On June 28th, 2006, the Senate Finance Committee voted to send Senator Jeff Bingaman’s (D-NM) bill, S. 832, The Taxpayer Protection and Assistance Act of 2005, to the full Senate. The bill includes the following provisions:
- An authorization of $10 million in matching grants for low income tax preparation clinics;
- Federal protection of the enrolled agent credential;
- A statutory framework for the regulation of all paid return preparers – All paid preparers would be subject to the ethical standards established under current Circular 230 (regulating lawyers, CPAs, enrolled agents, and enrolled actuaries). Additionally, they would be required to undergo an initial exam and yearly continuing education requirements. Regulation of all individuals providing tax return preparation would be consolidated under OPR, which would retain fees and penalties for internal operations and promotional costs. Please note that, as NAEA expected, the Finance Committee agreed to an amendment requiring the Treasury Department to accept the credentials of state licensing or registration programs for compensated preparers in lieu of testing by OPR, to the extent that such state licensing or registration programs are comparable to the eligibility requirements established by the Secretary;
- The regulation of refund anticipation loan providers – It would require the registration of all individuals originating an electronic return and soliciting, preparing, or otherwise facilitating the making of a refund anticipation loan. It would also require such individuals to disclose to consumers information on the specifics and costs of such loans;
- The authorization of demonstration projects to provide access for individuals lacking bank accounts;
- An expansion of the use of Tax Court practitioner fees to cover the cost of pro se taxpayers.
Additionally, the Committee agreed to the following additional amendments:
- The termination of the Debt Indicator program;
- A proposal to permit the IRS to expand the scope of returns prepared by paid return preparers that must be filed electronically, lowering the threshold to 5 returns;
- A proposal restricting disclosure by consent of taxpayer information only for tax preparation purposes;
- An amendment to expand the definition of tax return preparer to include any person who assists in preparing tax returns such as authorized e-file providers, regardless of whether the person charges a specific fee for the assistance;
- A proposal requiring the IRS to provide free electronic filing to all taxpayers;
- An amendment clarifying that the Tax Court has jurisdiction over equitable relief in innocent spouse claims even if the individual does not elect to have the general relief or separation of liabilities relief apply;
- A provision waiving the user fee for installment agreements in which the parties agree to the use of automated installment payments;
- A proposal increasing the threshold for imposing the penalty for failure to pay estimated tax from $1,000 to $2,000;
- A clarification that the application of the federal 10 percent tax deposit penalty only applies in cases in which the failure to deposit extends for more than 15 days and thus clarifying that taxpayer who makes a deposit on time but not in the manner required is subject to only a penalty of two percent;
- A provision expanding the scope of the aiding and abetting penalty;
- A proposal to increase the criminal monetary penalty limitation for underpayment or overpayment of the tax due to fraud;
- A new penalty on any taxpayer filing an erroneous claim for refund or credit;
- A proposal prohibiting the disclosure of taxpayer identification number as part of the publicly available summaries of accepted offers-in-compromise; and
- The creation of higher standards for request for and consents to disclosures.
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