I 

108TH CONGRESS 

2D SESSION H. R. 3983

To assist low income taxpayers in preparing and filing their tax returns 

and to protect taxpayers from unscrupulous refund anticipation loan 

providers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2004

Mr. BECERRA (for himself, Mr. BROWN of Ohio, Mr. FROST, and Mr. MCGOVERN) introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each 

case for consideration of such provisions as fall within the jurisdiction of 

the committee concerned 

A BILL

To assist low income taxpayers in preparing and filing their 

tax returns and to protect taxpayers from unscrupulous 

refund anticipation loan providers, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Low Income Taxpayer 

5 Protection Act of 2004’’. 
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1 SEC. 2. REGULATION OF INCOME TAX RETURN PREPARERS 

2 AND REFUND ANTICIPATION LOAN PRO3 VIDERS. 

4 (a) DEFINITIONS.—In this Act: 

5 (1) INCOME TAX RETURN PREPARER.—

6 (A) IN GENERAL.—The term ‘‘income tax 

7 return preparer’’ means any individual who is 

8 an income tax return preparer (within the 

9 meaning of section 7701(a)(36) of the Internal 

10 Revenue Code of 1986) who prepares not less 

11 than 5 returns of tax imposed by subtitle A of 

12 such Code or claims for refunds of tax imposed 

13 by such subtitle A per taxable year. 

14 (B) EXCEPTION.—Such term shall not in15 clude a federally authorized tax practitioner 

16 within the meaning of section 7526(a)(3) of 

17 such Code. 

18 (2) REFUND ANTICIPATION LOAN PROVIDER.—

19 The term ‘‘refund anticipation loan provider’’ means 

20 a person who makes a loan of money or of any other 

21 thing of value to a taxpayer because of the tax22 payer’s anticipated receipt of a Federal tax refund. 

23 (3) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of the Treasury. 

25 (b) REGULATIONS.—

26 (1) REGISTRATION REQUIRED.—
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1 (A) IN GENERAL.—Not later than 120 

2 days after the date of the enactment of this 

3 Act, the Secretary shall promulgate regulations 

4 that—

5 (i) require the registration of income 

6 tax return preparers and of refund antici7 pation loan providers with the Secretary or 

8 the designee of the Secretary, and 

9 (ii) prohibit the payment of a refund 

10 of tax to a refund anticipation loan pro11 vider or an income tax return preparer 

12 that is the result of a tax return which is 

13 prepared by the refund anticipation loan 

14 provider or the income tax return preparer 

15 which does not include the refund anticipa16 tion loan provider’s or the income tax re17 turn preparer’s registration number. 

18 (B) NO DISCIPLINARY ACTION.—The regu19 lations shall require that an applicant for reg20 istration must not have demonstrated any con21 duct that would warrant disciplinary action 

22 under part 10 of title 31, Code of Federal Reg23 ulations. 
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1 (C) BURDEN OF REGISTRATION.—In pro2 mulgating the regulations, the Secretary shall 

3 minimize the burden and cost on the registrant. 

4 (2) RULES OF CONDUCT.—All registrants shall 

5 be subject to rules of conduct that are consistent 

6 with the rules that govern federally authorized tax 

7 practitioners. 

8 (3) REASONABLE FEES AND INTEREST

9 RATES.—The Secretary, after consultation with any 

10 expert as the Secretary deems appropriate, shall in11 clude in the regulations guidance on reasonable fees 

12 and interest rates charged to taxpayers in connec13 tion with loans to taxpayers made by refund antici14 pation loan providers. 

15 (4) RENEWAL OF REGISTRATION.—The regula16 tions shall determine the time frame required for re17 newal of registration and the manner in which a reg18 istered income tax return preparer or a registered 

19 refund anticipation loan provider must renew such 

20 registration. 

21 (5) FEES.—

22 (A) IN GENERAL.—The Secretary may re23 quire the payment of reasonable fees for reg24 istration and for renewal of registration under 

25 the regulations.
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1 (B) PURPOSE OF FEES.—Any fees re2 quired under this paragraph shall inure to the 

3 Secretary for the purpose of reimbursement of 

4 the costs of administering the requirements of 

5 the regulations. 

6 (c) PROHIBITION.—Section 6695 of the Internal Rev7 enue Code of 1986 (relating to other assessable penalties 

8 with respect to the preparation of income tax returns for 

9 other persons) is amended by adding at the end the fol10 lowing new subsection: 

11 ‘‘(h) ACTIONS ON A TAXPAYER’S BEHALF BY A NON12 REGISTERED PERSON.—Any person not registered pursu13 ant to the regulations promulgated by the Secretary under 

14 the Low Income Taxpayer Protection Act of 2004 who—

15 ‘‘(1) prepares a tax return for another taxpayer 

16 for compensation, or 

17 ‘‘(2) provides a loan to a taxpayer that is linked 

18 to or in anticipation of a tax refund for the tax19 payer, 

20 shall be subject to a $500 penalty for each incident of 

21 noncompliance.’’. 

22 (d) COORDINATION WITH SECTION 6060(a).—The 

23 Secretary shall determine whether the registration re24 quired under the regulations issued pursuant to this sec-
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1 tion should be in lieu of the return requirements of section 

2 6060. 

3 (e) PAPERWORK REDUCTION.—The Secretary shall 

4 minimize the amount of paperwork required of a income

5 tax return preparer or a refund anticipation loan provider 

6 to meet the requirements of these regulations. 

7 SEC. 3. IMPROVED SERVICES FOR TAXPAYERS. 

8 (a) ELECTRONIC FILING EFFORTS.—

9 (1) IN GENERAL.—The Secretary shall focus 

10 electronic filing efforts on benefiting the taxpayer 

11 by—

12 (A) reducing the time between receipt of 

13 an electronically filed return and remitting a re14 fund, if any, 

15 (B) reducing the cost of filing a return 

16 electronically, 

17 (C) improving services provided by the In18 ternal Revenue Service to low and moderate in19 come taxpayers, 

20 (D) providing tax-related computer soft21 ware at no or nominal cost to low and moderate 

22 income taxpayers, and 

23 (E) providing electronic filing for all tax24 payers without the use of an intermediary. 
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1 (2) REPORT.—Not later than 120 days after 

2 the date of the enactment of this Act, the Secretary 

3 shall prepare and submit to Congress a report on 

4 the efforts made pursuant to paragraph (1). 

5 (b) VOLUNTEER INCOME TAX ASSISTANCE PRO6 GRAM.—

7 (1) STUDY.—The Secretary shall undertake a 

8 study on the expansion of the volunteer income tax 

9 assistance program to service more low income tax10 payers. 

11 (2) REPORT.—Not later than 120 days after 

12 the date of the enactment of this Act, the Secretary 

13 shall prepare and submit to Congress a report on 

14 the study conducted pursuant to paragraph (1). 

15 (c) TELE-FILING.—The Secretary shall ensure that 

16 tele-filing is available for all taxpayers for the filing of tax 

17 returns with respect to taxable years beginning in 2004. 

18 (d) TERMINATION OF THE DEBT INDICATOR PRO19 GRAM.—The Secretary shall terminate the Debt Indicator 

20 program announced in Internal Revenue Service Notice 

21 99–58. 

22 (e) DIRECT DEPOSIT ACCOUNTS.—The Secretary 

23 shall allocate resources to programs to assist low income 

24 taxpayers in establishing accounts at financial institutions 
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1 that receive direct deposits from the United States Treas2 ury. 

3 (f) PILOT PROGRAM FOR MOBILE TAX RETURN FIL4 ING OFFICES.—

5 (1) IN GENERAL.—The Secretary shall establish 

6 a pilot program for the creation of four mobile tax 

7 return filing offices with electronic filing capabilities. 

8 (2) LOCATION OF SERVICE.—

9 (A) IN GENERAL.—The mobile tax return 

10 filing offices shall be located in communities 

11 that the Secretary determines have a high inci12 dence of taxpayers claiming the earned income 

13 tax credit. 

14 (B) INDIAN RESERVATION.—At least one 

15 mobile tax return filing office shall be on or 

16 near an Indian reservation (as defined in sec17 tion 168(j)(6) of the Internal Revenue Code of 

18 1986). 

19 SEC. 4. ASSISTANCE PROGRAM TO IMPROVE ACCESS TO 

20 FEDERALLY INSURED FINANCIAL INSTITU21 TIONS FOR TAXPAYERS. 

22 (a) FINDINGS AND PURPOSE.—

23 (1) FINDINGS.—Congress finds the following:
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1 (A) Approximately 40,000,000 Americans 

2 are unbanked and not utilizing mainstream, in3 sured financial institutions. 

4 (B) In 1999, nearly half of the 

5 $30,000,000,000 in earned income tax credits 

6 (EITC) claimed nationwide was refunded 

7 through refund anticipation loans, and an esti8 mated $1,750,000,000 intended to assist low9 income families through the EITC was received 

10 by commercial tax preparers and affiliated na11 tional banks to pay for tax assistance, electronic 

12 filing of returns, and high-cost refund loans. 

13 (C) Refund anticipation loans carry inter14 est rates in a range between 97.4 percent to 

15 more than 2000 percent. 

16 (D) An estimated 45 percent of earned in17 come tax credit recipients pay for check cashing 

18 services, which reduces EITC benefits by 

19 $130,000,000. 

20 (E) Individuals with bank accounts can re21 ceive their tax refunds faster than waiting for 

22 a paper check and without the need to utilize 

23 refund anticipation loans or check cashiers. 

24 (F) Individuals with federally insured de25 pository accounts have an increased opportunity 
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1 to access financial services at mainstream fi2 nancial institutions, which typically have re3 duced costs for consumers. 

4 (2) PURPOSE.—It is the purpose of this section 

5 to establish a grant program to provide unbanked 

6 low- and moderate-income taxpayers with tax prepa7 ration services and increase their access to financial 

8 services by the establishment of an account at a fed9 erally insured depository institution or credit union 

10 and the provision of financial education. 

11 (b) ESTABLISHMENT OF PROGRAM.—The Secretary 

12 is authorized to award demonstration project grants (in13 cluding multi-year grants) to eligible entities to provide 

14 tax preparation services and assistance along with estab15 lishing an account in a federally insured depositary insti16 tution for individuals that currently do not have such an 

17 account. 

18 (c) ELIGIBLE ENTITIES.—

19 (1) IN GENERAL.—An entity is eligible to re20 ceive a grant under this section if such an entity 

21 is—

22 (A) an organization described in section 

23 501(c)(3) of the Internal Revenue Code of 1986 

24 and exempt from tax under section 501(a) of 

25 such Code, 
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1 (B) a federally insured depository institu2 tion, 

3 (C) an agency of a State or local govern4 ment, 

5 (D) a community development financial in6 stitution,

7 (E) an Indian tribal organization, 

8 (F) an Alaska Native Corporation, 

9 (G) a Native Hawaiian organization, 

10 (H) a labor organization, or 

11 (I) a partnership comprised of 1 or more 

12 of the entities described in the preceding sub13 paragraphs. 

14 (2) DEFINITIONS.—For purposes of this sec15 tion—

16 (A) FEDERALLY INSURED DEPOSITORY IN17 STITUTION.—The term ‘‘federally insured de18 pository institution’’ means any insured deposi19 tory institution (as defined in section 3 of the 

20 Federal Deposit Insurance Act (12 U.S.C. 

21 1813)) and any insured credit union (as defined 

22 in section 101 of the Federal Credit Union Act 

23 (12 U.S.C. 1752)). 

24 (B) COMMUNITY DEVELOPMENT FINAN25 CIAL INSTITUTION.—The term ‘‘community de-
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1 velopment financial institution’’ means any or2 ganization that has been certified as such pur3 suant to section 1805.201 of title 12, Code of 

4 Federal Regulations. 

5 (C) ALASKA NATIVE CORPORATION.—The 

6 term ‘‘Alaska Native Corporation’’ has the 

7 same meaning as the term ‘‘Native Corpora8 tion’’ under section 3(m) of the Alaska Native 

9 Claims Settlement Act (43 U.S.C. 1602(m)). 

10 (D) NATIVE HAWAIIAN ORGANIZATION.—

11 The term ‘‘Native Hawaiian organization’’ 

12 means any organization that—

13 (i) serves and represents the interests 

14 of Native Hawaiians, and 

15 (ii) has as a primary and stated pur16 pose the provision of services to Native 

17 Hawaiians. 

18 (E) LABOR ORGANIZATION.—The term 

19 ‘‘labor organization’’ means an organization in 

20 which employees participate and which exists 

21 for the purpose, in whole or in part, of dealing 

22 with employers concerning grievances, labor dis23 putes, wages, rates of pay, hours of employ24 ment, or conditions of work.
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1 (d) APPLICATION.—An eligible entity desiring a 

2 grant under this section shall submit an application to the 

3 Secretary in such form and containing such information 

4 as the Secretary may require. 

5 (e) LIMITATION ON ADMINISTRATIVE COSTS.—A re6 cipient of a grant under this section may not use more 

7 than 6 percent of the total amount of such grant in any 

8 fiscal year for the administrative costs of carrying out the 

9 programs funded by such grant in such fiscal year. 

10 (f) EVALUATION AND REPORT.—For each fiscal year 

11 in which a grant is awarded under this section, the Sec12 retary shall submit a report to Congress containing a de13 scription of the activities funded, amounts distributed, and 

14 measurable results, as appropriate and available. 

15 (g) AUTHORIZATION OF APPROPRIATIONS.—There is 

16 authorized to be appropriated to the Secretary, for the 

17 grant program described in this section, $10,000,000, or 

18 such additional amounts as deemed necessary, to remain 

19 available until expended. 

20 (h) REGULATIONS.—The Secretary is authorized to 

21 promulgate regulations to implement and administer the 

22 grant program under this section. 
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1 SEC. 5. MATCHING GRANTS TO LOW-INCOME TAXPAYER 

2 CLINICS FOR RETURN PREPARATION. 

3 (a) IN GENERAL.—Chapter 77 of the Internal Rev4 enue Code of 1986 (relating to miscellaneous provisions) 

5 is amended by inserting after section 7526 the following 

6 new section: 

7 ‘‘SEC. 7526A. RETURN PREPARATION CLINICS FOR LOW-IN8 COME TAXPAYERS. 

9 ‘‘(a) IN GENERAL.—The Secretary may, subject to 

10 the availability of appropriated funds, make grants to pro11 vide matching funds for the development, expansion, or 

12 continuation of qualified return preparation clinics. 

13 ‘‘(b) DEFINITIONS.—For purposes of this section—

14 ‘‘(1) QUALIFIED RETURN PREPARATION CLIN15 IC.—

16 ‘‘(A) IN GENERAL.—The term ‘qualified 

17 return preparation clinic’ means a clinic 

18 which—

19 ‘‘(i) does not charge more than a 

20 nominal fee for its services (except for re21 imbursement of actual costs incurred), and 

22 ‘‘(ii) operates programs which assist 

23 low-income taxpayers in preparing and fil24 ing their Federal income tax returns, in25 cluding schedules reporting sole proprietor26 ship or farm income. 
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1 ‘‘(B) ASSISTANCE TO LOW-INCOME TAX2 PAYERS.—A clinic is treated as assisting low-in3 come taxpayers under subparagraph (A)(ii) if 

4 at least 90 percent of the taxpayers assisted by 

5 the clinic have incomes which do not exceed 250 

6 percent of the poverty level, as determined in 

7 accordance with criteria established by the Di8 rector of the Office of Management and Budg9 et. 

10 ‘‘(2) CLINIC.—The term ‘clinic’ includes—

11 ‘‘(A) a clinical program at an eligible edu12 cational institution (as defined in section 

13 529(e)(5)) which satisfies the requirements of 

14 paragraph (1) through student assistance of 

15 taxpayers in return preparation and filing, and 

16 ‘‘(B) an organization described in section 

17 501(c) and exempt from tax under section 

18 501(a) which satisfies the requirements of para19 graph (1). 

20 ‘‘(c) SPECIAL RULES AND LIMITATIONS.—

21 ‘‘(1) AGGREGATE LIMITATION.—Unless other22 wise provided by specific appropriation, the Sec23 retary shall not allocate more than $10,000,000 per 

24 year (exclusive of costs of administering the pro25 gram) to grants under this section. 
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1 ‘‘(2) OTHER APPLICABLE RULES.—Rules simi2 lar to the rules under paragraphs (2) through (5) of 

3 section 7526(c) shall apply with respect to the 

4 awarding of grants to qualified return preparation 

5 clinics.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sections 

7 for chapter 77 of the Internal Revenue Code of 1986 is 

8 amended by inserting after the item relating to section 

9 7526 the following new item:

‘‘Sec. 7526A. Return preparation clinics for low-income taxpayers.’’.

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to grants made after the date of 

12 the enactment of this Act.

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