IRS gets new power to police tax preparers—and protect vulnerable filers

What it does

This bill establishes federal oversight and accountability standards for tax return preparers by requiring them to obtain identifying numbers, pass competency exams, complete continuing education, and undergo background checks. It also authorizes the IRS to revoke preparers' credentials for incompetence or misconduct, and directs the IRS to implement technology to identify taxpayers at risk of hardship and improve tax software security standards.

Why we flagged it

The bill's core mechanism is establishing federal competency and conduct standards for tax preparers and enhancing IRS technology to protect taxpayers. While it includes regulatory provisions, the primary intent is consumer accountability and protection, not industry capture.

What the text implies

• The hardship-identification algorithm may create a two-tiered collection system where vulnerable taxpayers receive different treatment, potentially raising fairness questions if the algorithm's criteria are opaque or if it inadvertently excludes eligible taxpayers.
• Requiring tax software providers to meet federal security standards may impose compliance costs that could consolidate the market toward larger providers, potentially reducing competition among smaller tax software vendors.
• The exemption for preparers supervised by attorneys, CPAs, or enrolled agents may create a loophole where less-regulated preparers working under these professionals avoid direct accountability if the supervising professional is not actively overseeing their work.
• Rescission of identifying numbers based on 'disreputable' conduct is undefined and may be applied inconsistently, creating uncertainty for preparers and potential due-process concerns if standards are not clearly codified in regulations.

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

Who it affects

The bill strengthens consumer protections by requiring tax preparers to meet minimum competency and conduct standards, reducing the risk of fraud, errors, and unethical practices that harm taxpayers. The hardship-identification algorithm and software security standards also protect vulnerable taxpayers and their data.

Who stands to gain

• Large tax software providers (compliance cost barrier to entry)
• Established CPA and enrolled agent firms (competitive advantage through exemptions)

Named in the bill

Internal Revenue Service (IRS), Department of the Treasury, Secretary of the Treasury, Office of the Director of Professional Responsibility, Tax return preparers, Certified public accountants (CPAs), Enrolled agents, Attorneys, Tax software providers, Federal Payment Levy Program, Private debt collection program

Where it stands

1 cosponsor: 1 Democrats.

• Mar 10, 2025 — Introduced · Congress.gov: “Introduced in House”
• Mar 10, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

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