PROCEDURES TO REDUCE IMPROPER CLAIMS.

SEC. 207. PROCEDURES TO REDUCE IMPROPER CLAIMS. (a) [26 U.S.C. 6695] Due Diligence Requirements.—Section 6695(g) is amended— (1) by striking “section 32”and inserting “section 24, 25A(a)(1), or 32”, and (2) in the heading by inserting “Child Tax Credit; American Opportunity Tax Credit; and” before “Earned Income Credit”. (b) Return Preparer Due Diligence Study.— (1) In general.—The Secretary of the Treasury, or his delegate, shall conduct a study of the effectiveness of tax return preparer due diligence requirements for claiming the earned income tax credit under section 32 of the Internal Revenue Code of 1986, the child tax credit under section 24 of such Code, and the American Opportunity Tax Credit under section 25A of such Code. (2) Requirements.—Such study shall include an evaluation of the following: (A) The effectiveness of the questions currently asked as part of the due-diligence requirement with respect to minimizing error and fraud. (B) Whether all such questions are necessary and support improved compliance. (C) The comparative effectiveness of such questions relative to other means of determining (i) eligibility for these tax credits and (ii) the correct amount of tax credit. (D) Whether due diligence of this type should apply to other methods of tax filing and whether such requirements should vary based on the methods to increase effectiveness. (E) The effectiveness of the preparer penalty under section 6695(g) in enforcing the due diligence requirements. (3) Report.—The Secretary, or his delegate, shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report detailing the study and its findings— (A) in the case of the portion of the study that relates to the earned income tax credit, not later than 1 year after the date of enactment of this Act, and (B) in the case of the portions of the study that relate to the child tax credit and the American opportunity tax credit, not later than 2 years after the date of the enactment of this Act. (c) [26 U.S.C. 6695 note] Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2015.