Tax Refund Protection Act of 2015

Bill: 114-s-935
Sponsor: full_name: Sen. Booker, Cory A. [D-NJ]
Introduced: 2015-04-14
Policy area: Taxation
Subjects: Administrative law and regulatory procedures

Business ethics

Consumer Financial Protection Bureau

Consumer affairs

Consumer credit

Department of the Treasury

Financial services and investments

Fraud offenses and financial crimes

Licensing and registrations

Tax administration and collection, taxpayers

User charges and fees
Latest action: action_date: 2015-04-14
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2015-04-14
action_desc: Introduced in Senate
text: <p><strong>Tax Refund Protection Act of 2015</strong></p> <p>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: (1) require that the tax return preparer demonstrate good character, good reputation, necessary qualifications to enable the preparer to provide valuable service as a tax return preparer, and competency; (2) require preparers to make certain disclosures relating to fees charged for tax preparation and the average amount of time expected to receive a tax refund; and (3) authorize Treasury to take enforcement action against a tax return preparer for incompetency or wrongdoing. </p> <p>The bill also amends the Consumer Financial Protection Act of 2010 to require the Consumer Financial Protection Bureau (CFPB)&nbsp;to regulate refund anticipation payment arrangements. A refund anticipation payment arrangement is defined as 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 a direct payment to a preparer or lender or by direct deposit to a designated account. The CFPB shall require tax return preparers 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. A certified public accountant who is offering to perform customary and usual accounting activities is&nbsp;exempted from such regulation. </p> <p>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.</p>

tv_txt: II 114th CONGRESS 1st Session S. 935 IN THE SENATE OF THE UNITED STATES April 14, 2015 Mr. Booker introduced the following bill; which was read twice and referred to the Committee on Finance A BILL 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 2015 . 2. Regulation of tax return preparers (a) In general Subchapter A of chapter 80 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 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 taxpayers 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 a taxpayer 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 taxpayer. (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 has the meaning given such term by section 1029B(d)(2) of the Consumer Financial Protection Act of 2010. . (b) Clerical amendment The table of sections for subchapter A of chapter 80 of the Internal Revenue Code of 1986 is amended by inserting after the item related to section 7811 the following new item: 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, 2015. 3. Regulation of refund anticipation payment instruments (a) In general Subtitle B of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5511 et seq. ) is amended by adding at the end the following: 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 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 promulgate 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 ) to the same extent as a creditor making a consumer credit transaction other than under an open end credit plan. (d) Definitions In this section: (1) Refund anticipation payment arrangement 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— (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. (2) Tax return preparer The term tax return preparer means a tax return preparer (as defined in section 7701(a) of the Internal Revenue Code of 1986) who is not subject to regulation under section 330 of title 31, United States Code. . (b) Technical and conforming amendment The table of contents of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5301 et seq. ) is amended by inserting after the item relating to section 1029A the following: Sec. 1029B. Regulation of refund anticipation payment arrangements. . (c) Exclusion for certain tax preparers (1) In general Section 1027(d) of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5517(d) ) is amended by striking paragraph (1) and inserting the following: (1) In general Except as permitted in paragraph (2), the Bureau may not exercise any rulemaking, supervisory, enforcement, or other authority over any person that is a certified public accountant, permitted to practice as a certified public accounting firm, or certified or licensed for such purpose by a State, or any individual who is employed by or holds an ownership interest with respect to a person described in this subparagraph, when such person is performing or offering to perform— (A) customary and usual accounting activities, including the provision of accounting, tax (except as related to tax return preparers pursuant to section 1029B), advisory, or other services that are subject to the regulatory authority of a State board of accountancy or a Federal authority; or (B) other services that are incidental to such customary and usual accounting activities, to the extent that such incidental services are not offered or provided— (i) by the person separate and apart from such customary and usual accounting activities; or (ii) to consumers who are not receiving such customary and usual accounting activities. . (2) Conforming amendments Section 1027(d) of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5517(d) ) is amended— (A) in the subsection heading, by striking and tax preparers ; and (B) in paragraph (2)— (i) in subparagraph (A)— (I) by striking paragraph (1)(A) or (1)(B) and inserting that paragraph ; and (II) by striking paragraph (1)(A) each place it appears and inserting paragraph (1) ; (ii) in subparagraph (C)— (I) by striking For purposes of subparagraphs (A) and (B), a person described in paragraph (1)(A) and inserting A person described in paragraph (1) ; and (II) by striking clause (i) or (ii) of paragraph (1)(A) and inserting subparagraph (A) or (B) of paragraph (1) ; and (iii) in subparagraph (D), by striking paragraph (1)(A) or (1)(B) and inserting that paragraph . 4. Split refunds may include tax return preparer (a) In general Section 6402 of the Internal Revenue Code of 1986 is amended by adding at the end the following: (m) 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 of the Internal Revenue Code of 1986, as added by section 2, and regulations issued under section 1029B of the Consumer Financial Protection Act of 2010, as added by section 3, should be coordinated to the extent practicable.