[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 894 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 894
To assist low-income taxpayers in preparing and filing their tax
returns and to protect taxpayers from unscrupulous refund anticipation
loan providers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 17, 2005
Mr. Becerra (for himself and Mr. Brown of Ohio) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Financial Services, for a period to
be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To assist low-income taxpayers in preparing and filing their tax
returns and to protect taxpayers from unscrupulous refund anticipation
loan providers, 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 ``Low-Income Taxpayer Protection Act
of 2005''.
SEC. 2. REGULATION OF INCOME TAX RETURN PREPARERS AND REFUND
ANTICIPATION LOAN PROVIDERS.
(a) Definitions.--In this Act:
(1) Income tax return preparer.--
(A) In general.--The term ``income tax return
preparer'' means any individual who is an income tax
return preparer (within the meaning of section
7701(a)(36) of the Internal Revenue Code of 1986) who
prepares not less than 5 returns of tax imposed by
subtitle A of such Code or claims for refunds of tax
imposed by such subtitle A per taxable year.
(B) Exception.--Such term shall not include a
federally authorized tax practitioner within the
meaning of section 7526(a)(3) of such Code.
(2) Refund anticipation loan provider.--The term ``refund
anticipation loan provider'' means a person who makes a loan of
money or of any other thing of value to a taxpayer because of
the taxpayer's anticipated receipt of a Federal tax refund.
(3) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(b) Regulations.--
(1) Registration required.--
(A) In general.--Not later than 120 days after the
date of the enactment of this Act, the Secretary shall
promulgate regulations that--
(i) require the registration of income tax
return preparers and of refund anticipation
loan providers with the Secretary or the
designee of the Secretary, and
(ii) prohibit the payment of a refund of
tax to a refund anticipation loan provider or
an income tax return preparer that is the
result of a tax return which is prepared by the
refund anticipation loan provider or the income
tax return preparer which does not include the
refund anticipation loan provider's or the
income tax return preparer's registration
number.
(B) No disciplinary action.--The regulations shall
require that an applicant for registration must not
have demonstrated any conduct that would warrant
disciplinary action under part 10 of title 31, Code of
Federal Regulations.
(C) Burden of registration.--In promulgating the
regulations, the Secretary shall minimize the burden
and cost on the registrant.
(2) Rules of conduct.--All registrants shall be subject to
rules of conduct that are consistent with the rules that govern
federally authorized tax practitioners.
(3) Reasonable fees and interest rates.--The Secretary,
after consultation with any expert as the Secretary deems
appropriate, shall include in the regulations guidance on
reasonable fees and interest rates charged to taxpayers in
connection with loans to taxpayers made by refund anticipation
loan providers.
(4) Renewal of registration.--The regulations shall
determine the time frame required for renewal of registration
and the manner in which a registered income tax return preparer
or a registered refund anticipation loan provider must renew
such registration.
(5) Fees.--
(A) In general.--The Secretary may require the
payment of reasonable fees for registration and for
renewal of registration under the regulations.
(B) Purpose of fees.--Any fees required under this
paragraph shall inure to the Secretary for the purpose
of reimbursement of the costs of administering the
requirements of the regulations.
(c) Prohibition.--Section 6695 of the Internal Revenue Code of 1986
(relating to other assessable penalties with respect to the preparation
of income tax returns for other persons) is amended by adding at the
end the following new subsection:
``(h) Actions on a Taxpayer's Behalf by a Non-Registered Person.--
Any person not registered pursuant to the regulations promulgated by
the Secretary under the Low Income Taxpayer Protection Act of 2005
who--
``(1) prepares a tax return for another taxpayer for
compensation, or
``(2) provides a loan to a taxpayer that is linked to or in
anticipation of a tax refund for the taxpayer,
shall be subject to a $500 penalty for each incident of
noncompliance.''.
(d) Coordination With Section 6060(a).--The Secretary shall
determine whether the registration required under the regulations
issued pursuant to this section should be in lieu of the return
requirements of section 6060.
(e) Paperwork Reduction.--The Secretary shall minimize the amount
of paperwork required of an income tax return preparer or a refund
anticipation loan provider to meet the requirements of these
regulations.
SEC. 3. IMPROVED SERVICES FOR TAXPAYERS.
(a) Electronic Filing Efforts.--
(1) In general.--The Secretary shall focus electronic
filing efforts on benefiting the taxpayer by--
(A) reducing the time between receipt of an
electronically filed return and remitting a refund, if
any,
(B) reducing the cost of filing a return
electronically,
(C) improving services provided by the Internal
Revenue Service to low- and moderate-income taxpayers,
(D) providing tax-related computer software at no
or nominal cost to low- and moderate-income taxpayers,
and
(E) providing electronic filing for all taxpayers
without the use of an intermediary.
(2) Report.--Not later than 120 days after the date of the
enactment of this Act, the Secretary shall prepare and submit
to Congress a report on the efforts made pursuant to paragraph
(1).
(b) Volunteer Income Tax Assistance Program.--
(1) Study.--The Secretary shall undertake a study on the
expansion of the volunteer income tax assistance program to
service more low-income taxpayers.
(2) Report.--Not later than 120 days after the date of the
enactment of this Act, the Secretary shall prepare and submit
to Congress a report on the study conducted pursuant to
paragraph (1).
(c) Tele-Filing.--The Secretary shall ensure that tele-filing is
available for all taxpayers for the filing of tax returns with respect
to taxable years beginning in 2004.
(d) Termination of the Debt Indicator Program.--The Secretary shall
terminate the Debt Indicator program announced in Internal Revenue
Service Notice 99-58.
(e) Direct Deposit Accounts.--The Secretary shall allocate
resources to programs to assist low-income taxpayers in establishing
accounts at financial institutions that receive direct deposits from
the United States Treasury.
(f) Pilot Program for Mobile Tax Return Filing Offices.--
(1) In general.--The Secretary shall establish a pilot
program for the creation of four mobile tax return filing
offices with electronic filing capabilities.
(2) Location of service.--
(A) In general.--The mobile tax return filing
offices shall be located in communities that the
Secretary determines have a high incidence of taxpayers
claiming the earned income tax credit.
(B) Indian reservation.--At least one mobile tax
return filing office shall be on or near an Indian
reservation (as defined in section 168(j)(6) of the
Internal Revenue Code of 1986).
SEC. 4. ASSISTANCE PROGRAM TO IMPROVE ACCESS TO FEDERALLY INSURED
FINANCIAL INSTITUTIONS FOR TAXPAYERS.
(a) Findings and Purpose.--
(1) Findings.--Congress finds the following:
(A) Approximately 40,000,000 Americans are unbanked
and not utilizing mainstream, insured financial
institutions.
(B) In 1999, nearly half of the $30,000,000,000 in
earned income tax credits (EITC) claimed nationwide was
refunded through refund anticipation loans, and an
estimated $1,750,000,000 intended to assist low-income
families through the EITC was received by commercial
tax preparers and affiliated national banks to pay for
tax assistance, electronic filing of returns, and high-
cost refund loans.
(C) Refund anticipation loans carry interest rates
in a range between 97.4 percent to more than 2000
percent.
(D) An estimated 45 percent of earned income tax
credit recipients pay for check cashing services, which
reduces EITC benefits by $130,000,000.
(E) Individuals with bank accounts can receive
their tax refunds faster than waiting for a paper check
and without the need to utilize refund anticipation
loans or check cashiers.
(F) Individuals with federally insured depository
accounts have an increased opportunity to access
financial services at mainstream financial institutions, which
typically have reduced costs for consumers.
(2) Purpose.--It is the purpose of this section to
establish a grant program to provide unbanked low- and
moderate-income taxpayers with tax preparation services and
increase their access to financial services by the
establishment of an account at a federally insured depository
institution or credit union and the provision of financial
education.
(b) Establishment of Program.--The Secretary is authorized to award
demonstration project grants (including multi-year grants) to eligible
entities to provide tax preparation services and assistance along with
establishing an account in a federally insured depository institution
for individuals that currently do not have such an account.
(c) Eligible Entities.--
(1) In general.--An entity is eligible to receive a grant
under this section if such an entity is--
(A) an organization described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from
tax under section 501(a) of such Code,
(B) a federally insured depository institution,
(C) an agency of a State or local government,
(D) a community development financial institution,
(E) an Indian tribal organization,
(F) an Alaska Native Corporation,
(G) a Native Hawaiian organization,
(H) a labor organization, or
(I) a partnership comprised of 1 or more of the
entities described in the preceding subparagraphs.
(2) Definitions.--For purposes of this section--
(A) Federally insured depository institution.--The
term ``federally insured depository institution'' means
any insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)) and any insured credit union (as defined
in section 101 of the Federal Credit Union Act (12
U.S.C. 1752)).
(B) Community development financial institution.--
The term ``community development financial
institution'' means any organization that has been
certified as such pursuant to section 1805.201 of title
12, Code of Federal Regulations.
(C) Alaska native corporation.--The term ``Alaska
Native Corporation'' has the same meaning as the term
``Native Corporation'' under section 3(m) of the Alaska
Native Claims Settlement Act (43 U.S.C. 1602(m)).
(D) Native hawaiian organization.--The term
``Native Hawaiian organization'' means any organization
that--
(i) serves and represents the interests of
Native Hawaiians, and
(ii) has as a primary and stated purpose
the provision of services to Native Hawaiians.
(E) Labor organization.--The term ``labor
organization'' means an organization in which employees
participate and which exists for the purpose, in whole
or in part, of dealing with employers concerning
grievances, labor disputes, wages, rates of pay, hours
of employment, or conditions of work.
(d) Application.--An eligible entity desiring a grant under this
section shall submit an application to the Secretary in such form and
containing such information as the Secretary may require.
(e) Limitation on Administrative Costs.--A recipient of a grant
under this section may not use more than 6 percent of the total amount
of such grant in any fiscal year for the administrative costs of
carrying out the programs funded by such grant in such fiscal year.
(f) Evaluation and Report.--For each fiscal year in which a grant
is awarded under this section, the Secretary shall submit a report to
Congress containing a description of the activities funded, amounts
distributed, and measurable results, as appropriate and available.
(g) Authorization of Appropriations.--There is authorized to be
appropriated to the Secretary, for the grant program described in this
section, $10,000,000, or such additional amounts as deemed necessary,
to remain available until expended.
(h) Regulations.--The Secretary is authorized to promulgate
regulations to implement and administer the grant program under this
section.
SEC. 5. MATCHING GRANTS TO LOW-INCOME TAXPAYER CLINICS FOR RETURN
PREPARATION.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986
(relating to miscellaneous provisions) is amended by inserting after
section 7526 the following new section:
``SEC. 7526A. RETURN PREPARATION CLINICS FOR LOW-INCOME TAXPAYERS.
``(a) In General.--The Secretary may, subject to the availability
of appropriated funds, make grants to provide matching funds for the
development, expansion, or continuation of qualified return preparation
clinics.
``(b) Definitions.--For purposes of this section--
``(1) Qualified return preparation clinic.--
``(A) In general.--The term `qualified return
preparation clinic' means a clinic which--
``(i) does not charge more than a nominal
fee for its services (except for reimbursement
of actual costs incurred), and
``(ii) operates programs which assist low-
income taxpayers in preparing and filing their
Federal income tax returns, including schedules
reporting sole proprietorship or farm income.
``(B) Assistance to low-income taxpayers.--A clinic
is treated as assisting low-income taxpayers under
subparagraph (A)(ii) if at least 90 percent of the
taxpayers assisted by the clinic have incomes which do
not exceed 250 percent of the poverty level, as
determined in accordance with criteria established by
the Director of the Office of Management and Budget.
``(2) Clinic.--The term `clinic' includes--
``(A) a clinical program at an eligible educational
institution (as defined in section 529(e)(5)) which
satisfies the requirements of paragraph (1) through
student assistance of taxpayers in return preparation
and filing, and
``(B) an organization described in section 501(c)
and exempt from tax under section 501(a) which
satisfies the requirements of paragraph (1).
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $10,000,000 per year (exclusive of costs of administering
the program) to grants under this section.
``(2) Other applicable rules.--Rules similar to the rules
under paragraphs (2) through (5) of section 7526(c) shall apply
with respect to the awarding of grants to qualified return
preparation clinics.''.
(b) Clerical Amendment.--The table of sections for chapter 77 of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to section 7526 the following new item:
``Sec. 7526A. Return preparation clinics
for low-income taxpayers.''.
(c) Effective Date.--The amendments made by this section shall
apply to grants made after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsor introductory remarks on measure. (CR E279)
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line