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HOUSE APPROVES REFORMS the day after IRS stumbles

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House lawmakers enjoyed good timing with their IRS reform bills.

The House voted Wednesday to implement a series of bipartisan changes to the IRS that were billed as customer service improvements.

The votes had been planned for weeks to go along with Tax Day, but were given added timeliness with the IRS’ website failure Tuesday just as taxpayers faced the filing deadline.

Two bills passed in Wednesday’s votes. One, the 21st Century IRS Act, would overhaul parts of the agency’s cybersecurity and information technology practices. It passed with only three "no" votes, all Republicans. Another, the Taxpayer First Act, which passed unanimously, would set new rules on the agency's interactions with taxpayers and implement modest reforms to its organizational structure. Both were written on a bipartisan basis.

“As a CPA, I’ve seen first-hand countless examples of the IRS being out of date with technology and out of touch with the needs of the taxpayer," said Rep. Lynn Jenkins, R-Ks., the chairman of the Ways and Means oversight subcommittee. "Yesterday’s website failure at the IRS added more urgency to the need to modernize the IRS and focus on the taxpayer experience."

Perhaps the most significant new provision would be the creation of a permanent office of appeals for taxpayers with disputes.

Pete Sepp, president of the National Taxpayers Union, said his group would favor more changes to the audit appeals process, but that the provision is a “a good, pretty large step in the right direction.”

But the legislation includes other provisions related to treatment of taxpayers. The legislation would limit the IRS’ ability to seize assets and impose new guidelines on the use of private debt collectors for tax liabilities. Taxpayers would get new private accounts at the IRS, allowing them to look up past returns, make payments, and do more.

Also, taxpayers hit by identity theft would get new protections, including the right to a single point of contact in the IRS to help them fix the problem.

As for nonprofits that don’t pay taxes, more would be required to electronically file form 990s that provide the public information about their finances.

Although republicans began this Congress promising to abolish the IRS and replace it with a new agency, the Taxpayer First Act would settle for more modest changes. Among other smaller moves, the title of IRS “commissioner” would be changed to “administrator of the Internal Revenue Service.” The agency also would have to submit a reorganization plan to Congress.

The IRS also would be required to hire a chief information officer and to set benchmarks for upgrading its technology. Given that the IRS site failed Tuesday as taxpayers went to file their taxes, “That oughtta be at the top of the list,” Sepp said.