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

New IRS sign-off for taxpayer penalties

If enacted, the bill would require written electronic approval before the IRS applies many penalties or credit disallowance periods. Approval must come from the decision maker's immediate supervisor or the IRS Office of Servicewide Penalties. The approval must be obtained on or before the date the IRS sends the first "appealable notice" that gives you a chance to appeal to the IRS Independent Office of Appeals or to petition a Federal court. The bill defines disallowance periods for credits under sections 24, 25A, and 32 and says the approval rule does not apply when such periods are calculated automatically by electronic means. These rules would apply to notices sent after the date that is 12 months after enactment. The bill would also require the Treasury to publish a public report, not later than 24 months after enactment and annually thereafter, showing penalties the IRS assessed the prior year, with data by each IRS unit and the steps and outcomes for those penalties.