Technical corrections only. The changes between v3 and v4 reflect the bill's procedural status update, noting its passage from the House to the Senate and including the name of the House Clerk. No substantive policy changes were made to the bill text.
Taxpayer Due Process Enhancement Act
- Sponsor
- Rep. Moran, Nathaniel [R-TX-1]
- Committees
- Finance Committee (primary)
- Last action
- May 20, 2026
Bottom line
The bill strengthens taxpayer rights by extending dispute periods, protecting overpayments during disputes, and broadening judicial review options in the Tax Court.
What it actually does
This bill, known as the "Taxpayer Due Process Enhancement Act," amends the Internal Revenue Code to bolster taxpayer protections during IRS collection actions. It suspends the statute of limitations for filing a claim for credit or refund when a taxpayer is actively disputing an underlying tax liability in a collection due process (CDP) hearing. The bill also prevents the IRS from automatically applying taxpayer overpayments to a tax liability that is currently under dispute in such proceedings, unless the taxpayer provides consent. Furthermore, it expands the Tax Court's jurisdiction to review not only the IRS's determination in a CDP hearing but also the underlying tax liability itself, and to consider equitable tolling of the 30-day deadline for petitioning the court, even if the IRS abandons its collection action.
Proponents argue
Supporters argue that this bill significantly enhances taxpayer due process rights, ensuring that individuals and businesses have adequate time and opportunity to challenge IRS collection actions and underlying tax liabilities without fear of losing their right to a refund or having overpayments seized prematurely. They contend it provides a crucial check on IRS power, promoting fairness and transparency in tax collection procedures, and preventing situations where taxpayers might be forced to settle disputes due to expiring deadlines or the immediate application of overpayments.
Opponents contend
Critics might argue that while enhancing taxpayer rights is important, these changes could introduce new avenues for taxpayers to prolong collection actions, potentially increasing administrative burdens on the IRS and delaying the collection of legitimate tax debts. They might contend that expanding Tax Court jurisdiction and suspending limitations periods could lead to an increase in litigation, strain judicial resources, and complicate the efficient administration of tax law, ultimately impacting federal revenue collection.
The bill text is short and relatively accessible, but understanding its full implications requires familiarity with existing tax code sections. An informed reader can quickly grasp its core changes.
Section 2(a), (b), (c)
Suspension of Period of Limitations on Filing a Claim for Credit or Refund During Collection Action Proceedings
This provision amends Internal Revenue Code Section 6330(e)(1) to include the period of limitations for filing a claim for credit or refund (under IRC 6511) among the periods that are suspended while a taxpayer is engaged in a collection due process (CDP) hearing with the IRS. It clarifies that this suspension only applies if the credit or refund relates to a tax liability properly disputed at the hearing and ends if the taxpayer forfeits their right to pursue the dispute through inaction or court order. This ensures taxpayers do not lose their right to a refund while actively challenging an IRS collection action.
Supporters argue
Supporters argue this provision is crucial for taxpayer fairness, ensuring that individuals do not lose their right to a refund or credit simply because they are engaged in a formal dispute process with the IRS. It provides a necessary safeguard against statutory deadlines forcing premature settlements.
Critics contend
Critics might contend that this provision could incentivize taxpayers to prolong collection actions, potentially delaying the resolution of legitimate tax debts and increasing the administrative burden on the IRS to manage cases with extended limitation periods.
Tradeoffs
The provision balances the taxpayer's right to fully dispute a liability and claim a refund against the IRS's need for timely and efficient collection of taxes and the administrative burden of managing prolonged disputes.
Section 3(a), (b)
Prohibition on Crediting of Overpayments Against Disputed Tax Liability During Collection Action Proceedings
This section adds a new subsection to Internal Revenue Code Section 6402, which prohibits the IRS from automatically crediting a taxpayer's overpayment (e.g., a refund) against a tax liability that is properly disputed in a collection due process (CDP) hearing. This prohibition remains in effect for the period during which the statute of limitations for a refund claim is suspended, unless the taxpayer provides consent. It also includes a technical clarification to ensure that existing levy hearing rules apply consistently to lien hearings.
Section 4(a)
Expansion of Jurisdiction of Tax Court
This provision amends Internal Revenue Code Section 6330(d)(1) to explicitly broaden the Tax Court's jurisdiction. Under the expanded authority, the Tax Court can now review not only the IRS's determination made in a collection due process (CDP) hearing but also the underlying tax liability itself, provided it was properly disputed at the administrative hearing. Furthermore, the Tax Court is granted jurisdiction to consider any equitable tolling of the 30-day deadline for filing a petition, and this expanded jurisdiction applies even if the IRS decides to abandon the collection action after a determination has been made.
This clause specifies that the suspension of the period of limitations on credit or refund "shall not result in a suspension of the running of such period of limitations after any date on which a lapse of a deadline, a court filing, or a court order establishes that the taxpayer has forfeited or otherwise lost the right to pursue such dispute."
Section 2(b)(3)(B), amending IRC 6330(e)
Why it matters:This is standard legislative practice to add necessary caveats and prevent potential abuses or indefinite delays. It ensures that the suspension is not open-ended if the taxpayer fails to pursue their case diligently.
Case for: This clause prevents taxpayers from exploiting the suspension to indefinitely delay collection by abandoning their dispute process. It balances taxpayer protection with the need for timely resolution of tax matters.
Case against: While necessary, it places the onus on taxpayers to be acutely aware of procedural deadlines and actions that could lead to forfeiture, potentially disadvantaging those without legal representation.
Estimated impact: Prevents an indeterminate number of cases from being indefinitely prolonged, ensuring that the IRS can eventually proceed with collection if a taxpayer ceases to actively dispute.
This amendment changes the language in IRC 6330(c)(2)(A) from "unpaid tax or the proposed levy" to "unpaid tax, collection action, or proposed collection action." This broadens the scope of what can be discussed at a collection due process (CDP) hearing to explicitly include the "collection action" itself, not just the "proposed levy." This is significant because CDP hearings can relate to both levies and liens.
Section 3(b), amending IRC 6330(c)(2)(A)
Why it matters:This is a technical clarification to ensure consistency and proper application of existing rules across different types of collection actions (liens vs. levies). It's a technical fix rather than a new policy.
Case for: Ensures that taxpayers have the same rights and scope of discussion in CDP hearings, regardless of whether the IRS is pursuing a levy or a lien, promoting fairness and consistency in administrative review.
Case against: No specific opposition is typically raised against such technical clarifications that aim to improve consistency and fairness in administrative procedures.
Estimated impact: Improves clarity and consistency for all taxpayers undergoing CDP hearings related to either liens or levies, potentially reducing confusion and ensuring proper application of due process rights.