The U.S. Senate has introduced the Taxpayer Assistance and Service Act (TAS Act), a legislative proposal aimed at modernizing the Internal Revenue Service (IRS) and enhancing taxpayer services. As tax administration continues to face scrutiny over inefficiencies and outdated processes, this bill seeks to address these concerns through targeted reforms. The TAS Act was released as a discussion draft by Senators Mike Crapo and Ron Wyden on January 30, 2025. f now, it remains a draft and has not been formally introduced or filed in either chamber of Congress.
Key Provisions of the TAS Act
The proposed legislation includes a wide range of measures designed to improve the taxpayer experience and streamline IRS operations. Some of the most notable provisions include:
1. Digital Modernization of Tax Administration
- Digitization of Paper Returns: The IRS will be required to implement barcode scanning and optical character recognition (OCR) technology to process paper-filed tax returns more efficiently.
- Online Dashboard for Taxpayers: A real-time tracking system will inform taxpayers of IRS backlogs, wait times, and the status of their filings.
- Expansion of Electronic Access: Taxpayers will gain greater access to digital tools that allow them to view and manage their tax returns and refunds.
- Callback Technology for IRS Phone Lines: The bill mandates that taxpayers calling the IRS receive automatic callbacks rather than waiting on hold indefinitely.
2. Taxpayer Protections and Relief
- Improved Error Notices: The IRS must provide clearer explanations for mathematical or clerical errors, along with detailed breakdowns of tax adjustments.
- Automation of Economic Hardship Refunds: Refund offsets will be bypassed for taxpayers in severe financial distress.
- Elimination of Installment Agreement Fees: Low-income taxpayers will no longer be subject to fees when entering into installment payment agreements with the IRS.
- Quarterly Tax Delinquency Notices: The IRS will now send more frequent, detailed notifications to taxpayers with outstanding balances.
3. International Taxpayer Provisions
- Simplification of Foreign Bank Account Reporting (FBAR): The bill aligns foreign financial account reporting with regular tax filing deadlines.
- Foreign Currency Exchange Rule Adjustments: Changes will reduce compliance burdens for expatriates and businesses handling currency conversions.
- Relief for Low-Income Dual-Citizen Expatriates: The legislation introduces measures to reduce tax compliance burdens for individuals who hold dual citizenship.
4. Strengthening IRS Oversight and Appeals Processes
- Expansion of the Taxpayer Advocate’s Authority: The National Taxpayer Advocate (NTA) will gain direct hiring authority and greater access to IRS legal and financial data.
- Judicial Review Enhancements: The U.S. Tax Court will have expanded jurisdiction over tax disputes, including those involving innocent spouse relief and equitable tolling.
- Penalties for Tax Preparers: The IRS will be given stronger enforcement tools to penalize tax preparers who misappropriate refunds or improperly alter tax returns.
Reactions to the TAS Act
The TAS Act has received bipartisan support, with key members of the Senate Finance Committee, including Senators Mike Crapo and Ron Wyden, leading the charge. The proposed bill is open for public comment until March 31, 2025, allowing taxpayers, tax professionals, and advocacy groups to weigh in. The public comment period has become much more significant since the Loper Bright decision on judicial review of regulatory decisions in regards to IRS regulations and is likely to be significant for legislation effecting regulation such as this bill.
The National Taxpayer Advocate, Erin Collins, has strongly endorsed the bill, citing its potential to “significantly strengthen taxpayer rights and modernize IRS procedures.”
While media coverage remains limited at this stage, tax policy experts and professionals have shown keen interest in how the TAS Act could reshape tax administration. The bill’s emphasis on digital modernization, taxpayer protections, and international tax compliance simplification has been particularly well received.
The Road Ahead: What This Means for Taxpayers
If enacted, the TAS Act could significantly transform IRS operations and customer service, reducing wait times, improving digital accessibility, and enhancing taxpayer protections. However, as with any major tax policy change, the challenge lies in effective implementation and ensuring the IRS has the necessary resources to execute these reforms efficiently.
The coming months will determine whether the TAS Act gains traction in Congress and whether it undergoes further revisions before a final vote. Taxpayers, professionals, and policymakers alike should stay informed and consider submitting feedback before the public comment period closes.
As always, proactive planning and staying ahead of potential legislative changes will be key for taxpayers navigating an evolving tax landscape.
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