The House unanimously passed legislation to strengthen taxpayer rights by making IRS collection proceedings more taxpayer-friendly, safeguard tax refunds from being unfairly taken by the IRS, and provide fair judicial review of tax liability claims.
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The Taxpayer Due Process Enhancement Act (H.R. 6506), introduced by Rep. Nathaniel Moran, R-Texas, and Terri Sewell, D-Alabama, would suspend the period of limitations for filing a claim for credit or refund during a collection due process proceeding, giving taxpayers an extended opportunity to receive their refunds. It also blocks the Internal Revenue Service from applying a taxpayer’s overpayments to any tax they are currently disputing, so the IRS cannot use a taxpayer’s old refunds against them during collection action proceedings. The bill was originally introduced and passed last December by the House Ways and Means Committee and passed this week in the House by unanimous consent.
According to a summary of the bill, if someone owes federal tax and doesn’t pay, the IRS can seize property or place a legal claim on it. Before doing this, the IRS has to send a notice to taxpayers explaining they have the right to ask for a collection due process hearing to challenge the IRS decision. A June 2025 Supreme Court decision ruled the Tax Court cannot hear a CDP appeal if the IRS drops its attempt to seize property and instead chooses a different method to take the taxpayer’s assets. In response to the Supreme Court’s ruling, the bill would suspend the period of limitations for filing a claim for credit or refund during a CDP proceeding, giving taxpayers more time to receive their refunds. The bill would also block the IRS from applying a taxpayer’s overpayment to any tax currently in dispute and expand the Tax Court’s CDP jurisdiction.
“Uncle Sam should not be able to circumvent the basic rights of American citizens,” said House Ways and Means Committee chairman Jason Smith, R-Missouri, in a statement Tuesday. “Unfortunately, right now, we have tax laws and judicial rulings that undermine taxpayer rights and could allow the IRS to impose penalties on individuals absent any judicial review. Thankfully, the House has acted to right this wrong and ensure American taxpayers are afforded their day in court.”
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