The Act requires the IRS to develop a thorough strategy for customer service. The IRS needs to submit the plan to Congress by July 1, 2020. The plan, updated guidance and training materials must be available to the public by July 1, 2021.
The strategy must incorporate best practices of businesses to meet reasonable customer expectations.
The Taxpayer First Act renames the IRS Office of Appeals as the IRS Independent Office of Appeals. This office will to continue to resolve tax controversies and review administrative decisions of the IRS in an impartial manner. However, it has some new requirements.
The new rules require the Independent Office of Appeals to make its referred case files available to:
- Individuals with adjusted gross incomes of $400,000 or less for the tax year to which the dispute relates;
- Entities with gross receipts of $5 million or less for the tax year to which the dispute relates.
When the IRS has issued a notice of deficiency to a taxpayer and the Independent Office of Appeals denies their request for review, the IRS must now issue a notice to explain the reasons. It also needs to tell the taxpayer how to protest the denial.
The Act provides a new way for low-income taxpayers to waive the application fee for an Offer-in-Compromise (OIC).
A taxpayer qualifies to waive the fee if their income is at or below 250% of the federal poverty level. In the past, the IRS waived the fee based on someone’s monthly gross income. The new method uses adjusted gross income (AGI) from the taxpayer’s most recent tax return.
A taxpayer who does not qualify under the new AGI method may request a waiver using their current household's gross monthly income, as entered on Form 433-A (OIC), for the next 12 months.
The Act prohibits IRS from using private collection agencies to recover delinquent taxes from certain individuals.
- Those whose income is substantially all supplemental security income benefits
- Those whose income is substantially all disability insurance benefit payments,
- Individuals whose adjusted gross income is below 200% of the applicable poverty level.
This change applies to inactive tax receivables identified by the IRS in 2021 and later.
The Act changed the definition of inactive tax receivable. It replaces the condition that more than 1/3 of the applicable limitations period has lapsed. The new requirement is that more than two years has passed since assessment.”
The Act also changes the length of installment agreements that private debt collectors can offer. Collectors can now offer individuals a seven-year agreement, instead of five.
Previous law said the IRS may not contact anyone other than the taxpayer to determine or collect taxes without providing reasonable notice. The Act now requires 45 days’ notice before the beginning of the period of contact. The period of contact may not be greater than one year. The Act requires that the IRS notify the taxpayer only if there is a present intent at the time of the notice for IRS to make such contacts.
Volunteer Income Tax Assistance (VITA) program volunteers help low-income and other underserved taxpayers prepare income tax returns. The Act codifies the VITA program and allows Treasury to allocate up to $30 million per year in matching grants for VITA. Treasury can award the grants to qualified entities to develop, expand, or continue qualified programs.
The Act allows Treasury Department personnel to advise taxpayers about low-income taxpayer clinics. Treasury staff can now provide information about the availability of clinics, eligibility requirements, locations and contact information for the clinics.
The Act requires IRS to publicly notify affected taxpayers 90 days before closing a Taxpayer Assistance Center (TAC). The notice must be available non-electronically and must include the date of the proposed closure and alternative ways for taxpayers to get help.
The Act allows IRS to exchange information with whistleblowers when doing so would be helpful to an investigation. It requires IRS to notify whistleblowers of the status of their claims at certain points in the review process. It also authorizes, but does not require, the IRS to provide status updates at other times upon written request.
To protect taxpayer privacy, the Act prohibits whistleblowers from publicly disclosing information they receive from IRS.
The Act also extends anti-retaliation provisions to IRS whistleblowers.
For more information about these reforms, see Whistleblower Reforms Under the Taxpayer First Act.
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 establish procedures for handling misdirected electronic tax refund deposits. These procedures should:
- Allow taxpayers to report when an electronic refund was not transferred to their account.
- Establish coordination with financial institutions to identify and recover these payments.
- Deliver refunds to the correct accounts of taxpayers.