[Congressional Record Volume 151, Number 46 (Monday, April 18, 2005)]
[Senate]
[Pages S3825-S3829]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Smith, Mr. Baucus, Mr. 
        Grassley, Mr. Akaka, Mr. Schumer, and Mr. Pryor):
  S. 832. A bill to amend the Internal Revenue Code of 1986 to provide 
taxpayer protection and assistance, and for other purposes; to the 
Committee on Finance.
  MR. BINGAMAN. Mr. President, I rise today to introduce the ``Taxpayer 
Protection and Assistance Act of 2005'' with Senators Smith, Baucus, 
Grassley, Akaka, Schumer and Pryor. This legislation combines various 
provisions intended to ensure that our nation's taxpayers are better 
able to prepare and file their tax returns each year in a fashion that 
is fair, reasonable and affordable. As long as we continue to require 
taxpayers to determine their own tax liability each year, we have a 
responsibility to ensure that we do not leave taxpayers vulnerable to 
abuses from those masquerading as tax professionals. This is bad for 
everyone including the majority of tax return preparers who provide 
professional and much needed services to taxpayers in their 
communities. I encourage my colleagues to work with us to ensure that 
the improvements that would be brought about by this bill are in place 
before the next filing season begins.
  As I previously stated, this legislation is composed of several 
provisions. The first section would create a $10 million matching grant 
program for lower income tax preparation clinics much like the program 
we have currently have in place for tax controversies. I have seen 
first hand the impact free tax preparation clinics can have on 
taxpayers and their communities, as we are fortunate to have one of the 
best state-wide programs in the nation in New Mexico. TaxHelp New 
Mexico, which was started only a couple of years ago, helped 17,000 New 
Mexicans prepare and file their returns last year, resulting in over 
$14 million in refunds--all without refund anticipation loans. This 
year they are on pace to pass their goal of helping 25,000 elderly and 
economically disadvantaged taxpayers with free tax preparation and 
electronic filing of their returns. This program, started by Fred 
Gordon and Robin Brule from TVI and Carol Radosevich and Jeff Sterba 
from PNM, has turned into one of the best delivery mechanisms for 
public assistance I have seen in the state. This program has been 
fortunate to receive additional funding from the Annie E. Casey 
Foundation and the McCune Foundation. In order to continue to grow, 
though, we need to do our part in Congress and give them matching 
funding so they can continue their outreach into new communities in 
need of assistance.
  The second set of provisions contained in this legislation would 
ensure that when taxpayers hire someone to help them with their tax 
returns they can be sure that the person is competent and professional. 
The first part of the bill makes sure that an enrolled agent, a tax 
professional licensed to practice before the IRS, shall have the 
exclusive right to describe him or herself as an ``enrolled agent,'' 
``EA,'' or ``E.A.'' In New Mexico, enrolled agents play an important 
role in helping taxpayers with problems with the IRS and with preparing 
their returns. They have earned the right to use their credentials, and 
we should prohibit those who have not taken the rigorous exams and do 
not have their experience to confuse the public into thinking they too 
have the same credentials. The second part of the bill requires the 
Treasury to determine what standards need to be met in order for a 
person to prepare tax returns commercially. Like all other tax 
professionals, this will require people who make a living preparing tax 
returns to pass a minimum competency exam and take brush up courses 
each year to keep abreast of tax law changes. The majority of tax 
return preparers already meet these standards, and it is clear that 
those who do not need to in order to prepare returns for a fee. The 
Treasury Department will also be required to operate a public awareness 
campaign so that taxpayers will know that they need to check to be sure 
that someone preparing their tax returns for a fee is qualified.
  The third set of provisions would directly address the problems with 
refund anticipation loans (RALs), which is a problem throughout the 
country, but is particularly bad in New Mexico. First, this bill 
requires refund loan facilitators to register with the Treasury 
Department. Refund loan facilitators are those people who solicit, 
process, or otherwise facilitate the making of a refund anticipation 
loan in relation to a tax return being electronically filed. The 
legislation also requires these refund loan facilitators to properly 
disclose to taxpayers that they do not have to get a RAL in order to 
file their return electronically, as well as clearly disclose what all 
the costs involved with the loan. Finally, the refund loan facilitators 
must disclose to taxpayers when the loans would allow their refunds to 
be offset by the amount of the loan. Failure to follow these new rules 
will empower Treasury to impose penalties as appropriate. Like the 
credentials required for preparing returns, the Treasury Department 
would need to operate a public awareness campaign to educate the public 
on the real costs of RALs as compared to other forms of credit. This 
program will be funded, at least in part, by amounts collected from 
penalties imposed on refund loan facilitators.
  The last section of the bill is an issue that my colleague from 
Hawaii, Senator Akaka, has been actively working on for the last 
several years. This provision would authorize the Treasury Department 
to award grants to financial institutions or charitable groups that 
help low income taxpayers set up accounts at bank or credit union. 
Because many taxpayers do not have checking or savings accounts, their 
refund from IRS cannot be electronically wired to them. The alternative 
is to have the check mailed to the taxpayer or to have the refund 
immediately loaned to the taxpayer in the form of a RAL. Of course, 
getting people to set up a checking or savings account for purposes of 
receiving their tax refund will also have the benefit of getting many 
of these people to start saving for the first time.
  Before I conclude, I would specifically like to thank Anita Horn 
Rizek from the Finance Committee for her tireless dedication to 
improving our nation's tax system and ensuring that all taxpayers are 
treated fairly regardless of their income class. Without her efforts 
this legislation would not have been possible.
  I hope my colleagues will join with us to ensure that another tax 
year does

[[Page S3826]]

not go by without making these modest changes. In order for our 
voluntary tax system to continue to function, taxpayers must have 
access to tax professionals with the highest ethical standards and 
greatest substantive knowledge possible. This bill will go a long way 
toward maintaining the integrity of the tax administration system.
  I ask unanimous consent that the text of the bill and an analysis of 
the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 832

       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 ``Taxpayer 
     Protection and Assistance Act of 2005''.
       (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. LOW-INCOME TAXPAYER CLINICS.

       (a) Grants for Return Preparation Clinics.--
       (1) In general.--Chapter 77 (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, 
     including individuals for whom English is a second language, 
     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 (7) of section 7526(c) shall 
     apply with respect to the awarding of grants to qualified 
     return preparation clinics.''.
       (2) Clerical amendment.--The table of sections for chapter 
     77 is amended by inserting after the item relating to section 
     7526 the following new item:

``Sec. 7526A Return preparation clinics for low-income taxpayers.''.

       (b) Grants for Taxpayer Representation and Assistance 
     Clinics.--
       (1) Increase in authorized grants.--Section 7526(c)(1) 
     (relating to aggregate limitation) is amended by striking 
     ``$6,000,000'' and inserting ``$10,000,000''.
       (2) Use of grants for overhead expenses prohibited.--
       (A) In general.--Section 7526(c) (relating to special rules 
     and limitations) is amended by adding at the end the 
     following new paragraph:
       ``(6) Use of grants for overhead expenses prohibited.--No 
     grant made under this section may be used for the overhead 
     expenses of any clinic or of any institution sponsoring such 
     clinic.''.
       (B) Conforming amendments.--Section 7526(c)(5) is amended--
       (i) by inserting ``qualified'' before ``low-income'', and
       (ii) by striking the last sentence.
       (3) Promotion of clinics.--Section 7526(c), as amended by 
     paragraph (2), is amended by adding at the end the following 
     new paragraph:
       ``(7) Promotion of clinics.--The Secretary is authorized to 
     promote the benefits of and encourage the use of low-income 
     taxpayer clinics through the use of mass communications, 
     referrals, and other means.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to grants made after the date of the enactment of 
     this Act.

     SEC. 3. CLARIFICATION OF ENROLLED AGENT CREDENTIALS.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7529. ENROLLED AGENTS.

       ``(a) In General.--The Secretary may prescribe such 
     regulations as may be necessary to regulate the conduct of 
     enrolled agents in regards to their practice before the 
     Internal Revenue Service.
       ``(b) Use of Credentials.--Any enrolled agents properly 
     licensed to practice as required under rules promulgated 
     under subsection (a) shall be allowed to use the credentials 
     or designation as `enrolled agent', `EA', or `E.A.'.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7529 Enrolled agents.''.

       (c) Prior Regulations.--The authorization to prescribe 
     regulations under the amendments made by this section may not 
     be construed to have any effect on part 10 of title 31, Code 
     of Federal Regulations, or any other related Federal rule or 
     regulation issued before the date of the enactment of this 
     Act.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 4. REGULATION OF INCOME TAX RETURN PREPARERS.

       (a) Authorization.--Section 330(a)(1) of title 31, United 
     States Code, is amended by inserting ``(including compensated 
     preparers of tax returns, documents, and other submissions)'' 
     after ``representatives''.
       (b) Requirement.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of the Treasury 
     shall prescribe regulations under section 330 of title 31, 
     United States Code--
       (A) to regulate those compensated preparers not otherwise 
     regulated under regulations promulgated under such section on 
     the date of the enactment of this Act, and
       (B) to carry out the provisions of, and amendments made by, 
     this section.
       (2) Examination.--In promulgating the regulations under 
     paragraph (1), the Secretary shall develop (or approve) and 
     administer an eligibility examination designed to test--
       (A) the technical knowledge and competency of each preparer 
     described in paragraph (1)(A)--
       (i) to prepare Federal tax returns, including individual 
     and business income tax returns, and
       (ii) to properly claim the earned income tax credit under 
     section 32 of the Internal Revenue Code of 1986 with respect 
     to such individual returns, and
       (B) the knowledge of each such preparer regarding such 
     ethical standards for the preparation of such returns as 
     determined appropriate by the Secretary.
       (3) Continuing eligibility.--
       (A) In general.--The regulations under paragraph (1) shall 
     require a renewal of eligibility every 3 years and shall set 
     forth the manner in which a preparer described in paragraph 
     (1)(A) must renew such eligibility.
       (B) Continuing education requirements.--As part of the 
     renewal of eligibility, such regulations shall require that 
     each such preparer show evidence of completion of such 
     continuing education requirements as specified by the 
     Secretary.
       (C) Nonmonetary sanctions.--The regulations under paragraph 
     (1) shall provide for the suspension or termination of such 
     eligibility in the event of any failure to comply with the 
     requirements for such eligibility.
       (c) Office of Professional Responsibility.--Section 330 of 
     title 31, United States Code, is amended by adding at the end 
     the following new subsection:
       ``(e) Office of Professional Responsibility.--
       ``(1) In general.--There shall be in the Internal Revenue 
     Service an Office of Professional Responsibility the 
     functions of which shall be as prescribed by the Secretary of 
     the Treasury, including the carrying out of the purposes of 
     this section.
       ``(2) Director.--
       ``(A) In general.--The Office of Professional 
     Responsibility shall be under the supervision and direction 
     of an official known as the `Director, Office of Professional 
     Responsibility'. The Director, Office of Professional 
     Responsibility, shall report directly to the Commissioner of 
     Internal Revenue and shall be entitled to compensation at the 
     same rate as the highest rate of basic pay established for 
     the Senior Executive Service under section 5382 of title 5, 
     or, if the Secretary of the Treasury so determines, at a rate 
     fixed under section 9503 of such title.
       ``(B) Appointment.--The Director, Office of Professional 
     Responsibility, shall be appointed by the Secretary of the 
     Treasury without regard to the provisions of title 5 relating 
     to appointments in the competitive service or the Senior 
     Executive Service.
       ``(3) Hearing.--Any hearing on an action initiated by the 
     Director, Office of Professional Responsibility to impose a 
     sanction under regulations promulgated under this section 
     shall be conducted in accordance with sections 556 and 557 of 
     title 5 by 1 or

[[Page S3827]]

     more administrative law judges appointed by the Secretary of 
     the Treasury under section 3105 of title 5.
       ``(4) Information on sanctions to be available to the 
     public.--
       ``(A) Sanctions initiated by action.--When an action is 
     initiated by the Director, Office of Professional 
     Responsibility, to impose a sanction under regulations 
     promulgated under this section, the pleadings, and the record 
     of the proceeding and hearing shall be open to the public 
     (subject to restrictions imposed under subparagraph (C)).
       ``(B) Sanction not initiated by action.--When a sanction 
     under regulations promulgated under this section (other than 
     a private reprimand) is imposed without initiation of an 
     action, the Director, Office of Professional Responsibility, 
     shall make available to the public information identifying 
     the representative, employer, firm or other entity 
     sanctioned, as well as information about the conduct which 
     gave rise to the sanction (subject to restrictions imposed 
     under subparagraph (C)).
       ``(C) Restrictions on release of information.--Information 
     about clients of the representative, employer, firm or other 
     entity and medical information with respect to the 
     representative shall not be released to the public or 
     discussed in an open hearing, except to the extent necessary 
     to understand the nature, scope, and impact of the conduct 
     giving rise to the sanction or proposed sanction. 
     Disagreements regarding the application of this subparagraph 
     shall be resolved by the administrative law judge or, when a 
     sanction is imposed without initiation of an action, by the 
     Director, Office of Professional Responsibility.
       ``(5) Fees.--Any fees imposed under regulations promulgated 
     under this section shall be available without fiscal year 
     limitation to the Office of Professional Responsibility for 
     the purpose of reimbursement of the costs of administering 
     and enforcing the requirements of such regulations.''.
       (d) Penalties.--
       (1) Increase in certain penalties.--Subsections (b) and (c) 
     of section 6695 (relating to other assessable penalties with 
     respect to the preparation of income tax returns for other 
     persons) are each amended by striking ``$50'' and inserting 
     ``$500''.
       (2) Use of penalties.--Unless specifically appropriated 
     otherwise, there is authorized to be appropriated and is 
     appropriated to the Office of Professional Responsibility for 
     each fiscal year for the administration of the public 
     awareness campaign described in subsection (f) an amount 
     equal to the penalties collected during the preceding fiscal 
     year under sections 6694 and 6695 of the Internal Revenue 
     Code of 1986 and under the regulations promulgated under 
     section 330 of title 31, United States Code (by reason of 
     subsection (b)(1)).
       (e) Coordination With Section 6060(A).--The Secretary of 
     the Treasury shall coordinate the requirements under the 
     regulations promulgated under section 330 of title 31, United 
     States Code, with the return requirements of section 6060 of 
     the Internal Revenue Code of 1986.
       (f) Public Awareness Campaign.--The Secretary of the 
     Treasury shall conduct a public information and consumer 
     education campaign, utilizing paid advertising--
       (1) to encourage taxpayers to use for Federal tax matters 
     only professionals who establish their competency under the 
     regulations promulgated under section 330 of title 31, United 
     States Code, and
       (2) to inform the public of the requirements that any 
     compensated preparer of tax returns, documents, and 
     submissions subject to the requirements under the regulations 
     promulgated under such section must sign the return, 
     document, or submission prepared for a fee and display notice 
     of such preparer's compliance under such regulations.
       (g) Additional Funds Available for Compliance Activities.--
     The Secretary of the Treasury may use any specifically 
     appropriated funds for earned income tax credit compliance to 
     improve and expand enforcement of the regulations promulgated 
     under section 330 of title 31, United States Code.
       (h) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 5. CONTRACT AUTHORITY FOR EXAMINATIONS OF PREPARERS.

       The Secretary of the Treasury is authorized to contract for 
     the development or administration, or both, of any 
     examinations under the regulations promulgated under section 
     330 of title 31, United States Code.

     SEC. 6. REGULATION OF REFUND ANTICIPATION LOAN FACILITATORS.

       (a) Regulation of Refund Anticipation Loan Facilitators.--
       (1) In general.--Chapter 77 (relating to miscellaneous 
     provisions), as amended by this Act, is amended by inserting 
     at the end the following new section:

     ``SEC. 7530. REFUND ANTICIPATION LOAN FACILITATORS.

       ``(a) Registration.--Each refund loan facilitator shall 
     register with the Secretary on an annual basis. As a part of 
     such registration, each refund loan facilitator shall provide 
     the Secretary with the taxpayer identification number of such 
     facilitator.
       ``(b) Disclosure.--Each refund loan facilitator shall 
     disclose to a taxpayer both orally and on a separate written 
     form at the time such taxpayer applies for a refund 
     anticipation loan the following information:
       ``(1) Nature of the transaction.--The refund loan 
     facilitator shall disclose--
       ``(A) that the taxpayer is applying for a loan that is 
     based upon the taxpayer's anticipated income tax refund,
       ``(B) the expected time within which the loan will be paid 
     to the taxpayer if such loan is approved,
       ``(C) the time frame in which tax refunds are typically 
     paid based upon the different filing options available to the 
     taxpayer,
       ``(D) that there is no guarantee that a refund will be paid 
     in full or received within a specified time period and that 
     the taxpayer is responsible for the repayment of the loan 
     even if the refund is not paid in full or has been delayed,
       ``(E) if the refund loan facilitator has an agreement with 
     another refund loan facilitator (or any lender working in 
     conjunction with another refund loan facilitator) to offset 
     outstanding liabilities for previous refund anticipation 
     loans provided by such other refund loan facilitator, that 
     any refund paid to the taxpayer may be so offset and the 
     implication of any such offset,
       ``(F) that the taxpayer may file an electronic return 
     without applying for a refund anticipation loan and the fee 
     for filing such an electronic return, and
       ``(G) that the loan may have substantial fees and interest 
     charges that may exceed those of other sources of credit and 
     the taxpayer should carefully consider--
       ``(i) whether such a loan is appropriate for the taxpayer, 
     and
       ``(ii) other sources of credit.
       ``(2) Fees and interest.--The refund loan facilitator shall 
     disclose all refund anticipation loan fees with respect to 
     the refund anticipation loan. Such disclosure shall include--
       ``(A) a copy of the fee schedule of the refund loan 
     facilitator,
       ``(B) the typical fees and interest rates (using annual 
     percentage rates as defined by section 107 of the Truth in 
     Lending Act (15 U.S.C. 1606)) for several typical amounts of 
     such loans,
       ``(C) typical fees and interest charges if a refund is not 
     paid or delayed, and
       ``(D) the amount of a fee (if any) that will be charged if 
     the loan is not approved.
       ``(3) Other information.--The refund loan facilitator shall 
     disclose any other information required to be disclosed by 
     the Secretary.
       ``(c) Fines and Sanctions.--
       ``(1) In general.--The Secretary may impose a monetary 
     penalty on any refund loan facilitator who--
       ``(A) fails to register under subsection (a), or
       ``(B) fails to disclose any information required under 
     subsection (b).
       ``(2) Maximum monetary penalty.--Any monetary penalty 
     imposed under paragraph (1) shall not exceed--
       ``(A) in the case of a failure to register, the gross 
     income derived from all refund anticipation loans made during 
     the period the refund loan facilitator was not registered, 
     and
       ``(B) in the case of a failure to disclose information, the 
     gross income derived from all refund anticipation loans with 
     respect to which such failure applied.
       ``(3) Reasonable cause exceptions.--No penalty may be 
     imposed under this subsection with respect to any failure if 
     it is shown that such failure is due to reasonable cause.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Refund loan facilitator.--
       ``(A) In general.--The term `refund loan facilitator' means 
     any electronic return originator who--
       ``(i) solicits for, processes, receives, or accepts 
     delivery of an application for a refund anticipation loan, or
       ``(ii) facilitates the making of a refund anticipation loan 
     in any other manner.
       ``(B) Electronic return originator.--For purposes of 
     subparagraph (A), the term `electronic return originator' 
     means a person who originates the electronic submission of 
     income tax returns for another person.
       ``(2) Refund anticipation loan.--The term `refund 
     anticipation loan' means any loan of money or any other thing 
     of value to a taxpayer in connection with the taxpayer's 
     anticipated receipt of a Federal tax refund. Such term 
     includes a loan secured by the tax refund or an arrangement 
     to repay a loan from the tax refund.
       ``(3) Refund anticipation loan fees.--The term `refund 
     anticipation loan fees' means the fees, charges, interest, 
     and other consideration charged or imposed by the lender or 
     facilitator for the making of a refund anticipation loan.
       ``(e) Regulations.--The Secretary may prescribe such 
     regulation as necessary to implement the requirements of this 
     section.''.
       (2) Clerical amendment.--The table of sections for chapter 
     77, as amended by this Act, is amended by adding at the end 
     the following new item:

``Sec. 7530 Refund anticipation loan facilitators.''.

       (b) Disclosure of Penalty.--Subsection (k) of section 6103 
     is amended by adding at the end the following new paragraph:
       ``(10) Disclosure of penalties on refund anticipation loan 
     facilitators.--The Secretary may disclose the name of any 
     person with respect to whom a penalty has been imposed under 
     section 7530 and the amount of any such penalty.''.
       (c) Use of Penalties.--Unless specifically appropriated 
     otherwise, there is authorized to be appropriated and is 
     appropriated to the Internal Revenue Service for each fiscal 
     year

[[Page S3828]]

     for the administration of the public awareness campaign 
     described in subsection (d) an amount equal to the penalties 
     collected during the preceding fiscal year under section 7530 
     of the Internal Revenue Code of 1986.
       (d) Public Awareness Campaign.--The Secretary of the 
     Treasury shall conduct a public information and consumer 
     education campaign, utilizing paid advertising, to educate 
     the public on making sound financial decisions with respect 
     to refund anticipation loans (as defined under section 7530 
     of the Internal Revenue Code of 1986), including the need to 
     compare--
       (1) the rates and fees of such loans with the rates and 
     fees of conventional loans; and
       (2) the amount of money received under the loan after 
     taking into consideration such costs and fees with the total 
     amount of the refund.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date that is 1 year after the date 
     of the enactment of this Act.

     SEC. 7. TAXPAYER ACCESS TO FINANCIAL INSTITUTIONS.

       (a) Establishment of Program.--The Secretary is authorized 
     to award demonstration project grants (including multi-year 
     grants) to eligible entities which partner with volunteer and 
     low-income preparation organizations to provide tax 
     preparation services and assistance in connection with 
     establishing an account in a federally insured depository 
     institution for individuals that currently do not have such 
     an account.
       (b) 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--
       (i) in which employees participate,
       (ii) 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, and
       (iii) which is described in section 501(c)(5).
       (c) 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.
       (d) 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.
       (e) 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.
       (f) 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.
       (g) Regulations.--The Secretary is authorized to promulgate 
     regulations to implement and administer the grant program 
     under this section.
       (h) Study on Delivery of Tax Refunds.--
       (1) In general.--The Secretary of the Treasury, in 
     consultation with the National Taxpayer Advocate, shall 
     conduct a study on the payment of tax refunds through debit 
     cards or other electronic means to assist individuals that do 
     not have access to financial accounts or institutions.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     submit a report to Congress containing the result of the 
     study conducted under subsection (a).

     SEC. 8. EXPANDED USE OF TAX COURT PRACTICE FEES FOR PRO SE 
                   TAXPAYERS.

       (a) In General.--Section 7475(b) (relating to use of fees) 
     is amended by inserting before the period at the end ``and to 
     provide services to pro se taxpayers''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.
                                  ____


           Analysis of Taxpayer Protection and Assistance Act

       OPR discipline is imposed after a hearing before an 
     administrative law judge or as a result of an agreement 
     between the OPR and the representative. Little is known about 
     the basis for these actions, because the current practice is 
     to publish only the identity of the representative, the 
     disciplinary action taken; and the effective date. The bill 
     would open the process to the public, providing greater 
     transparency and accountability for both the representatives 
     and the OPR.
       Following the practice of many State attorney discipline 
     processes, the bill provides that proceedings before an 
     administrative law judge are open to the public. These 
     proceedings are initiated by the Director of the Office of 
     Professional Responsibility after the representative has been 
     notified of the proposed charges, and has had an opportunity 
     to respond to the Director. In many cases, the representative 
     agrees with the Director that a violation of the rules of 
     conduct has occurred, and agrees to accept a disciplinary 
     action without a hearing before an administrative Judge. When 
     discipline is imposed based on such an agreement, the bill 
     provides that the Director will provide summary information 
     about the conduct which gave rise to the sanction.
       There is a longstanding provision of 26 USC 6103, 
     permitting taxpayer information to be disclosed in 
     proceedings brought to impose discipline under 31 USC 330. 
     The bill provides a limitation on the disclosure of 
     information about the client, allowing the administrative law 
     judge to decide whether the client information is necessary 
     to understand the nature, scope or impact of the misconduct. 
     In cases where discipline is imposed without bringing the 
     matter before an administrative law judge, the Director makes 
     this determination. The bill also provides a general 
     protection for medical information, the release of which 
     would be an unwarranted invasion of personal privacy. For 
     example, when a practitioner offers evidence of physical or 
     mental health problems to explain his or her conduct, the 
     release of that medical information in a proceeding may be 
     inappropriate.

  Mr. AKAKA Mr. President, I am proud to cosponsor the Taxpayer 
Protection and Assistance Act of 2005. I thank Senator Bingaman for 
introducing this bill and working closely with me over the years to 
protect taxpayers and expand access to financial services. I also 
appreciate all of the efforts of Senators Baucus, Smith, Grassley, and 
Pryor on this important piece of consumer protection legislation.
  The earned income tax credit (EITC) helps working families meet their 
food, clothing, housing, transportation, and education needs. 
Unfortunately, EITC refunds intended for working families are 
unnecessarily diminished by excessive tax preparation fees and the use 
of refund anticipation loans (RALs). According to the Brookings 
Institution, an estimated $1.9 billion intended to assist low-income 
families via 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 anticipation loans in 2002. Interest 
rates on RALs can range from 97 percent to more than 2,000 percent. The 
interest rates and fees charged on this type of product are not 
justified given the short duration and low repayment risk of this type 
of loan.
  This legislation is a good start towards improving the quality of tax 
preparation services, providing relevant and useful disclosures about 
the use of RALs, and expanding access to low- and moderate-income 
families to mainstream financial services. The Act will provide the 
Department of the Treasury with the authority to regulate individuals 
preparing federal income tax returns and other documents for submission 
to the Internal Revenue Service. Fifty-seven percent of EITC overclaims 
were made on returns put together by paid preparers. This Act requires 
examinations, education, and oversight of paid preparers and urges 
citizens to utilize the services of an accredited or licensed tax 
preparer. This should improve the quality of tax preparation services 
available to our citizens.

[[Page S3829]]

  In addition, the Act will require RAL facilitators to register with 
the Department of the Treasury, and comply with minimum disclosure 
requirements intended to improve the understanding of consumers about 
the costs associated with RALs. The Act also requires that the 
Department of the Treasury conduct a public awareness campaign intended 
to improve the knowledge of consumers about the costs associated with 
RALs. We need consumers to know more about the high fees associated 
with RALs and what alternatives are available, such as opening a bank 
or credit union account and having their refund directly deposited into 
it.
  I am pleased that authorization language for a grant program to link 
tax preparation services with the opening of a bank or credit union 
account is included in this legislation. It is estimated that four 
million EITC recipients are classified as unbanked, and lack a formal 
relationship with a financial institution. Approximately 45 percent of 
EITC recipients pay for check cashing services. Check cashing services 
reduce EITC benefits by $130 million. Having a bank account allows 
individuals to take advantage of electronic filing, thus eliminating 
the excessive fees that check cashing services and refund anticipation 
loan providers assess. An account at a bank or credit union provides 
consumers alternatives to rapid refund loans, check cashing services, 
and lower cost remittances. In addition, bank and credit union accounts 
provide access to products and services found at mainstream financial 
institutions, such as savings accounts and reasonably priced loans.
  This grant program builds upon the First Accounts initiative which 
has funded pilot projects that have coupled tax preparation services 
with the establishment of bank accounts. An example of such a project 
is the partnership that has been established by The Center for Economic 
Progress in Chicago. We need more of these types of programs intended 
to provide much needed tax preparation assistance, and encourage the 
use of mainstream financial services.
  I urge all of my colleagues to support this legislation. This is an 
important first step towards improving the quality of tax preparation 
services. I look forward to continuing to work with my colleagues on 
additional consumer protections and initiatives to bring more people 
into mainstream financial services, such as what I included in S. 324, 
the Taxpayer Abuse Prevention Act.
                                 ______