GAO Report on Paid Tax Return Preparers

GAO Report on Paid Tax Return Preparers

Cross References

• www.gao.gov
• GAO-26-108723, February 24, 2026

The U.S. Government Accountability Office (GAO) recently issued a report entitled “Paid Tax Return Preparers: Opportunities Remain to Improve IRS Oversight.” The following are highlights of the report.

Why this matters. During fiscal year 2024, more than half of all individual taxpayers relied on paid tax return preparers to assist them in meeting their federal tax filing obligations, according to Internal Revenue Service (IRS) data. Paid preparers play a critical role in our tax system helping taxpayers file accurate, complete, and fully compliant tax returns and IRS collect the revenue that funds the federal government.

Paid preparer errors contribute to billions of dollars in improper claims of refundable tax credits and can have negative consequences for taxpayers. However, many paid preparers do not have professional credentials and are generally not subject to IRS regulation, including competency testing, suitability checks, or educational requirements.

Our prior work indicates that in some circumstances these unregulated preparers can make errors at a higher rate than taxpayers who prepare their own returns. The absence of IRS oversight can put taxpayers at risk of receiving insufficient or incompetent tax preparation services that may expose them to potentially burdensome enforcement actions.

We were asked to examine IRS’s ability to oversee preparers. This report describes what we and other oversight bodies have previously found on IRS’s oversight of paid preparers and recommendations to improve its efforts.

Key takeaways:

• The majority of paid preparers are not subject to IRS regulation, such as testing and educational requirements.
• Unqualified paid preparers make serious errors on returns that can harm taxpayers and subject them to tax adjustments and penalties.
• IRS uses various tools to oversee paid preparers and bring them into compliance, including education and outreach, civil and criminal investigations, and penalties, but IRS’s authority to oversee paid tax preparers is limited.
• We previously recommended that Congress provide IRS the authority to establish professional standards for all paid preparers and identified opportunities for IRS to improve its oversight efforts of paid tax preparers.

What have we reported on the quality of tax preparation by paid preparers? Paid preparers can make serious errors on the tax returns they prepare, as we found in our prior work examining the quality of a sample of returns completed by paid preparers and in our analyses of IRS’s National Research Program (NRP) data.

Undercover visits found common errors. During undercover visits to commercial preparers in 2006 and 2014, we found selected paid preparers often prepared returns that were incorrect, with tax consequences that were sometimes substantial. Common errors included: not reporting non-Form W-2 income (e.g., cash tips), not reporting business income, claiming an ineligible child for the Earned Income Tax Credit, and not including identifying information, such as a signature and a PTIN.

We found that as a result of these and other errors, some calculated refunds were either substantially higher or lower than they should have been. In fact, most of the preparers we visited failed to calculate the correct refund amounts. While some errors had fairly small tax consequences, others had very large consequences. In 2014, we found, for our 19 nongeneralizable visits, paid preparer errors resulted in refund amounts that varied from giving the taxpayer $52 less to $3,718 more than the correct refund amount.

IRS data show similar error rates over time. In addition, our prior analyses of IRS’s NRP data suggest that tax returns prepared by paid preparers contained a substantial number of errors. For example, in our analysis of IRS’s NRP data of returns from tax years 2006 through 2009, tax returns prepared by preparers had a higher estimated rate of errors (60 percent) than self-prepared returns (50 percent).

We have also previously found that unenrolled preparers make errors at relatively high rates compared to other types of preparers on returns claiming refundable tax credits. In our 2016 analysis of NRP audit data for tax years 2009 to 2011, we reported that unenrolled paid preparers had higher error rates for the refundable tax credits than other types of preparers, including volunteers in IRS’s sponsored Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, and taxpayers who prepared their own returns.

Preparer errors can lead to consequences. When preparers make errors, taxpayers may face consequences, and the government may collect less revenue. For example, when paid preparers overstate a taxpayer’s liabilities, taxpayers may lose out on tax benefits to which they are entitled. Alternatively, when preparers understate a taxpayer’s tax liability, the taxpayer may be subject to IRS tax adjustments and penalties. Additionally, preparer errors on returns that claim refundable tax credits, such as the Earned Income Tax Credit, can contribute to billions of dollars in improper payments.

How could Congress improve federal oversight of paid preparers? Congress could improve federal oversight of paid preparers by granting IRS authority to establish professional standards for paid preparers and security requirements for IT systems of paid preparers, as we previously recommended.

Grant IRS authority to establish professional standards for paid preparers. Most significantly, and as discussed in this report, paid preparers are not held to uniform standards because IRS lacks the statutory authority to regulate all types of paid preparers. In 2014 and again in 2022, we recommended Congress grant IRS the authority to establish

professional requirements for paid tax preparers to reduce the risk of taxpayers receiving insufficient or incompetent tax preparation services and potentially burdensome enforcement actions. In 2025, we reported that action to address this matter could produce $100 million or more in financial savings.

Other IRS oversight groups have also recommended that Congress grant IRS the authority to establish professional requirements for paid preparers. For example, beginning in 2002 and most recently in 2024, the Taxpayer Advocate Service (TAS) has recommended that Congress authorize IRS to establish minimum competency standards for paid preparers. Further, TAS has recommended that Congress authorize IRS to revoke the PTINs of preparers for violations of established minimum standards for paid preparers. The IRS Advisory Council (IRSAC) and the Electronic Tax Administration Advisory Committee (ETAAC) also recommended Congress grant IRS the authority to regulate paid preparers, most recently in 2018 and 2025, respectively.

As of February 2026, legislation has been introduced in the 119th Congress that, if enacted, would authorize Treasury to regulate paid preparers. These bills have been introduced but not enacted. Additionally, we identified legislation introduced but not enacted in prior Congresses which would have addressed this matter.

Grant IRS authority to establish security requirements for IT systems of paid preparers. In 2019, we found that IRS was unable to ensure the adequate protection of taxpayers’ sensitive personal information when it was held by paid preparers or tax preparation software providers. We recommended that Congress should consider providing IRS with explicit authority to establish security requirements for the information systems of paid preparers and authorized e-file providers.

In 2018 and 2019, ETAAC supported granting IRS authority to establish and enforce security standards.

At least one bill was introduced in a prior Congress that, if enacted, would have addressed this matter. However, as of February 2026, no legislation has been introduced in the 119th Congress that, if enacted, would provide IRS with explicit authority to establish security requirements for the information systems of paid preparers and authorized e-file providers.

Consider recommendations by other oversight groups. Finally, TAS has recommended several changes to increase oversight of paid preparers. For example, in every year since 2017, TAS has recommended Congress amend IRC sections 6694 and 6695 to increase the dollar amount of the penalties and broaden their scope. In addition, in 2023 and 2024, TAS recommended Congress grant Treasury the authority to revoke PTINs for violations of established minimum standards.