HF5002

Purpose

The bill aims to tighten rules for tax preparation services in Minnesota. It would stop tax preparers from marking a tax return to designate a contribution to the state elections campaign account unless the taxpayer explicitly instructs them to do so. It also strengthens the standards of conduct for tax preparers and adds protections for clients, including how refunds are handled and how personal information is safeguarded.

Main Provisions

• Prohibition on political designation without explicit instruction

  • No marking of a tax return to designate a contribution to the state elections campaign account unless the taxpayer clearly and specifically asks for it.

• Standards of conduct for tax preparers (expanded in Minnesota Statutes 270C.445, subdivision 3)

  • Complete a client’s return promptly, diligently, and without unnecessary delay.
  • Obtain a client’s signature on the return or authorization documents only when appropriate and after blanks are filled.
  • Sign the client’s return when the preparer has been paid for services.
  • Provide the client’s tax identification number (TIN) on the return when required by law.
  • Give the client a copy of any document the client signed within a reasonable time.
  • Retain a copy of the client’s return for at least four years.
  • Maintain a confidential relationship with clients and former clients.
  • Safeguard a client’s nonpublic personal information with commercially reasonable measures.
  • Do not publish, disseminate, or make false, deceptive, or misleading statements about tax preparation services.
  • Do not require a client to enter into a loan arrangement to complete a return.
  • Do not claim credits or deductions for which the preparer knows or should know the client does not qualify.
  • Do not falsely report income the client does not actually have.
  • Avoid conduct that breaches certain professional penalties or rules.
  • Do not engage in disreputable, incompetent, or other prohibited conduct (as defined by Minnesota Rules).
  • Do not charge or accept a fee based on a percentage of the anticipated refund.
  • Do not withhold or fail to return a client’s document for use in preparing the return.
  • Do not take control of, or ownership over, a client’s refund or department payment; do not endorse, directly or indirectly, a refund check; do not direct the refund into an account unless the client’s name is on the account; do not use an account in the preparer’s name to receive a client’s refund.
  • Always act in the best interests of the client.
  • Safeguard and account for money handled for the client.
  • Disclose all material facts the preparer knows that could reasonably affect the client’s rights and interests.
  • Comply with relevant laws and rules, including prohibitions on certain risky clauses and practices.
  • Do not include prohibited terms in documents related to tax preparation (for example, hold harmless clauses, waivers of rights, confessions of judgment, or waivers of certain defenses).
  • If making or providing a refund anticipation loan, provide all disclosures required by the Truth in Lending Act (TILA).

• Handling refunds and other payments

  • Do not take or control a client’s refund through the preparer’s account or by directing deposits to accounts not in the client’s name, unless the client’s name is on the account.
  • Do not negotiate or otherwise misdirect a client’s refund or department payment.

• Additional disclosures and controls

  • Include required disclosures in any document provided or signed related to tax preparation.
  • Ensure protection against misleading statements and protect client rights and interests.
  • Comply with applicable statutes, rules, and federal requirements (including the Truth in Lending Act for loan disclosures).

• Administrative and enforcement elements

  • The changes reference and apply to Minnesota Statutes and Minnesota Rules related to tax preparers and professional conduct.
  • Align with existing penalties or enforcement mechanisms for violations of these conduct standards and disclosures.

Significant Changes to Existing Law

• Adds a comprehensive set of standards of conduct for tax preparers, including duties around:
  • timely completion, proper signing, providing copies, retention of records, confidentiality, and safeguarding client information.
  • prohibitions on misleading statements, inappropriate loan arrangements, improper handling of refunds, and certain types of fees or arrangements.
  • obligations to disclose material facts and to follow professional and privacy standards.
• Introduces a specific prohibition on marking a return to fund a political contribution without explicit taxpayer instruction, tying political designations to the taxpayer’s direct authorization.
• Expands rules around refund handling, direct deposits, and account ownership to protect clients from loss or misdirection of funds.
• Requires additional disclosures for refund anticipation loans under the federal Truth in Lending Act.
• Integrates these provisions with existing Minnesota statutes (270C.445) and Minnesota Rules (8052.0300 and related subparts).

Relevant terms from the bill (for searchability and quick reference) include: state elections campaign account, explicit instruction, tax preparer, standards of conduct, Minnesota Rules, Minnesota Statutes, 270C.445 subdivision 3, refundable loans, refund anticipation loan, Truth in Lending Act, direct deposit, client’s name on account, nonpublic personal information, hold harmless clause, confession of judgment, designated credits or deductions, and 6109a4 (Internal Revenue Code) references.

Who Is Affected

• Tax preparers and tax preparation businesses operating in Minnesota.
• Minnesota taxpayers who use tax preparation services, who will benefit from enhanced protections and clearer guidance on refunds, loans, and disclosures.

Relevant Terms state elections campaign account explicit instruction tax preparer standards of conduct Minnesota Rules Minnesota Statutes 270C.445 subdivision 3 refund anticipation loan Truth in Lending Act direct deposit client’s name on account nonpublic personal information hold harmless clause confession of judgment 6109a4 disclosures credits or deductions refunding controls