Fair and Accountable IRS Reviews (FAIR) Act and Tax Court Improvement Act Passed by House of Representatives

On December 1, 2025, the U.S. House of Representatives passed two significant pieces of bipartisan legislation aimed at reforming tax administration and judicial review: the Fair and Accountable IRS Reviews (FAIR) Act (H.R. 5346) and the Tax Court Improvement Act (H.R. 5349). Both bills, which previously advanced out of the Ways and Means Committee with unanimous support, were approved by voice vote, signaling a robust consensus on the need to strengthen taxpayer protections and modernize the U.S. Tax Court.

Both bills were discussed on this blog in a previous post. As a brief recap, the FAIR Act would introduce reforms to the civil penalty approval process, and the Tax Court Improvement Act would introduce a series of reforms to enhance the fairness and efficiency of Tax Court proceedings. This bipartisan legislation represents a targeted effort to address longstanding procedural friction points between taxpayers and the Internal Revenue Service (IRS). Now that these measures have cleared the House, they move to the Senate for consideration.

H.R. 5346 — Fair and Accountable IRS Reviews (FAIR) Act

The FAIR Act addresses long‑running disputes over when and by whom IRS civil penalties must be approved under IRC Code § 6751(b). It adopts a bright‑line rule intended to promote due process, curb the practice of administrators using penalties as leverage in the examination process, and reduce motion practice about approval timing. Under the bill, written supervisory approval must come before any written communication to the taxpayer proposing a penalty, and “immediate supervisor” is defined to mean the official to whom the penalty‑proposing employee reports (with authority for Treasury to designate a higher‑level official). Rep. Glenn Grothman (R-WI), the bill’s sponsor, has described the requirement for direct supervisor approval as “a simple but powerful safeguard that protects hardworking Americans from unjust fines.” If the bill becomes law, the changes would apply to notices issued and penalties assessed after December 31, 2025.

H.R. 5349 — The Tax Court Improvement Act

Co‑led by Reps. Nathaniel Moran (R-TX) and Terri Sewell (D-AL), the Tax Court Improvement Act modernizes four areas of Tax Court practice—subpoenas, special trial judges, recusals, and equitable tolling—to enhance fairness and efficiency.

First, the court’s authority to enforce subpoenas is strengthened by eliminating the need for a separate hearing, streamlining compliance, and reducing unnecessary delays. Additionally, the scope of cases that special trial judges are authorized to conduct is broadened to improve case management and alleviate the workload of regular judges. To reinforce judicial integrity and public trust, Tax Court judges will be subject to the same ethics rules governing recusals and conflicts of interest that apply to other federal judges. Finally, the application of equitable tolling to deficiency matters is clarified, ensuring that taxpayers are protected when extraordinary circumstances prevent timely filing. Collectively, these measures modernize Tax Court procedures while promoting fairness, efficiency, and accountability.

Representative Moran said the bill delivers “long‑overdue updates that modernize the system, ensuring greater fairness and integrity.” Representative Sewell emphasized that her constituents deserve an “efficient, fair, and transparent” court and that the Tax Court Improvement Act would have a tangible impact on the thousands of taxpayers and small businesses that utilize the court every year.

Takeaway

The Fair and Accountable IRS Reviews Act and the Tax Court Improvement Act represent bipartisan, technical refinements to federal tax procedure. While neither bill overhauls substantive tax liability rules, each promises to streamline dispute resolution, enhance judicial efficiency, and provide clearer guardrails for both taxpayers and the government. Tax professionals should track the bills’ progress and prepare to adjust audit, litigation, and compliance strategies accordingly.

For further information or to discuss how these changes may affect your organization, please contact any member of Winston’s Tax Controversy Group.