H.R. 9641, H.R. 3108, H.R. 9642, H.R. 9468, H.R. 3514, H.R. 9644, and H.R. 9645
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House Ways and Means U.S. House of Representatives
Follow its sittingsRichard Neal
They promised prosperity, that has not materialized. And they promised more money in people's pockets, and that certainly has not materialized. Instead, families are paying more for groceries, housing, energy costs, and travel. Consumer confidence has hit all-time lows and economic growth has fallen well short of the rosy projections they touted. In fact, almost two-thirds of the American people believe the country is headed in the wrong direction.
And while workers and families are being asked to stretch each paycheck, those at the very top are experiencing a completely different reality. Nowhere is that more clear than in our tax system where at every turn the Trump administration is showering the rich, less scrutiny, more lenient rules, and certainly higher refunds. The American people deserve a tax system that is fair, functional, and has earned their trust. Right now, millions are worse off because the Trump administration shrunk the IRS workforce by nearly one-third and even the taxpayer advocate has acknowledged that phone calls are going unanswered because of the cuts. There are not enough employees to open the mail, answer the phones, or assist taxpayers with their issues.
People are left waiting for hours if not days on the phone for months to get their refunds. On the other side of the spectrum, the president has secured a lifetime of never having to worry about IRS scrutiny again for himself. The administration can try to change the subject, but questions remain about this immunity agreement and the taxpayer-funded slush fund, which is why Republicans should stand up and join us in making sure this can never happen. A fair tax system is the bedrock of democracy and depends on public confidence that everyone without regard to wealth or status is held indeed to the same standard. When the president can shield himself from IRS audits, confidence certainly erodes.
Today's markup includes a handful of bills, but these bills cannot reverse how this administration has systematically weakened the IRS, undermined confidence in our tax laws, and further tilted the system once again to those at the very top. One year later, let the record reflect the promises that have evaporated and all that remains in their place are higher costs and clearly more dysfunction on the House floor, leaving the people wondering when the committee can start to address the problems on the hearts and minds of the American people. And with that, I yield back the balance of my time.
Jason Smith
Our first order of business is HR 9496, the End Tax Penalties on American Hostages Act introduced by Representatives Tenney and Beyer, which extends tax filing deadlines for individuals who are unlawfully detained or held hostage abroad.
Last Congress, it was her legislation to provide fair tax treatment to Americans held hostage or wrongfully detained abroad that ultimately advanced through the House of Representatives. Previously legislation that would prevent the IRS from posing fines and penalties on Americans held hostage also received unanimous approval in the Senate. This is as common sense as it comes. I appreciate Representative Tenney for keeping up this fight and I urge my colleagues to once again support this effort and I'm pleased to recognize the gentlelady from New York, Ms. Tenney for an opening statement.
Claudia Tenney
Thank you so much Mr. Chairman and thank you for having this hearing and recognizing the very sensitive and difficult situation that some Americans unfortunately find themselves in. I had a constituent, I still have a constituent, a man named Ryan Corbett who is detained in a nine by nine foot cell in Afghanistan for over two years while his wife and children were home alone not knowing what the outcome would be. Miraculously, Ryan was able to be released on January 20th, 2025, literally the evening of President Trump's inauguration. We are grateful to everyone for that but during this time period people like Ryan Corbett, for example, continued to have penalties against them and assessments by the IRS because their filings were late and they weren't able to put their tax returns in. Obviously he was unable being in a nine by nine cell in Kabul, Afghanistan under the Taliban's rule.
So this is a really common sense provision as the Chairman indicated. Let's give these Americans, people who are unable for circumstances beyond their control, particularly in this situation, to give them a chance and there's numerous sections of this for postponing tax deadlines, also to refund and abatement for anything that any fines these individuals may incur. And also this also extends the period of time for which they can put in timely tax returns. It's really just common sense. It's about helping Americans in the worst of situations and we're just hopeful that my colleagues will join us and make sure this legislation gets passed.
And I appreciate the Chairman bringing this to the forefront and recognizing the plight of Americans who end up in this unfortunate situation and, you know, certainly we are so grateful for the miracle that Ryan Corbett is home with his wife and three beautiful children. But thank you again Mr. Chairman and I yield.
Richard Neal
Thank you. Let me yield my time to the distinguished gentleman from Virginia, Mr. Beyer.
Donald Beyer
Thank you Mr. Neal very much. And thank you Mr. Chairman. I also want to thank Representative Tenney for her leadership on this long overdue legislation, the End Tax Penalties on American Hostages Act. After enduring captivity overseas, Americans who have been taken hostage or wrongfully detained often return home to massive tax bills from the IRS. These charges come in the form of interest on late tax payments and fines for non-payment of taxes during their detention.
In some cases they can total tens of thousands of dollars. Remember, these are faced by people who are returning from months or even years of imprisonment overseas who are doing their best to put their lives back together. Besides these penalties being financially ruinous, it's hard to overstate the emotional and mental toll of having to deal with them as the process can drag on for months. This absurd situation is obviously not the fault of the individual taxpayers, but nor is it the fault of the IRS, which doesn't have the authority to fully waive or delay these payments. So it's up to us to fix this problem.
It's long past time that we did so.
Speaker 5
I'm glad to say that with the advocacy of Representative Tenney, along with other champions in the House and Senate, we're on the cusp of providing urgently needed relief for these taxpayers. The bill postpones tax deadlines for any US national held hostage, detained abroad, while also extending relief to the spouse of the hostage or detainee. Additionally, it reimburses fees and penalties paid by American detainees and hostages released since 2021. With this legislation, we can do our part to make these Americans' lives a little easier and put them on the path towards being whole again. I urge my colleagues to vote yes, and I thank you.
Yield back.
Jason Smith
Thank you. The committee will now proceed to consideration of H.R. 9496, the End Tax Penalties on American Hostages Act. Without objection, the measure will be considered as read and open for amendment at any point. At this time, I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. Without objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for purpose of amendment.
I will now turn to Tom Barthold, Chief of Staff for the Joint Committee on Taxation, to provide a technical description of the amendment in the nature of a substitute with an emphasis on the changes made since introduction. I ask that members hold their questions until after his presentation.
Tom Barthold
Mr. Chairman, the committee members have before them two Joint Committee documents, JCX-20-26 and JCX-27-26, which describe H.R. 9496 and the Chairman's amendment in the nature of a substitute. The Chairman's amendment in the nature of a substitute makes small clerical corrections to the underlying provision. And that underlying provision extends the due dates for filing and payment in the case of persons held as a hostage or persons wrongfully detained. In addition, the period of detention or as a hostage is disregarded for determination of any interest or penalties, and this relief is also extended to the spouse of such an individual. The Secretary of the Treasury is to engage with the Secretary of State and the Attorney General to properly identify persons who would qualify under this provision.
And the provision would be effective for taxable years ending after the date of enactment. Also, there's a companion provision that directs the Secretary of the Treasury to initiate a program under which individuals detained during the period beginning January 1st of 2021 and extending through the date of enactment may seek refunds for any assessments that were imposed during that period. The staff of the Joint Committee has estimated this would have a negligible effect on federal receipts during the budget period fiscal 2027 through fiscal 2036. That includes my brief description. I'd be happy to answer any questions that the members might have.
Jason Smith
Thank you. Are there any technical questions about the amendment in the nature of a substitute? Seen none, we will move to strike the last word. Mr. Doggett is recognized to strike the last word.
Lloyd Doggett
Thank you, Mr. Chairman. I'm very pleased to see this bill so belatedly here before the committee for approval. Certainly no American who's held hostage or their families should have to worry about staying current on their taxes, returning from captivity only to be met by an IRS penalty. To its credit, the IRS has worked to resolve this problem on its own. It has used the legislative authority that it already had to ease this burden administratively.
An Inspector General's report this year confirms that the IRS implemented new procedures for penalty relief, but that report also found that the relief is still lacking with some of the freed hostages not really getting all that they're entitled to. And the IRS has been candid about its own limits, that under current law it cannot forgive the interest that keeps accruing while an American sits in a foreign cell.
This bill gives these protections the force of law and closed the gap the IRS cannot reach on its own. It has my full support. Of course, Ms. Tenney's bill could have long ago become the law of the land. In the prior Congress, as the chairman just noted, the Senate unanimously passed this very same relief for hostages. But this committee's Republican majority refused to give them that certainty.
Instead, they were intent on using our shared concern for Americans wrongly held abroad as an excuse for expanding the Trump regime's power to undermine a nonprofit by revoking its tax-exempt status without providing a shred of evidence based solely on a claim that they were supporting terrorists. Terrorist supporter, a rather expansive term that authoritarian governments use, can be implemented in a way by the Trump regime as most anyone who does not accept Trump as a self-described Messiah. While the court, while the House passed the bill over my objection last year and the objection of most Democrats, the Senate wisely refused to expand Trump's power to weaponize the tax code. That bill, the nonprofit killer as some called it, would have let the president's appointee simply label a nonprofit a terrorist-supporting organization, flip the burden onto the accused, give them 90 days to prove a negative, revoke their status without ever offering a shred of evidence or even stating the reason why their status was being revoked. And of course, an appeal after your tax-exempt status is revoked is no relief at all for a nonprofit.
The nearly 300 groups that implored Congress to vote no were not terrorists. They were churches, they were hospitals, immigrant aid organizations, charities, and nonprofit newsrooms like the ones that give the public the facts on this level of government and every other one. This effort that was made last year was never a shield against our enemies. It was a sword against Trump's enemies. The very same language came back here last year once again in this committee buried in Trump's big ugly bill which Republicans are celebrating.
And this committee passed it on a totally partisan vote, 26 to 19. Only after hundreds of charities across the country again raised the alarm was it quietly stripped from the bill before it reached the House floor. Americans across the political spectrum oppose giving the president the unilateral power by overwhelming margins because they understand a simple truth. A president that can destroy his critics without evidence has far more room to enrich himself and to rig the next election. So I'm pleased that we're finally being permitted to do this the right way.
It should have happened from the start, a clean bill for the hostages and their families without any poison hidden inside. The first rule of confronting a would-be strongman is not to hand him more tools. Today we take this one off the table and give American hostages the relief they've earned. I support this bill and I yield back.
Ms. Sewell.
Terri Sewell
Thank you, Mr. Chairman. I would like to thank our colleagues Representatives Tenney and Beyer for advancing this bipartisan legislation. You know, after Russia invaded Ukraine in February of 2022, two Alabamians by the name of Alex Drueke and Andy Huynh volunteered to join Ukraine resistant efforts and were captured by Russian forces.
These Alabamians were held captive as POWs for over four months, and it took a coordinated effort from the entire Alabama delegation and the State Department to secure their release. If we pass this legislation, they would have been able to fully focus on their medical treatment and recovery instead of worrying about tax penalties from the federal government. I therefore really support this legislation and ask that this bipartisan legislation become law. The Bipartisan End Tax Penalties on American Hostages Act would stop the IRS from levying fines on Americans who have been wrongfully detained or held hostage abroad. I urge my colleagues to support this legislation and I yield back the balance of my time.
Jason Smith
Are there additional members that wish to strike the last word? Seen none. Are there any amendments to the amendment in the nature of a substitute? Seen none, the question is on the adoption on the amendment in the nature of a substitute. All those in favor signify by saying aye.
Those opposed say no. In the opinion of the chair, the ayes have it and the amendment in the nature of a substitute is agreed to. I will now recognize Mr. Buchanan for the purpose of offering a motion.
Vern Buchanan
Mr. Chairman, I move the committee favorably report H.R. 9468 as amended to the House of Representatives.
Jason Smith
The question is on the motion to favorably report H.R. 9468 as amended to the House of Representatives. The clerk will call the roll.
Vern Buchanan
Mr. Buchanan. Yes. Mr. Buchanan, yes. Mr. Smith of Nebraska. Mr. Smith of Nebraska, yes.
Mr. Kelly. Mr. Kelly, yes. Mr. Schweikert. Mr. Schweikert, yes. Mr. LaHood.
Mr. Arrington. Mr. Estes. Mr. Estes, yes. Mr. Smucker. Mr. Thompson.
Mr. Thompson, yes. Mr. Larson. Mr. Larson, yes. Mr. Davis. Mr. Davis, yes.
Ms. Sanchez. Ms. Sanchez, yes. Ms. Sewell. Ms. Sewell, yes. Ms. DelBene.
Ms. DelBene, yes. Ms. Chu. Ms. Chu, yes. Ms. Moore. Ms. Moore, yes.
Mr. Boyle. Mr. Boyle, yes. Mr. Beyer. Mr. Beyer, yes. Mr. Evans.
Mr. Evans, yes. Mr. Schneider. Mr. Schneider, yes. Mr. Panetta. Mr. Panetta, yes.
Mr. Gomez. Mr. Gomez, yes. Mr. Horsford. Ms. Plaskett. Mr. Suozzi.
The clerk will report the vote.
Jason Smith
There being 40 yeses and zero nos, the motion is agreed to and H.R. 9496 as amended is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9496 and that members have two additional days to file with the committee clerk supplemental, additional, dissenting, or minority views. Our next order of business is H.R. 9500, the Tax Relief for Fraud Victims Act, introduced by Representatives Max Miller and Suozzi. As a leading voice on our oversight subcommittee, Representative Miller has made combating fraud and protecting the interests of taxpayers a top priority. I commend him for his focus on ensuring taxpayers get the relief they need as they try to rebuild their finances.
I urge my colleagues to support this legislation and I'm pleased to recognize the gentleman from Ohio, Mr. Miller, for an opening statement.
Max Miller
Thank you, Mr. Chairman, and I want to thank my colleague, Mr. Suozzi. I'm pleased that this committee is taking up my bill, the Tax Relief for Fraud's Victims Act. This is a common sense bipartisan answer to a crisis that is devastating families and seniors across our nation, a crisis that has hit record levels. We are living in an era where technology has fundamentally altered the landscape of crime. The FBI's 2025 Internet Crime Report paints a grim picture.
Cyber-enabled crimes have defrauded Americans of nearly 21 billion dollars in a single year. That's a 26 percent increase in losses from the year prior. We're witnessing an industrialization of deception before our very eyes. For the first time, the FBI's report features a dedicated section on artificial intelligence used in over 22,000 complaints and costing Americans nearly 900 million dollars. Criminals are now using generative AI to clone the voices of our loved ones and launch hyper-personalized attacks at scale.
The numbers for our seniors are particularly devastating. Last year, Americans over the age of 60 reported 7.7 billion dollars in losses, a 37 percent increase in the number of complaints compared to the previous year. These aren't just statistics, these are the life savings, retirement accounts, and securities of our constituents.
When a taxpayer is targeted by these increasingly sophisticated scams, they suffer an unimaginable blow they never see coming and can never recover from. But the law adds a second layer of injury. Under the current tax code, we effectively treat those stolen assets as taxable income. It is a fundamental failure of our system when a victim is robbed by a criminal and then taxed by their own government on the money that was stolen from them. The victims are victims twice over, by the fraudster and by the tax code that hasn't kept pace with today's digital threats.
This bill restores theft loss deduction, provides flexibility for reporting losses, and ensures retirement accounts are not treated as taxable windfall when drained by scammers. I want to thank Representative Suozzi for his partnership on this issue of fundamental taxpayer fairness, which serves as a powerful reminder that we can deliver effective real-world solutions when we work across the aisle. We cannot stop the evolution of technology, but we can ensure our tax code provides a safety net for those who fall through the cracks. This bill is a lifeline for the vulnerable, and I urge my colleagues to support this legislation. Thank you, Mr. Chairman, I yield back.
Richard Neal
Thank you. Let me yield my time to the distinguished gentleman from Connecticut, Mr. Larson.
John Larson
Thank you, Mr. Neal. Thank you, Mr. Chairman, and congratulations to Mr. Miller and Mr. Suozzi on what I think as Mr. Miller described it as a common sense bill and a common sense approach. I especially want to commend Mr. Suozzi for underscoring something he's been working on since 2017 when he arrived here, and as it deals with crumbling foundations and pyrrhotite. Again, it's something that may not be known to all members, but it's related to a similar kind of disaster that occurred for people called drywall. I also want to acknowledge the work of Mr. Neal during this time to make sure that victims in this strongly hit Southern New England and Massachusetts, but also New York and other states, imagine having bought a home and invested and then only to come to find that an element called pyrrhotite actually crumbles the foundation.
People were seeing sunlight through their basic foundations or taking chunks away from it. So, as Mr. Miller indicated, this is a tremendous step forward. And the bill repeals the limitation on casualty loss deduction put in place by the 2017 Trump law and made permanent by OBA. This limitation limited the deduction to damage caused by presidentially declared natural disasters. In 2017, Representative Courtney and others and Mr. Neal met to get the guidance from Treasury Department that how homeowners impacted by crumbling foundation were able to use the casualty loss deduction to write off the cost of repair.
In 2017, shortly after we were able to secure the 2017 when the Trump tax law of 2017 passed, we were able to secure a safe harbor that allowed homeowners to amend their 2017 tax returns. The work of Mr. Miller and Mr. Suozzi expands upon this and does a great service, as Mr. Miller said, from a common sense perspective.
I know this effort by Mr. Suozzi was personal and had the opportunity to work with him directly. I wanted also to submit for the record, Mr. Chairman, a letter from Representative Joe Courtney, who has been immersed in this issue since 2015, for the record, if I might.
Without objection.
John Larson
And also wanted to again thank the efforts by the committee staff also in working with the IRS throughout this. This is a, when you're confronted with something like this and visit citizens through no fault of their own who are subject to, and we all know how critical the issue of housing is, but when you have a house and it's your key investment and through no fault of your own it's crumbling before your very eyes, you can, I think, rightfully understand the need to address this, which makes the bipartisanship of this and the work together that Mr. Miller and Mr. Suozzi provided outstanding and sets an example. And I know my colleagues are probably wondering how I'm going to sneak Social Security into this. So it only, I would only add that it demonstrates what happens when you work bipartisanly, as Representative, excuse me, as Senator Warren and Senator Moreno recently demonstrated. And with that, I yield back.
Jason Smith
Thank you. The committee will now proceed to consideration of H.R. 9500, the Tax Relief for Fraud Victims Act. Without objection, the measure will be considered as read and open for amendment at any point. At this time, I offer an amendment in the nature of a substitute, which was distributed in advance along with the green sheet explaining it. Without objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for purpose of amendment.
Tom Barthold
Mr. Chairman, the members of the committee have before them two Joint Committee documents, JCX-21 and JCX-28, which describe H.R. 9500 and the Chairman's amendment in the nature of a substitute. The Chairman's amendment in the nature of a substitute makes clerical corrections to the underlying legislation and contains generally three components. First, the proposal generally reinstates the pre-2018 law which allows an individual taxpayer a deduction for a personal casualty loss, including theft losses, to the extent such losses exceed 10% of the taxpayer's adjusted gross income. With specifically with respect to thefts from fraud, the provision allows the taxpayer to elect to treat that loss as occurring in the taxable year in which the loss, in which the theft occurred, rather than the year in which it's discovered, and to accomplish that, it extends the limitation period for filing for refund. It also makes, provides comparable relief in the case of a taxpayer who has incurred an additional tax on an early distribution from a qualified retirement plan.
And then, as just noted by Mr. Larson, it provides a special rule for losses to a principal residence that are attributed to concrete foundations adversely impacted by pyrrhotite. The general limitations period, again, is treated as not expiring before one year after the date of enactment, and it's not limited to taxes paid within the prior two or three years.
This provision would be effective for casualty losses sustained and retirement plan distributions after December 31st of 2025, and with respect to pyrrhotite losses, losses after December 31st of 2020. The Joint Committee staff has estimated that the effect on federal receipts would be a loss of $6.52 billion over the fiscal period of fiscal years 2027 through 2036. That concludes my brief description. I'd be happy to answer any questions that the members might have.
Jason Smith
Thank you. Are there any technical questions about the amendment in the nature of a substitute? Seen none, does any member wish to strike the last word? Seen none, are there any amendments to the amendment in the nature of a substitute? Mr. Panetta.
Yes, thank you.
Jimmy Panetta
Thank you, Mr. Chairman. Obviously, I appreciate this bill, appreciate the good work between Mr. Miller and Mr. Suozzi, but I just have one issue that I think needs to be addressed through this amendment, which would ensure that the bill's provisions apply retroactively. I support the goal of this legislation to provide critical tax relief to those who have suffered devastating financial losses at the hands of scammers. Unfortunately, because the bill's provisions only apply for tax years 2025 and beyond as written, the bill would leave many of our constituents without relief. Now, my office has seen too many seniors defrauded of their retirement savings and hit with a double blow, meaning that not only are their funds stolen, but they are facing a tax liability on money that they no longer have.
And the consequences are devastating, as we know. When someone's retirement savings are stolen, it shatters decades of financial planning. It can financially destabilize entire families, forcing seniors to delay medical care, rely on their adult children for support, and suffer a diminished quality of life after years of frugal living. After contending with that loss, taxing victims on money that was stolen from them is borderline cruel. I have had multiple seniors come to my office hoping that their tax bill was a mistake and that we could fix the situation with casework.
Sadly, unless we make this bill retroactive, there is little that our offices can do. I believe it's borderline irresponsible to leave these victims without tax relief simply because they were defrauded during a single eight-year period. It condemns them to manage an unfair and unaffordable tax bill at the very moment they are most financially vulnerable. However, Mr. Chairman, and as we've discussed prior to this hearing, I would withdraw this amendment if there is a commitment to work with us towards incorporating this provision on the floor as we go forward.
Jason Smith
Thank you, Mr. Panetta. Definitely want to work with you on this. I think it's a, it serves a very good purpose and a good idea to try to implement.
Speaker 17
And with that commitment, Mr. Chairman, I will withdraw my amendment. Thank you.
Jason Smith
Thank you. Are there additional amendments to the amendment in the nature of a substitute? Seen none, the question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye. Those opposed say no.
In the opinion of the chair, the ayes have it and the amendment in the nature of a substitute is agreed to. I will now recognize Mr. Buchanan for the purpose of offering a motion.
Mr. Buchanan.
Yes.
Yes.
Yes.
The clerk will report the vote.
Jason Smith
There being 39 yeas and zero nays, the motion is agreed to and H.R. 9500 as amended is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9500 and that members have two additional days to file with the committee clerk supplemental additional dissenting or minority views. Our next order of business is H.R. 9501, the AI Tax Integrity Act of 2026, introduced by Ways and Means Committee Vice Chairman Buchanan and Representative Horsford. The pilot program authorized by this legislation is a reasonable approach toward embracing the power of AI while ensuring our test drive the policy first. With his years of experience on this committee, including as our current vice chairman and previous chairman of the Tax Subcommittee and Oversight Subcommittee, Representative Buchanan understands better than anyone that we can always do more to enforce our tax laws.
But at the same time, we must be cautious to implementing new, perhaps sweeping policies and never undermine our oversight over how the IRS goes about its business. I appreciate the vice chairman's leadership on this issue and I urge my colleagues to support this legislation that takes a thoughtful approach towards better tax treatment. I'm pleased to recognize the gentleman from Florida, Mr. Buchanan, for an opening statement.
Vern Buchanan
Thank you. Thank you, Mr. Chairman, for moving forward with my legislation that will enable the IRS to take a serious look at tax fraud using artificial intelligence. Billions of dollars are lost to fraudsters each year, as much as $600 billion. As AI continues to advance, Congress has a responsibility to evaluate, and that's the key, how this might make a difference in terms of being more effective, efficient, and more accountable than what we've had in the past. The AI Tax Integrity Act establishes a temporary pilot program to evaluate whether AI can be effectively identify different opportunities in terms of tax fraud.
Following the pilot, the GAO will report to Congress on its effectiveness. Most importantly, the bill does not, that's critical to a lot of people, expand the IRS enforcement activity, but is focused on the evaluation of AI at the IRS. I'd like to thank Congressman Horsford, Schweikert, and Bean for standing with me as we work to close the gap in terms of a lot of the tax fraud that's out there. I urge my colleagues to support the bill and I yield back.
The ranking member is recognized.
Richard Neal
Thank you. This legislation has been championed by Congressman Horsford and we want to thank him for his leadership on the effort along with Vern Buchanan. Artificial intelligence is already reshaping our economy and many of the processes we rely upon to this day. We've heard quite a few big promises from the Secretary of the Treasury about the use of AI at the IRS. I'll note that those remain aspirational, but this bill takes a different approach.
Like with any emerging technology, this legislation seeks to thoughtfully deploy AI with clear guardrails to establish a limited pilot program at the IRS focused on narrow areas to help improve tax administration.
This includes identifying identity theft, the use of ghost preparers and even fraudulent claims. Just as important is that this pilot program is temporary, but it's also subject to independent review by the GAO before any broader application is considered. When new tools have the potential to strengthen our current systems while remaining accountable to the people, they are worth further exploration and for that reason, I will support this legislation. And I yield back my time.
Jason Smith
Thank you, Ranking Member. Thank you, the committee will now proceed to consideration of H.R. 9501, the AI Tax Integrity Act of 2026. With that objection, the measure will be considered as read and open for amendment at any point. At this time I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. With that objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point and considered base text for purpose of amendment.
Tom Barthold
Mr. Chairman, the committee members have before them two Joint Committee documents, JCX-23 and JCX-30, which describe the underlying legislation H.R. 9501 and the Chairman's amendment in the nature of a substitute. The Chairman's amendment in nature of a substitute makes a modest clerical correction to the underlying legislation and the amendment starts from while the IRS is developing presently the use of artificial intelligence for use across the agency, this legislation directs the Secretary to establish a specific artificial intelligence pilot project specifically targeting inaccurate returns, inaccurate returns from identity theft, fraudulent claims for earned income tax credit and improperly identified third-party preparers. It also provides that the Government Accountability Office prepare a report assessing this pilot program and to deliver that report to this committee and the Senate Committee on Finance. This legislation would be effective on the date of enactment and the staff of the Joint Committee on Taxation has estimated that it would have a negligible effect on government receipts during the budget period of fiscal years 2027 through 2036. That concludes my brief description, I'd be happy to answer any questions that the members might have.
Jason Smith
Are there any technical questions? Does any member wish to strike the last word? Seen none, are there any amendments to the amendment in the substitute? Seen that there's no amendments, the question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye.
Those opposed say no. The ayes have it, I will now recognize Mr. Buchanan for the purpose of offering a motion.
Vern Buchanan
Mr. Chairman, I move the committee favorably report H.R. 9501 as amended to the House of Representatives.
Mr. Buchanan.
Speaker 27
Mr. Schweikert, yes. Mr. LaHood. Mr. Arrington. Mr. Estes. Mr. Smucker.
Speaker 27
The clerk will report the vote. There being 40 yeses and zero nos, the motion is agreed to and H.R. 9501 as amended is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9501 and that members have two additional days to file with the committee clerk supplemental, additional, dissenting, or minority views. Our next order of business is H.R. 7972, the Taxpayer Workforce Modernization Act, introduced by Oversight Subcommittee Chairman Schweikert. I commend Chairman Schweikert for his unwavering commitment to a forward-looking approach to IRS operations and for his commitment to advancing the government's technology capabilities and usage.
Jason Smith
He's always thinking outside of the box, and his efforts here will allow that agency to attract top talent from institutions and industries outside of Washington. Chairman Schweikert understands that bringing more expertise and experience to the table will spur a more innovative mindset that is desperately needed. The IRS can always be doing more to better serve American taxpayers, a goal long championed by our oversight chairman. I urge my colleagues to support this legislation, and I'm pleased to recognize the gentleman from Arizona, Mr. Schweikert, for an opening statement.
David Schweikert
Thank you, Mr. Chairman. Fairly simple bill, it's basically trying to design a fellowship program of data scientists. And you'll notice in the language we've tried to make sure that it has in there for rules and mechanics to do audits, to be able to track fraud. I can read all sorts of parts of it, it's not that complicated. But you know I and we've talked about this in previous years of increasing the quality and access to data science, data analytics for decision-making and then training IRS staff on the use of those tools.
And with that I yield back, Mr. Chairman.
I now recognize the ranking member.
Lloyd Doggett
Thank you very much. I want to start by giving the gentleman from Arizona his due. We seldom have a hearing that Mr. Schweikert doesn't talk about data. It's important. He has spent years pressing this committee to drag the IRS into the modern age.
And on the premise of this bill, I do not disagree. The IRS does need world-class data scientists. Sophisticated tax evasion, the kind hidden in partnership structures, in offshore entities, in the returns of the very wealthy and the returns of the president, it's not caught by a clerk with a calculator. It is caught by economists and statisticians building models that find the needle in more than 260 million return haystacks. So if the question is whether the IRS needs the kind of talent that he's discussing, the answer is yes, emphatically yes.
But I do not support this bill because it asks the committee to applaud the hiring of the very people that the Trump regime just spent a year firing. Here is what I mean. The IRS already had a division full of data scientists. It's called the Research, Applied Analytics, and Statistics division, RAAS. And it was staffed with exactly the very kind of economist and administrators and statisticians, data scientists that this bill claims to desire.
They build the models that flag high-end tax cheating. That capability is what led the Internal Revenue Service in 2023 to use artificial intelligence to identify 75 of the country's largest partnerships, hedge funds, real estate empires, the nation's biggest law firms, each averaging more than 10 billion dollars in assets, and open them to audit. And what happened to them? Well, the Government Accountability Office told us that one division lost 63 of its key employees who'd been working on artificial intelligence. Three of its directors, the people leading the AI work, departed in a single month.
So what does this bill do about it? It stands up a boutique fellowship to recruit a handful of data scientists from the private sector at salaries that the bill sets at a level that is $400,000, equivalent to the President's salary. And this is not a story about one division. In a single year, the Trump administration and its DOGE henchmen had dismissed more than 31,000 IRS employees, almost an entire third of the IRS workforce. A third of all revenue agents: gone.
46% of the agency's senior executives: gone. Seven different commissioners in 12 months. That's the kind of stability the Trump regime has offered. Senior employees reassigned to answer the telephone while high-end tax cheats ran rampant, and they continue to do so. That's not modernization; it's demolition.
And we are not guessing at the damage; we already measuring it. IRS data obtained under the Freedom of Information Act shows that enforcement revenue has fallen by nearly $5 billion in a single year as the agency opened more than 120,000 fewer audits. Independent analysts estimate that the staffing cuts will cost the Treasury on the order of $600 billion in the coming decade. That's $600 billion that could have been applied to reduce our nation's soaring debt or to fund much-needed programs: real money owed and never collected. The Treasury Secretary's answer to all this when he was here: "Nah, don't worry, the fewer agents would not cost a dime because the agency would lean on smarter IT."
But the GAO looked at that promise and poured cold water on it. You cannot run artificial intelligence without intelligent people running it and feeding it. After a decade of Republican budget cuts, I voted for the funding that finally let the IRS build this capacity. They took a wrecking ball to that funding, and now they bring us a fellowship and call it modernization. I'm not against hiring data scientists; I'm against the pretense that a handful of fellows can backfill the thousands of skilled and dedicated employees who the Trump regime fired.
Fully fund the IRS, restore the analysts, rebuild the enforcement staff. Until this bill is part of that work and not just a fig leaf for demolition, I urge my colleagues to oppose it, and I yield back.
Jason Smith
Thank you. The committee will now proceed to consideration of H.R. 7972, the Taxpayer Workforce Modernization Act. Without objection, the measure will be considered as read and open for amendment at any point. At this time, I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. Without objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for the purpose of amendment.
Tom Barthold
Mr. Chairman, the committee members have before them two Joint Committee documents, JCX-25 and JCX-32, which describe H.R. 7972 and your amendment in the nature of a substitute. Your amendment in the nature of a substitute makes modest clerical changes, and the general provision would establish, not later than September 30th of this year, a fellowship program within the IRS to recruit skilled data scientists with the goal to help address the most complex issues that the IRS faces. The program would be staffed with at least 10 such fellows, and it would establish an audit task force staffed by these fellows and regular IRS employees.
The legislation further requires that after the fellowship program is stood up, that the Secretary would provide an annual report to Congress on the effectiveness of the fellowship program. This legislation would be effective on the date of enactment. A cost estimate of this provision will be provided by the Congressional Budget Office as it involves an outlay program. That concludes my brief description of this legislation. I'd be happy to answer any questions that the members might have.
Jason Smith
Thank you. Are there any technical questions about the amendment in the nature of a substitute? Seeing none, we will move to strike the last word. Mr. Davis is recognized to strike the last word.
Danny Davis
Thank you, Mr. Chairman, and I'd like to associate myself with many of the comments made by Mr. Doggett. I strongly oppose the Taxpayer Workforce Modernization Act. This bill is a boondoggle to the Trump administration to gift high-paid government jobs to their donors and Doge loyalists. Over and over, the Trump administration has undermined the Internal Revenue Service workforce while Republicans have aided and abetted or remained silent. After cutting over $1 billion from the Internal Revenue Service, the base IRS budget is about 50% below its 2010 level after adjusting for inflation.
The TIGTA just reported that the Trump IRS lost 30% of its workforce between January 2025 and January 2026, and that 42% of the agency's IT staffers are gone or involuntarily reassigned. The Trump administration cut the Research, Applied Analytics, and Statistics unit with experts specifically trained to do the work listed in this bill. The Doge team bragged about how they could use AI to reduce the workforce. Instead of supporting the actual Internal Revenue Service agency and workforce, the Republicans are rubber-stamping high salaries for politically connected individuals to do the work of the professional Internal Revenue staff that the Trump administration fired. Republicans have green-lighted Trump's eternal immunity from Internal Revenue Service audits for himself, his family, and his businesses.
Now they want to gift $400,000 in salaries to his hand-picked, politically connected friends while firing the trained professionals doing the work that this bill purports to do. Let's support those professional staff who currently work for the Internal Revenue Service, and I yield back.
Mr. Thompson.
Mike Thompson
Thank you, Mr. Chairman. I move to strike the last word. Mr. Chairman, while I appreciate my colleague's interest in modernizing the IRS, I have serious concerns with this piece of legislation.
We should absolutely be looking for ways to make the IRS more efficient, more effective, and better equipped to serve taxpayers. Modernization is an important goal, and I support responsible innovation. But replacing tens of thousands of dedicated public servants and critical investments in tax administration with just ten data scientists, a fellowship program, is simply not a serious modernization strategy. The IRS is one of the most important agencies in the federal government. It collects the revenue that funds our national priorities, administers critical tax benefits, and serves millions of taxpayers every year.
If we want an IRS that's modern, efficient, and responsive, we should be investing in both technology and the experienced workforce needed to use it effectively. Technology should enhance the work of skilled employees, not be treated as a substitute for those employees. We should embrace innovation, but we should not undermine the agency's ability to enforce the law, to combat fraud, and to provide taxpayers with the services that they deserve. For those reasons, I have significant concerns with this piece of legislation and I'll be voting no. Thank you, Mr. Chairman, and I yield back.
Ms. Chu.
Judy Chu
I move to strike the last word. First, look at where we are. For decades, the IRS was asked to do more with less. As its resources dwindled, its workload grew. The result was exactly what you would expect.
Wealthy tax cheats slipped through the cracks, audits declined, taxpayer service deteriorated, refunds took long to process, and the tax gap continued to grow. That's why Democrats created a solution to fix this problem. We invested a historic eighty billion dollars for the IRS in the Inflation Reduction Act to address the problems plaguing the agency for so long. Those investments were already paying off. Customer service improved, the agency was able to devote more resources to pursuing wealthy tax cheats, and experts projected those investments would return over half a trillion dollars in revenue for taxpayers.
Unfortunately, this was cut short by Republicans who made it their mission to claw back this funding at every single opportunity. They've clawed back nearly ninety percent of that funding and President Trump has fired more than twenty-eight thousand dedicated IRS employees, more than one quarter of the agency's workforce. Now, Republicans bring us this bill. It would create a new fellowship program to recruit data scientists to address complex tax issues. But the IRS already has a division dedicated to exactly that work.
The Research, Applied Analytics, and Statistics Division already employs data scientists and technical experts who developed advanced tools to detect tax evasion, estimate the tax gap, and strengthen tax compliance. And the irony is impossible to ignore. While Republicans propose creating a new fellowship to recruit experts, President Trump has already fired more than twenty-five percent of the very division that performs this work today. This bill does not solve the problem. It duplicates existing responsibilities while ignoring the real issue.
The IRS has been stripped of the funding and personnel that it needs to do its job. If Republicans truly wanted to modernize the IRS and improve taxpayer service, they would restore the staff and resources they eliminated instead of creating another unnecessary program. I urge my colleagues to join me in voting against this bill and I yield back.
Jason Smith
Does anyone wish to strike the last word? Seen none, um, are there any amendments to the amendment in the nature of a substitute?
Mr. Chairman, I reserve a point of order.
Speaker 31
A point of order has been reserved. Would the gentlelady, um, uh, suspend while the amendment is distributed? Gentlelady may proceed.
Terri Sewell
The amendment I am offering today would prohibit the data scientists hired by this bill's fellowship program from auditing or conducting data analysis on working Americans who earn less than $100,000 annually until the IRS audit immunity settlement between President Donald Trump, the Department of Justice, and the IRS is permanently rescinded. As we all know, the IRS audits disproportionately target earned income tax credit recipients and low-income working families. Meanwhile, the Republicans gutted the funding Democrats provided the IRS to go after wealthy taxpayers who can use sophisticated schemes to dodge paying taxes. Furthermore, President Trump just made a corrupt deal with his own DOJ and IRS to ensure that his family, his businesses are immune from IRS audits forever. Just this week, we learned that President Trump made more than $1 billion from crypto since he took office last year, while everyday working families are struggling to pay for higher grocery prices as well as gas prices and skyrocketing healthcare costs.
But President Trump and his wealthy friends don't have to worry because they know that the IRS will not be coming after them. We will not stand by for this hypocrisy. If these new IRS fellows cannot go after Trump, they should not be able to go after working-class Americans making less than $100,000 a year. We will not stand for this hypocrisy. Therefore, my amendment prohibits these new fellows from targeting working families as long as President Trump is immune from audits.
I urge all my colleagues to vote for my amendment. We should choose to stand with hardworking taxpayers, and we should not be defending President Trump and his rich friends from accountability. I also want to acknowledge that this bill is supported by studies showing how the focus on audits on high-income individuals who often have the resources to evade paying taxes could help collect $700 billion in taxes that goes unpaid to the IRS each year. A 2022 report by the GAO explains that in recent years, audit rates have dropped for the most wealthiest among us. Those who are making $200,000 or more are paying less taxes.
And this fellowship program would not be necessary if the Republicans had not gutted the workforce in the IRS. The problem of declining audit rates has only been made worse by dramatic reductions in the workforce by the IRS in the current administration and the 2025 DOJ cuts.
By the middle of last year, the IRS audit staff had been reduced by approximately 31% or 3,600 employees. Every hour used to audit taxpayers who earn over $5 million generates nearly $5,000 in additional tax revenue in comparison to only 65 generated from auditing taxpayers who make about $200,000. This is a clear reason for us to ensure that higher earners pay their fair share. I'm skeptical that these data scientists from this fellowship program will actually create more revenue, but rather go after low-income hardworking Americans. But if my colleagues want to increase employment at the IRS, which we desperately need, we should guarantee that the highest rates on investments from that decision would be made by going after higher tax earners.
I ask my colleagues to support this important amendment because we should be going after the wealthiest among us, not the hardworking average Americans who are often the lowest hanging fruit when it comes to audits. With that, I yield back the balance of my time.
Jason Smith
Does anyone wish to strike the last word on the amendment? Seen none, the question is on agreeing to the amendment offered by Ms. Sewell. All those favor, we'll let the clerk call the roll.
Mr. Buchanan.
Speaker 27
Mr. Fitzpatrick. Mr. Steube. Mr. Steube, no. Mr. Horsford. Ms. Plaskett.
Mr. Suozzi.
How is Mr. Arrington recorded?
Chairman Smith, no.
The clerk will report the vote.
Jason Smith
There being 16 yeses and 23 nos, the amendment is not agreed to. Are there additional amendments to the amendment in the nature of a substitute? A point of order has been reserved. Ms. DelBene, can you suspend while the amendment is distributed? Proceed.
Suzan DelBene
Thank you, Mr. Chairman. My amendment is very simple. It restores the funding the IRS needs to do its job properly. The nearly 80 billion in enforcement and taxpayer service funding from the Inflation Reduction Act was delivering real results. The IRS hired 5,000 additional customer service representatives, raising taxpayer service levels from 15% to 87%, reducing call wait times from nearly 30 minutes to 2 minutes, and jump-starting the long-overdue modernization of its decades-old technology.
But repeated Republican cuts to these investments have stalled this progress, leaving only 10 billion of the original funding. It's ironic that my colleagues across the aisle talk about how they want to root out waste, fraud, and abuse when they want to cut services to working families, but not when it impacts their wealthy friends and donors. The tax gap between the amount of taxes legally owed but not paid currently totals 700 billion dollars annually. These are predominantly wealthy people who are dodging their taxes, and Republicans are effectively taking away the IRS's ability to ensure they're paying what they owe. Instead, Republicans are tasking the IRS with more responsibilities, like overseeing a fellowship program, with fewer resources.
We need an IRS that can answer the phones, process returns efficiently, upgrade technology, and make sure everyone pays their fair share. And if Republicans truly want to improve the IRS, they should give them the resources they need and make sure they're using it to enforce our tax laws. I urge the adoption of this amendment, and I yield back.
Suzan DelBene
Does the sponsor of the amendment want to be heard on Mr. Buchanan's point of order?
Yes, Mr. Chairman, I just want to be clear we're talking about funding fellowship programs. I don't know why it's out of order to be talking about funding actually enforcement activity at the IRS. This seems like the basic thing that we should be focusing on.
Speaker 35
Okay, I'm prepared to rule on the amendment as not being germane and the point of order is sustained. The amendment is not in order.
Jason Smith
Are there additional amendments to the amendment in the nature of a substitute? A point of order has been reserved. Mr. Doggett, will you suspend while the amendment's distributed?
Lloyd Doggett
Surely. I thank you, Mr. Chairman. By its own terms, this bill is built to quote support the audit of selected taxpayers. My amendment simply makes certain that that capability is allowed to reach the only set of returns that selected taxpayer who has been placed off limits. That would be President Trump, his family, and the growing number of entities that they control.
In effect, the amendment repeals for this narrow investment the tax immunity that the president has granted himself. We invest in building a tool to fund unpaid taxes and recover revenue for the Treasury. And in the very same breath, this is walled off an audit of the commander in chief who sets an example for all taxpayers in America, a very bad example. This bill even asks the IRS to prove its return on investment and what better place to do that than with the activities of the Trump family. We can recruit the data scientist, we can give them all the analytics in the world, the transaction level testing, the modeling, and it will all amount to very little if we also tell them that one family, only one family in all of America, the most powerful family, the one that daily corruptly enriches itself with private gain off the public trust, if that one family, the Trump family, is simply untouchable.
In what is among the most brazen acts of public corruption in the history of America, the president reached a settlement with himself. Not only for himself, but for his family and the quote affiliated individuals, whoever they may be. Sweeping immunity from the tax laws that no other American has ever enjoyed. The settlement papers themselves solemnly declare that the president will receive quote no monetary payment or damages of any kind. And yet the New York Times has estimated that this immunity is worth at the very least 100 million dollars to him on a single long-running audit.
Remember, this is the president who said he would disclose all his tax returns, but they were under audit. No payment of any kind, a tax bill that exceeds 100 million dollars just quietly disappears for him. And how did this come about?
Well, he appointed his former criminal defense attorney as the acting attorney general to sign the release. That individual cannot lawfully erase a tax audit and had no right to participate in this very corrupt deed. And when the companion 1.8 billion dollar fund, that's the one that would have taxpayers pay those who assaulted police officers here on January 6th in Trump's attempt to overthrow our government, the Trump regime tried to sidestep that one. It's still unclear where it stands. But the audit immunity for President Trump, the real direct benefit for him and that actually lets him walk away from his taxes, that all survived.
Take note that 35 federal judges, 35 from both political parties, appointed by presidents of both parties, went to court to challenge this wretched settlement as the fraud that it truly is, singling out the very addendum that bars the government pursuing claims against the president's family as an extraordinary benefit handed over for nothing in return, special treatment in a lawsuit that the president never formally asked for this type of relief. A federal judge has taken these allegations serious enough to reopen the case and order the president to answer. And former IRS and Justice Department officials have separately called this audit immunity, quote, breathtakingly improper, warning that it would create two tax codes, one for the Trump family and one for all the rest of us. My amendment adds a single duty to the very task list that this bill gives these new data scientists: review for accuracy and support the audit of any return filed by the president, any immediate relative or entity. My colleagues say they want to invest in the agency.
I'm offering them the chance to make the investment mean something, because there's no sense in building the capability and then handcuffing it to spare Trump, the one taxpayer with the most to hide. If we believe in this workforce, let it do its work. Let it do its job without a special exemption for the powerful. I yield back and urge the adoption of the amendment.
Jason Smith
Does anyone wish to strike the last word on the amendment? Seen none, the question is on agreeing to the amendment offered by Mr. Doggett. The clerk will call the roll.
Mr. Buchanan.
Vern Buchanan
Mr. Buchanan, no. Mr. Smith of Nebraska. Mr. Smith of Nebraska, no. Mr. Kelly. Mr. Kelly, no.
Mr. Schweikert. Mr. Schweikert, no. Mr. LaHood. Mr. Arrington.
Chairman Smith, no.
Jason Smith
The clerk will report the vote. There being 16 yeses and 23 nos, the amendment is not agreed to. Are there additional amendments to the amendment in the nature of a substitute? Seeing none, the question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye.
Aye.
Vern Buchanan
Mr. Chairman, I move the committee favorably report H.R. 7972 as amended to the House of Representatives.
Mr. Buchanan? Mr. Buchanan, yes. Mr. Smith of Nebraska? Mr. Smith of Nebraska, yes. Mr. Kelly?
Mr. Kelly, yes. Mr. Schweikert? Mr. Schweikert, yes. Mr. LaHood? Mr. Arrington?
Mr. Arrington, yes. Mr. Estes?
Chairman Smith? Yes. Chairman Smith, yes.
Jason Smith
There being 24 ayes and 16 noes, the motion is agreed to and H.R. 7972 as amended is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 7972 and that members have two additional days to file with the committee clerk supplemental additional dissenting or minority views. Our next order of business is H.R. 9504, the Tax-Exempt Hospital Transparency Act, introduced by Representative Murphy. Tax-exempt status is a privilege, not a right, and I appreciate that Dr. Murphy, someone who knows a thing or two about how hospitals operate, is asking some of our largest healthcare empires in this country, our nonprofit hospitals, to be more transparent about what and where they spend their money while enjoying tens of billions of dollars in tax benefits. I appreciate Dr. Murphy bringing to this effort his expertise and experience as we continue to work to lower healthcare costs for families across this country.
I urge my colleagues to support this legislation and I'm pleased to recognize the gentleman from North Carolina, Mr. Murphy, for an opening statement.
Gregory Murphy
Thank you, Mr. Chairman. Transparency in government or in any entity that the taxpayer pay for, pays for is always a good thing. Transparency builds trust, openness is the cornerstone of public confidence, and public scrutiny is a powerful safeguard. There's been growing concern with certain nonprofit hospital spending practices that everything from, and let me just say, let me just reiterate certain nonprofit hospitals, not everyone. And this is where it's very, very important.
Everything from lavish executive spending compensation, overseas investments to advertising on sports stadiums and questionable charity care. Just remind my colleagues on this committee that the majority of most hospital funds come from the US taxpayer and accountability is the function, is one of the functions of Congress. With burgeoning hospital consolidation and healthcare costs rising for all Americans, taxpayers and patients have a right to know that their hospital, which receives generous subsidies and tax benefits from the federal government, and how they are spending their money. There is something, there is simply nothing wrong with that. As I've always said, the greatest disinfectant is sunlight.
As we are all told in grade school, show your work. There's nothing wrong with that. I believe we've done a good job of striking the right balance with this policy by ensuring the requirements set forth are not overly burdensome, yet at the same time providing policymakers and the public with the necessary information to make informed decisions about whether or not certain hospitals are judiciously using an ever-increasingly scare tax, scare taxpayer dollars. As I've said before, and I mean this very, very strongly, I've been an equal opportunity offender when it comes to healthcare and I'll call out anyone of those in the medical community, any sector, who are not being good stewards of the taxpayer dollar or patient premiums. While the majority of nonprofit hospitals are being very good stewards, there are some that are not.
The American taxpayer needs to know the difference. At the same time, I do believe that we should require the same of our health insurers to see how they are using and abusing something called the medical loss ratio. But Mr. Chairman, we'll wait and save that investigation for another day in what I hope will be the not too distant future. I want to thank his, thank our chairman for his interest and support for this policy and I look forward to continuing our work together providing much needed reforms in healthcare. With that, I'll yield back.
Richard Neal
Thank you. First, let's talk about what this bill doesn't do. It doesn't lower hospital costs, it doesn't reduce drug prices, and it doesn't address the affordability crisis, and it doesn't help hospitals that are struggling to keep the doors open succeed. Instead, it piles on duplicative reporting requirements with no clear benefit. Once again, our colleagues are invoking the healthcare transparency as some sort of cure-all as though more paperwork will somehow undo the damage that they're doing to our healthcare system with their big ugly tax bill scheduled to kick in after the November elections.
It was in that bill that more than one trillion dollars was cut out of the healthcare system, all to pay for tax cuts for billionaires. The result so far, eight million Americans have lost their health coverage, countless more are facing increased premium costs, higher deductibles, and skimpier coverage. That isn't just a threat to one's healthcare, it's a threat to our entire system. The harm doesn't discriminate. I guarantee that most members on this dais have one facility back home that is now struggling to stay afloat in the face of these cuts and cost shifts.
They're cutting mental healthcare, maternity care, cancer care, in an effort just to keep doors open.
I hear from my hospitals weekly about the strain they are under. The last thing they need is another unfunded reporting mandate. They should be investing in patient care, not more compliance staff. This bill makes good on Republicans' long-standing desire to undermine and disrupt the 340B program. By cooking the books on reporting requirements, this bill will make it seem like hospitals are scamming the program and purposefully omitting any data collection on how the facilities are using 340B dollars.
Rather than lowering drug prices, our Republican colleagues are going to increase them and the burden to penalize those who already are going to have limited access. It's no surprise that Pharma is supporting this bill. The bill is a stalking horse for our Republican colleagues because this indeed in the long run will raise prices. A distraction from the real issues hospitals in our communities are facing and the technical merits because there really are none. Americans are about to feel the Republican big ugly bill right after the November election.
This is an effort to get out front of the calamity that their legislation has caused. American families and the hospitals that care for them deserve better. I yield back my time.
Jason Smith
The committee will now proceed to consideration of H.R. 9504, the Tax-Exempt Hospital Transparency Act. Without objection, the measure will be considered as read and open for amendment at any point. At this time, I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. Without objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for the purpose of amendment. I will now turn to Tom Barthold, Chief of Staff for the Joint Committee on Taxation, to provide a technical description of the amendment in the nature of a substitute with an emphasis on the changes made since introduction.
I ask that members hold their questions until after his presentation.
Tom Barthold
Mr. Chairman, the members of the committee have before them two Joint Committee documents, JCX-26 and JCX-33, which describe H.R. 9504 and your amendment in the nature of a substitute. Your amendment in the nature of a substitute makes certain clerical changes to the underlying legislation, and the proposal itself requires that all tax-exempt hospital organizations report additional information on their Form 990. This information is generally subject to public disclosure. In addition, the legislation specifically defines two additional specific classes of tax-exempt hospital organization. It defines a large tax-exempt hospital organization.
This would be an organization that is not a critical access hospital, not a rural emergency hospital, and has more than 100 inpatient beds. It would also define a high-revenue tax-exempt hospital organization. A high-revenue tax-exempt organization has net patient revenue in excess of $100 million annually. For these two classes of tax-exempt hospital organization, there are requirements for additional and more detailed information. The proposal also provides that for a one-year period that begins three years after the date of enactment of this legislation, that the Government Accountability Office would study and report to the Ways and Means Committee and the Senate Committee on Finance the additional cost to the Treasury for administering these new requirements, the additional cost to the hospital organizations to comply with these requirements, and in the case of the 25 largest revenue tax-exempt hospital organizations, it would require the Government Accountability Office to calculate a hypothetical income tax liability that would arise were those organizations subject to the income tax.
The proposal would be effective on the date of enactment, and the staff of the Joint Committee on Taxation has estimated that the effect on government revenues during the fiscal year periods of 2027 through 2036 would be negligible. That concludes my brief description of this legislation. I'd be happy to answer any questions that the members might have.
Speaker 41
Thank you, Mr. Barthold. Are there members with technical questions? Seeing none, are there members wishing to strike the last word? Mr. Smucker is recognized.
Lloyd Smucker
Thank you, Mr. Chairman. Thanks for bringing up this important bill today, and I'd like to voice my strong support for this legislation. I appreciate Dr. Murphy's leadership on it, and I'm proud to be an original co-sponsor because I think this is an important bill in the context of the special status that we grant nonprofits, which we've done for a long time from the IRS code, from the tax code. We grant nonprofit status and forgiveness on taxes in exchange for a public benefit provided by that organization. We've seen over the past few decades a large growth in the number of nonprofit organizations.
They are now about 5% of the total GDP economic activity, employ over 12 million individuals. And so I think it's incumbent on this committee to revisit that relationship and that benefit on a periodic basis, and particularly as it relates to nonprofit hospitals. Again, we have provided enormous tax advantages in exchange for an expectation that they'll provide meaningful charitable benefits to their communities. And I'll repeat what Mr. Murphy had said. Many hospitals do that, particularly rural hospitals, critical access hospitals, safety net providers.
But we have to also look at the total landscape and realize that it looks very different than it did when many of these tax policies were created. We now have large nonprofit health systems that have become very sophisticated multi-billion dollar enterprises. We've heard they own investment portfolios. They're certainly acquiring many physician practices. They advertise extensively.
And in many cases, they operate very similarly to their for-profit competitors. A few weeks ago at the hearing here with multiple hospital CEOs, I asked the CEO of the nation's largest for-profit hospital system whether he believed that there was a meaningful difference, operational difference, between for-profits and some of the nonprofit hospital systems that were represented there. And his answer was really simple. It was just the short answer is no. He doesn't see a meaningful difference.
And so if taxpayers are providing more than 37 billion annually in tax benefits to nonprofit hospitals, and roughly it'd be roughly 260 over the next decade, Congress has an obligation to understand what taxpayers are receiving in return. And I think that's exactly what this bill does. To be clear, it doesn't revoke anyone's tax-exempt status.
It simply asks hospitals to show their work. It requires more meaningful reporting on charity care, financial assistance, spending to address community health needs, advertising, health service lines, participation in 340B program, with reporting broken down by individual hospital facilities instead of massive system-wide aggregates. And so this in my view should really shouldn't be this is transparency that shouldn't be controversial. If nonprofit hospitals are delivering extraordinary value to their communities, then this legislation will help them demonstrate that. And if taxpayers are subsidizing activities that do not advance charitable care, then Congress should know that as well.
I think good policy begins with transparency and good information. So I again thank Mr. Murphy for leading this effort. I urge my colleagues to support this bill and I yield back, Mr. Chairman.
Mike Thompson
Thank you, Mr. Chairman. I move to strike the last word. Mr. Chairman, I am deeply concerned about this legislation. Too many Americans are already struggling to access and afford basic healthcare. That challenge is even more acute in rural communities like the ones that I represent, where every hospital is a nonprofit.
In many of these communities, the local nonprofit hospital is the only hospital for miles. It's not just a healthcare provider, it's an economic anchor and a lifeline during emergencies. At a time when rural hospitals are already facing tremendous financial pressure from rising costs and reduction in federal healthcare funding, which will only be exacerbated by HR 1, the big ugly bill, we should be looking for ways to strengthen them, not create new burdens that could further jeopardize their future and their service to our communities. While this bill is framed as a reporting requirement, and I might add that my Republican colleagues are increasing paperwork burden on these hospitals and adding yet another unfunded mandate, I'm concerned it could become the first step towards challenging the tax exempt status of nonprofit hospitals. That would place additional strain on providers that are already operating on thin margins and make it even harder for rural communities to maintain access to care.
We should be focused on preserving access to quality, affordable healthcare, especially in communities that have the fewest alternatives. For those reasons, I urge a no vote on this piece of legislation and I yield back, Mr. Chairman.
Aaron Bean
Thank you very much, Mr. Chairman. Good morning to you. I move to strike the last word. Good morning, committee. It was going down exactly 250 years ago today, right up the road in Philadelphia.
Have you thought about it? What they were doing? They were in the room, locked in the room, debating Jefferson's declaration. Lots of amendments were being discussed. You can only imagine the great thinkers of the day debating should we go forward with declaring independence.
We have two things today in this room they don't have. One, we have air conditioning.
Speaker 46
I think we're all grateful for that because I know it was hot in Philadelphia. We also have the five-minute clock. I don't if they had a five-minute clock or not, probably not the one that's staring me in the face right now. But in this room often limits our ability to debate and engage in ideas at a great level. And we hopefully solve or at least attempt to solve big problems for our country and challenges.
We have met after hours trying to build consensus, particularly in healthcare. The healthcare arena I've done some after hours, thanks to Chairman Smith we've been able to use this room. We've gotten rid of the clock and brought in thinkers of healthcare and industry leaders to try to come together and build consensus. If we're going to fix the deficit, which we have to, we have to solve healthcare. And we need to improve healthcare, put patients first of how that goes.
And we've had some great debate. We've had great debate in the pharma executives and arena. We need them healthy. We need them competitive. We need to keep our country on the cutting edge of technology of how they design our medications.
We need managed care to help manage the patient and put the patient first and bring value to the taxpayers. And we need providers like hospitals that are able to give us all that we want, the absolute best care, patient-centered. And so all that being said, the consensus is still being formed right now. I support Dr. Murphy and if you want to watch one of the great five-minute debates of his five minutes of coming in and really saying that the system is broken, we need to do better. I support him.
I know his heart is there. I believe the right answer is to vote yes on this bill. It advances the cause of moving forward. However, I just feel like the consensus is still not there. I've heard from many hospitals in Florida, several in my region that says, wait, we thought we were talking.
We thought we were having a discussion of how we can improve healthcare and continue to go on. Transparency is great. It also has some ways that it changes how we fund hospitals. So I want to say vote yes on the bill, but I and I know he is, I'm already looking at him, he's in because nobody is scared of the debate more than Dr. Murphy when it comes to healthcare. I appreciate that very much.
Florida hospitals, you know, we're still struggling. We are already extremely efficient and then some of the caps of what we've limited of their growth has brought great concern. But yet we support transparency. We support the debate of going forward. So vote yes.
Thank you for being open, your open, you came and spoke, Dr. Murphy, at one of the consensus. You were very lively and energized the room. So with that, we're voting yes today, but I just hope that this committee will continue to debate so we can have a product that moves America forward. Happy birthday America, yield back.
Speaker 45
Gentleman yields back. I now recognize Mr. Davis for five minutes to strike the last word.
Danny Davis
Thank you, Mr. Chairman. I move to strike the last word. And I certainly appreciate Dr. Murphy's skill, passion, and interest in healthcare and healthcare delivery. But one year after Donald Trump and the Republicans cut over one trillion dollars out of healthcare to fund tax cuts for billionaires and big businesses, millions of people have lost health insurance.
Millions more crushed by exploding healthcare costs. Hospitals are closing and cutting services and staff. People face the impossible choice between seeing a doctor, paying rent, eating, or getting gasoline. Yet the Republican leadership is moving a bill that does absolutely nothing, nothing to lower health costs or stabilize hospitals. More than 175,000 Illinoisans have lost their Medicaid, CHIP, or ACA coverage after the GOP's big ugly bill.
Premiums for Illinoisans receiving ACA tax cuts increased by an average of 144% this year. Illinois hospitals alone are expected to lose just under $31.3 billion annually, with 26 healthcare providers at risk. At a time when we should be helping hospitals, after we cut $1 trillion from healthcare, the GOP solution is a bill with additional paperwork, rather than tax credits to help people buy health insurance, and rather than funding to help hospitals hire health professionals to care for people. I just happen to have more hospital beds in my district than any other member of Congress. My professional work background includes working with health centers to provide low-cost healthcare to people in need.
I co-led the bipartisan Rural and Underserved Health Task Force, where we recognized that rural and underserved hospitals face similar challenges as urban hospitals. This bill is an offensive answer to the urgent healthcare crisis facing Americans. The bill does absolutely nothing to lower costs for patients. It does nothing to help hospitals provide low-cost care. It does nothing to push Pharma to lower drug costs.
The bill rejects the needs of hospitals in urban areas by carving out protections for certain rural hospitals, ignoring the very work done bipartisanly by members of this committee. It unfairly targets hospitals solely on the basis of their size, without accounting for their unique cost structures, especially for academic health systems and teaching hospitals who invest in their communities and ensure access to care for patients with complex, highly acute care needs, such as transplantation, Level 1 trauma care, neonatal intensive care, and burn care. These health systems and hospitals train tomorrow's healthcare workforce and invest in medical research.
Rather than helping health systems and hospitals focus on treating patients, train future healthcare providers, conduct cutting-edge research, and serve their communities, this bill forces these health entities to divert critical funding to administratively burdensome requirements. So I strongly oppose the Tax-Exempt Hospital Transparency Act for its abject failure to meet the healthcare crisis facing America's hospitals and communities. And Mr. Chairman, I ask unanimous consent to submit to the record statements by the American Hospital Association, the Association of American Medical Colleges, and America's Essential Hospitals voicing their concerns about the Tax-Exempt Hospital Transparency Act, and I yield back.
Without objection, so ordered. The gentleman yields back. I recognize to strike the last word, Ms. Sanchez.
Linda Sánchez
Thank you, Mr. Chairman. I support the goal of added transparency for nonprofit hospitals and large health systems. However, this legislation before us is unvetted. There is currently no singular source of public data on hospital costs and finances. Medicare cost reports are publicly accessible but may be misrepresented or inconsistently reported.
Audited financial statements are not universally available and often only completed on the system level. And private nonprofit hospitals or health systems can have their 990s audited by the IRS. However, multiple investigations have found major inconsistencies and errors in these forms. My colleagues across the aisle and I can agree, 340B participants now spend less on uncompensated care compared to earlier 340B participants. And unlike non-hospital covered entities, hospitals are not required to reinvest their 340B savings.
And that's why I support the intent of this bill. We do need transparency, and I think it would be good for the public to know which specific drugs hospitals acquire under this program. Hospitals also currently do not need to report 340B drug volume or revenue and how they use this revenue, including whether they fund safety net services. I think there is much that we can work together on to improve hospital transparency, but unfortunately, this bill only adds a reporting burden and compliance costs for hospitals while failing to improve our system. And I'm sure we all have heard how much reporting burdens and compliance burdens eat into the ability of hospital systems to stay in service.
This bill ultimately fails to create a solution to ensure that 340B savings are being reinvested into the communities that they are intended to serve. We need to hold some of these largely taxpayer-funded hospital systems accountable, but this effort makes clear to me that the Republicans are only piling on to the one trillion dollars in healthcare cuts they passed almost one year ago today. And for these reasons, I cannot support this bill. I urge a no vote, and I yield back the balance of my time.
I recognize Mr. Doggett to strike the last word.
Lloyd Doggett
Well, Big Pharma strikes again today. Transparency is an important goal, enabling enforcement of our federal rules, assuring reasonable spending, and allowing the Congress to consider reforms. But when reporting requirements are duplicative, vague, or near impossible to interpret, as is true with this bill, they only serve to provide more confusion and room for error. And that's what we have in this rushed bill with cherry-picked entities and data to create a misleading narrative about the 340B program, one of Big Pharma's favorite scapegoats. Republicans have long opposed doing anything to restrain Big Pharma monopoly prices, instead working to undo the work that Democrats did to establish an overly narrow price negotiation program.
Now, in another gift to the industry, which has twice as many lobbyists as there are members of Congress, the nonprofit hospitals are being targeted. They are dealing with the most vulnerable neighbors in our communities, and they're getting targeted instead of Big Pharma, which is charging Americans the highest prices for pharmaceuticals in the world and remains one of the most profitable industries in America. Big Pharma clearly has a stranglehold on this Congress. And while we still have a little transparency into how much manufacturers are contributing to the research and development of new treatments and cures versus the simple marketing and repackaging of older drugs, this bill demands that hospitals report. To be clear on that, we don't know enough about what Big Pharma is doing and why it is devoting more to advertising than to helping us get new cures, but this bill is demanding great specificity from nonprofits and asking that they report on what value they derive from the 340B pricing discounts, using an inaccurate comparative reference price that misleads and inflates what they're actually receiving.
Requiring reporting on what discounts hospitals collect through 340B was based on commercial insurance prices that have no bearing on what these hospitals actually receive through much lower group-negotiated prices. This requirement in the bill serves only to exaggerate the claim that 340B is a cash cow for nonprofit hospitals. Meanwhile, the hospitals are rightfully required to use the modest funds from 340B discounts to improve care to the underserved. Big Pharma has never been required to reinvest its unreasonable profits into R&D or lower prices or any other public benefit. The 340B program is not perfect, and I would support some reforms, particularly with transparency that I think could be improved.
But inaccurate analysis only undermines an important safety net program supporting our low-income and uninsured consumers. And unfortunately, that's a population of Americans that has grown substantially because of Republican sabotage of the affordable Obamacare program and trying to turn it into Trump nothing-care for millions of Americans. Indeed, reports out this week indicate that more than one of every 10 Americans who has relied on the marketplace to get their health insurance, and they did that last year, they no longer have it this year because of Republican policy. So I strongly urge my colleagues to reject this measure, and I yield back.
Terri Sewell
Just one year ago, Republicans cut nearly $1 trillion from our healthcare system in order to give tax breaks to the wealthy, and hospitals are carrying much of that burden. Now, on top of those cuts, this bill would impose duplicative and burdensome reporting requirements on hospitals that are already struggling to keep their doors open. While this bill correctly recognizes that these requirements could be more burdensome for critical access hospitals and rural emergency hospitals, the bill fails to recognize that safety net and DSH hospitals face many of those same financial pressures.
As we speak, Jackson Hospital, just outside of my district in Montgomery, Alabama, is facing immediate closure. Under this bill, hospitals like Jackson would likely have to use limited resources to hire more accountants and compliance officers to navigate the red tape in this bill, instead of hiring new nurses and doctors or keeping their lights on. We should be making it easier for hospitals to keep their doors open, not harder. Since Republicans refused to extend the ACA subsidies last year, over 22,000 Alabamians that once had healthcare have lost their healthcare. To add insult to injury, members received this bill late last night, just 26 hours before today's markup.
That is simply not enough time for members or stakeholders to fully review legislation with consequences as significant as these. Issues as serious as these require a thoughtful legislative process and meaningful stakeholder engagement. I support efforts to increase transparency and lower healthcare costs, but this bill falls far short of that standard, and I look forward to working with my colleagues across the aisle on a better approach, but I must vote no on this current bill, and I yield back the balance of my time.
Speaker 51
For the members to strike the last word, Ms. Chu is recognized for five minutes.
Judy Chu
I move to strike the last word. I have to say, I find today's markup incredibly frustrating. Americans are facing a healthcare affordability crisis across this country. Families are making impossible choices every day. They are skipping prescriptions because they can't afford them.
They're delaying doctor's appointments because they're worried about the bill. Millions of Americans are facing higher premiums, higher out-of-pocket costs, and because of Republican policies, many are losing their healthcare altogether. And yet, what is this committee doing? We are debating whether nonprofit hospitals should provide additional information on an IRS form. Nonprofit hospitals already submit extensive information to the IRS, to CMS, and to the public.
If Congress believes additional information is necessary, then we should be able to answer a simple question: how will any of this lower costs for patients? Does it lower the cost of a single prescription drug, reduce a family's insurance premium, lower a hospital bill? Does it help a single American keep their healthcare coverage? This legislation does none of those things. At a moment when hospitals are preparing to care for more uninsured patients and communities are struggling to keep healthcare within reach, we're asking those hospitals to spend more time complying with new federal reporting requirements.
This committee has the authority to tackle the real drivers of healthcare costs. We should be lowering prescription drug prices. We should be strengthening Medicare's ability to negotiate lower prices. We could be expanding access to affordable coverage. We could be helping families who are choosing between filling a prescription and paying their rent.
That's what's so disappointing about today's markup. Every hour this committee spends on legislation that doesn't lower healthcare costs is an hour we're not spending helping families who are worried about losing their coverage, affording their prescriptions, or paying their medical bills. We must do better than this. I yield back.
Gregory Murphy
Thank you, Mr. Chairman. I appreciate all my Democratic colleagues' comments.
Actually, it seems like they support it more than they don't like it, but they're just afraid to like it because it's Republican. You know, I find this very interesting. I appreciate all the different constituencies that were involved in writing and rewriting this bill, especially the American Hospital Association, because a lot of the carve-outs, a lot of things that we did were at their suggestions and their requests, which is great. I find it troublesome, actually really troublesome, given the amount of fraud that's now being found out around the country, what's gone on in Minnesota, what's happened in Los Angeles, and all the different things that we actually are going to have folks that vote against transparency. This is—there's no reason that—these are American taxpayer dollars.
And I gotta tell you, probably the only person on the dais here that's been involved in an active role being in hospital administration when I was chief of staff is—I had a great hospital system, a great nonprofit hospital system that does a fantastic job. But we have some bad actors. And unless—as I said in my opening comments, as part of our job is oversight. And when we have bad actors—you guys talk about the billionaires and all this other stuff—look at some of the nonprofit CEO compensation that goes around this country. This is a little bit disconcerting that you guys are saying one thing and then attacking it in the same breath.
We have some real problems. And if we're not going to be good stewards of the taxpayer dollars, then we just need to walk away. And by the way, all this burdensome stuff, guys, they have the information already. And by the way, this is nonprofit, non-taxed. All we're asking them to do is put it on the tax form.
Put it on the tax form. And again, I'll say this again and again and again: it's very simple, it's fourth-grade stuff. Show your work. Let us all be reassured that the good actors are doing the good things. And if there are bad actors, they're the ones who are raising probably the most alarm.
They're the ones who are probably raising the most alarm. And given the amount of quote effort, I would submit this'll take probably about six or eight hours from a hospital system to just move one data from the other, maybe a day or two, but boy, it surely's not going to do anything to take down huge massive CEO compensations. So, you know, I know this legislation does not save the whales. It does not do everything that is perfect and they want it to do. I don't know what the hell it has to do with Big Pharma.
This has nothing to do with that. I don't know where that argument comes from. This is merely about transparency. And we want transparency in everything. We went after insurance companies.
I'm happy for us to go after Big Pharma. Look, we talk about drug prices. Thank God President Trump has done what he's done to lower drug prices. It's a big deal for the average American. And if nonprofits—we have some bad actors that are jacking up prices to do things that they shouldn't be doing, that's something the American public needs to know.
That will lower prices. You know, hospital bills can be a lot. Things cost a lot in hospitals. But transparency is never a bad thing. A lot of fraud going on.
We have a lot of carve-outs for those individual hospitals that need it. But this is long overdue as we look at our entire healthcare system because people cannot afford it. And any avenue that we do should be a bipartisan effort to look at where we're spending money where we should not be spending money. And if it is in hospitals that are doing things, even if in 340B program, which we don't have jurisdiction, but why not spread a little sunlight on that? Because there are some problems with the 340B program.
There are people who are abusing the 340B program in the country. So look, it's very easy. Show your work. And sunlight's the best disinfectant. And let's just let the American people know what's going on in a place where they have tax privilege status.
With that, Mr. Chairman, I'll yield back.
Speaker 41
Thank you. Any others wishing to strike the last word? Seeing none, are there any amendments to the amendment in the nature of a substitute? Mr. Beyer.
Okay.
Speaker 54
Point of order has been reserved. The clerk will distribute the amendment and I ask the gentleman to suspend while the clerk distributes. Gentleman may proceed.
Donald Beyer
Thank you, Mr. Chairman. Mr. Chairman, this amendment is simple. It would exempt from these new administrative burdens any hospital that's facing funding or revenue cuts from the OBBBA. I understand and share the appetite to get more data on the community benefits that hospitals provide. I'm very sympathetic to what Dr. Murphy is trying to do.
I too have been distraught at leaders of the nonprofit hospitals making three and six million dollars a year. But tax-exempt status comes with concrete responsibilities to provide care to the communities that rely on these hospitals, but it has to be done in a way that avoids unnecessarily adding to hospitals' administrative costs. And it cannot add to the severe challenges that my Republican friends have already imposed on these same hospitals. Last year, Congressional Republicans and the White House cut one trillion dollars from Medicaid. Those cuts, in addition to denying healthcare coverage to millions of people, will cut funding for many of our nation's most vulnerable hospitals.
We're already seeing this severe impact on rural hospitals. A Harvard study found that 85% of the hospitals most threatened by the Republican healthcare cuts are actually located in urban areas. And those same hospitals are also facing new indirect costs from the big bill. We've seen millions of people lose healthcare coverage over the past year, but they don't stop getting sick because they don't have insurance. They also don't stop going to the hospital and receiving care when they're there.
Some hospitals are in financial situations where they can absorb that additional cost, but many are not. Adding new administrative burdens and red tape is only going to add to the challenges for all those hospitals. Implementing this bill will require them to spend more money that does not go directly to patient care. My colleagues understand that. That's why they've written in a narrow carve-out already for some vulnerable hospitals.
But these are not the only hospitals that are facing challenges. So my amendment is a common-sense solution to avoiding some more administrative costs to our most vulnerable hospitals. We have to be very careful when we propose requirements like this that the cost to implement them doesn't translate to hospital closures or get transferred to patients' hospital bills. We can't risk further closures nor higher bills for patients. And I urge my colleagues to vote yes.
Speaker 41
Thank you, Mr. Beyer. I do want to present my objection to the amendment. I want to remind folks that our legislation invested 50 billion dollars in rural healthcare through the Working Families Tax Cuts bill. I realize that the amendment is probably more of a messaging amendment than anything else, but on a technical basis, virtually impossible to enforce or detect what would trigger various actions.
And myself, I represent a significantly rural constituency, many critical access hospitals, and I appreciate their communication on details and concerns, and we want to move forward in a productive fashion, but certainly I would need to, I will need to object to the amendment here and urge a no vote. Thank you. Anyone wishing to strike the last word on the amendment, speak on the amendment? Seeing none. Ms. Moore is recognized for five minutes.
Move to strike the last word. I'd like to yield my time to Mr. Beyer.
Donald Beyer
Thank you, Congresswoman Moore. The only thing I'd say is this bill already exempts rural hospitals. What this amendment is trying to do is to get at the urban hospitals and the suburban hospitals hard hit by the OBBA that are not exempted in this bill. So the $50 billion rural healthcare thing, I approve, I'm glad we've done that for the rural hospitals. Those are not the ones at risk from Dr. Murphy's bill.
I yield back.
Speaker 41
Thank you. Does anyone else wish to speak on the amendment and strike the last word? Seeing none, the question is on agreeing to the amendment offered by Mr. Beyer. All those in favor signify by saying yes. Aye.
Those opposed no. No. In the opinion of the chair, the noes have it. The clerk will call the roll.
Vern Buchanan
Mr. Buchanan. No. Mr. Buchanan, no. Mr. Smith of Nebraska. No.
Mr. Smith of Nebraska, no. Mr. Kelly. Mr. Kelly, no. Mr. Schweikert. Mr. Schweikert, no.
Mr. LaHood. Mr. Arrington. Mr. Estes. Mr. Estes, no.
Call for the record.
Speaker 41
The ayes being 16, the noes being 21, the amendment is not adopted. Are there additional amendments? Ms. Chu.
Mr. Chair, I have an amendment at the desk.
Speaker 57
Mr. Chairman, I reserve a point of order. Point of order has been reserved. If the gentlelady will suspend while the amendment is being distributed. The gentlelady may proceed.
Judy Chu
Mr. Chair, if this committee is truly interested in transparency, then let's be transparent about the biggest driver of prescription drug costs in America, the prices charged by pharmaceutical companies. My amendment is simple. This bill requires hospitals to report information about the savings they receive through the 340B.
Speaker 55
Would the member suspend, please? I would ask all those present to take your conversations out in the hallway out of respect for the conversation happening and especially the introducer of the amendment, Ms. Chu. Ms. Chu, you may proceed.
Judy Chu
This bill requires hospitals to report information about the savings they receive through the 340B program. My amendment simply asks the Secretary to use that same information to calculate how much those hospitals would have saved if pharmaceutical manufacturers charged Americans the same prices paid in other developed countries under a most favored nation benchmark. This is information Congress should have because if we're going to scrutinize the discounts hospitals receive, we should also scrutinize the prices that make those discounts necessary in the first place.
The reality is that Americans pay three to four times more for many prescription drugs than patients in other developed countries. That's why programs like 340B are so important. Safety net hospitals rely on those discounts to stretch limited resources and continue serving their communities. But instead of doing anything to lower drug prices, this committee is asking hospitals to fill out more paperwork. Democrats took historic action by allowing Medicare to negotiate lower prescription drug prices, capping insulin prices at $35 for Medicare enrollees, and lowering out-of-pocket healthcare costs.
But we did it without a single Republican vote. We know there's more work to do. This amendment helps illustrate exactly why. It doesn't require hospitals to collect any new information. It doesn't create any new reporting burden.
It simply asks Treasury to calculate how much hospitals and the patients they serve could have saved if Americans paid the same fair prices that our peer nations pay for prescription drugs. If this committee truly wants transparency, then let's have transparency about the cost of America's sky-high drug prices. I urge adoption of my amendment and I yield back.
Speaker 56
Thank you. Are those wishing to strike the last word speaking to the amendment? Dr. Murphy is recognized for five minutes.
Gregory Murphy
Yeah, thank you. Yeah, again, I'm going to say again like I've said a couple times before, the hospitals for the original bill are not making any new data, they're just putting it onto their tax form. And the issue with the 340B program is not much how hospitals is primarily how much hospitals are charging patients, not how much they're paying for it. I think it's kind of interesting. I think it's kind of nice actually that we want to talk about, you know, what the drug prices are charged in other countries because Americans are paying way too much for drugs and, you know, I think the president's made some inroads on that.
So, you know, I applaud my colleague for that. But again, let's get back to the issue of the 340B program. It's about how much they're charging the patients, not how much they're paying for the drug. So I would just say, hey, happy to work on this, but I don't think this is ready for prime time as far as what this bill goes. Yield back.
Speaker 41
Thank you. Anyone else wish to strike the last word? Seeing none, the question is on agreeing to the amendment offered by Ms. Chu. All those in favor signify by saying yes. Aye.
All those opposed say no. No. In the opinion of the chair, the noes have it. Clerk call the roll.
Mr. Buchanan.
Speaker 27
Mr. Schweikert, no. Mr. LaHood. Mr. Arrington.
Chairman Smith. No. Chairman Smith, no.
Clerk will record.
Speaker 41
There being 16 ayes and 21 nays, the amendment is not adopted. Are there additional amendments? Point of order has been reserved. The gentleman will suspend while the amendment is being distributed. You may proceed.
Lloyd Doggett
Thank you very much. Mr. Chairman, this bill and the Republican majority are today targeting tax-exempt hospitals. What they should be concerned with is a tax-exempt president. My amendment is really straightforward. It provides that this bill shall not take effect until two sets, two acts of self-dealing by the administration are undone: the president's $1.8 billion slush fund and the secret addendum that grants him and his family immunity from IRS audit.
I'm not against transparency. This bill significantly expands the reporting requirements for hospitals and I understand that, but it's important that we address the real issue here about President Trump. You know, it's interesting we've had within the last day or two a financial disclosure statement of $2.2 billion that the president's earned apparently last year while he served as our commander in chief. What those stories don't reveal is whether he's going to pay a dime of taxes on those earnings. We know that in a number of prior years, he had profitable operations and paid $750 in taxes two years in a row.
And in another year, he didn't pay a dime. That's why he was under audit. And so we know of the slush fund here that it was one negotiated with a man who was recently his criminal defense attorney. And that second in addition to the slush fund is his immunity agreement. Now, he brought a $10 billion lawsuit against himself over the fact that there was disclosure of some of his tax returns.
That was done by a government contractor named Charles Littlejohn, who unlawfully disclosed the tax returns of thousands of Americans, including the president's. It was wrong. And when other victims of that same leak sued, the government's lawyers argued that the IRS was not liable precisely because Littlejohn was a contractor, not an employee of the IRS. Also of note is the fact that all this occurred under President Trump's administration during his first term of office. It was his IRS that was in charge.
Yet somehow out of that case about a contractor's leak, the president's former lawyer produced an addendum barring the IRS from ever auditing or pursuing the president or his family for returns they file. And that would include any return that they filed on that $2.2 billion from last year.
For years, the president told the American people he just couldn't release his returns because they were under audit. That was a lie. Nothing in the law prevents any taxpayer from releasing a return under audit, as Richard Nixon did. Every president for a half a century has released returns. And under our Democratic majority, this committee investigated whether the IRS was actually auditing the president, and we learned that though there is a mandatory presidential audit program in law after Richard Nixon's violations, we learned that there was one partially completed audit and that in four years of the Trump presidency, the law was basically ignored.
Before the president became... came into office, an audit was already underway on questionable claims he had made dating back to 2010, claims that involve millions of dollars. It is that audit that the president would have ended through this deal with his former criminal defense lawyer. The New York Times has now reported that it may be worth $100 million, but you know, just applying it to last year's earnings, the figure could jump significantly. $2.2 billion earned while he served as president. More than 600 million from the meme coin that he launched days before his second inauguration and 500 million from token sales by World Financial.
These are the very kind of novel transactions, complex self-dealing, digital tokens, licensing agreements that a serious IRS audit, which is required by law but it largely ignored during the first four years of the Trump presidency, that you need to scrutinize to see that this president is dealing with the American people correctly. No, we know he is a president who's boasted that he's smart by evading taxes. We know that the audit has not been completed in the past. It's time to assure that the indefensible does not occur, and I think the total failure today of Republican members to engage in debate to defend this deal shows that it is in fact totally indefensible. This amendment should be adopted quickly.
I yield back.
Speaker 41
Gentleman yields back. Does the gentleman insist on his point of order?
Speaker 41
Does the sponsor of the amendment wish to be heard on the point of order?
Lloyd Doggett
Mr. Speaker, I do... Mr. Chairman, I do. I understand the desire to avoid any evaluation of this president. The committee has a history of doing all it could to suppress access to any of his tax returns for a number of years during his first term of office. I think this amendment is directly germane to what's involved here, that we're talking about nonprofits, tax-exempt entities, and this president is seeking to be a tax-exempt entity. This is an opportunity to simply have an audit continue of all of the money that he has avoided paying as any other taxpayer would have to do.
And so certainly, I hope that the chair will not sustain a point of order that simply allows evading this committee's responsibility to hold the president accountable.
Speaker 41
Thank you to the gentleman. I am prepared to rule that the amendment is not germane and point of order is sustained. The amendment is not germane to the underlying resolution, and amendment is not germane if it makes the effectiveness of a bill contingent upon an unrelated event or determination. The condition imposed by this amendment is unrelated to the subject matter of the underlying resolution, which is specific to tax-exempt hospital reporting. Therefore, the amendment is not germane and the order stands.
Lloyd Doggett
Mr. Chairman, because it is such an important matter to the confidence of our tax system, I would appeal the ruling of the chair.
The gentleman moves to appeal the ruling of the chair.
Mr. Buchanan?
Speaker 27
Mr. Smith of Nebraska, yes. Mr. Kelly. Mr. Kelly, yes. Mr. Schweikert. Mr. LaHood.
Mr. Arrington. Mr. Estes.
Speaker 67
Mrs. Fischbach, yes. Mr. Moore. No. Oh, say yes. Yes, yes.
Mr. Moore, yes. Ms. Van Duyne.
Vern Buchanan
Mr. Panetta, no. Mr. Gomez. Mr. Horsford. Ms. Plaskett. Mr. Suozzi.
Mr. Schweikert.
Chairman Smith? Yes.
Clerk will record.
Speaker 41
There being 22 yeses and 15 noes, the motion is tabled. Are there additional amendments? Mr. Thompson. There's an amendment at the desk and there is a point of order has been reserved. Gentleman will suspend while the amendment is distributed.
Mr. Thompson's recognized for five minutes.
Mike Thompson
Thank you, Mr. Chairman. My amendment requires that this legislation not take effect until the American taxpayers are reimbursed for any taxpayer funds spent on the construction of the White House ballroom. Mr. Chairman, the American people are already facing an affordability crisis. Families are struggling to pay for groceries, struggling to fill up their gas tanks, struggling to afford housing, and to keep up with the cost of healthcare. At the same time, the federal government is spending hundreds of millions of dollars on a lavish ballroom at the White House.
We were told that this project would be privately funded, yet public reporting indicates that at least 300 million dollars in taxpayer funds have been already spent on this project. Mr. Chairman, I ask unanimous consent to enter into the record a Washington Post article detailing the use of taxpayer dollars for this project.
Without objection, so ordered.
Mike Thompson
Thank you, Mr. Chairman. Those taxpayer dollars should be helping lower costs for American families, not subsidizing an unnecessary, lavish ballroom. If this ballroom is truly being financed by private donations, then there should be no objection to reimbursing taxpayers and providing full transparency about who those donors are. Mr. Chairman, I urge my colleagues to support this amendment, and I yield back.
The gentleman yields back. Mr. Buchanan is recognized.
Vern Buchanan
I make a point of order against the amendment. The amendment is not germane to the underlying resolution and effective non-germane if it's made effectively of a bill contingent upon the unrelated events or determination. The condition imposed by this amendment is unrelated to the subject matter of the underlying resolution, which is specific to the tax-exempt hospital reporting. Therefore, the amendment is not germane, and I urge the chair to sustain the point of order.
Speaker 41
Does the sponsor of the amendment wish to be heard on the point of order? The gentleman is shocked. For the record. That's right. I am prepared to rule.
The amendment is not germane, and the point of order is sustained. The amendment is not in order. Are there additional amendments? Point of order has been reserved. Mr. Doggett, if you'll suspend while the amendment is being distributed.
The gentleman may proceed.
Lloyd Doggett
Thank you, Mr. Chairman. The Republican disastrous cuts to Medicaid are estimated to result in the closing or reduction in service of 446 hospitals across the country. They now offer a bill that once again targets the facilities in America that do the most to serve lower-income Americans. Republicans seem obsessed with tax-exempt organizations, except of course for the Trump organization. As to nonprofits, they've assailed organizations defending access to the ballot box, combating injustice, protecting our planet, and their latest target, facilities delivering healthcare to vulnerable families.
Meanwhile, Republicans ignore for-profit facilities and the private equity firms that are quickly gobbling up hospitals, physician practices, nursing homes where they've been devastating, and more. We need more transparency in healthcare, but this bill's oversight of the role of private equity is a missed opportunity. My amendment is simple. It simply ensures a more complete picture by requiring transparency into where our care dollars are going in private equity-owned facilities. These facilities have more than doubled in the last five years.
By 2024, private equity investments had ballooned to 104 billion dollars in a single year, with nearly a third of for-profit hospitals owned by private equity.
The result has been more debt, bankruptcies, closures, staff layoffs, and less quality care at a greater price. In 2023, more than 20% of healthcare bankruptcies were owned by private equity as short-term investments, and nearly 90% of health entities at high risk of default have been bought by private equity. This puts consumers at immense risk in communities that lose access to what is perhaps their only hospital or healthcare facility. Private equity is fueling consolidation, with a single firm owning half of physicians in 13% of metropolitan areas. This consolidation and misaligned incentives of private equity owners that are not focused on delivering quality healthcare is causing higher prices and declining quality.
One review of these PE-owned facilities found increased consumer cost in nine out of 10 cases and no decreases anywhere. Another study found that hospital prices increased by almost a third after private equity investment. Meanwhile, other studies have found private equity-owned hospitals and nursing homes have fewer staff, increased infections and patient falls, and higher mortality rates compared to their non-PE counterparts. In one of the most egregious examples, a private equity firm, Leonard Green, purchased Prospect Medical, a five-hospital system in Southern California. That deal was primarily financed by debt.
Through more debt-financed expansion, Prospect grew to 16 hospitals in five states, including my home state of Texas. Quality of care deteriorated, services were reduced, facilities closed as some communities lost their only hospital. Last year, Prospect filed for bankruptcy with $2.3 billion in debt, but the investors received over half a billion dollars in dividends and stock redemptions. It's just not right, it's not fair, and it deprives many communities of the healthcare they so desperately need. It's time to lift the hood on private equity.
My amendment would simply require the Secretary to promulgate regulations concerning PE ownership of health facilities, including information regarding debt payments, owned or leased property addresses, amounts paid for debt secured by real estate, and rental payments. I urge its adoption and yield back.
Kevin Hern
Thank you, Mr. Chairman. My Democratic colleagues are very concerned about private equity, and it has been widely reported year after year after year after year that tax-exempt hospitals actually spend less on charity than for-profit hospitals. In fact, the majority of nonprofit hospitals receive more taxpayer subsidies than they return in community benefits, according to the nonpartisan Lown Institute. And out of respect for my colleagues across the aisle, I won't mention this particular hospital by name, but one significantly sized hospital had a tax exemption estimated to be worth more than $400 million annually, yet it has invested a mere $90 million in its community, resulting in what the Lown Institute called a, quote, "fair share deficit," in-quote, of more than $325 million each year. My Democratic colleagues may have concerns about private equity, and I know many of my Republicans do as well, but nonprofit hospitals have escaped serious transparency for way too long, and I urge my colleagues to support this bill.
I yield back.
Thank you. Do others wish to strike the last word? Mr. Thompson.
Speaker 72
Mr. Chairman, I move to strike the last word and yield my time to Mr. Doggett.
Gentleman is recognized.
Lloyd Doggett
Well, I want to acknowledge Mr. Hern for his defense of private equity. There's no doubt that there are some circumstances where a private equity plays a private, a positive role, but it has not played a particularly positive role in the healthcare area.
And as I mentioned, the result has been higher cost, lower quality care, loss of hospitals that a community is relying on, and devastation for many nursing homes. But there's something also noteworthy about his presentation today. Republicans, every Republican on this committee has remained 100% silent about the whole concept of the tax-exempt presidency, about the corrupt audit deal that was negotiated between Trump and himself and his criminal defense lawyer. This is wrong. It undermines confidence in our entire tax system when the commander-in-chief can avoid any audit, any responsibility, and claim to be smart by evading taxes.
He may well have been granted an exemption on the $2.2 billion that he allegedly earned this past year. We don't know if he'll pay a dime of taxes on any or all of those earnings, making them all the more an indication of the corruption that surrounds that administration, where regardless of the country or the interest around the world, we find the Trump organization with a hand in the till. The public cannot have confidence in a corrupt administration of this type. I urge adoption of this amendment about private equity, but I think it is noteworthy the committee's unwillingness to debate the merits of the corruption surrounding this administration and particularly its evasion of taxes. I yield back.
Speaker 41
Gentleman yields back. Others wishing to strike the last word? Seeing none, clerk call the roll.
Mr. Buchanan. Mr. Smith of Nebraska.
Ms. Moore.
Ms. Moore, yes. Mr. Boyle.
Mr. Boyle, yes. Mr. Beyer.
Speaker 69
Chairman Smith, no. Clerk record. Mr. Chairman, the ayes are 15 and the noes are 24.
Speaker 41
The ayes being 15 and the noes being 24, the amendment is not adopted. Are there additional amendments? If there are no further amendments, the question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye.
Those opposed, nay.
Speaker 41
In the opinion of the chair, the ayes have it and the amendment in the nature of a substitute is agreed to. We'll now recognize Mr. Buchanan for the purpose of offering a motion.
Vern Buchanan
Mr. Chairman, I move that the committee favorably report H.R. 9504, as amended, to the House of Representatives.
Speaker 41
The question is on the motion to favorably report H.R. 9504, as amended, to the House of Representatives. Clerk call the roll.
Mr. Buchanan.
Jason Smith
There being 25 yeses and 15 nos, the motion is agreed to and H.R. 9504, as amended, is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9504 and that members have two additional days to file with the committee clerk supplemental, additional, dissenting, or minority views. Our next order of business is H.R. 9499, the Protecting Taxpayers from Ghost Preparers Act, introduced by Representative Malliotakis. Representative Malliotakis has spent years combating fraud and protecting taxpayers, having seen individuals and families in her own district become victims of these same crimes. Last year, she fought to ensure that taxpayers whose refund checks are lost or stolen can get the money that they are owed without additional hurdles.
I appreciate her continued leadership on this front and urge my colleagues to support this legislation. I'm pleased to recognize the gentlelady from New York, Ms. Malliotakis, for an opening statement.
Nicole Malliotakis
Thank you, Mr. Chairman. I'm pleased that my legislation, H.R. 9499, the Protecting Taxpayers from Ghost Preparers Act, is before the committee today. This legislation takes an important step in ensuring that taxpayers who are victims of preparer fraud are not unfairly punished for actions they did not commit. Unfortunately, over the past several years, we have seen too many cases of dishonest tax preparers exploiting hardworking Americans, senior citizens, and other vulnerable taxpayers who are simply just trying to pay their taxes. In Kentucky this past April, two individuals pleaded guilty to operating a major tax preparation fraud scheme.
Between 2018 and 2021, they prepared nearly 6,000 fraudulent federal tax returns, causing more than $10 million in tax losses to the IRS while collecting more than $700,000 in fees from their unsuspecting clients. In my own state of New York, an individual on Long Island pleaded guilty to nearly $12 million tax fraud scheme. They prepared fraudulent tax returns, charged clients more than $1 million in fees, including a percentage of their refunds, and they put innocent taxpayers at risk while enriching themselves. And in 2025, an individual in the Bronx was sentenced to four years in prison for orchestrating a decade-long $145 million tax fraud scheme. He oversaw the filing of tens of thousands of false tax returns, generating approximately $12 million in fraudulent proceeds.
These are not isolated incidents. Across the country, ghost preparers continue to file fraudulent returns and skim money from taxpayers' refunds, leaving the taxpayer on the hook to deal with the consequences. Under current law, when a ghost preparer commits fraud without the taxpayer's knowledge, it can leave an innocent taxpayer subject to an indefinite statute of limitations, even though the taxpayer had no intent to evade their tax obligations. My bill addresses this gap in the law by clarifying that the unlimited statute of limitations for fraudulent tax returns applies only when the taxpayer intended to commit fraud, not when a dishonest tax preparer acted alone without the taxpayer's knowledge. It's a simple, easy, common-sense bill that protects taxpayers who have been victimized by fraud.
And I also want to say that this is just a small piece of the puzzle. We have a lot more work to do, and I know my colleagues, Representative Steube and Panetta, have been working also very diligently on this issue. And I know, Mr. Chairman, that after we pass this bill today, which I hope will pass with unanimous bipartisan support, I think that we're going to be able to do a lot more all together in a bipartisan manner to address this issue and go after these fraudsters and make sure that they're being held accountable. Thank you, and I yield back.
Jason Smith
Thank you, and I'll recognize Mr. Panetta from California for his opening statement.
Jimmy Panetta
Oh, thank you, Mr. Chairman. I appreciate that, and thanks to Ms. Malliotakis and the committee's attention to the issue of ghost preparers, as I have long advocated for action on this topic. I also want to thank Chairman Smith. Thank you for the steps taken today to address the concerns raised by myself and Mr. Steube about previous provisions that were in the bill prior to the amendment. Now, this current legislation by Ms. Malliotakis advances an important provision to ensure that when tax preparers commit fraud, unwitting taxpayers are not targeted by the IRS decades after the case.
Currently, there is no statute of limitations on tax assessments for taxpayers whose preparers file a false or fraudulent return with the intent to evade taxes. That means that decades later, taxpayers can be subject to IRS enforcement action even though they had no idea that their preparer filed fraudulently.
They do not benefit from the three-year statute of limitations for mistakes in returns filed without intent to evade tax. Now, this bill also takes the important step of shifting the responsibility from the taxpayer to the preparer being paid to file returns. We still need to pass legislation to establish basic professional standards for tax preparers and ensure that the IRS can enforce those standards. I do hope to work with the committee on those issues in the future. However, this bill is a very positive step forward.
I appreciate Ms. Malliotakis for this, and then I support this bill. That is why I urge my colleagues to vote yes to ensure that innocent taxpayers are not indefinitely exposed to IRS enforcement actions when the wrongdoing was committed by a third-party preparer without the taxpayer's knowledge. And with that, Mr. Chairman, I thank you and I yield back.
Jason Smith
Thank you. The committee will now proceed to consideration of H.R. 9499, the Protecting Taxpayers from Ghost Preparers Act. Without objection, the measure will be considered as read and open for amendment at any point. At this time, I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. Without objection, the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for the purpose of amendment.
I will now turn to Tom Barthold, Chief of Staff for the Joint Committee on Taxation, to provide a technical description of the amendment in the nature of a substitute, with an emphasis on the changes made since introduction. I ask that members hold their questions until after his presentation.
Tom Barthold
Mr. Chairman, the members of the committee have before them two Joint Committee documents, JCX-24 and JCX-31, which describe H.R. 9499 and your amendment in the nature of a substitute. The amendment in the nature of a substitute makes clerical correction to the underlying legislation, and it really consists of three components. In section two, the provision ensures that preparer penalties apply to both valid filings made by taxpayers and to documents submitted that do not meet the criteria to be treated as a valid return. This provision would be effective upon the date of enactment, and the staff of the Joint Committee on Taxation has estimated that this provision would raise approximately five million dollars over the budget period of fiscal 2027 through fiscal 2036. The next component of the legislation resolves discordant judicial rulings by restricting the authority of the Internal Revenue Service to extend the period of limitations with respect to fraud to those cases in which the taxpayer is alleged to be the person committing the fraud.
This provision would be effective for assessments and proceedings initiated after the date of enactment, and this would result in an estimated revenue loss of approximately two million dollars over the 2027 to 2036 fiscal year budget period. Lastly, the legislation makes a technical correction to the Disaster-Related Extension of Deadlines Act. It would, this technical correction, as with all technical corrections generally passed out of this committee, would be effective retroactively to the date of enactment of that act. That concludes my brief description of this legislation. I'd be happy to answer questions that the members might have.
Jason Smith
Thank you. Are there any technical questions about the amendment in the nature of a substitute? Seen none, we will move to strike the last word. Does any member wish to strike the last word? Seen none, we will move to amendments, and I recognize myself for an amendment.
Jason Smith
Thank you.
Thank you. Thank you. Thank you, Mr. Thompson. When a- when a fraudulent return is filed with the intent to evade tax, the IRS can access tax at any time, even beyond the three-year statute of limitations. Unfortunately for honest taxpayers, that intent is currently not tied to their actions.
Fraudsters and ghost preparers can intentionally file fraudulent returns on behalf of the taxpayer without their knowledge. In doing so, they leave that honest taxpayer on the hook when the IRS comes to access, even if it- if it's decades later. This bill corrects that issue, requiring that the limitation on the statute of limitation only applies to cases where the taxpayer themselves filed a- filed a fraudulent return with intent to evade tax and- and pulls honest taxpayers out of the equation. Section two of this legislation was added to the bill to expand the definitions of tax returns to be identical to language in the Senate TAS Act that would ensure as many ghost preparers are captured by this bill. Um, with still ongoing items that's resolved, um, both sides are insisting on including additional provisions, um, regarding paid preparers that were not intended to be part of Ms. Malliotakis's bill.
In an effort to ensure we continue moving these tax administration bills in a bipartisan fashion, I'm offering this amendment to strike section two. Representative Malliotakis has spent years combating fraud and protecting taxpayers, having seen individuals and- and families in her own district become victims of these same crimes. Last year she fought to ensure that taxpayers whose refund checks are lost or stolen can get the money that they are o- owed without additional hurdles. I appreciate her continued bipartisan leadership on this front and urge my colleagues to support this amendment. Any member wishes to strike the last word on the amendment?
Seen- Point of order. Do you have a point of order? I just wanted you to know that I still love you, Mr. Buchanan. I love you too, Mr. Thompson.
Thank you. I want to make sure you get your flight. So, um, will the clerk call the roll.
Vern Buchanan
Mr. Buchanan. Yes. Mr. Buchanan, yes. Mr. Smith of Nebraska. Mr. Kelly.
Yes. Mr. Kelly, yes. Mr. Schweikert. Yes.
Mr. Davis. Aye. Mr. Davis, yes. Ms. Sanchez. Ms. Sanchez, yes.
Ms. Sewell. Aye. Ms. Sewell, yes. Ms. DelBene. Aye.
Ms. DelBene, yes. Ms. Chu. Aye. Ms. Chu, yes. Ms. Moore.
Aye. Ms. Moore, yes. Mr. Boyle. Aye. Mr. Boyle, yes.
Mr. Beyer. Yes. Mr. Beyer, yes. Mr. Evans. Yes.
Mr. Evans, yes. Mr. Schneider. Yes. Mr. Schneider, yes. Mr. Panetta.
Yes. Mr. Panetta, yes. Mr. Gomez. Yes. Chairman Smith, yes.
The clerk will report the vote.
Jason Smith
There being 37 ayes and zero nays, the amendment is adopted. Are there additional amendments to the amendment in the nature of a substitute? Seeing none, the question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye. Those opposed say no.
Vern Buchanan
Mr. Chairman, I move the committee favorably report H.R. 9499 as amended to the House of Representatives.
Jason Smith
The question is on the motion to favorably report H.R. 9499 as amended to the House of Representatives. The clerk will call the roll.
Vern Buchanan
Mr. Buchanan. Yes. Mr. Buchanan, yes. Mr. Smith of Nebraska. Mr. Smith of Nebraska, yes.
Mr. Kelly. Mr. Kelly, yes. Mr. Schweikert. Mr. Schweikert, yes. Mr. LaHood.
Mr. Thompson. Mr. Thompson, yes. Mr. Larson. Mr. Larson, yes. Mr. Davis.
Mr. Davis, yes. Ms. Sanchez. Ms. Sanchez, yes. Ms. Sewell. Ms. Sewell, yes.
Ms. DelBene. Ms. DelBene, yes. Ms. Chu. Ms. Chu, yes. Ms. Moore.
Ms. Moore, yes. Mr. Boyle. Mr. Boyle, yes. Mr. Beyer. Mr. Beyer, yes.
Mr. Evans. Mr. Evans, yes. Mr. Schneider. Mr. Schneider, yes. Mr. Panetta.
Mr. Panetta, yes. Mr. Gomez. Mr. Gomez. Mr. Horsford. Ms. Plaskett.
Mr. Suozzi. Chairman Smith. Chairman Smith, yes.
The clerk will report the vote.
Jason Smith
There being 40 yeses and zero noes, the motion is agreed to and H.R. 9499, as amended, is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9499 and that members have two additional days to file with the committee clerk supplemental, additional, dissenting, or minority views. Our next order of business is H.R. 9498, the Taxpayer Advocate Participation Act, introduced by Representatives Steube and DelBene. With this legislation, Representative Steube is building on his record as a tireless advocate for American taxpayers. This important reform to current law follows on the heels of previous efforts he has made, including the Taxpayer Notification and Privacy Act, which the House approved last year with unanimous consent.
Legislation that, not surprisingly, reflects recommendations of the National Taxpayer Advocate. I applaud Representative Steube's continued leadership on this front and urge my colleagues to support this legislation. I'm pleased to recognize the gentleman from Florida, Mr. Steube, for his opening statement.
W. Steube
Thank you, Mr. Chairman, and thank you for the opportunity for me to speak today in support of H.R. 9498, the Taxpayer Advocate Participation Act, or TAPA. When a federal court is deciding a case that may affect the rights of many or all taxpayers, it would benefit all for the National Taxpayer Advocate to submit amicus briefs to share her views as the voice of the taxpayer. However, under current law, the NTA is not authorized to submit amicus briefs in federal tax litigation.
This bill is a narrow, common sense fix. It would allow the National Taxpayer Advocate to appear as amicus curiae in federal tax cases, but only to present views on issues that may broadly affect the rights of taxpayers. This authority is expected to be used sparingly, similar to the authority exercised by the Small Business Administration's Chief Counsel for Advocacy. The Office of the Taxpayer Advocate already plays an important role in helping taxpayers resolve problems with the IRS, identifying systematic issues in tax administration, and making recommendations to Congress. The National Taxpayer Advocate is also required to report annually to Congress on the most litigated tax issues and ways to mitigate those disputes.
It makes sense that in appropriate cases the advocate should be able to share the taxpayer-focused expertise with federal courts. I'm thankful that the committee is facilitating bipartisan legislation aimed at protecting taxpayer rights and ensuring that courts can hear from an independent office whose mission is to identify and protect taxpayers from systematic problems in tax administration. I'm also thankful that this bill has been endorsed by a number of organizations including the National Taxpayers Union, the Small Business and Entrepreneurship Council, Intuit, 60 Plus Association, and the National Association of Consumer Advocates. This is a bipartisan effort and I'm honored to work with Representative DelBene because protecting taxpayers and improving their right to representation should not be a partisan issue. I urge my colleagues to support H.R. 9498, the Taxpayer Advocate Participation Act, and I yield back.
I now recognize the ranking member.
Speaker 74
Thank you Mr. Chairman, let me yield my time to the gentlelady from Washington State, Ms. DelBene.
Suzan DelBene
Thank you Mr. Chairman, and to the ranking member, and thank you to my colleague Mr. Steube, who's been a great partner on this bill. The Taxpayer Advocate Participation Act would ensure that the National Taxpayer Advocate is able to advocate on behalf of taxpayers when a court decision may affect their fundamental rights. The National Taxpayer Advocate is often referred to as the voice of the taxpayer because they assist taxpayers in resolving problems with the IRS, identifying systemic issues and making legislative recommendations to Congress based on their extensive experience. The Taxpayer Advocate Participation Act is a result of one of those recommendations. Under current law, the NTA is not authorized to submit amicus briefs and share her views, meaning that no one is representing the interests of taxpayers as a group in cases that could impact those rights.
H.R. 9498 addresses this gap by authorizing the National Taxpayer Advocate to submit amicus briefs in federal tax litigation, ensuring that the voices of taxpayers are heard. This bill is a targeted common sense measure to ensure taxpayers' voices are heard and reinforces fairness, transparency, and accountability in our tax system. I urge my colleagues to support this legislation and I yield back.
Jason Smith
At this time I offer an amendment in the nature of a substitute, which was distributed in advance along with a green sheet explaining it. Without objection the measure will be considered as read and open for amendment at any point. Thank you, the committee will now proceed to consideration of H.R. 9498, the Taxpayer Advocate Participation Act. Without objection the amendment in the nature of a substitute shall be considered as read, open for amendment at any point, and considered base text for purpose of amendment. I will now turn to Tom Barthold, Chief of Staff for the Joint Committee on Taxation, to provide a technical description of the amendment in the nature of a substitute with an emphasis on the changes made since introduction.
Tom Barthold
Mr. Chairman, the members of the committee have before them two Joint Committee documents, JCX-22 and JCX-29, which describe H.R. 9498 and your amendment in the nature of a substitute. Your amendment in the nature of a substitute makes a modest clerical change in the underlying text.
By way of background, under present law, it is generally the case that only officers of the Department of Justice may represent the United States in litigation. One such limited exemption is that the IRS Chief Counsel represents the Secretary of the Treasury in litigation before the Tax Court. This legislation in the amendment in the nature of a substitute authorizes the National Taxpayer Advocate to appear as amicus curiae in any action before a court of the United States related to federal tax law with respect to issues affecting the rights of taxpayers. This legislation would be effective upon the date of enactment. Our staff has estimated it would have a negligible effect on federal receipts over the budget period of fiscal years 2027 through 2036.
That concludes my brief description. I'd be happy to answer any questions that the members might have.
Jason Smith
Thank you. Are there any technical questions about the amendment in the nature of a substitute? Seen none, does anyone wish to strike the last word? Seen none, are there any amendments to the amendment in the nature of a substitute? That's wonderful.
The question is on the adoption of the amendment in the nature of a substitute. All those in favor signify by saying aye. Those opposed say no. In the opinion of the chair, the ayes have it and the amendment in the nature of a substitute is agreed to. I will now recognize Mr. Buchanan for the purpose of offering a motion.
Vern Buchanan
Mr. Chairman, I move that the committee favorably report HR 9498 as amended to the House of Representatives.
Jason Smith
The question is on the motion to favorably report HR 9498 as amended to the House of Representatives. The clerk will call the roll.
Mr. Buchanan.
Vern Buchanan
Mr. Buchanan, yes. Mr. Smith of Nebraska. Mr. Smith of Nebraska, yes. Mr. Kelly. Mr. Kelly, yes.
Mr. Schweikert. Mr. Schweikert, yes. Mr. LaHood. Mr. Thompson, yes. Mr. Larson.
Yes. Mr. Thompson. Mr. Thompson, yes. Mr. Larson. Mr. Larson, yes.
Mr. Larson, yes. Mr. Davis. Mr. Davis, yes. Ms. Sanchez. Ms. Sanchez, yes.
Ms. Sewell. Ms. Sewell, yes. Ms. DelBene. Ms. DelBene, yes. Ms. Chu.
Mr. Davis. Mr. Davis, yes. Ms. Sanchez. Ms. Sanchez, yes. Ms. Sewell.
Ms. Sewell, yes. Ms. DelBene. Ms. DelBene, yes. Ms. Chu. Ms. Chu, yes.
Ms. Moore. Ms. Moore, yes. Mr. Boyle. Mr. Boyle, yes. Mr. Beyer.
Mr. Beyer, yes. Chairman Smith. Yes. Chairman Smith, yes.
The clerk will report the vote.
Jason Smith
There being 39 yeses and zero nos, the motion is agreed to and H.R. 9498 as amended is ordered favorably reported to the House. Without objection, I ask that staff be authorized to make technical and conforming changes to H.R. 9498 and that members have two additional days to file with the committee clerk supplemental additional dissenting or minority views. There being no further business before the committee, the committee stands adjourned.