January 29, 2020

Lawmakers Ask IRS about Plans to Implement New Protections for Low-Income Taxpayers and Taxpayers Receiving Social Security Benefits

The Taxpayer First Act signed into law last summer required the IRS to implement protections for vulnerable taxpayers from overly aggressive collections that the agency has long resisted; Lawmakers warn the current IRS methods are inadequate to comply with the law

Text of Letter (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee Subcommittee on Financial Institutions and Consumer Protections; Senator Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee; Senator Ben Cardin (D-Md.), a member of the Senate Committee on Finance; and Congressman Jimmy Gomez (D-Calif.), a member of the House Committee on Ways and Means; wrote a letter to the Internal Revenue Service (IRS) asking about their plans to implement provisions of the Taxpayer First Act of 2019, which requires the agency to exclude recipients of Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) and taxpayers experiencing economic hardship from the IRS's Private Debt Collection (PDC) program.

The IRS's recent record on protecting SSI and SSDI recipients and low-income taxpayers from being referred to private debt collectors as part of the agency's flawed PDC program raises questions. The IRS has in the past declined to exclude SSDI recipients from having their debt assigned to private debt collectors, and rescinded a directive from the National Taxpayer Advocate to exclude taxpayers with incomes below 250% of the federal poverty level from the PDC program. And a new report from the National Taxpayer Advocate warns that the IRS is calculating taxpayers' income for the purposes of determining economic hardship in a way that misses hundreds of thousands of low-income taxpayers.

"Because the IRS has refused to implement National Taxpayer Advocate recommendations dating from 2016 to take these steps, we write to ensure that your agency is preparing to fully implement the new requirements of the Taxpayer First Act," the lawmakers wrote. "The Taxpayer Advocate Service has already developed a more accurate and practical method for determining economic hardship [...] The IRS should adopt the more rigorous method developed and used by the Taxpayer Advocate Service to ensure the agency is not putting vulnerable taxpayers at increased risk--and violating the Taxpayer First Act."

The lawmakers have requested responses from the IRS no later than February 6, 2019.

Earlier this month, Senator Warren sent a letter with Senator Brown to the IRS criticizing their introduction of a risky preauthorized direct debit payment option to the PDC program. In March 2018, Senator Warren wrote a letter to the IRS, also signed by Senators Richard Blumenthal (D-Conn.), Bernard Sanders (I-Vt.), and Bill Nelson (D-Fla.), asking about whether the PDC program unduly burdened taxpayers affected by natural disasters. In February 2018, she introduced legislation to repeal authority from the IRS to contract with private debt collectors to collect unpaid taxes with Senators Cardin and Brown.