Senator Marsha Blackburn (R-TN) introduced a bill on Wednesday that would prevent taxpayers from having to pay additional taxes if they prevail against the Internal Revenue Service (IRS).
The No Tax on Wrongful Delay Act would ensure that interest paid by the IRS to taxpayers is not treated as taxable income. The bill proposal says this would apply to IRS audits, a lawsuit brought by a taxpayer seeking a refund or credit, and a civil action administered by the federal government to collect taxes.
“The American people should not be forced to pay income taxes on the interest they are owed from the IRS when they prevail in an audit or in court,” said Blackburn. “The No Tax on Wrongful Delay Act would protect taxpayers and ensure that interest paid on overpayments resulting from audits, refund actions, or IRS collection cases is not taxable income when the IRS gets it wrong.”
In the past, Blackburn has tried to protect Americans from the IRS’s overreaching. Last year, Blackburn and other senators sent a letter to the United States Department of the Treasury requesting a review of a Biden-era IRS rule that could unfairly target small businesses.
The IRS created a special unit to enforce tax rules for pass-through businesses, including partnerships and S corporations. The lawmakers said the decision made during the Biden administration was influenced by ideology rather than tax law.
Also in 2025, Blackburn co-sponsored a bill to streamline tax filing and payment for individuals and small businesses. The Tax Administration Simplification Act seeks to safeguard taxpayers from penalties because of IRS delays in electronic filing, clarify S-corporation elections for small businesses, and standardize tax deadlines.
“Taxpayers shouldn’t be penalized when the IRS is delayed in processing their tax returns even though they submitted them on time,” said Senator Blackburn. “Our Tax Administration Simplification Act would shield taxpayers from unfair penalties, streamline tax filing, and provide more flexibility for small businesses.”
Currently, the bill proposal has been referred to the United States Senate Committee on Finance.
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Zachery Schmidt is the digital editor of The Star News Network. Email tips to Zachery at zschmidt1717@gmail.com.
