A Bipartisan Bill Would Expand Taxpayer Rights And Change How The IRS Works
Congress may be divided on many issues, including tax policy, but lawmakers appear to have found common ground on how the tax system should actually work—at least in the Senate.
The Senate Finance Committee has approved the Taxpayer Assistance and Service Act (TAS Act) and sent the bill to the full Senate for consideration. The bipartisan package aims to improve IRS service, strengthen taxpayer rights, and make several changes to tax administration. Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Oregon) worked together on the legislation.
Here’s what you need to know.
What Is The Taxpayer Assistance And Service Act?
The TAS Act focuses largely on how taxpayers interact with the tax system, including filing returns, communicating with the IRS, resolving disputes, receiving refunds, and challenging IRS decisions. The package includes more than 60 provisions covering topics ranging from IRS technology and paid tax return preparers to Tax Court jurisdiction, installment agreements, whistle-blowers, and taxpayer protections.
Crapo and Wyden have characterized the legislation as an effort to modernize IRS operations and make tax administration more efficient and transparent.
Better IRS Service And Online Access
Several provisions address longstanding complaints about communicating with the IRS. For example, the bill would require greater digitization of paper-filed returns and correspondence, improve IRS online accounts, expand callback options, and provide taxpayers with better information on the status of delayed refunds. The idea is to let taxpayers and tax professionals do more business with the IRS electronically rather than relying on paper correspondence and phone calls (if you’ve ever sent a letter or sat on hold waiting for the IRS, you know this is an issue).
More Authority For The Tax Court
The bill would also give the Tax Court jurisdiction over certain refund suits involving claims of $2 million or less that currently must be brought in federal district court or the Court of Federal Claims.
That’s a significant expansion of the Tax Court’s role. Taxpayers can already challenge many proposed deficiencies in Tax Court without first paying the disputed tax, but the court generally does not have jurisdiction over standalone refund suits. The TAS Act would change that for qualifying refund claims, giving taxpayers another forum for resolving those disputes.
(You can read more about recent changes to the U.S. Tax Court here.)
New Rules For Paid Tax Return Preparers
The bill also addresses how paid tax return preparers are regulated. Currently, attorneys, CPAs, enrolled agents, and certain other tax professionals are subject to professional standards, but unenrolled paid return preparers face no general federal competency or continuing-education requirement. The TAS Act would change that and establish requirements for preparers who are not otherwise exempt.
Under the proposal, Treasury could require those preparers to complete up to 18 hours of continuing education each year covering tax law, ethics, and professional responsibility.
Additionally, under current law, anyone who prepares or assists in preparing federal tax returns for compensation must have a valid Preparer Tax Identification Number (PTIN) before preparing returns. But Treasury has little wiggle room on PTINs. The bill would give Treasury clearer authority to deny, suspend, or revoke a PTIN for misconduct or failure to meet the new requirements. It would pair that authority with procedural protections, including notice and a hearing before Treasury suspends or revokes a PTIN, as well as the opportunity to appeal an adverse determination under procedures established by Treasury. To protect taxpayers, Treasury could impose a preliminary suspension of up to 180 days when immediate action is necessary to prevent serious harm.
Protections For Victims Of Bad Preparers
The bill also includes protections for taxpayers victimized by fraudulent return preparers, including an unusual problem recently highlighted.
The IRS normally has three years to assess additional tax after a return is filed. But there’s no time limit when a fraudulent return is filed with the intent to evade tax. That can create a particularly harsh result when the return preparer—not the taxpayer—committed the fraud, because the taxpayer can be left exposed to an IRS examination years after the ordinary limitations period would have expired.
The provision comes just months after the Supreme Court declined to hear a case highlighting the problem. In Murrin v. Commissioner, the IRS assessed additional tax on returns filed roughly two decades earlier after discovering that the taxpayer’s return preparer had committed fraud. Murrin maintained that she neither knew about nor participated in the fraud.
The Third Circuit held that the preparer’s fraudulent intent was enough to trigger the unlimited assessment period under current law. Murrin asked the Supreme Court to review that interpretation, but the Court denied her petition in June, leaving the Third Circuit’s decision in place. (You can learn more about Circuit Courts here.)
The TAS Act would change the statute to provide that the unlimited assessment period applies when the taxpayer intended to evade tax. Basically, Congress would resolve the question the Supreme Court declined to take up.
Relief For Taxpayers Experiencing Financial Hardship
Several provisions focus specifically on taxpayers experiencing financial hardship. Among them, the bill would waive installment agreement user fees for taxpayers whose income falls below 250% of the federal poverty level (for 2026, that’s $39,900 for an individual and $82,500 for a family of four in the 48 contiguous states and Washington, D.C.). It would also waive the fee for taxpayers who establish an installment agreement online and make payments by electronic debit, regardless of that income test.
The bill would require the IRS to automatically provide an offset-bypass refund (OBR) for the EITC portion of an overpayment when the taxpayer’s account has already been designated currently not collectible because of economic hardship. With an OBR, the IRS can issue part of your tax refund during severe economic hardship instead of applying the entire amount to past-due federal tax debts.
(Importantly, OBRs only apply to back federal taxes, not child support, state debts, or non-tax federal debts.)
Protection When The IRS Bars Refundable Credits
Currently, the law allows the IRS to stop taxpayers from claiming certain refundable credits for multiple years when statutory requirements are met. The TAS Act would add procedural protections, including notice requirements and access to Tax Court review, for bans on claiming the EITC, child tax credit, and American Opportunity Tax Credit. That would give taxpayers a clearer path to challenge the IRS determination rather than simply losing access to the credit.
Taxpayer Advocate Service And IRS Appeals
The bill also includes provisions intended to reinforce the independence of the Taxpayer Advocate Service and the IRS Independent Office of Appeals. Many taxpayers don’t realize that both are designed to operate with a degree of independence within the IRS and to provide important checks within the tax administration system. That’s especially true when taxpayers challenge IRS actions or have trouble resolving problems.
Among other changes, the bill would allow the National Taxpayer Advocate to hire attorneys who report directly to the NTA rather than IRS Chief Counsel and give TAS greater access to IRS information, legal advice, and meetings when assisting taxpayers.
What Happens Next?
The Finance Committee overwhelmingly approved the package 26-1 on July 30. On September 17, the bill was placed on the Senate Legislative Calendar as Calendar No. 670.
Senate leadership would need to bring it up for consideration. If it passes the Senate, the House would also have to act. Both chambers ultimately must approve identical legislative text before the bill can go to the President.
Tax Professionals Are Pushing Congress To Act
This week, the National Association of Tax Professionals (NATP), representing more than 24,000 tax professionals, urged Crapo and Wyden to work with Senate leadership to bring the legislation before the full Senate. In a September 15 letter, NATP said it “strongly supports” the legislation and highlighted improvements to taxpayer protections, IRS service, and standards for paid tax return preparers.
NATP CEO Scott Artman made the organization’s position clear in a statement accompanying the letter, noting, “A 26-1 vote sends a clear message that better taxpayer service and reasonable standards for paid tax return preparers are not partisan goals.”
The American Institute of Certified Public Accountants (AICPA) also strongly supports the legislation.
The National Taxpayer Advocate Is On Board, Too
As I noted in June of this year, National Taxpayer Advocate Erin Collins is enthusiastic about the legislation. In July, she followed up, noting that the more than 60 provisions would strengthen taxpayer rights, reduce unnecessary burdens, and improve tax administration for millions of taxpayers. She characterized the package as “far-reaching practical and common-sense improvements” and urged Congress to finish the job and enact the legislation.
