Bill introduced to regulate tax preparers and software security

[jklcpa]

March 10, 2025 Press Release

IRS would regulate service providers with minimum competency standards

WASHINGTON – Congressman Steve Cohen (TN-9) today re-introduced the Tax Return Preparer Accountability Act to provide the Internal Revenue Service with the explicit authority to regulate tax preparation services by enacting training and integrity requirements.

Congressman Cohen made the following statement:

“Most tax preparers are honest and trustworthy but, unfortunately, we’ve all heard or read about unscrupulous tax preparers who take advantage of customers or assist clients in claiming deductions to which they are not entitled. To guarantee that taxpayers get the quality service they deserve, the Tax Return Preparer Accountability Act will permit the IRS to establish minimum standards for accuracy and fairness.” 

The bill would also:

Direct the IRS to implement an automated formula to identify taxpayers at risk of economic hardship;

Authorize the IRS to establish minimum competency standards for federal tax return preparers and revoke the identification number of sanctioned preparers; and 

Recommend tax software changes, including requiring all tax software providers to adhere to prescribed information security controls and regular updates of security standards for tax software providers.  

 

https://cohen.house.gov/media-center/press-releases/congressman-cohen-re-introduces-tax-return-preparer-accountability-act

[kathyc2]

It won't happen but it should.

Ridiculous that someone needs to be certified to give a manicure but anyone can hang a sign and say they are a tax preparer.

[Lee B]

Since Congressman Cohen is in the minority party, this bill is DOA.

[jklcpa]

Here's some highlights about who and what would be affected, for what it's worth. I took this from a blog and eliminated the parts that pertain to CPA candidates and the parts that were an obvious sale pitch of the company's training products

grant IRS explicit authority to regulate tax preparers, enforce training standards, establish integrity requirements

require tax preparers to meet specific qualifications, ensure competency, transparency, and consumer protection in the tax filing process.

grant the IRS the power to establish requirements for tax preparers, ensuring that only qualified professionals can legally prepare tax returns. This includes:

• Mandatory registration for tax preparers
• Increased penalties for fraudulent tax filings
• Training and certification requirements
• Consumer protection measures to safeguard taxpayer information

Training Requirements - require tax preparers to complete training programs, pass a competency exam, ongoing education and training to stay updated on tax laws and practices.

The Consumer Protection Aspect - by enforcing transparency, accountability, and training, this bill seeks to reduce fraud committed by unlicensed preparers who exploit tax loopholes or file inaccurate returns. Enhanced penalties and compliance measures will deter dishonest practices and ensure greater accuracy in tax preparation.

Ensuring Security of Taxpayer Information - this bill would require preparers to meet data security standards, safeguarding sensitive taxpayer data from identity theft or misuse.

New system of verification of preparers and i.d. #s, registering for PTIN to ensure proper identification and accountability.

EROs - would have the same regulations and standards as other tax preparers.

Implementation - by enhanced enforcement measures, automating processes for registration and verification, and ensuring compliance through regular audits and checks of tax preparers.

Non-compliance - could result in increased penalties for tax preparers, including fines and potential suspension.

Current licensed CPAs - licensed CPAs will be exempt from additional requirements under the bill.

 

[jklcpa]

As Lee said, probably DOA, but the bill is specifically trying again to grant IRS authority to regulate preparers. That is what shot down the prior attempts too, because IRS currently doesn't have that authority over all preparers.

[Gail in Virginia]

Interesting - the bill seems to say according to your summary that current licensed CPAs are exempt from additional requirements but not mention EA's.  Is that because IRS already has authority over us?  Or just another example of no one knowing what an EA is.  

[jklcpa]

12 minutes ago, Gail in Virginia said:

Interesting - the bill seems to say according to your summary that current licensed CPAs are exempt from additional requirements but not mention EA's.  Is that because IRS already has authority over us?  Or just another example of no one knowing what an EA is.  

Here's the bill that has added that it would only cover those not defined in 31 USC 330, and sec 330 does include EAs, so I'd say that EAs would be excluded from this too.  See what you think and if I'm interpreting that correctly.

https://www.congress.gov/bill/116th-congress/house-bill/4751/text#toc-HBEE485E538604A07820A31702DCF9F75

https://uscode.house.gov/view.xhtml?req=(title:31 section:330 edition:prelim)

[mcb39]

So where does that leave those of us who passed the test last time and are current with our credits for the designation of AFSP?

[jklcpa]

Sorry, there aren't many answers at this point. I found the statement below from the NY State Society of CPAs a day or so ago. Perhaps it will all be halted again through the courts where they've continued to rule that IRS doesn't have this authority, but the bill tries to change that.

"This bill also follows longstanding IRS efforts to regulate unenrolled preparers, such as the Registered Tax Return Preparer Program, which was halted due to legal challenges. 

With support from the IRS Electronic Tax Administration Advisory Committee, the bill represents continued legislative efforts to address the growing need for oversight in the tax preparation industry. The bill is currently with the House Ways and Means Committee for review."

[BulldogTom]

I am sick and tired of the IRS complaining that they can't regulate preparers and that is why they can't catch the boogieman who is filing fraudulent returns.   It is the system they designed that allows the fraud, and if they would make TurdoTax a single user, pay for each download, register the purchase of the software product, they would not have boogieman preparers out there because the cost of the scam would outweigh the benefit of preparing fraudulent returns.   And they already regulate CPAs and EAs and they can't seem to catch any of them doing dirty deeds...allowing inflated business expenses, letting rich shareholders run all their personal through the corp, allowing no mileage logs, no business meal receipts, coding entertainment to "marketing" for those pricy box seats at (name your favorite stadium or arena).   The IRS has to know this crap is going on, but they don't do anything to make the system harder to game.   We are the dog whistle they blow when they want Congress to over look the crappy job they have done with tax enforcement for the last 2 decades.   

Done with my rant....stepping off the box...walking back from the ledge.

Tom
Longview, TX

[BTS]

Well if they have to cut IRS jobs, why not assert authority over preparers ?  Make us their "agents".      What an overreach !!!  And we all know it will fail like it has many times in the past.  

[jklcpa]

1 hour ago, BTS said:

Well if they have to cut IRS jobs, why not assert authority over preparers ?  Make us their "agents".      What an overreach !!!  And we all know it will fail like it has many times in the past.  

We already are agents in some instances. Preparer penalties for lack of due diligence and documentation for EIC comes to mind as one example.