April 19,2005

Baucus Works to Increase Taxpayers Assistance

Senator Joins Colleagues to Provide More Funds for Taxpayer Service

(WASHINGTON, D.C.) U.S. Senator Max Baucus has introduced legislation to provide moreassistance to taxpayers and promote competency among tax return preparers.

During last week’s Senate Finance Committee hearing on the Tax Gap--the differencebetween the amount of taxes owed and the amount of taxes paid--Baucus emphad theimportance of taxpayer service in addressing the $353 billion in taxes that goes uncollected everyyear. Baucus also raised concerns with administration plans to reduce taxpayer access toassistance and service.

“I have serious concerns regarding the IRS’s plans to cut taxpayer service,” Baucus said.“If we diminish the quality of and access to taxpayer service, honest Americans are not beingwell-served by their government. I urge the IRS to rethink their planned cuts. In that light, thelegislation introduced today will make it easier to give millions of taxpayers more assistance andwill promote ethical and competent service by tax practitioners.”

The “Taxpayer Protection and Assistance Act of 2005” authorizes $10 million inmatching grants for low-income tax preparation clinics. These clinics provide tax returnpreparation to those who cannot afford an accountant, including those who speak English as asecond language.

A provision in the bill will also address refund anticipation loans (RALs). RALs areloans based on the taxpayer’s tax refund. Unfortunately, RALs can carry excessive, hiddencosts. The legislation provides for more IRS regulation of RAL facilitators and requires thesefacilitators to disclose specific information to taxpayers.

The bill also contains a provision to ensure IRS oversight of tax return preparers.According to the National Taxpayer Advocate, over 55% of the 130 million individual taxpayerspaid a tax practitioner to prepare their federal income tax returns. Yet, one-quarter to one-halfare not required to hold a license or subject to any competency tests.

“There is no question our tax code is complex. That’s why it is critical for taxpayers tohave the help they need to comply with the law,” Baucus said. “Quality taxpayer assistance iskey to preserving the integrity of our voluntary tax system.”

Baucus was joined by Senators Bingaman, Smith, Grassley, Akaka, Schumer, and Pryorin introducing the bill.