[Congressional Record Volume 172, Number 145 (Tuesday, September 15, 2026)]
[House]
[Pages H5686-H5687]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             PROTECTING TAXPAYERS FROM GHOST PREPARERS ACT

  Mr. SMITH of Missouri. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 9499) to amend the Internal Revenue Code of 1986 to 
apply tax return preparation penalties to improperly altered returns, 
and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 9499

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Protecting Taxpayers from 
     Ghost Preparers Act''.

     SEC. 2. LIMITATION PERIOD NOT EXTENDED FOR VICTIMS OF 
                   PREPARER FRAUD.

       (a) In General.--Section 6501(c)(1) of the Internal Revenue 
     Code of 1986 is amended by inserting ``by the taxpayer'' 
     after ``intent''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to assessments made or proceedings begun after 
     the date of the enactment of this Act.

     SEC. 3. TECHNICAL AMENDMENT RELATED TO THE DISASTER RELATED 
                   EXTENSION OF DEADLINES ACT.

       (a) In General.--Subsection (f) of section 7508A of the 
     Internal Revenue Code of 1986 (as added by the Disaster 
     Related Extension of Deadlines Act) is redesignated as 
     subsection (g).
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in section 2(a) of the 
     Disaster Related Extension of Deadlines Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Smith) and the gentlewoman from California (Ms. Chu) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Missouri.


                             General Leave

  Mr. SMITH of Missouri. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks and 
submit extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of H.R. 9499, the Protecting 
Taxpayers from Ghost Preparers Act, introduced by Representative 
Malliotakis.
  Shady businesses and criminal enterprises commit all types of tax 
fraud, including exploiting the system by filing returns on behalf of 
individuals while making it appear that the taxpayers prepared and 
submitted those returns themselves.

[[Page H5687]]

  The actions of these so-called ghost preparers can leave an innocent 
taxpayer facing the blame and potential IRS penalties for a crime that 
they did not commit. This legislation provides much-needed clarity 
within our tax code and ensures Americans do not face an indefinite 
future of IRS assessments or penalties because of the misdeeds of 
others. It reflects the longstanding commitment of Representative 
Malliotakis to protecting the rights of taxpayers, particularly those 
within her own district who have been the victims of tax fraud.
  Mr. Speaker, I applaud her leadership on the issue and her work to 
put forward legislation that received unanimous approval from the House 
Ways and Means Committee.
  Mr. Speaker, I reserve the balance of my time.
  Ms. CHU. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 9499, the Protecting 
Taxpayers from Ghost Preparers Act.
  I thank my colleague, Ms. Malliotakis, for her leadership on this 
bill. This bill helps victims of tax fraud by ensuring that the IRS is 
penalizing the bad actor and not the taxpayer.
  The bill addresses circumstances under which a tax preparer commits 
fraud without the knowledge of the taxpayer. The taxpayer may not find 
out about a false or fraudulent return until years after it was filed, 
when the IRS audits the return.
  Under current law, the IRS generally must begin an audit within 3 
years after a return is filed. This is commonly referred to as a 3-year 
statute of limitations. However, when a return involves fraud with an 
intent to evade tax, the IRS has an indefinite amount of time to audit 
the return. In other words, there is no statute of limitations.
  Current law does not distinguish as to when the fraud is committed by 
a taxpayer or when it is committed by a third party, such as the 
taxpayer's return preparer who files a false or fraudulent return with 
the intent to evade tax.
  In both situations, the statute of limitations for audits is held 
open indefinitely, and the taxpayer is on the hook.
  The bill would fix this trap for unwitting taxpayers. The bill 
provides that misconduct solely by a third party, such as the 
taxpayer's return preparer, can no longer indefinitely suspend the 
statute of limitations for a taxpayer.
  It makes clear that only an intent to evade tax by the taxpayer would 
hold the statute of limitations open indefinitely for a taxpayer.
  This bill protects innocent taxpayers from being indefinitely exposed 
to IRS enforcement actions when a false or fraudulent return was filed 
by the return preparer without the taxpayer's knowledge.
  Mr. Speaker, this bill is a step in the right direction for 
protecting taxpayers from fraudulent preparers.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SMITH of Missouri. Mr. Speaker, I yield such time as she may 
consume to the gentlewoman from New York (Ms. Malliotakis).
  Ms. MALLIOTAKIS. Mr. Speaker, I rise today in strong support of my 
legislation, H.R. 9499, the Protecting Taxpayers from Ghost Preparers 
Act.
  This bill has received bipartisan support, and it passed unanimously 
out of our Ways and Means Committee.
  Every year, millions of Americans turn to tax professionals for help 
navigating our complicated tax code. They should be able to trust that 
the person they are paying to prepare their return is acting honestly 
and following the law.
  Unfortunately, dishonest tax preparers--often referred to as ghost 
preparers--take advantage of that trust. They alter returns, claim 
fraudulent deductions or credits, inflate refunds, and sometimes even 
take a percentage of the refund themselves. Then, they disappear and 
leave the taxpayer to deal with the IRS and the consequences. That is 
simply wrong.
  We have seen serious cases across the country. In Kentucky, two 
individuals pleaded guilty after preparing nearly 6,000 fraudulent 
Federal tax returns, resulting in more than $10 million in tax losses.
  In my home State of New York, a Long Island tax preparer pleaded 
guilty to nearly $12 million in a fraud scheme after preparing 
fraudulent returns and collecting more than $1 million in fees from his 
clients.
  In the Bronx, an individual was sentenced to 4 years in prison for 
orchestrating a decade-long tax fraud scheme involving tens of 
thousands of false returns.
  These schemes can leave innocent taxpayers holding the bag for 
misconduct they did not know about and did not participate in.
  Under current law, the IRS generally has 3 years to assess additional 
tax after a return is filed. When a return is fraudulent, that 
limitation can remain open indefinitely.
  The problem is that an innocent taxpayer could potentially face that 
unlimited period because of fraud committed by the preparer--even when 
the evidence is clear that the taxpayer had no intention whatsoever of 
evading taxes.

  My bill fixes that. H.R. 9499 makes clear that the unlimited statute 
of limitations for a fraudulent return applies when the taxpayer 
intended to evade taxes, not when a dishonest preparer acted alone 
without the taxpayer's knowledge. That is basic fairness.
  Taxpayers who knowingly commit fraud should absolutely face the 
consequences, and dishonest preparers who commit fraud should face the 
consequences, as well.
  I will continue working with my colleagues on both sides of the aisle 
on policies to ensure that fraudulent preparers and other bad actors 
are held accountable for taking advantage of hardworking taxpayers.
  Hardworking Americans should not face potentially endless tax 
liability because someone they trusted took advantage of them.
  Mr. Speaker, this is commonsense legislation, and it is a taxpayer 
protection measure. I thank Chairman Smith and the committee staff for 
their work to advance this legislation, and I urge my colleagues on 
both sides of the aisle to support it.
  Ms. CHU. Mr. Speaker, taxpayers who follow the rules should not be 
liable for the actions of those who do not. This bill will ensure that 
the innocent taxpayers are not on the hook for the wrongdoings of bad 
actors.
  Mr. Speaker, I urge my colleagues on both sides of the aisle to vote 
``yes'' on the bill, and I yield back the balance of my time.

                              {time}  2100

  Mr. SMITH of Missouri. Mr. Speaker, I yield myself the balance of my 
time.
  We need an IRS that is relentless in combatting fraud and pursuing 
criminals who break our tax laws. We have to make sure the agency's 
actions target the criminal and not the victim.
  This legislation will help protect taxpayers by fixing a flaw in our 
current IRS fraud prevention efforts, and I encourage all of my 
colleagues to support its passage.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Missouri (Mr. Smith) that the House suspend the rules 
and pass the bill, H.R. 9499, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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