Proposed Legislation to Redesign IRS Picks Up Steam

“Throughout this process over the past year and a half, we have kept one singular mission in mind: ensuring that the taxpayer comes first,” said Jenkins and Lewis in a joint press release. “These bipartisan bills take a giant leap forward in redesigning an agency that all Americans deal with throughout their lifetime. By enhancing customer service, improving the IRS’s vastly outdated IT infrastructure, and modernizing the appeals process, we are confident these bills will improve the taxpayer experience.”

The revised legislative package is extensive and far-reaching. Some of the highlights are as follows:

• One bill creates an independent IRS office of appeals to resolve taxpayer controversies. Taxpayers would have to be granted access to their case files before conference proceedings begin.

• Other bills address cyber-security issues and technology modernization. For instance, it was noted that IRS staffers are still using fax machines. The changes would include use of a special filing password to protect information from cyber-thieves. Also, the IRS would provide a single point of contact to taxpayers who are victimized by ID theft.

• Sales of property seized by the IRS would be strictly limited to perishable goods. This eliminates controversial practices currently employed by the IRS. But perishable goods could be seized and sold on the same day for less than market value. Also, low-income taxpayers would be off-limits to private debt collectors.

• The proposed legislation would establish Volunteer Income Tax Assistance centers on a permanent basis. These centers assist taxpayers who meet income requirements, have limited English skills or face other complications. A companion bill would require notification when a Taxpayer Assistance Center (TAC) is closed.

• Another bill is designed to encourage greater use of installment agreements to pay off tax debts, especially among low-income taxpayers. Qualified taxpayers would not have to pay fees for seeking offers in compromise (OIC) to resolve their situations.

• Still another bill is designed to end inadvertent disclosure of personal information – including Social Security and passport numbers – for shipments passing through customs. Also, for the protection of children, a new Social Security number would be issued to a child whose Social Security card in stolen in transit.

• The Free-File service for certain low-income taxpayers would be made permanent. The ability to file electronically, including use of necessary forms, must be made available to qualified taxpayers.

• Nonprofits would be required to file their Form 1099s electronically. In addition, tax professionals who file more than 10 returns would eventually be require to e-file those returns. The current limit is 250 returns.

• Finally, one bill mandates that the IRS create online taxpayer accounts no later than the end of 2023. With such an account, taxpayers could access their payment history, share information with the IRS, check balances due and revise returns – all from the convenience and comfort of home.

It is noteworthy that several other proposals died on the vine, including measures to regulate unenrolled tax return preparers and a complete overhaul of the IRS that would have divided agency into three separate units. But these proposals may surface again. 

The revised legislative package appears to have some momentum with both the AICPA and the NATP voicing their overall approval. We will keep a close watch as these bills wend their way through Congress.