Bill > S3587

This bill, titled the "No Tax on Wrongful Delay Act of 2026," proposes to amend the Internal Revenue Code of 1986 to exempt from taxation any interest paid to taxpayers by the Internal Revenue Service (IRS) when the taxpayer has successfully prevailed in an audit, a lawsuit for a tax refund, or a civil action initiated by the United States for tax collection. This means that if the IRS owes a taxpayer money back due to an error or delay in processing their taxes, and the taxpayer wins their case, the interest the IRS pays on that overpayment will not be considered taxable income. This change would apply to tax years beginning after December 31, 2025.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/3587/all-info