A bipartisan bill that would reform the IRS for the first time in 20 years is headed to the House floor for a full chamber vote. The Taxpayer First Act (HR 1957) cleared the House Ways and Means Committee by voice vote on April 2. The bipartisan bill, introduced on March 28, consists of over 45 provisions, all of which aim to modernize the IRS and enhance taxpayer services and protections.
Notably, the Taxpayer First Act would implement some of the following IRS reforms:
- Establish an independent office of appeals within the IRS;
- Require the IRS to submit to Congress plans to redesign the structure of the agency to improve efficiency, modernize technology systems, enhance cyber security and better meet taxpayer needs;
- Help protect taxpayers from tax ID theft and improve taxpayer interaction with the IRS should they become a victim of this crime;
- Establish new safeguards to protect taxpayers against recent IRS enforcement of so-called “structuring laws”; and
- Modify the private debt collection program to ensure lower-income Americans are not targeted, while also strengthening the long-term viability of the program.
Failure to File Penalty Could Boost Federal Revenue
The Taxpayer First Act could potentially boost federal revenue by $3 million over a 10-year budget window, according to Congress’s nonpartisan scorekeeper, the Joint Committee on Taxation (JCT). The JCT noted the slight increase in federal revenue estimate in its recent report, JCX-17-19.
Notably, the boost in revenue is largely because of the bill’s increase in the IRS’s failure to file penalty. Under the Taxpayer First Act, if a return is filed more than 60 days after its due date, then the failure to file penalty may not be less than the lesser of $330 (adjusted for inflation) or 100 percent of the amount required to be shown as tax on the return, according to the JCT. Currently, If a return is filed more than 60 days after its due date, then the penalty for failure to file may not be less than the lesser of $205 or 100 percent of the amount required to be shown as tax on the return, as noted in JCX-15-19.
“Excellent” Chance of Becoming Law
The IRS reform bill has an “excellent” chance of becoming law this year, the House’s top tax writer told reporters after the April 2 markup. Additionally, House Ways and Means Committee Chairman Richard Neal, D-Mass., who co-sponsors the bill, told reporters that he and Senate Finance Committee (SFC) Chairman Chuck Grassley, R-Iowa, are “on the same page.”
To that end, Grassley and SFC ranking member Ron Wyden, D-Ore., also introduced a companion Taxpayer First Act bill in the Senate on March 28. “This bipartisan, bicameral agreement represents years of hard work and consensus building,” Grassley said in a statement.
By Jessica Jeane, J.D.