Authority to deny, revoke, or suspend preparer tax identification numbers

(a) In general Section 6109 is amended— (1) in subsection (a), by striking paragraph (4) and inserting the following: (4) Furnishing identifying number of tax return preparer (A) In general Any return, claim for refund, or document purporting to be a return or claim for refund which is prepared by a tax return preparer shall bear such identifying number for securing proper identification of such preparer, their employer, or both, as may be prescribed. (B) Suspension or revocation In the case of any identifying number which has been suspended or revoked by the Secretary under subsection (e), such number shall not be deemed valid for purposes of subparagraph (A). (C) Definitions For purposes of this section— (i) Specified practitioner The term specified practitioner means a certified public accountant, attorney, or enrolled agent— (I) who is— (aa) in good standing with— (AA) the Department of the Treasury, and, (BB) in the case of a certified public accountant or attorney, State licensing authorities, and (bb) authorized to represent persons before the Department of the Treasury under section 330 of title 31, United States Code, and (II) whose professional license or certification has not been revoked or suspended. (ii) Return; claim for refund The terms return and claim for refund have the respective meanings given to such terms by section 6696(e)., and (2) by inserting after subsection (d) the following: (e) Identifying number of tax return preparer (1) In general The Secretary shall maintain a program for administration of preparer tax identification numbers required under subsection (a)(4), which shall include restrictions on the issuance of such numbers to any individual other than an individual who— (A) meets the suitability requirements of paragraph (2) and the education requirements of paragraph (3), (B) meets the state program requirements of paragraph (4), or (C) is a specified practitioner. (2) Demonstration of suitability (A) In general An individual meets the suitability requirements of this paragraph if such individual has demonstrated to the Secretary the individual's suitability to be a tax return preparer by— (i) providing such information as the Secretary determines necessary, and (ii) passing a background check, including a review by the Secretary regarding compliance with personal tax obligations. (B) Conduct demonstrating lack of suitability For purposes of subparagraph (A), an individual shall be deemed to have failed to demonstrate their suitability to be a tax return preparer if— (i) any license or registration issued to such individual by a State to prepare tax returns has been suspended or revoked by such State, or (ii) the Secretary determines that such individual is described in clauses (ii) through (vi) of paragraph (5)(A). (C) Regulations and guidance The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this paragraph. (D) Prohibition on examinations For purposes of subparagraph (A), except as provided in paragraph (3)(C)(iii), the Secretary may not require an examination as a prerequisite for the assignment or renewal of a preparer tax identification number. (E) Grandfathering of prior background checks (i) In general Subject to clause (ii), for purposes of subparagraph (A)(ii), in the case of a class of individuals (as identified by the Secretary) who have passed a background check prior to the date of enactment of this subsection, the Secretary may deem such class of individuals to have satisfied the requirement under such subparagraph. (ii) Nonapplication to requirement regarding compliance with personal tax obligations Clause (i) shall not apply with respect to review by the Secretary under subparagraph (A)(ii) regarding compliance with personal tax obligations. (3) Educational programs (A) In general An individual shall meet the education requirements of this paragraph if such individual completes a specified number of hours of educational programs on ethics, professional responsibility, and tax law (including recently enacted Federal income tax legislation) as required by the Secretary prior to the assignment or renewal of a preparer tax identification number. (B) Additional educational requirements for renewal The Secretary may require any individual seeking the renewal of a preparer tax identification number to complete educational programs in addition to those required under subparagraph (A). Any educational programs required under this subparagraph shall be based on— (i) a review of returns which include the preparer tax identification number of such preparer, and (ii) any errors identified by the Secretary as part of the review described in clause (i). (C) Other requirements For purposes of this paragraph, the Secretary— (i) may not require a tax return preparer to annually complete more than 18 hours of educational programs, (ii) shall require that any educational program include written materials which satisfy such standards as are established by the Secretary, (iii) shall require that any educational program include a method to ensure that the tax return preparer attended the program and sufficiently understood the material presented, and (iv) may not direct any educational program to be completed through a specific provider. (D) Notice of failure to timely complete requirements The Secretary shall provide any tax return preparer who fails to complete the requirements of this paragraph notice of such failure and a 30-day period in which to cure such failure. (E) Publication of approved courses The Secretary shall publish, on the public website of the Internal Revenue Service— (i) a list of educational programs which have been determined by the Secretary to satisfy the requirement under clause (ii) of subparagraph (C) (and, if applicable, the requirement under clause (iii) of such subparagraph), including the providers of such programs, and (ii) any such requirements as the Secretary deems necessary to impose with respect to any additional programs required under subparagraph (B), provided that such requirements are similar to the requirements provided under section 330 of title 31, United States Code, or regulations prescribed thereunder. (4) Exemption (A) In general Subject to subparagraph (B), any individual meets the state program requirements of this paragraph if such individual maintains a valid State license or registration issued by a State licensing program or State registration program (including State tax education councils) which includes examination, education, and background check requirements that are comparable to the suitability requirements described in paragraph (2) and the education requirements described in paragraph (3). (B) Grandfathering of certain programs For purposes of subparagraph (A), with respect to determining whether a State licensing program or State registration program (including State tax education councils) includes examination, education, and background check requirements which are comparable to the suitability requirements described in paragraph (2) and the education requirements described in paragraph (3), such determination shall be made by the Secretary without regard to whether such requirements were included in such program at the time that such individual was licensed or registered under such program, provided that such requirements are, as of the date that such individual requested assignment or renewal of a preparer tax identification number under this subsection, presently included in such program. (5) Authority to revoke or suspend preparer tax identification number (A) In general The Secretary may suspend or revoke a preparer tax identification number if, after notice and opportunity for a hearing, the Secretary makes a determination that the tax return preparer— (i) has not met— (I) the suitability requirements of paragraph (2) and the education requirements of paragraph (3), or (II) the state program requirements of paragraph (4), (ii) is incompetent, as demonstrated by a repeated pattern of errors in returns that were prepared by such preparer which affected the determination of tax liability in such returns, (iii) is disreputable, as demonstrated by— (I) giving false or misleading information under paragraph (2)(A)(i), (II) willful failure to comply with personal tax obligations, (III) an unpaid tax delinquency— (aa) which is outstanding for greater than 180 days, (bb) which is not being actively disputed, and (cc) which is not— (AA) subject to an agreement or compromise under section 6159 or 7122, (BB) classified as currently not collectible (within the meaning of section 6343(e)), or (CC) subject to a pending application for such an agreement, compromise, or status, (IV) revocation or suspension of any license or registration issued by a State for the preparation of tax returns, (V) conviction of any criminal offense— (aa) involving dishonesty or breach of trust, or (bb) which is punishable under this title, (VI) a final determination of liability for a penalty pursuant to section 6694, 6695(h), 6700, 6701, 6702, or 6713, (VII) subject to an injunction under section 7407 or 7408, or (VIII) any conduct similar to the conduct described in subclauses (I) through (VII), as provided under regulations prescribed by the Secretary, (iv) in the case of a person subject to regulation under section 330 of title 31, United States Code, or regulations prescribed thereunder, has violated the requirements under such section or such regulations, (v) with intent to defraud, willfully and knowingly misleads or threatens— (I) the person whose return or claim for refund is being prepared, or (II) a prospective person seeking for a return or claim for refund to be prepared, or (vi) has engaged in conduct (as identified in regulations or guidance issued by the Secretary) which is similar to the conduct described in clauses (i) through (v) and that the denial, suspension, or revocation of such number would promote compliance with the requirements of this title and effective tax administration. (B) Monetary penalty (i) In general In addition to, or in lieu of, any suspension or revocation of a preparer tax identification number under subparagraph (A), the Secretary may impose a penalty in any amount not exceeding $5,000. (ii) Reduction Any penalty imposed under clause (i) shall be reduced by the amount of any penalty imposed under section 6694, 6695, 6700, 6701, 6702, or 6713 with regard to the same conduct. (iii) Adjustment for inflation (I) In general In the case of any penalty imposed during any calendar year beginning after 2025, the dollar amount in clause (i) shall be increased by an amount equal to— (aa) such dollar amount, multiplied by (bb) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. (II) Rounding If any amount determined under subclause (I) is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100. (C) Reinstatement The Secretary shall, through regulations or other guidance, establish procedures to allow any tax return preparer whose preparer tax identification number has been suspended or revoked pursuant to subparagraph (A) to have such number reissued (or, in the case of a suspension, for such suspension to be terminated), provided that such preparer demonstrates, to the satisfaction of the Secretary, that— (i) the conduct described in such paragraph which was the basis for such suspension or revocation has been sufficiently addressed or resolved (such as through completion of educational programs described in paragraph (3) or reinstatement of a license issued by a State for the preparation of tax returns), and (ii) effective tax administration would be promoted by terminating the suspension of such number or reissuing such number to such preparer. (D) Preliminary suspension (i) In general After notice and opportunity to respond, the Secretary may suspend the preparer tax identification number of a tax return preparer for a period of not greater than 180 days if the Secretary determines that— (I) such tax return preparer has engaged in any conduct described in clauses (i) through (vi) of subparagraph (A), and (II) such suspension is necessary to prevent serious economic harm to taxpayers or serious impairment of effective tax administration, such as to prevent the filing of fraudulent returns or claims for refund. (ii) Limitation For purposes of clause (i), if the preparer tax identification number of a tax return preparer has been suspended pursuant to such clause 2 times during any 5-year period, the Secretary may not issue an additional suspension pursuant to such clause with respect to such preparer during such period unless such suspension is subsequent to a determination by the Secretary to suspend or revoke the preparer tax identification number of such preparer pursuant to subparagraph (A). (E) Regulations Not later than 24 months after the date of enactment of this subsection, the Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this paragraph, including— (i) guidelines that identify the particular penalty applicable to any conduct described in subparagraph (A), and (ii) the manner of notice and opportunity to respond for purposes of subparagraph (D). (F) No inference Nothing in this paragraph shall be construed to create any inference with respect to the definition or meaning of any term used in section 330 of title 31, United States Code, or regulations prescribed thereunder. (6) Appeal In the case of any tax return preparer for whom the Secretary has made a determination— (A) that such preparer has not met the requirements of paragraphs (2) and (3) or of paragraph (4) and that issuance of a preparer tax identification number should be denied, (B) under paragraph (5)(A) that the preparer tax identification number for such preparer should be suspended or revoked, or (C) that a penalty should be imposed pursuant to paragraph (5)(B), such preparer shall be provided with an opportunity to appeal such determination pursuant to procedures (as established by the Secretary through regulations or other guidance) which are similar to the procedures provided under section 330 of title 31, United States Code, and regulations prescribed thereunder. (7) Disclosure of final determinations (A) In general In the case of any determination— (i) in which an extended suspension or revocation of a preparer tax identification number is imposed under this subsection, and (ii) for which all administrative and judicial appeals are exhausted, not later than 30 days following such determination, the Secretary shall publish such determination on the public website of the Internal Revenue Service, which shall include a statement of the facts and circumstances relating to such determination and the reasons for the determination. (B) Extended suspension For purposes of subparagraph (A), the term extended suspension means a suspension issued by the Secretary pursuant to paragraph (5)(A) for a period of greater than 180 days. (8) Preparer tax identification number For purposes of this subsection, the term preparer tax identification number means an identifying number described in subsection (a)(4)(A).. (b) Determinations regarding practice before the Department Section 330 of title 31, United States Code, is amended— (1) by redesignating subsection (e) as subsection (f); and (2) by inserting after subsection (d) the following: (e) Disclosure of final determinations In the case of any determination under subsection (c) or (d)— (1) in which a suspension, disbarment, or censure, or other penalty is imposed, and (2) for which all administrative and judicial appeals are exhausted, not later than 30 days following such determination, the Secretary shall publish such determination on a public website, which shall include a statement of the facts and circumstances relating to such determination and the reasons for the determination.. (c) Disclosure relating to misconduct by practitioners and tax return preparers (1) In general Section 6103(k) is amended by adding at the end the following new paragraph: (16) Disclosure relating to misconduct by practitioners and tax return preparers Under such procedures as the Secretary may prescribe, the Secretary may disclose returns and return information to the extent the Secretary determines it is necessary to publish determinations pursuant to section 6109(e)(7) and section 330(e) of title 31, United States Code, provided that such disclosure is redacted to remove— (A) any name, address, or other identifying information with respect to any persons other than the representative or tax return preparer who is the subject of such determination, and (B) such other information as the Secretary determines appropriate to protect the privacy of such persons.. (2) Conforming amendment Section 6103(p)(3)(A) is amended by striking or (9) and inserting (9), or (16). (d) Requirement to include identifying number for paid preparer of offer-in-compromise (1) In general Section 6109(a) is amended by inserting after paragraph (4) the following new paragraph: (5) Furnishing identifying number for offer-in-compromise Any offer-in-compromise (as described in section 7122), including any required schedule or statement, which has been prepared by any person for compensation shall include such identifying number as may be prescribed for securing proper identification of such person.. (2) Penalty Section 7122, as amended by this Act, is amended by adding at the end the following new subsection: (i) Failure to furnish identifying number (1) In general (A) Penalty Any person who prepares an offer-in-compromise (including any required schedule or statement) for compensation and who fails to include an identifying number which complies with section 6109(a)(5) with respect to such offer-in-compromise shall pay a penalty of $250 for such failure. (B) Non-compliance For purposes of this paragraph, an identifying number shall be deemed to not comply with section 6109(a)(5) if such identifying number— (i) is assigned to another person, (ii) does not exist, (iii) is inactive or expired, (iv) has been withdrawn, (v) is suspended or has been revoked, or (vi) is otherwise invalid for use by the preparer. (C) Adjustment for inflation (i) In general In the case of any documents filed during any calendar year beginning after 2025, the $250 amount in subparagraph (A) shall be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. (ii) Rounding If any amount determined under clause (i) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10. (2) Exception The penalty imposed under paragraph (1) shall not apply if it is shown that such failure is due to reasonable cause and not due to willful neglect. (3) Limitation (A) In general The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $75,000. (B) Adjustment for inflation (i) In general In the case of any penalty imposed during any calendar year beginning after 2025, the $75,000 amount in subparagraph (A) shall be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. (ii) Rounding If any amount determined under clause (i) is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000. (4) Other applicable rules Rules similar to the rules of section 6696 shall apply for purposes of this subsection.. (e) GAO Study and report on the exchange of information between the IRS and State taxation authorities (1) In general Not later than 18 months after the date of the enactment of this Act, the Comptroller General of the United States shall conduct a study and submit to Congress a report on the sharing of information between the Secretary and State authorities, as authorized under subsections (d) and (k)(5) of section 6103 of the Internal Revenue Code of 1986, regarding identification numbers issued to paid tax return preparers and return preparer minimum standards. (2) Increased information sharing The study and report described in paragraph (1) shall include an analysis of the impact that increased information sharing between Federal and State authorities would have on efforts to enforce minimum standards on paid tax return preparers. (3) Audit of Internal Revenue Service Section 6103(i)(8) is amended by adding at the end the following new subparagraph: (D) Application to study conducted under Taxpayer Assistance and Service Act For purposes of this paragraph, the study and report described in section 504(e)(1) of the Taxpayer Assistance and Service Act shall be deemed to be an audit of the Internal Revenue Service.. (f) Publication of common errors and penalties Not later than 36 months after the date of the enactment of this Act and annually thereafter, the Commissioner of the Internal Revenue shall publish on the public website of the Internal Revenue Service— (1) the 10 most frequent errors found on tax returns which were prepared by tax return preparers (as defined in section 7701(a)(36) of the Internal Revenue Code of 1986) during the most recent calendar year for which data is available, and (2) with respect to the preceding calendar year, the top 10 reasons that tax return preparers were— (A) subject to penalties imposed under the Internal Revenue Code of 1986, or (B) otherwise disciplined under section 6109 of such Code or section 330 of title 31, United States Code. (g) Rule of construction Nothing in this section (or amendment made by this section) shall be construed to require the Secretary to eliminate or terminate any existing program or authority— (1) which, pursuant to section 330 of title 31, United States Code, permits a tax return preparer to represent a taxpayer before the Department of the Treasury in cases in which such preparer prepared and signed the return of tax, or (2) for publication of a public database on the website of the Internal Revenue Service of tax return preparers who have satisfied the requirements for issuance of a preparer tax identification number (as defined in section 6109(e)(8) of the Internal Revenue Code of 1986). (h) Effective date (1) In general The amendments made by this section shall take effect on the date which is 180 days after the date of enactment of this Act. (2) Transition rules for educational requirements for tax return preparers (A) Annual Filing Season Program In the case of any tax return preparer who, as of the date of enactment of this Act, has received a record of completion with respect to the Annual Filing Season Program established by the Internal Revenue Service, such tax return preparer shall be deemed to have satisfied the education requirements of section 6109(e)(3) of the Internal Revenue Code of 1986 (as added by this section) for the calendar year for which such record of completion applies. (B) Approved courses In the case of any entity which, as of the date of enactment of this Act, is approved to provide continuing education for purposes of the Annual Filing Season Program established by the Internal Revenue Service, such entity shall be deemed to satisfy the applicable requirements under section 6109(e)(3) of the Internal Revenue Code of 1986 until the date on which the Secretary has— (i) issued such regulations or other guidance as the Secretary determines necessary for purposes of establishing standards for educational programs under such section, and (ii) pursuant to subparagraph (E) of such section, published a list of educational programs which have been determined by the Secretary to satisfy the applicable requirements under such section.