Sponsor
Michael F. Bennet
Senator · D-CO
Senator · D-CO
The bill strengthens taxpayer protections and transparency by adding supervisory review and unit-level reporting for IRS penalty and credit-disallowance actions, but it increases IRS workload, costs, and the risk of slower processing and greater scrutiny of staff.
Taxpayers gain an additional supervisory review before penalties or credit-disallowance periods are applied, reducing the risk of erroneous or automated adverse actions.
Taxpayers get earlier procedural protections because supervisor approval must occur on or before the first appealable notice, ensuring appeals rights attach to reviewed decisions.
Certain tax credits (e.g., sections 24, 25A, 32) receive special protection from automated exceptions that would otherwise allow disallowance periods to bypass supervisory review, preserving access to those credits for eligible taxpayers.
Requiring written supervisory approvals and expanded reporting will increase IRS administrative burden and recurring costs, likely requiring more staff or resources.
Additional supervisory approvals could slow IRS processing, causing delays in issuing notices and resolving cases that affect taxpayers' timelines for refunds, disputes, or payments.
Delays in determining penalties or disallowances may postpone tax enforcement and collection, affecting the timing of government revenue and cash flow.
Based on analysis of 1 section of legislative text.
Requires written supervisor approval before the IRS issues appealable penalty or certain refundable-credit disallowance notices and mandates annual public reporting on IRS-assessed penalties.
Official title: Amend the Internal Revenue Code of 1986 to modify procedural requirements for penalties and disallowance periods.
Introduced July 28, 2026 by Michael F. Bennet · Last progress July 28, 2026
Requires a written, personal approval by an immediate supervisor or the IRS Office of Servicewide Penalties before the IRS issues any appealable notice assessing a penalty or disallowing certain refundable tax credits for a defined disallowance period. Expands the definition of covered actions to include disallowance periods for credits (child tax credit, education credits, and the earned income tax credit) and removes the automatic-exception for electronically calculated disallowance periods. Also requires annual public reporting by the Treasury on all IRS-assessed penalties, with unit-level data and the progression of each penalty from determination through final outcome; the new approval rule applies to notices sent more than 12 months after enactment, and reporting begins within 24 months of enactment and then annually.