Iowa Legislature Passes Bill to Regulate Tax Return Preparers

April 30, 2019


Update: This bill was signed into law May 16, 2019.

On April 24, 2019, the Iowa Legislature passed HF 590, a bill to regulate tax return preparers. If the bill is signed by the Governor, the new requirements would take effect 01/01/2020. Beginning on or after this date, “tax return preparers” (TRPs) would be required to include their federal PTIN on any Iowa tax return or claim for refund they prepare. A $50 penalty would apply to each violation unless the TRP can show that the violation was reasonable under the circumstances and not willful or reckless. The maximum penalty could not exceed $25,000 for any calendar year. The Iowa Department of Revenue would modify the forms to include a space for this number.

 “Tax return preparer” means any individual who, for a fee or other consideration, prepares ten or more Iowa tax returns or claims for refund or who assumes final responsibility for completed work on such tax returns or claims for refund on which preliminary work has been done by another individual. “Tax return preparer” does not include: CPAs, licensed public accountants, licensed attorneys, enrolled agents, or fiduciaries of trusts, estates, or individuals.

IDOR Could Seek to Enjoin Improper Conduct

Under the law, the Director of IDOR could seek a temporary or permanent injunction from any court to prevent TRPs from continuing to engage in any of the following conduct:

  • Preparation of any income tax return or claim for refund that includes an unreasonable position that understates the taxpayer’s liability.
  • Preparation of any income tax return or claim for refund that includes a willful or reckless understatement of the taxpayer’s liability.
  • Failure to do any of the following:
    • Furnish a copy of an income tax return or claim for refund, when required.
    • Sign the income tax return or claim for refund, when required.
    • Furnish an identifying number, when required.
    • Retain a copy of the income tax return, when required.
    • Complete required continuing education requirements
    • Use diligence in determining eligibility for tax benefits, when subject to due diligence requirements imposed by department rules.
  • Negotiating on behalf of a taxpayer the issuance of a check by the department, without the permission of the taxpayer.
  • Engaging in conduct subject to a criminal penalty under this chapter.
  • Misrepresenting the eligibility of the preparer to practice before the department or otherwise misrepresenting the experience or education of the preparer.
  • Guaranteeing the payment of any income tax refund or the allowance of any income tax credit.
  • Engaging in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the tax laws of Iowa.

Continuing Education Requirement

Beginning January 1, 2020, and every year thereafter, TRPs would be required complete a minimum of 15 hours of continuing education courses on subject matters determined by IDOR, including two hours of continuing education on professional ethics. Each course would have to be taken from an Internal Revenue Service approved provider of continuing education. A new TRP would not be required to complete continuing education prior to the first year of preparing returns. All TRPs would be required to retain records of continuing education completion.

 

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