Connecticut Commissioner of Revenue Services Kevin B. Sullivan has proposed legislation to protect taxpayers by setting basic standards for paid commercial tax preparers.

Under the proposed legislation, commercial tax preparers would qualify for a renewable two-year permit based on evidence of a high school diploma, Internal Revenue Service (IRS) issued preparer tax identification number and experience, education or training in income tax preparation. Starting in 2020, completing available basic IRS training would also be required.  Tax preparers who are already regulated – including accountants, attorneys, individual enrolled agents, and IRS qualified volunteers – would be exempt.

“Every tax season, thousands of our taxpayers go to commercial tax preparers.  Most probably get good service at a reasonable cost, but far too many do not,” Sullivan said in a statement. “In fact, we are seeing increased evidence of preparers’ errors, unfair practices and even fraud. … This doesn’t call for regulatory over-kill. But taxpayers should be able to count on some measure of quality assurance and protection from predatory practices.”

The legislation will prohibit the following practices:

• Knowingly giving false or misleading information;
• Refund anticipation loan fees in excess of the actual fee charged by the originating bank or other creditor;
• Actions violating the state or federal Taxpayer Bill of Rights;
• Refund anticipation loans conditioned upon taxpayers waiving legal rights or giving security interests other than the refund payment;
• Failure or refusal to return taxpayer documents or provide copies of documents requiring taxpayer signature;
• Requiring taxpayers to sign blank forms;
• Allowing a taxpayer to designate the preparer as payee of a tax refund;
• Requiring taxpayers to use a specific depository institution or debit card and promoting any commercial affiliation; and
• Failing to sign a prepared return and include the preparer’s federal identification number.