Bipartisan Senate Bill proposes significant improvements to US tax administration

On February 26, 2026, the Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Oregon) introduced the Taxpayer Assistance and Service Act (TAS)¹ to the Senate Floor with bipartisan support. Aimed at streamlining tax administration and improving taxpayer access to the IRS, the TAS builds on an earlier January 30, 2025 discussion draft and two recently-proposed bills in the House, the Fair and Accountable IRS Reviews (FAIR) Act² and the Tax Court Improvement Act³ which also had bipartisan support. For additional details on the House bills, see our prior coverage here and here.

The 162-page bill is divided into ten Titles addressing, among other things, tax administration and customer service, US citizens living abroad, Reports of Foreign Bank and Financial Accounts (FBARs), judicial review, the Office of the Taxpayer Advocate, and the IRS Independent Office of Appeals. Notably, according to a statement by Senate Finance GOP spokesperson Amanda Critchfield, no markup of the legislation is planned at this time.⁴

Modernization, Digital Return Processing, and Practitioner Access

Fluctuations in IRS staffing over the past several years have contributed to delays in return processing and prolonged wait times for taxpayers attempting to reach the IRS by phone. To address these challenges, Sections 101 and 103 of the TAS would require the IRS to fully transition to electronic processing of all returns, whether original or amended, digitize all returns and correspondence, and upgrade online tools such as “Where’s My Refund.” In addition, Section 102 of the TAS would mandate the creation of a “user-friendly real-time dashboard on IRS.gov” providing transparency into call volume, processing backlogs, wait times, and callback availability. Section 105 of the TAS would further require, among other things, that the IRS allow authorized practitioners and return preparers with valid Preparer Tax Identification Numbers (PTINs) to access client accounts through a centralized system “without requiring them to log in to each client’s account separately.” If enacted as proposed, these provisions would meaningfully reduce return processing delays and improve the overall experience for both taxpayers and practitioners.

Reinforcement of IRS Penalty Approval Safeguards

Consistent with the House-passed FAIR Act from last year, Chairman Crapo and Senator Wyden included reforms addressing the supervisory approval requirements under IRC Section 6751(b) for penalties. The proposed amendments clarify that written approval–either from an immediate supervisor or the Office of Servicewide Penalties–must be obtained at the same time or before the IRS sends the taxpayer a notice of the penalty that provides the taxpayer with an opportunity to appeal the decision to the IRS Independent Office of Appeals (Appeals) or petition a Federal court for review of the decision. The penalty approval requirements also apply to decisions to apply a “disallowance period,” a period during which the taxpayer cannot claim a child tax credit under IRC Section 24(g) or the American Opportunity credit under IRC Section 25A(b)(4)(A). Consistent with existing law, however, the amendments continue to exclude penalties that are automatically calculated through electronic means. See IRC Section 6751(b)(2)(B). If enacted as proposed, these changes could enhance transparency and accountability for the frequently litigated penalty issue. For additional discussion of the House-passed FAIR Act addressing this issue, see our prior coverage here.

Mandating the Simplification of FBAR Filing Obligations

Section 201 of the TAS would direct the Treasury Department to study and report to Congress on ways to combine and simplify FBAR reporting with overlapping international tax reporting requirements. US taxpayers with foreign financial accounts are often required to report substantially similar information both to FinCEN on FBARs (FinCEN Form 114) and to the IRS on various other tax forms, such as Forms 8938, which creates confusion, duplicative compliance burdens, and a heightened risk of inadvertent errors that can trigger severe penalties.

To address these issues, Section 201 of the TAS would require Treasury, within 180 days of enactment and in consultation with the Office of the Taxpayer Advocate and “nonresident United States taxpayers,” to report on actions taken to consolidate and streamline FBAR and related international reporting and recommend legislative changes. Such proposal, while not modifying FBAR procedures and enforcement in their current form, is an initial step in eliminating duplicative information requests, simplifying filing procedures, and reducing unnecessary compliance burdens on taxpayers with foreign accounts.

Revitalize and Reinforce Access to Appeals

Appeals is a valuable avenue available to taxpayers to resolve issues identified during an examination. Over the past few years, however, the number of taxpayers expressing concerns as to Appeals’ ability to effectively resolve issues has increased, especially with Appeals’ recent reduction in staff. For example, the December 2025 Taxpayer Advocate’s report to Congress reflects a 28.85-percent staffing reduction in 2025 alone.⁵ In an attempt to improve the effectiveness of Appeals, Sections 601 and 602 of the TAS allow Appeals to appoint IRS attorneys to report directly to the Chief of Appeals, who would be prohibited from representing the government in litigation. The bill also would allow Appeals to utilize direct hire authority, without regard to any notice or preference requirements, to appoint qualified applicants to positions in Appeals. The proposed amendments also expand taxpayer access to Appeals consideration in the context of refund claims by requiring the IRS to respond to a nonfrivolous refund claim within 12 months after receipt and allow an appeal of any such disallowance. If the IRS does not respond to the refund claim within 12 months, the overpayment interest rate would be increased by one percent (up to a maximum of $500 of additional interest). Failure by the IRS to respond to refund claims is another frequent point of contention. If no response is received after waiting the six-month period under Section 6511(c), taxpayers may be forced to file suit, which deprives them of Appeals consideration. Section 603 of the TAS proposes to treat a lack of response as a deemed disallowance triggering the taxpayer’s right to review before Appeals. 

To further address taxpayer concerns regarding meaningful access to Appeals, Section 605 of the TAS would amend IRC Section 7803(e) to clarify that Appeals must consider “all hazards of litigation” when reviewing federal tax controversies, which clarifies the more general provision in current IRC Section 7803(e)(3) to resolve controversies on a basis that is “fair and impartial to both the Government and the taxpayer.”

Currently, IRC Section 7803 and the underlying Treasury regulations carve out numerous exceptions to Appeals’ jurisdiction. Section 605 of the TAS would streamline and codify Appeals’ mandate by rewriting those exceptions and reducing them from 24 categories in Treas. Reg. Section 301.7803-2(c) to just six clearly defined categories, as follows:

1. Disputes unrelated to tax liability, penalties, or additions to tax, which fall outside Appeals’ core mission;
2. Challenges asserting only that a statute or regulation is unconstitutional or invalid, unless a federal court has already issued an unreviewable ruling;
3. Positions rejected by federal courts and designated as frivolous by the Secretary, along with related penalties;
4. Matters resolved through a closing agreement under IRC Section 7121, which are intended to be final;
5. Issues that could interfere with an ongoing criminal tax investigation or prosecution; and
6. Cases specifically designated by Chief Counsel for timely litigation, provided such designations are made on a case by case basis rather than applied categorically.

These provisions, if enacted as proposed, would significantly improve taxpayer access to Appeals and enhance Appeals’ ability to resolve disputes efficiently by providing clearer jurisdictional boundaries and reaffirming Appeals’ role as an independent forum focused on litigation risk and fair resolution.

Tax Court Procedural Reforms and Expanding Taxpayer Access to Judicial Review

1. Modernizing Tax Court Procedures and Judicial Authority (Sections 301–304)

Sections 301 through 304 of the TAS would modernize the US Tax Court’s procedures and judicial framework to better align the Tax Court with other federal courts and to improve efficiency in resolving disputes.

Section 301 of the TAS addresses longstanding limitations on the Tax Court’s pretrial discovery authority by expressly authorizing the Tax Court to issue third party subpoenas for documents and testimony before a hearing date. Based on the Senate’s discussion draft of the TAS, this change appears intended to facilitate earlier information exchange, promote settlement discussions, and improve trial preparation by allowing parties to develop a more complete factual record earlier in the case.⁶

Section 302 of the TAS, as stated in the Senate’s discussion draft, responds to criticism of the Tax Court’s rigid finality rules by clarifying its authority to grant relief from final judgments or orders in limited circumstances, including mistake, newly discovered evidence, or fraud, consistent with Federal Rule of Civil Procedure 60.⁷ The provision also confirms the court’s ability to correct clerical errors in non final orders, ensuring that minor procedural issues do not result in disproportionate consequences.

Sections 303 and 304 of the TAS would further strengthen the Tax Court’s institutional capacity by expanding the role of Special Trial Judges. These provisions permit broader consent based assignments, grant limited contempt authority, and subject both Tax Court Judges and Special Trial Judges to the same statutory disqualification standards that apply to other federal judges. Collectively, these reforms are consistent with the recent proposals under the Tax Court Improvement Act and reflect an effort to modernize the court’s operations and governance. For additional information on the Tax Court Improvement Act, see our prior coverage here.

2. Strengthening Taxpayer Protections and Clarifying Judicial Review (Sections 305 and 307)

Sections 305 and 307 of the TAS would address areas where existing law has produced uncertainty or inconsistent outcomes, particularly with respect to taxpayer protections and scope of judicial review.

Section 305 of the TAS addresses multi year bans on claiming the Earned Income Tax Credit, Child Tax Credit, and American Opportunity Tax Credit. The provision would require the IRS to clearly explain any such ban in a notice of deficiency and authorize the Tax Court to determine–and, where appropriate, redetermine–the applicability of these bans in deficiency proceedings. In the case of a petition with respect to a disallowance period, the Tax Court would also have jurisdiction to determine the amount of an overpayment for any taxable year in the disallowance period and order that such amount be refunded without the necessity of filing a refund claim. The statute of limitations for filing claims for refund is suspended for any period during which the imposition of the disallowance period is pending before the Tax Court. It also clarifies the applicable burdens of production and proof for two year and ten year bans and includes transition rules allowing the Tax Court to revisit certain previously imposed bans where taxpayers did not receive adequate notice.

Section 307 of the TAS resolves conflicting case law by clarifying that the Tax Court has jurisdiction to determine whether statutory filing deadlines may be equitably tolled in deficiency, collection due process, and innocent spouse cases. The provision further clarifies that dismissals based on tolling determinations are not decisions on the merits and toll filing deadlines when filing locations are inaccessible on the due date. Together, these changes ensure that procedural obstacles do not unduly foreclose judicial review.

3. Expanding Tax Court Jurisdiction and Remedies (Sections 308–313)

Sections 309 through 313 of the TAS expand the Tax Court’s jurisdiction and remedial authority with the goal of reducing inefficiency, lowering litigation costs, and improving access to streamlined procedures as discussed in the Senate’s prior discussion draft.

Section 309 of the TAS authorizes the Tax Court to order refunds or credits in collection due process cases where it has jurisdiction to determine the taxpayer’s underlying liability, eliminating the need for duplicative litigation in other forums. Section 310 of the TAS further expands access by permitting refund suits involving $2 million or less to be brought in Tax Court, allowing taxpayers to litigate overpayment claims in a less formal and potentially less costly forum than federal district courts or the Court of Federal Claims.

This expanded refund jurisdiction may encourage some taxpayers who would otherwise forgo litigation to pursue relief in Tax Court, particularly given its less stringent discovery rules and procedures. Refund cases in Tax Court, however, would most likely be handled by the IRS Office of Chief Counsel rather than the Department of Justice (DOJ), which may result in more centralized and less flexible settlement practices, especially in cases involving listed or reportable transactions or IRS campaigns, while the DOJ may offer a more flexible approach depending on the issue being litigated. As such, taxpayers may face a scenario where a settlement obtained in district court before the DOJ may be unavailable with IRS Counsel in Tax Court. In addition, unlike refund litigation in federal district court, Tax Court proceedings, like cases before the US Court of Federal Claims, do not provide for a jury trial.

Further, Section 311 of the TAS authorizes the IRS to use deficiency procedures for certain civil penalties that are not otherwise assessable under the IRC, such as penalties under IRC Section 6038, ensuring taxpayers have a pre assessment opportunity for judicial review while avoiding multiple notices for the same conduct. Section 312 of the TAS creates a targeted exception to the full payment rule by allowing refund suits where taxpayers are making payments through installment agreements or are in currently not collectible status, preventing refund claims from expiring while payment efforts continue. Finally, Section 313 of the TAS expands access to simplified small tax case procedures by doubling the dollar threshold to $100,000 and indexing it for inflation, enabling more taxpayers to resolve moderate sized disputes through expedited proceedings.

Bipartisan Effort to Modernize Tax Administration and Strengthen Taxpayer Rights

As proposed, the TAS would significantly modernize tax administration and judicial review by strengthening taxpayer access to Appeals, expanding and clarifying the Tax Court’s procedural authority, and reducing inefficiencies that currently drive unnecessary litigation and delay. The above-discussed provisions, among the many others in the bill, would improve transparency in penalty administration, codify clearer standards for Appeals review, modernize Tax Court discovery and jurisdiction, and ensure taxpayers receive meaningful notice and review of consequential IRS determinations.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 S.3931, 119th Cong. (1st Sess. 2025). The text of the bill can be found at the following link: https://www.finance.senate.gov/imo/media/doc/taxpayer_assistance_and_service_act.pdf. For the latest congressional developments related to the bill, see also: https://www.congress.gov/bill/119th-congress/senate-bill/3931/all-info?s=4&r=35.
2 H.R. 5346.
3 H.R. 5349. 
4 See Chris Cioffi and Zach Cohen, Top Senate Tax Writers Float IRS Administration Reforms Bill, BLOOMBERGLAW.COM (Feb. 26, 2026), available at: https://www.bloomberglaw.com/product/tax/bloombergtaxnews/daily-tax-report/BNA%200000019c-9b1b-d2ff-af9c-dffb36180001?emailQueueID=7bbb109f-7bce-4f5f-1a34-fb8022fa9fb4&senderID=50265562. 
5 See Annual Report to Congress 2025, National Taxpayer Advocate, p. 9, available at: https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2026/01/ARC_Publication-2104_2025_Web.pdf.
6 See Taxpayer Assistance and Services Act, Discussion Draft, 119th Cong., Section 301 (2025).
7 See id. at Section 302.}