House Ways and Means Committee Takes on Bipartisan IRS Reform

On Friday, April 13, the House Ways and Means Committee reported favorably on a package of bills intended to reform and modernize the Internal Revenue Service (IRS). Sponsored by two Democrats and three Republicans, the set of bills is expected to pass the House of Representatives with bipartisan support.

Several of the bills are designed to improve tax services for low-income Americans, like H.R. 2901, the “Volunteer Income Tax Assistance Permanence Act of 2017” and H.R. 5438, “To amend the Internal Revenue Code of 1986 to allow officers and employees of the Department of the Treasury to provide to taxpayers information regarding low-income taxpayer clinics.” The Volunteer Income Tax Assistance program helps disabled, poor, and elderly Americans with free tax filing services, which, along with low-income taxpayer clinics, can ensure that these disadvantaged groups receive maximum tax benefits.

A number of bills also provide enhanced privacy protections to prevent identity theft and help those who experience it. HR 5439 forces the IRS to establish a single point of contact to assist Americans who suffer identity theft due to taxes or the IRS. Another bill, HR 5437, requires the Secretary of the Treasury to establish a program within the next five years to provide a private verification number for any individual who requests one to protect their privacy.

Modernizing the IRS is a priority of this set of bills. The package requires the IRS to submit a proposal to redesign its organization structure and creates a new IRS Chief Information Officer position to help improve the information technology of the agency.

The last reform of the IRS was in 1998, and the suite of bills follow a short-term budget increase of $320 million for the agency. The agency has lost over 18,000 employees since 2010 and can only audit one in 60 Americans with its limited resources, the lowest ratio since 2002. With fewer resources, the IRS has been weakened in answering Americans’ tax questions and enforcing tax law.