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119-s-5141119th CongressWALLET

A bill to amend the Internal Revenue Code of 1986 to improve the notice and review procedure with respect to multi-year bans on claiming credits.

Sponsored By: Senator Bennet, Michael F. [D-CO]

Introduced

Summary

Strengthens taxpayer notice and court review for multi-year bans on claiming major tax credits. It focuses on clearer deficiency letters and new Tax Court paths for disputes over Child Tax Credit, American Opportunity Tax Credit, and Earned Income Tax Credit.

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  • Families and individual taxpayers get more detailed deficiency notices that must name which credit was denied, explain the grounds, and warn that losing an appeal can block the credit for future years unless the taxpayer provides required evidence. Notices mailed starting 3 years after enactment follow the new rule.
  • Taxpayers gain clearer access to the Tax Court to challenge the imposition of a multi-year disallowance period for those credits. The court can redetermine whether a disallowance period was proper and can decide overpayments for years in the disallowance period.
  • Procedure changes tighten the proof and timing rules. The bill aligns the burden of production in these cases with existing court standards, suspends certain limitation periods while a disallowance is pending, and sets phased-in effective dates for petitions and notices.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 1 benefits, 0 costs, 0 mixed.

More review and refunds for family credits

If enacted, the bill would require clearer IRS notices when the Child Tax Credit, the American Opportunity Tax Credit, or the Earned Income Tax Credit are denied. Notices mailed 36 months after enactment must name the denied credit, explain the grounds, and state how long any multi-year ban would last. Taxpayers could ask the Tax Court to review and undo multi-year bans, and the court could order refunds or credits after final decisions. While a Tax Court case is pending, time limits to claim refunds for the affected credits would be suspended. Older deficiency notices that lacked required grounds could also be reexamined and refunded if the Tax Court finds the ban was improper.

Sponsors & CoSponsors

Sponsor

Bennet, Michael F. [D-CO]

CO • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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