Senate Passes Tax Administration Overhaul Bill

Taxpayers will have more time to fight IRS levies, be allowed to make partial installment payments and deal with a less-complicated tax code under a measure passed unanimously by the Senate.

The bill gives taxpayers more rights, overhauls tax administration, clarifies the definition of "qualifying child" for the Earned Income Tax Credit and eliminates more than 60 obsolete tax code rules, the Wall Street Journal reported. The $4 billion cost will be offset by tax shelter penalties.

"This legislation is the first legislation addressing tax administration since the IRS Restructuring and Reform Act of 1998," said bill sponsor Max Baucus, D-Mont. The bill, approved Wednesday night, was also sponsored by Senate Finance Committee Chairman Charles Grassley, R-Iowa.

Some of the provisions of the bill include:

  • Allowing taxpayers to repay tax debts by making partial payments on installment plans.
  • Increasing the number of low-income taxpayer clinics.
  • Improving oversight of paid tax preparers.
  • Expanding interest abatement and interest netting plans.
  • Allowing taxpayers to deposit money into interest-bearing accounts to cover potential tax debts.

The bill also changes the administration of the U.S. Tax Court and taxpayer disclosure regulations.

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