Petition for Writ of Certiorari — Daniel Villa, Petitioner v. Commissioner of Internal Revenue

-- Redacted for Publication -Case Docket No.

IN THE

SUPREME COURT OF THE UNITED STATES

DANIEL ALLEN VILLA (“Pro Se”)

“Petitioner”

v.

COMMISSIONER OF THE

INTERNAL REVENUE SERVICE (IRS) (“et al”)

“Respondent”

ON PETITION FOR WRIT OF CERTIORARI TO THE

“UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT”

APPENDIX

Daniel Allen Villa

“Petitioner” (“Pro Se”)

1725 E Cambridge Ave Apt 105

Phoenix, AZ 85006

(602) 435-6681

- Appendix - Cover Page -

-- Redacted for Publication -APPENDIX A - ORDER’S AND

ORDER’S OF DISMISSAL FOR LACK

OF JURISDICTION REGARDING PETITIONER’S

UNITED STATES TAX COURT PETITION CASE

DOCKETS 2516-21W AND 36146-21W

FILED 01/06/2023 AND 01/09/2023

UNITED STATES TAX COURT

Washington, DC 20217

USTC’S: 2516-21W

Entered and Served 01/09/23

DANIEL ALLEN VILLA,

Petitioner

v.

Docket 2516-21W

COMMISSIONER OF INTERNAL

REVENUE

Respondent

ORDER AND ORDER OF DISMISSAL FOR LACK OF JURISDICTION

Petitioner seeks in this case review of a notice of determination under section 7623

concerning whistleblower action. The notice of determination on which this case is

based states in relevant part: “The Whistleblower Office has made a final decision to

reject your claim for an award. The claim has been rejected because the IRS

[Internal Revenue Service] decided not to pursue the information you provided.”

By opinion issued January 11, 2022, in the case of Li v. Commissioner, 22 F.4th 1014

(D.C. Cir. 2022), the U.S. Court of Appeals for the District of Columbia Circuit (to

which all whistleblower cases under section 7623 are appealable pursuant to section

7482(b)(1)) held that the Tax Court lacks subject matter jurisdiction of

whistleblower cases, such as this one, in which the IRS rejects the whistleblower

claim and therefore does not commence any administrative or judicial proceeding

based on the whistleblower’s information. Based on the holding in that case, by

Order and Order of Dismissal for Lack of Jurisdiction (order of dismissal), issued

July 11, 2022, the Court dismissed this case for lack of jurisdiction.

- App. A. 1 Appendix A

- Redacted for Publication -On August 30, 2022, the Supreme Court docketed a petition for writ of certiorari,

filed by the whistleblower in Li, as of June 16, 2022. Accordingly, by Order issued

September 2, 2022, this Court vacated and set aside the order of dismissal and

reminded the parties that the proceedings in this case were stayed. By order issued

October 31, 2022, the Supreme Court denied the whistleblower’s petition for a writ

of certiorari in Li. A review of the Supreme Court docket in Li reflects that a petition

for rehearing of the order denying the writ of certiorari has not been docketed, as of

the date of this Order. See U.S. Sup. Ct. Rule 44(2) (providing that such a petition

must be filed “within 25 days after the date of the order of denial”). Accordingly, we

conclude that the judgment in Li is now final and will thus dismiss this case for lack

of jurisdiction.

Upon due consideration of the foregoing, it is

ORDERED that the stay of proceedings in this case is lifted. It is further

ORDERED that, on the Court's own motion, this case is dismissed for lack of

jurisdiction.

(Signed) Kathleen Kerrigan

Chief Judge

'k'Sck'k

UNITED STATES TAX COURT

Washington, DC 20217

USTC’S: 36146-21W

Entered and Served 01/06/23

DANIEL ALLEN VILLA,

Petitioner

Docket 36146-21W

v.

COMMISSIONER OF INTERNAL

REVENUE,

Respondent

ORDER AND ORDER OF DISMISSAL FOR LACK OF JURISDICTION

-- App. A. 2 Appendix A

-- Redacted for Publication --

i

Petitioner seeks in this case review of a notice of determination under section 7623

concerning whistleblower action. The notice of determination on which this case is

based states in relevant part: “The Whistleblower Office has made a final decision to

reject your claim for an award. The claim has been rejected because the IRS

[Internal Revenue Service] decided not to pursue the information you provided.”

By opinion issued January 11, 2022, in the case of Li v. Commissioner, 22 F.4th

1014 (D.C. Cir. 2022), the U.S. Court of Appeals for the District of Columbia Circuit

(to which all whistleblower cases under section 7623 are appealable pursuant to

section 7482(b)(1)) held that the Tax Court lacks subject matter jurisdiction of

whistleblower cases, such as this one, in which the IRS rejects the whistleblower

claim and therefore does not commence any administrative or judicial proceeding

based on the whistleblower’s information. On March 14, 2022, respondent filed a

Motion to Dismiss for Lack of Jurisdiction. Based on the holding in Li, by Order and

Order of Dismissal for Lack of Jurisdiction (order of dismissal), issued July 11, 2022,

the Court granted respondent's motion and dismissed this case for lack of

jurisdiction.

On August 30, 2022, the Supreme Court docketed a petition for writ of certiorari,

filed by the whistleblower in Li, as of June 16, 2022. Accordingly, by Order issued

September 2, 2022, this Court vacated and set aside the order of dismissal and

reminded the parties that the proceedings in this were stayed. By order issued

October 31,2022, the Supreme Court denied the whistleblower’s petition for a writ

of certiorari in Li. A review of the Supreme Court docket in Li reflects that a petition

for rehearing of the order denying the writ of certiorari has not been docketed, as of

the date of this Order. See U.S. Sup. Ct. Rule 44(2) (providing that such a petition

must be filed “within 25 days after the date of the order of denial”). Accordingly, we

conclude that the judgment in Li is now final and will thus dismiss this case for lack

of jurisdiction. Upon due consideration of the foregoing, it is

ORDERED that the stay of proceedings in this case is lifted. It is further

ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction is

granted and this case is dismissed for lack of jurisdiction.

(Signed) Kathleen Kerrigan

Chief Judge

-- App. A. 3 -Appendix A

-- Redacted for Publication -APPENDIX B

OPINION OF THE U.S. COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT,

FILED JANUARY 11, 2022 IN,

“Li v. Commissioner No. 20-1245,"

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 2021 Decided January 11, 2022

No. 20-1245

MANDY MOBLEY LI,

APPELLANT

v.

COMMISSIONER OF INTERNAL REVENUE

APPELLEE

On Appeal from a Decision and Order of the United States Tax Court. Mandy

Mobley Li, pro se, argued the cause and filed the briefs for appellant. Matthew S.

Johnshoy, Attorney, U.S. Department of Justice, argued the cause for appellee.

With him on the briefs was Bruce R. Ellisen, Attorney. Robert Manhas, appointed

by the court, argued the cause as amicus curiae to assist the court by addressing this

court’s jurisdiction. With him on the brief was Robert M. Loeb, appointed by the

court.

Before: HENDERSON and MILLETT, Circuit Judges, and SENTELLE, Senior

Circuit Judge

Opinion for the Court filed by Senior Circuit Judge SENTELLE.

SENTELLE, Senior Circuit Judge: Appellant Mandy Mobley Li appeals the United

States Tax Court’s final decision awarding summary judgment to the IRS

Commissioner in her whistleblower case. Specifically, the Tax Court held that the

IRS Whistleblower Office (“WBO”) did not abuse its discretion in rejecting Li’s

request for a whistleblower award, since Li provided only vague and speculative

information as to purported tax violations. For the reasons explained below , we

dismiss this appeal for lack of subject matter jurisdiction and remand to the Tax

Court with instructions to do the same.1

- App. B.lAppendix B

-- Redacted for Publication -I. Background

On December 12, 2018, Li filed a Form 211 with the WBO alleging four tax

violations by a third party (the “target taxpayer”). A Form 211 is an application to

receive a monetary whistleblower award for supplying the IRS with actionable tax

violation information, pursuant to 26 U.S.C. § 7623(b). A WBO classifier reviewed

Li’s Form 211, as well as the target taxpayer’s 2016 and 2017 tax returns, and

concluded that Li’s allegations were “speculative and/or did not provide specific or

credible information regarding tax underpayments or violations of internal revenue

laws,” making Li ineligible for an award. Therefore, the WBO did not forward Li’s

form to anl The Court appointed Mr. Robert Manhas to assist in addressing the

Court’s jurisdiction to hear this appeal. The Court extends its appreciation to Mr.

Manhas for his excellent amicus brief on the topic.

1 The Court appointed Mr. Robert Manhas to assist in addressing the Court’s

jurisdiction to hear this appeal. The Court extends its appreciation to Mr. Manhas

for his excellent amicus brief on the topic.

IRS examiner for any potential action against the target taxpayer. The WBO

communicated its decision by letter to Li on February 8, 2019 and informed her that

she could appeal to the United States Tax Court if she thought the WBO had erred.

Li did so by petition on March 13, 2019. Neither party identified a jurisdictional

issue with the Tax Court’s review of the case. The Commissioner subsequently filed

a motion for summary judgment, which the Tax Court granted. The Tax Court found

that the WBO adequately performed its evaluative function in reviewing Li’s

application and did not abuse its discretion by rejecting it for an award. Li then filed

a motion for reconsideration. After the Tax Court denied the motion, Li appealed to

this Court.

ILAnalysis

Statutory law gives exclusive jurisdiction over Tax Court decisions to the United

States Courts of Appeals, which are required to review Tax Court decisions in the

same manner as any district court decision. 26 U.S.C. § 7482(a)(1). However, this

Court’s jurisdiction is predicated upon the Tax Court having had jurisdiction over

the case. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). If the Tax

Court lacks jurisdiction, this Court has “jurisdiction on appeal, not of the merits but

merely for the purpose of correcting the error of the lower court in entertaining the

suit.” Id.(quotingUnited States v. Corrick, 298 U.S. 435, 440 (1936)).For the reasons

set forth below, such is the case presently. The Tax Court lacked jurisdiction to hear

Li’s appeal from the WBO, leaving this Court with jurisdiction only to cure the

-- App. B.2 Appendix B

- Redacted for Publication -defect. Even though the parties did not raise the issue, “federal courts have an

independent obligation to ensure that they do not exceed the scope of their

jurisdiction, and therefore they must raise and decide jurisdictional questions that

the parties either overlook or elect not to press.” Henderson ex rel. Henderson v.

Shinseki, 562 U.S. 428, 434 (2011).

a. The Whistleblower Statute There are three relevant provisions of the

whistleblower statute, 26 U.S.C. § 7623. The first, subsection (a), authorizes the IRS

to grant monetary awards to persons helping to “detectQ underpayments of tax, or . .

. detectQ and bringQ to trial and punishment persons guilty of violating the internal

revenue laws or conniving at the same ....Ӥ 7623(a). The second, subsection (b)(1),

requires the IRS to give awards to whistleblowers “[i]f the Secretary proceeds with

any administrative or judicial action described in subsection (a) based on

information brought to the Secretary’s attention by an individual ....”§ 7623(b)(1).

This provision only applies if certain monetary conditions are met ((b)(5)). The

remainder of that portion of the statute provides the parameters for such awards,

including a floor and ceiling award amount ((b)(1)), a reduction in award amount for

information based on public data ((b)(2)), and a reduction or denial of award amount

in which the whistleblower participated in the tax violations ((b)(3)). The third

relevant segment, subsection (b)(4), gives the Tax Court exclusive jurisdiction over

an appeal of “[a]ny determination regarding an award under paragraph (1), (2), or

(3)....” When a whistleblower makes a Form 211 filing, the WBO follows several

steps. First, it reviews the Form, and any related information, to determine whether

the provided information may lead to the discovery of a tax violation. If the

information is too vague or speculative, the WBO issues a rejection. Rogers v.

Comm’r, No. 17985-19W, 2021 WL 3284613, at *5 (T.C. Aug. 2, 2021). “[A] rejection

is appropriate when a whistleblower’s claim fails to comply with the threshold

requirements as to who may submit a claim or what information the claim must

include.’’/^.; see also 26 C.F.R. § 301.7623-3(c)(7) (defining “rejection”). If the

whistleblower’s information signals a potential tax violation, the IRS may initiate a

proceeding against the target taxpayer. If the proceeding then yields payments to

the IRS, the whistleblower receives an award, subject to 26 U.S.C. § 7623(b)(1)-(3).

Any appeal of an award determination under subsections (b)(l)-(3) is then directed

to the Tax Court. § 7623(b)(4).

As we noted earlier, we have the continuing duty to examine our jurisdiction,

regardless of whether the parties raise the issue. The jurisdictional issue in this case

asks whether § 7623(b)(4) gives the Tax Court jurisdiction over the threshold first

step, the initial rejection of a whistleblower award before the WBO makes an award

determination under subsections (b)(l)-(3). This issue is not one of first impression

for the court below. In Cooper v. Comm’r, the Tax Court held that an initial rejection

of a whistleblower award is in fact an award determination under subsection (b)(4),

rejecting the argument that “there can be a determination for jurisdictional

purposes only if the Whistleblower Office undertakes an administrative or judicial

action and thereafter ‘determines’ to make an award.” 135 T.C. 70, 75 (2010).

- App. B.3 Appendix B

- Redacted for Publication -Instead, the Tax Court held that it had jurisdiction even over threshold rejections of

whistleblower awards, interpreting the statute to “expressly permit an individual to

seek judicial review in this Court of the amount or denial of an award

determination.” Id.(emphasis added).

This position was echoed in the Tax Court’s decision in Lacey v. Comm’r, 153 T.C.

146 (2019), where the Tax Court found jurisdiction on the grounds that “a denial or

rejection is a (negative) ‘determination regarding an award’, so the Tax Court has

jurisdiction where, pursuant to the WBO’s determination, the individual does not

receive an award.” Lacey, 153 T.C. at 163 n.19 (emphasis in original) (citing in

accompanying text Cooper, 135 T.C. 70); see also id. at 150 n.5 (citing Cooper, 135

T.C. at 75-76).

In the case at bar, the Tax Court relied on its precedent in Cooper and Lacey to find

jurisdiction over Li’s WBO appeal. Neither party identified a problem with the Tax

Court’s jurisdiction. However, as we noted above, we have the continuing duty to

examine our own jurisdiction.

b. Lack of Jurisdiction under 26 U.S.C. § 7623(b)(4).

After review, we conclude that Cooper and Lacey were wrongly decided. The

Tax Court lacks jurisdiction to hear appeals from threshold rejections of

whistleblower award requests.

Subsection (b)(4) of § 7623 gives the Tax Court exclusive jurisdiction over

only a “determination regarding an award” under subsections (b)(1) -(3). The Cooper

and Lacey Courts held that a threshold rejection of a whistleblower award request

constituted such an award determination because the rejection of an award was a

so-called “negative” award determination. Lacey, 153 T.C. 183 n.19 (citing in

accompanying text Cooper, 135 T.C. 70); see also id. at 150 n.5 (“[A] ‘rejection’ is also

a ‘determination’....”). We disagree. A threshold rejection of a whistleblower’s

Form 211 for vague and speculative information is not a negative award

determination, as there is no determination as to an award under subsections (b)(1) (3) whatsoever. Per subsection (b)(1), an award determination by the IRS arises only

when the IRS “proceeds with any administrative or judicial action described in

subsection (a) based on information brought to the Secretary’s attention by [the

whistleblower]...” 26 U.S.C. § 7623(b)(1) (emphasis added). A threshold rejection

of a Form 211 by nature means the IRS is not proceeding with an action against the

target taxpayer. See Cline v. Comm’r, 119T.C.M. (CCH) 1199, 2020 WL 1249454, at

*5 (T.C. 2020). Therefore, there is no award determination, negative or otherwise,

and no jurisdiction for the Tax Court.2

In this case, the WBO rejected Li’s Form 211 for providing vague and

speculative information it could not corroborate, even after examining supplemental

material Li herself did not provide. The WBO did not forward Li’s Form 211 to an

IRS examiner for further action, and the IRS did not take any action against the

- App. B.4 Appendix B

- Redacted for Publication target taxpayer. There was no proceeding and thus no “award determination” by the

IRS for Li’s whistleblower information. Therefore, the Tax Court had no jurisdiction

to review the WBO’s threshold rejection of Li’s Form 211.

This Court regrets that Li was informed otherwise by letter to her from the

WBO. However, “no action of the parties can confer subject-matter jurisdiction upon

a federal court.” Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee,

456 U.S. 694, 702 (1982).

2 Li does not argue on appeal that the IRS, in fact, did proceed against the target

taxpayer based on information in her Form 211 application. So we need not and do

not decide whether the Tax Court would have jurisdiction to hear a whistleblower’s

claim in a case in which the IRS wrongly denied a Form 211 application but

nevertheless proceeded against a target taxpayer based on the provided information.

Finally, the parties have called our attention to our decision in Myers v. Comm’r

which contains the statement that ‘“written notice informing a claimant that the

IRS has considered information that he submitted and has decided whether the

information qualifies the claimant for an award’ suffices to constitute a

‘determination’for the purpose of § 7623(b)(4).” 928 F.3d 1025, 1032 (D.C. Cir. 2019).

Upon review, we conclude that this statement is not a holding concerning the issue

in the present case. This statement was responding to petitioner’s argument that the

WBO denial letter in his case did not contain enough information to qualify as a

“determination” under the statute. Id. We subsequently declined to “craft

requirements out of whole cloth” regarding what information a WBO denial letter

must contain. Id. at 1033. By contrast, the question in this case asks whether §

7623(b)(4) confers jurisdiction only when there is both an IRS action based on

whistleblower information and proceeds collected from that action. As this issue was

not squarely before us in Myers, the above statement from Myers does not bind our

decision today.

III. Conclusion

For the reasons set forth above, we dismiss this appeal for lack of subject matter

jurisdiction under 26 U.S.C. § 7623(b)(4). We remand to the Tax Court with

instructions to do the same. So ordered.

-- App. B.5 -Appendix B

- Redacted for Publication APPENDIX C

ORDER'S REGARDING PETITIONER’S

MOTION TO CONSOLIDATE AND

MOTION FOR RECONSIDERATION OF

ORDERS OF THE UNITED STATES TAX COURT

PETITION CASE DOCKETS 2516-21W AND 36146-21W

FILED 02/09/2023

UNITED STATES TAX COURT

Washington, DC 20217

USTC’S: 2516-21W

Served 02/09/23

DANIEL ALLEN VILLA,

Petitioner

v.

Docket Electronically File

Docket No. 2516-21W

COMMISSIONER OF INTERNAL

Document No. 21

REVENUE,

Respondent

Motion to Consolidate Docket Numbers 2516-21W, 36146-21W

It is ORDERED as follows: This motion is DENIED

- App. C.l Appendix C

- Redacted for Publication -(Signed) Kathleen Kerrigan Chief Judge

Served 02/09/23

****

UNITED STATES TAX COURT

Washington, DC 20217

USTC’S: 2516-21W

Served 02/09/23

DANIEL ALLEN VILLA,

Petitioner

v.

Docket Electronically File

Docket No. 2516-21W

COMMISSIONER OF INTERNAL

Document No. 22

REVENUE,

Respondent

Motion for Reconsideration of Order of Dismissal for Lack of Jurisdiction

Entered January 9, 2023

It is ORDERED as follows: This motion is DENIED

(Signed) Kathleen Kerrigan Chief Judge

Served 02/09/23

****

- App. C.2 Appendix C

- Redacted for Publication -kkick

kkkk

UNITED STATES TAX COURT

Washington, DC 20217

USTC’S: 36146-21W

Served 02/09/23

DANIEL ALLEN VILLA,

Petitioner

Docket Electronically File

Docket No. 36146-21W

V;

COMMISSIONER OF INTERNAL

Document No. 28

REVENUE,

Respondent

Motion to Consolidate Docket Numbers 2516-21W, 36146-21W

It is ORDERED as follows: This motion is DENIED

(Signed) Kathleen Kerrigan Chief Judge

Served 02/09/23

****

UNITED STATES TAX COURT

-- App. C.3 Appendix C

-- Redacted for Publication -Washington, DC 20217

USTC’S: 36146-21VF

Served 02/09/23

DANIEL ALLEN VILLA,

Petitioner

Docket Electronically File

Docket No. 36146-21W

v.

COMMISSIONER OF INTERNAL

Document No. 29

REVENUE,

Respondent

Motion for Reconsideration of Order of Dismissal for Lack of Jurisdiction

Entered January 6, 2023

It is ORDERED as follows: This motion is DENIED

(Signed) Kathleen Kerrigan Chief Judge

Served 02/09/23

-- App. C.4 Appendix C

-- Redacted for Publication -APPENIX H

CONSTITUTIONAL, STATUTORY, AND

REGULATORY PROVISIONS INVOLVED

(Pursuant to Rule 14.1 - Indented Quotations - llpt Font Format)

•Amendment V: No person shall be held to answer for a capital, or otherwise

infamous crime, unless on a presentment or indictment of a grand jury, except in

cases arising in the land or naval forces, or in the militia, when in actual service in

time of war or public danger; nor shall any person be subject for the same offense to

be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to

be a witness against himself, nor be deprived of life, liberty, or property, without due

process of law; nor shall private property be taken for public use, without just

compensation

•The Fifth Amendment: creates a number of rights relevant to both criminal and

civil legal proceedings. In criminal cases, the Fifth Amendment guarantees the right

to a grand jury, forbids "double jeopardy," and protects against self-incrimination. It

also requires that "due process of law" be part of any proceeding that denies a citizen

"life, liberty or property" and requires the government to compensate citizens when

it takes private property for public use.

•The Eleventh Amendment: was the first Constitutional amendment adopted

after the Bill of Rights. The amendment was adopted following the Supreme Court's

ruling in Chisholm v. Georgia, 2 U.S. 419 (1793). In Chisholm, the Court ruled that

federal courts had the authority to hear cases in law and equity brought by private

citizens against states and that states did not enjoy sovereign immunity from suits

made by citizens of other states in federal court. Thus, the amendment clarified

Article Ill, Section 2 of the Constitution, which gives diversity jurisdiction to the

judiciary to hear cases "between a state and citizens of another state."

•AmendmentXIV Section 1: All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens of the United States and of the

state wherein they reside. No state shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the United States; nor shall any

state deprive any person of life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal protection of the laws.

•The Fourteenth Amendment: addresses many aspects of citizenship, the rights

of citizens and the equal protections of the laws. Civil Rights, Due Process Clause

and Equal Protection Clause are important integral rights that apply to this case.

•Due Process - The Fifth Amendment: says to the federal government that no

one shall be "deprived of life, liberty or property without due process of law." The

Fourteenth Amendment, ratified in 1868, uses the same eleven words, called the

Due Process Clause, to describe a legal obligation of all states. These words have as

their central promise an assurance that all levels of American government must

operate within the law ("legality") and provide fair procedures. Substantive Due

Process Substantive due process has been interpreted to include the right to work in

an ordinary kind of job, marry, and to raise one's children as a parent.

- App. H. 1 Appendix H

-- Redacted for Publication -•Equal Protection: The Equal Protection Clause of the Fourteenth Amendment of

the U.S. Constitution prohibits states from denying any person within its territory

the equal protection of the laws. This means that a state must treat an individual in

the same manner as others in similar conditions and circumstances. The Federal

Government must do the same, but this is required by the Fifth Amendment Due

Process.

Civil Rights: A civil right is an enforceable right or privilege, which if interfered

with hy another gives rise to an action for injury. Discrimination occurs when the

civil rights of an individual are denied or interfered with because of the individual's

membership in a particular group or class. Various jurisdictions have enacted

statutes to prevent discrimination based on a person's race, sex, religion, age,

previous condition of servitude, physical limitation, national origin, political

affiliation and in some instances sexual orientation.

•Article III - Section 1 - Judiciary Act of 1789: Article III of the Constitution

establishes the federal judiciary. Article III, Section I states that "The judicial Power

of the United States, shall be vested in one supreme Court, and in such inferior

Courts as the Congress may from time to time ordain and establish." Although the

Constitution establishes the Supreme Court, it permits Congress to decide how to

organize it. Congress first exercised this power in the Judiciary Act of 1789. The

Judiciary Act of 1789 gave the Supreme Court original jurisdiction to issue writs of

mandamus (legal orders compelling government officials to act in accordance with

the law).

(Quote) “And be it further enacted, That all the said courts of the United States shall

have power to grant new trials, in cases where there has been a trial by jury for

reasons for which new trials have usually been granted in the courts of law; and

shall have power to impose and administer all necessary oaths or affirmations, and

to punish by fine or imprisonment, at the discretion of said courts, all contempts of

authority in any cause or hearing before the same; and to make and establish all

necessary rules for the orderly conducting business in the said courts, provided such

rules are not repugnant to the laws of the United States.”

(Section 13- Clause) A clause in Section 13 of the Judiciary Act, which granted the

Supreme Court the power to issue writs of mandamus under its original jurisdiction,

was later declared unconstitutional. In Marbury v. Madison. 5 U.S. (1 Cranch) 137

(1803) one of the seminal cases in American law, the Supreme Court held that was

unconstitutional because it purported to enlarge the original jurisdiction of the

Supreme Court beyond that permitted by the Constitution. The case was the first

that clearly established that the judiciary can and must interpret what the

Constitution permits and declare any laws which are contrary to the Constitution as

unenforceable. Thus, the Judiciary Act of 1789 was the first act of Congress to be

partially invalidated by the Supreme Court.

•Arizona Constitution Article 2 Section 4 - Due process of law

Section 4. No person shall be deprived of life, liberty, or property without due

nvAoocc

r»T lotir

p* wvOO vi. aCvii •

•Arizona Constitution Article 2 Section 5 - Right of petition and of

assembly

- App. H. 2 Appendix H

-- Redacted for Publication -Section 5. The right of petition, and of the people peaceably to assemble for the

common good, shall never be abridged.

•5 USC § 704 provides in relevant part: Actions reviewable: Agency action

made reviewable by statute and final agency action for which there is no other

adequate remedy in a court are subject to judicial review. A preliminary, procedural,

or intermediate agency action or ruling not directly reviewable is subject to review

on the review of the final agency action. Except as otherwise expressly required by

statute, agency action otherwise final is final for the purposes of this section

whether or not there has been presented or determined an application for a

declaratory order, for any form of reconsideration, or, unless the agency otherwise

requires by rule and provides that the action meanwhile is inoperative, for an appeal

to superior agency authority.

*26 USC Section 7623 (b)(1), (4). (6) and (c - Proceeds) - Awards to

whistleblowers: (l)In general — If the Secretary proceeds with any administrative

or judicial action described in subsection (a) based on information brought to the

Secretary’s attention by an individual, such individual shall, subject to paragraph

(2), receive as an award at least 15 percent but not more than 30 percent of the

proceeds collected as a result of the action (including any related actions) or from

any settlement in response to such action (determined without regard to whether

such proceeds are available to the Secretary). The determination of the amount of

such award by the Whistleblower Office shall depend upon the extent to which the

individual substantially contributed to such action.

(4) Appeal of award determination — Any determination regarding an award under

paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to

the Tax Court (and the Tax Court shall have jurisdiction with respect to such

matter).

(6) Additional rules (A)No contract necessary. — No contract with the Internal

Revenue Service is necessary for any individual to receive an award under this

subsection. (B)Representation — Any individual described in paragraph (1) or (2)

may be represented by counsel. (C)Submission of information — No award may be

made under this subsection based on information submitted to the Secretary unless

such information is submitted under penalty of perjury.

(c)Proceeds — For purposes of this section, the term “proceeds” includes —

(l)penalties, interest, additions to tax, and additional amounts provided under the

internal revenue laws, and — (2) any proceeds arising from laws for which the

Internal Revenue Service is authorized to administer, enforce, or investigate,

including— (A) criminal fines and civil forfeitures, and (B) violations of reporting

requirements.

*26 USC § 7701 - Definitions (11)(B) and (12): (11) Secretary of the Treasury

and Secretary — (A)Secretary of the Treasury — The term “Secretary of the

Treasury” means the Secretary of the Treasury, personally, and shall not include

any delegate of his. — (B)Secretary —The term “Secretary'” means the Secretary of

the Treasury or his delegate.

-- App. H. 3 Appendix H

-- Redacted for Publication -(12) Delegate — (A)In general — The term “or his delegate”— (i)when used with

reference to the Secretary of the Treasury, means any officer, employee, or agency of

the Treasury Department duly authorized by the Secretary of the Treasury directly,

or indirectly by one or more redelegations of authority, to perform the function

mentioned or described in the context; and — (ii)when used with reference to any

other official of the United States, shall be similarly construed. (B)Performance of

Cfc;rt3.iil lUilCtiOnS in Ajruiliii Or AHlexiCcui bamua— me texm ucicgatc, miciauuu tu

the performance of functions in Guam or American Samoa with respect to the taxes

imposed by chapters 1, 2, and 21, also includes any officer or employee of any other

department or agency of the United States, or of any possession thereof, duly

authorized by the Secretary (directly, or indirectly by one or more redelegations of

authority) to perform such functions.

»26 USC § 7801 - Authority of Department of the Treasury: (A)In general —

The administration and enforcement of the following provisions of this title shall be

performed by or under the supervision of the Attorney General; and the term

“Secretary’ or “Secretary of the Treasury” shall, when applied to those provisions,

mean the Attorney General; and the term “internal revenue officer” shall, when

applied to those provisions, mean any officer of the Bureau of Alcohol, Tobacco,

Firearms, and Explosives so designated by the Attorney General:(i) Chapter 53. (ii)

Chapters 61 through 80, to the extent such chapters relate to the enforcement and

administration of the provisions referred to in clause (i).

• 26 USC § 7803 - Commissioner of Internal Revenue; other officials(c)(d): (c)

Office of the Taxpayer Advocate (1) Establishment (A)In general —There is

established in the Internal Revenue Service an office to be known as the “Office of

the Taxpayer Advocate”. (B)Nationai Taxpayer Advocate (i)In general — The Office

of the Taxpayer Advocate shall be under the supervision and direction of an official

to be known as the “National Taxpayer Advocate”. The National Taxpayer Advocate

shall report directly to the Commissioner of Internal Revenue and shall be entitled

to compensation at the same rate as the highest rate of basic pay established for the

Senior Executive Service under section 5382 of title 5, United States Code.

(ii)Appointment —The National Taxpayer Advocate shall be appointed by the

Secretary of the Treasury after consultation with the Commissioner of Internal

Revenue and the Oversight Board and without regard to the provisions of title 5,

United States Code, relating to appointments in the competitive service or the

Senior Executive Service. (iii)Qualifications — An individual appointed under clause

(ii) shall have— (I)a background in customer service as well as tax law; and

(Inexperience in representing individual taxpayers. (iv)Restriction on employment

— An individual may be appointed as the National Taxpayer Advocate only if such

individual was not an officer or employee of the Internal Revenue Service during the

2-year period ending with such appointment and such individual agrees not to

accept any employment with the Internal Revenue Service for at least 5 years after

ceasing to be the National Taxpayer Advocate. Service as an officer or employee of

- App. H. 4 Appendix H

-- Redacted for Publication -the Office of the Taxpayer Advocate shall not be taken into account in applying this

clause.

(2)Functions of office (A)In general — It shall be the function of the Office of the

Taxpayer Advocate to—(i)assist taxpayers in resolving problems with the Internal

Revenue Service;(ii)identify areas in which taxpayers have problems in dealings

with the Internal Revenue Service;(iii) to the extent possible, propose changes in the

administrative practices of the Internal Revenue Service to mitigate problems

identified under clause (ii); and (iv)identify potential legislative changes which may

be appropriate to mitigate such problems.

(B)Annual reports (i)Objectives Not later than June 30 of each calendar year, the

National Taxpayer Advocate shall report to the Committee on Ways and Means of

the House of Representatives and the Committee on Finance of the Senate on the

objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in such

calendar year. Any such report shall contain full and substantive analysis, in

addition to statistical information, (ii)Activities — Not later than December 31 of

each calendar year, the National Taxpayer Advocate shall report to the Committee

on Ways and Means of the House of Representatives and the Committee on Finance

of the Senate on the activities of the Office of the Taxpayer Advocate during the

fiscal year ending during such calendar year. Any such report shall contain full and

substantive analysis, in addition to statistical information, and shall— (I) identify

the initiatives the Office of the Taxpayer Advocate has taken on improving taxpayer

services and Internal Revenue Service responsiveness; (II) contain recommendations

received from individuals with the authority to issue Taxpayer Assistance Orders

under section 7811; (III) contain a summary of the 10 most serious problems

encountered by taxpayers, including a description of the nature of such problems;

(IV) contain an inventory of the items described in subclauses (I), (II), and (III) for

which action has been taken and the result of such action; (V) contain an inventory

of the items described in subclauses (I), (II), and (III) for which action remains to be

completed and the period during which each item has remained on such inventory;

(VI) contain an inventory of the items described in subclauses (I), (II), and (III) for

which no action has been taken, the period during which each item has remained on

such inventory, the reasons for the inaction, and identify any Internal Revenue

Service official who is responsible for such inaction; (Vll)identify any Taxpayer

Assistance Order which was not honored by the Internal Revenue Service in a

timely manner, as specified under section 7811(b); (VIII) identify any Taxpayer

Advocate Directive which was not honored by the Internal Revenue Service in a

timely manner, as specified under paragraph (5); (IX) contain recommendations for

such administrative and legislative action as may be appropriate to resolve problems

encountered by taxpayers; (X) identify areas of the tax law that impose significant

compliance burdens on taxpayers or the Internal Revenue Service, including specific

recommendations for remedying these problems; (XI) identify the 10 most litigated

issues for each category of taxpayers, including recommendations for mitigating

such disputes; (XII) with respect to any statistical information included in such

- App. H. 5 Appendix H

-- Redacted for Publication report, include a statement of whether such statistical information was reviewed or

provided by the Secretary under section 6108(d) and, if so, whether the Secretary

determined such information to be statistically valid and based on sound statistical

methodology; and (XIII) include such other information as the National Taxpayer

Advocate may deem advisable.(iii)Report to be submitted directly — Each report

required under this subparagraph shall be provided directly to the committees

described in clause (i) without any prior review or comment from the Commissioner,

the Secretary of the Treasury, the Oversight Board, any other officer or employee of

the Department of the Treasury, or the Office of Management and Budget. The

preceding sentence shall not apply with respect to statistical information provided to

the Secretary for review, or received from the Secretary, under section 6108(d).

(iv)Coordination with report of Treasury Inspector General for Tax Administration

— To the extent that information required to be reported under clause (ii) is also

required to be reported under paragraph (1) or (2) of subsection (d) by the Treasury

Inspector General for Tax Administration, the National Taxpayer Advocate shall not

contain such information in the report submitted under such clause.

(C)Other responsibilities — The National Taxpayer Advocate shall—(i) monitor the

coverage and geographic allocation of local offices of taxpayer advocates; (ii) develop

guidance to be distributed to all Internal Revenue Service officers and employees

outlining the criteria for referral of taxpayer inquiries to local offices of taxpayer

advocates; (iii) ensure that the local telephone number for each local office of the

taxpayer advocate is published and available to taxpayers served by the office; and

(iv) in conjunction with the Commissioner, develop career paths for local taxpayer

advocates choosing to make a career in the Office of the Taxpayer Advocate.

(D)Personnel actions (i)In general — The National Taxpayer Advocate shall have

the responsibility and authority to—(I) appoint local taxpayer advocates and make

available at least 1 such advocate for each State; and (II) evaluate and take

personnel actions (including dismissal) with respect to any employee of any local

office of a taxpayer advocate described in subclause (I). (ii)Consultation — The

National Taxpayer Advocate may consult with the appropriate supervisory

personnel of the Internal Revenue Service in carrying out the National Taxpayer

Advocate’s responsibilities under this subparagraph.

(E)Coordination with Treasury Inspector General for Tax Administration Before

beginning any research or study, the National Taxpayer Advocate shall coordinate

with the Treasury Inspector General for Tax Administration to ensure that the

National Taxpayer Advocate does not duplicate any action that the Treasury

Inspector General for Tax Administration has already undertaken or has a plan to

undertake.

(3) Responsibilities of Commissioner — The Commissioner shall establish

procedures requiring a formal response to all recommendations submitted to the

Commissioner by the National Taxpayer Advocate within 3 months after submission

to the Commissioner.

-- App. H. 6 Appendix H

-- Redacted for Publication -(4) Operation of local offices (A)In general — Each local taxpayer advocate—(i) shall

report to the National Taxpayer Advocate or delegate thereof; (ii) may consult with

the appropriate supervisory personnel of the Internal Revenue Service regarding the

daily operation of the local office of the taxpayer advocate; (iii) shall, at the initial

meeting with any taxpayer seeking the assistance of a local office of the taxpayer

advocate, notify such taxpayer that the taxpayer advocate offices operate

independently of any other Internal Revenue Service office and report directly to

Congress through the National Taxpayer Advocate; and (iv) may, at the taxpayer

advocate’s discretion, not disclose to the Internal Revenue Service contact with, or

information provided by, such taxpayer. (B)Maintenance of independent

communications — Each local office of the taxpayer advocate shall maintain a

separate phone, facsimile, and other electronic communication access, and a

separate post office address.

©Taxpayer Advocate Directives — In the case of any Taxpayer Advocate Directive

issued by the National Taxpayer Advocate pursuant to a delegation of authority

from the Commissioner of Internal Revenue—(A) the Commissioner or a Deputy

Commissioner shall modify, rescind, or ensure compliance with such directive not

later than 90 days after the issuance of such directive, and (B) in the case of any

directive which is modified or rescinded by a Deputy Commissioner, the National

Taxpayer Advocate may (not later than 90 days after such modification or rescission)

appeal to the Commissioner, and the Commissioner shall (not later than 90 days

after such appeal is made) ensure compliance with such directive as issued by the

National Taxpayer Advocate or provide the National Taxpayer Advocate with the

reasons for any modification or rescission made or upheld by the Commissioner

pursuant to such appeal.

(d) Additional duties of the Treasury Inspector General for Tax Administration (1)

Annual reporting — The Treasury Inspector General for Tax Administration shall

include in one of the semiannual reports under section 5 of the Inspector General

Act of 1978— (A)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;

(B) 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; (C)

information regarding extensions of the statute of limitations for assessment and

collection of tax under section 6501 and the provision of notice to taxpayers

- App. H. 7 Appendix H

- Redacted for Publication -regarding requests for such extension; (D) an evaluation of the adequacy and

security of the technology of the Internal Revenue Service; (E) any termination or

mitigation under section 1203 of the Internal Revenue Service Restructuring and

Reform Act of 1998; (F) information regarding improper denial of requests for

information from the Internal Revenue Service identified under paragraph (3)(A);

and (G)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.

(2) Semiannual reports — (A)In general.—The Treasury Inspector General for Tax

Administration 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. (B) Clauses (iii) and (iv) of subparagraph (A) shall

only apply to complaints and allegations of serious employee misconduct.

(3) Other responsibilities — The Treasury Inspector General for Tax Administration

shall—(A) 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; (B)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); and (C) not later than

December 31, 2010, submit a written report to Congress on the implementation of

section 6103(k)(10).

«26 USC Ch. 46: GOLDEN PARACHUTE PAYMENTS — $4999. Golden

parachute payments: (a) Imposition of tax There is hereby imposed on any person

who receives an excess parachute payment a tax equal to 20 percent of the amount

of such payment, (b) Excess parachute payment defined — For purposes of this

section, the term "excess parachute payment" has the meaning given to such term by

section 280G(b). (c) Administrative provisions (1) Withholding — In the case of any

excess parachute payment which is wages (within the meaning of section 3401) the

amount deducted and withheld under section 3402 shall be increased by the amount

of the tax imposed by this section on such payment. (2) Other administrative

provisions — For purposes of subtitle F, any tax imposed by this section shall be

treated as a tax imposed by subtitle A.

- App.H.8Appendix H

-- Redacted for Publication -•26 USC § 280G - Golden parachute payments: (a)General rule — No deduction

shall be allowed under this chapter for any excess parachute payment.

(b)Excess parachute payment — For purposes of this section— (l)In general The

term “excess parachute payment” means an amount equal to the excess of any

parachute payment over the portion of the base amount allocated to such payment.

(2)Parachute payment defined (A)In general — The term “parachute payment”

means any payment in the nature of compensation to (or for the benefit of) a

disqualified individual if— (i)such payment is contingent on a change—(I) in the

ownership or effective control of the corporation, or (II) in the ownership of a

substantial portion of the assets of the corporation, and (ii) the aggregate present

value of the payments in the nature of compensation to (or for the benefit of) such

individual which are contingent on such change equals or exceeds an amount equal

to 3 times the base amount. For purposes of clause (ii), payments not treated as

parachute payments under paragraph (4)(A), (5), or (6) shall not be taken into

account. (B)Agreements — The term “parachute payment” shall also include any

payment in the nature of compensation to (or for the benefit of) a disqualified

individual if such payment is made pursuant to an agreement which violates any

generally enforced securities laws or regulations. In any proceeding involving the

issue of whether any payment made to a disqualified individual is a parachute

payment on account of a violation of any generally enforced securities laws or

regulations, the burden of proof with respect to establishing the occurrence of a

violation of such a law or regulation shall be upon the Secretary. (C)Treatment of

certain agreements entered into within 1 year before change of ownership — For

purposes of subparagraph (A)(i), any payment pursuant to— (i) an agreement

entered into within 1 year before the change described in subparagraph (A)(i), or (ii)

an amendment made within such 1-year period of a previous agreement, shall be

presumed to be contingent on such change unless the contrary is established by

clear and convincing evidence. (3)Base amount (A)In general — The term “base

amount” means the individual’s annualized includible compensation for the base

period. (B)Allocation — The portion of the base amount allocated to any parachute

payment shall be an amount which bears the same ratio to the base amount as— (i)

the present value of such payment, bears to (ii) the aggregate present value of all

such payments. (4)Treatment of amounts which taxpayer establishes as reasonable

compensation — In the case of any payment described in paragraph (2)(A)— (A) the

amount treated as a parachute payment shall not include the portion of such

payment which the taxpayer establishes by clear and convincing evidence is

reasonable compensation for personal services to be rendered on or after the date of

the change described in paragraph (2)(A)(i), and (B) the amount treated as an excess

parachute payment shall be reduced by the portion of such payment which the

taxpayer establishes by clear and convincing evidence is reasonable compensation

for personal services actually rendered before the date of the change described in

paragraph (2)(A)(i). For purposes of subparagraph (B), reasonable compensation for

services actually rendered before the date of the change described in paragraph

- App. H. 9 Appendix H

- Redacted for Publication (2)(A)(i) shall be first offset against the base amount. (5)Exemption for small

business corporations, etc. (A)In general — Notwithstanding paragraph (2), the term

“parachute payment” does not include— (i) any payment to a disqualified individual

with respect to a corporation which (immediately before the change described in

paragraph (2)(A)(i)) was a small business corporation (as defined in section 1361(b)

but without regard to paragraph (1)(C) thereof), and (ii) any payment to a

disqualified individual with respect to a corporation (other than a corporation

described in clause (i)) if— (I) immediately before the change described in paragraph

(2)(A)(i), no stock in such corporation was readily tradeable on an established

securities market or otherwise, and (II) the shareholder approval requirements of

subparagraph (B) are met with respect to such payment. The Secretary may, by

regulations, prescribe that the requirements of subclause (I) of clause (ii) are not met

where a substantial portion of the assets of any entity consists (directly or indirectly)

of stock in such corporation and interests in such other entity are readily tradeable

on an established securities market, or otherwise. Stock described in section

1504(a)(4) shall not be taken into account under clause (ii)(I) if the payment does not

adversely affect the shareholder’s redemption and liquidation rights. (B)Shareholder

approval requirements — The shareholder approval requirements of this

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approved by a vote of the persons who owned, immediately before the change

described in paragraph (2)(A)(i), more than 75 percent of the voting power of all

outstanding stock of the corporation, and (ii) there was adequate disclosure to

shareholders of all material facts concerning all payments which (but for this

paragraph) would be parachute payments with respect to a disqualified individual.

— The regulations prescribed under subsection (e) shall include regulations

providing for the application of this subparagraph in the case of shareholders which

are not individuals (including the treatment of nonvoting interests in an entity

which is a shareholder) and where an entity holds a de minimis amount of stock in

the corporation.(6)Exemption for payments under qualified plans —

Notwithstanding paragraph (2), the term “parachute payment” shall not include any

payment to or from— (A) a plan described in section 401(a) which includes a trust

exempt from tax under section 501(a), (B)an annuity plan described in section

403(a), (C)a simplified employee pension (as defined in section 408(k)), or (D)a

simple retirement account described in section 408(p).

(c)Disqualified individuals — For purposes of this section, the term “disqualified

individual” means any individual who is— (l)an employee, independent contractor,

or other person specified in regulations by the Secretary who performs personal

services for any corporation, and (2)is an officer, shareholder, or highly-compensated

individual. — For purposes of this section, a personal service corporation (or similar

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“highly-compensated individual” only includes an individual who is (or would be if

the individual were an employee) a member of the group consisting of the highest

- App. H. 10 Appendix H

-- Redacted for Publication -paid 1 percent of the employees of the corporation or, if less, the highest paid 250

employees of the corporation.

(d)Other definitions and special rules — For purposes of this section—

(l)Annualized includible compensation for base period — The term “annualized

includible compensation for the base period” means the average annual

compensation which— (A) was payable by the corporation with respect to which the

change in ownership or control described in paragraph (2)(A) of subsection (b)

occurs, and (B) was includible in the gross income of the disqualified individual for

taxable years in the base period. (2)Base period—The term “base period” means the

period consisting of the most recent 5 taxable years ending before the date on which

the change in ownership or control described in paragraph (2)(A) of subsection (b)

occurs (or such portion of such period during which the disqualified individual

performed personal services for the corporation). (3)Property transfers —Any

transfer of property— (A)shall be treated as a payment, and (B)shall be taken into

account as its fair market value. (4)Present value — Present value shall be

determined by using a discount rate equal to 120 percent of the applicable Federal

rate (determined under section 1274(d)), compounded semiannually. ©Treatment of

affiliated groups — Except as otherwise provided in regulations, all members of the

same affiliated group (as defined in section 1504, determined without regard to

section 1504©) shall be treated as 1 corporation for purposes of this section. Any

person who is an officer of any member of such group shall be treated as an officer of

such 1 corporation.

(e)Special rule for application to employers participating in the Troubled Assets

Relief Program (l)In general — In the case of the severance from employment of a

covered executive of an applicable employer during the period during which the

authorities under section 101(a) of the Emergency Economic Stabilization Act of

2008 are in effect (determined under section 120 of such Act), this section shall be

applied to payments to such executive with the following modifications: (A)Any

reference to a disqualified individual (other than in subsection (c)) shall be treated

as a reference to a covered executive. (B)Any reference to a change described in

subsection ©(2)(A)(i) shall be treated as a reference to an applicable severance from

employment of a covered executive, and any reference to a payment contingent on

such a change shall be treated as a reference to any payment made during an

applicable taxable year of the employer on account of such applicable severance from

employment. (C)Any reference to a corporation shall be treated as a reference to an

applicable employer. (D)The provisions of subsections ©(2)(C), ©(4), ©(5), and

(d)(5) shall not apply. ©Definitions and special rules — For purposes of this

subsection: (A)Definitions —Any term used in this subsection which is also used in

section 162(m)(5) shall have the meaning given such term by such section.

(B)Applicable severance from employment — The term “applicable severance from

employment” means any severance from employment of a covered executive— (i)by

reason of an involuntary termination of the executive by the employer, or (ii) in

connection with any bankruptcy, liquidation, or receivership of the employer.

- App. H. 11 Appendix H

- Redacted for Publication (C)Coordination and other rules (i)In general — If a payment which is treated as a

parachute payment by reason of this subsection is also a parachute payment

determined without regard to this subsection, this subsection shall not apply to such

payment. (ii)Regulatory authority — The Secretary may prescribe such guidance,

rules, or regulations as are necessary— (I)to carry out the purposes of this

subsection and the Emergency Economic Stabilization Act of 2008, including the

extent to which this subsection applies in the case of any acquisition, merger, or

reorganization of an applicable employer, (II)to apply this section and section 4999

in cases where one or more payments with respect to any individual are treated as

parachute payments by reason of this subsection, and other payments with respect

to such individual are treated as parachute payments under this section without

regard to this subsection, and (III)to prevent the avoidance of the application of this

section through the mischaracterization of a severance from employment as other

than an applicable severance from employment.

©Regulations — The Secretary shall prescribe such regulations as may be

necessary or appropriate to carry out the purposes of this section (including

regulations for the application of this section in the case of related corporations and

in the case of personal service corporations).

*26 USC § 7201 (Evasion): Any person who willfully attempts in any manner to

evade or defeat any tax imposed by this title or the payment thereof shall, in

addition to other penalties provided by law, be guilty of a felony and, upon conviction

thereof, shall be fined not more than $100,000 ($500,000 in the case of a

corporation), or imprisoned not more than 5 years, or both, together with the costs of

prosecution.

*26 USC § 7202 (Trust Fund Violation—Willful Failure to Collect or Pay

Over Tax) Felony: - Any person required under this title to collect, account for, and

pay over any tax imposed by this title who willfully fails to collect or truthfully

account for and pay over such tax shall, in addition to other penalties provided hy

law, be guilty of a felony and, upon conviction thereof, shall be fined not more than

$10,000, or imprisoned not more than 5 years, or both, together with the costs of

prosecution.

*26 USC § 7203 - Willful failure to file return, supply information, or pay

tax: Any person required under this title to pay any estimated tax or tax, or

required by this title or by regulations made under authority thereof to make a

return, keep any records, or supply any information, who willfully fails to pay such

estimated tax or tax, make such return, keep such records, or supply such

information, at the time or times required by law or regulations, shall, in addition to

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thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation),

or imprisoned not more than 1 year, or both, together with the costs of prosecution.

In the case of any person with respect to whom there is a failure to pay any

estimated tax, this section shall not apply to such person with respect to such failure

-- App. H. 12 -Appendix H

— Redacted for Publication -if there is no addition to tax under section 6654 or 6655 with respect to such failure.

In the case of a willful violation of any provision of section 60501, the first sentence

of this section shall be applied by substituting “felony” for “misdemeanor” and “5

years” for “1 year”.

*26 USC § 7206 Fraud and false statements: Any person who— (l)Declaration

under penalties of perjury—Willfully makes and subscribes any return, statement,

or other document, which contains or is verified by a written declaration that it is

made under the penalties of perjury, and which he does not believe to be true and

correct as to every material matter; or (2)Aid or assistance — Willfully aids or

assists in, or procures, counsels, or advises the preparation or presentation under, or

in connection with any matter arising under, the internal revenue laws, of a return,

affidavit, claim, or other document, which is fraudulent or is false as to any material

matter, whether or not such falsity or fraud is with the knowledge or consent of the

person authorized or required to present such return, affidavit, claim, or document;

or (3)Fraudulent bonds, permits, and entries — Simulates or falsely or fraudulently

executes or signs any bond, permit, entry, or other document required by the

provisions of the internal revenue laws, or by any regulation made in pursuance

thereof, or procures the same to be falsely or fraudulently executed, or advises, aids

in, or connives at such execution thereof; or (4)Removal or concealment with intent

to defraud—Removes, deposits, or conceals, or is concerned in removing, depositing,

or concealing, any goods or commodities for or in respect whereof any tax is or shall

be imposed, or any property upon which levy is authorized by section 6331, with

intent to evade or defeat the assessment or collection of any tax imposed by this

title; or(5)Compromises and closing agreements — In connection with any

compromise under section 7122, or offer of such compromise, or in connection with

any closing agreement under section 7121, or offer to enter into any such agreement,

willfully— (A)Concealment of property— Conceals from any officer or employee of

the United States any property belonging to the estate of a taxpayer or other person

liable in respect of the tax, or— (B) Withholding, falsifying, and destroying rec-ords—

Receives, withholds, destroys, mutilates, or falsifies any book, document, or record,

or makes any false statement, relating to the estate or financial condition of the

taxpayer or other person liable in respect of the tax; shall be guilty of a felony and,

upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case

of a corporation), or imprisoned not more than 3 years, or both, together with the

costs of prosecution.

*26 USC § 7212 - Attempts to interfere with administration of internal

revenue laws - “Omnibus Clause”:- 7212(a) Corrupt or forcible interference —

Whoever corruptly or by force or threats of force (including any threatening letter or

communication) endeavors to intimidate or impede any officer or employee of the

United States acting in an official capacity under this title, or in any other way

corruptly or by force or threats of force (including any threatening letter or

communication) obstructs or impedes, or endeavors to obstruct or impede, the due

administration of this title, shall, upon conviction thereof, be fined not more than

-- App. H. 13 ■

Appendix H

- Redacted for Publication $5,000, or imprisoned not more than 3 years, or both, except that if the offense is

committed only by threats of force, the person convicted thereof shall be fined not

more than $3,000, or imprisoned not more than 1 year, or both. The term “threats of

force”, as used in this subsection, means threats of bodily harm to the officer or

employee of the United States or to a member of his family.

(b)Forcible rescue of seized property—Any person who forcibly rescues or causes to

be rescued any property after it shall have been seized under this title, or shall

attempt or endeavor so to do, shall, excepting in cases otherwise provided for, for

every such offense, be fined not more than $500, or not more than double the value

of the property so rescued, whichever is the greater, or be imprisoned not more than

2 years.

*26 USC § 7232 - Failure to register or reregister under section 4101, false

representations of registration status, etc.: - Every person who fails to register

or reregister as required by section 4101, or who in connection with any purchase of

any taxable fuel (as defined in section 4083) or aviation fuel falsely represents

himself to be registered as provided by section 4101, or who willfully makes any

false statement in an application for registration or reregistration under section

4101, shall, upon conviction thereof, be fined not more than $10,000, or imprisoned

not more than 5 years, or both, together with the costs of prosecution.

*26 U.S. Code $ 162 - Tax Cuts and Jobs Act (TC JA) of 2017 - Trade or

business expenses: (c)Illegal bribes, kickbacks, and other payments. (l)Illegal

payments to government officials or employees. No deduction shall be allowed under

subsection (a) for any payment made, directly or indirectly, to an official or employee

of any government, or of any agency or instrumentality of any government, if the

payment constitutes an illegal bribe or kickback or, if the payment is to an official or

employee of a foreign government, the payment is unlawful under the Foreign

Corrupt Practices Act of 1977. The burden of proof in respect of the issue, for the

purposes of this paragraph, as to whether a payment constitutes an illegal bribe or

kickback (or is unlawful under the Foreign Corrupt Practices Act of 1977) shall be

upon the Secretary to the same extent as he bears the burden of proof under section

7454 (concerning the burden of proof when the issue relates to fraud).

(2)Other illegal payments No deduction shall be allowed under subsection (a) for

any payment (other than a payment described in paragraph (1)) made, directly or

indirectly, to any person, if the payment constitutes an illegal bribe, illegal kickback,

or other illegal payment under any law of the United States, or under any law of a

State (but only if such State law is generally enforced), which subjects the payor to a

criminal penalty or the loss of license or privilege to engage in a trade or business.

For purposes of this paragraph, a kickback includes a payment in consideration of

the referral of a client, patient, or customer. The burden of proof in respect of the

issue, for purposes of this paragraph, as to whether a payment constitutes an illegal

bribe, illegal kickback, or other illegal payment shall be upon the Secretary to the

- App. H. 14 Appendix H

-- Redacted for Publication -same extent as he bears the burden of proof under section 7454 (concerning the

burden of proof when the issue relates to fraud).

(3)Kickbacks, rebates, and bribes under medicare and medicaid. No deduction shall

be allowed under subsection (a) for any kickback, rebate, or bribe made by any

provider of services, supplier, physician, or other person who furnishes items or

services for which payment is or may be made under the Social Security Act, or in

whole or in part out of Federal funds under a State plan approved under such Act, if

such kickback, rebate, or bribe is made in connection with the furnishing of such

items or services or the making or receipt of such payments. For purposes of this

paragraph, a kickback includes a payment in consideration of the referral of a client,

patient, or customer.

(e)Denial of deduction for certain lobbying and political expenditures:

(l)In general. No deduction shall be allowed under subsection (a) for any amount

paid or incurred in connection with— (A)influencing legislation,(B)participation in,

or intervention in, any political campaign on behalf of (or in opposition to) any

candidate for public office,(C)any attempt to influence the general public, or

segments thereof, with respect to elections, legislative matters, or referendums, or

(D)any direct communication with a covered executive branch official in an attempt

to influence the official actions or positions of such official.

(3)Influencing legislation. For purposes of this subsection— (A)In general. The

term “influencing legislation” means any attempt to influence any legislation

through communication with any member or employee of a legislative body, or with

any government official or employee who may participate in the formulation of

legislation. (B)Legislation. The term “legislation” has the meaning given such term

by section 4911(e)(2).

(f)Fines, penalties, and other amounts: (l)In general. Except as provided in the

following paragraphs of this subsection, no deduction otherwise allowable shall be

allowed under this chapter for any amount paid or incurred (whether by suit,

agreement, or otherwise) to, or at the direction of, a government or governmental

entity in relation to the violation of any law or the investigation or inquiry by such

government or entity into the potential violation of any law.

(g) Treble damage payments under the antitrust laws: If in a criminal

proceeding a taxpayer is convicted of a violation of the antitrust laws, or his plea of

guilty or nolo contendere to an indictment or information charging such a violation

is entered or accepted in such a proceeding, no deduction shall be allowed under

subsection (a) for two-thirds of any amount paid or incurred— (1) on any judgment

for damages entered against the taxpayer under section 4 of the Act entitled "An Act

to supplement existing laws against unlawful restraints and monopolies, and for

other purposes", approved October 15, 1914 (commonly known as the Clayton Act),

on account of such violation or any related violation of the antitrust laws which

occurred prior to the date of the final judgment of such conviction, or (2) in

- App. H. 15 Appendix H

- Redacted for Publication settlement of any action brought under such section 4 on account of such violation or

related violation.

«26 USC Subtitle A - Chi- Subch B - Part VI - § 165. Losses: (a) General rule

— There shall be allowed as a deduction any loss sustained during the taxable year

and not compensated for by insurance or otherwise.

(b) Amount of deduction — For purposes of subsection (a), the basis for determining

the amount of the deduction for any loss shall be the adjusted basis provided in

section 1011 for determining the loss from the sale or other disposition of property.

(c) Limitation on losses of individuals — In the case of an individual, the deduction

under subsection (a) shall be limited to— (1) losses incurred in a trade or business;

(2) losses incurred in any transaction entered into for profit, though not connected

with a trade or business; and (3) except as provided in subsection (h), losses of

property not connected with a trade or business or a transaction entered into for

profit, if such losses arise from fire, storm, shipwreck, or other casualty, or from

theft.

(d) Wagering losses — Losses from wagering transactions shall be allowed only to

the extent of the gains from such transactions. For purposes of the preceding

sentence, in the case of taxable years beginning after December 31, 2017, and before

January 1, 2026, the term "losses from wagering transactions" includes any

deduction otherwise allowable under this chapter incurred in carrying on any

wagering transaction.

(e) Theft losses — For purposes of subsection (a), any loss arising from theft shall be

treated as sustained during the taxable year in which the taxpayer discovers such

loss.

(f) Capital losses — Losses from sales or exchanges of capital assets shall be allowed

only to the extent allowed in sections 1211 and 1212.

(g) Worthless securities (1) General rule — If any security which is a capital asset

becomes worthless during the taxable year, the loss resulting therefrom shall, for

purposes of this subtitle, be treated as a loss from the sale or exchange, on the last

day of the taxable year, of a capital asset. (2) Security defined — For purposes of this

subsection, the term "security" means— (A) a share of stock in a corporation; (B) a

right to subscribe for, or to receive, a share of stock in a corporation; or (C) a bond,

debenture, note, or certificate, or other evidence of indebtedness, issued by a

corporation or by a government or political subdivision thereof, with interest

coupons or in registered form. (3) Securities in affiliated corporation — For purposes

of paragraph (1), any security in a corporation affiliated with a taxpayer which is a

domestic corporation shall not be treated as a capital asset. For purposes of the

preceding sentence, a corporation shall be treated as affiliated with the taxpayer

only if— (A) the taxpayer owns directly stock in such corporation meeting the

requirements of section 1504(a)(2), and (B) more than 90 percent of the aggregate of

-- App. H. 16 -Appendix H

-- Redacted for Publication -its gross receipts for all taxable years has been from sources other than royalties,

rents (except rents derived from rental of properties to employees of the corporation

in the ordinary course of its operating business), dividends, interest (except interest

received on deferred purchase price of operating assets sold), annuities, and gains

from sales or exchanges of stocks and securities. — In computing gross receipts for

purposes of the preceding sentence, gross receipts from sales or exchanges of stocks

and securities shall be taken into account only to the extent of gains therefrom.

(h) Treatment of casualty gains and losses (1) Dollar limitation per casualty Any

loss of an individual described in subsection (c)(3) shall be allowed only to the extent

that the amount of the loss to such individual arising from each casualty, or from

each theft, exceeds $500 ($100 for taxable years beginning after December 31, 2009).

(2) Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted

gross income (A) In general— If the personal casualty losses for any taxable year

exceed the personal casualty gains for such taxable year, such losses shall be

allowed for the taxable year only to the extent of the sum of— (i) the amount of the

. personal casualty gains for the taxable year, plus (ii) so much of such excess as

exceeds 10 percent of the adjusted gross income of the individual. (B) Special rule

where personal casualty gains exceed personal casualty losses— If the personal

casualty gains for any taxable year exceed the personal casualty losses for such

taxable year— (i) all such gains shall be treated as gains from sales or exchanges of

capital assets, and (ii) all such losses shall be treated as losses from sales or

exchanges of capital assets. (3) Definitions of personal casualty gain and personal

casualty loss — For purposes of this subsection— (A) Personal casualty gain— The

term "personal casualty gain" means the recognized gain from any involuntary

conversion of property which is described in subsection (c)(3) arising from fire,

storm, shipwreck, or other casualty, or from theft. (B) Personal casualty loss— The

term "personal casualty loss" means any loss described in subsection (c)(3). For

purposes of paragraph (2), the amount of any personal casualty loss shall be

determined after the application of paragraph (1). (4) Special rules (A) Personal

casualty losses allowable in computing adjusted gross income to the extent of

personal casualty gains— In any case to which paragraph (2)(A) applies, the

deduction for personal casualty losses for any taxable year shall be treated as a

deduction allowable in computing adjusted gross income to the extent such losses do

not exceed the personal casualty gains for the taxable year. (B) Joint returns— For

purposes of this subsection, a husband and wife making a joint return for the

taxable year shall be treated as 1 individual. (C) Determination of adjusted gross

income in case of estates and trusts— For purposes of paragraph (2), the adjusted

gross income of an estate or trust shall be computed in the same manner as in the

case of an individual, except that the deductions for costs paid or incurred in

connection with the administration of the estate or trust shall be treated as

allowable in arriving at adjusted gross income. (D) Coordination with estate tax—

No loss described in subsection (c)(3) shall be allowed if, at the time of filing the

return, such loss has been claimed for estate tax purposes in the estate tax return.

- App. H. 17 Appendix H

- Redacted for Publication (E) Claim required to be filed in certain cases— Any loss of an individual described

in subsection (c)(3) to the extent covered by insurance shall be taken into account

under this section only if the individual files a timely insurance claim with respect to

such loss. (5) Limitation for taxable years 2018 through 2025 (A) In general— In the

case of an individual, except as providedin subparagraph (B), any personal casualty

loss which (but for this paragraph) would be deductible in a taxable year beginning

after December 31, 2017, and before January 1, 2026, shall he allowed as a

deduction under subsection (a) only to the extent it is attributable to a Federally

declared disaster (as defined in subsection (i)(5)). (B) Exception related to personal

casualty gains— If a taxpayer has personal casualty gains for any taxable year to

which subparagraph (A) applies—(i) subparagraph (A) shall not apply to the portion

of the personal casualty loss not attributable to a Federally declared disaster (as so

defined) to the extent such loss does not exceed such gains, and (ii) in applying

paragraph (2) for purposes of subparagraph (A) to the portion of personal casualty

loss which is so attributable to such a disaster, the amount of personal casualty

gains taken into account under paragraph (2)(A) shall be reduced by the portion of

such gains taken into account under clause (i).

(i) Disaster losses— (1) Election to take deduction for preceding year—

Notwithstanding the provisions of subsection (a), any loss occurring in a disaster

area and attributable to a federally declared disaster may, at the election of the

taxpayer, be taken into account for the taxable year immediately preceding the

taxable year in which the disaster occurred.— (2) Year of loss— If an election is

made under this subsection, the casualty resulting in the loss shall be treated for

purposes of this title as having occurred in the taxable year for which the deduction

is claimed.(3) Amount of loss— The amount of the loss taken into account in the

preceding taxable year by reason of paragraph (1) shall not exceed the

uncompensated amount determined on the basis of the facts existing at the date the

taxpayer claims the loss. (4) Use of disaster loan appraisals to establish amount of

loss— Nothing in this title shall be construed to prohibit the Secretary from

prescribing regulations or other guidance under which an appraisal for the purpose

of obtaining a loan of Federal funds or a loan guarantee from the Federal

Government as a result of a federally declared disaster may be used to establish the

amount of any loss described in paragraph (1) or (2). (5) Federally declared

disasters—For purposes of this subsection— (A) In general—The term "Federally 1

declared disaster" means any disaster subsequently determined by the President of

the United States to warrant assistance by the Federal Government under the

Robert T. Stafford Disaster Relief and Emergency Assistance Act. (B) Disaster

area— The term "disaster area" means the area so determined to warrant such

assistance.

0 Denial of deduction for losses on certain obligations not in registered form (1) In

general— Nothing in subsection (a) or in any other provision of law shall be

construed to provide a deduction for any loss sustained on any registration-required

obligation unless such obligation is in registered form (or the issuance of such

- App. H. 18 Appendix H

-- Redacted for Publication -obligation was subject to tax under section 4701). (2) Definitions— For purposes of

this subsection— (A) Registration-required obligation— The term "registrationrequired obligation" has the meaning given to such term by section 163(f)(2). (B)

Registered form—The term "registered form" has the same meaning as when used

in section 163(f). (3) Exceptions—The Secretary may, by regulations, provide that

this subsection and section 1287 shall not apply with respect to obligations held by

any person if— (A) such person holds such obligations in connection with a trade or

business outside the United States, (B) such person holds such obligations as a

broker dealer (registered under Federal or State law) for sale to customers in the

ordinary course of his trade or business, (C) such person complies with reporting

requirements with respect to ownership, transfers, and payments as the Secretary

may require, or (D) such person promptly surrenders the obligation to the issuer for

the issuance of a new obligation in registered form, but only if such obligations are

held under arrangements provided in regulations or otherwise which are designed to

assure that such obligations are not delivered to any United States person other

than a person described in subparagraph (A), (B), or (C).

(k) Treatment as disaster loss where taxpayer ordered to demolish or relocate

residence in disaster area because of disaster— In the case of a taxpayer whose

residence is located in an area which has been determined by the President of the

United States to warrant assistance by the Federal Government under the Robert T.

Stafford Disaster Relief and Emergency Assistance Act, if— (1) not later than the

120th day after the date of such determination, the taxpayer is ordered, by the

government of the State or any political subdivision thereof in which such residence

is located, to demolish or relocate such residence, and (2) the residence has been

rendered unsafe for use as a residence by reason of the disaster, any loss

attributable to such disaster shall be treated as a loss which arises from a casualty

and which is described in subsection (i).

(l) Treatment of certain losses in insolvent financial institutions (1) In general—If—

(A) as of the close of the taxable year, it can reasonably be estimated that there is a

loss on a qualified individual's deposit in a qualified financial institution, and (B)

such loss is on account of the bankruptcy or insolvency of such institution, then the

taxpayer may elect to treat the amount so estimated as a loss described in

subsection (c)(3) incurred during the taxable year. (2) Qualified individual defined—

For purposes of this subsection, the term "qualified individual" means any

individual, except an individual—(A) who owns at least 1 percent in value of the

outstanding stock of the qualified financial institution, (B) who is an officer of the

qualified financial institution, (C) who is a sibling (whether by the whole or half

blood), spouse, aunt, uncle, nephew, niece, ancestor, or lineal descendant of an

individual described in subparagraph (A) or (B), or (D) who otherwise is a related

person (as defined in section 267(b)) with respect to an individual described in

subparagraph (A) or (B). (3) Qualified financial institution— For purposes of this

subsection, the term "qualified financial institution" means—(A) any bank (as

defined in section 581), (B) any institution described in section 591, (C) any credit

- App. H. 19 ■

Appendix H

-- Redacted for Publication -union the deposits or accounts in which are insured under Federal or State law or

are protected or guaranteed under State law, or (D) any similar institution chartered

and supervised under Federal or State law. (4) Deposit— For purposes of this

subsection, the term "deposit" means any deposit, withdrawable account, or

withdrawable or repurchasable share.(5) Election to treat as ordinary loss (A) In

general— In lieu of any election under paragraph (1), the taxpayer may elect to treat

the amount referred to in paragraph (1) for the taxable year as an ordinary loss

•described in subsection (c)(2) incurred during the taxable year. (B) Limitations (i)

Deposit may not be federally insured— No election may be made under

subparagraph (A) with respect to any loss on a deposit in a qualified financial

institution if part or all of such deposit is insured under Federal law. (ii) Dollar

limitation— With respect to each financial institution, the aggregate amount of

losses attributable to deposits in such financial institution to which an election

under subparagraph (A) maybe made by the taxpayer for any taxable year shall not

exceed $20,000 ($10,000 in the case of a separate return by a married individual).

The limitation of the preceding sentence shall be reduced by the amount of any

insurance proceeds under any State law which can reasonably be expected to be

received with respect to losses on deposits in such institution.(6) Election— Any

election by the taxpayer under this subsection for any taxable year—(A) shall apply

to all losses for such taxable year of the taxpayer on deposits in the institution with

respect to which such election was made, and (B) may be revoked only with the

consent of the Secretary. (7) Coordination with section 166— Section 166 shall not

apply to any loss to which an election under this subsection applies.

(m) Cross references (1) For special rule for banks with respect to worthless

securities, see section 582. (2) For disallowance of deduction for worthlessness of

securities to which subsection (g)(2)(C) applies, if issued by a political party or

similar organization, see section 271. (3) For special rule for losses on stock in a

small business investment company, see section 1242. (4) For special rule for losses

of a small business investment company, see section 1243. (5) For special rule for

losses on small business stock, see section 1244.

*26 USC § 275 - Certain taxes: (a)General rule — No deduction shall be allowed

for the following taxes: (l)Federal income taxes, including— (A) the tax imposed by

section 3101 (relating to the tax on employees under the Federal Insurance

Contributions Act); (B) the taxes imposed by sections 3201 and 3211 (relating to the

taxes on railroad employees and railroad employee representatives); and (C) the tax

withheld at source on wages under section 3402. (2) Federal war profits and excess

profits taxes. (3) Estate, inheritance, legacy, succession, and gift taxes. (4) Income,

war profits, and excess profits taxes imposed by the authority of any foreign country

or possession of the United States if the taxpayer chooses to take to any extent the

benefits of section 901. (5) Taxes on real property, to the extent that section 164(d)

requires such taxes to be treated as imposed on another taxpayer. (6) Taxes imposed

by chapters 41, 42, 43, 44, 45, 46, and 54. — Paragraph (1) shall not apply to any

-- App. H. 20 Appendix H

-- Redacted for Publication -taxes to the extent such taxes are allowable as a deduction under section 164(f).

(b)Cross reference — For disallowance of certain other taxes, see section 164(c)

•5 USC - Administrative Procedure Act (APA) - SUB CHAPTER II Administrative Procedure - $ 553. Rule making: (a) This section applies,

according to the provisions thereof, except to the extent that there is involved -(1) a

military or foreign affairs function of the United States; or (2) a matter relating to

agency management or personnel or to pubic property, loans, grants, benefits, or

contracts.

(b) General notice of proposed rule making shall be published in the Federal

Register, unless persons subject thereto are named and either personally served or

otherwise have actual notice thereof in accordance with law. The notice shall include

- (1) a statement of the time, place, and nature of public rule making proceedings; (2)

reference to the legal authority under which the rule is proposed; and (3) either the

terms or substance of the proposed rule or a description of the subjects and issues

involved. Except when notice or hearing is required by statute, this subsection does

not apply - (A) to interpretative rules, general statements of policy, or rules of

agency organization, procedure, or practice; or (B) when the agency for good cause

finds (and incorporates the finding and a brief statement of reasons therefore in the

rules issued) that notice and public procedure thereon are impracticable,

unnecessary, or contrary to the public interest.

(c) After notice required by this section, the agency shall give interested persons an

opportunity to participate in the rule making through submission of written data,

views, or arguments with or without opportunity for oral presentation. After

consideration of the relevant matter presented, the agency shall incorporate in the

rules adopted a concise general statement of their basis and purpose. When rules are

required by statute to be made on the record after opportunity for an agency

hearing, sections 556 and 557 of this title apply instead of this subsection.

(d) The required publication or service of a substantive rule shall be made not less

than 30 days before its effective date, except - (1) a substantive rule which grants or

recognizes an exemption or relieves a restriction; (2) interpretative rules and

statements of policy; or (3) as otherwise provided by the agency for good cause found

and published with the rule.

(e) Each agency shall give an interested person the right to petition for the issuance,

amendment, or repeal of a rule.

*5 U.S. Code § 2105 - Employee:

(a)For the purpose of this title, “employee”, except as otherwise provided by this

section or when specifically modified, means an officer and an individual who is—

(l)appointed in the civil service by one of the following acting in an official

capacity— (A)the President; (B)a Member or Members of Congress, or the

Congress;(C)a member of a uniformed service;(D)an individual who is an employee

- App. H. 21 Appendix H

- Redacted for Publication -under this section;(E)the head of a Government controlled corporation; or (F)an

adjutant general designated by the Secretary concerned under section 709(c) of title

32;(2)engaged in the performance of a Federal function under authority of law or an

Executive act; and (3)subject to the supervision of an individual named by

paragraph (1) of this subsection while engaged in the performance of the duties of

his position.

(b)An individual who is employed at the United States Naval Academy in the

midshipmen’s laundry, the midshipmen’s tailor shop, the midshipmen’s cobbler and

barber shops, and the midshipmen’s store, except an individual employed by the

Academy dairy (if any), and whose employment in such a position began before

October 1, 1996, and has been uninterrupted in such a position since that date is

deemed an employee.

(c)An employee paid from nonappropriated funds of the Army and Air Force

Exchange Service, Navy Ships Stores Program, Navy exchanges, Marine Corps

exchanges, Coast Guard exchanges, and other instrumentalities of the United States

under the jurisdiction of the armed forces conducted for the co mfort, pleasure,

contentment, and mental and physical improvement of personnel of the armed forces

is deemed not an employee for the purpose of—(l)laws administered by the Office of

Personnel Management, except— (A)section 7204; (B)as otherwise specifically

provided in this title; (C)the Fair Labor Standards Act of 1938; (D)for the purpose of

entering into an interchange agreement to provide for the noncompetitive movement

of employees between such instrumentalities and the competitive service; or

(E)subchapter V of chapter 63, which shall be applied so as to construe references to

benefit programs to refer to applicable programs for employees paid from Non

appropriated funds; or (2) subchapter I of chapter 81, chapter 84 (except to the

extent specifically provided therein), and section 7902 of this title. This subsection

does not affect the status of these nonappropriated fund activities as Federal

instrumentalities.

(d) AReserve of the armed forces who is not on active duty or who is on active duty

for training is deemed not an employee or an individual holding an office of trust or

profit or discharging an official function under or in connection with the United

States because of his appointment, oath, or status, or any duties or functions

performed or pay or allowances received in that capacity.

(e)Except as otherwise provided by law, an employee of the United States Postal

Service or of the Postal Regulatory Commission is deemed not an employee for

purposes of this title.

(f)For purposes of sections 1212, 1213, 1214, 1215, 1216, 1221, 1222, 2302, and 7701,

employees appointed under chapter 73 or 74 of title 38 snail be employees.

»5a USC - Compiled Act 95-452. INSPECTOR GENERAL ACT OF 1978 - § §

(2)(4)(5)(6)(8)(8D. Special Provisions Concerning the Department of the

- App. H. 22 -Appendix H

-- Redacted for Publication -Treasury) (8E. Special Provisions Concerning the Department of Justice)

(8G) (12. Definitions):

5a USC § 2 - Purpose and establishment of Offices of Inspector General;

departments and agencies involved — In order to create independent and objective

units— (1) to conduct and supervise audits and investigations relating to the

programs and operations of the establishments listed in section 12(2); (2) to provide

leadership and coordination and recommend policies for activities designed (A) to

promote economy, efficiency, and effectiveness in the administration of, and (B) to

prevent and detect fraud and abuse in, such programs and operations; and (3) to

provide a means for keeping the head of the establishment and the Congress fully

and currently informed about problems and deficiencies relating to the

administration of such programs and operations and the necessity for and progress

of corrective action; 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.

5a USC § 3 - Appointment of Inspector General; supervision; removal;

political activities; appointment of Assistant Inspector General for

Auditing and Assistant Inspector General for Investigations — (a) There

shall be at the head of each Office an Inspector General who shall be appointed by

the President, by and with the advice and consent of the Senate, without regard to

political affiliation and solely on the basis of integrity and demonstrated ability in

accounting, auditing, financial analysis, law, management analysis, public

administration, or investigations. Each Inspector General shall report to and be

under the general supervision of the head of the establishment involved or, to the

extent such authority is delegated, the officer next in rank below such head, but

shall not report to, or be subject to supervision by, any other officer of such

establishment. Neither the head of the establishment nor the officer next in rank

below such head shall prevent or prohibit the Inspector General from initiating,

carrying out, or completing any audit or investigation, or from issuing any subpoena

during the course of any audit or investigation, (b) An Inspector General may be

removed from office by the President. If an Inspector General is removed from office

or is transferred to another position or location within an establishment, the

President shall communicate in writing the reasons for any such removal or transfer

to both Houses of Congress, not later than 30 days before the removal or transfer.

Nothing in this subsection shall prohibit a personnel action otherwise authorized by

law, other than transfer or removal.

(c) For the purposes of section 7324 of title 5, United States Code, no Inspector

General shall be considered to be an employee who determines policies to be pursued

by the United States in the nationwide administration of Federal laws.

- App. H. 23 Appendix H

- Redacted for Publication -(d) (l)Each Inspector General shall, in accordance with applicable laws and

regulations governing the civil service—(A)appoint an Assistant Inspector General

for Auditing who shall have the responsibility for supervising the performance of

auditing activities relating to programs and operations of the establishment; (B)

appoint an Assistant Inspector General for Investigations who shall have the

responsibility for supervising the performance of investigative activities relating to

such programs and operations; and (C)designate a Whistleblower Protection

Coordinator who shall— (i)educate agency employees—(I) about prohibitions

against retaliation for protected disclosures; and (Il)who have made or are

contemplating making a protected disclosure about the rights and remedies against

retaliation for protected disclosures, including— (aa) the means by which employees

may seek review of any allegation of reprisal, including the roles of the Office of the

Inspector General, the Office of Special Counsel, the Merit Systems Protection

Board, and any other relevant entities; and (bb) general information about the

timeliness of such cases, the availability of any alternative dispute mechanisms, and

avenues for potential relief. [1] (ii)assist the Inspector General in promoting the

timely and appropriate handling and consideration of protected disclosures and

allegations of reprisal, to the extent practicable, by the Inspector General; and (iii)

assist the Inspector General in facilitating communication and coordination with the

Special Counsel, the Council of the Inspectors General on Integrity and Efficiency,

the establishment, Congress, and any other relevant entity regarding the timely and

appropriate handling and consideration of protected disclosures, allegations of

reprisal, and general matters regarding the implementation and administration of

whistleblower protection laws, rules, and regulations. (2) The Whistleblower

Protection Coordinator shall not act as a legal representative, agent, or advocate of

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shall have direct access to the Inspector General as needed to accomplish the

requirements of this subsection, (4)For the purposes of this section, the requirement

of the designation of a Whistleblower Protection Ombudsman [2] under paragraph

(1)(C) shall not apply to— (A) any agency that is an element of the intelligence

community (as defined in section 3(4) of the National Security Act of 1947 (50 U.S.C.

401a(4)) [50 U.S.C. 3003(4)]); or (B) as determined by the President, any executive

agency or unit thereof the principal function of which is the conduct of foreign

intelligence or counter intelligence activities.

(e) The annual rate of basic pay for an Inspector General (as defined under section

12(3)) shall be the rate payable for level III of the Executive Schedule under section

5314 of title 5, United States Code, plus 3 percent.

(f) An Inspector General (as defined under section 8G(a)(6) or 12(3)) may not receive

any cash award or cash bonus, including any cash award under chapter 45 of title 5,

United States Code.

- App. H. 24 Appendix H

-- Redacted for Publication -(g)Each Inspector General shall, in accordance with applicable laws and regulations

governing the civil service, obtain legal advice from a counsel either reporting

directly to the Inspector General or another Inspector General.

5a USC § 4 - Duties and responsibilities; report of criminal violations to

Attorney General. (a)It shall be the duty and responsibility of each Inspector

General, with respect to the establishment within which his Office is established—

(1) to provide policy direction for and to conduct, supervise, and coordinate audits

and investigations relating to the programs and operations of such establishment;

(2) to review existing and proposed legislation and regulations relating to programs

and operations of such establishment and to make recommendations in the

semiannual reports required by section 5(a) concerning the impact of such

legislation or regulations on the economy and efficiency in the administration of

programs and operations administered or financed by such establishment or the

prevention and detection of fraud and abuse in such programs and operations; (3) to

recommend policies for, and to conduct, supervise, or coordinate other activities

carried out or financed by such establishment for the purpose of promoting economy

and efficiency in the administration of, or preventing and detecting fraud and abuse

in, its programs and operations; (4) to recommend policies for, and to conduct,

supervise, or coordinate relationships between such establishment and other

Federal agencies, State and local governmental agencies, and nongovernmental

entities with respect to (A) all matters relating to the promotion of economy and

efficiency in the administration of, or the prevention and detection of fraud and

abuse in, programs and operations administered or financed by such establishment,

or (B) the identification and prosecution of participants in such fraud or abuse; and

(5) to keep the head of such establishment and the Congress fully and currently

informed, by means of the reports required by section 5 and otherwise, concerning

fraud and other serious problems, abuses, and deficiencies relating to the

administration of programs and operations administered or financed by such

establishment, to recommend corrective action concerning such problems, abuses,

and deficiencies, and to report on the progress made in implementing such corrective

action.

(b) (l)In carrying out the responsibilities specified in subsection (a)(1), each

Inspector General shall— (A) comply with standards established by the Comptroller

General of the United States for audits of Federal establishments, organizations,

programs, activities, and functions; (B) establish guidelines for determining when it

shall be appropriate to use non-Federal auditors; and (C) take appropriate steps to

assure that any work performed by non-Federal auditors complies with the

standards established by the Comptroller General as described in paragraph (1).[1]

(2) For purposes of determining compliance with paragraph (1)(A) with respect to

whether internal quality controls are in place and operating and whether

established audit standards, policies, and procedures are being followed by Offices of

- App. H. 25 Appendix H

-- Redacted for Publication -Inspector General of establishments defined under section 12(2), Offices of Inspector

General of designated Federal entities defined under section 8G(a)(2), and any audit

office established within a Federal entity defined under section 8G(a)(l), reviews

shall be performed exclusively by an audit entity in the Federal Government,

including the Government Accountability Office or the Office of Inspector General of

each establishment defined under section 12(2), or the Office of Inspector General of

each designated Federal entity defined under section 8G(a)(2).

(c) In carrying out the duties and responsibilities established under this Act, each

Inspector General shall give particular regard to the activities of the Comptroller

General of the United States with a view toward avoiding duplication and insuring

effective coordination and cooperation.

(d) In carrying out the duties and responsibilities established under this Act, each

Inspector General shall report expeditiously to the Attorney General whenever the

Inspector General has reasonable grounds to believe there has been a violation of

Federal criminal law.

(e) (l)In carrying out the duties and responsibilities established under this Act,

whenever an Inspector General issues a recommendation for corrective action to the

agency, the Inspector Genera]— (A)shall submit the document making a

recommendation for corrective action to— (i) the head of the establishment; (ii) the

congressional committees of jurisdiction; and (iii) if the recommendation for

corrective action was initiated upon request by an individual or entity other than the

Inspector General, that individual or entity; (B) may submit the document making a

recommendation for corrective action to any Member of Congress upon request; and

(C) not later than 3 days after the recommendation for corrective action is submitted

in final form to the head of the establishment, post the document making a

recommendation for corrective action on the website of the Office of Inspector

General. (2) Nothing in this subsection shall be construed as authorizing an

Inspector General to publicly disclose information otherwise prohibited from

disclosure by law.

5a USC § 5 - Semiannual reports; transmittal to Congress; availability to

public; immediate report on serious or flagrant problems; disclosure of

information; definitions — (a)Each Inspector General shall, not later than April

30 and October 31 of each year, prepare semiannual reports summarizing the

activities of the Office during the immediately preceding six-month periods ending

March 31 and September 30. Such reports shall include, but need not be limited to—

(1) a description of significant problems, abuses, and deficiencies relating to the

administration of programs and operations of such establishment disclosed by such

activities during the reporting period; (2) a description of the recommendations for

corrective action made by the Office during the reporting period with respect to

significant problems, abuses, or deficiencies identified pursuant to paragraph (1); (3)

an identification of each significant recommendation described in previous

semiannual reports on which corrective action has not been completed; (4) a

- App. H. 26 Appendix H

-- Redacted for Publication -summary of matters referred to prosecutive authorities and the prosecutions and

convictions which have resulted; (5) a summary of each report made to the head of

the establishment under section 6(c)(2) during the reporting period; (6) a listing,

subdivided according to subject matter, of each audit report, inspection reports, [1]

and evaluation reports [1] issued by the Office during the reporting period and for

each report, where applicable, the total dollar value of questioned costs (including a

separate category for the dollar value of unsupported costs) and the dollar value of

recommendations that funds be put to better use; (7) a summary of each particularly

significant report; (8)statistical tables showing the total number of audit reports,

inspection reports, and evaluation reports and the total dollar value of questioned

costs (including a separate category for the dollar value of unsupported costs), for

reports— (A) for which no management decision had been made by the

commencement of the reporting period; (B) which were issued during the reporting

period; (C)for which a management decision was made during the reporting period,

including— (i) the dollar value of disallowed costs; and (ii) the dollar value of costs

not disallowed; and (D) for which no management decision has been made by the end

of the reporting period; (9)statistical tables showing the total number of audit

reports, inspection reports, and evaluation reports and the dollar value of

recommendations that funds be put to better use by management, for reports— (A)

for which no management decision had been made by the commencement of the

reporting period; (B) which were issued during the reporting period; (C)for which a

management decision was made during the reporting period, including— (i) the

dollar value of recommendations that were agreed to by management; and (ii) the

dollar value of recommendations that were not agreed to by management; and (D)

for which no management decision has been made by the end of the reporting period;

(10)a summary of each audit report, inspection reports, 1 and evaluation reports 1

issued before the commencement of the reporting period—(A) for which no

management decision has been made by the end of the reporting period (including

the date and title of each such report), an explanation of the reasons such

management decision has not been made, and a statement concerning the desired

timetable for achieving a management decision on each such report; (B)for which no

establishment comment was returned within 60 days of providing the report to the

establishment; and(C) for which there are any outstanding unimplemented

recommendations, including the aggregate potential cost savings of those

recommendations.[2] (11) a description and explanation of the reasons for any

significant revised management decision made during the reporting period;

(12)information concerning any significant management decision with which the

Inspector General is in disagreement; (13)the information described under section

804(b) of the Federal Financial Management Improvement Act of 1996; (14) (A) an

appendix containing the results of any peer review conducted by another Office of

Inspector General during the reporting period; or (B) if no peer review was

conducted within that reporting period, a statement identifying the date of the last

peer review conducted by another Office of Inspector General; (15) a list of any

outstanding recommendations from any peer review conducted by another Office of

- App. H. 27 ■

Appendix H

-- Redacted for Publication -Inspector General that have not been fully implemented, including a statement

describing the status of the implementation and why implementation is not

complete; (16) a list of any peer reviews conducted by the Inspector General of

another Office of the Inspector General during the reporting period, including a list

of any outstanding recommendations made from any previous peer review (including

any peer review conducted before the reporting period) that remain outstanding or

have not been fully implemented; (17)statistical tables showing— (A) the total

number of investigative reports issued during the reporting period; (B) the total

number of persons referred to the Department of Justice for criminal prosecution

during the reporting period; (C) the total number of persons referred to State and

local prosecuting authorities for criminal prosecution during the reporting period;

and (D) the total number of indictments and criminal informations during the

reporting period that resulted from any prior referral to prosecuting authorities; (18)

a description of the metrics used for developing the data for the statistical tables

under paragraph (17); (19)a report on each investigation conducted by the Office

involving a senior Government employee where allegations of misconduct were

substantiated, including the name of the senior government official (as defined by

the department or agency) if already made public by the Office, and a detailed

description of— (A) the facts and circumstances of the investigation; and (B)the

status and disposition of the matter, including— (i) if the matter was referred to the

Department of Justice, the date of the referral; and (ii) if the Department of Justice

declined the referral, the date of the declination; (20) (A) a detailed description of

any instance of whistleblower retaliation, including information about the official

found to have engaged in retaliation; and (B) what, if any, consequences the

establishment actually imposed to hold the official described in subparagraph (A)

accountable; (21)a detailed description of any attempt by the establishment to

interfere with the independence of the Office, including— (A) with budget

constraints designed to limit the capabilities of the Office; and (B) incidents where

the establishment has resisted or objected to oversight activities of the Office or

restricted or significantly delayed access to information, including the justification of

the establishment for such action; and (22) detailed descriptions of the particular

circumstances of each— (A) inspection, evaluation, and audit conducted by the Office

that is closed and was not disclosed to the public; and (B) investigation conducted by

the Office involving a senior Government employee that is closed and was not

disclosed to the public.

(b)Semiannual reports of each Inspector General shall be furnished to the head of

the establishment involved not later than April 30 and October 31 of each year and

shall be transmitted by such head to the appropriate committees or subcommittees

of the Congress within thirty days after receipt of the report, together with a report

by the head of the establishment containing— (1) any comments such head

determines appropriate; (2)statistical tables showing the total number of audit

reports, inspection reports, and evaluation reports and the dollar value of disallowed

costs, for reports— (A) for which final action had not been taken by the

- App. H. 28 Appendix H

- Redacted for Publication commencement of the reporting period; (B) on which management decisions were

made during the reporting period; (C)for which final action was taken during the

reporting period, including— (i) the dollar value of disallowed costs that were

recovered by management through collection, offset, property in lieu of cash, or

otherwise; and (ii) the dollar value of disallowed costs that were written off by

management; and (D) for which no final action has been taken by the end of the

reporting period; (3)statistical tables showing the total number of audit reports,

inspection reports, and evaluation reports and the dollar value of recommendations

that funds be put to better use by management agreed to in a management decision,

for reports— (A) for which final action had not been taken by the commencement of

the reporting period; (B)on which management decisions were made during the

reporting period; (C)for which final action was taken during the reporting period,

including— (i) the dollar value of recommendations that were actually completed;

and (ii) the dollar value of recommendations that management has subsequently

concluded should not or could not be implemented or completed; and (D) for which

no final action has heen taken by the end of the reporting period; (4) whether the

establishment entered into a settlement agreement with the official described in

subsection (a)(20)(A), which shall be reported regardless of any confidentiality

agreement relating to the settlement agreement; and (5)a statement with respect to

audit reports on which management decisions have been made but final action has

not been taken, other than audit reports on which a management decision was made

within the preceding year, containing— (A) a list of such audit reports and the date

each such report was issued; (B) the dollar value of disallowed costs for each report;

(C) the dollar value of recommendations that funds be put to better use agreed to by

management for each report; and (D) an explanation of the reasons final action has

not been taken with respect to each such audit report, except that such statement

may exclude such audit reports that are under formal administrative or judicial

appeal or upon which management of an establishment has agreed to pursue a

legislative solution, but shall identify the number of reports in each category so

excluded.

(c)Within sixty days of the transmission of the semiannual reports of each Inspector

General to the Congress, the head of each establishment shall make copies of such

report available to the public upon request and at a reasonable cost. Within 60 days

after the transmission of the semiannual reports of each establishment head to the

Congress, the head of each establishment shall make copies of such report available

to the public upon request and at a reasonable cost.

(d)Each Inspector General shall report immediately to the head of the establishment

involved whenever the Inspector General becomes aware of particularly serious or

flagrant problems, abuses, or deficiencies relating to the administration of programs

and operations of such establishment. The head of the establishment shall transmit

any such report to the appropriate committees or subcommittees of Congress within

seven calendar days, together with a report by the head of the establishment

containing any comments such head deems appropriate.

- App. H. 29 Appendix H

- Redacted for Publication -(e)(l)Nothing in this section shall be construed to authorize the public disclosure of

information which is—(A) specifically prohibited from disclosure by any other

provision of law; (B) specifically required by Executive order to be protected from

disclosure in the interest of national defense or national security or in the conduct of

foreign affairs; or (C) a part of an ongoing criminal investigation. (2)

Notwithstanding paragraph (1)(C), any report under this section may be disclosed to

the public in a form which includes information with respect to a part of an ongoing

criminal investigation if such information has been included in a public record. (3)

Except to the extent and in the manner provided under section 6103(f) of the

Internal Revenue Code of 1986 [26 U.S.C. 6103(f)], nothing in this section or in any

other provision of this Act shall be construed to authorize or permit the withholding

of information from the Congress, or from any committee or subcommittee thereof.

(4) Subject to any other provision of law that would otherwise prohibit disclosure of

such information, the information described in paragraph (1) may be provided to any

Member of Congress upon request. (5) An Office may not provide to Congress or the

public any information that reveals the personally identifiable information of a

whistleblower under this section unless the Office first obtains the consent of the

whistleblower.

(f)As used in this section— (l)the term “questioned cost” means a cost that is

questioned by the Office because of— (A) an alleged violation of a provision of a law,

regulation, contract, grant, cooperative agreement, or other agreement or document

governing the expenditure of funds; (B) a finding that, at the time of the audit, such

cost is not supported by adequate documentation; or (C) a finding that the

expenditure of funds for the intended purpose is unnecessary or unreasonable; (2)

the term “unsupported cost” means a cost that is questioned by the Office because

the Office found that, at the time of the audit, such cost is not supported by adequate

documentation; (3) the term “disallowed cost” means a questioned cost that

management, in a management decision, has sustained or agreed should not be

charged to the Government; (4)the term “recommendation that funds be put to

better use” means a recommendation by the Office that funds could be used more

efficiently if management of an establishment took actions to implement and

complete the recommendation, including— (A) reductions in outlays; (B)

deobligation of funds from programs or operations; (C) withdrawal of interest

subsidy costs on loans or loan guarantees, insurance, or bonds; (D) costs not incurred

by implementing recommended improvements related to the operations of the

establishment, a contractor or grantee;(E) avoidance of unnecessary expenditures

noted in preaward reviews of contract or grant agreements; or (F) any other savings

which are specifically identified; (5) the term “management decision” means the

evaluation by the management of an establishment of the findings and

recommendations included in an audit report and the issuance of a final decision by

management concerning its response to such findings and recommendations,

including actions concluded to be necessary; (6)the term “final action” means— (A)

the completion of all actions that the management of an establishment has

-- App. H. 30 -Appendix H

-- Redacted for Publication -concluded, in its management decision, are necessary with respect to the findings

and recommendations included in an audit report; and (B) in the event that the

management of an establishment concludes no action is necessary, final action

occurs when a management decision has been made; and (7)the term “senior

Government employee” means— (A) an officer or employee in the executive branch

(including a special Government employee as defined in section 202 of title 18,

United States Code) who occupies a position classified at or above GS-15 of the

General Schedule or, in the case of positions not under the General Schedule, for

which the rate of basic pay is equal to or greater than 120 percent of the minimum

rate of basic pay payable for GS-15 of the General Schedule; and(B) any

commissioned officer in the Armed Forces in pay grades 0-6 and above.

5a USC § 6 - Authority of Inspector General; information and assistance

from Federal agencies; unreasonable refusal; office space and equipment:

(a)In addition to the authority otherwise provided by this Act, each Inspector

General, in carrying out the provisions of this Act, is authorized— (1) (A) to have

timely access to all records, reports, audits, reviews, documents, papers,

recommendations, or other materials available to the applicable establishment

which relate to the programs and operations with respect to which that Inspector

General has responsibilities under this Act; (B)to have access under subparagraph

(A) notwithstanding any other provision of law, except pursuant to any provision of

law enacted by Congress that expressly— (i) refers to the Inspector General; and

(ii)limits the right of access of the Inspector General; and (C) except as provided in

subsection (i), with regard to Federal grand jury materials protected from disclosure

pursuant to rule 6(e) of the Federal Rules of Criminal Procedure, to have timely

access to such information if the Attorney General grants the request in accordance

with subsection (h); (2) to make such investigations and reports relating to the

administration of the programs and operations of the applicable establishment as

are, in the judgment of the Inspector General, necessary or desirable; (3) to request

such information or assistance as may be necessary for carrying out the duties and

responsibilities provided by this Act from any Federal, State, or local governmental

agency or unit thereof; (4) to require by subpoena the production of all information,

documents, reports, answers, records, accounts, papers, and other data in any

medium (including electronically stored information), as well as any tangible thing

and documentary evidence necessary in the performance of the functions assigned

by this Act, which subpoena, in the case of contumacy or refusal to obey, shall be

enforceable by order of any appropriate United States district court: Provided, That

procedures other than subpoenas shall be used by the Inspector General to obtain

documents and information from Federal agencies; (5) to administer to or take from

any person an oath, affirmation, or affidavit, whenever necessary in the performance

of the functions assigned by this Act, which oath, affirmation, or affidavit when

administered or taken by or before an employee of an Office of Inspector General

designated by the Inspector General shall have the same force and effect as if

administered or taken by or before an officer having a seal; (6) to have direct and

- App. H. 31 Appendix H

-- Redacted for Publication -prompt access to the head of the establishment involved when necessary for any

purpose pertaining to the performance of functions and responsibilities under this

Act; (7) to select, appoint, and employ such officers and employees as may be

necessary for carrying out the functions, powers, and duties of the Office subject to

the provisions of title 5, United States Code, governing appointments in the

competitive service, and the provisions of chapter 51 and subchapter III of chapter

53 of such title relating to classification and General Schedule pay rates; (8) to

obtain services as authorized by section 3109 of title 5, United States Code, at daily

rates not to exceed the equivalent rate prescribed for grade GS-18 of the General

Schedule by section 5332 of title 5, United States Code; and (9) to the extent and in

such amounts as may be provided in advance by appropriations Acts, to enter into

contracts and other arrangements for audits, studies, analyses, and other services

with public agencies and with private persons, and to make such payments as may­

be necessary to carry out the provisions of this Act.

(b)Nothing in this section shall be construed as authorizing an Inspector General to

publicly disclose information otherwise prohibited from disclosure by law.

(c)(1) Upon request of an Inspector General for information or assistance under

subsection (a)(3), the head of any Federal agency involved shall, insofar as is

practicable and not in contravention of any existing statutory restriction or

regulation of the Federal agency from which the information is requested, furnish to

such Inspector General, or to an authorized designee, such information or

assistance.(2)Whenever information or assistance requested under subsection (a)(1)

or (a)(3) is, in the judgment of an Inspector General, unreasonably refused or not

provided, the Inspector General shall report the circumstances to the head of the

establishment involved without delay.

(d) Each head of an establishment shall provide the Office within such

establishment with appropriate and adequate office space at central and field office

locations of such establishment, together with such equipment, office supplies, and

communications facilities and services as may be necessary for the operation of such

offices, and shall provide necessary maintenance services for such offices and the

equipment and facilities located therein.

(e) (1) (A)For purposes of applying the provisions of law identified in subparagraph

(B)— (i) each Office of Inspector General shall be considered to be a separate agency,

and (ii) the Inspector General who is the head of an office referred to in clause (i)

shall, with respect to such office, have the functions, powers, and duties of an agency

head or appointing authority under such provisions. (B)This paragraph applies with

respect to the following provisions of title 5, United States Code: (i) Subchapter II of

chapter 35. (u) Sections 8335(b), 8336, 8344, 8414, 8468, and 8425(b). (m) All

provisions relating to the Senior Executive Service (as determined by the Office of

Personnel Management), subject to paragraph (2). (2) For purposes of applying

section 4507(b) of title 5, United States Code, paragraph (l)(A)(ii) shall be appliedby

substituting “the Council of the Inspectors General on Integrity and Efficiency

-- App. H. 32 ■

Appendix H

-- Redacted for Publication -(established by section 11 of the Inspector General Act) shall” for “the Inspector

General who is the head of an office referred to in clause (i) shall, with respect to

such office,”.

(f) (l)In addition to the authority otherwise provided by this Act, each Inspector

General, any Assistant Inspector General for Investigations under such an Inspector

General, and any special agent supervised by such an Assistant Inspector General

may be authorized by the Attorney General to— (A) carry a firearm while engaged

in official duties as authorized under this Act or other statute, or as expressly

authorized by the Attorney General; (B) make an arrest without a warrant while

engaged in official duties as authorized under this Act or other statute, or as

expressly authorized by the Attorney General, for any offense against the United

States committed in the presence of such Inspector General, Assistant Inspector

General, or agent, or for any felony cognizable under the laws of the United States if

such Inspector General, Assistant Inspector General, or agent has reasonable

grounds to believe that the person to be arrested has committed or is committing

such felony; and (C) seek and execute warrants for arrest, search of a premises, or

seizure of evidence issued under the authority of the United States upon probable

cause to believe that a violation has been committed. (2)The Attorney General may

authorize exercise of the powers under this subsection only upon an initial

determination that— (A) the affected Office of Inspector General is significantly

hampered in the performance of responsibilities established by this Act as a result of

the lack of such powers; (B) available assistance from other law enforcement

agencies is insufficient to meet the need for such powers; and (C) adequate internal

safeguards and management procedures exist to ensure proper exercise of such

powers. (3) The Inspector General offices of the Department of Commerce,

Department of Education, Department of Energy, Department of Health and Human

Services, Department of Homeland Security, Department of Housing and Urban

Development, Department of the Interior, Department of Justice, Department of

Labor, Department of State, Department of Transportation, Department of the

Treasury, Department of Veterans Affairs, Agency for International Development,

Environmental Protection Agency, Federal Deposit Insurance Corporation, Federal

Emergency Management Agency, General Services Administration, National

Aeronautics and Space Administration, Nuclear Regulatory Commission, Office of

Personnel Management, Railroad Retirement Board, Small Business

Administration, Social Security Administration, and the Tennessee Valley Authority

are exempt from the requirement of paragraph (2) of an initial determination of

eligibility by the Attorney General. (4) The Attorney General shall promulgate, and

revise as appropriate, guidelines which shall govern the exercise of the law

enforcement powers established under paragraph (1). (5) (A) Powers authorized for

an Office of Inspector General under paragraph (1) may be rescinded or suspended

, upon a determination by the Attorney General that any of the requirements under

paragraph (2) is no longer satisfied or that the exercise of authorized powers by that

Office of Inspector General has not complied with the guidelines promulgated by the

-- App. H. 33 Appendix H

-- Redacted for Publication —

Attorney General under paragraph (4). (B) Powers authorized to be exercised by any

individual under paragraph (1) maybe rescinded or suspended with respect to that

individual upon a determination by the Attorney General that such individual has

not complied with guidelines promulgated by the Attorney General under paragraph

(4). (6) A determination by the Attorney General under paragraph (2) or (5) shall not

be reviewable in or by any court. (7) To ensure the proper exercise of the law

enforcement powers authorized by this subsection, the Offices of Inspector General

described under paragraph (3) shall, not later than 180 days after the date of

enactment of this subsection, collectively enter into a memorandum of

understanding to establish an external review process for ensuring that adequate

internal safeguards and management procedures continue to exist within each

Office and within any Office that later receives an authorization under paragraph

(2). The review process shall be established in consultation with the AttorneyGeneral, who shall be provided with a copy of the memorandum of understanding

that establishes the review process. Under the review process, the exercise of the

law enforcement powers by each Office of Inspector General shall be reviewed

periodically by another Office of Inspector General or by a committee of Inspectors

General. The results of each review shall be communicated in writing to the

applicable Inspector General and to the Attorney General. (8) No provision of this

subsection shall limit the exercise of law enforcement powers established under any

other statutory authority, including United States Marshals Service special

deputation. (9) In this subsection, the term “Inspector General” means an Inspector

General appointed under section 3 or an Inspector General appointed under section

8G.

(g)(1) For each fiscal year, an Inspector General shall transmit a budget estimate

and request to the head of the establishment or designated Federal entity to which

the Inspector General reports. The budget request shall specify the aggregate

amount of funds requested for such fiscal year for the operations of that Inspector

General and shall specify the amount requested for all training needs, including a

certification from the Inspector General that the amount requested satisfies all

training requirements for the Inspector General’s office for that fiscal year, and any

resources necessary to support the Council of the Inspectors General on Integrity

and Efficiency. Resources necessary to support the Council of the Inspectors General

on Integrity and Efficiency shall be specifically identified and justified in the budget

request. (2)In transmitting a proposed budget to the President for approval, the

head of each establishment or designated Federal entity shall include— (A) an

aggregate request for the Inspector General; (B) amounts for Inspector General

training;(C) amounts for support of the Council of the Inspectors General on

Integrity and Efficiency; and (D) any comments of the affected Inspector General

with respect to the proposal. (3)The President shall include in each budget of the

United States Government submitted to Congress— (A) a separate statement of the

budget estimate prepared in accordance with paragraph (1); (B) the amount

requested by the President for each Inspector General; (C) the amount requested by

- App. H. 34 ■

Appendix H

-- Redacted for Publication -the President for training of Inspectors General; (D) the amount requested by the

President for support for the Council of the Inspectors General on Integrity and

Efficiency; and (E) any comments of the affected Inspector General with respect to

the proposal if the Inspector General concludes that the budget submitted by the

President would substantially inhibit the Inspector General from performing the

duties of the office.

(h) (1) If the Inspector General of an establishment submits a request to the head of

the establishment for Federal grand jury materials pursuant to subsection (a)(1), the

head of the establishment shall immediately notify the Attorney General of such

request. (2)Not later than 15 days after the date on which a request is submitted to

the Attorney General under paragraph (1), the Attorney General shall determine

whether to grant or deny the request for Federal grand jury materials and shall

immediately notify the head of the establishment of such determination. The

Attorney General shall grant the request unless the Attorney General determines

that granting access to the Federal grand jury materials would be likely to— (A)

interfere with an ongoing criminal investigation or prosecution; (B) interfere with an

undercover operation; (C) result in disclosure of the identity of a confidential source,

including a protected witness; (D) pose a serious threat to national security; or (E)

result in significant impairment of the trade or economic interests of the United

States. (3) (A) The head of the establishment shall inform the Inspector General of

the establishment of the determination made by the Attorney General with respect

to the request for Federal grand jury materials. (B)The Inspector General of the

establishment described under subparagraph (A) may submit comments on the

determination submitted pursuant to such subparagraph to the committees listed

under paragraph (4) that the Inspector General considers appropriate. (4)Not later

than 30 days after notifying the head of an establishment of a denial pursuant to

paragraph (2), the Attorney General shall submit a statement that the request for

Federal grand jury materials by the Inspector General was denied and the reason

for the denial to each of the following: (A) The Committee on Homeland Security and

Governmental Affairs, the Committee on the Judiciary, and the Select Committee on

Intelligence of the Senate. (B) The Committee on Oversight and Government

Reform, the Committee on the Judiciary, and the Permanent Select Committee on

Intelligence of the House of Representatives. (C) Other appropriate committees and

subcommittees of Congress, (i) Subsections (a)(1)(C) and (h) shall not apply to

requests from the Inspector General of the Department of Justice.

(j) (1) In this subsection, the terms “agency”, “matching program”, “record”, and

“system of records” have the meanings given those terms in section 552a(a) of title 5,

United States Code. (2) For purposes of section 552a of title 5, United States Code,

or any other provision of law, a computerized comparison of two or more automated

Federal systems of records, or a computerized comparison of a Federal system of

records with other records or non-Federal records, performed by an Inspector

General or by an agency in coordination with an Inspector General in conducting an

audit, investigation, inspection, evaluation, or other review authorized under this

-- App. H. 35 ■

Appendix H

-- Redacted for Publication -Act shall not be considered a matching program. (3) Nothing in this subsection shall

be construed to impede the exercise by an Inspector General of any matching

program authority established under any other provision of law.

(k) Subchapter I of chapter 35 of title 44, United States Code, shall not apply to the

collection of information during the conduct of an audit, investigation, inspection,

evaluation, or other review conducted by the Council of the Inspectors General on

Integrity and Efficiency or any Office of Inspector General, including any Office of

Special Inspector General.

5a U.S. Code § 8 - Additional provisions with respect to the Inspector

General of the Department of Defense (a) No member of the Armed Forces,

active or reserve, shall be appointed Inspector General of the Department of

Defense.

(b) (l)Notwithstanding the last two sentences of section 3(a), the Inspector General

shall be under the authority, direction, and control of the Secretary of Defense with

respect to audits or investigations, or the issuance of subpoenas, which require

access to information concerning—(A) sensitive operational plans; (B) intelligence

matters; (C) counterintelligence matters; (D) ongoing criminal investigations by

other administrative units of the Department of Defense related to national security;

or (E) other matters the disclosure of which would constitute a serious threat to

national security. (2) With respect to the information described in paragraph (1) the

Secretary of Defense may prohibit the Inspector General from initiating, carrying

out, or completing any audit or investigation, from accessing information described

in paragraph (1), or from issuing any subpoena, after the Inspector General has

decided to initiate, carry out or complete such audit or investigation, access such

information, or to issue such subpoena, if the Secretary determines that such

prohibition is necessary to preserve the national security interests of the United

States.(3) If the Secretary of Defense exercises any power under paragraph (1) or (2),

the Inspector General shall submit a statement concerning such exercise within

thirty days to the Committees on Armed Services and Governmental Affairs of the

Senate and the Committee on Armed Services and the Committee on Government

Reform and Oversight of the House of Representatives and to other appropriate

committees or subcommittees of the Congress. (4) The Secretary shall, within thirty

days after submission of a statement under paragraph (3), transmit a statement of

the reasons for the exercise of power under paragraph (1) or (2) to the congressional

committees specified in paragraph (3) and to other appropriate committees or

subcommittees.

(c)In addition to the other duties and responsibilities specified in this Act, the

Inspector General of the Department of Defense shall— (1) be the principal adviser

to the Secretary of Defense for matters relating to the prevention and detection of

fraud, waste, and abuse in the programs and operations of the Department; (2)

initiate, conduct, and supervise such audits and investigations in the Department of

Defense (including the military departments) as the Inspector General considers

-- App. H. 36 -Appendix H

-- Redacted for Publication -appropriate; (3) provide policy direction for audits and investigations relating to

fraud, waste, and abuse and program effectiveness; (4) investigate fraud, waste, and

abuse uncovered as a result of other contract and internal audits, as the Inspector

General considers appropriate; (5) develop policy, monitor and evaluate program

performance, and provide guidance with respect to all Department activities relating

to criminal investigation programs; (6) monitor and evaluate the adherence of

Department auditors to internal audit, contract audit, and internal review

principles, policies, and procedures; (7) develop policy, evaluate program

performance, and monitor actions taken by all components of the Department in

response to contract audits, internal audits, internal review reports, and audits

conducted by the Comptroller General of the United States; (8) request assistance as

needed from other audit, inspection, and investigative units of the Department of

Defense (including military departments); (9) give particular regard to the activities

of the internal audit, inspection, and investigative units of the military departments

with a view toward avoiding duplication and insuring effective coordination and

cooperation; and (10) conduct, or approve arrangements for the conduct of, external

peer reviews of Department of Defense audit agencies in accordance with and in

such frequency as provided by Government auditing standards as established by the

Comptroller General of the United States.

(d) Notwithstanding section 4(d), the Inspector General of the Department of

Defense shall expeditiously report suspected or alleged violations of chapter 47 of

title 10, United States Code (Uniform Code of Military Justice), to the Secretary of

the military department concerned or the Secretary of Defense.

(e)For the purposes of section 7, a member of the Armed Forces shall be deemed to

be an employee of the Department of Defense, except that, when the Coast Guard

operates as a service of another department or agency of the Federal Government, a

member of the Coast Guard shall be deemed to be an employee of such department

or agency.

(f) (l)Each semiannual report prepared by the Inspector General of the Department

of Defense under section 5(a) shall be transmitted by the Secretary of Defense to the

Committees on Armed Services and on Homeland Security and Governmental

Affairs of the Senate and the Committees on Armed Services and on Oversight and

Government Reform of the House of Representatives and to other appropriate

committees or subcommittees of Congress. Each such report shall include—(A)

information concerning the numbers and types of contract audits conducted by the

Department during the reporting period; and (B) information concerning any

Department of Defense audit agency that, during the reporting period, has either

- App. H. 37 Appendix H

- Redacted for Publication received a failed opinion from an external peer review or is overdue for an external

peer review required to be conducted in accordance with subsection (c)(10). (2) Any

report required to be transmitted by the Secretary of Defense to the appropriate

committees or subcommittees of the Congress under section 5(d) shall also be

transmitted, within the seven-day period specified in such section, to the

congressional committees specified in paragraph (1).

(g) The provisions of section 1385 of title 18, United States Code, shall not apply to

audits and investigations conducted by, under the direction of, or at the request of

the Inspector General of the Department of Defense to carry out the purposes of this

Act.

(h)(1) There is a General Counsel to the Inspector General of the Department of

Defense, who shall be appointed by the Inspector General of the Department of

Defense. (2)(A) Notwithstanding section 140(b) of title 10, United States Code, the

General Counsel is the chief legal officer of the Office of the Inspector General. (B)

The Inspector General is the exclusive legal client of the General Counsel. (C) The

General Counsel shall perform such functions as the Inspector General may

prescribe. (D) The General Counsel shall serve at the discretion of the Inspector

General. (3) There is an Office of the General Counsel to the Inspector General of the

Department of Defense. The Inspector General may appoint to the Office to serve as

staff of the General Counsel such legal counsel as the Inspector General considers

appropriate. (i)(l) The Inspector General of the Department of Defense is authorized

to require by subpoena the attendance and testimony of witnesses as necessary in

the performance of functions assigned to the Inspector General by this Act, except

that the Inspector General shall use procedures other than subpoenas to obtain

attendance and testimony from Federal employees. (2) A subpoena issued under this

subsection, in the case of contumacy or refusal to obey, shall he enforceable by order

of any appropriate United States district court. (3) The Inspector General shall

notify the Attorney General 7 days before issuing any subpoena under this section.

5a U.S. Code § 8D - Special provisions concerning the Department of the

Treasury: (a) (l)Notwithstanding the last two sentences of section 3(a), the

Inspector General of the Department of the Treasury 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 or to the

protection of any person or property authorized protection by section 3056 of title 18,

United States Code, section 3056A of title 18, United States Code, or any provision

- App. H. 38 Appendix H

-- Redacted for Publication -of the Presidential Protection Assistance Act of 1976 (18 U.S.C. 3056 note; Public

Law 94—524). (2) With respect to the information described under paragraph (1), the

Secretary of the Treasury may prohibit the Inspector General of the Department of

the Treasury from carrying out or completing any audit or investigation, from

accessing information described in paragraph (1), or from issuing any subpoena,

after such Inspector General has decided to initiate, carry out, or complete such

audit or investigation, access such information, 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) If the Secretary of the Treasury

exercises any power under paragraph (1) or (2), the Secretary of the Treasury shall

notify the Inspector General of the Department of the Treasury in writing stating

the reasons for such exercise. Within 30 days after receipt of any such notice, the

Inspector General of the Department of the Treasury 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) 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.

(b) (1) In carrying out the duties and responsibilities specified in this Act, the

Inspector General of the Department of the Treasury shall have oversight

responsibility for the internal investigations performed by the Office of Internal

Affairs of the Tax and Trade Bureau. The head of such office shall promptly report to

the Inspector General of the Department of the Treasury the significant activities

being carried out by such office. (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 Treasuiy 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.

(c) Notwithstanding subsection (b), the Inspector General of the Department of the

Treasury may initiate, conduct and supervise such audits and investigations in the

Department of the Treasury (including the bureau referred to in subsection (b)) as

the Inspector General of the Department of the Treasury considers appropriate.

(d) If the Inspector General of the Department of the Treasury initiates an audit or

investigation under subsection (c) concerning the bureau referred'to in subsection

(b), the Inspector General of the Department of the Treasury may provide the head

of the office of such bureau referred to in subsection (b) with written notice that the

- App. H. 39 Appendix H

-- Redacted for Publication -Inspector General of the Department of the Treasury has initiated such an audit or

investigation. If the Inspector General of the Department of the Treasury issues a

notice under the preceding sentence, no other audit or investigation shall be

initiated into the matter under audit or investigation by the Inspector General of the

Department of the Treasury and any other audit or investigation of such matter

shall cease.

(e) (1) The Treasury Inspector General for Tax Administration shall have access to

returns and return information, as defined in section 6103(b) of the Internal

Revenue Code of 1986 [26 U.S.C. 6103(b)], only in accordance with the provisions of

section 6103 of such Code [26 U.S.C. 6103] and this Act. (2) The Internal Revenue

Service shall maintain the same system of standardized records or accountings of all

requests from the Treasury Inspector General for Tax Administration for inspection

or disclosure of returns and return information (including the reasons for and dates

of such requests), and of returns and return information inspected or disclosed

pursuant to such requests, as described under section 6103(p)(3)(A) of the Internal

Revenue Code of 1986 [26 U.S.C. 6103(p)(3)(A)]. Such system of standardized

records or accountings shall also be available for examination in the same manner

as provided under section 6103(p)(3) of the Internal Revenue Code of 1986. (3) The

Treasury Inspector General for Tax Administration shall be subject to the same

safeguards and conditions for receiving returns and return information as are

described under section 6103(p)(4) of the Internal Revenue Code of 1986 [26 U.S.C.

6103(p)(4)].

(f) An audit or investigation conducted by the Inspector General of the Department

of the Treasury or the Treasury Inspector General for Tax Administration shall not

affect a final decision of the Secretary of the Treasury or his delegate under section

6406 of the Internal Revenue Code of 1986 [26 U.S.C. 6406].

(g) (1) Any report required to be transmitted by the Secretary of the Treasury to the

appropriate committees or subcommittees of the Congress under section 5(d) 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) 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.

(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

- App. H. 40Appendix H

-- Redacted for Publication -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.

©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)(A), the

Assistant Inspector General for Investigations of the Office of the Treasury Inspector

General for Tax Administration under section 3(d)(1)(B), 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) (l)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 [26 U.S.C. 7608(b)]; (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 protection

to the Commissioner of Internal Revenue; 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 at

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

- App. H. 41 Appendix H

- Redacted for Publication 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).

5a U.S, Code § 8E - Special provisions concerning the Department of

Justice: — (a) (l)Notwit

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