Changes are coming to the IRS! President Trump signed the Taxpayer First Act, which was approved by both the House and Senate. The act received strong bipartisan support and will overhaul key parts of the IRS, modernize its technology and help improve taxpayer’s experience with the IRS.
Taxpayers dealing with appeals will see some major changes in their dealings with the IRS. The bill creates an independent Office of Appeals and a new position called the Chief of Appeals, which will report directly to the IRS commissioner. The purpose of the new independent Office of Appeals, according to the bill, is to resolve federal tax controversies without going to court on a basis that is “fair and impartial to both the Government and the taxpayer, promotes consistent application and interpretation of, and voluntary compliance with, the Federal tax laws, and enhances public confidence in the integrity and efficiency” of the IRS. The changes also strengthen taxpayer’s right to an appeal. This includes full notice and protest procedures. It also pushes the IRS to develop a comprehensive training strategy for its employees.
The IRS will also make changes that will affect how it services its customers. The bill mandates that the IRS must develop a customer service strategy and submit it to Congress within one year of the enactment of the bill. The customer service strategy must include a plan to provide better assistance to taxpayers and determine what services the IRS can “co-locate” with other federal services. It must also update guidance and training materials for IRS customer service employees and identify metrics and benchmarks for measuring progress in implementing the strategy.
Taxpayers who are looking to file an Offer in Compromise will also see some changes. The bill eliminates the offer-in-compromise fee for taxpayers whose adjusted gross income is 250% or less of the applicable poverty level.
Changes also affected the assignment of taxpayers to private debt collection services. The bill limits who is assigned to private debt collection services. The changes remove taxpayers if a majority of their income consists of disability insurance benefits and taxpayers whose income does not exceed 200% of the applicable poverty level. In addition, the maximum length of an installment agreement that can be offered by private debt collectors is increased from five years to seven years.
There was also a host of other changes made that will affect taxpayers. For instance, the bill requires the IRS to create a single point of contact for tax-related identity theft victims and to notify taxpayers if it suspects they are victims of identity theft. It also increases the penalty for improper disclosure or use of information by a tax return preparer. For contractors and those who are 1099, the bill directs the IRS to create an online platform to allow taxpayers to prepare and file Forms 1099. It also requires mandatory e-filing by tax-exempt organizations. The bill also requires the IRS to notify organizations before revoking their exempt status for failure to file a return for three years ― specifically, after two years of nonfiling, the IRS would be required to notify the organization that it has no record of a return for two consecutive years and that revocation will occur after the third year.
You can read more about the Taxpayer First Act here.