Enfrocement and Administration of Internal Revenue Laws

Sec. 302. Unauthorized practice before the Department of the Treasury.
Sec. 303. Actions for recovery of internal revenue taxes-jury trial.
Sec. 304. Clarification of section 281 of title 18.

(b) TITLES I AND II AMENDATORY OF INTERNAL REVENUE CODE.-Except as otherwise expressly provided, wherever in title I or title II an amendment or repeal is expressed in terms of an amendment to or repeal of a chapter, subchapter, title, supplement, section, subsection, subdivision, paragraph, subparagraph, or clause, the reference shall be considered to be made to a provision of the Internal Revenue Code.

(c) MEANING OF TERMS USED.-Except as otherwise expressly provided, terms used in title I and title II shall have the same meaning as when used in the Internal Revenue Code.

TITLE I-AMENDMENTS OF THE INTERNAL REVENUE CODE-ENFORCEMENT PROVISIONS

SEC. 101. DISALLOWANCE OF UNSUBSTANTIATED DEDUCTIONS.

Section 23 (a) (relating to deductions for expenses) is hereby amended by adding at the end thereof the following new paragraph:

"(3) DISALLOWANCE OF UNSUBSTANTIATED DEDUCTIONS.-No deduction shall be allowed under this subsection unless it is substantiated in accordance with regulations prescribed by the Secretary under section 54 (a)."

SEC. 102. LOANS TO POLITICAL COMMITTEES.

(a) Section 23 (k) (relating to deduction for bad debts) is hereby amended by adding at the end thereof the following new paragraph:

"(6) LOANS TO POLITICAL COMMITTEES.-This subsection shall not apply in the case of a taxpayer, other than a bank, as defined in section 104, with respect to a loss resulting from a loan to any committee, association, or organization organized or operated primarily for the purpose of influencing or attempting to influence the nomination or election of political candidates or presidential and vice presidential electors."

(b) The amendment made by this section shall be applicable only with respect to loans made after the date of enactment of this Act.

SEC, 103. RECORDS.

Section 54 (a) (relating to taxpayers' records, statements, and returns) is hereby amended to read as follows:

"(a) BY TAXPAYER.-Every person liable to any tax imposed by this chapter or for the collection thereof, shall make such returns, render under oath such statements, and comply with such regulations as the Secretary may from time to time prescribe. Every such person, to the extent and in the manner prescribed under such regulations, shall keep and retain such records and other information as shall be sufficient to establish the amount, nature, and source of the gross income, deductions, and credits which may enter into the determination of income subject to tax under this chapter."

SEC. 104. INFORMATION At Source.

Section 147 is hereby amended by striking out subsection (c) and inserting in lieu thereof the following new subsections:

"(c) ADDITIONAL INFORMATION.-Any person (1) making any payment of any thing of value to or on behalf of any officer, employee, partner, or shareholder of such person, or (2) making any service, property, or facility available to any person described in clause (1), regardless of whether such payment, service, property, or facility constitutes gross income under this title, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by him, setting forth such information with respect to such payment, service, property, or facility as may be required by such regulations. This subsection shall not apply with respect to any payment made to, or any service, property, or facility made available to, any individual by any person during any taxable year of such person if

the aggregate value of all payments made to, and all services, property, and facilities made available to, such individual by such person during such taxable year is less than $200.

"(d) RECIPIENT TO FURNISH NAME AND ADDRESS.-When necessary to make effective the provisions of this section the name and address of the recipient shall be furnished upon demand of the person making the payment or making the service, property, or facility available."

SEC. 105. ADDITION TO TAX FOR FAILURE TO DISCLOSE INFORMATION AS TO GROSS INCOME.

Supplement M of chapter 1 is hereby amended by adding after section 299 the following new section:

"SEC. 300. FAILURE TO DISCLOSE INFORMATION AS TO GROSS INCOME.

"If upon written inquiry by the Secretary sent by registered mail to the taxpayer in connection with the determination of tax liability under this chapter the taxpayer fails to disclose within ninety days after such inquiry is mailed, or within such additional period as the Secretary may authoirze, information which is specifically required to be retained by a regulation prescribed under section 54 (a) as to the nature and source of any item of the taxpayer's gross income (unless it is shown that such failure is due to reasonable cause and not due to willful neglect), there shall be assessed, collected and paid, in the same manner as if it were a deficiency determined by the Secretary, 5 per centum (in addition to any tax, deficiency or additions to the tax) of the total amount of gross income and nature and source of which is not disclosed; except that the provisions of section 272 (i), relating to the prorating of a deficiency, and of section 292, relating to interests on deficiencies, shall not be applicable. The provisions of section 272 (k) with respect to notice of a deficiency shall be applicable with respect to any inquiry mailed under this section."

SEC. 106. AUTHORITY TO EXAMINE RECORDS.

(a) Section 3614 (a) (relating to examination of books and witnesses) is hereby amended to read as follows:

"(a) TO DETERMINE LIABILITY OF THE TAXPAYER.-The Secretary, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, or for the purpose of ascertaining that a taxpayer is keeping such books, records, and other information as are required by law and regulations, is authorized, by any officer or employee of the Bureau of Internal Revenue, including the field service, designated by him for that purpose, to examine any books, papers, records, memoranda, or other information bearing upon the matters required to be included in any return filed or required to be filed, and may require the person rendering the return or required to render a return or any officer or employee of such person, or any other person having knowledge in the premises, to appear and to produce such books, papers, records, memoranda, or other information, and may take his testimony with reference to the matter required by law or regulation to be included in such books, papers, records, memoranda, or return, with power to administer oaths to such person or persons."

(b) Section 3631 is hereby amended to read as follows:

"SEC. 3631. RESTRICTIONS ON EXAMINATION OF TAXPAYERS.

"No taxpayer shall be subjected to unnecessary examinations or investigations; and only one inspection of a taxpayer's books of account for the purpose of ascertaining the correctness of any return or of making a return where none has been made, and only one other inspection for the purpose of ascertaining that a taxpayer is keeping such books, records, and other information as are required by law and regulations, may be made for each taxable year unless the taxpayer requests otherwise or unless the Secretary, after investigation, notifies the taxpayer in writing that an additional inspection is necessary."

SEC. 107. PERSONS ASSISTING IN PREPARATION OF RETURNS.

Subchapter C of chapter 34 (relating to information and returns) is hereby amended by adding after section 3634 the following new section: "SEC. 3635. PERSONS ASSISTING IN PREPARATION OF RETURNS.

“(a) NAME AND ADDRESS TO BE STATED ON RETURN.-Any person, who, for compensation, prepares any return designated by the Secretary under subsection (c) shall state his name and address upon such return in the manner required by regulations prescribed by the Secretary. Any taxpayer who pays any compen

sation to any person for the preparation of or assistance in the preparation of any return designated by the Secretary under subsection (c) which the taxpayer is required to file shall state the name and address of such person upon the return, unless such person has done so in compliance with the preceding sentence.

"(b) NAME AND ADDRESS TO BE GIVEN TO TAXPAYER.-Upon request by the taxpayer, any person whose name and address the taxpayer is required under subsection (a) to state upon a return shall give his name and address to the taxpayer.

"(c) DESIGNATION OF RETURNS.-The Secretary shall by regulation designate the returns required by this title to which this section shall apply.

"(d) PENALTY FOR WILLFUL VIOLATION.-Any person willfully violating this section shall be fined not more than $1,000 or imprisoned not more than one year, or both."

SEC. 108. COLLECTION OF DELINQUENT TAXES OF EMPLOYEES.

(a) PAYROLL DEDUCTION FOR FEDERAL EMPLOYEES.-Subchapter A of chapter 36 is hereby amended by adding after section 3663 the following new section: "SEC. 3664. COLLECTION OF DELINQUENT TAXES OF FEDERAL EMPLOYEES.

"(a) IN GENERAL.-If any officer, employee, or elected official of the United States, or the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia (referred to hereafter in this section as an 'employee') liable to pay any Federal tax (including interest, additions to the tax, and additional amounts) fails to pay such tax within ten days after notice and demand, the Secretary may send to the employer (as defined in section 1621 (d)) of such employee a notice setting forth the name of the employee and the amount of unpaid tax. Upon receipt of such notice, the employer shall deduct and pay over to the Secretary from each payment of compensation thereafter payable to the employee, until the amount specified in the notice is fully paid, an amount equal to (1) 10 per centum of the portion of the compensation represented by such payment which does not exceed a rate of $10,000 per annum, plus (2) 25 per centum of the portion of such compensation which exceeds such rate. The aggregate amount deducted under this section from any payment of compensation to any employee shall not exceed the amount provided for in the preceding sentence even though more than one notice has been received with respect to the employee.

"(b) IMMUNITY OF EMPLOYER.-The employer shall not be liable to any person for any amount deducted and paid to the Secretary under this section. "(c) REGULATIONS.-The Secretary shall prescribe such regulations as he may deem necessary for carrying out the provisions of this action."

(b) CONTINUING LEVY FOR OTHER EMPLOYEES.-Section 3692 (relating to levy) is hereby amended by striking out "In case of" and inserting in lieu thereof "(a) IN GENERAL.-In case of"; and by adding at the end thereof the following new

subsection:

"(b) CONTINUING LEVY IN CASE OF DELINQUENT EMPLOYEES.-In addition to any levy authorized under subsection (a), a continuing levy may also be made with respect to compensation for personal services as an employee, which shall remain in effect until the liability in respect of which the levy is made is satisfied, but shall attach to such compensation accruing or becoming payable after the date on which such levy is made only to the extent of (1) 10 per centum of the portion of such compensation which does not exceed a rate of $10,000 per annum, plus (2) 25 per centum of the portion of such compensation which exceeds such rate. Only one levy may be in effect at any one time with respect to any one individual under this subsection. No person shall be liable to any other person for any amount paid to the Secretary in compliance with a levy made under this subsection."

(c) PERIOD OF LIMITATION.-Section 276 (c) (relating to collection after assessment) is hereby amended by inserting after "by distraint" the following: 66 or by deduction under section 3664,"; and by adding at the end of such subsection the following new sentence: "For the purposes of this subsection, where a levy is made under section 3692 (b) within the period of limitation prescribed by this subsection, or a notice is received by any employer under section 3664 (a) within such period, any subsequent levy under section 3692 (b), and any subsequent notice received under section 3664 (a), with respect to the same tax liability shall also be considered to have been made or received, as the case may be, within such period."

SEC. 109 AUTHORITY TO DISTRAIN.

Section 3690 (relating to authority to distrain) is hereby amended by striking out "collector or his deputy" and inserting in lieu thereof "Secretary"; and by striking out the period at the end of the section and inserting in lieu thereof a semicolon and the following: "except that, if the Secretary believes that the collection of any such taxes will be jeopardized by delay, notice and demand for immediate payment of such taxes (together with such interest and other additional amounts as are required by law) may be made by the Secretary and, upon failure or refusal to pay such taxes, interest, and additional amounts, collection thereof by distraint and sale shall be lawful without regard to the ten-day period provided in this section."

SEC. 110. EXTENSION OF PERIOD OF LIMITATIONS FOR CERTAIN OFFENSES.

(a) Section 3748 (a) (relating to periods of limitation for criminal prosecutions) is hereby amended by striking out "and" at the end of paragraph (2); by striking out the period at the end of paragraph (3) and inserting in lieu thereof a comma; and by adding after paragraph (3) the following new paragraphs:

"(4) for the offense of willfully failing to pay any tax, make a return or declaration, keep any records, or supply any information at the time or times required by law or regulations, and

"(5) for the offense of knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device a material fact, or making any false, fictitious or fraudulent statements or representations, or making or using any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, in any matter within the jurisdiction of the Bureau of Internal Revenue."

(b) The amendments made by subsection (a) shall apply to offenses committed on, before or after the date of enactment of this Act; except that such amendments shall not apply to any offense for which the period of limitations in effect prior to the enactment of this Act expired on or before the date of such enactment.

SEC. 111. PENALTY FOR MISREPRESENTATIONS IN REVENUE MATTERS.

Section 3793 (b) (relating to fraudulent returns, affidavits, and claims) is hereby amended by redesignating the presently designated paragraph (2) as paragraph (3); and by adding after paragraph (1) the following new paragraph:

"(2) Any person who, in any matter within the jurisdiction of the Bureau of Internal Revenue, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both."

TITLE II-AMENDMENTS OF INTERNAL REVENUE CODE

SEC. 201.

ADMINISTRATIVE PROVISIONS

EXEMPTION FROM REQUIREMENT OF DECLARATION OF ESTIMATED TAX. (a) Section 58 (a) is hereby amended to read as follows:

"SEC. 58. DECLARATION OF ESTIMATED TAX BY INDIVIDUALS.

"(a) REQUIREMENT OF DECLARATION.-Every individual (other than an estate or trust and other than a nonresident alien with respect to whose wages, as defined in section 1621 (a), withholding under subchapter D of chapter 9 is not made applicable, but including every alien individual who is a resident of Puerto Rico during the entire taxable year) shall, at the time prescribed in subsection (d), make a declaration of his estimated tax for the taxable year if—

"(1) the amount of tax under this chapter for the taxable year (determined without regard to any credits under sections 32 and 35 for taxes withheld at source and without regard to the tax imposed by subchapter E on self-employment income) can reasonably be expected to exceed by $10 or more the amount of the credits for the taxable year under sections 32 and 35; and

"(2) either

"(A) his gross income from wages (as defined in section 1621) can reasonably be expected to exceed the sum of $4,500 plus $600 with respect to each exemption provided in section 25 (b); or

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