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Prevents the IRS Independent Office of Appeals from deciding issues that were not part of the agency’s initial determination, tightens rules on collections against a taxpayer’s principal residence, increases penalties and damage awards for improper IRS actions, and creates new protections and process changes for taxpayers in appeals and dispute resolution. It also changes IRS personnel rules by adding mandatory termination for certain ideological targeting during tax‑exempt review, requires TIGTA reviews of selection criteria for potential discrimination, sets a 10‑year term for the National Taxpayer Advocate, and adds a limited above‑the‑line deduction for certain audit costs. The bill affects how taxpayers, small businesses, and nonprofits interact with the IRS (appeals, levies, offers‑in‑compromise, and mediation), raises civil and criminal penalties for IRS misconduct or disclosure of return information, alters employee discipline rules for IRS staff, and directs TIGTA oversight and reporting. Many provisions take effect on enactment; some tax and inflation‑adjustment rules become effective for taxable years or calendar years after enactment or after 2025.
The bill increases taxpayer protections, remedies, and transparency—especially around appeals, collections, and IRS misconduct—while trading off faster collections, greater administrative complexity, and higher litigation and liability risks that could raise costs for the IRS and taxpayers.
Homeowners and small-business owners: Stronger limits on aggressive collection actions (limits on liens against a principal residence, required hardship and business-viability reviews before levies or forced liquidations, and reduced upfront payments for offers-in-compromise) reduce the risk of losing a home or forced business closure and lower immediate cash burdens.
All taxpayers (including religious and political organizations applying for tax-exempt status): Stronger protections against discriminatory, ideologically motivated, or opaque IRS targeting — including prohibitions on off-the-record influence, limits on raising new issues mid-appeal, and TIGTA reporting requirements — that increase fairness and reduce surprise enforcement.
Taxpayers harmed by IRS misconduct or privacy breaches: Higher statutory damages, larger caps for willful/reckless violations, and an extended 5-year statute of limitations give individuals and entities more time and greater financial remedy to pursue redress.
Most taxpayers and the government: The bill raises the risk of increased litigation and dispute costs (foreclosing issues in Appeals, longer windows to sue, higher damage awards and statutory damages), likely producing more lawsuits, longer resolution times, and higher legal expenditures for both taxpayers and the Treasury.
Federal revenue and taxpayers overall: Restrictions on liens/levies, expanded hardship and business-viability reviews, and removal of some collection levers (e.g., partial-payment requirements) could reduce or delay tax collections and shift costs to other taxpayers or require tradeoffs in government services.
IRS operations and taxpayers: The bill imposes significant administrative and implementation burdens — new reporting, rosters for mediators, consent procedures, indexing, and systems changes — that will increase IRS costs, slow processing, and could temporarily worsen taxpayer service.
Introduced April 9, 2025 by John Cornyn · Last progress April 9, 2025