Senate introduces Taxpayer Assistance and Service Act

On Feb. 26, 2026, Senate Finance Committee leaders introduced the Taxpayer Assistance and Service Act, a bipartisan proposal to improve service and administration at the Internal Revenue Service (IRS).

The bill isn’t law yet, but it would expand IRS digitization and transparency. It would revise rules for collections, Appeals and Tax Court disputes that shape how you resolve client issues.

Additionally, this legislation would provide the IRS with the authority to oversee tax preparers. More information on this, including NATP’s stance, is available in our letter to Congress. This article will focus on the other components of the bill.

Quick takeaways for tax pros

• The IRS would be pushed toward end-to-end digitization, including paper returns and correspondence, and taxpayers would see clearer backlog and wait-time information on IRS.gov.
• Collections could get less punishing for taxpayers in hardship, including automatic refund offset bypass for certain earned income tax credit (EITC) overpayments when the taxpayer is currently not collectible (CNC), and broader installment agreement fee waivers.
• Not covered here: The bill also includes return preparer provisions, addressed in NATP's letter to Congress.

Service and transparency changes

Several provisions target the “Where is my return, refund, notice or letter?” pain point:

• Digitization: The IRS would be required to accept and process returns and amended returns electronically, and digitize paper submissions using optical character recognition (OCR) or similar technology.
• Real-time visibility: IRS.gov would display backlogs, phone wait times and callback availability. Status tools like “Where’s My Refund?” would be upgraded to show more individualized details.
• Expanded online accounts: Online accounts would expand for individuals and businesses, and certain authorized representatives would get more efficient access to client account information.

Collections, notices and taxpayer rights

If you do collections or representation, Titles I and VI are worth a close read:

• Automatic refund offset bypass for EITC: When a taxpayer is already classified as CNC, the IRS would refund EITC-related overpayments rather than offsetting them.
• Installment agreement fees: Fees would be waived for taxpayers at or below 250% of the applicable poverty level, and for taxpayers who set up an installment agreement online and pay by electronic payment through a debit instrument.
• Economic hardship “options notice”: When a taxpayer requests certain installment agreements and IRS data indicates economic hardship, the IRS would be required to share information on other collection alternatives, including partial payment installment agreements, offer-in-compromise (OIC) and CNC status.
• Quarterly delinquency notices: Instead of annual notices, the IRS would issue quarterly notices (with exceptions), including estimates of penalties and interest, with information on programs that may help.
• Offer-in-compromise processing: The bill would streamline certain Chief Counsel review requirements that can slow acceptance processing.

Appeals and Tax Court updates

The bill would also adjust dispute resolution pathways:

• Appeals: The Independent Office of Appeals would get additional flexibility to hire attorneys and use direct hire authority. The bill would additionally clarify or expand certain appeal rights, including in some “returned” determinations.
• Tax Court tools: Procedural updates would expand or clarify the court’s authority, including pre-hearing subpoenas to facilitate settlements, relief from judgments and expanded use of special trial judges.
• Credit bans and innocent spouse: It would require notice and provide judicial review rules for multi-year bans on claiming certain credits, as well as authorize de novo review of innocent spouse relief cases.
• Collection due process and small cases: The bill would clarify Tax Court jurisdiction in collection due process cases, authorize refunds in certain cases and raise the ceiling for small tax cases to $100,000.

Specialty provisions that may surface in niche practices

Beyond broad service reforms, the bill also includes targeted provisions that could surface in specialized practices.

• Taxpayers abroad: The bill proposes simplifications to currency exchange rules, higher thresholds for the simplified foreign tax credit and additional time to request math error abatement for certain taxpayers outside the United States.
• Whistleblowers and hostages: It updates whistleblower award procedures and provides deadline extensions, penalty relief and interest relief for individuals held hostage or wrongfully detained.
• Small businesses and partnerships: It creates a voluntary withholding agreement framework for payments to independent contractors, adds a failure-to-pay penalty safe harbor for certain individuals using extensions, applies “mailbox rule” treatment to certain electronic submissions and payments, and authorizes the IRS to require large partnerships to file electronically.

What the bill’s introduction means for your practice

• Expect continued online-first IRS interactions. Strong authorization practices and clean digital documentation will matter even more.
• Watch collections workflows. The installment agreement fee waivers, hardship “options notice” and Appeals access could change how you triage and sequence resolutions.
• Keep an eye on dispute strategy. A higher small tax case ceiling, plus expanded Tax Court tools, could change the cost-benefit analysis for smaller controversies.

For more context on the service issues driving reforms like these, read NATP’s “What the 2025 Taxpayer Advocate Service report signals.”