TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION.

SEC. 1103. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION. (a) Establishment of Two Inspectors General in the Department of the Treasury.— Section 2 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking the matter following paragraph (3) and inserting the following: “there is established— “(A) in each of such establishments an office of Inspector General, subject to subparagraph (B); and “(B) in the establishment of the Department of the Treasury— “(i) an Office of Inspector General of the Department of the Treasury; and “(ii) an Office of Treasury Inspector General for Tax Administration.”. (b) Amendments to Section 8D of the Inspector General Act of 1978.— (1) Limitation on authority of inspector general.— Section 8D(a) of the Inspector General Act of 1978 (5 U.S.C.112 STAT. 706 App.) is amended by adding at the end the following new paragraph: “(4) The Secretary of the Treasury may not exercise any power under paragraph (1) or (2) with respect to the Treasury Inspector General for Tax Administration.”. (2) Duties of inspector general of the department of the treasury; relationship to the treasury inspector general for tax administration.— Section 8D(b) of such Act is amended— (A) by inserting “(1)” after “(b)”; and (B) by adding at the end the following new paragraphs: “(2) The Inspector General of the Department of the Treasury shall exercise all duties and responsibilities of an Inspector General for the Department of the Treasury other than the duties and responsibilities exercised by the Treasury Inspector General for Tax Administration. “(3) The Secretary of the Treasury shall establish procedures under which the Inspector General of the Department of the Treasury and the Treasury Inspector General for Tax Administration will— “(A) determine how audits and investigations are allocated in cases of overlapping jurisdiction; and “(B) provide for coordination, cooperation, and efficiency in the conduct of such audits and investigations.”. (3) Access to returns and return information.— Section 8D(e) of such Act is amended— (A) in paragraph (1), by striking “Inspector General” and inserting “Treasury Inspector General for Tax Administration”; (B) in paragraph (2), by striking all beginning with “(2)” through subparagraph (B); (C) (i) by redesignating subparagraph (C) of paragraph (2) as paragraph (2) of such subsection; and (ii) in such redesignated paragraph (2), by striking “Inspector General” and inserting “Treasury Inspector General for Tax Administration”; and (D) (i) by redesignating subparagraph (D) of such paragraph as paragraph (3) of such subsection; and (ii) in such redesignated paragraph (3), by striking “Inspector General” and inserting “Treasury Inspector General for Tax Administration”. (4) Effect on certain final decisions of the secretary.— Section 8D(f) of such Act is amended by striking “Inspector General” and inserting “Inspector General of the Department of the Treasury or the Treasury Inspector General for Tax Administration”. (5) Repeal of limitation on reports to the attorney general.— Section 8D of such Act is amended by striking subsection (g). (6) Transmission of reports.— Section 8D(h) of such Act is amended— (A) by striking “(h)” and inserting “(g)(1)”; (B) by striking “and the Committees on Government Operations and Ways and Means of the House of Representatives” and inserting “and the Committees on Government Reform and Oversight and Ways and Means of the House of Representatives”; and 112 STAT. 707 (C) by adding at the end the following new paragraph: “(2) Any report made by the Treasury Inspector General for Tax Administration that is required to be transmitted by the Secretary of the Treasury to the appropriate committees or subcommittees of Congress under section 5(d) shall also be transmitted, within the 7-day period specified under such subsection, to the Internal Revenue Service Oversight Board and the Commissioner of Internal Revenue.”. (7) Treasury inspector general for tax administration.— Section 8D of the Act is amended by adding at the end the following new subsections: “(h) The Treasury Inspector General for Tax Administration 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 on all matters relating to the Internal Revenue Service. The Treasury Inspector General for Tax Administration shall have sole authority under this Act to conduct an audit or investigation of the Internal Revenue Service Oversight Board and the Chief Counsel for the Internal Revenue Service. “(i) In addition to the requirements of the first sentence of section 3(a), the Treasury Inspector General for Tax Administration should have demonstrated ability to lead a large and complex organization. “(j) An individual appointed to the position of Treasury Inspector General for Tax Administration, the Assistant Inspector General for Auditing of the Office of the Treasury Inspector General for Tax Administration under section 3(d)(1), the Assistant Inspector General for Investigations of the Office of the Treasury Inspector General for Tax Administration under section 3(d)(2), or any position of Deputy Inspector General of the Office of the Treasury Inspector General for Tax Administration 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. “(k) (1) In addition to the duties and responsibilities exercised by an inspector general of an establishment, the Treasury Inspector General for Tax Administration— “(A) shall have the duty to enforce criminal provisions under section 7608(b) of the Internal Revenue Code of 1986; “(B) in addition to the functions authorized under section 7608(b)(2) of such Code, may carry firearms; “(C) shall be responsible for protecting the Internal Revenue Service against external attempts to corrupt or threaten employees of the Internal Revenue Service, but shall not be responsible for the conducting of background checks and the providing of physical security; and “(D) may designate any employee in the Office of the Treasury Inspector General for Tax Administration to enforce such laws and perform such functions referred to under subparagraphs (A), (B), and (C). “(2) (A) In performing a law enforcement function under paragraph (1), the Treasury Inspector General for Tax Administration shall report any reasonable grounds to believe there has been a violation of Federal criminal law to the Attorney General at112 STAT. 708 an appropriate time as determined by the Treasury Inspector General for Tax Administration, notwithstanding section 4(d). “(B) In the administration of section 5(d) and subsection (g)(2) of this section, the Secretary of the Treasury may transmit the required report with respect to the Treasury Inspector General for Tax Administration 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); and “(ii) sensitive information concerning matters under subsection (a)(1)(A) through (F). (3) 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). “(l) (1) The Commissioner of Internal Revenue or the Internal Revenue Service Oversight Board may request, in writing, the Treasury Inspector General for Tax Administration to conduct an audit or investigation relating to the Internal Revenue Service. If the Treasury Inspector General for Tax Administration determines not to conduct such audit or investigation, the Inspector General shall timely provide a written explanation for such determination to the person making the request. “(2) (A) Any final report of an audit conducted by the Treasury Inspector General for Tax Administration shall be timely submitted by the Inspector General to the Commissioner of Internal Revenue and the Internal Revenue Service Oversight Board. “(B) The Treasury Inspector General for Tax Administration shall periodically submit to the Commissioner and Board a list of investigations for which a final report has been completed by the Inspector General and shall provide a copy of any such report upon request of the Commissioner or Board. “(C) This paragraph applies regardless of whether the applicable audit or investigation is requested under paragraph (1).”. (c) Transfer of Functions.— (1) In general.— Section 9(a)(1) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended in subparagraph (L)— (A) by inserting “(i)” after “(L)”; (B) by inserting “and” after the semicolon; and (C) by adding at the end the following new clause: “(ii) of the Treasury Inspector General for Tax Administration, effective 180 days after the date of the enactment of the Internal Revenue Service Restructuring and Reform Act of 1998, the Office of Chief Inspector of the Internal Revenue Service;”. (2) Termination of office of chief inspector.— Effective upon the transfer of functions under the amendment made by paragraph (1), the Office of Chief Inspector of the Internal Revenue Service is terminated. (3) Retention of certain internal audit personnel.— In making the transfer under the amendment made by paragraph (1), the Commissioner of Internal Revenue shall designate and retain an appropriate number (not in excess of 300) of internal audit full-time equivalent employee positions necessary for management relating to the Internal Revenue Service. (4) Additional personnel transfers.— Effective 180 days after the date of the enactment of this Act, the Secretary112 STAT. 709 of the Treasury shall transfer 21 full-time equivalent positions from the Office of the Inspector General of the Department of the Treasury to the Office of the Treasury Inspector General for Tax Administration. (d) Audits and Reports of Agency Financial Statements.— Subject to section 3521(g) of title 31, United States Code— (1) the Inspector General of the Department of the Treasury shall, subject to paragraph (2)— (A) audit each financial statement in accordance with section 3521(e) of such title; and (B) prepare and submit each report required under section 3521(f) of such title; and (2) the Treasury Inspector General for Tax Administration shall— (A) audit that portion of each financial statement referred to under paragraph (1)(A) that relates to custodial and administrative accounts of the Internal Revenue Service; and (B) prepare that portion of each report referred to under paragraph (1)(B) that relates to custodial and administrative accounts of the Internal Revenue Service. (e) Technical and Conforming Amendments.— (1) Transfer of functions.— Section 8D(b) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking “and the internal audits and internal investigations performed by the Office of Assistant Commissioner (Inspection) of the Internal Revenue Service”. (2) Amendments relating to references to the inspector general of the department of the treasury.— (A) Limitation on authority.— Section 8D(a) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended— (i) in the first sentence of paragraph (1), by inserting “of the Department of the Treasury” after “Inspector General”; (ii) in paragraph (2), by inserting “of the Department of the Treasury” after “prohibit the Inspector General”; and (iii) in paragraph (3)— (I) in the first sentence, by inserting “of the Department of the Treasury” after “notify the Inspector General”; and (II) in the second sentence, by inserting “of the Department of the Treasury” after “notice, the Inspector General”. (B) Duties.— Section 8D(b) of such Act is amended in the second sentence by inserting “of the Department of the Treasury” after “Inspector General”. (C) Audits and investigations.— Section 8D (c) and (d) of such Act are amended by inserting “of the Department of the Treasury” after “Inspector General” each place it appears. (3) References.— The second section 8G of the Inspector General Act of 1978 (relating to rule of construction of special provisions) is amended— (A) by striking “Sec. 8G” and inserting “Sec. 8H”; (B) by striking “or 8E” and inserting “8E or 8F”; and 112 STAT. 710 (C) by striking “section 8F(a)” and inserting “section 8G(a)”. (4) Amendment to internal revenue code of 1986.— Section 7608(b)(1) is amended by striking “or of the Internal Security Division”.