Tax Refund Protection Act of 2017

To amend the Internal Revenue Code of 1986 and the Consumer Financial Protection Act of 2010 to regulate tax return preparers and refund anticipation payment arrangements, and for other purposes. 1. Short title This Act may be cited as the Tax Refund Protection Act of 2017 2. Regulation of tax return preparers (a) In general Subchapter A of chapter 80 7812. Regulation of tax return preparers (a) In general The Secretary shall— (1) establish a program to license or certify tax return preparers subject to this section, (2) regulate such tax return preparers, and (3) before licensing or certifying a person as a tax return preparer subject to this section, require that the person demonstrate— (A) good character, (B) good reputation, (C) necessary qualifications to enable the person to provide to persons valuable service as a tax return preparer, and (D) competency to perform the functions of a tax return preparer. (b) Authority To impose a fee The Secretary shall require tax return preparers subject to this section to pay a reasonable fee for licensing or certification under this section. (c) Disclosure requirements The Secretary shall, by rule, require tax return preparers subject to this section to provide a disclosure statement to taxpayers that shall contain statements— (1) identifying the amount of fees such tax return preparer charges for preparing a Federal income tax return, filing a Federal income tax return, or executing a refund anticipation payment arrangement, and (2) identifying the average amount of time in which an individual who files a Federal income tax return electronically can expect to receive a refund by mail, according to information provided by the Internal Revenue Service. (d) Disciplinary procedures After notice and opportunity for a hearing, the Secretary may take any enforcement action against a tax return preparer subject to this section who— (1) is incompetent, (2) is disreputable, (3) violates regulations prescribed under this section, or (4) with intent to defraud, willfully and knowingly misleads or threatens a consumer. (e) Tax return preparer subject to section A tax return preparer is subject to this section if such preparer is not subject to section 330 of title 31, United States Code. (f) Definitions For purposes of this section— (1) Tax return preparer See section 7701(a)(36) for the definition of a tax return preparer. (2) Refund anticipation payment arrangement The term refund anticipation payment arrangement . (b) Clerical amendment The table of sections for subchapter A of chapter 80 Sec. 7812. Regulation of tax return preparers. . (c) Effective date The amendments made by this section shall apply with respect to returns filed after December 31, 2017. 3. Regulation of refund anticipation payment instruments (a) In general Subtitle B of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5481 1029B. Regulation of refund anticipation payment arrangements (a) In general The Bureau shall regulate refund anticipation payment arrangements. (b) Disclosure requirements The Bureau shall, by rule, require tax return preparers subject to this section offering a refund anticipation payment agreement to provide a disclosure statement to a consumer that shall contain statements— (1) identifying the amount of fees for executing a refund anticipation payment arrangement; (2) describing, in the case of a refund anticipation payment arrangement involving a depository account not controlled by the consumer, the difference in days between the average amount of time by which a consumer receives the tax refund (in whole or in part) from a refund anticipation payment arrangement and the average amount of time by which a consumer who files a Federal income tax return electronically receives the tax refund deposited directly to that consumer’s deposit account by the taxing authority; (3) that a refund anticipation payment arrangement is not necessary to receive a tax refund; and (4) that, if a consumer does not receive a tax refund or the amount of the tax refund is less than the amount anticipated under the refund anticipation payment arrangement, the consumer may be responsible for paying any fees and interest associated with a refund anticipation payment arrangement. (c) Requirements under TILA The Bureau shall issue regulations that, to the extent practicable, require tax return preparers that enter into a refund anticipation payment arrangement to comply with section 128 of the Truth in Lending Act ( 15 U.S.C. 1638 (d) Definitions For purposes of this section, the following definitions shall apply: (1) Tax return preparer The term tax return preparer subject to this section section 7701(a)(36) (2) Refund anticipation payment arrangement The term refund anticipation payment arrangement (A) requesting the Federal Government to deposit such tax refund, in whole or in part, directly into a depository account designated by either the consumer or the tax return preparer, lender, or other affiliated lender; or (B) directly paying the fee or interest to the tax return preparer, lender, or other affiliated lender. . (b) Clerical amendment The table of contents of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5301 Sec. 1029B. Regulation of refund anticipation payment arrangement. . (c) Exclusion for certain tax preparers (1) In general Section 1027(d)(1) of such Act is amended by striking subparagraph (B). (2) Conforming amendments Section 1027(d) of such Act is further amended— (A) in paragraph (1)— (i) in the heading, by striking and Tax Preparers (ii) by striking authority over any person that authority over any person that (iii) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively, and by moving such subparagraphs 2 ems to the left; (iv) by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively, and by moving such clauses 2 ems to the left; (v) by striking tax, advisory tax (except as related to tax return preparers pursuant to section 1029B), advisory (vi) in clause (ii) (as redesignated), by striking ; or (B) in paragraph (2)— (i) in subparagraph (A)— (I) by striking paragraph (1)(A) or (1)(B) such paragraph (II) by striking paragraph (1)(A) paragraph (1) (ii) in subparagraph (C)— (I) by striking in paragraph (1)(A) in paragraph (1) (II) by striking clause (i) or (ii) of paragraph (1)(A) subparagraph (A) or (B) of paragraph (1) (iii) in subparagraph (D), by striking paragraph (1)(A) or (1)(B) such paragraph 4. Split refunds may include tax return preparer (a) In general Section 6402 (n) Split refunds An income tax refund requested on a return of Federal income tax prepared by an income tax preparer may be split between the preparer and the taxpayer in accordance with the split requested by the taxpayer on the return, except that the amount designated for the preparer may not exceed the amount prescribed by the Secretary by regulation or other guidance. A split of an individual income tax return under this subsection shall not be treated as disreputable conduct merely because the taxpayer requested such split. . (b) Effective date The amendment made by subsection (a) shall apply with respect to returns for taxable years ending after the date of the enactment of this Act. 5. Regulations Regulations issued under section 7812

Summary: Tax Refund Protection Act of 2017 This bill amends the Internal Revenue Code to direct the Department of the Treasury to establish a program to license or certify and regulate tax return preparers. The program must require tax return preparers to: (1) demonstrate good character, good reputation, necessary qualifications, and competency; (2) pay a reasonable fee for licensing or certification; and (3) make certain disclosures regarding fees charged and the average amount of time expected to receive a tax refund. Treasury may take enforcement actions against a tax return preparer who is incompetent, disreputable, violates regulations, or misleads or threatens a consumer. The bill also amends the Consumer Financial Protection Act of 2010 to require the Consumer Financial Protection Bureau (CFPB) to regulate refund anticipation payment arrangements. A refund anticipation payment arrangement is an arrangement under which, in exchange for tax preparation services, a taxpayer agrees to pay a fee or interest upon receipt of a tax refund to a preparer or lender either by: (1) requesting the federal government to deposit a tax refund, or a portion of the refund, into an account; or (2) directly paying the preparer or lender. The CFPB shall require tax return preparers offering a refund anticipation payment arrangement to provide a disclosure statement to a consumer about the arrangement and shall promulgate regulations that require preparers to comply with the disclosure requirements of the Truth in Lending Act. Finally, the bill allows an income tax refund requested on a tax return prepared by an income tax preparer to be split between the preparer and the taxpayer and prohibits the treatment of such a split as disreputable conduct merely because the taxpayer requested such split.