Taxpayer Protection and Preparer Proficiency Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1192 To set minimum standards for tax return preparers. IN THE SENATE OF THE UNITED STATES APRIL 11, 2019 Mr. WYDEN (for himself, Mr. CARDIN, Mr. BENNET, Mr. CARPER, Mr. BROWN, and Ms. CORTEZ MASTO) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To set minimum standards for tax return preparers. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Taxpayer Protection 4 and Preparer Proficiency Act of 2019’’. 5 SEC. 2. REGULATION OF TAX RETURN PREPARERS. 6 (a) IN GENERAL.—Subsection (a) of section 330 of 7 title 31, United States Code, is amended— 8 (1) by striking paragraph (1) and inserting the 9 following: 10 ‘‘(1) regulate— 11 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 2 •S 1192 IS ‘‘(A) the practice of representatives of per- 1 sons before the Department of the Treasury; 2 and 3 ‘‘(B) the practice of tax return preparers; 4 and’’; and 5 (2) in paragraph (2)— 6 (A) by inserting ‘‘or a tax return preparer 7 to prepare tax returns’’ after ‘‘practice’’; 8 (B) by inserting ‘‘or tax return preparer’’ 9 before ‘‘demonstrate’’; and 10 (C) by inserting ‘‘or in preparing their tax 11 returns, claims for refund, or documents in con- 12 nection with tax returns or claims for refund’’ 13 after ‘‘cases’’ in subparagraph (D). 14 (b) AUTHORITY TO SANCTION REGULATED TAX RE- 15 TURN PREPARERS.—Subsection (c) of section 330 of title 16 31, United States Code, is amended— 17 (1) by striking ‘‘before the Department’’; 18 (2) by inserting ‘‘or tax return preparer’’ after 19 ‘‘representative’’ each place it appears; and 20 (3) in paragraph (4), by striking ‘‘misleads or 21 threatens’’ and all that follows and inserting ‘‘mis- 22 leads or threatens— 23 ‘‘(A) any person being represented or any 24 prospective person being represented; or 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 3 •S 1192 IS ‘‘(B) any person or prospective person 1 whose tax return, claim for refund, or document 2 in connection with a tax return or claim for re- 3 fund, is being or may be prepared.’’. 4 (c) MINIMUM COMPETENCY STANDARDS FOR TAX 5 RETURN PREPARERS.—Section 330 of title 31, United 6 States Code, is amended by adding at the end the fol- 7 lowing new subsection: 8 ‘‘(f) TAX RETURN PREPARERS.— 9 ‘‘(1) IN GENERAL.—Any tax return preparer 10 shall demonstrate minimum competency standards 11 under this subsection by— 12 ‘‘(A) obtaining an identifying number for 13 securing proper identification of such preparer 14 as described in section 6109(a)(4) of the Inter- 15 nal Revenue Code of 1986; 16 ‘‘(B) satisfying any examination and an- 17 nual continuing education requirements as pre- 18 scribed by the Secretary; and 19 ‘‘(C) completing a background check ad- 20 ministered by the Secretary. 21 ‘‘(2) EXEMPTION.—The Secretary shall exempt 22 tax return preparers who have been subject to com- 23 parable examination, continuing education require- 24 ments, and background checks administered by the 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 4 •S 1192 IS Secretary or any comparable State licensing pro- 1 gram. Such exemption shall extend directly to indi- 2 viduals who are supervised by such preparers and 3 are not required to secure an identification number 4 under section 6109(a)(4).’’. 5 (d) TAX RETURN PREPARER DEFINED.—Section 6 330 of title 31, United States Code, as amended by sub- 7 section (c), is amended by adding at the end the following 8 new subsection: 9 ‘‘(g) TAX RETURN PREPARER.—For purposes of this 10 section— 11 ‘‘(1) IN GENERAL.—The term ‘tax return pre- 12 parer’ has the meaning given such term under sec- 13 tion 7701(a)(36) of the Internal Revenue Code of 14 1986. 15 ‘‘(2) TAX RETURN.—The term ‘tax return’ has 16 the meaning given to the term ‘return’ under section 17 6696(e)(1) of the Internal Revenue Code of 1986. 18 ‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 19 refund’ has the meaning given such term under sec- 20 tion 6696(e)(2) of such Code.’’. 21 (e) AMENDMENTS WITH RESPECT TO IDENTIFYING 22 NUMBER.— 23 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 5 •S 1192 IS (1) IN GENERAL.—Section 6109(a) is amended 1 by striking paragraph (4) and inserting the fol- 2 lowing: 3 ‘‘(4) FURNISHING IDENTIFYING NUMBER OF 4 TAX RETURN PREPARER.— 5 ‘‘(A) IN GENERAL.—Any return or claim 6 for refund prepared by a tax return preparer 7 shall bear such identifying number for securing 8 proper identification of such preparer, his em- 9 ployer, or both, as may be prescribed. For pur- 10 poses of this paragraph, the terms ‘return’ and 11 ‘claim for refund’ have the respective meanings 12 given to such terms by section 6696(e). 13 ‘‘(B) EXCEPTION.—Subparagraph (A) 14 shall not apply to any tax return preparer who 15 prepares a return or claim for refund under the 16 supervision and direction of a tax return pre- 17 parer who signs the return or claim for refund 18 and is a certified public accountant, an attorney 19 or enrolled agent.’’. 20 (2) CLARIFICATION OF RESCISSION AUTHOR- 21 ITY.—Section 6109 is amended by inserting after 22 subsection (d) the following new subsection: 23 ‘‘(e) AUTHORITY TO RESCIND IDENTIFYING NUM- 24 BER OF TAX RETURN PREPARER.— 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 6 •S 1192 IS ‘‘(1) IN GENERAL.—The Secretary may rescind 1 an identifying number issued under subsection 2 (a)(4) if— 3 ‘‘(A) after notice and opportunity for a 4 hearing, the preparer is shown to be incom- 5 petent or disreputable (as such terms are used 6 in subsection (c) of section 330 of title 31, 7 United States Code); and 8 ‘‘(B) rescinding the identifying number 9 would promote compliance with the require- 10 ments of this title and effective tax administra- 11 tion. 12 ‘‘(2) RECORDS.—If an identifying number is re- 13 scinded under paragraph (1), the Secretary shall 14 place in the file in the Office of the Director of Pro- 15 fessional Responsibility the opinion of the Secretary 16 with respect to the determination, including— 17 ‘‘(A) a statement of the facts and cir- 18 cumstances relating to the determination; and 19 ‘‘(B) the reasons for the rescission.’’. 20 (f) GAO STUDY AND REPORT ON THE EXCHANGE 21 OF INFORMATION BETWEEN THE IRS AND STATE TAX- 22 ATION AUTHORITIES.— 23 (1) IN GENERAL.—Not later than 18 months 24 after the date of the enactment of this Act, the 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS 7 •S 1192 IS Comptroller General shall conduct a study and sub- 1 mit to Congress a report on the sharing of informa- 2 tion between the Secretary of the Treasury and 3 State authorities, as authorized under section 4 6103(d) of the Internal Revenue Code of 1986, re- 5 garding identification numbers issued to paid tax re- 6 turn preparers and return preparer minimum stand- 7 ards. 8 (2) INCREASED INFORMATION SHARING.—The 9 study and report described in paragraph (1) shall in- 10 clude an analysis of the impact that increased infor- 11 mation sharing between Federal and State authori- 12 ties would have on efforts to enforce minimum 13 standards on paid tax return preparers. 14 Æ VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S1192.IS S1192 kjohnson on DSK79L0C42 with BILLS