I 
109TH CONGRESS 
1ST SESSION 
H. R. 894 
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 
FEBRUARY 17, 2005 
Mr. BECERRA (for himself and Mr. BROWN of Ohio) 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 subse-
quently 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 pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Low-Income Taxpayer 
Protection Act of 2005’’.
SEC. 2. REGULATION OF INCOME TAX RETURN PREPARERS 
AND 
REFUND 
ANTICIPATION 
LOAN 
PRO-
VIDERS. 
(a) DEFINITIONS.—In this Act: 
(1) INCOME TAX RETURN PREPARER.— 
(A) IN GENERAL.—The term ‘‘income tax 
return preparer’’ means any individual who is 
an income tax return preparer (within the 
meaning of section 7701(a)(36) of the Internal 
Revenue Code of 1986) who prepares not less 
than 5 returns of tax imposed by subtitle A of 
such Code or claims for refunds of tax imposed 
by such subtitle A per taxable year. 
(B) EXCEPTION.—Such term shall not in-
clude a federally authorized tax practitioner 
within the meaning of section 7526(a)(3) of 
such Code. 
(2) REFUND ANTICIPATION LOAN PROVIDER.— 
The term ‘‘refund anticipation loan provider’’ means 
a person who makes a loan of money or of any other 
thing of value to a taxpayer because of the tax-
payer’s anticipated receipt of a Federal tax refund. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(b) REGULATIONS.— 
(1) REGISTRATION REQUIRED.—
(A) IN
GENERAL.—Not later than 120 
days after the date of the enactment of this 
Act, the Secretary shall promulgate regulations 
that— 
(i) require the registration of income 
tax return preparers and of refund antici-
pation loan providers with the Secretary or 
the designee of the Secretary, and 
(ii) prohibit the payment of a refund 
of tax to a refund anticipation loan pro-
vider or an income tax return preparer 
that is the result of a tax return which is 
prepared by the refund anticipation loan 
provider or the income tax return preparer 
which does not include the refund anticipa-
tion loan provider’s or the income tax re-
turn preparer’s registration number. 
(B) NO DISCIPLINARY ACTION.—The regu-
lations shall require that an applicant for reg-
istration must not have demonstrated any con-
duct that would warrant disciplinary action 
under part 10 of title 31, Code of Federal Reg-
ulations.
(C) BURDEN OF REGISTRATION.—In pro-
mulgating the regulations, the Secretary shall 
minimize the burden and cost on the registrant. 
(2) RULES OF CONDUCT.—All registrants shall 
be subject to rules of conduct that are consistent 
with the rules that govern federally authorized tax 
practitioners. 
(3) 
REASONABLE
FEES
AND
INTEREST 
RATES.—The Secretary, after consultation with any 
expert as the Secretary deems appropriate, shall in-
clude in the regulations guidance on reasonable fees 
and interest rates charged to taxpayers in connec-
tion with loans to taxpayers made by refund antici-
pation loan providers. 
(4) RENEWAL OF REGISTRATION.—The regula-
tions shall determine the time frame required for re-
newal of registration and the manner in which a reg-
istered income tax return preparer or a registered 
refund anticipation loan provider must renew such 
registration. 
(5) FEES.— 
(A) IN GENERAL.—The Secretary may re-
quire the payment of reasonable fees for reg-
istration and for renewal of registration under 
the regulations.
(B) PURPOSE
OF
FEES.—Any fees re-
quired under this paragraph shall inure to the 
Secretary for the purpose of reimbursement of 
the costs of administering the requirements of 
the regulations. 
(c) PROHIBITION.—Section 6695 of the Internal Rev-
enue Code of 1986 (relating to other assessable penalties 
with respect to the preparation of income tax returns for 
other persons) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(h) ACTIONS ON A TAXPAYER’S BEHALF BY A NON- 
REGISTERED PERSON.—Any person not registered pursu-
ant to the regulations promulgated by the Secretary under 
the Low Income Taxpayer Protection Act of 2005 who— 
‘‘(1) prepares a tax return for another taxpayer 
for compensation, or 
‘‘(2) provides a loan to a taxpayer that is linked 
to or in anticipation of a tax refund for the tax-
payer, 
shall be subject to a $500 penalty for each incident of 
noncompliance.’’. 
(d) COORDINATION WITH SECTION 6060(a).—The 
Secretary shall determine whether the registration re-
quired under the regulations issued pursuant to this sec-
tion should be in lieu of the return requirements of section 
6060. 
(e) PAPERWORK REDUCTION.—The Secretary shall 
minimize the amount of paperwork required of an income 
tax return preparer or a refund anticipation loan provider 
to meet the requirements of these regulations. 
SEC. 3. IMPROVED SERVICES FOR TAXPAYERS. 
(a) ELECTRONIC FILING EFFORTS.— 
(1) IN
GENERAL.—The Secretary shall focus 
electronic filing efforts on benefiting the taxpayer 
by— 
(A) reducing the time between receipt of 
an electronically filed return and remitting a re-
fund, if any, 
(B) reducing the cost of filing a return 
electronically, 
(C) improving services provided by the In-
ternal Revenue Service to low- and moderate-in-
come taxpayers, 
(D) providing tax-related computer soft-
ware at no or nominal cost to low- and mod-
erate-income taxpayers, and 
(E) providing electronic filing for all tax-
payers without the use of an intermediary.
(2) REPORT.—Not later than 120 days after 
the date of the enactment of this Act, the Secretary 
shall prepare and submit to Congress a report on 
the efforts made pursuant to paragraph (1). 
(b) VOLUNTEER INCOME TAX ASSISTANCE PRO-
GRAM.— 
(1) STUDY.—The Secretary shall undertake a 
study on the expansion of the volunteer income tax 
assistance program to service more low-income tax-
payers. 
(2) REPORT.—Not later than 120 days after 
the date of the enactment of this Act, the Secretary 
shall prepare and submit to Congress a report on 
the study conducted pursuant to paragraph (1). 
(c) TELE-FILING.—The Secretary shall ensure that 
tele-filing is available for all taxpayers for the filing of tax 
returns with respect to taxable years beginning in 2004. 
(d) TERMINATION OF THE DEBT INDICATOR PRO-
GRAM.—The Secretary shall terminate the Debt Indicator 
program announced in Internal Revenue Service Notice 
99–58. 
(e) DIRECT DEPOSIT ACCOUNTS.—The Secretary 
shall allocate resources to programs to assist low-income 
taxpayers in establishing accounts at financial institutions
that receive direct deposits from the United States Treas-
ury. 
(f) PILOT PROGRAM FOR MOBILE TAX RETURN FIL-
ING OFFICES.— 
(1) IN GENERAL.—The Secretary shall establish 
a pilot program for the creation of four mobile tax 
return filing offices with electronic filing capabilities. 
(2) LOCATION OF SERVICE.— 
(A) IN GENERAL.—The mobile tax return 
filing offices shall be located in communities 
that the Secretary determines have a high inci-
dence of taxpayers claiming the earned income 
tax credit. 
(B) INDIAN RESERVATION.—At least one 
mobile tax return filing office shall be on or 
near an Indian reservation (as defined in sec-
tion 168(j)(6) of the Internal Revenue Code of 
1986). 
SEC. 4. ASSISTANCE PROGRAM TO IMPROVE ACCESS TO 
FEDERALLY INSURED FINANCIAL INSTITU-
TIONS FOR TAXPAYERS. 
(a) FINDINGS AND PURPOSE.— 
(1) FINDINGS.—Congress finds the following:
(A) Approximately 40,000,000 Americans 
are unbanked and not utilizing mainstream, in-
sured financial institutions. 
(B) 
In 
1999, 
nearly 
half 
of 
the 
$30,000,000,000 in earned income tax credits 
(EITC) 
claimed 
nationwide 
was 
refunded 
through refund anticipation loans, and an esti-
mated $1,750,000,000 intended to assist low- 
income families through the EITC was received 
by commercial tax preparers and affiliated na-
tional banks to pay for tax assistance, electronic 
filing of returns, and high-cost refund loans. 
(C) Refund anticipation loans carry inter-
est rates in a range between 97.4 percent to 
more than 2000 percent. 
(D) An estimated 45 percent of earned in-
come tax credit recipients pay for check cashing 
services, which reduces EITC benefits by 
$130,000,000. 
(E) Individuals with bank accounts can re-
ceive their tax refunds faster than waiting for 
a paper check and without the need to utilize 
refund anticipation loans or check cashiers. 
(F) Individuals with federally insured de-
pository accounts have an increased opportunity
to access financial services at mainstream finan-
cial institutions, which typically have reduced 
costs for consumers. 
(2) PURPOSE.—It is the purpose of this section 
to establish a grant program to provide unbanked 
low- and moderate-income taxpayers with tax prepa-
ration services and increase their access to financial 
services by the establishment of an account at a fed-
erally insured depository institution or credit union 
and the provision of financial education. 
(b) ESTABLISHMENT OF PROGRAM.—The Secretary 
is authorized to award demonstration project grants (in-
cluding multi-year grants) to eligible entities to provide 
tax preparation services and assistance along with estab-
lishing an account in a federally insured depository insti-
tution for individuals that currently do not have such an 
account. 
(c) ELIGIBLE ENTITIES.— 
(1) IN GENERAL.—An entity is eligible to re-
ceive a grant under this section if such an entity 
is— 
(A) an organization described in section 
501(c)(3) of the Internal Revenue Code of 1986 
and exempt from tax under section 501(a) of 
such Code,
(B) a federally insured depository institu-
tion, 
(C) an agency of a State or local govern-
ment, 
(D) a community development financial in-
stitution, 
(E) an Indian tribal organization, 
(F) an Alaska Native Corporation, 
(G) a Native Hawaiian organization, 
(H) a labor organization, or 
(I) a partnership comprised of 1 or more 
of the entities described in the preceding sub-
paragraphs. 
(2) DEFINITIONS.—For purposes of this sec-
tion— 
(A) FEDERALLY INSURED DEPOSITORY IN-
STITUTION.—The term ‘‘federally insured de-
pository institution’’ means any insured deposi-
tory institution (as defined in section 3 of the 
Federal Deposit Insurance Act (12 U.S.C. 
1813)) and any insured credit union (as defined 
in section 101 of the Federal Credit Union Act 
(12 U.S.C. 1752)). 
(B) COMMUNITY
DEVELOPMENT
FINAN-
CIAL INSTITUTION.—The term ‘‘community de-
velopment financial institution’’ means any or-
ganization that has been certified as such pur-
suant to section 1805.201 of title 12, Code of 
Federal Regulations. 
(C) ALASKA NATIVE CORPORATION.—The 
term ‘‘Alaska Native Corporation’’ has the 
same meaning as the term ‘‘Native Corpora-
tion’’ under section 3(m) of the Alaska Native 
Claims Settlement Act (43 U.S.C. 1602(m)). 
(D) NATIVE HAWAIIAN ORGANIZATION.— 
The term ‘‘Native Hawaiian organization’’ 
means any organization that— 
(i) serves and represents the interests 
of Native Hawaiians, and 
(ii) has as a primary and stated pur-
pose the provision of services to Native 
Hawaiians. 
(E) LABOR
ORGANIZATION.—The term 
‘‘labor organization’’ means an organization in 
which employees participate and which exists 
for the purpose, in whole or in part, of dealing 
with employers concerning grievances, labor dis-
putes, wages, rates of pay, hours of employ-
ment, or conditions of work.
(d) APPLICATION.—An eligible entity desiring a 
grant under this section shall submit an application to the 
Secretary in such form and containing such information 
as the Secretary may require. 
(e) LIMITATION ON ADMINISTRATIVE COSTS.—A re-
cipient of a grant under this section may not use more 
than 6 percent of the total amount of such grant in any 
fiscal year for the administrative costs of carrying out the 
programs funded by such grant in such fiscal year. 
(f) EVALUATION AND REPORT.—For each fiscal year 
in which a grant is awarded under this section, the Sec-
retary shall submit a report to Congress containing a de-
scription of the activities funded, amounts distributed, and 
measurable results, as appropriate and available. 
(g) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to the Secretary, for the 
grant program described in this section, $10,000,000, or 
such additional amounts as deemed necessary, to remain 
available until expended. 
(h) REGULATIONS.—The Secretary is authorized to 
promulgate regulations to implement and administer the 
grant program under this section.
SEC. 5. MATCHING GRANTS TO LOW-INCOME TAXPAYER 
CLINICS FOR RETURN PREPARATION. 
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 (relating to miscellaneous provisions) 
is amended by inserting after section 7526 the following 
new section: 
‘‘SEC. 7526A. RETURN PREPARATION CLINICS FOR LOW-IN-
COME TAXPAYERS. 
‘‘(a) IN GENERAL.—The Secretary may, subject to 
the availability of appropriated funds, make grants to pro-
vide matching funds for the development, expansion, or 
continuation of qualified return preparation clinics. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED RETURN PREPARATION CLIN-
IC.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
return preparation clinic’ means a clinic 
which— 
‘‘(i) does not charge more than a 
nominal fee for its services (except for re-
imbursement of actual costs incurred), and 
‘‘(ii) operates programs which assist 
low-income taxpayers in preparing and fil-
ing their Federal income tax returns, in-
cluding schedules reporting sole proprietor-
ship or farm income.
‘‘(B) ASSISTANCE
TO
LOW-INCOME
TAX-
PAYERS.—A clinic is treated as assisting low-in-
come taxpayers under subparagraph (A)(ii) if 
at least 90 percent of the taxpayers assisted by 
the clinic have incomes which do not exceed 250 
percent of the poverty level, as determined in 
accordance with criteria established by the Di-
rector of the Office of Management and Budg-
et. 
‘‘(2) CLINIC.—The term ‘clinic’ includes— 
‘‘(A) a clinical program at an eligible edu-
cational institution (as defined in section 
529(e)(5)) which satisfies the requirements of 
paragraph (1) through student assistance of 
taxpayers in return preparation and filing, and 
‘‘(B) an organization described in section 
501(c) and exempt from tax under section 
501(a) which satisfies the requirements of para-
graph (1). 
‘‘(c) SPECIAL RULES AND LIMITATIONS.— 
‘‘(1) AGGREGATE
LIMITATION.—Unless other-
wise provided by specific appropriation, the Sec-
retary shall not allocate more than $10,000,000 per 
year (exclusive of costs of administering the pro-
gram) to grants under this section.
‘‘(2) OTHER APPLICABLE RULES.—Rules simi-
lar to the rules under paragraphs (2) through (5) of 
section 7526(c) shall apply with respect to the 
awarding of grants to qualified return preparation 
clinics.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 
7526 the following new item: 
‘‘Sec. 7526A. Return preparation clinics for low-income tax-
payers.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to grants made after the date of 
the enactment of this Act. 
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