Madam Chair, thank you for holding this hearing on proposals to improve the administration of our federal tax system. Today, we will hear suggestions from our colleagues on how to improve IRS operations and taxpayer services.
Madam Chair, as you know, we have a voluntary tax system that depends on taxpayers understanding their obligations and receiving timely answers to their questions. In a nation as great and diverse as ours, taxpayers have unique perspectives and needs. Unfortunately, identity theft and tax fraud continue to challenge tax administration. It is particularly important that all taxpayers - especially those who are low-income, disabled, and senior citizens -- receive fair, quality, and in-person services. For these reasons, we must strengthen Internal Revenue Service (IRS) staff and training and arm the agency with adequate tools to fight identity theft and tax fraud.
Without necessary resources, the agency will not be able to implement the ideas discussed today. Over the past eight years, Congress cut the agency’s budget by almost one billion dollars. We all understand that the Internal Revenue Service is in desperate need of more funding and staff. These reductions harm both taxpayer services and tax administration. We should adopt many of these good ideas only if the agency receives the additional funding it needs to carry out its duties.
Madam Chair, I would like to share an overview of my bill to improve taxpayer services-H.R. 2171, the Taxpayer Protection Act of 2017. The Democratic Members of this Subcommittee joined me in introducing this legislation. H.R. 2171 reflects many of the values in the Taxpayer Bill of Rights.
H.R. 2171 would repeal the private debt collection program restarted in 2015 by the Majority. The program abuses thousands of low-income taxpayers by enrolling them in installment agreements that they cannot afford. In her most recent report to Congress, the National Taxpayer Advocate states that the program only collected $6.7 million from taxpayers at a cost to the IRS of $20 million, which is three times the amount collected. Nearly 30 percent of the people who made payments under the program had incomes below $20,000, about 40 percent had incomes below 250 percent of the poverty level, and some were Social Security Disability Insurance (SSDI) recipients.
Simply said, Madam Chair, the collection of federal taxes is a core function of government. A for-profit focuses on bonuses and commissions; it cannot and will not ever have the best interest of taxpayers at heart. We have been down this road before Each and every single time, private debt collection fails. It creates confusion and wastes taxpayer dollars. The program is a shame and a disgrace, and it must end.
In addition, our legislation would allow the IRS to refer taxpayers to Low-Income Taxpayer Clinics for assistance, increase authorized grants to such clinics, and improve overall funding for taxpayer services. H.R. 2171 also would repeal the partial payment requirement for taxpayers who would like to enter into an offer-in-compromise to settle their tax liabilities. Today, the law requires taxpayers to make a nonrefundable partial payment of 20 percent of the amount of their offer with their application. Our bill would repeal the nonrefundable deposit that prevents taxpayers from settling their debts.
Finally, H.R. 2171 would authorize the agency to regulate tax return preparers and disclose information to the public related to tax return preparer misconduct. The IRS currently receives over 150 million tax returns each year, which mostly paid return preparers submit. Taxpayers should be able to know whether the professional preparing their return is licensed and in good standing with the IRS. As you can see, the Taxpayer Protection Act proposes good, sound policy, and I hope our colleagues on both sides of the aisle will support this bill.
Madam Chair, like you, I care deeply about the agency’s ability to provide service to taxpayers. Again, I thank you for holding this hearing, and I look forward to the testimony of our colleagues.
