[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 802 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 802

   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 SENATE OF THE UNITED STATES

                             April 30, 2001

 Mr. Bingaman introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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 2001''.

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 of 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 2001 
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 a 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, 
                and
                    (D) providing tax-related computer software at no 
                or nominal cost to low and moderate 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 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).
            (3) Authorization of Appropriations.--
                    (A) In general.--There is authorized to be 
                appropriated to the Secretary for volunteer income tax 
                assistance clinics $6,000,000, to remain available 
                until expended.
                    (B) Use of funds.--Such amounts appropriated under 
                subparagraph (A) shall be used for the operating 
                expenses of volunteer income tax assistance clinics, 
                expenses for providing electronic filing expenditures 
                through such clinics, and related expenses.
    (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 2001.
    (d) Deposit Indicator Program.--
            (1) Review.--The Secretary shall review the decision to 
        reinstate the Deposit Indicator program.
            (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 review made pursuant to paragraph 
        (1).
    (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).
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