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Federal Tax

Bicameral Bill Would Regulate Return Preparers

Jeff Carlson  

· 5 minute read

Jeff Carlson  

· 5 minute read

Senator Cory Booker, Democrat of New Jersey and Representative Suzanne Bonamici, Democrat of Oregon, on April 19 introduced bicameral legislation to protect taxpayers from unscrupulous tax preparers.

The Tax Refund Protection Act (TRPA) (HR 2702) would prevent predatory preparers from skimming money off tax returns, overcharging for their services through hidden fees, or redirecting an entire refund into their own account.

“Navigating tax season is complicated enough without having to worry about a refund being taken by someone who is unqualified or predatory,” said Bonamici in a prepared statement. “The Tax Refund Protection Act will stop unscrupulous tax preparers from stealing refunds individuals and families need and rely on to cover costs.”

The legislation would direct the Department of the Treasury to establish necessary licensing, fees, and certification of tax preparers. It would also require tax preparers to provide taxpayers with a disclosure statement outlining the fees they will charge for preparing a tax return, direct taxpayers to where they can find information about when they can expect to receive their refunds, and disclose potential additional fees associated with a refund anticipation check.

The TRPA updates the rules covering tax professionals, such as tax attorneys and accountants, allowing the Treasury Department to license and regulate for-profit tax preparers. The legislation also allows Treasury and the IRS to collect fees sufficient to support the cost of the licensing program and institute penalties for improper conduct.

In addition, the TRPA gives Treasury the authority to regulate Refund Anticipation Checks (RACs) through disclosure requirements and clarifies that the IRS may seek both civil and criminal penalties when tax return preparers improperly disclose taxpayers’ sensitive information.

The bill broadly covers any product sold as a means for a taxpayer to defer payment of tax prep until the refund is issued, this prevents preparers from simply changing their refund method to get around those protections. Tax Return Preparers would be required to disclose to taxpayers:

• How much they charge for preparing and filing a tax return;

• Where they can find how long it will take for the taxpayer to receive a refund;

• Difference in time between when a taxpayer would receive refund directly from IRS and from preparer in the form of a Refund Anticipation Check (RAC); and,

• That a RAC is not necessary to receive a tax refund.

Bonamici and Booker initially introduced The Tax Refund Protection Act, (HR 1778), on April 14, 2015, but it never came up for a vote in either chamber.


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