The Taxpayer Advocacy and Systemization Act modernizes IRS operations and strengthens taxpayer protections through multiple reforms. The bill requires the IRS to digitize paper tax returns using optical character recognition technology and establish an online account system allowing taxpayers to view and manage their returns and correspondence for the past six years, with professionals like tax preparers granted access with taxpayer permission; these digital initiatives must be completed within 18 to 24 months. The legislation also enhances procedural fairness by requiring supervisory approval before IRS penalties are assessed, expanding Tax Court authority to hear refund cases up to $2 million and to conduct pre-trial discovery, and allowing courts to independently review innocent spouse relief cases. Additionally, the bill significantly tightens requirements for tax return preparers by establishing stricter identification standards, raising penalties for improper preparation and failure to use valid identification numbers (ranging up to $1,000 per violation with annual caps of $50,000–$75,000), and granting the IRS authority to suspend or revoke preparer credentials for misconduct. The bill also requires studies on tax compliance burdens for Americans abroad, protects IRS whistleblower awards from budget sequestration, creates relief for tax penalties owed by hostages and wrongfully detained Americans during their detention, and makes various technical adjustments to tax administration, with most provisions taking effect between 180 days and 24 months after enactment.
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