IRS must tell taxpayers exactly what it wants before contacting banks or employers

What does this do?

HR 6495 requires the IRS to specifically tell taxpayers what information it is seeking before contacting outside parties such as banks or employers, but only when that information has not already been requested from the taxpayer and the taxpayer could reasonably provide it themselves. Taxpayers would then have at least 45 days to respond directly before the IRS reaches out to any third party. The rules would take effect one year after the bill becomes law.

Who does it affect?

The bill affects taxpayers who are under IRS audit or investigation, as well as third parties such as financial institutions and business associates who might otherwise be contacted. It does not apply when the IRS is actively collecting an already-established tax debt or when the IRS Secretary determines that contacting the third party is necessary regardless of what the taxpayer could provide.

Why does it matter?

Under current law, the IRS must give advance notice before contacting third parties but is not required to specify what information it is requesting, leaving taxpayers with limited ability to respond. This bill would alter that process, giving taxpayers earlier and more detailed notice and a defined window to act before their financial or personal information is sought from outside sources.

Where does it stand?