S. 5143

119 S5143 IS: To amend the Internal Revenue Code of 1986 to modify procedural requirements for penalties and disallowance periods.
 U.S. Senate
 2026-07-28
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 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  2d Session  S. 5143  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.
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.