YourVoice.Now Summary
Average Household ImpactPreparers who secretly alter returns face wider penalties — and their victims keep the normal IRS time limit.
Average Household Impact
- Penalty coverage for preparers — Extended to adjustment requests and tracking reports
- Protection for defrauded taxpayers — Open-ended assessment applies only to the taxpayer's intent
The details
Two changes would target tax preparers who alter returns without telling the client. So-called ghost preparers fill out a return, then change it after the taxpayer signs. Federal preparer penalties would reach more kinds of filings. That includes partnership adjustment requests and tracking reports, plus anything presented as one. The second change protects the taxpayer. Today a fraudulent return can leave the IRS free to assess tax with no time limit at all. That open-ended window would apply only when the taxpayer intended the fraud. A taxpayer whose preparer committed the fraud would keep the normal limitations period. The bill also fixes a lettering error in a recent disaster deadline law.
Congressional Summary
Protecting Taxpayers from Ghost Preparers ActThis bill limits the amount of time the Internal Revenue Service (IRS) has to assess taxes related to fraudulent or false federal tax returns where there is no intent by the taxpayer to evade taxes. The bill also expands the types of documents for which various penalties may be imposed against tax return preparers.As background, the IRS generally has three years from the date that a tax return is filed (statute of limitations) to assess taxes owed by the taxpayer for the tax year. However, if a false or fraudulent tax return is filed with the intent to evade tax (fraud exception), then the IRS may assess taxes at any time. In Murrin v. Commissioner the U.S. Tax Court held (and the U.S. Court of Appeals for the Third Circuit affirmed) that the fraud exception applies when a tax return preparer places false or fraudulent entries on a tax return without the taxpayer’s knowledge. In contrast, the U.S. Court of Federal Claims held in BASR Partnership v. Commissioner that the fraud exception only applies if the taxpayer intends to evade taxes.The bill limits the fraud exception to cases in which the taxpayer intends to evade taxes.Further, under the bill, tax return preparers may be subject to penalties related to false or fraudulent documents purporting to be federal tax returns, partnership administrative adjustment requests, or partnership adjustment tracking reports. (Currently, the penalties apply if the documents are valid submissions to the IRS.)
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2026-06-29
- Date Added
- 2026-07-23
- Source
- Congress.gov →
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