Amendment #222 to H4400

Protecting Taxpayers Through Paid Tax Preparer Registration

Mr. Kaufman of Lexington moves to amend the bill by inserting after section 11 the following section:

“SECTION 11A. Chapter 13 of the Generals Laws is hereby amended by adding the following section:-

Section 110: Board of individual tax preparers

Section 110. There shall be a board of individual tax preparers, hereafter called the board, consisting of 7 members appointed by the governor, at least 1 of whom shall be a certified public accountant registered in the commonwealth, at least 1 of whom shall be a lawyer admitted to the Massachusetts bar [whose practice areas include a focus on tax law], at least 1 of whom shall be a member of a nonprofit tax program or a nonprofit consumer advocate program, at least 1 of whom shall be an individual enrolled to practice before the Internal Revenue Service who is governed under Circular 230, at least 1 of whom shall be a tax preparer at a large commercial tax preparation agency, and at least 1 of whom shall be a tax preparer who is a solo practitioner or member of a small tax preparation firm. Each member shall be a citizen of the commonwealth with at least 5 years of tax preparation experience, or, in the case of the nonprofit consumer advocate, 5 years of consumer advocacy experience.

The term of a member shall begin on July 1 and shall be 4 years, except that the terms of initial members shall be staggered such that three members shall serve 4 years, 2 members shall serve 3 years and 2 members shall serve 2 years. At the end of a term, a member continues to serve until a successor is appointed. A member who is appointed after a term has begun shall serve only for the rest of the term and until a successor is appointed. Each member of the board is eligible for reappointment but may not serve more than 2 consecutive terms.

The governor may remove a member for incompetence, misconduct, neglect of duties, or other sufficient cause. The governor shall remove a member who ceases to meet the requirements under which the member was appointed, as provided in the first paragraph of this section.

The board shall annually elect a chair and other officers as necessary. The manner of election and the term of an officer shall be as the board determines.

A majority of the members then serving on the board is a quorum.

The members of the board shall serve without compensation but shall be reimbursed for actual and necessary expenses reasonably incurred in the performances of their duties as members or on behalf of the board.

The governor shall appoint to the board qualified persons to serve as the initial members by September 1 of 2018. The board shall promulgate the necessary rules, regulations, and fee schedule to carry out its duties within 1 year of the appointment of the seventh board member by the governor.”

and moves to further amend the bill by inserting after section 29 the following section:

“SECTION 29A. Chapter 112 of the General Laws is hereby amended by adding the following sections:-

Section 274: Board of individual tax preparers; definitions

Section 274. As used in sections 274 to 274J, inclusive, the following words shall, unless the context requires otherwise, have the following meanings:

“Applicant”, a person who applies for registration as a tax preparer.

“Board”, the Board of Individual Tax Preparers, as established by section 110 of chapter 13.

“Consumer”, any natural person who, singly or jointly, files a federal or state personal income tax return.

“Providing individual tax preparation services”, preparing, advising or assisting in the preparation of, or assuming final responsibility for another person’s preparation of, a federal or state personal income tax return of a consumer for valuable consideration.

“Registered preparer”, an individual who has been issued a registration by the board to provide individual tax preparation services.

“Registration”, an authorization issued by the board to provide individual tax preparation services.

Section 274A: Board of individual tax preparers; duties

Section 274A. (a) The board shall:

(1) adopt rules of professional conduct as appropriate to establish a high standard of integrity and dignity for the practice of providing individual tax preparation services;

(2) establish the amount of any fees, including fees for registration, renewal of registration and for administering the examinations described in this section;

(3) maintain a list of all registered preparers to whom the board has issued a registration;

(4) maintain records of all complaints it receives regarding registered preparers and individuals engaged in providing individual tax preparation services without a registration;

(5) develop examinations that measure the applicants’ knowledge of federal and state personal income tax law, theory, and practice;

(6) give examinations to applicants at least twice a year, at the times and places that the board determines; provided, however, that the board may give fewer examinations if the number of applicants seeking to take the examination since the last examination administered by the board is less than 10 individuals;

(7) give each qualified applicant notice of the time and place of examination;

(8) adopt regulations that establish the passing score for an examination; and

(9) notify each applicant of the applicant’s examination score.

(b) The board may adopt rules or regulations as it believes necessary to carry out sections 274 to 274J, inclusive.

(c) Meetings of the board shall be open to the public except insofar as they are concerned with investigations under the provisions of sections 274 to 274J, inclusive, and except as may be necessary to protect information which is required to be kept confidential by board rules or by the laws of the commonwealth. The board shall have a seal which shall be judicially noticed. In any proceedings in court, civil or criminal, arising out of or founded upon any provisions of said sections 274 to 274J, inclusive, copies of any of said records certified as true copies under the seal of the board shall be admissible in evidence as tending to prove the contents of said records.

Section 274B: Board of individual tax preparers; individuals not subject to oversight

Section 274B. The following individuals are exempt from the requirements imposed by sections 274 to 274J, inclusive:

(a) an individual in good standing with an active license issued by the Massachusetts Board of Public Accountancy;

(b) an individual in good standing and admitted to practice law in the commonwealth;

(c) an individual employed by a local, state, or federal governmental agency but only in performance of official duties;

(d) an individual enrolled to practice before the Internal Revenue Service who is governed under Circular 230; or

(e) an employee or volunteer of a Volunteer Income Tax Assistance program.

Section 274C: Board of individual tax preparers; individuals subject to oversight

Section 274C. No individual, other than those exempted under section 274B, may provide individual tax preparation services unless the individual has been issued a registration from the board. To qualify for a registration, the applicant must:

(a) be of good character and reputation;

(b) be at least 18 years old;

(c) possess a high school diploma or have passed an equivalency examination;

(d) present evidence satisfactory to the board that the applicant has successfully completed at least 60 hours in basic personal income tax law, theory and practice at a qualified continuing education provider pursuant to section 274E or other institution approved by the board;

(e) possess a preparer tax identification number issued by the Internal Revenue Service; and

(f) pass either:

(1) an examination developed and administered by the board pursuant to section 274A; or

(2) an examination administered by the Internal Revenue Service intended to test the competency of tax preparers.

Section 274D: Board of individual tax preparers; registration

Section 274D. (a) An applicant for a registration shall submit to the board an application on a form that the board shall establish.

(b) If an applicant qualifies for a registration under section 274C, the board shall send the applicant a notice that states that:

(1) the applicant has qualified for a registration; and

(2) on receipt of a registration fee set by the board, the board will issue a registration to the applicant.

(c) Upon payment of the registration fee, the board shall issue a registration to each applicant who meets the requirements of sections 274 to 274J, inclusive.

(d) Unless a registration is renewed as provided in section 274F, the registration shall be valid for a period ending on the last day of the month that is 2 years from when the registration was issued.

Section 274E: Board of individual tax preparers; continuing education requirements

Section 274E. (a) Every registered preparer shall complete at least 15 hours of continuing education every year. Two hours of continuing education must specifically address the topic of professional conduct.

(b) The board shall adopt regulations to implement the continuing education requirements of subsection (a). The regulations shall:

(1) establish minimum requirements for continuing education providers to ensure they include information about changes in tax law, regulation, procedure and current trends in federal and state tax preparation services;

(2) ensure that programs approved for compliance with the continuing education requirements are available at reasonable intervals throughout the commonwealth; and

(3) provide registered preparers with options by which to obtain continuing education through a variety of programs, which include:

(i) professional development programs;

(ii) technical sessions of professional societies or chapters;

(iii) college courses approved by the board;

(iv) seminars provided by governmental units, including the board; and

(v) other seminars or symposiums related to tax preparation services.

(c) The board may enter into written agreements with qualified continuing education providers wishing to conduct approved programs. A person seeking approval by the board for this purpose shall:

(1) submit to the board an application on a form that the board provides; and

(2) pay an application fee, as set by the board.

(d) A registered preparer may obtain qualifying hours to fulfill the requirements of subsection (a) from a qualified continuing education provider registered with the Internal Revenue Service.

Section 274F: Board of individual tax preparers; registration renewal

Section 274F. (a) At least 1 month before a registration expires, the board shall mail to the registered preparer, at the last known address of the individual:

(1) a renewal application form, established by the board; and

(2) a notice that states:

(i) the date on which the current registration expires;

(ii) the date by which the board must receive the renewal application for the renewal to be issued and mailed before the registration expires; and

(iii) the amount of the renewal fee.

(b) A registered preparer may renew a registration for an additional 2-year term if the individual is entitled to be registered and, before the date on which the registered preparer’s current registration expires:

(1) pays to the board a renewal fee, as set by the board;

(2) submits to the board a renewal application which has been deemed satisfactorily completed by the board; and

(3) submits to the board evidence deemed satisfactory to the board of compliance with the continuing education requirements set forth in section 274E.

(c) The board may restore any lapsed registration upon payment to the board of all past unpaid renewal fees and a fee for restoration of a lapsed registration as set by the board and upon proof of compliance with the continuing education requirements set forth in section 274E.

Section 274G: Board of individual tax preparers; required disclosures to consumers

Section 274G. Prior to providing any individual tax preparation services, a registered preparer must provide the consumer with the following:

(a) a written disclosure consisting of:

(1) the registered preparer’s name, address, telephone number, and paid preparer tax identification number from the IRS;

(2) a statement that the registered preparer is not a certified public accountant, an enrolled agent, or a tax attorney;

(3) a list or description of the services that the registered preparer is qualified to provide; and

(4) the registered preparer’s education and training, including examinations taken and successfully passed.

(b) a written disclosure of fees for individual tax preparation services that contains the following information:

(1) a list, clear and concise description, and price of each tax preparation service offered by the tax preparer along with their associated fees;

(2) a list, clear and concise description, and price of all miscellaneous fees associated with the registered preparer’s tax preparation services, including filing fees and processing fees; and

(3) an estimate of the total charge to the consumer based upon the tax preparation services the consumer has selected to purchase.

Section 274H: Board of individual tax preparers; violations

Section 274H. (a) Unless the person has obtained a registration from the board and otherwise complied with the provisions of sections 274 to 274J, inclusive, no person may individually or in conjunction or cooperation with another person:

(1) provide, or attempt to provide, individual tax preparation services; or

(2) represent to the public, by use of a title, by description of services, methods or procedures, or otherwise, that the individual is authorized to provide individual tax preparation services in the commonwealth.

(b) No registered preparer, including any employee or assistant, may individually or in cooperation with another person:

(1) make, or authorize the making of, any statement or representation, oral or written or recorded by any means, which is intended to induce persons to use individual tax preparation services, which statement or representation is fraudulent, untrue or misleading;

(2) obtain the signature of a consumer to a tax return or authorizing document which contains blank spaces to be filled in after it has been signed;

(3) fail or refuse to give a consumer a copy of any document requiring the consumer’s signature, immediately after the consumer signs the document, or if individual tax preparation services are provided by internet or mail, by sending a copy by electronic means or postal mail that same day;

(4) fail to maintain a copy of any tax return prepared for a customer for 4 years from the date of completion or the due date of the return, whichever is later;

(5) engage in advertising practices which are fraudulent, untrue or misleading;

(6) violate section 7216 of Title 26 of the United States Code or its implementing regulations, or counsel or assist another to do so;

(7) violate any law under chapters 58 to 65C, inclusive, or its implementing regulations, or counsel or assist another to do so;

(8) fail to sign a consumer’s tax return when the consumer has made payment to the tax preparer for individual tax preparation services;

(9) fail to return, upon the demand by or on behalf of a consumer, records or other data provided to the tax preparer by the consumer;

(10) knowingly give false or misleading information to the consumer or the board;

(11) engage in any other action prohibited by the code of professional conduct or other regulations promulgated by the board.

(c) Each violation of this section shall constitute a separate offense.

(d) Any waiver by a consumer of any provision of sections 274 to 274J, inclusive, shall be deemed null, void and of no effect.

Section 274I: Board of individual tax preparers; complaints against, penalties for and due process for registered tax preparers

Section 274I. (a) The board may deny a registration to any applicant, reprimand any registered preparer or suspend or revoke a registration if it finds that the applicant or registered preparer:

(1) fraudulently or deceptively obtained or attempted to obtain a registration for the applicant or registered preparer or for another;

(2) fraudulently or deceptively used or allowed another to use a registration;

(3) was convicted of a felony or of any crime, an element of which is dishonesty or fraud, under the laws of the United States or the commonwealth, or of any other state if the acts would have constituted such a crime under the laws of the commonwealth;

(4) is guilty of negligence, incompetence, deception or misconduct while providing individual tax preparation services; or

(5) violated any of the provisions of sections 274 to 274J, inclusive, or any rules promulgated by the board.

(b) In addition to reprimanding, suspending or revoking a registration under this section, the board may impose a penalty not exceeding $5,000 for each violation. To determine the amount of the penalty imposed under this subsection, the board shall consider:

(1) the seriousness of the violation;

(2) the harm caused by the violation;

(3) the good faith of the registered preparer; and

(4) any history of previous violations by the registered preparer.

(c) The board shall use any penalty collected under subsection (b) to provide for the enforcement of this section or to provide for the board’s other administrative costs.

(d) The board shall establish a complaint process whereby an aggrieved consumer or any member of the public may file a complaint against a registered preparer for any of the acts listed in subsection (a). The board shall create a toll-free telephone number and an internet page whereby consumers may obtain complaint forms and information about registered preparers, including information about complaints filed against them.

(e) The board may, upon receipt of a complaint or other information alleging violations of sections 274 to 274J, inclusive, or of the rules of the board, conduct investigations to determine whether there is probable cause to institute proceedings against any person for such violation; provided, however, that an investigation under this section shall not be a prerequisite to such proceedings in the event that a determination of probable cause can be made without investigation. In aid of such investigations, the board or the chair thereof may issue subpoenas to compel witnesses to testify and to produce evidence.

The board may designate a member, or any other person of appropriate competence, to serve as investigating officer to conduct an investigation. Upon completion of an investigation, the investigating officer shall file a report with the board. The board shall find probable cause or lack of probable cause upon the basis of the report, or shall return the report to the investigating officer for further investigation. Unless there has been a determination of probable cause, the report of the investigating officer, the complaint, if any, the testimony and documents submitted in support of the complaint or gathered in the investigation, and the fact of pendency of the investigation shall be treated as confidential information and shall not be disclosed to any person except law enforcement authorities and, to the extent deemed necessary in order to conduct the investigation, the subject of the investigation, persons whose complaints are being investigated, and witnesses questioned in the course of the investigation.

Upon a finding of probable cause, if the subject of the investigation is a registered preparer, the board shall direct that a complaint be issued and, if the subject of the investigation is not a registered preparer, the board shall take appropriate action pursuant to the provisions of section 274J. Upon a finding of no probable cause, the board shall close the matter and shall thereafter release information related thereto only with the consent of the person under investigation.

In any case where probable cause with respect to a violation by a registered preparer has been determined by the board, whether following an investigation or upon receipt of a written complaint furnishing grounds for a determination of such probable cause, the board shall issue a complaint setting forth appropriate charges and set a date for hearing before the board on such charges. The board shall, not less than 30 days prior to the date of the hearing, serve a copy of the complaint and notice of the time and place of the hearing upon the registered preparer, together with a copy of the board's rules governing proceedings under this section, either by personal delivery or by mailing a copy thereof by registered mail to the registered preparer at their last known address.

A registered preparer against whom a complaint has been issued under this section shall have the right, reasonably in advance of the hearing, to examine and copy the report of investigation, if any, and any documentary or testimonial evidence and summaries of anticipated evidence in the board's possession relating to the subject matter of the complaint. The board's rules governing proceedings under this section shall specify the manner in which such right may be exercised.

In a hearing under this section the respondent registered preparer may appear in person or by counsel, examine witnesses and evidence presented in support of the complaint, and present evidence and witnesses on their own behalf. The registered preparer shall be entitled, on application to the board, to the issuance of subpoenas to compel the attendance of witnesses and the production of documentary evidence.

The evidence supporting the complaint shall be presented by the investigating officer, by a board member designated for that purpose, or by counsel. A board member who presents the evidence, or who has conducted the investigation of the matter shall not participate in the board's decision of the matter.

In a hearing under this section the board shall be advised by counsel, who shall not be the same counsel who presents or assists in presenting the evidence supporting the complaint.

In a hearing under this section the board shall not be bound by technical rules of evidence.

In a hearing under this section a stenographic or electronic record shall be made, and filed with the board. A transcript need not be prepared unless review is sought or the board determines that there is other good cause for its preparation.

In a hearing under this section a recorded vote of a majority of all members of the board then in office, excluding members disqualified, shall be required to sustain any charge and to impose any penalty with respect thereto.

If, after service of a complaint and notice of hearing the respondent registered preparer fails to appear at the hearing, the board may proceed to hear evidence against the registered preparer and may enter such order as it deems warranted by the evidence, which order shall be final unless the registered preparer petitions for review; provided, however, that within 30 days from the date of any such order, upon a showing of good cause for the registered preparer’s failure to appear and defend, the board may set aside the order and schedule a new hearing on the complaint, to be conducted in accordance with applicable subsections of this section.

Any person adversely affected by any order of the board entered after a hearing may obtain review thereof by filing a written petition for review with the supreme judicial court within 30 days after the entry of said order. The procedures for review and the scope of the review shall be as specified in chapter 30A.

In any case where the board renders a decision imposing discipline against a registered preparer under this section, the board shall examine its records to determine whether the registered preparer holds a tax preparer registration in any other state and, if so, the board shall notify the appropriate board or agency in such other state of its decision by mail within 45 days of rendering the decision. The board may also furnish information relating to proceedings resulting in disciplinary action to other public authorities and to private professional organizations having a disciplinary interest in the registered preparer.

In any case where the board has suspended or revoked a registration or refused to renew a registration, the board may, upon application in writing by the person affected and for good cause shown, modify the suspension or reissue the registration.

The board shall by rule specify the manner in which such applications shall be made, the times within which they shall be made, and the circumstances in which hearings will be held thereon.

Before reissuing or terminating the suspension of a registration, and as a condition thereto, the board may require the applicant to show successful completion of specified continuing education and the board may make the reinstatement of a registration conditional, and subject to satisfactory completion of a quality review conducted in such fashion as the board may specify.

(f) No revocation, suspension, or surrender of any registration shall relieve a registered preparer from any other applicable civil or criminal liability, including liability that may arise under chapter 93A.

Section 274J: Board of individual tax preparers; enforcement for violations committed by non-registered persons

Section 274J. Whenever, as a result of an investigation or otherwise, the board believes that any person who is not a registered preparer has engaged, or is about to engage, in any acts or practices which constitute or will constitute a violation of section 274H, the board may make application to the appropriate court for an order enjoining such acts or practices, and upon a showing by the board that such person has engaged, or is about to engage, in any such acts or practices, an injunction, restraining order or other order as may be appropriate shall be granted by such court.

Whenever, by reason of an investigation, the board has reason to believe that any person has knowingly engaged in acts or practices which constitute a violation of section 274H, the board may bring its information to the attention of the attorney general, or other appropriate law enforcement officer, who may, in their discretion, cause appropriate criminal proceedings to be brought thereon.

In any action brought pursuant to the provisions of sections 274 to 274J, inclusive, evidence of the commission of a single act prohibited by said provisions shall be sufficient to justify a penalty, injunction, restraining order or conviction, respectively, without evidence of a general course of conduct.

No enforcement actions taken under this section against a person who is believed to be engaging in acts or practices which constitute a violation of section 274H shall relieve the person from any other applicable civil or criminal liability, including liability that may arise under chapter 93A.”

Additional co-sponsor(s) added to Amendment #222 to H4400

Protecting Taxpayers Through Paid Tax Preparer Registration