Senate passes IRS bill that would give organizations a right to appeal a denied or revoked tax exemption
The Taxpayer Assistance and Service Act, passed by unanimous consent on Sept. 30, would open the IRS Independent Office of Appeals to any organization whose exemption is denied or revoked, with some exceptions. The House must still agree to the Senate's version.
Washington. An organization whose application for tax exemption is denied, or whose exemption is revoked, would have a right in federal law to take the decision to the IRS Independent Office of Appeals under a bill the Senate passed by unanimous consent on Sept. 30. The Taxpayer Assistance and Service Act is a package of 65 bipartisan changes to the Internal Revenue Service, according to the Senate Finance Committee.
The Senate passed it by putting its text, first reported by the Finance Committee as S. 5441 on Sept. 17, into H.R. 5349, a tax administration bill the House passed by voice vote on Dec. 1, 2025.
What the provision says
Section 605 of the bill rewrites the right of appeal in Section 7803(e) of the tax code. The Office of Appeals process would be available to all taxpayers for determinations on tax liability, penalties, refund claims, collection alternatives and, newly listed, "any determination to deny or revoke the tax-exempt status of an organization." The IRS would have to tell the organization in writing that the appeals process is open to it.
The IRS could still restrict access in some cases: while it is actively weighing a criminal referral or a prosecution is pending, unless the IRS chief counsel finds an appeal would not interfere; when the chief counsel has designated an issue for litigation; for positions courts have found frivolous; and for claims that a law is unconstitutional or a regulation procedurally invalid, unless a court has already ruled so. The change would take effect on enactment, according to the Joint Committee on Taxation.
Today the IRS says an organization that disagrees with a proposed determination on its exempt status may appeal, and must file a protest within 30 days of the proposal letter.
The provision entered the bill when the Finance Committee approved it 26 to 1 on July 30. Accounting Today reported that day that it came from an amendment by Sens. James Lankford, Republican of Oklahoma, and Raphael Warnock, Democrat of Georgia.
“The Taxpayer Assistance and Service Act is designed to provide taxpayers with top-quality service and ensure their rights are protected.”
What comes next
Because the Senate changed a House bill, the House must approve the Senate's version before it can go to the president. The House is in recess and not expected to return until November, the Journal of Accountancy reported.
About this story
501c3.help wrote this story from the sources listed with it, not from material an organization sent. Our editors approved it on Oct. 2, 2026. Stories in The Nonprofit Herald are free, and nothing is asked in return. Editorial rules.
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