IRS Accountability and Taxpayer Protection Act

S. 2358, the IRS Accountability and Taxpayer Protection Act, would tighten the procedural rules governing IRS penalties and disallowance periods. It requires that any penalty or disallowance period be approved in writing by the immediate supervisor of the person making the initial penalty decision, and that this approval be obtained before any notice to the taxpayer is sent. The bill also defines what counts as the “initial determination,” and it restricts the Secretary’s requests or inquiries from being treated as an initial determination unless they offer a specific penalty or disallowance period for a set amount or period. It adds a new concept of “disallowance period” for certain credits (sections 24, 25A, and 32) and creates a carve-out for disallowance periods calculated automatically via electronic means. Finally, it establishes an annual public reporting requirement on penalties assessed, including detailed data by IRS units and the progression of penalties through the enforcement process. The effective date is for notices sent after enactment.