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AB-1140 Tax preparers: disclosures. (2019-2020)

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Date Published: 01/23/2020 09:00 PM
AB1140:v96#DOCUMENT

Amended  IN  Assembly  January 23, 2020
Amended  IN  Assembly  April 22, 2019
Amended  IN  Assembly  April 01, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1140


Introduced by Assembly Member Mark Stone

February 21, 2019


An act to add Section 22252.2 to the Business and Professions Code, relating to business.


LEGISLATIVE COUNSEL'S DIGEST


AB 1140, as amended, Mark Stone. Tax preparers: disclosures.
Existing law, the Tax Preparation Act, requires a tax preparer to register with the California Tax Education Council and, among other things, requires a tax preparer to provide specified written disclosures to a client in connection with tax preparation services, including written disclosures relating to refund anticipation loans. A violation of the provisions of the act is a misdemeanor, except as specified.
This bill would require a tax preparer to make provide a client with a specified written disclosures to a client disclosure before preparing the client’s tax return, including the total amount of all return that includes the costs and fees being charged by the tax preparer for usual and customary tax preparation services and a statement that an individual with income below $66,000 may be eligible for free tax preparation services relating to the availability of free tax preparation services for individuals with incomes below specified amounts that also identifies the Franchise Tax Board’s and Internal Revenue Service’s internet websites where the client may find additional information. The bill would require a tax preparer to provide a client with an additional written disclosure after preparing the tax return that includes the total cost the client is being charged by the tax preparer and the contact information of each tax preparer who worked on the tax return. The bill would also require a tax preparer to make the written disclosures available in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. The bill would require the Franchise Tax Board to develop and post on its internet website a model disclosure form. forms.
This bill would exempt violation of these provisions from the existing criminal sanctions, and would instead make a violation of the provisions subject to a warning by the Franchise Tax Board for a first violation and, for a 2nd or subsequent violation, a fine of $750 and discipline by the Franchise Tax Board, as specified. The bill would require the Franchise Tax Board to notify the council about a violation of these provisions. The bill would require the penalty money collected pursuant to those provisions to be used, upon appropriation by the Legislature, for the federal Volunteer Income Tax Assistance program and Earned Income Tax Credit outreach efforts.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 22252.2 is added to the Business and Professions Code, to read:

22252.2.
 (a) Before preparing a tax return for a client, a tax preparer shall provide a written disclosure to the client that contains all of the following information:
(1) The total amount of all costs and fees being charged by the tax preparer, preparer for usual and customary tax preparation services, including, but not limited to, Form 3514 and Schedule EIC (Form 1040), or subsequent versions of those forms, which shall be itemized and presented in a table format.
(2) A statement that an individual with income below sixty-six thousand dollars ($66,000) may be eligible for free, free online tax preparation services and an individual with income below fifty-six thousand dollars ($56,000) may be eligible for free in-person tax preparation services through the Internal Revenue Service Volunteer Income Tax Assistance program or online through free tax preparation software. program. The statement shall identify the Internal Revenue Service’s internet websites where an individual may find additional information on each program. program and the Franchise Tax Board’s CalFile internet website. If the income eligibility threshold for those programs changes in subsequent years, the disclosure shall reflect the updated amount for the current tax year.
(3) The tax preparer’s federal preparer tax identification number.
(b) (1) After preparing a tax return for a client, a tax preparer shall provide a written disclosure to the client that includes all of the following information:
(A) The total cost the client is being charged by the tax preparer.
(B) The tax preparer’s signature.
(C) The date the tax preparer signed the disclosure.
(D) The federal employer identification number.
(E) The tax preparer’s contact information, including, but not limited to, the tax preparer’s name, telephone number, and address.
(F) The tax preparer’s federal preparer tax identification number.
(2) The written disclosure shall include the information required in subparagraphs (E) and (F) for each tax preparer who worked on the tax return.

(b)

(c) The disclosures required by this section shall be on a single sheet of paper and written in not less than 20-point type, provided on paper, shall be clearly legible in not less than 12-point type, and shall be signed and dated by the client. The tax preparer shall retain the document documents for at least three years.

(c)

(d) The written disclosures required to be provided in this section shall be made available in English and the five languages listed in Section 1632 of the Civil Code.

(d)

(e) The Franchise Tax Board shall develop a model disclosure form, forms, which shall be made available on the Franchise Tax Board’s internet website.

(e)

(f) (1) A violation of this section is not subject to subdivision (b) of Section 22256 or Section 22257. A tax preparer who violates this section is subject to the following penalties:
(A) For a first violation, the tax preparer is subject to a warning by the Franchise Tax Board.
(B) For a second or subsequent violation, the tax preparer is subject to a fine of seven hundred fifty dollars ($750) and discipline by the Franchise Tax Board consistent with the provisions of this act. Moneys
(2) Moneys collected by the Franchise Tax Board pursuant to this section shall, upon appropriation by the Legislature, be used to fund the federal Volunteer Income Tax Assistance (VITA) program and Earned Income Tax Credit outreach efforts.

(2)

(3) The Franchise Tax Board shall notify the council of a violation of this section.