Tis the Season For Tax Procedure Legislation

We are knee deep in the holiday season, with Christmas songs and holiday parties and hopefully good times with your family and loved ones. Holiday time is also often accompanied by a crush of tax legislation.  In this brief post we want to highlight some of the provisions enacted in the past week or so, as well as flag for readers that there are likely to be more legislative procedural and administrative provisions before the end of the year.

The Fixing America’s Surface Transportation Act enacted a week or so ago has a bucketful of tax procedure provisions, including the requirement that IRS use private debt collectors and a new rule authorizing the revocation or denial of a passport for people with a “seriously delinquent tax debt.”

The debt collection issue is one Keith has discussed before in Private Debt Collection – An Idea Whose Time Will Never Come; proponents of the controversial bill (including Senator Grassley who this week is urging immediate implementation) have carried the day despite deep concerns that many have expressed about the possible impact on taxpayer rights and the limited return on investment.

There are important procedural rights in the passport provision, including the right to bring an injunction-type proceeding district court or Tax Court to review the certification sent by the IRS to Treasury and then to the State Department or the IRS’ failure to remove the certification in certain circumstances.

There is lots to the passport provision, and we will likely return to consider some of the nuances, including its impact on the collection notice stream and the court review provisions. Jack Townsend’s Federal Tax Crimes blog post New Transportation Bill, FAST, Adds Some Tax Provisions has a nice summary of the legislation, as well as links to the tax portion of the bill and the Joint Explanatory Statement of the Committee of the Conference report.

In this week’s enacted trade and customs bill there is a tax provision that boosts the minimum penalty for failure to file a broad range of returns if the return is filed more than 60 days after its due date. Under the new legislation, the failure to file penalty may not be less than the lesser of $205 or 100 percent of the amount required to be shown as tax on the return (it used to be $135 or 100%).

There are a number of important procedural aspects that have surfaced in negotiations in the still to be enacted extenders legislation that Congress is bickering over. While that is a moving target, some proposals include a provision that the Tax Court is not an agency of the Executive Branch. Likewise there have been at least two serious legislative proposals relating to authorizing Congress to regulate unlicensed tax preparers.

We will keep an eye on the legislation.

UPDATE:The additional penalty for failing to file returns was actually not part of the enacted legislation Congress did enact it and in February 2016 the President signed it into law in the Trade Facilitation and Trade Enforcement Act of 2015. It is effective for returns required to be filed in calendar year 2016.