National Taxpayer Advocate Purple Book

The National Taxpayer Advocate is releasing the inaugural edition of the National Taxpayer Advocate Purple Book. In it, she presents a concise summary of 50 legislative recommendations that she believes will strengthen taxpayer rights and improve tax administration. Most of the recommendations have been made in detail in prior reports but others are presented in this book for the first time.

She believes that most of the recommendations presented in this volume are non-controversial, common sense reforms that the tax-writing committees and other committees and other Members of Congress may find useful.  

NTA Purple Book: Compilation of Legislative Recommendations to Strengthen Taxpayer Rights and Improve Tax Administration

Introduction

1. Strengthen Taxpayer Rights

  1. Enact the Taxpayer Bill of Rights As a Freestanding Provision in the Internal Revenue Code
  2. Require the IRS to Provide Annual Taxpayer Rights Training to Employees
  3. Codify the IRS Mission Statement
  4. Require the IRS to Provide Taxpayers with a Receipt Showing How Their Tax Dollars Are Being Spent

 2. Improve the Filing Process

  5. Authorize the Volunteer Income Tax Assistance Grant Program
  6. Authorize the IRS to Establish Minimum Competency Standards for Federal Tax Return Preparers
  7. Require the IRS to Utilize Scannable Code or Similar Technology to Process Individual Income Tax Returns Prepared Electronically but Filed on Paper
  8. Clarify that IRS Employees May Help Taxpayers Locate a Specific Low Income Taxpayer Clinic
  9. Extend the Time for Small Businesses to Make Subchapter S Elections
10. Require Employers Filing More Than Five Forms W-2, 1099-MISC, and 941 to File Electronically and Provide a Breakdown By Employee of the Amounts Reported On Form 941
11. Authorize the IRS to Work with Financial Institutions to Reverse Misdirected Deposits
12. Revise the “Mailbox Rule” to Apply to Electronically Submitted Documents and Payments in the Same Manner as It Applies to Mailed Submissions
13. Amend IRC § 6654(c)(2) to Adjust Estimated Tax Payment Deadlines to Occur Quarterly
14. Harmonize Reporting Requirements for Taxpayers Subject to Both FBAR and FATCA by Eliminating Duplication and Excluding Accounts a U.S. Person Maintains in the Country Where He or She is a Bona Fide Resident

3. Improve Assessment and Collection Procedures

      15. Strengthen Taxpayer Protections in the Filing of Federal Tax Liens
      16. Codify the Rule That Taxpayers Can Request Equitable Relief Under Internal Revenue Code Section 6015(f) Any Time Before Expiration of the Period of Limitations on Collection
      17. Authorize the IRS to Release Levies That Cause Economic Hardship for Business Taxpayers
      18. Extend the Time Limit for Taxpayers to Sue for Damages for Improper Collection Actions
      19. Protect Retirement Funds from IRS Levies in the Absence of “Flagrant Conduct” by a Taxpayer
      20. Toll the Time Periods for Requesting the Return of Levy Proceeds While the Taxpayer or a Pertinent Third Party is Financially Disabled
      21. Require the IRS to Waive User Fees for Taxpayers Who Enter into Low-Cost Installment Agreements and Evaluate the Potential Revenue and Compliance Costs of Future User Fee Increases
      22. Hold Taxpayers Harmless When the IRS Returns Funds Levied from a Retirement Plan or Account
      23. Modify the Requirement That the Office of Chief Counsel Review Certain Offers-in-Compromise
      24. Continue to Limit the IRS’s Use of “Math Error Authority” to Clear-Cut Categories Specified by Statute
      25. Amend IRC § 7524 to Require the IRS to Mail Notices at Least Quarterly to Taxpayers with Delinquent Tax Liabilities
      26. Provide Additional Time for Taxpayers Outside the United States to Request Abatement of a Math Error Assessment Equal to the Time Extension Allowed in Responding to a Notice of Deficiency
      27. Improve Offer in Compromise Program Accessibility by Repealing the Partial Payment Requirement
      28. Amend IRC § 7403 to Provide Taxpayer Protections Before Lien Foreclosure Suits on Principal Residences
      29. Amend IRC §§ 6320 and 6330 to Provide Collection Due Process Rights to Third Parties Holding Legal Title to Property Subject to IRS Collection Actions
      30. Clarify that Taxpayers May Raise Innocent Spouse Relief as a Defense in Collection Proceedings and in Bankruptcy Cases

     4. Reform Penalty and Interest Provisions

        31. Convert the Estimated Tax Penalty into an Interest Provision for Individuals, Trusts, and Estates
        32. Apply One Interest Rate Per Estimated Tax Underpayment Period for Individuals, Estates, and Trusts
        33. Reduce the Federal Tax Deposit Penalty Imposed on Certain Taxpayers Who Make Timely Tax Deposits
        34. Authorize A Penalty for Tax Return Preparers Who Engage in Fraud or Misconduct By Altering a Taxpayer’s Tax Return
        35. Require Written Managerial Approval Before Assessing the Accuracy-Related Penalty for “Negligence”
        36. Compensate Taxpayers for “No Change” National Research Program Audits and Waive Assessment of Tax, Interest, and Penalties Resulting from Such Audits

       5. Strengthen Taxpayer Rights Before the Office of Appeals

          37. Require That At Least One Appeals Officer and One Settlement Officer Be Located and Permanently Available in Each State, the District of Columbia, and Puerto Rico
          38. Require Taxpayers’ Consent Before Allowing IRS Counsel or Compliance Personnel to Participate in Appeals Conferences

         6. Enhance Confidentiality and Disclosure Protections

          39. Limit Redisclosures and Unauthorized Uses of Tax Returns and Tax Return Information Obtained Through Section 6103-Based “Consent” Disclosures
          40. Authorize the Treasury Department to Issue Guidance Specific to IRC § 6713 Regarding the Disclosure or Use of Tax Return Information by Preparers

         7. Strengthen the Office of the Taxpayer Advocate

            41. Codify the National Taxpayer Advocate’s Authority to Issue Taxpayer Advocate Directives
            42. Clarify the Taxpayer Advocate Service’s Access to Files, Meetings, and Other Information
            43. Clarify That the National Taxpayer Advocate May Hire Legal Counsel
            44. Authorize the National Taxpayer Advocate to File Amicus Briefs
            45. Require the IRS to Address the National Taxpayer Advocate’s Comments in Final Rules
            46. Authorize the Office of the Taxpayer Advocate to Assist Certain Taxpayers During a Lapse in Appropriations
            47. Clarify the Authority of the National Taxpayer Advocate to Make Personnel Decisions to Protect the Independence of the Office of the Taxpayer Advocate
            48. Repeal Statute Suspension Under IRC § 7811(d) for Taxpayers Seeking Assistance From the Taxpayer Advocate Service
            49. Establish Compensation of the National Taxpayer Advocate by Statute and Eliminate Eligibility for Cash Bonuses

           8. Miscellaneous Provisions

              50. Authorize Independent Contractors and Service Recipients to Enter into Voluntary Withholding Agreements Without Risk They Will Be Used to Challenge Worker Classification Determinations

            Read the full 2017 Annual Report to Congress