Fair and Accountable IRS Reviews Act

The Fair and Accountable IRS Reviews Act would clarify and strengthen oversight procedures for how the IRS assesses tax penalties. Currently, IRS regulations require that when an employee proposes to assess certain federal tax penalties, their immediate supervisor must approve the decision in writing. However, the regulations do not always clearly specify when this approval must occur relative to communicating with taxpayers.

This bill would establish a clearer requirement: an IRS supervisor's written approval would need to be obtained before any written communication about tax penalties is sent to the taxpayer. The bill would also define an immediate supervisor as the person to whom an IRS employee directly reports, removing ambiguity in the current regulatory language that allows for broader interpretations of who qualifies as a supervisor.

For taxpayers, this change would mean an additional layer of supervisory review before they receive penalty notices from the IRS. The intent appears to be ensuring greater accountability and consistency in how the IRS applies penalties. The bill has passed the House and is currently in the Senate Committee on Finance, where it would need to be approved before moving forward in the legislative process.