Working Families Tax Relief Act of 2019
This bill increases and revises requirements for the refundable earned income and child tax credits. It also makes similar revisions to the earned income tax credit for residents of Puerto Rico.
The bill authorizes the Department of the Treasury to regulate the practice of tax return preparers and impose sanctions upon preparers found to be incompetent or disreputable.
The Government Accountability Office must study and report on the sharing of information between Treasury and states regarding identification numbers issued to tax return preparers and minimum standards for preparers.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3157 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 3157
To amend the Internal Revenue Code of 1986 to expand the earned income
and child tax credits, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 6, 2019
Mr. Kildee (for himself and Mr. Evans) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addition
to the Committee on Natural Resources, 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 amend the Internal Revenue Code of 1986 to expand the earned income
and child tax credits, 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; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Working Families
Tax Relief Act of 2019''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. EXPANSION OF EARNED INCOME CREDIT.
(a) Credit Percentage; Phaseout Percentage.--The table contained in
paragraph (1) of section 32(b) is amended to read as follows:
------------------------------------------------------------------------
``In the case of an eligible individual The credit The phaseout
with: percentage is: percentage is:
------------------------------------------------------------------------
1 qualifying child...................... 42.5 15.98
2 qualifying children................... 50 21.06
3 or more qualifying children........... 52.5 21.06
No qualifying children.................. 20 15.98.''.
------------------------------------------------------------------------
(b) Earned Income Amount; Phaseout Amount.--
(1) In general.--The table contained in subparagraph (A) of
section 32(b)(2) is amended to read as follows:
------------------------------------------------------------------------
The earned
``In the case of an eligible individual income amount The phaseout
with: is: amount is:
------------------------------------------------------------------------
1 qualifying child...................... $10,180 $18,660
2 or more qualifying children........... $14,290 $18,660
No qualifying children.................. $10,180 $11,380.''.
------------------------------------------------------------------------
(2) Joint filers.--Subparagraph (B) of section 32(b)(2) is
amended by striking ``$5,000'' and inserting ``$5,690''.
(3) Adjustment for inflation.--Paragraph (1) of section
32(j) is amended--
(A) by striking ``after 2015'' and inserting
``after 2018'';
(B) by striking ``subsections (b)(2)(A) and'' in
subparagraph (B)(i) and inserting ``subsection'';
(C) by striking ``the $5,000 amount in subsection
(b)(2)(B)'' in subparagraph (B)(ii) and inserting
``amounts in subsection (b)(2)''; and
(D) by striking ``calendar year 2008'' in
subparagraph (B)(ii) and inserting ``calendar year
2017''.
(c) Age of Eligible Individual.--Clause (ii) of section 32(c)(1)(A)
is amended--
(1) by striking ``age 25'' in subclause (II) and inserting
``age 19'';
(2) by striking ``age 65'' in subclause (II) and inserting
``age 68'';
(3) by striking ``and'' at the end of subclause (II);
(4) by striking the period at the end of subclause (III)
and inserting ``, and''; and
(5) by adding at the end the following new subclause:
``(IV) in the case of an individual
who has not attained age 25 before the
close of the taxable year, such
individual is not a student (as defined
in section 152(f)(2)).''.
(d) Advance Payment of Earned Income Credit.--
(1) In general.--Chapter 25 of subtitle C is amended by
inserting after section 3506 the following new section:
``SEC. 3507. ADVANCE PAYMENT OF EARNED INCOME CREDIT.
``(a) Advance Payment.--
``(1) In general.--An employer making payment of wages to
an employee with respect to whom an eligibility certificate is
in effect shall, at the time of paying such wages for the
payroll period elected by the employee under paragraph (2),
make an additional lump sum payment to such employee equal to
the earned income advance amount (except as provided in
subsection (b)(1)(C)(ii)) of such employee.
``(2) Payments available after 6 months of employment
during calendar year.--For purposes of paragraph (1), an
employee with respect to whom an eligibility certificate is in
effect for the calendar year may elect to receive the earned
income advance amount at the same time as wages for any payroll
period which begins after the employee has been paid wages by
the employer for a period of not less than 6 months during such
calendar year.
``(b) Eligibility Certificate.--
``(1) In general.--For purposes of this section, an
eligibility certificate is a statement submitted by an employee
to the employer which--
``(A) certifies that the employee is eligible to
receive the credit provided by section 32 for the
taxable year,
``(B) certifies that the employee does not have an
eligibility certificate in effect for the calendar year
with respect to the payment of wages by another
employer, and
``(C) certifies that--
``(i) an eligibility certificate has not
been in effect for the spouse of the employee
on any date during the calendar year, or
``(ii) such a certificate is in effect for
the spouse of the employee, and the employee is
eligible to receive only \1/2\ the earned
income advance amount otherwise determined with
respect to the employee.
``(2) Employer not responsible for verification.--For
purposes of this section, an employer shall not--
``(A) be required to verify any certification made
by an employee in the statement described in paragraph
(1), or
``(B) be held liable for any false claims or
statements made by an employee in regards to such
statement.
``(c) Earned Income Advance Amount.--
``(1) Determination of amount.--
``(A) In general.--Subject to subparagraph (B), the
term `earned income advance amount' means, with respect
to any payroll period, the amount of the credit
provided under section 32 as determined--
``(i) on the basis of the wages of the
employee from the employer during such calendar
year through such payroll period, and
``(ii) in accordance with tables issued by
the Secretary.
``(B) Limitation.--For each calendar year, except
as provided in subparagraph (C), the earned income
advance amount shall not exceed $500.
``(C) Adjustment for inflation.--
``(i) In general.--In the case of any
taxable year beginning after 2019, the $500
amount in subparagraph (B) shall be increased
by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year in which
the taxable year begins determined by
substituting `calendar year 2018' for
`calendar year 2016' in subparagraph
(A)(ii) thereof.
``(ii) Rounding.--If any increase
determined under paragraph (1) is not a
multiple of $10, such increase shall be rounded
to the nearest multiple of $10.
``(2) Armed forces.--In the case of an employee who is a
member of the Armed Forces of the United States, the earned
income advance amount shall be determined by taking into
account the total wages of such employee, as determined for
purposes of section 32.
``(3) Advance amount tables.--For purposes of paragraph
(1)(A)(ii), the tables issued by the Secretary shall be similar
in form to the tables issued under section 3402 and, to the
extent feasible, coordinated with such tables.
``(d) Payments To Be Treated as Payments of Withholding and FICA
Taxes.--
``(1) In general.--Payments made by an employer under
subsection (a) to an employee--
``(A) shall not be treated as payment of
compensation, and
``(B) shall be treated as made out of--
``(i) amounts required to be deducted and
withheld for the payroll period under section
3401,
``(ii) amounts required to be deducted for
the payroll period under section 3102, and
``(iii) amounts of the taxes imposed for
the payroll period under section 3111,
as if the employer had paid to the Secretary, on the
day on which the wages are paid to the employee, an
amount equal to such payments.
``(2) Advance payments exceed taxes due.--In the case of
any employer, if for any payroll period the aggregate amount of
earned income advance payments exceeds the sum of the amounts
referred to in paragraph (1)(B), the employer shall pay only so
much of such earned income advance payment as does not exceed
such sum, and shall not make any further advance payments to
the employee for the calendar year.
``(3) Failure to make advance payments.--Failure to make
any payment of an earned income advance amount as required
under this section shall be treated as the failure at such time
to deduct and withhold under chapter 24 an amount equal to the
earned income advance amount.
``(e) Submission of Certificate.--
``(1) Effective period.--An eligibility certificate
submitted to an employer at any time during the calendar year
shall continue in effect with respect to the employee during
such calendar year until revoked by the employee or until
another such certificate takes effect under this section.
``(2) Requirement to revoke certificate.--In the case of an
employee who has submitted an eligibility certificate under
this section and subsequently becomes ineligible for the credit
provided under section 32 for the taxable year, the employee
shall, not later than 10 days after becoming ineligible for
such credit, submit to the employer a revocation of such
certificate.
``(3) Form and contents of certificate.--Eligibility
certificates shall be in such form and contain such other
information as the Secretary may by regulations prescribe.
``(f) Taxpayers Making Prior Fraudulent or Reckless Claims.--
``(1) In general.--No earned income advance amount shall be
paid under this section for any taxable year in the
disallowance period.
``(2) Disallowance period.--For purposes of paragraph (1),
the disallowance period is--
``(A) the period of 10 taxable years after the most
recent taxable year for which there was a final
determination that the taxpayer's claim of an earned
income advance amount under this section was due to
fraud, and
``(B) the period of 2 taxable years after the most
recent taxable year for which there was a final
determination that the taxpayer's claim of an earned
income advance amount under this section was due to
reckless or intentional disregard of rules and
regulations (but not due to fraud).
``(g) Taxable Year.--The term `taxable year' means the last taxable
year of the employee under subtitle A beginning in the calendar year in
which the wages are paid.
``(h) IRS Notification.--The Internal Revenue Service shall take
such steps as may be appropriate to ensure that taxpayers who receive a
refund of the credit under section 32 are aware of the availability of
earned income advance amounts under this section.''.
(2) Coordination with advance payments.--Section 32 is
amended by inserting after subsection (f) the following new
subsection:
``(g) Coordination With Advance Payments of Earned Income Credit.--
``(1) Recapture of advance payments.--If any payment is
made to the individual by an employer under section 3507 during
any calendar year, then the tax imposed by this chapter for the
individual's last taxable year beginning in such calendar year
shall be increased by the aggregate amount of such payments.
``(2) Reconciliation of payments advanced and credit
allowed.--Any increase in tax under paragraph (1) shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit (other than the credit
allowed by subsection (a)) allowable under this part.''.
(3) Filing requirement.--Section 6012(a) is amended--
(A) in paragraph (7), by striking ``and'' at the
end;
(B) in paragraph (8), by adding ``and'' at the end;
and
(C) by inserting after paragraph (8) the following
new paragraph:
``(9) every individual who receives payments during the
calendar year in which the taxable year begins under section
3507.''.
(4) Receipts for employees.--Section 6051(a) is amended by
inserting after paragraph (6) the following new paragraph:
``(7) the total amount paid to the employee under section
3507 (relating to advance payment of earned income credit),''.
(5) Clerical amendment.--The table of sections for chapter
25 of subtitle C is amended by inserting after the item
relating to section 3506 the following new item:
``Sec. 3507. Advance payment of earned income credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2018.
SEC. 3. PERMANENT EXPANSION AND MODIFICATION OF CHILD TAX CREDIT.
(a) Permanence of Certain Special Rules.--
(1) Credit amount.--Subsection (a) of section 24 is amended
by striking ``$1,000'' and inserting ``$2,000''.
(2) Threshold amount.--Paragraph (2) of section 24(b) is
amended--
(A) by striking ``$110,000'' in subparagraph (A)
and inserting ``$200,000'';
(B) by striking ``$75,000'' in subparagraph (B) and
inserting ``$150,000''; and
(C) by striking ``$55,000'' in subparagraph (C) and
inserting ``$100,000''.
(3) Partial credit allowed for certain other dependents;
elimination of maximum amount of refundable credit.--Subsection
(h) of section 24 is amended--
(A) by striking paragraphs (1), (2), (3), (5), and
(6) and by redesignating paragraphs (4) and (7) as
paragraphs (1) and (2), respectively;
(B) by striking ``(after the application of
paragraph (2))'' in subparagraph (A) of paragraph (1),
as so redesignated;
(C) by striking ``paragraph (7)'' in subparagraph
(C) of paragraph (1), as so redesignated, and inserting
``paragraph (2)'';
(D) by inserting ``for a taxable year beginning
after December 31, 2017, and before January 1, 2026,''
after ``under this section'' in paragraph (2), as so
redesignated; and
(E) by striking ``for Taxable Years 2018 Through
2025'' in the heading.
(b) Increase in Credit for Young Children.--Subsection (a) of
section 24, as amended by subsection (a)(1), is amended by striking
``$2,000'' and inserting ``$2,000 ($3,000 in the case of a qualifying
child who has not attained age 6)''.
(c) Adjustment for Inflation.--Section 24 is amended by
redesignating subsection (h), as amended by subsection (a)(3) of this
section, as subsection (i) and by inserting after subsection (g) the
following new subsection:
``(h) Adjustment for Inflation.--
``(1) In general.--In the case of any taxable year
beginning after 2019, each of the dollar amounts in subsection
(a) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2018' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $50, such amount shall be rounded to
the next lowest multiple of $50.''.
(d) Modification of Qualifying Child Definition.--Paragraph (1) of
section 24(c) is amended by inserting ``, determined without regard to
paragraph (1)(D) thereof'' after ``section 152(c)''.
(e) Treatment as Fully Refundable.--
(1) Credit moved to subpart relating to refundable
credits.--
(A) In general.--The Internal Revenue Code of 1986
is amended--
(i) by redesignating section 24, as amended
by this section, as section 36C; and
(ii) by moving such section, as so
redesignated, from subpart A of part IV of
subchapter A of chapter 1 to the location
immediately after section 36B in subpart C of
part IV of subchapter A of chapter 1.
(B) Technical amendments.--
(i) Subsection (a) of section 36C, as moved
and redesignated by subparagraph (A), is
amended by striking ``this chapter'' and
inserting ``this subtitle''.
(ii) Section 36C, as so moved and
redesignated, is amended--
(I) by striking subsection (d); and
(II) by redesignating subsection
(i) as subsection (d), and by moving
such subsection to the location
immediately after subsection (c).
(C) Partial credit for other dependents
nonrefundable.--Paragraph (1) of subsection (d) of
section 36C, as moved and redesignated by subparagraph
(B)(ii), is amended by adding at the end the following
new subparagraph:
``(D) Portion of credit nonrefundable.--The amount
of the credit allowed under this paragraph--
``(i) shall not be treated as a credit
allowed under this subpart, and
``(ii) shall not be taken into account in
determining the amount of the credit under this
section for purposes of section 7527A.''.
(D) Clerical amendments.--
(i) The table of sections for subpart A of
part IV of subchapter A of chapter 1 is amended
by striking the item relating to section 24.
(ii) The table of sections for subpart C of
part IV of subchapter A of chapter 1 is amended
by adding at the end the following new item:
``Sec. 36C. Child tax credit.''.
(2) Advance payment of credit.--
(A) In general.--Section 36C, as amended by the
preceding provisions of this section, is amended by
adding at the end the following new subsection:
``(i) Reconciliation of Credit and Advance Credit.--
``(1) In general.--The amount of the credit allowed under
this section for any taxable year shall be reduced (but not
below zero) by the aggregate amount of any advance payments of
such credit under section 7527A for such taxable year.
``(2) Excess advance payments.--If the aggregate amount of
advance payments under section 7527A for the taxable year
exceed the amount of the credit allowed under this section for
such taxable year (determined without regard to paragraph (1)),
the tax imposed by this chapter for such taxable year shall be
increased by the amount of such excess.''.
(B) Advance payment.--Chapter 77 is amended by
inserting after section 7527 the following new section:
``SEC. 7527A. ADVANCE PAYMENT OF CHILD TAX CREDIT.
``(a) In General.--As soon as practicable and not later than 1 year
after the date of the enactment of this section, the Secretary shall
establish a program for making advance payments of the credit allowed
under section 36C (determined without regard to subsection (i)(1) of
such section) on a monthly basis, or as frequently as the Secretary
determines to be administratively feasible, to taxpayers allowed such
credit.
``(b) Limitation.--
``(1) In general.--The Secretary may make payments under
subsection (a) only to the extent that the total amount of such
payments made to any taxpayer during the taxable year does not
exceed an amount equal to the excess, if any, of--
``(A) subject to paragraph (2), the amount
determined under section 36C with respect to such
taxpayer (determined without regard to subsection (i)
of such section) for such taxable year, over
``(B) the estimated tax imposed by subtitle A, as
reduced by the credits allowable under subparts A and C
(with the exception of section 36C) of such part IV,
with respect to such taxpayer for such taxable year, as
determined in such manner as the Secretary deems
appropriate.
``(2) Application of threshold amount limitation.--The
program described in subsection (a) shall make reasonable
efforts to apply the limitation of section 36C(b) with respect
to payments made under such program.''.
(C) Clerical amendment.--The table of sections for
chapter 77 is amended by inserting after the item
relating to section 7527 the following new item:
``Sec. 7527A. Advance payment of child tax credit.''.
(3) Conforming amendments.--
(A) Subparagraph (B) of section 45R(f)(3) is
amended to read as follows:
``(B) Special rule.--Any amounts paid pursuant to
an agreement under section 3121(l) (relating to
agreements entered into by American employers with
respect to foreign affiliates) which are equivalent to
the taxes referred to in subparagraph (A) shall be
treated as taxes referred to in such subparagraph.''.
(B) Section 152(f)(6)(B)(ii) is amended by striking
``section 24'' and inserting ``section 36C''.
(C) Paragraph (26) of section 501(c) is amended in
the flush matter at the end by striking ``section
24(c))'' and inserting ``section 36C(c))''.
(D) Section 6211(b)(4)(A) is amended--
(i) by striking ``24(d),''; and
(ii) by striking ``and 36B, 168(k)(4)'' and
inserting ``36B, and 36C''.
(E) Section 6213(g)(2) is amended--
(i) in subparagraph (I), by striking
``section 24(e)'' and inserting ``section
36C(e)'';
(ii) in subparagraph (L), by striking ``24,
or 32'' and inserting ``32, or 36C''; and
(iii) in subparagraph (P)--
(I) by striking ``24(g)(2)'' and
inserting ``36C(g)(2)''; and
(II) by striking ``section 24'' and
inserting ``section 36C''.
(F) Section 6402(m) is amended by striking
``section 24 (by reason of subsection (d) thereof) or
32'' and inserting ``section 32 or 36C''.
(G) Section 6695(g)(2) is amended by striking ``24,
25A(a)(1), or 32'' and inserting ``25A(a)(1), 32, or
36C''.
(H) Paragraph (2) of section 1324(b) of title 31,
United States Code, is amended by inserting ``,
36C(a)'' after ``36B''.
(I) Section 1613(a)(11) of the Social Security Act
(42 U.S.C. 1382b(a)(11)) is amended by striking
``section 24 of the Internal Revenue Code of 1986
(relating to child tax credit) by reason of subsection
(d) thereof'' and inserting ``section 36C of the
Internal Revenue Code of 1986 (relating to child tax
credit), and any payment made to such individual (or
such spouse) under section 7527A of such Code (relating
to advance payment of child tax credit)''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2018.
SEC. 4. EARNED INCOME CREDIT EXPANSION FOR PUERTO RICO.
(a) In General.--Subsequent to an amendment of the Puerto Rico
Internal Revenue Code of 2011 expanding the earned income credit added
by Act 257 in a similar manner as the amendments made by section 2 of
this Act, the Secretary of the Treasury shall make annual payments to
Puerto Rico in the amount determined under subsection (b). Such
payments shall be made within a reasonable period of time before the
due date for the income tax in Puerto Rico each year, and shall be made
only if Puerto Rico provides to the Secretary of the Treasury--
(1) an estimate, certified by the Financial Oversight and
Management Board for Puerto Rico, of the cost of such expansion
in the first year; and
(2) annually thereafter, a report of the actual cost of
such expansion in the preceding year and an estimate, certified
by such Board, of the cost of such expansion in the year of the
report.
(b) Amount Determined.--For purposes of subsection (a), the amount
determined with respect to any year is so much of the estimated cost
(as reported under subsection (a)) of the expansion of the earned
income credit in Puerto Rico for such year as does not exceed
$204,000,000, as applicable--
(1) reduced by the excess, if any, of--
(A) the amount of the payments made to Puerto Rico
under this section for the preceding year; over
(B) the actual cost (as reported under subsection
(a)) of the expansion of the earned income credit in
Puerto Rico for such preceding year; or
(2) increased by the excess, if any, of the amount
described in paragraph (1)(B) over the amount described in
paragraph (1)(A).
(c) Cost of Expansion.--For purposes of this section, the cost of
expanding the earned income credit in Puerto Rico as described in
subsection (a) shall include only the cost of the amendments made as
described in such subsection, and shall not include the cost of laws in
effect as of the date of the enactment of this Act.
(d) Reporting Requirements.--The Treasury of Puerto Rico shall
submit to the Secretary of the Treasury an annual report on the earned
income credit of Puerto Rico, including the number of beneficiaries,
average benefits for different households, participation rates for
eligible populations, error rates and other compliance matters, and the
effects of the credit on labor force participation and poverty
reduction.
(e) Outreach Grant.--In addition to the payments under subsection
(a), the Secretary of the Treasury shall make a one-time grant in the
amount of $5,000,000 to Puerto Rico for the purpose of taxpayer
education efforts relating to the earned income credit, including
education of paid preparers.
(f) Appropriations.--Such sums as are necessary, not to exceed--
(1) $209,000,000 in the first year after enactment of the
amendment described in subsection (a); and
(2) except as provided in subsection (g), $204,000,000 in
each year thereafter (as long as Puerto Rico maintains an
earned income credit as described in subsection (a)),
are hereby appropriated to the Secretary of the Treasury to carry out
the purposes of this section.
(g) Adjustment for Inflation.--
(1) In general.--For each calendar year beginning after the
year described in subsection (f)(1), the $204,000,000 amount
under subsections (b) and (f)(2) shall be increased by an
amount equal to--
(A) such dollar amount; multiplied by
(B) the cost-of-living adjustment determined under
section 1(f)(3) of the Internal Revenue Code of 1986,
determined by substituting the calendar year preceding
the year described in subsection (f)(1) for calendar
year 2016 in subparagraph (A)(ii) thereof.
(2) Rounding.--If any amount adjusted under paragraph (1)
is not a multiple of $500, such amount shall be rounded to the
next lowest multiple of $500.
SEC. 5. REGULATION OF TAX RETURN PREPARERS.
(a) In General.--Subsection (a) of section 330 of title 31, United
States Code, is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) regulate--
``(A) the practice of representatives of persons
before the Department of the Treasury; and
``(B) the practice of tax return preparers; and'';
and
(2) in paragraph (2)--
(A) by inserting ``or a tax return preparer to
prepare tax returns'' after ``practice'';
(B) by inserting ``or tax return preparer'' before
``demonstrate''; and
(C) by inserting ``or in preparing their tax
returns, claims for refund, or documents in connection
with tax returns or claims for refund'' after ``cases''
in subparagraph (D).
(b) Authority To Sanction Regulated Tax Return Preparers.--
Subsection (c) of section 330 of title 31, United States Code, is
amended--
(1) by striking ``before the Department'';
(2) by inserting ``or tax return preparer'' after
``representative'' each place it appears; and
(3) in paragraph (4), by striking ``misleads or threatens''
and all that follows and inserting ``misleads or threatens--
``(A) any person being represented or any
prospective person being represented; or
``(B) any person or prospective person whose tax
return, claim for refund, or document in connection
with a tax return or claim for refund, is being or may
be prepared.''.
(c) Minimum Competency Standards for Tax Return Preparers.--Section
330 of title 31, United States Code, is amended by adding at the end
the following new subsection:
``(f) Tax Return Preparers.--
``(1) In general.--Any tax return preparer shall
demonstrate minimum competency standards under this subsection
by--
``(A) obtaining an identifying number for securing
proper identification of such preparer as described in
section 6109(a)(4) of the Internal Revenue Code of
1986;
``(B) satisfying any examination and annual
continuing education requirements as prescribed by the
Secretary; and
``(C) completing a background check administered by
the Secretary.
``(2) Exemption.--The Secretary shall exempt tax return
preparers who have been subject to comparable examination,
continuing education requirements, and background checks
administered by the Secretary or any comparable State licensing
program. Such exemption shall extend directly to individuals
who are supervised by such preparers and are not required to
secure an identification number under section 6109(a)(4).''.
(d) Tax Return Preparer Defined.--Section 330 of title 31, United
States Code, as amended by subsection (c), is amended by adding at the
end the following new subsection:
``(g) Tax Return Preparer.--For purposes of this section--
``(1) In general.--The term `tax return preparer' has the
meaning given such term under section 7701(a)(36) of the
Internal Revenue Code of 1986.
``(2) Tax return.--The term `tax return' has the meaning
given to the term `return' under section 6696(e)(1) of the
Internal Revenue Code of 1986.
``(3) Claim for refund.--The term `claim for refund' has
the meaning given such term under section 6696(e)(2) of such
Code.''.
(e) Amendments With Respect to Identifying Number.--
(1) In general.--Section 6109(a) is amended by striking
paragraph (4) and inserting the following:
``(4) Furnishing identifying number of tax return
preparer.--
``(A) In general.--Any return or claim for refund
prepared by a tax return preparer shall bear such
identifying number for securing proper identification
of such preparer, his employer, or both, as may be
prescribed. For purposes of this paragraph, the terms
`return' and `claim for refund' have the respective
meanings given to such terms by section 6696(e).
``(B) Exception.--Subparagraph (A) shall not apply
to any tax return preparer who prepares a return or
claim for refund under the supervision and direction of
a tax return preparer who signs the return or claim for
refund and is a certified public accountant, an
attorney or enrolled agent.''.
(2) Clarification of rescission authority.--Section 6109 is
amended by inserting after subsection (d) the following new
subsection:
``(e) Authority To Rescind Identifying Number of Tax Return
Preparer.--
``(1) In general.--The Secretary may rescind an identifying
number issued under subsection (a)(4) if--
``(A) after notice and opportunity for a hearing,
the preparer is shown to be incompetent or disreputable
(as such terms are used in subsection (c) of section
330 of title 31, United States Code), and
``(B) rescinding the identifying number would
promote compliance with the requirements of this title
and effective tax administration.
``(2) Records.--If an identifying number is rescinded under
paragraph (1), the Secretary shall place in the file in the
Office of the Director of Professional Responsibility the
opinion of the Secretary with respect to the determination,
including--
``(A) a statement of the facts and circumstances
relating to the determination, and
``(B) the reasons for the rescission.''.
(f) GAO Study and Report on the Exchange of Information Between the
IRS and State Taxation Authorities.--
(1) In general.--Not later than 18 months after the date of
the enactment of this Act, the Comptroller General shall
conduct a study and submit to Congress a report on the sharing
of information between the Secretary of the Treasury and State
authorities, as authorized under section 6103(d) of the
Internal Revenue Code of 1986, regarding identification numbers
issued to paid tax return preparers and return preparer minimum
standards.
(2) Increased information sharing.--The study and report
described in paragraph (1) shall include an analysis of the
impact that increased information sharing between Federal and
State authorities would have on efforts to enforce minimum
standards on paid tax return preparers.
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Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Natural Resources, 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 Natural Resources, 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.
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