House Passes Due Process Reform

The House approved legislation (H.R. 6506) by voice vote on May 19 that would protect taxpayers’ rights to contest liability and file refund claims in some circumstances. 

The Taxpayer Due Process Enhancement Act would suspend the period of limitations for refund claims during disputes with the IRS so that taxpayers do not lose their right to pursue refunds while the issue is ongoing in another forum. The bill would also prohibit the IRS from crediting an overpayment from a different year against the liability in a dispute so that disputes do not become legally moot because of an offset. The bill is partially a response to the Supreme Court ruling in Commissioner v. Zuch, which held that an individual could not challenge the liability in a collection case after the IRS used the taxpayer’s refunds from another period to offset the liabilities. 

The legislation represents the latest in a string of bipartisan tax administration bills that have passed the House this year. Several have a chance to be enacted, but Senate efforts to pass more sweeping tax administration legislation could complicate the outlook.

Twelve other tax administration bills have passed the House and await Seante 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. But Senate taxwriters could reject the House’s piecemeal approach and instead push their own broader legislation. Senate Finance Chair Mike Crapo, R-Idaho, and Ranking Minority Member Ron Wyden, D-Ore., recently released an updated version of their bipartisan tax administration bill, which shares provisions with some of the House bills (see our prior Alert, “Senate Tax Writers Introduce New Tax Administration Bill,” for more information). The lawmakers are hoping to mark up the bill in June.