Published
September 04, 2026
This summer, the Senate Committee on Finance gaveled in to advance an important yet underreported bill that warrants the business community’s attention: the Taxpayer Assistance and Service Act (TAS Act).
This bipartisan legislation would make a range of more than 60 long-sought reforms to improve Internal Revenue Service (IRS) administration and strengthen taxpayer rights, many of which have repeatedly appeared in the National Taxpayer Advocate’s annual report to Congress.
- In this article, we focus on the bill’s proposals to enhance the independence of and expand access to the IRS Independent Office of Appeals (IRS Appeals), the agency’s settlement arm.
IRS Appeals plays a vital role in our federal tax system by providing taxpayers an independent forum to resolve disputes with the IRS administratively—without the delay, expense, and uncertainty of litigation.
For businesses, meaningful and dependable access to IRS Appeals is particularly important as a mechanism for efficiently resolving their federal tax disputes. Relative to litigation, IRS Appeals is inexpensive, informal, and confidential, and it considers the hazards of litigation when negotiating settlements. In practice, however, too many businesses report being denied meaningful access to IRS Appeals as an impartial administrative process. This is where the TAS Act comes in.
Room for Improvement
For years, the National Taxpayer Advocate (NTA) has consistently reported to Congress that IRS Appeals plays a critical role in helping taxpayers resolve their federal tax disputes without litigation. At the same time, however, the NTA has also identified structural and operational deficiencies that diminish IRS Appeals’s effectiveness and undermine taxpayer confidence in the process. These include:
- insufficient independence;
- lack of transparency; and
- barriers to access and meaningful resolution.
Title VI of the TAS Act would address these concerns by building on IRS Appeals’s existing statutory framework with a set of targeted reforms. The proposals are designed to strengthen the independence, accessibility, and procedural fairness of the appeals process, while reinforcing IRS Appeals’s role as a neutral forum for efficiently resolving federal tax disputes. Collectively, the proposed reforms seek to further separate IRS Appeals from the agency’s enforcement functions and ensure that taxpayers have a meaningful opportunity to resolve disputes administratively before resorting to litigation.
Four Ways to Increase the Appeal of IRS Appeals
1. More Lawyers
For years, both the NTA and businesses have raised concerns that IRS Appeals lacks true independence from the IRS and its Office of Chief Counsel. Such independence is essential for IRS Appeals to carry out its mission of resolving federal tax disputes without litigation on a basis that is fair and impartial to both the government and the taxpayer. It does so by weighing the “hazards of litigation”—a legal and factual analysis that seeks to predict the outcome if the case were litigated—and offering a settlement on that basis. Under current law, however, IRS Appeals is not authorized to hire its own attorneys and must rely on the legal analysis of attorneys who work for the Office of Chief Counsel. This structure has contributed to the perception that IRS Appeals is not fully independent from the agency’s collection and examination functions—the same ones responsible for initiating disputes. The former Chief of IRS Appeals recently described the complexity of this relationship between IRS Appeals and the Office of Chief Counsel and emphasized that access to independent legal counsel is essential to the success and credibility of the IRS Appeals function.
Sections 601 and 602 of the TAS Act would directly address these concerns by authorizing IRS Appeals to hire its own attorneys, who would report to the Chief of IRS Appeals rather than the Office of Chief Counsel. In addition, the bill would authorize IRS Appeals to use direct-hire authority to recruit qualified candidates from outside the agency’s enforcement functions. Taken together, these changes would strengthen the independence of IRS Appeals and reinforce its role as a neutral and impartial forum for dispute resolution.
Notwithstanding these reforms, IRS Appeals would presumably continue to obtain some degree of legal assistance and advice from the Office of Chief Counsel. Accordingly, to further safeguard the independence of IRS Appeals, Congress should consider clarifying that any such consultation may occur only at the direction and under the authority of IRS Appeals. Explicitly codifying this boundary would help ensure that IRS Appeals retains control over its settlement decision-making process and remains insulated from any competing IRS enforcement priorities.
2. Fewer Exceptions
Although the law currently provides that access to IRS Appeals is “generally available to all taxpayers,” Treasury regulations carve out significant exceptions. As a result, businesses’ access to IRS Appeals has at times been restricted or inconsistent, prompting criticism from practitioners and the NTA alike. Section 605 of the TAS Act would expand such access by emphasizing a taxpayer’s right to access IRS Appeals and codifying a limited set of exceptions. The enactment of this proposal would represent an important step toward ensuring broader, more consistent access to IRS Appeals.
As introduced in February, the initial version of the legislation promoted some concern in the business community that one of the proposed statutory exceptions could still permit the use of so-called “fighting guidance”—internal directives or sub-regulatory guidance encouraging the IRS to litigate rather than settle certain matters—to deny access to IRS Appeals. Under a broad reading of that exception, as initially drafted, taxpayers challenging the agency’s interpretation of the law could have been denied access to IRS Appeals simply because their position conflicted with such guidance.
The Chairman’s Mark of the TAS Act, as described by the staff of the Joint Committee on Taxation, appears to have narrowed the proposed statutory exception by focusing solely on claims of constitutional or procedural invalidity rather than challenges to interpretative guidance. While it is not clear whether the revised legislation would eliminate all potential “fighting guidance” concerns, it appears to reduce the risk that businesses will be denied access to IRS Appeals solely because they dispute the agency’s interpretation of the law. Limiting this practice would further ensure that businesses of all sizes have a genuine opportunity to resolve their tax disputes administratively on a fair and impartial basis.
3. Limiting Case Designations and Passive Denials
Current law permits the IRS to designate certain cases as “not eligible for referral to IRS Appeals.” For example, when the IRS determines that a case is “designated for litigation,” it may deny the taxpayer’s request for referral to IRS Appeals altogether. Section 605 of the TAS Act would narrow the agency’s ability to deny requests for referral to IRS Appeals by limiting the circumstances in which such designations could be made. Specifically, the proposal would impose stricter procedural and notice requirements for denying a referral to IRS Appeals while curtailing the agency’s ability to exclude broad categories of disputes through blanket designations. As a result, more businesses would have the opportunity to resolve their tax disputes on a fair and impartial basis without litigation.
As the legislative process advances, Congress should consider clarifying that these limitations would apply not only to affirmative denials of requests for referral to IRS Appeals but also to so-called “passive denials” of such requests. A passive denial occurs when the IRS, through inaction, delay, or other informal process, effectively denies a referral to IRS Appeals without formally designating the case ineligible. Because passive denials can produce the same practical result as affirmative denials, they should be treated as such under section 605 of the TAS Act. Codifying this principle would help ensure that businesses retain meaningful access to IRS Appeals and that the agency cannot circumvent congressional limits on denials through informal processes.
4. Codifying Tax Court Authority
For cases docketed in the United States Tax Court, the TAS Act includes a provision that would appear to codify the court’s authority to enforce the taxpayer’s right to IRS Appeals consideration in appropriate cases. As described by the staff of the Joint Committee on Taxation, the proposal would provide that “the Tax Court may direct the parties to request referral to [IRS] Appeals in any case in which the Tax Court determines that such resolution process is appropriate.” Without more, however, it is unclear whether this provision would expressly codify the court’s authority to direct referral to IRS Appeals or merely facilitate a request for referral. For obvious reasons, we believe the former approach would be the better one.
Bipartisan Appeal
At the end of its July 30 markup, the Senate Committee on Finance voted 26–1 to pass the TAS Act out of committee with overwhelming bipartisan support. On passage, Chairman Mike Crapo lauded the measure as reflecting “years of bipartisan efforts to translate stories of casework frustrations into tangible fixes designed to make the IRS work more efficiently.” The U.S. Chamber could not agree more and urges lawmakers to seize this opportunity to meaningfully improve IRS Appeals for businesses of all sizes by passing the TAS Act.
