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

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5143 Introduced in Senate (IS)]

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119th CONGRESS
  2d Session
                                S. 5143

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 28, 2026

  Mr. Bennet introduced the following bill; which was read twice and
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

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

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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.'', and
            (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.
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