Dear Senator Cornyn:
On behalf of National Taxpayers Union (NTU) and our supporters across the United States, I write in strong support of S. 2689, the “Small Business Taxpayer Bill of Rights Act of 2018.” Building on the legacy of previous bills you have authored, this legislation admirably recognizes the need to reform the administrative facets of the tax system, which is essential in complementing the progress toward lower rates and simplification represented by the Tax Cuts and Jobs Act of 2017.
As you know, NTU has occupied a fundamental role in the development of taxpayer rights legislation during the past several decades. Throughout the 1980s, our advocacy efforts brought IRS “horror stories” to light, which contributed to the development of the first Taxpayer Bill of Rights in 1988. Our former Executive Vice President David Keating served on the National Commission on Restructuring the IRS, whose recommendations became the basis for the IRS Restructuring and Reform Act (RRA) of 1998. In 2016 and 2017, we provided testimony to the Senate and House of Representatives that provided perspectives on the most urgent tax administration issues facing small businesses. For all these reasons, we are particularly enthusiastic about your legislation. S. 2689 skillfully incorporates the experience of this entire legislative history, as well as a great deal of foresight into how future tax administration maladies can be avoided.
We cannot overstress the fact that several parts of your bill are uniquely vital to improving the way the IRS interacts with citizens. These include:
- Creating an Alternative Dispute Resolution program for audits that will permit neutral third-party mediation in a cost-effective manner for a subset of small business tax cases. In September 2017, we testified before the Oversight Subcommittee of the House Ways and Means Committee that the United States lags behind many other nations in making this tool more readily available to taxpayers. This section of the bill takes a major step toward correcting this deficiency.
- Increasing taxpayer access to the offer-in-compromise program as well as providing greater latitude for the IRS to release levies that exert hardships on otherwise viable small businesses. Both these sections of the bill reinforce an important principle that is in the best interest of the government as well as the taxpayer: the ability to remain self-supporting while working through a tax problem.
- Strengthening safeguards against taxpayer abuses such as a ban on ex parte communications between IRS case employees and appeals officers, requiring taxpayer permission for IRS compliance or chief counsel personnel to attend appeals conferences, and a prohibition on new issues being raised during a taxpayer’s appeal process. When combined with other procedures bolstering the right to appeal (such as those found in HR 3220), these reforms would create a much fairer audit process.
- Providing more avenues for redress when the IRS recklessly or intentionally disregards the law, including increases in the cap on damages and more options to recover attorney fees.
- Setting appropriate remedies for misbehavior of IRS officials, including higher penalties for extortion, fraud, or bribery, and higher obtainable damage amounts for unlawful disclosures of tax return information.
In April, the House of Representatives passed by wide margins a series of NTU-supported bills designed to improve tax administration. Among these was the “Taxpayer First Act” (H.R. 5444), several elements of which likewise address some of the matters on which your bill has focused. It is our fervent hope that the Senate will take this opportunity to collaborate on a tax administration reform bill that can reach the President’s desk before the session ends. In our view, several parts of S. 2689, especially those pertaining to audits, could very helpfully augment the contents of H.R. 5444 without undermining the bipartisan spirit or momentum of this critical legislative undertaking.
In the American system of government, effective enforcement of tax laws cannot depend solely on harsh threats of punishment or intricate surveillance of all financial transactions. Rather, it must be balanced with the means to help the public voluntarily comply with the laws – and, with protections to reassure the public that legitimate grievances with tax administrators will be resolved fairly and impartially. The Small Business Taxpayer Bill of Rights thoughtfully addresses this balance.
NTU looks forward to working with you and your colleagues in guiding the elements of this legislation to enactment, either as a stand-alone bill or as part of a larger package. We commend Senators Heller and Roberts for joining you as cosponsors of the bill, and we urge your colleagues on both sides of the aisle to do the same. We commend Senators Heller and Roberts for joining you as cosponsors of the bill, and we urge your colleagues on both sides of the aisle to do the same. We thank you for your diligence and attention to the often overlooked procedural dimensions of our tax law.
Sincerely,
Pete Sepp
President