June 27, 2025
A coalition has expressed opposition to Section 504 of the draft Taxpayer Assistance and Service (TAS) Act, which proposes new occupational licensing requirements for tax preparers. The group argues that these changes would increase costs and drive independent tax preparers out of business.
Currently, tax preparers must register with the IRS and undergo suitability checks, including screening for felony convictions and past tax compliance. Approved preparers receive a “Preparer Tax Identification Number” (PTIN), allowing the IRS to track returns and address misconduct with penalties up to $100,000 and imprisonment.
The proposed Section 504 would replace this system with a more burdensome federal occupational licensing regime. This includes a “continuing education” requirement of up to 18 hours annually. Critics argue this will raise compliance costs significantly, reducing competition in the market and harming consumers by limiting their choices.
Concerns have been raised about the potential growth of illegal “ghost preparers,” who prepare returns without signing them, making it difficult for the IRS to track them. Industry experts estimate that up to twenty percent of tax preparation businesses could close due to these new burdens.
The coalition urges lawmakers not to impose these new licensing requirements on tax preparers, arguing they are more likely to harm than help consumers. They suggest rejecting efforts to include this provision in any larger legislation.
For further inquiries, Dan Alban from the Institute for Justice can be contacted at [email protected].