A1752

An Act providing for the licensing of tax preparers, amending P.L.1971, c.60, P.L.1974, c.46 and P.L.1978, c.73, and supplementing Title 45 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1 (New section) Sections 1 through 15 of this act shall be known and may be cited as the “Tax Preparers Licensing Act.”

2. (New section) As used in this act:

“Board” means the State Board of Tax Preparers established pursuant to section 3 of this act.

“Client” means an individual who engages the services of a tax preparer.

“Director” means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.

“Tax preparer” means an individual, corporation, partnership, limited liability company, association, trustee or other entity who is licensed as a tax preparer pursuant to the provisions of this act.

“Tax preparation services” means services provided for a fee or other consideration to a client to:

(1) assist with preparing or filing State or federal individual income tax returns; or

(2) assume final responsibility for completed work on an individual tax return on which preliminary work has been completed by another.

3. (New section) There is established within the Division of Consumer Affairs in the Department of Law and Public Safety the State Board of Tax Preparers. The board shall consist of seven members who are residents of the State, two of whom shall be public members appointed pursuant to the provisions of subsection b. of section 2 of P.L.1971, c.60 (C.45:1-2.2) and one of whom shall be a member of the Executive Branch appointed in fulfillment of the requirement of subsection c. of section 2 of P.L.1971, c.60 (C.45:1-2.2). The four remaining members shall have been actively engaged in the practice of tax preparation for at least five years immediately preceding their appointment and all of whom, except for the members first appointed, shall be licensed as tax preparers pursuant to this act.

The Governor shall appoint each member, other than the State executive department member, for terms of three years, except that of the tax preparers first appointed, two shall serve for a term of three years, one shall serve for a term of two years, and one shall serve for a term of one year. Any vacancy in the membership shall be filled for the unexpired term in the manner provided by the original appointment. No member of the board may serve more than two successive terms in addition to any unexpired term to which he has been appointed. The Governor may remove any member of the board, other than the State executive department member, for cause.

4. (New section) Members of the board shall be compensated and reimbursed for expenses and provided with office and meeting facilities pursuant to section 2 of P.L.1977, c.285 (C.45:1-2.5).

5. (New section) The board shall annually elect from among its members a chairman and a vice-chairman and may appoint a secretary, who need not be a member of the board. The board shall meet at least once every four months and may hold additional meetings as necessary to discharge its duties.

6. (New section) The board shall, in addition to other powers and duties it may possess by law:

a. Administer the provisions of this act;

b. Issue and renew licenses to tax preparers pursuant to the provisions of this act;

c. Examine, evaluate and supervise all examinations and procedures;

d. Establish standards for continuing education;

e. Maintain a record of every tax preparer licensed in this State and the date and number of his license;

f. Annually publish a list of the names and addresses of all persons who are licensed under this act;

g. Adopt rules and regulations pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) as may be necessary to enable it to perform its duties under and to enforce the provisions of this act; and

h. Prescribe or change the charges for examinations, registrations, renewals and other services performed pursuant to P.L.1974, c.46 (C.45:1-3.1 et seq.).

7. (New section) a. No person shall provide, nor present, call or represent himself as able to provide, tax preparation services for compensation unless licensed in accordance with the provisions of this act.

b. No person shall assume, represent himself as, or use the title or designation “tax preparer” unless licensed pursuant to the provisions of this act.

8. (New section) To be eligible for licensure as a tax preparer, an applicant shall fulfill the following requirements:

a. Be of good moral character;

b. Have successfully completed high school or its equivalent;

c. Have successfully completed an approved course of study of 60 hours, as prescribed by the board, which includes instruction in basic personal income tax law, theory and practice; and

d. Have passed an examination administered or approved by the board, which measures the applicant’s knowledge of New Jersey and federal personal income tax law, theory and practice.

9. (New section) The provisions of this act shall not apply to:

a. An attorney admitted to practice law in New Jersey;

b. A certified public accountant licensed to practice in New Jersey;

c. An enrolled agent who has passed the special enrollment examination administered by the Internal Revenue Service;

d. Any employee hired to fill a permanent position with an employer, who in connection with his duties as an employee has the incidental duty of preparing income tax returns for the business of the employer only; and

e. Any employee of the State or a political subdivision thereof, but only in the course of his employment.

10. (New section) Prior to rendering any tax preparation services, a tax preparer shall disclose to a client in writing:

a. The tax preparer’s name, address and telephone number;

b. That the tax preparer is not a certified public accountant, an enrolled agent, or an attorney; and

c. Services that the tax preparer is qualified to provide.

11. (New section) The board may revoke or suspend the license of any tax preparer, after notice and hearing, if the tax preparer:

a. Without reasonable cause, failed to promptly, diligently and without unreasonable delay complete a client's tax return;

b. Obtained the signature of a client to a tax return or authorizing document containing blank entries to be completed after the document had been signed;

c. Failed to sign a client's tax return as the tax preparer;

d. Failed or refused to give a client a copy of any document requiring the client's signature within a reasonable time after the client signed the document;

e. Failed to retain for at least four years a copy of individual income tax returns;

f. Failed to maintain a confidential relationship with a client or former client;

g. Failed to take reasonable measures to maintain the confidentiality of information or documents provided by the client;

h. Produced, authorized, published, disseminated, circulated, or caused to make any false, deceptive, or misleading statement or representation relating to or in connection with the offering or provision of tax preparation services;

i. Claimed, or made representations to a client concerning, credits or deductions for which the tax preparer knew or reasonably should have known the client did not qualify; or

j. Withheld or declined to return to a client documentation provided by the client for use in preparing a client's tax return.

12. (New section) A fee to be determined by the board shall accompany each application for licensure. Licenses shall expire biennially and may be renewed upon submission of a renewal application provided by the board and payment of a fee. If the renewal fee is not paid by that date, the license shall automatically expire, but may be renewed within two years of its expiration date on payment to the board of a sum determined by the board for each year or part thereof during which the license was expired and an additional restoration fee. After a two-year period, a license may only be renewed by complying with the provisions of this act regarding initial licensure.

13. (New section) The board shall require each tax preparer, as a condition for biennial license renewal pursuant to section 12 of this act, to complete any continuing education requirements imposed by the board pursuant to sections 14 and 15 of this act.

14. (New section) a. The board shall:

(1) Establish standards for tax preparer education, including: the number of credits, which shall not exceed 20 credit hours biennially; the subject matter and content of courses of study; and the selection of instructors;

(2) Approve educational programs offering continuing education credits; and

(3) Approve other equivalent educational programs and establish procedures for the issuance of credit upon satisfactory proof of the completion of these programs.

b. In the case of education courses and programs, each hour of instruction shall be equivalent to one credit.

15. (New section) The board may, in its discretion, waive requirements for continuing education on an individual basis for reasons of hardship such as illness or disability, retirement of a license, or other good cause.

16. Section 1 of P.L.1971, c.60 (C.45:1-2.1) is amended to read as follows:

1. The provisions of this act shall apply to the following boards and commissions: the New Jersey State Board of Accountancy, the New Jersey State Board of Architects, the New Jersey State Board of Cosmetology and Hairstyling, the Board of Examiners of Electrical Contractors, the New Jersey State Board of Dentistry, the State Board of Mortuary Science of New Jersey, the State Board of Professional Engineers and Land Surveyors, the State Board of Marriage and Family Therapy Examiners, the State Board of Medical Examiners, the New Jersey Board of Nursing, the New Jersey State Board of Optometrists, the State Board of Examiners of Ophthalmic Dispensers and Ophthalmic Technicians, the Board of Pharmacy, the State Board of Professional Planners, the State Board of Psychological Examiners, the State Board of Examiners of Master Plumbers, the New Jersey Real Estate Commission, the State Board of Court Reporting, the State Board of Veterinary Medical Examiners, the Radiologic Technology Board of Examiners, the Acupuncture Examining Board, the State Board of Chiropractic Examiners, the State Board of Respiratory Care, the State Real Estate Appraiser Board, the State Board of Social Work Examiners, the State Board of Tax Preparers, the State Board of Examiners of Heating, Ventilating, Air Conditioning and Refrigeration Contractors, the State Board of Physical Therapy Examiners, the Orthotics and Prosthetics Board of Examiners, the New Jersey Cemetery Board, the State Board of Polysomnography, the New Jersey Board of Massage and Bodywork Therapy, the Genetic Counseling Advisory Committee and any other entity hereafter created under Title 45 to license or otherwise regulate a profession or occupation.

(cf: P.L.2009, c.41, s.11)

17. Section 1 of P.L.1974, c.46 (C.45:1-3.1) is amended to read as follows:

1. The provisions of this act shall apply to the following boards and commissions: the New Jersey State Board of Accountancy, the New Jersey State Board of Architects, the New Jersey State Board of Cosmetology and Hairstyling, the Board of Examiners of Electrical Contractors, the New Jersey State Board of Dentistry, the State Board of Mortuary Science of New Jersey, the State Board of Professional Engineers and Land Surveyors, the State Board of Marriage and Family Therapy Examiners, the State Board of Medical Examiners, the New Jersey Board of Nursing, the New Jersey State Board of Optometrists, the State Board of Examiners of Ophthalmic Dispensers and Ophthalmic Technicians, the Board of Pharmacy, the State Board of Professional Planners, the State Board of Psychological Examiners, the State Board of Examiners of Master Plumbers, the State Board of Court Reporting, the State Board of Veterinary Medical Examiners, the Radiologic Technology Board of Examiners, the Acupuncture Examining Board, the State Board of Chiropractic Examiners, the State Board of Respiratory Care, the State Real Estate Appraiser Board, the New Jersey Cemetery Board, the State Board of Social Work Examiners, the State Board of Tax Preparers, the State Board of Examiners of Heating, Ventilating, Air Conditioning and Refrigeration Contractors, the State Board of Physical Therapy Examiners, the State Board of Polysomnography, the Orthotics and Prosthetics Board of Examiners, the New Jersey Board of Massage and Bodywork Therapy, the Genetic Counseling Advisory Committee and any other entity hereafter created under Title 45 to license or otherwise regulate a profession or occupation.

(cf: P.L.2009, c.41, s.12)

18. Section 2 of P.L.1978, c.73 (C.45:1-15) is amended to read as follows:

2. The provisions of this act shall apply to the following boards and all professions or occupations regulated by, through or with the advice of those boards: the New Jersey State Board of Accountancy, the New Jersey State Board of Architects, the New Jersey State Board of Cosmetology and Hairstyling, the Board of Examiners of Electrical Contractors, the New Jersey State Board of Dentistry, the State Board of Mortuary Science of New Jersey, the State Board of Professional Engineers and Land Surveyors, the State Board of Marriage and Family Therapy Examiners, the State Board of Medical Examiners, the New Jersey Board of Nursing, the New Jersey State Board of Optometrists, the State Board of Examiners of Ophthalmic Dispensers and Ophthalmic Technicians, the Board of Pharmacy, the State Board of Professional Planners, the State Board of Psychological Examiners, the State Board of Examiners of Master Plumbers, the State Board of Court Reporting, the State Board of Veterinary Medical Examiners, the State Board of Chiropractic Examiners, the State Board of Respiratory Care, the State Real Estate Appraiser Board, the State Board of Social Work Examiners, the State Board of Tax Preparers, the State Board of Examiners of Heating, Ventilating, Air Conditioning and Refrigeration Contractors, the State Board of Physical Therapy Examiners, the State Board of Polysomnography, the Professional Counselor Examiners Committee, the New Jersey Cemetery Board, the Orthotics and Prosthetics Board of Examiners, the Occupational Therapy Advisory Council, the Electrologists Advisory Committee, the Acupuncture Advisory Committee, the Alcohol and Drug Counselor Committee, the Athletic Training Advisory Committee, the Certified Psychoanalysts Advisory Committee, the Fire Alarm, Burglar Alarm, and Locksmith Advisory Committee, the Home Inspection Advisory Committee, the Interior Design Examination and Evaluation Committee, the Hearing Aid Dispensers Examining Committee, the Landscape Architect Examination and Evaluation Committee, the Perfusionists Advisory Committee, the Physician Assistant Advisory Committee, the Audiology and Speech-Language Pathology Advisory Committee, the New Jersey Board of Massage and Bodywork Therapy, the Genetic Counseling Advisory Committee and any other entity hereafter created under Title 45 to license or otherwise regulate a profession or occupation.

(cf: P.L.2009, c.41, s.13)

19. This act shall take effect immediately, except that section 7 shall take effect 360 days following the appointment and qualification of the board members, and provided that the director and the board may take such anticipatory action as may be necessary to effectuate that provision of the act.

STATEMENT

This bill establishes licensing requirements for tax preparers, who provide tax preparation services. As defined in this bill, “tax preparation services” means services provided for a fee or other consideration to a client to: assist with preparing or filing State or federal individual income tax returns; or assume final responsibility for completed work on an individual tax return on which preliminary work has been completed by another. The bill defines “tax preparer” as an individual, corporation, partnership, limited liability company association, trustee or other entity who is licensed as a tax preparer pursuant to the provisions of this bill.

The bill also establishes the State Board of Tax Preparers within the Division of Consumer Affairs in the Department of Law and Public Safety. The board shall consist of seven members who are residents of this State. Four of the members shall have been actively engaged in the practice of tax preparation for at least five years immediately preceding their appointment and all of whom, except for the members first appointed, shall be licensed as tax preparers in accordance with the provisions of this bill. Two of the remaining board members shall be public members and one member shall be a member of the Executive Branch.

To be eligible for licensure as a tax preparer, an applicant shall fulfill the following requirements: be of good moral character; have successfully completed high school or its equivalent; have successfully completed an approved course of study of 60 hours, as prescribed by the board, which includes instruction in basic personal income tax law, theory and practice; and have passed an examination administered or approved by the board, which measures the applicant’s knowledge of New Jersey and federal personal income tax law, theory and practice.

Furthermore, the bill provides for a biennial license renewal of tax preparers.

In addition, the bill requires licensed tax preparers to complete continuing education courses as a condition of license renewal. The board shall: establish standards for tax preparer education, including the number of credits, which shall not exceed 20 credit hours biennially, the subject matter and content of courses of study, and the selection of instructors; approve educational programs offering continuing education credits; and approve other equivalent educational programs and establish procedures for the issuance of credit upon satisfactory proof of the completion of these programs. In the case of education courses and programs, each hour of instruction shall be equivalent to one credit.

The bill stipulates that no person shall provide, nor present, call or represent himself as able to provide tax preparation services for compensation unless licensed in accordance with its provisions.

The bill specifically exempts from its provisions: an attorney admitted to practice law in New Jersey; a certified public accountant qualified to practice in New Jersey; an enrolled agent who has passed the special enrollment examination administered by the Internal Revenue Service; any employee hired to fill a permanent position, who in connection with the duties as an employee has the incidental duty of preparing income tax returns for the business of the employer only; and any employee of the State or a political subdivision thereof, but only in the course of this employment.

Under the bill, tax preparers are required to meet certain standards, including: promptly completing clients’ tax returns; signing returns as the tax preparer; providing clients with copies of all documents requiring their signature; retaining certain files; maintaining confidentiality; and not claiming credits or deductions for which clients do not qualify.