AB-1140 would require CRTPs to provide fees upfront and inform clients of free tax services

A bill is currently in the California legislature that would significantly increase obligations if you’re a CTEC Registered Tax Preparer (CRTP). This bill, AB1140 (authored by Assembly Member Mark Stone), would apply to CRTPs only. It would not apply to a much larger portion of the tax preparation community that includes: Certified Public Accounts (CPAs); Enrolled Agents (EAs); and
attorneys. This bill, if passed in its current form, would require CRTPs to provide clients and potential clients with two disclosures, one before preparing the tax return and one after preparing the tax return.

Notice Before: A written notice would be required before preparing a potential client’s return that includes all of the following information:

• A standardized disclosure statement informing a potential client with income below sixty-six thousand dollars ($66,000) that they may be eligible for free online tax preparation services, and that an individual with income below fifty-six thousand dollars ($56,000) may be eligible for free in-person tax preparation services through the IRS’s Volunteer Income Tax Assistance (VITA) program. The statement shall also identify the IRS’s internet websites where an individual may find additional information on each program and the Franchise Tax Board’s CalFile internet website.
• A list of costs and fees charged by the CRTP for usual and customary tax preparation services, including, but not limited to, California Form 3514 and federal Schedule EIC (Form 1040).
• The CRTP’s federal PTIN number.

Notice After: After completing a tax return, a CRTP would be required to provide a written disclosure signed and dated by the CRTP including:

• The total cost charged by the tax preparer
• The CRTP’s contact information and federal preparer number (PTIN)
• Whether others were involved in preparing the return, their names, contact information and PTINs

Both statements must be signed and dated by the client and retained by the CRTP for a minimum period of three years.

A CRTP who violates these provisions more than once will be subject to a $750 penalty issued by the California Franchise Tax Board.

The full text of the bill can be found here: AB-1140 Tax Preparers - Disclosures

If you have concerns about this legislation, please contact your local representative and let your voice be heard. You can find your representative, or contact Assembly Member Mark Stone’s Office, as Mr. Stone is the legislator carrying this bill.

His office can be reached here: