S. 3587 — Introduced in Senate

II 119th CONGRESS 2d Session S. 3587 IN THE SENATE OF THE UNITED STATES January 7, 2026Mrs. 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. 1. Short title This Act may be cited as the No Tax on Wrongful Delay Act of 2026. 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: 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.