The Taxpayer First Act (the Act) has recently been passed by both the US House and Senate and now awaits signature from President Trump. The Act aims to reform the federal agency with which Americans interact more than any other: the Internal Revenue Service (IRS). While not as impactful as the tax reforms included in 2017’s Tax Cuts & Jobs Act (TCJA) this Act attempts to provide the foundation for an overall modernization of the IRS to better serve all taxpayers.
The Act addresses several key areas including:
- Taxpayer protections
- Structural reforms within the IRS
- Identity theft mitigation
The Act establishes an independent Office of Appeals within the IRS. This program is meant to strengthen appeal rights established in 1998. Expanded taxpayer rights include full notice and protest procedures, and open access to IRS case files.
Protections against seizures of taxpayers’ assets have also been strengthened. These safeguards include providing taxpayers a more timely and effective means of challenging the IRS through post-seizure hearings.
In addition, regulations and guidelines relative to the use of private debt collection agencies have been tightened in order to prevent the targeting of lower-income Americans. Specifically, taxpayers whose main source(s) of income are Social Security SSI benefits or other disability insurance benefits may not be pursued by private debt collectors on behalf of the IRS. Similarly, taxpayers with adjusted gross income (AGI) less than 200% of poverty levels are also ineligible to be referred to third-party debt collectors.
Structural reforms within the IRS
There is bipartisan political support for improved taxpayer assistance and service from the IRS. To that end, the Act requires the IRS to submit plans to Congress addressing deficiencies in efficiency, cyber security, and customer service. The Act also expands and streamlines a variety of payment plans and installment agreements available to taxpayers.
Funds are also earmarked to help the IRS modernize its IT networks. Bringing the IRS’s infrastructure into the 21st century will requires additional personnel and the Act reauthorizes streamlined hiring and higher pay for these in-demand IT professionals.
Greater Whistleblower protections are included in the Act as well. The goal being to allow the IRS to communicate more openly with whistleblowers while maintaining their personal privacy and protecting them from retaliation.
Protection against identity theft
Access to the IRS’s Identity Protection PIN (IP PIN) program has been available to victims of tax-related identity theft for several years. The Act will expand this program to allow taxpayers who have not been the victim of tax-related identity theft to participate and receive additional protections. In recent years, many taxpayers have experienced tax-related identity theft involving fraudulently filed tax returns, misappropriated tax refunds, and data breaches of government computer networks.
While the Taxpayer First Act includes provisions covering a number of other topics, the above are some of the more broad and meaningful components. If you are interested in or impacted by any of the above topics, Contact Us so that we may assist you in determining the best course of action for your situation.