Key Takeaways:
- The House passed legislation that would protect taxpayers’ refund claim rights while IRS disputes remain unresolved.
- The bill would prevent some IRS refund offsets from making taxpayer disputes legally moot before review is complete.
- Several bipartisan tax administration bills are also awaiting Senate action, though their path forward remains uncertain.
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The House passed the Taxpayer Due Process Enhancement Act (H.R. 6506) on May 19, a bipartisan bill designed to strengthen taxpayer protections during disputes with the IRS.
If enacted, the legislation would pause the statute of limitations for refund claims while a taxpayer’s dispute is being resolved, helping to make sure taxpayers don’t lose their right to pursue a refund simply because the issue remains under review. The bill would also prevent the IRS from using refunds from other tax years to offset disputed liabilities in a way that effectively ends a taxpayer’s ability to challenge the underlying tax assessment.
The proposal is, in part, a response to the Supreme Court’s decision in Commissioner v. Zuch, which held that a taxpayer could no longer challenge a liability in a collection proceeding after the IRS applied refunds from other years to satisfy the balance due.
The bill is among several bipartisan tax administration measures that have advanced through the House this year. Although many of these proposals have broad support, their fate remains uncertain as the Senate considers its own more comprehensive tax administration package.
Among the measures awaiting Senate consideration is the Fair and Accountable IRS Reviews Act (H.R. 5346), which would require IRS examiners to obtain supervisory approval before sending certain penalty-related communications to taxpayers.
Twelve other tax administration bills have passed the House and await Senate action:
- The Fair and Accountable IRS Reviews Act (H.R. 5346) would require IRS examiners to obtain written approval from “the person to whom such individual reports” before “any written communication with respect to such penalty (including proposal of a penalty as an adjustment) is sent to the taxpayer.”
- The Electronic Filing and Payment Fairness Act (H.R. 1152) would change the timeliness provisions for electronic filings so that timeliness would be determined based on when an electronic payment or form was sent.
- The Taxpayer Notification and Privacy Act (H.R. 6495) would expand the information required to be provided in notifications to taxpayers when seeking information from third parties.
- The Taxpayer Experience Improvement Act (H.R. 7971) would require the IRS to disclose call wait times on its website, implement callback technology, expand electronic access to refund information, and create online accounts with extensive return and taxpayer information.
- The Barcode Efficiency Act (H.R.6956) would require electronically prepared tax returns to include scannable codes when submitted on paper and would require the IRS to use optical character recognition technology for paper documents.
- The IRS Whistleblower Program Improvement Act (H.R. 7959) would clarify the judicial standard of review for whistleblower rewards, allow whistleblower anonymity before the Tax Court, and require the IRS to pay interest on whistleblower payments and publish an annual report of the top 10 tax avoidance schemes disclosed by whistleblowers.
- The Doug LaMalfa Federal Disaster Tax Relief Certainty Act (H.R. 5366) would codify individuals’ ability to deduct up to $500 in personal casualty losses from a qualified disaster without regard to the 10% adjusted gross income floor and would exclude wildfire relief payments from income.
- The Survivor Justice Tax Prevention Act (H.R. 2347) would exclude compensatory damages for sexual assault from income.
- The Supporting Early-Childhood Educators’ Deductions Act of 2025 (H.R. 3334) would expand the above-the-line deduction for teacher expenses to include pre-K teachers.
- The Tax Court Improvement Act (H.R. 5349) would make several changes to Tax Court procedures, including expanding subpoena authority and clarifying that the Tax Court has jurisdiction over equitable tolling questions.
- The Recovery of Stolen Checks Act (H.R. 1155) would allow the IRS to issue replacement checks for lost tax refund payments as electronic payments.
- The National Taxpayer Advocate Enhancement Act of 2025 (H.R. 997) would give the National Taxpayer Advocate Service authority to hire direct counsel.
It is typically more difficult to pass tax legislation through the Senate than the House, but lawmakers have had some success using the unanimous consent process during this Congress. Three tax administration bills were enacted into law last year after clearing the Senate by unanimous consent:
- The Filing Relief for Natural Disasters Act (H.R. 517) increased the mandatory filing and payment relief period for natural disasters under Section 7508A from 60 days to 120 days and gave the IRS authority to postpone deadlines for state-declared natural disasters.
- The Internal Revenue Service Math and Taxpayer Help Act (H.R. 998) imposed new restrictions on the IRS’s ability to use math error authority to make adjustments without using the regular deficiency procedures (see our prior Alert, “Math Error Legislation Heads to President’s Desk” for more information).
- The Disaster Related Extension of Deadlines Act (H.R 1491) provides that the period for which tax return filing deadlines are postponed under existing disaster relief in Section 7508A is treated as an extension of the statute of limitations for filing a refund claim under Section 6511(b)(2)(A). It also clarifies that the last day prescribed for payment after an assessment under Section 6303 includes any period of time subject to relief under Section 7508A.
All of the House-passed bills enjoy overwhelming bipartisan support, so enactment this year is possible. Senate Finance Chair Mike Crapo, R-Idaho, and Ranking Minority Member Ron Wyden, D-Ore., introduced their own bipartisan tax administration package, the Taxpayer Assistance and Service Act (S. 3931), which shares provisions with several of the House bills. The Senate Finance Committee approved the bill in a near-unanimous markup vote on July 30, 2026, sending it toward a possible full Senate floor vote.
Insights
- The bills are generally taxpayer-favorable and could make it easier for taxpayers to address issues in some narrow circumstances.
- Taxpayers should be aware that there are many existing mechanisms to respond to IRS issues under current law. Businesses and investors can consider working with tax advisors to understand their options.
How MGO Can Help
Navigating IRS disputes can be complex, especially when procedural rules affect a taxpayer’s ability to challenge assessments or pursue refunds. MGO’s Tax Advocacy Resolution professionals help businesses and individuals evaluate available options, respond to IRS examinations and notices, preserve procedural rights, and develop strategies for resolving tax disputes efficiently.
As tax administration legislation continues to evolve, our team can help taxpayers understand how potential changes may affect their compliance, controversy, and refund opportunities. Contact us to learn more.