HR6323-119

What This Bill Does

The Taxpayer Protection and Preparer Proficiency Act broadens preparer penalty definitions to cover tax returns, administrative adjustment requests, partnership adjustment tracking reports, and documents purporting to be those filings. It creates $250 penalties, subject to annual caps and reasonable-cause defenses, for tax return preparers who fail to furnish valid preparer tax identification numbers and for electronic return originators who fail to use assigned electronic filing identification numbers. It defines invalid identifiers to include numbers assigned to others, nonexistent, inactive, expired, withdrawn, suspended, revoked, or otherwise invalid. It creates a criminal offense for willful PTIN misuse or misappropriation. It raises multiple preparer penalties, increases misappropriation penalties for refund checks or electronic refunds to the greater of $1,000 or the full amount, and gives Treasury authority to maintain a PTIN program with suitability, background-check, education, State program, specified practitioner, denial, suspension, revocation, review, and compliance rules.

Who Benefits and How

Taxpayers benefit from stronger deterrence against preparers who alter returns, use stolen or invalid identifiers, or misappropriate refunds. Ethical CPAs, attorneys, enrolled agents, and compliant preparers benefit from standards that target abusive competitors. IRS enforcement staff benefit from clearer authority to deny, suspend, revoke, and police preparer identifiers.

Who Bears the Burden and How

Tax return preparers, electronic return originators, and tax preparation firms face higher penalties, background checks, education requirements, suitability reviews, PTIN denial or revocation risk, and possible criminal exposure for willful misuse. Treasury and IRS must run the PTIN administration program, issue guidance, process reviews, and enforce new penalties. Noncompliant preparers may lose the ability to prepare returns for compensation.

Key Provisions

• Expands preparer penalty definitions to cover returns, adjustment requests, partnership reports, and documents purporting to be those filings.
• Creates penalties for invalid preparer tax identification numbers and electronic filing identification numbers.
• Creates a criminal offense for willful PTIN misuse or use of another person’s identifier.
• Raises multiple preparer penalties and sets refund misappropriation penalties at the greater of $1,000 or the full refund amount.
• Authorizes Treasury to deny, revoke, or suspend PTINs using suitability, background-check, education, State program, and specified-practitioner rules.