Home>Articles>Tax Preparer Bill That Would Give All Costs Up Front Passes Assembly

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.

Evan Symon
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2 thoughts on “Tax Preparer Bill That Would Give All Costs Up Front Passes Assembly

  1. 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.

  2. 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.

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