Taxpayer First Act - IRS Modernization

The IRS Commissioner must appoint an IRS Chief Information Officer (CIO). The IRS CIO will be responsible for developing, implementing, and maintaining information technology (IT) systems for IRS. The CIO will ensure that the IT of IRS is secure and integrated, maintain operational control of all IT for IRS, and act as the chief advocate for the IT needs of IRS.

Also, the IRS must finish its plans to complete the Customer Account Data Engine (CADE 2) and have a third party independently validate plans for CADE 2 and Enterprise Case Management system(s). 

The Act requires IRS to develop an Internet portal by Jan. 1, 2023 that allows taxpayers to electronically file Forms 1099. The portal is to be modeled after a Social Security Administration (SSA) system that allows employers to file Forms W-2 with SSA. The website will provide taxpayers with IRS resources and guidance, and allow them to prepare, file and distribute Forms 1099, and create and maintain tax records.

The Act reauthorizes streamlined critical pay (SCP) authority for IRS with respect to IT positions. This authority ends on Sept. 30, 2025. The SCP authority gives IRS a management tool to quickly recruit and retain employees with high levels of expertise in technical or professional fields that are critical to the success of IRS’s restructuring efforts. The authority was originally authorized for ten years and extended twice.

The Act requires IRS to develop  an automated system to receive third-party income verification forms. This system would replace the current system, which relies on secure fax.

Also, the provision authorizes IRS to charge a separate user fee on all Income Verification Express Services (IVES) requests over a two-year period to fund the development of the new system.

Prior law prohibited any requirement that individuals who file fewer than 250 returns during a calendar year do so electronically. Under the Act, the 250 is reduced to 100 in calendar year 2021, and from 100 to 10 after 2021.

In the case of a partnership, the number will be 200 for calendar year 2018, 150 for calendar year 2019, 100 for calendar year 2020, and 50 for calendar year 2021.

The Act also authorizes IRS to waive the requirement that a tax return preparer must file electronically. A preparer may apply for a waiver and demonstrate that their inability to file electronically is due to lack of internet availability (other than dial-up or satellite service) in the geographic location where the return preparation business is operated.

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The Act requires IRS to publish guidance to establish uniform standards and procedures for the acceptance of taxpayers’ electronic signatures, which are meant to authorize disclosure to a practitioner or for any power of attorney granted by a taxpayer to a practitioner

Under prior law, IRS was prohibited from directly accepting credit and debit card payments for taxes due to a restriction on paying card issuer fees. IRS instead used a third-party processor to accept credit and debit card payments.

The Act enables IRS to directly accept credit, debit, or charge cards for the payment of income taxes provided that the fee is paid by the taxpayer.

The Act requires IRS to verify the identity of any individual opening an e-Services account before he or she is able to use the service.

The Act repeals 1998 legislation that requires IRS to study the possibility of implementing a return-free tax system for tax years beginning after 2007.

Feedback?

Do you have feedback you’d like to share as we continue to implement the Taxpayer First Act? Please send it to TFAO@irs.gov.