US Codex
Bill
Notes

To amend the Internal Revenue Code of 1986 to modify procedural requirements for penalties and disallowance periods.

S. 5143 · 119th Congress · Jul 28, 2026 · Lineage

A BILL

Section 1 Modification of procedural requirements for penalties and disallowance periods

(a)
In general— Section 6751(b) of the Internal Revenue Code of 1986 is amended—
(1)
by striking paragraph (1) and inserting the following:

“(1) In general—No penalty under this title shall be assessed, and no disallowance period shall take effect, unless—

“(A) the decision (as defined by the Secretary in regulations) to apply such penalty or disallowance period, as applicable, is personally approved (in writing on an electronic form) by—

“(i) the immediate supervisor of the individual making such decision, or

“(ii) the Internal Revenue Service Office of Servicewide Penalties (or any successor organization), and

“(B) the approval described in subparagraph (A) is obtained on or before the date any appealable notice is sent to the taxpayer regarding the application of such penalty or disallowance period.”

(2)
by adding at the end the following:

“(3) Appealable notice—For purposes of this subsection, the term appealable notice means the first written notice issued to a taxpayer that provides the taxpayer an opportunity to—

“(A) appeal the decision to the Internal Revenue Service Independent Office of Appeals, or

“(B) petition a Federal court for review of the decision.”

(b)
Disallowance period— Section 6751 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(d) Disallowance period

“(1) In general—For purposes of this section, the term disallowance period means—

“(A) with respect to any credit under section 24, the period determined under section 24(g)(1),

“(B) with respect to any credit under section 25A, the period determined under section 25A(b)(4)(A), and

“(C) with respect to any credit under section 32, the period determined under section 32(k)(1).

“(2) Approval required for disallowance period automatically calculated through electronic means—With respect to the application of any disallowance period, subsection (b)(2)(B) shall not apply.”

(c)
Effective date— The amendments made by this section shall apply to notices sent after the date which is 12 months after the date of the enactment of this Act.
(d)
Report— Not later than 24 months after the date of the enactment of this Act, and annually thereafter, the Secretary of the Treasury (or the Secretary's delegate) shall make publicly available a report regarding all penalties assessed by the Internal Revenue Service pursuant to the Internal Revenue Code of 1986 during the preceding calendar year, with all relevant data regarding such penalties to be collected and reported with respect to—
(1)
every organizational unit of the Internal Revenue Service that has power to assess, abate, or otherwise enforce any penalty imposed by the Internal Revenue Service under the Internal Revenue Code of 1986, and
(2)
the progression of such penalties at each step of the determination, assessment, and review processes, as well as the final result with respect to such penalties.