In June, Congress passed the Taxpayer First Act of 2019 (the Act), and it was signed into law by the President on July 1. The Act, among other things, provides some new safeguards to taxpayers in their interactions with the IRS, including the following.
… Notice to taxpayer of IRS contact with third party. Effective for notices provided, and contacts of persons made, after Aug. 15, 2019, the Act provides that the IRS may not contact any person other than the taxpayer regarding the determination or collection of the tax liability of the taxpayer without providing the taxpayer with notice at least 45 days before the beginning of the period of the contact.
… Structuring transactions and IRS seizures. Effective on July 1, 2019, the Act provides that, in the case of a suspected structuring violation (i.e., structuring transactions to avoid Bank Secrecy Act rules), the IRS may only pursue seizure or forfeiture of assets if either the property to be seized was derived from an illegal source or the transactions were structured for the purpose of concealing a violation of a criminal law or regulation other than rules against structuring.
… John Doe summonses. If certain requirements are met, the IRS may issue a third-party summons that doesn’t identify the taxpayer (a “John Doe” summons). Effective for summonses served after Aug. 15, 2019, the Act prevents the IRS from issuing a John Doe summons unless the information sought to be obtained is narrowly tailored and pertains to the failure (or potential failure) of a person or group or class of persons to comply with one or more provisions of the tax law which have been identified.
… Seizure and sale of perishable goods. Effective for property seized after July 1, 2019, the Act limits the property that may be sold under the IRS’s authority to seize and sell tangible property to satisfy unpaid taxes, to property that is liable to perish.
… Misdirected tax refund deposits. The Act requires the IRS to issue regulations, by Jan. 1, 2020, to establish procedures to allow taxpayers to report instances in which a refund made by electronic funds transfer was not transferred to the account of the taxpayer, to coordinate with financial institutions to identify and recover these payments, and to deliver refunds to the correct accounts of taxpayers.
… Notification of suspected identity theft. Effective for determinations made after Jan. 1, 2020, the Act requires the IRS to notify a taxpayer if it determines there has been any suspected unauthorized use of a taxpayer’s identity, or that of the taxpayer’s dependents, if an investigation has been initiated and its status, whether the investigation substantiated any unauthorized use of the taxpayer’s identity, and whether any action has been taken (such as a referral for prosecution). Additionally, when an individual is charged with a crime, the IRS must notify the victim as soon as possible, giving such victims the ability to pursue civil action against the perpetrators.
… IRS management of stolen identity cases. The Act requires that, not later than July 1, 2020, the IRS must develop and implement publicly available guidelines that reduce the burdens for identity theft tax refund fraud (IDTTRF) victims as they work with the IRS to sort out their tax affairs. The guidelines may include procedures to reduce the amount of time victims must wait to receive their tax refunds, the number of IRS employees with whom victims would need to interact, and the timeframe within which the issues related to the IDTTRF should be resolved.