The House Ways and Means Committee voted Wednesday on a bipartisan basis to approve a set of bills to “redesign” the Internal Revenue Service, including measures to help victims of identity theft and create an independent office of taxpayer appeals.
“It’s been 20 years since Congress and the Ways and Means Committee last considered major legislation to overhaul the IRS,” said House Ways and Means Committee chairman Kevin Brady, R-Texas., during a markup hearing of the legislation. “During that time much has changed, and the IRS must change with it.”
One of the bills would codify the IRS Independent Office of Appeals and provide more congressional oversight over decisions to withhold taxpayers from the administrative review process. Another provision would give taxpayers greater access to “the case against them.” Under current law, taxpayers only have access to their case file if they make a request under the Freedom of Information Act. The bill would require the IRS to provide the taxpayer with their case file before the start of any dispute resolution process.
“The bills we have before us today look to dramatically redesign the structure of the IRS and refocus it as a ‘Taxpayer First’ agency,” said Brady. “They advance a modern vision for the IRS so taxpayers are treated fairly, their disputes are handled objectively, and issues resolved quickly and more affordably. They create an independent office to handle taxpayer appeals and ensure taxpayers are no longer at a disadvantage to the IRS. They also insist that the IRS aggressively protects personal taxpayer information, proactively combats identity theft, and is prepared to readily assist American taxpayers when they are victims of this theft.”
One of the bills would amend the tax code to improve cybersecurity and taxpayer identity protection, and modernize the information technology of the IRS. Another bill would require the Treasury to establish a program for issuing identity protection personal identification numbers, also known as IP PINs. A related bill would provide for a single point of contact at the IRS for taxpayers who are victims of tax-related identity theft.
“This bill improves the independent appeals process, taxpayer services, and enforcement,” said Rep. John Lewis, D-Ga., the ranking Democrat on the House Ways and Means Committee. “It also makes common-sense updates to the IRS and Tax Court structure. This is a good and timely bill, and I hope all of our colleagues will support it.”
Another bill advanced by the committee would restrict the immediate sale of seized property by the Treasury to perishable goods, thereby limiting the use of the controversial practice of civil asset forfeiture by the IRS. Categorizing seized goods as “perishable” allows the agency to seize and sell a taxpayer’s property on the same day for significantly less than a normal auction would allow. One piece of legislation would amend the tax code to require electronic filing of the annual returns of tax-exempt organizations and provide for making the returns available for public inspection.
Another bill in the package would permanently set up Volunteer Income Tax Assistance centers. Another bill would require notice from the Treasury whenever a Taxpayer Assistance Center is closed. Yet another bill would amend the tax code to allow officers and employees of the Treasury Department to provide taxpayers with information regarding low-income taxpayer clinics.
The bill would also make installment agreements easier for taxpayers to pay off. “It also targets and abuses thousands of low-income taxpayers by enrolling them in installment agreements that they cannot afford,” said Lewis. “In my heart of hearts, I believe that the program is a shame and a disgrace, and that it must end. I am glad that our bill moves us in the right direction.”
Unlike the Tax Cuts and Jobs Act that was passed last December by Republicans, the package included several bills co-sponsored by Democrats. “There are many important reforms in all nine of the IRS redesign bills we’re acting on today, but I’m particularly pleased with the many provisions that would help low and moderate-income taxpayers,” said Rep. Richard Neal, D-Mass. “For example, an important reform we’ll be voting on today is codify the existing Free File program, under which the IRS partners with the tax preparation community to offer free online tax filing to people whose incomes fall in the bottom 70 percent. I’ve been a longtime champion of the Free File program along with my colleague, Ron Kind and others, and I’m pleased to see it in today’s package. Another important reform is codifying the Volunteer Income Tax Assistance program, under which the IRS partners with nonprofit and community groups to offer income tax assistance to people with low incomes, limited English skills, or other barriers to tax compliance.”
The American Institute of CPAs expressed support for the legislation after submitting comments on a draft version of the package. “The AICPA applauds the Ways and Means Committee for its efforts to modernize the IRS to meet taxpayers’ needs,” said AICPA vice president of taxation Edward S. Karl in a statement Wednesday. “Chairman Lynn Jenkins’ and Ranking Member John Lewis’ leadership on The Taxpayer First Act is a step in the right direction to redesign and modernize the IRS. As practitioners who serve millions of taxpayers on tax-related matters, assist them with compliance-related matters, and represent them before the IRS, we strongly support efforts to ensure a service-oriented, modernized tax administration system and believe the bills are an important move forward.”
The committee also voted to advance several related bills to reduce identity theft and fraud not specific to the IRS. The Moving Americans Privacy Protection Act would end the inadvertent disclosure of personally identifiable information, such as Social Security numbers and passport numbers, when U.S. Customs and Border Protection releases certain shipment data. Two other bills would help protect children from identity theft. The Social Security Child Protection Act would require the Social Security Administration to issue a new Social Security number to a child whose Social Security card has been stolen in transit. The Protecting Children from Identity Theft Act would reduce “synthetic” identity fraud by stopping fraudsters from creating fake identities by using a real Social Security number and fake name to access credit.
“The legislation would allow financial services companies, if they have consent from their customer, to verify the customer’s name and SSN with SSA, in order to help prevent identity theft,” said Neal. “I am pleased that we were able to work on a bipartisan basis to strengthen the bill in two key ways. First, we included provisions to ensure that the verification system would be secure and not subject to misuse. And second, we included provisions to make sure the users of the verification system would pay the full cost of it, and not detract from SSA’s ability to fulfill its primary mission of running the Social Security program.”
