Recent Tax Updates

Taxpayer First Act

By Mark Castro, CPA
October 11, 2019

The recently enacted Taxpayer First Act contained provisions that mainly focused on altering how the IRS operates and is directed by Congress to reorganize to prioritize taxpayer service and combating cybersecurity and other threats. It also included changes that will affect some business taxpayers and how taxpayers will be able to ask for an IP PIN in the future.

Here are some of the key provisions:

  • Identity Protection PIN
    The IRS is required to phase in over the next five years the ability for any taxpayer residing in the United States to request an IP PIN.
  • Electronic filing mandate for corporate and partnership returns are lowered from 250 returns as follows:
    • Corporate
      • 100 returns for 2021
      • 10 returns for 2022 and beyond
    • Partnership
      • Calendar year 2018 – 200
      • Calendar year 2019 – 150
      • Calendar year 2020 – 100
      • Calendar year 2021 – 50
      • After 2021 – 10
  • Reorganization of IRS
    IRS must submit a reorganization plan to Congress by September 30, 2020. This plan must consider how IRS will prioritize taxpayer services, streamline and simplify its structure, better position itself to combat ongoing cybersecurity and other threats, address whether the IRS Criminal Division should report directly to the IRS Commissioner and implement other provisions of the Taxpayer First Act.
  • Plan to Improve Service
    The legislation requires the IRS to submit to Congress a written comprehensive customer service strategy. This plan must provide assistance to taxpayers that is secure, designed to meet reasonable taxpayer expectations and adopt appropriate best practices of customer service provided in the private sector, including online services, telephone call back services, and training of employees providing customer services.
  • Enforcement Procedure Changes
    • Limits IRS seizure authority to property derived from an illegal source.
    • Revises requirements related to equitable relief from joint liability for unpaid taxes.
    • Restricts referrals of tax debts to private debt collection agencies, excluding taxpayers whose income consists of disability insurance benefits or other low income taxpayers.
    • IRS may no longer immediately sell seized property merely if is liable to become greatly reduced in price or value or cannot be kept without great expense.

See the Taxpayer First Act (HR 3151) for more information.