These are the things we like most from the summary of The Taxpayer First Act
- A more formally articulation of the independence of the IRS Office of Appeals and the hoped for availability of the IRS Office of Appeals in more cases. For instance, we hope appeals will be available prior to the issuance of a Final Notice of Intent to Levy or a Notice of Federal Tax Lien.
- The IRS must provide a Freedom of Information Act (FOIA) file — "the case against the taxpayer" quicker. Currently a FOIA can take three to six months — and often times when trying to negotiate with the IRS, we don't have the time to wait.
- A crack down on the abuses of siezures of cash because of claimed structuring under the Bank Secrecy Act of 1970. The governemnt will need actual probable cause first.
- Required notice of third party contact (the IRS can be very sneaky in an audit situations).
Yet, a lot of the rest of the bill might do little to help taxpayers.
These are the things we see as Congress putting window dressing on policies that seem to be working fine, or in the alternative, setting vague goals that have been tried before, but have failed.
- An insistence on calling taxpayer “customers.”
- A waiver of an Offer in Compromise fee for the destitute who probably lack the resources to actually submit a viable Form 656 OIC. Currently Non-collectible (CNC) costd nothing and is much more easily granted.
- A formal declaration of Innocent Spouse/Equitable relief policy on an expanded time to file a claim.
- A formalized grant structure for VITA (Volunteer Income Tax Assistance) Program.
- A generalized idea of "better" "customer" service.
- A formal notification process for when the IRS shut downs (already overworked) service centers. But how good should we expect these Service Centers to be anyway? We received a call from a couple in Florida that went to the IRS Service center because they were unsure if their UK pension was taxable. The employee could not answer the question (it was taxable in this case) but worse, failed to inform them that they had FBAR and Form 8938 obligations. Innocent mistakes of failing to file either form can result in two $10,000 penalties per year!
- A rule allowing IRS employees to refer low income taxpayers to Low Income Tax Clinics. It strikes us odd that they weren't able to do this before.
- A whole bunch of vague identity theft protections.
- A promise to modernize the IRS's Informational Technology. But this will likely be yet another waste of money; the IRS has been attempting to modernize since the LBJ administration with little results as there are too many competing goals.
- The ability to pay the IRS by credit card or debit card directly (but taxpayers will still be charged a user fee — likely around 2%)
Conclusion and outlook
The Taxpayer First Act will likely pass, and we do anticipate it being an overall help, but it can not cure the fatal conceit of the personal income tax that, since its orgination in 1913, was specifically designed to strip power from individuals and shift most of it to Washington, DC. According to the father of the IRS, Rep. Cordell Hull of Tennessee, revenue was not the primary goal, but rather social engineering. When questioning why the US tax is so complicated, this fact is often omitted.
Additonally, there is little mention that the complexity of such a system has overrun the IRS's ability to actually adminster the law, especially when it comes to those who have income or assets overseas.