Recognizing the need for greater taxpayer protection when interacting with the IRS, Congress has enacted The Taxpayer First Act (TFA) of 2019. The bill has bipartisan support, and the president is expected to sign it.
The comprehensive bill makes sweeping changes at the IRS to improve IRS efficiency and provide taxpayer protections, such as creating an independent office of appeals at the IRS. The following provides key provisions in the bill.
“This bipartisan, bicameral bill represents years of hard work and consensus building,” said Senate Finance Committee (SFC) Chairman Chuck Grassley (R-IO). “It’s a big first step toward strengthening taxpayer protections and turning the IRS into the customer service organization it ought to be.”
More Access to Independent Review Process
When an IRS auditor disagrees with the amount of the deduction you claim on your tax return, you have the right to request an independent review by the IRS Office of Appeals. However, you currently don’t have full access to the appeals process. The TFA would make the process available to all taxpayers with a legitimate claim. Specifically, the IRS would have to share its case file with individual taxpayers with adjusted gross income (AGI) of $400,000 or less and business taxpayers with gross receipts of $5 million or less. This will help taxpayers who in the past had limited resources to challenge the IRS.
Related e-Book: Your Right to an IRS Defense Strategy
Limits on Seizure of Property
The law also limits the IRS’s ability to seize assets that they believe were structured in order to avoid the requirements of the Bank Secrecy Act. In the past, the IRS could seize funds simply because those funds were structured (i.e. cash deposited or withdrawn in amounts under $10,000 to avoid the filing of a Currency Transaction Report). Now, the IRS must also have probable cause to believe that the funds were derived from underlying criminal activity.
Enhanced Innocent Spouse Protection
As we address in our e-book, Your Right to an IRS Defense Strategy, an innocent spouse has protection from being held liable for unpaid taxes under the IRS Innocent Spouse Relief Rules,but it’s not always easy or expedient. The TFA strengthens the protection for innocent spouses by making it easier for them to get relief.
Restricted Use of Private Companies to Collect Taxes
Many taxpayers are unaware that the IRS began outsourcing tax collection to third parties in 2017. The result has been that many low-income taxpayers entered into payment plans that they couldn’t meet. The TFA bans companies from collecting taxes from individuals with an AGI below 200 percent of the poverty level. It also contains protections for disabled individuals.
Fee Waiver for an Offer in Compromise
Taxpayers with AGI below 250 percent of the poverty level would receive a waiver for the initial fees applicable to an offer in compromise (OIC).
Curbed Access to Taxpayer Information
While taxpayer information is confidential and can’t be shared among non-IRS employees, it is available to third parties, such as attorneys or others hired to help with litigation and other matters. Going forward, contractors will be restricted in accessing confidential information obtained by summons with one exception: if they need the information to provide expert evaluation to the IRS.
Stronger Anti-Identity Theft Measures
Under the bill, the IRS must notify a taxpayer if it detects or suspects the unauthorized use of the person’s identity. Additionally, within five years, all taxpayers would be able to request a special identity protection personal identification number (PIN) to use when they file their tax returns—whether or not they previously had their identity stolen. A single point of contact within the IRS would be available to any identity theft victim.
Credit Card Payments for Taxes
The IRS isn’t permitted to directly accept credit or debit card payment because it is not allowed to pay the fee charged by the card companies. However, the workaround has been the use of a third-party processor, which also charges fees. Under the TFA, the IRS would be permitted to accept credit and debit card payment if the taxpayer is willing to personally pay for the fees.
The bill authorizes the IRS to communicate with whistleblowers during the processing of their claims while protecting their privacy. It also extends anti-retaliation provisions available to whistleblowers under other whistleblower laws.
Questions about this blog or other IRS Defense issues? Contact the accountants in our IRS Representation and Defense Group, or call Naveid Jahansouz at 972-818-5300.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.