The House Ways and Means Committee passed three bills aimed at bolstering taxpayer rights.
The
Under current law, while a CDP hearing or appeal is pending, the IRS may credit overpayments not at issue in the hearing or appeal against the tax liabilities subject to the liens or levies at issue in the hearing or appeal. The bill would also expand the Tax Court's collection due process jurisdiction, so taxpayers can choose the Tax Court over district court, which is more accessible and cheaper.
When a taxpayer asks the Tax Court to review an IRS decision from a CDP hearing, the court can review both the IRS's collection decision and the amount of tax owed, if the taxpayer properly challenged that amount at the hearing. The court would keep this power even if the IRS later drops the lien or levy. 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 June, the Supreme Court ruled in Commissioner v. Zuch that the Tax Court cannot hear a CDP appeal if the IRS drops its levy and chooses a different method to take the taxpayer's assets. The high court also said the IRS acted properly when it used the taxpayer's refunds to settle disputed tax liability. In response to the Supreme Court's ruling, the bill suspends 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 passed the committee by a unanimous vote of 41 to 0.
The
The IRS is legally allowed to request that a taxpayer provide additional information necessary to arrive at a fair and accurate audit adjustment. In cases where taxpayers don't fully cooperate with such requests, the IRS can seek information related to the audit from third parties, like banks or employers.
Like the other bill, it passed the committee with a unanimous vote of 41-0.
The
The bill passed the committee by a more divided vote of 26 to 15.
"Our next two bills continue our campaign to strengthen taxpayer rights," said House Ways and Means Committee chairman Jason Smith, R-Missouri, in an opening statement Wednesday during a markup of the legislation. "The first, legislation from Representatives Moran and Sewell, strengthens rights for taxpayers engaged in certain litigation in Tax Court in light of a recent Supreme Court ruling. The bill suspends the period of limitations for filing a claim for credit or refund during certain Tax Court proceedings and prohibits the IRS from applying refunds against a disputed tax liability while a hearing is underway. The second forces the IRS to be more transparent when asking third parties for confidential information about a taxpayer. Under current law, the IRS must notify taxpayers before contacting third parties, like banks or employers, during a tax investigation, but the agency is not required to tell taxpayers exactly what information it is seeking. This bill from Representatives Steube and Panetta requires the IRS to both disclose to taxpayers the exact information they are seeking from third parties and eliminates the need for many third-party contacts, by giving taxpayers the opportunity first to provide the information to the IRS themselves. The last bill from Representative Schweikert helps keep our communities safe. Currently, less-than-lethal weapons like tasers are taxed as firearms under outdated laws. Because of the incorrect classification, the tax raises the cost to use non-lethal tactics and discourages innovation for new safety devices. This bill corrects this error and ensures future taser-related innovations are not subject to the Firearms and Ammunition Excise Tax."
Smith's counterpart on the Democratic side, ranking member Richard Neal, D-Massachusetts, criticized consideration of the legislation as health insurance subsidies are set to rise without an extension of the expanded premium tax credit.
"Unfortunately, the wait continues," said Neal in his opening statement. "Republicans found a way to squeeze tax relief into today's markup, but not to keep premiums down or help families struggling with rising costs. Not content with cutting taxes on guns as part of their Big, Ugly, Law, they're now pushing a bill to ease taxes on tasers. Imagine if Republicans showed even a fraction of that urgency when it came to lowering costs for families. Instead, with millions about to lose their health care, with every American paying for the President's tariffs this holiday season and beyond, Republicans are only offering to stall, distract, and run out the clock. They'll move heaven and earth for tax cuts for the wealthy, but when it comes to governing for the American people, they come up empty every single time. The American people deserve better than that. "
