This bill changes how the IRS can add penalties to your taxes. Before the IRS sends you any letter about a penalty, a supervisor must first approve the penalty in writing. It also clearly defines “immediate supervisor” as the person the IRS employee reports to. These changes aim to make penalty decisions more careful and consistent, so taxpayers don’t get penalties that haven’t been properly reviewed.

Key points:

• Who’s affected: Taxpayers and IRS employees handling penalties.
• What changes: A supervisor must sign off in writing before any written notice about a penalty is sent; “immediate supervisor” is defined as the person the employee reports to.
• When: Applies to notices and penalties after December 31, 2025.