Ross MarchandThe power to tax—and endlessly audit and investigate—is the power to destroy. The Internal Revenue Service is well aware of its power and has wielded it to devastating effect, especially against some of the poorest counties in the country. As attorney Rimma Tsvasman noted in the Brooklyn Law Review, the IRS “is the only federal agency in the United States that has the legal right to take your money first, and then defend its right to the appropriation later. The IRS is also the agency whose laws are the hardest to challenge because of its countless, ever-changing rules, regulations, and pronouncement.”
Landmark legislation may soon give taxpayers a chance against this terrifying bureaucracy. The recently-marked-up Taxpayer Assistance and Service (TAS) Act (S. 3931) represents the most extensive overhaul of federal tax administration in years. With just a few commonsense tweaks, S. 3931 can provide meaningful protection for taxpayers facing an increasingly unaccountable IRS.
The Senate Finance Committee’s legislative text in its present form is a significant step in the right direction for taxpayers. It would codify strict electronic signature requirements for penalty approvals under Internal Revenue Code § 6751(b), ensuring that lower-level auditors cannot use proposed financial penalties as aggressive bargaining chips during routine audits. Requiring explicit and documented supervisory consent bolsters accountability within the agency and guarantees that tax penalties are imposed strictly on legal merits rather than used as intimidation tactics to force quick settlements — as was attempted by the IRS Chief Counsel in the recent Harty dispute at the Tax Court.
To make this reform truly meaningful to taxpayers, however, Congress should also incorporate mandatory high-level electronic signoffs (such as division-chief level approval) before the IRS can issue a Statutory Notice of Deficiency on examinations initiated near the end of a statute of limitations period. Adding this safeguard, alongside an explicit legislative rule barring the IRS Independent Office of Appeals from conducting ex-parte communications with the Office of Chief Counsel without prior written taxpayer consent, would prevent the agency from using late-stage deficiency notices or internal legal advice as coercive leverage during audits and administrative appeals.
Equally critical are the bill’s provisions expanding judicial access and fortifying statute-of-limitations protections for innocent taxpayers. By formalizing the application of equitable tolling to Tax Court deadline exceptions—aligned with Supreme Court precedent established in Boechler v. Commissioner—and expanding Tax Court pre-trial discovery powers, the TAS Act prevents taxpayers from losing their day in court due to minor procedural delays or lack of access to key evidence.
Here also is an opportunity to strengthen the legislative text. The legislation should include strengthened provisions addressing independent structural oversight and expanding substantive taxpayer rights to an independent administrative appeal. Incorporating the bipartisan “Portman-Cardin” framework to revitalize the dormant IRS Oversight Board would establish much-needed governance over IRS strategic operations and agency budget allocation. Congress should also clarify that the Independent Office of Appeals has full statutory authority to evaluate agency litigation for potential constitutional and regulatory challenges.
Furthermore, the legislation explicitly protects taxpayers from remaining stuck in audit purgatory because of rogue or fraudulent tax preparers, shielding innocent individuals from increasing legal and accounting costs when they had no knowledge of or participation in the fraud. Combined with a formal statutory prohibition against restrictive Treasury modifications to Circular 230 practice rules, these enhancements would ensure taxpayers retain robust representation and independent recourse against administrative overreach.
Finally, the bill mandates structural transparency and modern digital access, forcing the agency to respect taxpayers’ time and rights. Re-establishing the mandatory annual Tax Complexity Report requires the Treasury Department to publicly account for the federal tax code’s immense compliance costs—currently exceeding 6.9 billion hours annually according to the National Taxpayers Union Foundation—providing Congress with the objective data needed to right-size the code.
The TAS Act is a long overdue correction to the IRS’ increasingly bold power grabs and disregard for the rule of law. It’s time for both chambers of Congress to put taxpayers back in the driver’s seat by passing this critical legislation along with additional reforms.
Ross Marchand is the executive director of the Taxpayers Protection Alliance.
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