ELMHURST, IL - April 6, 2007 -- On March 27, 2007, the U.S. House of Representatives passed the Katrina Housing Tax Relief Act of 2007. According to Ways & Means Chair Charles B. Rangel, D-N.Y., “This bill is a small but very important step towards helping people of the Gulf Coast literally rebuild their lives.” However, according to local tax attorney Patrick T. Sheehan, “Although this legislation is touted as providing relief to Katrina’s victims, it also weakens taxpayers’ rights in a stealth fashion unrelated to the goal of this law.”

The legislation, in addition to helping Katrina’s victims, modifies IRS Collection Due Process procedures for employment tax liabilities. Under the new law, IRS levies issued to collect federal employment taxes would not have to meet the requirement of a pre-levy Collection Due Process hearing. Although taxpayers would have no right to a Collection Due Process hearing with the IRS before the issuance of a levy, they would still be afforded an opportunity for a hearing with the IRS within a reasonable period of time following the levy. “The Taxpayer Reform Act of 1998 was designed to protect taxpayers from the heavy hand of the IRS. The right to a Collection Due Process hearing before IRS enforced collection action is one of the cornerstones of the Taxpayer Reform Act of 1998 and is an important taxpayer protection. Unfortunately, the legislation ostensibly designed to help Katrina’s victims actually victimizes taxpayers unrelated to Katrina’s wrath in another sense,” said Sheehan. “Congress is known for hiding items in popular legislation that produce results which are not widely known or realized.”

The purpose of the change in IRS collection procedures was purportedly to help offset the cost of providing relief to Katrina’s victims. “Although I understand that there is an inherent cost to implement any government policy, pulling back on taxpayers’ rights to do so is a dangerous step to take,” Sheehan forewarned.

Patrick T. Sheehan is a former IRS attorney and the principal of Patrick T. Sheehan and Associates, Attorneys at Law, P.C. Mr. Sheehan’s practice focuses exclusively on assisting individuals and business with their tax disputes before the Internal Revenue Service and the Illinois Department of Revenue. Patrick T. Sheehan and Associates is the largest tax dispute resolution law firm in DuPage County.