Finance Committee to Consider Several Pro-taxpayer Rights Measures from Grassley
WASHINGTON – Several pro-taxpayer rights provisions from Sen. Chuck Grassley will receive key committee consideration this week.
“These provisions send a signal to those entrusted with administering the nation’s tax laws,” Grassley said. “The IRS needs to remember that it conducts the people’s business when it enforces and administers the federal tax code. With recent abusive scandals at the IRS, Congress has to step in to promote tax fairness and taxpayer privacy.”
On Wednesday at 10 a.m. Eastern, the Finance Committee is scheduled to consider a bill put together by the chairman, called the Taxpayer Protection Act of 2016. It includes measures from Grassley and Sen. John Thune from their Taxpayer Bill of Rights Enhancement Act of 2015. The Grassley co-authored measures include:
--Extend time limit for contesting an IRS levy. The IRS is authorized to levy property to satisfy a tax debt in certain instances. While the IRS is authorized to return property that has been wrongfully levied upon at any time, it is only authorized to return the monetary proceeds from the sale of levied property within 9 months of the date of the levy. Similarly, if a third party believes the levied property belongs to him/her and not the person against whom the tax is assessed, the third party generally has 9 months from the time of the levy to bring a civil action for wrongful levy in a U.S. district court. In some cases the 9-month period may be insufficient for individuals and third parties to discover a wrongful levy and seek remedy. Therefore, the provision extends from 9 months to 2 years the period for returning the monetary proceeds from the sale of property that has been wrongfully levied upon as well as the period for bringing a civil action for wrongful levy.
--Individuals held harmless on improper levy on retirement plans. Under present law, if the IRS improperly levies on an individual retirement arrangement (IRA) or certain employer-sponsored retirement plans, an individual may not be made whole even if the IRS returns the amount levied with interest because the individual may lose the opportunity to have those funds accumulate on a tax-favored basis until retirement. The provision allows amounts, including interest, returned to an individual from the IRS pursuant to a levy to be contributed to the IRA or employer-sponsored plan without regard to normal contribution limits. In general, any tax attributable to the amount distributed from the IRA or employer-sponsored plan by reason of a levy is not to be assessed, if assessed is to be abated, and if collected is to be credited or refunded as an overpayment. In addition, the IRS is required to pay interest on an amount returned to the individual in the case of a levy that is determined to be premature or otherwise not in accordance with administrative procedures, as well as in the case of a wrongful levy under present law. The purpose is to protect a taxpayer’s retirement nest egg where the IRS improperly levied a taxpayer’s IRA.
--Electronic record retention. In August 2012, the Office of Management and Budget and National Archives and Records Administration issued a joint directive to heads of executive departments and agencies to manage both permanent and temporary email records in an accessible electronic format by December 31, 2016. There are no tax code provisions governing IRS record retention, management, or transfer of paper or electronic records. The Internal Revenue Manual provides IRS employees processes, procedures, and guidelines regarding records and information management. The provision codifies the joint directive issued in August 2012. In addition, the provision requires that the IRS maintain email records of all principal officers and specified employees for no less than 15 years. The purpose is to ensure the IRS has in place adequate safeguards to ensure electronic records, such as e-mails, are properly saved and readily retrievable.
--Mandatory e-filing by exempt organizations. In general, only the largest and smallest tax-exempt organizations are required to electronically file their annual information returns. Tax-exempt corporations that have assets of $10 million or more and that file at least 250 returns during a calendar year must electronically file their Form 990 information returns. Private foundations and charitable trusts, regardless of asset size, that file at least 250 returns during a calendar year are required to file electronically their Form 990-PF information returns. Organizations that file Form 990-N (i.e., the e-postcard) also must electronically file. Information returns filed electronically can be processed more rapidly and at much lower cost than paper return filings. Therefore, the provision extends the requirement to electronically file to all tax-exempt organizations required to file statements or returns in the Form 990 series or Form 8872 (“Political Organization Report of Contributions and Expenditures”). The provision also requires that the IRS make the information provided on the forms available to the public in a machine-readable format as soon as practicable. The goal is to increase the transparency of, and enhance public access to information about, public charities.
--A study of problems with IRS use of offers in compromise. The Grassley-Thune bill would have eliminated red tape that may act as a barrier to taxpayers facing financial hardship to settle their tax debt for less through an offer in compromise. The chairman’s mark includes a Government Accountability Office study of the problem.
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