HF 1578

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; regulating tax preparers; 
  1.3             establishing consumer protections; providing 
  1.4             enforcement authority; proposing coding for new law in 
  1.5             Minnesota Statutes, chapter 270. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [270.30] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.9   270.30 to 270.303, the terms defined in this section have the 
  1.10  meanings given them. 
  1.11     Subd. 2.  [CLIENT.] "Client" means an individual for whom a 
  1.12  tax preparer performs or agrees to perform tax preparation 
  1.13  services. 
  1.14     Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
  1.15  commissioner of revenue. 
  1.16     Subd. 4.  [CONFIDENTIAL INFORMATION.] "Confidential 
  1.17  information" means information furnished to a tax preparer by a 
  1.18  client for, or in connection with, the preparation of a client's 
  1.19  individual income tax or business return. 
  1.20     Subd. 5.  [DEPARTMENT.] "Department" means the department 
  1.21  of revenue. 
  1.22     Subd. 6.  [FAMILY MEMBER.] "Family member" means spouse, 
  1.23  parent, grandparent, child, or sibling. 
  1.24     Subd. 7.  [FINANCIAL INSTITUTION.] "Financial institution" 
  1.25  means a lending institution chartered by an agency of the 
  2.1   federal government or regulated by the commissioner of commerce. 
  2.2      Subd. 8.  [NONPUBLIC PERSONAL INFORMATION.] "Nonpublic 
  2.3   personal information" means personally identifiable information 
  2.4   provided by a client to a tax preparer resulting from any 
  2.5   transaction or any service performed. 
  2.6      Subd. 9.  [PERSON.] "Person" means an individual, 
  2.7   corporation, partnership, association, trustee, or other legal 
  2.8   entity. 
  2.9      Subd. 10.  [TAX PREPARATION BUSINESS.] "Tax preparation 
  2.10  business" means a corporation, partnership, association, or 
  2.11  other entity that directly employs or otherwise has a business 
  2.12  arrangement with two or more tax preparers. 
  2.13     Subd. 11.  [TAX PREPARATION SERVICES.] "Tax preparation 
  2.14  services" means the services provided by a tax preparer for a 
  2.15  fee or other consideration, which include, but are not limited 
  2.16  to, assisting with or preparing individual income tax or 
  2.17  business returns for a client, assuming final responsibility for 
  2.18  completed work on an individual income tax or business return on 
  2.19  which preliminary work has been done by another, offering to 
  2.20  assist with or prepare an individual income tax or business 
  2.21  return, and offering or providing loans, on behalf of a tax 
  2.22  preparer or a financial institution, in anticipation of and for 
  2.23  which payment is intended to be a client's tax refund or federal 
  2.24  or state tax credit. 
  2.25     Subd. 12.  [TAX PREPARER.] "Tax preparer" means a person 
  2.26  who provides tax preparation services for a fee or other 
  2.27  consideration. 
  2.28     Sec. 2.  [270.301] [REQUIREMENTS OF TAX PREPARERS.] 
  2.29     Subdivision 1.  [FEES.] No tax preparer shall: 
  2.30     (1) charge a fee that has no reasonable relation to the 
  2.31  services provided; 
  2.32     (2) charge a fee for a service where the service is not 
  2.33  actually provided; 
  2.34     (3) misrepresent the amount charged by or paid to a third 
  2.35  party for a service; 
  2.36     (4) charge, offer to accept, or accept a contingent fee for 
  3.1   tax preparation services; 
  3.2      (5) charge, offer to accept, or accept a fee for 
  3.3   electronically filing a client's individual income tax or 
  3.4   business return that is related to or calculated as a percentage 
  3.5   of a client's refund or a loan offered or provided to a client, 
  3.6   on behalf of the tax preparer or a financial institution, in 
  3.7   anticipation of and for which payment is intended to be a 
  3.8   client's refund or federal or state tax credit; or 
  3.9      (6) fail to completely itemize all charges for tax 
  3.10  preparation services. 
  3.11     Subd. 2.  [STANDARDS OF CONDUCT.] No tax preparer shall: 
  3.12     (1) fail to promptly, diligently, and without unreasonable 
  3.13  delay complete a client's tax return; 
  3.14     (2) obtain the signature of a client to a tax return or 
  3.15  authorizing document that contains blank spaces to be filled in 
  3.16  after it has been signed; 
  3.17     (3) fail to sign a customer's tax return when payment for 
  3.18  services rendered has been made; 
  3.19     (4) fail or refuse to give a client a copy of any document 
  3.20  requiring the client's signature within a reasonable time after 
  3.21  the client signs the document; 
  3.22     (5) fail to retain for at least four years a copy of 
  3.23  individual income tax returns and for at least seven years a 
  3.24  copy of business returns; 
  3.25     (6) fail to maintain a confidential relationship between 
  3.26  themselves and their clients or former clients; 
  3.27     (7) fail to safeguard a client's nonpublic personal 
  3.28  information; 
  3.29     (8) make, authorize, or cause to make, either directly or 
  3.30  indirectly, any false, deceptive, or misleading statement or 
  3.31  representation, whether oral, written, or recorded by any means, 
  3.32  in connection with the offering or provision of tax preparation 
  3.33  services; 
  3.34     (9) make, publish, disseminate, circulate, place before the 
  3.35  public, or cause to be made, directly or indirectly, any 
  3.36  advertisement or marketing materials of any type, or any 
  4.1   statement or representation relating to the offering or 
  4.2   provision of tax preparation services that is false, deceptive, 
  4.3   or misleading; or 
  4.4      (10) include in a contract any provision that requires, or 
  4.5   requires in any other way, a client to assert any claim or 
  4.6   defense in a forum that is less convenient, more costly, or more 
  4.7   dilatory for the resolution of the dispute than a judicial forum 
  4.8   established in this state where the client may otherwise 
  4.9   properly bring a claim or defense, or limits in any way any 
  4.10  claim or defense the borrower may have. 
  4.11     Subd. 3.  [DISCLOSURES.] (a) Prior to entering into any 
  4.12  oral or written agreement to provide tax preparation services, a 
  4.13  tax preparer who offers to provide or provides loans, on behalf 
  4.14  of the tax preparer or a financial institution, in anticipation 
  4.15  of and for which payment is intended to be a client's tax refund 
  4.16  or federal or state tax credit shall provide in writing, on a 
  4.17  single sheet of paper, separate from any other written document 
  4.18  or oral statement, and shall orally read to a prospective client 
  4.19  the following statement:  "You may be eligible for FREE tax 
  4.20  preparation services.  For information about free tax 
  4.21  preparation services, contact the Minnesota Department of 
  4.22  Revenue at [phone]."  It is the obligation of the tax 
  4.23  preparer to ensure that the telephone number provided for the 
  4.24  department is current. 
  4.25     (b) Prior to entering into any oral or written agreement to 
  4.26  provide a loan, on behalf of the tax preparer or a financial 
  4.27  institution, in anticipation of and for which payment is 
  4.28  intended to be a client's tax refund or federal or state tax 
  4.29  credit, a tax preparer shall provide in writing, on a single 
  4.30  sheet of paper, separate from any other written document or oral 
  4.31  statement, to a prospective client, a notice containing: 
  4.32     (1) a legend, centered at the top of the single sheet of 
  4.33  paper, in bold, capital letters, and in 28-point type stating 
  4.34  "WARNING"; and 
  4.35     (2) the following verbatim statements in capital and small 
  4.36  type, in a minimum of 14-point type, with at least a double 
  5.1   space between each line in the statement and four spaces between 
  5.2   each statement: 
  5.3      (i) This is a loan.  The annual percentage rate (APR) is 
  5.4   (fill in APR). 
  5.5      (ii) Your refund will be reduced by (fill in appropriate 
  5.6   number) percent or $(fill in appropriate number of dollars) due 
  5.7   to fees, interest, and other charges. 
  5.8      (iii) You can get your refund in about two weeks if you 
  5.9   file your return electronically and have the IRS send your 
  5.10  refund to your own bank account.  You do not need to pay for a 
  5.11  loan to get your money quickly. 
  5.12     (iv) If you choose to take this loan and the IRS is late 
  5.13  with the refund, you may have to pay additional interest. 
  5.14     (c) The notice must be signed and dated by the licensee and 
  5.15  the client or clients if a joint return. 
  5.16     Sec. 3.  [270.302] [ENFORCEMENT.] 
  5.17     Subdivision 1.  [CIVIL PENALTIES.] The commissioner may 
  5.18  bring an enforcement action against any person who has violated 
  5.19  this chapter, and, after appropriate notice and hearing and upon 
  5.20  a finding that a lender has violated any of the provisions of 
  5.21  this chapter, may impose an administrative penalty of not more 
  5.22  than $10,000 for each violation.  Demonstration by the 
  5.23  commissioner of a pattern and practice of violation shall 
  5.24  establish a rebuttable presumption that the violation for which 
  5.25  the commissioner is bringing an action was not due to 
  5.26  unintentional error. 
  5.27     Subd. 2.  [CIVIL ACTIONS.] (a) Any violation of this 
  5.28  chapter constitutes an unfair, deceptive, and unlawful trade 
  5.29  practice within the meaning of section 8.31. 
  5.30     (b) A client may bring a civil action seeking redress for a 
  5.31  violation of this chapter in the district court of the county 
  5.32  wherein the unlawful action or practice is alleged to have been 
  5.33  committed or where the respondent resides or has a principal 
  5.34  place of business. 
  5.35     (c) A court finding for the plaintiff shall award actual 
  5.36  damages, including incidental and consequential damages, 
  6.1   reasonable attorney fees, court costs, and any other equitable 
  6.2   relief as the court considers appropriate. 
  6.3      Subd. 3.  [ASSIGNEE LIABILITY.] Any person who purchases or 
  6.4   is otherwise assigned rights granted under a contract entered 
  6.5   into in connection with tax preparation services is subject to 
  6.6   all affirmative claims and any defenses with respect to the loan 
  6.7   that the borrower could assert against the seller or assignor. 
  6.8      Sec. 4.  [270.303] [EXEMPTIONS.] 
  6.9      Sections 270.30 to 270.302, except for section 270.301, 
  6.10  subdivision 3, do not apply to: 
  6.11     (1) an attorney admitted to practice law in this state 
  6.12  pursuant to section 481.01; 
  6.13     (2) a certified public accountant holding a certificate 
  6.14  issued pursuant to section 326A.04; 
  6.15     (3) any person who, as part of the regular clerical duties 
  6.16  of employment, prepares income, sales, or payroll tax returns 
  6.17  for an employer; 
  6.18     (4) any person who provides, for a fee or valuable 
  6.19  consideration, tax preparation services for fewer than six 
  6.20  clients; 
  6.21     (5) any person who provides tax preparation services for a 
  6.22  family member; and 
  6.23     (6) while acting as such, any fiduciary, or the regular 
  6.24  employees of a fiduciary, acting on behalf of the fiduciary 
  6.25  estate, the testator, trustor, grantor, or beneficiaries thereof.