Congress Lays Groundwork to Tackle Tax Administration Headaches

Lawmakers are turning their attention to challenges long frustrating to a range of taxpayers and the center of legal disputes, input that backers say would streamline tax administration and the judicial process.

The effort by Congress clarifying issues ranging from US Tax Court procedures to requiring more information on math error notices could mean fewer court cases and less confused taxpayers. And with Republicans’ tax cut package now law, some in Congress see a path toward passage of more bipartisan tax administration legislation.

A House Ways and Means Committee markup earlier this month included bills aimed at making the Tax Court more efficient and clarifying rules for supervisory approval of IRS penalty assessments. Both passed on a unanimous basis—a rarity this Congress.

The Tax Court legislation includes new rules giving the court the ability to extend a deadline for taxpayers seeking to file a late petition and fight a bill from the IRS. Federal appeals courts have been divided over whether the Tax Court can hear petitions challenging certain deficiency notices after a 90-day deadline, and many Tax Court cases are ultimately dismissed or never filed because of the deadline.

Enactment “would stop all that litigation and then just focus the issue on—if somebody filed late, do they have a good excuse?” said Keith Fogg, Harvard Law School’s former Federal Tax Clinic director.

The Tax Court legislation would also make additional changes to help speed up the court, such as giving it more authority to issue subpoenas and allowing special trial judges to hear more proceedings.

Earlier this year, the Ways and Means Committee marked up additional bills making fixes to tax administration problems, many identified by the National Taxpayer Advocate’s 2025 Purple Book. These bills, which subsequently passed the House and await Senate action, include proposals that would give the taxpayer advocate’s office hiring authority over its own attorneys and require more information for math and clerical error notices.

Concerns over Tax Court backlogs are top of mind for Senate lawmakers too. Three lawmakers bemoaned the slow pace of cases through the court in written questions to Don Korb, the nominee for the IRS chief counsel job.

Laying a Path

While the proposals face a climb in the current partisan environment, they are the latest laying the groundwork for a tax administration package.

A Senate discussion draft released in January by Finance Committee Chair Mike Crapo (R-Idaho) and ranking member Ron Wyden (D-Ore.) includes dozens of other fixes highlighted by the NTA report.

That panel sought feedback from tax pros and groups including the National Taxpayers Union Foundation, which has worked with staff from both sides of the aisle on the legislation, said Pete Sepp, the group’s president. An updated draft of the proposal has not yet been released.

Not all the proposals are without controversy.

The Finance draft seeks to regulate paid tax preparers, which has become a flashpoint among the tax prep community and lawmakers.

Sepp wants clarifying rules around continuing education requirements, and suggested adding bipartisan language that he said would improve how the IRS oversight board functions. But, overall, he said a majority of the Senate bill would be outstanding to enact as is.

“The practitioner community has had reasons to be encouraged that Congress might move in a helpful rather than harmful direction on many of these issues,” Sepp said.

Rep. Nathaniel Moran (R-Texas), who sponsored the Tax Court legislation with Rep. Terri Sewell (D-Ala.), said opportunity exists for movement on a package with fixes like his by year’s end.

“There’s a lot of room for bipartisan work here in Congress that a lot of times seems mundane, but really has a top impact on our taxpayers,” Moran said.

House Democrats, still bitter from the battle over GOP passage of July’s tax law, have largely supported tax administration legislation, even as they’ve accused Republicans of rubber-stamping the Trump administration’s deep staffing cuts to the IRS.

Despite the heightened tension, Wyden said he remains open to working on a package. And, he said, he’s heard firsthand from constituents on a recent book tour about its importance.

“I’ve been out and around the country talking about my book, and I’ve had tax practitioners come to ask me about the bill even though it is not a big feature of the book,” he said. “There’s tremendous support.”