IRS gets real-time tax preparer credential check to block fraud

What it does

This bill requires the IRS to create a real-time validation system for EFINs (electronic filing identification numbers)—the credentials tax preparers and software use to file returns electronically on behalf of taxpayers. Before any return can be filed, the EFIN must be confirmed as active and authorized through the IRS system or through approved third-party validators (software companies, state agencies, financial institutions). The bill also allows the IRS to share EFIN validation information with these third-party validators under strict confidentiality rules.

Why we flagged it

The bill is a straightforward procedural and security enhancement to the IRS's electronic filing infrastructure, designed to prevent fraud and identity theft by validating the credentials of tax preparers before they can file returns.

What the text implies

• Third-party validators (software providers, state agencies, financial institutions) gain access to IRS EFIN validation data and systems, creating new data-sharing relationships and potential competitive advantages for large tax software platforms.
• The 2-year implementation window for information disclosure (subsection d) and filing requirements (subsection e) may create a transition period where some preparers face compliance challenges, potentially favoring larger firms with compliance infrastructure.
• Real-time validation system may create operational bottlenecks or latency issues during peak tax-filing season if system capacity is insufficient, potentially delaying legitimate filings.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary taxpayers are protected against identity theft and fraudulent tax returns filed in their names by bad actors using stolen or invalid EFINs. The validation requirement creates a gatekeeping mechanism that reduces a known vector for tax fraud and identity theft, with minimal burden on legitimate preparers.

Who stands to gain

• Large tax preparation software companies (Intuit, H&R Block, etc.) with existing validation infrastr
• State tax agencies and financial institutions approved as validators

Named in the bill

Internal Revenue Service (IRS), Secretary of the Treasury, Tax preparation software providers, State tax agencies, Financial institutions, Internal Revenue Code of 1986, Section 6103 (tax return confidentiality)

Where it stands

3 cosponsors: 2 Democrats, 1 Republicans.

• Sep 10, 2026 — Introduced · Congress.gov: “Introduced in House”
• Sep 10, 2026 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
• Sep 16, 2026 — Markup held in committee · Congress.gov: “Committee Consideration and Mark-up Session Held”
• Sep 16, 2026 — Reported out of committee · Congress.gov: “Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 40 - 0”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.