Sponsors (2)
The bill strengthens taxpayer protections, preparer professionalism, and software security to reduce fraud and unfair collections, but it raises compliance costs, privacy and algorithmic-bias risks, and may shrink low-cost preparer options for vulnerable filers.
Taxpayers and small-business owners will get higher-quality, better-supervised tax preparers because the bill requires preparers to obtain IRS IDs, pass exams, complete continuing education, undergo background checks, and lets the Director sanction or rescind identifiers for misconduct.
Low-income and other hardship-risk taxpayers will be more likely to be identified for relief and shielded from inappropriate collection because the IRS can flag hardship risk during online installment agreements and prioritize collection away from those unlikely to pay.
Taxpayers and financial institutions will benefit from reduced tax-related fraud and stronger data protection because the bill establishes annual security standards for tax software providers.
Low-income individuals and taxpayers who rely on small or informal preparers may lose access to affordable tax help because exams, background checks, and possible rescission of preparer identifiers raise barriers to entry and could shrink the pool of available preparers.
Taxpayers, preparers, and software providers will incur higher costs because compliance with new preparer requirements (exams, continuing education, background checks) and elevated software security standards will impose expenses that may be passed on to users.
Taxpayers face increased privacy and surveillance risks because the IRS will collect and store sensitive hardship and risk indicators to prioritize collection.
Based on analysis of 3 sections of legislative text.
Requires IRS preparer IDs and competency checks with sanction authority, mandates IRS hardship‑screening and collection exclusions, and sets annual security standards for tax software.
Introduced March 10, 2025 by Stephen Cohen · Last progress March 10, 2025
Creates new federal rules for tax return preparers and expands IRS collection and software-security requirements. It requires preparers to obtain an IRS preparer identifying number, pass competency exams, complete annual continuing education, and undergo a background check (with some exemptions); gives the IRS authority to sanction or rescind preparer numbers for incompetence or disreputability. It also directs the IRS to deploy an automated algorithm to identify taxpayers at high risk of economic hardship and to adjust automated collection actions and communications for those taxpayers, and requires the Treasury/IRS to set and annually update information security standards for tax software providers.