognition of tax-exempt status generally are not
deductible from income, gift, or estate tax until the
organization receives a determination letter from the IRS.\5\
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\3\Pursuant to Treas. Reg. sec. 301.9100-2(a)(2)(iv), organizations
are allowed an automatic 12-month extension as long as the application
for recognition of tax exemption is filed within the extended, i.e.,
27-month, period. The IRS also may grant an extension beyond the 27-
month period if the organization is able to establish that it acted
reasonably and in good faith and that granting relief will not
prejudice the interests of the government. Treas. Reg. secs. 301.9100-1
and 301.9100-3.
\4\Treas. Reg. sec. 1.508-1(a)(1).
\5\Sec. 508(d)(2)(B). Contributions made prior to receipt of a
favorable determination letter may be deductible prior to the
organization's receipt of such favorable determination letter if the
organization has timely filed its application to be recognized as tax-
exempt. Treas. Reg. secs. 1.508-1(a) and 1.508-2(b)(1)(i)(b).
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Information required on Form 1023 includes, but is not
limited to: (1) a detailed statement of actual and proposed
activities; (2) compensation and financial information
regarding officers, directors, trustees, employees, and
independent contractors; (3) a statement of revenues and
expenses for the current year and the three preceding years (or
for the years of the organization's existence, if less than
four years); (4) a balance sheet for the current year; (5) a
description of anticipated receipts and contemplated
expenditures; (6) a copy of the articles of incorporation,
trust document, or other organizational or enabling document;
(7) organization bylaws (if any); and (8) information about
previously filed Federal income tax and exempt organization
returns, if applicable.
A favorable determination letter issued by the IRS will
state that the application for recognition of tax exemption and
supporting documents establish that the organization submitting
the application meets the requirements of section 501(c)(3) and
will classify (as either an adverse or definitive ruling) the
organization as either a public charity or a private
foundation.
Organizations that are classified as public charities (or
as private operating foundations) and not as private
nonoperating foundations may cease to satisfy the conditions
that entitled the organization to such status. The IRS makes an
initial determination of public charity or private foundation
status (either a definitive ruling, or an advance ruling
generally effective for five years and then reviewed again by
the IRS) that is subsequently monitored by the IRS through
annual return filings. The IRS periodically announces in the
Internal Revenue Bulletin a list of organizations that have
failed to establish, or have been unable to maintain, their
status as public charities or as private operating foundations,
and that become private nonoperating foundations.
If the IRS denies an organization's application for
recognition of exemption under section 501(c)(3), the
organization may seek a declaratory judgment regarding its tax
status.\6\ Prior to utilizing the declaratory judgment
procedure, the organization must have exhausted all
administrative remedies available to it within the IRS.
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\6\Sec. 7428.
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Other section 501(c) organizations
Most section 501(c) organizations--including organizations
described within sections 501(c)(4) (social welfare
organizations, etc.), 501(c)(5) (labor organizations, etc.), or
501(c)(6) (business leagues, etc.)--are not required to provide
notice to the Secretary that they are requesting recognition of
exempt status. Rather, organizations are exempt under these
provisions if they satisfy the requirements applicable to such
organizations. However, in order to obtain certain benefits
such as public recognition of tax-exempt status, exemption from
certain State taxes, and nonprofit mailing privileges, such
organizations voluntarily may request a formal recognition of
exempt status by filing a Form 1024.
If such an organization voluntarily requests a
determination letter by filing Form 1024 within 27 months of
the end of the month in which it was formed, its determination
of exempt status, once provided, generally will be effective as
of the organization's date of formation.\7\ If, however, the
organization files Form 1024 after the 27-month deadline has
passed, its exempt status will be formally recognized only as
of the date the organization filed Form 1024.
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\7\Rev. Proc. 2015-9, sec. 11, 2015-2 I.R.B. 249.
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The declaratory judgment process available to organizations
seeking exemption under section 501(c)(3) is not available to
organizations seeking exemption under other subsections of the
Code, including sections 501(c)(4), 501(c)(5), and 501(c)(6).
Revocation (and suspension) of exempt status
An organization that has received a favorable tax-exemption
determination from the IRS generally may continue to rely on
the determination as long as there is not a ``material change,
inconsistent with exemption, in the character, the purpose, or
the method of operation of the organization, or a change in the
applicable law.''\8\ A ruling or determination letter
concluding that an organization is exempt from tax may,
however, be revoked or modified: (1) by notice from the IRS to
the organization to which the ruling or determination letter
was originally issued; (2) by enactment of legislation or
ratification of a tax treaty; (3) by a decision of the United
States Supreme Court; (4) by issuance of temporary or final
Regulations by the Treasury Department; (5) by issuance of a
revenue ruling, a revenue procedure, or other statement in the
Internal Revenue Bulletin; or (6) automatically, in the event
the organization fails to file a required annual return or
notice for three consecutive years.\9\ A revocation or
modification of a determination letter or ruling may be
retroactive if, for example, there has been a change in the
applicable law, the organization omitted or misstated a
material fact, or the organization has operated in a manner
materially different from that originally represented.\10\
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\8\Ibid.
\9\Ibid., sec. 12.
\10\Ibid.
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The IRS generally issues a letter revoking recognition of
an organization's tax-exempt status only after: (1) conducting
an examination of the organization; (2) issuing a letter to the
organization proposing revocation; and (3) allowing the
organization to exhaust the administrative appeal rights that
follow the issuance of the proposed revocation letter. In the
case of a section 501(c)(3) organization, the revocation letter
immediately is subject to judicial review under the declaratory
judgment procedures of section 7428. To sustain a revocation of
tax-exempt status under section 7428, the IRS must demonstrate
that the organization no longer is entitled to exemption.
Upon revocation of tax-exemption or change in the
classification of an organization (e.g., from public charity to
private foundation status), the IRS publishes an announcement
of such revocation or change in the Internal Revenue Bulletin.
Contributions made to organizations by donors who are unaware
of the revocation or change in status ordinarily will be
deductible if made on or before the date of publication of the
announcement.
The IRS may suspend the tax-exempt status of an
organization for any period during which an organization is
designated or identified by U.S. authorities as a terrorist
organization or supporter of terrorism.\11\ Such an
organization also is ineligible to apply for tax exemption. The
period of suspension runs from the date the organization is
first designated or identified to the date when all
designations or identifications with respect to the
organization have been rescinded pursuant to the law or
Executive Order under which the designation or identification
was made. During the period of suspension, no deduction is
allowed for any contribution to a terrorist organization.
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\11\Sec. 501(p) (enacted by Pub. L. No. 108-121, sec. 108(a),
effective for designations made before, on, or after November 11,
2003).
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Appeals of adverse determinations or revocations of exempt status
Adverse determination
If the IRS reaches the conclusion that an organization does
not qualify for exempt status, the exempt organizations Rulings
and Agreements unit (``EO Rulings and Agreements'') or the
exempt organizations technical unit located in Washington, D.C.
(``EO Technical'') will issue a proposed adverse determination
letter or ruling. In either case, the proposed adverse
determination will advise the taxpayer of its opportunity to
appeal the determination by requesting Appeals Office
consideration.\12\
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\12\Rev. Proc. 2015-9, 2015-2 I.R.B. 249, secs. 5 and 7.
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If an organization protests an adverse determination, EO
Rulings and Agreements (if it maintains its adverse position)
will forward the protest and the application case file to the
Appeals Office, which will consider the organization's appeal.
If the Appeals Office agrees with EO Rulings and Agreements, it
will issue a final adverse determination letter or, if a
conference was requested, schedule a conference with the
organization. At the end of the conference process, the Appeals
Office will issue a final adverse determination letter or a
favorable determination letter.\13\
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\13\Ibid., sec. 7.
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Under interim guidance issued on May 19, 2014, by the
Acting Director, Rulings and Agreements (Exempt Organizations),
an organization that receives a proposed adverse determination
with regard to an application that has been transferred to EO
Technical (or its successor) may request a conference with EO
Technical in addition to requesting Appeals Office
Consideration.\14\ Prior to that time, however, a determination
letter issued on the basis of technical advice from EO
Technical could not be appealed to the Appeals Office on issues
that were the subject of the technical advice.\15\ The
procedure described in the interim guidance has since been
added to the IRS Revenue Procedure relating to exempt status
determinations.\16\
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\14\IRS Memorandum, ``Appeals Office Consideration of All Proposed
Adverse Rulings Relating to Tax-Exempt Status from EO Technical by
Request,'' May 19, 2014.
\15\Rev. Proc. 2014-9, 2014-2 I.R.B. 281, sec. 7.
\16\Rev. Proc. 2015-9, 2015-2 I.R.B. 249, secs. 5 and 7.
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Revocation or modification of a determination
As stated above, a determination letter or ruling
recognizing exemption may be revoked or modified. In the case
of a revocation or modification of a determination letter or
ruling, the appeal and conference procedures are essentially
the same as described above in connection with initial
determinations of exempt status.\17\
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\17\Ibid., sec. 12.
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REASONS FOR CHANGE
The Committee found that IRS procedures allowed an
organization that received an adverse determination regarding
its tax-exempt status to file an appeal with the IRS Office of
Appeals only if the determination was provided by the EO
Determinations unit. An organization that received an adverse
determination from the EO Technical unit in Washington, D.C.
could not file an appeal with the Office of Appeals. As a
result, some organizations were not afforded the same
administrative protections as others. The Committee believes
that all organizations seeking tax-exempt status should be
entitled to the same impartial application review process,
including the right to appeal an adverse determination to the
IRS Office of Appeals, and that this right should be
safeguarded by law.
EXPLANATION OF PROVISION
The provision effectively codifies the May 19, 2014,
interim guidance by requiring the Secretary to describe
procedures under which a section 501(c) organization may
request an administrative appeal (including a conference
relating to such an appeal, if requested) to the Internal
Office of Appeals of an adverse determination. For this
purpose, an adverse determination includes a determination
adverse to the organization relating to:
1. the initial qualification or continuing classification
of the organization as exempt from tax under section 501(a);
2. the initial qualification or continuing classification
of the organization as an organization described in section
170(c)(2) (generally describing certain corporations, trusts,
community chests, funds, and foundations that are eligible
recipients of tax deductible contributions);
3. the initial or continuing classification of the
organization as a private foundation under section 509(a); or
4. the initial or continuing classification of the
organization as a private operating foundation under section
4942(j)(3).
EFFECTIVE DATE
The provision is effective for determinations made after
May 19, 2014.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 1314, the ``Ensuring Tax Exempt
Organizations the Right to Appeal Act,'' on March 25, 2015.
The Chairman's amendment in the nature of a substitute was
adopted by a voice vote (with a quorum being present).
The bill, H.R. 1314, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 1314, as
reported.
The bill, as reported, is estimated to have a negligible
effect on Federal budget receipts for fiscal years 2015-2025.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: the gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that there are no new or increased tax
expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 10, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1314, the Ensuring
Tax Exempt Organizations the Right to Appeal Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 1314--Ensuring Tax Exempt Organizations the Right to Appeal Act
H.R. 1314 would amend the Internal Revenue Code of 1986 to
provide a procedure for organizations requesting 501(c) (tax
exempt non-profit status) recognition to appeal decisions made
by the Internal Revenue Service (IRS). CBO estimates that
implementing the legislation would have no significant cost
over the next five years. CBO and the staff of the Joint
Committee on Taxation (JCT) estimate that enacting the bill
would not affect direct spending or revenues; therefore, pay-
as-you-go procedures do not apply.
The bill would enact provisions similar to the interim
guidance proposed by the IRS on May 19, 2014, under which an
entity that fails to receive tax exempt status may request an
administrative appeal. Because the legislation would codify the
agency's current practices CBO estimates that implementing this
bill would not significantly increase administrative costs.
CBO and JCT have determined that H.R. 1314 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would not affect the budgets
of state, local, or tribal governments.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by Theresa Gullo, Assistant
Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 1314 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4). The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
The following statement is made pursuant to clause 3(h)(1)
of rule XIII of the Rules of the House of Representatives.
Section 4022(b) of the Internal Revenue Service Restructuring
and Reform Act of 1998 requires the staff of the Joint
Committee on Taxation (in consultation with the Internal
Revenue Service and the Treasury Department) to provide a tax
complexity analysis. The complexity analysis is required for
all legislation reported by the Senate Committee on Finance,
the House Committee on Ways and Means, or any committee of
conference if the legislation includes a provision that
directly or indirectly amends the Internal Revenue Code and has
widespread applicability to individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code and that have ``widespread applicability'' to individuals
or small businesses, within the meaning of the rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
SECTION 7123 OF THE INTERNAL REVENUE CODE OF 1986
SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.
(a) Early Referral to Appeals Procedures.--The Secretary
shall prescribe procedures by which any taxpayer may request
early referral of 1 or more unresolved issues from the
examination or collection division to the Internal Revenue
Service Office of Appeals.
(b) Alternative Dispute Resolution Procedures.--
(1) Mediation.--The Secretary shall prescribe
procedures under which a taxpayer or the Internal
Revenue Service Office of Appeals may request non-
binding mediation on any issue unresolved at the
conclusion of--
(A) appeals procedures; or
(B) unsuccessful attempts to enter into a
closing agreement under section 7121 or a
compromise under section 7122.
(2) Arbitration.--The Secretary shall establish a
pilot program under which a taxpayer and the Internal
Revenue Service Office of Appeals may jointly request
binding arbitration on any issue unresolved at the
conclusion of--
(A) appeals procedures; or
(B) unsuccessful attempts to enter into a
closing agreement under section 7121 or a
compromise under section 7122.
B. Changes in Existing Law Proposed by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed 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 italic, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows (new
matter is printed in italic and existing law in which no change
is proposed is shown in roman):
SECTION 7123 OF THE INTERNAL REVENUE CODE OF 1986
SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.
(a) Early Referral to Appeals Procedures.--The Secretary
shall prescribe procedures by which any taxpayer may request
early referral of 1 or more unresolved issues from the
examination or collection division to the Internal Revenue
Service Office of Appeals.
(b) Alternative Dispute Resolution Procedures.--
(1) Mediation.--The Secretary shall prescribe
procedures under which a taxpayer or the Internal
Revenue Service Office of Appeals may request non-
binding mediation on any issue unresolved at the
conclusion of--
(A) appeals procedures; or
(B) unsuccessful attempts to enter into a
closing agreement under section 7121 or a
compromise under section 7122.
(2) Arbitration.--The Secretary shall establish a
pilot program under which a taxpayer and the Internal
Revenue Service Office of Appeals may jointly request
binding arbitration on any issue unresolved at the
conclusion of--
(A) appeals procedures; or
(B) unsuccessful attempts to enter into a
closing agreement under section 7121 or a
compromise under section 7122.
(c) Administrative Appeal Relating to Adverse Determination
of Tax-Exempt Status of Certain Organizations.--
(1) In general.--The Secretary shall prescribe
procedures under which an organization which claims to
be described in section 501(c) may request an
administrative appeal (including a conference relating
to such appeal if requested by the organization) to the
Internal Revenue Service Office of Appeals of an
adverse determination described in paragraph (2).
(2) Adverse determinations.--For purposes of
paragraph (1), an adverse determination is described in
this paragraph if such determination is adverse to an
organization with respect to--
(A) the initial qualification or continuing
qualification of the organization as exempt
from tax under section 501(a) or as an
organization described in section 170(c)(2),
(B) the initial classification or continuing
classification of the organization as a private
foundation under section 509(a), or
(C) the initial classification or continuing
classification of the organization as a private
operating foundation under section 4942(j)(3).
[all]