Changes To The IRS And Taxpayers Under The Taxpayer First Act Of 2022
President Donald Trump discreetly signed the Taxpayer First Act of 2019 into law in July, according to reports. There were no significant, dramatic changes to the tax law as a result of this legislation. Rather, it was a step in the direction of developing a more compassionate and understanding IRS. The measure had bipartisan support in the House of Representatives.
The TFA improves customer service and organizational structure within the Internal Revenue Service, and also fights identity theft as a result of this reform. Overall, taxpayers should be pleased with this bill, with the exception of one item.
A Kinder Internal Revenue Service
Yes, it’s tough to envision the terms “kind” and “IRS” being used in the same phrase, but that is exactly what the TFA is aiming to achieve with its initiative. The IRS is required to submit a new customer service strategy to Congress within one year, or by July 2020, if the legislation is followed. Agent training and counseling in customer service concerns should be a part of the overall strategy.
Historically, IRS training for agents has been centered on the tax law, which, let’s face it, is understandable to the vast majority of taxpaying citizens. The purpose of this new training program is to close the gap. In other words, agents should learn to communicate in English rather than in Tax.
We’ll have to wait and watch how this plays out. The Internal Revenue Service may have one year to formulate a strategy, but it has two years to put it into action.
When you owe money but are unable to pay it
When it comes to payment alternatives, the Taxpayer First Act of 2019 alleviates some of the burden that taxpayers may be experiencing. The restrictions for making an offer in compromise have been loosening up a bit. An individual or business may request that the Internal Revenue Service accept a lesser amount of taxes payable than the entire amount due because paying the full amount would result in undue financial hardship for the taxpayer.
More information may be found at: What Happens If I Make a Partial Tax Payment to the IRS.
There is an application cost for an OIC, which may discourage persons who are in grave financial difficulties from requesting this form of assistance.
The fee is waived automatically for taxpayers with adjusted gross incomes that are at or below 250 percent of the federal poverty level, and others can request that the fee be waived by submitting IRS Form 433-A – the information statement that must be submitted in order to request an OIC – to the Taxpayer Advocate Service.
It also applies to any upfront payments that may be required before the IRS will accept an OIC under the terms of the new regulation.
When You Have No Alternative But to Use a Credit Card
Perhaps you’ve run out of cash, but your Mastercard is still in good shape. Once upon a time, you could only settle your tax obligation using a credit card, which was processed by a third-party processor.
The IRS is now able to take credit cards as a result of the TFA. In fact, it may now take your debit card as well, if you choose to make a payment straight from your bank account. Both methods are subject to a cost, of course, but the IRS is required to make every effort to keep them to a minimum.
The Appellate Procedure
There has always been an appeals mechanism in existence at the Internal Revenue Service for taxpayers who think that an agency judgment is just incorrect. The TFA makes modifications to this procedure.
Taxpayers have always had the right to file an appeal, but the IRS has the authority to decline these petitions. It is now required to offer a written explanation of how it arrived at its conclusion, and the taxpayer has the right to appeal the decision as well. The IRS message must provide instructions on how the taxpayer may do so.
Furthermore, the TFA mandates that the Independent Office of Appeals give its case files to each taxpayer who has an adjusted gross income of $400,000 or less, so that they may see what they’re up against when appealing a decision.
More information may be found at: What Happens If You Are Convicted of Tax Fraud?
New Anti-Identity Theft Security Measures
In addition, the TFA assists the IRS in its efforts to safeguard taxpayers from identity theft. In the event that you have to call the IRS and are inevitably placed on hold, you’ll still be subjected to a recorded message, but the recording will now inform you of all the latest tax scams, explain how to report one if you have reason to believe you’ve been a victim, and provide advice on how to avoid being a victim in the future.
Furthermore, the IRS is required by the TFA to tell taxpayers if it has reasonable grounds to think they are victims of identity theft, as well as to inform taxpayers of the measures it has taken in response to the problem.
This involves notifying taxpayers if someone has been charged with a crime in connection with the incident, as well as providing the identify of the thief so that the taxpayer may seek civil court remedy. Taxpayers who have been victims of identity theft will be allocated a “single point of contact” inside the IRS, who will be assigned to manage the taxpayer’s case.
Furthermore, you no longer have to be a victim of identity theft in order to get a protected IRS personal identification number, which you may use to submit information to the agency electronically in the future. This program is now available to anybody who wishes to participate.
Assistance with Refunds That Have Been Misdirected
Nobody would deny that completing a tax return can be a time-consuming and frustrating experience. Upon completing the task, you could breathe a big sigh of relief before beginning the process of inputting the routing number of your financial institution together with your account number so that you can receive your long-awaited return by direct deposit.
In the olden days, if you made a clerical error or misread a number, you were very much on your own to straighten things up. The Internal Revenue Service has been constrained in its ability to recover your money if it has been transferred to another account.
More information may be found at IRS Refund Issues.
Thanks to the TFA, this is no longer the case. The new legislation compels the Internal Revenue Service to put in place measures to help taxpayers in these situations, including setting up a reporting system for concerned taxpayers and ensuring that any refunds are returned and sent to the appropriate recipient.
The Failure to File Penalty is a monetary penalty.
The awful news is now in order. If you file your tax return late or not at all, you’ll have to pay a little extra in interest and penalties. It used to be a bare minimum of $205, but the TFA increased it to a maximum of $330 in 2012.
Perhaps you’re thinking that’s not so awful, but a few new tax rules have gone into force since the beginning of the year. One of them, the SECURE Act, upped the minimum punishment for violating it once again in December of this year. The price has now been fixed at $435.
Aside from this penalty, the TFA is a very taxpayer-friendly piece of legislation.
