The Taxpayer First Act, Explained

Ever heard of the Taxpayer First Act?

We bet that at some point or another, you’ve heard of it; maybe it was mentioned on the nightly news, covered in-depth on the radio, or mentioned in the newspaper. However, there’s a good chance you haven’t heard all too much about it.

Unlike the hotly contested Tax Cuts and Jobs Act of 2017, the Taxpayer First Act wasn’t nearly as controversial or as sweeping in scope. As we all know, the larger the bill and the more controversial it is, the more likely the average American is to be familiar with it.

Nonetheless, this new law is the latest piece of tax legislation to wind its way through Congress and onto President Trump’s desk. It was signed into law on July 1, 2019.

In a lot of ways, the Taxpayer First Act has slipped under the radar. And that just doesn’t sit right with us, because it’s a useful piece of legislation that aims to expand taxpayer rights and modernize the way you interact with the IRS.

We think you deserve to have a clear idea of what this law means for you, so we’re going to walk you through the new law itself and explain what kinds of major changes it is making to the IRS and your taxpaying experience.

What Is the Taxpayer First Act?

According to the IRS, the legislation “aims to expand and strengthen taxpayer rights and to reform the IRS into a more taxpayer friendly agency.” This bill, which was passed with fairly bipartisan support, targets change through a few specific areas: the Taxpayer Experience, IRS Modernization, and IRS Reorganization.

Let’s tackle these one by one then dive into some specifics.

Taxpayer Experience

To improve the taxpayer experience, the Taxpayer First Act makes a number of changes that specifically expand the rights of taxpayers and help improve the taxpayer experience.

A few of these changes specifically benefit low-income taxpayers and help taxpayers understand and complete their taxes (though at the expense of some taxpayer assistance centers):

  • Low-income exceptions regarding offers-in-compromise
  • Low Income Taxpayer Clinics
  • Community Volunteer Income Tax Assistance programs
  • Taxpayer assistance center closures

Other changes improve the collections processes, how folks with tax debt can pay, and help IRS employees improve their customer service:

  • Taxes collected by private collection agencies
  • Notice to taxpayer of IRS contact with third party
  • Payment of taxes by debit and credit cards
  • Misdirected tax refund deposits
  • Comprehensive customer service strategy
  • Continual learning environment for employees

IRS Modernization

The IRS isn’t known for being the most technologically advanced branch of the U.S. government, a gap the Taxpayer First Act aims to shore up through the following mix of IRS technology improvements and electronic options for taxpayers:

  • Management of IRS information technology
  • IRS information technology jobs
  • Internet platform for Form 1099 filings
  • Electronic filing of returns
  • Electronic signatures by taxpayers to authorize action by their practitioner

IRS Reorganization

The Taxpayer First Act takes aim at the structure of the IRS, too. It outlines a couple of major changes:

  • Establishment of IRS Independent Office of Appeals
  • IRS organizational structure

Taxpayer First Act: The Need-to-Knows

That’s a whole lot of changes, we know. Here are the standout changes that you may want to pay special attention to.

1. IRS Independent Office of Appeals

The IRS already had an Office of Appeals, but the new law specifically added the term “Independent,” formalizing the appeals process as independent from the rest of the IRS—a minor but meaningful difference.

Now, should your case find its way to IRS Appeals, you have more access and independence baked into the appeals process, which helps your case in terms of keeping the IRS out of your appeal.

2. Third-Party Summons

This one is big for any person or business owner who might be locked with the IRS. Specifically, the Taxpayer First Act requires the IRS to give a taxpayer advanced warning (at least 45 days) before reaching out to a third party.

Sometimes, the IRS will reach out to third parties—like banks, contractors, or clientele—to gain information surrounding a case without a taxpayer having an adequate chance to provide the information on their own. Requiring the IRS to take this extra step gives the taxpayer more of an opportunity to understand and respond to their case.

3. Cybersecurity

As a country, we may be getting better at understanding identity theft in the digital age—but fraudsters always seem to find a way. The new law includes reforms aimed at combating identity theft, from how the IRS handles cases of identity theft to how you interact with the IRS if you’ve been a victim.

A Win by Congress, a Win for You.

The reason you haven’t heard about the Taxpayer First Act is the reason you should be excited about it. While it always remains to be seen how the reforms will be implemented, the legislation really helps taxpayers, especially when dealing with the IRS.

If you’re dealing with IRS, you still shouldn’t entirely rest on these reforms. Give us a toll-free call about tax relief. We’ll help you get things sorted out and back on the right track.

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