Bills · S 3587
IN COMMITTEE· 119TH CONGRESS
Senate BillS 3587Taxation
No Tax on Wrongful Delay Act of 2026
INTRO JAN 7· LAST ACTION JAN 7
READING
2MIN
COSPONSORS
0
READER REACTIONS0 TOTAL
NO VOTES YET · BE THE FIRST
- Introduced only
LEGISLATIVE PROGRESS
STEP 2 / 8Introduced
In Committee
Reported
Passed Senate
Passed House
Conference
To President
Became Law
WHAT THE BILL DOES
AI-writtenVoters should care about this bill because it addresses a matter of fairness in how the government handles its own errors or delays. When the IRS holds a taxpayer's money for an extended period and is later required to pay it back with interest, that interest serves as compensation for the time the taxpayer's money was tied up. Currently, the government effectively takes a portion of that compensation back by taxing it.
If this bill becomes law, taxpayers who successfully challenge the IRS and are due interest on an overpayment would keep the full amount, providing complete restitution for the delayed use of their funds. If it doesn't pass, the current system continues, meaning taxpayers must pay income tax on interest they receive from the IRS, which some argue reduces the overall benefit intended to offset the government's delay.
KEY PROVISIONS
3AI-extractedPROVISION 01
Exempts from gross income any interest paid by the IRS to taxpayers following an audit or litigation where the taxpayer prevailed.
This ensures that taxpayers do not have to pay income tax on compensation received for the government's delay in returning their overpaid taxes.
PROVISION 02
Applies this exemption to specific scenarios: IRS examinations, taxpayer lawsuits for refunds or credits, and civil actions by the U.S. for tax collection where the taxpayer was successful.
This clearly defines the circumstances under which the interest will be considered tax-free, avoiding ambiguity.
PROVISION 03
Establishes that these changes will apply to taxable years beginning after December 31, 2025.
This provides a clear effective date for when the new tax rule will take effect for taxpayers and the IRS.
SPONSORSHIP
1 + 0
R· Tennessee
YRS IN OFFICE
23
BILLS LED
142
ACTION TIMELINE
2 EVENTSJAN 7
Introduced in Senate
JAN 7
Read twice and referred to the Committee on Finance.
BILL INFO
TypeSenate Bill
NumberS 3587
Congress119th
StatusIn Committee
IntroducedJan 7, 2026
Last actionJan 7, 2026
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IN COMMITTEE· 119TH CONGRESS · SENATE · INTRODUCED JAN 7, 2026
Senate BillS 3587Taxation
No Tax on Wrongful Delay Act of 2026
INTRODUCED JAN 7, 2026· LAST ACTION JAN 7, 2026
PASSAGE CHANCES
—%
READING
2 min
COSPONSORS
0
COMPLEXITY
Moderate
