[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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