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Bipartisan Tax Reform Bill Introduced; Would Amend Private Collection Agency Program

A bipartisan bill has been introduced in the Senate to reform the Internal Revenue Service, including how it is told to operate its private collection agency program where unpaid tax debts are outsourced to one of four collection agencies.

The Taxpayer First Act Of 2019 is sponsored by Sen. Chuck Grassley [R-Iowa], the chairman of the Senate Finance Committee, and Sen. Ron Wyden [D-Kan.], the committee’s Ranking member. The bill is said to be endorsed by Rep. Richard Neal [D-Mass.], the chairman of the House Ways and Means Committee, which could indicate that the bill has enough support to become law. The House passed similar legislation last year, but the bill was not considered by the Senate.

Among other changes to the IRS, the proposed legislation would remove two categories of individuals from having their debts placed with private collection agencies. Those categories are: taxpayers whose income is substantially derived from supplemental security income benefits or disability insurance benefit payments or taxpayers with an adjusted gross income of 200% of the applicable poverty level and below. The IRS has been cited by a number of critics for unfairly targeting lower-income individuals, who might not have the means to repay their debts owed to the IRS.

As well, the proposed legislation would also amend “the definition of inactive tax receivables that can be assigned to private debt collection agencies to those in which more than two years has passed since assessment of the tax debt and limits installment agreements between the taxpayer and private debt collection agencies to seven years.”

“There’s no federal agency Americans interact with more than the IRS, and it’s critical that it be reformed and modernized to better serve taxpayers,” Wyden said in a statement. “Our bill would strengthen tax-preparation services for low-income Americans, improve agency technology and better protect taxpayers’ personal data. This legislation has strong bipartisan support and I’m hopeful it will be passed without delay.”

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