Senate passes bipartisan IRS modernization bill

Senate passes bipartisan IRS modernization bill
© Greg Nash

The Senate on Thursday passed a bipartisan bill to make improvements to the IRS, after the House passed the measure earlier this week.

The bill, known as the Taxpayer First Act, passed the Senate by voice vote. It now heads to President TrumpDonald John TrumpCould Donald Trump and Boris Johnson be this generation's Reagan-Thatcher? Merkel backs Democratic congresswomen over Trump How China's currency manipulation cheats America on trade MORE's desk for a signature.

“This bipartisan, bicameral bill represents years of hard work and consensus building," Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyScandal in Puerto Rico threatens chance at statehood Poll: McConnell is most unpopular senator Democrat: Treasury 'acknowledged the unprecedented process' in Trump tax return rejection MORE (R-Iowa) said in a statement.

"It’s a big first step toward strengthening taxpayer protections and turning the IRS into the customer service organization it ought to be,” he said. “I look forward to President Trump signing it into law so the IRS can begin implementing long overdue reforms that will put taxpayers first.”

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The bill contains a host of provisions designed to modernize the IRS, in areas such as customer service, taxpayer rights during the enforcement process, information technology, identity theft protection and electronic systems.

For example, there are provisions to exempt low-income people from the IRS's private debt collection program, establish an independent appeals office, and provide identity theft victims with a single point of contact at the IRS.

The House had passed versions of the bill on multiple occasions last year, and had also approved a version of the measure in April.

But some lawmakers raised concerns about a provision in those versions that would have codified the IRS's "Free File" program, in which it partners with tax-preparation companies to have those businesses offer free tax-filing software to low- and middle-income taxpayers. 

On the day of the April vote, some House Democrats questioned the Free File provision after ProPublica reported on tax-prep companies' lobbying on the issue. Subsequently, ProPublica reported that tax-prep companies had taken steps to hide their options under the Free Free file program, raising concerns from lawmakers in both parties and prompting the IRS to announce a review of the program.

The concerns about the Free File provision pushed House lawmakers to reintroduce the bill last week without the provision. The reintroduced bill is what the House and Senate passed this week.

"Passage of the Taxpayer First Act will modernize the agency, allowing it to better serve taxpayers," Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenDemocrat: Treasury 'acknowledged the unprecedented process' in Trump tax return rejection Hillicon Valley: Twitter says Trump 'go back' tweet didn't violate rules | Unions back protests targeting Amazon 'Prime Day' | Mnuchin voices 'serious concerns' about Facebook crypto project | Congress mobilizes on cyber threats to electric grid Top Democrat demands answers on election equipment vulnerabilities MORE (D-Ore.) said in a statement. "Our bill includes critical provisions to improve customer service, protect personal data, preserve tax-preparation services and shield low-income taxpayers from abusive private debt collectors. Going forward, I will be closely tracking the IRS review of the Free File program and working to achieve a public filing program run by the IRS.”