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1 1 (April 10, 2019)

handle is hein.crs/govzgl0001 and id is 1 raw text is: Cogesoa Resarc Servic 0 April 10, 2019 IRS Reform and the Taxpayer First Act of 2019 The Internal Revenue Service (IRS) has two main statutory responsibilities: to collect most of the revenue needed to fund the federal government and to enforce federal tax laws and regulations. In FY2017, the agency processed 245.4 million tax returns and other documents, collected $3.4 trillion in gross revenue, and had a budget of $11.2 billion. While the collection and enforcement of federal taxes has changed over the years (increasing e-filing, for example), the IRS structure has largely been static over the past 20 years-since the IRS Restructuring and Reform Act of 1998 (P.L. 105-206; RRA98). Since then, the IRS has struggled with customer service, a large and growing amount of uncollected taxes, and information security, as documented by the Taxpayer Advocate and the Government Accountability Office (GAO). The Taxpayer First Act of 2019 (H.R. 1957 and S. 928: TFA19) woild implement various IRS reforms. including establishing atn Independent Office of Appeals, making changes aimned at improving taxpayer service, reforming rules related to enforcement, modernizing agency structure and technology, providing better cyhersecurity and identity protection, and achieving other objectives. On April 9, 2019, the House passed H.R. 1957, as amended. TFA19 huilds upon H.R. 5444 and H.R. 5445 in the 1 15h Congress, which both passed in the House on April 18, 2018, hut saw no further legislative action. The Joint Comuittee on Taxationha cored the TFA19 as raising million over 10 r with 44 of the 47 cored provisions having no r ne ligible ev enue effects. This prodct focuses on areas of TFA19 that have been historically the focus of congressional oversight. At the end of this rolict is a lit of additional surs. Establishment of an Independent Office of Appeals RRA98 directed the IRS Commissioner to restructure the IRS to ensure an independent appeals function within the agency, but did not mandate how it should be accomplished. TFA19 would codify the requirement for an independent appeals function and make access to appeals generally available to all taxpayers. Taxpayer Service TFA19 would require the IRS to submit to Congress a comprehensive customer service strategy within one year of its enactment. The legislation would also codify the IRS Free File Program, an agreement between the IRS and commercial tax return preparers to provide free filing services to low-income filers. Some object to codification of the IRS Free File Program, which, they say, from 2002 has barred IRS from creating its own online system of tax filing to the detriment of some taxpayers. TFA19 would also provide an exemption of certain low-income taxpayers from payments required to utilize the offer-in-compromise program (which allows a taxpayer to settle a tax debt at a lower amount than what the taxpayer generally owes). Enforcement TFA19 would exempt two additional categories of taxpayers from referral to the private debt collection and special compliance personnel programs. If enacted, taxpayers with income substantially derived from the supplemental security income (SSI) benefits or disability insurance (DI) benefit and taxpayers with adjusted gross income (AGI) less than or equal to 200% of the poverty level would not be eligible for referral. TFA19 would also require the IRS to notify taxpayers 45 days in advance of contacting third parties (including friends and neighbors) and only if the audit team is intending to actually initiate contact-as opposed to the current practice in which notice is generally given in order to preserve the right to initiate contact. The legislation would require the IRS to show probable cause that funds believed to have been structured to avoid Bank Secrecy Act reporting requirements are derived from an illegal source or are connected to another criminal activity. A post-seizure hearing would have to be held within 30 days of the seizure, and any interest paid by the government on returned funds would be exempt from tax. TFA19 would require the IRS to demonstrate that it made a reasonable request for the needed information, prior to the issuance of a designated summons. It would also require that third-party summonses (John Doe summonses) be narrowly tailored. TFA19 also clarifies that the Tax Court has jurisdiction to redetermine equitable claims for relief from joint liability. It also limits the access of non-IRS employees to returns and return information. IRS Organizational Structure and Technology TFA19 would require the Treasury Secretary to submit to Congress a comprehensive written plan to redesign the organization of the IRS by September 30, 2020. The comprehensive plan must consider how the IRS will prioritize taxpayer services, streamline and simplify its structure, better position itself to combat ongoing cybersecurity and other threats, address whether the IRS Criminal Division should report directly to the IRS Commissioner, and implement other priorities of TFA19. https:/crsreports.con, -- _-_

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