The House Ways and Means Committee passed seven bills Wednesday aimed at reforming the Internal Revenue Service.
Many of the bills came in response to the still-simmering scandal over the extra scrutiny that the IRS’s Exempt Organizations unit gave to applications for Section 501(c)4 tax-exempt status from groups with terms like “Tea Party” in their names, and the protracted search for emails from the former director of the unit, Lois Lerner.
One of the bills, H.R. 1152, would prohibit officers and employees of the IRS from using personal email accounts to conduct official business.
Another bill, H.R. 1295, would amend the Tax Code to improve the process for making determinations on tax-exempt status for organizations, in effect making the requests for tax exemption and acknowledgements of the applications more timely by requiring them to be made within 60 days. Organizations that are operating as 501(c)4 groups would have to notify the government within 60 days that they are operating as such, or face a penalty of $20 per day after the 60 days elapses, up to a maximum of $5,000.
H.R. 1314 would amend the Tax Code to provide for the right to an administrative appeal relating to adverse determinations of tax-exempt status.
H.R. 1026, the Taxpayer Knowledge of IRS Investigations Act, would provide taxpayers with information on whether they were being investigated by the IRS and whether the investigation was open or closed.
H.R. 709, the Prevent Targeting at the IRS Act, would terminate IRS employees for taking official actions for political purposes, including performing, delaying or failing to perform or threatening to perform or delay official actions such as audits for personal gain or benefit or a political purpose.
H.R. 1104, the Fair Treatment for All Donations Act, would allow deductions from the gift tax for gifts made to certain tax-exempt organizations.
H.R. 1058, the Taxpayer Bill of Rights Act of 2015, would enshrine the Taxpayer Bill of Rights, which the IRS unveiled last year, in the Tax Code (see IRS Adopts Taxpayer Bill of Rights).
The Ways and Means Committee also passed H.R. 1105, the Death Tax Repeal Act of 2015, which would eliminate the estate tax (see Wealthiest Win as U.S. House Panel Advances Estate-Tax Repeal).
"Now, these reforms are simply common sense,” said House Ways and Means Committee chairman Paul Ryan R-Wis., during his opening statement at the markup session Wednesday. “All we're saying are things like, 'Don't target people because of their political beliefs. Don't tax donations to tax-exempt groups. Don't send taxpayer information to your private email.' Pretty simple stuff.”
Rep. Sander Levin, D-Mich., the ranking Democratic member on the committee, said he agreed with most of the bills, except the bill that would repeal the estate tax, which nevertheless passed on a 22-10 party line vote. “The other legislation before us today concerns the IRS and its treatment of nonprofit organizations,” he said in his opening statement at the markup session. “Five of the seven bills we have seen before—they were on the floor last year. We do not oppose them. I also support the two bills that are new, including H.R. 1295, which would require 501(c)(4) organizations to provide notice to the IRS within 60 days of forming. It also makes sense that when organizations provide that notice they should also indicate whether they plan to engage in political activity or expect to file a report with the Federal Election Commission. We intend to offer an amendment that adds that requirement.”
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