[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3587 Introduced in Senate (IS)]

<DOC>






119th CONGRESS
  2d Session
                                S. 3587

To amend the Internal Revenue Code of 1986 to provide an exemption from 
  gross income for interest paid to taxpayers by the Internal Revenue 
    Service following an audit or litigation in which the taxpayer 
                               prevailed.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 7, 2026

Mrs. Blackburn introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide an exemption from 
  gross income for interest paid to taxpayers by the Internal Revenue 
    Service following an audit or litigation in which the taxpayer 
                               prevailed.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``No Tax on Wrongful Delay Act of 
2026''.

SEC. 2. EXEMPTION FROM GROSS INCOME FOR INTEREST PAID TO TAXPAYERS 
              FOLLOWING AUDIT OR LITIGATION.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before section 
140 the following new section:

``SEC. 139M. INTEREST PAID TO TAXPAYERS FOLLOWING AN AUDIT OR 
              LITIGATION.

    ``Gross income shall not include any interest which, pursuant to 
section 6611, is required to be paid upon any overpayment in respect of 
any internal revenue tax following--
            ``(1) an examination pursuant to the provisions of section 
        7602,
            ``(2) any suit or proceeding brought by the taxpayer for 
        the credit or refund of taxes, or
            ``(3) any civil action commenced by the United States for 
        the collection or recovery of taxes.''.
    (b) Conforming Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting before the item relating to section 140 the 
following new item:

``Sec. 139M. Interest paid to taxpayers following an audit or 
                            litigation.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
                                 <all>