This Act mandates that the IRS provide taxpayers with specific details and a 45-day response window before contacting third parties for certain tax information.
John Barrasso
Senator
WY
The Taxpayer Notification and Privacy Act of 2025 requires the IRS to provide taxpayers with much more specific notices detailing exactly what information they plan to request from third parties. This law generally mandates that taxpayers receive at least a 45-day window to provide the information themselves before the IRS contacts external sources. These enhanced notification requirements aim to increase transparency and protect taxpayer privacy during information gathering.
New IRS Rules Require 45-Day Notice Before Contacting Your Bank—But Loopholes Abound
The Taxpayer Notification and Privacy Act of 2025 aims to change how the IRS interacts with taxpayers when it needs external information during an audit. This bill mandates that when the IRS plans to contact a third party—like your bank, employer, or business partner—to get information about your taxes, they must first send you a notice. Crucially, that notice must now specifically list every single piece of information they plan to request, provided you could reasonably supply that information yourself. Furthermore, the IRS must generally give you at least 45 days to respond to that notice, giving you a chance to provide the data directly before they reach out to anyone else. This new procedure applies to notices issued 12 months after the Act becomes law (SEC. 2).
The Good News: A Head Start on Audits
For the average person, the best part of this bill is the 45-day window. Imagine the IRS is auditing your business expenses and wants to talk to a supplier to verify invoices. Under the current system, you might not know exactly what they’re asking for until it’s too late. This bill forces the IRS’s hand: they have to tell you exactly what they are looking for (e.g., “copies of all invoices between you and Supplier X from 2023”) and then wait 45 days. This gives you a clear shot to gather those specific documents and hand them over yourself. If you can provide the information, you potentially stop the IRS from involving third parties, which is a huge win for privacy and keeping your business relationships separate from your tax issues (SEC. 2).
The Fine Print: Where the Protections Get Fuzzy
While the bill sounds great for taxpayer rights, the exceptions written into it are significant and create a medium concern for real-world application. The requirements for specificity and the 45-day waiting period do not apply if the IRS decides the information is “necessary,” even if you, the taxpayer, could provide it yourself (SEC. 2). This is a massive loophole. If the IRS simply declares the third-party contact “necessary,” they can bypass the entire notice process meant to protect you. Essentially, the IRS gets to decide when the rules apply, which could severely limit the intended transparency.
The Secretary’s Blank Check
Adding to the uncertainty, the bill grants the Secretary of the Treasury the authority to set “other exceptions” to these new notification rules (SEC. 2). This is a very broad delegation of power. It means that even if the IRS can’t justify bypassing the rules using the “necessary” loophole, the Secretary can simply create a new exception category that allows them to move forward without the specific notice or the 45-day wait. For busy people who rely on clear, predictable rules, this open-ended authority adds a layer of administrative risk, as the protections outlined in the bill could be easily undone via regulation later on.