1.1 	A bill for an act
1.2 	relating to taxes; regulating tax preparers; amending
1.3 	Minnesota Statutes 2004, sections 270.30, subdivisions
1.4 	1, 5, 6, 8, by adding subdivisions; 289A.08,
1.5 	subdivision 16; 289A.60, subdivision 13; proposing
1.6 	coding for new law in Minnesota Statutes 2004, chapter
1.7 	270.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 270.30,
1.10 	subdivision 1, is amended to read:
1.11 		Subdivision 1.Scope. (a) This section applies to a
1.12 	person who offers,provides, or facilitates the provision of
1.13 	refund anticipation loans, as part of or in connection with the
1.14 	provision of tax preparation services.
1.15 	(b) This section does not apply to:
1.16 	(1) a tax preparer who provides tax preparation services
1.17 	for fewer than six clients in a calendar year;
1.18 	(2) the provision by a person of tax preparation services
1.19 	to a spouse, parent, grandparent, child, or sibling; and 
1.20 	(3) the provision of services by an employee for an
1.21 	employer.

1.22 	Sec. 2. Minnesota Statutes 2004, section 270.30,
1.23 	subdivision 5, is amended to read:
1.24 		Subd. 5.Itemized bill required.  A tax preparer who
1.25 	provides services for a fee or other consideration must provide
1.26 	an itemized statement of the charges for services, at least
2.1 	separately stating the charges for:
2.2 	(1) return preparation; and 
2.3 	(2) electronic filing; and 
2.4 	(3) providing or facilitating a refund anticipation loan.

2.5 	Sec. 3. Minnesota Statutes 2004, section 270.30,
2.6 	subdivision 6, is amended to read:
2.7 		Subd. 6.Enforcement; penalties.  The commissioner may
2.8 	impose an administrative penalty of not more than $1,000 per
2.9 	violation of subdivision 3, 4, or 5.  The commissioner may
2.10 	terminate a tax preparer's authority to transmit returns
2.11 	electronically to the state, if the commissioner determines the
2.12 	tax preparer engaged in a pattern and practice of violating this
2.13 	section.  Imposition of a penalty under this subdivision is
2.14 	subject to the contested case procedure under chapter 14.  The
2.15 	commissioner shall collect the penalty in the same manner as the
2.16 	income tax. Penalties imposed under this subdivision are public
2.17 	data.

2.18 	Sec. 4. Minnesota Statutes 2004, section 270.30, is
2.19 	amended by adding a subdivision to read:
2.20 		Subd. 6a.Exchange of data; state board of
2.21 	accountancy. The State Board of Accountancy shall refer to the
2.22 	commissioner complaints it receives about tax preparers who are
2.23 	not subject to the jurisdiction of the State Board of
2.24 	Accountancy and who are alleged to have violated the provisions
2.25 	of subdivisions 3 to 5.

2.26 	Sec. 5. Minnesota Statutes 2004, section 270.30, is
2.27 	amended by adding a subdivision to read:
2.28 		Subd. 6b.Exchange of data; lawyers board of professional
2.29 	responsibility. The Lawyers Board of Professional
2.30 	Responsibility may refer to the commissioner complaints it
2.31 	receives about tax preparers who are not subject to its
2.32 	jurisdiction and who are alleged to have violated the provisions
2.33 	of subdivisions 3 to 5.

2.34 	Sec. 6. Minnesota Statutes 2004, section 270.30, is
2.35 	amended by adding a subdivision to read:
2.36 		Subd. 6c.Exchange of data; commissioner. The
3.1 	commissioner shall refer complaints about tax preparers who are
3.2 	alleged to have violated the provisions of subdivisions 3 to 5
3.3 	to:
3.4 	(1) the State Board of Accountancy, if the tax preparer is
3.5 	under its jurisdiction; and 
3.6 	(2) the Lawyers Board of Professional Responsibility, if
3.7 	the tax preparer is under its jurisdiction.

3.8 	Sec. 7. Minnesota Statutes 2004, section 270.30, is
3.9 	amended by adding a subdivision to read:
3.10 		Subd. 6d.Data private. Information exchanged on
3.11 	individuals under subdivisions 6a to 6c are private data under
3.12 	section 13.02, subdivision 12, until such time as a penalty is
3.13 	imposed as provided in section 326A.08 or by the Lawyers Board
3.14 	of Professional Responsibility.

3.15 	Sec. 8. Minnesota Statutes 2004, section 270.30,
3.16 	subdivision 8, is amended to read:
3.17 		Subd. 8.Exemptions; enforcement provisions. (a) The
3.18 	provisions of subdivisions 6 and 7 this section, except for
3.19 	subdivision 4,do not apply to:
3.20 	(1) an attorney admitted to practice under section 481.01;
3.21 	(2) a certified public accountant holding a certificate
3.22 	under section 326A.04 or a person issued a permit to practice
3.23 	under section 326A.05or other person who is subject to the
3.24 	jurisdiction of the State Board of Accountancy; and 
3.25 	(3) a person designated as a registered accounting
3.26 	practitioner under Minnesota Rules, part 1105.6600, or a
3.27 	registered accounting practitioner firm issued a permit under
3.28 	Minnesota Rules, part 1105.7100;
3.29 	(4) an enrolled agent who has passed the special enrollment
3.30 	examination administered by the Internal Revenue Service; and .
3.31 	(b) The provisions of this section do not apply to:
3.32 	(5) (1) any fiduciary, or the regular employees of a
3.33 	fiduciary, while acting on behalf of the fiduciary estate, the
3.34 	testator, trustor, grantor, or beneficiaries of them;
3.35 	(2) a tax preparer who provides tax preparation services
3.36 	for fewer than six clients in a calendar year;
4.1 	(3) tax preparation services to a spouse, parent,
4.2 	grandparent, child, or sibling of the tax preparer; and 
4.3 	(4) the preparation by an employee of the tax return of the
4.4 	employee's employer.

4.5 	Sec. 9. [270.301] PUBLICATION OF NAMES OF TAX PREPARERS
4.6 	SUBJECT TO PENALTIES.
4.7 		Subdivision 1.Publication of list. Notwithstanding any
4.8 	other law, the commissioner must publish as provided in this
4.9 	section a list or lists of tax preparers subject to penalties.
4.10 		Subd. 2.Required and excluded tax preparers. (a)
4.11 	Subject to the limitations of paragraphs (b) and (c), the
4.12 	commissioner must publish lists of the tax preparers described
4.13 	in subdivision 1.  The list must include:
4.14 	(1) the tax preparers who have been assessed penalties
4.15 	under section 289A.60, subdivision 13, or who have been
4.16 	convicted under section 289A.63;
4.17 	(2) tax preparers against whom cumulative penalties of
4.18 	$1,000 or more have been assessed under section 270.30,
4.19 	subdivision 6; and 
4.20 	(3) tax preparers whose authority to transmit returns
4.21 	electronically has been terminated under section 270.30,
4.22 	subdivision 6, or under section 289A.60, subdivision 13.
4.23 	The list may include tax preparers against whom cumulative
4.24 	penalties of less than $1,000 have been assessed.
4.25 	(b) For the purposes of this section, a penalty was not
4.26 	assessed if:
4.27 	(1) an administrative or court action contesting the
4.28 	penalty has been filed or served and is unresolved at the time
4.29 	when notice would be given under subdivision 3; or 
4.30 	(2) an appeal period to contest the penalty has not expired.
4.31 	(c) Penalties are not subject to publication if:
4.32 	(1) the commissioner is in the process of reviewing or
4.33 	adjusting the penalty; or 
4.34 	(2) the commissioner has been notified that the tax
4.35 	preparer is deceased.
4.36 		Subd. 3.Notice to tax preparer. (a) At least 30 days
5.1 	before publishing the name of a tax preparer subject to penalty,
5.2 	the commissioner shall mail a written notice to the tax
5.3 	preparer, detailing the amount and nature of each penalty and
5.4 	the intended publication of the information listed in
5.5 	subdivision 4 related to the penalty.  The notice must be mailed
5.6 	by first class and certified mail addressed to the last known
5.7 	address of the tax preparer.  The notice must include
5.8 	information regarding the exceptions listed in subdivision 2 and
5.9 	must state that the tax preparer's information will not be
5.10 	published if the tax preparer provides information establishing
5.11 	that subdivision 2 prohibits publication of the tax preparer's
5.12 	name.
5.13 	(b) After at least 30 days has elapsed since the notice was
5.14 	mailed and the tax preparer has not proved to the commissioner
5.15 	that subdivision 2 prohibits publication, the commissioner may
5.16 	publish in a list of tax preparers subject to penalty the
5.17 	information about the tax preparer that is listed in subdivision
5.18 	4.
5.19 		Subd. 4.Form of list. The list may be published by any
5.20 	medium or method.  The list must contain the name, associated
5.21 	business name or names, address or addresses, and violation or
5.22 	violations for which a penalty was imposed of each tax preparer
5.23 	subject to administrative penalty.
5.24 		Subd. 5.Removal from list. The commissioner shall
5.25 	remove the name of a tax preparer from the list of tax preparers
5.26 	published under this section when:
5.27 	(1) the commissioner determines that the name was included
5.28 	on the list in error;
5.29 	(2) 90 days have elapsed since the preparer has fully paid
5.30 	all fines imposed, served any suspension and demonstrated to the
5.31 	satisfaction of the commissioner that the preparer has
5.32 	successfully completed any remedial actions required by the
5.33 	commissioner, the State Board of Accountancy, or the Lawyers
5.34 	Board of Professional Responsibility; or 
5.35 	(3) the commissioner has been notified that the tax
5.36 	preparer is deceased.
6.1 		Subd. 6.Names published in error. If the commissioner
6.2 	publishes a name under subdivision 1 in error, the tax preparer
6.3 	whose name was erroneously published has a right to request a
6.4 	retraction and apology.  If the tax preparer so requests, the
6.5 	commissioner shall publish a retraction and apology
6.6 	acknowledging that the tax preparer's name was published in
6.7 	error.  The retraction and apology must appear in the same
6.8 	medium and the same format as the original list that contained
6.9 	the name listed in error.
6.10 		Subd. 7.Payment of damages. Actions against the
6.11 	commissioner of revenue or the state of Minnesota arising out of
6.12 	the implementation of this program must be brought under section
6.13 	270.276.
6.14 	
EFFECTIVE DATE. The requirement of subdivision 1,
6.15 	paragraph (a), clause (2) is effective for crimes committed on
6.16 	or after August 1, 2005.  The remainder of subdivision 1 is
6.17 	effective for tax preparers engaging in conduct described in
6.18 	paragraph (a), clause (1) or (3), on or after August 1, 2005.

6.19 	Sec. 10. Minnesota Statutes 2004, section 289A.08,
6.20 	subdivision 16, is amended to read:
6.21 		Subd. 16.Tax refund or return preparers; electronic
6.22 	filing; paper filing fee imposed.  (a) A "tax refund or return
6.23 	preparer," as defined in section 289A.60, subdivision 13,
6.24 	paragraph (g) (h), who prepared more than 500 100 Minnesota
6.25 	individual income tax returns for the prior calendar year must
6.26 	file all Minnesota individual income tax returns prepared for
6.27 	the current calendar year by electronic means.
6.28 	(b) For tax returns prepared for the tax year beginning in
6.29 	2001, the "500" in paragraph (a) is reduced to 250.
6.30 	(c) For tax returns prepared for tax years beginning after
6.31 	December 31, 2001, the "500" in paragraph (a) is reduced to 100.
6.32 	(d) Paragraph (a) does not apply to a return if the
6.33 	taxpayer has indicated on the return that the taxpayer did not
6.34 	want the return filed by electronic means.
6.35 	(e) (c) For each return that is not filed electronically by
6.36 	a tax refund or return preparer under this subdivision,
7.1 	including returns filed under paragraph (d), a paper filing fee
7.2 	of $5 is imposed upon the preparer.  The fee is collected from
7.3 	the preparer in the same manner as income tax.  The fee does not
7.4 	apply to returns that the commissioner requires to be filed in
7.5 	paper form.

7.6 	Sec. 11. Minnesota Statutes 2004, section 289A.60,
7.7 	subdivision 13, is amended to read:
7.8 		Subd. 13.Penalties for tax return preparers.  (a) If an
7.9 	understatement of liability with respect to a return or claim
7.10 	for refund is due to a willful attempt in any manner to
7.11 	understate the liability for a tax by a person who is a tax
7.12 	return preparer with respect to the return or claim, the person
7.13 	shall pay to the commissioner a penalty of $500.  If a part of a
7.14 	property tax refund claim is excessive due to a willful attempt
7.15 	in any manner to overstate the claim for relief allowed under
7.16 	chapter 290A by a person who is a tax refund or return preparer,
7.17 	the person shall pay to the commissioner a penalty of $500 with
7.18 	respect to the claim.  These penalties may not be assessed
7.19 	against the employer of a tax return preparer unless the
7.20 	employer was actively involved in the willful attempt to
7.21 	understate the liability for a tax or to overstate the claim for
7.22 	refund.  These penalties are income tax liabilities and may be
7.23 	assessed at any time as provided in section 289A.38, subdivision
7.24 	5.
7.25 	(b) A civil action in the name of the state of Minnesota
7.26 	may be commenced to enjoin any person who is a tax return
7.27 	preparer doing business in this state from further engaging in
7.28 	any conduct described in paragraph (c).  An action under this
7.29 	paragraph must be brought by the attorney general in the
7.30 	district court for the judicial district of the tax return
7.31 	preparer's residence or principal place of business, or in which
7.32 	the taxpayer with respect to whose tax return the action is
7.33 	brought resides.  The court may exercise its jurisdiction over
7.34 	the action separate and apart from any other action brought by
7.35 	the state of Minnesota against the tax return preparer or any
7.36 	taxpayer.
8.1 	(c) In an action under paragraph (b), if the court finds
8.2 	that a tax return preparer has:
8.3 	(1) engaged in any conduct subject to a civil penalty under
8.4 	section 289A.60 or a criminal penalty under section 289A.63;
8.5 	(2) misrepresented the preparer's eligibility to practice
8.6 	before the Department of Revenue, or otherwise misrepresented
8.7 	the preparer's experience or education as a tax return preparer;
8.8 	(3) guaranteed the payment of any tax refund or the
8.9 	allowance of any tax credit; or
8.10 	(4) engaged in any other fraudulent or deceptive conduct
8.11 	that substantially interferes with the proper administration of
8.12 	state tax law, and injunctive relief is appropriate to prevent
8.13 	the recurrence of that conduct,
8.14 	the court may enjoin the person from further engaging in that
8.15 	conduct.
8.16 	(d) If the court finds that a tax return preparer has
8.17 	continually or repeatedly engaged in conduct described in
8.18 	paragraph (c), and that an injunction prohibiting that conduct
8.19 	would not be sufficient to prevent the person's interference
8.20 	with the proper administration of state tax laws, the court may
8.21 	enjoin the person from acting as a tax return preparer.  The
8.22 	court may not enjoin the employer of a tax return preparer for
8.23 	conduct described in paragraph (c) engaged in by one or more of
8.24 	the employer's employees unless the employer was also actively
8.25 	involved in that conduct.
8.26 	(e) The commissioner may terminate or suspend a tax
8.27 	preparer's authority to transmit returns electronically to the
8.28 	state, if the commissioner determines that the tax preparer has
8.29 	engaged in a pattern and practice of conduct in violation of
8.30 	this subdivision or of section 289A.63.
8.31 	(f) For purposes of this subdivision, the term
8.32 	"understatement of liability" means an understatement of the net
8.33 	amount payable with respect to a tax imposed by state tax law,
8.34 	or an overstatement of the net amount creditable or refundable
8.35 	with respect to a tax.  The determination of whether or not
8.36 	there is an understatement of liability must be made without
9.1 	regard to any administrative or judicial action involving the
9.2 	taxpayer.  For purposes of this subdivision, the amount
9.3 	determined for underpayment of estimated tax under either
9.4 	section 289A.25 or 289A.26 is not considered an understatement
9.5 	of liability.
9.6 	(f) (g) For purposes of this subdivision, the term
9.7 	"overstatement of claim" means an overstatement of the net
9.8 	amount refundable with respect to a claim for property tax
9.9 	relief provided by chapter 290A.  The determination of whether
9.10 	or not there is an overstatement of a claim must be made without
9.11 	regard to administrative or judicial action involving the
9.12 	claimant.
9.13 	(g) (h) For purposes of this section, the term "tax refund
9.14 	or return preparer" means an individual who prepares for
9.15 	compensation, or who employs one or more individuals to prepare
9.16 	for compensation, a return of tax, or a claim for refund of
9.17 	tax.  The preparation of a substantial part of a return or claim
9.18 	for refund is treated as if it were the preparation of the
9.19 	entire return or claim for refund.  An individual is not
9.20 	considered a tax return preparer merely because the individual:
9.21 	(1) gives typing, reproducing, or other mechanical
9.22 	assistance;
9.23 	(2) prepares a return or claim for refund of the employer,
9.24 	or an officer or employee of the employer, by whom the
9.25 	individual is regularly and continuously employed;
9.26 	(3) prepares a return or claim for refund of any person as
9.27 	a fiduciary for that person; or
9.28 	(4) prepares a claim for refund for a taxpayer in response
9.29 	to a tax order issued to the taxpayer.