This bill modifies how the Internal Revenue Service handles penalties and certain tax credit disallowance periods. Currently, the IRS can assess penalties relatively easily, but this legislation requires that any penalty or disallowance decision be personally approved in writing by either the immediate supervisor of the employee making the decision or the IRS Office of Servicewide Penalties before sending the taxpayer an appealable notice. The bill specifically addresses three tax credits: the child tax credit, the American Opportunity tax credit, and the earned income tax credit. The changes take effect 12 months after the bill becomes law, and the legislation requires the Treasury Department to publish annual reports starting 24 months after enactment detailing all IRS penalties assessed, broken down by IRS office and showing how penalties progress through the determination and review process.
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