Sponsors (6)
The bill improves transparency and gives modest financial compensation to taxpayers harmed by long IRS refund delays while capping government liability and adding IRS administrative burdens, which may leave those with large overpayments insufficiently compensated.
Taxpayers receive a written explanation of refund denials and, when applicable, instructions on how to appeal, improving transparency and ability to contest IRS decisions.
Taxpayers whose refund decisions are delayed more than 12 months receive an additional 1 percentage point in interest on overpayments (subject to a cap), providing direct monetary compensation for IRS delays.
The additional interest payment is capped (at $500, indexed after 2026), which limits the Treasury's fiscal exposure and creates a predictable remedy for taxpayers.
Taxpayers with large overpayments may be undercompensated because the extra interest is limited to a fixed cap (currently $500), which may not reflect the true cost of prolonged delays.
The IRS will face additional administrative work to prepare detailed written explanations and track delay deadlines, potentially raising compliance costs or slowing other taxpayer services.
A narrow or unclear definition of 'frivolous claim' may create disputes and require the IRS to issue timely denials without full explanations, adding administrative complexity and potential litigation.
Based on analysis of 2 sections of legislative text.
Requires IRS to mail detailed denial explanations for refund claims, adds a 1 percentage-point interest penalty for late decisions with a $500 cap, and sets a 12-month default decision deadline.
Official title: To amend the Internal Revenue Code of 1986 to improve responses by the Internal Revenue Service to claims for refund, and for other purposes.
Introduced June 25, 2026 by Deborah K. Ross · Last progress June 25, 2026
Requires the IRS to give taxpayers a written, detailed explanation mailed to their last known address when a refund claim (or part of it) is denied, and to include appeals instructions when an appeal right exists. If the IRS misses the deadline to decide on a refund claim, the law raises the overpayment interest rate by 1 percentage point for the period after that deadline, with the extra interest payable to the taxpayer capped at $500 (indexed after 2026). Exclusions and definitions apply for frivolous claims and for agreed alternate decision dates. The rule applies to refund claims received more than 12 months after enactment.