Tax preparer changes

People who enter into tax refund anticipation loan agreements could have a business day to change their mind.

That is one provision in HF722, sponsored by Rep. Paul Thissen (DFL-Mpls), which contains a number of new standards for tax preparers.

“This is a bill to expand on some legislation that we passed in 2003 that set the first standards in the country for tax preparers,” he said. “This is building on some things we’ve learned since then, some of the abuses, in some sense, that go on with some of the tax preparation services. We’re trying to tighten that up.”

Approved March 11 by the House Civil Justice Committee, the bill was sent to the House Taxes Committee. A companion, SF616, sponsored by Sen. Ann Rest (DFL-New Hope), awaits action by the Senate Judiciary Committee.

Ron Elwood, staff attorney with Legal Services Advocacy Project, said that even with the disclosures and other things currently in place, some people still do not realize the monetary advance is actually a loan.

“We figured to be fair to the offering, which is for people who really want the money immediately, we thought 24 hours would be at least some cooling off period, but not too much,” he said. “We thought it balanced the interests of the business and the client.”

In addition, a written agreement would be required for those entering into a refund anticipation loan agreement. Failure to do so could result in a $1,000 administrative penalty.

Other changes include:

• preparers advertising in a foreign language must also provide forms or disclosures in that language; and

• an expansion of the taxpayer standards of conduct, including that no preparer shall fail to safeguard and account for all money handled for the client, shall fail to act in the client’s best interest or establish an account in the preparer’s name to receive a client’s refund through direct deposit, unless the client’s name is also on the account.