Taxpayer Due Process Act (H.R. 6506)

Summary

Protects taxpayers by pausing deadlines for refund claims and stopping the IRS from taking overpayments for disputed taxes during collection hearings.

What problem does this solve?

Currently, taxpayers can lose their right to a refund because the deadline passes while they are disputing an IRS collection action. This bill pauses that deadline and stops the IRS from taking overpayments to cover disputed debts, giving taxpayers a fairer chance to resolve issues.

What does this bill do?

Pauses deadline for refund claims

Stops the clock on the time limit for a taxpayer to file a claim for a credit or refund while they are in a collection dispute hearing with the IRS.

Protects taxpayer overpayments

Prohibits the IRS from using a taxpayer's overpayment (refund) to pay off a different tax debt if that debt is currently being disputed in a collection hearing.

Expands Tax Court power

Gives the Tax Court the authority to review both the IRS's collection decision and the underlying tax debt itself. The court keeps this power even if the IRS later drops the collection action.

Who does this affect?

Taxpayers in collection disputes with the IRS
Tax attorneys and preparers
Internal Revenue Service (IRS)

What is the real world impact?

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Strengthens taxpayer protections

Ensures taxpayers don't lose their right to a refund or have their overpayments taken while they are actively disputing a tax collection action with the IRS. This creates a more fair process for resolving tax disagreements.

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Increases Tax Court authority

Gives the Tax Court more power to review IRS collection decisions and related tax liability disputes. This provides an independent judicial review, even if the IRS decides to stop its collection effort.

When does this start?

The changes in this bill will generally apply to tax disputes and court petitions that are active on or after the date the bill becomes law.