HF 1234

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxes; regulating tax preparers; amending
Minnesota Statutes 2004, sections 270.30, subdivisions
1, 5, 6, 8, by adding subdivisions; 289A.08,
subdivision 16; 289A.60, subdivision 13; proposing
coding for new law in Minnesota Statutes 2004, chapter
270.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 270.30,
subdivision 1, is amended to read:

Subdivision 1.

Scope.

deleted text begin (a) deleted text end This section applies to a
person who deleted text begin offers, deleted text end provides deleted text begin , or facilitates the provision of
refund anticipation loans, as part of or in connection with the
provision of deleted text end tax preparation services.

deleted text begin (b) This section does not apply to:
deleted text end

deleted text begin (1) a tax preparer who provides tax preparation services
for fewer than six clients in a calendar year;
deleted text end

deleted text begin (2) the provision by a person of tax preparation services
to a spouse, parent, grandparent, child, or sibling; and
deleted text end

deleted text begin (3) the provision of services by an employee for an
employer.
deleted text end

Sec. 2.

Minnesota Statutes 2004, section 270.30,
subdivision 5, is amended to read:

Subd. 5.

Itemized bill required.

A tax preparer new text begin who
provides services for a fee or other consideration new text end must provide
an itemized statement of the charges for services, at least
separately stating the charges for:

(1) return preparation; new text begin and
new text end

(2) deleted text begin electronic filing; and
deleted text end

deleted text begin (3) deleted text end providing or facilitating a refund anticipation loan.

Sec. 3.

Minnesota Statutes 2004, section 270.30,
subdivision 6, is amended to read:

Subd. 6.

Enforcement; penalties.

The commissioner may
impose an administrative penalty of not more than $1,000 per
violation of subdivision 3, 4, or 5. The commissioner may
terminate a tax preparer's authority to transmit returns
electronically to the state, if the commissioner determines the
tax preparer engaged in a pattern and practice of violating this
section. Imposition of a penalty under this subdivision is
subject to the contested case procedure under chapter 14. The
commissioner shall collect the penalty in the same manner as the
income tax. new text begin Penalties imposed under this subdivision are public
data.
new text end

Sec. 4.

Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:

new text begin Subd. 6a. new text end

new text begin Exchange of data; state board of
accountancy. new text end

new text begin The State Board of Accountancy shall refer to the
commissioner complaints it receives about tax preparers who are
not subject to the jurisdiction of the State Board of
Accountancy and who are alleged to have violated the provisions
of subdivisions 3 to 5.
new text end

Sec. 5.

Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:

new text begin Subd. 6b. new text end

new text begin Exchange of data; lawyers board of professional
responsibility. new text end

new text begin The Lawyers Board of Professional
Responsibility may refer to the commissioner complaints it
receives about tax preparers who are not subject to its
jurisdiction and who are alleged to have violated the provisions
of subdivisions 3 to 5.
new text end

Sec. 6.

Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:

new text begin Subd. 6c. new text end

new text begin Exchange of data; commissioner. new text end

new text begin The
commissioner shall refer complaints about tax preparers who are
alleged to have violated the provisions of subdivisions 3 to 5
to:
new text end

new text begin (1) the State Board of Accountancy, if the tax preparer is
under its jurisdiction; and
new text end

new text begin (2) the Lawyers Board of Professional Responsibility, if
the tax preparer is under its jurisdiction.
new text end

Sec. 7.

Minnesota Statutes 2004, section 270.30, is
amended by adding a subdivision to read:

new text begin Subd. 6d. new text end

new text begin Data private. new text end

new text begin Information exchanged on
individuals under subdivisions 6a to 6c are private data under
section 13.02, subdivision 12, until such time as a penalty is
imposed as provided in section 326A.08 or by the Lawyers Board
of Professional Responsibility.
new text end

Sec. 8.

Minnesota Statutes 2004, section 270.30,
subdivision 8, is amended to read:

Subd. 8.

Exemptions; enforcement provisions.

new text begin (a) new text end The
provisions of deleted text begin subdivisions 6 and 7 deleted text end new text begin this section, except for
subdivision 4, new text end do not apply to:

(1) an attorney admitted to practice under section 481.01;

(2) a certified public accountant deleted text begin holding a certificate
under section 326A.04 or a person issued a permit to practice
under section 326A.05 deleted text end new text begin or other person who is subject to the
jurisdiction of the State Board of Accountancy new text end ; new text begin and
new text end

(3) deleted text begin a person designated as a registered accounting
practitioner under Minnesota Rules, part 1105.6600, or a
registered accounting practitioner firm issued a permit under
Minnesota Rules, part 1105.7100;
deleted text end

deleted text begin (4) deleted text end an enrolled agent who has passed the special enrollment
examination administered by the Internal Revenue Service deleted text begin ; and deleted text end new text begin .
new text end

new text begin (b) The provisions of this section do not apply to:
new text end

deleted text begin (5) deleted text end new text begin (1) new text end any fiduciary, or the regular employees of a
fiduciary, while acting on behalf of the fiduciary estate, the
testator, trustor, grantor, or beneficiaries of them new text begin ;
new text end

new text begin (2) a tax preparer who provides tax preparation services
for fewer than six clients in a calendar year;
new text end

new text begin (3) tax preparation services to a spouse, parent,
grandparent, child, or sibling of the tax preparer; and
new text end

new text begin (4) the preparation by an employee of the tax return of the
employee's employer new text end .

Sec. 9.

new text begin [270.301] PUBLICATION OF NAMES OF TAX PREPARERS
SUBJECT TO PENALTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Publication of list. new text end

new text begin Notwithstanding any
other law, the commissioner must publish as provided in this
section a list or lists of tax preparers subject to penalties.
new text end

new text begin Subd. 2. new text end

new text begin Required and excluded tax preparers. new text end

new text begin (a)
Subject to the limitations of paragraphs (b) and (c), the
commissioner must publish lists of the tax preparers described
in subdivision 1. The list must include:
new text end

new text begin (1) the tax preparers who have been assessed penalties
under section 289A.60, subdivision 13, or who have been
convicted under section 289A.63;
new text end

new text begin (2) tax preparers against whom cumulative penalties of
$1,000 or more have been assessed under section 270.30,
subdivision 6; and
new text end

new text begin (3) tax preparers whose authority to transmit returns
electronically has been terminated under section 270.30,
subdivision 6, or under section 289A.60, subdivision 13.
new text end

new text begin The list may include tax preparers against whom cumulative
penalties of less than $1,000 have been assessed.
new text end

new text begin (b) For the purposes of this section, a penalty was not
assessed if:
new text end

new text begin (1) an administrative or court action contesting the
penalty has been filed or served and is unresolved at the time
when notice would be given under subdivision 3; or
new text end

new text begin (2) an appeal period to contest the penalty has not expired.
new text end

new text begin (c) Penalties are not subject to publication if:
new text end

new text begin (1) the commissioner is in the process of reviewing or
adjusting the penalty; or
new text end

new text begin (2) the commissioner has been notified that the tax
preparer is deceased.
new text end

new text begin Subd. 3. new text end

new text begin Notice to tax preparer. new text end

new text begin (a) At least 30 days
before publishing the name of a tax preparer subject to penalty,
the commissioner shall mail a written notice to the tax
preparer, detailing the amount and nature of each penalty and
the intended publication of the information listed in
subdivision 4 related to the penalty. The notice must be mailed
by first class and certified mail addressed to the last known
address of the tax preparer. The notice must include
information regarding the exceptions listed in subdivision 2 and
must state that the tax preparer's information will not be
published if the tax preparer provides information establishing
that subdivision 2 prohibits publication of the tax preparer's
name.
new text end

new text begin (b) After at least 30 days has elapsed since the notice was
mailed and the tax preparer has not proved to the commissioner
that subdivision 2 prohibits publication, the commissioner may
publish in a list of tax preparers subject to penalty the
information about the tax preparer that is listed in subdivision
4.
new text end

new text begin Subd. 4. new text end

new text begin Form of list. new text end

new text begin The list may be published by any
medium or method. The list must contain the name, associated
business name or names, address or addresses, and violation or
violations for which a penalty was imposed of each tax preparer
subject to administrative penalty.
new text end

new text begin Subd. 5. new text end

new text begin Removal from list. new text end

new text begin The commissioner shall
remove the name of a tax preparer from the list of tax preparers
published under this section when:
new text end

new text begin (1) the commissioner determines that the name was included
on the list in error;
new text end

new text begin (2) 90 days have elapsed since the preparer has fully paid
all fines imposed, served any suspension and demonstrated to the
satisfaction of the commissioner that the preparer has
successfully completed any remedial actions required by the
commissioner, the State Board of Accountancy, or the Lawyers
Board of Professional Responsibility; or
new text end

new text begin (3) the commissioner has been notified that the tax
preparer is deceased.
new text end

new text begin Subd. 6. new text end

new text begin Names published in error. new text end

new text begin If the commissioner
publishes a name under subdivision 1 in error, the tax preparer
whose name was erroneously published has a right to request a
retraction and apology. If the tax preparer so requests, the
commissioner shall publish a retraction and apology
acknowledging that the tax preparer's name was published in
error. The retraction and apology must appear in the same
medium and the same format as the original list that contained
the name listed in error.
new text end

new text begin Subd. 7. new text end

new text begin Payment of damages. new text end

new text begin Actions against the
commissioner of revenue or the state of Minnesota arising out of
the implementation of this program must be brought under section
270.276.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The requirement of subdivision 1,
paragraph (a), clause (2) is effective for crimes committed on
or after August 1, 2005. The remainder of subdivision 1 is
effective for tax preparers engaging in conduct described in
paragraph (a), clause (1) or (3), on or after August 1, 2005.
new text end

Sec. 10.

Minnesota Statutes 2004, section 289A.08,
subdivision 16, is amended to read:

Subd. 16.

Tax refund or return preparers; electronic
filing; paper filing fee imposed.

(a) A "tax refund or return
preparer," as defined in section 289A.60, subdivision 13,
paragraph deleted text begin (g) deleted text end new text begin (h) new text end , who prepared more than deleted text begin 500 deleted text end new text begin 100 new text end Minnesota
individual income tax returns for the prior calendar year must
file all Minnesota individual income tax returns prepared for
the current calendar year by electronic means.

(b) deleted text begin For tax returns prepared for the tax year beginning in
2001, the "500" in paragraph (a) is reduced to 250.
deleted text end

deleted text begin (c) For tax returns prepared for tax years beginning after
December 31, 2001, the "500" in paragraph (a) is reduced to 100.
deleted text end

deleted text begin (d) deleted text end Paragraph (a) does not apply to a return if the
taxpayer has indicated on the return that the taxpayer did not
want the return filed by electronic means.

deleted text begin (e) deleted text end new text begin (c) new text end For each return that is not filed electronically by
a tax refund or return preparer under this subdivision,
including returns filed under paragraph (d), a paper filing fee
of $5 is imposed upon the preparer. The fee is collected from
the preparer in the same manner as income tax. The fee does not
apply to returns that the commissioner requires to be filed in
paper form.

Sec. 11.

Minnesota Statutes 2004, section 289A.60,
subdivision 13, is amended to read:

Subd. 13.

Penalties for tax return preparers.

(a) If an
understatement of liability with respect to a return or claim
for refund is due to a willful attempt in any manner to
understate the liability for a tax by a person who is a tax
return preparer with respect to the return or claim, the person
shall pay to the commissioner a penalty of $500. If a part of a
property tax refund claim is excessive due to a willful attempt
in any manner to overstate the claim for relief allowed under
chapter 290A by a person who is a tax refund or return preparer,
the person shall pay to the commissioner a penalty of $500 with
respect to the claim. These penalties may not be assessed
against the employer of a tax return preparer unless the
employer was actively involved in the willful attempt to
understate the liability for a tax or to overstate the claim for
refund. These penalties are income tax liabilities and may be
assessed at any time as provided in section 289A.38, subdivision
5.

(b) A civil action in the name of the state of Minnesota
may be commenced to enjoin any person who is a tax return
preparer doing business in this state from further engaging in
any conduct described in paragraph (c). An action under this
paragraph must be brought by the attorney general in the
district court for the judicial district of the tax return
preparer's residence or principal place of business, or in which
the taxpayer with respect to whose tax return the action is
brought resides. The court may exercise its jurisdiction over
the action separate and apart from any other action brought by
the state of Minnesota against the tax return preparer or any
taxpayer.

(c) In an action under paragraph (b), if the court finds
that a tax return preparer has:

(1) engaged in any conduct subject to a civil penalty under
section 289A.60 or a criminal penalty under section 289A.63;

(2) misrepresented the preparer's eligibility to practice
before the Department of Revenue, or otherwise misrepresented
the preparer's experience or education as a tax return preparer;

(3) guaranteed the payment of any tax refund or the
allowance of any tax credit; or

(4) engaged in any other fraudulent or deceptive conduct
that substantially interferes with the proper administration of
state tax law, and injunctive relief is appropriate to prevent
the recurrence of that conduct,

the court may enjoin the person from further engaging in that
conduct.

(d) If the court finds that a tax return preparer has
continually or repeatedly engaged in conduct described in
paragraph (c), and that an injunction prohibiting that conduct
would not be sufficient to prevent the person's interference
with the proper administration of state tax laws, the court may
enjoin the person from acting as a tax return preparer. The
court may not enjoin the employer of a tax return preparer for
conduct described in paragraph (c) engaged in by one or more of
the employer's employees unless the employer was also actively
involved in that conduct.

(e) new text begin The commissioner may terminate or suspend a tax
preparer's authority to transmit returns electronically to the
state, if the commissioner determines that the tax preparer has
engaged in a pattern and practice of conduct in violation of
this subdivision or of section 289A.63.
new text end

new text begin (f) new text end For purposes of this subdivision, the term
"understatement of liability" means an understatement of the net
amount payable with respect to a tax imposed by state tax law,
or an overstatement of the net amount creditable or refundable
with respect to a tax. The determination of whether or not
there is an understatement of liability must be made without
regard to any administrative or judicial action involving the
taxpayer. For purposes of this subdivision, the amount
determined for underpayment of estimated tax under either
section 289A.25 or 289A.26 is not considered an understatement
of liability.

deleted text begin (f) deleted text end new text begin (g) new text end For purposes of this subdivision, the term
"overstatement of claim" means an overstatement of the net
amount refundable with respect to a claim for property tax
relief provided by chapter 290A. The determination of whether
or not there is an overstatement of a claim must be made without
regard to administrative or judicial action involving the
claimant.

deleted text begin (g) deleted text end new text begin (h) new text end For purposes of this section, the term "tax refund
or return preparer" means an individual who prepares for
compensation, or who employs one or more individuals to prepare
for compensation, a return of tax, or a claim for refund of
tax. The preparation of a substantial part of a return or claim
for refund is treated as if it were the preparation of the
entire return or claim for refund. An individual is not
considered a tax return preparer merely because the individual:

(1) gives typing, reproducing, or other mechanical
assistance;

(2) prepares a return or claim for refund of the employer,
or an officer or employee of the employer, by whom the
individual is regularly and continuously employed;

(3) prepares a return or claim for refund of any person as
a fiduciary for that person; or

(4) prepares a claim for refund for a taxpayer in response
to a tax order issued to the taxpayer.