When you dispute a tax bill with the IRS through a collection-due-process hearing, the clock keeps ticking on your right to claim a refund — and the IRS can quietly grab any other refund you're owed and apply it to the disputed bill. This bill would pause the refund-claim deadline while your dispute is active and block the IRS from seizing other refunds to cover the contested amount without your consent. It also lets the U.S. Tax Court hear the underlying tax question, not just the collection action. The changes give ordinary taxpayers more breathing room and a fairer shot when they push back on what they owe.
Congressional Summary
Taxpayer Due Process Enhancement ActThis bill suspends the period of time allowed for claiming a federal tax refund (limitations period) during collection due process (CDP) proceedings, prohibits the Internal Revenue Service (IRS) from applying tax overpayments to a tax liability that is disputed in such proceedings, and expands the Tax Court’s jurisdiction.As background, IRS collection actions and the underlying tax liability (in some circumstances) may be disputed in a CDP hearing. Collection actions are suspended during CDP proceedings, but the IRS may apply tax overpayments from other tax years to the disputed tax liability. The Tax Court may review an appeal of a CDP hearing determination. However, the Supreme Court held in Commissioner v. Zuch that the Tax Court loses jurisdiction over a CDP appeal if the CDP hearing determination is revoked because tax overpayments are applied to and fully satisfy the tax liability. In such circumstances, the taxpayer may claim a refund and seek redress in federal district court. Currently, the limitations period to file a refund claim is not suspended during CDP proceedings.The billsuspends the limitations period for claiming a tax refund during CDP proceedings (with exceptions),prohibits the IRS from applying tax overpayments to a properly disputed tax liability during CDP proceedings (unless waived or an exception applies),expands the Tax Court's jurisdiction in CDP cases to include jurisdiction over the underlying tax liability amount (if properly disputed), andprovides that the Tax Court retains its jurisdiction if the IRS abandons collection actions.
Legislative Subjects
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Reported to House
- Action Date
- 2026-01-07
- Date Added
- 2026-04-25
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