H.R. 9499 · Passed House · Taxation

Protecting Taxpayers from Ghost Preparers Act

What it does

Limit the IRS's ability to assess taxes under the fraud exception to cases where the taxpayer (not just the preparer) intends to evade taxes, narrowing the current Murrin v. Commissioner standard.
Extend tax preparer penalties to cover false or fraudulent documents purporting to be federal tax returns, partnership administrative adjustment requests, or partnership adjustment tracking reports.
Reduce the statute of limitations for tax assessment in fraud cases from unlimited to three years when the false return is filed without taxpayer knowledge or intent to evade.

Official summary

Protecting Taxpayers from Ghost Preparers Act This 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…

Latest action

Sep 16, 2026: Received in the Senate and Read twice and referred to the Committee on Finance.

Committee: Senate Finance