Congress Approves IRS reform bill
The Taxpayer First Act was signed into law by President Trump on July 1 st . This bill includes new provisions focused on improving service for taxpayers:
- The bill establishes a new IRS independent Office of Appeals, which will resolve federal tax controversies without litigation. It will be generally available to all taxpayers as part of the administrative review process, and, if an appeal request is denied, the IRS must provide a written notice explaining why.
- The bill requires the IRS to develop and submit “a comprehensive customer service strategy” to Congress to provide better assistance to taxpayers. The strategy must also establish metrics and benchmarks for measuring success.
- The bill provides clarification of equitable relief from joint liability. Typically, married couples who file tax returns jointly are both responsible for the total tax liability. Some exceptions apply, including innocent spouse relief in cases where one spouse’s income is the sole reason for the tax balance due. The provision clarifies that the Tax Court has jurisdiction to redetermine
equitable claims for relief, meaning that each taxpayer would be responsible for their fair share. It also makes clear that the standard of review will be based on the record as well as any newly discovered or previously unavailable evidence.
- The new law makes further limitations on the types of tax receivables that can be assigned to private debt collection services. The changes remove taxpayers if substantially all of their income consists of disability insurance benefits and taxpayers whose income does not exceed 200% of the applicable poverty level.
- The bill requires a plan to redesign the organization of the IRS to ensure implementation of the priorities specified by Congress in the bill, like taxpayer services, streamlining the agency’s structure, and positioning the IRS to combat cybersecurity threats
Among its other provisions, the bill creates a matching grant program to expand the Volunteer Income Tax Assistance (VITA) program, increases the penalty for improper disclosure of information by a tax return preparer, directs the IRS to create an online platform to allow taxpayers to prepare and file Forms 1099, requires mandatory e-filing by tax-exempt organizations, requires the IRS to notify organizations before revoking their exempt status for failure to file a return for three years, and increases the failure-
to-file penalty to $330.
Feel free to contact your representative at DKC if you have any questions or would like updates on the bill described above.