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S. 5173Senate119th Congress (2025-2027)In Committee

Fairness in Foreign Filing Act

A bill to amend the Internal Revenue Code of 1986 to treat tax penalties as assessable in the same manner as taxes, to provide notice requirements for certain penalties, and for other purposes.

Sponsored by Sheldon WhitehouseSen. Sheldon Whitehouse (D-RI)
Introduced July 30, 2026

AI-Generated Summary

Updated August 4, 2026 at 6:24 AM UTC

The Fairness in Foreign Filing Act changes how tax penalties are handled, making them assessable like regular taxes and adding a formal notice and review process for specific foreign‑related penalties. It also removes some filing deadline rules for foreign‑trust information returns. The changes affect taxpayers who may incur those penalties and the IRS offices that assess and collect them.

Key Provisions

  • Amends the tax code so that penalties are treated the same as taxes for purposes of assessment and collection, with an exception for penalties that are normally collected through civil or criminal actions.
  • Creates a new notice requirement for “covered penalties” (penalties under sections 6038(b)(1), 6038A(d)(1), 6038B(c), 6038C(c), 6038D(d)(1), 6039F(c)(1)(B), or 6677). The IRS must mail a written notice at least 60 days (120 days for overseas taxpayers) before assessing the penalty, detailing the penalty, tax periods, and basis.
  • Gives taxpayers a 60‑day (120‑day overseas) window to request a review of the proposed penalty by the IRS Independent Office of Appeals. Assessment and collection are paused until the review is completed or the notice period expires.
  • Requires the Treasury Secretary to issue regulations on the notice process, how taxpayers can present defenses, and simplified reviews for low‑amount penalties.
  • Repeals certain due‑date requirements for information returns related to foreign trusts by removing paragraphs (9) and (10) of a 2015 law, effective for tax years starting after Dec. 31, 2026.

Legislative Activity

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1 earlier action
SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

July 30, 2026

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SenateIntro Referral

Introduced in Senate

July 30, 2026

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

July 30, 2026

Bill Text

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Introduced in SenateIssued July 30, 2026

II

119th CONGRESS

2d Session

S. 5173

IN THE SENATE OF THE UNITED STATES

July 30, 2026

Mr. Whitehouse (for himself and Mr. Cassidy) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to treat tax penalties as assessable in the same manner as taxes, to provide notice requirements for certain penalties, and for other purposes.

1.

Short title

This Act may be cited as the Fairness in Foreign Filing Act.

2.

Treatment of tax penalties

(a)

Treatment of penalties as taxes

Section 6671(a) of the Internal Revenue Code of 1986 is amended—

(1)

by striking The penalties and liabilities provided by this subchapter and inserting the following:

(1)

In general

Any penalties provided by this title, including the penalties and liabilities provided by this subchapter,

,

(2)

by striking the penalties and liabilities provided by this subchapter. and inserting the penalties provided by this title, including the penalties and liabilities provided by this subchapter., and

(3)

by adding at the end the following new paragraph:

(2)

Exception

Paragraph (1) shall not apply to any penalty not provided by this subchapter if such penalty is a penalty for which a civil or criminal action is prescribed as the method of collection or has been consistently treated by the Secretary before the date of the enactment of this paragraph as such a penalty.

.

(b)

Notice requirement for certain penalties

(1)

In general

Subchapter C of chapter 68 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

6752.

Preliminary notice and right of review for covered penalties

(a)

Notice

(1)

In general

No covered penalty shall be assessed unless the Secretary provides a notice to the taxpayer in writing by mail to an address as determined under section 6212(b) that contains the following information:

(A)

The covered penalty proposed to be assessed.

(B)

The taxable years or periods involved.

(C)

The basis for the proposed penalty.

(D)

Information about the right of the taxpayer to request review as provided in subsection (b).

(2)

Timing of notice

The mailing of the notice described in paragraph (1) shall precede any notice and demand of any covered penalty by at least 60 days (120 days in the case of a notice addressed to a taxpayer outside the United States).

(b)

Right to a review

Within 60 days (120 days in the case of a notice sent to a taxpayer outside the United States) of the mailing of the notice described in subsection (a), the taxpayer may request a review of the proposed penalty by the Internal Revenue Service Independent Office of Appeals.

(c)

Suspension of assessment and collection

(1)

In general

A covered penalty may not be assessed, demanded, or collected before—

(A)

the expiration of the period provided under subsection (b), or

(B)

in any case in which the taxpayer requests a review under subsection (b), the date a final determination is issued in such review.

(2)

Statute of limitations

If a notice described in subsection (a) with respect to any covered penalty is mailed before the expiration of the period provided by section 6501 for the assessment of such penalty (determined without regard to this paragraph), the running of such period shall be suspended for the period during which assessment is prohibited under this section and for 30 days thereafter.

(d)

Covered penalty

For purposes of this section, the term covered penalty means any penalty imposed under section 6038(b)(1), 6038A(d)(1), 6038B(c), 6038C(c), 6038D(d)(1), 6039F(c)(1)(B), or 6677.

(e)

Exception for jeopardy

This subsection shall not apply if the Secretary finds that the collection of the penalty is in jeopardy.

(f)

Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out this section, including regulations or other guidance relating to—

(1)

procedures for issuing notices under subsection (a),

(2)

the time and manner for presenting appropriate defenses under subsection (b)(2), and

(3)

establishing simplified reviews for cases in which the penalty amount at issue does not exceed a designated dollar threshold.

.

(2)

Clerical amendment

The table of sections for subchapter C of chapter 68 of such Code is amended by adding at the end the following new item:

Sec. 6752. Preliminary notice and right of review for covered penalties.

.

(c)

Interpretive rules

(1)

Taxpayer rights

Nothing in the amendments made by this section shall be construed to create any limitation on the rights of a taxpayer—

(A)

under subchapter C or D of chapter 64 of the Internal Revenue Code of 1986, or

(B)

to pursue refund litigation with respect to the assessment or imposition of any penalty imposed under such Code.

(2)

No inference

Nothing in the amendments made by this section shall be construed to create any inference with respect to the treatment of any covered penalty (as defined in section 6752 of the Internal Revenue Code of 1986, as added by this section) before the date of the enactment of this Act.

3.

Repeal of due date requirements for certain information returns relating to foreign trusts

(a)

In general

Section 2006(b) of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 is amended by striking paragraphs (9) and (10).

(b)

Effective date

The amendment made by this section shall apply to returns for taxable years beginning after December 31, 2026.