The Honorable Jason Smith
U.S. House of Representatives
1118 Longworth House Office Building
Washington, D.C. 20515
Dear Representative Smith,
As the nation’s oldest taxpayer advocacy group, National Taxpayers Union (NTU) has long supported constructive reforms that improve transparency, accountability, and resolution of administrative matters between citizens and the Internal Revenue Service (IRS). Your bipartisan bill, the Preserving Taxpayers’ Rights Act (HR 3220), includes important provisions that would enhance all of these principles, particularly as they relate to the examination process. The safeguards contained in HR 3220 represent some of the most comprehensive improvements to tax administration since the IRS Restructuring and Reform Act of 1998.
As you may be aware, NTU was the first citizen-taxpayer organization to have assembled a coalition on behalf of the first Taxpayer Bill of Rights in 1988. Our former Executive Vice President served with the bipartisan National Commission on Restructuring the IRS, whose recommendations later informed the landmark 1998 Restructuring and Reform Act. It is with this longstanding interest and experience in tax compliance issues that we strongly endorse the approaches you have taken in HR 3220, and urge your colleagues in Congress to do the same.
Your bill would take several steps to increase IRS efficiency and bolster its quality of service. First, it would codify the right of taxpayers to have their appeal heard by an independent and impartial IRS Office of Appeals to ensure there is a timely and efficient resolution to tax disputes between the agency and the taxpayer. Second, it narrows the scope for which kinds of cases can be designated for litigation by clarifying the limits of the agency’s prerogatives. In fact, this power has never been authorized by Congress, but is an administrative power the IRS has developed institutionally.
Additionally, HR 3220 would limit the IRS’s ability to issue designated summonses, a tactic which law-abiding individuals and businesses acting in good faith have increasingly encountered. Under the proposed law, this power could only be applied to taxpayers who are uncooperative and refuse to provide information or documents requested by the IRS. Finally, the language prohibits a growing, and unprecedented practice of the IRS outsourcing federal tax audits of citizens to third parties.
The provisions outlined in your bill represent a strong start toward restoring faith in the audit process and a more businesslike resolution environment between the IRS and the taxpayer. If adopted, the results will be lower IRS litigation costs, increased efficiency of agency resources and reduced uncertainty for taxpayers undergoing audits. Our tax system need not, and should not perpetuate complexity and frustration when sensible and obvious remedies exist. HR 3220 commendably offers such remedies, thereby sharpening the IRS’s mission focus of assisting taxpayers in meeting their lawful responsibilities.
Last year, NTU testified before a subcommittee of the House Committee on Small Business on the topic of tax examinations. In our introductory statement, we noted:
Although we advocate for many structural changes to the tax system, from the comprehensive to the incremental, one common aspect on which NTU often specifically focuses is the administrability of such proposals. As policymakers define the rates, bases, deductions, credits, and other features of a tax system, what will the practical impact be on taxpayers’ lives and their rights?
This question should inform all discussions surrounding tax law, which is why last year NTU endorsed many of the same proposals to strengthen the integrity of the audit process that you have incorporated into your legislation.
In 1998, Members of Congress on both sides of the aisle came together to forge legislation that constructively and thoughtfully redesigned the way that taxpayers and the IRS interacted with each other. Some 20 years later, the legislation you have introduced admirably reflects the best qualities and cooperative spirit with which your predecessors approached their task. Accordingly, NTU pledges all available assistance to you in enacting HR 3220, and we strongly encourage all Representatives to support this pro-taxpayer bill.
Policy and Government Affairs Associate