Sponsor
David Kustoff
Representative · R-TN
Representative · R-TN
Official title: To provide a taxpayer bill of rights for small businesses.
Introduced April 9, 2025 by David Kustoff · Last progress April 9, 2025
The bill strengthens taxpayer protections, independent appeals, and penalties for IRS misconduct (benefiting homeowners, nonprofits, and taxpayers), but does so at the cost of added administrative complexity, higher government liability, potential delays in collection and case resolution, and increased risks to federal employees' job security and due process.
Individual taxpayers gain stronger, more independent appeals protections: Appeals officers face limits on expanding proposed deficiencies, ex parte communications are restricted, and taxpayers get clearer rights to an Appeals conference without IRS counsel present.
Taxpayers harmed by IRS misconduct or unauthorized disclosures get materially stronger remedies: higher statutory damages and caps, longer windows to sue, criminal fines raised for disclosures, and indexing to inflation preserve real value over time.
Homeowners—especially low- and moderate-income owners—are better protected: the IRS would be barred from civil seizure of a principal residence unless other property cannot satisfy the tax and a senior official documents the finding.
Stronger procedural protections (limits on expanding issues at Appeals, ex parte bans, and restrictions on counsel during Appeals) could slow case resolution, push more disputes into court, and raise administrative costs for taxpayers and the IRS.
Ruling out seizure of principal residences except in narrow circumstances may reduce the IRS's leverage to collect large unpaid taxes, prolong collections, increase administrative costs, and could shift unpaid-tax burdens to other taxpayers.
Mandatory termination rules, required unpaid leave during investigations, and tightened disciplinary regimes risk financial harm and due-process concerns for federal employees, could prompt more dismissals or chilling cautious behavior that reduces enforcement vigor.
Based on analysis of 32 sections of legislative text.
Reforms IRS appeals and collections, adds taxpayer protections and TIGTA reviews, raises damage/penalty caps and indexing, expands mediation, and creates a limited audit expense deduction.
Makes broad changes to IRS administration and taxpayer protections by restricting what the Independent Office of Appeals may consider on appeal, limiting seizure of a taxpayer’s principal residence, strengthening prohibitions on ideological or discriminatory scrutiny, expanding dispute resolution options (mediation/arbitration), raising civil and criminal damage and penalty caps for IRS misconduct or unauthorized disclosures, and adding a limited above-the-line deduction for certain audit-related expenses from National Research Program (NRP) audits. Many provisions take effect on enactment; some tax-related changes apply to taxable years beginning after enactment.