Newspaper article The Christian Science Monitor

Bill Adds Muscle to 'Weakling' Taxpayer IRS Makeover

Newspaper article The Christian Science Monitor

Bill Adds Muscle to 'Weakling' Taxpayer IRS Makeover

Article excerpt

This week's surprise agreement between Congress and the White House on reorganizing the Internal Revenue Service will give taxpayers more muscle if they get into scraps with the agency.

The bipartisan bill approved Wednesday by the House's tax-writing Ways and Means Committee would bolster taxpayers' rights and put the burden of proof on the IRS - not on the citizen - when tax disputes go to court.

Most important, observers say, it will change how the IRS relates to its "customers." IRS critics say the agency sees itself primarily as a law-enforcement force. But "the IRS is primarily a customer-service organization with a law-enforcement function, not the reverse," says Robert Goldstein, head of IRS relations for the New York State Society of Certified Public Accountants. Several provisions of the bill should bolster the customer-service approach, he says. The shift in burden of proof would be a significant change in taxpayers' favor. Currently, citizens are guilty in tax disputes until they prove themselves innocent. For example: A taxpayer donates an old car to a charity and claims it is worth $2,000. IRS disputes that, claiming the car is worth only $1,000 and challenging the amount claimed as a deduction. As the law now stands, if both the taxpayer and the IRS produce experts to back up their claims, IRS automatically wins, because its position is presumed to be correct. Under the new law, the taxpayer's deduction would be upheld in tax court unless the IRS proves the taxpayer wrong. THE change would apply only in tax court after a taxpayer has exhausted administrative remedies with the IRS. Taxpayers must still cooperate with the IRS in producing documents and witnesses the agency "reasonably" requests. Corporations and partnerships worth more than $7 million are not eligible for the proposal's benefits. Mr. …

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