Another bill that was approved aims to solve inefficiencies in the Tax Court structure regarding pre-trial discovery documents.
The House of Representatives voted to pass two bills on Monday that increase protections for taxpayers in matters related to penalties imposed by the IRS and tax dispute proceedings in the U.S. Tax Court.
The first bill, HR 5346, the Fair and Accountable IRS Reviews Act, relates to supervisory approval for certain federal penalties imposed by IRS agents on taxpayers.
An IRS employee can impose certain federal penalties on taxpayers after gaining written authorization from their immediate supervisor.
Under present regulations, an immediate supervisor is broadly defined as an individual tasked with reviewing another employee’s proposed penalties, and not necessarily the supervisor to whom the IRS employee reports, according to a fact sheet from the House Committee on Ways and Means.
IRS agents can thus “shop around for sympathetic supervisors,” it said, which weakens taxpayer protections.
“This circular definition is so broad that IRS agents can obtain approval to apply tax penalties on taxpayers from virtually any other employee,” the fact sheet states.
The bill seeks to resolve the issue by defining an immediate supervisor “to be the person to whom the individual making the determination reports,” the fact sheet said.
In addition, the bill clarifies that supervisory approval of a penalty will only be considered timely if such approval is obtained in writing before a taxpayer is notified of such a penalty.
In a Dec. 3 statement, the House Ways and Means Committee said the bill will ensure that “rogue IRS agents are not levying fines and penalties on taxpayers without specific supervisory approval.”
The second bill, HR 5349, the Tax Court Improvement Act, seeks to expand the authority of the U.S. Tax Court in issuing subpoenas. The court will be authorized to extend certain petition deadlines and also institute other changes to court procedures.
The U.S. Tax Court is a federal trial court specializing in adjudicating disputes related to federal income tax, a process that typically takes place before formal tax assessments are conducted by the IRS, according to a fact sheet from the House Committee on Ways and Means.
The Tax Court is the only forum in the United States where taxpayers can litigate issues without having to first pay in full the taxes that are being disputed.
