House Bill 115 (HB 115) enhances oversight of tax return preparers through identification requirements, permitting, and annual training.
House Bill 115 (HB 115) increases professional tax return preparers standards. The Taxation and Revenue Department (TRD) is charged with rulemaking and permitting of tax return preparers.
To apply for an annual permit, preparers must be at least 18, obtained a high school diploma, and obtain an Internal Revenue Service (IRS) identification number (PTIN). In 2023, preparers must complete an annual filing season program administered by the IRS. TRD may permit those preparers that are already subject to continuing professional education and had to take a comparable exam to practice (i.e., Certified Public Accountants, attorneys and enrolled agents). Volunteers, preparers who prepare fewer than 10 returns a year do not require a permit.
Permitting fees will not exceed $100 for an initial application or $50 for renewal. Practicing without a permit will result in a $100 fine per day while providing tax services. Businesses employing prepares that have not received a permit are subject to a $500 fine.
Tax professionals with an are authorized to prepare federal tax returns. Return preparers, under this legislation, would be required to furnish their PTIN on state returns in order to better identify fraudulent and incompetent preparers. Additionally, HB 115 requires preparers to sign state returns. The penalty for failure to sign or provide PTIN on state returns is $50, double the current fine. Penalties for preparers are limited to $25,000 per year.
HB 115 authorizes court injunctions to prevent misconduct and reckless preparers from operating. Misconduct includes understating tax liability, failure to provide a copy of the tax return, failure to sign the income tax return, failure to provide PTIN, action subject to criminal penalty, and other deceptive conduct. If a tax preparer has been barred from preparing federal returns or other state returns in the previous five years, they are banned from practicing in the state.
TRD may discipline prepares through written warnings, permit suspension, or revocation of the tax preparer. Denial, suspension, or revocation of permits may be disputed.
The effective date of HB 115 is January 1, 2022.