In 2008, I had just passed the enrolled agent’s exam, and I can vividly remember Congressional hearings regarding the malfeasance of the IRS. The IRS 2008 Act that created a Taxpayer Bill of Rights was passed. Unfortunately, it just seemed to be suggestions. The act also set up an independent appeals process, which later collaborated with the exam, and set the stage for a “kinder, gentler, IRS.”
Eleven years later, we need a new law because the IRS is out of control yet again.
The Taxpayer First Act of 2019 begins with the establishment of an independent appeals office. If that sounds familiar, it should: Before 2008, appeals didn’t exist. The 2008 Reform Act was supposed to make one, and specifically an appeals office that was independent. It was explained as an office that was independent from the auditor, or collections officer, and gave the case a fresh look, without exchanging any files. This did not go into effect until about 2013. Today, the appeals office receives the entire audit or collections file before they meet.
Then the new bill tackles “better” customer service, which it recommends improving through additional training. I guess this will consist of not leaving a taxpayer or tax professional on hold for two hours and then giving them a courtesy disconnect.
The bill goes on to expand free filing for taxpayers and discusses an offer in compromise for low-income taxpayers, as if that didn’t already exist.
Then we get to the good stuff: subtitle C, which covers Sensible Enforcement. Again, this should sound familiar. In regards to the seizure of property, the IRS can now only take that which was obtained through illegal means. Then it discusses equitable relief from joint tax liability, which also already exists.
Then there is an attempt to modify the collection of documents from third parties. However, Publication 1, given to every taxpayer with IRS issues, clearly spells out that the agency can contact third parties, and it discusses the scope in which third-party collectors can collect back taxes. I mean, why eliminate a service that just brought in only 2 percent of the debt it was asked to collect? It even goes on to cover something I always thought couldn’t happen: giving IRS employees access to the tax information of non-employees.
Subtitle D discusses the taxpayer advocate hearing before Congress, which I personally believe Congress sleeps through, and the notification to Congress for change, which they already ignore. It goes on to mention that by September 30, 2020, the IRS will issue a report to Congress on how to modernize the agency’s organizational structure. I could sum that up in a week.
There are also minor changes to the VITA program, which include implementing a process to inform low-income taxpayers of these free programs. I think my favorite is the seizure and storage of perishable goods. I guess now, the IRS stores these goods and they, of course, go bad. Now they will sell the perishable goods immediately. I can’t believe we actually had to write that out. I mean, it’s common sense.
The act goes on to address whistleblowers. They now have a process to pay them, when they simply used to refuse. It effectively gets rid of that annoying hold music the Service has used since I was in practice and will replace it with helpful tips, information on common tax scams and explanations of how to report said scams. I bet it will just point you to their website.
One thing I was surprised to see was the plan for identity theft, which is only now being created after occurring for the last 15 years. They will basically be working with contractors to cut down the instances of this happening, and they use the act to explain what information the contractors will and will not have access to in regards to taxpayer info. For years, the IRS’s computers could be described as a hamster on a wheel. Now, they’re talking about developing IT, hiring a Chief Information Officer and modernizing third-party verification systems.
It’s a lovely read that just repeats promises made over 10 years ago. I highly recommend it.
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as...