A dying man decided to make his final arrangements. “I want you to promise me that when I die you will have my remains cremated,” he told his friend.
“Okay,” his friend agreed. “And what do you want me to do with your ashes?”
“Mail them to the Internal Revenue Service. Be sure to write on the envelope, ‘Now you have everything.'”
I’m sure that you’ve heard a few IRS jokes before. The reality is that very few people rank dealing with or talking to the Internal Revenue Service (IRS) high on their “to-do” list. That’s why the Ways and Means Oversight Subcommittee is taking steps they believe will improve the agency, including modernizing information technology, infrastructure, and services.
The subcommittee has released a draft of proposed legislation, The Taxpayer First Act, intended to improve IRS operations and tax administration. Here are some of the highlights:
- A new IRS Independent Office of Appeals. Currently, the IRS has broad discretion to establish an administrative review process for tax disputes and to determine which taxpayers have access to that review process. Under the proposed legislation, an Independent Office of Appeals would generally be available for all taxpayers as part of the administrative review process. Additionally, the law would require the IRS to allow taxpayers access to their files before any dispute resolution process: Believe it or not, currently, taxpayers only have access to that information if they make a request under the Freedom of Information Act (FOIA).
- Improved customer service. The proposal would require the IRS to develop and submit to Congress “a comprehensive customer service strategy.” I’m not sure how this is different from the requirements outlined in the omnibus bill, but I suspect it makes Congress feel better to see it on paper. Again.
- Guarantees for Volunteer Income Tax Assistance (VITA) Program, FreeFile, and other assistance programs. Currently, free tax help and free filing options are available for certain taxpayers including low-income populations, persons with disabilities, taxpayers with limited English proficiency, and other underserved communities. The proposal would provide resources to ensure that these programs continue.
- Seizure modifications. Over the past few years, the IRS has made news with seizures related to structuring. Structuring occurs when large transactions are broken into smaller ones to avoid bank reporting requirements which kick in at $10,000. If you do that with the intent to evade, it’s illegal and the IRS can seize certain assets. Amid concerns about abuse and misunderstandings, the proposal would require that the IRS show probable cause that the structuring was linked to an illegal source or connected to other criminal activity. The new law would also provide new administrative procedures, including a post-seizure hearing within 30 days of the seizure.
- New threshold for private debt collections. Rather than put an end to a program that many, including the National Taxpayer Advocate (NTA), consider a terrible idea – ferreting out debt collection to private companies – Congress proposes merely changing the rules. After d, Congress took a second look, noting that IRS does not have a filter in place to prevent low-income individuals from being referred for collection. This, despite the fact that the NTA reported that a disproportionate number of taxpayers on private debt collector lists are poor: 80% are taxpayers below 250% of the federal poverty level and 1/3 of taxpayers turned over for collection have income below $20,000. The new law creates a low-income exemption to prevent such referrals to private collection agencies.
- Cybersecurity and identity theft protection. With a nod to the seriousness of identity theft, the new law proposes several changes, including expanding the Identity Protection Personal Identification Number (IP PIN) program and establishing a single point of contact within the IRS for any taxpayer who is a victim of identity theft.
- Modernization. The bulk of the new law focuses on bringing the IRS into the 21st century, including technology improvements. Chief among them, establishing secure online accounts for taxpayers and allowing the IRS to directly accept credit and debit card payments without the need to go through a third-party processor.
- Title changes. Admit it. What’s really been bugging you about the IRS isn’t waiting on the phone for hours or not being able to decipher form instructions, it’s the titling of certain jobs. You can finally relax. Under the proposal, the title of “Commissioner of Internal Revenue” will be changed to “Administrator of the Internal Revenue Service” and “Deputy Commissioner” will be changed to “Deputy Administrator.” Ditto for the Tax Court: The new law renames “special trial judges” to “magistrate judges.” Thanks, Congress.
And sorry, tax pros, absolutely no word on changing that hold music.
For details, you can read the entire 81-page proposal here (downloads as a PDF).
If you have thoughts about the changes, the Committee wants to hear from you. You can submit comments via email to irsreform@mail.house.gov through April 6, 2018.
