Tax Refund Protection Act

To regulate tax return preparers and refund anticipation payment arrangements. 1. Short title This Act may be cited as the Tax Refund Protection Act 2. Regulation of tax return preparers (a) In general Section 330 of title 31, United States Code, is amended to read as follows: 330. Practice before the department and tax return preparers (a) Subject to section 500 of title 5, the Secretary of the Treasury may— (1) regulate the practice of representatives of persons before the Department of the Treasury through licensure; (2) certify the practice of tax return preparers; and (3) before admitting a representative or a tax return preparer to practice, require that the representative or tax return preparer demonstrate— (A) good character; (B) good reputation; (C) necessary qualifications to enable the representative or tax return preparer to provide to persons valuable service; and (D) competency to advise and assist persons in presenting their cases or in preparing tax returns, claims for refund, or other submissions related to the Internal Revenue Code of 1986 or other laws or regulations administered by the Internal Revenue Service. (b) Any enrolled agents properly licensed to practice as required under rules promulgated under subsection (a) shall be allowed to use the credentials or designation of enrolled agent EA E.A. (c) (1) After notice and opportunity for a proceeding, the Secretary may, with respect to a representative or tax return preparer who is described in paragraph (2)— (A) suspend or disbar from practice before the Department a representative; (B) decertify a tax return preparer; or (C) censure a representative or tax return preparer. (2) A representative or tax return preparer is described in this paragraph if the representative or tax return preparer— (A) is incompetent; (B) is disreputable; (C) violates regulations prescribed under this section; or (D) with intent to defraud, willfully and knowingly misleads or threatens the person being represented or a prospective person to be represented. (3) The Secretary may impose a monetary penalty on any representative or tax return preparer described in paragraph (2). If the representative or tax return preparer was acting on behalf of an employer or any firm or other entity in connection with the conduct giving rise to such penalty, the Secretary may impose a monetary penalty on such employer, firm, or entity if it knew, or reasonably should have known, of such conduct. Such penalty shall not exceed the gross income derived (or to be derived) from the conduct giving rise to the penalty and may be in addition to, or in lieu of, any suspension of the representative, the decertification of the tax return preparer, or censure of the representative or the tax return preparer. (d) After notice and opportunity for a hearing to any appraiser, the Secretary may— (1) provide that appraisals by such appraiser shall not have any probative effect in any administrative proceeding before the Department of the Treasury or the Internal Revenue Service, and (2) bar such appraiser from presenting evidence or testimony in any such proceeding. (e) Nothing in this section or in any other provision of law shall be construed to limit the authority of the Secretary of the Treasury to impose standards applicable to the rendering of written advice with respect to any entity, transaction plan or arrangement, or other plan or arrangement, which is of a type which the Secretary determines as having a potential for tax avoidance or evasion. (f) (1) The Secretary of the Treasury may impose fees on tax return preparers necessary to implement such programs as required by subsection (a). (2) In addition to paragraph (1), the Commissioner of Internal Revenue may impose an annual fee necessary for any competency testing and training required for licensure and certification under this section. (3) Nothing in this section may be construed to limit the authority of the Commissioner of Internal Revenue to issue orders and establish fees related to the other purposes, including the issuing of Preparer Tax Identification Numbers. (g) For purposes of this section— (1) the term tax return preparer section 7701(a)(36) (2) the term tax return return (3) the term claim for refund . (b) Clerical amendment The chapter analysis for chapter 3 330. Practice before the department and tax return preparers. . 3. Clarifying authority to impose civil penalties for improper disclosures Subsection (c) of section 6713 (c) Exceptions (1) Exceptions The rules of section 7216(b) shall apply for purposes of this section. (2) Cross reference See section 7216 for criminal penalty for disclosure or use of information by preparers of returns. . 4. Regulation of refund anticipation payment instruments (a) Disclosure requirements for tax return preparers Subchapter A of chapter 80 7813. Disclosure requirements for tax return preparers (a) In general The Secretary may require tax return preparers to provide disclosures to a person receiving tax return preparation services or a prospective person to receive such services. Such disclosures shall— (1) identify the amount of fees the tax return preparer charges for preparing a tax return, filing a tax return, submitting a claim for refund, executing a refund anticipation payment arrangement, or submitting other submissions related to this title or other laws or regulations administered by the Internal Revenue Service, (2) identify where on the website published by the Internal Revenue Service the average amount of time in which an individual who files a Federal income tax return can expect to receive a refund, (3) in the case of a refund anticipation payment arrangement involving a depository account not controlled by the person receiving tax return preparation services or a prospective person to receive such services, describe— (A) the difference in days between the average amount of time by which a person receiving tax return preparation services or a prospective person to receive such services receives the tax refund (in whole or in part) from a refund anticipation payment arrangement, and (B) the average amount of time by which a person receiving tax return preparation services or a prospective person to receive such services who files a Federal income tax return electronically receives the tax refund deposited directly to that person’s account by the taxing authority, (4) state that a refund anticipation payment arrangement is not necessary to receive a tax refund, (5) state that, if a person receiving tax return preparation services or a prospective person to receive such services 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 person receiving tax return preparation services or a prospective person to receive such services may be responsible for paying any fees and interest associated with a refund anticipation payment arrangement, and (6) include any such other disclosures not specified in the preceding paragraphs to carry out this section that the Secretary deems appropriate. (b) Refund anticipation payment arrangement defined For purposes of this section, the term ‘refund anticipation payment arrangement’ means an arrangement under which, in exchange for Federal income tax preparation services, a consumer agrees to pay a fee or interest upon receipt of the consumer’s tax refund to a tax return preparer, lender, or other affiliated lender by— (1) 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 (2) directly paying the fee or interest to the tax return preparer, lender, or other affiliated lender. . (b) Failure To disclose Part I of subchapter B of chapter 68 of such Code is amended by adding at the end the following: 6720D. Failure to meet disclosure requirements for tax return preparers (a) General rule If a tax return preparer fails to meet the requirements of section 7813, the Secretary may impose a penalty of up to $1,000 per each such failure. (b) Penalty in addition to other penalties The penalty imposed by this section shall be in addition to any other penalty imposed by law. . (c) Clerical amendments (1) The table of sections for subchapter B of chapter 68 of such Code is amended by inserting after the item related to section 6720C the following new item: Sec. 6720D. Failure to meet disclosure requirements for tax return preparers. . (2) The table of sections for subchapter A of chapter 80 of such Code is amended by inserting after the item related to section 7812 the following new item: Sec. 7813. Disclosure requirements for tax return preparers. . (d) Effective date The amendments made by this section shall apply with respect to returns filed after December 31, 2023.

Summary: Tax Refund Protection Act This bill authorizes the Department of the Treasury to certify or decertify (for incompetence or willful misrepresentation) the practice of tax return preparers and impose fees on such preparers. It also authorizes Treasury to require tax return preparers to provide disclosures to person receiving tax return preparation services and regarding refund anticipation payment arrangements. Treasury may impose a penalty on tax return preparers who fail to make required disclosures.