Bill Text: IA HSB147 | 2019-2020 | 88th General Assembly | Introduced

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Bill Title: A bill for an act relating to tax return preparers, and providing penalties.

Spectrum: Committee Bill

Status: (N/A - Dead) 2019-02-26 - Committee report, recommending amendment and passage. H.J. 366. [HSB147 Detail]

Download: Iowa-2019-HSB147-Introduced.html

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House Study Bill 147 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE ON
STATE GOVERNMENT BILL BY
CHAIRPERSON KAUFMANN)
A BILL FOR
An Act relating to tax return preparers, and providing
penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 421.62 Inclusion of preparer tax
identification number.
1. For purposes of this section, unless the context
otherwise requires:
a. “Department” means the Iowa department of revenue.
b. “PTIN” means a preparer tax identification number, as
defined in Internal Revenue Service Notice 2011-6.
c. (1) “Tax return preparer” means any individual who, for
a fee or other consideration, prepares ten or more tax returns
or claims for refund under chapter 422 during a calendar year,
or who assumes final responsibility for completed work on such
tax returns or claims for refund under chapter 422 on which
preliminary work has been done by another individual.
(2) “Tax return preparer” does not include any of the
following:
(a) An individual licensed as a certified public accountant
or a licensed public accountant under chapter 542 or a similar
law of another state.
(b) An individual admitted to practice law in this state or
another state.
(c) An enrolled agent enrolled to practice before the
federal internal revenue service pursuant to 31 C.F.R. §10.4.
(d) A fiduciary of an estate, trust, or individual, while
functioning within the fiduciary’s legal duty and authority
with respect to that individual, or that estate or trust or its
testator, trustor, grantor, or beneficiaries.
(e) An individual who prepares the tax returns of
the individual’s employer, while functioning within the
individual’s scope of employment with the employer.
(f) An individual employed by a local, state, or federal
government agency, while functioning within the individual’s
scope of employment with the government agency.
(g) An employee of a person described in subparagraph (1),
if the employee provides only clerical or other comparable
services and does not sign tax returns.
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H.F. _____
d. “Willful or reckless” means the same as “willful or
reckless conduct” defined in section 6694(b)(2) of the Internal
Revenue Code.
2. a. On or after January 1, 2020, a tax return preparer is
required to include the tax return preparer’s PTIN on any tax
return or claim for refund prepared by the tax return preparer
and filed under chapter 422.
b. (1) A tax return preparer who violates paragraph “a”
shall pay a civil penalty in the amount of fifty dollars for
each violation unless the tax return preparer shows that the
failure was reasonable under the circumstances and not willful
or reckless conduct.
(2) The maximum aggregate penalty imposed upon a tax
return preparer pursuant to this subsection shall not exceed
twenty-five thousand dollars during any calendar year.
(3) The penalty shall be paid to the department.
3. The department shall draft relevant tax return forms
to provide the space necessary for a tax return preparer to
include a PTIN.
Sec. 2. NEW SECTION . 421.63 Authority to enjoin certain tax
return preparers.
1. For purposes of this section, unless the context
otherwise requires:
a. “Department” means the Iowa department of revenue.
b. “State” means any 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.
c. “Tax return preparer” means the same as defined in
section 421.62.
d. “Unreasonable position” means the same as defined in
section 6694(a)(2) of the Internal Revenue Code.
e. “Willful or reckless” means the same as “willful or
reckless conduct” defined in section 6694(b)(2) of the Internal
Revenue Code.
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2. The director of the department may seek a temporary or
permanent injunction from any court of competent jurisdiction
to prevent a tax return preparer from engaging in further
conduct described in subsection 3.
3. A tax return preparer may be temporarily or permanently
enjoined from engaging in activity described in section 421.62,
subsection 1, paragraph “c” , if the court finds that a tax
return preparer has continually engaged in the following
conduct and that injunctive relief is necessary to prevent the
recurrence of such conduct:
a. Preparation of any income tax return or claim for refund
that includes an unreasonable position that understates the
taxpayer’s liability.
b. Preparation of any income tax return or claim for refund
that includes a willful or reckless understatement of the
taxpayer’s liability.
c. Failure to do any of the following:
(1) Furnish a copy of an income tax return or claim for
refund, when required.
(2) Sign the income tax return or claim for refund, when
required.
(3) Furnish an identifying number, when required.
(4) Retain a copy of the income tax return, when required.
(5) Complete continuing education requirements as required
pursuant to section 421.64.
(6) Use diligence in determining eligibility for tax
benefits, when subject to due diligence requirements imposed by
department rules.
d. Negotiating on behalf of a taxpayer the issuance of
a check by the department, without the permission of the
taxpayer.
e. Engaging in conduct subject to a criminal penalty under
this chapter.
f. Misrepresenting the eligibility of the preparer to
practice before the department or otherwise misrepresenting the
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H.F. _____
experience or education of the preparer.
g. Guaranteeing the payment of any income tax refund or the
allowance of any income tax credit.
h. Engaging in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration
of the tax laws of this state.
4. 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.
Sec. 3. NEW SECTION . 421.64 Tax return preparer ——
continuing education.
1. For purposes of this section, “tax return preparer” means
the same as defined in section 421.61.
2. a. Beginning January 1, 2020, and every year thereafter,
a tax return preparer shall complete a minimum of fifteen
hours of continuing education courses on subject matters
prescribed by the department of revenue, including two hours
of continuing education on professional ethics. Each course
shall be taken from an Internal Revenue Service approved
provider of continuing education. A tax return preparer shall
not engage in activity as such a preparer unless the preparer
has completed, during the previous calendar year, a minimum of
fifteen hours of continuing education courses prescribed by
the department of revenue, including two hours of continuing
education on professional ethics. For purposes of completing
continuing education pursuant to this section, a new tax
preparer shall not be required to complete continuing education
prior to the first year of preparing returns.
b. A tax return preparer is required to retain records of
continuing education completion.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
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H.F. _____
This bill relates to tax return preparers. On or after
January 1, 2020, the bill requires all tax return preparers to
include the tax return preparer’s federally issued preparer
tax identification number (PTIN) on any tax return or refund
claim prepared by the tax return preparer and filed under Code
chapter 422, which governs the Iowa individual and corporate
income taxes and franchise taxes.
The bill defines “tax return preparer” to generally include
individuals who prepare 10 or more Iowa tax returns or refund
claims in a calendar year. A certified or licensed accountant,
a licensed attorney, certain fiduciaries, employees who
prepare tax returns of their employers, and other employees are
excluded from the definition.
If a tax return preparer fails to include the preparer’s
PTIN on any tax return or claim for refund, the preparer
shall be subject to a civil penalty in the amount of $50 for
each violation, unless the tax return preparer shows that the
failure was reasonable under the circumstances and not willful
or reckless conduct.
The bill specifies that a tax return preparer may be
temporarily or permanently enjoined from preparing Iowa tax
returns or refund claims if the court finds that injunctive
relief is necessary to prevent the recurrence of certain
conduct.
Beginning January 1, 2020, and every year thereafter, a
tax return preparer shall complete a minimum of 15 hours of
continuing education courses on subject matters prescribed by
the department of revenue, including two hours of continuing
education on professional ethics.
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