Assemblyman Mark Stone. (Kevin Sanders for California Globe)
Tax Preparer Bill That Would Give All Costs Up Front Passes Assembly
AB 1140 would give a full cost disclose to all tax preparer clients
By Evan Symon, January 28, 2020 2:49 pm
On Monday the Assembly passed a bill that would make all tax preparers legally bound to provide all costs and fees up front to all clients.
Under Assembly Bill 1140, authored by Assemblyman Mark Stone (D-Monterey Bay), a fully written disclosure giving all costs and the contact information of all tax preparers would be given to client before any work is done. All tax preparers would also have to give the disclosure in other languages as need be, including English, Korean, Spanish, Chinese, Tagalog, and Vietnamese.
Assemblyman Stone created the bill due to many poorer families having their taxes done only to find out they had been charged more than they thought. As free services are available to many, the bill would point this out to those who may not be able to afford professional services.
“This lack of upfront cost information is especially harmful to low-income families who often end up paying hundreds of dollars for a service that could be provided at no cost,” said Assemblyman Stone in a statement. “AB 1140 will let them know the cost of services upfront while providing a written notice informing low and moderate income filers that free in-person and web-based tax preparation options are available.”
It was also noted that about a quarter of low-income Earned Income Tax Credit (EITC) recipients pay about a quarter of their EITC for tax preparation services.
While the bill was widely accepted, made it past the Assembly Appropriations Committee last week, and was passed in the Assembly 55-17 on strict party-line voting, many tax professionals pointed out the flaws in the plan.
“This makes accountants closer to being a contractor or other ‘bidding’ types of work,” said former H&R tax preparer and current private accountant Julian Taylor. “If this becomes a law, people can literally go to a bunch of tax services to get the best price. That sounds good, but when you go to someone else and say ‘Well H&R said they can do it for $15 less,’, then you have a virtual bidding war.”
“I know this bill is to help those who are poorer, but accountants and tax preparers charge what they do because of the time and the care they put into tax returns. Now either more people turn to TurboTax or tax preparers have to take up more clients to pick up the slack because they have to charge less to stay competitive.”
“The real winners are computer programs, big accounting and tax preparing companies who can handle a higher workload, and retired accountants who do tax season as a side hustle. This is going to hurt the bread and butter accountants and preparers out there. Again, I know the heart is in the right place, but there is a lot of damage behind the scenes.”
AB 1140 will now face a Senate vote in the next few months.
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CORRECTION. AB 1140 does not apply to all tax preparers in California. State law says only an attorney, CPA, enrolled agent or tax preparer registered with the California Tax Education Council (CTEC) can prepare tax returns for a fee. The bill only targets tax preparers registered with CTEC – it excludes attorneys, CPAs and enrolled agents.
Ha! This is rich …. “Assemblyman Stone created the bill due to many poorer families having their taxes done only to find out they had been charged more than they thought” because this never happens with CPA’s who routinely charge 100% or more than CTEC Preparers. Most of us already refer potential clients to the free services which are already advertised through the government and other charitable organizations. No preparer I know wants a client who can’t afford our services. But of course if this puts us out of business, which is likely, it throws them into the arms of the high priced CPA’s and EA’s, which is what it’s designed to do. I suggest you find out who’s paying for the advertising of this bill. Don’t be surprised if it’s the CPA’s who have been responsible for similar legislation in the past. Of course, they’re always excluded from the new legislative requirements. Sour grapes? You bet!
CORRECTION. AB 1140 does not apply to all legally qualified tax preparers as defined by California law – that’s attorneys, CPAs, enrolled agents and tax preparers registered with the California Education Council (CTEC). This bill EXCLUDES attorneys, CPAs and enrolled agents. Only registrants with CTEC fall under this bill.
he California Tax Education Council are a bunch of corrupt cronies who take kickbacks from the big CPA firms. I HATE you. It’s not “Education” – it’s corruption and organized crime. You are bought and paid for.
This bill will probably put me out of business. I have been preparing tax returns since 1978. I do not advertise. My clients have been with me for several years, a few as long 25 years. I only accept new clients when I am recommended to them by an old client. Some have continued even after they move out of state. It would be very difficult and in some cases impossible to comply with all the requirements of this bill.
I wouldn’t even know where to begin to comply with this idiocy. What in the world is this nut case thinking? I have been preparing taxes out of my home for nearly 30 years and this is surely a way to put me out of business. Why are just the CTEC preparers being held to this stupidity? Totally unfair.
This is over regulation of the most damaging kind. If you made it apply to CPAs, Enrolled Agents, and Attorneys who charge much more it might make at least a little sense. This legislation is designed to put independent tax preparers out of work. It is insane. I never even heard of some of the languages this nut job bill requires tax preparers to print their fee schedule into. You better find some democrat senators to vote against this disaster or California will put a whole lot more people out of work. Thank God all the Republicans vote against this insane over regulation. Democrats seem hell bent on destroying their own state. No wonder so many people are escaping to other states.
Ugh .. I’m a nonprofit accountant who did taxes as a side hustle for years until the FTB decided to try to regulate it. Professional licensing really messes up career advancement. All my clients were happy with my work, and I would adjust my fee as necessary. I had a niche with musicians who had absurdly complex taxes and low incomes – it’s impossible to pre-estimate the time requirements with this group.