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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10258 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 10258
To amend the Internal Revenue Code of 1986 to clarify due process
rights in the case of an action to terminate tax exempt status.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 3, 2026
Mr. Doggett (for himself and Ms. Sewell) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to clarify due process
rights in the case of an action to terminate tax exempt status.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting the Rights of
Organizations Fairly Act of 2026'' or the ``PROOF Act''.
SEC. 2. PROCESS FOR EXAMINATION OF CERTAIN TAX EXEMPT ENTITIES.
(a) In General.--Subchapter A of chapter 78 is amended by inserting
after section 7611 the following new section:
``SEC. 7611A. PROCESS FOR EXAMINATION OF CERTAIN TAX EXEMPT ENTITIES.
``(a) In General.--
``(1) Examination.--In the case of an organization exempt
from tax under section 501(a) (other than a church) the
Secretary may begin a tax exempt examination only if the notice
requirements of subsection (b) are met.
``(2) Revocation of status.--The Secretary may make an
adverse determination with respect to an organization's status
as exempt from tax under section 501(a) only if--
``(A) an examination begun pursuant to paragraph
(1), or in the case of a church, section 7611(b),
sufficiently supports such determination, and
``(B) the due process requirements of subsection
(c) are met.
``(b) Notice Requirements.--
``(1) In general.--The notice requirements of this
subsection shall be treated as met with respect to an
examination if the Secretary provides written notice to the
organization of the examination that includes in clear and
sufficient detail the following:
``(A) A statement that the organization has been
selected for examination of whether the organization is
exempt from tax under section 501(a).
``(B) A statement that identifies the general
subject matter and issue areas that are the basis for
the examination and the provisions of this title, and
any related Treasury Regulations, which authorize such
examination or which may be otherwise involved in such
examination.
``(C) Identification of the tax periods subject to
examination.
``(D) The name and contact information of the
individual assigned to the examination and the
individual's supervisor.
``(E) An explanation of the organization's rights
during the examination, including the right to
representation by legal counsel or an authorized
representative and the right to request a supervisory
conference pursuant to subsection (c)(4).
``(F) An offer to consider a response or have an
opening conference between the organization and the
Secretary to seek to resolve concerns relating to such
examination.
``(2) Expanded scope of examination.--In the case of any
issue not identified in the notice prescribed by paragraph (1),
the notice requirements of this subsection shall not be treated
as met with respect to any examination of such issue unless the
Secretary provides a subsequent written notice to the
organization that meets the requirements of paragraph (1) with
respect to the issue.
``(c) Due Process Requirements.--
``(1) In general.--The due process requirements of this
subsection shall be treated as met with respect to an
examination if the Secretary--
``(A) generates and maintains a record of the
examination that meets the requirements of paragraph
(2) and that constitutes prima facie evidence for the
conclusion reached,
``(B) makes requests for information and
documentation only as provided in paragraph (3),
``(C) affords the organization the opportunity for
conferences as provided in paragraphs (4) and (5), and
``(D) notifies the organization of any adverse
decision made, and any rights to protest or appeal such
decision, as provided in paragraph (6).
``(2) Record.--
``(A) In general.--The requirements of this
paragraph shall be treated as met with respect to a
record of the examination if such record includes--
``(i) documentation of--
``(I) the basis for the
examination,
``(II) each information or document
request made to the organization,
``(III) the organization's
responses to any notices, inquiries,
requests, or other communications,
``(IV) the examiner's analysis of
the applicable facts and law, and
``(V) the basis for any proposed
determination, and
``(ii) a date-specific case chronology
reflecting all significant contacts, decisions,
and actions taken during the examination,
``(B) Required disclosure.--
``(i) In general.--After completion of the
record of the examination, or after submission
of a protest or appeal by the organization of
the proposed adverse determination under
paragraph (6), whichever is earlier, on written
request from the organization, the Secretary
shall not later than 30 days after such request
disclose to the organization the contents of
the record described in subparagraph (A).
``(ii) Exception for privileged
communications.--Clause (i) shall not apply to
any privileged communications, except that if
any contents of the record described in
subparagraph (A) are otherwise contained solely
within a privileged communication, the
disclosure under clause (i) shall include a
summary of such contents in sufficient detail
to apprise the organization of such contents as
so described.
``(3) Information document requests.--
``(A) In general.--All requests by the Secretary
seeking information or documentation from the
organization shall include the following:
``(i) A description of the documents or
other information sought sufficient in detail
to allow the organization to identify and
produce responsive materials.
``(ii) An explanation of the connection
between the request and the subject matter of
the examination.
``(B) Period for response.--The deadline for
response by an organization to any such request shall
not be less than 30 days from the date of such request.
``(C) Deficient requests.--Failure by the
organization to respond to an examination request that
does not meet the requirements of this paragraph shall
not be treated as a basis for an adverse determination
with respect to an organization's status as an
organization exempt from tax under section 501(a).
``(4) Right to supervisory conference during examination.--
In the case of a request by the organization during the
examination for a conference with the examining agent's
supervisor regarding any issue in dispute between the
organization and the examining agent, the Secretary shall--
``(A) not later than 10 business days after such
request is made, acknowledge such request,
``(B) not later than 30 days after such request is
made, or such longer period as may be agreed upon, hold
such requested conference, at which the organization
may present its position on any issue in dispute,
``(C) not later than 15 business days after such
conference, provide a written summary of the conference
that includes a description of any decisions made with
respect to an issue in dispute.
``(5) Closing conference.--In the case of an examination
from which an adverse decision is made with respect to the
organization's tax exempt status under section 501(a), prior to
issuing a proposed adverse determination letter with respect to
such decision, the Secretary shall--
``(A) make available a conference, at which there
shall be provided with respect to the adverse
decision--
``(i) a summary of the examination
findings,
``(ii) the legal and factual basis for the
adverse decision, including the specific legal
authority and conclusions from the record of
the examination that support the decision, and
``(iii) an explanation of the
organization's appeal rights and applicable
deadlines, and
``(B) provide a written summary of such conference
not later than 15 business days thereafter.
``(6) Proposed adverse determination letter.--
``(A) In general.--The Secretary shall not issue a
final adverse determination letter in the case of an
adverse decision with respect to the organization's tax
exempt status under section 501(a), unless, and in no
case earlier than 30 days after, the Secretary provides
a proposed adverse determination letter to the
organization.
``(B) Contents.--Such proposed adverse
determination letter shall include the following:
``(i) A prominent statement of how the
Secretary is proposing to revoke, modify, or
adversely affect the organization's tax-exempt
status under section 501(a).
``(ii) A summary of the examination
findings and the legal and factual basis for
the determination, including the specific legal
authority and conclusions from the record of
the examination that support the determination.
``(iii) A statement of the proposed
effective date of the determination.
``(iv) An explanation of the organization's
protest and appeal rights, including submitting
to the Secretary a protest of the proposed
adverse determination letter, administrative
appeal and requesting a conference with the
Internal Revenue Service Independent Office of
Appeals for consideration of the proposed
adverse determination, and initiating a
judicial proceeding under section 7428.
``(v) An explanation of the applicable
deadlines for such protests and appeals, and
the legal consequences of exercising (or
failing to exercise) such rights.
``(vi) A statement of the date on which the
Secretary may issue a final adverse
determination letter in the absence of a
protest or appeal.
``(C) Cross-reference.--For rights with respect
appeal and requested conference with the Internal
Revenue Service Independent Office of Appeals, see
section 7803(e)(8).''.
(b) Coordination With Current Restrictions on Church Tax
Examinations.--
(1) Contents of notice of examination.--Section
7611(b)(3)(A) of such Code is amended by redesignating clauses
(iii) and (iv) as clauses (iv) and (v), respectively, and by
inserting after clause (ii) the following new clause:
``(iii) an explanation of the church's
rights during the examination, including the
right to representation by legal counsel or an
authorized representative and the right to
request a supervisory conference pursuant to
section 7611A(c)(4),''.
(2) Consideration of response to notice of examination.--
Section 7211(b)(3)(A)(iv) of such Code, as redesignated by
paragraph (1), is amended by inserting ``an offer to consider a
response and'' before ``an offer to have a conference''.
(3) Expansion of scope.--Section 7611(b)(4) of such Code is
amended by inserting before the period at the end the
following: ``and the Secretary provides the church a
supplementary written notice that includes a description of any
such church records and activities which the Secretary seeks to
examine''.
(c) Independent Office of Appeals.--Section 7803(e) of such Code is
amended by adding at the end the following new paragraph:
``(8) Appeal of proposed adverse determination letter with
respect to organization's tax exempt status.--
``(A) In general.--In the case of a proposed
adverse determination letter with respect to an
organization's tax exempt status under section 501(a),
the resolution process described in paragraph (3) shall
be available to the organization, and a conference
shall be provided, with respect to such proposed
adverse determination if requested by the organization
not later than 30 days after the date of the proposed
adverse determination letter.
``(B) Deadlines.--In the case of such a timely
request by the organization, the Internal Revenue
Service Independent Office of Appeals shall--
``(i) not later than 10 business days after
receipt of such request, acknowledge such
request, and
``(ii) in the case of a request for a
conference, not later than 90 days after
receipt of such request, schedule and hold such
conference.''.
(d) Clerical Amendment.--The table of sections for subchapter A of
chapter 78 of such Code is amended by inserting after the item relating
to section 7611 the following new item:
``Sec. 7611A. Process for examination of certain tax exempt
entities.''.
(e) Effective Date.--The amendments made by this section shall
apply to examinations begun after December 31, 2024.
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