Sponsors (2)
The bill strengthens taxpayer data security, preparer accountability, and protections for vulnerable taxpayers while improving collection prioritization — but it creates new compliance costs, privacy and misclassification risks from algorithmic tools, and regulatory friction that may burden preparers, software providers, and some taxpayers.
All taxpayers will have stronger protections for their personal tax data because the bill requires tax software providers to meet security standards and annual updates, reducing breach risk.
Taxpayers will face fewer instances of misleading or threatening conduct from paid representatives and preparers because the bill strengthens protections and oversight of preparer behavior.
Taxpayers and small-business owners will benefit from higher-quality tax preparation because paid preparers must meet minimum competency standards (ID number, exam, continuing education, background check).
Low-income and other taxpayers risk being misclassified by automated algorithms, which could wrongly limit access to collection relief or fail to protect those who need it.
Taxpayers face privacy risks because collecting additional hardship-related information during balance-due contacts increases sensitive data holdings and could be exposed if safeguards are inadequate.
Tax software providers (and ultimately taxpayers) will incur compliance costs from required annual security updates and standards, which may be passed through in higher prices or fees.
Based on analysis of 3 sections of legislative text.
Creates a new regulatory and accountability framework for paid tax return preparers and gives the IRS tools to identify taxpayers facing economic hardship and adjust collection actions. It requires preparers to obtain an identifying number, pass a Secretary-prescribed exam, complete annual continuing education, and clear a Secretary-administered background check (with limited exemptions and supervisory rules); the IRS may revoke preparer IDs for incompetence or disreputability after notice and hearing. Directs the IRS to build an algorithm and procedures to flag taxpayers at high risk of financial hardship, to ask taxpayers who call about balances whether they face hardship, to notify hardship-risk filers about resources when they seek streamlined installment agreements online, to consider excluding debts from automated collection programs, and to issue and annually update information security standards for tax software providers.
Introduced March 10, 2025 by Stephen Cohen · Last progress March 10, 2025