QUALIFIED TAX COLLECTION CONTRACTS.

SEC. 881. QUALIFIED TAX COLLECTION CONTRACTS.(a) Contract Requirements.—(1) In general.—Subchapter A of chapter 64 (relating to collection) is amended by adding at the end the following new section:“SEC. 6306. QUALIFIED TAX COLLECTION CONTRACTS.“(a) In General.—Nothing in any provision of law shall be construed to prevent the Secretary from entering into a qualified tax collection contract.“(b) Qualified Tax Collection Contract.—For purposes of this section, the term ‘qualified tax collection contract’ means any contract which—“(1) is for the services of any person (other than an officer or employee of the Treasury Department)—“(A) to locate and contact any taxpayer specified by the Secretary,“(B) to request full payment from such taxpayer of an amount of Federal tax specified by the Secretary and, if such request cannot be met by the taxpayer, to offer the taxpayer an installment agreement providing for full payment of such amount during a period not to exceed 5 years, and“(C) to obtain financial information specified by the Secretary with respect to such taxpayer,“(2) prohibits each person providing such services under such contract from committing any act or omission which employees of the Internal Revenue Service are prohibited from committing in the performance of similar services,“(3) prohibits subcontractors from—“(A) having contacts with taxpayers,“(B) providing quality assurance services, and“(C) composing debt collection notices, and“(4) permits subcontractors to perform other services only with the approval of the Secretary.“(c) Fees.—The Secretary may retain and use—“(1) an amount not in excess of 25 percent of the amount collected under any qualified tax collection contract for the costs of services performed under such contract, and“(2) an amount not in excess of 25 percent of such amount collected for collection enforcement activities of the Internal Revenue Service. The Secretary shall keep adequate records regarding amounts so retained and used. The amount credited as paid by any taxpayer shall be determined without regard to this subsection. “(d) No Federal Liability.—The United States shall not be liable for any act or omission of any person performing services under a qualified tax collection contract.“(e) Application of Fair Debt Collection Practices Act.—The provisions of the Fair Debt Collection Practices Act (15 U.S.C. 118 STAT. 1626 1692 et seq.) shall apply to any qualified tax collection contract, except to the extent superseded by section 6304, section 7602(c), or by any other provision of this title.“(f) Cross References.—“(1) For damages for certain unauthorized collection actions by persons performing services under a qualified tax collection contract, see section 7433A.“(2) For application of Taxpayer Assistance Orders to persons performing services under a qualified tax collection contract, see section 7811(g).”.(2) Conforming amendments.—(A) Section 7809(a) is amended by inserting “6306,” before “7651”.(B) The table of sections for subchapter A of chapter 64 is amended by adding at the end the following new item: “Sec. 6306. Qualified tax collection contracts.”. (b) Civil Damages for Certain Unauthorized Collection Actions by Persons Performing Services Under Qualified Tax Collection Contracts.—(1) In general.—Subchapter B of chapter 76 (relating to proceedings by taxpayers and third parties) is amended by inserting after section 7433 the following new section:“SEC. 7433A. CIVIL DAMAGES FOR CERTAIN UNAUTHORIZED COLLECTION ACTIONS BY PERSONS PERFORMING SERVICES UNDER QUALIFIED TAX COLLECTION CONTRACTS. “(a) In General.—Subject to the modifications provided by subsection (b), section 7433 shall apply to the acts and omissions of any person performing services under a qualified tax collection contract (as defined in section 6306(b)) to the same extent and in the same manner as if such person were an employee of the Internal Revenue Service.“(b) Modifications.—For purposes of subsection (a):“(1) Any civil action brought under section 7433 by reason of this section shall be brought against the person who entered into the qualified tax collection contract with the Secretary and shall not be brought against the United States.“(2) Such person and not the United States shall be liable for any damages and costs determined in such civil action.“(3) Such civil action shall not be an exclusive remedy with respect to such person.“(4) Subsections (c), (d)(1), and (e) of section 7433 shall not apply.” . (2) Clerical amendment.—The table of sections for subchapter B of chapter 76 is amended by inserting after the item relating to section 7433 the following new item: “Sec. 7433A. Civil damages for certain unauthorized collection actions by persons performing services under qualified tax collection contracts.”. (c) Application of Taxpayer Assistance Orders to Persons Performing Services Under a Qualified Tax Collection Contract.—Section 7811 (relating to taxpayer assistance orders) is amended by adding at the end the following new subsection:“(g) Application to Persons Performing Services Under a Qualified Tax Collection Contract.—Any order issued or action taken by the National Taxpayer Advocate pursuant to this section shall apply to persons performing services under a qualified tax collection contract (as defined in section 6306(b)) to the same 118 STAT. 1627 extent and in the same manner as such order or action applies to the Secretary.”.(d) Ineligibility of Individuals Who Commit Misconduct to Perform Under Contract.—Section 1203 of the Internal Revenue Service Restructuring Act of 1998 (relating to termination of employment for misconduct) is amended by adding at the end the following new subsection:“(e) Individuals Performing Services Under a Qualified Tax Collection Contract.—An individual shall cease to be permitted to perform any services under any qualified tax collection contract (as defined in section 6306(b) of the Internal Revenue Code of 1986) if there is a final determination by the Secretary of the Treasury under such contract that such individual committed any act or omission described under subsection (b) in connection with the performance of such services.”.(e) Biennial Report.—The Secretary of the Treasury shall biennially submit (beginning in 2005) to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a report with respect to qualified tax collection contracts under section 6306 of the Internal Revenue Code of 1986 (as added by this section) which includes—(1) a complete cost benefit analysis,(2) the impact of such contracts on collection enforcement staff levels in the Internal Revenue Service,(3) the impact of such contracts on the total number and amount of unpaid assessments, and on the number and amount of assessments collected by Internal Revenue Service personnel after initial contact by a contractor,(4) the amounts collected and the collection costs incurred (directly and indirectly) by the Internal Revenue Service,(5) an evaluation of contractor performance,(6) a disclosure safeguard report in a form similar to that required under section 6103(p)(5) of such Code, and(7) a measurement plan which includes a comparison of the best practices used by the private collectors with the Internal Revenue Service’s own collection techniques and mechanisms to identify and capture information on successful collection techniques used by the contractors which could be adopted by the Internal Revenue Service.(f) Effective Date.—The amendments made to this section shall take effect on the date of the enactment of this Act.