On July 1, President Trump signed into law the Taxpayer First Act of 2019, which changes the management and oversight of the IRS with the aim of improving customer service, including the process for filing appeals, as well as modernizing its technology.
Many of the provisions will take effect as of July 1, 2019, although some will not be effective for six months or more. As always, we will monitor how this new law is implemented so we can remain your trusted adviser and tax advocate.
Below is a quick snapshot of some of the most relevant changes in the new law.
Independent Office of Appeals: The Taxpayer First Act establishes an Independent Office of Appeals that is designed to strengthen taxpayer rights. The Office of Appeals will continue to resolve tax controversies and review administrative decisions of the IRS, but individuals with adjusted gross income less than $400,000 and small business entities with gross receipts not exceeding $5 million for the tax year are entitled to receive the administrative case file.
Improved customer service: The IRS is required to develop a comprehensive strategy for customer service by July 2, 2020, that outlines the appropriate level of online services available; telephone call back services; and customer service training for employees based on best practices of businesses.
Electronic signatures: Electronic signatures will soon be allowed on Form 8821, which lets the IRS disclose tax information to a tax practitioner; and Form 2848, which is the power of attorney needed for audits and inquiries
Misdirected tax refund deposits: The IRS must establish procedures for instances when direct deposits of tax refunds are sent to the wrong account. These procedures must include ways for the taxpayer to report the misdirected funds; for the IRS to coordinate with financial institutions to identify and recover the payments; and provide a mechanism for delivering the refunds to the correct account.
Identity Protection Personal Identification Numbers: The Treasury Department will start establishing a program to issue an Identity Protection Personal Identification Number to any individual who requests one. This is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of Social Security numbers on fraudulent tax returns.
Identity theft: Beginning after Jan. 2, 2020, the IRS must notify a taxpayer if there is a suspicion of unauthorized use of his or her identity or that of the taxpayer’s dependents. The IRS must inform the taxpayer that an investigation has been initiated and its status, including whether a suspect has been charged with a crime so that victims can pursue civil action against the perpetrator.
Along with this, the IRS is to work with the National Tax Advocate to establish guidelines that reduce the burdens on victims of identity theft tax refund fraud as they work with the IRS to sort out their tax affairs.
Third-party income verification: By 2023, the IRS must develop an automated system for submitting taxpayer income verification to third parties, such as mortgage lenders, instead of by secure fax as is the current process.
An explanation of other IRS reforms can be found in this article at Accounting Today
Krystle Keys, CPA, is a Tax Manager with Antares Group, Inc. She can be reached at firstname.lastname@example.org.