On December 1, 2025, the House of Representatives passed H.R. 5349, the “Tax Court Improvement Act,” with bipartisan support. The bill seeks to modernize several historically challenging aspects of tax administration. As approved by the House, H.R. 5349 would strengthen the Tax Court’s ability to effectively advance cases by expanding its subpoena authority, permitting equitable tolling, and implementing other procedural enhancements. Although it is not clear that the bill has the support to pass the Senate, in light of bipartisan support it is increasingly likely that it could be enacted as part of legislation in the current Congress. The bill was championed by Rep. Jason Smith (R), Chairman of the House Ways and Means Committee, and reflects Congress’s ongoing efforts to balance enforcement with greater procedural fairness for taxpayers.
Background on US Tax Court Procedures
The Tax Court is the main forum in which taxpayers challenge IRS assessments and determinations, because in all other forums the taxpayer must first pay the tax and then sue for a refund. But, the Tax Court’s unique grant of authority and procedures can result in a less streamlined process. For example, the court’s authority to order the production of evidence from third parties before hearings has been limited by both statute and the Court’s own rules.
Under present law, the Tax Court may issue subpoenas to compel the attendance of third-party witnesses and the production of third-party documents, but only at a scheduled hearing, deposition, or pre-trial conference. This limitation, rooted in Section 7456(a) and implemented through Tax Court Rule 147, rather than the Federal Rules of Civil Procedure, constrains the parties’ ability to obtain key documents early enough to facilitate settlements or streamline trial preparation. Rep. Nathaniel Moran (R), one of the co-sponsors of the bill, noted on the floor of the House that “[t]oday, if someone is subpoenaed to produce documents before the Tax Court, they must show up in person. This wastes time, adds expense, and clogs an already full docket.” 171 Cong. Rec. H4942-H4944 (2025) (statement of Rep. Nathaniel Moran). This limitation contrasts with Tax Court Rule 91, which requires parties to stipulate facts and exchange information voluntarily, but does not provide the court with the power to compel production of documents or testimony prior to trial. Instead, Rule 91 relies on cooperation and mutual agreement, which can be effective in straightforward cases but often falls short when parties are unwilling or unable to reach stipulations.
In the Tax Court, taxpayers also face rigid filing deadlines with little recourse when court offices or electronic portals were inaccessible due to unforeseen events. Tax Court Rule 25 governs the computation of time, but until recently, the Tax Court lacked explicit authority to grant equitable tolling in deficiency cases. Unlike the broader discretion available to judges in other federal courts, these limitations leave taxpayers vulnerable when circumstances beyond their control prevent timely filings.
Special trial judges for the Tax Court also face constraints not found in other courts. As compared to district courts, which rely heavily on magistrates to move dockets, Tax Court special trial judges are limited in the cases they can hear by Section 7443A and the Tax Court assignment rules. These limitations lead to backlogs in the general Tax Court docket, which cause frustration for taxpayers and slows the process. Further, Section 7456(c) in its current form limits the ability of special trial judges to hold parties in contempt. The absence of recourse for the taxpayer’s failure to appear further clogs the system today, which leads to calls for Congressional action.
H.R. 5349, the “Tax Court Improvement Act,” and Why it Matters
H.R. 5349 responds directly to the current challenges faced by the Tax Court. The bill would amend Section 7456(a) and allow the Tax Court to issue subpoenas for the attendance of third parties and production of books, records, ESI, or “tangible things,” before hearings to facilitate settlements. This allows parties to obtain and exchange information earlier in the process. When Rep. Sewell (a co-sponsor of the bill with Rep. Moran) introduced the bill to the floor of the House, she explained that the intention is to expand the Tax Court’s ability to compel third parties “to produce relevant documents, electronic records, and other evidence early, facilitating settlement, reducing the need for protracted litigation, and helping to resolve disputes sooner rather than later.” 171 Cong. Rec. H4942-H4944 (2025) (statement of Rep. Terri Sewell).
The bill also expands deposition power, allowing deposition to “be taken before any designated information competent to administer oaths under this title.” It expands the jurisdiction of special trial judges under Section 7433A(b), permitting them to hear any case within the court’s authority if the parties consent, which is designed to alleviate backlogs and speed up case resolution. Further, the bill also grants trial judges the power to punish contempt, subject to the limits for a Class C misdemeanor, ensuring that the court can enforce its orders without risking excessive penalties.
The bill clarifies the Tax Court’s authority to apply equitable tolling in deficiency cases by amending Section 7451(b). Specifically, if a filing location (the office of the clerk of the Tax Court or the Tax Court’s online portal) is inaccessible or unavailable to the public on the date a petition is due, the time period for filing is extended by the number of days the location is inaccessible. An additional 14 days are also provided beyond the period of inaccessibility for filing the petition. This ensures taxpayers are not penalized for events outside their control, like a government shutdown, and allows litigants to file an “expeditious” motion to appeal dismissals based on time limit grounds under Tax Court Rule 123. These reforms promise a more efficient and fair process for taxpayers and practitioners navigating disputes with the IRS, modernizing the Tax Court’s operations. In the words of Rep. Sewell, “These reforms are not radical. They are common sense improvements designed to deliver timely justice, lower court costs, and greater access for everyday Americans, small businesses, and those who currently face intimidating and burdensome procedures.” 171 Cong. Rec. H4942-H4944 (2025) (statement of Rep. Terri Sewell).
Looking Ahead
The passage of H.R. 5349, the “Tax Court Improvement Act,” would mark a significant change in the landscape of US tax administration, reinforcing procedural fairness for taxpayers. The bill aims to modernize Tax Court procedures by reforming long-standing limitations on equitable tolling, expanding the court’s ability to issue early subpoenas to third parties, and granting special trial judges full jurisdiction and contempt powers. These changes streamline case management and safeguard taxpayer rights in the face of unforeseen obstacles.
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