The Senate unanimously approved the
The TAS Act had
The AICPA hailed passage of the bill. "The Senate's passage of the TAS Act is a significant achievement for taxpayers, tax professionals and the integrity of our tax administration system," said AICPA president and CEO Mark Koziel in a statement Thursday. "This bipartisan legislation reflects years of thoughtful work by congressional leaders to address persistent challenges that taxpayers and practitioners encounter when interacting with the IRS and to advance practical reforms that make the system more efficient, transparent and responsive."
The AICPA pointed to several provisions it favored in the bill. "We are encouraged by provisions that strengthen taxpayer protections and reinforce confidence in the tax system, including measures related to preparer oversight and support for taxpayers facing economic hardship," Koziel added. "Together, these reforms help promote fairness, accountability and trust while improving the overall taxpayer experience."
Leaders of the Senate Finance Committee also praised the bill. "Taxpayers deserve a tax system that is competent, responsive and works for them," said chairman Sen. Mike Crapo, R-Idaho, in a statement Wednesday. "The Taxpayer Assistance and Service Act is designed to provide taxpayers with top-quality service and ensure their rights are protected."
"The Taxpayer Assistance and Service Act is the direct result of years of bipartisan work," said ranking member Sen. Ron Wyden, D-Oregon. "This bill will help improve services for hardworking taxpayers while cracking down on predatory tax prep scammers that are taking advantage of low-income families to turn a quick profit."
The bill still needs to be passed by the House, which has been taking a more piecemeal approach, including the recent
Glen Frost, founding partner of Frost Law, based in metropolitan Washington, D.C., also praised the Senate action.
"This is an important step forward for a critical piece of legislation that will help taxpayers as well as help tax administration work inside the IRS and at the Tax Court," Frost said. "It's important to reach a final agreement with the House on these proposals before this Congress ends. Seeing this common-sense proposal pass the Senate unanimously on a bipartisan basis is a positive step. This is a hopeful sign for hammering out a final agreement on legislation that has wide-ranging support in the tax community."
Frost Law plans to present a free webinar on the TAS Act at 2 p.m. on Oct. 14. The webinar, hosted by the Accounting, Legal, & Financial Institute, is eligible for one CPE credit.
Summary of provisions
Here is a summary of the various provisions, prepared with the help of Google's Gemini Notebook:
TITLE I—TAX ADMINISTRATION AND CUSTOMER SERVICE
- Scanning and Digitization: Mandates barcode scanning technology for electronically prepared returns printed on paper. Manually prepared paper returns and other paper correspondence must be processed using optical character recognition (OCR) or similar technology to automate transcription.
- Taxpayer Backlog Dashboard: Establishes a weekly dashboard on the public IRS website when there are "significant delays". A significant delay is defined as failing to process items within 21 days or failing to answer 30% of toll-free calls in a week. The dashboard must show average processing times and detailed phone wait statistics (median times, shortest wait hours, and callback metrics).
- Individualized Online Portals: Instructs the IRS to offer up-to-date, individualized details via websites or mobile apps tracking return processing milestones, expected refund dates, or reasons and requirements for suspended processing.
- Callback Services & Account Viewing: Requires the IRS to employ callback options for toll-free lines if wait times exceed 10 minutes. Taxpayers must be allowed to view 6 years of filings/correspondence online, upload replies directly, and permit tax representatives to seamlessly access multiple client accounts.
- Improved Error Notices: Requires mathematical or clerical error notices to explain the error in comprehensive, plain language, itemize adjustments, provide a transcript helpline, and display the deadline to request an abatement in bold, 14-point font next to the address on page one.
Low-Income & Hardship Protections:
- Refund Offset Bypass: Automatically bypasses federal refund offsets for low-income individuals qualifying for the Earned Income Tax Credit (EITC).
- Fee Waivers: Waives installment agreement fees for taxpayers below 250% of the poverty level or those paying electronically.
- Proactive Collection Alternatives: Proactively identifies individuals likely facing economic hardship to present alternative payment options like partial collection, offers-in-compromise (OIC), or "currently not collectible" status.
- State-Declared Disasters: Empowers the IRS to apply federal disaster extension rules to qualified State-declared disasters upon the written request of a Governor or the Mayor of D.C., extending mandatory filing and payment deadlines to 120 days (up from 60).
- Supervisory Approval for Penalties: Prohibits assessing penalties or applying disallowance periods unless personally approved in writing by the employee's immediate supervisor prior to sending a notice to the taxpayer.
TITLE II—AMERICAN CITIZENS ABROAD
- Combined Reporting: Integrates Foreign Bank and Financial Account (FBAR) reporting with the annual federal income tax return, treating them as timely filed if the main tax return is on time.
- GAO Study on Compliance Burdens: Directs the Comptroller General to study and report on tax compliance difficulties encountered by US citizens living abroad, particularly low- and moderate-income individuals.
Foreign Currency Transaction Rules:
- Increases the personal transaction exchange exclusion threshold from $200 to $1,000 (adjusted for inflation).
- Allows taxpayers to recognize foreign currency losses on qualified mortgages securing an overseas residence (only up to the gain recognized on the home sale) and vice versa.
- Establishes an election allowing qualified expats to aggregate foreign income/expenses and use annual average exchange rates.
- Low-Income Dual Citizens: Minimizes reporting and tax certification burdens for low-income, dual-citizen expatriates who have limited connections to the US and minimal unpaid tax liability.
TITLE III—JUDICIAL REVIEW
- Pre-Hearing Subpoenas: Grants Tax Court judges and special trial judges the authority to issue subpoenas and examine witnesses/documents before hearings to facilitate discovery and settlements.
- Relief from Judgments: Confirms that the Tax Court can correct clerical errors and relieve a party from a final judgment on grounds such as mistake, surprise, newly discovered evidence, fraud, or void judgments.
- Special Trial Judges & Disqualification: Authorizes special trial judges to hear additional cases with party consent, punishes contempt up to Class C misdemeanor caps, and formally applies federal judicial disqualification rules (28 U.S.C. 455) to the Tax Court.
- Multi-Year Credit Claiming Bans: Establishes specific notice requirements when a taxpayer's Child Tax Credit, American Opportunity Tax Credit, or EITC is denied under a multi-year ban. It explicitly grants the Tax Court jurisdiction to review and redetermine whether these disallowance periods were properly imposed.
- Equitable Tolling: Clarifies that the Tax Court has jurisdiction to apply equitable tolling for filing petitions based on equity, specifically mandating a 14-day tolling extension if physical or online filing locations are inaccessible (e.g., due to government shutdowns).
- Refund Jurisdiction: Broadens the Tax Court's jurisdiction, allowing it to determine tax liabilities and issue refunds/credits during collection due process (CDP) cases. It also establishes concurrent jurisdiction with federal district courts to hear general suits for refunds or credits.
- Unpaid Tax Claims: Allows the Tax Court, district courts, and Court of Federal Claims to retain jurisdiction over tax liability disputes even if the tax is not fully paid, provided the taxpayer is compliant with an active installment agreement or is in "currently not collectible" status.
TITLE IV—OFFICE OF THE TAXPAYER ADVOCATE
- Direct Hire Authority: Permits the National Taxpayer Advocate (NTA) to independently recruit and appoint legal counsel who report directly to the NTA instead of the IRS Chief Counsel.
- Swift Access to IRS Information: Mandates that the IRS Commissioner provide the NTA with access to necessary taxpayer returns, Chief Counsel legal advice, and taxpayer-IRS meetings within 2 weeks of a request. Any failure to provide access must be flagged in annual congressional reports.
- Government Shutdown Support: Authorizes the Commissioner and NTA to incur obligations during a lapse in appropriations to assist taxpayers facing economic hardship from IRS action/inaction.
TITLE V—TAX RETURN PREPARERS
- PTIN Suitability & Education: Formally establishes strict suitability background checks (including personal tax compliance) and continuing education requirements (up to 18 hours on ethics and tax law) for paid preparers seeking a Preparer Tax Identification Number (PTIN).
- PTIN Suspension & Penalties: Gives the IRS power to suspend or revoke PTINs for incompetence, disreputable conduct, fraud, or tax noncompliance, and impose monetary penalties of up to $1,000 (or $5,000 for fraud).
- PTIN Evasion Felony: Makes the willful misuse, misappropriation, or evasion of PTIN requirements a felony punishable by a fine of up to 50,000(100,000 for corporations), up to 2 years of imprisonment, or both.
- Misappropriation of Refunds: Increases penalties for paid preparers who improperly endorse or negotiate refund checks, or misappropriate direct deposit electronic refunds, to the greater of $1,000 or the full amount of the refund.
TITLE VI—APPEALS
- Independent Office of Appeals Counsel: Grants Appeals the authority to directly hire its own counsel who report to the Chief of Appeals rather than the IRS Chief Counsel.
- Refund Timelines & Explanations: IRS must review and determine refund claims within 36 months. Disallowed claims must receive a detailed written explanation. Delays past the deadline trigger an overpayment interest rate penalty on the IRS of 1 additional percentage point, capped at $1,000.
- Hazards of Litigation: Mandates that Appeals evaluates and considers all "hazards of litigation" in resolving cases referred to them.
- Right of Appeal: Clarifies that the appeals process must be available to all taxpayers regarding liabilities, penalties, or additions to tax, barring a few specific exceptions (such as constitutional challenges or active criminal referrals).
TITLE VII—WHISTLEBLOWERS
- De Novo Tax Court Review: Clarifies that Tax Court reviews of whistleblower award determinations must be de novo, utilizing the original administrative record and newly discovered or previously unavailable evidence.
- Sequestration Protection: Exempts whistleblower awards from reduction under federal sequestration orders.
- Anonymity in Proceedings: Whistleblowers shall proceed anonymously before the Tax Court unless the court determines a heightened societal interest outweighs potential harm to the whistleblower.
- Interest on Delayed Awards: Mandates that if the IRS fails to provide a preliminary award notice within 12 months after all proceeds are collected and liabilities are resolved, interest will accrue at the standard overpayment rate.
- Strict Return Confidentiality: Prohibits whistleblowers and their counsel from redisclosing a taxpayer's confidential return information received during proceedings, backed by felony criminal penalties for willful violations.
TITLE VIII—HOSTAGES
- Tax Postponement: Suspends all federal tax deadlines, interest accruals, penalties, and additions to tax for US nationals unlawfully or wrongfully detained abroad or held hostage, as well as their spouses.
- Refund & Abatement Program: Directs the IRS, State Department, and Justice Department to run a program to refund or abate interest and penalties collected from eligible hostages and wrongful detainees dating back to January 1, 2021.
TITLE IX—SMALL BUSINESSES
- Voluntary Contractor Withholding: Permits voluntary tax withholding agreements on non-wage payments made to independent contractors.
- S Corporation Election Extension: Extends the time small business corporations have to make S-corp elections to the due date of the return itself, including extensions.
- Quarterly Estimated Payment Changes: Aligns installment dates by moving estimated tax payment deadlines from June 15 to July 15, and from September 15 to October 15.
- Failure-to-Pay Safe Harbor: Waives failure-to-pay penalties for individuals who timely pay 125% of their preceding year's income tax liability.
- Mailbox Rule for Electronic Filings: Formally extends the physical "mailbox rule" to electronic submissions and electronic payments, treating the electronic transmission date as the filing/payment date.
- Third-Party Contact Notice Specificity: IRS must identify the exact items of information they seek from third parties and provide taxpayers with a minimum of 45 days to resolve the request independently before contacting third parties.
TITLE X—MISCELLANEOUS
- CBO Loan Data Access: Authorizes the redisclosure of specific education loan tax information to CBO employees to assist with official budgetary cost projections.
- Magnetic Media for Large Partnerships: Mandates electronic (magnetic media) filing for partnerships with over 100 partners, and authorizes the requirement for partnerships with assets/income exceeding $10 million in the preceding three years.
- Employment Tax Penalty: Extends Section 6676 penalties to erroneous refund or credit claims relating to employment taxes.
