How confident are you in the person preparing your tax return?

Millions of taxpayers rely on paid preparers each year, often assuming those professionals meet basic competency standards. But that isn’t always the case.

Should tax preparers be subject to more regulation? Congress is giving that question a second look.

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So far this season , the IRS has received 41,377,000 e-filed returns, and 17,795,000—about 43%—were filed by tax professionals. By the end of the filing season, that share will likely grow. In fiscal year 2024, more than 85 million taxpayers—57% of all individual filers—used a paid preparer. Yet in most states, almost anyone can prepare tax returns for pay.

PTINs And The Basics Of Tax Preparer Identification

There are approximately 870,000 preparers with active Preparer Tax Identification Numbers (PTINs). A PTIN is a unique identification number issued by the IRS to anyone who prepares or helps prepare federal tax returns for pay. Paid tax preparers must obtain and include a valid PTIN on the returns they prepare so the IRS can identify and track them. PTINs aren’t transferable and must be renewed every year.

However, some individuals file tax returns on behalf of clients without providing a valid PTIN. The IRS calls these individuals ghost preparers. According to the IRS, ghost preparers might encourage taxpayers to claim tax credits and benefits they don’t qualify for and may even attempt to steal the taxpayer’s refund. Ghost-preparer returns are not included among the 85 million returns identified as completed by paid preparers for taxpayers in fiscal year 2024.

Credentialed Preparers Compared To Unenrolled Preparers

Only about 295,751 (or 40%) of PTIN holders are credentialed professionals, such as certified public accountants, attorneys, or enrolled agents. Many of them have strict licensing requirements.

Enrolled agents, for example, must pass a three-part IRS exam at the federal level and complete ongoing education requirements. CPAs and attorneys are licensed at the state level and typically face extensive testing and yearly education requirements. All credentialed preparers are subject to Treasury Department Circular 230—a list of dos and don'ts for tax professional—when representing taxpayers before the IRS.

All other paid preparers without professional credentials are considered unenrolled preparers. Unenrolled preparers generally cannot represent taxpayers before the IRS unless they voluntarily participate in the’ Annual Filing Season Program (AFSP). Participants complete continuing education and agree to IRS standards of competency and ethics and in return, receive a record of completion and are listed in the public IRS preparer database.

Anyone Can Prepare Taxes In Most States

If you decide not to pursue credentials, you can still generally prepare tax returns since, in most states, anyone can become a tax preparer. Usually, no minimum education, testing, or experience is required, and there’s little to no oversight.

A recent Government Accountability Office (GAO) report suggests that the lack of standards can create problems. The GAO previously found that paid preparers sometimes make serious errors—and that unenrolled preparers make mistakes more often than taxpayers who prepare their own returns or those who use credentialed professionals.

Error Rates And Their Consequences

In undercover visits conducted by the GAO in 2006 and 2014, the agency found that most preparers failed to calculate the correct refund. In the 2014 study, mistakes resulted in refund amounts ranging from $52 less than the correct amount to $3,718 more.

In addition, the GAO’s review of IRS research data found that returns prepared by paid preparers had an estimated 60% error rate, compared to 50% for self-prepared returns. The highest error rates were among unenrolled preparers, particularly on returns claiming refundable credits.

(With refundable tax credits , a taxpayer may receive money back even if they owe little or no tax.)

Those mistakes can have real consequences. If a preparer understates a taxpayer’s tax liability, the taxpayer may face audits, penalties, and stress months or years later. If a preparer overstates liability, the taxpayer may lose credits or refunds they are entitled to receive.

Why The IRS Can’t Fully Regulate Preparers

Despite these concerns, the IRS’s ability to regulate preparers is limited. In 2011, the agency tried to require testing and continuing education for all paid preparers. But in 2014 , a federal appeals court ruled inLoving v. Commissionerthat the IRS lacked the statutory authority to regulate or license paid tax return preparers.

The case was filed by three independent preparers who challenged an IRS program introduced in 2009 that would have required preparers to register, pass competency tests, and complete continuing education. The IRS argued that it had authority under an old statute allowing it to regulate representatives who practice before the agency.

Both the district court and the appellate court rejected that argument. The courts concluded that the law—originally enacted in the 1880s to regulate representatives handling Civil War pension claims—did not grant the IRS the power to impose licensing requirements on tax preparers. The court held that the IRS could not expand its authority without explicit congressional authorization.

The decision stopped the IRS’s attempt to more closely regulate tax preparers, but it did not remove all oversight. Preparers still need to obtain and use a PTIN, and the IRS can still penalize misconduct under current tax laws.

Congress Considers New Reforms

The GAO has repeatedly recommended that Congress give the IRS authority to set minimum professional requirements. The agency estimates that doing so could generate $100 million or more in savings. However, followingLoving, Congress has not acted to give the IRS broader authority.

That could be changing. Congress is now considering a sweeping bipartisan bill—the Taxpayer Assistance and Service Act (TAS Act)—aimed at modernizing the IRS and improving its service to taxpayers.

The bill, introduced by Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Ore.), seeks to improve IRS operations—from faster refunds to better online tools—while also tightening rules on preparer misconduct. It does not create a nationwide licensing system for preparers, but it does attempt to strengthen enforcement and accountability.

What The Bill Would Change

The bill would increase penalties for preparers who modify returns without permission, fail to use valid identification numbers, improperly prepare returns, and steal refunds.

It would also grant the Treasury Department clear authority to deny, revoke, or suspend a PTIN. That bit is significant. Currently, the IRS can penalize preparers after misconduct occurs, but removing a preparer from the system entirely can be difficult. Explicit authority to revoke or suspend PTINs would give the agency a stronger tool to stop repeat offenders.

Still, the bill stops short of requiring minimum competency standards. It does not require testing or continuing education for paid preparers. In that sense, the bill focuses more on misconduct than basic competence.

Modernizing The IRS

The TAS Act also attempts to address another issue: why so many taxpayers feel they need paid help in the first place.

As a first step towards a fix, the bill requires the IRS to digitize more paper returns and correspondence, process electronic filings more efficiently, and use optical character recognition (OCR) to handle paper submissions (rather than rely on manual processing). These changes could reduce processing delays and transcription errors.

The bill would also upgrade the “Where’s My Refund?” tool, expand online accounts so taxpayers and their representatives can view notices and respond digitally, and provide real-time information on phone wait times. It would also expands callback options so taxpayers don’t have to sit on hold indefinitely (no matter how delightful the hold music might be).

These changes might seem minor, but they are important. When taxpayers struggle to get clear answers from the IRS, when refunds are delayed, and phone lines are overwhelmed, many turn to paid preparers for help navigating the system. If the IRS becomes more transparent and responsive, some of that reliance could decrease.

The bill also strengthens reporting requirements around tax fraud. It requires annual reports detailing efforts to detect and prevent refund fraud, including data on fraudulent claims and disallowed refunds. Better data could help identify patterns of preparer abuse.

At the same time, the TAS Act enhances the independence and authority of the National Taxpayer Advocate and the IRS Independent Office of Appeals. This may improve fairness and accountability in disputes, especially for taxpayers harmed by preparer errors.

Two Different Approaches To The Same Problem

While the goals are generally the same (a better experience for taxpayers), the GAO and the TAS Act approach the issue of preparer oversight differently. You could think of it this way. The GAO is arguing for setting the bar—ensuring that paid preparers meet basic professional standards before they start work. The TAS Act focuses more on removing bad actors after they break the rules and on improving the tax system overall.

The Policy Tradeoffs

There are tradeoffs. Requiring testing and continuing education for all preparers could reduce the number of available preparers—particularly in rural or lower-income communities—and could increase costs for taxpayers. These are arguments that have proved persuasive to Congress in previous years.

But leaving the system largely unregulated means accepting higher error rates and greater risk to taxpayers. As long as most preparers can operate without meeting basic professional standards, it’s likely that taxpayers will continue to be on the receiving end of inconsistent quality and avoidable mistakes.

For now, Congress appears focused on improving oversight and enforcement rather than setting uniform competency requirements. Whether lawmakers ultimately decide to give the IRS authority to establish those standards remains an open question.

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