A bill to amend the Internal Revenue Code of 1986 to modify procedural requirements for penalties and disallowance periods.

Key Points

• This bill requires an IRS supervisor or a specific penalty office to personally approve any tax penalty in writing. This must happen before the agency sends the first notice that allows a taxpayer to appeal the decision.
• The rule also covers disallowance periods, which are years-long bans on claiming certain tax credits. This includes the Child Tax Credit, the Earned Income Tax Credit, and education credits often used by college students.
• Under current law, some of these bans can happen automatically through computer systems. This bill would stop those automatic bans and require a person to review the case first to ensure the punishment is fair.
• The government would be required to release a public report every year about IRS penalties. This report would show how many penalties are issued, which IRS units are responsible, and how many of those penalties are eventually overturned.
• These changes would begin one year after the bill is signed into law. This gives the IRS time to set up electronic forms for supervisors to sign and to change their internal procedures.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.