The House Ways and Means Committee has approved a package of seven bills aimed at protecting taxpayer rights, improving IRS services, combating fraud, and increasing transparency for nonprofit hospitals. The legislation addresses tax relief for American hostages held abroad, aid for victims of financial fraud, and the adoption of new technology at the IRS.
“The Ways and Means Committee has been systematically identifying weaknesses in how our tax code is administered,” said Ways and Means Committee Chairman Jason Smith (R-MO). “No citizen who has had to endure the horror of being held captive abroad should have their homecoming overshadowed by a massive tax bill from the IRS. Similarly, victims of fraud deserve tax relief when rebuilding their financial lives.”
Ranking Member Richard Neal (D-MA) offered a different perspective on the legislation’s impact. “Today’s markup includes a handful of bills. But these bills cannot reverse how this Administration has systematically weakened the IRS, undermined confidence in our tax laws, and further tilted the system toward those at the top,” Neal said.
Tax relief for American hostages
The End Tax Penalties on American Hostages Act, H.R. 9496, introduced by Representative Claudia Tenney (R-NY), provides the IRS with new tools to ensure that American citizens held hostage or wrongfully detained abroad, along with their families, do not incur penalties for late tax payments resulting from their captivity. It addresses a gap in current law where some Americans have returned home to significant tax penalties and fines.
The legislation ensures that any American determined to be held hostage or wrongfully detained under the Robert Levinson Hostage Recovery and Hostage-Taking Accountability Act will receive these protections.
The bill passed the committee by a vote of 40-0.
Deductions for financial fraud victims
The Tax Relief for Fraud Victims Act, H.R. 9500, introduced by Representative Max Miller (R-OH), repeals the current limitation on deductions for personal casualty and theft losses, which requires a loss to be linked to a federally or state-declared disaster. This change allows victims of private-sector fraud, such as Ponzi schemes and identity theft, to deduct their financial losses.
The bill also provides flexible reporting options for fraud victims, extends the timeframe for filing refund claims related to theft, and establishes special rules allowing victims to repay distributions from retirement plans and seek refunds for taxes paid on those distributions.
The bill passed the committee by a vote of 39-0.
AI pilot program to target inaccurate returns
The AI Tax Integrity Act of 2026, H.R. 9501, introduced by Representative Vern Buchanan (R-FL), directs the Treasury Department to establish a pilot program using artificial intelligence (AI) to identify inaccurate tax returns, including those resulting from identity theft, fraudulent claims, or improper preparation.
The bill also requires the Government Accountability Office (GAO) to report to Congress on the pilot program’s performance, including the aggregate amount of improper refunds detected and the accuracy of the AI tool. The legislation is designed to test the technology on a limited basis before any large-scale investment.
The bill passed the committee by a vote of 40-0.
IRS tech fellowship program
The Taxpayer Workforce Modernization Act, H.R. 7972, introduced by Representative David Schweikert (R-AZ), requires the IRS to create a new fellowship program to hire data scientists and technology experts to assist with the agency’s modernization efforts.
The bill also establishes a task force, staffed by the fellows, to develop data-driven methodologies for audit case selection, train IRS employees on data analytics, and review the agency’s current use of AI to recommend improvements for effectiveness and efficiency.
The bill passed the committee by a vote of 24-16.
Increased transparency for nonprofit hospitals
The Tax Exempt Hospital Transparency Act, H.R. 9504, introduced by Representative Greg Murphy (R-NC), amends the Internal Revenue Code to require additional reporting from all tax-exempt hospitals. New disclosures include the CMS certification number for each hospital facility, the value of financial assistance provided, and the number of financial assistance applications received, granted, and denied.
The bill imposes further requirements on large tax-exempt hospitals — those with more than 100 inpatient beds — which would report spending to address the three highest-priority health needs identified in their most recent community health needs assessment, along with spending on quality improvement and nonclinical programming. High-revenue hospitals — those with more than $100 million in net patient revenue — would additionally disclose spending on advertising, information on health service lines, and information on the 340B drug discount program.
The bill passed the committee by a vote of 25-15.
New liability rules for ‘ghost preparers’
The Protecting Taxpayers from Ghost Preparers Act, H.R. 9499, introduced by Representative Nicole Malliotakis (R-NY), clarifies the statute of limitations for fraudulent returns when a taxpayer uses a “ghost preparer” — an unlicensed tax professional who prepares a return but does not sign it. Current law can indefinitely suspend the three-year assessment limitation period due to preparer misconduct. The new legislation clarifies that this exception applies only when it is the taxpayer, not the preparer, who is seeking to evade their tax obligations. The bill also makes a technical correction to IRC § 7508A.
The bill passed the committee by a vote of 40-0.
Taxpayer Advocate participation in court cases
The Taxpayer Advocate Participation Act, H.R. 9498, introduced by Representative Greg Steube (R-FL), amends the Internal Revenue Code to permit the national taxpayer advocate to appear as an amicus curiae (“friend of the court”) in federal tax-related court cases. Under current law, the advocate is not authorized to represent the interests of taxpayers in litigation.
The bill allows the advocate to weigh in on cases that may broadly affect the rights of taxpayers, providing a voice for taxpayers as a group in precedential court issues.
The bill passed the committee by a vote of 39-0.
Take your tax and accounting research to the next level with Checkpoint Edge and CoCounsel. Get instant access to AI-assisted research, expert-approved answers, and cutting-edge tools like Advisory Maps and State Charts. Try it today and transform the way you work! Subscribe now and discover a smarter way to find answers.
