HR 451
Fair prep act of 2025
Fair Prep Act of 2025
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Bill overview
The Fair Prep Act of 2025 prohibits the Internal Revenue Service (IRS) from directly preparing federal tax returns or refund claims, with some exceptions. Specifically, it restricts the IRS’s Direct File program and similar electronic services. However, it allows for tax preparation through existing programs like the IRS Free File and Volunteer Income Tax Assistance, while also limiting the Treasury Department’s ability to fund new electronic tax preparation services. The bill aims to increase taxpayer autonomy in preparing their own returns.
Key provisions
- Prohibits the IRS from preparing federal tax returns or refund claims.
- Specifically restricts the IRS’s Direct File program.
- Allows tax preparation through the IRS Free File program and Volunteer Income Tax Assistance.
- Defines ‘prepare’ as completing forms and filing returns, excluding certain computations and corrections.
- Limits the Treasury Department’s ability to fund new electronic tax preparation services.
- Establishes a 30-day delay before the prohibition takes effect.
- Clarifies that the bill does not impact the IRS’s existing programs.
- Prohibits the awarding of grants for electronic tax preparation services after enactment.
Who is affected
- Taxpayers
- The Internal Revenue Service (IRS)
- The Department of the Treasury
- Tax preparation software providers
- Low-income and disabled taxpayers
Notable changes
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Primary sponsor
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119th CONGRESS — 1st Session
H. R. 451
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to prohibit certain activities constituting preparation of tax returns by the Secretary of the Treasury, and for other purposes.
This Act may be cited as the Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025 FAIR PREP Act of 2025
or the
.
Section 6020 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Except as provided in section 6014 and subsections (a) and (b) of this section, the Secretary shall not prepare any return of tax imposed by this title or any claim for refund of tax imposed by this title.
For purposes of paragraph (1), any return or claim for refund prepared using an electronic tax preparation service operated by the Secretary shall be treated as if such return or claim were prepared by the Secretary.
Paragraph (2) shall not apply to any return or claim for refund solely because such return or claim for refund was prepared via, or with the assistance of—
a qualified return preparation program (as defined in section 7526A(e)), or
the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.
the completion of any form and schedule needed to compute and report any tax imposed by this title or any claim for refund of such a tax, and
the filing of any such return or claim for refund, regardless of whether such return or claim is submitted electronically or on paper.
For purposes of the preceding sentence, the preparation of any portion of a return or claim for refund shall be treated as if it were the preparation of such return or claim for refund.
Such term shall not include the provision of fillable forms by the Secretary merely because such forms include an automated calculation feature.
The amendment made by this section shall apply to returns filed after the date which is 30 days after the date of the enactment of this Act.
The Secretary of the Treasury (or any delegate of such Secretary) may not award or make payment of grants or enter into or maintain any contract, other transaction, or reimbursable agreement for the development or operation of an electronic tax preparation service option after the date of the enactment of this Act unless otherwise authorized by law.