President Trump yesterday signed into a law a bill that aims to overhaul the Internal Revenue Service, including which of the tax agency’s unpaid accounts are placed with one of four private collection agencies.
The Taxpayer First Act of 2019 establishes the creation of an independent appeals office within the IRS that individuals can use to protest procedures or rulings. Overall, the new law is intended to help the IRS improve its customer service, modernize its aging information technology infrastructure, and strengthen taxpayers’ rights.
The new law also establishes limits on which unpaid tax debts can be placed with a private collection agency. The IRS had been accused of targeting low-income individuals by placing a disproportionate number of accounts from low-income individuals with collection agencies.
Under the law, individuals who receive most of their income from Social Security would be exempt from having their unpaid tax debts placed with a private collection agency, as would those whose total gross income is less than 200% of the federal poverty line, which currently stands at $12,490 for one individual. The four agencies will also now be able to create payment plans that extend for up to seven years, an increase of two years from the original limit.
“This signing is the culmination of a lengthy, bipartisan process undertaken by the Ways and Means Committee to implement pro-taxpayer reforms at the IRS for the first time in more than 20 years,” said Rep. Richard Neal [D-Mass], chairman of the House Ways and Means Committee, in a statement. “New protections for low-income taxpayers, practical enforcement reforms and upgraded assistance for taxpayers and small businesses will all now go into place.”
