A bill to regulate tax return preparers and refund anticipation payment arrangements.
Bill: S.2856 | Sponsor: Sen. Booker, Cory A. (D-NJ)
Policy area: Taxation

Summary:
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.

To regulate tax return preparers and refund anticipation payment 
                             arrangements.

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

SECTION 1. REGULATION OF TAX RETURN PREPARERS.

    (a) In General.--Section 330 of title 31, United States Code, is 
amended to read as follows:
``Sec. 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', or `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' has the meaning given 
        such term by section 7701(a)(36) of the Internal Revenue Code 
        of 1986;
            ``(2) the term `tax return' has the meaning given to the 
        term `return' under section 6696(e)(1) of such Code; and
            ``(3) the term `claim for refund' has the meaning given 
        such term under section 6696(e)(2) of such Code.''.
    (b) Clerical Amendment.--The chapter analysis for chapter 3 of 
title 31, United States Code, is amended by striking the item relating 
to section 330 and inserting the following:

``330. Practice before the department and tax return preparers.''.

SEC. 2. CLARIFYING AUTHORITY TO IMPOSE CIVIL PENALTIES FOR IMPROPER 
              DISCLOSURES.

    Subsection (c) of section 6713 of the Internal Revenue Code of 1986 
is amended to read as follows:
    ``(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.''.

SEC. 3. REGULATION OF REFUND ANTICIPATION PAYMENT INSTRUMENTS.

    (a) Disclosure Requirements for Tax Return Preparers.--Subchapter A 
of chapter 80 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new section:

``SEC. 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:

``SEC. 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, 2021.
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