II 118TH CONGRESS 1ST SESSION S. 1209 To regulate tax return preparers and refund anticipation payment arrangements. IN THE SENATE OF THE UNITED STATES APRIL 19, 2023 Mr. BOOKER introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To regulate tax return preparers and refund anticipation payment arrangements. 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 ‘‘Tax Refund Protection 4 Act’’. 5 SEC. 2. REGULATION OF TAX RETURN PREPARERS. 6 (a) IN GENERAL.—Section 330 of title 31, United 7 States Code, is amended to read as follows: 8 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1209 IS ‘‘§ 330. Practice before the department and tax return 1 preparers 2 ‘‘(a) Subject to section 500 of title 5, the Secretary 3 of the Treasury may— 4 ‘‘(1) regulate the practice of representatives of 5 persons before the Department of the Treasury 6 through licensure; 7 ‘‘(2) certify the practice of tax return pre- 8 parers; and 9 ‘‘(3) before admitting a representative or a tax 10 return preparer to practice, require that the rep- 11 resentative or tax return preparer demonstrate— 12 ‘‘(A) good character; 13 ‘‘(B) good reputation; 14 ‘‘(C) necessary qualifications to enable the 15 representative or tax return preparer to provide 16 to persons valuable service; and 17 ‘‘(D) competency to advise and assist per- 18 sons in presenting their cases or in preparing 19 tax returns, claims for refund, or other submis- 20 sions related to the Internal Revenue Code of 21 1986 or other laws or regulations administered 22 by the Internal Revenue Service. 23 ‘‘(b) Any enrolled agents properly licensed to practice 24 as required under rules promulgated under subsection (a) 25 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1209 IS shall be allowed to use the credentials or designation of 1 ‘enrolled agent’, ‘EA’, or ‘E.A.’. 2 ‘‘(c)(1) After notice and opportunity for a proceeding, 3 the Secretary may, with respect to a representative or tax 4 return preparer who is described in paragraph (2)— 5 ‘‘(A) suspend or disbar from practice before the 6 Department a representative; 7 ‘‘(B) decertify a tax return preparer; or 8 ‘‘(C) censure a representative or tax return pre- 9 parer. 10 ‘‘(2) A representative or tax return preparer is de- 11 scribed in this paragraph if the representative or tax re- 12 turn preparer— 13 ‘‘(A) is incompetent; 14 ‘‘(B) is disreputable; 15 ‘‘(C) violates regulations prescribed under this 16 section; or 17 ‘‘(D) with intent to defraud, willfully and know- 18 ingly misleads or threatens the person being rep- 19 resented or a prospective person to be represented. 20 ‘‘(3) The Secretary may impose a monetary penalty 21 on any representative or tax return preparer described in 22 paragraph (2). If the representative or tax return preparer 23 was acting on behalf of an employer or any firm or other 24 entity in connection with the conduct giving rise to such 25 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1209 IS penalty, the Secretary may impose a monetary penalty on 1 such employer, firm, or entity if it knew, or reasonably 2 should have known, of such conduct. Such penalty shall 3 not exceed the gross income derived (or to be derived) 4 from the conduct giving rise to the penalty and may be 5 in addition to, or in lieu of, any suspension of the rep- 6 resentative, the decertification of the tax return preparer, 7 or censure of the representative or the tax return preparer. 8 ‘‘(d) After notice and opportunity for a hearing to 9 any appraiser, the Secretary may— 10 ‘‘(1) provide that appraisals by such appraiser 11 shall not have any probative effect in any adminis- 12 trative proceeding before the Department of the 13 Treasury or the Internal Revenue Service, and 14 ‘‘(2) bar such appraiser from presenting evi- 15 dence or testimony in any such proceeding. 16 ‘‘(e) Nothing in this section or in any other provision 17 of law shall be construed to limit the authority of the Sec- 18 retary of the Treasury to impose standards applicable to 19 the rendering of written advice with respect to any entity, 20 transaction plan or arrangement, or other plan or arrange- 21 ment, which is of a type which the Secretary determines 22 as having a potential for tax avoidance or evasion. 23 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1209 IS ‘‘(f)(1) The Secretary of the Treasury may impose 1 fees on tax return preparers necessary to implement such 2 programs as required by subsection (a). 3 ‘‘(2) In addition to paragraph (1), the Commissioner 4 of Internal Revenue may impose an annual fee necessary 5 for any competency testing and training required for licen- 6 sure and certification under this section. 7 ‘‘(3) Nothing in this section may be construed to limit 8 the authority of the Commissioner of Internal Revenue to 9 issue orders and establish fees related to the other pur- 10 poses, including the issuing of Preparer Tax Identification 11 Numbers. 12 ‘‘(g) For purposes of this section— 13 ‘‘(1) the term ‘tax return preparer’ has the 14 meaning given such term by section 7701(a)(36) of 15 the Internal Revenue Code of 1986; 16 ‘‘(2) the term ‘tax return’ has the meaning 17 given to the term ‘return’ under section 6696(e)(1) 18 of such Code; and 19 ‘‘(3) the term ‘claim for refund’ has the mean- 20 ing given such term under section 6696(e)(2) of 21 such Code.’’. 22 (b) CLERICAL AMENDMENT.—The chapter analysis 23 for chapter 3 of title 31, United States Code, is amended 24 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1209 IS by striking the item relating to section 330 and inserting 1 the following: 2 ‘‘330. Practice before the department and tax return preparers.’’. SEC. 3. CLARIFYING AUTHORITY TO IMPOSE CIVIL PEN- 3 ALTIES FOR IMPROPER DISCLOSURES. 4 Subsection (c) of section 6713 of the Internal Rev- 5 enue Code of 1986 is amended to read as follows: 6 ‘‘(c) EXCEPTIONS.— 7 ‘‘(1) EXCEPTIONS.—The rules of section 8 7216(b) shall apply for purposes of this section. 9 ‘‘(2) CROSS REFERENCE.—See section 7216 for 10 criminal penalty for disclosure or use of information 11 by preparers of returns.’’. 12 SEC. 4. REGULATION OF REFUND ANTICIPATION PAYMENT 13 INSTRUMENTS. 14 (a) DISCLOSURE REQUIREMENTS FOR TAX RETURN 15 PREPARERS.—Subchapter A of chapter 80 of the Internal 16 Revenue Code of 1986 is amended by adding at the end 17 the following new section: 18 ‘‘SEC. 7813. DISCLOSURE REQUIREMENTS FOR TAX RETURN 19 PREPARERS. 20 ‘‘(a) IN GENERAL.—The Secretary may require tax 21 return preparers to provide disclosures to a person receiv- 22 ing tax return preparation services or a prospective person 23 to receive such services. Such disclosures shall— 24 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1209 IS ‘‘(1) identify the amount of fees the tax return 1 preparer charges for preparing a tax return, filing a 2 tax return, submitting a claim for refund, executing 3 a refund anticipation payment arrangement, or sub- 4 mitting other submissions related to this title or 5 other laws or regulations administered by the Inter- 6 nal Revenue Service, 7 ‘‘(2) identify where on the website published by 8 the Internal Revenue Service the average amount of 9 time in which an individual who files a Federal in- 10 come tax return can expect to receive a refund, 11 ‘‘(3) in the case of a refund anticipation pay- 12 ment arrangement involving a depository account 13 not controlled by the person receiving tax return 14 preparation services or a prospective person to re- 15 ceive such services, describe— 16 ‘‘(A) the difference in days between the av- 17 erage amount of time by which a person receiv- 18 ing tax return preparation services or a pro- 19 spective person to receive such services receives 20 the tax refund (in whole or in part) from a re- 21 fund anticipation payment arrangement, and 22 ‘‘(B) the average amount of time by which 23 a person receiving tax return preparation serv- 24 ices or a prospective person to receive such 25 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1209 IS services who files a Federal income tax return 1 electronically receives the tax refund deposited 2 directly to that person’s account by the taxing 3 authority, 4 ‘‘(4) state that a refund anticipation payment 5 arrangement is not necessary to receive a tax re- 6 fund, 7 ‘‘(5) state that, if a person receiving tax return 8 preparation services or a prospective person to re- 9 ceive such services does not receive a tax refund or 10 the amount of the tax refund is less than the 11 amount anticipated under the refund anticipation 12 payment arrangement, the person receiving tax re- 13 turn preparation services or a prospective person to 14 receive such services may be responsible for paying 15 any fees and interest associated with a refund antici- 16 pation payment arrangement, and 17 ‘‘(6) include any such other disclosures not 18 specified in the preceding paragraphs to carry out 19 this section that the Secretary deems appropriate. 20 ‘‘(b) REFUND ANTICIPATION PAYMENT ARRANGE- 21 MENT DEFINED.—For purposes of this section, the term 22 ‘refund anticipation payment arrangement’ means an ar- 23 rangement under which, in exchange for Federal income 24 tax preparation services, a consumer agrees to pay a fee 25 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1209 IS or interest upon receipt of the consumer’s tax refund to 1 a tax return preparer, lender, or other affiliated lender 2 by— 3 ‘‘(1) requesting the Federal Government to de- 4 posit such tax refund, in whole or in part, directly 5 into a depository account designated by either the 6 consumer or the tax return preparer, lender, or 7 other affiliated lender, or 8 ‘‘(2) directly paying the fee or interest to the 9 tax return preparer, lender, or other affiliated lend- 10 er.’’. 11 (b) FAILURE TO DISCLOSE.—Part I of subchapter 12 B of chapter 68 of such Code is amended by adding at 13 the end the following: 14 ‘‘SEC. 6720D. FAILURE TO MEET DISCLOSURE REQUIRE- 15 MENTS FOR TAX RETURN PREPARERS. 16 ‘‘(a) GENERAL RULE.—If a tax return preparer fails 17 to meet the requirements of section 7813, the Secretary 18 may impose a penalty of up to $1,000 per each such fail- 19 ure. 20 ‘‘(b) PENALTY IN ADDITION TO OTHER PEN- 21 ALTIES.—The penalty imposed by this section shall be in 22 addition to any other penalty imposed by law.’’. 23 (c) CLERICAL AMENDMENTS.— 24 VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1209 IS (1) The table of sections for subchapter B of 1 chapter 68 of such Code is amended by inserting 2 after the item related to section 6720C the following 3 new item: 4 ‘‘Sec. 6720D. Failure to meet disclosure requirements for tax return pre- parers.’’. (2) The table of sections for subchapter A of 5 chapter 80 of such Code is amended by inserting 6 after the item related to section 7812 the following 7 new item: 8 ‘‘Sec. 7813. Disclosure requirements for tax return preparers.’’. (d) EFFECTIVE DATE.—The amendments made by 9 this section shall apply with respect to returns filed after 10 December 31, 2023. 11 Æ VerDate Sep 11 2014 22:44 Apr 21, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1209.IS S1209 kjohnson on DSK79L0C42PROD with BILLS