Summary of HR 5346: Fair and Accountable IRS Reviews Act

Bill Overview

• Bill Number: HR 5346
• Title: Fair and Accountable IRS Reviews Act
• Status: Reported (Amended) by the Committee on Ways and Means (H. Rept. 119-318)
• Introduced: September 15, 2025
• Primary Sponsor: Glenn Grothman
• Cosponsor: Adrian Smith

Purpose and Intent

The Fair and Accountable IRS Reviews Act aims to reform the procedural requirements for assessing penalties under the Internal Revenue Code. The bill seeks to enhance taxpayer protections by ensuring that any penalties assessed by the IRS are subject to proper supervisory approval before any communication is made to the taxpayer.

Key Provisions

1. Approval Requirement for Penalties:

   • The bill amends Section 6751(b)(1) of the Internal Revenue Code to mandate that no penalty can be assessed unless it is approved in writing by the immediate supervisor of the IRS employee proposing the penalty before any written communication regarding the penalty is sent to the taxpayer.

2. Definition of Immediate Supervisor:

   • The bill introduces a clear definition of "immediate supervisor," specifying that it refers to the person to whom the IRS employee making the penalty determination reports.

3. Effective Date:

   • The amendments will apply to notices issued and penalties assessed after December 31, 2025.

Background and Need for Legislation

The legislation addresses concerns regarding the current lack of clarity in the IRS's penalty assessment process. Previously, the definition of "initial determination" was vague, allowing IRS agents to seek approval from a broad range of supervisors, which weakened taxpayer protections. The bill aims to tighten these requirements and ensure accountability within the IRS.

Impact

• Taxpayers: The bill is designed to provide greater protection for taxpayers by ensuring that penalties are assessed only after proper oversight, potentially reducing unjust penalties.
• IRS Employees: The legislation will require IRS employees to follow stricter procedural guidelines, which may impact their workflow and the speed at which penalties can be assessed.

Legislative History

• Introduced: September 15, 2025
• Committee Action: The Committee on Ways and Means marked up the bill on September 17, 2025, and reported it favorably with amendments.
• Recent Actions: The bill was placed on the Union Calendar on September 30, 2025.

Conclusion

HR 5346 represents a significant step towards reforming the IRS's penalty assessment process, aiming to enhance accountability and protect taxpayers from potential overreach. By establishing clear procedural requirements, the bill seeks to restore confidence in the fairness of tax penalty assessments.