Taxpayer Rights Have Been Expanded: Taxpayer First Act of 2019

August 20, 2019 Blog

Taxpayers can celebrate that a divided Congress was able to find common ground and pass a new law—the President signed the Taxpayer First Act on July 1, 2019. The law will improve taxpayers’ dealings with the IRS and rein in some of the more arbitrary IRS behavior.

Appeals Process

The biggest achievement is the creation of an independent appeals process, which will be especially helpful for individuals and small businesses. An independent process means that it will be possible to challenge an IRS ruling without undertaking the time and expense of going to court. Though the new appeals office will be part of the IRS, technically it will be independent.

"Innocent Spouses"

When a spouse signs a tax return, he or she becomes personally liable for the taxes owed, plus future interest and penalties. A spouse may be unaware of the other spouse’s bad behavior, but becomes responsible nonetheless. The new law permits courts to grant relief to innocent spouses if they accept their explanations.

Third-Party Summons

Another provision of the law is more restraint on the IRS when it comes to issuing third-party summons. Going forward, the IRS must give the taxpayer at least 45 days notice that it will be reaching out to third parties (banks, customers, vendors, etc.). This will allow time and opportunity for the taxpayer to supply the information the IRS is seeking.

Identity Theft and Cybersecurity

A host of reforms that deal with identity theft and cybersecurity are included in the law. Of special importance are: 1) A requirement that there be a single point of contact for identity theft victims; 2) Taxpayers must be notified if the IRS suspects they have been subject to identify theft; 3) A set of guidelines for handling refund fraud cases must be established; and 4) Increased penalties for unauthorized disclosures of tax return information.

Vehicle Depreciation

The law dramatically boosts the depreciation deductions for purchased autos. Subject to business use percentage, heavy SUVs with gross vehicle weight over 6,000 pounds are 100% depreciable through 2022. After that, the 100% is phased out in 20% annual increments through 2027. Passenger vehicles (cars, minivans, small SUVs, etc.) are subject to different rules, and every year the IRS is required to come out with new auto deduction limits to account for the fact that car prices rise each year with inflation. For vehicles placed in service in 2019 (whether bought in 2019 or in a prior year), the depreciation numbers can be found in IRS Revenue Procedure 2019-26.

Though the Taxpayer First Act will make the IRS more customer-friendly, it’s likely you’ll still need tax advice. Collier & Associates connects dentists, physicians, and veterinarians with the resources and guidance they need. Contact us for more information, or subscribe to the C&A Newsletter for ongoing expert advice.

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