Small Business Taxpayer Bill of Rights Act of 2025

House Votes

This bill sets a taxpayer bill of rights for small businesses, aiming to make IRS interactions fairer and more private. It strengthens appeals, adds options to settle disputes, raises penalties and damages when IRS staff mishandle information, and adds checks to prevent biased treatment. It also gives more protection for your home and for viable small businesses when the IRS collects taxes, and offers a small tax break tied to certain research audits.

• Who is affected: small businesses and taxpayers in IRS disputes, and IRS employees. The bill defines “eligible small business” and expands who can qualify for help with fees.
• Appeals and dispute options: you have a right to an independent appeals conference without IRS enforcement or legal staff unless you agree; Appeals cannot raise new issues; and you may request mediation or arbitration, including an independent mediator. Low‑income individuals and some small businesses don’t have to share the mediator’s cost.
• No behind‑the‑scenes talks: stops off‑the‑record communications between IRS Appeals and other IRS staff about your pending case, with strong penalties for employees who break this rule.
• Privacy and accountability: raises fines for unauthorized disclosure of tax data to $10,000 (with inflation increases), allows larger damages if IRS staff recklessly or intentionally break the law (up to $5,000,000, or $500,000 for negligence), and extends the time to sue to 5 years in these cases.
• Protecting homes and businesses: limits forcing the sale of a person’s main home unless other assets can’t cover the tax and it won’t cause economic hardship; only top IRS officials can approve it. The IRS must also consider a business’s viability and the harm to others before levying a business.
• Preventing bias and misconduct: requires the Treasury Inspector General for Tax Administration to check that IRS selection rules for audits and other actions don’t discriminate by race, religion, or political ideology, and to report on it. It also strengthens discipline rules for IRS misconduct and bars methods that target groups in reviews of tax‑exempt status.
• Other changes: lets individuals deduct up to $5,000 for certain National Research Program audit expenses if the audit ends with no extra tax; removes the partial payment requirement when submitting an offer‑in‑compromise and applies any user fee toward the tax owed; sets a 10‑year term for the National Taxpayer Advocate.

When: Many changes take effect after the bill becomes law. Some apply to future tax years or to actions and filings made after that date (for example, the audit‑expense deduction applies to tax years beginning after enactment, and the offer‑in‑compromise change applies to offers submitted after enactment).