S.935 - Tax Refund Protection Act Of 2015

[congressional bills 114th congress]
[from the u.s. government publishing office]
[s. 935 introduced in senate (is)]

114th congress
  1st session
                                 s. 935

 to amend the internal revenue code of 1986 and the consumer financial 
  protection act of 2010 to regulate tax return preparers and refund 
       anticipation payment arrangements, and for other purposes.


_______________________________________________________________________


                   in the senate of the united states

                             april 14, 2015

  mr. booker introduced the following bill; which was read twice and 
                  referred to the committee on finance

_______________________________________________________________________

                                 a bill


 
 to amend the internal revenue code of 1986 and the consumer financial 
  protection act of 2010 to regulate tax return preparers and refund 
       anticipation payment arrangements, and for other purposes.

    be it enacted by the senate and house of representatives of the 
united states of america in congress assembled,

section 1. short title.

    this act may be cited as the ``tax refund protection act of 2015''.

sec. 2. regulation of tax return preparers.

    (a) in general.--subchapter a of chapter 80 of the internal revenue 
code of 1986 is amended by adding at the end the following new section:

``sec. 7812. regulation of tax return preparers.

    ``(a) in general.--the secretary shall--
            ``(1) establish a program to license or certify tax return 
        preparers subject to this section,
            ``(2) regulate such tax return preparers, and
            ``(3) before licensing or certifying a person as a tax 
        return preparer subject to this section, require that the 
        person demonstrate--
                    ``(a) good character,
                    ``(b) good reputation,
                    ``(c) necessary qualifications to enable the person 
                to provide to taxpayers valuable service as a tax 
                return preparer, and
                    ``(d) competency to perform the functions of a tax 
                return preparer.
    ``(b) authority to impose a fee.--the secretary shall require tax 
return preparers subject to this section to pay a reasonable fee for 
licensing or certification under this section.
    ``(c) disclosure requirements.--the secretary shall, by rule, 
require tax return preparers subject to this section to provide a 
disclosure statement to taxpayers that shall contain statements--
            ``(1) identifying the amount of fees such tax return 
        preparer charges for preparing a federal income tax return, 
        filing a federal income tax return, or executing a refund 
        anticipation payment arrangement, and
            ``(2) identifying the average amount of time in which a 
        taxpayer who files a federal income tax return electronically 
        can expect to receive a refund by mail, according to 
        information provided by the internal revenue service.
    ``(d) disciplinary procedures.--after notice and opportunity for a 
hearing, the secretary may take any enforcement action against a tax 
return preparer subject to this section who--
            ``(1) is incompetent,
            ``(2) is disreputable,
            ``(3) violates regulations prescribed under this section, 
        or
            ``(4) with intent to defraud, willfully and knowingly 
        misleads or threatens a taxpayer.
    ``(e) tax return preparer subject to section.--a tax return 
preparer is subject to this section if such preparer is not subject to 
section 330 of title 31, united states code.
    ``(f) definitions.--for purposes of this section--
            ``(1) tax return preparer.--see section 7701(a)(36) for the 
        definition of a tax return preparer.
            ``(2) refund anticipation payment arrangement.--the term 
        `refund anticipation payment arrangement' has the meaning given 
        such term by section 1029b(d)(2) of the consumer financial 
        protection act of 2010.''.
    (b) clerical amendment.--the table of sections for subchapter a of 
chapter 80 of the internal revenue code of 1986 is amended by inserting 
after the item related to section 7811 the following new item:

``sec. 7812. regulation of tax return preparers.''.
    (c) effective date.--the amendments made by this section shall 
apply with respect to returns filed after december 31, 2015.

sec. 3. regulation of refund anticipation payment instruments.

    (a) in general.--subtitle b of the consumer financial protection 
act of 2010 (12 u.s.c. 5511 et seq.) is amended by adding at the end 
the following:

``sec. 1029b. regulation of refund anticipation payment arrangements.

    ``(a) in general.--the bureau shall regulate refund anticipation 
payment arrangements.
    ``(b) disclosure requirements.--the bureau shall, by rule, require 
tax return preparers to provide a disclosure statement to a consumer 
that shall contain statements--
            ``(1) identifying the amount of fees for executing a refund 
        anticipation payment arrangement;
            ``(2) describing, in the case of a refund anticipation 
        payment arrangement involving a depository account not 
        controlled by the consumer, the difference in days between the 
        average amount of time by which a consumer receives the tax 
        refund (in whole or in part) from a refund anticipation payment 
        arrangement and the average amount of time by which a consumer 
        who files a federal income tax return electronically receives 
        the tax refund deposited directly to that consumer's deposit 
        account by the taxing authority;
            ``(3) that a refund anticipation payment arrangement is not 
        necessary to receive a tax refund; and
            ``(4) that, if a consumer does not receive a tax refund or 
        the amount of the tax refund is less than the amount 
        anticipated under the refund anticipation payment arrangement, 
        the consumer may be responsible for paying any fees and 
        interest associated with a refund anticipation payment 
        arrangement.
    ``(c) requirements under tila.--the bureau shall promulgate 
regulations that, to the extent practicable, require tax return 
preparers that enter into a refund anticipation payment arrangement to 
comply with section 128 of the truth in lending act (15 u.s.c. 1638) to 
the same extent as a creditor making a consumer credit transaction 
other than under an open end credit plan.
    ``(d) definitions.--in this section:
            ``(1) refund anticipation payment arrangement.--the term 
        `refund anticipation payment arrangement' means an arrangement 
        under which, in exchange for federal income tax preparation 
        services, a consumer agrees to pay a fee or interest upon 
        receipt of the consumer's tax refund to a tax return preparer, 
        lender, or other affiliated lender by--
                    ``(a) requesting the federal government to deposit 
                such tax refund, in whole or in part, directly into a 
                depository account designated by either the consumer or 
                the tax return preparer, lender, or other affiliated 
                lender; or
                    ``(b) directly paying the fee or interest to the 
                tax return preparer, lender, or other affiliated 
                lender.
            ``(2) tax return preparer.--the term `tax return preparer' 
        means a tax return preparer (as defined in section 7701(a) of 
        the internal revenue code of 1986) who is not subject to 
        regulation under section 330 of title 31, united states 
        code.''.
    (b) technical and conforming amendment.--the table of contents of 
the dodd-frank wall street reform and consumer protection act (12 
u.s.c. 5301 et seq.) is amended by inserting after the item relating to 
section 1029a the following:

``sec. 1029b. regulation of refund anticipation payment 
                            arrangements.''.
    (c) exclusion for certain tax preparers.--
            (1) in general.--section 1027(d) of the consumer financial 
        protection act of 2010 (12 u.s.c. 5517(d)) is amended by 
        striking paragraph (1) and inserting the following:
            ``(1) in general.--except as permitted in paragraph (2), 
        the bureau may not exercise any rulemaking, supervisory, 
        enforcement, or other authority over any person that is a 
        certified public accountant, permitted to practice as a 
        certified public accounting firm, or certified or licensed for 
        such purpose by a state, or any individual who is employed by 
        or holds an ownership interest with respect to a person 
        described in this subparagraph, when such person is performing 
        or offering to perform--
                    ``(a) customary and usual accounting activities, 
                including the provision of accounting, tax (except as 
                related to tax return preparers pursuant to section 
                1029b), advisory, or other services that are subject to 
                the regulatory authority of a state board of 
                accountancy or a federal authority; or
                    ``(b) other services that are incidental to such 
                customary and usual accounting activities, to the 
                extent that such incidental services are not offered or 
                provided--
                            ``(i) by the person separate and apart from 
                        such customary and usual accounting activities; 
                        or
                            ``(ii) to consumers who are not receiving 
                        such customary and usual accounting 
                        activities.''.
            (2) conforming amendments.--section 1027(d) of the consumer 
        financial protection act of 2010 (12 u.s.c. 5517(d)) is 
        amended--
                    (a) in the subsection heading, by striking ``and 
                tax preparers''; and
                    (b) in paragraph (2)--
                            (i) in subparagraph (a)--
                                    (i) by striking ``paragraph (1)(a) 
                                or (1)(b)'' and inserting ``that 
                                paragraph''; and
                                    (ii) by striking ``paragraph 
                                (1)(a)'' each place it appears and 
                                inserting ``paragraph (1)'';
                            (ii) in subparagraph (c)--
                                    (i) by striking ``for purposes of 
                                subparagraphs (a) and (b), a person 
                                described in paragraph (1)(a)'' and 
                                inserting ``a person described in 
                                paragraph (1)''; and
                                    (ii) by striking ``clause (i) or 
                                (ii) of paragraph (1)(a)'' and 
                                inserting ``subparagraph (a) or (b) of 
                                paragraph (1)''; and
                            (iii) in subparagraph (d), by striking 
                        ``paragraph (1)(a) or (1)(b)'' and inserting 
                        ``that paragraph''.

sec. 4. split refunds may include tax return preparer.

    (a) in general.--section 6402 of the internal revenue code of 1986 
is amended by adding at the end the following:
    ``(m) split refunds.--an income tax refund requested on a return of 
federal income tax prepared by an income tax preparer may be split 
between the preparer and the taxpayer in accordance with the split 
requested by the taxpayer on the return, except that the amount 
designated for the preparer may not exceed the amount prescribed by the 
secretary by regulation or other guidance. a split of an individual 
income tax return under this subsection shall not be treated as 
disreputable conduct merely because the taxpayer requested such 
split.''.
    (b) effective date.--the amendment made by subsection (a) shall 
apply with respect to returns for taxable years ending after the date 
of the enactment of this act.

sec. 5. regulations.

    regulations issued under section 7812 of the internal revenue code 
of 1986, as added by section 2, and regulations issued under section 
1029b of the consumer financial protection act of 2010, as added by 
section 3, should be coordinated to the extent practicable.
                                 
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