IRS Reform: Congress Puts IRS on a Short Leash

After three years of debate and public hearings, on June 13, the United States Senate passed the Taxpayer First Act of 2019 (TFA). The bill, designed to modernize and improve the Internal Revenue Service, comprises the first major effort to reform the IRS in the last 20 years. Why is this important? This legislation could impact anyone who interacts with the IRS. What does the Act entail?

The Act includes the following provisions:

• establish an IRS Independent Office of Appeals to resolve federal tax controversies free of litigation;
• require the IRS to develop a comprehensive customer service strategy;
• continue the IRS Free File Program;
• exempt certain low-income taxpayers from payments required to submit an offer-in-compromise;
• modify tax enforcement procedures that address issues such as the seizure of property, issuing a summons, joint liability, referral for private debt collection, and contacting third parties;
• establish requirements for responding to Taxpayer Advocate Directives;
• permanently authorize the Volunteer Income Tax Assistance Matching Grant Program;
• modify procedures for whistle-blowers;
• establish requirements for cybersecurity and identify protection; prohibit the rehiring of certain IRS employees who were removed for misconduct;
• allows the IRS to require additional taxpayers to file returns electronically; and increase the penalty for failing to file a return.
• requires the IRS Commissioner to appoint a Chief Information Officer, modifies the requirements for managing information technology, and authorizes streamlined critical pay authority for certain IRS information technology positions.

Those embroiled in disputes with the IRS may take heart in many provisions of the TFA. The bill’s requirement to establish an independent IRS Appeals office should give taxpayers more confidence they will be treated fairly and impartially when they disagree with IRS determinations. Currently, the IRS is only required to conduct an independent administrative review of certain decisions made by the Service. Modification of the IRS’s tax enforcement procedures should lessen the likelihood the IRS will run roughshod over taxpayers in arrears. Having passed the United States House on April 9, the TFA is now headed off for the President’s signature. If you have any questions about how IRS reform impact you or help you resolve any of your tax controversies, please fill out the form below.