H.R. 5349 — TAS Act

This section requires electronic filing and processing of all federal tax returns and amendments. It directs the Internal Revenue Service to use optical character recognition technology to transcribe paper returns and correspondence, with exceptions if the technology is slower or less reliable than manual processes and a required report to the House Ways and Means and Senate Finance Committees within 30 days. The requirements apply to individual income tax returns received on or after January 1 of the first calendar year beginning more than 180 days after enactment, to estate and gift tax returns received on or after January 1 of the first calendar year beginning more than 24 months after enactment, and to all other returns and correspondence received on or after January 1 of the first calendar year beginning more than 18 months after enactment.

This section requires the Internal Revenue Service to display real-time data on its public website for each applicable phone line, including callers connected to representatives or automated systems, callers waiting, longest wait times, callback availability, an embedded wait-time estimator, an API for third-party access, and prior-month averages and percentages for call length, transfers, disconnections, and satisfaction. It also requires screening of automated calls and weekly reporting on any category of returns or claims with processing delays exceeding 21 days, effective 12 months after enactment.

This section requires the Secretary of the Treasury, no later than January 1 of the first calendar year beginning more than 12 months after enactment, to provide taxpayers through a website and mobile application with individualized, up-to-date information on their returns and amended returns. The information must cover whether the IRS has received the return, completed processing (including refund issuance date, estimated receipt date, and deposit account or mailing address details), or suspended processing (including the reason and any requested information with submission deadlines).

This section expresses the sense of Congress that taxpayers contacting the Internal Revenue Service should have the option to receive a callback, and that by calendar year 2028 the Internal Revenue Service should provide any taxpayer, including those residing outside the United States, the option to receive a callback for calls to applicable phone number extensions unanswered within 5 minutes.

This section establishes a website or mobile application, available no later than January 1 of the first calendar year beginning more than 18 months after enactment, that allows any taxpayer to view IRS returns, documents, notices, and letters from the preceding six years and to respond by uploading materials. It permits authorized representatives, tax return preparers, and qualified reporting agents to access and act on multiple taxpayer accounts. The section requires the Secretary to investigate and address unauthorized disclosures of return information by such designees and to publish annual public reports on enforcement actions, and to conduct focus groups with taxpayers and tax professionals before launch.

This section requires the Secretary to refund overpayments attributable to the earned income tax credit under section 32, up to the amount of that credit, for applicable taxpayers classified as currently not collectible before requesting the refund. The rule applies to offsets made after the date that is 12 months after enactment.

This section waives fees for installment agreements under section 6159 for taxpayers whose adjusted gross income does not exceed 250 percent of the applicable poverty level, as determined for the most recent year with available data. The change applies to agreements entered into after the date that is 12 months after enactment.

This section establishes a program, within 12 months of enactment, to identify taxpayers reasonably likely to be experiencing economic hardship with unpaid tax liabilities using recent income and asset data. It requires the IRS to inform such taxpayers who request installment agreements of alternatives including partial collection agreements, offers-in-compromise, and currently not collectible status, and directs submission of a report to the House Ways and Means and Senate Finance Committees within 2 years on identification accuracy and taxpayer outcomes.

This section requires the Secretary of the Treasury to send written notices of tax delinquency amounts quarterly (from annually) to affected taxpayers. Each notice must include an estimate of penalties and interest that will accrue if the debt remains unpaid within the section 6502(a) collection period and information on available assistance programs. The requirement does not apply during an installment agreement under section 6159(a) or accepted offer-in-compromise under section 7122, or when the Secretary has determined the tax is uncollectible under section 6343(e). The changes take effect 24 months after enactment.

This section removes the $6 million annual aggregate cap and the $100,000 annual per-clinic cap on grants for qualified low-income taxpayer clinics. It requires each clinic to provide matching funds equal to 100 percent of the grant amount (or a lower percentage, not below 25 percent, if the Secretary determines the reduction would expand coverage to additional taxpayers), allowing salaries and equipment costs but excluding indirect expenses such as overhead. The changes apply to calendar years beginning after enactment.

This section limits the requirement for a General Counsel opinion on IRS offers-in-compromise to cases the Secretary determines present a significant legal issue (from all cases). It eliminates the prior exception for compromises involving less than $50,000 in assessed tax and applies to offers submitted or pending on or after the date of enactment.

This section requires written approval by an immediate supervisor or the IRS Office of Servicewide Penalties before any penalty is assessed or any disallowance period takes effect for the child tax credit under section 24, the American Opportunity Tax Credit under section 25A, or the earned income tax credit under section 32. Approval must occur before the first appealable notice is sent to the taxpayer. The changes apply to notices sent after the date that is 12 months after enactment, and the Secretary must issue annual public reports on all assessed penalties beginning 24 months after enactment.

This section requires the IRS to return to a taxpayer any amounts collected in excess of the remaining payments due under an accepted offer-in-compromise, unless the taxpayer agrees otherwise or the compromise is in default. It also requires the IRS to release any levy and return property when an offer-in-compromise is accepted with respect to the underlying liability. The changes apply to compromises accepted after the date of enactment.

This section extends the period for returning money wrongfully levied upon or received from the sale of property under section 6343(b) to 2 years from the date the Secretary receives the amount (from 2 years from the date of the levy). The change applies to amounts levied upon or received from sales after the date that is 12 months after enactment.

This section requires the Secretary to report to the House Ways and Means and Senate Finance Committees on IRS implementation of the title within 2 years of enactment, after consulting the National Taxpayer Advocate, TIGTA, and GAO. It mandates annual fraud reports beginning 12 months after enactment detailing Security Summit interactions, threat information, and specific dollar amounts of fraudulent claims by form and filing method, with redacted data posted publicly. It also requires annual reports for 6 years on IRS document tracking systems to reduce duplicative requests and clarifies that certain complexity analyses do not satisfy existing statutory requirements.

This section directs the Secretary to study combining and simplifying reporting required under section 5314 of title 31 and Internal Revenue Code sections 6038, 6038A, 6038B, 6038C, 6038D, 6039F, 6046A, and 6048, while eliminating duplicative information requests from nonresident United States taxpayers. The study must incorporate input from the National Taxpayer Advocate and nonresident taxpayers, and the Secretary must submit a report with any resulting actions and legislative recommendations to Congress within 180 days of enactment.

This section directs the Comptroller General to study compliance burdens with Federal tax laws for United States persons living abroad, including filing returns, foreign retirement plans treated as passive foreign investment companies, foreign currency gains, IRS and FinCEN inquiries, and access to financial services and tax preparation, with particular attention to low- and moderate-income individuals. It requires the Comptroller General to submit a public report to the Secretary of the Treasury and Congress within one year of enactment, followed by a Treasury report within one year thereafter describing actions taken and any needed legislation.

This section extends the period to request abatement of a mathematical or clerical error assessment to 120 days (from 60 days) when the notice is addressed to a person outside the United States. The change applies to notices sent after the date that is 180 days after enactment.

This section requires the IRS to mail written notice specifying the proposed penalty amount, tax years involved, and basis at least 60 days (120 days for taxpayers abroad) before assessing any covered foreign information return penalty under sections 6038(b)(1), 6038A(d)(1), 6038B(c), 6038C(c), 6038D(d)(1), 6039F(c)(1)(B), or 6677, and grants taxpayers the right to request review by the Independent Office of Appeals within that period. It suspends assessment, demand, and collection until the review period expires or a final determination issues, and suspends the statute of limitations during that time plus 30 days. It treats all penalties under the Internal Revenue Code as taxes for assessment and collection purposes, except those for which civil or criminal actions are the prescribed collection method. It preserves taxpayer rights under subchapters C and D of chapter 64 and to refund litigation, and creates no inference regarding prior treatment of covered penalties.

This section repeals the due date requirements for certain information returns relating to foreign gifts and trusts. The repeal applies to returns for taxable years beginning after December 31, 2026.

This section expands the Tax Court’s subpoena authority to require the attendance and testimony of parties or witnesses and the production of books, papers, documents, electronically stored information, or tangible things from any place in the United States for purposes of discovery or as evidence, issued and served in accordance with the court’s rules and orders. It also authorizes administration of affirmations and examination of parties.

This section authorizes the Tax Court to correct clerical mistakes, oversights, or omissions in judgments, orders, or records, and to relieve a party from a final judgment or order on grounds of mistake, newly discovered evidence, fraud, voidness, or other circumstances where justice requires. Motions must be filed within a reasonable time and no later than one year after entry for the first three grounds; pending motions do not affect finality. Either party may appeal a relief order within 90 days.

This section authorizes special trial judges of the Tax Court to hear any proceeding not listed in paragraphs (1) through (6) of subsection (b), upon the consent of the parties and pursuant to Tax Court rules. It also authorizes those judges to make the decision of the court in such proceedings and grants them independent authority to punish contempt, subject to a maximum penalty of a Class C misdemeanor.

This section applies the disqualification standards for federal judges under 28 U.S.C. 455 to judges, special trial judges, and proceedings of the Tax Court. Those standards require disqualification where impartiality might reasonably be questioned or in cases of personal bias, prior service as counsel, financial interests, or specified family relationships to a party or lawyer.

This section requires IRS notices of deficiency for the child tax credit, American Opportunity Tax Credit, or earned income tax credit to identify the denied credit, state the grounds for denial, explain any multi-year disallowance period, and inform the taxpayer of the need to demonstrate eligibility for future claims. It grants the Tax Court jurisdiction to review the imposition and length of such disallowance periods, shifts the burden of production to the IRS in related proceedings, and changes the trigger for a disallowance period from a final determination to the mailing of a notice of deficiency (or a Tax Court decision). These notice and burden rules apply to notices mailed and proceedings beginning 36 months after enactment; Tax Court review applies to petitions filed on or after enactment.

This section authorizes de novo review by the Tax Court and other courts of innocent spouse relief determinations under section 6015. It expands the scope of review to include any remedy applicable in a suit for refund or collection or in a bankruptcy case. The changes apply to petitions, requests, and suits filed or pending on or after the date of enactment.

This section treats deadlines for filing petitions under sections 6015(e)(1)(A), 6213(a), and 6330(d)(1)(A) as nonjurisdictional claims-processing rules subject to waiver, forfeiture, estoppel, and equitable tolling. When the Tax Court excuses a late filing, it requires the Secretary or Attorney General to abate related assessments, suspend levies and collection proceedings, and refund amounts collected, except where sections 6330(e)(2), 6330(f), 6330(g), 6851, 6852, or 6861 apply. It also tolls filing periods when a Tax Court filing location is inaccessible for part of a day.

This section clarifies that the Tax Court and other federal courts may determine the amount or existence of underlying tax liability in collection due process hearings under section 6330 when the taxpayer did not otherwise have an opportunity to dispute such liability in the Tax Court or another federal court (other than through a refund suit under section 7442 or 28 U.S.C. 1346(a)(1)). It also permits issues related to the amount or existence of the underlying tax liability to be raised in such hearings.

This section authorizes the Tax Court to determine and enforce overpayments of tax in collection due process cases under section 6330, including refunds of amounts paid after the required notice or within the periods specified in section 6511. It suspends the period of limitations for credits or refunds during such proceedings and prohibits the IRS from crediting overpayments against disputed liabilities without taxpayer consent. The changes apply to cases pending on or after the date of enactment.

This section grants the Tax Court jurisdiction, concurrent with district courts, to hear refund suits not exceeding $2,000,000 for taxes under subtitle A (per taxable year), chapter 11, chapter 12 (per calendar year), subtitles C, D, or E (per taxable period or event), or any other amount collected. It allows small case procedures for refund petitions not exceeding $50,000 and applies to actions filed after 12 months following enactment.

This section grants the district courts, Court of Federal Claims, and Tax Court jurisdiction over actions to determine a taxpayer’s correct liability or claim a refund without requiring full payment, when the amount is subject to a section 6159 installment agreement with timely payments made or has been determined not collectible under section 6343(e). It permits dismissal upon request if the taxpayer falls out of compliance and bars collection of any liability disallowed by a final court decision. The changes apply to actions filed 12 months after enactment.

This section raises the threshold for small case procedures in Tax Court to $100,000 (from $50,000) per calendar quarter for disputes involving employment tax status determinations under section 7436 and other matters under section 7463. It adds an inflation adjustment to the threshold for petitions filed after calendar year 2026.

This section authorizes the National Taxpayer Advocate to appoint counsel in the Office of the Taxpayer Advocate who report directly to the Advocate or a delegate. The Advocate may use direct-hire authority to recruit such counsel without regard to preference requirements; the counsel shall not report to the IRS Chief Counsel, shall not represent the government in litigation, and their legal interpretations shall not bind the Secretary, while the Chief Counsel continues to provide advice to the Office.

This section expands the National Taxpayer Advocate’s authority to make personnel decisions to cover any officer or employee of the Office of the Taxpayer Advocate (from only employees of local offices). The change takes effect 12 months after the date of enactment.

This section requires the Commissioner of Internal Revenue to provide the Office of the Taxpayer Advocate, within 2 weeks of a request, access to returns and return information, legal advice from the Office of Chief Counsel, and meetings with IRS employees for any open taxpayer assistance case, as well as documents, data, and legal advice needed for reports. It also requires annual reports to identify any failures to meet the deadline.

This section repeals the suspension of limitation periods for taxpayers seeking assistance from the Taxpayer Advocate Service. It updates the cross-reference in section 6306(k)(2) to reflect the redesignated subsection. The changes take effect on the date of enactment.

This section authorizes designated Internal Revenue Service employees to assist taxpayers experiencing economic hardship from IRS action or inaction and to comply with Taxpayer Assistance Orders during any lapse in appropriations, treating those functions as emergencies involving the safety of human life or the protection of property.

This section expands the definition of "return" for purposes of penalties on tax return preparers under sections 6694, 6695, and 6695A to include any document purporting to be a return of tax, an administrative adjustment request under section 6227, or a partnership adjustment tracking report under section 6226(b)(4)(A). The change takes effect on the date of enactment.

This section increases the penalty on tax return preparers who fail to furnish a valid identifying number that complies with section 6109(a)(4)(A) to $250 per failure (from $50), with an annual maximum of $75,000 (from $25,000), and deems a number non-compliant if it is assigned to another person, nonexistent, inactive, expired, withdrawn, suspended, revoked, or otherwise invalid. It imposes a new $250 penalty on electronic return originators who fail to use an electronic filing identification number assigned to them by the Secretary or validated under a new real-time program, and directs the Secretary to establish and maintain that validation program, including real-time confirmation of validity status, within 24 months of enactment.

This section increases penalties for tax return preparers under section 6695. It raises the per-failure penalty to $250 (from $50) for failures to furnish copies to taxpayers, sign returns, retain copies or lists, and file correct information returns, with corresponding increases to annual maximum penalties to $50,000 or $75,000 (from $25,000). It also increases the penalty for failure to be diligent in determining eligibility for certain credits to $1,000 (from $500), updates inflation adjustments beginning in 2025, and establishes a new penalty for misappropriation of taxpayer refunds equal to the greater of $1,000 or the full amount of the payment, with an exception for bank deposits into the taxpayer's account.

This section establishes a program requiring individuals to demonstrate suitability through background checks and personal tax compliance, complete up to 18 hours of annual education on ethics and tax law, or qualify as a specified practitioner (certified public accountant, attorney, or enrolled agent in good standing) to obtain or renew a preparer tax identification number. It authorizes the Secretary to deny, revoke, or suspend such numbers for noncompliance and provides a 30-day cure period for education failures.

This section authorizes the Chief of Appeals to appoint counsel in the Internal Revenue Service Independent Office of Appeals who report directly to the Chief of Appeals. Such counsel shall not report to the Chief Counsel for the Internal Revenue Service, shall not represent the Government in litigation, and their legal interpretations shall not bind the Secretary.

This section authorizes the Secretary to use direct hire authority to recruit and appoint qualified applicants who are not Internal Revenue Service enforcement employees to positions in the Independent Office of Appeals, without regard to notice or preference requirements.

This section requires the Secretary of the Treasury to review every claim for refund, issue a determination, and mail a detailed written explanation of any disallowance (in whole or in part) to the taxpayer’s last known address within 12 months of receipt, including instructions for appeal to the IRS Independent Office of Appeals. It increases the overpayment interest rate by 1 percentage point for any delayed determination, capped at $500 (inflation-adjusted after 2026), allows appeals within 30 days (90 days if mailed abroad), suspends the 2-year period for filing suit during the appeal, and exempts frivolous claims from these requirements.

This section expands independent administrative review of offers-in-compromise to cover any determination that an offer is not accepted for processing or is nonprocessable before the determination is communicated to the taxpayer. It also extends such review to rejections of proposed offers-in-compromise or installment agreements under section 7122 or 6159 before the rejection is communicated to the taxpayer.

This section requires the Internal Revenue Service Independent Office of Appeals to evaluate all hazards of litigation without exception when resolving cases. It expands the right of appeal to all taxpayers for determinations under subtitles A, B, or C concerning tax liabilities, penalties, collection alternatives, tax-exempt status, and related discretionary actions, subject to exceptions for constitutional or procedural challenges without final court precedent, frivolous positions, closing agreements, pending criminal investigations, and issues designated for litigation by Chief Counsel. It also authorizes the Tax Court to direct referral to the Office of Appeals when appropriate.

This section revises Tax Court review of IRS whistleblower award determinations under section 7623 from an appeal to de novo review based on the administrative record at the time of the original determination plus any newly discovered or previously unavailable evidence. The change applies to petitions pending on or filed on or after the date of enactment.

This section exempts awards authorized under section 7623 of the Internal Revenue Code of 1986 from reduction under any sequestration order issued under the Balanced Budget and Emergency Deficit Control Act of 1985 after the date of enactment of this Act.

This section requires whistleblowers to proceed anonymously before the Tax Court in all proceedings under section 7623, unless the court finds that a societal interest in disclosure outweighs potential harm to the whistleblower. The rule applies to petitions pending on or filed after the date of enactment.

This section expands the annual IRS whistleblower report to include a list and descriptions of the top 10 tax avoidance schemes disclosed by whistleblowers during the fiscal year. The requirement applies to reports for fiscal years ending after the date of enactment.

This section requires the IRS to pay interest at the overpayment rate under section 6621(a) on whistleblower awards under 26 USC 7623(b) when it fails to issue a preliminary award recommendation within 12 months after all proceeds are collected and tax liabilities are finalized with no pending refund claims. The requirement takes effect 180 days after enactment, with the 12-month period beginning on that date for pending cases that already meet the collection and finality conditions.

This section expands the above-the-line deduction for attorney's fees and court costs paid in connection with awards under section 7623 to cover the entire section (from only subsection (b)). The change applies to taxable years ending after the date of enactment.

This section postpones tax filing, payment, and related deadlines, and waives interest and penalties, for US nationals unlawfully or wrongfully detained abroad or held hostage abroad, and for their spouses, by disregarding the period of detention. It requires the Secretary of State and the Attorney General to provide annual identification lists to Treasury beginning January 1, 2027, and directs Treasury to update its databases to apply the relief.

This section establishes a program, to be created by January 1, 2027, under which the Secretary of the Treasury (in consultation with the Secretary of State and the Attorney General) refunds or abates tax penalties, interest, additions to tax, and related amounts paid by eligible individuals held hostage or wrongfully detained abroad (or their spouses and dependents) for taxable years ending during the period beginning January 1, 2021, and ending on the date of enactment. It directs the Hostage Recovery Fusion Cell to compile and transmit to the Secretary a list of such individuals by January 1, 2027, and requires notice to each identified individual within 90 days of enactment or release. Refunds are issued in the same manner as tax overpayments, with the period of limitations extended to one year after notice.

This section permits payers and recipients of non-wage remuneration for services performed by an individual to enter voluntary withholding agreements, under which such payments are treated as wages subject to withholding. It requires the Secretary to issue regulations or guidance on the amounts to be withheld and the types of payments covered no later than 18 months after enactment.

This section extends the mailbox rule to electronic tax filings and payments authorized by the Secretary, treating the date of authorized electronic submission as the filing or payment date if the document or payment is received within 3 business days after the due date. It bars the rule for payments designed principally to delay Treasury funds and directs the Secretary to issue implementing regulations within 1 year of enactment, with the changes applying to submissions on or after that date.

This section requires the Internal Revenue Service to specify in third-party contact notices the particular information sought from others when the taxpayer could reasonably provide it, and to give the taxpayer at least 45 days (or more upon request with reasonable cause) to respond before contacts occur. It also creates a good cause exception to the notice rules when compliance would risk concealment of records, intimidation of witnesses, or taxpayer flight, effective for notices issued more than 12 months after enactment.

This section extends the deadline for farmers and fishermen to pay estimated taxes to April 15 (from March 1) for taxable years beginning after the date of enactment.

This section establishes a Business Child Care Liaison within the Internal Revenue Service, appointed outside the competitive service and compensated at Executive Schedule level V. The Liaison coordinates with businesses, state agencies, tribal organizations, and other federal officials to expand use of employer-provided child care benefits such as dependent care assistance programs, Dependent Care Flexible Spending Accounts, and the section 45F credit; issues fact sheets and SAM.gov resources within 120 days; recommends legislative and administrative changes; and submits annual reports to the Senate Finance and House Ways and Means Committees detailing assistance requests, activities, and utilization data by employer size.

This section authorizes redisclosure of return information received under education loan provisions to officers and employees of the Congressional Budget Office, upon written request by its Director to the Secretary of Education and only to the extent necessary for purposes described in subclause (III) of clause (i). It requires the Secretary of Education to submit annual reports to the Secretary of the Treasury on the number of such redisclosures and any unauthorized use, access, or disclosure, effective for disclosures made after the date of enactment.

This section requires partnerships with more than 50 partners or assets valued at $1 million or more to file returns on magnetic media, regardless of the general threshold for the number of returns. The requirement applies to returns filed on or after January 1 of the first calendar year beginning after the date of enactment.

This section limits the exception to the 3-year assessment period for false or fraudulent returns by requiring intent to evade tax by the taxpayer rather than a preparer. It treats intent by either spouse on a joint return under section 6013 as intent by the taxpayer and applies the exception to both spouses. The changes take effect for assessments made or proceedings begun after the date of enactment.

This section makes a technical correction to the subsection numbering in section 7508A of the Internal Revenue Code for the provision added by the Disaster Related Extension of Deadlines Act, effective as if included in that Act.

This section advances the deadline for electronically filing certain information returns to January 31 (from March 31) of the year following the calendar year to which the returns relate. The change applies to returns required under sections 6041 (other than nonemployee compensation), 6042, 6047(d), 6049, 6050F, and 6050W, and to reports of IRA distributions. The amendments take effect for returns relating to calendar years after December 31, 2027.

This section increases criminal penalties for the unauthorized disclosure of taxpayer returns or return information to $250,000 or imprisonment of not more than 7 years (from $5,000 or 5 years). It establishes a new felony for IRS contractors who willfully fail to protect confidentiality under section 6103, resulting in unauthorized disclosure, punishable by a fine equal to the greater of $500,000 or 25 percent of the contract value. It increases civil damages for such violations to $5,000 (from $1,000) per disclosure and applies these changes to inspections or disclosures after the date of enactment.