Sponsors
This bill strengthens taxpayer protections, remedies, and procedural fairness (especially against bias and for vulnerable homeowners/small businesses) but does so at the cost of higher litigation and administrative expenses, greater potential government payouts and penalties, and operational strain on IRS staffing and processes.
Taxpayers (including nonprofits and religious organizations) gain stronger protections against discriminatory or ideologically motivated targeting and more impartial appeals processes (limits on biased scrutiny, mandatory reporting to TIGTA, bans on ex parte influence, and the option for independent Appeals conferences).
Victims of wrongful IRS conduct or unauthorized disclosure can obtain substantially larger damages and have more time to sue, with inflation indexing preserving real value (higher statutory damages, longer statutes of limitations, COLA adjustments).
Collection practices are made fairer for homeowners, small businesses, and vulnerable taxpayers by protecting primary residences, requiring consideration of business viability before levies, and easing upfront payment burdens for offers‑in‑compromise.
Many changes are likely to increase litigation, delay case resolution, and create IRS backlogs (limits on Appeals scope, more discretionary review steps for liens/levies/compromises, expanded review requirements and staffing penalties can push disputes into Tax Court or slow processing).
Higher statutory damages, expanded awards, and indexed penalties increase potential government payouts and overall litigation costs, which could raise administrative expenses borne by taxpayers and reduce net IRS receipts.
Tougher employee penalties (mandatory long unpaid leave, mandatory termination for violations, higher criminal penalties for officers) risk harming IRS morale, recruitment, and operational capacity, possibly worsening service and enforcement effectiveness.
Based on analysis of 32 sections of legislative text.
Narrows Appeals’ decision scope, limits liens on primary residences, adds ADR in Appeals, raises damages/penalties, revises IRS personnel rules, and creates a limited NRP audit-expense deduction.
Introduced April 9, 2025 by David Kustoff · Last progress April 9, 2025
Creates a package of changes to tax administration that narrow what the IRS Independent Office of Appeals may decide, restrict the IRS’s ability to seize a taxpayer’s primary residence, expand independent dispute-resolution options (mediation and arbitration), raise civil and criminal penalties and damage caps for certain employee misconduct, and add taxpayer-friendly procedures (audit expense deduction, offer-in-compromise changes, penalty and levy hardship rules). It also tightens discipline for IRS employees who engage in prohibited communications or ideological screening and requires additional oversight and reporting by TIGTA.