RETURN Act

This legislation, known as the RETURN Act, aims to significantly improve the Internal Revenue Service's responsiveness to taxpayer refund claims. It mandates that the IRS must review all refund claims and make a determination within 12 months of receipt, or by another agreed-upon date. For any claim that is denied, either in whole or in part, the IRS is required to provide the taxpayer with a detailed written explanation for the disallowance. This explanation must be mailed to the taxpayer's last known address and, if applicable, include clear instructions for appealing the decision to the IRS Independent Office of Appeals. To ensure compliance, the bill introduces a penalty for the IRS if it fails to meet the 12-month deadline. In such cases, the overpayment interest rate for any period subsequent to the deadline will be increased by one percentage point , although this additional interest is capped at $500, with adjustments for inflation. The bill includes an exception for "frivolous claims," for which only a written notification of denial is required.