State Codes and Statutes

State Codes and Statutes

Statutes > California > Bpc > 22250-22259

BUSINESS AND PROFESSIONS CODE
SECTION 22250-22259



22250.  (a) A tax preparer shall maintain a bond issued by a surety
company admitted to do business in this state for each individual
preparing tax returns for another person. The principal sum of the
bond shall be five thousand dollars ($5,000). A tax preparer subject
to this section shall provide to the surety company proof that the
individual is at least 18 years of age before a surety bond may be
issued.
   (b) The bond required by this section shall be in favor of, and
payable to, the people of the State of California and shall be for
the benefit of any person or persons damaged by any fraud,
dishonesty, misstatement, misrepresentation, deceit, or any unlawful
acts or omissions by the tax preparer, or the tax preparers employed
or associated with it to provide tax preparation services.
   (c) The tax preparer filing the bond shall identify all tax
preparers employed or associated with the tax preparer and shall
provide for each employee or associate the evidence required by
subdivision (a) to the surety company. A tax preparer employed or
associated with a tax preparer shall be covered by the bond of the
tax preparer with which he or she is employed or associated. However,
in no event shall the total bond required for any single tax
preparer and the tax preparers employed or associated with it be
required to exceed one hundred twenty-five thousand dollars
($125,000). The aggregate liability of the surety to any and all
persons regardless of the number of claims against the bond or the
number of years the bond remains in force shall not exceed five
thousand dollars ($5,000) for any one tax preparer. Any revision of
the bond amount shall not be cumulative. The liability of the surety
on the bond shall not include payment of any civil penalties, fines,
attorneys' fees, or any other cost provided by statute or regulation.
   (d) The tax preparer shall file an amendment to the bond within 30
days of a change in information contained in the bond, including a
change in the tax preparers employed or associated with the tax
preparer.
   (e) (1) A tax preparer may not conduct business without having a
current surety bond in the amount prescribed by this section.
   (2) Thirty days prior to the cancellation or termination of any
surety bond required by this section, the surety shall send a written
notice of that cancellation or termination to the tax preparer and
the California Tax Education Council, identifying the bond and the
date of cancellation or termination.
   (3) If a tax preparer fails to obtain a new bond by the effective
date of the cancellation or termination of the former bond, the tax
preparer shall cease to conduct business until that time as a new
surety bond is obtained.
   (f) Notwithstanding Section 995.710 of the Code of Civil
Procedure, a tax preparer may not make a deposit in lieu of bond.
   (g) A tax preparer shall furnish evidence of the bond required by
this section upon the request of any state, federal agency or any law
enforcement agency or the California Tax Education Council.




22251.  For the purposes of this chapter, the following words have
the following meanings:
   (a) (1) Except as otherwise provided in paragraph (2), "tax
preparer" includes:
   (A) A person who, for a fee or for other consideration, assists
with or prepares tax returns for another person or who assumes final
responsibility for completed work on a return on which preliminary
work has been done by another person, or who holds himself or herself
out as offering those services. A person engaged in that activity
shall be deemed to be a separate person for the purposes of this
chapter, irrespective of affiliation with, or employment by, another
tax preparer.
   (B) A corporation, partnership, association, or other entity that
has associated with it persons not exempted under Section 22258,
which persons shall have as part of their responsibilities the
preparation of data and ultimate signatory authority on tax returns
or that holds itself out as offering those services or having that
authority.
   (2) Notwithstanding paragraph (1), "tax preparer" does not include
an employee who, as part of the regular clerical duties of his or
her employment, prepares his or her employer's income, sales, or
payroll tax returns.
   (b) "Tax return" means a return, declaration, statement, refund
claim, or other document required to be made or filed in connection
with state or federal income taxes or state bank and corporation
franchise taxes.
   (c) An "approved curriculum provider," for purposes of basic
instruction as described in subdivision (a) of Section 22255, and
continuing education as described in subdivision (b) of Section
22255, is one who has been approved by the council as defined in
subdivision (d). A curriculum provider who is approved by the tax
education council is exempt from Chapter 7 (commencing with Section
94700) of Part 59 of Division 10 of the Education Code.
   (d) "Council" means the California Tax Education Council that is a
single organization made up of not more than one representative from
each professional society, association, or other entity operating as
a nonprofit corporation that chooses to participate in the council
and that represents tax preparers, enrolled agents, attorneys, or
certified public accountants with a membership in California of at
least 200 for the last three years, and not more than one
representative from each for-profit tax preparation corporation that
chooses to participate in the council and that has at least 200
employees and has been operating in California for the last three
years. The council shall establish a process by which six individuals
who are tax preparers pursuant to Section 22255 are appointed to the
council with full voting privileges to serve terms as determined by
the council, with their initial terms being served on a staggered
basis. A person exempt from the requirements of this chapter pursuant
to Section 22258 is not eligible for appointment to the council,
other than an employee of an individual in an exempt category.
   (e) "Client" means an individual for whom a tax preparer performs
or agrees to perform tax preparation services.
   (f) "Refund anticipation loan" means a loan, whether provided by
the tax preparer or another entity, such as a financial institution,
in anticipation of, and whose payment is secured by, a client's
federal or state income tax refund or by both.
   (g) "Refund anticipation loan fee schedule" means a list or table
of refund anticipation loan fees that includes three or more
representative refund anticipation loan amounts. The schedule shall
separately list each fee or charge imposed, as well as a total of all
fees imposed, related to the making of a refund anticipation loan.
The schedule shall also include, for each representative loan amount,
the estimated annual percentage rate calculated under the guidelines
established by the federal Truth in Lending Act (15 U.S.C. Sec. 1601
and following).



22252.  Prior to rendering any tax preparation services, a tax
preparer shall provide the customer in writing with the tax preparer'
s name, address, telephone number, and evidence of compliance with
the bonding requirement of Section 22250, including the bond number,
if any.



22252.1.  (a) No confidential information obtained by a tax
preparer, in his or her professional capacity, concerning a client or
a prospective client shall be disclosed by the tax preparer without
the written permission of the client or prospective client, except
for the following:
   (1) Disclosures made by a tax preparer in compliance with a
subpoena or a summons enforceable by order of a court.
   (2) Disclosures made by a tax preparer regarding a client or
prospective client to the extent the tax preparer reasonably believes
it is necessary to maintain or defend himself or herself in a legal
proceeding initiated by the client or prospective client.
   (3) Disclosures made by a tax preparer in response to an official
inquiry from a federal or state government regulatory agency.
   (4) Disclosures made by a tax preparer or to a tax preparer's duly
authorized representative to another tax preparer in connection with
a proposed sale or merger of the tax preparer's professional
practice.
   (5) Disclosures made by a tax preparer to either of the following:
   (A) Another tax preparer to the extent necessary for purposes of
professional consultation.
   (B) Organizations that provide professional standards review and
ethics or quality control peer review.
   (6) Disclosures made when specifically required by law.
   (b) In the event that confidential client information may be
disclosed to persons or entities outside the United States of America
in connection with the services provided, the tax preparer shall
inform the client in writing and obtain the client's written
permission for the disclosure.
   (c) It is the intent of the Legislature that this section
complement and does not replace Section 17530.5 as applied to tax
preparers by subdivision (f) of Section 1799.1a of the Civil Code.



22252.5.  The Legislature finds and declares that it is important to
inform taxpayers that they may make voluntary contributions to
certain funds or programs, as provided on the state income tax
return. The Legislature further finds and declares that many
taxpayers remain unaware of the voluntary contribution check-offs on
the state income tax return. Therefore, it is the intent of the
Legislature to encourage all persons who prepare state income tax
returns, including tax preparers, to inform their clients in writing,
prior to the completion of any state income tax return, that they
may make a contribution to any voluntary contribution check-off on
the state income tax return if they so choose.



22253.  (a) It is a violation of this chapter for a tax preparer to
do any of the following:
   (1) Fail to register as a tax preparer with the council.
   (2) Make, or authorize the making of, any statement or
representation, oral or written or recorded by any means, which is
intended to induce persons to use the tax preparation service of the
tax preparer, which statement or representation is fraudulent,
untrue, or misleading.
   (3) Obtain the signature of a customer to a tax return or
authorizing document which contains blank spaces to be filled in
after it has been signed.
   (4) Fail or refuse to give a customer, for his or her own records,
a copy of any document requiring the customer's signature, within a
reasonable time after the customer signs the document.
   (5) Fail to maintain a copy of any tax return prepared for a
customer for four years from the date of completion or the due date
of the return, whichever is later.
   (6) Engage in advertising practices which are fraudulent, untrue,
or misleading, including, but not limited to, assertions that the
bond required by Section 22250 in any way implies licensure or
endorsement of a tax preparer by the State of California.
   (7) Violate Section 17530.5 or 17530.6.
   (8) Violate Section 7216 of Title 26 of the United States Code.
   (9) Fail to sign a customer's tax return when payment for services
rendered has been made.
   (10) Fail to return, upon the demand by or on behalf of a
customer, records or other data provided to the tax preparer by the
customer.
   (11) Knowingly give false or misleading information to the
consumer pursuant to Section 22252, or give false or misleading
information to the surety company pursuant to subdivision (a) of
Section 22250, or give false or misleading information to the
California Tax Education Council pursuant to Section 22255.
   (b) Each violation of this section constitutes a separate offense.




22253.1.  (a) Any tax preparer who advertises the availability of a
refund anticipation loan shall not directly or indirectly represent
the loan as a client's actual refund. Any advertisement that mentions
a refund anticipation loan shall state conspicuously that it is a
loan and that a fee or interest will be charged by the lending
institution. The advertisement shall also disclose the name of the
lending institution.
   (b) Every tax preparer who offers to facilitate, or who
facilitates, a refund anticipation loan to a client shall display a
refund anticipation loan schedule showing the current fees for refund
anticipation loans facilitated at the office, for the electronic
filing of the client's tax return, for setting up a refund account,
and any other related activities necessary to receive a refund
anticipation loan. The fee schedule shall also include a statement
indicating that the client may have the tax return filed
electronically without also obtaining a refund anticipation loan.
   (c) The postings required by this section shall be made in not
less than 28-point type on a document measuring not less than 16 by
20 inches. The postings required in this section shall be displayed
in a prominent location at each office where any tax preparer is
offering to facilitate or facilitating a refund anticipation loan.
   (d) (1) Prior to the client's completion of the refund
anticipation loan application, a tax preparer that offers to
facilitate a refund anticipation loan shall provide to the client a
clear, written disclosure containing all of the following
information:
   (A) The refund anticipation loan fee schedule.
   (B) That a refund anticipation loan is a loan and is not the
client's actual income tax refund.
   (C) That the taxpayer can file an income tax return electronically
without applying for a refund anticipation loan.
   (D) The average amount of time, according to the Internal Revenue
Service, within which a taxpayer who does not obtain a refund
anticipation loan can expect to receive a refund if the taxpayer's
return is filed or mailed as follows:
   (i) Filed electronically and the refund is deposited directly into
the taxpayer's bank account or mailed to the taxpayer.
   (ii) Mailed to the Internal Revenue Service and the refund is
deposited directly into the taxpayer's bank account or mailed to the
taxpayer.
   (E) That the Internal Revenue Service does not guarantee that it
will pay the full amount of the anticipated refund and it does not
guarantee a specific date that a refund will be deposited into the
taxpayer's bank account or mailed to the taxpayer.
   (F) That the client is responsible for the repayment of the refund
anticipation loan and the related fees in the event that the tax
refund is not paid or paid in full.
   (G) The estimated time within which the loan proceeds will be paid
to the client if the loan is approved.
   (H) The fee that will be charged, if any, if the client's loan is
not approved.
   (2) Prior to the client's consummation of the refund anticipation
loan transaction, a tax preparer that facilitates a refund
anticipation loan shall provide to the client, in either written or
electronic form, the following information:
   (A) The estimated total fees for obtaining the refund anticipation
loan.
   (B) The estimated annual percentage rate for the client's refund
anticipation loan, using the guidelines established under the federal
Truth in Lending Act (15 U.S.C. Sec. 1601 and following).
   (C) A comparison of the various costs, fees, and finance charges,
if applicable, associated with receiving a refund by mail or by
direct deposit directly from the Internal Revenue Service, a refund
anticipation loan, a refund anticipation check, or any other refund
settlement options facilitated by the tax preparation service.
   (e) This section shall comply with the language requirements set
forth in Section 1632 of the Civil Code.
   (f) Any tax preparer who offers to facilitate, or who facilitates,
a refund anticipation loan may not engage in any of the following
activities:
   (1) Requiring a client to enter into a loan arrangement in order
to complete a tax return.
   (2) Misrepresenting a material factor or condition of a refund
anticipation loan.
   (3) Failing to process the application for a refund anticipation
loan promptly after the client applies for the loan.
   (4) Engaging in any transaction, practice, or course of business
that operates a fraud upon any person in connection with a refund
anticipation loan.


22253.2.  (a) The Franchise Tax Board shall notify the California
Tax Education Council when it identifies an individual who has
violated paragraph (1) of subdivision (a) of Section 22253.
   (b) Upon receiving the notice described in subdivision (a), the
California Tax Education Council shall notify the Attorney General, a
district attorney, or a city attorney of the violation. Upon
receiving this notice, the Attorney General, a district attorney, or
a city attorney may do any of the following:
   (1) Cite individuals preparing tax returns in violation of
subdivision (a) of Section 22253.
   (2) Levy a fine up to five thousand dollars ($5,000) per
violation.
   (3) Issue a cease and desist order, which shall remain in effect
until the individual has complied with paragraph (1) of subdivision
(a) of Section 22253.
   (c) The California Tax Education Council may enter into an
agreement with the Franchise Tax Board to provide reimbursement to
the Franchise Tax Board for any expenses incurred by the Franchise
Tax Board to implement subdivision (a) of this section.



22254.  A provider of tax preparer education for tax preparers shall
meet standards and procedures as approved by the council. The
council shall either approve or decline to approve providers of tax
preparer education within 120 days of receiving a request for
approval. If approval is not declined within 120 days, the provider
shall be deemed approved. A listing of those providers approved by
the council shall be made available to tax preparers upon request.



22255.  (a) The council shall issue a "certificate of completion" to
the tax preparer when the tax preparer demonstrates that he or she
has (1) completed not less than 60 hours of instruction in basic
personal income tax law, theory, and practice by an approved
curriculum provider within the previous 18 months; and (2) provides
evidence of compliance with the bonding requirement of Section 22250,
including the name of the surety company, the bond number, and the
bond expiration date. Of the required 60 hours, 45 hours shall be
concerned with federal tax curriculum and 15 hours shall be concerned
with state tax curriculum.
   (b) A tax preparer shall complete on an annual basis not less than
20 hours of continuing education, including 12 hours in federal
taxation, four hours in California taxation and an additional four
hours in either federal or California taxation from an approved
curriculum provider. The council shall issue annually a "statement of
compliance" when the tax preparer demonstrates that he or she has
(1) completed the required 20 hours of continuing education, and (2)
provides evidence of compliance with the bonding requirement of
Section 22250, including the name of the surety company, the bond
number, and the bond expiration date.
   (c) An individual who possesses a minimum of two recent years
experience in the preparation of personal income tax returns may
petition the council to review the experience and determine if it is
the equivalent of the required qualifying education. The council may
provide that individual with a "certificate of completion" if it is
determined that the experience is the equivalent of the required
hours. Tax preparation performed in situations that violate this
chapter, by an individual who is neither registered nor exempted, may
not be used toward the qualifying experience needed for registration
as a tax preparer.


22256.  (a) The superior court in and for the county in which any
person acts as a tax preparer in violation of the provisions of this
chapter, may, upon a petition by any person, issue an injunction or
other appropriate order restraining the conduct. The proceedings
under this paragraph shall be governed by Chapter 3 (commencing with
Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.
   (b) A person who violates a provision of this chapter is guilty of
a misdemeanor, which offense is punishable by a fine not exceeding
one thousand dollars ($1,000), or by imprisonment in a county jail
for not more than one year, or by both.



22257.  (a) If a tax preparer fails to perform a duty specifically
imposed upon him or her pursuant to this chapter, any person may
maintain an action for enforcement of those duties or to recover a
civil penalty in the amount of one thousand dollars ($1,000), or for
both enforcement and recovery.
   (b) In an action to enforce these duties or to recover civil
penalties, or for both enforcement and recovery, the prevailing
plaintiff shall be entitled to reasonable attorney's fees and costs,
in addition to the civil penalties provided under subdivision (a).




22258.  (a) The following persons are exempt from the requirements
of this title, subject to the requirements of subdivision (b):
   (1) A person with a current and valid license issued by the
California Board of Accountancy.
   (2) A person who is an active member of the State Bar of
California.
   (3) Any trust company or trust business as defined in Chapter 1
(commencing with Section 99) of Division 1 of the Financial Code.
   (4) A financial institution regulated by the state or federal
government, insofar as the activities of the financial institution
with respect to tax preparation are subject to federal or state
examination or oversight.
   (5) A person who is enrolled to practice before the Internal
Revenue Service pursuant to Subpart A (commencing with Section 10.1)
of Part 10 of Title 31 of the Code of Federal Regulations.
   (6) Any employee of any person described in paragraph (1), (2),
(3), (4), or (5), while functioning within the scope of that
employment.
   (7) Any employee of any corporation, partnership, association, or
any entity described in subparagraph (B) of paragraph (1) of
subdivision (a) of Section 22251.
   (b) (1) Except for employees of entities described in paragraph
(3) or (4) of subdivision (a), paragraph (6) of subdivision (a) shall
apply only if all tax returns prepared by that employee are signed
by a person described in paragraph (1), (2), or (5) of subdivision
(a).
   (2) Paragraph (7) of subdivision (a) shall apply only if all tax
returns prepared by that employee are signed by the person described
in paragraph (7) of subdivision (a).
   (3) No person described in this subdivision as an employee may
sign a tax return, unless that employee is otherwise exempt under
this section, is registered as a tax preparer with the council, or is
an employee of either a trust company or trust business described in
paragraph (3) of subdivision (a), or any employee of a financial
institution described in paragraph (4) of subdivision (a).
   (c) For purposes of this section, preparation of a tax return
includes the inputting of tax data into a computer.



22259.  This chapter shall be subject to the review required by
Division 1.2 (commencing with Section 473).
   This chapter shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.