Proposed Taxpayers First Act Includes Revision to Private Debt Collection Program

Bipartisan legislation would limit debt collection from some consumers based on income, a compromise for lawmakers to move the proposal forward.

4/2/2019 10:00 AM

Proposed Taxpayers First Act Includes Revision to Private Debt Collection Program

U.S. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Ranking Member Ron Wyden, D-Ore., introduced the Taxpayer First Act of 2019, bipartisan legislation to modernize the IRS, improve taxpayer services and strengthen taxpayer protections, according to a news release from Grassley’s office.

Among several components, the bipartisan legislation modifies the IRS’ private debt collection (PDC) program to ensure lower-income Americans are not targeted, while also strengthening the long-term viability of the program.

“This legislation is a first step toward reforming the IRS and strengthening taxpayer protections. This bipartisan, bicameral agreement represents years of hard work and consensus building. I hope that it can pass in a timely manner and with broad support,” Grassley said in the news release.

Former Finance Committee Chairman Orrin Hatch, R- Utah, and Wyden introduced similar legislation in the last Congress, according to the news release.

“There’s no federal agency Americans interact with more than the IRS, and it’s critical that it be reformed and modernized to better serve taxpayers,” Wyden said. “Our bill would strengthen tax-preparation services for low-income Americans, improve agency technology and better protect taxpayers’ personal data. This legislation has strong bipartisan support and I’m hopeful it will be passed without delay.”

The PDC program is a public/private partnership developed to bolster the U.S. Treasury, strengthen the effectiveness of the IRS and ensure fairness in the federal tax system, ACA International previously reported. Grassley was instrumental in creating the IRS’ bipartisan PDC Program as chairman of the Senate Finance Committee in 2004 as well as its reinstatement in 2015 after the IRS terminated it in 2009 following a flawed review of the program.

According to a report on the Taxpayers First Act from Bloomberg Tax, the change to the PDC program in the legislation is a compromise for lawmakers.

“The bill would bar the agency from referring debt to private debt collectors if a taxpayer’s income is below 200 percent of the federal poverty level. An earlier version of the legislation had set the threshold at 250 percent,” according to the article.

“The latest legislation also says the agency can’t refer accounts to the debt collection agencies if ‘substantially all’ of a taxpayer’s income comes from Supplemental Security Income benefits or disability insurance benefit payments,” Bloomberg Tax reports.

Additional components of the Taxpayers First Act of 2019 include:

  • Establishing an independent office of appeals within the IRS;
  • Requiring the IRS to submit to Congress plans to redesign the structure of the agency to improve efficiency, modernize technology systems, enhance cyber security and better meet taxpayer needs; and
  • Several provisions to help protect taxpayers from tax ID theft and improve taxpayer interaction with the IRS should they become a victim of this crime.

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