Taxpayer Notification and Privacy Act
Summary
The Taxpayer Notification and Privacy Act 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 a 45-day window for the taxpayer to respond before contacting third parties. There are exceptions for cases where the IRS determines the information is necessary and has not been previously requested from the taxpayer.
Expected Effects
The Act 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, requiring more detailed and specific communication with taxpayers. The changes will apply to notices provided 12 months after the Act's enactment.
Potential Benefits
- Enhanced Taxpayer Privacy: Taxpayers receive specific notice about information sought from third parties.
- Increased Transparency: The IRS must identify the exact information they are seeking.
- Opportunity to Respond: Taxpayers have 45 days to respond before third-party contact.
- Reduced Burden on Third Parties: By first seeking information from the taxpayer, the Act may reduce unnecessary inquiries to third parties.
- Greater Accountability: The IRS is held to a higher standard of communication and justification for third-party inquiries.
Potential Disadvantages
- Increased Administrative Burden: The IRS faces increased workload due to detailed notice requirements.
- Potential for Delay: The 45-day response window could slow down investigations.
- Exceptions May Limit Impact: The Secretary's ability to waive specificity requirements could weaken the Act's protections.
- Complexity for Taxpayers: Some taxpayers may find the detailed notices confusing or overwhelming.
- Potential for Manipulation: Taxpayers might use the notice period to conceal information.
Constitutional Alignment
The Act aligns with the Fourth Amendment's protection against unreasonable searches and seizures by ensuring taxpayers are informed when the government seeks information related to their tax liability. It also supports the Fifth Amendment's due process clause by providing taxpayers with an opportunity to respond before the IRS contacts third parties. The Act does not appear to infringe upon any other constitutional rights or provisions.
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).