Taxpayer Notification and Privacy Act
Summary
The "Taxpayer Notification and Privacy Act" (H.R. 6495) amends the Internal Revenue Code of 1986, requiring the IRS to provide taxpayers with more specific notice when seeking information from third parties. This includes identifying the specific information sought and providing taxpayers at least 45 days to respond before contacting third parties. The bill also outlines exceptions, particularly for tax liability collection or when the Secretary determines the information is necessary.
Expected Effects
The bill aims to enhance taxpayer privacy and ensure they are informed about IRS inquiries involving third parties. It will likely increase the administrative burden on the IRS, potentially slowing down some investigations. However, it could also improve taxpayer compliance by giving them a chance to provide the requested information directly.
Potential Benefits
- Increased Taxpayer Awareness: Taxpayers will be better informed about IRS requests for their information from third parties.
- Enhanced Privacy: The bill provides additional privacy protections by requiring specific notice.
- Opportunity to Respond: Taxpayers get a chance to provide the information themselves before the IRS contacts third parties.
- Reduced Third-Party Contact: Limits unnecessary contact with third parties when the taxpayer can provide the information.
- Greater Transparency: Promotes greater transparency in IRS information-gathering practices.
Potential Disadvantages
- Increased Administrative Burden: The IRS will face additional requirements in providing notices.
- Potential Delays: Investigations could be slowed down due to the notice period and response time.
- Exceptions Limit Scope: Exceptions for tax collection and Secretary's determination could reduce the bill's overall impact.
- Complexity: The added specificity and exceptions may complicate IRS procedures.
- Potential for Abuse: Taxpayers might delay providing information, hindering investigations.
Constitutional Alignment
The bill aligns with the spirit of the Fourth Amendment, which protects against unreasonable searches and seizures. By requiring specific notice before seeking information from third parties, the bill provides a layer of protection for taxpayer privacy. It also aligns with principles of due process, ensuring taxpayers have an opportunity to respond before actions are taken based on third-party information. Article 1, Section 8, grants Congress the power to lay and collect taxes, but this power is limited by individual rights and protections.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).