Proposed Tax Preparer Legislation

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A recently introduced bill in Congress would authorize the U.S. Treasury to regulate paid tax return preparers and mandate minimum competency standards. According to the Journal of Accountancy, the introduction of the Taxpayer Protection and Preparer Proficiency Act, H.R. 4184, in Congress follows the Biden administration’s request in late April, in its American Families Plan, for bipartisan legislation to authorize the IRS to regulate paid tax preparers who are currently unregulated.

Should this bill be approved, H.R. 4184 would give the Treasury authority to regulate paid tax return preparers, clarify that the authority being provided is to reinstitute the IRS’s 2011 Registered Tax Return Preparer program, give the IRS authority to revoke an incompetent or fraudulent preparer’s preparer tax identification number (PTIN), clarify that certain nonsigning preparers — those persons who are employed by and prepare returns under the supervision of an attorney, CPA, or enrolled agent — are not required to obtain a PTIN and lastly, require a U.S. Government Accountability Office study on the sharing of information between Treasury and state authorities regarding PTINs issued to paid return preparers and preparer minimum standards.

The American Institute of Certified Public Accountants (AICPA) has come out in full support of the new legislation.

“The AICPA is pleased to endorse this bill, and we appreciate Representatives Panetta and Rice for working together to introduce this important legislation,” Edward Karl, CPA, CGMA, AICPA vice president–Taxation, said in a press statement. “Ensuring that tax preparers are competent and ethical, and that the IRS has the tools it needs to conduct appropriate oversight, is critical to maintaining taxpayer confidence in our tax system and protecting the interests of the American taxpayer.”

The proposed bill has also been endorsed by other external stakeholder organizations.