The Senate Just Passed an IRS Overhaul That Could Mean Faster Answers for Small Business Owners

On September 30, 2026, the U.S. Senate passed the Taxpayer Assistance and Service Act by unanimous consent. The bipartisan package changes how the IRS communicates, how refund claims are handled and how paid tax preparers are regulated. It is not law yet. The House has not acted on the full package, and it is not scheduled to return until November 9.

Still, if you have ever waited on hold with the IRS, tried to answer a notice by mail, or paid a preparer to fix a return, the bill is worth understanding now.

What passed, and what has not

According to KPMG's tax newsletter, the bill combines proposals recommended by the National Taxpayer Advocate with standalone bills from members of Congress. Its stated goals are better communication between the IRS and taxpayers, simpler compliance, and quicker access to expert help. The Senate approved it by unanimous consent, which means there was no recorded vote tally.

The House passed several individual taxpayer-service bills over the past year, but it has not yet taken up this full package. Separately, the Senate passed H.R. 997, the National Taxpayer Advocate Enhancement Act of 2025, on September 29. It lets the Taxpayer Advocate appoint attorneys who report directly to that office, and it now awaits the president's signature.

Bills can change or stall in the second chamber, so treat everything below as proposed, not promised.

Better tools for tracking refunds and notices

Several provisions target the everyday frustrations of dealing with the IRS:

• Refund tracking: When processing stops on an original or amended return, the IRS would have to state the reason and what it needs from you, including a deadline.
• Wait-time dashboard: The IRS would publish estimated phone wait times and callback availability, plus notices of significant processing delays.
• Callbacks: A non-binding "sense of Congress" provision says the IRS should offer a callback option by 2028 when calls go unanswered for five minutes.
• Digitized paper: The IRS would digitize paper returns and correspondence using scanning technology, while still allowing paper filing.

The National Association of Tax Professionals, which summarized the bill, notes that the callback provision is not a guarantee of a five-minute answer. That is an important caveat for anyone hoping for instant phone service.

Online accounts for your accountant

Representatives authorized to practice before Treasury, preparers with a PTIN, and qualified reporting agents would be able to view covered returns and IRS correspondence, including notices sent to taxpayers. They could also upload responses to notices online and access several authorized clients without logging into each account separately. The lookback is six years but not before enactment.

If you use a bookkeeper or CPA to handle IRS notices, this could shorten the time between receiving a notice and answering it. It does not expand who can represent you.

Items that touch business and self-employed filers

A few provisions apply directly to people who run businesses or work for themselves:

• Voluntary contractor withholding: Independent contractors and the businesses that pay them could enter voluntary withholding agreements, with covered payments treated as wages for specified withholding rules. It is not mandatory and does not reclassify contractors for other purposes. Owners who work with 1099 workers should still review independent contractor vs. employee rules.
• January 31 e-filing deadline: Covered information returns, including miscellaneous income, interest, dividends and payment-card or third-party network reporting, would carry a January 31 electronic filing deadline.
• Timely electronic payments: An authorized electronic filing or payment would count as timely if you authorize it by the deadline and the IRS receives it within three business days.

Refund claims and Tax Court

The bill would give the IRS 12 months to decide a refund claim unless both sides agree otherwise. A denial would need a written explanation and appeal instructions. The Tax Court would be able to hear covered refund suits, capped at $2 million per applicable tax year, period or category, and the small-case threshold would rise from $50,000 to $100,000, with inflation adjustments.

For a business that overpaid payroll or income tax and had a claim sit unanswered, a firm deadline and a path to the Tax Court would be a real change.

Tighter rules for paid preparers

If you pay someone to prepare your business return, the preparer provisions matter. The bill would add education and suitability requirements for some preparers, including a background check and a personal tax compliance check. Annual education could not exceed 18 hours, and Treasury could not require a separate general exam for a PTIN. The IRS could suspend or revoke a preparer's status for specified conduct, with notice, hearing and appeal protections. The rules would take effect 180 days after enactment.

Proposed penalties include $250 per failure for not furnishing a valid PTIN (capped at $75,000 a year), $1,000 per failure for missing due diligence requirements, and the greater of $1,000 or the full amount for misappropriating a payment such as a refund. Preparers would also have to validate their e-file identification numbers through a real-time IRS system.

The practical takeaway is that you should already be checking that your preparer has a valid PTIN and signs your return. That is true whether or not this bill becomes law.

What to do while Congress decides

Keep your records ready for notices

Good books make every IRS interaction easier. Keep a current profit and loss statement and keep business funds in a dedicated business bank account. Confirm your EIN details are on file correctly.

Ask your preparer the right questions

Ask whether your preparer has a PTIN, whether they e-file, and how they handle IRS notices on your behalf. If you are still choosing a business structure, review our guides on LLC formation and LLC vs. S corp before filing season.

Watch the House calendar

The House returns on November 9, 2026. Whether it takes up the package, amends it or lets it wait is unknown. Until a bill is signed, current IRS rules apply, and you should not change any filing plans based on this one.

The takeaway

Passing a bill unanimously is a strong signal of bipartisan interest in fixing IRS service, but it is only the first step. The provisions that would most help business owners are clearer refund and notice information, online access for your representative, and firm deadlines on refund claims. None of them is in force today.

This article is general information, not tax or legal advice. Talk with a qualified tax professional about your own situation.

Sources: KPMG TaxNewsFlash, "Senate passes tax administration reform package," October 2026; National Association of Tax Professionals, "What's in the Taxpayer Assistance and Service Act passed by the Senate."

Photo by Kelly Sikkema on Unsplash