To ensure the successful development of the electronic Income Verification Express Service of the Internal Revenue Service by amending the Taxpayer First Act to clarify that taxpayer identity verification is the responsibility of users of the system rather than the taxpayer, and for other purposes.

I 118TH CONGRESS 1ST SESSION H. R. 3335 To ensure the successful development of the electronic Income Verification Express Service of the Internal Revenue Service by amending the Tax- payer First Act to clarify that taxpayer identity verification is the respon- sibility of users of the system rather than the taxpayer, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 15, 2023 Mr. MCHENRY (for himself and Mr. PANETTA) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To ensure the successful development of the electronic In- come Verification Express Service of the Internal Rev- enue Service by amending the Taxpayer First Act to clarify that taxpayer identity verification is the responsi- bility of users of the system rather than the taxpayer, 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. IDENTITY VERIFICATION RESPONSIBILITY. 3 (a) IN GENERAL.—Section 2201 of the Taxpayer 4 First Act (Public Law 116–25) is amended— 5 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3335 IH (1) in subsection (a), by striking ‘‘and’’ at the 1 end of paragraph (1), by redesignating paragraph 2 (2) as paragraph (3), and by inserting after para- 3 graph (1) the following new paragraph: 4 ‘‘(2) is accomplished only after a financial insti- 5 tution (or a service provider, subsidiary, affiliate, 6 agent, subcontractor, or assignee of a financial insti- 7 tution) has formed a reasonable belief that the iden- 8 tity of the taxpayer has been authenticated; and’’; 9 and 10 (2) in subsection (b), by striking ‘‘by the Sec- 11 retary to a person seeking to verify the income or 12 creditworthiness of a taxpayer who is a borrower in 13 the process of a loan application’’ and inserting ‘‘, 14 including business tax return information, by the 15 Secretary to a taxpayer or financial institution (or a 16 service provider, subsidiary, affiliate, agent, subcon- 17 tractor, or assignee of a financial institution) des- 18 ignated by a taxpayer seeking to verify the income 19 or creditworthiness of a taxpayer who is in the proc- 20 ess of a financial application’’. 21 (b) FINANCIAL INSTITUTION DEFINITION, STAND- 22 ARDS AND GUIDELINES.—Section 2201(c) of such Act is 23 amended— 24 (1) in subsection (c)— 25 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3335 IH (A) by striking ‘‘The Secretary’’ and in- 1 serting: 2 ‘‘(1) IN GENERAL.—The Secretary’’; and 3 (B) by adding at the end the following new 4 paragraph: 5 ‘‘(2) STANDARDS.—The Secretary shall ensure 6 that any standards and guidelines deemed applicable 7 to the system described in this section— 8 ‘‘(A) Enable a taxpayer to provide the ap- 9 propriate designation and electronic consent to 10 a financial institution (or a service provider, 11 subsidiary, affiliate, agent, subcontractor, or as- 12 signee of a financial institution), including 13 those defined in section 106 of the Electronic 14 Signatures in Global and National Commerce 15 Act (15 U.S.C. 7006); 16 ‘‘(B) Enable a financial institution (or a 17 service provider, subsidiary, affiliate, agent, 18 subcontractor, or assignee of a financial institu- 19 tion) to act upon such designation and consent 20 to request a qualified disclosure directly with 21 the system implemented pursuant to this sec- 22 tion; and 23 ‘‘(C) Ensure the security and confiden- 24 tiality of taxpayer information, to the extent 25 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3335 IH such standards and guidelines do not conflict 1 with other standards and guidelines applicable 2 to financial institutions.’’, and 3 (2) by redesignating subsections (c) and (d) as 4 subsections (d) and (e), respectively, and by insert- 5 ing after subsection (b) the following new subsection: 6 ‘‘(c) FINANCIAL INSTITUTION.—For purposes of this 7 section, the term ‘financial institution’ has the meaning 8 given such term in section 509 of the Gramm-Leach-Bliley 9 Act (15 U.S.C. 6809).’’. 10 (c) LIMITATION ON AUTHORITY.—Section 2201 of 11 such Act is amended by adding at the end the following 12 new subsection: 13 ‘‘(f) LIMITATION ON AUTHORITY.—The Secretary 14 may not require a taxpayer seeking a qualified disclosure 15 to access any information technology system or service 16 used by or on behalf of the Internal Revenue Service pur- 17 suant to this section for any purpose relating to a qualified 18 disclosure, including identity verification or the provision 19 of electronic consent.’’. 20 (d) CLARIFICATION REGARDING CERTAIN BUSINESS 21 TAX RETURN INFORMATION AVAILABLE FOR DISCLO- 22 SURE.—Section 2201 of such Act, as amended by sub- 23 section (c), is amended by adding at the end the following 24 new subsection: 25 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3335 IH ‘‘(g) PROGRAM REQUIRED TO MAKE CERTAIN IN- 1 FORMATION AVAILABLE FOR DISCLOSURE.—The Sec- 2 retary shall ensure that the program implemented under 3 this section makes certain business tax return information 4 available for disclosure, including, but not limited to, the 5 following: 6 ‘‘(1) The following information from Schedule 7 K–1 of Forms 1065 and 1120: 8 ‘‘(A) Names of owners. 9 ‘‘(B) Percentage of capital ownership of 10 each owner. 11 ‘‘(C) Distributions to each owner. 12 ‘‘(D) In the case of Form 1065, direct 13 payments to partners. 14 ‘‘(2) The following information from Schedule 15 G of Form 1120: 16 ‘‘(A) Names of owners. 17 ‘‘(B) Percentage of capital ownership of 18 each owner. 19 ‘‘(3) With respect to each entity identified on 20 Schedule C of Form 1040, the following information 21 from such Schedule: 22 ‘‘(A) Name of such entity. 23 ‘‘(B) Names of owners of such entity. 24 ‘‘(C) Income statement of each entity. 25 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3335 IH ‘‘(4) All information available on the following 1 forms or schedules: 2 ‘‘(A) Schedule L. 3 ‘‘(B) Schedule M. 4 ‘‘(C) Form 1125–E. 5 ‘‘(D) Any schedules or supplemental sched- 6 ules of Form 1040 (or any other personal in- 7 come tax return form) which includes informa- 8 tion related to any income, deduction, gain, 9 loss, or credit which is derived in the conduct 10 of any trade or business (other than the trade 11 or business of being an employee). 12 ‘‘(5) NAICS codes with respect to all forms and 13 schedules. 14 Each reference to a form or schedule in this subsection 15 shall be treated as including a reference to any form or 16 schedule which is a successor or alternative to such form 17 or schedule.’’. 18 (e) EFFECTIVE DATE.— 19 (1) IN GENERAL.—Except as otherwise pro- 20 vided in this subsection, the amendments made by 21 this section shall take effect as if included in section 22 2201 of the Taxpayer First Act (Public Law 116– 23 25). 24 VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3335 IH (2) CLARIFICATION REGARDING CERTAIN BUSI- 1 NESS TAX RETURN INFORMATION AVAILABLE FOR 2 DISCLOSURE.—The amendment made by subsection 3 (d) shall take effect on the date which is 1 year after 4 the date of the enactment of this Act. 5 Æ VerDate Sep 11 2014 01:27 May 30, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H3335.IH H3335 kjohnson on DSK79L0C42PROD with BILLS