A federal inquiry is examining whether the tax ombudsman needs more powers to help taxpayers when they have grievances, and to protect whistleblowers who make public interest disclosures.

The inquiry comes as former Australian Taxation Office public servant Richard Boyle faces life in prison for blowing the whistle on unfair debt collection practices at the ATO.

Mr Boyle says Adelaide office staff were instructed to seize funds from the bank accounts of taxpayers assessed to owe the ATO money, regardless of their personal circumstances.

Current tax ombudsman Karen Payne also wants recommendations her office makes to be binding on the ATO, and responded to within a specified time frame.