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H.R.5445 - 21st Century IRS Act

To amend the Internal Revenue Code of 1986 to improve cybersecurity and taxpayer identity protection, and modernize the information technology of the Internal Revenue Service, and for other purposes.

You might favor this bill if:
►  You believe the IRS must have a modern system set in place, not only to facilitate easy tax filing online, but to create security measures against fraud and identity theft.

You might oppose this bill if:
►  You believe that, at a price tag of $3 million a year, there is no need in modernizing the IRS. This is likely to have a negative impact on the American tax preparing industry.

Watch Rep. Bishop’s remarks on the House floor in support of the 21st Century IRS Act.

06/06/18 CAN-UPDATE: The 21st Century IRS Act has passed the House with a vote of 414-3. The bill is expected to move to the Senate. The Congressional Budget Office (CBO) released a cost estimate report on the legislation 2 days before the House vote. This report says that over the past five years, "the IRS has spent an average of $290 million annually on modernizing its business systems." This could make the cost of the legislation, which sits at $3 million a year, a more reasonable number compared to the current cost of modernizing its current technology.

On the last day of the tax-filing deadline, the IRS's system went offline, forcing them to extend the deadline by another day. Legislators are citing the incident as further evidence an overhaul in their technology is needed.

The financial sector is applauding the bill being passed. "Today’s House action helps bring the federal government one step closer to better enabling digital financial tools. Paper-based verification has no place in a 21st century economy, and FIN looks forward to working with Congress and the U.S. Treasury to ensure the Internal Revenue Service can build a robust and secure interface for digital income verification," said Brian Peters, Executive Director of Financial Innovation Now.

The 21st Century IRS Act aims to combat identity theft and tax refund fraud by modernizing IRS technology. It would do so by implementing a new internet portal that would facilitate taxpayers filling forms and would accept the use of credit and debit cards, among other things.

The legislation aims to foster a partnership between public and private stakeholders to help provide meaningful recommendations to the system as well as building a system which provides an early warning system for refund fraud, identity theft schemes, and cybersecurity issues.

Under present law, state tax agency employees may disclose tax return information to contractors for administration purposes. A provision on the bill would put in place additional confidentiality safeguards on tax return information provided to contractors. Under this provision, the IRS will not be able to provide taxpayer information to any contractors or other agents of a Federal, state, or local agency unless the contractor has safeguards in place to protect the confidentiality of such information and agrees to conduct on-site compliance reviews every three years.

Another provision on the legislation seeks to strengthen IRS accountability for the billions of taxpayer dollars spent annually on developing and maintaining their technology systems. The provision would codify into law the exact duties, roles and responsibilities that the IRS's CIO must follow.

The bill aims to have the IRS develop a robust and secure online service for taxpayers and their preparers by the end of 2023. By 2020, the online portal would start facilitating 2099 forms. While the IRS currently provides limited online assistance through its web applications, it continues to lag behind in developing online options for those taxpayers who wish to use them.

The new automated online portal would allow for tax payments to be made via credit cards, provided that the fee is paid by the taxpayer. The IRS is then directed to minimize the cost of those fees when entering into contracts. Also, under the provision, the Treasury would work with the private industry to find ways to utilize new payment platforms and increase the amount of tax refunds delivered electronically.

The IRS would have six months from enactment to publish guidelines and regulations that establishes "uniform standards" that allow for electronic signatures to be used when requesting taxpayer information or to execute power of attorney. The Joint Committee on Taxation determined the legislation would cost approximately $30 million over the next decade.

“This is an issue that hits home for me because I’ve seen the devastation identity theft can inflict on a family or small-business owner,” said Rep. Bishop, sponsor of the bill. “It’s been two decades since Congress has considered legislation to overhaul the IRS, and we all understand the rapid changes our technology has experienced during this timeframe. The 21st Century IRS Act takes meaningful action to address this problem by providing the IRS much-needed tools to strengthen taxpayer protections and bringing IRS technology out of the 20th century.”

“As a former tech CEO, I was astounded to learn that the IRS is still using fax equipment to conduct regular business and has IT systems still running from the 1960s,” said Rep. DelBene. “It is long past time for the IRS to enter the digital age. The 21st Century IRS Act will enhance IRS security measures to keep taxpayers safe from fraud and give hard working Americans more peace of mind. It will also make it easier for people to submit tax forms online while easing burdens on small businesses. Much work remains, but these are important steps in bringing the IRS into the 21st century.”


Sponsored by: Rep. Bishop, Mike [R-MI-8]

Cosponsored by: 4 Rep / 2 Dem.

See list of cosponsors.

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