What changed between these versions
v2 significantly narrows the scope of the bill by deleting Section 2 from v1, which proposed new penalties for tax return preparers who improperly alter returns. The remaining provisions, concerning the limitation period for preparer fraud victims and a technical amendment, are retained but renumbered. This change removes a key enforcement mechanism against "ghost preparers."
Overview
A single, significant deletion of an entire operative section. · v2 significantly narrows the scope and enforcement capabilities of the bill compared to v1, primarily by removing a key penalty provision.
The most significant change in v2 is the complete deletion of Section 2 from v1, which aimed to apply tax return preparation penalties to improperly altered returns by expanding the definition of "return" under IRC section 6696(e)(1). This removal eliminates a core enforcement mechanism against "ghost preparers" as originally envisioned. The remaining two sections from v1, pertaining to the limitation period for victims of preparer fraud and a technical amendment, are retained without substantive alteration, but are renumbered as Section 2 and Section 3, respectively, in v2.
Deletions
This section proposed to amend paragraph (1) of section 6696(e) of the Internal Revenue Code of 1986 to expand the definition of "return" to include "any other document purporting to be a return, request, or report described in subparagraphs (A) through (C)." This expansion was intended to apply tax return preparation penalties to individuals who improperly alter returns, specifically targeting "ghost preparers."
The deletion removes the primary operative provision that would have broadened the scope of tax return preparer penalties. This means that the specific mechanism for penalizing preparers for improperly altered returns, as defined by the expanded "return" term, will not be enacted through this bill. It significantly reduces the bill's intended impact on combating improper tax preparation practices by "ghost preparers."
Scope
Meaningful expansion or narrowing — The changes are concentrated in the removal of a single, but significant, operative section, leading to a reordering of the remaining provisions. — Yes, v2 represents a meaningful change in policy direction by removing the core enforcement mechanism against "ghost preparers" that was central to v1's stated purpose. While the title remains the same, the operative penalty provision is gone. — The deletion of Section 2 means that the proposed amendment to IRC section 6696(e)(1) will not occur, leaving the existing definition of "return" in place for the purpose of tax return preparer penalties. The remaining sections (now Sections 2 and 3) interact with existing IRC provisions 6501(c)(1) and 7508A(f) as originally intended in v1.
Impact analysis
Taxpayers who might be victims of improper tax return alteration by "ghost preparers."
Negative, as a proposed safeguard against improper preparation practices is no longer included, potentially leaving taxpayers more vulnerable to such actions without the specific deterrent.
In v1, these taxpayers would have had an additional layer of protection through expanded penalties for preparers. In v2, this specific expanded penalty mechanism is removed.
Tax return preparers who improperly alter returns (often referred to as "ghost preparers").
Positive, as a new potential liability for their specific actions is removed.
In v1, these preparers would have faced expanded penalties due to the broadened definition of "return." In v2, this specific expansion of penalties is removed.