‘Taxpayer First Act’ Signed into LawJuly 10, 2019 | Katherine A. Heptig |
On July 1, 2019, President Trump signed the Taxpayer First Act into law. The Act represents an important and welcome step toward improving technology and security while providing for an overall improved service experience for taxpayers interacting with the IRS.
The Act contains two parts. The main themes of the first portion of the Act include improved service, sensible enforcement, independent appeals and organizational modernization. Key provisions in this area include:
- Independent Appeals Process – Establishes an Independent Office of Appeals, enabling individuals and small businesses to access an administrative review process in a cost-effective way, including full notice and protest procedures, while also providing taxpayers with access to their case files prior to the start of any dispute resolution process.
- Comprehensive Customer Service Strategy – Directs the IRS, within one year, to develop a comprehensive training strategy for its employees to enforce taxpayer rights, considering best practices from the private sector, and to establish benchmarks for measuring the success of the strategy developed.
- Modification of Procedures for Issuance of Third-Party Summons – Requires the IRS to provide taxpayers reasonable advance notice of a third-party summons, in effect giving taxpayers an opportunity to provide the information requested directly to the IRS prior to the IRS initiating contact with third parties, such as customers and financial institutions.
- Whistleblower Reforms – Allows the IRS to exchange information with whistleblowers to improve communication and requires the IRS to notify whistleblowers of the status of their claims at certain points in the review process. Also amends the Tax Code to extend anti-retaliation provisions to IRS whistleblowers similar to those that are provided to whistleblowers under the False Claims Act and the Sarbanes-Oxley Act.
The remainder of the Act largely focuses on the creation of a “21st Century IRS,” addressing cybersecurity and identity protection, expanded use of electronic systems and development of IRS information technology. Additional key provisions include:
- Cybersecurity and Identify Protection – Establishes a single point of contact for identity theft victims, requires notification to taxpayers if the IRS suspects identify theft, establishes guidelines for dealing with identity theft cases, increases penalties for unauthorized disclosures, and permits greater information sharing from the Identity Theft Tax Refund Fraud Information Sharing and Analysis Center to allow for improved centralization and standardization with respect to identity theft and cybersecurity.
- Information Technology – Requires the IRS to issue uniform guidance for the use of electronic signatures, and reauthorizes Streamlined Critical Pay (SCP) authority for employees with high levels of expertise in technical or professional fields, allowing the IRS to quickly recruit and retain the employees who are critical to the success of these restructuring efforts.
- Internet Platform for 1099 Filings – Requires the IRS to develop an internet portal to facilitate the filing of Forms 1099 with the IRS. The portal will provide taxpayers with access to resources and IRS guidance, and will allow taxpayers to prepare, file and distribute Forms 1099, as well as create and maintain taxpayer records.
- Payment of Taxes by Debit and Credit Cards – Permits the IRS to directly accept credit and debit card payments for taxes, provided that the applicable card fee is paid by the taxpayer.
This legislation is a welcome act of bipartisanship that seeks to provide taxpayers with strengthened and expanded rights when dealing with the IRS. If you have any questions about the application of these reforms to your personal circumstances, please contact your attorney.
- Katherine A. Heptig