With the aim of improving the interaction between the IRS and taxpayers, the Taxpayer First Act of 2019 (TFA) was signed into law on July 1. The bill includes a number of adjustments to the IRS’s organizational structure, customer service and enforcement procedures, and provides some new safeguards to taxpayers. The significant changes are summarized below.
Establishment of an independent appeal process
The TFA officially establishes the IRS Independent Office of Appeals to resolve federal tax controversies without litigation. The bill also requires the IRS to provide more information to taxpayers on how the appeal was decided and, in some cases, requires the agency to provide a written explanation in the event of a denial.
Improvement in IRS service
The IRS is required to submit a comprehensive customer service strategy along with a detailed plan to Congress within one year of TFA’s enactment. The plan will include customer expectations and improvement goals.
Exceptions regarding OIC agreement
Low-income taxpayers who propose an offer-in-compromise agreement with the IRS may be eligible to waive the application fee and initial payment.
Modification in enforcement procedures
The TFA limits IRS enforcement procedures, including the issuance of a summons, seizure of property (post-seizure review is now required) and joint liability.
Expansion of electronic filing requirements
The threshold for mandatory electronic filing will be reduced from 250 returns in 2020 to 10 returns in 2022, which means the majority of tax preparers will have to e-file after 2022. Meanwhile, tax-exempt organizations filing a Form 990 now are required to file electronically for taxable years beginning after July 1, 2019. Defined “small tax-exempt organizations” will have an e-filing requirement after July 1, 2021.
Besides these changes, the TFA also reforms the whistleblower’s program, which allows the IRS to exchange information and update claim status with informers. Certain enhancements surrounding internet technology are also required, such as providing an online platform for Form 1099 filing and automated programs for the disclosure of taxpayer information.
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