Press Releases

U.S. Representatives Nathaniel Moran (TX-01) and Terri Sewell (AL-07) released the following statement after their bipartisan Taxpayer Due Process Enhancement Act was unanimously passed out of the Ways and Means Committee yesterday. 

This bill protects taxpayer rights by blocking the IRS from withholding refunds or cutting off a case mid-dispute, and it guarantees that the Tax Court can fully review what taxpayers truly owe. It ensures Americans have a fair and open path to challenge the IRS.

“This is another critical step toward strengthening taxpayer rights and increased liberty in the Tax Court process,” said Congressman Moran. “American taxpayers deserve protected deadlines, safeguarded refunds, and strong judicial review. This legislation reaffirms our commitment to transparency, accountability, and a taxpayer friendly, judicially appropriate tax administration process.” 

The bill makes three changes to Tax Court proceedings to protect taxpayers’ rights:

• Removes Unfair Deadlines 

When a taxpayer is undergoing collection proceedings, the statutory deadline for filing a claim for a refund will be held open to account for the pending collection proceeding. Currently, only three years is permitted whether you are currently challenging a tax dispute before the court or not.

• Protects Taxpayer Rights 

Unless the taxpayer consents, the IRS will no longer be allowed to apply a taxpayer’s annual overpayments to a taxpayer’s disputed tax liability during collection proceedings. This prevents the IRS from pulling the jurisdictional rug out from under a taxpayer who is involved in a collection proceeding.

• Expands the Tax Court's Jurisdiction

Codifies the Tax Court's ability to review determinations and existing tax liabilities, as well as make equitable tolling decisions for collection proceedings so the taxpayer is not deprived of his or her day in court. 

“The IRS must be held to the same standard of accountability as the people it serves,” said Ways and Means Committee Chairman Jason Smith (MO-08). “Representative Moran’s bill restores fairness and common sense to the tax system by ensuring taxpayers don’t lose their rights simply because they stood up to challenge the IRS. These changes will ensure the government does not seize refunds during active tax disputes and guarantees that the Tax Court can fully hear a case on the merits.”

“This is yet another big win for taxpayer rights,” said Congresswoman Sewell. “I was proud to once again partner with Congressman Moran to ensure that the Tax Court is fair and transparent for the thousands of taxpayers and small businesses who utilize it each year.”

The following statement of support for H.R. 6506 comes from the National Taxpayers Union (NTU): “Because of a faulty U.S. Supreme Court ruling, Jennifer Zuch and thousands of taxpayers like her have no option left except Congress to protect themselves from a greedy IRS that claims it can claw back lawful tax refunds to settle a previous tax debt, even while the original debt is still being contested in court. Taxpayers deserve a fair hearing on the cases they bring to Tax Court, not tactics from the government that cut corners to make those cases go away.  Congressman Moran has earned a hearty 'thank you' from taxpayers for answering the call to justice with this thoughtful legislation.”

Background: 

The U.S. Supreme Court ruled 8-1 in Commissioner v. Zuch affirming that the IRS faces minimal risk during Tax Court proceedings. If the Tax Court appears poised to rule in favor of the taxpayer, the IRS can withdraw the levy and create a favorable outcome for the federal government. 

• Taxpayers have three years to ask the IRS for their refund.  Under current law, this three-year time limit is never suspended, even if a taxpayer is disputing a tax liability before the U.S. Tax Court.  If the Tax Court rules in favor of the taxpayer, and the taxpayer is owed a refund from the IRS, they cannot receive said refund if the three-year period of limitations has lapsed.

• Due to the lack of statutory prohibition, the IRS can apply a taxpayer’s refunds from previous years to the taxpayer’s current balance they owe the federal government, even if the taxpayer is disputing the balance before the Tax Court. 

The Taxpayer Due Process Enhancement Act will provide much-needed reform to current law to ensure the IRS cannot take advantage of hardworking taxpayers and circumvent the U.S. Tax Court. 

Read the full text of the bill here. 

###