Budget Amendment ID: FY2019-S4-56

OTH 56

Fraud Protection

Messrs. Brady, Tarr, Timilty and O'Connor moved that the proposed new text be amended by inserting after section 1A ,in Chapter 58 of the General Laws the following new section:-

Section 1B. (a) In a court of competent jurisdiction, the commissioner of the department of revenue may commence suit to enjoin any tax preparer from further engaging in any conduct described in paragraph (b) or from further action as a tax preparer.

(b) In any action under this section, the court may enjoin the tax preparer from further engaging in any conduct specified in this paragraph if the court finds that injunctive relief is appropriate to prevent the recurrence of this conduct. The court may enjoin conduct when a tax preparer has done any of the following:

(1) Prepared any return or claim for refund that includes an understatement of a taxpayer's liability due to an unreasonable position. For purposes of this paragraph, "unreasonable position" shall have the same meaning as provided by Section 6694 of the Internal Revenue Code.

(2) Prepared any return or claim for refund that includes an understatement of a taxpayer's liability due to willful or reckless conduct. For purposes of this paragraph, "willful or reckless conduct" shall have the same meaning as provided by Section 6694 of the Internal Revenue Code.

(3) Where required, failed to furnish copy of return or claim for refund.

(4) Where required, failed to sign return or claim for refund.

(5) Where required, failed to furnish identifying number.

(6) Where required, failed to retain copy of records.

(7) Where required, failed to file correct information returns.

(8) Where required, failed to be diligent in determining eligibility for tax benefits.

(9) Negotiated a check issued to a taxpayer by the Department of Revenue without the permission of the taxpayer.

(10) Engaged in any conduct subject to any criminal penalty.

(11) Misrepresented the tax preparer's eligibility to practice before the Department of Revenue or otherwise misrepresented the tax preparer's experience or education.

(12) Guaranteed the payment of any tax refund or the allowance of any tax credit.

(13) Engaged in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the tax laws of the commonwealth.

(c)(1) If the court finds that a tax preparer has continually or repeatedly engaged in any conduct described in paragraph (b) of this section and that an injunction prohibiting the conduct would not be sufficient to prevent the person's interference with the proper administration of the tax laws of the commonwealth, the court may enjoin the person from acting as a tax preparer.

(2) The fact that the person has been enjoined from preparing tax returns or claims for refund for the United States or any other state, in the five years preceding the petition for an injunction shall establish a prima facie case for an injunction to be issued pursuant to this section. For purposes of this section, "state" shall mean a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(d) The term "tax preparer" means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return for taxes or any claim for refund of taxes. The preparation of a substantial portion of a tax return or claim for refund shall be treated as if it were the preparation of the return or claim for refund.