Lawmakers introduce bill to stop fraudulent tax returns

A pair of congressmen have introduced legislation to help prevent the submission of fraudulent tax returns to the Internal Revenue Service before they're filed by requiring tax software to verify that Electronic Filing Identification Numbers are active and authorized before e-file functionality is enabled. 

The bipartisan bill, known as the EFIN Verification Act of 2026, would require validation of an EFIN through tax software prior to the electronic filing of any return or other document, and would not permit electronic filing unless an EFIN has been validated. It was introduced by Rep. Ron Estes, R-Kansas, and Jimmy Panetta, D-California. 

"The EFIN Verification Act of 2026 will reduce the risk of fraudsters using stolen or compromised EFIN numbers to file IRS returns," said Estes in a statement Monday. "By preventing fraudulent IRS returns from being filed with EFIN verification, this legislation will maintain the integrity of our tax system, prevent scams before they happen, and codify an already-existing IRS program into law."

The bill would set up an EFI verification system that the IRS could use to authenticate legitimate tax preparation firms.

"Tax preparation firms play an important role in helping working Americans file their tax returns electronically, but the IRS currently lacks the tools to authenticate their Electronic Filing Identification Numbers," said Panetta in a statement. "This security gap leaves those numbers vulnerable to theft and misuse by online scammers. I'm proud to co-lead this bipartisan legislation with Rep. Estes to require the IRS to establish an EFIN verification system that will strengthen security, reduce fraud and protect taxpayers' hard-earned money."

Under the bill, the Treasury would have to develop a program for validating EFINs prior to their use and periodically ensure their continued integrity and validity. There would be a real-time system for EFIN validation, providing immediate confirmation of the validity status of an EFIN at the time a validation request is made, confirming whether an EFIN is active and authorized or has been suspended, revoked or otherwise identified as compromised or ineligible. It would be "designed to support secure, automated and high-volume validation requests, including usage by large-scale tax preparation software systems."

The Treasury would have to make the system available in a secure, standardized way to people authorized to submit validation requests two years after enactment of the bill.