Congress Acts to Protect Taxpayers From IRS Errors and Tax Refund Theft

Lebanon - Circa June 2022: USPS Post Office location. The USPS is responsible for providing mail delivery and providing postal service.

(Image credit: Getty Images)

published 19 February 2025

Tens of thousands of U.S. Treasury checks were stolen in the mail last year, and a recently advanced bill aims to help victims recover funds via direct deposit.

The House Ways and Means Committee unanimously advanced several bipartisan bills on Feb. 12, including legislation that safeguards last-minute tax filers from late penalties.

The measures address reforms that would timestamp electronically filed tax returns, require the IRS to notify taxpayers of rights to dispute math errors, and protect the independence of the National Taxpayer Advocate.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

New bipartisan legislation passed by the committee also points to reducing the risk of IRS tax refund mail theft, by giving taxpayers the alternative to ask for a direct deposit.

“The common thread that unites each of these bills is we are putting American taxpayers first,” said the Chairman of the House Committee on Ways and Means, U.S. Congressman for Missouri’s 9th District Jason Smith in an emailed markup. “They deserve to have an IRS that works for them and not the other way around.”

Here’s what these advanced measures could mean for you as a taxpayer.

Returning stolen taxpayer money

Imagine expecting your tax refund to be delivered by the mail, only to have it stolen. Then, requesting your check to be reissued only for it to be sniped again.

As Kiplinger has reported, Nicole Malliotakis (NY-11) says postal fraud has hit her district hard. At least $5.3 million in checks were stolen across 377 cases, with refund amounts ranging from a few hundred dollars up to $500,000. One constituent had their check reissued four times before it was received.

At least 40,000 IRS checks were stolen across the U.S. in 2024, up from 100 in 2022.

The increase in stolen checks led Malliotakis to join Reps. David Kustoff (TN-08), and Terri Sewell (AL-07) in introducing The Recovery of Stolen Checks Act on Feb. 11.

The bipartisan legislation, which passed the House Committee on Ways and Means in a vote of 41-0, would allow taxpayers who’ve had tax refunds stolen from the U.S. Treasury in the mail to receive a replacement check via direct deposit.

Worth noting, that so far this year, tax refunds are coming in bigger. As reported by Kiplinger, that extra boost is due to recent inflation adjustments to the tax code.

Legal independence for IRS watchdog

The second bill passed the committee in a vote of 41-0, would allow the National Taxpayer Advocate (NTA), Erin M. Collins, to hire attorneys who report directly to her.

This measure would grant the government watchdog group independence from the IRS in its choice of legal counsel. It also supports the NTA’s mission to improve taxpayer service and case outcomes at the IRS.

The tax agency has prohibited the National Taxpayer Advocate from hiring legal counsel since 2015, according to Rep. Randy Feenstra (R-IA). Currently, the staff hired by the NTA is accountable to the internal IRS counsel. The measure argues this may create a conflict of interest.

This National Taxpayer Enhancement Act of 2025 is co-sponsored by Reps. Feenstra, and Danny Davis (R-IL). U.S. Senators Bill Cassidy (R-LA) and Ben Cardin (D-MD) introduced companion legislation in the Senate.

Notify taxpayer rights to dispute math errors

The committee also passed a bill that simplifies taxpayers' experience when dealing with a math error in a vote of 43-0.

The Internal Revenue Service Math and Taxpayer Help Act requires the IRS to provide a clear explanation of an alleged math error and inform the taxpayer they have 60 days to dispute the assessment.

The IRS is currently not required to inform taxpayers they have the right to dispute mathematical adjustments within 60 days.

This bill is from Reps. Feenstra and Brad Schneider (Ill-10).

Fairness for last-minute electronic tax filers

If you’ve ever rushed to the U.S. Postal Service to deliver your tax return or payment to the IRS before the tax deadline, you just have to make sure your mail is postmarked by midnight.

However, if taxpayers submit the same payment or return electronically on the due date, it may be considered late if the IRS processes or receives it on the next business day. That can be incredibly frustrating.

The Electronic Filing and Payment Fairness Act passed in a vote of 41-0, ensures that electronic payments or returns submitted by midnight of the due date are considered timely. That’s regardless of whether the IRS waits to process or receive the payment the next day.

The bill is sponsored by Rep. Darin LaHood, (R-Ill), extends the IRS’s “mailbox rule” to electronic payments. The National Taxpayer Advocate pointed to this solution five years ago.

Addressing pandemic-era UI benefits fraud

Federal law enforcement agencies will have additional time and resources to prosecute criminals who stole billions of dollars in pandemic-era unemployment insurance (UI) benefits, under this new measure.

According to the Government Accountability Office, between $100 to $135 billion of UI benefits were stolen during the pandemic.

The legislation introduced by House and Means Committee Chairman Jason Smith, and co-sponsored by all 25 Republican members of the committee, extends the statute of limitations for CARES Act-related unemployment fraud from 5 to 10 years.

The Pandemic Unemployment Fraud Enforcement Act advanced in a vote of 24-18. Currently, the statute of limitations expires on March 27, 2025.

Bottom line

With tax season in full swing, taxpayers should take precautionary measures when preparing and completing their tax returns.

Filing a tax return electronically and selecting direct deposit can help you avoid the risk of mail theft. Additionally, keeping track of IRS notices and potential errors can help avoid penalties you may have to dispute or correct.

Lastly, filing your return or making payments ahead of the April 15 tax deadline can steer you away from accidentally having your documents processed at a later date.

Still, these new measures aim to give taxpayers less to worry about by simplifying their tax experience and better protecting their owed refunds during tax season.

For more information and live updates, follow our tax team on Filing Taxes 2025: Live Updates, Tax Tips, and Strategies from Kiplinger.

TOPICS

Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.

Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life.