To amend the Internal Revenue Code of 1986 to provide for the disclosure of return information for student financial assistance purposes.

November 21, 2003

Mr. SAM JOHNSON of Texas (for himself, Mr. BOEHNER, and Mr. HOUGHTON) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide for the disclosure of return information for student financial assistance purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Student Aid Streamlined Disclosure Act of 2003'.

SEC. 2. DISCLOSURE OF TAX RETURN INFORMATION FOR STUDENT AID PURPOSES.

(a) IN GENERAL- Subsection (l) of section 6103 of the Internal Revenue Code of 1986 (relating to disclosure of returns and return information for purposes other than tax administration) is amended to read as follows:

`(13) DISCLOSURE OF RETURN INFORMATION FOR STUDENT FINANCIAL ASSISTANCE PURPOSES-

`(A) FULL DISCLOSURE TO DEPARTMENT OF EDUCATION- The Secretary may, with respect to a person described in subparagraph (F)(i) and upon written request from the Secretary of Education, disclose to the officers and employees of the Department of Education for the purposes described in subparagraph (E)--

`(i) taxpayer identity information, and

`(ii) the following items in the case of a material discrepancy between the information reported, directly or indirectly, to officers, employees, and contractors of the Department of Education and the following items:

`(I) The filing status of that taxpayer.

`(II) The adjusted gross income of that taxpayer.

`(III) The total earnings from employment (including net earnings from self-employment) of that taxpayer.

`(IV) The Federal income tax liability of that taxpayer.

`(V) The type of tax return filed by that taxpayer.

`(B) REDISCLOSURE TO CONTRACTORS- Officers and employees of the Department of Education may disclose to contractors whether a material discrepancy between items reported, directly or indirectly, to an officer, employee, or contractor of the Department of Education and any of the items described in subparagraph (A)(ii) would result in an over or under award of grants or loans under title IV of the Higher Education Act of 1965.

`(C) FACT OF DISCREPANCY REDISCLOSURE OF INFORMATION-

`(i) IN GENERAL- Subject to subparagraphs (D) and (E), officers, employees, and contractors of the Department of Education may, with respect to an application for assistance under title IV of the Higher Education Act of 1965, disclose to persons described in clauses (ii) and (iii)--

`(I) the fact of a material discrepancy between items reported, directly or indirectly, to such officers, employees, or contractors and any of the items described in subparagraph (A)(ii), and

`(II) whether such items as shown on the return are greater than or less than such items as reported to the Department of Education.

`(ii) APPLICANT- The person described in this clause is the applicant described in subclause (I) or (II) of subparagraph (F)(i).

`(iii) OTHER PERSONS- The persons described in this clause are--

`(I) individuals whose information is discrepant,

`(II) officers and employees of institutions of higher education (as defined in section 102 of the Higher Education Act of 1965) that administer, or assist the Secretary of Education in administering, a grant, loan, benefit, or work assistance program under title IV of such Act,

`(III) officers and employees of State agencies that administer a grant or work assistance program under subpart 4 of part A of title IV of such Act, and

`(IV) auditors engaged to perform audits or reviews required under section 487(c) of such Act,

`(D) LIMITATION ON FULL REDISCLOSURES RELATING TO MATERIAL DISCREPANCIES- Information specific to an individual which is disclosed by the Secretary under subparagraph (A) may only be redisclosed to the individual whose information is discrepant and to the Department of Justice for purposes relating to the collection of overpayments of grants or loans provided under title IV of the Higher Education Act of 1965, including by means of litigation.

`(E) RESTRICTION ON USE OF DISCLOSED INFORMATION-

`(i) IN GENERAL- Information may be disclosed under subparagraphs (A) through (C) only for the purpose of, and to the extent necessary to--

`(I) verify the information reported by a person described in subparagraph (F)(i) in connection with any application for grant, loan, benefit or work assistance under title IV of the Higher Education Act of 1965,

`(II) determine income contingent repayment amounts and schedules on an applicable student loan,

`(III) collect overpayments of grants or loans provided under title IV of such Act, including by means of litigation in the case of the Department of Justice, or

`(IV) audit title IV student assistance programs, as required under section 487(c) of such Act.

`(ii) INFORMATION LIMITED TO TAX YEARS REQUIRED- Information disclosed under this paragraph shall be limited to the tax years required, in accordance with such Act and implementing regulations, to carry out the purposes described in this paragraph.

`(F) DEFINITIONS AND SPECIAL RULES- For purposes of this paragraph--

`(i) PERSON DESCRIBED- A person is described in this clause if the person--

`(I) has applied for grant, loan, benefit, or work assistance under title IV of the Higher Education Act of 1965,

`(II) is seeking income contingent repayment on an applicable student loan,

`(III) in the case of an individual who is a dependent student and who has applied for the assistance described in subclauses (I) and (II), is the parent (as defined for purposes of title IV of such Act) of such individual, or

`(IV) in the case of an individual who is an independent student and who has applied for the assistance described in subclauses (I) and (II), is the spouse of such individual.

`(ii) MATERIAL DISCREPANCY- The term `material discrepancy' means, with respect to similar items in 2 sets of information--

`(I) a difference between such sets of not less than the greater of $100 or one percent of the item shown on the return in the case of items described in subclause (II), (III), or (IV) of subparagraph (A)(ii), and

`(II) any difference between such sets of information in the case of items described in subclause (I) or (V) of subparagraph (A)(ii).

`(iii) APPLICABLE STUDENT LOAN- The term `applicable student loan' means--

`(I) any loan made under the program authorized under part D of title IV of such Act, and

`(II) any loan made under part B or E of title IV of such Act that is in default and has been assigned to the Department of Education.

`(iv) EXCLUSIVE AUTHORITY- For purposes of subsection (a), subsection (c) shall not be construed to be an authorization for any disclosure covered by this paragraph.

`(v) FUNDING- Information may be disclosed under this paragraph only if there is in effect an agreement between the Secretary and the Secretary of Education under which the Secretary of Education makes periodic payments to the Secretary--

`(I) to reimburse the Secretary for costs incurred in carrying out this paragraph, and

`(II) to cover the cost to the Secretary of monitoring compliance with this section by the Secretary of Education in carrying out this paragraph.

`(vi) REFERENCES TO HIGHER EDUCATION ACT OF 1965- For purposes of this paragraph, references to the Higher Education Act of 1965 shall be treated as references to the Higher Education Act of 1965 as in effect on the date of the enactment of this paragraph.

`(G) TERMINATION- This paragraph shall not apply to requests for disclosures made after September 30, 2008.'.

(b) CONFORMING AND OTHER AMENDMENTS-

(1) Section 6103(a)(3) of such Code is amended by striking `paragraph (6), (12), or (16) of subsection (l),' and inserting `paragraph (6), (12), (13), or (16) of subsection (l),'.

(2) Section 6103(p) of such Code is amended--

(A) in paragraph (3)(A) by striking `(13)'; and

(B) in paragraph (4) by striking `paragraph (6)(A), (12)(B), or (16) of subsection (l)' in the flush language at the end and inserting `paragraph (6)(A), (12)(B), (13), or (16) of subsection (l)'.

(3) Section 7213(a)(2) of such Code is amended by inserting `(13),' after `(12),'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to requests for disclosures made after the date of the enactment of this Act.

END