2012 -- H 8066

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LC02389

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION

     Introduced By: Representatives Melo, Valencia, Gallison, Ferri, and Blazejewski

     Date Introduced: April 12, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 44-1 of the General Laws entitled "State Tax Officials" is hereby

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amended by adding thereto the following section:

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     44-1-35. Tax return preparer due diligence and penalties. – (a) For the purpose of this

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section a “tax return preparer” is an individual who prepares a substantial portion of any return

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for compensation. Tax return preparers include any individual required to register with the

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Internal Revenue Service as a tax return preparer and having a preparer tax identification number

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(PTIN).

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     (b) For the purpose of this section the following individuals shall not be considered tax

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return preparers:

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     (1) Volunteer tax return preparers; or

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     (2) Employees of a tax return preparer or a commercial tax return preparation business

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who provide only clerical, administrative or other similar services.

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     (c) A tax return preparer must sign all returns prepared and include their federal PTIN on

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all returns prepared.

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     (d) Failure to be diligent in determining eligibility for earned income credit. Any tax

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return preparer who prepares any return or claim for refund and fails to comply with due

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diligence requirements imposed by regulations issued by the tax administrator with respect to

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determining eligibility for, or the amount of, the credit allowable by subparagraph 44-30-

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2.6(c)(2)(N) shall pay a penalty of five hundred dollars ($500) for each such return.

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     (e) Failure to be diligent in determining eligibility for property tax relief credit. Any tax

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return preparer who prepares any return or claim for refund and fails to comply with due

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diligence requirements imposed by regulations issued by the tax administrator with respect to

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determining eligibility for, or the amount of, the credit allowable by section 44-33-1 et seq., shall

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pay a penalty of five hundred dollars ($500) for each such return.

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     (f) Tax return preparer civil penalties. Any tax return preparer who willfully prepares,

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assists in preparing, or causes a preparation of a return or claim for a refund filed with the

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division of taxation with fraudulent intent or the intent to evade taxes shall pay a penalty of five

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thousand dollars ($5,000), or five hundred ($500) for each such return, whichever is greater.

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     (g) The tax administrator may suspend or revoke the privilege of a tax return preparer to

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prepare and/or file returns with the division of taxation for failure to comply with any provision

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of this section or with any provision of any other law relative to the preparation of tax returns.

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Any tax return preparer aggrieved by the suspension or revocation may apply, within thirty (30)

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days of such suspension or revocation, to the tax administrator for a hearing. If the tax return

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preparer is aggrieved by the decision of the tax administrator (or his or her designated hearing

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officer) may, within thirty (30) days after notice of the decision is sent to the tax return preparer

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by certified or registered mail, directed to their last known address, petition the sixth division of

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the district court pursuant to chapter 8 of title 8 setting forth the reasons why the decision is

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alleged to be erroneous and praying relief therefrom.

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     (h) Tax return preparer criminal penalties. Any tax return preparer who willfully

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prepares, assists in preparing, or causes a preparation of a false tax return or claim for refund filed

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with the division of taxation with fraudulent intent or the intent to evade taxes who has previously

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been penalized under this section shall be guilty of a felony and, on conviction, shall be subject to

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a fine not exceeding fifty thousand dollars ($50,000) or imprisonment not exceeding five (5)

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years, or both.

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     (i) The tax administrator shall promulgate rules and regulations to carry out the

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provisions, policies, and purposes of this chapter.

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     SECTION 2. This act shall take effect upon passage.

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LC02389

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION

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     This act would set forth the due diligence with which a tax return preparer must act. It

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would establish civil penalties for the first offense and criminal penalties for repeated offenses.

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     This act would take effect upon passage.

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LC02389

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