House approves IRS reform bills
The House voted Wednesday to pass bipartisan legislation to modernize the Internal Revenue Service’s information technology systems, a day after a computer crash temporarily suspended processing of tax returns on the date of the filing deadline.
The bill would also improve cybersecurity at the IRS and taxpayer identity protection. A related bill would improve taxpayer service at the IRS, and it passed 411 to 0. They were part of a package of bipartisan bills the House began taking up and voting to approve Tuesday, and most of them passed on an overwhelming basis. The Taxpayer First Act passed by a vote of 414 to 0, while the 21st Century IRS Act passed on a 414 to 3 vote.
The legislation would also set up an independent appeals office at the IRS. A bill to make the IRS’s Volunteer Income Tax Assistance program permanent passed by unanimous consent. Another bill that passed by unanimous consent would require notice from the Treasury Department in case any Taxpayer Assistance Center is scheduled to be closed. Also passed by unanimous consent was a bill to amend the tax code to allow IRS and Treasury employees to provide taxpayers with information on low-income taxpayer clinics. Also passed by unanimous consent was legislation to amend the tax code to restrict the immediate sale of seized property by the Treasury to perishable goods only, sharply limiting the practice of civil asset forfeiture.
A bill requiring the Treasury to establish a program for issuing identity protection personal identification numbers, or IP PINs, upon request also passed the House by unanimous consent. Another bill would provide a single point of contact at the IRS for taxpayers who are victims of tax-related identity theft, and that too passed unanimously. Finally, legislation to amend the tax code to require electronic filing of the annual returns of tax-exempt organizations and make those returns available for public inspection, passed by unanimous consent.
“A new tax code calls for a new tax administrator, and we have worked together so that the IRS can be transformed into an agency with a singular mission: ‘taxpayer first,’” said House Ways and Means Committee chairman Kevin Brady, R-Texas., in a statement. “With this package, we are taking a monumental step in redesigning the IRS for first time in 20 years, refocusing the agency to live up to its mission of quality service, and reining in its enforcement powers to prevent future abuse.”
He noted that the legislation would put an emphasis on customer service. The bills would require the IRS to submit to Congress plans to restructure the agency to improve efficiency, better service taxpayers and enhance cybersecurity. The IRS would need to adopt customer service options typically available in the private sector, such as a callback option when the phone lines are busy. The legislation would also overhaul the IRS’s enforcement tools so families and small businesses wouldn’t have their property seized without fair notice and due process.
“The IRS is not just a tax enforcement agency,” said Brady on the House floor. “They are also an administrator.”
The final votes came on a day that the IRS added to tax season, extending tax filing through Wednesday night, after a computer crash on the normal deadline disrupted processing (see IRS systems run into trouble, agency gives taxpayers an extra day to file).
A lawmaker who is also a CPA praised the package. “As a CPA, I’ve seen first-hand countless examples of the IRS being out of date with technology and out of touch with the needs of the taxpayer,” said House Ways and Means Oversight Subcommittee Chairman Lynn Jenkins, R-Kan. “Yesterday’s website failure at the IRS added more urgency to the need to modernize the IRS and focus on the taxpayer experience.”
She thanked Rep. John Lewis, D-Ga., the ranking Democrat on the Ways and Means Oversight Subcommittee, and his colleagues for their bipartisan support. Lewis contrasted the bipartisan nature of the legislation with more partisan efforts in Congress, such as last December’s Tax Cuts and Jobs Act. He noticed that his subcommittee held hearings for over a year.
“We reached out to taxpayers and advocates and we negotiated,” he said. “We took our time and, Mr. Speaker, I believe that we did it right. Together we developed a bill that improves the independent appeals process and taxpayer services.”
The Senate still has to take up the legislation, but last week the chairman of the Senate Finance Committee, Orrin Hatch, R-Iowa, said he looked forward to working with the ranking Democrat on his committee, Sen. Ron Wyden, D-Ore., on exploring “legislative options here in the Senate.”