Taxpayer First Act

On July 1, 2019, President Trump signed into law the Taxpayer First Act (P.L. 116-25), which is legislation focused on IRS practices and procedures. The IRS is supposed to enhance customer service to taxpayers by restructuring some activities and improving cybersecurity and access to electronic services. The IRS is directed to create a single point of contact for victims of tax identity theft, rather than having multiple contact options.

The new law also creates an independent Office of Appeals. The purpose of this is to allow taxpayers’ cases to be heard by an independent decision maker. The law requires the IRS to provide certain individual and business taxpayers with their case files, if requested, prior to the start of any dispute resolution process.

The law also clarifies equitable relief from joint and several liability for taxes on joint returns. It makes clear that Tax Court would take a fresh look at the case without taking previous decisions into account. The review would be based on the administrative record and any newly discovered or previously unavailable evidence. The new law specifies that if the equitable relief request involves a tax liability that has not been paid, the request must be made before the end of the statute of limitations for IRS collections, generally 10 years after the IRS assessment. If the request concerns a liability that has been paid, the request must be made within the period for filing a refund claim (3 years from filing of the return, or if later, two years from payment of the tax).

While most of the changes in the new law are taxpayer-friendly, the new law increases the penalty for late filing of returns more than 60 days after the due date. The penalty is the lesser of $330 (up from $215) or 100% of the amount required to be shown on the return. This change applies to returns required to be filed after 2019, so it will apply to 2019 income tax returns filed in 2020.