Key Provisions of the Taxpayer First Act of 2019

Tax identity theft is increasing. Tax reform in 2017 muddied the waters of compliance. Reaching someone at the IRS, when you need to, is burdensome. Thanks to the Taxpayer First Act of 2019, some of those issues are expected to improve. The bipartisan bill was signed into law on July 1, 2019 and contains some welcome provisions to enhance the IRS’s customer service and focus on cybersecurity. Here’s what you need to know.

1. Independent Appeals Process

Traditionally, small businesses and individuals who wanted to appeal an IRS decision had somewhat of a complicated and/or costly journey ahead of them. If the IRS audited your return and decided that a deduction was misapplied, but you disagreed, it would have been up to the auditor to grant you access to the IRS Office of Appeals. Your only other option would have been Tax Court.

No more, under the Taxpayer First Act. As long as you have a legitimate claim, your appeal can be heard. Other key details of this provision are that taxpayers will have the right to their case files and the right to protest if the IRS denies the appeal. Taxpayers with less than $400,000 in adjusted gross income will get access to the IRS’s case file prior to the review, a big help to low- and middle-income taxpayers who don’t want to or can’t hire an attorney. Additionally, the IRS Appeals office can issue advice independent of the IRS Chief Counsel.

2. Enhanced Security and Privacy

Most of the Act’s cybersecurity efforts won’t ever be visible to most taxpayers, instead requiring the IRS to make substantive advancements to identify and prevent fraud. Some measures that will affect taxpayers include: anyone will be able to request a personal identification number to use when filing tax returns. This is currently only available to taxpayers who have already had their identity stolen. Also, in what will be a breath of fresh air if you do ever find yourself the victim of fraud, you will have a single point of contact at the IRS to resolve the issues as quickly and efficiently as possible.

Two other security provisions will require the IRS to proactively reach out to taxpayers if suspicious or unauthorized use of their identity has occurred, prohibit contractors (like outside attorneys) from accessing personal information except when they need to provide expert assistance to the IRS, and protect whistleblowers from retaliation.

3. Limited Property Seizures

Under the law, the IRS will be limited in its ability to seize property as part of back taxes or violating reporting rules. Unless the property in question was obtained illegally or the cash transaction that wasn’t reported was criminal in nature, the IRS generally cannot take your property anymore (under certain circumstances, of course).

4. Innocent Spouse Relief

This addition will be valuable to couples who suspect one or the other of cheating on their taxes. When a tax return is jointly signed, often both spouses are responsible for all information submitted, even if they were unaware and uninvolved in any wrongdoing. The Act doesn’t create any new guidelines here, but it does make the process easier for innocent spouses to get a fair judgment – and be absolved from paying for something they didn’t know about.

5. Low-Income Taxpayer Relief

Certain low-income taxpayers who owe the IRS money will benefit from a mandatory Offer in Compromise program, which waives some required upfront payments and fees when attempting to settle for a lower amount. The RIS will also be prohibited from using a third-party debt collector for anyone with adjusted gross income below 200 percent of the poverty level. In addition, the length of time required for repayment will be extended. Some disabled taxpayers will fall under this relief, too.

The Taxpayer First Act also requires the IRS to:

  • Develop a customer service strategy
  • Directly accept credit or debit card payments,
  • Stick to a 45-day reasonable notice period before reaching out to customers regarding a business audit,
  • Put more emphasis on the role of the Taxpayer Advocate, and
  • Tighten the “John Doe” summons law.

In a separate bill, Congress also voted to increase the IRS’s budget, a necessary move if the agency is expected to implement several new initiatives and crack down on cybersecurity.

Don’t expect changes overnight. Some provisions have a window of a few years to become policy. But overall, the Taxpayer First Act should make a dramatic impact to how the IRS operates and how it serves taxpayers. Have questions about dealing with the IRS? Let Naden/Lean help. Contact us today.