Sponsor
Nicole Malliotakis
Representative · R-NY
Representative · R-NY
Expands the legal definition of a tax "return" and stops the IRS from extending the assessment deadline when a return is falsified solely by a preparer without taxpayer intent.
The bill trades clearer, earlier statutory authority and protections for innocent taxpayers (reducing uncertainty and streamlining administration) against increased risk that informal documents will be treated as returns, higher compliance and administrative costs, and retroactive legal uncertainty for some filers.
Taxpayers and IRS administrators: a broader set of documents (including certain sham or mischaracterized filings and adjustment requests) is explicitly treated as formal 'returns,' giving clearer statutory authority that should streamline audits and administrative processing.
Taxpayers who were victims of tax preparer fraud: receive a clear statute of limitations on assessments, reducing uncertainty and preventing reopening of long‑closed tax years when the taxpayer lacked intent to evade.
Taxpayers and tax administrators: corrected statutory citations and immediate/retroactive effective-date treatment provide prompt legal clarity for ongoing filings and align the provisions with the original Act's date.
Taxpayers: informal, substitute, or auxiliary documents that previously seemed benign may now be treated as formal returns, increasing the risk of enforcement actions, assessments, or penalties for taxpayers who did not intend to file a return.
Tax preparers, financial institutions, tax professionals, and the IRS: will face compliance and administrative costs to change procedures, update disclosures, and revise forms/guidance to avoid inadvertent treatment of documents as returns.
Taxpayers and federal employees: the immediate or retroactive effective dates could alter the legal treatment of recently submitted but still-pending filings, creating uncertainty, disputes, and potential litigation over past filings.
Based on analysis of 4 sections of legislative text.
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 tax code's definition of a "return" to explicitly include other documents that purport to be returns or related partnership/admin adjustment reports, and limits the IRS's ability to extend the assessment period when a return is false only because a paid preparer committed fraud. Also makes a technical redesignation in a disaster-deadline provision. The changes take effect on enactment for the definition change and for later assessments/proceedings for the limitations-period amendment.