H.R. 5346 would specify the procedure for obtaining approval to assess tax penalties under section 6751(b)(1) of the Internal Revenue Code. Internal Revenue Service (IRS) employees proposing a penalty on a taxpayer would be required to obtain written approval from their immediate supervisor before sending any communication to the taxpayer. The bill also would define “immediate supervisor” either as the person to whom the employee reports or as a higher-level IRS official designated by the Secretary of the Treasury.
The estimated budgetary effect of H.R. 5346 is shown in Table 1. The costs of the legislation fall within budget function 800 (general government).
CBO and the staff of the Joint Committee on Taxation (JCT) assume that H.R. 5346 will be enacted by the end of 2025. The bill would apply to penalties assessed starting in 2026.
The Congressional Budget Act of 1974, as amended, stipulates that revenue estimates provided by JCT are the official estimates for all tax legislation considered by the Congress. CBO therefore incorporates such estimates into its cost estimates of the effects of legislation. The revenue estimates for H.R. 5346 were provided by JCT.
Table 1.
Estimated Budgetary Effects of H.R. 5346
By Fiscal Year, Millions of Dollars
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2026-2030
2026-2035
Estimated Revenues
3
7
10
12
13
14
14
14
15
15
46
117
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding.
CBO estimates that implementing H.R. 5346 would increase spending subject to appropriation by less than $500,000 over the 2026-2030 period for the administrative costs of the Internal Revenue Service.
JCT estimates that enacting the bill would increase revenues by $117 million over the 2026‑2035 period. Because enacting the bill would probably reduce the number of disputes concerning when and how the IRS grants approval to assess certain tax penalties, those penalties would be remitted more promptly than would be the case under current law.
CBO and JCT’s estimates of the budgetary effects of H.R. 5346 are subject to uncertainty: They are based on underlying projections and other factors that could change significantly. In particular, the estimates rely in part on expectations of the way taxpayers and the IRS might respond to changes in procedures required by the bill.
The CBO staff contacts for this estimate are Shannon Mok and Matthew Pickford. The estimate was reviewed by H. Samuel Papenfuss, Deputy Director of Budget Analysis, and John McClelland, Director of Budget Analysis.
