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Wednesday April 1, 2015

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IRS 'Treat Taxpayers Nice' Rules

In 1998, Congress passed the IRS Restructuring and Reform Act, which included a list of ten guidelines to require IRS employees to treat taxpayers fairly. A failure of an IRS employee to follow these rules could lead to loss of his or her position. The ten current rules for “Treating Taxpayers Nicely” include the following:

  1. Willful failure to obtain required approval signatures to authorize seizure of a taxpayer’s home, personal belongings or business assets.
  2. Providing a false statement under oath on a material matter involving a taxpayer or taxpayer representative.
  3. Violating the rights protected under the Constitution or the civil rights of a taxpayer or taxpayer representative.
  4. Falsifying or destroying documents to conceal mistakes made by any employee with respect to a taxpayer or taxpayer representative.
  5. Assault or battery of a taxpayer or taxpayer representative if there is a criminal conviction or a final judgment by a court in a civil case.
  6. Violating the Internal Revenue Code, Department of the Treasury regulations or policies of the IRS (including the Internal Revenue Manual) for the purpose of retaliating against or harassing a taxpayer or taxpayer representative.
  7. Willful misuse of the provisions of Section 6103 of the Internal Revenue Code for the purpose of concealing information from Congress.
  8. Willful failure to file a personal tax return, unless such failure is due to reasonable cause and not to willful neglect.
  9. Willful understatement of federal tax liability, unless such failure is due to reasonable cause and not to willful neglect.
  10. Threatening to audit a taxpayer for the purpose of extracting personal gain or benefit.

On March 26 the House Ways and Means Committee passed the Prevent Targeting at the IRS Act. This bill instructs the IRS not to target a taxpayer based upon political beliefs. Sponsor Jim Renacci (R-OH) stated, “If someone at the IRS targets taxpayers based on their political beliefs, he or she should be held accountable. It’s that simple. I was proud to see the Ways & Means Committee unanimously approve this commonsense legislation as it is a step in the right direction to restoring a federal government that is accountable to the American people – and not the other way around.”

Estate Tax Repeal Bill Passes Ways and Means Committee


On March 26 the House Ways and Means Committee passed a bill to repeal the estate tax. The party-line vote on the Death Tax Repeal Act (H.R. 1105) was 22-10. The bill also repeals generation-skipping transfer tax and lowers the gift tax rate to 35%. The Joint Committee on Taxation (JCT) estimates the ten year cost to be $269 billion.

Sen. John Thune (R-SD) is expected to introduce a similar bill for consideration by the Senate Finance Committee within the next week.

In his opening statement, House Ways and Means Chairman Paul Ryan (R-WI) highlighted the “unfairness and frustration” associated with the tax system. Ryan continued, “Sometimes it even punishes people from beyond the grave. That's why today we're here to repeal the death tax. People work hard and pay taxes all their lives. They've earned the right to leave something for their kids—often a family business—without being penalized for it. And this tax doesn't just hit the big guy. It hits the little guy—like the small business and the family farm. It is both unwise and unfair, and it needs to go.”

Ways and Means Ranking Member Sander Levin (D-MI) pointed to the JCT claim that the tax savings from estate tax repeal would benefit only 5,500 households per year. In addition, 75% of the tax savings would go to estates over $20 million. Levin noted, “Americans already overwhelmingly believe that the tax code is stacked in favor of a select few. This irresponsible legislation simply reinforces that perception. This amounts to a massive tax cut for a tiny number of the wealthiest households. This isn’t middle class economics, it is estate economics.”

Editor’s Note: The Senate bill will normally require 60 votes for passage. Sen. Thune will attempt to reach that number through persuading farm belt Senators to support his bill. If the White House continues to oppose repeal of estate taxes, the bill will require 67 Senate votes for passage.

Published March 27, 2015

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