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Imposes a broad set of reforms that change how the IRS enforces, reviews, and handles taxpayer disputes and employee misconduct. Key changes limit what the IRS Appeals office can consider on appeal, restrict enforcement against a taxpayer’s primary residence without a written Treasury determination, strengthen oversight and disciplinary rules for IRS employees, expand taxpayer access to mediation/arbitration, raise civil damages and privacy penalties, and create a new above-the-line deduction for certain National Research Program (NRP) audit expenses when those audits produce no tax increase. The package also requires the Treasury Inspector General to review IRS selection criteria for discriminatory treatment, adjusts taxpayer remedies and recovery rules (including for small businesses), and sets new procedural protections for independent Appeals conferences and prohibitions on ex parte communications with Appeals. Many provisions take effect on enactment; some tax-deduction and eligibility changes apply to taxable years beginning after enactment.
The bill substantially strengthens taxpayer protections, remedies, and procedural safeguards—especially for homeowners, privacy, and access to dispute resolution—at the cost of greater administrative burdens, slower collections, higher litigation risk, and tougher personnel consequences for IRS employees.
Millions of taxpayers gain stronger remedies and deterrents against IRS misconduct and unauthorized disclosures: bigger statutory damages, longer filing windows, and inflation indexing preserve the value of awards and penalties.
Homeowners (especially low-income or vulnerable households) are less likely to lose or be forced to sell their primary residence because the IRS must get a written determination and consider hardship before enforcing liens or levies on a primary home.
Individual taxpayers, small businesses, and low‑income filers get easier access to relief and lower out‑of‑pocket dispute costs via: an above‑the‑line deduction for certain audit expenses, removal of OIC upfront partial‑payment requirements and user‑fee offsets, expanded mediation/arbitration options (with fee waivers for qualifying filers), and required hardship consideration before levies.
Tax collection will likely slow and administrative burdens will rise because new written‑determination, hardship, and review requirements (and expanded dispute options) require extra IRS work, potentially delaying revenue recovery and increasing costs borne indirectly by taxpayers.
Greater damages, longer filing windows, and widened recovery rights increase the risk of more lawsuits and higher litigation/settlement costs for the IRS, which can strain budgets and indirectly raise costs for taxpayers or divert resources from tax administration.
Federal employees face tougher personnel consequences (mandatory unpaid 90‑day leave, mandatory termination for certain violations, higher indexed penalties) and reduced appeal options, creating financial hardship for workers and reducing managerial flexibility in discipline.
Introduced April 9, 2025 by David Kustoff · Last progress April 9, 2025