For many Americans, tax season isn’t just a date on the calendar—it’s a complex financial hurdle. In fiscal year 2024, 57% of individual taxpayers (over 85 million people) turned to paid preparers for help. While these professionals are vital to our tax system, a new report from the U.S. Government Accountability Office (GAO) reveals a startling reality: the majority of these preparers operate without any federal oversight regarding their competency or education.
Here is a breakdown of why this matters for your wallet and what needs to change.
The “Competency Gap” in Tax Preparation
Taxpayers often assume that if someone charges for tax services, they must be licensed. However, the GAO found a significant divide in the “preparer population” as of December 2025:
- Tax Practitioners: There are approximately 295,751 credentialed practitioners, including Certified Public Accountants (CPAs), attorneys, and Enrolled Agents. These individuals are subject to IRS standards and state licensing.
- Unenrolled Preparers: This group includes over 519,000 individuals with no professional credentials. In most states, anyone can be an unenrolled preparer regardless of their education or experience.
- “Ghost” Preparers: These are individuals who prepare returns for a fee but refuse to sign them or provide a Preparer Tax Identification Number (PTIN). They often encourage fraudulent claims and may even attempt to steal taxpayer refunds.
Why This Is Risky for Taxpayers
When a preparer lacks proper training, the taxpayer pays the price. GAO’s prior undercover visits and data analysis highlight several critical issues:
- High Error Rates: In some studies, returns handled by paid preparers had a 60% error rate, compared to 50% for self-prepared returns.
- Financial Consequences: Errors can lead to “substantially higher or lower” refunds than what is legally owed. If a preparer understates your liability, you—the taxpayer—are responsible for the resulting IRS adjustments and penalties.
- Billions in Improper Payments: Errors by unregulated preparers contribute to billions of dollars in improper claims for refundable tax credits.
Current IRS Oversight Tools
The IRS isn’t completely powerless, but its “toolbox” is limited. Currently, the agency uses:
- Education and Outreach: Programs like the “Dirty Dozen” list warn taxpayers about common scams.
- Due Diligence Requirements: Preparers must follow specific rules when claiming certain credits, such as the Earned Income Tax Credit.
- Investigations and Penalties: The IRS can issue civil penalties, such as a $1,000 fine (or 50% of the fee) for “unreasonable positions” that understate liability. Criminal penalties for willful fraud can include up to 3 years of imprisonment.
The Path Forward: GAO Recommendations
The GAO argues that the current system is insufficient because the IRS lacks the statutory authority to set uniform professional standards. To fix this, the GAO and other oversight bodies recommend:
- Granting New Authority: Congress should authorize the IRS to establish minimum competency standards and security requirements for all paid preparers.
- Centralizing Leadership: The IRS needs a coordinated, service-wide strategy to handle preparer misconduct and protect taxpayer data held by third-party providers.
- Increasing Penalties: Some oversight groups suggest broadening the scope and increasing the dollar amount of penalties to deter bad actors.
The Bottom Line: Until Congress acts, the responsibility of vetting a tax preparer falls largely on the consumer. Choosing a credentialed professional or a participant in the IRS’s voluntary Annual Filing Season Program can help ensure your return is accurate and your financial data is secure.
