Washington, D.C. – Today, U.S. Senator Marsha Blackburn (R-Tenn.) released the following statement after introducing the No Tax on Wrongful Delay Act, which would ensure interest paid by the Internal Revenue Service (IRS) to taxpayers who prevail in an audit or tax-related litigation is not treated as taxable income:
“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 Senator 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.”
The No Tax On Wrongful Delay Act
The No Tax on Wrongful Delay Act would exclude from taxable income any interest the IRS pays to taxpayers when the taxpayer prevails in an audit or tax-related litigation. Specifically, this legislation provides that interest paid on tax overpayments is not considered gross income if the overpayment results from:
- An IRS audit or examination;
- A lawsuit or proceeding brought by the taxpayer to obtain a refund or credit; or
- A civil action brought by the United States to collect taxes.
This legislation would apply to taxable years beginning after December 31st, 2025.
Click here for bill text.
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