House introduces taxpayer appeal rights bill

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A bipartisan group of lawmakers has introduced legislation to provide taxpayers more rights to have their cases heard by the Internal Revenue Service’s Office of Appeals.

The Preserving Taxpayers’ Rights Act would provide taxpayers the legal right to have cases heard by the IRS Office of Appeals, further define which IRS cases can be designated for litigation and when tax liability assessments can be levied, and eliminate the use of outside law firms for federal tax audits.

The bill aims to strengthen consumer confidence in the IRS and help the agency provide services more efficiently. It was introduced Thursday in the House by Rep. Jason Smith, R-Mo., co-sponsored by Judy Chu, D-Calif., Carlos Curbelo, R-Fla., George Holding, R-N.C., Terri Sewell, D-Ala., and Mike Thompson, D-Calif.

The bill would require that cases the IRS “designates for litigation,” a procedure that removes a case from the process that otherwise would lead to the Appeals office, could only be used when it involves a tax abuse that is a recurring, significant legal issue affecting a large number of taxpayers. It would also require that the use of designated summonses that extend the time period for the IRS to assess a tax liability are properly authorized and only used when taxpayers are uncooperative and refuse to provide information requested by the IRS. The bill would also prohibit the IRS from outsourcing federal tax audits of private taxpayers to outside law firms, a recent development that has been unprecedented in IRS history, which the bill proponents worry might become a routine practice.

The bill is backed by Financial Executives International, in coordination with an industry group called the Coalition for Effective and Efficient Tax Administration. CEETA took the lead in proposing the bill’s major provisions.

“The IRS’ efficacy has historically proven more successful when a good faith, collaborative system is in place, one in which the taxpayers are willing to participate, with the confidence that the IRS is able to productively work with them to resolve disputes,” said FEI managing director of technical activities Brian Cove in a statement. “FEI’s work as an active CEETA member aimed to restore that system by delivering needed process reforms to IRS examinations. These reforms, in turn, will reduce the time, cost and burden of current exam practices that, to date, have proven burdensome to our FEI members as well as the taxpayer at large.”

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