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119-s-5477119th CongressWALLET

Federal Receivership Fairness Act

Sponsored By: Senator Young, Todd [R-IN]

Introduced

Summary

Gives federal and state-court receivers and the courts that oversee them explicit power to have federal tax liability for a receivership estate decided in court. It sets how receivers can seek rulings, who can be bound, and key timing limits for IRS review.

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  • Receivers and receivership estates: A court-appointed receiver can ask the court to decide the amount or legality of any federal tax, penalty, or addition to tax by filing a return and a formal determination request. The court cannot decide taxes already contested and adjudicated before the receivership, and it must respect time limits such as 120 days for refund requests and 60/180-day windows tied to IRS examination selection and completion.
  • IRS, the federal government, and recovery rules: After a court determination the Secretary of the Treasury may assess the tax against the receivership estate, the person or entity in receivership, or successors. The bill narrows sovereign-immunity protections so the Secretary can be brought into these proceedings and so offsets are allowed against the Secretary's claims that are property of the estate.
  • Courts and scope limits: In state or D.C. receivership cases federal tax determinations must be adjudicated by the U.S. District Court for the district where the proceeding is pending, not by state courts. The law excludes bankruptcy trustees and executors whose tax rights are governed by other law.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 0 benefits, 0 costs, 4 mixed.

Claim priority rules for receiverships

If enacted, the bill would update federal laws so receivership cases under the new rule are added to the federal declaratory judgment statute and treated like bankruptcy cases for certain priority and claim rules. This would change how courts and claimants sort competing claims and government priorities in those receiverships. The changes would apply to returns with open assessment or audit periods at enactment and to returns filed on or after enactment.

Courts can decide receivership taxes

If enacted, the court that appointed a receiver would be able to decide federal tax amounts, penalties, and additions tied to that receivership. This would apply even if the tax was previously assessed, paid, or contested, subject to exceptions. The rule would not apply to taxes finally decided before the receivership or to ad valorem property taxes when the state contest window has already expired. The change would exclude bankruptcy trustees and estate executors and would apply to returns with open audit periods at enactment and to returns filed after enactment.

IRS claims in receivership cases

If enacted, after a receivership court decides tax owed, the IRS could assess that tax against the receivership estate, the person or entity in receivership, successors, or entities arising from the receivership, subject to other law. If the IRS asserts a claim in the receivership, it would be treated as waiving sovereign immunity for related estate property claims from the same transaction, and offsets against IRS claims would be allowed. Courts could order money recoveries against the United States for covered matters, but not punitive damages, and awards of costs or fees would follow existing law.

Receiver filing and timing rules

If enacted, a receiver who asks the IRS to decide unpaid receivership taxes would need to file a tax return and a written request where the IRS says. If the IRS does not select the return for examination within 60 days, paying the tax shown would discharge liability. If the IRS selects the return, the receiver would have 180 days after selection (or a court extension for cause) for the IRS to notify tax due; payment after a court or IRS determination would also discharge liability. A court could not decide a refund claim before the earlier of 120 days after a proper refund request or the IRS's determination of that request.

Sponsors & CoSponsors

Sponsor

Young, Todd [R-IN]

IN • R

Cosponsors

  • Sen. Warner, Mark R. [D-VA]

    VA • D

    Sponsored 9/23/2026

Roll Call Votes

No roll call votes available for this bill.

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