Sponsors (2)
The bill gives nonprofits stronger procedural protections, clearer notices, and faster access to appeals—reducing rushed compliance—but at the cost of higher administrative and compliance burdens, potential delays in shutting down abusive tax-exempt actors, and added complexity around privileged disclosures.
Nonprofits (including religious organizations) gain stronger procedural protections, clearer notice content, and improved record access during examinations and revocation processes, increasing fairness and transparency.
Nonprofits receive a minimum 30-day deadline to respond to IRS information requests, reducing rushed compliance burdens and giving organizations more time to gather accurate documentation.
Organizations get expedited appeals and conference timelines with the Independent Office of Appeals, providing quicker access to administrative review and potentially faster resolution of disputes.
Longer procedural timelines and more detailed notice requirements could delay enforcement actions against abusive or fraudulent tax-exempt organizations, potentially prolonging misuse of tax-exempt status and harming taxpayers.
The IRS will face additional procedural and documentation burdens that could slow examinations and increase administrative costs, with potential downstream impacts on federal employees and overall taxpayer administration.
Smaller nonprofits may incur higher operational and compliance costs (time, legal review, preparing detailed responses) when interacting with the IRS under the new notice and documentation standards.
Based on analysis of 2 sections of legislative text.
Adds a statutory requirement that the IRS give detailed written notice and meet due‑process and recordkeeping conditions before examining or revoking most 501(a) tax‑exempt statuses.
Official title: To amend the Internal Revenue Code of 1986 to clarify due process rights in the case of an action to terminate tax exempt status.
Introduced September 3, 2026 by Lloyd Alton Doggett · Last progress September 3, 2026
Creates new procedural rules that limit how and when the IRS can open examinations into most 501(a) tax-exempt organizations and when the IRS can revoke their tax-exempt status. Requires detailed written notice to organizations selected for examination, restricts examination to issues identified in the notice unless a new notice is provided, and imposes specified recordkeeping and due‑process steps before revocation. Requires the Treasury/IRS to provide specified information in the notice (topics, tax periods, assigned examiner and supervisor contact info, rights and representation options, and opportunity for an opening conference) and to meet written-record and procedural safeguards during examinations and reconsiderations prior to revocation of exempt status (with a carve‑out for churches handled under existing law).