Sponsors (2)
The bill increases oversight, accountability, and targeted protections (especially for low-income taxpayers and taxpayer data security), but does so at the cost of added compliance expenses, market disruption for small preparers and software vendors, and new privacy and automation risks that could misclassify or limit taxpayer protections.
Taxpayers and small businesses who use paid preparers will get stronger oversight and accountability because the Treasury can set competency standards, require preparer identifying numbers on returns, and rescind IDs for misconduct.
Low-income and hardship-risk taxpayers will be identified and notified of available resources when they contact the IRS, improving access to relief options.
The IRS will more selectively exclude qualifying debts from aggressive automated collections (levies, private collectors, passport certification), reducing undue financial harm for vulnerable taxpayers.
Taxpayers and small businesses who use paid preparers may face higher fees because preparers will incur new costs for exams, continuing education, background checks, and compliance.
Smaller and unlicensed preparers may be pushed out of the market if they cannot meet new competency or licensing requirements, reducing competition and local service options.
Using IRS algorithms to detect economic hardship risks misclassifying needy taxpayers, leaving some who qualify without relief or incorrect routing.
Based on analysis of 3 sections of legislative text.
Establishes federal standards and oversight for tax preparers, requires preparer IDs on returns, permits revoking IDs, and directs IRS hardship‑identification and tax‑software security measures.
Introduced March 10, 2025 by Stephen Cohen · Last progress March 10, 2025
Creates a federal regulatory system for tax return preparers that sets minimum competency requirements (identifying number, an exam, annual continuing education, and a Secretary‑administered background check), requires preparer identifying numbers on returns, and lets the Treasury rescind those numbers after notice and hearing for incompetence or disreputability. Directs the Treasury/IRS to deploy an algorithm to identify taxpayers at high risk of economic hardship, change certain automated collection treatments for those taxpayers, provide targeted notices and resources, rank collection cases by priority, and issue annual information‑security rules for tax software providers.