“This week, many Americans are preparing and filing their income tax returns,” said Oversight Subcommittee chairman John Lewis, D-Ga., in a statement. “The Taxpayer Assistance Act of 2010 responds to taxpayer needs that have been raised in hearings before the committee. This legislation helps taxpayers who are struggling in this economy by making it easier to enter into payment arrangements with the IRS. It also helps low-income taxpayers by improving IRS services available to them and helps small businesses and nonprofit organizations by relaxing the record-keeping requirements for employer-provided cell phones. I am pleased that many of these provisions have broad, bipartisan support.”
As recommended by the Obama administration, the bill would eliminate the strict substantiation rules requiring individuals to keep detailed records regarding cell phones and similar equipment used for business purposes.
The bill would also allow the Treasury Secretary to exempt, for religious reasons, certain tax return preparers from the electronic filing mandate.
The bill would also accelerate the interest on refunds for returns filed electronically by requiring the IRS to pay interest on refunds related to individual income tax returns that are filed electronically if the refund is not paid within 30 days of the later of the return due date or the date the return is filed.
In addition, the Taxpayer Assistance Act of 2010 would require the Treasury Secretary to conduct a study on the effectiveness of collection alternatives, such as offers-in-compromise.It would also repeal the partial payment requirement on submissions of offers-in-compromise. The bill would help taxpayers enter into offer-in-compromise agreements to settle their federal tax liabilities, and increase the likelihood that some amount of tax is collected, by repealing this requirement.
As recommended by National Taxpayer Advocate Nina Olson, the bill would allow IRS employees to refer taxpayers to Low Income Taxpayer Clinics. The bill would also codify the Volunteer Income Tax Assistance program and allow the Treasury Secretary to allocate, in the absence of a specific appropriation, up to $20 million of grant funding annually for the program. The bill also would increase the allocated amount for LITCs from $6 million to $20 million annually.
The bill would require the IRS, to the extent practicable, to notify taxpayers of the availability of the Earned Income Tax Credit in prior taxable years. The bill also would require the IRS to review return information (such as Forms W-2, Wage and Tax Statements) and identify potentially eligible taxpayers to the extent possible.
The bill would require the IRS to notify taxpayers when it suspects that their identities, or their dependents’ identities, have been stolen. It would also allow the IRS to use "mass communication," including the Internet and its Web site, to notify taxpayers of undelivered refunds.
The bill would require the National Taxpayer Advocate to conduct a study on the feasibility of delivering federal tax refunds on debit cards or prepaid cards, or by other electronic means. Furthermore, as recommended by the National Taxpayer Advocate, the bill would require the Treasury Secretary to study, and make recommendations on, the administrative and legislative steps required to allow the IRS to receive information returns before it processes income tax returns. The bill would also require the Treasury Secretary to study how to reduce the number of taxpayers making in-person payments at IRS Taxpayer Assistance Centers.
To pay for all the various provisions, the bill contains revenue-raising aspects, including expanding the "bad check" penalty to electronic payments. As recommended by the Obama administration, the bill would clarify that the penalty applicable to bad checks or money orders extends to all commercially acceptable instruments of payments, i.e., electronic payments. This proposal is estimated to raise $47 million over 10 years.
Similar to another administration proposal, the bill would also increase information return penalties. The bill would hike the penalties for failing to file correct returns, failing to furnish correct payee statements, and failing to comply with other information reporting requirements. This proposal is estimated to raise $419 million over 10 years.
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