IRS gets new power to police tax preparers—and protect vulnerable filers
H.R. 1983 — Tax Return Preparer Accountability Act of 2025 · Filed by Steve Cohen (D-TN) · 1 cosponsor · Introduced Mar 10, 2025 · Referred to committee
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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 full analysis lists 4 implications of this text.
Who stands to gain
Large tax software providers (compliance cost barrier to entry); Established CPA and enrolled agent firms (competitive advantage through exemptions)