Linda Galler (Hofstra) & Jay A. Soled (Rutgers; Google Scholar), Should PTIN Omissions Be Criminalized?, 186 Tax Notes Fed. 1831 (Mar. 10, 2025):
On January 30 Senate Finance Committee Chair Mike Crapo, R-Idaho, and ranking member Ron Wyden, D-Ore., released a discussion draft of bipartisan legislation pertaining to IRS procedure and administration. Several provisions are designed to protect the public and fisc from unscrupulous tax return preparers. For example, the draft prescribes minimum requirements for obtaining a preparer tax identification number, which preparers are required to include on tax returns and claims for refunds that they prepare. The draft provides for healthy increases in the dollar amounts of civil penalties that can be imposed for various failings by return preparers, including the penalty for omitting a PTIN from a tax return or claim for refund.
To deter “ghost preparers” — persons who prepare but do not sign returns or otherwise comply with PTIN obligations — the draft proposes the criminalization of failure to comply with PTIN requirements. The proposed legislation would make it a felony to willfully (1) fail to furnish a PTIN, (2) furnish an invalid PTIN, or (3) furnish a PTIN assigned to another person. Those charged could face two years in prison, a fine of up to $50,000 ($100,000 for a corporation), or both.
We have argued elsewhere that the IRS should use artificial intelligence to identify return preparers who are derelict in their professional duties and to hold such individuals accountable for their misdeeds [AI and the Regulation of Tax Return Preparers, 28 Fla. Tax Rev. 1 (2024)]. AI’s ability to detect patterns and anomalies should enable the IRS to find many more ghost preparers than it has in the past.
However, our joint analysis leads us to opposing conclusions regarding the advisability of a criminal penalty. One of us [Soled] believes that criminal sanctions are both called for and necessary, while the other [Galler] argues that, coupled with the use of AI as we have proposed, existing civil and criminal penalty provisions — if enforced — are sufficient to deter ghost preparers.
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