For many Americans, Tuesday brought a flurry of action as people rushed to file their tax returns on time. This year Congress also got into the act, passing legislation to strengthen taxpayer protections and make the tax system work better for consumers.
The "Taxpayer Assistance and Simplification Act" (H.R. 5719), passed by a bipartisan majority this week, is a critical bill that stops taxpayer harassment by ending the private collection of federal taxes, cracks down on identify theft and tax fraud and enables the IRS to use its resources to help consumers access the system more easily.
In recent years, the IRS has been using private debt collectors to collect federal income taxes. These outsourced collectors often expose taxpayers to harassment, abusive calling, and violations of taxpayer rights and disclosure protections. To date, this program has cost taxpayers nearly $50 million over what they’ve been able to gather in uncollected tax revenues. It seems this is due to the huge bounties paid to these private debt collectors. What’s clear is that this outsourcing of our tax collection system is wasting tax payer’s money. H.R. 5719 scraps this flawed process, returning a core government function to the hands of the professional and capable civil service.
With regards to the scourge of identity theft and tax fraud, H.R. 5719 takes the proactive step of requiring the IRS to notify a taxpayer when an unauthorized use of their identity is uncovered during the course of a tax fraud investigation. It also cracks down on misleading websites that seek to obtain personal information by imitating the IRS; increasing both civil and criminal penalties on abusers. These con artists are literally bilking consumers out of thousands of dollars in tax refunds each year and tougher penalties are needed to get them to stop.
Finally, H.R. 5719 provides consumer friendly tweaks to the tax code, a number of which are especially helpful to low income families. Under the legislation, the IRS’ ability to make sure that people know they are entitled to tax refunds or to payments under the Earned Income Tax Credit (EITC) is strengthened. In recent years approximately 25 percent of households eligible for the EITC did not claim it–totaling approximately $8 billion in unclaimed earned income credits.
For taxpayers who would benefit from the use of low income tax clinics, H.R. 5719 increases funding for the clinics and permits the IRS to refer taxpayers to their services—something currently prohibited. It further clarifies that the IRS can use its website to publicize unclaimed taxpayer refunds.
A final provision in H.R. 5719, the “Taxpayer Assistance and Simplification Act” would eliminate the outdated and cumbersome requirement on cell phone reporting. This reporting requirement says that by law, taxpayers need to comb through their business-issued cell phone records to determine which calls were business-related and which were personal calls. It’s a difficult, time-consuming requirement; one that is not consumer friendly and needs repealing.
Tax time is never easy. But we can take some of the burden off taxpayers by making this House-passed bill law.