The Senate passed a bill on September 30 that would write a basic protection into federal tax law: if the IRS denies or revokes your organization's tax-exempt status, you have a statutory right to appeal. It passed by unanimous consent, with no senator objecting. The bill now sits with the House, and it is not law yet.
What Passed
The Taxpayer Assistance and Service Act (S. 5441) is a 65-provision IRS reform package led by Senate Finance Committee Chairman Mike Crapo and Ranking Member Ron Wyden. Most of it has nothing to do with nonprofits. It mandates callback options when IRS phone waits run long, adds oversight of paid tax preparers, and expands online account tools. The Finance Committee announced the unanimous vote the same day.
The provision that matters for this audience came in as an amendment from Sen. James Lankford, a Republican from Oklahoma, and Sen. Raphael Warnock, a Democrat from Georgia. It adds determinations of tax-exempt status, both denials of new applications and revocations of existing organizations, to the list of IRS decisions a taxpayer can take to the agency's Independent Office of Appeals. It also requires the IRS to tell organizations they have that right. Warnock's office described the provision plainly when it cleared committee in July: it would codify a right to appeal denials or revocations of tax-exempt status.
Appeals Already Happen. The Law Does Not Guarantee Them.
If this sounds like something nonprofits already have, that is roughly true in practice. Today, an organization facing a proposed revocation after an examination gets a window to protest and a conference with an appeals officer, and an organization that exhausts those administrative steps can ask a federal court for a declaratory judgment. We walked through that machinery in how revocation actually works.
The difference is where those rights live. The court route is already statutory, but the administrative appeal path for exemption cases rests largely on IRS procedure rather than on a statute naming exempt organizations. The 2019 Taxpayer First Act made the Independent Office of Appeals "generally available" to taxpayers, but left the agency room to decide what that covers. The Lankford-Warnock language closes that gap for exemption determinations specifically: the right to appeal would be in the tax code, not in a revenue procedure the agency could rewrite.
The timing is not an accident. The amendment follows a year in which the administration has publicly threatened revocations aimed at organizations whose missions it opposes, and sector groups have been looking for structural protections rather than case-by-case defenses. Independent Sector president and CEO Akilah Watkins called tax-exempt status "a privilege and a responsibility, a measure of trust earned through good governance and service to their communities every day" in backing the bill. Notably, the provision drew support from both parties: senators who worry about politicized revocations under this administration and senators who worried about IRS treatment of conservative and religious groups under earlier ones let the same sentence through without objection.
What It Does Not Do
Three limits worth being clear about. First, this is not law. The House has not acted, it is in recess and not expected back until November, and few working days remain in this Congress. A unanimous Senate vote is a strong signal, not a guarantee.
Second, the provision is about process, not outcomes, and the right it codifies is not unconditional. The bill keeps an explicit list of exceptions under which the IRS can restrict access to Appeals, including frivolous positions, cases with a pending criminal referral, and issues the agency's Chief Counsel has designated for litigation and stands ready to litigate promptly. That last one matters: in a high-profile revocation fight, the IRS could still steer the dispute to court rather than to its own appeals office. What the provision guarantees is the default right and written notice of it. It does not stop the IRS from opening an examination or proposing a revocation in the first place.
Third, it would not touch the most common way small nonprofits actually lose their status: automatic revocation for failing to file a Form 990 series return for three straight years. That happens by operation of law, with no examination to appeal. If that is your situation, the path back is the IRS reinstatement process, and this bill does not change it.
The Takeaway
There is nothing to file and nothing to change in your operations today. The news is that a unanimous Senate, in a polarized year, agreed that exemption decisions deserve an appeal right written into law. If the House passes the bill intact, the right to contest a denial or revocation stops depending on IRS procedure and becomes something the agency has to tell you about. Watch for House action after the November recess. If your organization is facing an examination right now, the current protest rights still apply, and the clock on those is short enough that you should not wait for Congress.