The Taxpayer Notification and Privacy Act (H.R. 6495) aims to enhance the notification process the IRS must follow when seeking information from third parties about a taxpayer's federal tax liability. Currently, the IRS must inform taxpayers 45 days before contacting a third party but does not have to disclose what specific information it seeks. This bill mandates that the IRS specify the information it wants from a third party, provided the taxpayer can reasonably supply it and the IRS hasn't asked for it before. The taxpayer must also be given at least 45 days to respond before the IRS proceeds to contact the third party, with the possibility of requesting more time if necessary.
Supporters of the Taxpayer Notification and Privacy Act praise it for enhancing taxpayer rights and privacy. They argue that by requiring the IRS to disclose the specific information it seeks from third parties, taxpayers are better informed and have a fair chance to provide the information themselves, thus reducing unnecessary third-party involvement. The bill is seen as a step towards greater transparency and accountability in IRS operations.
Critics of the Taxpayer Notification and Privacy Act express concerns that the additional requirements could slow down IRS processes and complicate tax enforcement. They argue that the need to specify information and potentially wait longer for taxpayer responses might hinder the IRS's ability to efficiently gather necessary information, potentially impacting tax compliance and revenue collection.