IRS Accountability and Taxpayer Protection Act

Bill Number

S. 2358

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-07-21: Read twice and referred to the Committee on Finance.

Last Updated

2025-08-06T18:15:30Z

AI-Generated Summary

IRS Accountability and Taxpayer Protection Act (S. 2358)

Purpose

This legislation amends the Internal Revenue Code to strengthen procedural safeguards for the assessment of tax penalties and certain disallowance periods, aiming to ensure supervisory oversight before taxpayers receive notices of penalties or restrictions on credits.

Key Provisions

• Supervisor Approval Requirement: No penalty may be assessed, and no disallowance period may take effect, unless the initial determination is personally approved in writing by the immediate supervisor of the individual making the determination, and this approval must occur on or before the date any notice is sent to the taxpayer.
• Definition of Initial Determination: This refers to the first written notice to a taxpayer that specifies, based on the taxpayer's specific facts and circumstances, a particular penalty amount or a disallowance period of a specific duration. Routine requests or inquiries from the IRS do not qualify unless they include an offer to agree to a specific penalty or disallowance period (with an exception for settlement initiatives).
• Disallowance Periods: These are defined for credits under sections 24 (child tax credit), 25A (education credits), and 32 (earned income tax credit). Electronic calculations of these periods still require the same supervisory approval.
• Reporting Mandate: The Treasury Secretary must publish an annual public report, starting 24 months after enactment, detailing all penalties assessed in the prior year. The report must cover every IRS organizational unit with penalty authority and track the progression of penalties through determination, assessment, and review stages.

Significant Changes to Existing Law

The bill replaces the prior general requirement for supervisor approval of penalties under section 6751(b) with more detailed rules, including timing tied to notice issuance and a new definition of "initial determination." It extends these procedural rules to disallowance periods for specific credits and adds a comprehensive annual reporting obligation on penalty enforcement, which did not previously exist in this form.

Potential Impacts

• On Government Agencies: Increases administrative steps for the IRS before issuing penalty notices, potentially slowing enforcement processes and requiring new tracking systems for reports. The Treasury Department faces ongoing obligations for public data compilation.
• On Citizens: Provides taxpayers with earlier supervisory review of proposed penalties and disallowance periods, reducing the risk of unapproved assessments and enhancing transparency through public reports.
• On International Relations: No direct effects identified.

Main Stakeholders Affected

• Taxpayers subject to IRS penalties or credit restrictions.
• The Internal Revenue Service and its organizational units responsible for assessments.
• The Department of the Treasury, which must prepare and release annual reports.
• Congressional oversight bodies, which may use the reports for review.

Notable Legal, Constitutional, or Political Implications

The changes emphasize due process protections in tax administration by mandating written supervisory approval prior to taxpayer notification. They promote greater accountability and transparency in IRS operations through mandatory public reporting, while maintaining the existing framework of the Internal Revenue Code without altering penalty amounts or credit eligibility rules.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Scott, Tim [R-SC]

Cosponsors (6)

Sen. Lummis, Cynthia M. [R-WY], Sen. Tillis, Thomas [R-NC], Sen. Grassley, Chuck [R-IA], Sen. Barrasso, John [R-WY], Sen. Crapo, Mike [R-ID], Sen. Risch, James E. [R-ID]

Recent Actions

• 2025-07-21: Read twice and referred to the Committee on Finance.
• 2025-07-21: Introduced in Senate

Bill Versions

• IRS Accountability and Taxpayer Protection Act — issued 2025-07-21 — PDF (5 pages)