Bill Overview
Title: To ensure the successful development of the electronic Income Verification Express Service of the Internal Revenue Service by amending the Taxpayer First Act to clarify that taxpayer identity verification is the responsibility of users of the system rather than the taxpayer, and for other purposes.
Description: This bill modifies provisions of the Taxpayer First Act relating to taxpayer identity verification (i.e., the electronic Income Verification Express Service) and disclosures of taxpayer information. The bill requires the Internal Revenue Service (IRS) to implement a program that insures that certain disclosures of taxpayer returns or return information are accomplished only after a financial institution or other relevant entity (other than the taxpayer) has formed a reasonable belief that the identity of the taxpayer has been authenticated. The bill requires the IRS to ensure that the taxpayer information disclosure program complies with specified security standards and guidelines, including those relating to security and confidentiality of taxpayer information. The bill prohibits the IRS from requiring a taxpayer seeking a disclosure of information to access any information technology system or service used by the IRS for any purpose relating to a disclosure, including identity verification or the provision of electronic consent.
Sponsors: Rep. McHenry, Patrick T. [R-NC-10]
Target Audience
Population: Taxpayers needing income verification from the IRS
Estimated Size: 50000000
- The bill affects individuals who need to verify their income through the IRS, indicating that they are taxpayers.
- This could include a broad range of taxpayers, from individuals involved with financial institutions to those requiring verification for loans or other financial services.
- The bill shifts the responsibility of identity verification from the taxpayer to the entity requesting the information, such as banks and financial services institutions, which could reduce the administrative burden on the taxpayer.
- Taxpayers who previously may have struggled with IRS system access for identity verification would benefit from having the financial institution manage that process instead.
Reasoning
- This policy primarily affects individuals who are involved with financial institutions and need to verify their income, such as those applying for loans or mortgages. It relieves the burden of identity verification from the taxpayer and places it on the requester.
- The budget constraint suggests that the policy cannot drastically overhaul IRS systems but can focus on improving existing verification processes and ensuring security compliance.
- The policy impacts a potentially broad and heterogeneous group, ranging from low-income individuals who might face barriers in technology access to high-income earners frequently engaging with financial institutions.
- Considering the estimated 50 million potentially impacted individuals, the budget for the first year ($15 million) implies a focus on setting up the foundational changes, such as software upgrades and partnership negotiations with financial services.
Simulated Interviews
Software Engineer (Texas)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I'm glad this will take away the hassle of identity verification from the taxpayer side.
- Financial institutions are better equipped to handle digital verification processes efficiently.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Bank Teller (California)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- As someone working in banking, this policy could streamline processes and reduce errors, which helps both the customers and the bank.
- Security is key, and robust measures need to ensure client data is safe.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Retired (Florida)
Age: 63 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- It's a relief not to have to deal with complicated IRS systems yourself, especially as a retiree.
- I hope this simplifies processes with less manual input required.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Freelancer (New York)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- This policy could really ease my part of the process when setting up new contracts or clients that need my income verified.
- I hope financial institutions are able to manage this transition smoothly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Small Business Owner (Illinois)
Age: 42 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- Extra security is reassuring given past data breaches.
- This could help businesses like mine by reducing bureaucratic hold-ups with clients who need financial verification.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Graduate Student (Ohio)
Age: 29 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 4.0 years
Commonness: 9/20
Statement of Opinion:
- This should make the process easier when dealing with student financial services.
- Our generation prefers streamlined, trouble-free digital interactions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Financial Advisor (Colorado)
Age: 54 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- Modernizing these processes is overdue, will be beneficial for both clients and professionals.
- Emphasizes that security shouldn't compromise usability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Teacher (Michigan)
Age: 38 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- It seems like a proactive step toward improving financial procedures.
- I'm curious how these changes will be communicated to taxpayers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Retail Worker (Georgia)
Age: 25 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 16/20
Statement of Opinion:
- I hope this policy protects people with limited digital skills from identity theft.
- It's good that financial institutions are stepping up to verify more securely.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired (Arizona)
Age: 71 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- This policy could remove some of the stress related to dealing with identity burdens, especially in our age.
- I hope it comes with adequate support and communication for older adults.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $15000000 (Low: $12000000, High: $20000000)
Year 2: $14000000 (Low: $11000000, High: $18000000)
Year 3: $13000000 (Low: $10000000, High: $16000000)
Year 5: $13000000 (Low: $10000000, High: $16000000)
Year 10: $13000000 (Low: $10000000, High: $16000000)
Year 100: $13000000 (Low: $10000000, High: $16000000)
Key Considerations
- Implementation depends on financial institutions complying with verification protocols and security standards.
- Initial cost spikes are likely due to system upgrades and transitioning responsibilities.
- Long-term benefits may arise from increased efficiency and reduced administrative burdens on the IRS.
- Potential externalities include improved taxpayer relations and better integration with financial institutions.