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H.R. 5444 (115th): Taxpayer First Act

H.R. 5444 makes numerous changes to reorganize the Internal Revenue Service (IRS) in an attempt to focus the agencies efforts more on taxpayer service. Specifically, the bill does the following:

  • Creates an independent appeals process to improve the dispute resolution process within the agency.
  • Requires the IRS to submit to Congress a comprehensive plan to improve its customer service strategy, based on best practices from the private sector.
  • Requires the IRS to maintain the IRS Free File Program that provides free individual income tax preparation and electronic filing services to the lowest 70 percent of taxpayers by adjusted gross income.
  • Ensures taxpayers have access to the same information as the IRS during the dispute resolution process, in an attempt to level the playing field.
  • Requires the IRS to submit to Congress a plan to redesign the structure of the agency to improve efficiency, enhance cyber security, and better meet the needs of taxpayers.
  • Ensures that the IRS sends notice to the actual taxpayer when conducting an audit before contacting friends, neighbors, and clients.
  • Restructures the IRS’s enforcement tools to ensures taxpayers do not have their assets seized without proper, timely, and fair notice.
  • Changes the head position at the IRS from a Commissioner to an Administrator.

Of particular note, this bill would simplify some taxpayers' access to case files. Under current law, a taxpayer must file a Freedom of Information Act (FOIA) request in order to obtain from the IRS the file of information on his or her case. The bill requires that the administrative case file referred to Independent Appeals be available to certain individual and small business taxpayers. Eligible taxpayers are individuals with adjusted gross income below $400,000 and entities with gross receipts below $5 million. Under the proposal, eligible taxpayers may review the non-privileged portions of materials developed by the IRS for its administrative case file not later than ten days prior to the first conference with Independent Appeals. In providing the materials, the IRS need not produce for the taxpayer the documents that were initially provided to the IRS by the taxpayer. In addition, the taxpayer may elect to waive the ten-day period and accept access to the materials on the date of the scheduled conference.

Last updated Apr 29, 2018. Source: Republican Policy Committee

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 13, 2018.

Taxpayer First Act

This bill amends the Internal Revenue Code to modify the organizational structure, enforcement procedures, and services of the Internal Revenue Service (IRS).

The bill establishes within the IRS the Independent Office of Appeals to resolve tax controversies and review administrative decisions.

With respect to the services provided to taxpayers, the bill requires the IRS to:

submit to Congress a customer service strategy, continue to operate the IRS Free File Program, and exempt certain low-income taxpayers from payments required to submit an offer-in-compromise. The bill revises enforcement procedures relating to:

the seizure of property that has been structured to avoid Bank Secrecy Act reporting requirements, equitable relief from joint liability, the issuance of a summons, referrals for private debt collection, contacting third parties, and providing access to return and return information to individuals who are not IRS employees. The bill addresses the organizational structure of the IRS by:

modifying the titles of several IRS officials, establishing requirements for responding to Taxpayer Advocate Directives and providing statistical support to the National Taxpayer Advocate, eliminating the IRS Oversight Board, and requiring the IRS to submit a reorganization plan to Congress. The bill also makes Tax Court judges subject to the same grounds for disqualification as other federal judges.