HR2782-119

What This Bill Does

The Small Business Taxpayer Bill of Rights Act is an IRS-process bill for small businesses and taxpayers in disputes. It removes the net-worth limit for fee awards for eligible small businesses with average annual gross receipts up to $50 million, raises civil damages for reckless or intentional IRS collection misconduct to $5 million and negligent misconduct to $500,000, extends the filing period from two to five years, raises statutory damages for unauthorized inspection or disclosure of return information from $1,000 to $10,000, bans ex parte Appeals discussions with other IRS personnel, guarantees an independent Appeals conference unless the taxpayer consents to counsel or compliance participation, expands mediation and arbitration access, raises criminal penalties for unauthorized disclosures, bars Appeals from raising new issues, limits principal-residence lien enforcement, adds misconduct-related termination and TIGTA review provisions, creates an above-the-line deduction for certain National Research Program audit expenses, sets a term limit for the National Taxpayer Advocate, extends economic-hardship levy release to business taxpayers, and repeals the partial-payment requirement for offers-in-compromise.

Who Benefits and How

Eligible small businesses benefit because the net-worth limit no longer blocks fee recovery in qualifying tax proceedings. Taxpayers harmed by IRS misconduct benefit from higher damages caps, longer filing periods, and larger unauthorized-disclosure damages. IRS appeals taxpayers benefit because the bill bars ex parte communications and protects conferences without counsel or compliance personnel unless the taxpayer consents. Business taxpayers facing hardship benefit because IRS levy-release authority would include their financial condition.

Who Bears the Burden and How

Internal Revenue Service employees face higher penalties, termination exposure, and stricter communication limits for misconduct. IRS Independent Office of Appeals staff must preserve conference independence, avoid new issues, and administer broader mediation access. Treasury Inspector General for Tax Administration must review additional misconduct and termination matters. Federal taxpayers bear potential costs from higher damages awards, fee awards, audit-expense deductions, and reduced collections from hardship levy releases or offers-in-compromise changes.

Key Provisions

• Expands fee recovery for eligible small businesses with up to $50 million in average annual gross receipts.
• Raises IRS collection-misconduct damages to $5 million for reckless or intentional violations and $500,000 for negligence.
• Prohibits ex parte Appeals communications and guarantees an independent Appeals conference unless the taxpayer consents.
• Requires broader mediation or arbitration access and public explanation of excluded issues or case classes.
• Limits principal-residence lien enforcement, extends business-hardship levy release, and repeals partial-payment submissions for offers-in-compromise.