Taxpayer Protection and Preparer Proficiency Act
- Bill Number
- H.R. 6323
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-11-28: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-05-08T08:06:45Z
AI-Generated Summary
Purpose of the Legislation
The Taxpayer Protection and Preparer Proficiency Act (H.R. 6323) aims to strengthen oversight of paid tax return preparers by imposing stricter penalties for misconduct, establishing minimum standards for their qualifications, and enhancing the Internal Revenue Service's (IRS) ability to regulate them. This is intended to protect taxpayers from errors, fraud, or improper practices that could lead to inaccurate tax filings or financial harm, while promoting overall compliance with tax laws.
Key Provisions
- Penalties for Improper Handling of Returns and IDs:
- Expands the definition of a "return" to include administrative adjustment requests, partnership reports, and similar documents.
- Imposes a $250 penalty (up to $75,000 annually) for using invalid, expired, suspended, revoked, or stolen preparer tax identification numbers (PTINs) or electronic filing identification numbers on returns or refund claims. Exceptions apply for reasonable cause without willful neglect.
- Introduces a criminal felony penalty (fine up to $50,000 or $100,000 for corporations, plus up to 2 years imprisonment) for willful misuse of PTINs, such as using a non-existent or another's number to evade requirements.
- Increased Penalties for Tax Preparation Misconduct:
- Raises existing civil penalties under Section 6695 from $50 to $250 per violation (with annual caps increased to $50,000–$75,000) for failures like not signing returns, not providing copies to clients, or failing to keep records.
- For misappropriating refunds (e.g., negotiating a taxpayer's check or diverting electronic funds), the penalty is the greater of $1,000 or the full amount involved.
- Updates inflation adjustments for penalties starting in 2025.
- Regulation of PTINs and Preparer Qualifications:
- Requires the IRS to issue PTINs only to individuals who meet suitability standards (e.g., background checks, tax compliance history), complete up to 18 hours of annual education on ethics, tax law, and professional responsibility, or hold a valid state license/registration comparable to federal standards.
- Allows the IRS to deny, suspend (up to 180 days preliminarily or longer), or revoke PTINs for incompetence (e.g., repeated errors affecting tax liability), disreputable conduct (e.g., criminal convictions involving dishonesty, tax violations), or fraud. Affected preparers can appeal to the IRS Independent Office of Appeals and seek reinstatement.
- Exempts supervised preparers under certified public accountants (CPAs), attorneys, or enrolled agents (defined as "specified practitioners" in good standing).
- Mandates reporting of supervised preparers' details by their supervisors.
- Compliance and Enforcement Tools:
- Requires the IRS to create a program to detect and allow correction of ID errors before processing returns, avoiding penalties.
- Extends PTIN requirements to paid preparers of offers-in-compromise (agreements to settle tax debts), with similar $250 penalties.
- Authorizes public disclosure of final IRS decisions on PTIN suspensions/revocations and practitioner discipline, including facts and reasons (with privacy redactions).
- Directs the IRS to annually publish the top 10 preparer errors and reasons for penalties/discipline.
- Requires a Government Accountability Office (GAO) study on improving information sharing between the IRS and state tax authorities to enforce preparer standards.
- Transition and Implementation:
- Grandfathering for existing IRS Annual Filing Season Program participants and approved educators.
- Effective dates vary: immediate for some penalties, 18 months for others, and 180 days for PTIN reforms. Regulations must be issued within 24 months.
Significant Changes to Existing Law
- Expanded Scope and Definitions: Broadens "tax return preparer" to include those preparing substantial portions of returns or documents purporting to be returns. Introduces "electronic return originator" for e-filers and specific rules for invalid electronic IDs.
- New Regulatory Framework: Adds Section 6109(e) for PTIN administration, including education and suitability mandates—previously, PTINs were issued with fewer restrictions. Introduces Section 7218 for criminal misuse penalties.
- Enhanced Penalties and Enforcement: Multiplies most civil penalties by 5x and adds revocation/suspension authority, replacing voluntary compliance programs with mandatory standards. Updates inflation indexing from 2013/2014 baselines to 2023/2024.
- Disclosure Requirements: Amends Sections 6103 and 31 U.S.C. § 330 to allow public posting of disciplinary actions, which was not previously required at this level.
- No Impact on Existing Programs: Preserves IRS authority for limited taxpayer representation by preparers and public databases of qualified preparers.
Potential Impacts
- On Government Agencies: The IRS gains stronger tools to monitor and discipline preparers, potentially reducing fraudulent filings and improving tax administration efficiency. This could increase administrative workload initially (e.g., background checks, appeals) but lead to fewer audits or disputes long-term. State tax authorities may benefit from recommended information sharing, enhancing coordinated enforcement.
- On Citizens (Taxpayers): Provides greater protection against incompetent or dishonest preparers, potentially resulting in more accurate tax returns, fewer refund delays or errors, and reduced risk of identity theft or fund misappropriation. However, higher standards might increase costs for tax preparation services.
- On International Relations: No direct impacts, as the bill focuses on domestic U.S. tax compliance.
Main Stakeholders Affected
- Tax Return Preparers: Most directly impacted, facing new qualification barriers, higher penalties, and risk of losing PTINs, which could limit their ability to work. Supervised or state-licensed preparers have exemptions or pathways to compliance.
- Taxpayers: Benefit from safeguards but may see higher fees from compliant preparers.
- IRS and Department of the Treasury: Responsible for implementation, including program development, education approvals, and disclosures; gains enforcement leverage.
- State Tax Authorities and Licensing Bodies: Involved in comparable standards and potential data sharing; could see expanded roles in preparer oversight.
- Professional Groups (e.g., CPAs, Attorneys, Enrolled Agents): Unaffected directly as "specified practitioners" but may supervise more preparers.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Strengthens IRS regulatory powers under the Internal Revenue Code without requiring examinations for PTINs (except in limited cases), aligning with prior court rulings limiting IRS overreach (e.g., no mandatory licensing). Appeals process mirrors existing practitioner discipline under 31 U.S.C. § 330, ensuring due process. Criminal provisions target willful acts, reducing vagueness concerns.
- Constitutional Implications: No apparent challenges; enhancements to administrative penalties and disclosures respect privacy via redactions under Section 6103 and provide notice/hearing opportunities, avoiding due process violations.
- Political Implications: Promotes bipartisan goals of tax integrity and fraud reduction (introduced by Reps. Panetta and Steube). Could face pushback from preparer associations over increased burdens, but supports public trust in the tax system amid rising identity theft concerns. The GAO study may influence future federal-state collaborations.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Rep. Steube, W. Gregory [R-FL-17], Rep. Sewell, Terri A. [D-AL-7], Rep. McCollum, Betty [D-MN-4]
Recent Actions
- 2025-11-28: Referred to the House Committee on Ways and Means.
- 2025-11-28: Introduced in House
- 2025-11-28: Introduced in House
Bill Versions
- Taxpayer Protection and Preparer Proficiency Act — issued 2025-11-28 — PDF (39 pages)