What This Bill Does
This bill makes several changes to how the Internal Revenue Service (IRS) operates and reports information. It limits when nonprofit organizations must file tax reports, increases penalties for people who improperly share taxpayer information, restricts how the IRS can spend money on enforcement activities, and creates a fellowship program to hire private tax experts to work on complex tax cases.
##
Who It Affects
- Nonprofit organizations and tax-exempt groups
- The Internal Revenue Service and its employees
- Taxpayers subject to IRS audits
- Congress
- The Department of the Treasury
- Tax return preparers
- Federal employees working at the IRS
##
Key Provisions
- Nonprofit organizations no longer must report to the IRS if they have less than $50,000 in gross receipts each year, instead of the previous $5,000 threshold (Sec. 101)
- The penalty for illegally sharing taxpayer information increases to $250,000 (Sec. 103)
- The IRS cannot spend more money on enforcement activities than it spent in fiscal year 2022 until 180 days after the IRS publishes a tax gap projection (Sec. 203)
- The IRS must establish a fellowship program by September 30, 2024 to hire at least 30 private sector tax experts to help with complex tax cases and offshore tax evasion (Sec. 206)
- The Secretary of the Treasury must set yearly goals to reduce improper tax payments and publish information about these payments on the internet (Sec. 303)
##
What Changes
If this bill becomes law, fewer nonprofit organizations will need to file annual tax reports with the IRS. People who illegally share tax information face much larger financial penalties. The IRS will face spending restrictions on enforcement until it submits specific tax reports to Congress. The IRS will hire experienced tax professionals from outside government to work on difficult cases. The public will be able to see online how many incorrect tax payments the IRS makes and what the agency is doing to reduce them.
##
Important Definitions
- **Tax gap**: The difference between taxes owed to the United States under federal tax law and the actual taxes collected by the IRS (Sec. 201)
- **Improper tax payment**: Any credit or refund of an overpayment that should not have been made or was made in an incorrect amount (Sec. 302)
##
Effective Date
Most provisions take effect on different dates: some apply to tax years ending after the bill is signed into law (Sec. 101, 103), some within specific timeframes after enactment like 90 days or 180 days (Sec. 303, 304), and one spending restriction expires one year after the bill is signed (Sec. 203).
II
118TH CONGRESS
1ST SESSION
S. 1101
To amend the Social Security Act to remove the restriction on the use
of Coronavirus State Fiscal Recovery funds, to amend the Internal Rev-
enue Code of 1986 to codify the Trump administration rule on reporting
requirements of exempt organizations, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 30, 2023
Mr. BRAUN (for himself and Mr. SCOTT of Florida) introduced the following
bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Social Security Act to remove the restriction
on the use of Coronavirus State Fiscal Recovery funds,
to amend the Internal Revenue Code of 1986 to codify
the Trump administration rule on reporting requirements
of exempt organizations, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Simplify, Don’t Am-
4
plify the IRS Act’’.
5
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•S 1101 IS
TITLE I—PROVISIONS RELATING
1
TO
TAX
ADMINISTRATION
2
AND TAXPAYER PROTECTION
3
SEC. 101. PREVENTING WEAPONIZATION OF THE INTERNAL
4
REVENUE SERVICE.
5
(a) ORGANIZATIONS EXEMPT FROM REPORTING.—
6
(1) GROSS RECEIPTS THRESHOLD.—Clause (ii)
7
of section 6033(a)(3)(A) of the Internal Revenue
8
Code of 1986 is amended by striking ‘‘$5,000’’ and
9
inserting ‘‘$50,000’’.
10
(2)
ORGANIZATIONS
DESCRIBED.—Subpara-
11
graph (C) of section 6033(a)(3) of the Internal Rev-
12
enue Code of 1986 is amended—
13
(A) by striking ‘‘and’’ at the end of clause
14
(v),
15
(B) by striking the period at the end of
16
clause (vi) and inserting a semicolon, and
17
(C) by adding at the end the following new
18
clauses:
19
‘‘(vii) any other organization described
20
in section 501(c) (other than a private
21
foundation or a supporting organization
22
described in section 509(a)(3)); and
23
‘‘(viii) any organization (other than a
24
private foundation or a supporting organi-
25
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3
•S 1101 IS
zation described in section 509(a)(3))
1
which
is
not
described
in
section
2
170(c)(2)(A), or which is created or orga-
3
nized in a possession of the United States,
4
which has no significant activity (including
5
lobbying and political activity and the op-
6
eration of a trade or business) other than
7
investment activity in the United States.’’.
8
(3) EFFECTIVE DATE.—The amendments made
9
by this subsection shall apply to taxable years end-
10
ing after the date of the enactment of this Act.
11
(b) CLARIFICATION OF APPLICATION TO SECTION
12
527 ORGANIZATIONS.—
13
(1) IN
GENERAL.—Paragraph (1) of section
14
6033(g) of the Internal Revenue Code of 1986 is
15
amended—
16
(A) by striking ‘‘This section’’ and insert-
17
ing ‘‘Except as otherwise provided by this sub-
18
section, this section’’, and
19
(B) by striking ‘‘for the taxable year.’’ and
20
inserting ‘‘for the taxable year in the same
21
manner as to an organization exempt from tax-
22
ation under section 501(a).’’.
23
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•S 1101 IS
(2) EFFECTIVE DATE.—The amendments made
1
by this subsection shall apply to taxable years end-
2
ing after the date of the enactment of this Act.
3
(c) REPORTING OF NAMES AND ADDRESSES OF CON-
4
TRIBUTORS.—
5
(1) IN
GENERAL.—Paragraph (1) of section
6
6033(a) of the Internal Revenue Code of 1986 is
7
amended by adding at the end the following: ‘‘Ex-
8
cept as provided in subsections (b)(5) and (g)(2)(B),
9
such annual return shall not be required to include
10
the names and addresses of contributors to the orga-
11
nization.’’.
12
(2) APPLICATION TO SECTION 527 ORGANIZA-
13
TIONS.—Paragraph (2) of section 6033(g) of the In-
14
ternal Revenue Code of 1986 is amended—
15
(A) by striking ‘‘and’’ at the end of sub-
16
paragraph (A),
17
(B) by redesignating subparagraph (B) as
18
subparagraph (C), and
19
(C) by inserting after subparagraph (A)
20
the following new subparagraph:
21
‘‘(B) containing the names and addresses
22
of all substantial contributors, and’’.
23
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•S 1101 IS
(3) EFFECTIVE DATE.—The amendments made
1
by this subsection shall apply to taxable years end-
2
ing after the date of the enactment of this Act.
3
SEC. 102. LIMITATION ON TAXPAYER FUNDED UNION OFFI-
4
CIAL TIME FOR INTERNAL REVENUE SERV-
5
ICE EMPLOYEES.
6
(a) IN GENERAL.—Section 7131 of title 5, United
7
States Code, is amended by adding at the end the fol-
8
lowing:
9
‘‘(e) The authority provided under subsection (d)
10
shall not apply with respect to the Internal Revenue Serv-
11
ice, or an employee of the Internal Revenue Service, dur-
12
ing the period each year beginning on February 12 and
13
ending on April 15.’’.
14
(b) CONFORMING AMENDMENT.—Section 7131(d) of
15
title 5, United States Code, is amended, in the matter pre-
16
ceding paragraph (1), by striking ‘‘preceding’’ and insert-
17
ing ‘‘other’’.
18
(c) APPLICATION.—The amendments made by sub-
19
sections (a) and (b) shall apply to any collective bar-
20
gaining agreement entered into after the date of enact-
21
ment of this section.
22
SEC. 103. PROTECTING TAXPAYER PRIVACY.
23
(a) INCREASE
OF PENALTY
FOR UNAUTHORIZED
24
DISCLOSURE OF TAXPAYER INFORMATION.—
25
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6
•S 1101 IS
(1) IN
GENERAL.—Paragraph (1) of section
1
7213(a) of the Internal Revenue Code of 1986 is
2
amended by striking ‘‘$5,000’’ and inserting
3
‘‘$250,000’’.
4
(2) DISCLOSURES
BY
TAX
RETURN
PRE-
5
PARERS.—Subsection (a) of section 7216 of the In-
6
ternal Revenue Code of 1986 is amended by striking
7
‘‘$1,000 ($100,000 in the case of a disclosure or use
8
to which section 6713(b) applies)’’ and inserting
9
‘‘$250,000’’.
10
(3) EFFECTIVE DATE.—The amendments made
11
by this subsection shall apply to disclosures made on
12
or after the date of the enactment of this Act.
13
(b) REMOVAL.—
14
(1) IN
GENERAL.—Section 7701(c)(1)(A) of
15
title 5, United States Code, is amended by inserting
16
‘‘or in the case of an action involving a removal from
17
the service for an alleged violation of section
18
7213(a)(1) of the Internal Revenue Code of 1986,’’
19
after ‘‘described in section 4303,’’.
20
(2) RULE
OF
CONSTRUCTION.—The amend-
21
ments made by paragraph (1) may not be construed
22
to permit an officer or employee of the United
23
States to submit an appeal to the Merit Systems
24
Protection Board if that individual is dismissed from
25
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7
•S 1101 IS
office or discharged from employment upon convic-
1
tion for a violation of section 7213(a)(1) of the In-
2
ternal Revenue Code of 1986.
3
TITLE II—RESTRAINTS ON IRS
4
ENFORCEMENT
5
SEC. 201. TAX GAP PROJECTION.
6
(a) IN GENERAL.—Not later than 180 days after the
7
date of the enactment of this section, and no later than
8
July 31 annually thereafter, the Commissioner of Internal
9
Revenue shall submit to Congress a projection detailing
10
the tax gap estimate for the most recent taxable year as
11
is practicable using the most recently available data, and
12
including identification and detailed descriptions of the
13
data used for such projection and clear identification of
14
the amount of the projected tax gap associated with non-
15
filing, underreporting, and underpayment (including iden-
16
tifying the amount subject to collection actions).
17
(b) USE OF ARTIFICIAL INTELLIGENCE.—To the ex-
18
tent practicable, for purposes of reducing the burden on
19
taxpayers subject to National Research Program audits,
20
the Commissioner shall use artificial intelligence, including
21
neural machine learning, and other available data analysis
22
tools, including commercial analytic data providers, to cal-
23
culate a projection described in subsection (a).
24
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•S 1101 IS
(c) NATIONAL RESEARCH PROGRAM AUDITS.—In
1
calculating a projection described in subsection (a), the
2
Commissioner of Internal Revenue shall not undertake
3
more National Research Program audits in any one fiscal
4
year than are undertaken in fiscal year 2022.
5
(d) TAX GAP.—For purposes of this section, the term
6
‘‘tax gap’’ means the difference between tax liabilities
7
owed to the United States under the Internal Revenue
8
Code of 1986 and those liabilities actually collected by the
9
Internal Revenue Service.
10
SEC. 202. JCT REPORT.
11
(a) IN GENERAL.—Not later than 180 days after the
12
submission of the first tax gap projection to Congress
13
under section 201, and not later than 90 days after the
14
submission of each successive submission, the Chief of
15
Staff of the Joint Committee on Taxation shall submit to
16
the Committee on Ways and Means of the House of Rep-
17
resentatives and the Committee on Finance of the Senate
18
a report analyzing such projection, including—
19
(1) identification of methodologies used,
20
(2) any statistical or methodological uncertain-
21
ties,
22
(3) the effect of outdated data, if any, on the
23
accuracy of such projection, and
24
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9
•S 1101 IS
(4) such additional information as the Joint
1
Committee on Taxation determines is useful for
2
Congress to use to assess and analyze the tax gap
3
projections provided by the Commissioner of Inter-
4
nal Revenue.
5
(b) RELEASE OF INFORMATION.—For purposes of fa-
6
cilitating the report described in subsection (a), the Sec-
7
retary of the Treasury shall, in a timely manner, provide
8
to the Joint Committee on Taxation such information as
9
such committee requests.
10
SEC. 203. RESTRICTION ON INCREASED ENFORCEMENT
11
FUNDS.
12
(a) IN GENERAL.—Notwithstanding any other provi-
13
sion of law, no funds appropriated to the Department of
14
the Treasury for audit and enforcement purposes in excess
15
of the levels appropriated for such purposes in fiscal year
16
2022 may be expended for such purposes, including for
17
salaries, expenses, and enforcement activities, until 180
18
days after the Internal Revenue Service publishes an up-
19
dated tax gap projection pursuant to, and compliant with,
20
section 201.
21
(b) SUNSET.—The provisions of subsection (a) shall
22
not apply after the date which is one year after the date
23
of the enactment of this section.
24
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•S 1101 IS
SEC. 204. RESTRICTION ON INCREASED FUNDING FOR
1
OTHER SPECIFIED PURPOSES.
2
(a) IN GENERAL.—Notwithstanding any other provi-
3
sion of law, no funds appropriated to the Department of
4
the Treasury in excess of the levels appropriated for speci-
5
fied purposes in fiscal year 2022 may be expended for
6
specified purposes.
7
(b) SPECIFIED PURPOSES.—For purposes of sub-
8
section (a), the term ‘‘specified purposes’’ means—
9
(1) the implementation of new information re-
10
porting requirements on flows of deposits and with-
11
drawals in individual and small-business banking ac-
12
counts and other financial accounts,
13
(2) the targeting of United States citizens in re-
14
sponse to the exercise by such citizens of any legally
15
protected or recognized right guaranteed under the
16
First Amendment to the United States Constitution,
17
(3) the targeting of a group for regulatory scru-
18
tiny based on the ideological beliefs of such group,
19
(4) the auditing of individual taxpayers with an
20
adjusted gross income of less than $400,000, and
21
(5) the hiring under an agreement pursuant to
22
the Intragovernmental Personnel Act of 1970 (sec-
23
tions 3371 et seq. of title 5, United States Code) or
24
any other authority of an authorized researcher who
25
is not a full time Federal employee to access data
26
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•S 1101 IS
subject to privacy protections afforded by section
1
6103 of the Internal Revenue Code of 1986.
2
SEC. 205. EFFICIENT USE OF EXISTING IRS RESOURCES.
3
For purposes of increasing enforcement actions in
4
areas of high noncompliance and reducing the corporate
5
audit no-change rate of the Internal Revenue Service to
6
below 20 percent by 2024—
7
(1) the Secretary (or the Secretary’s delegate)
8
shall, not later than 180 days after the date of the
9
enactment of this section—
10
(A) update the methodology that is used
11
for the selection of corporate returns for audit,
12
and
13
(B) reassign resources of the Internal Rev-
14
enue Service such that the majority of high-in-
15
come nonfilers are subject to enforcement ac-
16
tions, and
17
(2) the Comptroller General of the United
18
States shall, within one year after the date of the
19
enactment of this section, issue a comprehensive re-
20
port to Congress on information returns and data
21
collected by the Internal Revenue Service that could
22
be deployed for compliance activities but that are
23
not currently used for such activities.
24
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•S 1101 IS
SEC. 206. IRS FELLOWSHIP PROGRAM.
1
(a) ESTABLISHMENT.—Not later than September 30,
2
2024, the Commissioner of Internal Revenue (hereinafter
3
known as the ‘‘Commissioner’’) after consultation with the
4
Chief Counsel of the Internal Revenue Service (hereinafter
5
known as the ‘‘Chief Counsel’’), shall establish within the
6
Internal Revenue Service a fellowship program (herein-
7
after known as the ‘‘program’’) to recruit private sector
8
tax experts to join the Internal Revenue Service to create
9
and participate in the audit task force established under
10
subsection (e).
11
(b) OBJECTIVE.—The Commissioner, after consulta-
12
tion with the Chief Counsel, sh
[Text truncated for display. Full text available on Congress.gov.]