Last week the US Senate passed the Taxpayer First Act of 2019, a package of IRS reform legislation intended to redesign the Internal Revenue Service (IRS). The House also passed the legislation for the second time last week.
The bill, which contains many provisions, establishes an independent office of appeals within the IRS, requires the IRS to submit to Congressional plans to restructure the IRS to modernize technology systems and enhance cybersecurity. The bill will allow the IRS to improve efficiency, better meet taxpayer needs, and requires the development of a comprehensive customer service strategy.
Included in the bill are additional provisions to help protect taxpayers from tax-related identity theft, and improve taxpayer interactions with the IRS if they fall victim to identity theft. Also included is an expansion to all taxpayers of an IRS program that currently allows only victims of tax identity theft to obtain a personalized PIN to better secure their identity. New safeguards have been put into place to protect taxpayers against IRS enforcement abuses of “structuring laws” that previously allowed the agency to seize taxpayer assets using civil forfeiture procedures if taxpayers appear to be making bank deposits in amounts just below $10,000 to avoid bank-reporting requirements.
Additionally, the Taxpayer First Act protects low-income taxpayers by permanently authorizing, and also authorizing additional funding for, the Volunteer Income Tax Assistance program. The bill includes several provisions regarding fee waivers and lump sum payments associated with IRS payment plans, and modifies IRS legal authority to issue a summons in certain cases to ensure the enforcement tool is only used for uncooperative taxpayers.
The bipartisan legislation strengthen taxpayers’ rights to an appeal and preserves the IRS Oversight Board, which gives the IRS and Congress the opportunity to revitalize the board in order to achieve its original purpose, acting as a board of directors for the IRS. Another provision of the Taxpayer First Act creates two new categories of cases that are not eligible for future referral to private collection agencies.
- Taxpayers whose income is substantially derived from supplemental security income benefits or disability insurance benefit payments;
- Taxpayers with an adjusted gross income of 200 percent of the applicable poverty level and below.
The provision ensures that cases involving low-income taxpayers will stay within the IRS and not be referred to the Private Debt Collection program.
The Taxpayer First Act of 2019 will now be sent to President Trump for signature.