Sponsors (2)
The bill strengthens taxpayer protections and clarifies review and limitation rules during collection disputes—preserving refunds and access to Tax Court—while increasing the risk of forfeiture for improperly preserved claims and raising administrative, collection, and litigation costs for taxpayers and the IRS.
Taxpayers in CDP or equivalent collection hearings can prevent the IRS from applying refunds/overpayments to disputed tax without their consent, preserving cash flow while disputes proceed.
The bill clarifies that the suspension of limitation periods during collection proceedings applies only to refund/credit claims that directly relate to the contested liability, giving taxpayers clearer expectations and allowing the IRS to close out suspended periods when taxpayers forfeit rights.
By defining 'collection action' and 'proposed collection action' to include lien hearings, the bill ensures consistent procedural protections across levy and lien proceedings.
Taxpayers who fail to precisely raise or preserve related refund/credit claims at the §6330 hearing risk losing those claims because the limitation-suspension protection will not extend to unrelated claims; limitation periods may begin sooner after procedural missteps or court orders, increasing forfeiture risk and potential financial loss.
Allowing taxpayers to block offsets of refunds to disputed liabilities may delay IRS recovery of other non‑disputed debts, increasing collection delays and raising administrative and enforcement costs (which can be borne indirectly by taxpayers and the government).
Narrowing IRS offset authority and expanding opportunities for judicial review is likely to increase appeals and litigation workload for the IRS and raise legal costs for taxpayers (more cases and higher attorney fees).
Based on analysis of 4 sections of legislative text.
Narrows tolling of refund/credit limitation periods during collection appeals, bars involuntary offset of overpayments for disputed liabilities during hearings without consent, and expands Tax Court review to underlying liabilities and equitable tolling.
Official title: Taxpayer Due Process Enhancement Act
Introduced December 9, 2025 by Nathaniel Moran · Last progress May 20, 2026
Changes to tax collection appeal rules narrow when the statute of limitations for refund or credit claims is suspended during collection dispute proceedings, stop the IRS from unilaterally applying an overpayment to a tax liability that is actively being contested at a collection hearing (unless the taxpayer agrees), and expand Tax Court review to include challenges to the underlying disputed liability and requests for equitable tolling of the 30-day petition deadline. The bill adjusts cross-references in the Internal Revenue Code, clarifies that certain hearing rules apply to lien as well as levy disputes, and phases these changes into effect for limitation periods, hearings, and petitions after enactment.