IRS Accountability and Taxpayer Protection Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2358 Introduced in Senate (IS)]

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119th CONGRESS
  1st Session
                                S. 2358

  To amend the Internal Revenue Code of 1986 to modify the procedural 
                          rules for penalties.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 21, 2025

 Mr. Scott of South Carolina (for himself, Ms. Lummis, Mr. Tillis, Mr. 
   Grassley, Mr. Barrasso, Mr. Crapo, and Mr. Risch) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to modify the procedural 
                          rules for penalties.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``IRS Accountability and Taxpayer 
Protection Act''.

SEC. 2. MODIFICATION OF PROCEDURAL REQUIREMENTS FOR PENALTIES AND 
              DISALLOWANCE PERIODS.

    (a) In General.--Section 6751(b) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) In general.--No penalty under this title shall be 
        assessed, and no disallowance period shall take effect, 
        unless--
                    ``(A) the initial determination to apply such 
                penalty or disallowance period, as applicable, is 
                personally approved (in writing) by the immediate 
                supervisor of the individual making such determination, 
                and
                    ``(B) the approval described in subparagraph (A) is 
                obtained on or before the date any notice is sent to 
                the taxpayer regarding the application of such penalty 
                or disallowance period.'', and
            (2) by adding at the end the following:
            ``(3) Initial determination.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `initial determination' means the first 
                determination, provided in a written notice to a 
                taxpayer, that, based on specific facts and 
                circumstances with respect to such taxpayer--
                            ``(i) a specific penalty applies to such 
                        taxpayer for a specific amount, or
                            ``(ii) a disallowance period applies to 
                        such taxpayer for a specific period.
                    ``(B) Requests or inquiries.--No request or inquiry 
                made by the Secretary shall be deemed to be an initial 
                determination unless such request or inquiry provides 
                the taxpayer with an offer to agree to a specific 
                penalty for a specific amount (with the exception of 
                any penalty offered under a settlement initiative to a 
                class of taxpayers) or a disallowance period for a 
                specific period.''.
    (b) Disallowance Period.--Section 6751 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new subsection:
    ``(d) Disallowance Period.--
            ``(1) In general.--For purposes of this section, the term 
        `disallowance period' means--
                    ``(A) with respect to any credit under section 24, 
                the period determined under section 24(g)(1),
                    ``(B) with respect to any credit under section 25A, 
                the period determined under section 25A(b)(4)(A), and
                    ``(C) with respect to any credit under section 32, 
                the period determined under section 32(k)(1).
            ``(2) Approval required for disallowance period 
        automatically calculated through electronic means.--With 
        respect to the application of any disallowance period, 
        subsection (b)(2)(B) shall not apply.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to notices sent after the date of the enactment of this Act.
    (d) Report.--Not later than 24 months after the date of enactment 
of this Act, and annually thereafter, the Secretary of the Treasury (or 
the Secretary's delegate) shall make publicly available a report 
regarding all penalties assessed by the Internal Revenue Service 
pursuant to the Internal Revenue Code of 1986 during the preceding 
calendar year, with all relevant data regarding such penalties to be 
collected and reported with respect to--
            (1) every organizational unit of the Internal Revenue 
        Service that has power to assess, abate, or otherwise enforce 
        any penalty imposed by the Internal Revenue Service under the 
        Internal Revenue Code of 1986, and
            (2) the progression of such penalties at each step of the 
        determination, assessment, and review processes, as well as the 
        final result with respect to such penalties.
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