Sponsor
Nicole Malliotakis
Representative · R-NY
Representative · R-NY
The bill improves legal and administrative clarity about what counts as a tax return and protects victims of preparer fraud, but does so at the cost of retroactive legal uncertainty, higher enforcement risk for informal filings, compliance costs for preparers, and possible enforcement-resource trade-offs.
Taxpayers and IRS administrators gain clearer rules about what counts as a 'return' and clearer authority for the IRS to treat sham or mischaracterized filings as returns, reducing ambiguity in audits and enforcement.
Taxpayers and tax administrators get prompt legal and administrative clarity because certain provisions take effect immediately and statutory citations are corrected/renumbered, reducing delay for ongoing filings and enforcement actions.
Taxpayers who were victims of tax preparer fraud gain a definite statute of limitations and protection against reopening long-closed tax years when the taxpayer lacked intent, reducing uncertainty and potential surprise assessments.
Some taxpayers may face increased enforcement or penalties because informal or substitute documents they submitted could now be treated as formal returns.
The law's immediate effective date and retroactive redesignation risk changing the legal treatment of recent filings or pending matters, creating uncertainty, disputes, and potential litigation for taxpayers and IRS staff.
Tax preparers, financial institutions, and tax professionals may incur compliance and operational costs to change procedures and disclosures to avoid inadvertent treatment of auxiliary documents as returns.
Based on analysis of 4 sections of legislative text.
Broadens the legal definition of "return" to include documents that purport to be returns and bars indefinite IRS assessments when falsity is caused solely by a preparer's fraud.
Official title: To amend the Internal Revenue Code of 1986 to apply tax return preparation penalties to improperly altered returns, and for other purposes.
Introduced June 29, 2026 by Nicole Malliotakis · Last progress June 29, 2026
Expands the Internal Revenue Code definitions and limits IRS assessment authority so that documents prepared by third‑party "ghost" preparers are treated explicitly as returns and victims of preparer fraud are protected from open‑ended IRS assessment windows. It also makes a technical redesignation in a disaster‑related deadlines provision to correct earlier enacted language. The bill narrows the false‑or‑fraud exception that lets the IRS assess taxes at any time by excluding cases where a taxpayer's return was rendered false solely because a preparer committed fraud without the taxpayer's intent to evade tax. It also clarifies that documents that merely purport to be returns or related reports fall within the statute's definition of "return."