Sponsors (2)
The bill strengthens oversight, accountability, protections for vulnerable taxpayers, and software security standards, but does so at the cost of new compliance expenses, privacy and due‑process risks from automated processes, and potential disruption to smaller preparers and vendors.
Taxpayers and businesses using paid preparers will get stronger oversight and accountability because the Treasury can set competency standards, require preparer identifying numbers, and rescind IDs for misconduct, while exempting already‑regulated state-licensed preparers to avoid duplication.
Low-income and hardship-risk taxpayers will be identified and notified of relief resources when they contact the IRS, and qualifying debts can be more selectively excluded from aggressive collections, reducing undue financial harm.
IRS collections will be more efficient because cases can be ranked for priority, focusing limited enforcement resources on higher-value or higher-probability recoveries.
Paid preparers — and the taxpayers who hire them — may face higher costs (exams, continuing education, background checks) and reduced competition if smaller or unlicensed preparers are pushed out of the market.
Administrative rescission of preparer identifying numbers after proceedings can bar preparers from working and raises due-process and fairness concerns.
Requiring preparer identifying numbers on all returns creates an immediate compliance burden for filers and preparers as the mandate takes effect.
Based on analysis of 3 sections of legislative text.
Creates federal standards and oversight for paid tax preparers, requires preparer ID on returns, deploys IRS hardship‑identification algorithms, and sets security rules for tax software.
Official title: To amend title 31, United States Code, to direct the Secretary of the Treasury to regulate tax return preparers, and for other purposes.
Introduced March 10, 2025 by Stephen Cohen · Last progress March 10, 2025
Creates a federal regulatory regime for paid tax return preparers, requiring them to obtain identifying numbers, pass competency exams, complete annual continuing education, and undergo Secretary‑administered background checks unless covered by comparable state or professional licensing. It also requires preparer identification on returns and lets the Treasury rescind preparer IDs for incompetence or disreputability after notice and hearing. Directs the Treasury/IRS to deploy algorithms and technology to identify taxpayers at high risk of economic hardship, tailor collection interactions and decide whether to exclude certain debts from automated collection programs; and it requires publication and annual review of information security standards for tax software providers.