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Imposes a new federal annual wealth tax on ultra‑high‑net‑worth individuals, creates new reporting and penalty rules for undervaluation of wealth, and gives Treasury expanded authority to police use of foreign entities to evade reporting. It also authorizes large, multi‑year appropriations for IRS enforcement, taxpayer services, and business system modernization and requires Treasury reporting on administration of the tax. The measure includes a 12‑month rulemaking deadline, up to five‑year payment extensions for taxpayers with severe liquidity constraints, heightened penalties and valuation thresholds for substantial understatements, and ongoing data‑use planning to improve chapter 4 compliance and enforcement activity oversight.
The bill channels substantial new resources and reporting rules to the IRS to improve services, IT, and enforcement and to implement a new wealth tax aimed at greater fairness and revenue — but it imposes new tax burdens on wealthy owners, raises compliance and valuation costs, increases audit and privacy risks, and creates fiscal pressures from large appropriations.
All taxpayers (and the tax system) benefit from a large, coordinated boost to IRS resources — $10B for taxpayer services, $20B for IT modernization, and $70B for enforcement over 2027–2037 — which should improve taxpayer assistance, reduce processing delays, and strengthen detection of noncompliance.
Taxpayers who comply benefit from stronger enforcement and better IRS data/analytics that reduce unfair tax avoidance by related owners using foreign entities and improve overall tax fairness.
The bill creates a statutory reporting framework and new reporting requirements that increase transparency around administration of the new tax and support better enforcement and oversight.
Many high‑wealth taxpayers will face a new, recurring annual wealth tax beginning in 2027, increasing their overall tax burden.
The substantial increase in enforcement resources is likely to raise audit rates and lead to more aggressive enforcement activity, increasing compliance risk and costs for taxpayers (especially those with complex returns or limited resources).
Taxpayers with complex or illiquid assets face higher compliance, valuation and appraisal costs and exposure to steep penalties (including a 20% penalty and rules treating large undervaluations as gross misstatements at a 65% threshold).
Introduced March 25, 2026 by Pramila Jayapal · Last progress March 25, 2026