Overview
Title
To set minimum standards for tax return preparers.
ELI5 AI
The "Taxpayer Protection and Preparer Proficiency Act of 2024" wants people who help others with their taxes to prove they know what they're doing by passing tests and other checks. This helps make sure they are doing the right thing when handling your tax information.
Summary AI
H. R. 10461, known as the "Taxpayer Protection and Preparer Proficiency Act of 2024," aims to set minimum standards for tax return preparers. The bill proposes that tax preparers must demonstrate their competence by obtaining an identification number, passing examinations, fulfilling continuing education requirements, and undergoing background checks. It also seeks to reinstate the Registered Tax Return Preparer Program and provide exemptions for preparers already meeting similar standards in other programs. Additionally, the bill calls for a study on enhancing information sharing between federal and state authorities to improve regulation and compliance among tax return preparers.
Published
Keywords AI
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Bill Statistics
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "Taxpayer Protection and Preparer Proficiency Act of 2024," seeks to establish more stringent standards for those who prepare tax returns. The bill gives the Department of the Treasury authority to regulate the practice of tax return preparers. It introduces measures requiring tax return preparers to meet certain competency standards through examinations, continuing education, and background checks. Additionally, the bill reinstates the Registered Tax Return Preparer Program and imposes rules for identifying numbers linked to tax return preparers. Importantly, this legislation also aims to enhance the sharing of information between federal and state tax authorities.
Summary of Significant Issues
One of the prominent issues with this bill is the complexity of its language. It modifies existing statutes, which may make it difficult for non-experts to understand. The legislation's various provisions require familiarity with specific sections of the Internal Revenue Code, potentially leading to confusion among stakeholders not well-versed in tax law.
Another significant concern is the potential burden the legislation could place on small tax preparation businesses and individual preparers. The requirement for additional exams and background checks might increase operational costs, which could in turn be passed on to consumers.
Additionally, the bill's criteria for exempting certain preparers from these standards lack clarity. This could lead to inconsistent applications and potential loopholes. The reinstatement of the Registered Tax Return Preparer Program may also result in redundant regulatory efforts, especially where similar state-level standards exist.
Concerns regarding privacy and security also arise from the provisions related to the handling and potential rescission of identifying numbers for preparers. The increased information sharing between federal and state authorities further amplifies these concerns, raising ethical questions regarding taxpayer privacy.
Lastly, the absence of a clear analysis of the financial impact on both the government and the public is noteworthy. The costs associated with implementing and enforcing these new standards remain unspecified.
Impact on the Public and Specific Stakeholders
From a broad public perspective, the bill may lead to increased costs for taxpayers seeking professional assistance with their tax returns. Tax preparation services could become more expensive as businesses adjust to meet new compliance requirements. On the other hand, the legislation aims to enhance the accuracy and reliability of tax return preparation, potentially reducing instances of fraud and error, which could be beneficial for taxpayers.
For tax return preparers, particularly those operating smaller practices, the bill represents a significant regulatory hurdle. The additional requirements for competency standards could pose financial and administrative challenges. However, for larger firms and those already meeting high standards, these changes could present a competitive advantage.
State authorities might find themselves better equipped to work in tandem with federal agencies due to enhanced information sharing, potentially leading to more effective enforcement of tax laws. However, if not carefully managed, this could also lead to concerns about data privacy and the security of taxpayer information.
In summary, while the bill has the potential to improve the standards in tax return preparation, it also presents challenges that will require careful consideration and management to avoid unintended negative consequences for both professionals and the public.
Issues
The complexity of the language used in Section 2 (subsections (a) and (b)) may make it difficult for non-experts to understand the bill, as it includes legal jargon and multiple insertions/amendments to existing code sections.
The requirement for tax return preparers to undergo competency standards, including exams and background checks as stated in Section 2(c), could impose additional burdens and costs on small tax preparation businesses and individuals, potentially leading to increased service costs for consumers.
The exemption criteria for tax return preparers already subject to comparable requirements in Section 2(c)(2) is not sufficiently detailed, which may lead to inconsistencies in the application and possible loopholes.
The reinstatement of the Registered Tax Return Preparer Program and potential duplication of regulatory efforts as noted in Section 2(c)(3) could result in administrative overhead, especially where state-level requirements are already in place.
The identification number provision for tax return preparers in Section 2(e)(1) raises privacy concerns due to the Secretary's rescission authority, as mentioned in Section 2(e)(2). The management of these identification numbers and the reasons for rescission represent potential risks for identity security and privacy.
The ambiguity surrounding increased information sharing between Federal and State authorities in Section 2(f) could impact taxpayer privacy and compliance, raising ethical considerations regarding the protection of sensitive information.
The legislative text lacks a clear financial impact analysis of implementing and enforcing new standards for tax return preparers, particularly as outlined in Sections 2(c) and 2(e), leaving the government and taxpayers with unknown potential costs.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
This section states that the Act can be referred to as the “Taxpayer Protection and Preparer Proficiency Act of 2024”.
2. Regulation of tax return preparers Read Opens in new tab
Summary AI
The bill aims to regulate tax return preparers by amending existing laws to grant the Department of the Treasury authority to oversee their practice, require minimum competency standards, and reinstate the Registered Tax Return Preparer Program. It also addresses the handling of identifying numbers for tax return preparers and includes provisions for enhanced information sharing between federal and state authorities to improve enforcement of these regulations.