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CA CRTPs


JRS

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The most problematic issues are:

Paragraph 1 - the detailed table of fees per form for preparers like myself that don't charge by the form.

Paragraph 2 - the explicit steering of prospective clients to FreeFile and to VITA which doesn't bother me since I have very few clients  that would qualify.

I wonder how much Intuit and H & R Block have to do with this bill they have pretty much done everything they could to misdirect people away from FreeFile

toward their fee based software.

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3 minutes ago, cbslee said:

I wonder how much Intuit and H & R Block have to do with this bill 

Probably a lot.   Have you seen the commercials where they are bragging about their up-front pricing model?   Sounds like CA just thought that was a good idea and wrote the commercial into the law.   Wonder if they will go after CPA's and make them follow the same rules, since the state licenses them as well as CRTP's.   Probably the AICPA would pay enough bribes (oh - I mean lobby enough) to stop that from ever happening.

Tom
Modesto, CA

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Here is the email from the California Tax Education Council opposing this measure.

NEW LEGISLATION WOULD DISCRIMINATE AGAINST CALIFORNIA REGISTERED TAX PREPARERS (CRTPs)

Dear CTEC Registrant:

A bill is currently in the California legislature that would significantly increase your obligations as 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.  
 

 

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One little section in the bill:

(d) The written disclosures required to be provided in this section shall be made available in English and the five languages listed in Section 1632 of the Civil Code.

Hopefully, Google can translate into the five acceptable languages!

Edited by JRS
Showsection d
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Does anyone know why CA is proposing this?  I can imagine the state does get lots of complaints about taxpayers who walk into one of the chains or seasonal places with a couple of W2s and walks out with a fee of $600 because they had HOH and EIC.  Those places know these clients get free money from the gov't and definitely take a share.  Since the IRS is pushing free file this year after they noticed that only 2% of eligible taxpayers use it, I can see CA following suit.  A PR campaign from the tax dept could accomplish the same end of making people aware of their options.  I don't think the pricing requirement will help people at all because they don't know what all those additional items are.  They might know they get some kind of credit for their children but likely have no idea what the additional child tax credit is.  If they put some money into a 401k they won't be aware of the retirement saver's credit.  Many probably don't realize it takes another form to get a state credit for car taxes paid.  All of these forms add to the fee, but the client walking in the door doesn't know s/he needs them.  So with their couple of W2s they'll think they will pay the basic fee and still be surprised by the $600 final.

The above verbiage does state we only have to disclose average fees to potential clients, not existing ones. 

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