Sponsors (2)
The bill protects taxpayers who were harmed by fraudulent preparers from prolonged IRS assessments and legal costs, at the trade-off of potentially limiting the IRS’s ability to recover concealed tax liabilities and shifting detection burdens earlier onto enforcement resources.
Taxpayers who were victimized by fraudulent tax preparers will no longer face an extended IRS assessment period, reducing prolonged uncertainty and administrative burden for affected filers.
Victim taxpayers will likely get faster resolution and incur lower legal and compliance costs because the IRS's ability to assess additional tax against them is time-limited.
Tax administration may be weakened because limiting the assessment period could prevent the IRS from pursuing assessments when preparer fraud conceals underlying tax liabilities, potentially reducing tax collections.
The IRS may need to detect preparer fraud earlier, shifting workload and requiring more upfront audit or investigative resources for federal employees responsible for enforcement.
Based on analysis of 2 sections of legislative text.
Bars the IRS from extending the three-year assessment limitation for taxpayers who are victims of preparer fraud for proceedings begun after enactment.
Prevents the IRS from extending the normal three-year statute of limitations for assessing and collecting tax when the taxpayer was a victim of preparer fraud. The change inserts a rule into the Internal Revenue Code saying victims of preparer fraud cannot be subject to an extended assessment period for actions begun after the law takes effect. The change is narrow and procedural: it alters the exceptions to the three-year bar on assessments by removing preparer-fraud victims from the category that can trigger an extended limitations period. It applies only to assessments or proceedings begun after enactment.
Official title: Amend the Internal Revenue Code of 1986 to clarify that the exception to the general statute of limitations for fraudulent returns applies only when a taxpayer seeks to evade their tax obligations.
Introduced July 14, 2026 by Roger Wayne Marshall · Last progress July 14, 2026