RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

IRS COLLECTION POLICY UPDATE – 1 May 2008

Posted by Service Officer on April 30th, 2008

On 15 APR the House of Representatives today approved the Taxpayer Assistance and Simplification Act of 2008 (H.R.5719) by a vote of 238 to 179. The legislation, introduced by Rep. Charles B. Rangel (D-NY) and Oversight Subcommittee Chairman John Lewis (D-GA) of House Ways and Means , would modernize Internal Revenue Service functions to provide protections to taxpayers and improve outreach. Additionally, the bill repeals the IRS Private Debt Collector program, an imprudent outsourcing of an inherent government function that to date has spent $75 million to collect just $35 million. The bill is the result of hearings conducted by the Oversight Subcommittee. The provisions included in H.R. 5719 as agreed to by the Committee would:

• Repeal the IRS’s authority to use private debt collection companies to collect Federal taxes.

• Eliminate the special requirements for individuals to keep detailed records of calls made on employer-provided cell phones.

• Delay for one year the imposition of a three-percent withholding requirement on government payments for goods and services made after 31 DEC 10.

• Stop federal contractors from using foreign subsidiaries to evade Social Security and other employment taxes.

• Make the administrators of state and local government programs liable for paying the employment taxes on amounts paid by government programs to in-home care workers provided to elderly and disabled persons.

• Prohibit the misuse of Department of the Treasury names and symbols in misleading websites and phishing schemes.

• Protect low-income taxpayers by prohibiting IRS debt indicators for predatory refund anticipation loans, allowing IRS employees to refer taxpayers to qualified low-income taxpayer clinics, and authorizing funding for Volunteer Income Tax Assistance ("VITA") programs.

• Require the IRS to notify taxpayers if it suspects theft of a taxpayer’s identity.

The bill will now go to the Senate for approval and if ultimately signed into law by the President its provisions will be added to the federal tax code. At present the federal income tax code is nearly 1.3 million words long, 282 times as many words as the Constitution. In 2006, the IRS estimated individuals and businesses spent 6.65 billion hours complying with the tax laws. The 1040EZ form, which is supposed to be the simplest form in IRS inventory, on average required 3 hours and 46 minutes to complete. In the interim, the current Senate Budget Resolution includes plans for a tax increase of $1.2 trillion. If the budget is enacted, 116 million taxpayers will see a tax increase and the national debt will increase to $2 trillion by 2013. Under the Senate-passed proposal, 43 million families will see their taxes increase by an average of $2,300, 18 million seniors will pay $2,200 more in taxes, and 27 million small business owners will face a tax increase of $4,100. The resolution passed the Senate by a vote of 51 to 44. [Source: House Ways & Means Committee Press Release 15 Apr 08 ++]

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