IRS Penalty Notices Must Get Manager Sign-Off Starting 2026: A New Check on Tax Enforcement

The aptly named Fair and Accountable IRS Reviews Act is setting up a new procedural safeguard for anyone dealing with the IRS—specifically when it comes to penalties. If you’ve ever received a scary-looking letter from the IRS threatening a fine, you know how stressful that is. This bill aims to make sure that initial penalty notice isn't sent out prematurely or in error.

The Mandatory Manager Check

What’s the big change? Before the IRS can send you any written notice about a tax penalty, that penalty determination has to get a personal sign-off from a higher-up. Specifically, the immediate supervisor of the IRS employee who decided you owe the penalty, or an officially designated higher-ranking official, must approve it. Think of it as a mandatory, internal second set of eyes before the government hits your mailbox with a demand for money. This is detailed right in Section 2 of the bill.

For most people, this means that the first time you hear about a potential penalty, that decision has already been double-checked by a manager. The bill is clear about who that supervisor is: the person the penalty-assessing employee reports directly to. This simple change adds a layer of accountability, ensuring that the IRS is procedural and thoughtful before moving forward with enforcement. It’s a win for fairness, reducing the chance you’ll have to spend time and money fighting an erroneous penalty notice.

When Does This Kick In?

While this is a great step for taxpayer protection, don't expect it to apply to any penalty notices you might receive next year. The bill includes a delayed effective date. This new manager approval process only applies to penalties that are assessed and notices sent out after December 31, 2025. This gives the IRS plenty of time to update its internal systems and training, though it might add a slight administrative burden and potentially slow down the processing of penalty assessments by a few days once it goes live.

This delay is important for anyone running a small business or managing complex personal finances. It means the current system remains in place for the next few years, but come 2026, there will be a higher bar for the IRS to clear before they can officially notify you of a penalty. It’s a straightforward, procedural tweak designed to enhance fairness and accountability in a part of the government most people would rather avoid dealing with altogether.