The Protecting the Rights of Organizations Fairly (PROOF) Act of 2026 aims to enhance due process protections for tax-exempt organizations undergoing IRS examinations that could lead to the revocation of their tax-exempt status. The bill mandates that the IRS provide detailed written notices before initiating examinations, clearly outlining the issues under review and the tax periods involved. It also grants organizations the right to request supervisory conferences during the examination process and to receive copies of examination records within 30 days upon request. Before issuing any adverse determinations, the IRS must offer a closing conference and provide a proposed adverse determination letter at least 30 days in advance, allowing organizations time to protest or appeal through the IRS Independent Office of Appeals. These provisions apply to examinations commencing after December 31, 2024, and include similar protections for churches, which are already subject to special examination rules under existing law.
Supporters of the PROOF Act commend the bill for strengthening transparency and fairness in the IRS examination process for tax-exempt organizations. They argue that the enhanced due process protections will prevent unwarranted revocations of tax-exempt status and ensure that organizations have ample opportunity to address and rectify any issues identified during examinations. Proponents believe that these measures will bolster public trust in the IRS and provide a more equitable framework for tax-exempt entities.
Critics of the PROOF Act express concerns that the additional procedural requirements could lead to delays in the IRS's ability to address and rectify non-compliance among tax-exempt organizations. They argue that the bill may impose administrative burdens on the IRS, potentially hindering its efficiency in enforcing tax laws. Detractors also worry that the extended timelines for notices and appeals could be exploited by organizations to prolong the examination process, thereby delaying necessary corrective actions.
The analysis of H.R. 10258, which aims to clarify due process rights regarding the termination of tax-exempt status, shows no direct industry overlaps with the sponsor Lloyd Doggett's top donor industries. Doggett's primary donor base consists of Health Professionals, contributing $120 million, and Retired individuals, contributing $37.5 million. Since these industries do not have a direct connection to tax-exempt status or the Internal Revenue Code, the potential for conflicts of interest appears minimal. The absence of PAC contributions also indicates a lack of organized industry influence on this specific legislation.
While the Health Professionals industry is significant in terms of financial support, their interests do not seem to align with the provisions of this bill. Voters should be aware that while large donations can raise questions about influence, in this case, the lack of overlap suggests that the bill is unlikely to be swayed by donor interests. Thus, the risk of conflicts of interest remains low, and the legislative intent appears to be focused on protecting due process rather than serving specific donor agendas.
Top industries funding Lloyd Doggett, ranked by total contributions.
Source: OpenSecrets.org (Center for Responsive Politics)
