Right on time for the conclusion of tax season, the House has passed a bill that promises to make tax preparation easier, while also repealing the IRS Private Debt Collection Program.
The House approved the Taxpayer Assistance and Simplification Act of 2008 by a vote of 238 to 179. Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Oversight Subcommittee Chairman John Lewis, D-Ga., introduced the bill.
The bill repeals the controversial IRS Private Debt Collection program, which has been criticized for spending $75 million to collect just $35 million for the IRS from three private firms that take a 24 percent cut of the taxes they collect.
"It would once and for all repeal the authority of the IRS to enter into private debt collection contracts," said Lewis (pictured) in a statement. "This program violates the public trust and must end."
In addition to the private debt collection repeal, the bill eliminates special requirements for individuals to keep detailed records of the calls they make on cell phones provided by their employers.
The bill also equalizes the tax return reporting standards for tax preparers and taxpayers, reversing a provision in a 2007 law that the American Institute of CPAs had lobbied heavily against. The new provision modifies the penalty on an understatement of a taxpayer's liability to remove potential conflicts of interest between the taxpayer and tax preparer.
It also delays for one year the imposition of a 3 percent withholding requirement on government payments for goods and services made after Dec. 31, 2010.
Another provision of the bill promises to stop federal contractors from using foreign subsidiaries to evade Social Security and other employment taxes. And it makes the administrators of state and local government programs liable for paying employment taxes on amounts paid by government programs to in-home care workers provided to elderly and disabled persons.
The bill seeks to combat identity theft and fraud by prohibiting the misuse of Department of the Treasury names and symbols in misleading Web sites and "phishing" schemes. It requires the IRS to notify taxpayers if it suspects theft of a taxpayer's identity.
The authors of the bill hope to protect low-income taxpayers by prohibiting IRS debt indicators for predatory refund anticipation loans, allowing IRS employees to refer taxpayers to qualified low-income taxpayer clinics, and authorizing funding for Volunteer Income Tax Assistance programs.
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