Congress has passed and President Trump is expected to sign into law a broad package of reforms aimed at the IRS. The Taxpayer First Act contains several new protections for taxpayers along with provisions intended to improve the IRS’s customer service.
Customer service improvements
The bill gives the IRS one year to develop and submit to Congress a comprehensive customer service strategy. The strategy must include a plan to extend assistance to taxpayers that is secure and designed to meet appropriate customer service best practices from the private sector, including online services, telephone callback services and training of customer service employees. In addition, the bill would implement the following changes:
- Waive the application fee for an Offer in Compromise (OIC) by a low-income taxpayer;
- Codify the Volunteer Income Tax Assistance (VITA) Program;
- Improve the IRS whistleblower program; and
- Modify the private debt collection program.
Stronger safeguards against identity theft
Several of the bill’s provisions address tax-related identity theft. For example, the IRS must provide notification of suspected identity theft, a single point of contact for victims of identity theft and guidelines for stolen identity fraud cases.
The IRS is also required to expand its current program that allows taxpayers to obtain an identity protection personal identification number (IP PIN). Taxpayers who are not yet victims of identity theft must be allowed to proactively request an IP PIN.
Electronic filing and services
The bill extends mandatory electronic filing to all tax-exempt organizations regardless of size. In addition, the IRS is required to develop an internet portal to allow taxpayers to file 1099 forms similar to the portal used to file W-2s with the Social Security Administration.
The IRS must publish uniform standards for accepting electronic signatures on requests for disclosure of taxpayer information. It must also restrict the disclosure of return information by a designee to only those expressly consents to by the taxpayer. The bill increases the penalty for improper disclosure or use of information by tax return preparers. Overall, the IRS must develop procedures to authenticate users of its suite of electronic service to prevent tax return fraud.
The far-reaching bill will affect a variety of other areas, such as innocent spouse relief, misdirected tax refunds and safeguards on the seizure of funds.