To amend the Internal Revenue Code of 1986 to consolidate the Inspectors General relating to the Department of the Treasury, and for other purposes.

November 21, 2003

Mr. PORTMAN (for himself, Mr. HOUGHTON, and Mr. POMEROY) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to consolidate the Inspectors General relating to the Department of the Treasury, and for other 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 `Department of the Treasury Inspector General Consolidation Act of 2003'.

SEC. 2. OFFICE OF THE TREASURY INSPECTOR GENERAL.

(a) IN GENERAL- Subchapter A of chapter 80 of the Internal Revenue Code of 1986 is amended by inserting after section 7804 the following new section:

`SEC. 7804A. OFFICE OF THE TREASURY INSPECTOR GENERAL.

`(a) IN GENERAL- There shall be in the Department of the Treasury the Office of the Treasury Inspector General.

`(b) TREASURY INSPECTOR GENERAL-

`(1) IN GENERAL- There shall be at the head of such Office the Treasury Inspector General. The Treasury Inspector General shall be under the authority, direction, and control of the Secretary of the Treasury with respect to audits or investigations, or the issuance of subpoenas, which require access to sensitive information concerning--

`(A) ongoing criminal investigations or proceedings;

`(B) undercover operations;

`(C) the identity of confidential sources, including protected witnesses;

`(D) deliberations and decisions on policy matters, including documented information used as a basis for making policy decisions, the disclosure of which could reasonably be expected to have a significant influence on the economy or market behavior;

`(E) intelligence or counterintelligence matters; or

`(F) other matters the disclosure of which would constitute a serious threat to national security.

`(2) SPECIAL RULE RELATING TO NATIONAL INTERESTS OF THE UNITED STATES- With respect to the information described under paragraph (1), the Secretary of the Treasury may prohibit the Treasury Inspector General from carrying out or completing any audit or investigation, or from issuing any subpoena, after such Inspector General has decided to initiate, carry out, or complete such audit or investigation or to issue such subpoena, if the Secretary determines that such prohibition is necessary to prevent the disclosure of any information described under paragraph (1) or to prevent significant impairment to the national interests of the United States.

`(3) NOTICE OF EXERCISE OF SECRETARY'S POWER- If the Secretary of the Treasury exercises any power under paragraph (1) or (2), the Secretary of the Treasury shall notify the Treasury Inspector General in writing stating the reasons for such exercise. Within 30 days after receipt of any such notice, the Treasury Inspector General shall transmit a copy of such notice to the Committees on Governmental Affairs and Finance of the Senate and the Committees on Government Operations and Ways and Means of the House of Representatives, and to other appropriate committees or subcommittees of the Congress.

`(4) LIMITATION ON EXERCISE OF SECRETARY'S POWER- The Secretary of the Treasury may not exercise any power under paragraph (1) or (2) with respect to the duties and responsibilities of the Treasury Inspector General concerning the Internal Revenue Service, the Internal Revenue Service Oversight Board, or the Office of Chief Counsel of the Internal Revenue Service.

`(c) AUTHORITY OF TREASURY INSPECTOR GENERAL-

`(1) INSPECTOR GENERAL ACT OF 1978- The Office of the Treasury Inspector General shall be deemed an establishment of an office of Inspector General under the Inspector General Act of 1978. The Treasury Inspector General shall exercise all duties and responsibilities of an Inspector General of an establishment with respect to the Department of the Treasury and the Secretary of the Treasury.

`(2) GENERAL AUTHORITY FOR AUDITS AND INVESTIGATIONS- Subject to subsection (b), the Treasury Inspector General may initiate, conduct, and supervise such audits and investigations in the Department of the Treasury as the Treasury Inspector General considers appropriate.

`(3) NOTICE OF AUDITS AND INVESTIGATIONS- If the Treasury Inspector General initiates an audit or investigation under paragraph (2), the Treasury Inspector General may provide the head of the affected bureau or office that is the subject of the audit or investigation with written notice that the Treasury Inspector General has initiated such audit or investigation. If the Treasury Inspector General issues a notice under the preceding sentence, no other audit or investigation shall be initiated into the matter under audit or investigation by the Treasury Inspector General and any other audit or investigation of such matter shall cease.

`(4) ADDITIONAL DUTIES-

`(A) ANNUAL REPORTING- The Treasury Inspector General shall include in one of the

semiannual reports under section 5 of the Inspector General Act of 1978--

`(i) an evaluation of the compliance of the Internal Revenue Service with--

`(I) restrictions under section 1204 of the Internal Revenue Service Restructuring and Reform Act of 1998 on the use of enforcement statistics to evaluate Internal Revenue Service employees,

`(II) restrictions under section 7521 on directly contacting taxpayers who have indicated that they prefer their representatives be contacted,

`(III) required procedures under section 6320 upon the filing of a notice of a lien,

`(IV) required procedures under subchapter D of chapter 64 for seizure of property for collection of taxes, including required procedures under section 6330 regarding levies, and

`(V) restrictions under section 3707 of the Internal Revenue Service Restructuring and Reform Act of 1998 on designation of taxpayers,

`(ii) a review and a certification of whether or not the Secretary is complying with the requirements of section 6103(e)(8) to disclose information to an individual filing a joint return on collection activity involving the other individual filing the return,

`(iii) information regarding extensions of the statute of limitations for assessment and collection of tax under section 6501 and the provision of notice to taxpayers regarding requests for such extension,

`(iv) an evaluation of the adequacy and security of the technology of the Internal Revenue Service,

`(v) any termination or mitigation under section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998,

`(vi) information regarding improper denial of requests for information from the Internal Revenue Service identified under subparagraph (C)(i), and

`(vii) information regarding any administrative or civil actions with respect to violations of the fair debt collection provisions of section 6304, including--

`(I) a summary of such actions initiated since the date of the last report, and

`(II) a summary of any judgments or awards granted as a result of such actions.

`(B) SEMIANNUAL REPORTS-

`(i) IN GENERAL- The Treasury Inspector General shall include in each semiannual report under section 5 of the Inspector General Act of 1978--

`(I) the number of taxpayer complaints during the reporting period,

`(II) the number of employee misconduct and taxpayer abuse allegations received by the Internal Revenue Service or the Inspector General during the period from taxpayers, Internal Revenue Service employees, and other sources,

`(III) a summary of the status of such complaints and allegations, and

`(IV) a summary of the disposition of such complaints and allegations, including the outcome of any Department of Justice action and any monies paid as a settlement of such complaints and allegations.

`(ii) Subclauses (III) and (IV) of clause (i) shall only apply to complaints and allegations of serious employee misconduct.

`(C) OTHER RESPONSIBILITIES- The Treasury Inspector General shall--

`(i) conduct periodic audits of a statistically valid sample of the total number of determinations made by the Internal Revenue Service to deny written requests to disclose information to taxpayers on the basis of section 6103 of this title or section 552(b)(7) of title 5, United States Code, and

`(ii) establish and maintain a toll-free telephone number for taxpayers to use to confidentially register complaints of misconduct by Internal Revenue Service employees and incorporate the telephone number in the statement required by section 6227 of the Omnibus Taxpayer Bill of Rights (Internal Revenue Service Publication No. 1).

`(d) RELATING TO ADMINISTRATIVE REVIEW OF DECISIONS- An audit or investigation conducted by the Treasury Inspector General shall not affect a final decision of the Secretary under section 6406.

`(e) TRANSMISSION OF REPORTS TO CONGRESS-

`(1) IN GENERAL- Any report required to be transmitted by the Secretary to the appropriate committees or subcommittees of the Congress under section 5(d) of the Inspector General Act of 1978 shall also be transmitted, within the seven-day period specified under such section, to the Committees on Governmental Affairs and Finance of the Senate and the Committees on Government Reform and Oversight and Ways and Means of the House of Representatives.

`(2) REPORTS RELATING TO THE IRS- Any report made by the Treasury Inspector General concerning the Internal Revenue Service, the Internal Revenue Service Oversight Board, or the Office of

Chief Counsel of the Internal Revenue Service that is required to be transmitted by the Secretary to the appropriate committees or subcommittees of Congress under section 5(d) of the Inspector General of 1978 shall also be transmitted, within the 7-day period specified under such section, to the Internal Revenue Service Oversight Board and the Commissioner of Internal Revenue.

`(f) ADDITIONAL SELECTION CRITERIA FOR TREASURY INSPECTOR GENERAL- In addition to the requirements of the first sentence of section 3(a) of the Inspector General Act of 1978, the Treasury Inspector General should have demonstrated ability to lead a large and complex organization.

`(g) TREASURY INSPECTOR GENERAL NOT EMPLOYEE OF IRS- An individual appointed to the position of Treasury Inspector General may not be an employee of the Internal Revenue Service--

`(1) during the 2-year period preceding the date of appointment to such position, or

`(2) during the 5-year period following the date such individual ends service in such position.

`(h) CRIMINAL AUTHORITY-

`(1) IN GENERAL- In addition to the duties and responsibilities exercised by an Inspector General of an establishment, the Treasury Inspector General--

`(A) shall have the authority and duty to enforce the criminal provisions within the scope of the Treasury Inspector General's jurisdiction, powers, duties and responsibilities as an Inspector General of an establishment under the Inspector General Act of 1978 and under this section,

`(B) in enforcing the criminal provisions described in subparagraph (A), shall have the authority to--

`(i) execute and serve search warrants and arrest warrants, and serve subpoenas and summonses issued under authority of the United States,

`(ii) make arrests without warrant for any offense against the United States relating to the laws under the jurisdiction, powers, duties and responsibilities of the Treasury Inspector General committed in the presence of an employee of the Treasury Inspector General authorized to enforce such laws, or for any felony cognizable under such laws if there is a reasonable ground to believe that the person to be arrested has committed or is committing any such felony,

`(iii) make seizures of property subject to forfeiture under such laws, and

`(iv) carry firearms,

`(C) shall be responsible for protecting the Department of the Treasury against external attempts to corrupt or threaten employees of the Department of the Treasury, but shall not be responsible for the conducting of background checks, and

`(D) may designate any employee in the Office of the Treasury Inspector General to enforce such laws and perform such functions referred to under subparagraphs (A), (B), and (C).

`(2) REPORTING TO ATTORNEY GENERAL OF UNITED STATES-

`(A) IN GENERAL- In performing a law enforcement function under paragraph (1), the Treasury Inspector General shall report any reasonable grounds to believe there has been a violation of Federal criminal law to the Attorney General of the United States at an appropriate time as determined by the Treasury Inspector General, notwithstanding section 4(d) of the Inspector General Act of 1978.

`(B) EXCEPTION- In the administration of section 5(d) of the Inspector General Act of 1978 and subsection (e)(2) of this section, the Secretary of the Treasury may transmit the required report at an appropriate time as determined by the Secretary, if the problem, abuse, or deficiency relates to--

`(i) the performance of a law enforcement function under paragraph (1) of this subsection, and

`(ii) sensitive information concerning matters under any of the subsection (b)(1)(A) through (F).

`(3) RULE OF CONSTRUCTION- Nothing in this subsection shall be construed to affect the authority of any other person to carry out or enforce any provision specified in paragraph (1).

`(i) SPECIAL RULES RELATING TO INTERNAL REVENUE SERVICE-

`(1) IN GENERAL- The Commissioner of Internal Revenue or the Internal Revenue Service Oversight Board may request, in writing, the Treasury Inspector General to conduct an audit or investigation relating to the Internal Revenue Service, the Internal Revenue Service Oversight Board, or the office of Chief Counsel of the Internal Revenue Service. If the Treasury Inspector General determines not to conduct such audit or investigation, the Treasury Inspector General shall timely provide a written explanation for such determination to the person making the request.

`(2) REPORTS-

`(A) AUDITS- Any final report of an audit conducted by the Treasury Inspector General concerning the Internal Revenue Service, the Internal Revenue Service Oversight Board, or the Office of the Chief Counsel of the Internal Revenue Service shall be timely submitted by the Treasury Inspector General to the Commissioner of Internal Revenue and the Internal Revenue Service Oversight Board.

`(B) INVESTIGATIONS- The Treasury Inspector General shall periodically submit to the Commissioner and Board a list of investigations concerning the Internal Revenue Service, the Internal Revenue Service Oversight Board, or the Office of the Chief Counsel of the Internal

Revenue Service for which a final report has been completed by the Treasury Inspector General and shall provide a copy of any such report upon request of the Commissioner or Board.

`(C) APPLICATION- This paragraph applies regardless of whether the applicable audit or investigation is requested under paragraph (1).'.

(b) CONFORMING AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986-

(1) The following provisions of the Internal Revenue Code of 1986 are each amended by striking `Treasury Inspector General for Tax Administration' each place it appears in the headings and the text and inserting `Treasury Inspector General':

(A) Section 6103(h)(6).

(B) Section 6103(k)(6).

(C) Section 7217(b).

(D) Section 7803(c)(2)(B)(iv).

(2) Section 6103(p)(3) of such Code is amended by adding at the end the following new subparagraph:

`(D) SPECIAL RULE RELATING TO THE TREASURY INSPECTOR GENERAL- The exception under subparagraph (A) that the Secretary not be required to maintain records or accountings shall not apply with respect to the Treasury Inspector General.'.

(3) Section 6103(p)(4) of such Code is amended by inserting `the Treasury Inspector General,' before `the General Accounting Office'.

(4) Section 7803 of such Code is amended by striking subsection (d).

(5) Section 7608(b) of such Code is amended by striking `of the Intelligence Division'.

(c) CONFORMING AMENDMENTS TO INSPECTOR GENERAL ACT OF 1978-

(1) Section 2 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking `established--' and all that follows and inserting `established in each of such establishments an Office of Inspector General.'.

(2) The Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking section 8D.

(d) CLERICAL AMENDMENT- The table of sections for subchapter A of chapter 80 of such Code is amended by inserting after the item relating to section 7804 the following new item:

`Sec. 7804A. Office of the Treasury Inspector General.'.

SEC. 3. TRANSFER OF OFFICE OF THE INSPECTOR GENERAL OF THE DEPARTMENT OF THE TREASURY TO THE OFFICE OF TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION.

(a) IN GENERAL- The Office of the Inspector General of the Department of the Treasury is hereby transferred to the Office of Treasury Inspector General for Tax Administration.

(b) ABOLISHMENT OF OFFICE OF THE INSPECTOR GENERAL OF THE DEPARTMENT OF THE TREASURY- Effective upon the transfer under subsection (a) and consistent with the Inspector General Act of 1978 (as amended by this Act), the Office of Inspector General of the Department of the Treasury established by the Inspector General Act Amendments of 1988 is abolished.

(c) RENAMING OF TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION- The Office of Treasury Inspector General for Tax Administration is hereby redesignated as the Office of the Treasury Inspector General.

(d) TRANSFER OF FUNCTIONS, ETC- Subparagraph (L) of section 9(a)(1) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended to read as follows:

`(L) of the Department of the Treasury (established by the Department of the Treasury Inspector General Consolidation Act of 2003), the offices of that department referred to as the `Office of the Inspector General of the Department of the Treasury' (established by the Inspector General Act Amendments of 1988);'.

SEC. 4. SAVINGS PROVISIONS.

(a) COMPLETED OR PENDING MATTERS- Completed or pending administrative actions, proceedings, orders, determinations, rules, regulations, personnel actions, permits, agreements, grants, contracts, certificates, licenses, registrations, privileges, or civil actions, of either the Inspector General of the Department of the Treasury or the Treasury Inspector General for Tax Administration shall not be affected by the enactment of this Act or the consolidation of the Office of the Inspector General of the Department of the Treasury and the Office of the Treasury Inspector General for Tax Administration under this Act as the Office of the Treasury Inspector General, but shall continue in effect according to their terms until amended, modified, superseded, terminated, set aside, or revoked, in accordance with law by an officer of the United States or a court of competent jurisdiction, or by operation of law.

(b) REFERENCES- Any reference to either the Inspector General of the Department of the Treasury or the Treasury Inspector General for Tax Administration in any statute, Executive Order, rule, regulation, directive, or delegation of authority that precedes the effective date of this Act shall be deemed to be a reference to the Treasury Inspector General established under the Inspector General Act of 1978, as amended by this Act, unless otherwise provided by this Act or the Inspector General Act of 1978.

SEC. 5. TRANSITION PROVISION.

The President may designate an individual to serve as the Treasury Inspector General (as consolidated under section 2 of this Act and the amendments made by this Act) until a Treasury Inspector General is appointed pursuant to section 3 of the Inspector General Act of 1978.

SEC. 6. EFFECTIVE DATE.

This Act and the amendments made by this Act shall take effect 120 days after the date of the enactment of this Act.

END